Registration No. 33-
As filed with the Securities and Exchange Commission on _________, 1998
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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STRUCTURED ASSET TRUST UNIT REPACKAGINGS
MSDW STRUCTURED ASSET CORP.
(Exact name of registrant as specified in governing instruments)
Delaware *
(State or other jurisdiction (I.R.S. employer identification number)
of incorporation or organization)
1585 Broadway
New York, NY 10036
(212) 761-1715
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
---------
Michael Harpe
MSDW Structured Asset Corp.
1585 Broadway
New York, NY 10036
(212) 761-2520
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
---------
Copies to:
Mitchell S. Dupler, Esq.
Cleary, Gottlieb, Steen & Hamilton
2000 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Approximate date of commencement of proposed sale to the public:
From time to time after this Registration Statement becomes
effective in light of market conditions.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans,
please check the following box. [ ]
If any of the securities being registered on this Form are to be
offered pursuant to delayed or continuous basis pursuant to Rule
415 under the Securities Act of 1933, other than securities
offered only in connection with dividend or interest reinvestment
plans, check the following box.
[X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check
the following box and list the Securities Act registration
statement number of the earlier effective registration for the
same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. [ ]
*Applied for and to be filed by amendment
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CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Title of maximum maximum
securities Amount offering aggregate Amount of
being being price offering registration
registered registered per unit(1) price(1) fee
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Trust Units $500,000,000 100% $500,000,000 $147,500.00
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(1) Estimated solely for purposes of calculating the registration
fee on the basis of the proposed maximum aggregate offering price.
-------------------------
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
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<PAGE>
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR +
+ AMENDMENT. A REGISTRATION STATEMENT RELATING TO THE +
+ SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE +
+ COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS +
+ TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION +
+ STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND +
+ THE PROSPECTUS TO WHICH IT RELATES SHALL NOT CONSTITUTE AN +
+ OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR +
+ SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN +
+ WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL +
+ PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES +
+ LAWS OF ANY SUCH STATE. +
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS SUPPLEMENT
(To Prospectus dated ___________, 1998)
Structured Asset Trust Unit Repackagings (SATURNS SM)
Series 1998-__
[$] [Principal or Notional Amount] [(Approximate)],
Class __ Units
[ %] [Variable] Pass Through Rate
[$] [Principal or Notional Amount] [(Approximate)],
Class __ Units
[ %] [Variable] Pass Through Rate
MSDW Structured Asset Corp.
Depositor
The Structured Asset Trust Unit Repackagings (the "Units")
offered hereby will consist of __ classes of Units (each a
"Class"), denominated in [dollars] [____ the "Specified
Currency"]. The Units will represent in the aggregate the entire
beneficial ownership interest in the debt securities or loans
described in this Supplement (the "Debt Securities") to be
deposited in a trust (the "Trust") formed pursuant to a trust
agreement (the "Trust Agreement") to be entered into between MSDW
Structured Asset Corp., as depositor (the "Depositor"), and
[Chase Bank of Texas, National Association] (the "Trustee"). The
Debt Securities will be acquired by the Depositor and, pursuant
to the Trust Agreement, deposited into the Trust for the benefit
of Unitholders. [The Debt Securities were issued and sold as part
of an underwritten public offering in [ ].] The Debt Securities
are obligations of [describe] (the "Debt Security Issuer") and
[explain whether senior or subordinate, whether secured or
unsecured and whether subject to any redemption or put rights].
[Describe any required principal payments of Debt Securities.]
Terms used but not otherwise defined in this Prospectus
Supplement are defined in the attached Prospectus.
Distributions on the Units will be made [monthly] [quarterly]
[semi-annually] on [[ ] of each year]-[to be conformed to
interest payment dates for Debt Securities], or, if any such date
is not a business day, then on the immediately following business
day (each, a "Distribution Date") commencing [ ]. The last day on
which distributions are scheduled to be made on the Units is [ ]
(the "Scheduled Final Distribution Date"), by which date the
holders of the Units will receive a distribution of all amounts
allocable to principal on such Units or, to the extent specified
herein, a pro rata share of any remaining Debt Securities.
[The Trust will enter into one or more derivative transactions
(each a "Transaction") under a swap agreement ("Swap Agreement")
with [ ] (the "Swap Counterparty"). Subject to the Swap
Counterparty's performance of its obligations, the Swap Agreement
will effectively alter the interest rate or currency applicable
to the Debt Securities during the term of the related
Transaction, give the Trust rights or liabilities under an option
agreement relating to a designated portion of the Trust Property,
or create other rights or liabilities of the Trust in respect of
derivative agreements. See "Description of Swap Agreements"
herein and in the Prospectus.]
[Application will be made to list the Units on the
New York Stock Exchange.]
There will be no market for any Series of Units prior to the
issuance thereof, and there can be no assurance that a secondary
market will develop or, if it does develop, that it will provide
Unitholders with liquidity of investment or will continue for the
life of the Units.
The Units represent interests in the Trust only and do not
represent obligations of or interests in the Depositor, Morgan
Stanley & Co. Incorporated ("Morgan Stanley") or any of their
respective affiliates. The Units do not represent a direct
obligation of the Debt Security Issuer or any of its affiliates.
At the time of issue, the [Class __] Units will be
rated [ ] by [ ] (each a "Rating Agency").
--------------
SEE "RISK FACTORS" HEREIN ON PAGES [__] TO [__] AND IN THE
PROSPECTUS ON PAGES __ to __.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------------
The Underwriter has agreed to purchase the Units from the
Depositor at [ ]% of the Unit Principal Balance thereof ($[ ]
aggregate proceeds to the Depositor, before deducting expenses
estimated at $[ ]) plus accrued interest, if any, at the
Pass-Through Rate calculated from [ ], 1998 (the "Closing Date"),
subject to the terms and conditions set forth in the Underwriting
Agreement referred to herein under "Plan of Distribution."
The Underwriter proposes to offer the Units from time to time for
sale in negotiated transactions or otherwise, at prices
determined at the time of sale. For further information with
respect to the plan of distribution and any discounts,
commissions or profits that may be deemed underwriting discounts
or commissions, see "Plan of Distribution." The Units are offered
subject to receipt and acceptance by the Underwriter, to prior
sale and to the Underwriter's right to reject any order in whole
or in part and to withdraw, cancel or modify the offer without
notice. [It is expected that delivery of the [specify applicable
Classes] Units will be made in book-entry
form through [specify depositary] on or about the Closing Date.]
As and to the extent described herein, collections received by
the Trustee with respect to the Trust Property will be
distributed to Unitholders [of each Class] in the manner and
priority described herein. [The rights of the holders of the
Class Units [and specify other Classes] to receive distributions
of such collections are subordinated to the rights of the holders
of the Class Units [and specify other Classes].] As and to the
extent described herein, losses realized on the Trust Property
will be borne by the holders of the Class Units [and specify
other Classes] before such losses will be borne by the holders of
the other Classes of the Units [and the Class Units [and specify
other Classes]]. To the extent described herein, the relative
priorities of each Class of Units with respect to collections
from and losses on the Trust Property may each change over time,
either permanently or temporarily, upon the occurrence of certain
circumstances specified herein. See "Description of
the Units-Allocation of Losses; Subordination."
The Debt Security Issuer is not participating in, and will not
receive any proceeds in connection with, this offering.
SM SATURNS is being registered as a service mark of Morgan
Stanley Dean Witter & Co
<PAGE>
[The [specify applicable Classes] Units initially will be
represented by certificates registered in the name of CEDE & Co.,
as nominee of The Depository Trust Company ("DTC"). The interests
of beneficial owners of such Units will be represented by book
entries on the records of participating members of DTC.]
[The [specify applicable Classes] Units initially will be
represented by a Temporary Global Security, issued outside the
United States and exchangeable for a Permanent Global Bearer Unit
or definitive Bearer Units after 40 days upon certification of
non-U.S. beneficial ownership, in accordance with the provisions
set forth in the Prospectus under "Limitations on Issuance of
Bearer Units". Bearer Units are subject to U.S. tax law
requirements and may not be offered, sold or delivered within the
United States or its possessions or to U.S. persons, except in
certain transactions permitted by U.S. tax regulations].
THE UNITS OFFERED BY THIS PROSPECTUS SUPPLEMENT WILL CONSTITUTE A
SEPARATE SERIES OF UNITS BEING OFFERED BY THE DEPOSITOR PURSUANT
TO ITS PROSPECTUS DATED [__________], 1998, OF WHICH THIS
PROSPECTUS SUPPLEMENT IS A PART AND WHICH ACCOMPANIES THIS
PROSPECTUS SUPPLEMENT. THE PROSPECTUS CONTAINS IMPORTANT
INFORMATION REGARDING THIS OFFERING WHICH IS NOT CONTAINED
HEREIN, AND PROSPECTIVE INVESTORS ARE URGED TO READ THE
PROSPECTUS AND THIS PROSPECTUS SUPPLEMENT IN FULL. IN PARTICULAR,
INVESTORS SHOULD CONSIDER CAREFULLY THE FACTORS SET FORTH UNDER
"RISK FACTORS" IN THE PROSPECTUS AND IN THIS PROSPECTUS
SUPPLEMENT.
UNTIL ,1998, ALL DEALERS EFFECTING TRANSACTIONS IN THE UNITS,
WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER A PROSPECTUS SUPPLEMENT AND THE PROSPECTUS TO
WHICH IT RELATES. THIS DELIVERY REQUIREMENT IS IN BE ADDITION TO
THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS SUPPLEMENT AND
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND BE
WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
--------------
MORGAN STANLEY DEAN WITTER
September __, 1998
S-2
<PAGE>
TABLE OF CONTENTS
Page
SUMMARY OF PRINCIPAL TERMS.....................................3
RISK FACTORS...................................................7
FORMATION OF THE TRUST.........................................7
YIELD ON THE UNITS.............................................7
DESCRIPTION OF TRUST PROPERTY..................................8
[DESCRIPTION OF SWAP AGREEMENT]...............................17
DESCRIPTION OF UNITS..........................................18
DESCRIPTION OF TRUST AGREEMENT................................20
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.......................21
ERISA CONSIDERATIONS..........................................21
[BEARER UNITS]................................................23
PLAN OF DISTRIBUTION..........................................23
RATINGS.......................................................24
LEGAL OPINIONS................................................25
S-2
<PAGE>
SUMMARY OF PRINCIPAL TERMS
The Terms Schedule to the Trust Agreement sets forth the
following principal terms with respect to the Trust, the Units,
the Debt Securities[, and the Swap Agreement:]
1. Terms of Trust and Units:
Trust: Structured Asset Trust Unit
Repackagings Series 199_-_
Date of Trust Agreement:
Trustee:
Initial Unit Principal
Balance:
Issue Price:
Cut-off Date:
Closing Date:
Specified Currency:
Business Day:
Pass Through Rate: [Swap Rate]
Interest Reset Period: [Each Swap Rate Accrual
Period]
Rating:
Rating Agencies:
Scheduled Final
Distribution Date:
[Swap Agreement:] [The ISDA Agreement referred
to in Schedule III]
[Swap Counterparty:] [Party A to the Swap Agreement
referred to in Schedule III]
[Guarantee:]
S-3
<PAGE>
[Swap Notional Amount:] [The Notional Amount specified
in Schedule III]
[Swap Payment Date:] [Each Payment Date specified
in Schedule III for Party A]
[Swap Rate:] [The [Fixed][Floating]
Rate specified in Schedule
III for the applicable
Calculation Period under the
Swap Agreement, plus or minus
the Spread specified in
Schedule III].
Distribution Date:
Record Date:
Form: [Global/Definitive]
[Registered/Bearer]
Depositary:
Alternative ERISA
Restrictions [Apply][Do Not Apply]
Deemed Representations: [Apply][Do Not Apply]
Additional Trust
Wind-Up Event:
Exchangeable Series
Terms:
Terms of Retained
Interest:
Call Option Terms:
Other Terms:
2. Terms of Trust Property
Concentrated Debt Securities:
[repeat for each]
Debt Securities:
Debt Security Issuer:
S-4
<PAGE>
Principal Amount:
Debt Security Rate:
Credit Ratings:
Listing:
Debt Security Agreement:
Events of Default:
Form:
Currency of
Denomination:
Acquisition Price Units having an initial Unit
by Trust: Principal Balance of [$______].
Debt Security Payment
Date:
Original Issue Date:
Maturity Date:
Sinking Fund Terms:
Redemption Terms:
CUSIP No.:/ISIN No.
Debt Security Trustee:
Cut-Off Date:
Credit Support:
Other Trust Property:
<PAGE>
[3. Terms of Swap Transaction[s] [repeat separately for each]
Trade Date: [ ], 1998
Effective Date: [ ], 1998
Termination Date:
Fixed Amounts:
Fixed Rate Payer
Notional/Currency Amount:
Fixed Rate Payer:
Fixed Rate Payer
Payment Date:
Fixed Rate:
Floating Amounts:
Floating Rate Payer
Notional/Currency Amount:
Floating Rate Payer:
Floating Rate:
Floating Rate Payer
Payment Dates:
Floating Rate Option:
Designated Maturity:
Floating Rate Day Count
Fraction:
Reset Dates:
No Adjustment of Period
End Dates:
Rate Cut-off Dates:
Method of Averaging:
Compounding:
Calculation Agent: Party A
Business Days:]
S-6
<PAGE>
RISK FACTORS
[Describe risk factors applicable to the specific Debt
Securities[, Swap Agreement] or other Trust Property and the
particular structure of the Units being offered, including
factors relating to the yield on the Units and risks associated
with the Trust Property and the terms thereof, as described
elsewhere herein.] See "Risk Factors" and "Maturity and Yield
Considerations" in the Prospectus.
FORMATION OF THE TRUST
The Trust will be formed pursuant to the Trust Agreement
between the Depositor and the Trustee, which incorporates the
provisions of the Standard Terms of Trust Agreements between the
Depositor and the Trustee dated __________, 1998. Concurrently
with the execution and delivery of the Trust Agreement, the
Depositor will deposit the Debt Securities in the Trust. The
Trustee, on behalf of the Trust, will accept such Debt
Securities[, enter into the Swap Agreement] and deliver the Units
to or upon the order of the Depositor.
The Debt Securities [will be] [have been] purchased by
the Depositor in the secondary market (either directly or through
an affiliate of the Depositor). The Debt Securities will not be
acquired from the Debt Securities Issuer as part of any
distribution by or pursuant to any agreement with the Debt
Security Issuer. The Debt Security Issuer is not participating in
this offering and will not receive any of the proceeds of the
sale of the Debt Securities to the Depositor or the issuance of
the Units. [Neither the Depositor nor any of its affiliates
participated in the initial public offering of the Debt
Securities] [Morgan Stanley, an affiliate of the Depositor,
participated in the initial public offering of the Debt
Securities as a [co-underwriter] [underwriter]].
YIELD ON THE UNITS
[Describe factors relating to the Trust Property, the terms
thereof and the manner and priority in which collections thereon
are allocated to the Unitholders of each Class of the Units, as
described elsewhere herein.] See "Maturity and Yield
Considerations" in the Prospectus.
S-7
<PAGE>
DESCRIPTION OF TRUST PROPERTY
This Prospectus Supplement sets forth certain relevant
terms with respect to the Debt Securities, but does not provide
detailed information with respect to the Debt Securities. This
Prospectus Supplement relates only to the Units offered hereby
and does not relate to the Trust Property.
All information set forth in this Prospectus Supplement
with respect to each of the Debt Securities is derived solely
from the related Debt Security Prospectus, or other publicly
available information. [Describe publicly available documents.]
[Prospective purchasers of Units are urged to read this
Prospectus Supplement in conjunction with each Debt Security
Prospectus and each Debt Security Registration Statement. None of
the Depositor, Morgan Stanley or the Trustee nor any of their
respective affiliates has participated in the preparation of any
Debt Security Prospectus or Debt Security Registration Statement
or other public information relating to the Debt Securities, and
takes no responsibility for the accuracy or completeness of the
information provided therein.]
This Prospectus Supplement does not provide information
with respect to the Debt Security Issuer(s), and no investigation
of the financial condition or creditworthiness of any of the Debt
Security Issuer(s) or any of its subsidiaries or other
affiliates, [or of the ratings on the Debt Securities], has been
made by the Depositor, Morgan Stanley or the Trustee in
connection with the issuance of the related Units. Prospective
purchasers of Units should consider carefully each Debt Security
Issuer's financial condition and its ability to make payments in
respect of the related Debt Securities. All information contained
in this Prospectus Supplement regarding each Debt Security Issuer
has been derived from the related Debt Security Prospectus,
reports filed by the Debt Security Issuer pursuant to the
Exchange Act, or other publicly available information. There can
be no assurance that events affecting the Debt Securities or the
Debt Security Issuer have not occurred, which have not yet been
publicly disclosed, which would affect the accuracy or
completeness of the publicly available documents described above.
Concentrated Debt Securities
[Use the following where Units are backed principally by
Treasury/FNMA/FHLMC securities]:
[The Debt Securities include] [Each Debt Security will
represent] [(i) an obligation issued or guaranteed by the United
States of America or any agency thereof or the payment of which
is guaranteed by the full faith and credit of the United States
of America ("Treasury Securities"), (ii) obligations of the
Federal National Mortgage Association ("Fannie Mae") or (iii)
obligations of the Federal Home Loan Mortgage Association
("Freddie Mac")] .
S-8
<PAGE>
The Federal National Mortgage Association
The Federal National Mortgage Association ("Fannie Mae") is
a federally chartered and stockholder-owned corporation organized
and existing under the Federal National Mortgage Association
Charter Act, 12 U.S.C. ss. 1716 et seq. It is the largest
investor in home mortgage loans in the United States. Fannie Mae
originally was established in 1938, as a United States government
agency to provide supplemental liquidity to the mortgage market
and was transformed into a stockholder-owned and privately
managed corporation by legislation enacted in 1968. Fannie Mae
provides funds to the mortgage market by purchasing mortgage
loans from lenders, thereby replenishing their funds for
additional lending. Fannie Mae acquires funds to purchase loans
from many capital market investors that ordinarily may not invest
in mortgage loans, thereby expanding the total amount of funds
available for housing. Operating nationwide, Fannie Mae helps to
redistribute mortgage funds from capital-surplus to capital-short
areas. Fannie Mae also issues mortgaged-backed securities
("MBS"). Fannie Mae receives guaranty fees for its guaranty of
timely payment of principal of and interest on MBS. Fannie Mae
issues MBS primarily in exchange for pools of mortgage loans from
lenders. The issuance of MBS enables Fannie Mae to further its
statutory purpose of increasing the liquidity of residential
mortgage loans.
Fannie Mae prepares an Information Statement annually which
describes Fannie Mae, its business and operations and contains
Fannie Mae's audited financial statements. From time to time
Fannie Mae prepares supplements to its Information Statement
which include certain unaudited financial data and other
information concerning the business and operations of Fannie Mae.
These documents can be obtained without charge from Paul Paquin,
Senior Vice President -- Investor Relations, Fannie Mae, 3900
Wisconsin Avenue, N.W., Washington, D.C. 20016 (telephone: (202)
752-7115). Fannie Mae is not subject to the periodic reporting
requirements of the Securities Exchange Act of 1934.]
[The Federal Home Loan Mortgage Corporation
The Federal Home Loan Mortgage Corporation ("Freddie Mac")
is a publicly held government-sponsored enterprise created on
July 24, 1970 pursuant to the Federal Home Loan Mortgage
Corporation Act, Title III of the Emergency Home Finance Act of
1970, as amended (the "FHLMC Act"). Freddie Mac's statutory
mission is to provide stability in the secondary market for home
mortgages, to respond appropriately to the private capital market
and to provide ongoing assistance to the secondary market for
home mortgages (including mortgages secured by housing for
low-and moderate-income families involving a reasonable economic
return to Freddie Mac) by increasing the liquidity of mortgage
investments and improving the distribution of investment capital
available for home mortgage financing. The principal activity of
Freddie Mac consists of the purchase of first lien, conventional,
residential mortgages and participation interests in such
mortgages from mortgage lending institutions and the resale of
the mortgages so purchased in the form of guaranteed mortgage
securities. Freddie Mac generally matches and finances its
purchases or mortgages with sales of guaranteed securities.
S-9
<PAGE>
Mortgages retained by Freddie Mac are financed with short-and
long-term debt, cash temporarily held pending disbursement to
security holders, and equity capital.
Freddie Mac prepares an Information Statement annually
which describes Freddie Mac, its business and operations and
contains Freddie Mac's audited financial statements. From time to
time Freddie Mac prepares supplements to its Information
Statement which include certain unaudited financial data and
other information concerning the business and operations of
Freddie Mac. These documents can be obtained from Freddie Mac by
writing or calling Freddie Mac's Investor Inquiry Department at
8200 Jones Branch Drive, McLean, Virginia 22102 (outside
Washington, D.C. metropolitan area, telephone (800) 336-3672;
within Washington, D.C. metropolitan area, telephone (703)
759-8160). Freddie Mac is not subject to the periodic reporting
requirements of the Securities Exchange Act of 1934.]
[Add the following where the Concentrated Debt Security is issued
by a foreign sovereign agency or instrumentality]
[The Trust Property includes Concentrated Debt Securities which
consist of obligations of, or guaranteed by, foreign governments,
foreign political subdivisions, or agencies and instrumentalities
thereof (each such issuer and guarantor, if any, sometimes
referred to herein as a "Foreign Government Issuer" and a
"Foreign Government Guarantor," respectively; and collectively
referred to as "Foreign Governments"). In the absence of a waiver
of immunity by a Foreign Government, it would not be possible to
obtain a United States judgment against such Foreign Government
unless a court were to determine that such issuer is not entitled
under the Foreign Sovereign Immunities Act of 1976 (the
"Immunities Act") to sovereign immunity with respect to such
action. Even if such an issuer is amenable to suit in the United
States, the enforceability of any judgment obtained may be
limited by a lack of substantial assets which can be levied upon
in the United States or the inability to obtain recognition and
enforcement of the judgment in the issuer's country. Because the
Debt Securities represent direct or indirect obligations of
foreign governments, Unitholders should consider the political,
economic and other risks attendant on holding the obligations of
a foreign government which are not typically associated with an
investment in securities of a domestic issuer. Such risks include
future political and economic developments, governmental
repudiation, moratorium on payment or rescheduling of external
debts, confiscatory taxation, imposition of any withholding tax,
exchange rate fluctuations, political or social instability or
diplomatic developments and the imposition of additional
governmental laws or restrictions. While a Foreign Government
Issuer may make certain information available by filing periodic
reports and other information with the Commission, such
information (including financial information) may differ in
timing, form and substance from that normally available with
respect to domestic issuers.]
[The Debt Securities of ___________ have been issued
pursuant to a fiscal agency agreement with provision for a Fiscal
Agent, rather than a Trustee. A Fiscal Agent does not have the
same responsibilities or duties to act on behalf of the holders
of a Foreign Government's debt securities as would a trustee. The
due and punctual payment of each Debt Security and the due and
timely performance of all obligations with respect thereto [are
backed
S-10
<PAGE>
by the full faith and credit of the sovereign entity] [or]
[unconditionally guaranteed by the sovereign entity].]
[Use the following with respect to each obligor of a Concentrated
Debt Security --only a single obligor is referred to for purposes
of this section of the form of Prospectus Supplement.]
[A significant portion of] [Virtually all of] [All of] the
Trust Property of the Trust will consist of the [___%] [floating
rate] [specify publicly issued debt security] due of [specify
issuer][, exclusive of the interest therein retained by [the
Depositor] as described below (the "Retained Interest")], having
an aggregate principal amount outstanding as of the Cut-off Date
of approximately [$][specify currency] (the "Debt Securities").
The Debt Securities will be purchased by the Depositor in the
secondary market (either directly or through an affiliate of the
Depositor) and will be deposited into the Trust. The Debt
Securities will not be acquired either from [name such obligor]
or pursuant to any distribution by or agreement with [name such
obligor]. [Describe any put, call or other conversion or
redemption options applicable to the Debt Securities, as well as
the nature of the obligation represented by such Debt Securities
(i.e., senior, subordinate, secured)]. As of the Cut-off Date,
the foregoing debt security comprising [ %] of the Debt
Securities was rated [specify investment grade rating]
[investment grade] by [specify nationally recognized rating
agency or agencies], and the obligor thereon was not in default
in the payment of any installments of principal, interest or
premium (if any) with respect thereto. Any such rating of such
Debt Securities is not a recommendation to purchase, hold or sell
such Debt Securities or the Units, and there can be no assurance
that a rating will remain for any given period of time or that a
rating will not be lowered or withdrawn entirely by a rating
agency if in its judgment circumstances in the future so warrant.
See "Ratings" herein regarding certain considerations applicable
to the ratings of the Units.
According to [name such obligor]'s publicly available
documents, [name such obligor] is a [identify form of entity,
banking organization, insurance company, or describe foreign
sovereign or agency or instrumentality] whose principal executive
offices are located at [specify address]. The Depositor is not an
affiliate of [name such obligor]. [Name such obligor] is subject
to the informational requirements of the Exchange Act and in
accordance therewith files reports and other information
(including financial information) with the Commission [and makes
available to the public upon request certain annual reports
containing financial and other information]. Copies of such
reports and other information [may be inspected and copied at the
Commission locations listed under "Available Information" in the
accompanying Prospectus and may be obtained from the Public
Reference Section of the Commission at Washington, D.C. 20549, at
prescribed rates. In addition, such reports and other information
[can be inspected at the offices of the [New York Stock Exchange
at 20 Broad Street, New York, New York 10005] [may be obtained
from [name such obligor], according to its most recent annual
report, upon written or oral request to [name such obligor]].
[Describe material covenants and events of default under Debt
Security Agreement relating to each Concentrated Debt Security]
S-11
<PAGE>
[Use the following where the Debt Securities consist of a pool of
obligations of multiple obligors.]
[Debt Securities Pool
[The Debt Securities consist of debt securities of [specify
all types of issuers --domestic, foreign, corporate, government].
The Debt Securities [will be] [have been] purchased by the
Depositor in the secondary market (either directly or through an
affiliate of the Depositor) and will be deposited into the Trust.
The Debt Securities will not be acquired either from the
respective obligors on the Debt Securities or pursuant to any
distribution by or agreement with such obligors.
The composition of the Debt Securities pool and the
distribution by ratings, remaining term to maturity and interest
rate of the Debt Securities as of the Cut-off Date are as set
forth below:
Composition Of The Debt Securities Pool
As Of The Cut-Off Date
Number of Debt Securities:
Aggregate Principal Balance:
Average Principal Balance:
Largest Balance:
Weighted Average Interest Rate: %
Weighted Average Original Term
to Maturity: years
Weighted Average Remaining Term
to Maturity: years
Longest Remaining Term
to Maturity: years
Distribution By Industry Classification
Of The Debt Securities Pool As Of The Cut-Off Date
Aggregate Percent of
Industry Principal Aggregate
Classification Number Balance Principal Balance
- -------------- ------ ------- -----------------
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Total
Distribution By Ratings Of The
Debt Securities Pool As Of The Cut-Off Date
Aggregate Percent of
Principal Aggregate
Rating Number Balance Principal Balance
- ------ ------ ------- -----------------
Total:
[As of the Cut-off Date, [all of] [approximately % of] such
Debt Securities were rated [investment grade] [specify particular
rating] by at least one nationally recognized rating agency, and
no obligor of any Debt Security was in default in the payment of
any installments of principal, interest or premium (if any) with
respect thereto. Any such rating of any of the Debt Securities is
not a recommendation to purchase, hold or sell such Debt Security
or the Units, and there can be no assurance that a rating will
remain for any given period of time or that a rating will not be
lowered or withdrawn entirely by a rating agency if in its
judgment circumstances in the future so warrant. See "Ratings"
herein regarding certain considerations applicable to the ratings
of the Units.]
Distribution By Remaining Term To Maturity
Of The Debt Securities Pool As Of The Cut-Off Date
Aggregate Percent of
Remaining Term Principal Aggregate
to Maturity Number Balance Principal Balance
- ----------- ------ ------- -----------------
Total
Distribution By Interest Rate
Of The Debt Securities Pool As Of The Cut-Off Date
Aggregate Percent of
Interest Principal Aggregate
Rate Range Number Balance Principal Balance
- ---------- ------ ------- -----------------
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[Add the following where pool includes Foreign Government
Issuers].
[The Debt Securities will include obligations of, or
guaranteed by, foreign governments, foreign political
subdivisions, or agencies and instrumentalities thereof (each
such issuer and guarantor, if any, sometimes referred to herein
as a "Foreign Government Issuer" and a "Foreign Government
Guarantor," respectively; and collectively referred to as
"Foreign Governments"). In the absence of a waiver of immunity by
a Foreign Government, it would not be possible to obtain a United
States judgment against such Foreign Government unless a court
were to determine that such issuer is not entitled under the
Sovereign Immunities Act of 1976 (the "Immunities Act") to
sovereign immunity with respect to such action. Even if such an
issuer is amenable to suit in the United States, the
enforceability of any judgment obtained may be limited by a lack
of substantial assets which can be levied upon in the United
States or the inability to obtain recognition and enforcement of
the judgment in the issuer's country. Because the Debt Securities
represent direct or indirect obligations of foreign governments,
Unitholders should consider the political, economic and other
risks attendant on holding the obligations of a foreign
government which are not typically associated with an investment
in securities of a domestic issuer. Such risks include future
political and economic developments, governmental repudiation,
moratorium on payment or rescheduling of external debts,
confiscatory taxation, imposition of any withholding tax,
exchange rate fluctuations, political or social instability or
diplomatic developments and the imposition of additional
governmental laws or restrictions. While a Foreign Government
Issuer may make certain information available by filing periodic
reports and other information with the Commission, such
information (including financial information) may differ in
timing, form and substance from that normally available with
respect to domestic issuers.]
[The Debt Securities generally have been issued pursuant to
a fiscal agency agreement with provision for a Fiscal Agent,
rather than a Trustee. A Fiscal Agent does not have the same
responsibilities or duties to act on behalf of the holders of a
Foreign Government's debt securities as would a trustee. The due
and punctual payment of each Debt Security and the due and timely
performance of all obligations with respect thereto [are backed
by the full faith and credit of the sovereign entity] [or]
[unconditionally guaranteed by the sovereign entity].
[There are few contractual restrictions on the Foreign
Government Issuers or Foreign Government Guarantors in respect of
the Debt Securities. The Debt Securities by their terms and
provisions may, however, restrict certain actions of the related
Foreign Governments and may also require, among other things, the
creation or maintenance of reserves or a sinking fund or contain
an undertaking or pledge of the Foreign Government not to
encumber its assets to secure any other external indebtedness
without providing like security for the related Debt Securities.
Certain actions in respect of the debt securities of Foreign
Governments may also be subject to proper executive, legislative
or administrative approval.]
Debt Security Agreements
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Each of the Debt Security Agreement[s] limits the
[respective] Debt Security Issuer's ability to engage in certain
activities and transactions and requires that the Debt Security
Issuer perform certain obligations with respect to the Debt
Securities. [Describe common restrictive, financial and other
covenants on the Debt Security Issuer contained in the Debt
Security Agreement.]
[The following is a summary of the typical Debt Security
Events of Default for each series of Outstanding Debt Securities:
(a) failure to make payments of principal (and premium, if
any) and interest to holders of the Outstanding Debt Securities
in the time periods given in the Debt Security Agreement;
(b) material breaches of certain representations,
warranties or covenants or failure to observe or perform in any
material respect any covenant or agreement under a Debt Security
Agreement continuing for a specified period of time after notice
thereof is given to the Debt Security Issuer by the Debt Security
Trustee or the holders of not less than a specified percentage of
the Outstanding Debt Securities;
(c) failure by the Debt Security Issuer to make any
required payment of principal (and premium, if any) or interest
with respect to certain of the other outstanding debt obligations
of the Debt Security Issuer or the acceleration by or on behalf
of the holders thereof of such securities; [and]
(d) certain events of bankruptcy or insolvency relating to
the Debt Security Issuer; and
[(e) describe any additional common events of default with
respect to the pool of Debt Securities].]
As of the Cut-off Date, [all of] [approximately __% of] the
Debt Securities were [subject to [describe any put, call or other
conversion or redemption options applicable to the Debt
Securities as well as the nature of the obligation represented by
such Debt Securities (i.e., senior, subordinate, secured) and
describe commonalities with respect to any subordination or
security provisions or collateral].]
[Credit Support
For the benefit [solely] of the [Offered] [Class [ ] Units
[and the Class [ ] Units]], Credit Support will be obtained [and
will constitute part of the Trust to the extent provided below]
to support or ensure the [servicing and] [timely] [ultimate]
distribution of amounts due with respect to the Trust Property,
in the form and amount described below.
[The Letter of Credit
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<PAGE>
Simultaneously with the Depositor's assignment of the Trust
Property to the Trust, the Depositor will obtain the Letter of
Credit from [ ] (the "Letter of Credit Bank") in favor of the
Trustee on behalf of the Unitholders. The Letter of Credit will
be irrevocable and will [support] the [timely][ultimate]
remittance of amounts due with respect to the Trust Property].
[The maximum amount that the Trustee may draw under the Letter of
Credit will initially be equal to . The initial amount of the
Letter of Credit will be [$] . Thereafter, the amount of the
Letter of Credit with respect to any Distribution Date will equal
[the lesser of (i) % of the aggregate Unit Principal Balance
outstanding on the preceding Distribution Date (after giving
effect to any payment of principal made on such preceding
Distribution Date) but in any event not less than [$] , and (ii)]
the amount of the Letter of Credit on the preceding Distribution
Date, plus [(a) reimbursement of certain advances under the
Letter of Credit and (b) recoveries on defaulted Trust Property]
[describe other methods]. The Letter of Credit expires on , 19 .
The Trustee will be obligated, in the event of a drawing on the
Letter of Credit, to pursue appropriate remedies against the
Trust Property and other collateral, and any realization thereon
shall be paid to the Letter of Credit Bank to the extent of any
amounts owing, in the manner and priority specified herein.]
[Add description of the Letter of Credit Bank with respect
to its debt ratings, activities it engages in, regulatory
authorities having jurisdiction over it and the nature of such
regulation, a narrative description of its assets, liabilities
(including deposits) and equity, and include an address for
further information concerning the Letter of Credit Bank. In
addition, to the extent that the Letter of Credit will cover
payment of 20% or more of the aggregate principal amount of the
Units covered thereby, provide information of financial and other
matters with respect to the Letter of Credit Bank.]]
[The Insurance Policy
Simultaneously with the Depositor's assignment of the Trust
Property to the Trust, the Depositor will obtain the financial
guaranty insurance policy (the "Policy") from [ ] (the "Insurer")
in favor of the Trustee on behalf of the Unitholders. The Policy
will guaranty scheduled payments of principal, premium (if any)
and interest with respect to the [Class[ ]] Units. The Policy
expires on , 19 . The Trustee will be obligated, in the event of
a drawing on the Policy, to pursue appropriate remedies against
the Trust Property and other collateral, and any realization
thereon shall be paid to the Insurer to the extent of any amounts
owing, in the manner and priority specified herein.
[Add language regarding the issuer of the Policy with
respect to its insurance strength ratings, activities it engages
in, regulatory authorities having jurisdiction over it and the
nature of such regulation, a narrative description of its assets,
liabilities (including deposits) and equity, and include an
address for further information concerning the Insurer. In
addition, to the extent that the Policy will cover payment of 20%
or more of the aggregate principal amount of the Units covered
thereby, provide information of financial and other matters with
respect to the issuer of the Policy.]]
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[Reserve Account
The Depositor will establish for the benefit of the Trustee
on the Closing Date a Reserve Account containing cash, letters of
credit and short-term investments acceptable to the Rating Agency
initially rating the Units in the amount of [$] . [Collections
with respect to the Trust Property not distributed with respect
to the Units shall be deposited in the Reserve Account.] Amounts
so deposited in such Reserve Account will be used by the Trustee
to make payments of principal of and premium (if any) and
interest on the Units to the extent that funds are not otherwise
available. Immediately after any Distribution Date, amounts in
the Reserve Account in excess of [indicate formula] [may be paid
to the Depositor].]
[Allocation of Losses; Subordination
The subordination described herein provided by the Class [
] Units [and the Class [ ] Units] is designed to protect holders
of the remaining Classes of Units from certain losses and other
shortfalls with respect to the Trust Property. As a result,
losses and other shortfalls with respect to the Trust Property
will be borne by the remaining Classes of Units, to the extent
described below, only if such losses and other shortfalls are not
so covered, or the coverage in respect thereof has been
exhausted.
Realized Losses will be allocated on any Distribution Date
as follows: [describe allocation among the various Classes].]
[DESCRIPTION OF SWAP AGREEMENT]
As set forth in the Prospectus, the Trust will enter into a
Swap Agreement with [Morgan Stanley Capital Services, Inc.]
[other Swap Counterparty] in the form of a 1992 Master Agreement
(as governed by the ISDA Definitions), subject to a Schedule to
the Master Agreement in the form attached as an exhibit to the
Registration Statement.
[The Swap Agreement will document an interest rate swap
Transaction between the Trust and the Swap Counterparty under
which the Trust will pay to the Swap Counterparty the [fixed
rate/floating rate] coupon payments received in respect of
[specified] Debt Securities and receive from the Swap
Counterparty [floating rate/fixed rate] payments. The Transaction
will have the effect, subject to performance by the Swap
Counterparty of its obligations under the Swap Agreement, of
converting the coupon otherwise applicable to the [specified]
Debt Securities to the effective coupon received by the Trust
under the Swap Agreement.]
[The Swap Agreement will document a cross-currency swap
Transaction between the Trust and the Swap Counterparty under
which the Trust will pay to the Swap Counterparty the [fixed
rate/floating rate] [foreign currency/dollar] coupon and
principal payments received in respect of [specified] Debt
Securities, and will receive from the Swap Counterparty [floating
rate/fixed rate] [dollar/foreign currency] payments. The
Transaction will have the effect, subject to performance by the
Swap Counterparty of its obligations under the Swap Agreement,
S-17
<PAGE>
of converting the interest rate and currency otherwise applicable
to payment of interest and principal under the [specified] Debt
Securities to the interest rate and currency received by the
Trust under the Swap Agreement.]
[The Swap Agreement will document an option transaction
between the Trust and the Swap Counterparty under which the Trust
will grant a call option to the Swap Counterparty with respect to
the [specified] Debt Securities or other Trust Property, and the
Swap Counterparty will make a payment to the Trust of ________.]
[The call option will effectively reserve to the Swap
Counterparty the right to realize all or a portion of the gain
from an increase in the market value of the specified Trust
Property at or prior to the maturity of the Units or to effect a
conversion of the Debt Securities into the right to receive
another security.] [The put option will entitle the Trust to put
to the Swap Counterparty [specified] [Debt Securities] at par,
thereby protecting the Trust from a decline in the market value
of the related Debt Securities in circumstances where the Debt
Securities may be outstanding on the Scheduled Final Distribution
Date with respect to the Units. The Trust Agreement will provide
that the Trust will automatically exercise the put option, unless
otherwise instructed by the Unitholders, if the market value of
the Debt Securities on the exercise date for the put option is
less than the par value of such Debt Securities.]
[Describe any other derivative agreements to be documented
under the Swap Agreement].
[As set forth in the Prospectus, early termination of the
Swap Agreement upon the occurrence of a Debt Security Default,
Trust Wind-Up Event or other early termination event may result
in the Trust becoming liable for a Swap Termination Payment, and
the Trust may be required to sell Debt Securities in order to pay
such Swap Termination Payment. Investors should consider
carefully the Risk Factors applicable to Swap Agreements as set
forth in the Prospectus.]
[Guarantee of MSDW
MSDW will unconditionally and irrevocably guarantee the due
and punctual payment of all amounts payable by the Swap
Counterparty under such Swap Agreement. Pursuant to such
Guarantee, MSDW will agree to pay or cause to be paid all such
amounts upon the failure of the Swap Counterparty punctually to
pay any such amount and written demand by the Trustee to MSDW to
pay such amount.]
DESCRIPTION OF UNITS
General
The Units will consist of [ ] Classes of Units,
designated as Class [ ][,] [and] Class [ ] [and Class___] Units.
The Units will be denominated and distributions with respect
thereto will be payable in the Specified Currency. The Units
represent in the aggregate the entire beneficial
S-18
<PAGE>
ownership interest in the related Trust. The Class [ ] Units have
in the aggregate an initial [Unit Principal Balance] [Notional
Amount] of [$]________ (approximate) and a [___%] [Variable]
Pass-Through Rate. The Class [ ] Units have in the aggregate an
initial [Unit Principal Balance] [Notional Amount] of [$]________
(approximate) and a [___%] [Variable] Pass-Through Rate. [The
Class [ ] Units have in the aggregate an initial [Unit Principal
Balance] [Notional Amount] of [$]________ (approximate) and a
[___%] [Variable] Pass-Through Rate.] [The Class [ ] Units, which
are not being offered hereby, will be transferred by the
Depositor to an affiliate on the Closing Date, and may be sold at
any time by the Depositor in accordance with the terms of the
Trust Agreement.]
[Use the following except for issuance of Bearer Units]:
The Units [(other than the Class [ ] Units [and specify
others] (the "Definitive Classes"))] will be issued, maintained
and transferred on the book-entry records of DTC and its
Participants in minimum denominations of [$ ] and [integral
multiples thereof] [multiples of [$ ] in excess thereof]. [The
Class [ ] Units [and specify any others] will be offered in
registered, certificated form, in minimum percentage interests
corresponding to the initial Notional Amounts or Unit Principal
Balances, as applicable, of [$ ] and integral multiples thereof,
except that one Unit of each such Class may be issued with an
initial Notional Amount or Unit Principal Balance, as applicable,
equal to an integral multiple of [$ ] plus the excess of the
initial aggregate Notional Amount or Unit Principal Balance, as
applicable, of such Class over the greatest integral multiple of
[$ ] that is not more than such initial aggregate Notional Amount
or Unit Principal Balance, as applicable.]
The Units [(other than the Definitive Classes of Units)]
will each initially be represented by one or more global
certificates registered in the name of the nominee of DTC, except
as provided below. The Depositor has been informed by DTC that
DTC's nominee will be CEDE & Co. ("CEDE"). No holder of any such
Unit will be entitled to receive a certificate representing such
person's interest, except as set forth below under "--Definitive
Units." Unless and until Definitive Units are issued under the
limited circumstances described herein, all references to actions
by Unitholders with respect to any such Units shall refer to
actions taken by DTC upon instructions from its Participants. See
"Description of Units--Form" in the Prospectus.
Under the rules, regulations and procedures creating and
affecting DTC and its operations, DTC will take action permitted
to be taken by a Unitholder under the Trust Agreement only at the
direction of one or more Participants to whose DTC account such
Units are credited. Additionally, DTC will take such actions with
respect to specified Voting Rights only at the direction and on
behalf of Participants whose holdings of such Units evidence such
specified Voting Rights. DTC may take conflicting actions with
respect to Voting Rights, to the extent that Participants whose
holdings of Units evidence such Voting Rights, authorize
divergent action.
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<PAGE>
Principal of Units
[Describe any scheduled amortization or indexation features
of the Units]
Interest on Units
[Describe any floating rate or interest indexation
features]
[Call Rights
The Units are a Callable Series; has the right to purchase
all or a portion of the Units (the "Call") at a price of ___%,
provided that the Call must be exercised with respect to a
minimum Unit Principal Balance of or integral multiples thereof;
[specify any time restriction] Each Unitholder will be entitled
to receive a distribution of a pro rata share of the Call Price
paid in connection with exercise of the Call.]
[Optional Exchange
The Units are an "Exchangeable Series." A holder may
exchange Units of any for a pro rata portion of the Trust
Property; provided that: (i) the exchanging holder tenders to the
Trustee Units of each Class; (ii) the exchange is made with
respect to a minimum Unit Principal Balance or Notional Amount of
______ or an integral multiple thereof; (iii) exchange may only
be affected on the following Optional Exchange Dates; [(iv) an
exchanging holder is required to obtain the consent of the Swap
Counterparty to such exchange and tender to the Swap Counterparty
a termination payment in respect of termination of any portion of
the Swap Agreement corresponding to the portion of the Debt
Securities to be distributed to such holder by the Trustee;]
[other limitations or provisions].]
DESCRIPTION OF TRUST AGREEMENT
The following summaries do not purport to be complete and,
with respect to a particular Series of Units to be offered
pursuant to this Prospectus and a Prospectus Supplement, are
subject to the detailed provisions of the form of Trust Agreement
included as an exhibit to the Registration Statement, to which
reference is hereby made for a full description of such
provisions, including the definitions of certain terms used.
General
The Units will be issued pursuant to a Trust Agreement
incorporating the provisions of the Standard Terms of Trust
Agreements, a form of which is filed as an exhibit to the
Registration Statement. A Current Report on Form 8-K relating to
the Units containing a copy of the Trust Agreement as executed
will be filed by the Depositor with the Commission following the
issuance and sale of the Units. The Trust created under the Trust
Agreement will
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<PAGE>
consist of (i) the Trust Property (exclusive of any Retained
Interest, which is not part of the Trust), (ii) all payments on
or collections in respect of the Trust Property due after the
Cut-off Date, together with any proceeds thereof[,] [and] [(iii)
any Credit Support in respect of any class or classes of Units]
[and (iv) the rights of the Depositor under the Purchase
Agreement between the Depositor and the Seller]. [In addition,
the Unitholders of the Units may also have the benefit of certain
Credit Support discussed above. See "Description of Trust
Property --Credit Support"] Reference is made to the Prospectus
for important information in addition to that set forth herein
regarding the Trust, the terms and conditions of the Trust
Agreement and the Units.
Trustee Compensation
As compensation for and in payment of trust expenses
related to its services under the Trust Agreement other than
Extraordinary Trust Expenses, the Trustee will receive Trustee
Fees in the amount of _______, payable [from Trust Property/by
the Depositor/other]. The "Trigger Amount" with respect to
Extraordinary Trust Expenses for the Trust is _________ and the
Maximum Reimburseable Amount is ________________.
Retained Interest
[Description of any Retained Interest of Depositor]
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
[Discuss any special tax features not discussed in Base
Prospectus, including, if applicable, FASIT election, partnership
classification of Trust,
ERISA CONSIDERATIONS
[The Units are Book-Entry Units and interests in the Units
may not be transferred to any person unless that person is not a
Plan subject to the fiduciary responsibility provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA") or
Section 4975 of the Code and is not acquiring the Units with the
assets of any such Plan or any government or other plan subject
to substantially similar requirements. The Trust Agreement
provides that any purported transfer in violation of this
restriction shall be void. Each person who acquires any
Book-Entry Unit, and each fiduciary which causes any such person
to so acquire a Book-Entry Unit, in its individual as well as its
fiduciary capacity, will be deemed to have represented upon the
acquisition of such Book-Entry Unit that such purchaser or
transferee is not a Plan subject to the fiduciary responsibility
provisions of ERISA or Section 4975 of the Code or any government
or other plan subject to substantially similar requirements and
is not using the assets of any such Plan to purchase the
Book-Entry Units. THE TRUST AGREEMENT PROVIDES THAT EACH HOLDER
OF A BOOK-ENTRY UNIT SHALL INDEMNIFY THE TRUSTEE, THE
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DEPOSITOR, MORGAN STANLEY AND THEIR AFFILIATES AGAINST ANY COSTS,
EXPENSES, DAMAGES OR LOSSES INCURRED BY THEM AS A RESULT OF THE
FAILURE OF THE FOREGOING REPRESENTATION TO BE TRUE.]
The "Alternative ERISA Restrictions" are applicable to the
Units, and Units will be issued only as Definitive Units in
registered form and only upon execution and delivery of a
definitive Purchase Agreement, which will contain additional
representations regarding whether such purchaser or proposed
transferee is a benefit plan investor (within the meaning of the
Plan Asset Regulations) or is acquiring the Units with assets of
a benefit plan investor. A definitive Purchase Agreement will
similarly be required to be obtained from any proposed transferee
of a Unit to which the "Alternative ERISA Restrictions" apply. As
set forth in the Prospectus, no such purchase or proposed
transfer shall be permitted to the extent that it would cause the
ownership by benefit plan investors to be "significant" within
the meaning of the Plan Asset Regulations immediately after such
purchase or proposed transfer. In addition, the Depositor and the
Trustee will agree that, after the initial distribution of a
particular Series of Units subject to the Alternative ERISA
Restrictions, neither they nor their affiliates will acquire any
Units of such Series, unless such acquisition would not cause the
ownership by benefit plan investors immediately following such
acquisition to be "significant."]
[The "Alternative ERISA Restrictions" are applicable to the
Units. Units will be issued in reliance on certain exemptions
from the prohibited transaction provisions of Section 406 of
ERISA and Section 4975 of the Code which may be applicable,
depending in part on the type of Plan fiduciary making the
decision to acquire a Unit and the circumstances under which such
decision is made. Included among these exemptions are Prohibited
Transaction Class Exemption ("PTCE") 91-38 (relating to
investments by bank collective investment funds), PTCE 84-14
(relating to transactions effected by a "qualified professional
asset manager"), PTCE 90-1 (relating to investments by insurance
company pooled separate accounts) and PTCE 96-23 (relating to
transactions determined by in-house asset managers). There can be
no assurance that any of these class exemptions or any other
exemption will be available with respect to any particular
transaction involving the Units. BY ITS PURCHASE OF ANY UNIT, THE
PURCHASER THEREOF WILL BE DEEMED TO HAVE REPRESENTED AND
WARRANTED EITHER THAT (A) IT IS NOT AN ERISA PLAN OR OTHER PLAN,
AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE THE ASSETS OF ANY SUCH
ERISA PLAN OR OTHER PLAN, OR A GOVERNMENTAL PLAN WHICH IS SUBJECT
TO ANY FEDERAL, STATE OR LOCAL LAW THAT IS SUBSTANTIALLY SIMILAR
TO THE PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE
CODE OR (B) ITS PURCHASE, HOLDING AND DISPOSITION OF A UNIT WILL
NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA
OR SECTION 4975 OF THE CODE (OR, IN THE CASE OF A GOVERNMENTAL
PLAN, ANY SUBSTANTIALLY SIMILAR FEDERAL, STATE OR LOCAL LAW) FOR
WHICH AN EXEMPTION IS NOT AVAILABLE. THE TRUST AGREEMENT PROVIDES
THAT EACH HOLDER OF A BOOK-ENTRY UNIT SHALL INDEMNIFY THE
TRUSTEE, THE DEPOSITOR, MORGAN STANLEY AND THEIR AFFILIATES
AGAINST ANY COSTS, EXPENSES, DAMAGES OR LOSSES INCURRED BY THEM
AS A RESULT OF THE FAILURE OF THE FOREGOING REPRESENTATION TO BE
TRUE.]
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[BEARER UNITS
The [Class __] Units will be issued as Bearer Units. In
compliance with United States Federal income tax laws and
regulations, the Depositor and any underwriter, agent or dealer
participating in the offering of the Bearer Units will agree
that, in connection with the original issuance of such Bearer
Unit and during the period ending 40 days after the issue of such
Bearer Unit, they will not offer, sell or deliver such Bearer
Unit, directly or indirectly, to a U.S. Person or to any person
within the United States, except to the extent permitted under
U.S. Treasury regulations. The [Class __] Units will bear a
legend to the following effect: "Any United States Person who
holds this obligation will be subject to limitations under the
United States income tax laws, including the limitations provided
in Sections 165(j) and 1287(a) of the Internal Revenue Code."
Pending the availability of a permanent Global Security or
definitive Bearer Units, as the case may be, the [Class __] Units
will initially be represented by a single temporary Global
Security, without interest coupons, to be deposited with a common
depositary in London for Euroclear and CEDEL for credit to the
accounts designated by or on behalf of the purchasers thereof.
Following the availability of a permanent Global Security in
bearer form, without coupons attached, or definitive Bearer Units
and subject to any further limitations described in the
applicable Prospectus Supplement, the temporary Global Security
will be exchangeable for interests in such permanent Global
Security or for such definitive Bearer Units, respectively, only
upon receipt of a Certificate of Non-U.S. Beneficial Ownership"
as described in the Prospectus. Interest on a temporary Global
Security will be distributed to each of Euroclear and CEDEL with
respect to that portion of such temporary Global Security held
for its account, but only upon receipt as of the relevant
Distribution Date of a Certificate of Non-U.S.
Beneficial Ownership.]
PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in the
Underwriting Agreement, dated as of [ ], 199[ ] (the
"Underwriting Agreement"), the Depositor has agreed to sell and
[Morgan Stanley (an affiliate of the Depositor)] [each of the
Underwriters named below, including Morgan Stanley (an affiliate
of the Depositor)] (the "Underwriter[s]")[,] has [severally]
agreed to purchase, the [Units] [the principal amount of each
class of Units set forth below opposite its name].
[Morgan Stanley has] [The several Underwriters have]
agreed, subject to the terms and conditions set forth in the
Underwriting Agreement, to purchase all Units offered hereby if
any of such Units are purchased. [In the event of default by any
Underwriter, the Underwriting Agreement provides that, in certain
circumstances, the purchase commitments of non-defaulting
Underwriters may be increased or the Underwriting Agreement may
be terminated.]
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The Depositor has been advised by the Underwriter[s] that
[it][they] propose[s] to offer the Units from time to time in
negotiated transactions or otherwise at varying prices to be
determined at the time of sale. The Underwriter[s] may effect
such transactions by selling Units to or through dealers and such
dealers may receive compensation in the form of underwriting
discounts, concessions or commissions from the Underwriter[s] and
any purchasers of Units for whom they may act as agents. The
Underwriter[s] and any dealers that participate with the
Underwriter[s] in the distribution of Units may be deemed to be
underwriters, and any profit on the resale of Units by them may
be deemed to be underwriting discounts, or commissions under the
Securities Act.
The Underwriting Agreement provides that the Depositor will
indemnify the Underwriter[s] against certain civil liabilities,
including liabilities under the Securities Act, or will
contribute to payments the Underwriter[s] may be required to make
in respect thereof.
Morgan Stanley is an affiliate of the Depositor, and the
participation by Morgan Stanley in the offering of the Units
complies with Section 2720 of the Conduct Rules of the National
Association of Securities Dealers, Inc. regarding underwriting
securities of an affiliate.
RATINGS
It is a condition to the issuance of the Units that the
Units be rated not lower than [specify ratings applicable to each
class] by [Standard & Poor's Ratings Group ("Standard &
Poor's")][Moody's Investors Service, Inc. ("Moody's")][Fitch
Investors Service, L.P. ("Fitch")] [and] [Duff & Phelps Credit
Rating Company ("Duff & Phelps")](the "Rating[Agency]
[Agencies]"). The ratings address the likelihood of the receipt
by the Unitholders of payments required under the Trust
Agreement, and are based primarily on the credit quality of the
Trust Property and any providers of Credit Support, as well as on
the relative priorities of the Unitholders of each class of the
Units with respect to collections and losses with respect to the
Trust Property. The rating on the Units does not, however,
constitute a statement regarding the occurrence or frequency of
redemptions or prepayments on, or extensions of the maturity of,
the Trust Property, the corresponding effect on yield to
investors, or whether investors in the Class [ ] Units [specify
class with Notional Amount] may fail to recover fully their
initial investment.
A security rating is not a recommendation to buy, sell or
hold securities and may be subject to revision or withdrawal at
any time by the assigning Rating Agency. Each security rating
should be evaluated independently of any other security rating.
The Depositor has not requested a rating on the Units by
any rating agency other than the Rating [Agency] [Agencies].
However, there can be no assurance as to whether any other rating
agency will rate the Units, or, if it does, what rating would be
assigned by any such other rating agency. A rating on the Units
by another rating agency, if assigned at all, may be lower than
the ratings assigned to the Units by the Rating [Agency]
[Agencies].
S-24
<PAGE>
LEGAL OPINIONS
Certain legal matters relating to the Units will be passed
upon for the Depositor and the Underwriter[s] by [Cleary,
Gottlieb, Steen & Hamilton, Washington, D.C.].
S-25
<PAGE>
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR +
+ AMENDMENT. A REGISTRATION STATEMENT RELATING TO THE +
+ SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE +
+ COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS +
+ TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION +
+ STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT +
+ CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER +
+ TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY +
+ STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+ UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE +
+ SECURITIES LAWS OF ANY SUCH STATE. +
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion, Dated _________, 199_
PROSPECTUS
Structured Asset Trust Unit Repackagings (SATURNS SM)
Issuable in Series
MSDW Structured Asset Corp.
Depositor
The Structured Asset Trust Unit Repackagings (the "Units")
offered hereby and by Prospectus Supplements (each a "Prospectus
Supplement") to this Prospectus will be offered from time to time
in one or more series (each a "Series") and in one or more
classes within each such Series (each a "Class"), denominated in
dollars or in one or more foreign currencies. Units of each
respective Series and Class will be offered on terms to be
determined at the time of sale as described in the related
Prospectus Supplement accompanying the delivery of this
Prospectus. Units may be sold for United States dollars or for
one or more foreign currencies, and the principal of, premium on,
if any, and any interest to be distributed in respect of Units
may be payable in United States dollars or in one or more foreign
currencies. Each Series and Class of Units may be issued in fully
registered form without interest coupons ("Registered Units") or
in bearer form with or without coupons attached ("Bearer Units"),
as one or more global securities in registered or bearer form
(each a "Global Security") or as individual securities in
definitive form with or without coupons ("Definitive Units").
Each Series of Units will represent in the aggregate the entire
beneficial ownership interest in one or more debt securities or
loans (the "Debt Securities"), together with, if specified in the
Prospectus Supplement, rights under certain swap or other
derivative agreements or certain other assets described herein
and in the related Prospectus Supplement (such assets, together
with the Debt Securities and any Credit Support as defined below,
the "Trust Property"), to be deposited in a trust (the "Trust")
formed pursuant to a trust agreement (the "Trust Agreement") to
be entered into between MSDW Structured Asset Corp., as depositor
(the "Depositor"), and Chase Bank of Texas, National Association
(the "Trustee") or another Trustee specified in the Prospectus
Supplement. Unless otherwise specified in the Prospectus
Supplement, the Debt Securities will be purchased by the
Depositor in the secondary market (either directly or through an
affiliate of the Depositor), and will not be acquired from the
issuer thereof (each a "Debt Security Issuer") as part of any
distribution by or pursuant to any agreement with such Debt
Security Issuer. Each Debt Security which represents on the date
of formation of the Trust 10% or more by principal amount of the
Debt Securities held by such Trust (a "Concentrated Debt
Security") will represent (i) obligations of or guaranteed by the
United States government, obligations of the Federal National
Mortgage Association or Federal Home Loan Mortgage Corporation,
or (ii) obligations of one or more corporations, limited
partnerships, trusts, limited liability companies or other
organizations, banking organizations, insurance companies or
foreign sovereigns or political subdivisions or instrumentalities
thereof (each a "Foreign Sovereign"), in each case which are
subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and which,
in accordance therewith, file reports and other information with
the Securities and Exchange Commission (or another applicable
agency pursuant to Section 12(i) of the Exchange Act) (and in the
case of a Foreign Sovereign, are current in their filings in
accordance with such requirements). If so specified in the
related Prospectus Supplement, the Trust Property for a Series of
Units may also include, or the Unitholders of such Units may have
the benefit of, any combination of insurance policies, letters of
credit, reserve accounts and other types of rights or assets
designed to support or ensure the servicing and distribution of
amounts due in respect of the Trust Property (collectively,
"Credit Support"). See "Description of Units" and "Description of
Trust Property."
Each Class of Units of any Series will represent the right, which
may be senior to those of one or more of the other Classes of
such Series, to receive specified portions of payments of
principal, interest and certain other amounts on the Trust
Property in the manner described herein and in the related
Prospectus Supplement. A Series may include two or more Classes
differing as to entitlement to distributions of principal,
interest or premium and one or more Classes within such Series
may be subordinated in certain respects to other Classes of such
Series.
If specified in the Prospectus Supplement, application will be
made to list the related Series of Units on the New York Stock
Exchange.
There will be no market for any Series of Units prior to the
issuance thereof, and there can be no assurance that a secondary
market will develop or, if it does develop, that it will provide
Unitholders with liquidity of investment or will continue for the
life of the Units.
Bearer Units are subject to U.S. tax law requirements and may not
be offered, sold or delivered within the United States or its
possessions or to U.S. persons, except in certain transactions
permitted by U.S. tax regulations.
The Units represent interests in the Trust only and do not
represent obligations of or interests in the Depositor, Morgan
Stanley & Co. Incorporated ("Morgan Stanley") or any of their
respective affiliates. The Units do not represent a direct
obligation of the Debt Security Issuer or any of its affiliates.
At the time of issue, the Units of any given Series (or each
Class of such Series that is offered hereby) will be rated in one
of the investment grade categories recognized by one or more
nationally recognized rating agencies (each a "Rating Agency").
------------------
PURCHASERS OF UNITS SHOULD CAREFULLY CONSIDER ALL INFORMATION
CONTAINED IN THIS PROSPECTUS AND THE APPLICABLE PROSPECTUS
SUPPLEMENT, PARTICULARLY THE INFORMATION SET FORTH UNDER "RISK
FACTORS" IN THIS PROSPECTUS AND ANY ANALOGOUS DISCUSSION IN SUCH
PROSPECTUS SUPPLEMENT. THE PURCHASE OF UNITS IS SUITABLE ONLY FOR
AND SHOULD BE MADE ONLY BY INVESTORS WHO CAN BEAR THE RISKS OF
LIMITED LIQUIDITY AND UNDERSTAND AND CAN BEAR THE FINANCIAL AND
OTHER RISKS OF AN INVESTMENT IN UNITS.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------
The Units may be offered and sold to or through Morgan Stanley as
underwriter, dealer or agent, or through one or more other
underwriters, dealers or agents, or directly to purchasers, as
more fully described under "Plan of Distribution" and in the
related Prospectus Supplement. This Prospectus may not be used to
consummate sales of Units offered hereby unless accompanied by a
Prospectus Supplement.
------------------
MORGAN STANLEY DEAN WITTER
September __, 1998
SM SATURNS is being registered as a service mark of Morgan
Stanley Dean Witter & Co.
<PAGE>
TABLE OF CONTENTS
Page
PROSPECTUS SUPPLEMENTS.........................................3
AVAILABLE INFORMATION..........................................4
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE................4
IMPORTANT CURRENCY INFORMATION.................................5
RISK FACTORS...................................................5
THE DEPOSITOR.................................................12
USE OF PROCEEDS...............................................13
FORMATION OF TRUSTS...........................................13
DESCRIPTION OF TRUST PROPERTY.................................15
DESCRIPTION OF SWAP AGREEMENTS................................23
MSDW..........................................................28
DESCRIPTION OF UNITS..........................................29
DESCRIPTION OF TRUST AGREEMENTS...............................52
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.......................62
ERISA CONSIDERATIONS..........................................75
CURRENCY RISKS................................................78
LIMITATIONS ON ISSUANCE OF BEARER UNITS.......................79
PLAN OF DISTRIBUTION..........................................80
LEGAL MATTERS.................................................82
2
<PAGE>
PROSPECTUS SUPPLEMENTS
A Prospectus Supplement which describes the specific
matters described below will be provided with this Prospectus.
The Prospectus must be read in conjunction with the related
Prospectus Supplement. TO THE EXTENT THERE IS ANY CONFLICT
BETWEEN THE INFORMATION PROVIDED HEREIN AND THE INFORMATION
PROVIDED IN THE RELATED PROSPECTUS SUPPLEMENT, THE RELATED
PROSPECTUS SUPPLEMENT SHALL CONTROL.
Each Prospectus Supplement will set forth, among other
things, the following with respect to the related Series of
Units: (i) the title, aggregate principal amount and authorized
denominations (or, if applicable, notional amount); (ii) the
currency or currencies in which the principal (the "Specified
Principal Currency"), premium, if any (the "Specified Premium
Currency"), and any interest (the "Specified Interest Currency")
are distributable on such Units (the Specified Principal
Currency, the Specified Premium Currency and the Specified
Interest Currency being collectively referred to as the
"Specified Currency"), if other than U.S. dollars; (iii) the
interest rate on such Units or the method of calculation thereof
(the "Pass Through Rate"); (iv) the terms of one or more swap or
other derivative transactions (each a "Transaction") under a
master agreement in the form described herein (the master
agreement together with each specific Transaction thereunder, the
"Swap Agreement") to be entered into by the Trust; (v) the number
of Classes of such Series and, with respect to each Class of such
Series, its designation, aggregate principal amount and
authorized denominations, the stated principal amount (or, if
applicable, notional amount), if fixed or whether the principal
amount or notional amount will be variable based upon one or more
Transactions under a Swap Agreement; (vi) the time and place of
distribution (each such date, a "Distribution Date") of any
interest, premium and/or principal; (vii) the original date of
issue and the scheduled final Distribution Date for such Units;
(viii) if the Units are offered at a fixed price, such price;
(ix) certain information concerning the type, characteristics and
specifications of the Trust Property for such Series or Class;
(x) the relative rights and priorities of each such Class
(including the method for allocating collections from the Trust
Property to the Unitholders of each Class and the relative
ranking of the claims of the Unitholders of each Class to such
Trust Property); (xi) the identity of any entity or entities
identified in the related Prospectus Supplement as entering into
one or more Transactions with the Trust under any Swap Agreement
(each a "Swap Counterparty"); (xii) a description of the specific
provisions of any related Swap Agreement to the extent not
described under "Description of Swap Agreements" or inconsistent
with such description; (xiii) if the Swap Counterparty is not
Morgan Stanley Capital Services Inc. ("MSCS"), a description of
any guarantee (the "Guarantee") or other type of support, if any,
of such Swap Counterparty's obligations under the Swap Agreement;
(xiv) any Call Rights (as defined herein) exercisable by the
Depositor or any third party, or any other any mandatory or
optional exchange or redemption terms; and (xv) any other
specific terms of such Units not described in this Prospectus.
See "Description of Units - General" for a listing of other items
that may be specified in the applicable Prospectus Supplement.
3
<PAGE>
AVAILABLE INFORMATION
Each Trust is subject to the informational requirements of
the Exchange Act and in accordance therewith the Depositor files
on behalf of each Trust reports and other information with the
Securities and Exchange Commission (the "Commission"). Reports
with respect to each Trust and other information concerning each
Trust can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's
Regional Offices located at Seven World Trade Center, Suite 1300,
New York, New York 10048, and Citicorp Center, Suite 1400, 500
West Madison Street, Chicago, Illinois 60661. Copies of such
material can be obtained upon written request addressed to the
Commission, Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission also
maintains a site on the World Wide Web (the "Web") at
"http://www.sec.gov" at which users can view and download copies
of reports, proxy, information statements and other information
filed electronically through the Electronic Data Gathering,
Analysis and Retrieval ("EDGAR") system. The Depositor does not
intend to send any financial reports to Unitholders.
If the Prospectus Supplement for the Units of a given
series specifies that the Units are to be listed on the New York
Stock Exchange, reports and other information concerning the
related Trust can also be inspected at the offices of the New
York Stock Exchange, 20 Broad Street, New York, New York 10005.
The Depositor has filed with the Commission a registration
statement on Form S-3 (together with all amendments and exhibits,
the "Registration Statement") under the Securities Act of 1933,
as amended (the "Securities Act"), relating to the Units. This
Prospectus does not contain all the information set forth in the
Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For
further information, reference is hereby made to the Registration
Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed by the Depositor pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act prior to and
subsequent to the date of this Prospectus and prior to the
termination of the offering of the Units shall be deemed to be
incorporated by reference in this Prospectus. Any statement
contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any subsequently filed
document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this
Prospectus.
The Depositor will provide without charge to each person to
whom a copy of this Prospectus is delivered, on the written or
oral request of any such person, a copy of any or all of the
documents incorporated herein by reference, except the exhibits
to such documents
4
<PAGE>
(unless such exhibits are specifically incorporated by reference
in such documents). Written requests for such copies should be
directed to MSDW Structured Asset Corp. 1585 Broadway, New York,
New York 10036, Attention: Assistant Secretary, Tel. 212-761-
1715.
REPORTS TO UNITHOLDERS
Except as otherwise specified in the applicable Prospectus
Supplement, on each Distribution Date unaudited reports
containing information concerning the related Trust will be
prepared by the Trustee and sent on behalf of each Trust to
registered holders of the Units. Where the Units are represented
by a Global Security in registered form, unless and until
Definitive Units are issued, reports will be sent only to the
Depositary (as defined herein) or its nominee, as registered
holder of the Units. See "Description of Units--Form" and
"Description of the Trust Agreement--Reports to Unitholders;
Notices." Such reports will not constitute financial statements
prepared in accordance with generally accepted accounting
principles. The Depositor, on behalf of each Trust, will cause to
be filed with the Commission such periodic reports as are
required under the Exchange Act.
IMPORTANT CURRENCY INFORMATION
Unless otherwise specified in the applicable Prospectus
Supplement, purchasers will be required to pay for each Unit in
the Specified Principal Currency for such Unit. Currently, there
are limited facilities in the United States for conversion of
U.S. dollars into foreign currencies and vice versa, and banks do
not currently offer non-U.S. dollar checking or savings account
facilities in the United States. However, if requested by a
prospective purchaser of a Unit having a Specified Principal
Currency other than U.S. dollars, Morgan Stanley or an affiliate
or its agent, as exchange rate agent (the "Exchange Rate Agent"),
in its sole discretion, may arrange for the exchange of U.S.
dollars into such Specified Principal Currency to enable the
purchaser to pay for such Unit. Each such exchange will be made
by the Exchange Rate Agent on such terms and subject to such
conditions, limitations and charges as it may from time to time
establish in accordance with its regular foreign exchange
practice. All costs of exchange will be borne by the purchaser.
References in this Prospectus and in Prospectus Supplements
to "U.S. dollars", "U.S.$", "USD", "dollar" or "$" are to the
lawful currency of the United States.
RISK FACTORS
No Obligation of or Interest in Depositor or Morgan
Stanley. The Units do not represent a direct obligation of or
interest in the Depositor, Morgan Stanley or any affiliate of
either of them.
Limited Liquidity. There will be no market for any Series
of Units prior to the issuance thereof, and there can be no
assurance that a secondary market will develop or, if it does
develop, that it will provide Unitholders with liquidity of
investment or that it will continue for
5
<PAGE>
the life of such Units. Morgan Stanley is not obligated to make a
market for the Units, and may or may not do so.
Maturity and Prepayment Considerations. The timing of
distributions of interest, premium (if any) and principal of
Units will be affected by any early redemption, prepayment or
extension of maturity with respect to the related Debt
Securities. The applicable Prospectus Supplement will describe
any puts, calls or other mandatory or optional redemption
features, any extension of maturity provisions and certain other
terms applicable to such Debt Securities. In addition, the timing
of distributions on Units will be affected by any exchange of the
related Debt Securities pursuant to a tender offer or otherwise.
To the extent that the aggregate principal amount of the related
Debt Securities is reduced through any such redemption, payment
or exchange, the corresponding notional amount for any swap or
amount of any option or other reference amount for any derivative
obligation (collectively "Swap Amount") subject to the Swap
Agreement, may be ratably reduced. See "Description of Swap
Agreements - Payments Under Swap Agreements". To the extent that
the amount of any distribution of interest or principal on Units
is calculated according to a formula that references such Swap
Amount under the terms of the related Swap Agreement, any
reduction in such Swap Amount may affect such distributions.
Yield Characteristics of Units. The yield to maturity of
any Unit will be a function of the purchase price of, and the
interest rate from time to time applicable to, and amount
returned at maturity of, such Unit. If the interest rate from
time to time applicable to such Unit is variable based on an
index different from that applicable to the Debt Securities, such
rate as of any determination date will generally be determined by
the terms of any related Swap Agreement. In such circumstance,
the holders of such Unit will effectively be exchanging the right
to receive interest payments on the related Debt Securities for
the right to receive payments on such Unit according to the terms
of such Swap Agreement for so long as it is in effect. The yield
to maturity of such Unit will therefore also be affected by any
early termination of a Swap Agreement under the circumstances
described under "Description of Swap Agreements" and in any
related discussion in the applicable Prospectus Supplement. The
applicable Prospectus Supplement will set forth additional
information concerning yield characteristics on the related Unit
resulting from the specific terms of any related Swap Agreement
as well as the specific attributes of the related Debt
Securities.
Distributions on Index-Linked Units. If specified in the
applicable Prospectus Supplement, the amounts of any distribution
of principal or interest on the related Unit, including the
amount of any final distribution of principal upon the final
scheduled Distribution Date of such Unit, may be determined by
reference to an index of one or more securities, currencies,
commodities or other goods and may therefore be variable (such
Units, "Index-Linked Units"). Holders of such Units will likely
receive different amounts of principal or interest on such Units,
which may be lesser amounts, than they would otherwise have
received had they held the related Debt Securities.
6
<PAGE>
An investment in Index-Linked Units may entail significant
risks that are not associated with a similar investment in an
instrument that has a fixed principal amount, is denominated in
U.S. dollars and entitles the holder to distributions of interest
at either a fixed rate or a floating rate determined by reference
to nationally published interest rate references. The risks of a
particular Index-Linked Unit will depend on the terms of such
Index-Linked Unit, but may include, without limitation, the
possibility of significant changes in the prices of securities,
commodities, currencies, intangibles, goods or articles or of
other objective price, economic or other measures making up the
relevant index (the "Underlying Assets"). Such risks generally
depend on factors over which the Depositor, any Swap Counterparty
or the Trustee or any of their respective affiliates have no
control and which cannot readily be foreseen, such as economic
and political events and the supply of and demand for the
Underlying Assets.
In considering whether to purchase Index-Linked Units,
investors should be aware that the calculation of amounts payable
in respect of Index-Linked Units may involve reference to an
index determined by an affiliate of the Depositor or the Swap
Counterparty or to prices which are published solely by third
parties or entities which are not subject to regulation under the
laws of the United States.
THIS PROSPECTUS DOES NOT, AND ANY PROSPECTUS SUPPLEMENT
WILL NOT, DESCRIBE ALL THE RISKS OF AN INVESTMENT IN INDEX-LINKED
UNITS, AND THE DEPOSITOR, THE SWAP COUNTERPARTY, THE TRUSTEE AND
THEIR RESPECTIVE AFFILIATES DISCLAIM ANY RESPONSIBILITY TO ADVISE
PROSPECTIVE PURCHASERS OF SUCH RISKS AS THEY EXIST AT THE DATE OF
THIS PROSPECTUS OR AS SUCH RISKS MAY CHANGE FROM TIME TO TIME.
THIS RISK OF LOSS AS A RESULT OF THE LINKAGE OF PRINCIPAL OR
INTEREST PAYMENTS ON INDEX-LINKED UNITS TO AN INDEX AND TO THE
UNDERLYING ASSETS CAN BE SUBSTANTIAL. PROSPECTIVE PURCHASERS
SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISORS AS TO THE
RISKS ENTAILED BY AN INVESTMENT IN INDEX-LINKED UNITS. AN
INDEX-LINKED UNIT IS NOT AN APPROPRIATE INVESTMENT FOR PERSONS
WHO ARE UNSOPHISTICATED WITH RESPECT TO TRANSACTIONS IN THE
UNDERLYING ASSETS OF ANY INDEX RELEVANT TO THAT INDEX-LINKED
UNIT.
Certain Considerations relating to Swap Agreements. In
general, a Swap Agreement will alter the amounts and timing and,
if applicable, currency, of distributions of principal and/or
interest on the related Units to which a holder thereof would be
entitled from what such holder would otherwise have been entitled
to receive had such holder held the related Debt Securities
directly. Unless otherwise provided in the related Prospectus
Supplement, it is not intended that any Swap Agreement will
provide coverage against losses as a result of failure to receive
payments on the related Debt Securities, and no assurance can be
given that the Trustee will receive either the payments due to be
received on such Debt Securities or any payment due to be
received under such Swap Agreement, in each case when due, or
that the Trustee will recover moneys under a related Guarantee,
if any, upon a payment default by the Swap Counterparty under
such Swap Agreement.
Upon an early termination of a Swap Agreement or one or
more Transactions thereunder, as described more fully in
"Description of Swap Agreements - Early Termination of Swap
Agreements" and in any analogous discussion in the applicable
Prospectus
7
<PAGE>
Supplement, a payment (the "Swap Termination Payment") may be
payable by the applicable Trust to the Swap Counterparty or by
the Swap Counterparty to such Trust, unless the Prospectus
Supplement provides that Swap Termination Payments will not be
payable in connection with early termination of the related Swap
Agreement or Transaction. The amount of any Swap Termination
Payment will generally be based on the market value of each
replacement transaction for the Swap Counterparty (or, if such
market value cannot be determined or does not produce a
commercially reasonable result, the losses suffered as a result
of the termination of the Swap Agreement or specific
Transaction(s)).
The amount incurred by the Trust as a Swap Termination
Payment and the resulting loss to Unitholders could be quite
substantial in relation to the total value of the Debt Securities
if interest rates, currency rates and/or swap spreads have
changed significantly since the Closing Date. Any Swap
Termination Payment payable by the Trust will be limited (i) in
the case of an early termination other than as a result of a Debt
Security Default, to a claim against the Trust Property pro rata
with that of the Unitholders based on the aggregate Unit
Principal Balance and (ii) in the case of an early termination as
a result of a Debt Security Default, to the Trust Property. See
"Description of Units -- Early Distribution of Debt Securities"
and "Description of Trust Agreements -- Trust Wind-Up Events".
Unitholders will not be liable to the Swap Counterparty for Swap
Termination Payments to the extent, if any, that the amount of
any such termination payments exceeds the assets of the Trust.
Upon an early termination of a Transaction under the Swap
Agreement, the applicable Trust will terminate (unless one or
more Transactions under the Swap Agreement are not affected by
the related Termination Event (as defined herein)), any
applicable Swap Termination Payment will be paid by or to the
Trust and Debt Securities may be sold by the Trustee through the
Selling Agent, unless and until the Selling Agent receives notice
from the Trustee of an exercise by the Unitholders of their right
to tender the amount of any related Swap Termination Payment as
set forth below. Unless otherwise provided in the Prospectus
Supplement, the Selling Agent will be Morgan Stanley or an
affiliate of Morgan Stanley (including the Swap Counterparty)
designated by it. The timing, price and other terms of any sale
conducted by the Selling Agent shall be determined by the Selling
Agent in its sole discretion, but all such sales shall be
completed within 30 days or such longer period of time as may be
reasonable with respect to particular Debt Securities. The
Selling Agent shall be permitted to sell Debt Securities to
affiliates of the Selling Agent. In connection with any Swap
Termination Payment payable by the Trust, the Unitholders may,
acting unanimously, deliver to the Trustee the amount of such
outstanding Swap Termination Payment (and any fees payable to the
Trustee from Trust Property) and a written instruction to
discontinue sale of the Debt Securities. It is possible that Debt
Securities may be sold by the Selling Agent in the time necessary
for the Unitholders to be notified of and act upon their rights
under the foregoing provision. After giving effect to any sales,
the remaining Debt Securities will be distributed to the
Unitholders. With respect to each such Unitholder, such
distribution will constitute full satisfaction of such holder's
fractional undivided interest in such Trust. Unitholders could be
materially adversely affected if the Trust is required to sell
Debt Securities in order to pay Swap Termination Payments at a
time when prices for the Debt Securities in the secondary
8
<PAGE>
market are depressed as a result of a default on the Debt
Securities or for any other reason. See "Description of Swap
Agreements -- Early Termination of Swap Agreements" and "-- Swap
Termination Payments" and "Description of Trust Agreements --
Sale of Debt Securities; Secured Party Rights".
After such distribution of the related Debt Securities, the
holders thereof will only be entitled to distributions of
principal and interest in accordance with the terms of such Debt
Securities, and not in accordance with the terms of the
terminated Transaction(s) under the Swap Agreement, which may
result in such holders receiving less than they would have if the
related Transaction(s) had not terminated.
The obligations of each Trust to any related Swap
Counterparty will be secured by a security interest in the Trust
Property granted by the Trust in favor of the Swap Counterparty.
Early Termination of Trusts. Unless otherwise specified in
a Prospectus Supplement, the related Trust will terminate prior
to the final scheduled distribution on the Units issued thereby
upon the occurrence of a Trust Wind-Up Event, as described under
"Description of Trust Agreements - Trust Wind-Up Events". Unless
otherwise specified in the applicable Prospectus Supplement, a
Trust Wind-Up Event will be deemed to have occurred where (i)
certain standard events of default or termination events have
occurred under any related Swap Agreement, including a Debt
Security Default (as defined herein) resulting in termination of
all affected Transactions under the Swap Agreement; (ii) the
Trustee incurs certain losses, liabilities or expenses in excess
of a specified "Trigger Amount" set forth in the Prospectus
Supplement (the "Trigger Amount"), which are to be indemnified by
the Depositor in an aggregate amount up to a Maximum Reimbursable
Amount set forth in the Prospectus Supplement (the "Maximum
Reimbursable Amount"), unless the Unitholders unanimously
undertake (or any Swap Counterparty undertakes) to indemnify the
Trustee as described under "Description of Trust Agreements -
Trust Wind-Up Events"; (iii) in certain circumstances if the
Trust holds Disqualified Securities as defined below (see
"--Termination Risk With Respect To Reporting Requirements"
below); and certain other events.
Upon an early termination of a Trust, any related Swap
Agreement, including each Transaction thereunder, will terminate
and any applicable Swap Termination Payment will be incurred or
received by the Trust.
Non-recourse Obligations. The Units will be obligations of
the applicable Trust and distributions of interest, premium (if
any) and principal thereon will only be made out of the
applicable Trust Property. Such Units will not represent
obligations of or interests in the Depositor, Morgan Stanley,
Morgan Stanley Dean Witter & Co. ("MSDW"), any Swap Counterparty,
the Trustee or any of their affiliates, except to the limited
extent described herein and in the applicable Prospectus
Supplement. None of the Depositor, Morgan Stanley, MSDW, any Swap
Counterparty, the Trustee or any of their affiliates or any other
person or entity, will be obligated to make payments on such
Units in the event that the applicable Trust Property is
insufficient to provide for such distributions and purchasers of
such Units will have
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no recourse against any of them or their respective assets in
respect of payments not made on such Units.
Priority of Payment. No final distribution will be made to
Unitholders of a Trust until (i) all amounts due to the Swap
Counterparty under any related Swap Agreement, including any Swap
Termination Payment (as limited to a claim pro rata with that of
the Unitholders for the aggregate Unit Principal Balance other
than in connection with a Debt Security Default), and (ii) all
amounts due to the Trustee with respect to Extraordinary Trust
Expenses (as hereinafter defined) have been paid. Debt Securities
may be sold by the Trustee to fund such payments. It is possible
that all or a substantial part of such Trust Property may be
required to be paid to the Swap Counterparty and/or the Trustee
prior to the final distribution to Unitholders.
Potential Conflicts of Interest. The Swap Counterparty (or
an affiliate thereof) may act as calculation agent (the "Swap
Calculation Agent") under any Swap Agreement, and potential
conflicts of interest may exist between the Swap Calculation
Agent and the Trustee on behalf of the Unitholders, with respect
to the Swap Calculation Agent's determination of currency
exchange rates applicable to the Swap Agreement, certain
calculations with respect to interest on the Units or other
calculations or determinations with respect to the Swap
Agreement. See "Description of Swap Agreements - Interest on
Units" and "Description of Units - Interest of Units." The Swap
Calculation Agent is obligated to carry out its duties and
functions as Swap Calculation Agent in good faith.
The Swap Counterparty, Morgan Stanley or another affiliate
of Morgan Stanley may act as Selling Agent and will have the
right to sell Debt Securities upon such terms as it may determine
it its sole discretion (unless and until instructed to the
contrary by the Unitholders as provided under "Description of
Trust Agreement -- Sale of Debt Securities; Secured Party
Rights") where such sale is required to enable the Trust to make
payment of a Swap Termination Payment under any Swap Agreement.
The Selling Agent will be permitted to sell Debt Securities to
affiliates of the Selling Agent. Moreover, where a Swap
Termination Payment is owed to the Swap Counterparty, the
interests of the Swap Counterparty and the Unitholders with
respect to the liquidation of the Debt Securities may conflict.
The Selling Agent is an agent of the Trustee only and will have
no fiduciary or other duties to the Unitholders, nor will the
Selling Agent have any liability to the Trust in the absence of
the Selling Agent's bad faith or wilful default.
Currency Risks. To the extent specified in the
applicable Prospectus Supplement, the Units may be denominated in
a currency other than U.S. dollars. An investment in a Unit
having a Specified Currency other than U.S. dollars entails
significant risks that are not associated with a similar
investment in a security denominated in U.S. dollars. In
particular, depreciation of the Specified Currency for such a
Unit against the U.S. dollar would result in a decrease in the
effective yield of such Unit below its Pass Through Rate and, in
certain circumstances, could result in a loss to the investor of
principal or interest or both on a U.S. dollar basis. Prospective
purchasers of such Units should consult their own financial and
legal
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advisors as to the risks entailed by an investment in such Units
denominated in a currency other than U.S. dollars. Such Units are
not an appropriate investment for persons who are unsophisticated
with respect to foreign currency transactions. See "Currency
Risks".
Passive Nature of the Trust. The Trustee with respect to
any Series of Units will hold the Trust Property for the benefit
of the Unitholders. Each Trust will generally hold the related
Trust Property to maturity and not dispose of it, regardless of
adverse events, financial or otherwise, which may affect any Debt
Security Issuer or the value of the Trust Property. Under certain
circumstances the holders of the Units may direct the Trustee to
dispose of the Debt Securities or take certain other actions in
respect of the Trust Property.
Investing in the High Yield Debt Securities Market. If
specified in the applicable Prospectus Supplement, the Trust may
acquire high yield corporate debt obligations of U.S. or other
issuers rated below investment grade. High yield debt obligations
are generally unsecured, may be subordinated to other obligations
of the issuer and generally have greater credit and liquidity
risk than is typically associated with investment grade corporate
obligations. High yield obligations are often issued in
connection with leveraged acquisitions or recapitalizations in
which the issuers incur a substantially higher amount of
indebtedness than the level at which they had previously
operated.
High yield debt obligations have historically experienced
greater default rates than has been the case for investment grade
securities. Although studies have been made of historical default
rates in the high yield market, such studies do not necessarily
provide a basis for drawing definitive conclusions with respect
to default rates and, in any event, do not necessarily provide a
basis for predicting future default rates.
Investing in Emerging Markets. If specified in the
applicable Prospectus Supplement, the Trust may acquire emerging
market Debt Securities. Investing in the debt of emerging markets
involves special risks not associated with investing in more
established capital markets such as the United States and Western
Europe, including risks attributable to fluctuations in foreign
exchange rates, political, economic and diplomatic instability,
hyperinflation, expropriation, different legal systems, exchange
controls, confiscatory taxation, nationalization of private
businesses, or other governmental restrictions. Individual
economies may differ substantially with respect to growth of
gross national product, rates of inflation, capital reinvestment,
resources, self-sufficiency and balance of payments position. In
addition, certain foreign investments may be subject to foreign
withholding taxes or other taxes or changes in the rates or
methods of taxation applicable to the Trust or to the Debt
Security Issuer.
Smaller capital markets with substantially less volume than
capital markets of non-emerging markets are common in emerging
markets and the securities traded therein are generally less
liquid and securities prices are generally more volatile than
securities of comparable companies in non-emerging markets. A
limited number of issuers often represent a disproportionately
large percentage of market capitalization and trading value in
emerging markets. Should there be a Swap Default (as defined
below) and a Trust Wind-Up Event
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resulting in the Unitholders receiving a distribution of their
pro rata share of the Debt Securities, the limited liquidity of
the securities markets of emerging markets may also affect the
Unitholders' ability to dispose of such Debt Securities at the
price and time they wish to do so. In addition, emerging markets
securities markets are susceptible to influence by large
investors trading significant blocks of securities or by large
dispositions of securities resulting from failure to meet margin
calls when due.
Disclosure and regulatory standards in emerging markets are
in many respects less stringent than those in other international
securities markets, with a low level of monitoring and regulation
of the market and market participants, and limited and uneven
enforcement of existing regulations. There may be less publicly
available information about an issuer in an emerging market
country than would be available in a non-emerging market, and the
issuer may not be subject to accounting, auditing and financial
reporting standards comparable to those of companies in
non-emerging markets. As a result, traditional investment
measurements, such as price/earnings ratios, may not be useful in
emerging markets.
Termination Risk With Respect to Reporting Requirements. If
an issuer of a Concentrated Debt Security ceases to file periodic
reports under the Exchange Act, the Depositor, on behalf of the
Trust, will not be able to meet applicable reporting requirements
of the Exchange Act. Accordingly, unless otherwise provided in
the Prospectus Supplement, if the issuer of any Concentrated Debt
Security ceases to be a reporting company under the Exchange Act
(such Debt Security a "Disqualified Security"), (i) a Termination
Event shall occur with respect to any Transaction related to such
Disqualified Security under any related Swap Agreement and the
Trust shall be required to sell Debt Securities to the extent
necessary to pay any related Swap Termination Payment; (ii) the
remaining Disqualified Securities shall be distributed pro rata
to the Unitholders; and (iii) a Trust Wind Up Event shall occur
if (A) the Trust holds only Disqualified Securities and no other
Trust Property or (B) if so provided in the Prospectus
Supplement.
The Prospectus Supplement for the Units may set forth
additional information regarding special considerations
applicable to such Units.
THE DEPOSITOR
The Depositor was incorporated in the State of Delaware on
September 21, 1998, as an indirect, wholly-owned, limited-purpose
subsidiary of MSDW. The address of the Depositor is at 1585
Broadway, New York, New York 10036, Attention: Secretary. Its
telephone number is (212) 761-1715. The Certificate of
Incorporation of the Depositor provides generally that the
business to be conducted by the Depositor is limited to
acquiring, holding and disposing of Debt Securities, arranging
for Credit Support, acting as Depositor of Trusts in connection
with Series of Units, registering the Units with the Commission
and complying on behalf of each Trust with the related reporting
and filing requirements under the Exchange Act, holding and
transferring interests in the Units and Retained Interests in the
Trust Property, and engaging in
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other related activities and transactions. The Depositor is
required at all times to have at least one director which is not
affiliated with MSDW.
USE OF PROCEEDS
Unless otherwise specified in the applicable Prospectus
Supplement, the net proceeds to be received from the sale of each
Series or Class of Units (whether or not offered hereby) will be
used by the Depositor to purchase the related Trust Property,
including, if specified in the related Prospectus Supplement,
arranging Credit Support, (including by making required deposits
into any Reserve Account (as defined below) or another account of
the Trustee for the benefit of the Unitholders of such Series or
Class). Any remaining net proceeds will be used by the Depositor
for general corporate purposes.
FORMATION OF TRUSTS
The Units of any Series will be issued by a Trust. Each
Trust will be established under the laws of New York pursuant to
a Trust Agreement to be entered into between the Depositor and
the Trustee, as more fully described in such Prospectus
Supplement. Concurrently with the execution and delivery of such
Trust Agreement, (i) the Depositor will transfer the related Debt
Securities and other Trust Property to the Trustee, in its
capacity as Trustee, for the benefit of the Unitholders and
deposit such Debt Securities in the related Trust, (ii) the
Trustee will enter into any Swap Agreement with the applicable
Swap Counterparty and accept the related Guarantee, if any.
The Trustee, on behalf of such Trust, will accept such Debt
Securities and other Trust Property and deliver Units to or upon
the order of the Depositor. The Depositor's transfer of such Debt
Securities to the Trustee will be without recourse.
The Trust Property with respect to a Trust will consist of:
(i) the related Debt Securities and all payments on or
collections in respect of such Debt Securities due after a
specified cut-off date (the "Cut-off Date") set forth in the
applicable Prospectus Supplement; (ii) all the Trustee's right,
title and interest under any Swap Agreement and any related
Guarantee; (iii) all the Trustee's right, title and interest in
any related Credit Support; (iv) all funds from time to time
deposited in certain segregated accounts held by the Trustee in
trust and for the benefit of the holders of the Units
representing interests in such Trust; and (v) any other asset
described in the applicable Prospectus Supplement as constituting
a portion of such Trust Property, in each case as more fully
described in this Prospectus or in such Prospectus Supplement,
and in each case exclusive of any interest retained by the
Depositor or a third party ("Retained Interest") in any of the
Debt Securities, the Swap Agreement or other assets constituting
Trust Property. The Units to be issued by a Trust will represent
fractional undivided interests in the related Trust Property and
claims of the holders of such Units on such Trust Property will
be subject to (i) if applicable, the security interest of the
Swap Counterparty with respect to amounts due to it under the
Swap Agreement, including, without
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limitation, any Swap Termination Payments (as limited in the case
of a termination other than for a Debt Security Default to a
claim pro rata with that of the Unitholders), and (ii) the prior
claims of the Trustee with respect to any Extraordinary Trust
Expense. See "Risk Factors-Priority of Payment."
The Trustee will administer the Trust Property pursuant to
the related Trust Agreement and will perform such tasks with
respect to the related Units as are specified in such Trust
Agreement. As compensation and in payment of all its regular and
ordinary expenses, the Trustee will receive customary fees (the
"Trustee Fees"), which will, unless otherwise provided in the
applicable Prospectus Supplement, be paid by the Depositor or
another entity (other than any Trust). The Trustee will not have
any claim to or lien upon the related Trust or any of its
property in order to secure payment of the Trustee Fees. See
"Description of Trust Agreements - Trustee Compensation".
MATURITY AND YIELD CONSIDERATIONS
Each Prospectus Supplement will, to the extent applicable,
contain information with respect to the type and maturities of
the related Debt Securities and the terms, if any, upon which
such Debt Securities may be subject to early redemption (either
by the applicable obligor or pursuant to a third-party call
option), repayment (at the option of the holders thereof) or
extension of maturity. The provisions of the Debt Securities with
respect to the foregoing will, unless otherwise specified in the
applicable Prospectus Supplement, affect the weighted average
life of the related Series of Units.
The effective yield to holders of the Units of any Series
(and Class within such Series) may be affected by certain aspects
of the Trust Property or the manner and priorities of allocations
of collections with respect to such Trust Property between the
Classes of a given Series. With respect to any Series of Units
where the related Trust holds Debt Securities that consist of one
or more redeemable securities, extendable securities or
securities subject to a third-party call option, the yield to
maturity of such Series (or Class within such Series) may be
affected by any optional or mandatory redemption or repayment or
extension of the related Debt Securities prior to the stated
maturity thereof. A variety of tax, accounting, economic, and
other factors will influence whether a corporate issuer exercises
any right of redemption in respect of its securities. All else
remaining equal, if prevailing interest rates fall significantly
below the interest rates on the related Debt Securities, the
likelihood of redemption would be expected to increase. There can
be no certainty as to whether any Debt Security redeemable at the
option of the related Debt Security Issuer will be repaid prior
to its stated maturity.
Unless otherwise specified in the related Prospectus
Supplement, each of the Debt Securities will be subject to
acceleration upon the occurrence of certain Covenant Defaults (as
defined below). The maturity and yield on the Units will be
affected by any early repayment of the Debt Securities as a
result of the acceleration of the Outstanding Debt Securities (as
hereinafter defined) by the holders thereof. See "Description of
Trust Property -- Debt Security Agreement." If a Debt Security
Issuer becomes subject to a bankruptcy proceeding,
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the timing and amount of payments with respect to both interest
and principal may be materially and adversely affected. A variety
of factors influence the performance of private debt issuers and
correspondingly may affect a Debt Security Issuer's ability to
satisfy its obligations under the Debt Securities, including the
company's operating and financial condition, leverage, and
social, geographic, legal and economic factors.
The extent to which the yield to maturity of such Units may
vary from the anticipated yield due to the rate and timing of
payments on the Trust Property will depend upon the degree to
which they are purchased at a discount or premium and the degree
to which the timing of payments thereon is sensitive to the rate
and timing of payments on the Trust Property.
The yield to maturity of any Series (or Class) of Units
will also be affected by variations in the interest rates
applicable to, and the corresponding payments in respect of, such
Units, to the extent that the Pass Through Rate (as defined
below) for such Series (or Class) is based on variable or
adjustable interest rates. With respect to any Series of Units
representing an interest in two or more Debt Securities,
disproportionate principal payments (whether resulting from
differences in amortization schedules, payments due on scheduled
maturity or upon early redemption) on the related Debt Securities
having interest rates higher or lower than the then applicable
Pass Through Rates applicable to such Units may affect the yield
thereon.
The Prospectus Supplement for each Series of Units will set
forth additional information regarding yield and maturity
considerations applicable to such Series (and each Class within
such Series) and the related Trust Property, including the
applicable Debt Securities.
DESCRIPTION OF TRUST PROPERTY
Unless otherwise set forth in the Prospectus Supplement,
the Debt Securities will have been purchased by the Depositor (or
an affiliate thereof) in the secondary market. Each Debt Security
which represents on the date of formation of the Trust 10% or
more by principal amount of the Debt Securities held by such
Trust (a "Concentrated Debt Security") will represent (i)
obligations of or guaranteed by the United States government,
obligations of the Federal National Mortgage Association or
Federal Home Loan Mortgage Corporation, or (ii) obligations of
one or more corporations, limited partnerships, trusts, limited
liability companies or other organizations, banking
organizations, insurance companies or foreign sovereigns or
political subdivisions or instrumentalities thereof (each a
"Foreign Sovereign"), in each case which are subject to the
informational requirements of the Exchange Act, and which, in
accordance therewith, file reports and other information with the
Commission (or another applicable agency pursuant to Section
12(i) of the Exchange Act) (and in the case of a Foreign
Sovereign, are current in their filings in accordance with such
requirements). If so specified in the related Prospectus
Supplement, the Trust for a Series of Units may also include, or
the Unitholders of such Units may have the benefit of, any
combination of insurance policies, letters of credit, reserve
accounts and other types of rights or assets
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designed to support or ensure the servicing and distribution of
amounts due in respect of the Trust Property (collectively,
"Credit Support").
All information set forth in a Prospectus Supplement with
respect to a Concentrated Debt Security or any other Debt
Security will be derived solely from the description of such Debt
Security contained in a publicly available prospectus or offering
document relating to such Debt Security, if any ("Debt Security
Prospectus"), or other publicly available information. Unless
otherwise specified in the Prospectus Supplement, the Debt
Security Prospectus with respect to any Concentrated Debt
Security will have been filed with the Commission in connection
with the issuance of the related Debt Security or otherwise in
public filings by the related Debt Security Issuer. Prospective
purchasers of Units are urged to read this Prospectus and the
applicable Prospectus Supplement in conjunction with (i) each
related Debt Security Prospectus and (ii) each registration
statement of which any Debt Security Prospectus is a part (a
"Debt Security Registration Statement"). No representation is
made by the Trust, the Trustee or the Depositor or any of their
respective affiliates as to the accuracy or completeness of the
information contained in any Debt Security Prospectus or Debt
Security Registration Statement.
Unless otherwise indicated in a Prospectus Supplement, such
Prospectus Supplement will not provide information with respect
to any Debt Security Issuer (other than, in the case of the
issuer of a Concentrated Debt Security, the identity thereof),
and no investigation of the financial condition or
creditworthiness of any Debt Security Issuer or any of its
subsidiaries or other affiliates, or of the ratings, if any, on
the related Debt Securities, will have been made by the
Depositor, Morgan Stanley or the Trustee in connection with the
issuance of the related Units. Prospective purchasers of Units
should consider carefully each Debt Security Issuer's financial
condition and its ability to make payments in respect of the
related Debt Securities. All information contained in a
Prospectus Supplement regarding a Debt Security Issuer will be
derived from the related Debt Security Prospectus, reports filed
by the Debt Security Issuer pursuant to the Exchange Act, or
other publicly available information. Unless otherwise provided
in the Prospectus Supplement, none of the Depositor, Morgan
Stanley or the Trustee nor any of their respective affiliates has
participated in the preparation of any Debt Security Prospectus
or Debt Security Registration Statement or other public
information relating to the Debt Securities, and takes no
responsibility for the accuracy or completeness of the
information provided therein.
Reference is made to the applicable Prospectus Supplement
with respect to each Series of Units for a description of the
following terms, as applicable, of any Concentrated Debt
Security: (i) the title and series of such Concentrated Debt
Securities, the aggregate principal amount, denomination and form
thereof; (ii) whether such securities are senior or subordinated
to any other obligations of the related Debt Security Issuer;
(iii) whether any of the obligations are secured or unsecured and
the nature of any collateral; (iv) the limit, if any, upon the
aggregate principal amount of such debt securities; (v) the dates
on which, or the range of dates within which, the principal of
(and premium, if any, on) such debt securities will be payable;
(vi) the rate or rates or the method of determination thereof, at
which such Concentrated Debt Securities will bear interest, if
any; the date or dates from which such
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interest will accrue; and the dates on which such interest will
be payable; (vii) the obligation, if any, of the Debt Security
Issuer to redeem the Outstanding Debt Securities pursuant to any
sinking fund or analogous provisions, or at the option of a
holder thereof, and the periods within which or the dates on
which, the prices at which and the terms and conditions upon
which such debt securities may be redeemed or repurchased, in
whole or in part, pursuant to such obligation; (viii) the periods
within which or the dates on which, the prices at which and the
terms and conditions upon which such debt securities may be
redeemed, if any, in whole or in part, at the option of the Debt
Security Issuer; (ix) whether the Debt Securities were issued at
a price lower than the principal amount thereof; (x) if other
than United States dollars, the foreign currency in which such
debt securities are denominated, or in which payment of the
principal of (and premium, if any) or any interest on such Debt
Securities will be made, and the circumstances, if any, when such
currency of payment may be changed; (xi) material events of
default or restrictive covenants provided for with respect to
such Debt Securities; (xii) the rating thereof, if any; (xiii)
the Retained Interest, if any, with respect thereto; and (xiv)
any other material terms of such Debt Securities.
With respect to any portion of the Trust Property comprised
of Debt Securities other than Concentrated Debt Securities, the
related Prospectus Supplement will describe the composition of
such portion as of the Cut-off Date, certain material events of
default or restrictive covenants common to the Debt Securities,
and, on an aggregate, percentage or weighted average basis, as
applicable, the characteristics of such portion with respect to
the terms set forth in (ii), (iii), (v), (vi), (vii), (viii),
(ix) and (x) of the preceding paragraph and any other material
terms regarding such portion of the Trust Property.
In addition to the foregoing, with respect to each
Concentrated Debt Security the applicable Prospectus Supplement
will disclose the identity of the applicable obligor and any
trustee under the applicable Debt Security Agreement, and will
describe the existence and type of certain information that is
made publicly available by each obligor regarding such
Concentrated Debt Security or Concentrated Debt Securities and
will disclose where and how prospective purchasers of the Units
may obtain such publicly available information with respect to
each such obligor. Such publicly available information will
typically consist of the quarterly and annual reports filed under
the Exchange Act by such issuer with, and which are available
from, the Commission.
Debt Security Agreement
General. Unless otherwise specified in the related
Prospectus Supplement, each Debt Security will have been issued
pursuant to an indenture or other agreement (each, a "Debt
Security Agreement") between the Debt Security Issuer and, in
certain cases a trustee, or in other cases the initial purchasers
of such Debt Security. Except as specifically described in any
Prospectus Supplement, all information set forth therein with
respect to the provisions of any Debt Security Agreement
pertaining to a Concentrated Debt Security will be based solely
on the version of the Debt Security Agreement filed with the
Commission in connection with the registration of such
Concentrated Debt Security.
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Certain Covenants. A Debt Security Agreement will generally
contain covenants intended to protect security holders against
the occurrence or effects of certain specified events, including
restrictions limiting the issuer's, and in some cases any of its
subsidiaries' ability to: (i) consolidate, merge, or transfer or
lease assets; (ii) incur or suffer to exist any lien, charge, or
encumbrance upon any of its property or assets, or to incur,
assume, guarantee or suffer to exist any indebtedness for
borrowed money if the payment of such indebtedness is secured by
the grant of such a lien; (iii) declare or pay any cash
dividends, or make any distributions on or in respect of, or
purchase, redeem, exchange or otherwise acquire or retire for
value any capital stock or subordinated indebtedness of the
issuer or its subsidiaries, if any. A Debt Security Agreement may
also contain financial covenants which, among other things,
require the maintenance of certain financial ratios or the
creation or maintenance of reserves. Subject to certain
exceptions, a Debt Security Agreement typically may be amended or
supplemented and past defaults may be waived with the consent of
the indenture trustee (if any), the consent of the holders of not
less than a specified percentage of the outstanding securities or
both.
The Debt Security Agreement related to one or more Debt
Securities included in a Trust may include some, all or none of
the foregoing provisions or variations thereof or additional
covenants not discussed herein. To the extent that the Debt
Securities are investment grade debt they are unlikely to contain
significant restrictive covenants although certain non-investment
grade debt may not be subject to restrictive covenants either.
There can be no assurance that any such provision will protect
the Trust as a holder of the Debt Securities against losses. The
Prospectus Supplement used to offer any Series of Units will
describe material covenants in relation to any Concentrated Debt
Security (as defined below) and, as applicable, will describe
material covenants which are common to other Debt Securities
included in the Trust Property.
Events of Default. A Debt Security Agreement may provide
that any one of a number of specified events will constitute an
event of default with respect to the securities issued
thereunder. Such events of default typically include the
following or variations thereof: (i) failure by the issuer to pay
an installment of interest or principal on the securities at the
time required (subject to any specified grace period) or to
redeem any of the securities when required (subject to any
specified grace period); (ii) failure by the issuer to observe or
perform any covenant, agreement or condition contained in the
securities or the Debt Security Agreement which failure is
materially adverse to security holders and continues for a
specified period after notice thereof is given to the issuer;
(iii) failure by the issuer to make any required payment of
principal (and premium, if any) or interest with respect to
certain of the other outstanding debt obligations of the issuer
or the acceleration by or on behalf of the holders thereof of
such securities; and (iv) certain events of insolvency or
bankruptcy with respect to the Debt Security Issuer.
Remedies. A Debt Security Agreement will generally
provide that upon the occurrence of an event of default, the
indenture trustee may, and upon the written request of the
holders of
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not less than a specified percentage of the outstanding
securities must, take such action as it may deem appropriate to
protect and enforce the rights of the security holders. In
certain cases, the indenture trustee or a specified percentage of
the holders of the outstanding securities will have the right to
declare all or a portion of the principal and accrued interest on
the outstanding securities immediately due and payable upon the
occurrence of certain events of default, subject to the issuer's
right to cure, if applicable. Generally, an indenture will
contain a provision entitling the trustee thereunder to be
indemnified by the security holders prior to proceeding to
exercise any right or power under such indenture with respect to
such securities at the request of such security holders. An
indenture is also likely to limit a security holder's right to
institute certain actions or proceedings to pursue any remedy
under the indenture unless certain conditions are satisfied,
including consent of the indenture trustee, that the proceeding
be brought for the ratable benefit of all holders of the
security, and/or the indenture trustee, after being requested to
institute a proceeding by the owners of at least a specified
minimum percentage of the securities, shall have refused or
neglected to comply with such request within a reasonable time.
Each Debt Security Agreement may or may not be in the form
of an indenture and may include some, all or none of the
foregoing provisions or variations thereof or additional events
of default not discussed herein. The Prospectus Supplement with
respect to any Series of Units will describe the material terms
of the events of default under the Debt Security Agreement with
respect to any Concentrated Debt Security (each a "Covenant
Default") and applicable remedies with respect thereto. With
respect to any portion of the Trust Property comprised of Debt
Securities other than Concentrated Debt Securities, the
applicable Prospectus Supplement will describe certain common
Covenant Defaults with respect to such portion. There can be no
assurance that any such provision will protect the Trust, as a
holder of the Debt Securities, against losses. If a Covenant
Default occurs and the Trust as a holder of the Debt Securities
is entitled to vote or take such other action to declare the
principal amount of a Debt Security and any accrued and unpaid
interest thereon to be due and payable, the Unitholders'
objectives may differ from those of holders of other securities
of the same series and class as any Debt Security ("Outstanding
Debt Securities") in determining whether to declare the
acceleration of the Debt Securities.
Subordination. As set forth in the applicable Prospectus
Supplement, certain of the Debt Securities with respect to any
Trust may be either senior ("Senior Debt Securities") or
subordinated ("Subordinated Debt Securities") in right to payment
to other existing or future indebtedness of the Debt Security
Issuer. With respect to Subordinated Debt Securities, to the
extent of the subordination provisions of such securities, and
after the occurrence of certain events, security holders and
direct creditors whose claims are senior to Subordinated Debt
Securities, if any, may be entitled to receive payment of the
full amount due thereon before the holders of any subordinated
debt securities are entitled to receive payment on account of the
principal (and premium, if any) or any interest on such
securities. Consequently, the Trust as a holder of subordinated
debt may suffer a greater loss than if it held unsubordinated
debt of the Debt Security Issuer. There can be no assurance,
however, that in the event of a bankruptcy or similar proceeding
the Trust as a holder of Senior Debt Securities would receive
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all payments in respect of such securities even if holders of
subordinated securities receive amounts in respect of such
securities. Reference is made to the Prospectus Supplement used
to offer any Series of Units for a description of any
subordination provisions with respect to any Concentrated Debt
Securities and the percentage of Senior Debt Securities and
Subordinated Debt Securities, if any, in the portion of a Trust
comprised of other than Concentrated Debt Securities.
Secured Obligations. Certain of the Debt Securities with
respect to any Trust may represent secured obligations of the
Debt Security Issuer ("Secured Debt Securities"). Generally,
unless an event of default shall have occurred and is continuing,
or with respect to certain collateral or as otherwise set forth
in the indenture pursuant to which such securities were offered
and sold, an issuer of secured obligations generally has the
right to remain in possession and retain exclusive control of the
collateral securing a security and to collect, invest and dispose
of any income related to the collateral. The indenture pursuant
to which any secured indebtedness is issued may also contain
certain provisions for release, substitution or disposition of
collateral under certain circumstances with or without the
consent of the indenture trustee or upon the direction of not
less than a specified percentage of the security holders. The
indenture pursuant to which any secured indebtedness is issued
will also provide for the disposition of the collateral upon the
occurrence of certain events of default with respect thereto. In
the event of a default in respect of any secured obligation,
security holders may experience a delay in payments on account of
principal (and premium, if any) or any interest on such
securities pending the sale of any collateral and prior to or
during such period the related collateral may decline in value.
If proceeds of the sale of collateral following an indenture
event of default are insufficient to repay all amounts due in
respect of any secured obligations, the holders of such
securities (to the extent not repaid from the proceeds of the
sale of the collateral) would have only an unsecured claim
ranking pari passu with the claims of all other general unsecured
creditors.
The Debt Security Agreement with respect to any Secured
Debt Security may include, some, all or none of the foregoing
provisions or variations thereof. The Prospectus Supplement used
to offer any Series of Units which includes Concentrated Debt
Securities which are Secured Debt Securities, will describe the
security provisions of such Debt Securities and the related
collateral. With respect to any portion of the Trust Property
comprised of Secured Debt Securities other than Concentrated Debt
Securities, the applicable Prospectus Supplement will disclose
certain general information with respect to such security
provisions and the collateral.
Other Trust Property
The Trust Property for a given Series of Units and the
related Trust will not constitute Trust Property for any other
Series of Units and the related Trust and the Units of each Class
of a given Series possess an equal and ratable undivided
ownership interest in such Trust Property. The applicable
Prospectus Supplement may, however, specify that certain assets
constituting a part of the Trust Property relating to any given
Series may be beneficially owned
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solely by or deposited solely for the benefit of one Class or a
group of Classes within such Series. In such event, the other
Classes of such Series will not possess any beneficial ownership
interest in those specified assets constituting a part of the
Trust Property.
Credit Support
As specified in the applicable Prospectus Supplement for a
given Series of Units, the Trust for any Series of Units may
include, or the Unitholders of such Series (or any Class or group
of Classes within such Series) may have the benefit of, Credit
Support for any Class or group of Classes within such Series.
Such Credit Support may be provided by any combination of the
following means described below or any other means described in
the applicable Prospectus Supplement. The applicable Prospectus
Supplement will set forth whether the Trust for any Class or
group of Classes of Units contains, or the Unitholders of such
Units have the benefit of, Credit Support and, if so, the amount,
type and other relevant terms of each element of Credit Support
with respect to any such Class or Classes and certain information
with respect to the obligors of each such element, including
financial information with respect to any such obligor providing
Credit Support for 20% or more of the aggregate principal amount
of such Class or Classes unless such obligor is subject to the
informational requirements of the Exchange Act.
Subordination. As discussed below under "--Collections,"
the rights of the Unitholders of any given Class within a Series
of Units to receive collections from the Trust for such Series
and any Credit Support obtained for the benefit of the
Unitholders of such Series (or Classes within such Series) may be
subordinated to the rights of the Unitholders of one or more
other Classes of such Series to the extent described in the
related Prospectus Supplement. Such subordination accordingly
provides some additional credit support to those Unitholders of
those other Classes. If losses are realized during a given period
on the Trust Property relating to a Series of Units such that the
collections received thereon are insufficient to make all
distributions on the Units of such Series, those realized losses
would be allocated to the Unitholders of any Class of any such
Series that is subordinated to another Class, to the extent and
in the manner provided in the related Prospectus Supplement. In
addition, if so provided in the applicable Prospectus Supplement,
certain amounts otherwise payable to Unitholders of any Class
that is subordinated to another Class may be required to be
deposited into a reserve account. Amounts held in any reserve
account may be applied as described below under "--Reserve
Accounts" and in the related Prospectus Supplement.
If so provided in the related Prospectus Supplement, the
Credit Support for any Series or Class of Units may include, in
addition to the subordination of certain Classes of such Series
and the establishment of a reserve account, any of the other
forms of Credit Support described below. Any such other forms of
Credit Support that are solely for the benefit of a given Class
will be limited to the extent necessary to make required
distributions to the Unitholders of such Class or as otherwise
specified in the related Prospectus Supplement. In addition, if
so provided in the applicable Prospectus Supplement, the obligor
of any other forms of Credit
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Support may be reimbursed for amounts paid pursuant to such
Credit Support out of amounts otherwise payable to one or more of
the Classes of the Units of such Series.
Letter of Credit; Guaranty. The Unitholders of any Series
(or Class or group of Classes of Units within such Series) may,
if specified in the applicable Prospectus Supplement, have the
benefit of a letter or letters of credit (a "Letter of Credit")
issued by a bank (a "Letter of Credit Bank") or a financial
guaranty or surety bond (a "Guaranty") issued by a financial
guarantor or surety company (a "Guarantor"). In either case, the
Trustee or such other person specified in the applicable
Prospectus Supplement will use its reasonable efforts to cause
the Letter of Credit or the Guaranty, as the case may be, to be
obtained, to be kept in full force and effect (unless coverage
thereunder has been exhausted through payment of claims) and to
pay timely the fees or premiums therefor unless, as described in
the related Prospectus Supplement, the payment of such fees or
premiums is otherwise provided for. The Trustee or such other
person specified in the applicable Prospectus Supplement will
make or cause to be made draws or claims under the Letter of
Credit or the Guaranty, as the case may be, under the
circumstances and to cover the amounts specified in the
applicable Prospectus Supplement. The applicable Prospectus
Supplement will provide the manner, priority and source of funds
by which any such draws are to be repaid.
Unless otherwise specified in the applicable Prospectus
Supplement, in the event that the Letter of Credit Bank or the
Guarantor, as applicable, ceases to satisfy any credit rating or
other applicable requirements specified in the related Prospectus
Supplement, the Trustee or such other person specified in the
applicable Prospectus Supplement will use its reasonable efforts
to obtain or cause to be obtained a substitute Letter of Credit
or Guaranty, as applicable, or other form of credit enhancement
providing similar protection, that meets such requirements and
provides the same coverage to the extent available for the same
cost. There can be no assurance that any Letter of Credit Bank or
any Guarantor, as applicable, will continue to satisfy such
requirements or that any such substitute Letter of Credit,
Guaranty or similar credit enhancement will be available
providing equivalent coverage for the same cost. To the extent
not so available, the credit support otherwise provided by the
Letter of Credit or the Guaranty (or similar credit enhancement)
may be reduced to the level otherwise available for the same cost
as the original Letter of Credit or Guaranty.
Reserve Accounts. If so provided in the related Prospectus
Supplement, the Trustee or such other person specified in the
Prospectus Supplement will deposit or cause to be deposited into
an account maintained with an eligible institution (which may be
the Trustee) (a "Reserve Account") any combination of cash or
permitted investments in specified amounts, which will be applied
and maintained in the manner and under the conditions specified
in such Prospectus Supplement. In the alternative or in addition
to such deposit, a Reserve Account may be funded through
application of a portion of collections received on the Trust
Property for a given Series of Units, in the manner and priority
specified in the applicable Prospectus Supplement.
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The Trust Property will be identified in a schedule
appearing as an exhibit to the Trust Agreement.
DESCRIPTION OF SWAP AGREEMENTS
Concurrently with the formation of a Trust, the Trust may
enter into a related Swap Agreement. The following summaries
describe certain general provisions of the form of Swap Agreement
to be entered into in connection with issuances of Units. The
following summaries of provisions of the Swap Agreements do not
purport to be complete and are subject to the detailed provisions
of the form of Swap Agreement, filed as an exhibit to the
Registration Statement and in the manner set forth in the
applicable Prospectus Supplement. In addition, the specific terms
of each Transaction under the Swap Agreement, particularly the
method of calculation of payments by the Swap Counterparty
thereunder and the timing of such payments, will be set forth in
the applicable Prospectus Supplement.
General
As particularly described in the applicable Prospectus
Supplement, for any Trust, the Transaction or Transactions under
a related Swap Agreement may be one or more of the following: (i)
a rate swap transaction, basis swap, forward rate transaction,
commodity swap, commodity option, index swap, index option, bond
option, total rate of return swap, credit default swap, credit
spread put, credit spread call, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar
transaction, currency swap transaction, cross currency rate swap
transaction, currency option or any other similar transaction
(including any option with respect to any of these transactions);
(ii) any combination of these transactions; or (iii) any other
transaction identified in such Swap Agreement or the relevant
confirmation and described in such Prospectus Supplement.
Unless otherwise indicated in the applicable Prospectus
Supplement, a Swap Agreement will be in the form of the 1992 ISDA
Master Agreement (Multicurrency - Cross Border) (the "1992 Master
Agreement") published by the International Swaps and Derivatives
Association, Inc. ("ISDA") and will incorporate the 1991 ISDA
Definitions (as published by ISDA, the "ISDA Definitions"), as
modified and supplemented by a schedule thereto (the "Schedule")
except as modified to reflect the terms of the related Units and
Trust Agreement and any specific terms of the Transaction or
Transactions under such Swap Agreement. Except as expressly set
forth in the Schedule or in any Prospectus Supplement, a Swap
Agreement will be governed in all relevant respects by the
provisions set forth in the 1992 Master Agreement and the ISDA
Definitions, without regard to any amendments or modifications to
the 1992 Master Agreement or the ISDA Definitions published by
ISDA subsequent to the date of such Swap Agreement.
Payments under Swap Agreements
In general, under a Swap Agreement, the related Trust and
the Swap Counterparty will each agree to exchange certain
payments on each payment date (each, a "Swap Payment Date")
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under such Swap Agreement. The amounts to be exchanged by the
parties on a Swap Payment Date may both be floating amounts,
calculated with reference to one or more interest rate bases
(which may be one or more of the interest rate Base Rates
described under "Description of Units - Interest on Units") or
other types of bases, in each case as set forth in the applicable
Prospectus Supplement, or one such amount may be floating and the
other fixed. In addition, such amounts will also be calculated
with reference to the notional principal amount of the
Transaction or Transactions under such Swap Agreement, which,
unless otherwise specified in the applicable Prospectus
Supplement, as of any date of determination will be equal to the
then aggregate principal amount of the related Debt Securities
(as such amount may have been reduced through any redemption,
prepayment or exchange). The obligations of the Trust to the Swap
Counterparty will be secured by a security interest in the Trust
Property granted by the Trust in favor of the Swap Counterparty.
A Swap Agreement may provide for either periodic exchanges
of payment amounts or, in the case of Index-Linked Units, a
single exchange or series of exchanges upon one or more interest
payment dates or the maturity or prospective maturities of the
related Debt Securities, or both.
If specified in the applicable Prospectus Supplement, a
Swap Agreement may also document a call option granted by the
Trust, or a put option in favor of the Trust with respect to all
or a portion of the Debt Securities or other Trust Property. A
call option written by the Trust will effectively reserve to the
Swap Counterparty the right to realize all or a portion of the
gain from an increase in the market value of the specified Trust
Property at or prior to the maturity of the Units or to effect a
conversion of the Debt Securities into the right to receive
another security, rights which the Trust ordinarily will not be
entitled to exercise. Conversely, a put option in favor of the
Trust will generally be intended to protect the Trust in whole or
in part from a decline in the market value of the related Debt
Securities in circumstances where the Debt Securities may be
outstanding on the Scheduled Final Distribution Date with respect
to the Units. A put option written in favor of the Trust will,
unless otherwise specified in the Prospectus Supplement, be
automatically exercised by the Trustee upon the occurrence of
specified events.
Unless otherwise specified in the applicable Prospectus
Supplement, on any given Swap Payment Date (including a Swap
Payment Date occurring upon the maturity of the related Debt
Securities or a portion thereof), each exchange of payments in
the same currency will be settled on a "net payments" basis,
which means that only a single net payment will be due from one
of the parties under the Swap Agreement to the other. On each
Distribution Date with respect to Units in connection with which
the Trust has entered into a Swap Agreement, the Trustee will
have available for distribution to Unitholders funds equal to (i)
the amount of any payments received on the Swap Agreement and
other related Trust Property less (ii) all payments made by such
Trustee to the Swap Counterparty, in each case since the
immediately preceding Distribution Date. The effect of such Swap
Agreement, therefore, will be that holders of such Units will be
entitled to distributions of interest (and, in the case of
Index-Linked Units, of principal) thereon in accordance with the
terms of the Swap Agreement rather than the terms of the related
Debt Securities. Unless otherwise specifically provided in the
Prospectus
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Supplement, the Swap Agreement will not provide coverage against
losses as a result of failure to receive payments on the related
Debt Securities, and no assurance can be given that the Trustee
will receive either any payment due to be received on such Debt
Securities or any net payment, if any, due to be received under
such Swap Agreement, in each case when due, or that the Trustee
will recover moneys under a related Guarantee, if any, upon a
payment default by the Swap Counterparty under such Swap
Agreement.
Modification and Amendment of Swap Agreements
Unless otherwise specified in the applicable Prospectus
Supplement, the related Trust Agreement will contain provisions
permitting the Trustee to enter into any amendment of a related
Swap Agreement requested by the Swap Counterparty to cure any
ambiguity in, or to correct or supplement any provision of, such
Swap Agreement, so long as (i) the Trustee determines that such
amendment will not materially and adversely affect the interests
of the holders of the Units and (ii) the Trustee has received an
opinion of counsel to the effect that such amendment will not
alter the classification of the related Trust for United States
Federal income tax purposes.
Defaults Under Swap Agreements
Unless otherwise noted in the applicable Prospectus
Supplement, "Events of Default" under the related Swap Agreement
(each, a "Swap Default") are limited to: (i) the failure of the
applicable Trust to pay any amount when due under the Swap
Agreement after giving effect to the applicable grace period, if
any; (ii) the failure of the applicable Swap Counterparty or the
Guarantor, if any, to pay any amount when due under such Swap
Agreement after giving effect to the applicable grace period, if
any; and (iii) certain other standard events of default under the
1992 Master Agreement including "Credit Support Default",
"Bankruptcy" and "Merger without Assumption", as described in
Sections 5(a)(iii), 5(a)(vii) and 5(a)(viii) of the 1992 Master
Agreement. Several of the standard events of default of the 1992
Master Agreement are not Events of Default under the Swap
Agreement. The standard events of default excluded are "Breach of
Agreement", "Misrepresentation", "Default Under Specified
Transaction" and "Cross Default" as described in Sections
5(a)(ii), 5(a)(iv), 5(a)(v) and 5(a)(vi), respectively, of the
1992 Master Agreement.
Termination Events
Unless otherwise specified in the applicable Prospectus
Supplement, "Termination Events" under the related Swap Agreement
consist of the following: (i) the occurrence of a Debt Security
Default with respect to a related Debt Security or Reporting
Event (each as defined below) with respect to a related
Concentrated Debt Security (which Termination Event shall apply
only to the specific Transaction under the Swap Agreement
relating to such Debt Security or Concentrated Debt Security, as
applicable); (ii) the occurrence of an Excess Expense Event (as
defined under "Description of Trust Agreements - Trust Wind-Up
Events"); (iii) other Trust Wind-Up Events; (iv) the occurrence
of an "Illegality" or "Tax Event" as described in Sections
5(b)(i) and 5(b)(ii) of the 1992 Master Agreement. With respect
to each
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of (i), (ii) and (iii), both the Trust and the Swap Counterparty
will be deemed to be "Affected Parties" entitled to terminate the
Swap Agreement or the particular affected Transaction; however,
for purposes of the calculation of any Swap Termination Payment,
the Trust will be deemed the sole Affected Party. The "Tax Event
Upon Merger" and "Credit Event Upon Merger" Termination Event
contained in Section 5(b)(iii) and 5(b)(iv) of the 1992 Master
Agreement will not apply.
Early Termination of Swap Agreements
Unless otherwise specified in the applicable Prospectus
Supplement, upon the occurrence of a Termination Event of the
types referred to in clauses (i), (ii) and (iii) above under "-
Termination Events" or upon the occurrence of any Swap Default
arising from any action taken, or failure to act, by the Swap
Counterparty, the Trustee will by notice to the Swap Counterparty
terminate the Swap Agreement or the particular affected
Transaction thereunder (the date of such termination being an
"Early Termination Date"). With respect to other Termination
Events, the date on which the Swap Agreement will terminate
(also, an "Early Termination Date") must be designated by one of
the parties, as specified in each case in the Swap Agreement, and
will occur only upon notice and, in certain cases, after any
Affected Party (other than a Trust) has (or Affected Parties
have, if applicable) used reasonable efforts to transfer their
rights and obligations under such Swap Agreement to a related
entity within a limited time period after notice has been given
of the Termination Event, all as set forth in such Swap
Agreement. In the event that the Trustee becomes aware that a
Termination Event occurs with respect to which the Swap
Counterparty is the sole Affected Party, the Trustee will under
the terms of the Trust Agreement, designate a Termination Event;
provided, however, that if the Trust would thereby owe the Swap
Counterparty a Swap Termination Payment, it will not designate a
Termination Event. If a Termination Event occurs and, when
applicable, an Early Termination Date is designated, such Swap
Agreement (or the particular affected Transaction) will terminate
and Swap Termination Payments may be payable by the applicable
Trust to the applicable Swap Counterparty or by the applicable
Swap Counterparty to such Trust. The Selling Agent will be
authorized, in the absence of a unanimous decision by the
Unitholders to pay the Swap Termination Payment to sell Debt
Securities in order to fund such payments. See "Description of
Trust Agreements -- Trust Wind Up Events".
In addition to the termination events described above,
unless otherwise provided in the Prospectus Supplement, to the
extent that the aggregate principal amount of the Debt Securities
held by the Trust is reduced through redemption, prepayment or
exchange, the corresponding Swap Amount subject to the Swap
Agreement will be ratably reduced automatically without the Trust
or the Swap Counterparty incurring liability for a termination
payment.
In general, not all events of default under the applicable
Debt Security Agreement will trigger a Debt Security Default for
purposes of the Swap Agreement. Rather, unless otherwise
specified in the applicable Prospectus Supplement, a "Debt
Security Default" shall mean one of the following events: (i) the
acceleration of the outstanding Debt Securities under the terms
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of the Debt Securities and/or the applicable Debt Security
Agreement; (ii) the failure of the applicable Debt Security
Issuer to pay an installment of principal of, or any amount of
interest due on, the related Debt Securities after the due date
thereof specified in such Prospectus Supplement and after the
expiration of any applicable grace period, or (iii) the
occurrence of certain events of default under such Debt
Securities and/or Debt Security Agreement relating to the
insolvency or bankruptcy of the applicable Debt Security Issuer.
Notwithstanding the existence of a grace period with respect to a
Debt Security, the failure of a Debt Security Issuer to make
timely payment of an amount required in order for the Trust to
make a related payment under the Swap Agreement may result in a
default by the Trust under the Swap Agreement prior to the
occurrence of a Debt Security Default.
A "Reporting Event" will occur where a Concentrated Debt
Security relating to a Transaction under the Swap Agreement has
become a Disqualified Security. See "Description of Trust
Agreements -- Trust Wind Up Events".
Swap Termination Payments
If the Swap Agreement is terminated prior to maturity
thereof, the market value of each Transaction under the Swap
Agreement will be established by one or both parties as specified
in the Swap Agreement either (a) on the basis of the market
quotations of the cost of entering into a replacement transaction
or (b) if such market quotations are unavailable or do not
produce a commercially reasonable result, based on losses
suffered by either party as a result of the termination of the
affected Transaction(s), in each case in accordance with the
procedures set forth in detail in the Swap Agreement. The market
value may be positive for the Trust or the termination may result
in a loss to the Trust, in which case a Swap Termination Payment
will be due from the Swap Counterparty to the Trust, or it may be
positive for or result in a loss to the Swap Counterparty, in
which case a Swap Termination Payment will be due to the Swap
Counterparty.
The resulting loss to Unitholders could, if interest rates,
currency rates and/or swap spreads have changed significantly
since the Closing Date, be quite substantial in relation to the
total value of the Debt Securities. The Trust may be required to
sell Debt Securities through the Selling Agent in order to pay
any Swap Termination Payments owed to the Swap Counterparty. In
connection with any Swap Termination Payment payable by the
Trust, the Unitholders may, acting unanimously, deliver to the
Trustee the amount of such outstanding Swap Termination Payment
(and any fees payable to the Trustee from Trust Property) and a
written instruction to discontinue sale of the Debt Securities.
It is possible that Debt Securities may be sold by the Selling
Agent in the time necessary for the Unitholders to be notified of
and act upon their rights under the foregoing provision, in which
case the Trustee will not be obligated to sell the Debt
Securities. The Swap Termination Payments payable by the Trust
will be limited to the assets of the Trust, and Unitholders will
not be liable to the Swap Counterparty for Swap Termination
Payments to the extent, if any, that the amount of such
termination payments exceeds the assets of the Trust. If the Swap
Agreement is terminated, any further distributions in respect of
the Debt Securities would be made pursuant to the Debt Securities
without the benefit of the Swap Agreement.
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Unitholders could also be materially adversely affected if
the Trust is required to sell Debt Securities in order to pay
Swap Termination Payments at a time when prices for the Debt
Securities in the secondary market are depressed as a result of a
default on the Debt Securities or for any other reason. See "Risk
Factors."
If a Swap Agreement is terminated for reasons other than a
Debt Security Default, any Swap Termination Payment payable to
the Swap Counterparty will be limited to a claim against the
Trust Property pro rata with that of the Unitholders.
Guarantees of MSDW; Other Guarantees or Support
In general, unless otherwise specified in the applicable
Prospectus Supplement, the payment obligations of the Swap
Counterparty under the related Swap Agreement will be general,
unsecured obligations of such Swap Counterparty. With respect to
any Swap Agreement in which the Swap Counterparty is MSCS or if
set forth in the Prospectus Supplement, pursuant to the related
Guarantee to be delivered with respect to any such Swap
Agreement, MSDW will unconditionally and irrevocably guarantee
the due and punctual payment of all amounts payable by the Swap
Counterparty under such Swap Agreement. Pursuant to such
Guarantee, MSDW will agree to pay or cause to be paid all such
amounts upon the failure of the Swap Counterparty punctually to
pay any such amount and written demand by the Trustee to MSDW to
pay such amount. With respect to any Swap Agreement in which the
obligations of the Swap Counterparty are not guaranteed by MSDW,
the applicable Prospectus Supplement will describe the material
provisions of any Guarantee or other type of support, if any, of
the obligations of such Swap Counterparty.
MSDW
MSDW is a global financial services corporation organized
under the laws of the State of Delaware. MSDW's principal
executive offices are at 1585 Broadway, New York, New York 10036,
United States of America and its telephone number is (212)
761-4000. The long term debt of MSDW is currently rated "A1" by
Moody's and "A+" by S&P.
At prescribed rates, Unitholders may obtain copies of all
reports, proxy statements and other publicly available
information filed by MSDW with the Commission from the Public
Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, United States of America. Unitholders may
inspect and copy such materials at the Commission's Regional
Offices located at Suite 1400, Citicorp Center, 500 West Madison
Street, Chicago, Illinois 60661 and at Seven World Trade Center,
13th Floor, New York, New York 10048. In addition, the Commission
maintains a website that contains reports, proxy and other
information regarding registrants that file electronically, such
as MSDW. The address of the Commission's website is
http://www.sec.gov.
DESCRIPTION OF UNITS
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The Units of any Series to be offered pursuant to this
Prospectus and the applicable Prospectus Supplement will be
issued pursuant to a Trust Agreement to be entered into between
the Depositor and the Trustee, which agreement will be in the
form filed as an exhibit to the Registration Statement. The terms
of a specific Series of Units will be set forth in the applicable
Prospectus Supplement to the extent they materially differ from
or are in addition to the general description of Units set forth
below. In addition to a general description of such Units, the
description set forth below also summarizes certain general
provisions of the form of Trust Agreement. Certain other general
provisions are summarized in this Prospectus under the caption
"Description of Trust Agreements". The provisions of Trust
Agreements may vary depending upon the terms of the Units to be
issued thereunder and the related Debt Securities and any Swap
Agreement and any Credit Support.
The following summaries do not purport to be complete and,
with respect to an issuance of Units to be offered pursuant to
this Prospectus and a Prospectus Supplement, are subject to the
detailed provisions of the related Trust Agreement and such
Units, to which reference is hereby made for a full description
of such provisions.
General
The Units of a particular Series to be issued under a Trust
Agreement will represent the entire beneficial ownership interest
in the Trust created pursuant to such Trust Agreement. The Units
issued under a Trust Agreement may be limited to a single class,
or, if so specified in the applicable Prospectus Supplement, a
Series of Units may include two or more Classes differing as to
entitlement to distributions of principal, interest or premium,
and one or more Classes may be subordinated in certain respects
to other Classes of such Series.
Reference is made to the applicable Prospectus Supplement
for a description of the following terms of the Series (and, if
applicable, Classes within such Series) of Units in respect of
which this Prospectus and such Prospectus Supplement are being
delivered: (i) the title of such Units; (ii) the Series of such
Units and, if applicable, the number and designation of Classes
of such Series; (iii) certain information concerning the type,
characteristics and specifications of the Trust Property being
deposited into the related Trust by the Depositor (and, with
respect to any Concentrated Debt Security, the identity of the
issuer thereof and where publicly available information regarding
such issuer may be obtained); (iv) the limit, if any, upon the
aggregate principal amount or notional amount, as applicable, of
each Class thereof; (v) the dates on which or periods during
which such Series or Classes within such Series may be issued,
the offering price thereof and the applicable Distribution Dates
on which the principal, if any, of (and premium, if any, on) such
Series or Classes within such Series will be distributable; (vi)
if applicable, the relative rights and priorities of each such
Class (including the method for allocating collections from and
defaults or losses on the Trust Property to the Unitholders of
each such Class); (vii) whether the Units of such Series or each
Class within such Series are Fixed Rate Units or Floating Rate
Units (each as defined below) and the applicable Pass Through
Rate for each such Class including the applicable rate, if fixed,
or the terms relating to the particular method of calculation
thereof applicable to such Series or each Class within such
Series, if variable, the date or dates from which such interest
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<PAGE>
will accrue, the applicable Distribution Dates on which interest,
principal and premium, in each case as applicable, on such Series
or Class will be distributable and the related Record Dates (as
defined in the related Prospectus Supplement), if any; (viii) the
option, if any, of any Unitholder of such Series or Class to
withdraw a portion of the assets of the Trust in exchange for
surrendering such Unitholder's Unit or of the Depositor, or
another third party to purchase or repurchase any Trust Property
(in each case to the extent not inconsistent with the Depositor's
continued satisfaction of the applicable requirements for
exemption under Rule 3a- 7 under the Investment Company Act of
1940 and all applicable rules, regulations and interpretations
thereunder ("Rule 3a-7"), as relevant) and the periods within
which or the dates on which, and the terms and conditions upon
which any such option may be exercised, in whole or in part (see
"--Optional Exchange"); (ix) the rating of each Series or each
Class within such Series offered hereby (provided, however, that
one or more Classes within such Series not offered hereunder may
be unrated or may be rated below investment grade); (x) if other
than denominations of $1,000 and any integral multiple thereof,
the denominations in which such Series or Class within such
Series will be issuable; (xi) whether the Units of any Class
within a given Series are to be entitled to (1) principal
distributions, with disproportionate, nominal or no interest
distributions, or (2) interest distributions, with
disproportionate, nominal or no principal distributions ("Strip
Units") and the applicable terms thereof; (xii) whether the Units
of such Series or of any Class within such Series are to be
issued as Registered Units or Bearer Units or both and, if Bearer
Units are to be issued, whether coupons will be attached thereto;
whether Bearer Units of such Series or Class may be exchanged for
Registered Units of such Series or Class and the circumstances
under which and the place or places at which any such exchanges,
if permitted, may be made; (xiii) whether the Units of such
Series or of any Class within such Series are to be issued in the
form of one or more Global Securities and, if so, the identity of
the Depositary (as defined below), if other than the Depository
Trust Company ("DTC"), for such Global Security or Securities;
(xiv) if a temporary Unit is to be issued with respect to such
Series or any Class within such Series, whether any interest
thereon distributable on a Distribution Date prior to the
issuance of a Definitive Unit of such Series or Class will be
credited to the account of the persons entitled thereto on such
Distribution Date; (xv) if a temporary Global Security is to be
issued with respect to such Series or Class, the terms upon which
beneficial interests in such temporary Global Security may be
exchanged in whole or in part for beneficial interests in a
definitive Global Security or for individual Definitive Units of
such Series or Class and the terms upon which beneficial
interests in a definitive Global Security, if any, may be
exchanged for individual Definitive Units of such Series or
Class; (xvi) if other than U.S. dollars, the Specified Currency
applicable to the Units of such Series or Class for purposes of
denominations and distributions on such Series or each Class
within such Series and the circumstances and conditions, if any,
when such Specified Currency may be changed, at the election of
the Depositor or a Unitholder, and the currency or currencies in
which any principal of or any premium or any interest on such
Series or Class are to be distributed pursuant to such election;
(xvii) all applicable Required Percentages and Voting Rights
(each as defined below) relating to the manner and percentage of
votes of Unitholders of such Series and each Class within such
Series required with respect to certain actions by the Depositor,
if any, or Trustee under the Trust Agreement or with respect to
the applicable Trust; and
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<PAGE>
(xviii) any other terms of such Series or Class within such
Series of Units not inconsistent with the provisions of the Trust
Agreement relating to such Series.
Unless otherwise indicated in the applicable Prospectus
Supplement, Units of each Series (including any Class of Units
not offered hereby) will be issued only as Registered Units in
denominations of $1,000 and any integral multiple thereof and
will be payable only in U.S. dollars. The authorized
denominations of Registered Units of a given Series or Class
within such Series having a Specified Currency other than U.S.
dollars will be set forth in the applicable Prospectus
Supplement. Unless otherwise specified in the applicable
Prospectus Supplement and if the purchaser of such Units has
elected to pay in U.S. dollars, the U.S. dollar equivalent of the
purchase price of Units having a Specified Principal Currency
other than U.S. dollars may be determined by the Exchange Rate
Agent in its sole discretion.
Unless otherwise provided in the applicable Prospectus
Supplement, Units may be transferred or exchanged for a like face
amount of Units at the corporate trust office or agency of the
Trustee in the City and State of New York, subject to the
limitations provided in the applicable Trust Agreement, without
the payment of any service charge, other than any tax or
governmental charge payable in connection therewith.
Bearer Units will be transferable by delivery. Provisions
with respect to the exchange of Bearer Units will be described in
the applicable Prospectus Supplement. Unless otherwise specified
in the applicable Prospectus Supplement, Registered Units may not
be exchanged for Bearer Units.
Morgan Stanley or an affiliate may at any time purchase
Units at any price in the open market or otherwise. Any Units so
purchased by Morgan Stanley or such affiliate may, at the
discretion of Morgan Stanley, be held or resold.
Distributions
In general, distributions allocable to principal, premium
(if any) and interest on any Units will be made in the Specified
Currency for such Units by or on behalf of the Trustee on each
Distribution Date as specified in the related Prospectus
Supplement. If the Specified Currency for Units is other than
U.S. dollars, the Exchange Rate Agent may, at its discretion and
upon request by the Unitholder in the manner set forth in the
Prospectus Supplement, arrange to convert all payments in respect
of any such Unit into U.S. dollars as described in the following
paragraph.
Unless otherwise specified in the applicable Prospectus
Supplement, in the case of a Unit having a Specified Currency
other than U.S. dollars, the amount of any U.S. dollar
distribution in respect of such Unit will be determined by the
Exchange Rate Agent in its sole discretion; provided, that the
Exchange Rate Agent is not required to provide any such exchange
rate. All currency exchange costs will be borne by the holders of
such Units by deductions from such distributions. If no such bid
quotations are available or if the Exchange Rate Agent elects not
to provide any such quotations at any time in its sole
discretion, such
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<PAGE>
distributions will be made in such Specified Currency, except in
the circumstances described under "Currency Risks".
Unless otherwise provided in the applicable Prospectus
Supplement and except as provided in the succeeding paragraph,
distributions with respect to Registered Units of any Series will
be made at the corporate trust office or agency of the Trustee in
The City of New York. U.S. dollar distributions on Registered
Units will be made by wire transfer of immediately available
funds to the holder of record on the relevant Record Date (as
specified in the applicable Prospectus Supplement) for such
distribution, but only if appropriate wire transfer instructions
have been received in writing by the Trustee for such Units not
later than 15 calendar days prior to the applicable Distribution
Date. However, in the case of Registered Units issued between a
Record Date and the related Distribution Date, interest for the
period beginning on the issue date for such Units and ending on
the last day of the interest accrual period immediately prior to
such Distribution Date will, unless otherwise specified in the
Prospectus Supplement, be distributed on the next succeeding
Distribution Date to the holders of the Registered Units on the
related Record Date. Simultaneously with the election by any
Unitholder to receive payments in a Specified Currency other than
U.S. dollars (as provided above), such Unitholder shall provide
appropriate wire transfer instructions to the Trustee for such
Registered Units, and all such payments will be made by wire
transfer of immediately available funds to an account maintained
by the payee with a bank located outside the United States.
Unless otherwise indicated in the Pricing Supplement,
subject to the provisions described under "Limitations on
Issuance of Bearer Units," and to applicable laws and
regulations, payments in respect of interest or principal or
premium on Bearer Units will be payable only upon surrender of
applicable coupons, if any, or Units, respectively, and at such
offices or agencies outside the United States as the Trustee may
from time to time designate.
Unless otherwise specified in the applicable Prospectus
Supplement, "Business Day" with respect to any Unit means any
day, other than a Saturday or Sunday, that is (i) not a day on
which banking institutions are authorized or required by law or
regulation to be closed in (a) The City of New York and in the
city where the corporate trust office of the Trustee is located
or (b) if the Specified Currency for such Unit is other than U.S.
Dollars, the financial center of the country issuing such
currency and (ii) if the Pass Through Rate for such Unit is based
on LIBOR, a London Banking Day. "London Banking Day" with respect
to any Unit means any day on which dealings in deposits in the
Specified Currency of such Unit are transacted in the London
interbank market.
Interest on Units
General. Each Class of Units (other than certain Classes of
Strip Units) of a given Series may have a different Pass Through
Rate as described below. In the case of Strip Units with no or,
in certain cases, a nominal Unit Principal Balance, distributions
of interest will be in an amount described in the related
Prospectus Supplement. For purposes hereof, "Notional
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<PAGE>
Amount" means the notional principal amount specified in the
applicable Prospectus Supplement on which interest on Strip Units
with no or, in certain cases, a nominal Unit Principal Balance
will be made on each Distribution Date. Reference to the Notional
Amount of a Class of Strip Units herein or in a Prospectus
Supplement does not indicate that such Units represent the right
to receive any distribution in respect of principal in such
amount, but rather the term "Notional Amount" is used solely as a
basis for calculating the amount of required distributions and
determining certain relative voting rights, all as specified in
the related Prospectus Supplement.
Fixed Rate Units. Each Unit having a fixed Pass Through
Rate (a "Fixed Rate Unit") will bear interest, on the outstanding
Unit Principal Balance (or Notional Amount, if applicable) (as
described below under "Principal of Units - General") thereof,
from its original issue date, or from the last Distribution Date
to which interest has been paid, at the fixed Pass Through Rate
stated on the face thereof and in the applicable Prospectus
Supplement until the principal amount thereof is distributed or
made available for payment, (or in the case of Fixed Rate Units
with no or a nominal principal amount, until the Notional Amount
thereof is reduced to zero), except that, if so provided under
the terms of a related Swap Agreement or the terms of the Debt
Securities, the Pass Through Rate for such Series or any such
Class or Classes may be subject to adjustment from time to time
in response to designated changes in the rating assigned to such
Units by one or more rating agencies, in accordance with a
schedule or otherwise, all as described in such Prospectus
Supplement. Unless otherwise specified in the applicable
Prospectus Supplement, interest will be distributable in arrears
on each Distribution Date with respect to such Fixed Rate Units.
Floating Rate Units. As specified in the applicable
Prospectus Supplement, each Unit having a variable Pass Through
Rate (a "Floating Rate Unit") will bear interest, on the
outstanding Unit Principal Balance (or Notional Amount, if
applicable) thereof from its original issue date to the first
Interest Reset Date (as defined below) at the initial Pass
Through Rate set forth in the applicable Prospectus Supplement.
Thereafter, the Pass Through Rate on such Series or Class for
each Interest Reset Period (as defined below) will be determined
by reference to an interest rate basis (the "Base Rate"), plus or
minus the Spread, if any, or multiplied by the Spread Multiplier,
if any. The "Spread" is the number of basis points (one basis
point equals one one-hundredth of a percentage point) that may be
specified in the applicable Prospectus Supplement as being
applicable to such Series or Class, and the "Spread Multiplier"
is the percentage that may be specified in the applicable
Prospectus Supplement as being applicable to such Series or
Class, except that if so provided under the terms of a related
Swap Agreement or the terms of the Debt Securities, the Spread or
Spread Multiplier on such Series or any such Class or Classes of
Floating Rate Units may be subject to adjustment from time to
time in response to designated changes in the rating assigned to
such Units by one or more rating agencies, in accordance with a
schedule or otherwise, all as described in such Prospectus
Supplement. The applicable Prospectus Supplement may designate
one or more of the following Base Rates as a reference for the
calculation of payments under the related Swap Agreement, which
will determine the interest rate to be payable on the Floating
Rate Units: (i) LIBOR (a "LIBOR Unit"); (ii) the Commercial Paper
Rate (a "Commercial Paper Rate Unit");
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<PAGE>
(iii) the Treasury Rate (a "Treasury Rate Unit"); (iv) the
Federal Funds Rate (a "Federal Funds Rate Unit"); (v) the CD Rate
(a "CD Rate Unit"); or (vi) such other Base Rate (which may be
based on, among other things, one or more market indices or the
interest and/or other payments (whether scheduled or otherwise)
made with respect to a designated asset or pool of assets) as is
set forth in such Prospectus Supplement and in such Floating Rate
Unit. The "Index Maturity" for any Floating Rate Unit is the
period of maturity of the instrument or obligation from which the
Base Rate is calculated. "H. 15(519)" means the publication
entitled "Statistical Release H.15(519), Selected Interest
Rates", or any successor publication, published by the Board of
Governors of the Federal Reserve System. "Composite Quotations"
means the daily statistical release entitled "Composite 3:30 p.m.
Quotations for U.S. Government Securities" published by the
Federal Reserve Bank of New York.
If specified in the applicable Prospectus Supplement, a
Series of Floating Rate Units may also have either or both of the
following (in each case expressed as a rate per annum on a simple
interest basis): (i) a maximum limitation, or ceiling, on the
rate at which interest may accrue during any interest accrual
period specified in the applicable Prospectus Supplement (a
"Maximum Pass Through Rate") and (ii) a minimum limitation, or
floor, on the rate at which interest may accrue during any such
interest accrual period (a "Minimum Pass Through Rate"). In
addition to any Maximum Pass Through Rate that may be applicable
to any Floating Rate Units, the Pass Through Rate applicable to
any Floating Rate Units will in no event be higher than the
maximum rate permitted by applicable law, as the same may be
modified by United States law of general application.
Unless otherwise specified in the Prospectus Supplement,
the Pass Through Rate applicable to the Units will be the
equivalent floating rate applicable to payments received by the
Trust under any related Swap Agreement (as determined by the Swap
Calculation Agent) or under the Debt Securities. If the
Prospectus Supplement specifies a Calculation Agent, the
Calculation Agent shall calculate the Pass Through Rate
applicable to the Units from time to time as specified in the
Prospectus Supplement. All determinations of interest by the
Calculation Agent shall, in the absence of manifest error, be
conclusive for all purposes and binding on the holders of
Floating Rate Units.
Unless otherwise specified in the applicable Prospectus
Supplement, the Pass Through Rate on each Series of Floating Rate
Units will be reset daily, weekly, monthly, quarterly,
semiannually or annually (such period being the "Interest Reset
Period" for such issuance, and the first day of each Interest
Reset Period being an "Interest Reset Date"), as specified in the
applicable Prospectus Supplement. The Interest Reset Dates with
respect to a given Series of Floating Rate Units will be
specified in the applicable Prospectus Supplement. However,
unless otherwise specified in such Prospectus Supplement, the
Pass Through Rate in effect for the ten days immediately prior to
the scheduled final Distribution Date will be that in effect on
the tenth day preceding such scheduled final Distribution Date.
If an Interest Reset Date for any Floating Rate Units would
otherwise be a day that is not a Business Day, such Interest
Reset Date will occur on a prior or succeeding Business Day
specified in the applicable Prospectus Supplement.
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<PAGE>
Unless otherwise specified in the applicable Prospectus
Supplement, interest payable in respect of Floating Rate Units
shall be the accrued interest from and including the original
issue date thereof or the last Interest Reset Date to which
interest has accrued and been distributed, as the case may be, to
but excluding the immediately following Interest Reset Date.
With respect to a Floating Rate Unit, accrued interest
shall be calculated by multiplying its Unit Principal Balance (or
Notional Amount, if applicable) by the accrued interest factor of
such Floating Rate Unit. Such accrued interest factor will be
computed by adding the interest factors calculated for each day,
in the period for which accrued interest is being calculated.
Unless otherwise specified in the applicable Prospectus
Supplement, the interest factor (expressed as a decimal
calculated to seven decimal places without rounding) for each
such day is computed by dividing the Pass Through Rate in effect
on such day by 360, in the case of LIBOR Units, Commercial Paper
Rate Units, Federal Funds Rate Units and CD Rate Units or by the
actual number of days in the year, in the case of Treasury Rate
Units. For purposes of making the foregoing calculation, the Pass
Through Rate in effect on any Interest Reset Date will be the
applicable rate as reset on such date.
Unless otherwise specified in the applicable Prospectus
Supplement, all percentages resulting from any calculation of the
Pass Through Rate on a Floating Rate Unit will be rounded, if
necessary, to the nearest 1/100,000 of 1% (.0000001), with five
one-millionths of a percentage point rounded upward, and all
currency amounts used in or resulting from such calculation on
Floating Rate Units will be rounded to the nearest one-hundredth
of a unit (with .005 of a unit being rounded upward).
Interest on any Series of Floating Rate Units will be
distributable on the Distribution Dates and for the interest
accrual periods as and to the extent set forth in the applicable
Prospectus Supplement.
LIBOR Units. Each LIBOR Unit will bear interest for each
Interest Reset Period at a Pass Through Rate calculated with
reference to LIBOR, as specified in such Unit and in the
applicable Prospectus Supplement.
With respect to LIBOR indexed to the offered rates for U.S.
dollar deposits, "LIBOR" for each Interest Reset Period will be
determined by the Calculation Agent for any LIBOR Unit as
follows:
(i) On the second London Banking Day prior to the
Interest Reset Date for such Interest Reset Period (a
"LIBOR Determination Date"), the Calculation Agent for such
LIBOR Unit will determine (a) if "Reuters" is specified in
the applicable Prospectus Supplement, the arithmetic mean
of the offered rates for deposits in U.S. dollars for the
period of the Index Maturity which appear on the Reuters
Screen LIBO Page at approximately 11:00 a.m., London time,
on such LIBOR Determination Date if at least two such
offered rates appear on the Reuters Screen LIBO Page
("LIBOR Reuters"), or
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<PAGE>
(b) if "Telerate" is specified in the applicable Prospectus
Supplement, the rate for deposits in U.S. dollars for the
period of the Index Maturity that appears on the Telerate
Page 3750 at approximately 11:00 a.m., London time, on such
LIBOR Determination Date ("LIBOR Telerate"). "Reuters
Screen LIBO Page" means the display designated as Page
"LIBO" on the Reuters Monitor Money Rates Service (or such
other page as may replace the LIBO page on that service for
the purpose of displaying London interbank offered rates of
major banks). "Telerate Page 3750" means the display
designated as page "3750" on the Telerate Service (or such
other page as may replace the 3750 page on that service or
such other service or services as may be nominated by the
British Bankers' Association for the purpose of displaying
London interbank offered rates for U.S. dollar deposits).
If neither LIBOR Reuters nor LIBOR Telerate is specified in
the applicable Prospectus Supplement, LIBOR will be
determined as if LIBOR Telerate had been specified. If
fewer than two offered rates appear on the Reuters Screen
LIBO Page, or if no rate appears on the Telerate Page 3750,
as applicable, LIBOR in respect of that LIBOR Determination
Date will be determined as described in (ii) below.
(ii) If fewer than two offered rates appear on the
Reuters Screen LIBO Page on such LIBOR Determination Date
or no rate appears on Telerate Page 3750, the Calculation
Agent for such LIBOR Unit will request the principal London
offices of each of four major banks in the London interbank
market selected by such Calculation Agent to provide such
Calculation Agent with its offered quotations for deposits
in U.S. dollars for the period of the specified Index
Maturity, commencing on such Interest Reset Date, to prime
banks in the London interbank market at approximately 11:00
a.m., London time, on such LIBOR Determination Date and in
a principal amount equal to an amount of not less than $1
million that is representative of a single transaction in
such market at such time. If at least two such quotations
are provided, "LIBOR" for such Interest Reset Period will
be the arithmetic mean of such quotations. If fewer than
two such quotations are provided, "LIBOR" for such Interest
Reset Period will be the arithmetic mean of rates quoted by
three major banks in The City of New York selected by the
Calculation Agent for such LIBOR Unit at approximately
11:00 a.m., New York City time, on such LIBOR Determination
Date for loans in U.S. dollars to leading European banks,
for the period of the specified Index Maturity, commencing
on such Interest Reset Date, and in a principal amount
equal to an amount of not less than $1 million that is
representative of a single transaction in such market at
such time; provided, however, that if fewer than three
banks selected as aforesaid by such Calculation Agent are
quoting rates as mentioned in this sentence, "LIBOR" for
such Interest Reset Period will be the same as LIBOR for
the immediately preceding Interest Reset Period (or, if
there was no such Interest Reset Period, the Initial Pass
Through Rate).
If LIBOR with respect to any LIBOR Unit is indexed to the
offered rates for deposits in a currency other than U.S. dollars,
the applicable Prospectus Supplement will set forth the method
for determining such rate.
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<PAGE>
Commercial Paper Rate Units. Each Commercial Paper Rate
Unit will bear interest for each Interest Reset Period at a Pass
Through Rate calculated with reference to the Commercial Paper
Rate (subject to any Maximum or Minimum Pass Through Rate, if
any), as specified in such Unit and in the applicable Prospectus
Supplement.
Unless otherwise specified in the applicable Prospectus
Supplement, the "Commercial Paper Rate" for each Interest Reset
Period will be determined by the Calculation Agent for such
Commercial Paper Rate Unit as of the second Business Day prior to
the Interest Reset Date for such Interest Reset Period (a
"Commercial Paper Rate Determination Date") and shall be the
Money Market Yield (as defined below) on such Commercial Paper
Rate Determination Date of the rate for commercial paper having
the Index Maturity specified in the applicable Prospectus
Supplement, as such rate shall be published in H.15(519) under
the heading "Commercial Paper". In the event that such rate is
not published prior to 9:00 a.m., New York City time, on the
Calculation Date (as defined below) pertaining to such Commercial
Paper Rate Determination Date, then the "Commercial Paper Rate"
for such Interest Reset Period shall be the Money Market Yield on
such Commercial Paper Rate Determination Date of the rate for
commercial paper of the specified Index Maturity as published in
Composite Quotations under the heading "Commercial Paper". If by
3:00 p.m., New York City time, on such Calculation Date such rate
is not yet published in either H.15(519) or Composite Quotations,
then the "Commercial Paper Rate" for such Interest Reset Period
shall be the Money Market Yield of the arithmetic mean of the
offered rates, as of 11:00 a.m., New York City time, on such
Commercial Paper Rate Determination Date of three leading dealers
of commercial paper in The City of New York selected by the
Calculation Agent for such Commercial Paper Rate Unit for
commercial paper of the specified Index Maturity placed for an
industrial issuer whose bonds are rated "AA" or the equivalent by
a nationally recognized rating agency; provided, however, that if
the dealers selected as aforesaid by such Calculation Agent are
not quoting offered rates as mentioned in this sentence, the
"Commercial Paper Rate" for such Interest Reset Period will be
the same as the Commercial Paper Rate for the immediately
preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the Initial Pass Through Rate).
"Money Market Yield" shall be a yield calculated in
accordance with the following formula:
Money Market Yield D X 360 X 100
-------------
360 - (D X M)
where "D" refers to the applicable per annum rate for commercial
paper quoted on a bank discount basis and expressed as a decimal,
and "M" refers to the actual number of days in the specified
Index Maturity.
The "Calculation Date" pertaining to any Commercial Paper
Rate Determination Date shall be the first to occur of (a) the
tenth calendar day after such Commercial Paper Rate Determination
Date or, if such day is not a Business Day, the next succeeding
Business Day or
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(b) the second Business Day preceding the date any distribution
of interest is required to be made following the applicable
interest Reset Date.
Treasury Rate Units. Each Treasury Rate Unit will bear
interest for each Interest Reset Period at a Pass Through Rate
calculated with reference to the Treasury Rate (subject to any
Maximum or Minimum Pass Through Rate, if any), as specified in
such Unit and in the applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus
Supplement, the "Treasury Rate" for each Interest Reset Period
will be the rate for the auction held on the Treasury Rate
Determination Date (as defined below) for such Interest Reset
Period of direct obligations of the United States ("Treasury
bills") having the Index Maturity specified in the applicable
Prospectus Supplement, as such rate shall be published in
H.15(519) under the heading "U.S. Government Units-Treasury
bills-auction average (investment)" or, in the event that such
rate is not published prior to 9:00 a.m., New York City time, on
the Calculation Date (as defined below) pertaining to such
Treasury Rate Determination Date, the auction average rate
(expressed as a bond equivalent on the basis of a year of 365 or
366 days, as applicable, and applied on a daily basis) on such
Treasury Rate Determination Date as otherwise announced by the
United States Department of the Treasury. In the event that the
results of the auction of Treasury bills having the specified
Index Maturity are not published or reported as provided above by
3:00 p.m., New York City time, on such Calculation Date, or if no
such auction is held on such Treasury Rate Determination Date,
then the "Treasury Rate" for such Interest Reset Period shall be
calculated by the Calculation Agent for such Treasury Rate Unit
and shall be a yield to maturity (expressed as a bond equivalent
on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) of the arithmetic mean of the secondary
market bid rates, as of approximately 3:30 p.m., New York City
time, on such Treasury Rate Determination Date, of three leading
primary United States government securities dealers selected by
such Calculation Agent for the issue of Treasury bills with a
remaining maturity closest to the specified Index Maturity;
provided, however, that if the dealers selected as aforesaid by
such Calculation Agent are not quoting bid rates as mentioned in
this sentence, then the "Treasury Rate" for such Interest Reset
Period will be the same as the Treasury Rate for the immediately
preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the Initial Pass Through Rate).
The "Treasury Rate Determination Date" for each Interest
Reset Period will be the day of the week in which the Interest
Reset Date for such Interest Reset Period falls on which Treasury
bills would normally be auctioned. Treasury bills are normally
sold at auction on Monday of each week, unless that day is a
legal holiday, in which case the auction is normally held on the
following Tuesday, except that such auction may be held on the
preceding Friday. If, as the result of a legal holiday, an
auction is so held on the preceding Friday, such Friday will be
the Treasury Rate Determination Date pertaining to the Interest
Reset Period commencing in the next succeeding week. Unless
otherwise specified in the applicable Series Prospectus
Supplement, if an auction date shall fall on any day that would
otherwise be an
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Interest Reset Date for a Treasury Rate Unit, then such Interest
Reset Date shall instead be the Business Day immediately
following such auction date.
The "Calculation Date" pertaining to any Treasury Rate
Determination Date shall be the first to occur of (a) the tenth
calendar day after such Treasury Rate Determination Date or, if
such a day is not a Business Day, the next succeeding Business
Day or (b) the second Business Day preceding the date any
distribution of interest is required to be made following the
applicable Interest Reset Date.
Federal Funds Rate Units. Each Federal Funds Rate Unit will
bear interest for each Interest Reset Period at a Pass Through
Rate calculated with reference to the Federal Funds Rate (subject
to any Maximum or Minimum Pass Through Rate, if any), as
specified in such Unit and in the applicable Prospectus
Supplement.
Unless otherwise specified in the applicable Prospectus
Supplement, the "Federal Funds Rate" for each Interest Reset
Period shall be the effective rate on the Interest Reset Date for
such Interest Reset Period (a "Federal Funds Rate Determination
Date") for Federal Funds as published in H.15(519) under the
heading "Federal Funds (Effective)". In the event that such rate
is not published prior to 9:00 a.m., New York City time, on the
Calculation Date (as defined below) pertaining to such Federal
Funds Rate Determination Date, the "Federal Funds Rate" for such
Interest Reset Period shall be the rate on such Federal Funds
Rate Determination Date as published in Composite Quotations
under the heading "Federal Funds/Effective Rate". If by 3:00
p.m., New York City time, on such Calculation Date such rate is
not yet published in either H.15(519) or Composite Quotations,
then the "Federal Funds Rate" for such Interest Reset Period
shall be the rate on such Federal Funds Rate Determination Date
made publicly available by the Federal Reserve Bank of New York
which is equivalent to the rate which appears in H.15(519) under
the heading "Federal Funds (Effective)"; provided, however, that
if such rate is not made publicly available by the Federal
Reserve Bank of New York by 3:00 p.m., New York City time, on
such Calculation Date, the "Federal Funds Rate" for such Interest
Reset Period will be the same as the Federal Funds Rate in effect
for the immediately preceding Interest Reset Period (or, if there
was no such Interest Reset Period, the initial Pass Through
Rate). Unless otherwise specified in the applicable Prospectus
Supplement, in the case of a Federal Funds Rate Unit that resets
daily, the Pass Through Rate on such Unit for the period from and
including a Monday to but excluding the succeeding Monday will be
reset by the Calculation Agent for such Unit on such second
Monday (or, if not a Business Day, on the next succeeding
Business Day) to a rate equal to the average of the Federal Funds
Rates in effect with respect to each such day in such week.
The "Calculation Date" pertaining to any Federal Funds Rate
Determination Date shall be the next succeeding Business Day.
CD Rate Units. Each CD Rate Unit will bear interest for
each Interest Reset Period at a Pass Through Rate calculated with
reference to the CD Rate (subject to any Maximum or
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Minimum Pass Through Rate, if any), as specified in such Unit and
in the applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus
Supplement, the "CD Rate" for each Interest Reset Period shall be
the rate as of the second Business Day prior to the Interest
Reset Date for such Interest Reset Period (a "CD Rate
Determination Date") for negotiable certificates of deposit
having the Index Maturity designated in the applicable Prospectus
Supplement as published in H.15(519) under the heading "CDs
(Secondary Market)". In the event that such rate is not published
prior to 9:00 a.m., New York City time, on the Calculation Date
(as defined below) pertaining to such CD Rate Determination Date,
then the "CD Rate" for such Interest Reset Period will be the
rate on such CD Rate Determination Date for negotiable
certificates of deposit of the Index Maturity designated in the
applicable Prospectus Supplement as published in Composite
Quotations under the heading "Certificates of Deposit". If by
3:00 p.m., New York City time, on such Calculation Date such rate
is not yet published in either H.15(519) or Composite Quotations,
then the "CD Rate" for such Interest Reset Period will be
calculated by the Calculation Agent for such CD Rate Unit and
will be the arithmetic mean of the secondary market offered rates
as of 10:00 a.m., New York City time, on such CD Rate
Determination Date, of three leading nonbank dealers in
negotiable U.S. dollar certificates of deposit in The City of New
York selected by the Calculation Agent for such CD Rate Unit for
negotiable certificates of deposit of major United States money
center banks of the highest credit standing (in the market for
negotiable certificates of deposit) with a remaining maturity
closest to the Index Maturity designated in the related
Prospectus Supplement in a denomination specified in the related
Prospectus Supplement which shall in no event be less than
$100,000; provided, however, that if the dealers selected as
aforesaid by such Calculation Agent are not quoting offered rates
as mentioned in this sentence, the "CD Rate" for such Interest
Reset Period will be the same as the CD Rate for the immediately
preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the initial Pass Through Rate).
The "Calculation Date" pertaining to any CD Rate
Determination Date shall be the first to occur of (a) the tenth
calendar day after such CD Rate Determination Date or, if such
day is not a Business Day, the next succeeding Business Day or
(b) the second Business Day preceding the date any distribution
of interest is required to be made following the Applicable
Interest Reset Date.
Principal of Units
General. Unless the applicable Prospectus Supplement
provides otherwise, each Unit will have a "Unit Principal
Balance" which, at any time, will equal the maximum amount that
the holder thereof will be entitled to receive in respect of
principal from the related Debt Securities, subject to any
requirement that distributions of principal on Index-Linked Units
be determined in accordance with the terms of the related Swap
Agreement.
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The outstanding Unit Principal Balance of a Unit will be
reduced to the extent of distributions of principal thereon, and,
if applicable pursuant to the terms of the related Series, by the
amount of any net losses realized on the Trust Property allocated
thereto. Unless the related Prospectus Supplement provides
otherwise, the initial aggregate Unit Principal Balance of all
Classes of Units of a Series will equal the outstanding aggregate
principal balance of the related Trust Property as of the
applicable Cut-off Date. The initial aggregate Unit Principal
Balance of a Series and each Class thereof will be specified in
the related Prospectus Supplement. Distributions of principal of
any Class of Units will be made on a pro rata basis among all the
Units of such Class. Strip Units with no Unit Principal Balance
will not receive distributions of principal.
Index-Linked Units. From time to time, the Trust may offer
a Series of Units ("Index-Linked Units"), the principal amount
payable at the stated maturity date of which (the "Indexed
Principal Amount") and/or interest amounts with respect to which
are determined by reference to (i) the rate of exchange between
the specified currency for such Unit and the other currency (the
"Indexed Currency") specified therein; (ii) the difference in the
price of a specified commodity (the "Indexed Commodity") on
specified dates; (iii) the difference in the level of a specified
stock index (the "Stock Index"), which may be based on U.S. or
foreign stocks, on specified dates; or (iv) such other objective
price or economic measure as are described in the related
Prospectus Supplement. The manner of determining the Indexed
Principal Amount of a Index-Linked Unit, and historical and other
information concerning the Indexed Currency, Indexed Commodity,
Stock Index or other price or economic measure used in such
determination, will generally be set forth under a related Swap
Agreement and will be specified in the related Prospectus
Supplement. Index-Linked Units will be issued only to the extent
consistent with qualification of the Trust under Rule 3a-7, as
applicable.
Except as otherwise specified in the related Prospectus
Supplement, interest on a Index-Linked Unit will be payable based
on the amount designated in the related Prospectus
Supplement as the "Face Amount" of such Index-Linked Unit. The
related Prospectus Supplement will describe whether the principal
amount of the related Index-Linked Unit that would be payable
upon redemption or repayment prior to the stated maturity date
will be the Face Amount of such Index-Linked Unit, the Indexed
Principal Amount of such Index-Linked Unit at the time of
redemption or repayment, or another amount described in such
Prospectus Supplement.
Foreign Currency Units
If the specified currency of any Unit is not U.S. dollars
(a "Foreign Currency Unit"), certain provisions with respect
thereto will be set forth in the related Prospectus Supplement
which will specify the denominations, the currency or currencies
in which the principal and interest with respect to such Unit are
to be paid and any other terms and conditions relating to the
non-U.S. dollar denominations or otherwise applicable to the
Units.
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Dual Currency Units
Units may be issued as dual currency units ("Dual Currency
Units"), in which case payments of principal and/or interest in
respect of Dual Currency Units will be made in such currencies.
The exchange rates will be calculated upon such bases, as
indicated in the Units and described in the related Prospectus
Supplement. Other material terms and conditions relating to Dual
Currency Units will be set forth in the Units and the related
Prospectus Supplement.
Call Rights
If one or more specified persons has the right to purchase
all or a portion of the Units of any given Series, the applicable
Prospectus Supplement will designate such Series as a "Callable
Series". The terms upon which any such specified person or entity
may exercise its right to purchase all or a portion of the Units
of a Series will be specified in the related Prospectus
Supplement. Such terms may relate to, but are not limited to, the
following:
(a) a minimum Unit Principal Balance with respect to
each Unit being purchased;
(b) a requirement that the Unit Principal Balance of
each Unit being purchased be an integral multiple of an
amount specified in the Prospectus Supplement;
(c) specified dates during which such a purchase may
be effected (each, a "Call Date"); and
(d) the price at which such a purchase may be effected
(the "Call Price").
After receiving notice of the exercise of such a call
right, the Trustee will provide notice thereof as specified in
the applicable Prospectus Supplement. Upon the satisfaction of
any applicable conditions to the exercise of such right to
purchase of the Units described in such Prospectus Supplement,
each Unitholder of a Unit that has been called will be entitled
to receive a distribution of a pro rata share of the Call Price
paid in connection with such exercise, in the manner and to the
extent described in such Prospectus Supplement.
Optional Exchange
If a holder may exchange Units of any given Series for a
pro rata portion of the Trust Property, an "Exchangeable Series,"
the terms upon which a holder may exchange Units of any
Exchangeable Series for a pro rata portion of the Trust Property
of the related Trust will be specified in the related Prospectus
Supplement and/or the related Trust Agreement; provided that any
right of exchange shall be exercisable only to the extent that
such exchange would not be inconsistent with the Depositor's and
such Trust's continued satisfaction of the applicable
requirements for exemption under Rule 3a-7, as applicable. Such
terms may relate to, but are not limited to, the following:
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(i) a requirement that the exchanging holder tender to
the Trustee Units of each Class within such Exchangeable
Series;
(ii) a minimum Unit Principal Balance or Notional
Amount, as applicable, with respect to each Unit being
tendered for exchange;
(iii) a requirement that the Unit Principal Balance or
Notional Amount, as applicable, of each Unit tendered for
exchange be an integral multiple of an amount specified in
the Prospectus Supplement;
(iv) specified dates during which a holder may effect
such an exchange (each, an "Optional Exchange Date");
(v) limitations on the right of an exchanging holder
to receive any benefit upon exchange from any Credit
Support or other non-Debt Securities deposited in the
applicable Trust;
(vi) adjustments to the value of the proceeds of any
exchange based upon the required prepayment of future
expense allocations and the establishment of a reserve for
any anticipated Extraordinary Trust Expenses as set forth
in the applicable Prospectus Supplement; and
(vii) a requirement that the exchanging holder obtain
the consent of any Swap Counterparty to such exchange and
tender to the Swap Counterparty a termination payment in
respect of termination of any portion of the Swap Agreement
corresponding to the portion of the Debt Securities to be
distributed by the Trustee.
Unless otherwise specified in the related Prospectus
Supplement, in order for a Unit of a given Exchangeable Series
(or Class within such Exchangeable Series) to be exchanged by the
applicable Unitholder, the Trustee for such Unit must receive, at
least 30 (or such shorter period acceptable to the Trustee) but
not more than 45 days prior to an Optional Exchange Date (i) such
Unit with the form entitled "Option to Elect Exchange" on the
reverse thereof duly completed or (ii) in the case of Registered
Units, a telegram, telex, facsimile transmission or letter from a
member of a national securities exchange or the National
Association of Securities Dealers, Inc., the Depositary (in
accordance with its normal procedures) or a commercial bank or
trust company in the United States setting forth the name of the
holder of such Registered Unit, the Unit Principal Balance or
Notional Amount of such Registered Unit to be exchanged, the
certificate number or a description of the tenor and terms of
such Registration Unit, a statement that the option to elect
exchange is being exercised thereby and a guarantee that the
Registered Unit to be exchanged with the form entitled "Option to
Elect Exchange" on the reverse of the Registered Unit duly
completed will be received by such Trustee not later than five
Business Days after the date of such telegram, telex, facsimile
transmission or letter. If the procedure described in clause (ii)
of the preceding sentence is followed, then such Registered Unit
and form duly completed must be received by such
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Trustee by such fifth Business Day. Any tender of a Unit by the
holder for exchange shall be irrevocable. The exchange option may
be exercised by the holder of a Unit for less than the entire
Unit Principal Balance of such Unit provided that the Unit
Principal Balance or Notional Amount, as applicable, of such Unit
remaining outstanding after redemption is an authorized
denomination and all other exchange requirements set forth in the
related Prospectus Supplement are satisfied. Upon such partial
exchange, such Unit shall be canceled and a new Unit or Units for
the remaining Unit Principal Balance thereof shall be issued
(which, in the case of any Registered Unit, shall be in the name
of the holder of such exchanged Unit).
Unless otherwise provided in the applicable Prospectus
Supplement, upon the satisfaction of the foregoing conditions and
any applicable conditions with respect to the related Trust
Property, as described in such Prospectus Supplement, the
applicable Unitholder will be entitled to receive a distribution
of a pro rata share of the Trust Property related to the
Exchangeable Series (and Class within such Exchangeable Series)
of the Unit being exchanged, in the manner and to the extent
described in such Prospectus Supplement. Alternatively, to the
extent so specified in the applicable Prospectus Supplement, the
applicable Unitholder, upon satisfaction of such conditions, may
direct the related Trustee to sell, on behalf of such Unitholder,
such pro rata share of the Trust Property, in which event the
Unitholder shall be entitled to receive the net proceeds of such
sale, less any costs and expenses incurred by such Trustee in
facilitating such sale, subject to any additional adjustments set
forth in the Prospectus Supplement.
Ratings of Units
At the time of issue, the Units of any given Series (or
each Class of such Series that is offered hereby) will be rated
in one of the investment grade categories recognized by one or
more nationally recognized rating agencies (a "Rating Agency").
Unless otherwise specified in the applicable Prospectus
Supplement, the rating of any Series or Class of Units is based
primarily on the related Trust Property and the relative
priorities of the Unitholders of such Series or Class to receive
collections from, and to assert claims against, the Trust with
respect to such Trust Property. There can be no assurance that
the rating will remain for any given period of time or that the
rating will not be lowered or withdrawn entirely by the Rating
Agency if in its judgment circumstances in the future so warrant.
Any Class or Classes of a given Series of Units may not be
offered pursuant to this Prospectus, in which case such Class or
Classes will not necessarily be rated in an investment grade
category by a Rating Agency.
In general, a credit rating is not a recommendation to buy,
sell or hold securities and may be subject to revision or
withdrawal at any time by the assigning Rating Agency. The rating
also does not comment as to market price or suitability for a
particular investor. In addition, any credit rating will be
limited in scope to its terms. Prospective purchasers of Units
are urged to review in its entirety any disclosure relating to
any rating of such Units that is contained in the applicable
Prospectus Supplement, including the text of any such rating
letter or letters, if provided.
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Form
Subject to the "Limitations on Issuance of Bearer Units"
set forth herein, each Series and Class of Units may be issued in
fully registered form without interest coupons ("Registered
Units") or, in bearer form with or without coupons attached
("Bearer Units"), as one or more global securities in registered
or bearer form (each a "Global Security") or as individual
securities in definitive form with or without coupons
("Definitive Units"). Registered Units will be transferable on
the records of the Unit Register (as defined below) maintained by
the Trustee. Unless otherwise specified in the applicable
Prospectus Supplement, all Units of a given Series (or, if more
than one Class exists, any given Class within that Series) will,
upon issuance, be represented by one or more Global Securities
that will be deposited with, or on behalf of, DTC (only for
Registered Units denominated and payable in U.S. dollars), Morgan
Guaranty Trust Company of New York, Brussels office, as operator
of the Euroclear System ("Euroclear"), Cedel Bank, S.A.
("CEDEL"), or another entity specified in the Prospectus
Supplement (any of the foregoing a "Depositary"). Global
Securities may be issued in either registered or bearer form and
in either temporary or permanent form. Global Securities
representing Registered Units will be registered in the name of a
nominee of the Depositary, and will clear and settle in
book-entry form ("Book-Entry Units") only through the facilities
of one or more Depositaries. Unless and until it is exchanged in
whole or in part for the individual Units represented thereby, a
Global Security may not be transferred except as a whole by the
Depositary for such Global Security to a nominee of such
Depositary or by a nominee of such Depositary to such Depositary
or another nominee of such Depositary or by such Depositary or
any such nominee to a successor of such Depositary or a nominee
of such successor.
With respect to each Series of Registered Units, the
Trustee will maintain a register (the "Unit Register") in which,
subject to such reasonable regulations as it may prescribe, the
Trustee will provide for the registration of Units of each Series
and the registration of transfers of such Units. No service
charge will be payable with respect to any transfer of Units, but
the Trustee may require payment of a sum sufficient to cover any
tax or government charge that may be imposed in connection with
any such transfer.
Unless otherwise specified in the applicable Prospectus
Supplement, because initially and until Definitive Units are
issued, each Unit will be represented by a Global Security, the
Depositary's nominee will be the Unitholder of such Unit and
therefore will be the only entity that can exercise a right of
exchange. In order to ensure that the Depositary's nominee will
timely exercise a right of exchange with respect to a particular
Unit, the beneficial owner of such Unit must instruct the broker
or other direct or indirect participant through which it holds an
interest in such Unit to notify the Depositary of its desire to
exercise a right of exchange. Different firms have different
cut-off times for accepting instructions from their customers
and, accordingly, each beneficial owner should consult the broker
or other direct or indirect participant through which it holds an
interest in a Unit in order to ascertain the cut-off time by
which such an instruction must be given in order for timely
notice to be delivered to the Depositary.
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DTC is a limited-purpose trust company organized under the
New York Banking Law, a "banking organization" within the meaning
of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act.
DTC holds securities that its participants ("Participants")
deposit with DTC. DTC also facilitates the settlement among
Participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized
book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates.
Participants in DTC include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other
organizations ("Direct Participants"). DTC is owned by a number
of its Direct Participants and by the New York Stock Exchange
Inc., the American Stock Exchange, Inc., and the National
Association of Securities Dealers, Inc. Access to the DTC system
is also available to others, such as securities brokers and
dealers, banks and trust companies that clear transactions
through or maintain a direct or indirect custodial relationship
with a Direct Participant, either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its
Participants are on file with the Commission.
Conveyance of notices and other communications by DTC to
Direct Participants, by Direct Participants to Indirect
Participants, and by Direct Participants and Indirect
Participants to beneficial owners of the Units will be governed
by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Upon the issuance of a Global Security, the Depositary for
such Global Security will credit, on its book-entry registration
and transfer system, the respective principal amounts or notional
amounts, if applicable, of the individual Units represented by
such Global Security to the accounts of its participants. The
accounts to be accredited shall be designated by the underwriters
of such Units, or, if such Units are offered and sold directly
through one or more agents, by the Depositor or such agent or
agents. Ownership of beneficial interests in a Global Security
will be limited to participants or persons that may hold
beneficial interests through participants. Ownership of
beneficial interests in a Global Security will be shown on, and
the transfer of that ownership will be effected only through,
records maintained by the Depositary for such Global Security or
by participants or persons that hold through participants. The
laws of some states require that certain purchasers of securities
take physical delivery of such securities. Such limits and such
laws may limit the market for beneficial interests in a Global
Security.
So long as the Depositary for a Global Security, or its
nominee, is the owner of such Global Security, such Depositary or
such nominee, as the case may be, will be considered the sole
Unitholder of the individual Units represented by such Global
Security for all purposes under the Trust Agreement governing
such Units. Except as set forth below, owners of beneficial
interests in a Global Security will not be entitled to have any
of the individual Units represented by such Global Security
registered in their names, will not receive or be entitled to
receive physical delivery of any such Units and will not be
considered the Unitholder thereof under the Trust Agreement
governing such Units. Because the Depositary can only act on
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behalf of its participants, the ability of a holder of any Unit
to pledge that Unit to persons or entities that do not
participate in the Depositary's system, or to otherwise act with
respect to such Unit, may be limited due to the lack of a
physical certificate for such Unit.
Subject to the restrictions discussed under "Limitations on
Issuance of Bearer Units" below, distributions of principal of
(and premium, if any) and any interest on individual Units
represented by a Global Security will be made to the Depositary
or its nominee, as the case may be, as the Unitholder of such
Global Security. None of the Depositor, the Trustee for such
Units, any paying agent or the Unit registrar for such Units will
have responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial interests
in such Global Security or for maintaining, supervising or
reviewing any records relating to such beneficial interests. The
Depositor expects that the Depositary for Units of a given Class
and Series, upon receipt of any distribution of principal,
premium or interest in respect of a definitive Global Security
representing any of such Units, will credit immediately
participants' accounts with payments in amounts proportionate to
their respective beneficial interests in the principal amount of
such Global Security as shown on the records of such Depositary.
The Depositor also expects that payments by participants to
owners of beneficial interests in such Global Security held
through such participants will be governed by standing
instructions and customary practices, as is now the case with
securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of
such participants. Receipt by owners of beneficial interests in a
temporary Global Security of payments of principal, premium or
interest in respect thereof will be subject to the restrictions
discussed below under "Limitations on Issuance of Bearer Units".
If the Depositary for Units of a given Class of any Series
is at any time unwilling or unable to continue as depositary and
a successor depositary is not appointed by the Depositor within
thirty days, the Depositor will issue individual Definitive Units
in exchange for the Global Security or Securities representing
such Units. In addition, the Depositor may at any time and in its
sole discretion determine not to have any Units of a given Class
represented by one or more Global Securities and, in such event,
will issue individual Definitive Units of such Class in exchange
for the Global Security or Securities representing such Units.
Further, if the Prospectus Supplement so specifies with respect
to the Units of a given Class, an owner of a beneficial interest
in a Global Security representing Units of such Class may, on
terms acceptable to the Depositor and the Depositary of such
Global Security, receive individual Definitive Units in exchange
for such beneficial interest. In any such instance, an owner of a
beneficial interest in a Global Security will be entitled to
physical delivery of individual Definitive Units of the Class
represented by such Global Security equal in principal amount or
notional amount, if applicable, to such beneficial interest and
to have such Definitive Units registered in its name (if the
Units of such Class are issuable as Registered Units). Individual
Definitive Units of such Class so issued will be issued (a) as
Registered Units in denominations, unless otherwise specified by
the Depositor or in the related Prospectus Supplement, of $1,000
and integral multiples thereof if the Units of such Class are
issuable as Registered Units, (b) as Bearer Units in the
denomination or denominations specified by the Depositor or as
specified in the related Prospectus Supplement if the Units of
such Class are issuable as Bearer Units or (c) as either
Registered or Bearer Units, if the Units of such Class
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are issuable in either form. See "Limitations on Issuance of
Bearer Units" below for a description of certain restrictions on
the issuance of individual Bearer Units in exchange for
beneficial interests in a Global Security.
The applicable Prospectus Supplement will set forth any
specific terms of the depositary arrangement with respect to any
Class or Series of Units being offered thereby to the extent not
set forth or different from the description set forth above.
European Monetary Union
Unless otherwise provided in an applicable Prospectus
Supplement, the Depositor may, without the consent of the
Unitholders, on giving at least 30 days' prior notice to
Unitholders, the relevant clearing systems and the Trustee,
designate a date (a "Redenomination Date"), being a date for
payment of interest under Units which are denominated in any of
the currencies of the countries which are member states of the
European Community that are participating in the third stage of
economic and monetary union pursuant to the Treaty establishing
the European Community (the "Treaty") falling on or after the
start of such third stage or, if the country of the specified
currency is not one of the countries then participating in such
third stage, the Redenomination Date in respect of such Units
shall be such date designated by the Depositor, falling on or
after such later date as it does so participate.
"Euro" means the currency to be introduced at the start of
the third stage of economic and monetary union pursuant to the
Treaty.
With effect from the Redenomination Date notwithstanding
the other provisions of the Units:
(i) Such Units shall (unless already so provided by
mandatory provisions of applicable law) be deemed to be
redenominated into Euro in the denomination of Euro 0.01
with an aggregate principal amount equal to their aggregate
principal amount in the Specified Currency, converted into
Euro at the rate for the conversion of the specified
currency into Euro established by the Council of the
European Union pursuant to the Treaty (including compliance
with rules relating to roundings in accordance with
European Community regulations).
(ii) If definitive Units are required to be issued
they shall be in the denominations of Euro 0.01, Euro
1,000, Euro 10,000, Euro 100,000 and such other
denominations as the Trustee shall determine after
consultation with the relevant clearing systems and notify
Unitholders.
(iii) All unmatured coupons denominated in the
specified currency (whether or not attached to such Units)
will become void and no payments will be made in respect of
them. New Units in respect of Euro-denominated Units and
coupons will be issued in exchange for the specified
currency Units and coupons in such manner as the Trustee
may specify and notify to Unitholders.
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(iv) All payments in respect of the Units (other than
payments of interest in respect of periods commencing
before the Redenomination Date) will be made solely in
Euro. Such payments will be made in Euro by credit or
transfer to a Euro account (or any other account to which
Euro may be credited or transferred) specified by the payee
or by check.
(v) A redenominated Unit or coupon may only be
presented for payment on a day which is a day on which the
relevant clearance system is operating.
(vi) The amount of interest due in respect of such
Units will be calculated by reference to the aggregate
principal amount of Units presented (or, as the case may
be, in respect of which coupons are presented) for payment
by the relevant holder and the amount of such payment shall
be rounded down to the nearest Euro 0.01.
Following any redenomination of Units pursuant to the
foregoing provisions, the amount of interest due in respect of
such Units represented by any Global Security will be calculated
by reference to the aggregate principal amount of such Units and
the amount of such payment shall be rounded down to the nearest
Euro 0.01.
If a Unit redenominated in accordance with this section is
a Floating Rate Unit, the Pass Through Rate that shall apply to
such Unit from, and including, the Distribution Date falling on
or immediately prior to the Redenomination Date shall be (i) the
interest rate which applied to such Unit prior to the
redenomination, with "Euros" substituted for the Specified
Currency specified for such Unit, unless such interest rate is
inconsistent with legally applicable standards adopted for
Euro-denominated debt obligations issued in the Euromarkets with
floating rate interest payments of frequencies identical or
substantially similar to the frequency of interest payments
hereunder and held in international clearing systems, as
determined by the Calculation Agent, or (ii) if such interest
rate is so inconsistent, the interest rate which the Calculation
Agent determines is consistent with applicable market practices
adopted for Euro-denominated debt obligations issued in the
Euromarkets and held in international clearing systems, in each
case with such interest rate equal to the interest rate
applicable hereto (adjusted as aforesaid) plus or minus any
Spread or multiplied by any Spread Multiplier, as indicated in
the Prospectus Supplement for such Units, as determined by the
Calculation Agent.
The interest accrual basis and the provisions of the Units
of such Series relating to the source and determination of such
interest accrual basis that shall apply to such Units from, and
including, the Distribution Date falling on or immediately prior
to the Redenomination Date shall be (i) the interest accrual
basis and such provisions which applied to such Units prior to
such redenomination, unless such interest accrual basis is and/or
such provisions are inconsistent with market practices adopted
for Euro-denominated debt obligations issued in the Euromarkets
with fixed rate or floating rate interest payments (as the case
may be) of frequencies identical or substantially similar to the
frequency of interest payments under such Units, based, in the
case of floating interest rate payments, on the reference rate
applicable to such Units prior to the Redenomination Date and
held in international clearing systems as
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determined by the Calculation Agent or (ii) if the interest
accrual basis which applied to such Units prior to Redenomination
Date is and/or such provisions are so inconsistent, the interest
accrual basis and/or the provisions of the Units of such Series
relating to the source and determination of such interest accrual
basis, as the case may be, which the Calculation Agent determines
is consistent with applicable market practices adopted for
Euro-denominated debt obligations issued in the Euromarkets with
fixed rate or floating rate interest payments (as the case may
be) of frequencies identical or substantially similar to the
frequency of interest payments under such Units, based, in the
case of floating interest rate payments, on the reference rate
applicable to such Units (adjusted as aforesaid) and held in
international clearing systems as determined by the Calculation
Agent.
The Depositor may, with the consent of the Trustee, and
without the need to obtain the consent of the Holder of any Unit,
make any changes or additions to the terms of the Units of a
Series which (i) the Depositor and the Trustee believe are
necessary or appropriate to facilitate the implementation of the
provisions of this section as they relate to such Units in the
context of the introduction of the Euro or (ii) correct any
manifest error or any ambiguity or correct or supplement any
defective provisions described herein and which changes or
additions the Depositor and the Trustee believe are not
materially prejudicial to the interests of the Holders of the
Units of such Series. Any such change or addition shall be
binding on the Depositor, the Holders of the Units of such
Series, the Trustee, and any agent of the Trustee. The Trustee
shall promptly give notice of any such change or addition to the
Unitholders affected thereby.
Voting of Debt Securities; Modification of Debt Security Agreements
Within five Business Days after receipt of notice of any
meeting of, or other occasion for the exercise of voting rights
or the giving of consents by, owners of any of the Debt
Securities, the Trustee will give notice to the Unitholders,
setting forth (i) such information as is contained in such notice
to owners of Debt Securities, (ii) a statement that the
Unitholders will be entitled, subject to any applicable provision
of law and any applicable provisions of such Debt Securities, to
instruct the Trustee as to the exercise of voting rights, if any,
pertaining to such Debt Securities and (iii) a statement as to
the manner in which instructions may be given to the Trustee to
give a discretionary proxy to a person designated in the notice
received by the Trustee. The Trustee will give such notice to the
Unitholders of record on the relevant record date.
Unless otherwise specified in the applicable Prospectus
Supplement, the voting rights allocable to the owners of the Debt
Securities pursuant to the terms thereof will be allocated among
the Unitholders pro rata, in the proportion that the denomination
of each Unit bears to the aggregate denomination of all Units;
and upon the written request of the applicable Unitholder,
received on or before the date established by the Trustee for
such purpose, the Trustee will endeavor, insofar as practicable
and permitted under any applicable provision of law and any
applicable provision of or governing the Debt Securities, to vote
in accordance with any nondiscretionary instruction set forth in
such written request, provided that the Trustee will not vote
except as specifically authorized and directed in written
instructions from
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the applicable Unitholder entitled to give such instructions.
Notwithstanding the foregoing, the Trustee must reject any vote
to (i) alter the currency, amount or timing of payment of, or the
method or rate of accruing, principal or interest on the Debt
Securities underlying the Units held by such Unitholder or (ii)
consent to any redemption or prepayment of the Debt Securities
underlying the Units held by such Unitholder or (iii) consent to
the issuance of new obligations in exchange or substitution for
any Debt Securities pursuant to a plan or refunding of the Debt
Securities or any other offer for the Debt Securities; in each
case unless the Trustee is directed by the affirmative vote of
all Unitholders to accept such amendment or offer as the case may
be; and provided, further, that the Trustee receives advice of
nationally recognized independent tax counsel, designated by the
Depositor, that such exercise of voting rights with respect to
any Debt Securities would not result in a "sale or other
disposition" of such Debt Securities within the meaning of
Section 1001(a) of the Internal Revenue Code of 1986, as amended
(the "Code"). The Trustee will not grant any consent (other than
a unanimous consent) solicited from the owners of the Debt
Securities underlying the Units with respect to the foregoing
matters in (i), (ii) and (iii) above nor will it accept or take
any action in respect of any consent, proxy or instructions
received from any Unitholder in contravention of such provisions.
Early Distribution of Debt Securities
Unless otherwise specified in the applicable Prospectus
Supplement, upon the occurrence of a Trust Wind-Up Event (as
defined under "Description of Trust Agreements-Trust Wind-Up
Events"), the applicable Trust Agreement and any related Swap
Agreement will terminate, subject to payment of Swap Termination
Payments, if any, and the Trustee shall deliver notice to each of
the Unitholders of the occurrence of a Trust Wind-Up Event, the
termination of such Swap Agreement (and payment of Swap
Termination Payments, if any) and the termination of such Trust
Agreement and related Trust, and such notice shall state that
holders should surrender their Units to the Trustee or give, to
the Trustee's reasonable satisfaction, appropriate indemnity or
security in exchange for a portion of the Debt Securities or cash
if the Trust is liquidated, as specified in the applicable Trust
Agreement. Such notice to the Unitholders shall also specify: (i)
the cause of the Trust Wind-Up Event; (ii) the location and hours
of the office or agency of the Trustee at which Units should be
presented and surrendered; (iii) that each holder must supply
transfer instructions in writing with respect to the related Debt
Securities; and (iv) any other information required to be set
forth by such Trust Agreement, as set forth in the applicable
Prospectus Supplement.
Upon receipt by the Trustee of (i) appropriate transfer
instructions in writing from a holder with respect to such Debt
Securities and (ii) such holder's Units, or appropriate and
satisfactory indemnity or security, the Trustee shall promptly
deliver to such holder its pro rata share of such Debt Securities
or cash in accordance with such transfer instructions by physical
delivery or, if applicable, by causing the book-entry depositary
for such Debt Securities to credit such Debt Securities to an
account of such holder with such depositary or an account of a
designated participant in such depositary.
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Unless otherwise specified in the applicable Prospectus
Supplement, upon the occurrence of a Trust Wind-Up Event, any
related Swap Agreement will terminate and the only distributions
(other than the early distribution of the related Debt Securities
themselves) from the related Trust to which the holders of Units
issued thereby will be entitled will be any payments on the Debt
Securities, if any, or any amounts recovered under the Swap
Agreement or the related Guarantee, if any, that are in each case
received by the Trustee after the occurrence of the Trust Wind-Up
Event, which the Trustee shall distribute to the Unitholders upon
satisfaction of the conditions for transfer of Debt Securities
referred to above. No interest will accrue on, and no investments
will be made with, any such funds awaiting distribution to
Unitholders.
Except for certain duties and reporting requirements set
forth in the applicable Trust Agreement, the obligations of the
Trustee thereunder will terminate upon the distribution to
Unitholders of all amounts required to be so distributed pursuant
to such Trust Agreement and the disposition of all related Debt
Securities held by such Trustee.
DESCRIPTION OF TRUST AGREEMENTS
General
Set forth below are summaries of certain provisions of the
Trust Agreement to be entered into in connection with any Series
of Units. Each Trust Agreement will be entered into by the
Depositor and the Trustee. The provisions of the Trust Agreements
may vary from one another depending upon the terms of the Units
to be issued thereunder, the related Debt Securities and any Swap
Agreement. The specific provisions of each Trust Agreement, to
the extent they materially differ from or are in addition to the
summaries below, will be set forth in the applicable Prospectus
Supplement.
The following summaries do not purport to be complete and,
with respect to a particular Series of Units to be offered
pursuant to this Prospectus and a Prospectus Supplement, are
subject to the detailed provisions of the form of Trust Agreement
included as an exhibit to the Registration Statement, to which
reference is hereby made for a full description of such
provisions, including the definitions of certain terms used.
Collections on Debt Securities
With respect to any Series of Units, the Trustee shall make
reasonable efforts to collect all scheduled payments on the
related Debt Securities and other Trust Property provided that
such procedures are consistent with the applicable Trust
Agreement and that, except as otherwise expressly set forth in
such Trust Agreement and in the applicable Prospectus Supplement,
it shall not be required to expend or risk its own funds or
otherwise incur personal financial liability.
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Trustee Compensation
As compensation for and in payment of trust expenses
related to its services under the Trust Agreement other than
Extraordinary Trust Expenses, the Trustee will receive the
Trustee Fees. The Prospectus Supplement will set forth, the
amount, source, manner and priority of payment with respect to
such Trustee Fees.
Certain Matters Regarding Trustees and the Depositor
Unless otherwise provided in the applicable Prospectus
Supplement, the related Trust Agreement will provide that neither
the Depositor nor any of its directors, officers, employees or
agents will incur any liability to the related Trust or
Unitholders for any action taken, or for refraining from taking
any action, in good faith pursuant to such Trust Agreement or for
errors in judgment; however, neither the Depositor nor any such
person will be protected against any liability that would
otherwise be imposed by reason of willful misfeasance, bad faith
or negligence in the performance of their duties under such Trust
Agreement or by reason of reckless disregard of obligations and
duties thereunder. In addition, such Trust Agreement will provide
that the Depositor will not be under any obligation to appear in,
prosecute or defend any legal action related to its
responsibilities under such Trust Agreement which in its opinion
may involve it in any expense or liability. The Depositor may,
however, in its discretion undertake any such action which it
deems necessary or desirable with respect to such Trust Agreement
and the rights and duties of the parties thereto and the
interests of the Unitholders thereunder.
The Trustee will undertake to perform only such duties as
are specifically set forth in the related Trust Agreement. Unless
otherwise provided in the applicable Prospectus Supplement, the
Depositor or one or more third parties will be responsible for
payment of the Trustee Fees related to each Trust. The Depositor
will also indemnify any other loss, liability or expense
("Extraordinary Trust Expenses") relating to the applicable Trust
Agreement, Swap Agreement or Debt Securities (other than any such
loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence in the performance of the
Trustee's duties under such Trust Agreement) up to the Maximum
Reimbursable Amount in the aggregate. Extraordinary Trust
Expenses not paid by the Depositor will be payable to the Trustee
from Trust Property.
The Trust Agreement provides that the Trustee may elect to
perform some or all of its duties through a custodian or other
administrative agent. Any particular provisions with respect to
entities acting as a custodian or administrative agent of the
Trustee will be described in a Prospectus Supplement.
Unless otherwise provided in the Prospectus Supplement,
prior to the date that is one year and one day after all
distributions in respect of the Units have been made, neither the
Trustee nor the Depositor shall take any action or institute any
proceeding against the other under the United States Bankruptcy
Code or any other liquidation, insolvency, bankruptcy,
moratorium, reorganization or similar law ("Insolvency Law")
applicable to either of them,
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now or hereafter in effect, or which would be reasonably likely
to cause the other to be subject to, or seek the protection of,
any such Insolvency Law.
Retained Interest
The Prospectus Supplement for a Series of Units will
specify whether there will be any Retained Interest in the Trust
Property, and, if so, the owner thereof. If so provided, the
Retained Interest will be established on an asset-by-asset basis
and will be specified in an exhibit to the applicable Trust
Agreement. A Retained Interest in the Trust Property represents a
specified interest therein. Payments in respect of the Retained
Interest will be deducted from payments on the Trust Property as
received and, in general, will not become a part of the related
Trust. Unless otherwise provided in the applicable Prospectus
Supplement, any partial recovery of interest on the Trust
Property, after deduction of all applicable administration fees,
will be allocated between the Retained Interest (if any) and
interest distributions to Unitholders on a pari passu basis.
Modification and Waiver
Unless otherwise specified in the applicable Prospectus
Supplement, the Trust Agreement for each Series of Units may be
amended by the Depositor and the Trustee with respect to such
Series, without notice to or consent of the Unitholders, for
certain purposes including (i) to cure any ambiguity; (ii) to
correct or supplement any provision therein which may be
inconsistent with any other provision therein or in the
Prospectus Supplement; (iii) to add or supplement any Credit
Support for the benefit of any Unitholders (provided that if any
such addition affects any Series or Class of Unitholders
differently than any other Series or class of Unitholders, then
such addition will not, as evidenced by an opinion of counsel,
have a material adverse effect on the interests of any affected
Series or class of Unitholders); (iv) to add to the covenants,
restrictions or obligations of the Depositor, or the Trustee for
the benefit of the Unitholders; (v) to add, change or eliminate
any other provisions with respect to matters or questions arising
under such Trust Agreement so long as (x) any such addition,
change or elimination will not, as evidenced by an opinion of
counsel, affect the tax status of the Trust or result in a sale
or exchange of any Unit for tax purposes and (y) the Trustee has
received written confirmation from each Rating Agency rating such
Units that such amendment will not cause such Rating Agency to
qualify, reduce or withdraw the then current rating thereof; or
(vi) to comply with any requirements imposed by the Code. Without
limiting the generality of the foregoing, unless otherwise
specified in the applicable Prospectus Supplement, the Trust
Agreement may also be modified or amended from time to time by
the Depositor, and the Trustee, with the consent of the holders
of Units evidencing not less than the "Required
Percentage--Amendment" (as defined in the Prospectus Supplement)
of the Voting Rights of those Units that are materially adversely
affected by such modification or amendment for the purpose of
adding any provision to or changing in any manner or eliminating
any provision of the Trust Agreement or of modifying in any
manner the rights of such Unitholders; provided, however, that in
the event such modification or amendment would materially
adversely affect the rating of any Series or Class by each Rating
Agency, the "Required Percentage--
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Amendment" specified in the related series supplement to the
Trust Agreement shall include an additional specified percentage
of the Units of such Series or Class.
Except as otherwise set forth under "Description of the
Units -- European Monetary Union" or in the applicable Prospectus
Supplement, no such modification or amendment may, however, (i)
reduce in any manner the amount of or alter the timing, currency
or amounts of distributions or payments which are required to be
made on any Unit without the consent of the holder of such Unit
or (ii) reduce the aforesaid Required Percentage of Voting Rights
required for the consent to any such amendment without the
consent of the holders of all Units covered by the Trust
Agreement then outstanding.
Unless otherwise specified in the applicable Prospectus
Supplement, holders of Units evidencing not less than the
"Required Percentage--Waiver" (as defined in the Prospectus
Supplement) of the Voting Rights of a given Series may, on behalf
of all Unitholders of that Series, (i) waive, insofar as that
Series is concerned, compliance by the Depositor or the Trustee,
with certain restrictive provisions, if any, of the Trust
Agreement before the time for such compliance and (ii) waive any
past default under the Trust Agreement with respect to Units of
that Series, except a default in the failure to distribute
amounts received as principal of (and premium, if any) or any
interest on any such Unit and except a default in respect of a
covenant or provision the modification or amendment of which
would require the consent of the holder of each outstanding Unit
affected thereby.
Reports to Unitholders
Reports to Unitholders. Unless otherwise provided in the
applicable Prospectus Supplement, on each Distribution Date the
Trustee will forward or cause to be forwarded to each such
Unitholder, to the Depositor and to such other parties as may be
specified in the Trust Agreement, a statement setting forth:
(i) the amount of such distribution to Unitholders
allocable to principal of or interest or premium, if any,
on the Units;
(ii) the Pass Through Rate applicable to such
Distribution Date, as calculated in accordance with the
method specified herein and in the related Prospectus
Supplement;
(iii) the aggregate stated principal amount of the
related Debt Securities as of the Distribution Date and the
interest rate applicable to such Debt Securities for the
accrual period therefor next beginning;
(iv) the amount received by the Trustee on the related
Debt Securities for the accrual period therefor last ended;
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(v) the amounts of and recipients of any payments
under any Swap Agreement for the accrual period for the
Swap Agreement last ended;
(vi) if feasible, the new Swap Rate applicable to the
accrual period for any Swap Agreement next beginning;
(vii) the aggregate Unit Principal Balance (or
Notional Amount, if applicable) at the close of business on
such Distribution Date;
(viii) with respect to any Trust having Trust Property
which includes Credit Support, the available amount of each
element of Credit Support; and
(ix) any additional information relevant to the
Unitholders as specified in the applicable Prospectus
Supplement or in the applicable Trust Agreement.
In the case of information furnished pursuant to clause (i)
above, the amounts shall be expressed as a U.S. dollar amount (or
equivalent thereof in any other Specified Currency) per minimum
denomination of Units or for such other specified portion
thereof. Within a reasonable period of time after the end of each
calendar year, the Trustee, as provided in the related Prospectus
Supplement, will furnish to each person who at any time during
the calendar year was a Unitholder, a statement containing the
information set forth in clause (i) above, aggregated for such
calendar year or the applicable portion thereof during which such
person was a Unitholder and containing such information as is
sufficient to enable Unitholders to calculate their United States
federal income tax liability with respect to Units. Such
obligation of the Trustee shall be deemed to have been satisfied
to the extent that substantially comparable information shall be
provided by the Trustee pursuant to any requirements of the Code
as are from time to time in effect.
Evidence as to Compliance
If so specified in the applicable Prospectus Supplement,
the Trust Agreement will provide that commencing on a certain
date and on or before a specified date in each year thereafter, a
firm of independent public accountants will furnish a statement
to the Trustee to the effect that such firm has examined certain
documents and records relating to the administration of the Trust
Property during the related 12-month period (or, in the case of
the first such report, the period ending on or before the date
specified in the Prospectus Supplement, which date shall not be
more than one year after the related original issue date with
respect to such Units) and that, on the basis of certain agreed
upon procedures considered appropriate under the circumstances,
such firm is of the opinion that such administration was
conducted in compliance with the terms of the Trust Agreement,
except for such exceptions as such firm shall believe to be
immaterial and such other exceptions and qualifications as shall
be set forth in such report.
The Trust Agreement may also provide for delivery to the
Depositor and the Trustee on behalf of the Unitholders, on or
before a specified date in each year, of an annual statement
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signed by two officers of the Trustee to the effect that the
Trustee has fulfilled its obligations under the Trust Agreement
throughout the preceding year with respect to any Series of
Units.
Copies of the annual accountants' statement, if any, and
the statement of officers of the Trustee may be obtained by
Unitholders without charge upon written request to the Trustee at
the address set forth in the related Prospectus Supplement.
Notices
The Trustee will notify the Unitholders of all notices and
communications it receives from the Debt Security Issuer,
including notice of any call of the Debt Securities by the Debt
Security Issuer. The Trustee will also notify the Unitholders of
any call of the Debt Securities by a Swap Counterparty under the
terms of a Swap Agreement. Unless otherwise provided in the
applicable Prospectus Supplement, any notice required to be given
to a holder of a Registered Unit will be given by facsimile to
such number as may be provided to the Trustee or be mailed to the
last address of such holder set forth in the applicable Unit
Register. Any notice so mailed within the time prescribed in the
Trust Agreement shall be conclusively presumed to have been given
when mailed, whether or not the Unitholder receives such notice.
Notices given by facsimile will be effective upon confirmation
(including electronic confirmation) of effective transmission. In
the case of Registered Units in global form, the Depositary will
be the sole direct recipient of notices. See "Description of the
Units -- Form".
Notice shall be sufficiently given to holders of Bearer
Units if (i) published in an Authorized Newspaper (defined in the
Trust Agreement to mean a leading daily newspaper of general
circulation) in such city or cities as may be specified in such
Units on a Business Day and (ii) in the case of a Global
Security, if also delivered to Euroclear or CEDEL, as applicable
for communication by them to the persons shown in their
respective records as having interests therein. In case by reason
of suspension of publication of any Authorized Newspaper or
Authorized Newspapers or by reason of any other cause it shall be
impracticable to publish any notice to Holders of Bearer Units as
provided above, then such notification to Holders of Bearer Units
shall be published as provided above in an Authorized Newspaper
of general circulation in Europe or, if such publication shall
also be impracticable, such notification shall be given in such
manner as shall be approved by the Trustee and the Depositor.
Replacement Units
Unless otherwise provided in the applicable Prospectus
Supplement, if a Unit is mutilated, destroyed, lost or stolen, it
may be replaced at the corporate trust office or agency of the
Trustee in the City and State of New York upon payment by the
holder of such expenses as may be incurred by the Trustee in
connection therewith and the furnishing of such evidence and
indemnity as the Trustee may require. Mutilated Units must be
surrendered before new Units will be issued unless the Depositor
and the Trustee receive, to their satisfaction, such security or
indemnity as they may require to save each of them harmless.
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Trust Wind-Up Events
Unless otherwise provided in the applicable Prospectus
Supplement, a Trust Wind-Up Event under the related Trust
Agreement is defined as the occurrence of (i) any Swap Default
arising from any action taken or failure to act, by the Swap
Counterparty, if applicable; (ii) one or more Debt Security
Defaults where either (a) a Debt Security Default has occurred
with respect to all Debt Securities held by the Trust or (b) a
Termination Event results under the Swap Agreement with respect
to which all Transactions are "Affected Transactions" (as defined
in the Swap Agreement); (iii) any Termination Event under the
Swap Agreement with respect to which the Swap Counterparty shall
be the sole "Affected Party" (as defined in the Swap Agreement);
provided that at the time of such occurrence no Swap Termination
Payment would be payable by the Trust to the Swap Counterparty
upon designation of an Early Termination Date by the Trust; (iv)
the designation of an Early Termination Date by the Swap
Counterparty under a related Swap Agreement (other than with
respect to the termination of fewer than all Transactions entered
into under the Swap Agreement); (v) the designation by the
Depositor, if the Depositor owns 100% of the Unit Principal
Balance, of a "Special Depositor Wind-Up Event"; and (vi) the
Debt Security Issuer with respect to any Concentrated Debt
Security ceases to be a reporting company under the Exchange Act,
provided that the Trust holds no other Debt Securities for which
the Debt Security Issuer continues to be a reporting company or
which is not a Concentrated Debt Security; (vii) any Excess
Expense Event (as defined below); or (viii) any other Trust
Wind-Up Event set forth in the Prospectus Supplement. See
"Description of Swap Agreements - Defaults Under Swap Agreements"
and "- Termination Events". Unless otherwise provided in the
applicable Prospectus Supplement, upon the occurrence of a Trust
Wind-Up Event, such Trust Agreement and the related Swap
Agreement will terminate, the Trustee will sell some or all of
the Debt Securities to fund the payment of applicable Swap
Termination Payments, if any, and hold all related Debt
Securities and any proceeds thereof until the satisfaction of
certain conditions, at which time the Trustee will distribute
such Debt Securities to the Unitholders. See "Description of
Units - Early Distribution of Debt Securities".
Unless otherwise provided in the Prospectus Supplement, if
the issuer of any Concentrated Debt Security ceases to be a
reporting company under the Exchange Act (such Debt Security a
"Disqualified Security"), (i) a Termination Event shall occur
with respect to any Transaction related to such Disqualified
Security under any related Swap Agreement and the Trust shall be
required to sell Debt Securities to the extent necessary to pay
any related Swap Termination Payment; (ii) the remaining
Disqualified Securities shall be distributed pro rata to the
Unitholders; and (iii) a Trust Wind Up Event shall occur if (A)
the Trust holds only Disqualified Securities and no other Trust
Property or (B) if so provided in the Prospectus Supplement.
The Trustee will not be responsible for giving notice of a
Trust Wind-Up Event unless and until (i) the Trustee fails to
receive amounts due on the Debt Securities or under a Swap
Agreement when due and such payment is not received within any
applicable grace period, (ii) receipt by the Trustee of notice
from a Swap Counterparty of the occurrence of a Swap Default or
Termination Event or upon actual knowledge of a Swap Default or
Termination
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Event by an officer of the Trustee assigned to its Corporate
Trust Department or (iii) receipt of notice of an event
constituting a Debt Security Default.
Under each Trust Agreement, unless otherwise specified in
the applicable Prospectus Supplement, an "Excess Expense Event"
will occur if the Trustee has incurred Extraordinary Trust
Expenses in an aggregate amount exceeding the Trigger Amount
specified in the applicable Prospectus Supplement, and either any
Swap Counterparty has not agreed, or the holders of Units issued
under such Trust Agreement have not unanimously agreed, to
provide adequate assurance of indemnity to the Trustee within
seven calendar days after notice, as described in the next
sentence. Under the terms of such Trust Agreement, the Trustee
will be required to provide notice to any Swap Counterparty and
each Unitholder promptly upon the incurrence by the Trustee of
Extraordinary Trust Expenses in an aggregate amount in excess of
the Trigger Amount, stating that an Excess Expense Event will
occur on the seventh calendar day following the provision of such
notice unless prior to such day the Unitholders unanimously agree
(or any Swap Counterparty agrees) to indemnify the Trustee for
future Extraordinary Trust Expense (and Extraordinary Trust
Expense that has already been incurred at the time of the
agreement to indemnify) that exceeds the Maximum Reimbursable
Amount specified in the applicable Prospectus Supplement, to the
reasonable satisfaction of the Trustee. Following such an
agreement to indemnify, upon the incurrence by the Trustee of
aggregate Extraordinary Trust Expense greater than the Maximum
Reimbursable Amount, an Excess Expense Event will occur unless
either (i) any Swap Counterparty agrees or (ii) the holders of
the Units unanimously agree, to provide further adequate
assurance of indemnity to the Trustee within seven calendar days
after notice, as described in the preceding sentence.
Unless otherwise provided in the Prospectus Supplement, in
connection with early termination of a Swap Agreement or one or
more Transactions thereunder, other than as a result of Debt
Security Default, the claim of the Swap Counterparty against the
Debt Securities (or proceeds thereof arising from sale thereof)
and any other Trust Property will be limited to a claim pro rata
with that of the Unitholders according to the amount of the
Termination Payment otherwise payable to the Swap Counterparty
and the Unitholders' aggregate Unit Principal Balance plus
accrued interest.
Termination
Unless a Trust is terminated early upon the occurrence of a
Trust Wind-Up Event, the obligations created by the related Trust
Agreement (other than the obligations of the Trustee to provide
reports and certain other information under such Trust Agreement)
will terminate (after payment of Extraordinary Trust Expenses, if
any, and any amount due under the Swap Agreement and upon
distribution of Debt Securities) and the payment to the holders
of Units issued thereunder of all amounts required to be paid
under the terms of such Trust Agreement and such Units following
the final scheduled Distribution Date. Written notice of such
termination will be provided as set forth above under "Reports to
Unitholders; Notices", and the final distribution on such Units
will be made only upon surrender and cancellation of such Units
at an office or agency of the Trustee.
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Sale of Debt Securities; Secured Party Rights
Immediately upon receipt of notice from the Swap
Counterparty that the Trust will be obligated to pay a Swap
Termination Payment or upon other notice from the Trustee that
the Trust is required to sell Debt Securities, the Selling Agent
will undertake to sell Debt Securities on behalf of the Trust,
unless and until the Selling Agent receives notice from the
Trustee of an exercise by the Unitholders of their rights to
tender the amount of any related Swap Termination Payment as set
forth below. The timing, price and other terms of any sale
conducted by the Selling Agent shall be determined by the Selling
Agent in its sole discretion, but all such sales shall be
completed within 30 days or such longer period of time as may be
reasonable with respect to particular Debt Securities. In the
case of a Debt Security Default or Reporting Event which does not
result in termination of the Trust, sales shall be limited to the
Debt Securities affected by such event, except where the proceeds
from the affected Debt Securities are insufficient to make
payment of the Swap Termination Payment.
In connection with any Termination Payment payable by the
Trust, the Unitholders may, acting unanimously, deliver to the
Trustee the amount of such outstanding Termination Payment
(together with, in the case of a Trust Wind-Up Event, any
Extraordinary Trust Expenses in excess of the Maximum
Reimbursable Amount payable to the Trustee) and a written
instruction to discontinue sale of the Debt Securities. If the
Selling Agent receives notice from the Trustee of the exercise by
the Unitholders of their rights under the foregoing provision,
the Selling Agent shall promptly discontinue sales of the related
Debt Securities (but the Selling Agent and the Trustee shall
complete the settlement of any sale already agreed).
The Selling Agent is an agent of the Trustee only and shall
have no fiduciary or other duties to the Unitholders, nor shall
the Selling Agent have any liability to the Trust in the absence
of the Selling Agent's bad faith or wilful default. The Selling
Agent shall be permitted to sell Debt Securities to Affiliates of
the Selling Agent. The Selling Agent may elect not to act as
Selling Agent with respect to some or all of the Debt Securities
by written notice to that effect to the Trustee, and may resign
at any time.
In addition to the provisions of the Trust Agreement with
respect to the Selling Agent, upon any failure of the Trust to
make any payment when due under the Swap Agreement, the Swap
Counterparty shall have the right to take all action and to
pursue all remedies with respect to such property that a secured
party is permitted to take with respect to collateral under the
UCC, including the right to require the Trustee promptly to sell
all or any portion of the Debt Securities in the open market or,
if the Swap Counterparty elects, to sell the Debt Securities to
the Swap Counterparty for its fair value as determined in good
faith by the Swap Counterparty. In either case, the proceeds of
sale shall be applied to any amounts owed to the Swap
Counterparty.
Trustee
The Trustee shall at all times be a corporation which is
not an affiliate of the Depositor (but may have normal banking
relationships with the Depositor or any obligor with respect to
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the Debt Securities with respect to any Series of Units and their
respective affiliates) organized and doing business under the
laws of any State or the United States, authorized under such
laws to exercise corporate trust powers, having a combined
capital and surplus of at least $50,000,000 and subject to
supervision or examination by Federal or State authority, the
long-term debt obligations of which are rated in one of the four
highest categories assigned to long-term debt obligations by each
of the Rating Agencies, and shall at all times satisfy the
requirements of Section 310(a) of the Trust Indenture Act of
1939, as amended (the "TIA") and Section (a)(4)(i) of Rule 3a-7
(any such Trustee, an "Eligible Trustee"). Unless otherwise
specified in the applicable Prospectus Supplement and for so long
as it is an Eligible Trustee, the Trustee for each Trust will be
Chase Bank of Texas, National Association. The Trustee may at any
time resign and be discharged from the Trust by giving written
notice thereof to the Depositor, the Swap Counterparty, and the
Unitholders, in which event the Depositor will appoint a
successor trustee, which must be an Eligible Trustee. If no
successor trustee shall have been so appointed and have accepted
appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee
for the Units.
The Trust Agreement and the provisions of the TIA
incorporated by reference therein, contain limitations on the
rights of the Trustee thereunder, should it become a creditor of
the Trust, to obtain payment of claims in certain cases or to
realize on certain property received by it in respect of any such
claims, as security or otherwise. The Trustee is permitted to
engage in other transactions; provided, however, that if it
acquires any conflicting interest (as defined) it must eliminate
such conflict or resign.
Governing Law
The Units, the Trust Agreement and any Swap Agreement will
be governed by the laws of the State of New York. The Trust
Agreement will be subject to the provisions of the TIA that are
required to be part of the Trust Agreement and will, to the
extent applicable, be governed by such provisions.
The federal and state courts in the Borough of Manhattan in
the City of New York shall have non-exclusive jurisdiction in
respect of any action arising out of or relating to the Units,
the Trust Agreement or any Swap Agreement.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of certain
anticipated federal income tax consequences of the ownership of
Units by a Unitholder who acquires its Units on the date on which
the net proceeds of this offering are received by the Depositor
(the "Closing Date"). The discussion is based on interpretations
of law, regulations, rulings and decisions currently in effect,
all of which are subject to change. Any such change may be
applied retroactively, and may adversely affect the federal
income tax consequences described herein. Except where otherwise
noted, the discussion below is addressed to Unitholders that are
domestic
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corporations or are otherwise subject to federal income taxation
on a net income basis, and that hold Units as capital assets. It
does not discuss state, local, or foreign tax consequences, nor
does it discuss the tax consequences that may be relevant to a
Unitholder subject to special rules, including dealers in stocks,
securities or notional principal contracts, traders in securities
electing to mark to market, banks, savings and loan associations
and similar financial institutions, taxpayers that hold Units as
part of a "straddle" or "conversion transaction" for federal
income tax purposes, or taxpayers whose functional currency is
other than the U.S. dollar. It also does not discuss tax
consequences for individuals or entities taxed like individuals.
Units of a particular Series may have special features that
produce tax consequences different from those described below. In
cases where the related Prospectus Supplement contains additional
tax information, prospective Unitholders should review such
information together with this tax discussion.
PROSPECTIVE UNITHOLDERS SHOULD CONSULT THEIR TAX ADVISORS
AS TO THE FEDERAL TAX CONSEQUENCES TO THEM OF ACQUIRING, HOLDING
AND DISPOSING OF UNITS, INCLUDING, IN PARTICULAR, THE APPLICATION
IN THEIR PARTICULAR CIRCUMSTANCES OF THE TAX CONSIDERATIONS
DISCUSSED BELOW, AS WELL AS THE APPLICATION OF STATE, LOCAL,
FOREIGN OR OTHER TAX LAWS.
Classification of the Trust
Cleary, Gottlieb, Steen & Hamilton, counsel to the
Depositor, will provide to the Depositor its opinion that, under
current law, the Trust will not be classified as a corporation or
as an association taxable as a corporation for U.S. federal
income tax purposes. As a consequence, the Trust will not be
subject to federal income taxation.
Unless another characterization is applicable, as described
below and indicated in the applicable Prospectus Supplement, the
Trust will be classified as a grantor trust for federal income
tax purposes, and the Trustee intends to report income, gain,
loss and deductions to the Internal Revenue Service ("IRS")
accordingly. Under the federal income tax rules applicable to
grantor trusts, a Unitholder will be treated as the owner of an
undivided interest in the assets and income of the Trust and as
having entered into any Swap Agreement, both to the extent of
such Unitholder's proportionate interest in the Trust. The sale
of a Unit will be considered a sale of a Unitholder's interest in
the assets and income of the Trust and a termination of any Swap
Agreement with respect to that Unitholder. In the case of an
Exchangeable Series, a Unitholder's withdrawal of Debt Securities
representing the Unitholder's proportionate share of such assets
of the Trust will not constitute a taxable event, but any
termination of a Swap Agreement will be taxable. A Unitholder may
deduct its pro rata share of the fees and other deductible
expenses paid by the Trust, at the same time and to the same
extent as such items could be deducted by the Unitholder if the
Unitholder paid directly a pro rata portion of the amounts paid
by the Trust.
If so indicated in the applicable Prospectus Supplement, a
Trust in a particular Series may be characterized as a
partnership rather than a grantor trust. Although a partnership
is not subject to federal income taxation at the entity level,
partnership classification may result in
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differences in the timing and character of income reported by
Unitholders, as well as different requirements for reporting tax
information, making tax elections, and conducting contests with
the IRS.
An election may be made to treat a Trust in a particular
Series as a financial asset securitization investment trust
("FASIT"), as defined in section 860L of the Code. If a Trust
makes a FASIT election, the Prospectus Supplement relating to any
Class or Series of Units representing interests in such FASIT
will state that the Trust is a FASIT for federal income tax
purposes and will describe the federal income tax consequences of
the ownership of such Units.
Treatment of the Debt Securities and Swap Agreement as Integrated
or Separate Transactions
The tax treatment of the Debt Securities and any Swap
Agreement will depend on whether they are integrated into a
single synthetic debt instrument or treated as separate financial
instruments. If the Debt Securities and Swap Agreement qualify
for integration under Treasury regulations section 1.1275-6 (the
"Integration Regulations") or section 1.988-5 (the "Foreign
Currency Integration Regulations"), the Unitholder may elect, or
the IRS may require, integrated treatment. If the transaction is
integrated, the Unitholder will be required to take into account
its pro rata share of the income from the synthetic debt
instrument resulting from such integration. See "Tax Consequences
of Integration," below.
If integrated treatment is not available, a Unitholder will
be required to take into account its pro rata share of the income
from the Debt Securities and any Swap Agreement as determined
under the separate federal income tax rules applicable to those
items. See "Tax Consequences of Separate Treatment," below.
Integrated treatment will not be available for a Swap Agreement
and related Debt Securities underlying Dual Currency Units.
The discussion in the two preceding paragraphs assumes that
the Debt Securities are considered to be owned by the Trust for
federal income tax purposes. In some circumstances, the Debt
Securities and Swap Agreement may be treated together as a loan
to the Swap Counterparty. See "Tax Consequences of Separate
Treatment--Taxation of the Swap Agreement--Other
Characterizations."
Tax Consequences of Integration
Integration of Debt Securities and Swap Agreements that Do Not
Hedge Currency Risk
In general, under the Integration Regulations, a Debt
Security and a Swap Agreement that does not hedge currency risk
may be integrated and treated as a single synthetic debt
instrument if the combined cash flows are substantially
equivalent to the cash flows on a fixed rate debt instrument or
on a variable rate debt instrument that pays interest at a
qualified rate or rates (as such terms are defined in applicable
sections of the Code and Treasury regulations) and certain other
requirements are satisfied, including the identification of the
integrated economic transaction in the Unitholder's books and
records on the date of purchase of the
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Units. The synthetic debt instrument may be denominated in U.S.
dollars or another single currency. Certain Debt Securities, such
as pay-through bonds that are subject to prepayment out of
principal received on other debt instruments or tax-exempt
obligations, will not qualify for integration. The IRS generally
may require integration where a Unitholder could have but did not
make the appropriate identification and in certain other cases.
The synthetic debt instrument created through integration
generally will be subject to the tax rules that apply to
conventional debt instruments, except that all stated interest on
the instrument will be treated as original issue discount
("OID"), which a Unitholder must include in income as it accrues.
See the discussion of OID and other income from a debt instrument
under "Tax Consequences of Separate Treatment -- Taxation of Debt
Securities," below. The issue date of the synthetic debt
instrument will be the date of purchase, and the term of the
instrument will be the period from the issue date to the maturity
date of the Debt Securities. The issue price will be the adjusted
issue price of the Debt Securities as of the issue date of the
synthetic debt instrument, decreased or increased by any payments
of Swap Premium (as defined below under "Tax Consequences of
Separate Treatment - Allocation of Basis and Sales Proceeds") by
or to the Unitholder. The source and character of interest income
from the synthetic debt instrument will be determined by
reference to the source and character of income on the Debt
Securities. Income from the Debt Securities and Swap Agreement
underlying a synthetic debt instrument will be treated separately
for purposes of the withholding tax rules. See "Foreign
Unitholders," below.
Integration of Debt Securities and Swap Agreements that Hedge
Currency Risk
If a Swap Agreement hedges currency risk, then integration
of the Swap Agreement and Debt Security may be available under
the Foreign Currency Integration Regulations. The rules for such
integration and for the treatment of the resulting synthetic debt
instrument generally are similar to the rules described above for
integration of Debt Securities and Swap Agreements not hedging
currency risk. One difference is that to qualify for integration,
the combined cash flows on the Debt Security and Swap Agreement
must be substantially equivalent to the cash flows on a
fixed-rate debt instrument. In addition, different types of debt
instruments may qualify for integration under the Foreign
Currency Integration Regulations. Other differences between the
two sets of rules may be relevant for particular Debt Securities
and Swap Agreements.
The issue price of the synthetic debt instrument is
determined by translating the adjusted issue price of the Debt
Securities into the currency in which the synthetic debt
instrument is denominated at the spot rate on the issue date. If
the synthetic debt instrument is payable in U.S. dollars,
Unitholders will not recognize any foreign exchange gain or loss
(as defined below under "Foreign Currency Rules") with respect to
the instrument.
Tax Consequences of Separate Treatment
The discussion under this heading assumes that the
integration rules described above do not apply, so that a
Unitholder must take into account its pro rata share of the
income from the
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Debt Securities and the Swap Agreement, as determined under the
separate tax rules applicable to those items.
Allocation of Basis and Sales Proceeds
A Unitholder should be considered to have purchased its
interest in the Debt Securities for an amount equal to the cost
of its Unit multiplied by a fraction, the numerator of which is
the fair market value of the Debt Securities and the denominator
of which is the sum of the fair market value of the Debt
Securities and the fair market value of any Swap Agreement (which
may be negative, zero or positive), in each case at the time of
purchase. The Unitholder's initial tax basis in the Debt
Securities will equal such allocated purchase price. The
Unitholder's tax basis in the Debt Securities generally will be
increased by any amounts included in income with respect thereto,
and reduced by any payments thereon and any amortized premium
with respect thereto.
If the fair market value to the Trust of the Swap Agreement
is not zero at the time of purchase of a Unit by a Unitholder,
the Unitholder should be treated as having received or paid a
premium with respect to the Swap Agreement ("Swap Premium"). If
such fair market value is negative, a Swap Premium will be
treated as paid to such Unitholder in an amount equal to the
excess of the amount allocated to the Debt Securities (determined
as described above) over the cost of the Unit. If such fair
market value is positive, a Swap Premium will be treated as paid
by such Unitholder equal to the excess of the cost of the Unit
over the amount allocated to the Debt Securities.
Upon a sale of a Unit, the same method would apply in
allocating the amount realized by the selling Unitholder between
the Debt Securities and the Swap Agreement using fair market
values at the time of sale. The amount allocated to the Swap
Agreement would be considered a termination payment made to or by
the Unitholder, depending on whether the amount is positive or
negative as to the Trust.
If the Trust holds, at the time of purchase of a Unit, cash
or cash equivalents, then the cost of the Unit would first be
reduced by the amount of such cash or cash equivalents allocated
to the Unit before making the above allocation.
Taxation of Debt Securities
It is assumed for purposes of the following discussion that
the Debt Securities underlying the Units of each Series will
constitute debt instruments in their entirety and that such Debt
Securities are not acquired by the Trust at their original
issuance. If the Debt Securities are denominated in a foreign
currency, the rules for calculation of foreign exchange gains and
losses discussed below under "Foreign Currency Rules" will also
apply.
Interest, Discount and Premium
Stated Interest. A Unitholder will be required to include
stated interest on Debt Securities in gross income as ordinary
interest income, in accordance with such Unitholder's
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method of accounting, to the extent such stated interest is
qualified stated interest. Stated interest on a Debt Security
will be qualified stated interest, in very general terms, if such
stated interest is unconditionally payable in cash or property
(other than debt instruments of the issuer) at least annually
during the entire term of the Debt Security at a single fixed
rate of interest or, subject to certain conditions, under a
single formula based on one or more interest indices. If stated
interest is not qualified stated interest, it will be included in
OID and a Unitholder will be required to take such discount into
account in accordance with the rules described below.
General OID Rules. OID is the amount by which a debt
instrument's stated redemption price at maturity (as defined
below) exceeds its issue price. Holders of debt instruments
generally are required to include OID in ordinary gross income
using a constant yield method, whether the holder uses the cash
or accrual method of accounting. The amount of OID allocable to
each accrual period is determined by multiplying the adjusted
issue price (as defined below) of the debt instrument at the
beginning of the accrual period by the yield to maturity of such
debt instrument (appropriately adjusted to reflect the length of
the accrual period). The yield to maturity of a debt instrument
is the discount rate that causes the present value of all
payments on the debt instrument as of its issue date to equal the
issue price of such debt instrument. The adjusted issue price of
a debt instrument equals its issue price plus prior accruals of
OID, adjusted for prior payments of amounts included in the
stated redemption price at maturity. The stated redemption price
at maturity of a debt instrument equals the sum of all payments
to be made thereunder other than payments of qualified stated
interest. An accrual period is a period not longer than one year
that generally ends on dates that are or correspond to payment
dates.
Debt Securities Issued With OID. If a Debt Security was
initially issued with OID, a Unitholder will be required to treat
as interest income its share of such discount, adjusted to
reflect the Unitholder's actual purchase price allocated to such
Debt Security, as such discount accrues, without regard to the
timing of receipt of the cash attributable to such income. In
very general terms, if the purchase price allocated to such a
Debt Security exceeds its adjusted issue price but is less than
the stated redemption price at maturity of such Debt Security, a
Unitholder will have acquired such Debt Security with acquisition
premium and such premium will offset and reduce a Unitholder's
share of OID. If the purchase price allocated to such Debt
Security exceeds its stated redemption price at maturity, a
Unitholder will not be required to include OID in income. The
excess of the purchase price over the amount payable on maturity
of the Debt Security (exclusive of any portion of such excess
attributable to a conversion feature) generally will be
amortizable bond premium which, at the election of a Unitholder,
may be offset against stated interest payments on such Debt
Security or in some cases deducted. If the purchase price
allocated to such a Debt Security is less than its adjusted issue
price by more than a de minimis amount, a Unitholder will have
acquired such Debt Security with market discount (as defined in
the Code), which the Unitholder will be required to accrue and
include in income in accordance with special market discount
rules, in addition to OID amounts. Those market discount rules
generally require accrued market discount to be treated as
interest income (1) as principal payments on a debt instrument
are received (up to the amount of such payments), or (2) when a
debt instrument is sold, up to the amount of gain
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recognized in the sale. Any de minimis discount generally is
taken into income ratably as principal payments are received or
the debt instrument is sold.
Debt Securities Issued Without OID. If a Debt Security was
initially issued without OID, a Unitholder will be required to
take into account only stated interest payments on such Debt
Security, unless the purchase price allocated to such Debt
Security differs from the stated redemption price at maturity of
such Debt Security. If the purchase price allocated to a Debt
Security exceeds its amount payable on maturity, that excess
amount (exclusive of any portion thereof attributable to a
conversion feature) generally will be amortizable bond premium,
which at the Unitholder's election, may be offset against stated
interest payments on such Debt Security or in some cases
deducted. In general, if the purchase price allocated to a Debt
Security is less than its stated redemption price at maturity by
more than a de minimis amount, a Unitholder will have acquired
such Debt Security with market discount. The tax treatment of
market discount and de minimis discount are described in the
immediately preceding paragraph.
Special Election to Apply OID Rules. In lieu of the rules
described above with respect to discount and premium, a
Unitholder may elect to report all income on a Debt Security
under the principles of the OID rules, as if such Debt Security
were newly issued on the date of purchase of the Units by the
Unitholder, the issue price of such Debt Security equaled the
purchase price allocated thereto, and none of the interest
thereon was qualified stated interest. An election made by a
taxpayer with respect to one obligation can affect other
obligations it holds. Unitholders should consult with their tax
advisors regarding the merits of making this election.
Sale, Exchange and Retirement of Debt Securities
Upon the sale, exchange or retirement of Debt Securities
(including a sale resulting from a sale of Units), a Unitholder
generally will recognize gain or loss equal to the difference
between the amount realized on the sale, exchange or retirement
and the Unitholder's tax basis in the Debt Securities.
Except as discussed above with respect to market discount
and below under "--Debt Securities Providing for Contingent
Payments," "Straddle Rules," and "Foreign Currency Rules," gain
or loss recognized by a Unitholder on the sale, exchange or
retirement of Debt Securities generally will be capital gain or
loss, and will be long-term capital gain or loss if the
Unitholder is considered to have held the Debt Securities for
more than one year at the time of the disposition.
Debt Securities Providing for Contingent Payments
Debt Securities in a Trust may provide for contingent
payments ("contingent debt obligations"). Regulations issued in
1996 (the "Contingent Payment Regulations") govern the treatment
of contingent debt obligations issued on or after August 13,
1996.
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Under the Contingent Payment Regulations, contingent
debt obligations generally will be subject to the noncontingent
bond method. In general, under this method the issuer of a
contingent debt obligation creates a schedule of projected fixed
payments on the instrument (the "Tax Projected Payment
Schedule"). The Tax Projected Payment Schedule is calculated by
replacing each contingent payment with a projected payment and
then setting the level of those projected payments so that the
obligation has a yield equal to the issuer's comparable yield.
The comparable yield is the rate of interest the issuer would pay
on a comparable debt instrument that did not provide for
contingent payments. The Tax Projected Payment Schedule is
calculated based on the rules in the Contingent Payment
Regulations and does not necessarily represent the issuer's
prediction of how a contingent debt obligation will perform. The
Tax Projected Payment Schedule in respect of contingent debt will
be binding on the Unitholders as long as it is reasonable.
A Unitholder of a Trust holding a contingent debt
obligation generally must include in income interest on such
contingent debt obligation as it accrues, calculated as if the
contingent debt obligation provided only for fixed payments
according to the Tax Projected Payment Schedule. The Tax
Projected Payment Schedule generally is not revised to account
for changes in circumstances that occur while the contingent debt
obligation is outstanding. Any difference between a projected
payment and an actual payment is taken into account as an
adjustment to the Unitholder's interest income when the payment
is made. (This treatment assumes that any contingency affecting a
payment is resolved, so that the payment becomes fixed, no
earlier than six months prior to the date of payment.) Upward and
downward adjustments are netted for each taxable year with
respect to each contingent debt obligation. Any net upward
adjustment for the taxable year is treated as additional interest
income. Any net downward adjustment reduces the interest income
on the obligation for the taxable year that would otherwise
accrue. If any downward adjustment exceeds the interest income
otherwise reported in respect of a contingent debt obligation for
the taxable year, the adjustment would be allowed as an ordinary
deduction, to the extent it does not exceed the net amount of
interest income of the Unitholder from the contingent debt
obligation in prior years.
If a Unitholder is treated as purchasing a contingent
debt obligation for an amount different from its adjusted issue
price, the Unitholder will be required to accrue interest income
on the obligation in accordance with the original Tax Projected
Payment Schedule. Any difference between the purchase price and
the obligation's adjusted issue price on the date of purchase
will be allocated among the remaining payments in the Tax
Projected Payment Schedule. If the Unitholder's basis is greater
than the adjusted issue price of the obligation, the excess is a
downward adjustment; and if the Unitholder's basis is less than
the adjusted issue price, the difference is an upward adjustment.
These adjustments are taken into account at the time the
corresponding interest payment is accrued or made. Any downward
or upward adjustment in respect of a difference between the
Unitholder's purchase price and a contingent debt obligation's
adjusted issue price at the date of purchase will decrease or
increase the Unitholder's basis in the obligation.
Gain or loss recognized on a sale or exchange of a
contingent debt obligation generally would be treated as interest
income or ordinary loss. However, any loss in excess of
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the net amount of interest income on the contingent debt
obligation previously included in income by the Unitholder will
be a capital loss. Furthermore, any gain or loss will be
long-term capital gain or loss if the Unitholder has held the
contingent debt obligation for the long-term holding period and
there are no remaining contingent payments on the obligation at
the time of the disposition.
Taxation of the Swap Agreement
It is assumed for purposes of the following discussion that
a Swap Agreement is a "notional principal contract" in its
entirety. Alternative characterizations of a Swap Agreement are
discussed below under "--Other Characterizations." If payments
under a Swap Agreement are denominated in, or determined by
reference to, a foreign currency, the rules relating to foreign
exchange gains and losses discussed below under "Foreign Currency
Rules" will also apply.
Periodic Payments and Nonperiodic Payments (Including Swap Premium)
Income or deductions with respect to a Swap Agreement may
be attributable to periodic payments, nonperiodic payments
(including Swap Premium) or Swap Termination Payments.
Periodic payments under a Swap Agreement are payments made
or received by the Trust that are payable at intervals of one
year or less during the entire term of the contract (including
any extension periods), that are based on a specified index and
are based on a single notional principal amount or a notional
principal amount that varies over the term of the contract in the
same proportion as the notional principal amount that measures
the other party's payments. However, payments to buy or sell an
interest rate cap or floor are never periodic payments.
All taxpayers must account for periodic payments under an
accrual method of accounting. In a case where periodic payments
to be made under a Swap Agreement are set in arrears, and the
payment relating to a period during a taxable year of a
Unitholder cannot be determined by the end of the year, then
accruals for that year will be based on a reasonable estimate of
the payment, and the difference between the estimated amount and
actual amount will be taken into account in the year in which the
payment is fixed.
Payments under a Swap Agreement that are not periodic
payments or Swap Termination Payments are "nonperiodic payments".
(Accordingly, any Swap Premium paid or received generally would
be a nonperiodic payment.) Nonperiodic payments generally must be
recognized over the term of the Swap Agreement in a manner that
reflects the economic substance of the contract. The amount of
any nonperiodic payment that is amortized in any taxable year
will be treated in the same manner as a periodic payment that
accrues in that year.
Under an alternative rule, nonperiodic payments under a
notional principal contract may be amortized under a level
payment method. Under that method, nonperiodic payments are
allocated as if they represented principal payments on a level
payment loan that extends over the life of the contract and bears
interest at a rate equal to the rate (or rates) used by the
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parties to determine the nonperiodic payments (or if such rate is
not readily ascertainable, a rate that is reasonable under the
circumstances). The level payment method cannot be used by a
taxpayer with respect to a notional principal contract if the
taxpayer reduces risk with respect to the contract by purchasing,
selling or otherwise entering into other financial contracts
(other than debt instruments).
Periodic and nonperiodic payments attributed to any taxable
year would be netted. The net amount received or paid should
generally be ordinary income or an ordinary deduction,
respectively, for that year. Although not certain, income or loss
attributable to changes in the value of property may be treated
as gain or loss from the termination of a right or obligation
with respect to such property, and accordingly may be treated as
capital gains or losses under section 1234A of the Code (except
as discussed below under "Straddle Rules" and "Foreign Currency
Rules").
As an exception to the treatment of nonperiodic payments
outlined above, a notional principal contract that provides for a
"significant" nonperiodic payment is divided into two parts for
federal income tax purposes: a notional principal contract with
periodic payments and a loan.
Where relevant, for purposes of tax information reporting,
the Trustee intends (i) to assume that all of the Units were
purchased on the Closing Date, and (ii) to amortize any
nonperiodic payments that are fixed in amount (including any
initial Swap Premium) under the level payment method described
above. Unitholders that purchase a Unit and are deemed either to
receive or to pay Swap Premium should consult with their tax
advisors regarding the appropriate methods for amortizing such
Swap Premium.
Swap Termination Payments
As described above under "Allocations of Basis and Sales
Proceeds," a Unitholder may be considered to pay or receive a
Swap Termination Payment under a Swap Agreement in connection
with the sale of a Unit. In such a case, a Unitholder would have
gain or loss from termination of a Swap Agreement equal to (i)
the sum of the unamortized portion of any nonperiodic payments
received by the Unitholder and any Swap Termination Payment it
receives or is deemed to have received, less (ii) the sum of the
unamortized portion of any nonperiodic payments paid by the
Unitholder and any Swap Termination Payment it pays or is deemed
to have paid.
A termination of a Swap Agreement generally will be
considered to involve a "sale or exchange" of the Swap Agreement,
with the result that any gain or loss generally will be treated
as capital gain or loss (subject to the discussion below under
"Straddle Rules" and "Foreign Currency Rules"). A Unitholder that
recognizes capital loss upon termination of the Swap Agreement
generally will be able to offset that loss against any gain
recognized with respect to the Debt Securities to the extent such
gain is capital gain.
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Straddle Rules
The Debt Securities and the Swap Agreement may be
considered offsetting positions in a "straddle" subject to the
straddle rules of section 1092 of the Code. Under section
1092(d), a selling Unitholder's capital gain or loss (if any)
with respect to Debt Securities that are positions in a straddle
will be short-term unless such Debt Securities have been held for
the long term capital gain holding period after termination of
the Swap Agreement. Similarly, if the Swap Agreement is a
position in a straddle, capital gain or loss realized in
connection with its termination (or the termination of a right or
obligation thereunder) will be short-term. In addition, under
section 1092, all or a portion of any loss realized upon such
termination may be deferred until disposition of the Debt
Securities. Further, if the Debt Securities and the Swap
Agreement are positions in a straddle and as a result are
considered to be held as part of a "conversion transaction"
within the meaning of section 1258 of the Code, all or a portion
of any gain that would otherwise be capital gain may be
recharacterized as ordinary income. Finally, if the Debt
Securities and the Swap Agreement are positions in a straddle,
any interest or carrying charges incurred by a Unitholder with
respect to its Units may have to be capitalized to the extent
they exceed the Unitholder's interest income from the Debt
Securities, under section 263(g) of the Code.
Other Characterizations of the Debt Securities and Swap Agreement
Depending on its terms, a Swap Agreement may be in economic
substance an option or forward contract (among other
possibilities), instead of or in addition to a notional principal
contract. In general, a Swap Agreement will be treated for
federal income tax purposes in accordance with its economic
substance. Consequently, if a Swap Agreement is an option, a
Unitholder will be treated as writing or purchasing an option.
Any premium paid or received in respect of the option (calculated
in the same manner as Swap Premiums in respect of a Swap
Agreement, as described under "Tax Consequences of Separate
Treatment--Allocation of Basis and Sales Proceeds") generally
will be taken into account in determining gain or loss only upon
termination of the option or, if the option is physically settled
and involves the purchase of property by the Trust, upon the
disposition of such property. Any such gain or loss will be
capital gain or loss (subject to the discussion below under
"Straddle Rules" and "Foreign Currency Rules"). An option
generally will not be subject to the mark-to-market rules under
section 1256 of the Code, but the inapplicability of those rules
is not entirely free from doubt in the case of a purchased option
underlying a Unit that is itself listed on a national securities
exchange. An option and the Debt Securities may be considered
offsetting positions in personal property for purposes of the
straddle rules discussed in the preceding paragraph.
In some cases, Debt Securities and a related Swap Agreement
may represent economically a loan to the Swap Counterparty
secured by the Debt Securities. In that case, the Trust may be
considered to have made a loan providing for cash flows equal to
the cash flows of the Debt Securities and the Swap Agreement
combined. Such a loan would be subject to the rules governing
debt instruments described above under "Tax Consequences of
Separate Treatment--Taxation of Debt Securities."
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Other characterizations may be possible, depending on
the particular terms of the Swap Agreement. Unitholders should
consult their own tax advisors with respect to the federal income
tax treatment of the Swap Agreement.
Stripped Bond Rules
A Unitholder that holds a Strip Unit will be taxed under
the "stripped bond" rules of the Code. The Unitholder will be
treated as having purchased a newly issued, single debt
instrument providing for payments equal to the payments on the
Debt Securities allocable to the Unit and having OID equal to the
excess of the sum of such payments over the issue price. The
issue price is the price at which the Unitholder is considered to
have purchased its right to payments on the Debt Securities. In
the case of a Trust that holds only Debt Securities and cash or
cash equivalents, the issue price would be the cost of the Unit
less the Unitholder's allocable share of such cash or cash
equivalents. The Unitholder will include OID in income as it
accrues in accordance with the constant yield method described
above under "Taxation of Debt Securities--Interest, Discount and
Premium--General OID Rules."
Holders of certain Strip Units may not be entitled to
receive current distributions on such Units. In that case, OID
will be includible in income prior to the receipt of cash
attributable to such income and the amount of OID includible in
income will increase each year.
Unless otherwise specified in the Prospectus Supplement, it
is anticipated that a Trust will, for information reporting
purposes, account for OID reportable by holders of Strip Units by
reference to the first price at which a substantial amount of the
Units is sold to purchasers (other than the underwriters), even
though the amount of OID will differ for subsequent purchasers.
Unitholders should consult their tax advisors regarding the
proper calculation of OID.
Foreign Currency Rules
If the Debt Securities provide for payments denominated in,
or determined by reference to, a foreign currency, and the
integration rules do not apply, then (under the rules of section
988 of the Code and the regulations promulgated thereunder)
foreign exchange gain or loss will be computed separately from
interest income and gain or loss from the Debt Securities.
Foreign exchange gain or loss is treated as ordinary income or
loss that is generally not interest income (or a direct offset to
interest income) and is sourced based on the residence of the
taxpayer.
In general terms, interest income (including OID, and
adjusted for any premium amortization) from the Debt Securities
will be calculated first in foreign currency units as if the
instrument were denominated in U.S. dollars. Interest in foreign
currency units will then be translated into U.S. dollars based on
an average exchange rate for the period when the interest accrues
or, in some cases, based on the exchange rate at the time
interest is paid. Foreign exchange gain or loss will be
recognized when interest income is actually paid in an amount
equal to the difference, if any, between the U.S. dollar value of
the interest payment based on
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the exchange rate or rates used in calculating the interest
income attributable to the payment and the rate when it is
actually paid. Similarly, foreign exchange gain or loss will be
recognized upon the receipt of a principal payment (exclusive of
any portion thereof representing original issue discount) in an
amount equal to the difference between the U.S. dollar value of
the payment based on the exchange rate when the Debt Securities
were acquired and the rate when the payment is made. Upon a sale
of the Debt Securities, gain or loss will be treated as foreign
exchange gain or loss to the extent it does not exceed the gain
or loss, respectively, attributable to changes in exchange rates
over the period that the Unitholder is considered to have held
the Debt Securities.
The principles described above would also apply to any
synthetic debt instrument created by integrating the Debt
Securities and Swap Agreement if that instrument provides for
payments in, or determined by reference to, a foreign currency.
The rules governing a Swap Agreement whose payments are
denominated in, or determined by reference to, foreign currencies
and that is not integrated with the Debt Securities will depend
on its specific terms. In general, the timing of income and
deductions would be determined under the principles described in
"Tax Consequences of Separate Treatment--Taxation of the Swap
Agreement" and any income, loss or deduction (including any gain
or loss from a termination of a Swap Agreement) would be
characterized as foreign exchange gain or loss. In the case of a
Swap Agreement that exchanges both interest and principal
payments, however, the amount and timing of income or loss
generally would be determined as though the Trust had made a
hypothetical loan denominated in the currency in which payments
are received and had incurred a hypothetical debt denominated in
the currency in which payments are made. The resulting net income
or loss would be characterized as foreign exchange gain or loss.
Tax-Exempt Organizations
A qualified pension plan or other entity that generally is
exempt from federal income taxation pursuant to section 501 of
the Code (such an entity, a "Tax-Exempt Investor") nonetheless
will be subject to federal income taxation to the extent that its
income is unrelated business taxable income within the meaning of
section 512 of the Code. Interest on the Debt Securities (or
synthetic debt instrument, if the Debt Securities and Swap
Agreement are integrated), income from a Swap Agreement that is a
notional principal contract and gains from the sale, exchange or
other disposition of Units held by a Tax-Exempt Investor
generally will not be unrelated business taxable income, unless
such Units are "debt-financed property" within the meaning of
section 514 of the Code. A portion of any income or gain from the
Debt Securities would be unrelated business taxable income if,
because of the existence of a significant Swap Premium or other
nonperiodic payment under the Swap Agreement, the Swap
Counterparty were deemed to have made a loan to a Tax-Exempt
Investor that is a Unitholder. See "Tax Consequences of Separate
Treatment--Taxation of Swap Agreement."
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Foreign Unitholders
The following discussion applies to Unitholders that hold
Registered Units. The applicable Prospectus Supplement will
discuss the rules applicable to non-U.S. holders of Bearer Units.
A Unitholder that is not a U.S. person (as defined below)
and that is not subject to U.S. federal income tax as a result of
any direct or indirect connection to the United States in
addition to its ownership of a Unit will not be subject to United
States income or withholding tax, except as described below and
under "Information Reporting and Backup Withholding," in respect
of interest income or gain on the Debt Securities or income from
the Swap Agreement if (i) the Debt Securities were issued after
July 18, 1984, (ii) the Unitholder is not a "10-percent
shareholder" or "related controlled foreign corporation" with
respect to the issuer of the Debt Securities (or the Swap
Counterparty, if the Swap Agreement is considered to involve a
significant nonperiodic payment to the Swap Counterparty that is
treated as a loan or is otherwise considered part of a loan to
the Swap Counterparty), (iii) interest on the Debt Securities
(or, to the extent the Swap Agreement is considered to involve a
loan to the Swap Counterparty, interest on such loan) is not
contingent on the cash flows of, value of property of, or
dividends or other equity payments by, the issuer of the Debt
Securities (or, in the case of a loan to the Swap Counterparty,
the Swap Counterparty), except that this clause will not apply to
Debt Securities that are debt instruments with a fixed term
issued on or before April 7, 1993, (iv) the Unitholder provides
an appropriate statement (generally on IRS Form W-8), signed
under penalties of perjury, identifying the Unitholder and
stating, among other things, that the Unitholder is not a U.S.
person (or, with respect to payments made after December 31,
1999, satisfies certain documentary evidence requirements for
establishing that it is not a U.S. person) and (v) the Unitholder
is not considered to be a bank extending credit under a loan
entered into in the ordinary course of its trade or business.
If the Debt Securities or Swap Agreement provide for
payments relating to a "United States real property interest"
within the meaning of section 897 of the Code, then gain from the
Debt Securities or Swap Agreement, as the case may be, may be
treated as income effectively connected with a United States
trade or business, and a related withholding tax may apply.
A Unitholder that is not a U.S. person may also be subject
to U.S. federal income taxation with respect to a Unit if it is a
personal holding company, corporation that accumulates earnings
to avoid U.S. taxes on shareholders or private foundation under
the Code.
The term "U.S. person" means a citizen or resident of the
United States, a corporation, partnership or other entity created
or organized in or under the laws of the United States or any
political subdivision thereof, an estate the income of which is
subject to United States federal income taxation regardless of
its source or a trust if (i) a U.S. court is able to exercise
primary supervision over the trust's administration and (ii) one
or more U.S. persons have the authority to control all of the
trust's substantial decisions.
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Information Reporting and Backup Withholding
The Trustee will furnish or make available, within 90 days
after the end of each calendar year, to each party registered
during such calendar year as a Unitholder, such information as is
required under the Code or regulations under the Code to enable
each Unitholder to file its federal income tax returns with
respect to its ownership of Registered Units. Such information
may also be reported to the IRS.
Distributions made on a Unit and proceeds from the sale of
a Unit to or through certain brokers may be subject to a "backup"
withholding tax of 31% unless, in general, the Unitholder
complies with certain procedures or establishes that it is a
corporation or otherwise exempt from such withholding. A
Unitholder may be required to provide a statement under penalties
of perjury (generally on IRS Form W-9 for U.S. persons or W-8 for
non-U.S. persons) to establish an exemption. Any amounts so
withheld from distributions on the Unit would be allowed as a
credit against the Unitholder's federal income tax liability, or
upon application by the Unitholder to the IRS, would be refunded
by the IRS to the extent it exceeds such liability.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and the Code impose requirements on employee
benefit plans (and on certain other retirement plans and
arrangements, including individual retirement accounts and
annuities, Keogh plans and collective investment funds and
insurance company separate accounts in which such plans, accounts
or arrangements are invested) subject to ERISA or the Code
(collectively, "Plans") and on persons who are fiduciaries with
respect to such Plans. Among other things, ERISA requires that
the assets of a Plan subject to ERISA be held in trust and
imposes general standards of investment prudence and
diversification on fiduciaries of Plans. In addition, ERISA and
Section 4975 of the Code prohibit a broad range of transactions
involving Plan assets and persons ("Parties in Interest") having
certain specified relationships to a Plan and impose additional
prohibitions where Parties in Interest are fiduciaries with
respect to a Plan. Each of Morgan Stanley, any Swap Counterparty,
the issuers of the Debt Securities and the Trustee and their
affiliates may be Parties in Interest with respect to Plans.
The United States Department of Labor (the "DOL") has
issued regulations (DOL Reg. ss.2510.3-101) concerning what
constitutes the assets of a Plan when a Plan invests in another
entity (the "Plan Asset Regulations"). The Units would constitute
equity interests in the Trust for purposes of the Plan Asset
Regulations. Under the Plan Asset Regulations, the underlying
assets and properties of corporations, partnerships and certain
other entities in which a Plan makes an "equity" investment could
be deemed for purposes of ERISA and Section 4975 of the Code to
be assets of the investing Plan in certain circumstances, unless
the ownership by "benefit plan investors" of equity interests in
the entity is not "significant." In general, ownership by benefit
plan investors of equity interests in an entity is "significant"
on any date if, immediately after the most recent acquisition of
any equity interest in the entity, twenty-five percent or more
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of the value of any class of equity interests in the entity is
held by benefit plan investors. For purposes of the Plan Asset
Regulations, the term "benefit plan investor" includes (a) any
employee benefit plan (as defined in Section 3(3) of ERISA),
whether or not it is subject to the provisions of Title I of
ERISA, including governmental and foreign employee benefit plans,
(b) any plan described in Section 4975(e)(1) of the Code and (c)
any entity whose underlying assets include plan assets by reason
of a plan's investment in the entity.
Unless the "Alternative ERISA Restrictions" or "Deemed
Representations" apply, Units may not be transferred to any
person unless that person is not a Plan subject to the fiduciary
responsibility provisions of ERISA or Section 4975 of the Code
and is not acquiring the Units with the assets of any such Plan
or any government or other plan subject to substantially similar
requirements. The Trust Agreement provides that any purported
transfer in violation of this restriction shall be void ab
initio. Each person who acquires any Book-Entry Unit, and each
fiduciary which causes any such person to so acquire a Book-Entry
Unit, in its individual as well as its fiduciary capacity, will
be deemed to have represented upon the acquisition of such
Book-Entry Unit that such purchaser or transferee is not a Plan
subject to the fiduciary responsibility provisions of ERISA or
Section 4975 of the Code or any government or other plan subject
to substantially similar requirements and is not using the assets
of any such Plan to purchase the Book-Entry Units. THE TRUST
AGREEMENT PROVIDES THAT EACH HOLDER OF A BOOK-ENTRY UNIT SHALL
INDEMNIFY THE TRUSTEE, THE DEPOSITOR, MORGAN STANLEY AND THEIR
AFFILIATES AGAINST ANY COSTS, EXPENSES, DAMAGES OR LOSSES
INCURRED BY THEM AS A RESULT OF THE FAILURE OF THE FOREGOING
REPRESENTATION TO BE TRUE.
Alternatively, if the Prospectus Supplement with respect to
a Series of Units elects the "Alternative ERISA Restrictions",
the restrictions described in the preceding paragraph will not
apply. Unless otherwise specified in the applicable Prospectus
Supplement, Units subject to the "Alternative ERISA Restrictions"
will be issued only as Definitive Units in registered form and
only upon execution and delivery of a definitive Purchase
Agreement, which will contain additional representations
regarding whether such purchaser or proposed transferee is a
benefit plan investor (within the meaning of the Plan Asset
Regulations) or is acquiring the Units with assets of a benefit
plan investor. A definitive Purchase Agreement will similarly be
required to be obtained from any proposed transferee of a Unit to
which the "Alternative ERISA Restrictions" apply. No such
purchase or proposed transfer shall be permitted to the extent
that it would cause the ownership by benefit plan investors to be
"significant" within the meaning of the Plan Asset Regulations
immediately after such purchase or proposed transfer. In
addition, the Depositor and the Trustee will agree that, after
the initial distribution of a particular Series of Units subject
to the Alternative ERISA Restrictions, neither they nor their
affiliates will acquire any Units of such Series, unless such
acquisition would not cause the ownership by benefit plan
investors immediately following such acquisition to be
"significant."
Alternatively, if the Prospectus Supplement with respect to
a Series of Units elects the "Deemed Representations", the
restrictions described in the two preceding paragraphs will not
apply. Units will be issued in reliance on certain exemptions
from the prohibited transaction provisions of Section 406 of
ERISA and Section 4975 of the Code which may be applicable,
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depending in part on the type of Plan fiduciary making the
decision to acquire a Unit and the circumstances under which such
decision is made. Included among these exemptions are Prohibited
Transaction Class Exemption ("PTCE") 91-38 (relating to
investments by bank collective investment funds), PTCE 84-14
(relating to transactions effected by a "qualified professional
asset manager"), PTCE 90-1 (relating to investments by insurance
company pooled separate accounts) and PTCE 96-23 (relating to
transactions determined by in-house asset managers). There can be
no assurance that any of these class exemptions or any other
exemption will be available with respect to any particular
transaction involving the Units. BY ITS PURCHASE OF ANY UNIT, THE
PURCHASER THEREOF WILL BE DEEMED TO HAVE REPRESENTED AND
WARRANTED EITHER THAT (A) IT IS NOT AN ERISA PLAN OR OTHER PLAN,
AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE THE ASSETS OF ANY SUCH
ERISA PLAN OR OTHER PLAN, OR A GOVERNMENTAL PLAN WHICH IS SUBJECT
TO ANY FEDERAL, STATE OR LOCAL LAW THAT IS SUBSTANTIALLY SIMILAR
TO THE PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE
CODE OR (B) ITS PURCHASE, HOLDING AND DISPOSITION OF A UNIT WILL
NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA
OR SECTION 4975 OF THE CODE (OR, IN THE CASE OF A GOVERNMENTAL
PLAN, ANY SUBSTANTIALLY SIMILAR FEDERAL, STATE OR LOCAL LAW) FOR
WHICH AN EXEMPTION IS NOT AVAILABLE. THE TRUST AGREEMENT PROVIDES
THAT EACH HOLDER OF A BOOK-ENTRY UNIT SHALL INDEMNIFY THE
TRUSTEE, THE DEPOSITOR, MORGAN STANLEY AND THEIR AFFILIATES
AGAINST ANY COSTS, EXPENSES, DAMAGES OR LOSSES INCURRED BY THEM
AS A RESULT OF THE FAILURE OF THE FOREGOING REPRESENTATION TO BE
TRUE.
The Prospectus Supplement may also specify restrictions
with respect to ERISA investors different from any of the
foregoing.
Each Plan fiduciary who is responsible for making the
investment decisions whether to purchase or commit to purchase
and to hold Units should determine whether, under the general
fiduciary standards of investment prudence and diversification
and under the documents and instruments governing the Plan, an
investment in the Units is appropriate for the Plan, taking into
account the overall investment policy of the Plan and the
composition of the Plan's investment portfolio. Any Plan
proposing to invest in Units should consult with its counsel to
confirm that such investment will not result in a prohibited
transaction and will satisfy the other requirements of ERISA and
the Code. The sale of any Units to a Plan or a governmental or
other plan is in no respect a representation by the Trust or
Morgan Stanley that such an investment meets all relevant legal
requirements with respect to investments by Plans generally, any
particular Plan or any such other plan, or that such an
investment is appropriate for Plans generally, any particular
Plan or any such other plan.
CURRENCY RISKS
PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN FINANCIAL
AND LEGAL ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN
UNITS DENOMINATED IN A CURRENCY OTHER THAN U.S.
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DOLLARS. SUCH UNITS ARE NOT AN APPROPRIATE INVESTMENT FOR PERSONS WHO ARE
UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS.
Exchange Rates and Exchange Controls
An investment in a Unit having a Specified Currency other
than U.S. dollars entails significant risks that are not
associated with a similar investment in a security denominated in
U.S. dollars. Such risks include, without limitation, the
possibility of significant changes in rates of exchange between
the U.S. dollar and such Specified Currency and the possibility
of the imposition or modification of foreign exchange controls
with respect to such Specified Currency. Such risks generally
depend on factors over which the Depositor, Morgan Stanley and
the Trustee have no control, such as economic and political
events and the supply of and demand for the relevant currencies.
In recent years, rates of exchange between the U.S. dollar and
certain currencies have been highly volatile, and such volatility
may be expected in the future. Fluctuations in any particular
exchange rate that have occurred in the past are not necessarily
indicative, however, of fluctuations in the rate that may occur
during the term of any Unit. Depreciation of the Specified
Currency for a Unit against the U.S. dollar would result in a
decrease in the effective yield of such Unit below its Pass
Through Rate and, in certain circumstances, could result in a
loss to the investor of principal or interest or both on a U.S.
dollar basis.
Governments have from time to time imposed, and may in the
future impose, exchange controls that could affect exchange rates
as well as the availability of a Specified Currency for making
distributions in respect of Units denominated in such currency.
Even if there are no actual exchange controls, it is possible
that, on a Distribution Date with respect to any particular Unit,
the currency in which amounts then due to be distributed in
respect of such Unit are distributable would not be available.
Except as set forth below or unless otherwise provided in the
applicable Prospectus Supplement, if distributions in respect of
a Unit are required to be made in a Specified Currency other than
U.S. dollars and such currency is unavailable due to the
imposition of exchange controls or other circumstances beyond the
control of the Depositor or the Trust or their respective
affiliates, or is no longer used by the government of the country
issuing such currency or for the settlement of transactions by
public institutions of or within the international banking
community (other than under the circumstances described under
"Description of Units -- European Monetary Union"), then all
distributions in respect of such Unit shall be made at a time and
in a manner determined by the Exchange Rate Agent in its sole
discretion, which may be in the Specified Currency at such time
as such currency is again available or so used or in such other
currency and at such rates as the Exchange Rate Agent shall
determine.
Foreign Currency Judgments
Unless otherwise specified in the applicable Prospectus
Supplement, the Units will be governed by and construed in
accordance with the law of the State of New York. Courts in the
United States customarily have not rendered judgments for money
damages denominated in any currency other than the U.S. dollar. A
1987 amendment to the Judiciary Law of the State of
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New York provides, however, that an action based upon an
obligation denominated in a currency other than U.S. dollars will
be rendered in the foreign currency of the underlying obligation
and converted into U.S. dollars at the rate of exchange
prevailing on the date of the entry of the judgment or decree.
The information set forth in this Prospectus is directed to
prospective purchasers of Units who are United States residents.
The applicable Prospectus Supplement for certain issuances of
Units may set forth certain information applicable to prospective
purchasers who are residents of countries other than the United
States with respect to matters that may affect the purchase or
holding of, or receipt of distributions of principal, premium or
interest in respect of, such Units.
LIMITATIONS ON ISSUANCE OF BEARER UNITS
In compliance with United States Federal income tax laws
and regulations, the Depositor and any underwriter, agent or
dealer participating in the offering of any Bearer Unit will
agree that, in connection with the original issuance of such
Bearer Unit and during the period ending 40 days after the issue
of such Bearer Unit, they will not offer, sell or deliver such
Bearer Unit, directly or indirectly, to a U.S. Person or to any
person within the United States, except to the extent permitted
under U.S. Treasury regulations.
Bearer Units will bear a legend to the following effect:
"Any United States Person who holds this obligation will be
subject to limitations under the United States income tax laws,
including the limitations provided in Sections 165(j) and 1287(a)
of the Internal Revenue Code." The sections referred to in the
legend provide that, with certain exceptions, a United States
taxpayer who holds Bearer Units will not be allowed to deduct any
loss with respect to, and will not be eligible for capital gain
treatment with respect to any gain realized on a sale, exchange,
redemption or other disposition of, such Bearer Units.
Pending the availability of a permanent Global Security or
definitive Bearer Units, as the case may be, Units that are
issuable as Bearer Units may initially be represented by a single
temporary Global Security, without interest coupons, to be
deposited with a common depositary in London for Euroclear and
CEDEL for credit to the accounts designated by or on behalf of
the purchasers thereof. Following the availability of a permanent
Global Security in bearer form, without coupons attached, or
definitive Bearer Units and subject to any further limitations
described in the applicable Prospectus Supplement, the temporary
Global Security will be exchangeable for interests in such
permanent Global Security or for such definitive Bearer Units,
respectively, only upon receipt of a "Certificate of Non-U.S.
Beneficial Ownership." A "Certificate of Non-U.S. Beneficial
Ownership" is a certificate to the effect that a beneficial
interest in a temporary Global Security is owned by a person that
is not a U.S. Person or is owned by or through a financial
institution in compliance with applicable U.S. Treasury
regulations. No Bearer Unit will be delivered in or to the United
States. If so specified in the applicable Prospectus Supplement,
interest on a temporary Global Security will be distributed to
each of Euroclear and CEDEL with respect to that portion of such
temporary
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Global Security held for its account, but only upon receipt as of
the relevant Distribution Date of a Certificate of Non-U.S.
Beneficial Ownership.
PLAN OF DISTRIBUTION
The Units may be offered and sold to or through Morgan
Stanley as underwriter, dealer or agent, or through one or more
other underwriters, dealers or agents, or directly to purchasers.
The applicable Prospectus Supplement will set forth the terms of
the offering of any Series of Units, which may include the names
of any underwriters, or initial purchasers, the purchase price of
such Units and the proceeds to the Depositor from such sale, any
underwriting discounts and other items constituting underwriters'
compensation, any initial public offering price, any discounts or
concessions allowed or reallowed or paid to dealers, any
securities exchanges on which such Units may be listed, any
restrictions on the sale and delivery of Units in bearer form and
the place and time of delivery of the Units to be offered
thereby.
If underwriters are used in the sale, Units will be
acquired by the underwriters for their own account and may be
resold from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale. Such Units may be
offered to the public either through underwriting syndicates
represented by managing underwriters or by underwriters without a
syndicate. Such managing underwriters or underwriters in the
United States will include Morgan Stanley, an affiliate of the
Depositor. Unless otherwise set forth in the applicable
Prospectus Supplement, the obligations of the underwriters to
purchase such Units will be subject to certain conditions
precedent, and the underwriters will be obligated to purchase all
such Units, if any, of such Units are purchased. Any initial
public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
In connection with an underwritten offering of Units,
certain underwriters and selling group members and their
respective affiliates may engage in transactions that stabilize,
maintain or otherwise affect the market price of the Units. Such
transactions may include stabilization transactions effected in
accordance with Rule 104 of Regulation M under the Exchange Act,
pursuant to which such persons may bid for or purchase Units for
the purposes of stabilizing their market price.
Units may also be sold through agents designated by the
Depositor from time to time. Any agent involved in the offer or
sale of Units will be named, and any commissions payable by the
Depositor to such agent will be set forth, in the applicable
Prospectus Supplement. Unless otherwise indicated in the
applicable Prospectus Supplement, any such agent will act on a
best efforts basis for the period of its appointment.
If so indicated in the applicable Prospectus Supplement,
the Depositor will authorize agents, underwriters or dealers to
solicit offers by certain specified institutions to purchase
Units at the public offering price described in such Prospectus
Supplement pursuant to delayed delivery contracts providing for
payment and delivery on a future date specified in such
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Prospectus Supplement. Such contracts will be subject only to
those conditions set forth in the applicable Prospectus
Supplement and such Prospectus Supplement will set forth the
commissions payable for solicitation of such contracts.
Any underwriters, dealers or agents participating in the
distribution of Units may be deemed to be underwriters and any
discounts or commissions received by them on the sale or resale
of Units may be deemed to be underwriting discounts and
commissions under the Securities Act. Agents and underwriters may
be entitled under agreements entered into with the Depositor to
indemnification by the Depositor against certain civil
liabilities, including liabilities under the Securities Act, or
to contribution with respect to payments that the agents or
underwriters may be required to make in respect thereof. Agents
and underwriters may be customers of, engage in transactions
with, or perform services for, the Depositor or its affiliates in
the ordinary course of business.
If specified in the Prospectus Supplement, the Debt
Securities may be deposited into the Trust in connection with a
distribution of the Debt Securities by one or more affiliates of
the Depositor pursuant to a registration statement under the
Securities Act, in which the Trust will effectively act as an
underwriter of the Debt Securities pursuant to Rule 140 under the
Securities Act.
Morgan Stanley is an affiliate of the Depositor. Morgan
Stanley's participation in the offer and sale of Units complies
with the requirements of Section 2720 of the Conduct Rules of the
National Association of Securities Dealers, Inc. regarding
underwriting securities of an affiliate.
As to each Series of Units, only those Classes rated in one
of the investment grade rating categories by a Rating Agency will
be offered hereby. Any unrated Classes or Classes rated below
investment grade may be retained by the Depositor or sold at any
time to one or more purchasers.
The Depositor and Morgan Stanley may be indemnified by the
Trust for certain expenses or liabilities incurred in connection
with the offer and sale of the Units.
From time to time, Morgan Stanley and its affiliates may be
engaged by Debt Security Issuers as an underwriter or placement
agent, in an advisory capacity or in other business arrangements.
In addition, Morgan Stanley and its affiliates may make a market
in other outstanding securities of any Debt Security Issuer. Each
Unitholder will be deemed to have acknowledged and agreed that
Morgan Stanley or its affiliates may engage in any kind of
business with, or have an investment in, any Debt Security Issuer
or related persons, and in connection therewith, may obtain or be
in possession of non-public information regarding the Debt
Securities or related persons which may not be made available to
Unitholders.
Affiliates of other underwriters may also act as agents or
underwriters in connection with the sale of the Units. Any
affiliate of the underwriters so acting will be named, and its
affiliation with the underwriters described, in the related
Prospectus Supplement. Also, affiliates of the underwriters may
act as principals or agents in connection with market-making
transactions relating to the Units.
81
<PAGE>
LEGAL MATTERS
Certain legal matters with respect to the issuance of Units
will be passed upon for the Depositor by Cleary, Gottlieb, Steen
& Hamilton.
82
<PAGE>
=================================================================
No dealer, salesperson or any other person has been
authorized to give any information or to make any representations
other than those contained in the Prospectus (including the
accompanying Prospectus Supplement) in connection with the offer
contained herein and, if given or made, such information or
representations must not be relied upon as having been authorized
by the company or an agent. Neither the delivery of this
Prospectus (including the accompanying Prospectus Supplement) nor
any sale made hereunder shall, under any circumstances, create an
implication that there has been no change in the affairs of the
company since the dates as of which information is given in this
Prospectus (including the accompanying Prospectus Supplement).
This Prospectus (including the accompanying Prospectus
Supplement) do not constitute an offer or solicitation by anyone
in any jurisdiction in which such offer or solicitation is not
authorized or in which the person making such offer or
solicitation is not qualified to do so or to any person to whom
it is unlawful to make such offer or solicitation.
TABLE OF CONTENTS
Page
----
PROSPECTUS SUPPLEMENTS........................................3
AVAILABLE INFORMATION.........................................4
INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE...................................4
IMPORTANT CURRENCY INFORMATION................................5
RISK FACTORS..................................................5
THE DEPOSITOR................................................12
USE OF PROCEEDS..............................................13
FORMATION OF TRUSTS..........................................13
DESCRIPTION OF TRUST PROPERTY................................15
DESCRIPTION OF SWAP AGREEMENTS...............................23
MSDW.........................................................28
DESCRIPTION OF UNITS.........................................29
DESCRIPTION OF TRUST AGREEMENTS..............................52
CERTAIN FEDERAL INCOME
TAX CONSEQUENCES........................................62
ERISA CONSIDERATIONS.........................................75
CURRENCY RISKS...............................................78
LIMITATIONS ON ISSUANCE OF
BEARER UNITS............................................79
PLAN OF DISTRIBUTION.........................................80
LEGAL MATTERS................................................82
=================================================================
=================================================================
$
MSDW STRUCTURED ASSET CORP.
STRUCTURED ASSET TRUST UNIT REPACKAGINGS
PROSPECTUS
Dated , 199__
=================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Other Expenses of Issuance and Distribution (Item 14 of Form S-3)
The expenses expected to be incurred in connection with the
issuance and distribution of the Certificates being registered,
other than underwriting compensation, are as set forth below.
Filing Fee for Registration Statement............... $147,500
Legal Fees and Expenses............................. *
Accounting Fees and Expenses........................ *
Trustee's Fees and Expenses
(including counsel fees)...................... *
Blue Sky Fees and Expenses.......................... *
Printing and Engraving Fees......................... *
Rating Agency Fees.................................. *
Miscellaneous....................................... *
------
Total............................................... ======
---------------
* To be provided by amendment.
Indemnification of Directors and Officers (Item 15 of Form S-3).
The Company's By-laws provide that the Corporation shall
indemnify, to the fullest extent permitted by applicable law, any
person who was or is a party or is threatened to be made a party
to, or is involved in any manner in, any threatened, pending or
completed action, suit or proceeding (whether civil, criminal,
administrative or investigative) by reason of the fact that such
person (1) is or was a director or officer of the Corporation or
a Subsidiary or (2) is or was serving at the request of the
Corporation or a Subsidiary as a director, officer, partner,
member, employee or agent of another corporation, partnership,
joint venture, trust, committee or other enterprise.
Section 145 of the Delaware General Corporation Law (the
"GCL") provides as follows:
"(a) A corporation shall have power to indemnify any person
who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation) by reason
of the fact that the person is or was a director, officer,
employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust
or
<PAGE>
other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by the person in connection with such action,
suit or proceeding if the person acted in good faith and in a
manner the person reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe
the person's conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good
faith and in a manner which the person reasonably believed to be
in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, had reasonable
cause to believe that the person's conduct was unlawful.
(b) A corporation shall have power to indemnify any person
who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor by
reason of the fact that the person is or was a director, officer,
employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust
or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by the person in connection with
the defense or settlement of such action or suit if the person
acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the corporation unless
and only to the extent that the Court of Chancery or the court in
which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses which the
Court of Chancery of such other court shall deem proper.
(c) To the extent that a present or former director or
officer of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred
to in subsections (a) and (b) of this section, or in defense of
any claim, issue or matter therein, such person shall be
indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by such person in connection therewith.
(d) Any indemnification under subsections (a) and (b) of
this section (unless ordered by a court) shall be made by the
corporation only as authorized in the specific case upon a
determination that indemnification of the present or former
director, officer, employee or agent is proper in the
circumstances because the person has met the applicable standard
of conduct set forth in subsections (a) and (b) of this section.
Such determination shall be made, with respect to a person who is
a director or officer at the time of such determination, (1) by a
majority vote of the directors who are not parties to such
action, suit or proceeding, even though less than a quorum, or
(2) by a committee of such directors designated by majority vote
of such directors, even though less than a quorum, or (3) if
there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, or (4) by the
stockholders.
2
<PAGE>
(e) Expenses (including attorneys' fees) incurred by an
officer or director in defending any civil, criminal,
administrative or investigative action, suit or proceeding may be
paid by the corporation in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that such person is not
entitled to be indemnified by the corporation as authorized in
this section. Such expenses (including attorneys' fees) incurred
by former directors and officers or other employees and agents
may be so paid upon such terms and conditions, if any, as the
corporation deems appropriate.
(f) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other subsections of
this section shall not be deemed exclusive of any other rights to
which those seeking indemnification or advancement of expenses
may be entitled under any bylaw, agreement, vote of stockholders
or disinterested directors or otherwise, both as to action in
such person's official capacity and as to action in another
capacity while holding such office.
(g) A corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted
against such person and incurred by such person in any such
capacity, or arising out of such person's status as such, whether
or not the corporation would have the power to indemnify such
person against such liability under this section.
(h) For purposes of this section, references to "the
corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have
had power and authority to indemnify its directors, officers, and
employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is
or was serving at the request of such constituent corporation as
a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall
stand in the same position under this section with respect to the
resulting or surviving corporation as such person would have with
respect to such constituent corporation if its separate existence
had continued.
(i) For purposes of this section, references to "other
enterprises" shall include employee benefit plans; references to
"fines" shall include any excise taxes assessed on a person with
respect to any employee benefit plan; and references to "serving
at the request of the corporation" shall include any service as a
director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director,
officer, employee or agent with respect to any employee benefit
plan, its participants or beneficiaries; and a person who acted
in good faith and in a manner such person reasonably believed to
be in the interest of the participants and beneficiaries of an
employee benefit plan shall be deemed to have acted in a manner
"not opposed to the best interests of the corporation" as
referred to in this section.
3
<PAGE>
(j) The indemnification and advancement of expenses
provided by, or granted pursuant to, this section shall, unless
otherwise provided when authorized or ratified, continue as to a
person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive
jurisdiction to hear and determine all actions for advancement of
expenses of indemnification brought under this section or under
any bylaw, agreement, vote of stockholders or disinterested
directors, or otherwise. The Court of Chancery may summarily
determine a corporation's obligation to advance expenses
(including attorneys' fees)."
The Certificate of Incorporation also limits the personal
liability of directors to the Corporation or its stockholders for
monetary damages for any breach of fiduciary duty. The
Certificate of Incorporation provides as follows:
"A director of the Corporation shall not be personally
liable to the Corporation or its stockholders for
monetary damages for any breach of fiduciary duty as a
director, except for liability (i) for any breach by
the director of his duty of loyalty to the Corporation
or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or
a knowing violation of law, (iii) under Section 174 of
the General Corporation Law of the State of Delaware
or (iv) for any transaction from which the director
derived an improper personal benefit."
Undertakings (Item 17 of form S-3).
A. Undertakings Pursuant to Rule 415.
The undersigned Registrant hereby undertakes:
(a) (1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
Registration Statement (i) to include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933, (ii) to reflect
in the prospectus any facts or events arising after the effective
date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement, and (iii) to include any
material information with respect to the plan of distribution not
previously disclosed in this Registration Statement or any
material change to such information in this Registration
Statement; provided however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information required to be
included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this Registration Statement.
4
<PAGE>
(2) That, for the purpose of determining any
liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(b) That, for purposes of determining any liability
under the Securities Act of 1933, each filing of the Registrant's
annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the Registration Statement shall be
deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(c) To provide to the underwriter at the closing
specified in the underwriting agreements certificates in such
denominations and registered in such names as required by the
underwriter to permit prompt delivery to each purchaser.
B. Undertaking in Respect of Indemnification.
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the Registrant pursuant to
the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form
S-3, reasonably believes that the security rating requirement
contained in Transaction Requirement B.5. of Form S-3 will be met
by the time of the sale of the securities registered hereunder
and has duly caused by this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in
New York, New York on the 30th day of September, 1998.
MSDW STRUCTURED ASSET CORP.
By: /s/ Laya Khadjavi
------------------
Laya Khadjavi
Director
Pursuant to the requirements of the Securities Act of
1933, this Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
/s/ Laya Khadjavi Director, President September 30, 1998
- ---------------------- and Chief Executive
Officer
/s/ Michael Harpe Director, Treasurer September 30, 1998
- ---------------------- and Chief Financial
Officer
/s/ Donald J. Puglisi Assistant Secretary September 30, 1998
- ----------------------
6
<PAGE>
Registration No. 33-______
=================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
EXHIBITS
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
MSDW Structured Asset Corp.
(Exact name of registrant as specified in charter)
=================================================================
<PAGE>
Index to Exhibits
Exhibit Number Exhibit Page
-------------- ------- ----
1.1 Form of Underwriting --
Agreement
3.1 Certificate of Incorporation --
3.2 By-Laws --
4.1 Standard Terms of Trust --
Agreements
5.1 Opinion of Cleary, Gottlieb, --
Steen & Hamilton with respect
to legality
8.1 Opinion of Cleary, Gottlieb, --
Steen & Hamilton with respect
to certain tax matters
10.1 Form of Schedule to ISDA --
Master Agreement
23.1 Consent of Cleary, Gottlieb, --
Steen & Hamilton (included in
Exhibit 8.1)
25.1 Statement of Eligibility of --
Trustee
MSDW STRUCTURED ASSET CORP.
UNDERWRITING AGREEMENT
STANDARD PROVISIONS
September __, 1998
From time to time, MSDW Structured Asset Corp., a
Delaware corporation (the "Company"), may enter into one or more
underwriting agreements that provide for the sale of designated
securities to the several underwriters named therein. The
standard provisions set forth herein may be incorporated by
reference in any such underwriting agreement (an "Underwriting
Agreement"). The Underwriting Agreement, including the provisions
incorporated therein by reference, is herein sometimes referred
to as this Agreement. Terms defined in the Underwriting Agreement
are used herein as therein defined.
The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement, including
a prospectus, relating to the Units and has filed with, or
transmitted for filing to, or shall promptly hereafter file with
or transmit for filing to, the Commission a prospectus supplement
(the "Prospectus Supplement") specifically relating to the Units
pursuant to Rule 424 under the Securities Act of 1933, as amended
(the "Securities Act"). The term "Registration Statement" means
the registration statement, including the exhibits thereto, as
amended to the date of this Agreement. The term "Basic
Prospectus" means the prospectus included in the Registration
Statement. The term "Prospectus" means the Basic Prospectus
together with the Prospectus Supplement. The term "preliminary
prospectus" means a preliminary prospectus supplement
specifically relating to the Offered Securities and the Debt
Warrant Securities, together with the Basic Prospectus. As used
herein, the terms "Basic Prospectus," "Prospectus" and
"preliminary prospectus" shall include in each case the
documents, if any, incorporated by reference therein. The terms
"supplement," "amendment" and "amend" as used herein shall
include all documents deemed to be incorporated by reference in
the Prospectus that are filed subsequent to the date of the Basic
<PAGE>
Prospectus by the Company with the Commission pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
The term "Contract Securities" means the Offered
Securities to be purchased pursuant to the delayed delivery
contracts substantially in the form of Schedule I hereto, with
such changes therein as the Company may approve (the "Delayed
Delivery Contracts"). The term "Underwriters' Securities" means
the Offered Securities other than Contract Securities.
1. Representations and Warranties. The Company
represents and warrants to and agrees with each of the
Underwriters that:
(a) The Registration Statement has become
effective; no stop order suspending the effectiveness of
the Registration Statement is in effect, and no proceedings
for such purpose are pending before or threatened by the
Commission.
(b) (i) Each document, if any, filed or to be
filed pursuant to the Exchange Act and incorporated by
reference in the Prospectus complied or will comply when so
filed in all material respects with the Exchange Act and
the applicable rules and regulations of the Commission
thereunder, (ii) each part of the Registration Statement,
when such part became effective, did not contain, and each
such part, as amended or supplemented, if applicable, will
not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading,
(iii) the Registration Statement and the Prospectus comply,
and, as amended or supplemented, if applicable, will comply
in all material respects with the Securities Act and the
applicable rules and regulations of the Commission
thereunder and (iv) the Prospectus does not contain and, as
amended or supplemented, if applicable, will not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in
the light of the circumstances under which they were made,
not misleading, except that the representations and
warranties set forth in this paragraph do not apply (A) to
statements or omissions in the Registration Statement or
the Prospectus based upon information relating to any
Underwriter furnished to the Company in writing by such
Underwriter through the Manager expressly for use therein
or (B) to that part of the Registration Statement that
constitutes the Statement of Eligibility (Form T-1) under
the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), of the Trustee.
(c) The Company has been duly incorporated, is
validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its property and to
conduct its business as described in the Prospectus and is
duly qualified to transact business and is in good standing
in each jurisdiction in which the conduct of its business
or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be
so qualified or be in good standing would not have a
material adverse effect on the Company and its
subsidiaries, taken as a whole.
2
<PAGE>
(d) Each subsidiary of the Company has been duly
incorporated, is validly existing as a corporation in good
standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own
its property and to conduct its business as described in the
Prospectus and is duly qualified to transact business and is
in good standing in each jurisdiction in which the conduct
of its business or its ownership or leasing of property
requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not
have a material adverse effect on the Company and its
subsidiaries, taken as a whole; all of the issued shares of
capital stock of each subsidiary of the Company have been
duly and validly authorized and issued, are fully paid and
non-assessable and are owned directly by the Company, free
and clear of all liens, encumbrances, equities or claims.
(e) This Agreement has been duly authorized,
executed and delivered by the Company.
(f) The Trust Agreement has been duly qualified
under the Trust Indenture Act and has been duly authorized,
executed and delivered by the Company and is a valid and
binding agreement of the Company, enforceable in accordance
with its terms, subject to applicable bankruptcy,
insolvency or similar laws affecting creditors' rights
generally and general principles of equity.
(g) The Delayed Delivery Contracts have been duly
authorized, executed and delivered by the Company and are
valid and binding agreements of the Company, enforceable in
accordance with their respective terms, subject to
applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principles of
equity.
(h) The Offered Securities have been duly
authorized and, when executed and authenticated in
accordance with the provisions of the Trust Agreement and
delivered to and paid for by the Underwriters in accordance
with the terms of the Underwriting Agreement, in the case
of the Underwriters' Securities, or by institutional
investors in accordance with the terms of the Delayed
Delivery Contracts in the case of the Contract Securities,
will be entitled to the benefits of the Trust Agreement, as
the case may be, and will be valid and binding obligations
of the Company, in each case enforceable in accordance with
their respective terms, subject to applicable bankruptcy,
insolvency or similar laws affecting creditors' rights
generally and general principles of equity.
(i) The execution and delivery by the Company of,
and the performance by the Company of its obligations
under, this Agreement and the Trust Agreement will not
contravene any provision of applicable law or the
certificate of incorporation or by-laws of the Company or
any agreement or other instrument binding upon the Company
or any of its subsidiaries that is material to the Company
and its subsidiaries, taken as a whole, or any judgment,
order or decree of any governmental body, agency or court
having jurisdiction over the Company or any subsidiary, and
no
3
<PAGE>
consent, approval, authorization or order of, or
qualification with, any governmental body or agency is
required for the performance by the Company of its
obligations under this Agreement and the Trust Agreement,
except such as may be required by the securities or Blue
Sky laws of the various states in connection with the offer
and sale of the Offered Securities.
(j) There has not occurred any material adverse
change, or any development involving a prospective material
adverse change, in the condition, financial or otherwise,
or in the earnings, business or operations of the Company
and its subsidiaries, taken as a whole, from that set forth
in the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this
Agreement).
(k) There are no legal or governmental
proceedings pending or threatened to which the Company or
any of its subsidiaries is a party or to which any of the
properties of the Company or any of its subsidiaries is
subject that are required to be described in the
Registration Statement or the Prospectus and are not so
described or any statutes, regulations, contracts or other
documents that are required to be described in the
Registration Statement or the Prospectus or to be filed or
incorporated by reference as exhibits to the Registration
Statement that are not described, filed or incorporated as
required.
(l) Each preliminary prospectus filed as part of
the registration statement as originally filed or as part
of any amendment thereto, or filed pursuant to Rule 424
under the Securities Act, complied when so filed in all
material respects with the Securities Act and the
applicable rules and regulations of the Commission
thereunder.
(m) The Company is not and, after giving effect
to the offering and sale of the Offered Securities and the
application of the proceeds thereof as described in the
Prospectus, will not be an "investment company" as such
term is defined in the Investment Company Act of 1940, as
amended.
(n) The Company and its subsidiaries (i) are in
compliance with any and all applicable foreign, federal,
state and local laws and regulations relating to the
protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all
permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except
where such noncompliance with Environmental Laws, failure
to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such
permits, licenses or approvals would not, singly or in the
aggregate, have a material adverse effect on the Company
and its subsidiaries, taken as a whole.
(o) There are no costs or liabilities associated
with Environmental Laws (including, without limitation, any
capital or operating expenditures required for
4
<PAGE>
clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any
related constraints on operating activities and any
potential liabilities to third parties) which would, singly
or in the aggregate, have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
(p) The Company has complied with all provisions of
Section 517.075, Florida Statutes relating to doing
business with the Government of Cuba or with any person or
affiliate located in Cuba.
2. Delayed Delivery Contracts. If the Prospectus
provides for sales of Offered Securities pursuant to Delayed
Delivery Contracts, the Company hereby authorizes the
Underwriters to solicit offers to purchase Contract Securities on
the terms and subject to the conditions set forth in the
Prospectus pursuant to Delayed Delivery Contracts. Delayed
Delivery Contracts may be entered into only with institutional
investors approved by the Company of the types set forth in the
Prospectus. On the Closing Date, the Company will pay to the
Manager as compensation for the accounts of the Underwriters the
commission set forth in the Underwriting Agreement in respect of
the Contract Securities. The Underwriters will not have any
responsibility in respect of the validity or the performance of
any Delayed Delivery Contracts.
If the Company executes and delivers Delayed Delivery
Contracts with institutional investors, the aggregate amount of
Offered Securities to be purchased by the several Underwriters
shall be reduced by the aggregate amount of Contract Securities;
such reduction shall be applied to the commitment of each
Underwriter pro rata in proportion to the amount of Offered
Securities set forth opposite such Underwriter's name in the
Underwriting Agreement, except to the extent that the Manager
determines that such reduction shall be applied in other
proportions and so advises the Company; provided, however, that
the total amount of Offered Securities to be purchased by all
Underwriters shall be the aggregate amount set forth above, less
the aggregate amount of Contract Securities.
3. Terms of Public Offering. The Company is advised by
the Manager that the Underwriters propose to make a public
offering of their respective portions of the Underwriters'
Securities as soon after this Agreement has been entered into as
in the Manager's judgment is advisable. The terms of the public
offering of the Underwriters' Securities are set forth in the
Prospectus.
4. Payment and Delivery. Except as otherwise provided
in this Section 4, payment for the Underwriters' Securities shall
be made to the Company in Federal or other funds immediately
available at the time and place set forth in the Underwriting
Agreement, upon delivery to the Manager for the respective
accounts of the several Underwriters of the Underwriters'
Securities registered in such names and in such denominations as
the Manager shall request in writing not less than two full
business days prior to the date of delivery, with any transfer
taxes payable in connection with the transfer of the
Underwriters' Securities to the Underwriters duly paid.
5
<PAGE>
Delivery on the Closing Date of any Units that are (i) Units in
bearer form shall be effected by delivery of a single temporary
Global Security (as defined in the Trust Agreement) to a common
depositary for Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear System
("Euroclear"), and for Centrale de Livraison de Valeurs
Mobilieres S.A. ("Cedel") for credit to the respective accounts
at Euroclear or Cedel of each Underwriter or to such other
accounts as such Underwriter may direct. Any Global Security
shall be delivered to the Manager not later than the Closing
Date, against payment of funds to the Company in the net amount
due to the Company for such Global Security by the method and in
the form set forth in the Underwriting Agreement. The Company
shall cause definitive Units in bearer form to be prepared and
delivered in exchange for such Global Security in such manner and
at such time as may be provided in or pursuant to the Indenture;
provided, however, that the Global Security shall be exchangeable
for definitive Units in bearer form only on or after the date
specified for such purpose in the Prospectus.
5. Conditions to the Underwriters' Obligations. The
several obligations of the Underwriters are subject to the
following conditions:
(a) Subsequent to the execution and delivery of
the Underwriting Agreement and prior to the Closing Date:
(i) there shall not have occurred any
downgrading, nor shall any notice have been given of
any intended or potential downgrading or of any review
for a possible change that does not indicate the
direction of the possible change, in the rating
accorded any of the Company's securities by any
"nationally recognized statistical rating
organization," as such term is defined for purposes of
Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any
change, or any development involving a prospective
change, in the condition, financial or otherwise, or
in the earnings, business or operations of the Company
and its subsidiaries, taken as a whole, from that set
forth in the Prospectus (exclusive of any amendments
or supplements thereto subsequent to the date of this
Agreement) that, in the judgment of the Manager, is
material and adverse and that makes it, in the
judgment of the Manager, impracticable to market the
Offered Securities on the terms and in the manner
contemplated in the Prospectus.
(b) The Underwriters shall have received on the
Closing Date a certificate, dated the Closing Date and
signed by an executive officer of the Company, to the
effect set forth in Section 5(a)(i) above and to the effect
that the representations and warranties of the Company
contained in this Agreement are true and correct as of the
Closing Date and that the Company has complied with all of
the agreements and satisfied all of the conditions on its
part to be performed or satisfied hereunder on or before
the Closing Date.
6
<PAGE>
The officer signing and delivering such certificate may
rely upon the best of his or her knowledge as to proceedings
threatened.
(c) An opinion, dated the Closing Date, addressed
to MSDW Structured Asset Corp. in substantially the form
attached at Exhibit A to this Underwriting Agreement, shall
be received by the Underwriters.
6. Covenants of the Company. In further consideration
of the agreements of the Underwriters herein contained, the
Company covenants with each Underwriter as follows:
(a) To furnish the Manager, without charge, ___
signed copies of the Registration Statement (including
exhibits thereto) and for delivery to each other
Underwriter a conformed copy of the Registration Statement
(without exhibits thereto) and to furnish the Manager in
New York City, without charge, prior to 10:00 a.m. New York
City time on the business day next succeeding the date of
this Agreement and during the period mentioned in Section
6(c) below, as many copies of the Prospectus, any documents
incorporated by reference therein and any supplements and
amendments thereto or to the Registration Statement as the
Manager may reasonably request.
(b) Before amending or supplementing the
Registration Statement or the Prospectus with respect to
the Offered Securities, to furnish to the Manager a copy of
each such proposed amendment or supplement and not to file
any such proposed amendment or supplement to which the
Manager reasonably objects.
(c) If, during such period after the first date
of the public offering of the Offered Securities as in the
opinion of counsel for the Underwriters the Prospectus is
required by law to be delivered in connection with sales by
an Underwriter or dealer, any event shall occur or
condition exist as a result of which it is necessary to
amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when
the Prospectus is delivered to a purchaser, not misleading,
or if, in the opinion of counsel for the Underwriters, it
is necessary to amend or supplement the Prospectus to
comply with applicable law, forthwith to prepare, file with
the Commission and furnish, at its own expense, to the
Underwriters and to the dealers (whose names and addresses
the Manager will furnish to the Company) to which Offered
Securities may have been sold by the Manager on behalf of
the Underwriters and to any other dealers upon request,
either amendments or supplements to the Prospectus so that
the statements in the Prospectus as so amended or
supplemented will not, in the light of the circumstances
when the Prospectus is delivered to a purchaser, be
misleading or so that the Prospectus, as amended or
supplemented, will comply with law.
(d) To endeavor to qualify the Offered Securities
for offer and sale under the securities or Blue Sky laws of
such jurisdictions as the Manager shall reasonably request.
7
<PAGE>
(e) During the period beginning on the date of the
Underwriting Agreement and continuing to and including the
Closing Date, not to offer, sell, contract to sell or
otherwise dispose of any debt securities of the Company or
warrants to purchase debt securities of the Company
substantially similar to the Offered Securities (other than
(i) the Offered Securities and (ii) commercial paper issued
in the ordinary course of business), without the prior
written consent of the Manager.
(f) Whether or not the transactions contemplated
in this Agreement are consummated or this Agreement is
terminated, to pay or cause to be paid all expenses
incident to the performance of its obligations under this
Agreement, including: (i) the fees, disbursements and
expenses of the Company's counsel and the Company's
accountants in connection with the registration and
delivery of the Offered Securities under the Securities Act
and all other fees or expenses in connection with the
preparation and filing of the Registration Statement, any
preliminary prospectus, the Prospectus and amendments and
supplements to any of the foregoing, including all printing
costs associated therewith, and the mailing and delivering
of copies thereof to the Underwriters and dealers, in the
quantities hereinabove specified, (ii) all costs and
expenses related to the transfer and delivery of the
Offered Securities to the Underwriters, including any
transfer or other taxes payable thereon, (iii) the cost of
printing or producing any Blue Sky or legal investment
memorandum in connection with the offer and sale of the
Offered Securities under state law and all expenses in
connection with the qualification of the Offered Securities
for offer and sale under state law as provided in Section
6(d) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with
the Blue Sky or legal investment memorandum, (iv) the fees
and disbursements of the Company's counsel and accountants
and of the Trustee and its counsel, (v) all filing fees and
the reasonable fees and disbursements of counsel to the
Underwriters incurred in connection with the review and
qualification of the offering of the Offered Securities by
the National Association of Securities Dealers, Inc., (vi)
any fees charged by the rating agencies for the rating of
the Offered Securities, [(vii) all fees and expenses in
connection with the preparation and filing of the
registration statement on Form 8-A relating to the
Securities and all costs and expenses incident to listing
the Offered Securities on [the NYSE/AMEX/the NASDAQ
National Market] [and other national securities exchanges
and foreign stock exchanges]], (viii) the costs and
expenses of the Company relating to investor presentations
on any "road show" undertaken in connection with the
marketing of the offering of the Offered Securities,
including, without limitation, expenses associated with the
production of road show slides and graphics, fees and
expenses of any consultants engaged in connection with the
road show presentations with the prior approval of the
Company, travel and lodging expenses of the representatives
and officers of the Company and any such consultants, and
the cost of any aircraft chartered in connection with the
road show, (ix) all other costs and expenses incident to
the perfor mance of the obligations of the Company
hereunder for which provision is not otherwise made in this
Section [and (x) all document production charges and
expenses of counsel to the Underwriters incurred in
connection with the preparation of the Indenture]. It is
8
<PAGE>
understood, however, that except as provided in this
Section, Section 8 entitled "Indemnity and Contribution",
and the last paragraph of Section 10 below, the
Underwriters will pay all of their costs and expenses,
including fees and disbursements of their counsel, and any
advertising expenses connected with any offers they may
make].
7. Covenants of the Underwriters.
Each of the several Underwriters represents and
agrees with the Company that:
(i) except to the extent permitted under
U.S. Treas. Reg. Section 1.163-5(c)(2)(i)(D) (the "D
Rules"), (A) it has not offered or sold, and during
the restricted period will not offer or sell, Debt
Securities in bearer form (including any Debt Security
in global form that is exchangeable for Debt
Securities in bearer form) to a person who is within
the United States or its possessions or to a United
States person and (B) it has not delivered and will
not deliver within the United States or its
possessions definitive Debt Securities in bearer form
that are sold during the restricted period;
(ii) it has, and throughout the restricted
period will have, in effect procedures reasonably
designed to ensure that its employees or agents who
are directly engaged in selling Debt Securities in
bearer form are aware that such Debt Securities may
not be offered or sold during the restricted period to
a person who is within the United States or its
possessions or to a United States person, except as
permitted by the D Rules;
(iii) if it is a United States person, it is
acquiring the Debt Securities in bearer form for
purposes of resale in connection with their original
issuance and if it retains Debt Securities in bearer form
for its own account, it will only do so in accordance with
the requirements of U.S. Treas. Reg. Section 1.163-5(c)(2)
(i)(D)(6);
(iv) if it transfers to any affiliate Debt
Securities in bearer form for the purpose of offering
or selling such Debt Securities during the restricted
period, it will either (A) obtain from such affiliate
for the benefit of the Company the representations and
agreements contained in Sections 7(a)(i), 7(a)(ii) and
7(a)(iii) or (B) repeat and confirm the
representations and agreements contained in Sections
7(a)(i), 7(a)(ii) and 7(a)(iii) on such affiliate's
behalf and obtain from such affiliate the authority to
so obligate it;
(v) it will obtain for the benefit of the Company
the representations and agreements contained in
Sections 7(a)(i), 7(a)(ii), 7(a)(iii) and 7(a)(iv) from
any person other than its affiliate with whom it enters
into a written contract, as defined in U.S. Treas. Reg.
Section 1.163-5(c)(2)(i)(D)(4) for the offer or sale
during the restricted period of Debt Securities in
bearer form; and
9
<PAGE>
(vi) it will comply with or observe any other
restrictions or limitations set forth in the Prospectus on
persons to whom, or the jurisdictions in which, or the manner in
which, the Debt Securities may be offered, sold,
resold or delivered.
All other terms used in the preceding paragraph have the
meaning given to them by the U.S. Internal Revenue Code (the
"Code") and regulations thereunder, including the D Rules.
The restricted period is defined at U.S. Treas. Reg. Section
1.163-5(c)(2)(i)(D)(7).
8. Indemnity and Contribution. (a) The Company agrees
to indemnify and hold harmless each Underwriter and each person,
if any, who controls any Underwriter within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange
Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue
statement or alleged untrue statement of a material fact
contained in the Registration Statement or any amendment thereof,
any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments
or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission
or alleged untrue statement or omission based upon information
relating to any Underwriter furnished to the Company in writing
by such Underwriter through the Manager expressly for use
therein.
(b) Each Underwriter agrees, severally and not
jointly, to indemnify and hold harmless the Company, its
directors, its officers who sign the Registration Statement and
each person, if any, who controls the Company within the meaning
of either Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from
the Company to such Underwriter, but only with reference to
information relating to such Underwriter furnished to the Company
in writing by such Underwriter through the Manager expressly for
use in the Registration Statement, any preliminary prospectus,
the Prospectus or any amendments or supplements thereto.
(c) In case any proceeding (including any
governmental investigation) shall be instituted involving any
person in respect of which indemnity may be sought pursuant to
either Section 8(a) or 8(b), such person (the "indemnified
party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and
the indemnifying party, upon request of the indemnified party,
shall retain counsel reasonably satisfactory to the indemnified
party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay
the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall
have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such
indemnified party unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of
such counsel or (ii) the named parties to any such
10
<PAGE>
proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate due to
actual or potential differing interests between them. It is
understood that the indemnifying party shall not, in respect of
the legal expenses of any indemnified party in connection with
any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate
firm (in addition to any local counsel) for all such indemnified
parties and that all such fees and expenses shall be reimbursed
as they are incurred. Such firm shall be designated in writing by
the Manager, in the case of parties indemnified pursuant to
Section 8(a) above, and by the Company, in the case of parties
indemnified pursuant to Section 8(b) above. The indemnifying
party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from
and against any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party
to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second and third sentences of this
paragraph, the indemnifying party agrees that it shall be liable
for any settlement of any proceeding effected without its written
consent if (i) such settlement is entered into more than 30 days
after receipt by such indemnifying party of the aforesaid request
and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of
which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release
of such indemnified party from all liability on claims that are
the subject matter of such proceeding.
(d) To the extent the indemnification provided
for in Section 8(a) or 8(b) is unavailable to an indemnified
party or insufficient in respect of any losses, claims, damages
or liabilities referred to therein, then each indemnifying party
under such paragraph, in lieu of indemnifying such indemnified
party thereunder, shall contribute to the amount paid or payable
by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate
to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other hand from the offering
of the Offered Securities or (ii) if the allocation provided by
clause 8(d)(i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative
benefits referred to in clause 8(d)(i) above but also the
relative fault of the Company on the one hand and of the
Underwriters on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on
the one hand and the Underwriters on the other hand in connection
with the offering of the Offered Securities shall be deemed to be
in the same respective proportions as the net proceeds from the
offering of such Offered Securities (before deducting expenses)
received by the Company and the total underwriting discounts and
commissions received by the Underwriters, in each case as set
forth in the table on the cover of the Prospectus Supplement,
bear to the aggregate Public Offering Price of the Offered
Securities.
11
<PAGE>
The relative fault of the Company on the one hand and the
Underwriters on the other hand shall be determined by reference
to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the
Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Underwriters' respective
obligations to contribute pursuant to this Section 8 are several
in proportion to the respective principal amounts of Offered
Securities they have purchased hereunder, and not joint.
(e) The Company and the Underwriters agree that
it would not be just or equitable if contribution pursuant to
this Section 8 were determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or
by any other method of allocation that does not take account of
the equitable considerations referred to in Section 8(d). The
amount paid or payable by an indemnified party as a result of the
losses, claims, damages and liabilities referred to in the
immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section 8, no
Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Offered
Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall
be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The remedies provided for in
this Section 8 are not exclusive and shall not limit any rights
or remedies which may otherwise be available to any indemnified
party at law or in equity.
(f) The indemnity and contribution provisions
contained in this Section 8 and the representations, warranties
and other statements of the Company contained in this Agreement
shall remain operative and in full force and effect regardless of
(i) any termination of this Agreement, (ii) any investigation
made by or on behalf of any Underwriter or any person controlling
any Underwriter or the Company, its officers or directors or any
person controlling the Company and (iii) acceptance of and
payment for any of the Offered Securities.
9. Termination. This Agreement shall be subject to
termination by notice given by the Manager to the Company, if (a)
after the execution and delivery of the Underwriting Agreement
and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may
be, any of the New York Stock Exchange, the American Stock
Exchange, the National Association of Securities Dealers, Inc.,
the Chicago Board of Options Exchange, the Chicago Mercantile
Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any
exchange or in any over-the-counter market, (iii) a general
moratorium on commercial banking activities in New York shall
have been declared by either Federal or New York State
authorities or (iv) there shall have occurred any outbreak or
escalation of hostilities or any change in financial markets or
any
12
<PAGE>
calamity or crisis that, in the judgment of the Manager, is
material and adverse and (b) in the case of any of the events
specified in clauses 9(a)(i) through 9(a)(iv), such event, singly
or together with any other such event, makes it, in the judgment
of the Manager, impracticable to market the Offered Securities on
the terms and in the manner contemplated in the Prospectus.
10. Defaulting Underwriters. If, on the Closing Date,
any one or more of the Underwriters shall fail or refuse to
purchase Underwriters' Securities that it has or they have agreed
to purchase hereunder on such date, and the aggregate amount of
Underwriters' Securities which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more
than one-tenth of the aggregate amount of the Underwriters'
Securities to be purchased on such date, the other Underwriters
shall be obligated severally in the proportions that the amount
of Underwriters' Securities set forth opposite their respective
names in the Underwriting Agreement bears to the aggregate amount
of Underwriters' Securities set forth opposite the names of all
such non-defaulting Underwriters, or in such other proportions as
the Manager may specify, to purchase the Underwriters' Securities
which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase on such date; provided that in no
event shall the amount of Underwriters' Securities that any
Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 10 by an amount in excess of
one-ninth of such amount of Underwriters' Securities without the
written consent of such Underwriter. If, on the Closing Date, any
Underwriter or Underwriters shall fail or refuse to purchase
Underwriters' Securities and the aggregate amount of
Underwriters' Securities with respect to which such default
occurs is more than one-tenth of the aggregate amount of
Underwriters' Securities to be purchased on such date, and
arrangements satisfactory to the Manager and the Company for the
purchase of such Underwriters' Securities are not made within 36
hours after such default, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter or the
Company. In any such case either the Manager or the Company shall
have the right to postpone the Closing Date, but in no event for
longer than seven days, in order that the required changes, if
any, in the Registration Statement and in the Prospectus or in
any other documents or arrangements may be effected. Any action
taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
If this Agreement shall be terminated by the
Underwriters, or any of them, because of any failure or refusal
on the part of the Company to comply with the terms or to fulfill
any of the conditions of this Agreement, or if for any reason the
Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such
Underwriters as have so terminated this Agreement with respect to
themselves, severally, for all out-of-pocket expenses (including
the fees and disbursements of their counsel) reasonably incurred
by such Underwriters in connection with this Agreement or the
offering contemplated hereunder.
11. Counterparts. This Agreement may be signed in two
or more counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon
the same instrument.
13
<PAGE>
12. Applicable Law. This Agreement shall be governed by
and construed in accordance with the internal laws of the State
of New York.
13. Headings. The headings of the sections of this
Agreement have been inserted for convenience of reference only
and shall not be deemed a part of this Agreement.
14
<PAGE>
UNDERWRITING AGREEMENT
__________, 199_
MSDW Structured Asset Corp.
Delaware
Ladies and Gentlemen:
We (the "Manager") are acting on behalf of the
underwriter or underwriters (including ourselves) named below
(such underwriter or underwriters being herein called the
"Underwriters"), and we understand that MSDW Structured Asset
Corp., a Delaware corporation (the "Company"), proposes to sell
[Currency and Principal Amount] aggregate initial offering price
of Structured Asset Trust Unit Repackaging ("SATURNS") Units
Series _____ ("Offered Securities"). The Offered Securities will
be issued pursuant to the provisions of a Trust Agreement between
the Company and Chase Bank of Texas, National Association, as
Trustee (the "Trustee").
Subject to the terms and conditions set forth or
incorporated by reference herein, the Company hereby agrees to
sell to the several Underwriters, and each Underwriter agrees,
severally and not jointly, to purchase from the Company the
respective principal amounts of Offered Securities set forth
below opposite their names at a purchase price of ____% of the
initial unit principal balance of the Offered Securities, plus
accrued interest, if any, from Date of Offered Securities to the
date of payment and delivery:
15
<PAGE>
Name Aggregate initial unit
principal balance of
Offered Securities
Morgan Stanley & Co. Incorporated
Morgan Stanley & Co. International Limited
[Insert syndicate list]
Total
The Underwriters will pay for the Offered Securities
upon delivery thereof at [Specify office for Depositary for
Global Security] at ______ a.m. (New York City time) on
___________, 199_, or at such other time, not later than 5:00
p.m. (New York City time) on __________, 199_, as shall be
designated by the Manager. The time and date of such payment and
delivery are hereinafter referred to as the Closing Date.
The Offered Securities shall have the terms set forth
in the Prospectus dated ___________, 199_, and the Prospectus
Supplement dated ____________, 199_, including the following:
16
<PAGE>
Terms of Offered Securities
[attach Schedule 1 to Trust Agreement]
All provisions contained in the document entitled MSDW
Structured Asset Corp. Underwriting Agreement Standard Provisions
dated September __, 1998, a copy of which is attached hereto, are
herein incorporated by reference in their entirety and shall be
deemed to be a part of this Agreement to the same extent as if
such provisions had been set forth in full herein, except that
(i) if any term defined in such document is otherwise defined
herein, the definition set forth herein shall control, (ii) all
references in such document to a type of security that is not an
Offered Security shall not be deemed to be a part of this
Agreement, and (iii) all references in such document to a type of
agreement that has not been entered into in connection with the
transactions contemplated hereby shall not be deemed to be a part
of this Agreement.
17
<PAGE>
[SIGNATURE PAGE WHERE
MORGAN STANLEY & CO. INCORPORATED
OR MORGAN STANLEY & CO. INTERNATIONAL LIMITED
IS A CO-LEAD MANAGER]
Please confirm your agreement by having an authorized
officer sign a copy of this Agreement in the space set forth
below.
Very truly yours,
[MORGAN STANLEY & CO.
INCORPORATED]
[MORGAN STANLEY & CO.
INTERNATIONAL LIMITED]
[Name of Other Lead Managers]
Acting severally on behalf of themselves and the
several Underwriters named herein
By: [MORGAN STANLEY & CO.
INCORPORATED]
[MORGAN STANLEY & CO.
INTERNATIONAL LIMITED]
By:
Name:
Title:
Accepted:
MSDW STRUCTURED ASSET CORP.
By:
Name:
Title:
18
<PAGE>
[SIGNATURE PAGE WHERE
MORGAN STANLEY & CO. INCORPORATED
OR MORGAN STANLEY & CO. INTERNATIONAL LIMITED
IS SOLE MANAGER]
Please confirm your agreement by having an authorized
officer sign a copy of this Agreement in the space set forth
below.
Very truly yours,
[MORGAN STANLEY & CO.
INCORPORATED]
[MORGAN STANLEY & CO.
INTERNATIONAL LIMITED]
[Name of Other Lead Managers]
Acting severally on behalf of themselves and the
several Underwriters named herein
By:
Name:
Title:
Accepted:
MSDW STRUCTURED ASSET CORP.
By:
Name:
Title:
19
<PAGE>
SCHEDULE I
DELAYED DELIVERY CONTRACT
________, 199_
Dear Ladies and Gentlemen:
The undersigned hereby agrees to purchase from MSDW
Structured Asset Corp., a Delaware corporation (the "Company"),
and the Company agrees to sell to the undersigned the Company's
securities described in Schedule A annexed hereto (the
"Securities"), offered by the Company's Prospectus dated
__________________, 19__ and Prospectus Supplement dated
________________, 19__, receipt of copies of which are hereby
acknowledged, at a purchase price stated in Schedule A and on the
further terms and conditions set forth in this Agreement. The
undersigned does not contemplate selling Securities prior to
making payment therefor.
The undersigned will purchase from the Company
Securities in the principal amount and numbers on the delivery
dates set forth in Schedule A. Each such date on which Securities
are to be purchased hereunder is hereinafter referred to as a
"Delivery Date."
Payment for the Securities which the undersigned has
agreed to purchase on each Delivery Date shall be made to the
Company or its order by certified or official bank check in New
York Clearing House funds at the office of______________________,
New York, N.Y., at 10:00 a.m. (New York City time) on the
Delivery Date, upon delivery to the undersigned of the Securities
to be purchased by the undersigned on the Delivery Date, in such
denominations and registered in such names as the undersigned may
designate by written or telegraphic communication addressed to
the Company not less than five full business days prior to the
Delivery Date.
The obligation of the undersigned to take delivery of
and make payment for the Securities on the Delivery Date shall be
subject to the conditions that (1) the purchase of Securities to
be made by the undersigned shall not at the time of delivery be
prohibited under the laws of the jurisdiction to which the
undersigned is subject and (2) the Company shall have sold, and
delivery shall have taken place to the underwriters (the
"Underwriters") named in the Prospectus Supplement referred to
above of, such part of the Securities as is to be sold to them.
Promptly after completion of sale and delivery to the
Underwriters, the Company will mail or deliver to the undersigned
as its address set forth below notice to such effect, accompanied
by a copy of the opinion of counsel for the Company delivered to
the Underwriters in connection therewith.
20
<PAGE>
Failure to take delivery of and make payment for
Securities by any purchaser under any other Delayed Delivery
Contract shall not relieve the undersigned of its obligations
under this agreement.
This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors,
but will not be assignable by either party hereto without the
written consent of the other.
If this Agreement is acceptable to the Company, it is
requested that the Company sign the form of acceptance below and
mail or deliver one of the counterparts hereof to the undersigned
at its address set forth below. This will become a binding
agreement, as of the date first above written, between the
Company and the undersigned when such counterpart is so mailed or
delivered.
This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
Very truly yours,
(Purchaser)
By:
(Title)
(Address)
Accepted:
MSDW STRUCTURED ASSET CORP.
By:
Name:
Title:
21
<PAGE>
PURCHASER -- PLEASE COMPLETE AT TIME OF SIGNING
The name and telephone and department of the representative
of the Purchaser with whom details of delivery on the Delivery
Date may be discussed is as follows: (Please print.)
Telephone No.
Name (Including Area Code)Department
22
<PAGE>
SCHEDULE A
Securities:
Aggregate Initial Unit Principal Balance:
Purchase Price:
Delivery:
<PAGE>
Exhibit A
OPINION OF COUNSEL FOR ISSUER
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
MSDW Structured Asset Corp.
1585 Broadway
New York, New York 10036
Ladies and Gentlemen:
We have acted as special counsel to MSDW Structured
Asset Corp., a Delaware corporation (the "Company"), in
connection with the Company's offering pursuant to a registration
statement on Form S-3 (No. 33-_____) of the Structured Assets
Trust Unit Repackaging Units (the "Securities") to be issued
under a Trust Agreement dated as of September __, 1998 (the
"Trust Agreement") between the Company and Chase Bank of Texas,
National Association, as trustee. Such registration statement, as
amended when it became effective, but excluding the documents
incorporated by reference therein, is herein called the
"Registration Statement," and the related prospectus, as
supplemented by the prospectus supplement dated ____________, and
as first filed with the Securities and Exchange Commission
pursuant to Rule 424(b)(2) under the Securities Act, but
excluding the documents incorporated by reference therein, is
herein called the "Prospectus." This opinion letter is furnished
pursuant to Section 5(c) of the Underwriting Agreement dated
September __, 1998
<PAGE>
(the "Underwriting Agreement") between the Company and the
underwriter named in the Agreement (the "Underwriter").
In arriving at the opinions expressed below, we have
reviewed the following documents:
(a) an executed copy of the Underwriting Agreement;
(b) the Registration Statement and the documents
incorporated by reference therein;
(c) the Prospectus and the documents incorporated by
reference therein;
(d) a form of the Securities;
(e) an executed copy of the Trust Agreement; and
(f) the documents delivered to you by the Company at
the closing pursuant to the Underwriting
Agreement, including copies of the Company's
Certificate of Incorporation and By-Laws
certified by the Secretary of State of the State
of Delaware and the corporate secretary of the
Company, respectively.
In addition, we have reviewed the originals or copies certified
or otherwise identified to our satisfaction of all such corporate
records of the Company and such other instruments and other
certificates of public officials, officers and representatives of
the Company and such other persons, and we have made such
investigations of law, as we have deemed appropriate as a basis
for the opinions expressed below.
In rendering the opinions expressed below, we have
assumed the authenticity of all documents submitted to us as
originals and the conformity to the originals of all documents
submitted to us as copies. In addition, we have assumed and have
not verified the accuracy as to factual matters of each document
we have reviewed (including, without limitation, the accuracy of
the representations and warranties of the Company in the
Underwriting Agreement).
2
<PAGE>
Based on the foregoing, and subject to the further
assumptions and qualifications set forth below, it is our opinion
that:
[1. The Company is validly existing as a corporation
in good standing under the laws of its jurisdiction of
incorporation.]
[2. The Company has corporate power to own its
properties and conduct its business as described in the
Prospectus, and the Company has corporate power to issue the
Securities, to enter into the Underwriting Agreement and the
Trust Agreement and to perform its obligations thereunder.]
3. The statements set forth under the headings
"Description of Trust Agreements" and "Description of Units" in
the Prospectus, insofar as such statements purport to summarize
certain provisions of the Securities, and Trust Agreement and the
Certificate of Incorporation of the Company, provide a fair
summary of such provisions.
4. The execution and delivery of the Underwriting
Agreement have been duly authorized by all necessary corporate
action of the Company, and the Underwriting Agreement has been
duly executed and delivered by the Company.
5. The sale of the Securities to the Underwriter
pursuant to the Underwriting Agreement, and the performance by
the Company of its obligations in the Underwriting Agreement and
the Trust Agreement (a) do not require any consent, approval,
authorization, registration or qualification of or with any
governmental authority of the United States or the State of New
York, except such as have been obtained or effected under the
Securities Act (but we express no opinion as to any consent,
approval, authorization, registration or qualification that may
be required under state securities or Blue Sky laws), and (b) do
not result in a breach
3
<PAGE>
or violation of any of the terms and provisions of, or constitute
a default under the Certificate of Incorporation or By-Laws of
the Company.
[Insofar as the foregoing opinions relate to the valid
existence and good standing of the Company, they are based solely
on a certificate of good standing received from the Secretary of
State of the State of Delaware and on a telephonic confirmation
from such Secretary of State.] Insofar as the foregoing opinions
relate to the validity, binding effect or enforceability of any
agreement or obligation of the Company, (a) we have assumed that
each other party to such agreement or obligation has satisfied
those legal requirements that are applicable to it to the extent
necessary to make such agreement or obligation enforceable
against it, and (b) such opinions are subject to applicable
bankruptcy, insolvency and similar laws affecting creditors'
rights generally and to general principles of equity.
The foregoing opinions are limited to the federal law
of the United States of America, and the law of the State of New
York and the General Corporation Law of the State of Delaware.
4
<PAGE>
We are furnishing this opinion letter to you, the
Underwriter, solely for your benefit in connection with the
offering of the Securities. This opinion letter is not to be
used, circulated, quoted or otherwise referred to for any other
purpose, except that this opinion letter may be relied upon by
(i) the Trustee in its capacity as such and (ii) _______ in
connection with their rating of the Securities.
Very truly yours,
CLEARY, GOTTLIEB, STEEN & HAMILTON
By Mitchell S. Dupler, a Partner
--------------------------------
5
CERTIFICATE OF INCORPORATION
OF
MSDW STRUCTURED ASSET CORP.
* * *
1. The name of the corporation is:
MSDW Structured Asset Corp.
2. The address of its registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street,
in the City of Wilmington, County of New Castle. The name
of its registered agent at such address is The Corporation
Trust Company.
3. The nature of the business or purpose to be conducted or
promoted by the Corporation is to engage exclusively in the
following activities:
(a) to acquire, own, hold, sell, transfer, pledge or
otherwise dispose of, or to arrange for Trusts (as
defined below) to acquire (1) interests in bonds,
notes, debentures or other debt securities, loans, or
other extensions of credit or evidences of
indebtedness, instruments, contract rights and other
financial assets, created, issued, owing or guaranteed
by any person or persons (whether a government,
sovereign, ruler, commissioner, public body or
authority, whether supreme, municipal, local or
otherwise, or a company, bank, association partnership
or other entity or individual) located anywhere in the
world ("Debt Securities"), (2) any combination of
insurance policies, letters of credit, reserve
accounts and other types of rights or other assets
designed to assure the servicing or timely
distribution of amounts due in respect of the Debt
Securities or other property held by a Trust
(collectively, "Credit Support");
(b) To act as settlor or depositor of trusts (each a
"Trust") formed under a trust agreement, pooling and
servicing agreement or other agreement to issue one or
more series (any of which series may be issued in one
or more classes) of trust units ("Units"), including
without limitation pursuant to one or more Trust
Agreements upon standard terms (the "Standard Terms")
filed with the Securities and Exchange Commission in
connection with registration of the Units under the
Securities Act of 1933 pursuant to a form of base
prospectus (the "Prospectus") and registration
statement ("Registration Statement"), and supplements
and amendments thereto from time to time (such Trust
Agreements, together with the Swap Agreements and
Distribution Agreements as defined in the Standard
Terms, the Prospectus, the Registration Statement and
other agreements and documents contemplated by the
formation of the Trusts and issuance and distribution
of the Units in connection therewith, the "Program
Documents"), which Units shall represent beneficial
interests in the Debt Securities, Credit Support, Swap
<PAGE>
Agreements and other Trust Property (as defined in the
Standard Terms);
(c) to register the Units on behalf of each Trust with the
Commission pursuant to the Prospectus and Registration
Statement and to comply with reporting, filing and
other requirements applicable to the Trusts under the
Securities Act and the Securities Exchange Act of
1934, and to participate in the sale and distribution
of the Units through one or more broker-dealers
(including Affiliates of the Corporation) as described
in the Prospectus and Registration Statement
applicable to the Units from time to time and pursuant
to one or more Distribution Agreements as defined in
the Standard Terms;
(d) To hold, pledge, transfer or otherwise deal with (i)
the Units, including Units representing a senior
interest, subordinated interest or residual interest
in one or more of the assets comprising the Trust
Property (as defined in the Standard Terms), (ii) any
Retained Interest (as defined in the Standard Terms)
in the Trust Property and (iii) any option or other
right with respect to the Units or the Trust Property;
(e) to loan or invest or otherwise apply proceeds from
Debt Securities, funds received in respect of the
Units (including Units representing senior interests,
subordinated interests or residual interests),
Retained Interests and any other income;
(f) to borrow money and otherwise incur indebtedness to
facilitate any activity authorized herein and to
pledge or otherwise grant security interests in its
property to secure such borrowing, provided that (i)
recourse with respect to all such indebtedness is
limited to the proceeds of collateral pledged by the
Corporation to secured such indebtedness and (ii) the
terms of such indebtedness prohibit the creditor from
filing or joining in the filing of any complaint or
petition with respect to Corporation and any of the
matters set forth in Paragraph 6;
(g) to issue capital stock as provided for herein; and
(h) to engage in any lawful act or activity to exercise
any powers permitted to corporations organized under
the General Corporation Law of the State of Delaware
that are incidental to and necessary or convenient for
the accomplishment of the foregoing purposes.
4. The total number of shares of common stock which the
corporation shall have authority to issue is One Thousand
(1,000) and the par value of each of such shares is One
($1.00) Dollar, amounting in the aggregate to One Thousand
($1,000) Dollars.
2
<PAGE>
5. The name and mailing address of the incorporator is:
Susan Krause
Morgan Stanley Dean Witter
1221 Avenue of the Americas - 27th Floor
New York, NY 10020
6. (a) As used in this Certificate of Incorporation, (i) a
"Person" is an individual, partnership, corporation
(including a business trust), joint stock company,
trust, limited liability company, unincorporated
association, joint venture, government (including any
agency or subdivision thereof) or any other entity;
(ii) an "Affiliate" of a Person is a Person that
directly or indirectly through one or more
intermediaries, controls or is controlled by, or is
under common control with, the Person specified; and
(iii) an "Associate," when used to indicate a
relationship with any Person, is (A) a corporation or
organization of which such Person is an officer,
director or partner or is, directly or indirectly, the
beneficial owner of ten percent or more of any class
of equity securities, (B) any trust or other estate in
which such Person serves as trustee or in a similar
capacity, and (C) any relative or spouse of such
Person, or any relative of such spouse, who has the
same home as such Person.
(b) The business and affairs of the Corporation shall be
managed by and under the direction of the Board of
Directors. At any given time, the Corporation will
have at least one member of the Corporation's Board of
Directors (herein referred to as the "Independent
Director") and at least one officer (herein referred
to as the "Independent Officer"), each of whom shall
be an individual who is not (and is not an Associate
of), and for a twelve-month period prior to election
or appointment, as the case may be, has not been a
direct, indirect or beneficial holder of two percent
or more of any class of equity securities, director,
officer or employee of any Affiliate of the
Corporation. The same individual may serve both as an
Independent Director and an Independent Officer.
(c) No Independent Director serving pursuant to the
requirements of this Paragraph 6 shall, with regard to
any matter described in Paragraph 8, owe a fiduciary
duty or other obligation to the stockholders (except
as may specifically be required by the statutory law
of any applicable jurisdiction); instead, such
Independent Director's fiduciary duty and other
obligations with regard to any matter described in
Paragraph 8 shall be owed to the Corporation
including, without limitation, the Corporation's
creditors. Every stockholder of the Corporation shall
be deemed to have consented to the foregoing by virtue
of such stockholder's purchase of shares of capital
stock of the Corporation, and no further act or deed
of any stockholder shall be required to evidence such
consent. In addition, no Independent Director may be
removed unless his or her successor has been duly
elected.
3
<PAGE>
(d) The Corporation's Board of Directors is authorized to
make, alter or repeal the by-laws of the corporation.
Election of directors need not be by written ballot.
7. A director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary
damages for any breach of fiduciary duty as a director,
except for liability (i) for any breach by the director of
his duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the General Corporation Law
of the State of Delaware or (iv) for any transaction from
which the director derived an improper personal benefit.
No repeal, modification or amendment of, or adoption of any
provision inconsistent with this Paragraph 7 nor, to the
fullest extent permitted by law, any modification of law
shall adversely affect any right or protection of a
director of the corporation existing at the time of such
repeal, amendment, adoption or modification or affect the
liability of any director of the corporation for any action
taken or any omission that occurred prior to the time of
such repeal, amendment, adoption or modification.
If the General Corporation Law of the State of Delaware
shall be amended after this Certificate of Incorporation is
filed with the Secretary of State of Delaware to authorize
corporate action further eliminating or limiting the
liability of directors, then a director of the corporation,
in addition to the circumstances in which he is not liable
immediately prior to such amendment, shall be free of
liability to the fullest extent permitted by the General
Corporation Law of Delaware, as so amended.
8. The Corporation shall not, without the affirmative vote of
each member of the Corporation's Board of Directors,
including the affirmative vote of the Independent Director:
(a) make an assignment for the benefit of creditors, file
a petition in bankruptcy, petition or apply to any
tribunal for the appointment of a custodian, receiver,
trustee or other similar official for it or for a
substantial part of its property, commence any
proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution or
liquidation law or statute or similar law or statute
of any jurisdiction, whether now or hereinafter in
effect, consent or acquiesce in the filing of any such
petition, application, proceeding or appointment of or
taking possession by the custodian, receiver,
liquidator, assignee, trustee, sequestrator (or other
similar official) of the Corporation or any
substantial part of its property, admit its inability
to pay its debts generally as they become due, or
declare or effect a moratorium on its debt or
authorize any of the foregoing to be done or taken on
behalf of the Corporation;
(b) be a party to any merger or consolidation or sell,
transfer, assign, convey or lease any substantial part
of the assets of the Corporation, unless the entity
(if other than
4
<PAGE>
the Corporation) formed under or surviving the
consolidation or merger or which acquires the
properties or assets of the Corporation is a
corporation organized and existing under the laws of
the United States, any state thereof or the District
of Columbia, expressly assumes the due and punctual
payment of, and all obligations of the Corporation in
connection with, indebtedness of the Corporation
permitted by this Certificate of Incorporation, has a
certificate of incorporation containing provisions
substantially identical to the provisions of Paragraph
3, Paragraph 6, Paragraph 8, Paragraph 9 and Paragraph
10, and, immediately after giving effect to the
proposed merger, consolidation or transfer, no default
or event of default under any obligation of the
Corporation would occur and be continuing; or
(c) dissolve or liquidate, in whole or in part; provided
that if there is not one Independent Director then in
office and acting, a vote upon any matter set forth in
this Paragraph 8 shall not be taken unless and until
one Independent Director shall have been duly elected.
9. Without the affirmative vote of each member of the
Corporation's Board of Directors, including the affirmative
vote of the Independent Director, the Corporation shall not
amend Paragraph 3, Paragraph 6, Paragraph 8, Paragraph 10,
and this Paragraph 9 (together, the "Independent Director
Provisions") of this Certificate of Incorporation or any
By-laws of the Corporation related to the Independent
Director Provisions; provided that if there is not one
Independent Director then in office, no vote upon any
matter set forth in this Paragraph 9 shall be taken unless
and until one Independent Director shall have been duly
elected.
10. The Corporation shall take all reasonable steps to continue
its identity as a separate legal entity and to make it
apparent to third Persons that the Corporation is an entity
with assets and liabilities distinct from those of Morgan
Stanley Dean Witter & Co. and any other Person, and that
the Corporation is not a division of Morgan Stanley Dean
Witter & Co. or any other Person. Without limiting the
generality of the foregoing, the Corporation shall take the
following actions:
(a) The Corporation will compensate each of its employees,
consultants and agents from the Corporation's own
funds for services provided to the Corporation, except
as provided in the Services Agreement between the
Corporation and Morgan Stanley & Co. Incorporated (the
"Services Agreements"). Morgan Stanley Dean Witter and
its subsidiaries and affiliates may act as agent of
the Corporation only through express agencies created
by arms-length agreements and any such agencies will
be conducted only on a fully disclosed basis and for
fair compensation. Accountants and attorneys will be
fairly compensated by the Corporation for their fees
and other charges as agreed to by the Corporation and
such accountants or attorneys (as applicable).
(b) The Corporation shall pay from its own assets all
obligations of any kind incurred
5
<PAGE>
by the Corporation, recognizing, however, that certain
organizational expenses of the Corporation have been
or shall be paid by Morgan Stanley & Co. Incorporated
in such capacity.
(c) The Corporation shall take all appropriate action
necessary to maintain its existence in good standing
under the laws of the State of Delaware. The
Corporation shall conduct its own business in its own
name and shall observe all customary formalities,
including holding regular meetings of its Board of
Directors and its stockholders and maintenance of
current minute books. Regular meetings of the Board of
Directors shall be held at least annually.
(d) The Corporation will allocate fairly and reasonably
any overhead for shared office space.
(e) The Corporation will maintain financial reports,
corporate records and books of account separate from
those of any other person, and stationery, invoices,
and business forms that are separate and distinct from
those of any other Person.
(f) Any financial statements of any Affiliate of the
Corporation which are consolidated to include the
Corporation will contain detailed notes clearly
stating that (i) all of the Corporation's assets are
owned by the Corporation and (ii) the Corporation is a
separate corporate entity with its own separate
creditors which will be entitled to be satisfied out
of the Corporation's assets prior to any asset of the
Corporation becoming available to the holder of any
stock of the Corporation.
(g) The Corporation shall not commingle its assets with
those of any of its Affiliates. The Corporation's
assets will be separately identified and segregated.
All of the Corporation's assets shall at all times be
held by or on behalf of the Corporation, and, if held
on behalf of the Corporation by another entity, shall
be kept identifiable (in accordance with customary
usages) as assets owned by the Corporation. The
Corporation will strictly observe corporate
formalities in its dealings with each of its
Affiliates. The Corporation shall not maintain joint
bank accounts or other depository accounts to which
any of its Affiliates has independent access.
(h) The Corporation shall not, directly or indirectly, be
named and shall not enter into an agreement to be
named as a direct or contingent beneficiary or loss
payee on any insurance policy covering the property of
any of its Affiliates.
(i) The Corporation will maintain arm's length
relationships with each of its Affiliates. All
business transactions entered into by the Corporation
with any of its Affiliates shall be on terms that are
not more or less favorable to the Corporation than the
terms and conditions that could have been obtained,
under similar circumstances, from unaffiliated
persons. In addition, except for
6
<PAGE>
transactions under the Services Agreement, purchases
of Debt Securities or Credit Support by the
Corporation for the purposes of the formation of
Trusts and issuance of Units pursuant to the Program
Documents, sales of Units by the Corporation to or
through its broker-dealer Affiliates pursuant to a
Distribution Agreement, and other transactions
contemplated by the Program Documents in the ordinary
course of the Corporation's business, all business
transactions entered into by the Corporation with any
of its Affiliates shall be approved by the unanimous
written consent of the Board of Directors. The
Corporation will pay its own liabilities out of its
own funds. Neither the Corporation nor any of its
Affiliates will guarantee the debts of the other, will
pledge, or grant a security interest in or lien upon,
its assets for the benefit of the other, or will be or
will hold itself out to be responsible for the debts
of the other or the decisions or actions respecting
the daily business and affairs of the other.
(j) The annual financial statements of the Corporation
will disclose, in accordance with generally accepted
accounting principles, any transactions between the
Corporation and any of its Affiliates.
(k) The Corporation will retain as its auditors a
nationally recognized firm of certified public
accountants.
I, THE UNDERSIGNED, being the incorporator hereinbefore
named, for the purpose of forming a corporation pursuant to the
General Corporation Law of Delaware, do make this Certificate,
declaring and certifying that this is my act and deed and the
facts stated herein are true, and accordingly have set my hand
this 21st day of September, 1998.
/s/ Susan Krause
-----------------------
Susan Krause
Sole Incorporator
7
BY-LAWS
of
MSDW STRUCTURED ASSET CORP.
(a Delaware Corporation)
(As Adopted on September 30, 1998)
------------------
ARTICLE I
Offices
Section 1.1. Registered Office in Delaware. The
registered office of MSDW Structured Asset Corp. (the
"Corporation") in the State of Delaware shall be in the City of
Wilmington, County of New Castle, and the registered agent in
charge thereof shall be The Corporation Trust Company.
ARTICLE II
Meetings of Stockholders
Section 2.1. Place of Meetings. All meetings of
stockholders shall be held at such place or places, within or
without the State of Delaware, as may from time to time be fixed
by the Board of Directors, or as shall be specified in the
respective notices, or waivers of notice, thereof.
Section 2.2. Annual Meetings. The annual meeting of
stockholders shall be held on such date and at such time as shall
be designated from time to time by the Board of Directors and
stated in the notice of the meeting, at which meetings the
stockholders shall elect a Board of Directors and transact such
other business as may properly be brought before the meeting.
Section 2.3. Special Meetings. A special meeting of
the stockholders may be called at any time and for any purpose or
purposes by the President or the Chairman of the Board or by
order of the Board of Directors, and shall be called by the
Secretary upon the written request of the holders of record of at
least 80% of the voting power of the then outstanding shares of
capital stock of the Corporation entitled to vote generally in
the election of directors. Every such request shall state the
purpose or purposes of each meeting.
<PAGE>
Section 2.4. Notice of Meetings. Except as otherwise
expressly required by law, written notice of each meeting of
stockholders, whether annual or special, stating the place, date
and hour of the meeting shall be given not less than ten days nor
more than fifty days before the date on which the meeting is to
be held, to each stockholder of record entitled to vote thereat
by delivering a notice thereof to him personally or by mailing
such notice in a postage prepaid envelope directed to him at his
address as it appears on the stock ledger of the Corporation,
unless he shall have filed with the Secretary of the Corporation
a written request that notices intended for him be directed to
another address, in which case such notice shall be directed to
him at the address designated in such request. If any stockholder
shall, in person or by attorney thereunto authorized, in writing
or by telegraph, cable, telecopy or telex, waive notice of any
meeting of the stockholders, whether prior to or after such
meeting, notice thereof need not be given to him. Every notice of
a special meeting of the stockholders, besides stating the time
and place of the meeting, shall state briefly the purpose or
purposes thereof.
Section 2.5. List of Stockholders. It shall be the
duty of the Secretary or other officer of the Corporation who
shall have charge of the stock ledger to prepare and make, at
least ten days before every meeting of the stockholders, a
complete list of the stockholders entitled to vote thereat,
arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in his name. Such
list shall be open to the examination of any stockholder, for any
purpose germane to the meeting, during ordinary business hours,
for a period of at least ten days prior to the meeting, either at
a place within the city where the meeting is to be held, which
place shall be specified in the notice of the meeting, or, if not
so specified, at the place where the meeting is to be held. The
list shall be kept and produced at the time and place of the
meeting during the whole time thereof and subject to the
inspection of any stockholder who may be present. The original or
duplicate stock ledger shall be the only evidence as to who are
the stockholders entitled to examine the stock ledger, such list
or the books of the Corporation or to vote in person or by proxy
at such meeting.
Section 2.6. Quorum. At each meeting of the
stockholders, the holders of record of a majority of the issued
and outstanding stock of the Corporation entitled to vote at such
meeting, present in person or by proxy, shall constitute a quorum
for the transaction of business, except where otherwise provided
by law, the Certificate of Incorporation or these ByLaws. In the
absence of a quorum, any officer entitled to preside at, or act
as Secretary of, such meeting shall have the power to adjourn the
meeting from time to time until a quorum shall be constituted.
Section 2.7. Voting. At all meetings of the
stockholders, a quorum being present, all matters shall be
decided by majority vote of the shares of stock entitled to vote
held by the stockholders present in person or by proxy, except as
otherwise required by the Certificate of Incorporation or the
laws of the State of Delaware. Unless otherwise provided in the
Certificate of Incorporation, each stockholder shall at every
meeting of the stockholders be entitled to one vote in person or
by proxy for each share of the capital stock having voting power
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held by such stockholder, but no proxy shall be voted after three
years from its date, unless the proxy provides for a longer
period.
Section 2.8. Action Without Meeting. Unless otherwise
provided in the Certificate of Incorporation, any action required
to be taken at any annual or special meeting of stockholders of
the Corporation, or any action which may be taken at any annual
or special meeting of such stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by
the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon
were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not
consented in writing.
ARTICLE III
Board of Directors
Section 3.1. Number, Term of Office and Eligibility.
The number of directors shall be fixed from time to time by
resolution of the stockholders or Board of Directors of the
Corporation. Each director shall hold office until his successor
is elected and qualified, or until his earlier resignation or
removal.
Section 3.2. Quorum and Manner of Acting. At all
meetings of the Board of Directors a majority of the total number
of directors shall constitute a quorum for the transaction of
business, and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the
Board of Directors, except as may be otherwise specifically
provided by the laws of the State of Delaware, the Certificate of
Incorporation or the By-Laws. If a quorum shall not be present at
any meeting of the Board of Directors, the directors present
thereat may adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be
present.
Section 3.3. Annual Meeting. Immediately after each
annual meeting of stockholders for the election of directors the
Board of Directors shall meet at the place of the annual meeting
of stockholders for the purpose of organization, the election of
officers and the transaction of other business. Notice of such
meeting need not be given. If such meeting is held at any other
time or place, notice thereof must be given or waived as
hereinafter provided for special meetings of the Board of
Directors.
Section 3.4. Regular Meetings. Regular meetings of the
Board of Directors may be held at such time and place, within or
without the State of Delaware, as shall from time to time be
determined by the Board of Directors. After there has been such
determination, and
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notice thereof has been once given to each member of the Board of
Directors, regular meetings may be held without further notice
being given.
Section 3.5. Special Meetings; Notice. Special
meetings of the Board of Directors shall be held whenever called
by the Chairman of the Board or the President. Notice of each
such meeting shall be mailed to each director, addressed to him
at his residence or usual place of business, at least two days
before the date on which the meeting is to be held, or shall be
sent to him at such place by telegraph, cable, telecopy or telex,
or be delivered personally or by telephone, not later than the
day before the day on which such meeting is to be held. Each such
notice shall state the time and place of the meeting and the
purposes thereof. If any director shall, in person or by attorney
thereunto authorized, in writing or by telegraph, cable, telecopy
or telex, waive notice of any meeting of the Board of Directors,
whether prior to or after such meeting, notice thereof need not
be given to him. No notice to or waiver by any director with
respect to any special meeting shall be required if such director
shall be present at said meeting.
Section 3.6. Resignation. Any director of the
Corporation may resign at any time by giving written notice to
the Chairman of the Board, if any, the President or the Secretary
of the Corporation. The resignation of any director shall take
effect upon receipt of notice thereof or at such later time as
shall be specified in such notice; and, unless otherwise
specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
Section 3.7. Newly-Created Directorships and Vacancies
on the Board of Directors. Subject to the rights of the holders
of any class or series of stock having preference over the Common
Stock as to dividends or upon liquidation, dissolution or winding
up of the Corporation to elect directors under specified
circumstances, if any, newly-created directorships resulting from
any increase in the authorized number of directors or any
vacancies on the Board of Directors resulting from death,
resignation, retirement, disqualification, removal from office or
other cause may be filled by a majority vote of the directors
then in office, although less than a quorum, or by a majority of
the votes cast by the holders of the Voting Stock; and any
director so chosen shall hold office for the remaining term of
his predecessor or, if there shall have been no predecessor,
until the next annual election of directors or until his
successor shall have been duly elected and qualified. No decrease
in the number of directors constituting the Board of Directors
shall shorten the term of any incumbent director.
Section 3.8. Removal of Directors. Subject to the
rights of the holders of any class or series of stock having
preference over the Common Stock as to dividends or upon
liquidation, dissolution or winding up of the Corporation to
elect directors under specified circumstances, if any, any
director, or the entire Board of Directors, may be removed from
office at any time, with or without cause, only by the
affirmative vote of the holders of at least 80% of the voting
power of the Voting Stock, voting together as a single class.
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Section 3.9. Compensation of Directors. The Board of
Directors shall have the authority to fix the compensation of
directors and of members of committees of directors.
Section 3.10. Action Without Meeting. Any action
required or permitted to be taken at any meeting of the Board of
Directors or of any committee thereof may be taken without a
meeting if a written consent thereto is signed by all members of
the Board or of such committee, as the case may be, and such
written consent is filed with the records of the proceedings of
the Board or committee.
Section 3.11. Meeting by Conference Telephone.
Directors and members of any committee designated by the Board of
Directors may participate in a meeting of the Board of Directors
or of such committee, as the case may be, by means of conference
telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this Section shall
constitute presence in person at such meeting.
ARTICLE IV
Committees of Directors
Section 4.1. Designation of Committees. The Board of
Directors may, by resolution passed by a majority of the whole
Board, designate one or more committees, each committee to
consist of one or more of the directors of the Corporation. The
Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee.
Section 4.2. Vacancies. In the absence or
disqualification of a member of a committee, the member or
members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to
act at the meeting in the place of any such absent or
disqualified member.
Section 4.3. Powers. Any such committee, to the extent
provided in the resolution of the Board of Directors, shall have
and may exercise all the powers and authority of the Board of
Directors to the extent provided by Section 141(c) of the General
Corporation Law of the State of Delaware as it exists now or may
hereafter be amended.
Section 4.4. Minutes of Committee Meetings. Each
committee shall keep regular minutes of its meetings and report
the same to the Board of Directors when required.
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ARTICLE V
Officers
Section 5.1. Principal Officers. The Board of
Directors shall elect a President, a Secretary and a Treasurer,
and may in addition elect a Chairman of the Board, a Chief
Financial Officer, one or more Vice Presidents, one or more
Assistant Secretaries and one or more Assistant Treasurers. One
person may hold, and perform the duties of, any two or more of
said offices.
Section 5.2. Election, Term of Office and Eligibility.
The officers of the Corporation referred to in Section 5.1 shall
be elected annually by the Board of Directors at the annual
meeting thereof. Each such officer shall hold office until his
successor shall have been duly elected and shall qualify, or
until his death or until he shall resign or shall have been
removed.
Section 5.3. Other Officers. The Board of Directors
may appoint such other officers as it may from time to time
determine, each of whom shall hold office for such period, and
perform such duties as the President or the Board of Directors
may from time to time determine. The Board of Directors may
delegate to any officer referred to in Section 5.1 the power to
appoint and to remove any such officers.
Section 5.4. Removal. Any officer may be removed,
either with or without cause, at any time, by resolution adopted
by the Board of Directors at any regular meeting of the Board or
at any special meeting of the Board called for that purpose at
which a quorum is present.
Section 5.5. Resignations. Any officer may resign at
any time by giving written notice to the Board of Directors, to
the Chairman of the Board, if any, the President or the Secretary
of the Corporation. The resignation of any officer shall take
effect upon receipt of notice or at such later time as shall be
specified in such notice; and, unless otherwise specified
therein, the acceptance of such resignation shall not be
necessary to make it effective.
Section 5.6. Chairman of the Board. The Chairman of
the Board, if any, shall preside at all meetings of stockholders
and at all meetings of the Board of Directors. Subject to the
control and the direction of the Board of Directors, the Chairman
of the Board may enter into any contract and execute and deliver
any instrument in the name and on behalf of the Corporation. The
Chairman of the Board shall perform such other duties and have
such other powers as the Board of Directors shall prescribe.
Section 5.7. President. In the absence of the Chairman
of the Board, the President shall preside at all meetings of the
stockholders and at all meetings of the Board of
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Directors. Subject to the control and the direction of the Board
of Directors, the President may enter into any contract and
execute and deliver any instrument in the name and on behalf of
the Corporation. The President shall perform such other duties
and have such other powers as the Board of Directors shall
prescribe.
Section 5.8. Chief Financial Officer. The Chief
Financial Officer shall be responsible for the financial affairs
of the Corporation, including overseeing the duties performed by
the Treasurer of the Corporation. Subject to the control and
direction of the Board of Directors, the Chief Financial Officer
may enter into any contract and execute and deliver any
instrument in the name of and on behalf of the Corporation. The
Chief Financial Officer shall perform such other duties and have
such other powers as the Board of Directors prescribes.
Section 5.9. Vice Presidents. The Vice Presidents
shall perform such duties and have such powers as the President
or the Board of Directors may from time to time prescribe.
Subject to the control and the direction of the Board of
Directors, each Vice President may enter into any contract and
execute and deliver any instrument in the name and on behalf of
the Corporation.
Section 5.10. Secretary. The Secretary, if present,
shall act as Secretary at all meetings of the Board of Directors
and of the stockholders and keep the minutes thereof in a book or
books to be provided for that purpose; he shall see that all
notices required to be given by the Corporation are duly given
and served; he shall have charge of the stock records of the
Corporation; he shall see that all reports, statements and other
documents required by law are properly kept and filed; and, in
general, he shall perform all the duties incident to the office
of Secretary.
Section 5.11. Assistant Secretary. The Assistant
Secretary, if any, or, if there be more than one, the Assistant
Secretaries, in the order determined by the Board of Directors,
shall, in the absence or disability of the Secretary, perform the
duties and exercise the powers of the Secretary and shall perform
such other duties and have such other powers as the Board of
Directors, the Chairman of the Board or the President may from
time to time prescribe.
Section 5.12. Treasurer. The Treasurer shall have
charge and custody of, and be responsible for, all funds and
securities of the Corporation and shall deposit all such funds in
the name of the Corporation in such banks or other depositories
as shall be selected by the Board of Directors or by such
officers as shall be designated by the Board of Directors. He
shall exhibit at all reasonable times his books of account and
records to any of the directors of the Corporation upon
application during business hours at the office of the
Corporation where such books and records shall be kept; when
requested by the Board of Directors, he shall render a statement
of the condition of the finances of the Corporation at any
meeting of the Board or at the annual meeting of stockholders; he
shall receive, and give receipt for, moneys due and payable to
the Corporation from any source whatsoever; and, in general, he
shall perform all the duties incident
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to the office of Treasurer. The Treasurer shall give such bond,
if any, for the faithful discharge of his duties as the Board of
Directors may require.
Section 5.13. Assistant Treasurer. The Assistant
Treasurer, if any, or, if there shall be more than one, the
Assistant Treasurers, in the order determined by the Board of
Directors, shall, in the absence or disability of the Treasurer,
perform the duties and exercise the powers of the Treasurer and
shall perform such other duties and have such other powers as the
Board of Directors, the Chairman of the Board or the President
may from time to time prescribe.
ARTICLE VI
Shares and Their Transfer
Section 6.1. Certificates for Stock. The interest of
each stockholder in the Corporation shall be evidenced by a
certificate or certificates for shares of stock of the
Corporation certifying the number of shares owned by him, in such
form as the Board of Directors may from time to time prescribe.
The certificates for shares of stock of the Corporation shall be
signed by the Chairman of the Board, the President or a Vice
President and by the Secretary or the Treasurer or an Assistant
Secretary or an Assistant Treasurer, and shall be countersigned
and registered in such manner, if any, as the Board of Directors
may by resolution prescribe; provided, however, that in case such
certificates are signed by a transfer agent other than the
Corporation or its employee or by a registrar other than the
Corporation or its employee the signatures of the Chairman of the
Board, President, Vice President, Treasurer, Assistant Treasurer,
Secretary or Assistant Secretary may be facsimile; and further
provided that in case any officer or officers who shall have
signed, or whose facsimile signature or signatures shall have
been used on any such certificate or certificates shall cease to
be such officer or officers of the Corporation, whether because
of death, resignation or otherwise, before such certificate or
certificates shall have been delivered by the Corporation, such
certificate or certificates may nevertheless be adopted by the
Corporation and be issued and delivered as though the person or
persons who signed such certificate or certificates or whose
facsimile signature or signatures shall have been used thereon
had not ceased to be such officer or officers of the Corporation.
Section 6.2. Stock Ledger. A record shall be kept by
the Secretary, transfer agent or by any other officer, employee
or agent designated by the Board of Directors of the name of each
person, firm or corporation holding capital stock of the
Corporation, the number of shares represented by, and the
respective dates of, each certificate for such capital stock, and
in case of cancellation of any such certificate, the respective
dates of cancellation.
Section 6.3. Cancellation. Every certificate
surrendered to the Corporation for exchange or registration of
transfer shall be canceled, and no new certificate or
certificates shall
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be issued in exchange for any existing certificate until such
existing certificate shall have been so canceled, except as
provided in Section 6.5 and in cases provided by the applicable
law.
Section 6.4. Transfers. Shares of stock shall be
transferable on the books of the Corporation by the holder of
record thereof in person or by his attorney upon surrender of
such certificate with an assignment endorsed thereon or attached
thereto duly executed and with such proof of authenticity of
signatures as the Corporation may reasonably require. The Board
of Directors may make such rules and regulations as it may deem
expedient, not inconsistent with the Certificate of Incorporation
or these By-Laws, concerning the issue, transfer and registration
of certificates for shares of the stock of the Corporation. The
Board of Directors may appoint, or authorize any principal
officer or officers to appoint, one or more transfer clerks or
one or more transfer agents and one or more registrars, and may
require all certificates of stock to bear the signature or
signatures of any of them.
Section 6.5. Lost, Stolen, Destroyed or Mutilated
Certificates. Before any certificates for stock of the
Corporation shall be issued in exchange for certificates which
shall become mutilated or shall be lost, stolen or destroyed,
proper evidence of such loss, theft, mutilation or destruction
shall be procured for the Board of Directors, if it so requires.
When authorizing such issue of a new certificate or certificates,
the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificate or certificates, or his
legal representative, to give the Corporation a bond in such sum
as it may direct as indemnity against any claim that may be made
against the Corporation with respect to the certificate alleged
to have been lost, stolen or destroyed.
Section 6.6. Record Dates. For the purpose of
determining the stockholders entitled to notice of or to vote at
any meeting of stockholders or any adjournment thereof, or
entitled to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend
or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or
exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix, in advance, a date as a record
date for any such determination of stockholders. Such record date
shall not be more than sixty nor less than ten days before the
date of such meeting, nor more than sixty days prior to any other
action.
ARTICLE VII
Indemnification
The Corporation shall indemnify, to the fullest extent
permitted by applicable law, any person who was or is a party or
is threatened to be made a party to, or is involved in any manner
in, any threatened, pending or completed action, suit or
proceeding (whether civil, criminal, administrative or
investigative) by reason of the fact that such person (1) is or
was a director or officer of the Corporation or a Subsidiary or
(2) is or was serving at the request of the
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Corporation or a Subsidiary as a director, officer, partner,
member, employee or agent of another corporation, partnership,
joint venture, trust, committee or other enterprise.
To the extent deemed advisable by the Board of
Directors, the Corporation may indemnify, to the fullest extent
permitted by applicable law, any person who was or is a party or
is threatened to be made a party to, or is involved in any manner
in, any threatened, pending or completed action, suit or
proceeding (whether civil, criminal, administrative or
investigative) by reason of the fact that the person is or was an
employee or agent (other than a director or officer) of the
Corporation or a Subsidiary.
The Corporation shall have the power to purchase and
maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Corporation or a
Subsidiary, or is or was serving at the request of the
Corporation or a Subsidiary as a director, officer, partner,
member, employee or agent of another corporation, partnership,
joint venture, trust, committee or other enterprise, against any
expense, liability or loss asserted against him and incurred by
him in any such capacity, or arising out of his status as such,
whether or not the Corporation or a Subsidiary would have the
power to indemnify him against such expense, liability or loss
under the provisions of applicable law.
No repeal, modification or amendment of, or adoption
of any provision inconsistent with, this Article VII, nor to the
fullest extent permitted by applicable law, any modification of
law shall adversely affect any right or protection of any person
granted pursuant hereto existing at, or with respect to events
that occurred prior to, the time of such repeal, amendment,
adoption or modification.
For purposes of this Article VII the term "Subsidiary"
or "Subsidiaries" shall mean a corporation(s), all of the capital
stock of which is owned directly or indirectly by the
Corporation, other than directors' qualifying shares.
The right to indemnification conferred in this Article
VII also includes, to the fullest extent permitted by applicable
law, the right to be paid the expenses (including attorney's
fees) incurred in connection with any such proceeding in advance
of its final disposition. The payment of any amounts to any
director, officer, partner, member, employee or agent pursuant to
this Article VII shall subrogate the Corporation to any right
such director, officer, partner, member, employee or agent may
have against any other person or entity. The rights conferred in
this Article VII shall be contract rights.
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ARTICLE VIII
Liability of Directors
A director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary
damages for any breach of fiduciary duty as a director, except
for liability (i) for any breach by the director of his duty of
loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174
of the General Corporation Law of the State of Delaware or (iv)
for any transaction from which the director derived an improper
personal benefit.
No repeal, modification or amendment of, or adoption of
any provision inconsistent with, this Article VIII nor, to the
fullest extent permitted by law, any modification of law shall
adversely affect any right or protection of a director of the
Corporation existing at the time of such repeal, amendment,
adoption or modification or affect the liability of any director
of the Corporation for any action taken or any omission that
occurred prior to the time of such repeal, amendment, adoption or
modification.
If the General Corporation Law of the State of
Delaware shall be amended, after these By-Laws are amended to
include this Article VIII, to authorize corporate action further
eliminating or limiting the liability of directors, then a
director of the Corporation, in addition to the circumstances in
which he is not liable immediately prior to such amendment, shall
be free of liability to the fullest extent permitted by the
General Corporation Law of the State of Delaware, as so amended.
ARTICLE IX
Miscellaneous Provisions
Section 9.1. Corporate Seal. The Board of Directors
shall provide a corporate seal, which shall be in the form of a
circle and shall bear the name of the Corporation and words and
figures showing that it was incorporated in the State of Delaware
in the year 1998. The Secretary shall be the custodian of the
seal.
Section 9.2. Fiscal Year. The fiscal year of the
Corporation shall be as specified by the Board of Directors.
Section 9.3. Voting of Stocks Owned by the
Corporation. The Board of Directors may authorize any person on
behalf of the Corporation to vote and grant proxies to be used at
any meeting of stockholders of any corporation (except this
Corporation) in which the Corporation may hold stock.
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ARTICLE X
Amendment of By-Laws
In furtherance of and not in limitation of the powers
conferred by statute, the Board of Directors of the Corporation
from time to time may make, amend or repeal the ByLaws of the
Corporation; provided that any By-Laws may be amended or
repealed, and may be made, by the stockholders of the
Corporation. Notwithstanding any other provisions of the
Certificate of Incorporation of the Corporation or these By-Laws
(and not withstanding the fact that a lesser percentage may be
specified by law, the Certificate of Incorporation or these
ByLaws), the affirmative vote of the holders of at least 80% of
the voting power of the Voting Stock, voting together as a single
class, shall be required for the stockholders of the Corporation
to amend, repeal or adopt any By-Laws of the Corporation.
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STRUCTURED ASSET TRUST UNIT REPACKAGINGS
- -----------------------------------------------------------------
STANDARD TERMS FOR TRUST AGREEMENTS
MSDW Structured Asset Corp.
(as Depositor)
and
Chase Bank of Texas, National Association
(as Trustee)
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<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE I
Definitions; Construction
SECTION 1.01. Definitions.....................................1
SECTION 1.02. Rules of Construction..........................12
SECTION 1.03. Article and Section References.................13
ARTICLE II
Declaration of Trust; Entry into Swap Agreement;
Issuance of Units
SECTION 2.01. Creation and Declaration of Trust;
Assignment of Debt Securities13
SECTION 2.02. Entry into Swap Agreement and Distribution
Agreement.....................................14
SECTION 2.03. Acceptance by Trustee..........................14
SECTION 2.04. Representations and Warranties of the
Depositor.....................................14
SECTION 2.05. Breach of Representation or Warranty...........15
SECTION 2.06. Agreement to Authenticate and Deliver Units....16
ARTICLE III
Trust Powers; Administration of the Trust Property
SECTION 3.01. Trust Property.................................16
SECTION 3.02. Administration of the Trust....................16
SECTION 3.03. Collection of Certain Debt Security Payments...18
SECTION 3.04. Sale...........................................18
SECTION 3.05. Unit Account...................................18
SECTION 3.06. Investment of Funds in the Accounts............19
SECTION 3.07 Retained Interest..............................20
SECTION 3.08. Access to Certain Documentation................20
ARTICLE IV
Distributions and Reports to Unitholders
SECTION 4.01. Distributions..................................20
SECTION 4.02. Reports to Unitholders.........................20
SECTION 4.03. Calculation of Pass Through Rates..............22
SECTION 4.04. Compliance with Tax Reporting and
Withholding Requirements......................23
SECTION 4.05. Preservation of Information, Communications
to Holders....................................23
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ARTICLE V
The Units
SECTION 5.01. The Units......................................23
SECTION 5.02. Execution, Authentication and Delivery.........24
SECTION 5.03. Registration; Registration of Transfer
and Exchange..................................25
SECTION 5.04. Mutilated, Destroyed, Lost and Stolen Units....26
SECTION 5.05. Distributions in Respect of Units..............27
SECTION 5.06. Persons Deemed Owners..........................27
SECTION 5.07. Cancellation...................................28
SECTION 5.08. Currency of Distributions in Respect of
Units; Redenomination.........................28
SECTION 5.09. Appointment of Paying Agent....................31
SECTION 5.10. Authenticating Agent...........................31
SECTION 5.11. Issuance and Transfer Restrictions.............32
SECTION 5.12. Exchangeable Series............................35
SECTION 5.13. Limitation on Issuance of Bearer Units.........37
SECTION 5.14. Callable Units.................................37
SECTION 5.15. Delivery of Information........................38
ARTICLE VI
The Depositor
SECTION 6.01. Liability of the Depositor.....................38
SECTION 6.02. Limitation on Liability of the Depositor.......38
SECTION 6.03. Depositor May Purchase Units...................39
SECTION 6.04. Preparation and Filing of Exchange Act
Reports; Obligations of the Depositor.........39
SECTION 6.05. Preferential Collection of Claims Against
Depositor.....................................40
ARTICLE VII
Rights of Unitholders
SECTION 7.01. Voting Rights with Respect to Debt Securities..40
SECTION 7.02. Amendments and Waivers Under Swap Agreement
and Guarantee.................................41
ARTICLE VIII
Default on Debt Securities and Permitted Investments
SECTION 8.01. Realization Upon Default.......................41
ARTICLE IX
Trust Wind-Up Events
SECTION 9.01. Trust Wind-Up Events...........................42
SECTION 9.02. Liquidation Events.............................43
SECTION 9.03. Trust Property Made Available..................43
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SECTION 9.04. Limitation on Notice Requirement...............45
SECTION 9.05. Expense Event..................................46
SECTION 9.06. Special Depositor Wind-Up Event................46
ARTICLE X
Concerning the Trustee
SECTION 10.01. Duties of Trustee..............................47
SECTION 10.02. Certain Matters Affecting the Trustee..........48
SECTION 10.03. Limitation on Liability of Trustee.............49
SECTION 10.04. Trustee May Own Units..........................50
SECTION 10.05. Trustee Fees and Expenses; Limited
Indemnification...............................50
SECTION 10.06. Eligibility Requirements for Trustee...........51
SECTION 10.07. Resignation or Removal of the Trustee..........51
SECTION 10.08. Successor Trustee..............................52
SECTION 10.09. Merger or Consolidation of Trustee.............52
SECTION 10.10. Appointment of Co-Trustee......................53
SECTION 10.11. Appointment of Office or Agency................54
SECTION 10.12. Representations and Warranties of Trustee......54
SECTION 10.13. Limitation of Powers and Duties................55
SECTION 10.14. Non-Petition...................................55
ARTICLE XI
Termination
SECTION 11.01. Termination of the Trust.......................56
ARTICLE XII
Miscellaneous Terms
SECTION 12.01. Amendment of Trust Agreement...................56
SECTION 12.02. Counterparts...................................57
SECTION 12.03. Limitation on Rights of Unitholders............57
SECTION 12.04. Governing Law..................................57
SECTION 12.05. Notices........................................58
SECTION 12.06. Severability of Terms..........................58
SECTION 12.07. Notice to Rating Agencies......................58
SECTION 12.08. Perfection of Swap Counterparty Security
Interest......................................59
SECTION 12.09. No Recourse....................................59
SECTION 12.10. Conflict With Trust Indenture Act..............59
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EXHIBIT A TRUST AGREEMENT AND TERMS SCHEDULE
EXHIBIT B1 FORM OF REGISTERED UNIT
EXHIBIT B2 FORM OF BEARER UNIT
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STRUCTURED ASSET TRUST UNIT REPACKAGINGS
STANDARD TERMS FOR
TRUST AGREEMENTS
Chase Bank of Texas, National Association, as Trustee
MSDW Structured Asset Corp., as Depositor
These Standard Terms for Trust Agreements, dated September
__, 1998 ("Standard Terms"), may be incorporated by reference in
one or more Trust Agreements (each a "Trust Agreement") relating
to a particular series of Structured Asset Trust Unit
Repackagings described in the Prospectus dated __________ and the
applicable Prospectus Supplement. Any such Trust Agreement may be
in the form of Exhibit A hereto or such other form as MSDW
Structured Asset Corp. (the "Depositor") and the Trustee may
approve, such approval to be evidenced by their execution
thereof. All terms defined herein shall have meanings solely with
respect to the particular Trust Agreement in which these Standard
Terms are incorporated. Incorporation of these Standard Terms
into a Trust Agreement is for convenience only to avoid the
necessity of physically including the Standard Terms in such
Trust Agreement, and each trust created by a Trust Agreement
shall be a legally separate and distinct trust from any other
trust created by any other Trust Agreement into which these
Standard Terms may also be incorporated. These Standard Terms
shall by themselves be of no force and effect, and shall only
have effect as and to the extent incorporated by reference in a
Trust Agreement. Execution hereof by the Trustee and the
Depositor is for purposes of identification only and the absence
of such execution shall not affect the validity of any Trust
Agreement or these Standard Terms to the extent incorporated
therein. The Trust Agreement into which these Standard Terms are
incorporated by reference, including the Terms Schedule attached
thereto and made a part thereof and these Standard Terms so
incorporated by reference therein, as amended, modified or
supplemented from time to time, shall together constitute a
single Trust Agreement and are referred to herein as the "Trust
Agreement". In the event of a conflict between any Trust
Agreement, including the Terms Schedule attached thereto, and
these Standard Terms, the Trust Agreement and Terms Schedule
shall control.
ARTICLE I
Definitions; Construction
SECTION 1.01. Definitions. Except as otherwise specified
herein or as the context may otherwise require, the following
terms have the respective meanings set forth below for all
purposes of these Standard Terms:
"Account": As defined in Section 3.05.
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"Affected Debt Securities": As defined in Section 9.02.
"Affected Transaction": As defined in the Swap Agreement.
"Affiliate": With respect to any specified Person, any
other Person directly or indirectly controlling or controlled by
or under direct or indirect common control with such specified
Person. For the purposes of this definition, "control", when used
with respect to any specified Person, means the power to direct
the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities,
by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Alternative ERISA Restrictions": The restrictions on
transfer of Units set forth in Section 5.11(d)(1).
"Authenticating Agent": As defined in Section 5.10.
"Authorized Newspaper": As defined in Section 12.05.
"Available Funds": With respect to any Distribution Date,
(i) all amounts received by the Trustee on or with respect to the
Debt Securities or other Trust Property plus (ii) all investment
income from Permitted Investments plus (iii) all Swap Amounts, if
any, paid to the Trustee by the Swap Counterparty pursuant to the
Swap Agreement, or by the Guarantor pursuant to the Guarantee,
minus (iv) all amounts paid or payable to the Swap Counterparty
by the Trustee pursuant to the Swap Agreement, minus (v) any
amounts reimbursable to the Trustee under Section 10.02(ix), in
each case on deposit in the Unit Account, and available for
distribution, on such Distribution Date.
"Bearer Unit": Any Unit (with or without coupons), title of
which passes by delivery only, but exclusive of any coupons.
"Benefit Plan": The meaning specified in Section 5.11(d).
"Book-Entry Unit": A Unit represented by a Global Security.
"Business Day": As specified in the Terms Schedule.
"Calculation Agent": As specified in the Terms Schedule, if
any.
"Call Date": As defined in Section 5.14.
"Call Option": As specified in the Terms Schedule.
"Call Price": As defined in Section 5.14.
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"Callable Series": A Series so designated in the Terms
Schedule which grants one or more specified persons the right to
purchase all or a portion of the Units of any given Series.
"CEDEL": Cedel Bank, S.A.
"Certificate": A certificate in the form attached as
Exhibit B1, evidencing a Registered Unit or B2, evidencing a
Bearer Unit.
"Certificate of Non-U.S. Beneficial Ownership": As defined
in Section 5.13.
"Class": A separately denominated class of the Units of any
Series, entitled to specified distributions of the Trust
Property.
"Closing Date": As specified in the Terms Schedule.
"Code": The Internal Revenue Code of 1986, as amended, and
Treasury Regulations promulgated thereunder.
"Commission": The Securities and Exchange Commission, or
any successor agency.
"Concentrated Debt Security": Any Debt Security that on the
Closing Date constitutes 10% or more of the total Debt Securities
held by the Trust with respect to a Series of Units.
"Corporate Trust Office": The Trustee's offices at 600
Travis Street, 9th Floor, Chase Tower, Houston, Texas 77002,
Texas Commerce Trust Company of New York, 55 Water Street, North
Building, Room 234, Windows 20 and 21, New York, New York 10041
or such other addresses as the Trustee may designate from time to
time by notice to the Unitholders, the Depositor, the Swap
Counterparty and the Guarantor.
"Credit Support": With respect to any Series (or any Class
within such Series), any combination of insurance policies,
letters of credit, reserve accounts and other types of rights or
assets designed to support or ensure the servicing and
distribution of amounts due in respect of the Trust Property,
which in each case is specified as such in the applicable Terms
Schedule.
"Currency": Dollars or Foreign Currency.
"Debt Securities": As specified in the Terms Schedule.
"Debt Security Accrual Period": The Initial Debt Security
Accrual Period and each period from and including a Debt Security
Payment Date to but excluding the next succeeding Debt Security
Payment Date.
"Debt Security Agreement": The indenture, fiscal agency
agreement, or other agreement with respect to a Debt Security
which sets forth the covenants and agreements of the Debt
Security Issuer in connection with issuance of the Debt Security.
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"Debt Security Amount": With respect to each Debt Security
Payment Date, an amount equal to the accrued interest and/or
other payment obligation calculated with reference to the
applicable Debt Security for the immediately preceding applicable
Debt Security Accrual Period at the applicable Debt Security
Rate.
"Debt Security Default": Unless otherwise specified in the
Terms Schedule, (i) the acceleration of the maturity of the Debt
Securities under the Debt Securities and/or the Debt Security
Agreement, as applicable, whether by declaration of the Holders
thereof, the Debt Security Trustee or otherwise, (ii) the failure
to pay an installment of principal of, or any amount of interest
due on, the Debt Securities after the due date, and after the
expiration of any applicable grace period or cure period or (iii)
the occurrence of any event of default relating to bankruptcy or
insolvency of the Debt Security Issuer under the Debt Securities
and/or the Debt Security Agreement, as applicable. A Debt
Security Default will be deemed to have occurred for all purposes
of the Trust Agreement notwithstanding any rescission or
annulment of any such acceleration or any subsequent payment
(after the default and after any applicable grace period) of such
overdue principal or interest.
"Debt Security Agreement": As specified in the Terms
Schedule, if applicable.
"Debt Security Issuer": As specified in the Terms Schedule.
"Debt Security Payment Date": As specified in the Terms
Schedule.
"Debt Security Rate": As specified in the Terms Schedule.
"Debt Security Trustee": As specified in the Terms
Schedule, if applicable.
"Definitive Registered Unit": A Registered Unit in
definitive, certificated form without coupons attached.
"Depositary": DTC or, if so provided in the Terms Schedule,
Euroclear or CEDEL; or another depositary specified in the Terms
Schedule.
"Depositor": MSDW Structured Asset Corp., a Delaware
corporation, and any of its successors or assigns.
"Depositor Order" or "Depositor Requests": A written order
or request, respectively, signed in the name of the Depositor by
any of its Chief Executive Officer, Chief Financial Officer,
Chief Operating Officer, President, a Vice President, its
Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary and delivered to the Trustee.
"Distribution Agreement": The agreement between each
Distribution Participant and the Trust relating to the
distribution of the Units.
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"Distribution Date": As specified in the Terms Schedule.
"Distribution Participant": Each Person acting as
underwriter, dealer, placement agent or any similar capacity in
connection with the initial distribution of the Units.
"Dollar" or "$" or "USD": Such currency of the United
States as at the time of payment is legal tender for the payment
of public and private debts.
"DTC": The Depository Trust Company, a limited purpose
trust company organized under the laws of the State of New York,
its successors and assigns.
"D&P": Duff & Phelps Credit Rating Co.
"Early Termination Date": As defined in the Swap Agreement.
"Eligible Account": A non-interest bearing account, held in
either the United States or the United Kingdom, in the name of
the Trustee for the benefit of the Trust that is either (i) a
segregated account or segregated accounts maintained with a
Federal or State chartered depository institution or trust
company the short-term and long-term unsecured debt obligations
of which (or, in the case of a depository institution or trust
company that is the principal subsidiary of a holding company,
the short-term and long-term unsecured debt obligations of such
holding company) are rated P-i and Aaa by Moody's, A-1+ and AAA
by S&P, and, if rated by D&P, D-1+ and AAA by D&P at the time any
amounts are held on deposit therein including when such amounts
are initially deposited and all times subsequent or (ii) a
segregated trust account or segregated accounts maintained as a
segregated account or as segregated accounts and held by the
Trustee in its Corporate Trust Office in trust for the benefit of
the Unitholders.
"ERISA": The Employee Retirement Income Security Act of
1974, as amended, including any successor or amendatory statutes.
"ERISA Benefit Plan": As specified in Section 5.11(d).
"Euro": As defined in Section 5.08.
"Euroclear": Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear System
"Event of Default": As specified in the Swap Agreement.
"Excess Expense Event": As defined in Section 9.05(a).
"Exchange Act": The Securities Exchange Act of 1934, as
amended.
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"Exchange Rate Agent" Unless otherwise specified in the
Terms Schedule, Morgan Stanley & Co. Incorporated ("Morgan
Stanley") or an Affiliate of Morgan Stanley designated by Morgan
Stanley.
"Executive Officer": With respect to any corporation, the
Chief Executive Officer, Chief Operating Officer, Chief Financial
Officer, President, any Vice President, the Secretary, any
Assistant Secretary, the Treasurer or any Assistant Treasurer of
such corporation; with respect to any partnership, any general
partner thereof.
"Extraordinary Trust Expense": As defined in Section
10.05(b).
"Foreign Currency": A currency issued by the government of
any country other than the United States or a composite currency
the value of which is determined by reference to the values of
the currencies of any group of countries.
"Global Security": A Certificate in global form issued to
the Depositary and (in the case of a Registered Unit) registered
in the name of the Depositary or its nominee.
"Guarantee": The Guarantee (if any) identified in the Terms
Schedule of the obligations of the Swap Counterparty under the
Swap Agreement. If the Terms Schedule does not specify a
Guarantee, references to the Guarantee and the Guarantor herein
shall be deemed deleted.
"Guarantor": The Guarantor who issues and is identified in
the Guarantee (if a Guarantee is identified in the Terms
Schedule), and, if a successor Person shall have become the
Guarantor pursuant to the Guarantee, "Guarantor" shall mean such
successor Person.
"Independent": When used with respect to any specified
Person means that the Person (1) is in fact independent of the
Depositor, the Swap Counterparty and the Guarantor and of any
Affiliate of any of the foregoing Persons, (2) does not have any
direct or indirect financial interest in the Depositor, the Swap
Counterparty or the Guarantor, or in any Affiliate of any of the
foregoing Persons which is material with respect to such Person
and (3) is not connected with the Depositor, the Swap
Counterparty or the Guarantor, as an officer, employee, promoter,
partner, director or person performing similar functions.
"Initial Debt Security Accrual Period": The period from and
including the Closing Date to but excluding the next Debt
Security Payment Date.
"Initial Swap Rate Accrual Period": The period from and
including the Closing Date to but excluding the next Swap Payment
Date.
"Insolvency Law": As defined in Section 10.14.
"Investment Company Act": The United States Investment
Company Act of 1940, as amended, and applicable rules thereunder.
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"Liquidation Event": As defined in Section 9.02.
"Maximum Reimbursable Amount": As specified in the Terms
Schedule (or any other amount specified by the party agreeing to
indemnify the Trustee).
"Moody's": Moody's Investors Service, Inc.
"Notional Amount": A notional amount specified in the Terms
Schedule with respect to any Class of Units with respect to which
distributions of interest or other distributions are determined
but which does not represent a Unit Principal Balance.
"Officers' Certificate": A certificate signed by any one
(or, if specified in the Trust Agreement, more than one)
Executive Officer of the applicable Person, and delivered to the
Trustee.
"Opinion of Counsel": A written opinion of counsel, who
may, except as otherwise expressly provided in the Trust
Agreement, be counsel for the Depositor, acceptable to the
Trustee.
"Optional Exchange Date": As defined in Section 5.12.
"Outstanding": As of any date of determination, all Units
theretofore authenticated and delivered under the Trust
Agreement, except:
(i) Units theretofore canceled by the Unit Registrar
or delivered to the Trustee for cancellation; and
(ii) Units in exchange for or in lieu of which other
Units have been authenticated and delivered pursuant to the
Trust Agreement, unless proof satisfactory to the Trustee
is presented that any such Units are held by a bona fide
purchaser in whose hands such Units represent interests in
the Trust.
"Pass Through Rate": As specified in the Terms Schedule.
"Paying Agent": As defined in Section 5.09.
"Permitted Investments": All investments made by the
Trustee pursuant to Section 3.05 in any one or more of the
following; provided, however, that the total return specified by
the terms of each such obligation or security is at least equal
to the purchase price thereof; and provided, further, that each
such obligation or security shall be held in the name of the
Trustee on behalf of the Trust:
(i) direct obligations of, and obligations fully
guaranteed by, the United States, the Federal Home Loan
Mortgage Corporation, the Federal National Mortgage
Association, the Federal Farm Credit System or any agency
or instrumentality of the
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United States the obligations of which are explicitly
backed by the full faith and credit of the United States of
America; provided that obligations of, or guaranteed by,
the Federal Home Loan Mortgage Corporation, the Federal
National Mortgage Association or the Federal Farm Credit
System shall be Permitted Investments only if, at the time,
and during the course, of investment, it has at least the
credit rating of P-1 or Aaa by Moody's, A-1+ or AAA by S&P,
and, if rated by D&P, D-1+ or AAA by D&P;
(ii) demand and time deposits in, certificates of
deposit of, or banker' acceptances issued by any depository
institution or trust company (including the Trustee or any
agent of the Trustee acting in their respective commercial
capacities) incorporated under the laws of the United
States or any State and subject to supervision and
examination by Federal and/or State banking authorities so
long as the commercial paper and/or the short-term debt
obligations of such depository institution or trust company
at the time of, and during the course of, such investment
or contractual commitment providing for such investment
have at least the credit rating of P-1 or Aaa by Moody's,
A-l+ or AAA by S&P, and, if rated by D&P, D-1+ or AAA by
D&P (or, in the case of a depository institution which is
the principal subsidiary of a holding company, the
commercial paper or other short-term debt obligations of
such holding company have a credit rating of P-i or Aaa by
Moody's, A-1+ or AAA by S&P, and, if rated by D&P, D- l+ or
AAA by D&P;
(iii) commercial paper having a maturity of not more
than 180 days and having at the time, and during the
course, of such investment at least the credit rating of
P-1 by Moody's, A-1+ by S&P, and, if rated by D&P, D-l+ by
D&P; and
(iv) repurchase agreements with respect to (a) any
security described in clause (i) above or (b) any other
security issued or guaranteed by an agency or
instrumentality of the United States with an entity having
the credit rating of P-1 or Aaa by Moody's, A-1+ or AAA by
S&P, and, if rated by D&P, D-1+ or AAA by D&P. Copies of
any repurchase agreement entered into will be delivered to
the Rating Agencies, if any.
In no event shall a Permitted Investment at any time
constitute (a) a swap agreement as defined in the United States
Bankruptcy Code, 11 U.S.C. S 101 et seq., (b) an interest-only or
principal-only security or (c) a liability of the Trust in excess
of the principal amount invested by the Trustee. Permitted
Investments shall include, without limitation, those investments
for which the Trustee or an Affiliate of the Trustee provides
services.
"Person": Any individual, corporation, partnership, joint
venture, association, joint stock company, trust (including any
beneficiary thereof), unincorporated organization or government
or any agency or political subdivision thereof.
"Predecessor Unit": With respect to any particular Unit,
every previous Unit evidencing all or a portion of the same
interest as that evidenced by such particular Unit; and, for the
purpose of this definition, any Unit authenticated and delivered
under Section 5.04 in lieu of a
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lost, destroyed or stolen Unit shall be deemed to evidence the
same interest as the lost, destroyed or stolen Unit.
"Proceeding": Any suit in equity, action at law or other
judicial or administrative proceeding.
"Rating Agencies": As specified in the Terms Schedule.
"Rating Agencies Condition": A condition, with respect to
any action or occurrence of which the Rating Agencies shall have
been given 10 days (or such shorter period acceptable to the
Rating Agencies) prior notice, the violation of which would cause
the Rating Agencies to reduce or withdraw the then current rating
of any Units.
"Record Date": As specified in the Terms Schedule.
"Redenomination Date": As defined in Section 5.08.
"Registered Unit": Any Unit in registered form ownership of
which is evidenced by the Unit Register.
"Responsible Officer": With respect to the Trustee, any
officer within the Corporate Trust Office of the Trustee,
including any Vice President, Assistant Vice President,
Secretary, Assistant Secretary or any other officer of the
Trustee customarily performing functions similar to those
performed by any of the above designated officers and also, with
respect to a particular matter, any other officer to whom such
matter is referred because of such officer' knowledge of and
familiarity with the particular subject.
"Retained Interest": If applicable, with respect to any
Debt Security or other Trust Property, an ownership interest
therein and a right to a portion of the payments thereon by the
obligor thereof, as specified in the Terms Schedule, held by the
Person so specified in such Terms Schedule.
"Scheduled Final Distribution Date": As specified in the
Terms Schedule.
"Securities Act": The Securities Act of 1933, as amended.
"Selling Agent": Unless otherwise specified in the Terms
Schedule, Morgan Stanley or any Affiliate of Morgan Stanley
designated by it.
"Series": All of the Units issued by a particular Trust.
"Special Depositor Wind-up Event": As defined in Section
9.06.
"Specified Currency": Unless otherwise specified in the
Terms Schedule, United States Dollars.
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"State": Any one of the 50 states of the United States or
the District of Columbia.
"S&P": Standard & Poor's Ratings Service, a division of The
McGraw-Hill Companies, Inc.
"Swap Agreement": The ISDA Master Agreement (including the
Schedule thereto and Confirmation or Confirmations thereunder and
any ISDA Credit Support Annex forming a part thereof), if any, to
which the Trust is a party identified in the Terms Schedule. In
the event that the Trust shall enter into more than one ISDA
Master Agreement, "Swap Agreement" shall mean each such ISDA
Master Agreement specified in the Terms Schedule.
"Swap Amount": With respect to each Swap Payment Date, an
amount, payable by, or on behalf of, the Swap Counterparty, equal
to the accrued interest or other payment obligation calculated
with reference to the Swap Notional Amount for the immediately
preceding Swap Rate Accrual Period at the Swap Rate.
"Swap Calculation Agent": The "Calculation Agent" as
defined in the Swap Agreement.
"Swap Counterparty": Morgan Stanley Capital Services, Inc.,
unless another Person is identified in the Terms Schedule as the
counterparty of the Trust under the Swap Agreement; unless a
successor Person shall have become the Swap Counterparty pursuant
to the applicable terms of the Swap Agreement, whether by
assignment or otherwise, and thereafter "Swap Counterparty" shall
mean such Person. In the event that the Trust shall enter into
more than one Swap Agreement, "Swap Counterparty" shall mean each
counterparty of the Trust specified in the Terms Schedule.
"Swap Default": The occurrence of an "Event of Default" (as
defined in the Swap Agreement) under the Swap Agreement.
"Swap Notional Amount": As specified in the Terms Schedule.
"Swap Payment Date": As specified in the Terms Schedule.
"Swap Rate": As specified in the Terms Schedule.
"Swap Rate Accrual Period": The Initial Swap Rate Accrual
Period and each period from and including a Swap Payment Date to
but excluding the next succeeding Swap Payment Date.
"Termination Event": As defined in the Swap Agreement.
"Termination Payment": Any amounts payable under the Swap
Agreement in accordance with its terms, whether to or by the
Trust, as the case may be, in consequence of an early termination
of one or more Transactions under the Swap Agreement.
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"Terms Schedule": The schedule or schedules (which may be
in the form of Schedules I, II and III attached to Exhibit A
hereto) which contains information with respect to the particular
terms of the Units, as well as the Swap Agreement, the Debt
Securities and any other Trust Property.
"TIA": The Trust Indenture Act of 1939, as amended.
"Transaction": As defined in the Swap Agreement.
"Transfer": To sell, convey, assign, transfer, create,
grant a lien upon and a security interest in and right of setoff
against, deposit, set over, contribute and confirm to the Trustee
pursuant to the Trust Agreement; and the terms "Transferred" and
"Transferring" have the meanings correlative to the foregoing. A
Transfer of any Debt Securities or of any other instrument shall
include all rights, powers and options (but none of the
obligations) of the Transferring party thereunder, including the
first priority and continuing right to claim for, collect,
receive and give receipt for principal, premium, if any, and
interest payments in respect of such Debt Securities and all
other moneys payable thereunder, to give and receive notices and
other communications, to make waivers or other agreements, to
exercise all rights and options, to bring Proceedings in the name
of the Transferring party or otherwise, and generally to do and
receive anything that the Transferring party is or may be
entitled to do or receive thereunder or with respect thereto.
"Treaty": As defined in Section 5.08.
"Trigger Amount": As specified in the Terms Schedule.
"Trust": The trust created by the Trust Agreement.
"Trust Agreement": As defined in the preamble hereto.
"Trust Property": As defined in Section 3.01.
"Trust Wind-up Event": As defined in Section 9.01.
"Trustee": Chase Bank of Texas, National Association, a
national banking association, or any co-trustee appointed
pursuant to Section 10.10, until a successor Person shall have
become the Trustee pursuant to the applicable terms of the Trust
Agreement, and thereafter "Trustee" shall mean such successor
Person.
"Trustee Fee Letter": A letter agreement between the
Trustee and the Depositor dated on or before the Closing Date
setting forth the fees and expenses of the Trust and the Trustee
which are subject to reimbursement by the Depositor.
"Trustee Fees": The amount or amounts set forth in the
Trustee Fee Letter.
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"UCC": The Uniform Commercial Code as in effect in the
relevant jurisdiction or, with respect to the State of Louisiana,
the equivalent body of statutory and common law.
"Unit Account": As defined in Section 3.04.
"Unit Principal Balance": With respect to a Unit that is
Outstanding, as determined at any time, the maximum amount that
the Holder thereof is entitled to receive as distributions
allocable to principal payments on the Debt Securities.
"Unit Register" and "Unit Registrar": As respectively
defined in Section 5.03.
"Unitholder" and "Holder": In the case of Registered Units,
the Person in whose name a Unit is registered in the Unit
Register on the applicable Record Date, and in the case of Bearer
Units, the bearer of such Unit.
"Units": The securities authorized by, and authenticated
and delivered under, the Trust Agreement and evidenced by a
certificate in the form or forms attached hereto as Exhibit B.
"United States": The United States of America (including
the States and the District of Columbia), its territories, its
possessions and other areas subject to its jurisdiction.
"U.S. Person": A citizen or resident of the United States,
a corporation, partnership or other entity created or organized
in or under the laws of the United States or any political
subdivision thereof, an estate the income of which is subject to
United States federal income taxation regardless of its source or
a trust if (i) a U.S. court is able to exercise primary
supervision over the trust's administration and (ii) one or more
U.S. persons have the authority to control all of the trust's
substantial decisions.
Certain additional defined terms have the meanings assigned
thereto in other terms hereof.
SECTION 1.02. Rules of Construction. Unless the context
otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the
meaning assigned to it in accordance with generally
accepted accounting principles as in effect in the United
States from time to time;
(iii) "or" is not exclusive;
(iv) the words "herein", "hereof", "hereunder" and
other words of similar import refer to the Trust Agreement
as a whole and not to any particular Article, section or
other subdivision;
(v) "including" means including without limitations;
and
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(vi) words in the singular include the plural and
words in the plural include the singular.
SECTION 1.03. Article and Section References. All article
and section references used in the Trust Agreement, unless
otherwise provided, are to articles and sections in the Trust
Agreement. Any reference to "this Section" appearing within a
particular paragraph of a section is a reference to such section
as a whole.
ARTICLE II
Declaration of Trust; Entry into Swap Agreement;
Issuance of Units
SECTION 2.01. Creation and Declaration of Trust; Assignment
of Debt Securities. (a) The Depositor, concurrently with the
execution and delivery of the Trust Agreement, Transfers to the
Trustee, on behalf and for the benefit of the Unitholders and
without recourse, all the right, title and interest of the
Depositor, including any security interest therein, in, to and
under (i) the Debt Securities, (ii) the Unit Account, including
all income from the investment of funds in the Unit Account,
(iii) all payments on or under and all proceeds of any of the
foregoing (including all proceeds of the conversion thereof,
voluntary or involuntary, into cash or other liquid property, all
cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, causes of action, rights to
payment of any and every kind and other forms of obligations,
receivables, instruments and other property which at any time
constitute all or part of or are included in the proceeds of any
of the foregoing) and (iv) all other assets included or to be
included in the Trust Property; in each case except for any
specified Retained Interest.
(b) In connection with the Transfer referred to in the
preceding paragraph, the Depositor shall, not later than the
Closing Date, (i) deposit the Debt Securities with the Trustee by
physical delivery of such Debt Securities, duly endorsed, to the
Trustee or cause the Debt Securities to be registered by
book-entry in the name of the Trustee provided that the
book-entry depositary will be an agency of the United States, DTC
or another book-entry institution acceptable to the Depositor and
(ii) with respect to each such Debt Security, deliver or cause to
be delivered to the Trustee all documents necessary to transfer
such Debt Security to the Trustee.
(c) The Guarantor shall deliver the Guarantee to the
Trustee for the benefit of the Unitholders.
(d) The Transfer of the Debt Securities by the Depositor
accomplished by the Trust Agreement is absolute (other than with
respect to any Retained Interest) and is intended by the parties
thereto as a sale as further provided in Section 3.03.
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SECTION 2.02. Entry into Swap Agreement and Distribution
Agreement. Concurrently with the execution of the Trust
Agreement, the Trust shall (i) execute and deliver the Swap
Agreement and each Transaction thereunder, if any, (ii) accept
the Guarantee and (iii) enter into any Distribution Agreement
with each Distribution Participant. It shall be a condition to
the effectiveness of the Trust Agreement that the Swap Agreement
be effective as of the date of the Trust Agreement. The Trustee
shall, on behalf of the Trust, perform the obligations of the
Trust under the Swap Agreement in accordance with its terms and
shall make demands under the Guarantee immediately upon obtaining
notice of a payment default under the Swap Agreement by the Swap
Counterparty. The Trustee and the Depositor agree, and each
Unitholder by acquiring its Units shall be deemed to agree, that
the Swap Agreement does not represent an ownership interest in
the Trust or its assets and that none of them shall treat the
Swap Agreement as an ownership interest for the Trust for any
purpose. Except as expressly set forth in this Trust Agreement
and in the Swap Agreement, the receipt by the Trustee of the Debt
Securities and the execution by the Trustee of the Swap Agreement
shall not constitute and is not intended to result in an
assumption by the Trustee or any Unitholder of any obligation of
the issuer of the Debt Securities or the Swap Counterparty or any
other Person in connection with the Debt Securities or the Swap
Agreement or under any agreements or instruments relating to any
of them.
SECTION 2.03. Acceptance by Trustee. The Trustee will
acknowledge receipt by it of (i) the Debt Securities and the
related documents referred to in Section 2.01, now existing or
hereafter acquired, (ii) the Swap Agreement, (ii) the Guarantee
and (iv) the documents specified in the Swap Agreement (in Part 3
of the Schedule to the 1992 Master Agreement), and declares that
it will hold such assets and all other assets comprising the
Trust Property in trust, for the exclusive use and benefit of all
present and future Unitholders and for the purposes and subject
to the terms and conditions set forth in the Trust Agreement,
including the Trustee's obligations, as and when they may arise,
(I) to pay any amount due from the Trust under the Swap
Agreement, which obligations shall be and hereby are designated
to be secured, under the terms of the Swap Agreement, by a pledge
of all of the Trust Property, (II) to pay Extraordinary Trust
Expenses and (III) to make distributions to the Unitholders in
accordance with Section 4.01.
SECTION 2.04. Representations and Warranties of the
Depositor. The Depositor represents and warrants to the Trustee
that as of the Closing Date or as of such other date otherwise
specifically provided in the Trust Agreement:
(i) the Depositor is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware;
(ii) to the Depositor' knowledge after the inquiry,
there are not any liens or encumbrances on the Debt
Securities immediately prior to the time of Transfer except
those created by the Trust Agreement;
(iii) the execution and delivery of the Trust
Agreement by the Depositor and its performance of and
compliance with the terms thereof will not violate the
Depositor' articles of incorporation or By-laws or
constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under,
or result in the breach or
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acceleration of, any material contract, agreement or other
instrument to which the Depositor is a party or by which
the Depositor or any of its assets is bound;
(iv) to the Depositor' knowledge after due inquiry,
the Depositor has the full power and authority to enter
into and consummate all transactions contemplated by the
Trust Agreement, has duly authorized the execution,
delivery and performance of the Trust Agreement and has
duly executed and delivered the Trust Agreement. The Trust
Agreement, upon its execution and delivery by the Depositor
and assuming due authorization, execution and delivery by
the Trustee, will constitute a valid, legal and binding
obligation of the Depositor, enforceable against it in
accordance with the terms thereof, except as such
enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other laws
relating to or affecting the rights of creditors generally,
and by general equity principles (regardless of whether
such enforcement is considered in a proceeding in equity or
at law); and
(v) to the Depositor' knowledge after due inquiry, the
Depositor is not in violation, and the execution and
delivery of the Trust Agreement by the Depositor and its
performance and compliance with the terms of the Trust
Agreement will not constitute a violation, of any order
decree of any court or any order or regulation of any
Federal, State, municipal or governmental agency having
jurisdiction over the Depositor or its properties, which
violation would reasonably be expected to have a material
and adverse effect on the duties and obligations of the
Depositor under the Trust Agreement.
It is understood and agreed that the representations and
warranties of the Depositor set forth in this Section shall
survive delivery of the respective documents to the Trustee and
shall inure to the benefit of the Trustee on behalf of the
Unitholders notwithstanding any restrictive or qualified
endorsement or assignment. Upon discovery by any of the
Depositor, the Guarantor, or the Trustee of a breach of any of
the foregoing representations and warranties which materially and
adversely affects the interests of the Unitholders, the party
discovering such breach shall give prompt written notice thereof
to the other parties.
SECTION 2.05. Breach of Representation or Warranty. Upon
the earlier of discovery by the Depositor or receipt of notice by
the Depositor of a breach of any representation or warranty of
the Depositor set forth in Section 2.04 that materially and
adversely affects the rights of the Unitholders to receive
distributions under the Trust Agreement when due and payable, the
Depositor shall notify the Rating Agencies of such breach. The
Depositor shall cure such breach in all material respects within
two Business Days of the earlier of discovery by the Depositor or
receipt of notice by the Depositor of such breach.
SECTION 2.06. Agreement to Authenticate and Deliver Units.
The Trustee agrees and acknowledges that it will, concurrently
with the Transfer to and receipt by it of the Debt Securities and
the Guarantee and delivery to it by the Depositor of the executed
Trust Agreement and by the Swap Counterparty of the executed Swap
Agreement, cause to be executed, authenticated and delivered to
or upon the order of the Depositor, in exchange for the Debt
Securities and such other assets constituting the Trust Property,
Units duly executed and
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authenticated by or on behalf of the Trustee in authorized
denominations evidencing ownership of the entire Trust Property,
all in accordance with the terms and subject to the conditions of
Section 5.02.
ARTICLE III
Trust Powers; Administration of the Trust Property
SECTION 3.01. Trust Property. (a) The "Trust Property" with
respect to a Trust will consist of: (i) the related Debt
Securities and all payments on or collections in respect of such
Debt Securities due after a specified "Cut-off Date" set forth in
the Terms Schedule; (ii) all the Trustee's right, title and
interest under any Swap Agreement and any related Guarantee;
(iii) all the Trustee's right, title and interest in any related
Credit Support, if any; (iv) all Permitted Investments and all
funds from time to time deposited in certain segregated accounts
held by the Trustee in trust and for the benefit of the
Unitholders representing interests in such Trust; and (v) any
other asset described in the Terms Schedule as constituting a
portion of such Trust Property, in each case exclusive of any
Retained Interest.
(b) The Trust Property for a given Series of Units and the
related Trust will not constitute Trust Property for any other
Series of Units and the related Trust and the Units of each Class
of a given Series possess an equal and ratable undivided
ownership interest in such Trust Property. The Terms Schedule
may, however, specify that certain assets constituting a part of
the Trust Property relating to any given Series may be
beneficially owned solely by or deposited solely for the benefit
of one Class or a group of Classes within such Series. In such
event, the other Classes of such Series will not possess any
beneficial ownership interest in those specified assets
constituting a part of the Trust Property.
SECTION 3.02. Administration of the Trust. (a) The Trustee
shall administer the Trust Property for the benefit of the
Unitholders. In engaging in such activities, the Trustee shall
follow or cause to be followed collection procedures in
accordance with the terms of the Trust Agreement, the Debt
Securities, the Swap Agreement, the indemnification offered by
the Depositor pursuant to Section 10.05(b) and the Guarantee. The
duties of the Trustee shall be performed in accordance with
applicable local, State and Federal law.
(b) Subject to Article X, the Trustee is hereby authorized
to perform, and from time to time hereafter, shall perform only
those acts which are described in the Trust Agreement as obli
gations of the Trustee. Notwithstanding the generality of the
foregoing, the Trustee is hereby specifically authorized to do
the following on behalf of the Trust: to issue the Certificates
evidencing Units; to execute and deliver and perform its
obligations and exercise its rights under the Swap Agreement; to
establish and maintain the Unit Account hereunder; to accept
delivery of the Debt Securities and the Swap Agreement; to pledge
the assets of the Trust (including the Debt Securities) to secure
the obligations of the Trust including obligations under the Swap
Agreement; to sell the Debt Securities through the Selling Agent
in accordance with Section 9.03; to make Permitted Investments
pursuant to Section 3.06; to liquidate the Trust pursuant to
Article IX and to make distributions pursuant to Article IV.
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(c) Notwithstanding anything to the contrary herein, the
Trust shall not engage in any business or activities other than
receiving the Debt Securities and any Credit Support or other
Trust Property and entering into the Swap Agreement as provided
herein, holding the Debt Securities, the Swap Agreement and any
Credit Support (or other Trust Property), issuing Certificates
evidencing Units, making Permitted Investments in accordance with
Section 3.06 and performing its obligations hereunder and under
the Swap Agreement; provided, however, that during its existence
the Trust shall not engage in any business or activity which will
cause it to be or become an open-end investment company, unit
investment trust or face-amount certificate company that is or is
required to be registered under Section 8 of the Investment
Company Act, or to be or become a closed-end investment company
required to be registered, but not registered, under the
Investment Company Act.
(d) The Trustee shall not sell, assign, pledge or otherwise
transfer the Debt Securities, the Swap Agreement, any Credit
Support or other Trust Property, or any interest of the Trust
therein, to any Person or Persons, except to a successor trustee
as provided in Section 10.07, through the Selling Agent in
accordance with Section 9.03, in accordance with Section
10.02(a)(x), as required under any Swap Agreement or as otherwise
expressly permitted hereunder. This section shall not be
construed to prohibit transfers of the Units.
(e) The Trustee shall have the legal power to exercise all
of the rights, powers and privileges of holders of the Debt
Securities in which the Units evidence an interest; provided,
however, that the exercise of such powers shall be subject to the
provisions of this Section 3.02, Article X and the other
provisions hereof. However, neither the Trustee (except as
specifically provided herein or in the TIA) nor the Depositor
shall be under any obligation whatsoever to appear in, prosecute
or defend any action, suit or other proceeding in respect of Debt
Securities or Units.
(f) Except for actions expressly authorized by the Trust
Agreement, the Trustee shall not take actions reasonably likely
to (nor fail to take actions, if such failure would be reasonably
likely to) (i) impair the interests of the Trust in any Debt
Security, any Credit Support, the Swap Agreement or the Guarantee
(or any other Trust Property); (ii) impair the value of any Debt
Security, any Credit Support, the Swap Agreement or the Guarantee
(or any other Trust Property); or (iii) alter the classification
of a Trust for U.S. federal income tax purposes.
(g) Except as expressly provided in the Trust Agreement,
the Trustee shall have no power to vary the corpus of the Trust
Property including by (i) accepting any substitute obligation or
asset for a Debt Security or any Credit Support, (ii) entering
into any amendment or modification of the Swap Agreement or the
Debt Securities, (iii) accepting any substitute guarantee for the
Guarantee, (iv) adding any other investment, obligation or
security to the Trust Property, (v) withdrawing from the Trust
Property any Debt Securities or Credit Support, (vi) terminating
the Swap Agreement except in accordance with its terms or (vii)
rejecting or otherwise failing to accept the continuing benefits
of the Guarantee.
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SECTION 3.03. Collection of Certain Debt Security Payments.
The Trustee shall make reasonable efforts to collect all payments
required to be made pursuant to the terms of the Debt Securities
in a manner consistent with the terms of the Trust Agreement and
such Debt Securities.
SECTION 3.04. Sale. The parties hereto agree and intend
that the Transfer of Debt Securities, the Swap Agreement and all
proceeds of any of the foregoing shall be treated as a sale and
purchase by the Trust and not a loan or a pledge to secure a
loan. If for any reason such Transfer is deemed to be a loan or a
pledge to secure a loan, the parties intend that the Trust
Agreement shall be a security agreement pursuant to which there
shall be deemed to have been granted to the Trustee a security
interest in all right, title and interest in the Debt Securities,
the Swap Agreement and all proceeds of any of the Trust Property
granted in favor of the Swap Counterparty pursuant to the Swap
Agreement and to the obligation of the Trust to pay Extraordinary
Trust Expenses. If the Trust terminates prior to the satisfaction
of the claims of any Unitholder under any Unit, the security
interest created hereby shall continue in full force and effect
and the Trustee shall be deemed to be the collateral agent for
the benefit of such Unitholder, subject to the prior security
interest of the Swap Counterparty under the Swap Agreement and to
the terms of the Trust Agreement.
SECTION 3.05. Unit Account. (a) The Trustee shall establish
and maintain one or more Eligible Accounts (collectively, the
"Unit Account"), held in trust for the benefit of the
Unitholders, subject to the security interest in all of the Trust
Property granted in favor of the Swap Counterparty pursuant to
the Swap Agreement and the obligation of the Trust to pay
Extraordinary Trust Expenses. The Trustee, on behalf of the
Unitholders, shall possess all right, title and interest in all
funds on deposit from time to time in the Unit Account and in all
proceeds thereof, subject to the security interest in all of the
Trust Property granted in favor of the Swap Counterparty pursuant
to the Swap Agreement and the obligation of the Trust to pay
Extraordinary Trust Expenses. The Unit Account shall be under the
sole dominion and control of the Trustee. The Trustee shall
deposit or cause to be deposited in the Unit Account all amounts
collected with respect to the Debt Securities, Swap Agreement and
the Guarantee including:
(i) all payments received by the Trustee on account
of principal of the Debt Securities;
(ii) all payments received by the Trustee on account
of interest (if any) on the Debt Securities;
(iii) all payments received by the Trustee on account
of premium (if any) on the Debt Securities;
(iv) all Swap Amounts and all other payments, if any,
received by the Trustee on account of the Swap Agreement;
(v) the Unit Principal Balance, if applicable;
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(vi) all payments received by the Trustee on account
of the Guarantee; and
(vii) it is understood and agreed that payments in the
nature of prepayment or redemption penalties, late payment
charges or assumption fees which may be received by the
Trustee shall be deposited by the Trustee in the Unit
Account and shall not be retained by the Trustee for its
own account.
If, at any time, a formerly Eligible Account no longer
fulfills the definition of Eligible Account, the Trustee shall
within five Business Days or by the next Distribution Date,
whichever comes earlier, establish a new Unit Account meeting the
conditions specified above and transfer any cash and any
investments on deposit in the Unit Account to such new Unit
Account, and from the date such new Unit Account is established,
it shall be the Unit Account.
(b) The Trustee shall give notice to the Depositor and the
Rating Agencies of the location of each Eligible Account
constituting the Unit Account prior to any change thereof.
SECTION 3.06. Investment of Funds in the Accounts. The
Depositor, on behalf of the Trust, may direct in writing the
Trustee or any depositary institution maintaining the Unit
Account, if any, and any other segregated account the contents of
which are held for the benefit of the Trust (each, an "Account")
to invest the funds therein in one or more Permitted Investments
bearing interest or sold at a discount, which shall be held to
maturity unless payable on demand. If the Depositor does not
provide any investment directions to the Trustee, then the
Trustee shall invest funds held in any Account in the Permitted
Investments specified in clause (i) of the definition thereof
upon receipt of such funds. Such funds shall be invested in
Permitted Investments that will mature at least one calendar day
prior to the next Distribution Date.
SECTION 3.07. Retained Interest. The Retained Interest, if
any, in any Debt Security or other Trust Property shall initially
be held by the Person so specified in the Terms Schedule and to
the extent specified therein. The Retained Interest will be
established on an asset-by-asset basis. With respect to each Debt
Security, unless otherwise specified in the Terms Schedule, the
Retained Interest shall be deducted by the Trustee from
applicable collections in respect of such Debt Security or other
Trust Property. Unless otherwise provided in the Terms Schedule,
collections in respect of Retained Interest shall not be
deposited in the Unit Account and shall not constitute a part of
the Trust, but shall instead be distributed to the holder of such
Retained Interest; provided, however, that the Terms Schedule
with respect to which there is a Retained Interest may provide
that commingled amounts received in respect of Debt Securities
and the related Retained Interest may initially be deposited in
separate and discrete accounts established by the Trustee.
SECTION 3.08. Access to Certain Documentation. The Trustee
shall provide to any Federal, State or local regulatory authority
that may exercise authority over the Depositor, the Swap
Counterparty, the Guarantor or any Unitholder access to the
documentation regarding the Debt Securities, the Swap Agreement
and the Guarantee required by applicable laws and
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regulations. Such access shall be afforded without charge, but
only upon reasonable request and during normal business hours at
the offices of the Trustee designated by it. In addition, access
to the documentation regarding the Debt Securities, the Swap
Agreement and the Guarantee will be provided to the Depositor,
the Swap Counterparty, the Guarantor or any Unitholder upon
reasonable request during normal business hours at the offices of
the Trustee designated by it at the expense of the Person
requesting such access.
ARTICLE IV
Distributions and Reports to Unitholders
SECTION 4.01. Distributions. On each Distribution Date for
the Units (including the Scheduled Final Distribution Date), the
Trustee shall distribute the pro rata portion of the Available
Funds in the Unit Account allocable to each Unitholder.
SECTION 4.02. Reports to Unitholders. (a) On each
Distribution Date the Trustee shall forward or cause to be
forwarded to the Depositor, the Rating Agency, if any, and each
Unitholder a statement setting forth:
(i) the amount of such distribution to Unitholders
allocable to principal of or interest or premium, if any,
on the Units;
(ii) the Pass Through Rate applicable to such
Distribution Date;
(iii) the aggregate stated principal amount of the
Debt Securities as of the Distribution Date and the
interest rate applicable to the Debt Securities for the
Debt Security Accrual Period therefor next beginning;
(iv) the amount received by the Trustee on the related
Debt Securities for the Debt Security Accrual Period
therefor last ended;
(v) the amounts of and the recipients of any payments
under the Swap Agreement for the Swap Rate Accrual Period
last ended;
(vi) if feasible, the new Swap Rate applicable to the
Swap Rate Accrual Period next beginning;
(vii) the aggregate Unit Principal Balance (or
Notional Amount, if applicable) at the close of business on
such Distribution Date;
(viii) the current rating, if any, of the Units and
the Debt Securities and the name of the Rating Agencies
giving such rating;
(ix) the cumulative amount of Extraordinary Trust
Expense, if any, on such Distribution Date;
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(x) with respect to any Trust having Trust Property
which includes Credit Support, the available amount of each
element of Credit Support; and
(xi) any additional information relevant to the
Unitholders as specified in the Terms Schedule.
In the case of information furnished pursuant to clause (i)
above, any amount shall be expressed as a Dollar amount (or the
equivalent thereof in any other Specified Currency) per minimum
denomination of Units or for such other specified portion
thereof. Within a reasonable period of time after the end of each
calendar year, the Trustee shall furnish to each Person who at
any time during each such calendar year was a Unitholder a
statement containing the information set forth in clause (i)
above, aggregated for such calendar year or the applicable
portion thereof during which such Person was a Unitholder which
statement shall contain sufficient information to
allow Unitholders to calculate their U.S. federal income tax
liability with respect to the Units. Such obligation of the
Trustee shall be deemed to have been satisfied to the extent that
substantially comparable information shall have been provided by
the Trustee pursuant to any requirements of the Code as are from
time to time in effect.
(b) At any time when the Trust is not subject to Section 13
or 15(d) of the Exchange Act, upon request to the Trustee by a
Unitholder or a prospective purchaser from a Unitholder of the
information required by Rule 144A(d)(4)(i) of the Securities Act,
the Trustee shall promptly notify the Depositor of such request,
and the Depositor shall promptly thereafter provide such
information to the Trustee, and the Trustee shall furnish such
information to such Unitholder or prospective purchaser,
provided, that for purposes of this Section 4.02(b), the
information required by Rule 144A(d)(4)(i) shall be as
interpreted in Release No. 33-6862, Part D, i.e., basic, material
information concerning the structure of the Trust, the Units and
distributions in respect thereof, and the nature and performance
of the Debt Securities, the Swap Agreement and any other assets
of the Trust.
(c) The Trustee will deliver to Unitholders copies of all
notices and communications it receives from each Debt Security
Issuer, including notice of any call of the Debt Securities by
the Debt Security Issuer. The Trustee will also notify the
Unitholders of any call of the Debt Securities by a Swap
Counterparty under the terms of a Swap Agreement.
(d) If so specified in the Terms Schedule commencing on a
certain date and on or before a specified date in each year
thereafter, a firm of independent public accountants will furnish
a statement to the Trustee to the effect that such firm has
examined certain documents and records relating to the
administration of the Trust Property during the related 12-month
period (or, in the case of the first such report, the period
ending on or before the date specified in the Terms Schedule,
which date shall not be more than one year after the related
original issue date with respect to such Units) and that, on the
basis of certain agreed upon procedures considered appropriate
under the circumstances, such firm is of the opinion that such
administration was conducted in compliance with the terms of the
Trust Agreement, except for
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such exceptions as such firm shall believe to be immaterial and
such other exceptions and qualifications as shall be set forth in
such report.
The Terms Schedule may also provide for delivery to the
Depositor and the Trustee on behalf of the Unitholders, on or
before a specified date in each year, of an annual statement
signed by two officers of the Trustee to the effect that the
Trustee has fulfilled its obligations under the Trust Agreement
throughout the preceding year with respect to any Series of
Units. Copies of the annual accountants' statement, if any, and
the statement of officers of the Trustee may be obtained by
Unitholders without charge upon written request to the Trustee.
(e) If the Terms Schedule provides the Units are subject to
the right of one or more specified Persons to purchase all or a
portion of the Units of a given Series (a "Call Option") and
designates such Series a "Callable Series," then after receiving
notice of the exercise of such a call right, the Trustee will
provide notice thereof as provided in the Terms Schedule. The
Trustee and the Depositor agree, and each Unitholder by acquiring
its Units shall be deemed to agree, that the Call Option does not
represent an ownership interest in the Trust or its assets and
that none of them shall treat the Call Option as an ownership
interest in the Trust for any purpose.
(f) If required by TIA Section 313(a), within 60 days after
December 31 of each year, the Trustee shall mail to (i) each
Unitholder as required by TIA Section 313(c) and (ii) the
Depositor, a brief report dated as of such date that complies
with TIA Section 313(a). The Trustee also shall comply with TIA
Section 313(b). A copy of any report delivered pursuant to this
Section 4.02(f) shall, at the time of its mailing to Unitholders
and the Depositor, be filed by the Trustee with the Commission
and each stock exchange, if any, on which the Units are listed.
The Depositor shall notify the Trustee if and when the Units are
listed on any stock exchange.
SECTION 4.03. Calculation of Pass Through Rates. Unless
otherwise specified in the Terms Schedule, the Pass Through Rate
applicable to the Units will be the equivalent floating rate
applicable to payments received by the Trust under any related
Swap Agreement (as determined by the Swap Calculation Agent) or
under the Debt Securities. If the Terms Schedule specifies a
Calculation Agent, the Calculation Agent shall calculate the Pass
Through Rate applicable to the Units from time to time as
specified in the Terms Schedule. All determinations of interest
by the Calculation Agent hereunder shall, in the absence of
manifest error, be conclusive for all purposes and binding on the
holders of Units. Each of the protections, releases, indemnities
and other terms applicable to the Trustee under Section 10.01,
10.02, 10.03 and 10.05 shall apply to the Calculation Agent in
connection with its actions as Calculation Agent for the Trust.
SECTION 4.03. Compliance with Tax Reporting and Withholding
Requirements. Unless otherwise specified in the Terms Schedule,
the Trustee shall file or cause to be filed, within the time
limits established by law, federal and state income tax returns
and information statements as a grantor trust for each of Trust's
taxable years. The Trust's taxable year shall be the calendar
year. Notwithstanding any other provision of the Trust Agreement
to the contrary, the Trustee shall comply with all Federal
withholding requirements respecting distributions to, or receipts
of amounts on behalf of, Unitholders and pursuant to the Swap
Agreement that the Trustee reasonably believes are applicable
under the Code. The consent of Unitholders shall not be required
for such withholding. In the event the Trustee does withhold any
amount from interest or original issue discount distributions
thereof to any Unitholder pursuant to Federal
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withholding requirements, the Trustee shall indicate in the
statement required pursuant to Section 4.02 the amount so
withheld.
SECTION 4.04. Preservation of Information, Communications
to Holders.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the
Unitholders contained in the most recent list furnished to the
Trustee and the names and addresses of Unitholders received by
the Trustee in its capacity as Unit Registrar. The Trustee may
destroy any list furnished to it as provided upon receipt of a
new list.
(b) Unitholders shall have the right to communicate
pursuant to TIA Section 312(b) with other Unitholders with
respect to their rights under this Agreement or under the
Certificates.
(c) Irrespective of whether the TIA shall apply to this
Agreement, the Depositor, the Trustee, the Paying Agent and the
Unit Registrar shall have the protections provided pursuant to
TIA Section 312(c).
ARTICLE V
The Units
SECTION 5.01. The Units. (a) The Units may be issued in the
form of and be represented by definitive certificates
substantially in the form of Exhibit B1 or B2 hereto (a
"Certificate") or by one or more Global Securities. Units will be
issued in denominations specified in the applicable Terms
Schedule, but in no event will Units denominated in U.S. dollars
be issued in denominations less than $100,000 and in integral
multiples of $1,000 in excess thereof. The authorized
denomination of Units having a Specified Currency other than U.S.
dollars will be set forth in the applicable Terms Schedule. All
Units of the same Class shall be identical in all respects except
for the denominations thereof. All Units issued under the Trust
Agreement shall be in all respects equally and ratably entitled
to the benefits thereof without preference, priority or
distinction on account of the actual time or times of
authentication and delivery, all in accordance with the Terms
Schedule. No additional interests in the Trust other than the
Units shall be issued hereunder, except in accordance with
Section 5.04. The Units in the aggregate may be subject, to the
extent provided in the Terms Schedule, to Call Option.
(b) The Units issued under a Trust Agreement may be limited
to a single class, or, if so specified in the Terms Schedule, a
Series of Units may include two or more Classes differing as to
entitlement to distributions of principal, interest or premium
and one or more Classes may be subordinated in certain respects
to other Classes of such Series with respect to allocation of
losses arising from any defaults with respect to the Trust
Property.
Each Series and Class of Units may be issued as
Registered Units or, subject to Section 5.13, as Bearer Units, in
definitive form or as one or more Global Securities. Unless
otherwise specified in the Terms Schedule, all Units of a given
Series (or, if more than one Class exists, any given Class within
that Series) will, upon issuance, be represented by one or more
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Global Securities that will be deposited with, or on behalf of,
DTC (only for Registered Units denominated and payable in U.S.
dollars), Euroclear, CEDEL, or another Depositary. Global
Securities may be issued in either registered or bearer form and
in either temporary or permanent form. Global Securities
representing Registered Units will be registered in the name of a
nominee of the Depositary, and will clear and settle in
book-entry form only through the facilities of one or more
Depositaries. Unless and until it is exchanged in whole or in
part for the individual Units represented thereby, a Global
Security may not be transferred except as a whole by the
Depositary for such Global Security to a nominee of such
Depositary or by a nominee of such Depositary to such Depositary
or another nominee of such Depositary or by such Depositary or
any such nominee to a successor of such Depositary or a nominee
of such successor.
SECTION 5.02. Execution, Authentication and Delivery. (a)
The Units shall be executed on behalf of the Trust by the Trustee
by its President, its Treasurer, or one of its Vice Presidents,
Assistant Vice Presidents or Trust Officers. The signature of any
of these officers may be manual or facsimile. Units bearing the
manual or facsimile signature of individuals who were at any time
the proper officers of the Trustee shall be binding,
notwithstanding that such individuals or any of them have ceased
to hold such offices prior to the authentication and delivery of
such Units or did not hold such offices at the date of such
Units.
(b) The Trustee shall not be required to authenticate any
Units if the issuance of such Units pursuant to the Trust
Agreement will adversely affect the Trustee's own rights, duties
or immunities under the Trust Agreement.
(c) Each Unit shall be dated as of the date of its
authentication.
(d) Subject to Section 5.10(c), no Unit shall be entitled
to any benefit under the Trust Agreement or be valid or
obligatory for any purpose, unless there appears on such Unit a
certificate of authentication substantially in the form as
contained in the form of Unit attached to the Trust Agreement as
Exhibit B1 or B2 executed by the Trustee by the manual signature
of one of its authorized signatories, and such certificate upon
any Unit shall be conclusive evidence, and the only evidence,
that such Unit has been duly authenticated and delivered under
the Trust Agreement and is entitled to the benefits of the Trust
Agreement.
SECTION 5.03. Registration; Registration of Transfer and
Exchange. (a) The Trustee shall cause to be kept a register for
Registered Units (the registers maintained in such office and in
any other office or agency of the Trustee from which
distributions are made being herein sometimes collectively
referred to as the "Unit Register") in which, subject to such
reasonable regulations as it may prescribe, a transfer agent and
registrar (which may be the Trustee) (the "Unit Registrar") shall
provide for the registration of Registered Units and the
registration of transfers and exchanges of Registered Units. The
Trustee is hereby initially appointed Unit Registrar for the
purpose of registering Registered Units and transfers and
exchanges of Registered Units as herein provided and the Trustee
shall remain Unit Registrar for such purposes until the earlier
to occur of (i) the appointment by the Depositor of a different
Unit Registrar, (ii) the resignation or termination of the
Trustee and appointment of a successor trustee
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in accordance with Section 10.07, in which case such successor
trustee shall assume the duties of Unit Registrar and (iii) the
termination of the Trust and discharge of the Trustee's
obligations under the Trust Agreement in accordance with the
applicable terms of Articles IX and XI; provided, however, that
the Trustee may appoint one or more Co-Unit Registrars. Upon any
resignation of any Unit Registrar appointed by the Depositor
pursuant to clause (i) above, the Trustee shall promptly appoint
a successor or, in the absence of such appointment, assume the
duties of Unit Registrar.
Upon (i) the appointment by the Depositor of a Person other
than the Trustee as Unit Registrar, (ii) the appointment of any
Co-Unit Registrar or (iii) any change in the identity of the Unit
Registrar or any Co-Unit Registrar, the Depositor will in each
case give each of the Trustee and each Rating Agency, if any,
written notice within three Business Days of any such appointment
or change and of the location, and any change in the location, of
the Unit Register, and the Trustee shall have the right to rely
upon a certificate executed on behalf of the Unit Registrar by an
Executive Officer thereof as to the names and addresses of the
Holders of the Registered Units and the principal amounts and
numbers of such Registered Units.
Upon surrender for registration of transfer of any
Registered Unit at the office or agency of the Trustee, if the
requirements of Section 8-401(1) of the Uniform Commercial Code
are met to the Trustee's satisfaction, and subject to the
transfer restrictions set forth in Section 5.11 hereof, the
Trustee shall execute, authenticate and deliver, in the name of
the designated transferee or transferees, one or more new
Registered Units of any authorized denominations, of a like
aggregate Unit Principal Balance. All transfers of Registered
Units are subject to the approval of the Trustee and the Trustee
shall not register any transfer of Registered Units if such
transfer would violate any provision of the Trust Agreement.
(b) At the option of the Holder, Registered Units may be
exchanged for other Registered Units of any authorized
denomination or denominations of like tenor and aggregate Unit
Principal Balance upon surrender of the Registered Units to be
exchanged at the office or agency of the Trustee maintained for
such purpose. Whenever any Registered Units are so surrendered
for exchange, the Trustee shall execute, authenticate and deliver
the Registered Units that the Holder making the exchange is
entitled to receive.
All Registered Units issued upon any registration of
transfer or exchange of Units shall constitute complete and
indefeasible evidence of ownership in the Trust Property and be
entitled to the same benefits under the Trust Agreement as the
Units surrendered upon such registration of transfer or exchange.
(c) Every Registered Unit presented or surrendered for
registration of transfer or exchange shall (if so required by the
Trustee or the Unit Registrar) be duly endorsed, or be
accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Unit Registrar, duly
executed, by the Holder thereof or his attorney duly authorized
in writing, with such signature guaranteed by a commercial bank
or trust company located, or having a correspondent located, in
The City of New York or the city in which the Corporate Trust
Office
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is located, or by a member firm of a national securities
exchange, and such other documents as the Trustee may require.
No service charge shall be made to a Holder for any
registration of transfer or exchange of Units, but the Trustee
may require payment by the Holders of a sum sufficient to cover
any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of
Units.
SECTION 5.04. Mutilated, Destroyed, Lost and Stolen Units.
If (i) any mutilated Unit is presented to the Depositor and the
Trustee or (ii) the Depositor and the Trustee receive evidence to
their satisfaction of the destruction, loss or theft of any Unit,
and there is delivered to the Depositor and the Trustee such
security or indemnity as they may require to save each of them
and any Paying Agent harmless, and neither the Depositor nor the
Trustee receives notice that such Unit has been acquired by a
bona fide purchaser, then, in each case, the Trustee, shall
execute, authenticate and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Unit, a new Unit of
like tenor, form, terms and principal amount, bearing a number
not contemporaneously Outstanding, so that neither gain nor loss
in interest shall result from such exchange or substitution.
Upon the issuance of any new Unit under this Section, the
Trustee may require the payment by the Holder of a sum sufficient
to cover any tax or other governmental charge that may be imposed
in respect thereto and any other expenses (including the fees and
expenses of the Trustee) connected therewith.
Every new Unit issued pursuant to this Section shall
constitute complete and indefeasible evidence of ownership in the
Trust Property, whether or not the destroyed, lost or stolen Unit
shall be at any time enforceable by anyone, and shall be entitled
to all the benefits of the Trust Agreement equally and
proportionately with any and all other Units, if any, duly issued
thereunder.
The terms of this Section are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect
to the replacement or payment of mutilated, destroyed, lost or
stolen Units.
SECTION 5.05. Distributions in Respect of Units. (a) Any
per Unit amount in respect of a Registered Unit that is payable
and is punctually paid or duly provided for on any Distribution
Date or any other date shall be distributed to the Person in
whose name such Registered Unit (or one or more Predecessor
Units) is registered at the close of business on the related
Record Date notwithstanding the cancellation of such Registered
Unit upon any transfer or exchange subsequent to such related
Record Date. Distributions on Registered Units shall be made, in
accordance with arrangements satisfactory to the Trustee, by wire
transfer to an account designated in writing by a Holder, or, in
the case of distributions of Debt Securities in kind, by delivery
of such Debt Securities to any DTC or other depositary account
designated in writing by a Holder, or, if such arrangements with
respect to any Holder are not so made no later than 15 calendar
days prior to the applicable Distribution Date, at the Corporate
Trust Office (with
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respect to the final distribution and distributions in kind of
Debt Securities) or by check mailed to the address of the Person
entitled thereto as such address shall appear in the Unit
Register.
(b) Unless otherwise indicated in the Terms Schedule,
subject to Section 5.13 and to applicable laws and regulations,
distributions in respect of interest or principal or premium on
Bearer Units will be payable only upon surrender of applicable
coupons, if any, or Units, respectively, and at such offices or
agencies outside the United States as the Trustee may from time
to time designate.
(c) Subject to the foregoing terms of this Section, each
Unit delivered under the Trust Agreement upon transfer of or in
exchange for or in lieu of any other Unit shall carry the rights
to amounts to be distributed that are accrued and undistributed,
and to accrue, that were carried by such other Unit.
SECTION 5.06. Persons Deemed Owners. Subject to Section
5.05 and except for the final distribution, the Depositor and the
Trustee and any agent of the Depositor or the Trustee may treat
the Person in whose name any Registered Unit is registered as the
owner of such Unit on the related Record Date for the purpose of
receiving distributions of principal of (and premium, if any) and
(subject to Section 5.05) interest, if any, on such Unit and for
all other purposes whatsoever, whether or not such Unit be
overdue, and neither the Depositor, the Trustee, nor any agent of
the Depositor or the Trustee shall be affected by notice to the
contrary. All distributions made to any such Holder, or upon his
order, shall be valid, and, to the extent of the sum or sums
paid, effectual to satisfy and discharge the liability for moneys
distributable upon such Unit.
SECTION 5.07. Cancellation. All Units surrendered for
payment, redemption, transfer or exchange shall, if surrendered
to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly canceled by it. No Units shall be
authenticated in lieu of or in exchange for any Units canceled as
provided in this Section, except as expressly permitted by the
Trust Agreement.
SECTION 5.08. Currency of Distributions in Respect of
Units; Redenomination. (a) Except as provided in (b) and (c)
below, distributions of the principal of (and premium and
interest, if any) on the Units will be made in the Specified
Currency.
(b) Except as set forth below or unless otherwise provided
in the Terms Schedule, if distributions in respect of a Unit are
required to be made in a Specified Currency other than U.S.
dollars and such currency is unavailable due to the imposition of
exchange controls or other circumstances beyond the control of
the Depositor or the Trust or their respective Affiliates, or is
no longer used by the government of the country issuing such
currency or for the settlement of transactions by public
institutions of or within the international banking community
(other than under the circumstances described in (c)), then all
distributions in respect of such Unit shall be made at a time and
in a manner determined by the Exchange Rate Agent in its sole
discretion, which may be in the Specified Currency at such time
as such currency is again available or so used or in such other
currency and at such rates as the Exchange Rate Agent shall
determine.
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Each of the protections, releases, indemnities and other
terms applicable to the Trustee under Section 10.01, 10.02, 10.03
and 10.05 shall apply to the Exchange Rate Agent in connection
with its actions as Exchange Rate Agent for the Trust.
(c) Unless otherwise provided in the Terms Schedule, the
Depositor may, without the consent of the Unitholders, on giving
at least 30 days' prior notice to Unitholders, the relevant
clearing systems and the Trustee, designate a date (a
"Redenomination Date"), being a date for payment of interest
under Units which are denominated in any of the currencies of the
countries which are member states of the European Community that
are participating in the third stage of economic and monetary
union pursuant to the Treaty establishing the European Community
(the "Treaty") falling on or after the start of such third stage
or, if the country of the specified currency is not one of the
countries then participating in such third stage, the
Redenomination Date in respect of such Units shall be such date
designated by the Depositor, falling on or after such later date
as it does so participate.
"Euro" means the currency to be introduced at the start of
the third stage of economic and monetary union pursuant to the
Treaty.
With effect from the Redenomination Date notwithstanding
the other provisions of the Units:
(i) Such Units shall (unless already so provided by
mandatory provisions of applicable law) be deemed to be
redenominated into Euro in the denomination of Euro 0.01
with an aggregate principal amount equal to their aggregate
principal amount in the Specified Currency, converted into
Euro at the rate for the conversion of the specified
currency into Euro established by the Council of the
European Union pursuant to the Treaty (including compliance
with rules relating to roundings in accordance with
European Community regulations).
(ii) If definitive Units are required to be issued
they shall be in the denominations of Euro 0.01, Euro
1,000, Euro 10,000, Euro 100,000 and such other
denominations as the Trustee shall determine after
consultation with the relevant clearing systems and notify
Unitholders.
(iii) All unmatured coupons denominated in the
specified currency (whether or not attached to such Units)
will become void and no payments will be made in respect of
them. New Units in respect of Euro-denominated Units and
coupons will be issued in exchange for the specified
currency Units and coupons in such manner as the Trustee
may specify and notify to Unitholders.
(iv) All payments in respect of the Units (other than
payments of interest in respect of periods commencing
before the Redenomination Date) will be made solely in
Euro. Such payments will be made in Euro by credit or
transfer to a Euro account (or any other account to which
Euro may be credited or transferred) specified by the payee
or by check.
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(v) A redenominated Unit or coupon may only be
presented for payment on a day which is a day on which the
relevant clearance system is operating.
(vi) The amount of interest due in respect of such
Units will be calculated by reference to the aggregate
principal amount of Units presented (or, as the case may
be, in respect of which coupons are presented) for payment
by the relevant holder and the amount of such payment shall
be rounded down to the nearest Euro 0.01.
Following any redenomination of Units pursuant to the
foregoing provisions, the amount of interest due in respect of
such Units represented by any Global Security will be calculated
by reference to the aggregate principal amount of such Units and
the amount of such payment shall be rounded down to the nearest
Euro 0.01.
If the Pass Through Rate applicable to a Unit redenominated
in accordance with this section is a floating rate, the Pass
Through Rate that shall apply to such Unit from, and including,
the Distribution Date falling on or immediately prior to the
Redenomination Date shall be (i) the interest rate which applied
to such Unit prior to the redenomination, with "Euros"
substituted for the Specified Currency specified for such Unit,
unless such interest rate is inconsistent with legally applicable
standards adopted for Euro-denominated debt obligations issued in
the Euromarkets with floating rate interest payments of
frequencies identical or substantially similar to the frequency
of interest payments hereunder and held in international clearing
systems, as determined by the Depositor (or the Calculation
Agent, if any), or (ii) if such interest rate is so inconsistent,
the interest rate which the Depositor (or the Calculation Agent,
if any) determines is consistent with applicable market practices
adopted for Euro-denominated debt obligations issued in the
Euromarkets and held in international clearing systems, in each
case with such interest rate equal to the interest rate
applicable hereto (adjusted as aforesaid) plus or minus any
spread or multiplied by any spread multiplier, as indicated in
the Terms Schedule, as determined by the Depositor (or the
Calculation Agent, if any).
The interest accrual basis and the provisions of the Units
of such Series relating to the source and determination of such
interest accrual basis that shall apply to such Units from, and
including, the Distribution Date falling on or immediately prior
to the Redenomination Date shall be (i) the interest accrual
basis and such provisions which applied to such Units prior to
such redenomination, unless such interest accrual basis is and/or
such provisions are inconsistent with market practices adopted
for Euro-denominated debt obligations issued in the Euromarkets
with fixed rate or floating rate interest payments (as the case
may be) of frequencies identical or substantially similar to the
frequency of interest payments under such Units, based, in the
case of floating interest rate payments, on the reference rate
applicable to such Units prior to the Redenomination Date and
held in international clearing systems as determined by the
Depositor (or the Calculation Agent, if any) or (ii) if the
interest accrual basis which applied to such Units prior to
Redenomination Date is and/or such provisions are so
inconsistent, the interest accrual basis and/or the provisions of
the Units of such Series relating to the source and determination
of such interest accrual basis, as the case may be, which the
Depositor (or the Calculation Agent, if any) determines is
consistent with applicable market practices adopted for
Euro-denominated debt obligations issued in the Euromarkets with
fixed rate or floating rate interest payments (as
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the case may be) of frequencies identical or substantially
similar to the frequency of interest payments under such Units,
based, in the case of floating interest rate payments, on the
reference rate applicable to such Units (adjusted as aforesaid)
and held in international clearing systems as determined by the
Depositor (or the Calculation Agent, if any).
(d) The Depositor may, with the consent of the Trustee, and
without the need to obtain the consent of the Holder of any Unit,
make any changes or additions to the terms of the Units of a
Series which (i) the Depositor and the Trustee believe are
necessary or appropriate to facilitate the implementation of the
provisions of this section as they relate to such Units in the
context of the introduction of the Euro or (ii) correct any
manifest error or any ambiguity or correct or supplement any
defective provisions described herein and which changes or
additions the Depositor and the Trustee believe are not
materially prejudicial to the interests of the Holders of the
Units of such Series. Any such change or addition shall be
binding on the Depositor, the Holders of the Units of such
Series, the Trustee, and any agent of the Trustee. The Trustee
shall promptly give notice of any such change or addition to the
Unitholders affected thereby.
SECTION 5.09. Appointment of Paying Agent. (a) The Trustee
may appoint one or more paying agents (each, a "Paying Agent")
with respect to the Units, and shall appoint at least one Paying
Agent outside the United States in respect of payments to be made
on any Bearer Units. Any such Paying Agent shall be authorized to
make distributions to Unitholders pursuant to the Trust Agreement
and shall report the amounts of such distributions to the
Trustee. The Trustee may remove the Paying Agent if the Trustee
determines in its sole discretion that the Paying Agent shall
have failed to perform its obligations under the Trust Agreement
in any material respect or if the Paying Agent fails to satisfy
the eligibility requirements set forth in paragraph (b) of this
Section. The Paying Agent shall initially be the Trustee and any
co-paying agent chosen by the Depositor and acceptable to the
Trustee. Any Paying Agent shall be permitted to resign as Paying
Agent upon 30 days' written notice to the Trustee. In the event
that the Trustee shall no longer be the Paying Agent, the Trustee
shall appoint a successor or additional Paying Agent and shall
provide written notice of such appointment to the Rating
Agencies, if any. The Trustee shall cause each such Paying Agent
to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee that it will hold all
sums, if any, held by it for distribution to the Unitholders in
an Eligible Account in trust for the benefit of the Unitholders
entitled thereto until such sums shall be distributed to such
Unitholders. The Paying Agent shall return all. unclaimed funds
to the Trustee within two years from the time such funds were
first eligible to be claimed and promptly upon removal shall also
return all funds in its possession to the Trustee.
(b) The Paying Agent shall at all times be a corporation or
an association, the combined capital and surplus of which is at
least $50,000,000 and the long-term debt obligations of which are
rated in one of the four highest categories assigned long-term
debt obligations by each of the Rating Agencies, and is subject
to supervision of examination by Federal or State authority. If
such corporation or association publishes reports of conditions
at least annually, pursuant to combined capital and surplus of
such corporation or association shall be deemed to be its
combined capital and surplus as set forth in its most recent
report of conditions so published. In the event that at any time
the Paying Agent shall cease to be eligible in accordance with
the terms of this paragraph, the Paying Agent shall release all
Trust Property to the Trustee
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and then resign immediately. Upon such resignation, the Trustee
shall act as Paying Agent until the appointment of a successor
Paying Agent in accordance with paragraph (c) of this Section.
(c) The terms of Sections 10.01, 10.02, 10.03, 10.05 and
10.06 shall apply to the Trustee also in its role as Paying
Agent, for so long as the Trustee shall act as Paying Agent.
(d) Any reference in the Trust Agreement to the Paying
Agent shall include any co-paying agent unless the context
requires otherwise.
SECTION 5.10. Authenticating Agent. (a) The Trustee may
appoint any one or more Authenticating Agents (each, an
"Authenticating Agent") with respect to the Units which shall be
authorized to act on behalf of the Trustee in authenticating the
Units in connection with the issuance, delivery and registration
or transfer or exchange of the Units. Whenever reference is made
in the Trust Agreement to the authentication of Units by the
Trustee or the Trustee's unit of authentication, such reference
shall be deemed to include authentication on behalf of the
Trustee by an Authenticating Agent. Each Authenticating Agent
must be acceptable to the Depositor.
(b) Any institution succeeding to the corporate agency
business of any Authenticating Agent shall continue to be an
Authenticating Agent without the execution or filling of any
power or any further act on the part of the Trustee or such
Authenticating Agent. An Authenticating Agent may at any time
resign by giving notice of resignation to the Trustee, the
Depositor and the Rating Agencies. The Trustee may at any time
terminate the agency of an Authenticating Agent by signing notice
of termination to such Authenticating Agent and to the Depositor.
Upon receiving such a notice of resignation or upon such a
termination, or in case at any time an Authenticating Agent shall
cease to be acceptable to the Trustee or the Depositor, the
Trustee may appoint a successor Authenticating Agent. Subsequent
to any such removal or resignation of the Authenticating Agent,
the Trustee shall act as Authenticating Agent until a successor
Authenticating Agent, if any, is appointed. Any successor
Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its
predecessor hereunder, with like effect as if originally named as
an Authenticating Agent. No successor Authenticating Agent shall
be appointed unless acceptable to the Depositor. The Trustee
agrees to pay to each Authenticating Agent from time to time
reasonable compensating for its services under this Section. The
provision of Sections 10.01, 10.02 and 10.03 shall be applicable
to any Authenticating Agent.
(c) Pursuant to an appointment made under this Section, the
Units may have endorsed thereon, in lieu of the Trustee's
certificate of authentication, an alternate certificate of
authentication in substantially the following form:
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This is one of the Units described in the Trust Agreement.
_________________________________
as Authenticating Agent for
the Trustee,
By_______________________________
Authorized Signatory
SECTION 5.11. Issuance and Transfer Restrictions. (a) The
Units shall be issued on the Closing Date upon (i) deposit of the
Debt Securities into the Trust by the Depositor in exchange for
all the Units, (ii) satisfaction of the conditions set forth in
Section 2.06 and (iii) the due authentication by the Trustee of
the Units in the form set forth in Exhibit B1 or B2 attached
hereto.
(b) In the event that the Terms Schedule provides that the
Units will be Book-Entry Units, the following terms shall apply:
(i) The Units will be represented by one or more
Global Securities registered (in the case of Registered
Units) in the name of a Depositary or its nominee.
(ii) Unless otherwise provided in the Units or the
Terms Schedule, any Global Security representing Registered
Units shall be exchangeable for Certificates registered in
the name of Persons other than the Depositary or its
nominee only if (i) the Depositary is no longer willing or
able to act as a depositary and the Trustee is unable to
locate a qualified successor within 30 days, or (ii) there
shall have occurred and be continuing an event specified in
Section 9.01. Upon such issuance, the Trustee shall
register such Certificates in the name of, and cause the
same to be delivered to, such Person or Persons (or the
nominee thereof) consistent with Section 5.02.
(iii) Any Global Security representing Registered
Units may bear a legend in substantially the following
form:
"This Certificate is a Global Security within the
meaning of the Trust Agreement hereinafter referred to
and is registered in the name of a Depositary or a
nominee of a Depositary. This Certificate is
exchangeable for Certificates registered in the name of
a person other than the Depositary or its nominee only
in the limited circumstances described in the Trust
Agreement, and may not be transferred except as a whole
by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another
nominee of the Depositary."
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(iv) Any Global Security representing Bearer Units
shall be exchangeable for definitive bearer Certificates
only outside the United States and otherwise in the time
and manner set forth in Section 5.13.
(c) (i) If the Terms Schedule provides that the Alternative
ERISA Restrictions apply, Units will be issued only as
definitive Registered Units and no transfer of any
Certificate evidencing a Unit shall be made to any employee
benefit plan, domestic or foreign, whether or not subject
to ERISA, or described in Section 4975(e)(1) of the Code,
or comparable terms of any subsequent enactments, or a
trustee of any such plan, or an entity whose underlying
assets include the assets of any such plan (each of the
foregoing a "Benefit Plan"), unless immediately after such
transfer, either (i) no Certificates are held by a Benefit
Plan subject to the fiduciary responsibility terms of Part
4, Subtitle A, Title I of ERISA, described in Section
4975(e)(1) of the Code or subject to substantially similar
legal requirements (an "ERISA Benefit Plan") or (ii)
Certificates representing a percentage interest of not more
than 24.9% are held by Benefit Plans (for this purpose the
percentage interest shall be calculated as if any
Certificates held by the Depositor, the Trustee or any of
their affiliates (within the meaning of Department of Labor
Reg. ss. 2510.3-101(f)(3)) were not outstanding). If the
Terms Schedule provides that the Alternative ERISA
Restrictions apply, the Distribution Agreement shall
require any prospective transferee to certify whether or
not it is a Benefit Plan or an ERISA Benefit Plan.
(ii) If the Terms Schedule provides that "Deemed
Representations" apply, the restrictions described in d(1)
above will not apply. Units will be issued in reliance on
certain exemptions from the prohibited transaction
provisions of Section 406 of ERISA and Section 4975 of the
Code which may be applicable, depending in part on the type
of Plan fiduciary making the decision to acquire a Unit and
the circumstances under which such decision is made.
Included among these exemptions are Prohibited Transaction
Class Exemption ("PTCE") 91-38 (relating to investments by
bank collective investment funds), PTCE 84-14 (relating to
transactions effected by a "qualified professional asset
manager"), PTCE 90-1 (relating to investments by insurance
company pooled separate accounts) and PTCE 96-23 (relating
to transactions determined by in-house asset managers).
Where "Deemed Representations" apply, BY ITS PURCHASE OF
ANY UNIT, THE PURCHASER THEREOF WILL BE DEEMED TO HAVE
REPRESENTED AND WARRANTED EITHER THAT (A) IT IS NOT AN
ERISA PLAN OR OTHER PLAN, AN ENTITY WHOSE UNDERLYING ASSETS
INCLUDE THE ASSETS OF ANY SUCH ERISA PLAN OR OTHER PLAN, OR
A GOVERNMENTAL PLAN WHICH IS SUBJECT TO ANY FEDERAL, STATE
OR LOCAL LAW THAT IS SUBSTANTIALLY SIMILAR TO THE
PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE
CODE OR (B) ITS PURCHASE, HOLDING AND DISPOSITION OF A UNIT
WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION
406 OF ERISA OR SECTION 4975 OF THE CODE (OR, IN THE CASE
OF A GOVERNMENTAL PLAN, ANY SUBSTANTIALLY SIMILAR FEDERAL,
STATE OR LOCAL LAW) FOR WHICH AN EXEMPTION IS NOT AVAILABLE
OR (C) IT IS AN INSURANCE COMPANY ACQUIRING THE UNIT(S) FOR
ITS GENERAL ACCOUNT WHICH IS AN INSURANCE COMPANY GENERAL
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ACCOUNT AS SUCH TERM IS USED IN PTCE 95-60 ISSUED BY THE
UNITED STATES DEPARTMENT OF LABOR AND THERE IS NO EMPLOYEE
BENEFIT PLAN (TREATING AS A SINGLE PLAN ALL PLANS
MAINTAINED BY THE SAME EMPLOYER OR EMPLOYEE ORGANIZATION)
WITH RESPECT TO WHICH THE AMOUNT OF THE GENERAL ACCOUNT
RESERVES AND LIABILITIES FOR ALL CONTRACTS HELD BY OR ON
BEHALF OF SUCH PLAN EXCEEDS 10% OF THE TOTAL RESERVES AND
LIABILITIES OF SUCH GENERAL ACCOUNT (EXCLUSIVE OF SEPARATE
ACCOUNT LIABILITIES) PLUS SURPLUS, AS SET FORTH IN THE NAIC
ANNUAL STATEMENTS FILED WITH ITS STATE OF DOMICILE.
(iii) Unless the Alternative ERISA Restrictions or
Deemed Representations apply, no Certificate may be
transferred to any ERISA Benefit Plan. Notwithstanding the
preceding sentence, unless the Alternative ERISA
Restrictions apply, each person who acquires a Certificate,
and each fiduciary which causes a person to acquire a
Certificate, in such fiduciary's individual capacity,
hereby agrees to indemnify and hold harmless the Depositor,
the Swap Counterparty, the Trustee and their affiliates
from any cost, damage, loss or expense incurred by them as
a result of such person being or being deemed to be an
ERISA Benefit Plan.
(d) The Trustee and the Depositor are entitled to request
additional evidence from a proposed transferee of such Units to
ensure to their sole satisfaction the accuracy of the
representations in the items in the Distribution Agreement
described above.
(e) If, at any time, the Trustee learns that any of the
representations or warranties provided by a potential transferee
of Units is false or that any agreement made therein has been
violated, any transfer of a Unit to such potential transferee
shall be null and void ab initio. The Trustee will arrange for
the compulsory sale (at a price determined by the Depositor) for
any Unit sold or otherwise acquired in contravention of any of
the transfer restrictions set forth herein. The Trustee shall
also have such other powers to effect compliance with the terms
of this Section 5.11 as it deems appropriate.
(f) Each Certificate shall be required to bear a legend
describing the restrictions on transferability set forth in this
Section 5.11 applicable thereto.
SECTION 5.12. Exchangeable Series.
(a) In order for a Unit of a given Exchangeable Series (or
Class within such Exchangeable Series) to be exchanged by the
applicable Unitholder, the Trustee must receive, at least 30 (or
such shorter period acceptable to the Trustee) but not more than
45 days prior to an Optional Exchange Date (i) such Unit with the
form entitled "Option to Elect Exchange" on the reverse thereof
duly completed or (ii) in the case of Registered Units, a
telegram, telex, facsimile transmission or letter from a member
of a national securities exchange or the National Association of
Securities Dealers, Inc., the Depositary (in accordance with its
normal procedures) or a commercial bank or trust company in the
United States setting forth the name of the Holder
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of such Registered Unit, the Unit Principal Balance or Notional
Amount of such Registered Unit to be exchanged, the certificate
number or a description of the tenor and terms of such
Registration Unit, a statement that the option to elect exchange
is being exercised thereby and a guarantee that the Registered
Unit to be exchanged with the form entitled "Option to Elect
Exchange" on the reverse of the Registered Unit duly completed
will be received by such Trustee not later than five Business
Days after the date of such telegram, telex, facsimile
transmission or letter. If the procedure described in clause (ii)
of the preceding sentence is followed, then such Registered Unit
and form duly completed must be received by such Trustee by such
fifth Business Day. Any tender of a Unit by the Holder for
exchange shall be irrevocable. The exchange option may be
exercised by the Holder of a Unit for less than the entire Unit
Principal Balance of such Unit provided that the Unit Principal
Balance or Notional Amount, as applicable, of such Unit remaining
outstanding after redemption is an authorized denomination and
all other exchange requirements set forth in the related Terms
Schedule are satisfied. Upon such partial exchange, such Unit
shall be canceled and a new Unit or Units for the remaining Unit
Principal Balance thereof shall be issued (which, in the case of
any Registered Unit, shall be in the name of the Holder of such
exchanged Unit).
(b) Unless otherwise provided in the Terms Schedule, upon
the satisfaction of the foregoing conditions and any applicable
conditions with respect to the related Trust Property, the
applicable Unitholder will be entitled to receive a distribution
of a pro rata share of the Trust Property related to the
Exchangeable Series (and Class within such Exchangeable Series)
of the Unit being exchanged, in the manner and to the extent
described in the Terms Schedule. Alternatively, if so specified
in the Terms Schedule, the applicable Unitholder, upon
satisfaction of such conditions, may direct the Trustee to sell,
on behalf of such Unitholder, such pro rata share of the Trust
Property, in which event the Unitholder shall be entitled to
receive the net proceeds of such sale, less any costs and
expenses incurred by such Trustee in facilitating such sale,
subject to any additional adjustments set forth in the Terms
Schedule.
Any right of exchange in respect of Units of an
Exchangeable Series shall be exercisable only to the extent that
the Depositor determines that such exchange would not be
inconsistent with the Depositor's and such Trust's continued
satisfaction of the applicable requirements for exemption under
Rule 3a-7 under the Investment Company Act. The Terms Schedule
shall set forth additional terms pertaining to any right of
exchange, including but are not limited to, the following:
(i) a requirement that the exchanging Holder tender to
the Trustee Units of each Class within such Exchangeable
Series;
(ii) a minimum Unit Principal Balance or Notional
Amount, as applicable, with respect to each Unit being
tendered for exchange;
(iii) a requirement that the Unit Principal Balance or
Notional Amount, as applicable, of each Unit tendered for
exchange be an integral multiple of an amount specified in
the Terms Schedule;
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(iv) specified dates during which a Holder may effect
such an exchange (each, an "Optional Exchange Date");
(v) limitations on the right of an exchanging Holder
to receive any benefit upon exchange from any Credit
Support or other non-Debt Securities deposited in the
applicable Trust;
(vi) adjustments to the value of the proceeds of any
exchange based upon the Unitholder's allocable share of
expenses incurred but not yet paid and the establishment of
a reserve for any allocable Extraordinary Trust Expenses as
set forth in the Terms Schedule; and
(vii) a requirement that the exchanging holder obtain
the consent of any Swap Counterparty to such exchange and
tender to the Swap Counterparty a termination payment for
termination of the portion of the Swap Agreement
corresponding to the portion of the Debt Securities to be
distributed by the Trustee.
SECTION 5.13. Limitations on Issuance of Bearer Units.
In compliance with U.S. federal income tax laws and
regulations, the Depositor and any underwriter, agent or dealer
participating in the offering of any Bearer Unit will agree that,
in connection with the original issuance of such Bearer Unit and
during the period ending 40 days after the issue of such Bearer
Unit, they will not offer, sell or deliver such Bearer Unit,
directly or indirectly, to a U.S. Person or to any person within
the United States, except to the extent permitted under U.S.
Treasury regulations.
Bearer Units will bear a legend to the following effect:
"Any United States Person who holds this obligation will be
subject to limitations under the United States income tax laws,
including the limitations provided in Sections 165(j) and 1287(a)
of the Internal Revenue Code." The sections referred to in the
legend provide that, with certain exceptions, a United States
taxpayer who holds Bearer Units will not be allowed to deduct any
loss with respect to, and will not be eligible for capital gain
treatment with respect to any gain realized on a sale, exchange,
redemption or other disposition of, such Bearer Units.
Pending the availability of a permanent Global Security or
definitive Bearer Units, as the case may be, Units that are
issuable as Bearer Units may initially be represented by a single
temporary Global Security, without interest coupons, to be
deposited with a common depositary in London for Euroclear and
CEDEL for credit to the accounts designated by or on behalf of
the purchasers thereof. Following the availability of a permanent
Global Security in bearer form, without coupons attached, or
definitive Bearer Units and subject to any further limitations
described in the Terms Schedule, the temporary Global Security
will be exchangeable for interests in such permanent Global
Security or for definitive Bearer Units, respectively, only upon
receipt of a certificate acceptable to the Depositor and the
Trustee to the effect that a beneficial interest in a temporary
Global Security is owned by a person that is not a U.S. Person or
is owned by or through a financial institution in compliance with
applicable U.S. Treasury
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regulations (a "Certificate of Non-U.S. Beneficial Ownership").
No Bearer Unit will be delivered in or to the United States. If
so specified in the Terms Schedule, interest on a temporary
Global Security will be distributed to each of Euroclear and
CEDEL with respect to that portion of such temporary Global
Security held for its account, but only upon receipt as of the
relevant Distribution Date of a Certificate of Non-U.S.
Beneficial Ownership.
SECTION 5.14. Callable Units. If one or more specified
Persons has the right to purchase all or a portion of the Units
of any given Series, the Terms Schedule will designate such
Series as a "Callable Series," and specify the terms upon which
any such specified Person may exercise its right to purchase all
or a portion of the Units. Such terms may relate to, but are not
limited to, the following:
(i) a minimum Unit Principal Balance with respect to
each Unit being purchased;
(ii) a requirement that the Unit Principal Balance of
each Unit being purchased be an integral multiple of a
specified amount;
(iii) specified dates during which such a purchase may
be effected (each, a "Call Date"); and
(iv) the price at which such a purchase may be
effected (the "Call Price").
After receiving notice of the exercise of such a call
right, the Trustee will provide notice thereof as specified in
the Terms Schedule. Upon the satisfaction of any applicable
conditions to the exercise of such right to purchase of the Units
described in such Terms Schedule, each Unitholder will be
entitled to receive a distribution of a pro rata share of the
Call Price paid in connection with such exercise, in the manner
and to the extent described in such Terms Schedule.
SECTION 5.15. Delivery of Information. The Trustee shall
deliver to the Unitholders copies of all notices and
communications it receives from the Debt Security Issuer,
including notice of any exercise of any call option with respect
to the Debt Securities by the Debt Security Issuer. The Trustee
shall also notify the Unitholders of any call of the Debt
Securities by the Counterparty under the terms of the Swap
Agreement.
ARTICLE VI
The Depositor
SECTION 6.01. Liability of the Depositor. The Depositor
shall be liable in accordance with the Trust Agreement only to
the extent of the obligation specifically imposed thereby.
SECTION 6.02. Limitation on Liability of the Depositor. (a)
Unless otherwise expressly specified in the Trust Agreement, the
Depositor shall not be under any obligation to expend or risk its
own funds, except to the extent of its obligation to pay any
amount payable
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under the Trustee Fee Letter or under Section 10.05(b) hereof, or
otherwise incur financial liability in the performance of its
duties thereunder or in the exercise of any of its rights or
powers if reasonable grounds exist for believing that the
repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it.
(b) Neither the Depositor nor any of the directors,
officers, employees or agents of the Depositor shall be under any
liability to the Trustee, the Trust Property or the Unitholders
for any action taken, or for refraining from the taking of any
action, in good faith pursuant to the Trust Agreement, or for
errors in judgment; provided, however, that this provision shall
not protect the Depositor or any such person against any breach
of warranties, representations or covenants made in the Trust
Agreement, or against any specific liability imposed on the
Depositor pursuant to the Trust Agreement, or against any
liability which would otherwise be imposed by reason of willful
misfeasance, bad faith or negligence in the performance of duties
specifically set forth in the Trust Agreement or by reason of
reckless disregard of obligations and duties specifically set
forth in the Trust Agreement.
The Depositor shall not be under any obligation to appear
in, prosecute or defend any legal action unless such action is
related to its duties under the Trust Agreement and, in its
reasonable opinion, does not involve it in any expense or
liability; provided, however, that the Depositor may in its
discretion undertake any such action which it may deem necessary
or desirable with respect to the Trust Agreement and the rights
and duties of the parties thereto and the interests of the
Unitholders.
SECTION 6.03. Depositor May Purchase Units. The Depositor
or its Affiliates may at any time purchase Units in the open
market or otherwise. Units so purchased by the Depositor may, at
the discretion of the Depositor, be held or resold.
SECTION 6.04. Preparation and Filing of Exchange Act
Reports; Obligations of the Depositor. The Depositor shall:
(a) on behalf of the Trust, prepare, sign and file with the
Commission, within the time period set forth below, copies of the
annual reports and of the information, documents and other
reports (or copies of such portions of any of the foregoing as
the Commission may from time to time by rules and regulations
prescribe), if any, which the Depositor on behalf of the Trust
may be required to file with the Commission pursuant to Section
13 or 15(d) of the Exchange Act (collectively, "Exchange Act
Reports") with respect to the Trust. The names of such Exchange
Act Reports and the dates on which they are required to be filed
with the Commission are as follows:
(i) Form 8-K, within the time requirement prescribed
by the Exchange Act if the filing of Form 8-K is necessary;
(ii) Form 10-K, within the time requirement prescribed
by the Exchange Act; and
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(iii) such other reports as may be required pursuant
to Section 13 or 15(d) of the Exchange Act.
(b) deliver to the Trustee within 15 days after the
Depositor is required to file the same with the Commission, such
additional information, documents and reports with respect to
compliance by the Depositor with the conditions and covenants of
this Agreement, if any, as may be required to be filed with the
Commission from time to time by such rules and regulations; and
(c) deliver to the Trustee, which shall then transmit by
mail to all Holders described in TIA Section 313(c), in the
manner and to the extent provided therein, such summaries of any
information, documents and reports required to be filed by the
Depositor and received pursuant to clauses (a) and (b) of this
Section 6.04, if any, as may be required by rules and regulations
prescribed from time to time by the Commission.
SECTION 6.05. Preferential Collection of Claims Against
Depositor. Irrespective of whether the TIA shall apply to those
Agreement, the Trustee shall comply with TIA Section 311(a),
excluding any creditor relationship listed in TIA Section 311(b).
A trustee who has resigned or been removed shall be subject to
TIA Section 311(a) to the extent required by TIA Section 311(a).
ARTICLE VII
Rights of Unitholders
SECTION 7.01. Voting Rights with Respect to Debt
Securities. (a) Within five Business Days after receipt of notice
of any meeting of, or other occasion for the exercise of voting
rights or the giving of consents by, owners of any of the Debt
Securities, the Trustee shall give notice to the Unitholders,
setting forth (i) such information as is contained in such notice
to owners of Debt Securities, (ii) a statement that the
Unitholders will be entitled, subject to any applicable provision
of law and any applicable terms of such Debt Securities (and to
the extent of the voting rights allocated to the Unitholders), to
instruct the Trustee as to the exercise of voting rights, if any,
pertaining to such Debt Securities and (iii) a statement as to
the manner in which instructions may be given to the Trustee to
give a discretionary proxy to a person designated in the notice
received by the Trustee. Such notice shall be given by the
Trustee to the Unitholders of record on such record date.
(b) Unless otherwise specified in the Terms Schedule the
voting rights allocable to the owners of the Debt Securities
pursuant to the terms thereof will be allocated among the
Unitholders pro rata, in the proportion that the denomination of
each Unit bears to the aggregate denomination of all Units; and
upon the written request of the applicable Unitholder, received
on or before the date established by the Trustee for such
purpose, the Trustee shall endeavor, insofar as practicable and
permitted under any applicable provision of law and any
applicable provision of or governing the Debt Securities, to vote
in accordance with any nondiscretionary instruction set forth in
such written request, provided, that the Trustee shall not vote
except as specifically
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authorized and directed in written instructions from the
applicable Unitholder entitled to give such instructions.
(c) Notwithstanding Section 7.01(b), the Trustee must
reject any vote to (i) after the currency, amount or timing of
payment of, or the method or rate of accruing, any principal or
interest on the Debt Securities underlying the Units held by such
Unitholder or (ii) consent to any redemption or prepayment of the
Debt Securities underlying the Units held by such Unitholder or
(iii) consent to the issuance of new obligations in exchange or
substitution for any Debt Securities pursuant to a plan or
refunding of the Debt Securities or any other offer for the Debt
Securities; in each case unless the Trustee is directed by the
affirmative vote of all Unitholders to accept such amendment or
offer as the case may be; and provided, further, that the Trustee
receives advice of nationally recognized independent tax counsel,
designated by the Depositor, that such exercise of voting rights
with respect to any Debt Securities would not result in a "sale
or other disposition" of such Debt Securities within the meaning
of Section 1001(a) of the Code. The Trustee will not grant any
consent (other than a unanimous consent) solicited from the
owners of the Debt Securities underlying the Units with respect
to the foregoing matters in (i), (ii) and (iii) above nor will it
accept or take any action in respect of any consent, proxy or
instructions received from any Unitholder in contravention of
such provisions. In addition, if the Trustee determines (based
upon advice furnished by nationally recognized independent tax
counsel, whether at the request of any Unitholder or otherwise)
that the exercise of voting rights with respect to any Debt
Securities could result in a "sale or other disposition" of such
Debt Securities within the meaning of Section 1001(a) of the
Code, the Trustee shall exercise such voting rights in a manner
that would not result in any such sale or other disposition. The
Trustee will have no responsibility to undertake on its own
initiative to determine that any exercise of voting rights will
result in any such sale or other disposition and in any event
will not undertake to make such determination unless given an
indemnity reasonably satisfactory to it against the costs of such
determination.
SECTION 7.02. Amendments and Waivers Under Swap Agreement
and Guarantee. Without the need for consent of any Unitholder,
the Trustee shall enter into any amendment of the Swap Agreement
or the Guarantee requested by the Swap Counterparty or the
Guarantor, respectively, to cure any ambiguity or manifest error
in, or to correct or supplement any provision of, the Swap
Agreement or the Guarantee, so long as (i) the Trustee determines
that such amendment will not adversely affect the interests of
the Unitholders and (ii) the Trustee has received an Opinion of
Counsel, at the expense of the Swap Counterparty or the
Guarantor, to the effect that such amendment will not adversely
affect the interests of the Unitholders and will not alter the
classification of the Trust for Federal income tax purposes. The
Trustee shall not agree to any other request from the Swap
Counterparty or the Guarantor for approval of any consent, waiver
or other modification of the Swap Agreement or the Guarantee
without the unanimous consent of the Unitholders and compliance
with clause (ii) of the preceding sentence.
ARTICLE VIII
Default on Debt Securities and Permitted Investments
SECTION 8.01. Realization Upon Default. (a) The Trustee, on
behalf of the Unitholders, shall assert claims under the Debt
Securities or the Permitted Investments, and shall take such
reasonable steps as are necessary to receive payment or to permit
recovery thereunder with respect to any default, subject in all
cases to the terms of Article X.
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(b) If the Trustee is unable to obtain full recovery in
respect of a defaulted Debt Security or Permitted Investment, the
Trustee shall follow or cause to be followed such normal
practices and procedures as it deems necessary or advisable to
realize upon such defaulted Debt Security or Permitted
Investment, subject in all cases to the terms of Article X.
(c) If there is an event of default (as defined in the
indenture or other document pursuant to which the Debt Securities
were issued) with respect to any Debt Security and such default
is known to the Trustee, the Trustee shall promptly give notice
to the Unitholders thereof as promptly as practicable as provided
in Section 12.05 hereof, and in the manner and to the extent
provided in TIA Section 313(c)) within 90 days after such event
of default occurs.
ARTICLE IX
Trust Wind-Up Events
SECTION 9.01. Trust Wind-Up Events. If any of the following
events (each event, a "Trust Wind-up Event") shall occur:
(a) any Swap Default arising from any action taken or
failure to act, by the Swap Counterparty, if applicable;
(b) the occurrence of one or more Debt Security Defaults
which either (i) results in a Debt Security Default with respect
to all Debt Securities held by the Trust or (ii) results in a
Termination Event under the Swap Agreement with respect to which
all Transactions under the Swap Agreement are Affected
Transactions, as a result of;
(c) any Termination Event under the Swap Agreement with
respect to which the Swap Counterparty shall be the sole
"Affected Party" (as defined in the Swap Agreement); provided
that at the time of such occurrence no Settlement Amount would be
payable by the Trust to the Swap Counterparty upon designation of
an Early Termination Date by the Trust;
(d) the designation of an Early Termination Date by the
Swap Counterparty under a related Swap Agreement (other than with
respect to the termination of fewer than all Transactions entered
into under the Swap Agreement);
(e) the designation of a Special Depositor Wind-Up Event
described in Section 9.06;
(f) the Debt Security Issuer with respect to any
Concentrated Debt Security ceases to be a reporting company under
the Exchange Act, provided that the Trust holds no other Debt
Securities for which the Debt Security Issuer continues to be a
reporting company or which is not a Concentrated Debt Security;
(g) any Excess Expense Event; and
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(h) any other Trust Wind-Up Event set forth in the Terms
Schedule;
then the Trustee shall by notice to the Swap Counterparty
terminate the Swap Agreement (including all Transactions
thereunder) if such notice is applicable under the Swap
Agreement, and the Trustee shall distribute to each Unitholder
its pro rata share of the Trust Property in accordance with
Section 9.03 and the Trust shall terminate. The Trustee shall
also provide notice of such Trust Wind-up Event to the Rating
Agencies immediately upon discovery or receipt of notice of such
Trust Wind-Up Event.
SECTION 9.02. Liquidation Events. In the event that (a) a
Debt Security Default shall occur which under the terms of the
Swap Agreement results in the termination of at least one but
fewer than all Transactions under the Swap Agreement or (b) the
Debt Security Issuer with respect to any Concentrated Debt
Security ceases to be a reporting company under the Exchange Act,
but the Trust holds other Debt Securities for which the Debt
Security Issuer continues to be a reporting company or which are
not a Concentrated Debt Security (either of (a) and (b) a
"Liquidation Event" and the Debt Securities affected thereby the
"Affected Debt Securities"), and a Trust Wind-Up Event has not
otherwise occurred, then the Debt Securities affected by such
Liquidation Event shall be sold to the extent necessary to pay
any Termination Payment applicable to the Affected Transaction
under the Swap Agreement, and the remainder distributed to the
Unitholders in accordance with Section 9.03, but the Trust shall
continue thereafter.
SECTION 9.03. Trust Property Made Available. (a) Subject to
Section 9.04, as promptly as possible after the occurrence of a
Trust Wind-up Event or Liquidation Event, and in any case within
three Business Days following such occurrence, the Trustee shall
provide notice to the Unitholders and the Rating Agencies of the
occurrence of a Trust Wind-up Event or Liquidation Event, the
termination of the Swap Agreement or the particular Affected
Transaction(s) thereunder, the amount of any related Termination
Payment and a notice of the rights of the Unitholders under
Section 9.03(c). In the case of a Trust Wind-Up Event, subject to
Section 9.01, the Trustee shall also provide notice to the
Unitholders and the Rating Agencies of the termination of the
Trust and that Holders should surrender their Units to the
Trustee, or deliver security or indemnity acceptable to the
Trustee, for their respective pro rata distributions of the Debt
Securities and any other remaining Trust Property, if any. Such
notice to the Unitholders and the Rating Agencies shall also
specify (i) the cause of the Trust Wind-up Event, (ii) the
location and hours of the Corporate Trust Office at which Units
should be presented and surrendered and (iii) that each Holder
must supply transfer instructions in writing with respect to the
Debt Securities and/or other Trust Property to be distributed in
cash or in kind.
(b) Immediately upon receipt of notice from the Swap
Counterparty that the Trust will be obligated to pay a
Termination Payment or upon other notice from the Trustee that
the Trust is required to sell Debt Securities, the Selling Agent
shall undertake to sell Debt Securities on behalf of the Trust,
unless and until the Selling Agent receives notice from the
Trustee of an exercise by the Unitholders of their rights under
Section 9.03(c); provided, however, that the Selling Agent may
elect not to act as Selling Agent with respect to some or all of
the Debt Securities by written notice to that effect to the
Trustee. The timing, price and other terms of any sale conducted
by the Selling Agent shall be determined by the Selling Agent in
its sole
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discretion, but all such sales shall be completed within 30 days
or such longer period of time as may be reasonable with respect
to particular Debt Securities. In the case of a Liquidation
Event, sales under this provision shall be limited to the
Affected Debt Securities except where the proceeds from the
Affected Debt Securities are insufficient to make payment of the
Termination Payment.
(c) Notwithstanding Section 9.03(b), in connection with any
Termination Payment payable by the Trust, the Unitholders may,
acting unanimously, deliver to the Trustee the amount of such
outstanding Termination Payment (together with, in the case of a
Trust Wind-Up Event, any Extraordinary Trust Expenses in excess
of the Maximum Reimbursable Amount payable to the Trustee) and a
written instruction to discontinue sale of the Debt Securities.
If the Selling Agent receives notice from the Trustee of the
exercise by the Unitholders of their rights under this Section
9.03(c), the Selling Agent shall promptly discontinue sales of
the related Debt Securities (but the Selling Agent and the
Trustee shall complete the settlement of any sale already
agreed). It is expressly understood and agreed that Debt
Securities may be sold in the time necessary for the Unitholders
to be notified of and act upon their rights under this Section
9.03(c).
(d) Subject to the security interest in all of the Trust
Property granted in favor of the Swap Counterparty pursuant to
the Swap Agreement and the obligation of the Trust to pay
Extraordinary Trust Expenses, and as provided in the Terms
Schedule, the Debt Securities or Affected Debt Securities shall
be made available by the Trustee to the Holders upon the
occurrence of a Trust Wind-up Event or Liquidation Event,
respectively, after expiration of any sale period referred to in
Section 9.03(b), and upon surrender, or delivery of security or
indemnity acceptable to the Trustee, by each Holder of its Units
at the Corporate Trust Office specified pursuant to paragraph (a)
of this Section 9.03. Upon receipt by the Trustee of (i)
appropriate transfer instructions in writing from a Holder with
respect to the Debt Securities and (ii) such Holder' Units (or
acceptable security or indemnity), the Trustee shall promptly
deliver Debt Securities to such Holder in an aggregate principal
amount equal to the aggregate Unit Principal Balance of such
Holder' Units in accordance with such transfer instructions by
(A) physical delivery or (B) if applicable, causing the
book-entry depositary for such Debt Securities to credit such
Debt Securities to an account of such Holder with such depositary
or an account of a designated participant in such depositary,
provided that such book-entry depositary will be an agency of the
United States, DTC or another book-entry institution acceptable
to the Depositary. Any Transfer made in accordance with this
paragraph shall satisfy all obligations of the Trust with respect
to the Unitholders.
(e) Unless otherwise provided in the Terms Schedule, and
notwithstanding any other provision of this Agreement (and as
specified in the Swap Agreement), in connection with early
termination of a Swap Agreement or one or more Transactions
thereunder, other than as a result of Debt Security Default, the
claim of the Swap Counterparty against the Debt Securities (or
proceeds thereof arising from sale thereof) and any other Trust
Property will be limited to a claim pro rata with that of the
Unitholders according to the amount of the Termination Payment
otherwise payable to the Swap Counterparty and the Unitholders'
aggregate Unit Principal Balance plus accrued interest.
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(f) The only distributions from the Trustee to which the
Holders shall be entitled are, subject to the security interest
in all of the Trust Property granted in favor of the Swap
Counterparty pursuant to the Swap Agreement and the obligation of
the Trust to pay Extraordinary Trust Expenses, payments on the
Debt Securities, amounts, if any, recovered under the Swap
Agreement (including Termination Payments, if any, and amounts
collected pursuant to Section 2(e) and Section 11 of the Swap
Agreement) or Guarantee, received by the Trustee after the
occurrence of the Trust Wind-Up Event, and any other remaining
Trust Property, if any, which in each case the Trustee shall
distribute pro rata to the Unitholders in the manner provided
pursuant to Section 4.01 upon satisfaction of the conditions for
transfer of Debt Securities referred to in paragraph (b) of this
Section.
(g) Except for reports and other information required to be
provided to Holders under the Trust Agreement, the obligations
the Trustee and the Depositor will terminate upon the
distribution to Unitholders of all amounts required to be
distributed to them and the disposition of all Debt Securities
held by the Trustee, and such distribution shall constitute full
satisfaction of all of the interests of the Unitholders under
this Trust Agreement.
(h) In the event that the Selling Agent resigns or declines
to sell specific Debt Securities, the Trustee shall proceed under
Section 10.02(a)(x).
(i) The Selling Agent is an agent of the Trustee only and
shall have no fiduciary or other duties to the Unitholders, nor
shall the Selling Agent have any liability to the Trust in the
absence of the Selling Agent's bad faith or willful default. The
Selling Agent shall be permitted to sell Debt Securities to
Affiliates of the Selling Agent. The Selling Agent may (in
addition to declining to sell specific Debt Securities as
provided in Section 9.03(b)) resign at any time by notice to the
Trustee, such resignation to take effect immediately upon notice.
Except as provided in the first sentence of this Section 9.03(i),
each of the protections, releases, indemnities and other terms
applicable to the Trustee under Section 10.01, 10.02, 10.03 and
10.05 shall apply to the Selling Agent in connection with its
actions as Selling Agent for the Trust.
(j) Subject to Section 9.03(b) and Section 9.03(e), the
Trustee agrees that upon any failure of the Trust to make any
payment when due under the Swap Agreement, the Swap Counterparty
shall have the right to take all action and to pursue all
remedies with respect to such property that a secured party is
permitted to take with respect to collateral under the UCC,
including the right to require the Trustee promptly to sell all
or any portion of the Debt Securities in the open market or, if
the Swap Counterparty elects, to sell the Debt Securities to the
Swap Counterparty for its fair value as determined in good faith
by the Swap Counterparty. In either case, the proceeds of sale
shall be applied to any amounts owed to the Swap Counterparty.
The Trustee further agrees to take any actions necessary to
facilitate the perfection of the aforementioned security interest
of the Swap Counterparty in the property of the Trust as the Swap
Counterparty may reasonably request.
SECTION 9.04. Limitation on Notice Requirement. The Trustee
shall not be responsible for terminating the Swap Agreement (or
any individual Affected Transaction thereunder) or giving notice
of a Trust Wind-up Event unless and until (i) the Trustee fails
to receive funds due
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on the Debt Securities or under the Swap Agreement when due and
such funds are not received within any applicable grace period,
(ii) receipt by the Trustee of notice from the Swap Counterparty
of the occurrence of a Swap Default or Termination Event or upon
actual knowledge of a Swap Default or Termination Event by a
Responsible Officer of the Trustee; provided, however, that the
Trustee is responsible for making due inquiry as to whether a
Trust Wind-up Event occurred if it has reason to believe that
such a Trust Wind-up Event has occurred or (iii) receipt of
notice from the Debt Security Issuer of an event constituting a
Debt Security Default.
SECTION 9.05. Expense Event. (a) In the event that the
Trustee incurs Extraordinary Trust Expense in an aggregate amount
exceeding the Trigger Amount and neither the Swap Counterparty
nor the Unitholders have provided adequate assurance of indemnity
to the Trustee in accordance with the terms of paragraph (b) or
paragraph (c), as applicable, of this Section (such event, an
"Excess Expense Event"), the Trust shall terminate as provided in
Section 9.01.
(b) Promptly upon the incurrence by the Trustee of
Extraordinary Trust Expense in an aggregate amount exceeding the
Trigger Amount, and in any event within one Business Day after
such incurrence, the Trustee shall provide notice to each
Unitholder, to the Swap Counterparty and to the Rating Agencies,
if any. Such notice shall state that an Excess Expense Event
shall occur on the seventh calendar day (or, if such day is not a
Business Day, on the next succeeding day that is a Business Day)
following the provision of such notice unless prior to such day
either the Unitholders unanimously agree, or the Swap
Counterparty agrees, to indemnify the Trustee for Extraordinary
Trust Expense in an aggregate amount exceeding the Maximum
Reimbursable Amount (or any other amount specified by the party
agreeing to indemnify the Trustee), and actually incurred by the
Trustee as of the date of such agreement, to the reasonable
satisfaction of the Trustee and its counsel; provided, however,
in no event shall the Trustee be released from its obligations
under the Trust Agreement until such seventh calendar day (or, if
such day is not a Business Day, on the next succeeding day that
is a Business Day).
(c) Following an agreement to indemnify the Trustee for
future Extraordinary Trust Expense, upon the incurrence of
Extraordinary Trust Expense in excess of the Maximum Reimbursable
Amount, then an "Excess Expense Event" will occur unless adequate
assurance of indemnity is given to the Trustee in the manner
specified in paragraph 9.05(b).
(d) Nothing in this Section shall be construed to excuse
the Depositor from its indemnification obligations under Section
10.05.
SECTION 9.06. Special Depositor Wind-Up Event. If the
Depositor (or, if applicable, its permitted assignee) owns 100%
of the Units, then it shall have the power to designate a
distribution of the Trust Property to the Unitholders and the
termination of the Trust (a "Special Depositor Wind-Up Event")
pursuant to this Article IX.
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ARTICLE X
Concerning the Trustee
SECTION 10.01. Duties of Trustee. (a) The Trustee
undertakes to perform such duties and only such duties as are
specifically set forth in the Trust Agreement. Any permissive
right of the Trustee enumerated in the Trust Agreement shall not
be construed as a duty.
(b) The Trustee, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or
other instruments furnished to the Trustee which are specifically
required to be furnished pursuant to any provision of the Trust
Agreement, shall examine them to determine whether they conform
to the requirements of the Trust Agreement. If any such
instrument is found not to conform to the requirements of the
Trust Agreement, the Trustee shall take action as it deems
appropriate to have the instrument corrected, and if the
instrument is not corrected to the Trustee's satisfaction, the
Trustee will provide notice thereof to the Depositor, the
Unitholders and the Rating Agencies, if any.
(c) Upon a default by the Swap Counterparty in making any
other payment due under the Swap Agreement and upon a default by
the Guarantor after the Trustee makes demand under the Guarantee,
the Trustee shall exercise such of the rights and powers vested
in it by the Trust Agreement, and shall use the same degree of
care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of such
person' own affairs.
(d) No provision of the Trust Agreement shall be construed
to relieve the Trustee from liability for its own negligent
action, its own negligent failure to act or its own misconduct;
provided, however, that:
(i) the duties and obligations of the Trustee shall be
determined solely by the express terms of the Trust
Agreement, the Trustee shall not be liable except for the
performance of such duties and obligations as are
specifically set forth in the Trust Agreement, no implied
covenants or obligations (except for a fiduciary duty to
the beneficiaries of the Trust) shall be read into the
Trust Agreement against the Trustee and, in the absence of
negligence, bad faith or willful misconduct on the part of
the Trustee, the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions
furnished to the Trustee that conform to the requirements
of the Trust Agreement;
(ii) the Trustee shall not be personally liable for an
error of judgment made in good faith by a Responsible
Officer or Responsible Officers of the Trustee, unless it
shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(iii) except with respect to actions or duties
required to be taken or performed, as applicable, by the
Trustee under the express terms of the Trust Agreement, the
Trustee shall not be required to expend or risk its own
funds or otherwise incur financial liability in the
performance of any of its duties or in the exercise of any
of its rights powers under the Trust Agreement if there is
reasonable ground for believing that the repayment of such
funds or adequate indemnity against such risk or liability
is not reasonably assured
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to it; provided, however, that the Trustee agrees that the
indemnification under Section 10.05 will provide reasonable
assurance against such risk or liability; and
(iv) in the event that the Paying Agent or the Unit
Registrar shall fail to perform any obligation, duty or
agreement in the manner or on the day required to be
performed by the Paying Agent or Unit Registrar, as the
case may be, under the Trust Agreement, the Trustee shall
be obligated promptly upon its knowledge thereof to perform
such obligation, duty or agreement in the manner so
required.
SECTION 10.02. Certain Matters Affecting the Trustee. (a)
Except as otherwise provided in Section 10.01:
(i) the Trustee may request and rely upon and shall be
protected in acting or refraining from acting upon any
resolution, Officers' Certificate, certificate of auditors
or any other certificate, statement, instrument, opinion,
report, notice, request, consent, order, appraisal, bond or
other paper or document reasonably believed by it to be
genuine and to have been signed by the proper party or
parties;
(ii) the Trustee may consult with counsel and any
advice or Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken
or suffered or omitted by it under the Trust Agreement in
good faith and in accordance with such advice or Opinion of
Counsel;
(iii) except for the duties and obligations of the
Trustee expressly created by the Trust Agreement, the
Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by the Trust Agreement or to
institute, conduct or defend any litigation thereunder or
in relation thereto, at the request, order or direction of
any of the Unitholders, pursuant to the terms of the Trust
Agreement, unless such Unitholders or the Depositor shall
have, to the reasonable satisfaction of the Trustee and its
counsel, offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which
may be incurred therein or thereby;
(iv) the Trustee shall not be personally liable for
any action taken, suffered or omitted by it in good faith
and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by the
Trust Agreement;
(v) the Trustee shall not be bound to make any
investigation into the facts of matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, appraisal,
approval, bond or other paper or document believed by it to
be genuine;
(vi) the Trustee may execute any of the trusts or
powers or perform any duties under the Trust Agreement
either directly or by or through agents or attorneys or a
custodian or administrative agent;
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(vii) the Trustee shall not be personally liable for
any loss resulting from the investment of funds held in any
Unit Account pursuant to Section 3.04;
(viii) the Trustee shall not be deemed to have notice
or knowledge of any matter unless a Responsible Officer
assigned to and working in the Corporate Trust Office has
actual knowledge thereof or unless written notice thereof
is received by the Trustee at the Corporate Trust Office
and such notice references the Units generally or the Trust
Agreement;
(ix) the Trustee shall have the power to reimburse
itself for any unpaid Extraordinary Trust Expense actually
incurred in accordance with the terms and conditions of
this Trust Agreement prior to the distribution of funds or
Trust Property to Unitholders; and
(x) the Trustee shall have the power to sell the Debt
Securities and other Trust Property, in accordance with
Article IX and XI, through the Selling Agent or, if the
Selling Agent shall have resigned or declined to sell some
or all of the Debt Securities, any broker selected by the
Trustee (with the consent of the Depositor) with reasonable
care, in an amount sufficient to pay any amount due to the
Swap Counterparty under the Swap Agreement (including
Termination Payments) or reimbursable to itself in respect
of unpaid Extraordinary Trust Expenses and to use the
proceeds thereof to make such payments prior to the
distribution of funds or Trust Property to Unitholders. Any
such broker shall be instructed by the Trustee to sell such
Trust Property in a reasonable manner designed to maximize
the sale proceeds.
(b) All rights of action under the Trust Agreement or under
any of the Units, enforceable by the Trustee, may be enforced by
it without the possession of any of the Units, or the production
thereof at the trial or other Proceeding relating thereto, and
any such suit, action or proceeding instituted by the Trustee
shall be brought in its name for the benefit of all the Holders,
subject to the terms of the Trust Agreement.
SECTION 10.03. Limitation on Liability of Trustee. The
Trustee assumes no responsibility for the correctness of the
recitals contained in the Trust Agreement, the Units, the Swap
Agreement and the Guarantee, or in any document issued in
connection with the sale of the Units (other than the signature
and authentication on the Units). The sole obligor with respect
to the Debt Securities is the related Debt Security Issuer, with
respect to the Swap Agreement is the Swap Counterparty and with
respect to the Guarantee, is the Guarantor. Except as set forth
in Section 10.12, the Trustee makes no representations or
warranties as to the validity or sufficiency of the Trust
Agreement, the Units (other than the signature and authentication
on the Units), any Debt Security, the Swap Agreement, the
Guarantee or of any related document. The Trustee shall not be
accountable for the use or application by the Depositor of any of
the Units or of the proceeds of such Units, or for the use or
application of any funds paid to the Depositor or the Swap
Counterparty in respect of the Debt Securities. The Units do not
represent interests in or obligations of the Trustee and the
Trustee shall not be responsible or accountable for any tax,
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accounting or other treatment proposed to be applied to the Units
or any interest therein except as expressly provided in the Trust
Agreement.
SECTION 10.04. Trustee May Own Units. The Trustee in its
individual capacity or any other capacity may become the owner or
pledgee of Units with the same rights it would have if it were
not Trustee.
SECTION 10.05. Trustee Fees and Expenses; Limited
Indemnification. (a) As compensation for its regular and
customary services and in payment of its regular and customary
expenses under the Trust Agreement (including the reasonable
compensation, expenses and disbursements of its counsel for
regular and customary services hereunder) the Trustee shall be
entitled to the Trustee Fees (which shall not be limited by any
provision of law in regard to compensation or payment of a
trustee of an express trust). The Depositor agrees to pay such
Trustee Fees when due in accordance with the Trustee Fee Letter;
provided, however, that, subject to paragraph (b) below, the
Depositor shall be under no obligation to make any other payment
for any other services and expenses, disbursements and advances
of the Trustee.
(b) The Trustee and any director, officer, employee or
agent of the Trustee shall be indemnified by the Depositor and
held harmless against any loss, liability or expense incurred in
connection with any Proceeding relating to the Trust Agreement,
the Swap Agreement or the Units or the performance of any of the
Trustee's duties under the Trust Agreement, other than any loss,
liability or expense (i) that constitutes a specific liability of
the Trustee under the Trust Agreement or (ii) incurred by reason
of willful misfeasance, bad faith or negligence in the
performance of the Trustee's duties thereunder or by reason of
reckless disregard of the Trustee's obligations and duties
thereunder (such loss, liability or expense, other than as
described in clauses (i) and (ii) of this sentence,
"Extraordinary Trust Expense"); provided, however, that with
respect to any such Proceeding, (1) the Trustee shall have given
the Depositor notice thereof promptly after the Trustee shall
have knowledge thereof; (2) while maintaining control over its
own defense in any such legal action, the Trustee shall consult
with the Depositor in preparing such defense; (3) if any Person
ever alleges such willful misfeasance, bad faith or negligence by
the Trustee, the indemnification provided for in this paragraph
(b) shall nonetheless be paid upon demand, subject to later
adjustment or reimbursement, until such time as a court of
competent jurisdiction enters a final judgment as to the extent
and effect of the alleged willful misfeasance, bad faith or
negligence; and (4) the Depositor shall in no event be obligated
under the Trust Agreement to indemnify the Trustee for any
Extraordinary Trust Expense to the extent that such Extraordinary
Trust Expense, when aggregated with all Extraordinary Trust
Expense previously indemnified, exceeds the Maximum Reimbursable
Amount. Subject to clause (4) of the proviso to the immediately
preceding sentence, the indemnity for Extraordinary Trust Expense
shall survive the termination or discharge of the Trust Agreement
and the resignation or removal of the Trustee. In the event the
Trustee is not indemnified by the Depositor, whether due to
bankruptcy, insolvency or otherwise, pursuant to the first
sentence of this paragraph, the Trustee shall nevertheless remain
obligated to perform its duties under the Trust Agreement.
(c) The Trustee and the Depositor expressly acknowledge
that the limited obligations of the Depositor to indemnify the
Trustee pursuant to paragraph (b) of this Section do not extend
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to amounts attributable to compensation for services or payment
of expenses of the Trustee, which amounts are payable in full in
the form of the Trustee Fee.
SECTION 10.06. Eligibility Requirements for Trustee. (a)
The Trustee shall at all times satisfy the requirements of TIA
Section 310(a) and Section (a)(4)(i) of Rule 3a-7 under the
Investment Company Act. The Trustee hereunder shall at all times
be a corporation which is not an Affiliate of the Depositor (but
may have normal banking relationships with the Depositor or any
obligor with respect to the Debt Securities with respect to such
Series of Units and their respective Affiliates) organized and
doing business under the laws of any State or the United States,
authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least $50,000,000 and
subject to supervision or examination by Federal or State
authority, and the long-term debt obligations of which are rated
in one of the four highest categories assigned long-term debt
obligations by each of the Rating Agencies. If such corporation
or association publishes reports of conditions at least annually,
pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this
Section the combined capital and surplus of such corporation or
association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of conditions so
published. In the event that at any time the Trustee shall cease
to be eligible in accordance with the terms of this Section, the
Trustee shall resign immediately in the manner and with the
effect specified in Section 10.07.
(b) The Trustee shall comply with Section 310(b) of the
TIA; provided, however, that there shall be excluded from the
operation of TIA Section 310(b)(1), any Series under which other
securities are outstanding evidencing ownership interest in
obligations of the Debt Security Issuer if the requirements for
such exclusion set forth in TIA Section 310(b)(1) are met.
SECTION 10.07. Resignation or Removal of the Trustee. (a)
Subject to the last sentence of this paragraph (a), the Trustee
may at any time resign and be discharged from the Trust by giving
written notice thereof to the Depositor, the Swap Counterparty
and the Guarantor and to all Unitholders. Upon receiving such
notice or resignation, the Depositor, with the consent of the
Swap Counterparty and the Guarantor which consents shall not be
unreasonably withheld, shall as promptly as possible (and in any
event within 30 days after the date of such notice of
resignation) appoint a successor trustee by written instrument,
in duplicate, which instrument shall be delivered to the
resigning Trustee and to the successor trustee. A copy of such
instrument shall be delivered to the Unitholders, the Swap
Counterparty, the Guarantor and the Rating Agencies by the
Depositor. If no such successor trustee shall have been so
appointed and have accepted appointment within 30 days after the
giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment
of a successor trustee for the Units. Upon any appointment of a
successor trustee pursuant to this paragraph (a), the resigning
Trustee shall be solely liable for (i) the payment of such
successor trustee's fees and expenses and (ii) provision of
adequate indemnities satisfactory to such successor trustee (it
being understood that the indemnification obligations of the
Depositor pursuant to Section 10.05(b) shall inure to the benefit
of such successor trustee, but that any Extraordinary Trust
Expense previously indemnified by the Depositor shall reduce the
Maximum Reimbursable Amount with respect to such successor
trustee on a dollar-for-dollar basis). In the
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event that the Trustee fails to satisfy the conditions contained
in clauses (i) and (ii) above, the Trustee may not resign
pursuant to this paragraph (a).
(b) If at any time the Trustee shall cease to be eligible
in accordance with the terms of Section 10.06 and shall fail to
resign after written request therefor by the Depositor, or if at
any time the Trustee shall become incapable of acting, or shall
be adjudged 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 purpose of rehabilitation, conservation or
liquidation, then the Depositor may, with the consent of the Swap
Counterparty and the Guarantor which consents shall not be
unreasonably withheld, remove the Trustee and appoint a successor
trustee by written instrument, in duplicate, which instrument
shall be delivered to the Trustee so removed and to the successor
trustee. A copy of such instrument shall be delivered to the
Unitholders, the Swap Counterparty, the Guarantor, and the Rating
Agencies by the Depositor.
(c) Any resignation or removal of the Trustee and
appointment of a successor trustee pursuant to any of the terms
of this Section shall not become effective until acceptance of
appointment by the successor trustee as provided in Section
10.08.
SECTION 10.08. Successor Trustee. (a) Any successor trustee
appointed as provided in Section 10.07 shall execute, acknowledge
and deliver to the Depositor, its predecessor trustee and the
Rating Agencies an instrument accepting such appointment under
the Trust Agreement, and thereupon the resignation or removal of
the predecessor trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and
obligations of its predecessor under the Trust Agreement, with
the like effect as if originally named as trustee in the Trust
Agreement. The predecessor trustee shall deliver to the successor
trustee all documents and statements held by it under the Trust
Agreement, and the Depositor and the predecessor trustee shall
execute and deliver such instruments and do such other things as
may reasonably be required for more fully and certainly vesting
and confirming in the successor trustee all such rights, powers,
duties and obligations. No successor trustee shall accept
appointment as provided in this Section unless at the time of
such acceptance such successor trustee shall be eligible under
the terms of Section 10.06.
(b) Upon acceptance of appointment by a successor trustee
as provided in this Section, the Depositor shall transmit notice
of the succession of such trustee under the Trust Agreement to
all Unitholders in the manner provided pursuant to Section 12.05.
SECTION 10.09. Merger or Consolidation of Trustee. Any
corporation or association into which the Trustee may be merged
or converted or with which it may be consolidated or any
corporation or association resulting from any merger, conversion
or consolidation to which the Trustee shall be a party, or any
corporation or association succeeding to the business of the
Trustee, shall be the successor of the Trustee under the Trust
Agreement, provided such corporation or association shall be
eligible under the terms of Section 10.06, without the execution
or filing of any paper or any further act on the part of any of
the parties to the Trust Agreement, anything in the Trust
Agreement to the contrary notwithstanding.
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SECTION 10.10. Appointment of Co-Trustee. (a)
Notwithstanding any other terms of the Trust Agreement, at any
time, for the purpose of meeting any legal requirements of any
jurisdiction in which any party of the Trust Property may at the
time be located, the Depositor and the Trustee acting jointly
shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the
Trustee to act as co-trustee or co-trustees, jointly with the
Trustee, of all or any part of the Trust Property, and to vest in
such Person or Persons, in such capacity, such title to the Trust
Property, or any part thereof, and, subject to the other terms of
this Section, such powers, duties, obligations, rights and trusts
as the Depositor and the Trustee may consider necessary or
desirable. If the Depositor shall not have joined in such
appointment within 15 days after the receipt by it of a request
so to do, the Trustee alone shall have the power to make such
appointment. No co-trustee under the Trust Agreement shall be
required to meet the terms of eligibility as a successor trustee
under Section 10.06 and no notice to Unitholders of the
appointment of a co-trustee or co-trustees shall be required
under Section 10.08.
(b) In the case of any appointment of a co-trustee pursuant
to this Section, all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or
imposed upon and exercised or performed by the Trustee and such
co-trustee jointly, except to the extent that under any law of
any jurisdiction in which any particular act or acts are to be
performed by the Trustee, the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of
title to such Trust Property or any portion thereof in any such
jurisdiction) shall be exercised and performed by such co-trustee
at the direction of the Trustee.
(c) Any notice, request or other writing given to the
Trustee shall be deemed to have been given to each of then
co-trustees, as effectively as if given to each of them. Every
instrument appointment any co-trustee shall refer to the Trust
Agreement and the conditions of this Article X. Each co-trustee,
upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of
appointment, jointly with the Trustee subject to all the terms of
the Trust Agreement, specifically including every provision of
the Trust Agreement relating to the conduct of, affecting the
liability of, or affording protection to, the Trustee. Every such
instrument shall be filed with the Trustee.
(d) Any co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful
act under or in respect of the Trust Agreement on its behalf and
in its name. If any co-trustee shall die, become incapable of
acting, resign or be removed, all its estates, properties,
rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment
of a new or successor trustee.
SECTION 10.11. Appointment of Office or Agency. The Units
may be surrendered for registration of transfer or exchange, and
presented for the final distribution with respect thereto, and
notices and demands to or upon the Trustee in respect of the
Units and the Trust Agreement may be served at the Corporate
Trust Office.
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SECTION 10.12. Representations and Warranties of Trustee.
(a) The Trustee represents and warrants that:
(i) the Trustee is duly organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation or association;
(ii) the Trustee has full power, authority and right
to execute, deliver and perform its duties and obligations
under the Trust Agreement, the Units and the Swap Agreement
and has taken all necessary action to authorize the
execution, delivery and performance by it (or, with respect
to the Units, by an Authenticating Agent on its behalf, if
applicable) of the Trust Agreement, the Units and the Swap
Agreement;
(iii) the execution and delivery of the Trust
Agreement, the Units, the Distribution Agreement and the
Swap Agreement by the Trustee and its performance of and
compliance with the terms of the Trust Agreement, the Units
and the Swap Agreement will not violate the Trustee's
articles of incorporation, association or other
constitutive documents or By-laws or constitute a default
under, or result in the breach or acceleration of, any
material contract, agreement or other instrument to which
the Trustee is a party or which may be applicable to the
Trustee or any of its assets;
(iv) as of the Closing Date, each of the Trust
Agreement, the Units and the Swap Agreement has been duly
executed and delivered by the Trustee (or, with respect to
the Units, by an Authenticating Agent on its behalf, if
applicable) and each of the Trust Agreement and the Swap
Agreement constitutes the legal, valid and binding
obligation of the Trustee, enforceable in accordance with
its terms, except as enforcement may be limited by the
applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of
creditors generally and general principles of equity;
(v) the Trustee is not in violation, and the execution
and delivery of the Trust Agreement, the Swap Agreement and
the Units by the Trustee and its performance and compliance
with respective terms of the Trust Agreement, the Swap
Agreement and the Units will not constitute a violation, of
any order or decree of any court or any order or regulation
of any Federal, State, municipal or governmental agency
having jurisdiction over the Trustee or its properties,
which violation would reasonably be expected to have a
material adverse effect on the condition (financial or
otherwise) or operations of the Trustee or its properties
or on the performance of its duties thereunder;
(vi) there are no actions or proceedings against, or
investigations of, the Trustee pending, or, to the
knowledge of the Trustee, threatened, before any court,
administrative agency or other tribunal (A) that could
reasonably be expected to prohibit its entering into the
Trust Agreement or the Swap Agreement or to render the
Units invalid, (B) seeking to prevent the issuance of the
Units or the consummation of any of the transactions
contemplated by the Trust Agreement or the Swap Agreement
or (C) that could reasonably be expected to prohibit or
materially and adversely affect the
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performance by the Trustee of its obligations under, or the
validity or enforceability of, the Trust Agreement, the
Swap Agreement or the Units; and
(vii) no consent, approval, authorization or order of
any court or governmental agency or body is required for
the execution, delivery and performance by the Trustee of,
or compliance by the Trustee with, the Trust Agreement, the
Swap Agreement or the Units, or for the consummation of the
transactions contemplated by the Trust Agreement or the
Swap Agreement, except for such consents, approvals,
authorizations and orders, if any, that have been obtained
prior to the Closing Date.
(b) Within 30 days of the earlier of discovery by the
Trustee or receipt of notice by the Trustee of a breach of any
representation or warranty of the Trustee set forth in this
Section 10.12 that materially and adversely affects the interests
of the Unitholders, the Trustee shall promptly cure such breach
in all material respects.
SECTION 10.13. Limitation of Powers and Duties. The Trust
is constituted solely for the purposes of acquiring and holding
the Debt Securities, entering into the Swap Agreement, accepting
the Guarantee, entering into the Distribution Agreement and
issuing the Units. The Trust may not incur any additional debt
other than the debt that does not constitute a claim against the
Trust to the extent that excess proceeds are insufficient to pay
such debt. The Trustee is not authorized to acquire any other
investments or engage in any activities not authorized in the
Trust Agreement and, in particular, the Trustee is not authorized
(i) to sell, assign, transfer, exchange, pledge, set-off or
otherwise dispose of any of the Debt Securities or interests
therein, including to Unitholders (except upon termination of the
Trust in accordance with Article IX and Article XI of the Trust
Agreement) or (ii) to do anything that would cause the Trust to
fail or cease to qualify as a "grantor trust" for Federal income
tax purposes.
SECTION 10.14. Non-Petition . Prior to the date that is one
year and one day after all distributions in respect of the Units
have been made, neither the Trustee nor the Depositor shall take
any action or institute any proceeding against the other under
the United States Bankruptcy Code or any other liquidation,
insolvency, bankruptcy, moratorium, reorganization or similar law
("Insolvency Law") applicable to either of them, now or hereafter
in effect, or which would be reasonably likely to cause the other
to be subject to, or seek the protection of, any such Insolvency
Law.
ARTICLE XI
Termination
SECTION 11.01. Termination of the Trust. (a) Except as
otherwise provided in Article IX, the respective obligations and
responsibilities under the Trust Agreement of the Depositor and
the Trustee (other than the obligations imposed by Section
10.05(b) and the obligations of the Trustee to provide reports
and other information under the Trust Agreement and to make
distributions to Unitholders as hereafter set forth) shall
terminate upon the distribution to such Holders of all amounts
held in all the Accounts and required to be paid to such Holders
pursuant
54
<PAGE>
to the Trust Agreement; provided, however, that in no event shall
the Trust continue beyond the expiration of 21 years from the
death of the last survivor of the descendants of Queen Elizabeth
II of England, living on the date of the Trust Agreement.
(b) Written notice of any termination shall be provided to
each Unitholder and the Depositor, the Swap Counterparty, the
Guarantor, each Distribution Participant and the Rating Agencies
pursuant to Section 12.05 within ten Business Days, unless such
termination occurs pursuant to the Scheduled Final Distribution
Date.
(c) On the Scheduled Final Distribution Date, the Trustee
shall distribute to each Holder presenting and surrendering its
Units, and to each Holder delivering such security or indemnity
to the Trustee as the Trustee may require to save the Trustee and
hold the Trustee harmless, the amount distributable on such
Distribution Date pursuant to Section 4.01 in respect of the
Units so presented and surrendered. Any funds not distributed on
such Distribution Date shall be set aside and held in trust for
the benefit of Unitholders either (i) not presenting and
surrendering their Units in the aforesaid manner or (ii) not
delivering such security or indemnity to the Trustee. as the
Trustee may require to save the Trustee and hold the Trustee
harmless, and shall be disposed of in accordance with this
Section and Sections 4.01 and 5.09. Immediately following the
deposit of such funds in trust hereunder, the Trust shall
terminate.
ARTICLE XII
Miscellaneous Terms
SECTION 12.01. Amendment of Trust Agreement. (a) The Trust
Agreement may be amended from time to time by the Depositor and
the Trustee without the consent of any of the Unitholders, upon
delivery by the Depositor of an Opinion of Counsel acceptable to
the Trustee to the effect that such amendment will not adversely
affect in any material respect the interests of any Unitholder,
for any of the following purposes: (i) to cure any ambiguity or
to correct or supplement any provision in the Trust Agreement
which may be defective or inconsistent with any other provision
in the Trust Agreement; (ii) to provide for any other terms or
modify any other terms with respect to matters or questions
arising under the Trust Agreement; (iii) to amend the definitions
of Trigger Amount and Maximum Reimbursable Amount so as to
increase, but not decrease, the respective amounts contained in
such definitions or to otherwise amend or waive the terms of
Section 10.05(b) in any manner which shall not adversely affect
the Unitholders in any material respect; (iv) to amend the
definition of Trustee Fee; (v) to evidence and provide for the
acceptance of appointment under the Trust Agreement by a
successor Trustee; or (vi) to add or change any of the terms of
the Trust Agreement as shall be necessary to provide for or
facilitate the administration of the Trust; provided, however,
that in the case of any amendment pursuant to any of clauses (i)
through (v) above, the Rating Agency Condition shall be satisfied
with respect to such amendment.
(b) Promptly after the execution of any such amendment or
modification, the Trustee shall furnish a copy of such amendment
or modification to each Unitholder.
55
<PAGE>
(c) Notwithstanding the foregoing, no amendment or
modification to the Trust Agreement shall be permitted unless the
Trustee first receives an Opinion of Counsel that such amendment
or modification will not alter the classification of the Trust
for U.S. federal income tax purposes.
SECTION 12.02. Counterparts. The Trust Agreement may be
executed simultaneously in any number of counterparts, each of
which counterparts shall be deemed to be an original, and such
counterparts shall constitute but one and the same instrument.
SECTION 12.03. Limitation on Rights of Unitholders. (a) The
death or incapacity of any Unitholder shall not operate to
terminate the Trust Agreement or the Trust Property, nor entitle
such Unitholder' legal representatives or heirs to claim an
accounting or to take any action or proceeding in any court for a
partition or winding up of the Trust Property, nor otherwise
affect the rights, obligations and liabilities of the parties
thereto or any of them.
(b) Except as otherwise expressly provided herein, no
Unitholder shall have any right to control the operation and
management of any Trust Property, or the obligations of the
parties thereto, nor shall anything in the Trust Agreement set
forth, or contained in the terms of the Units, be construed so as
to constitute the Unitholders from time to time as partners or
members of an association; nor shall any Unitholder be under any
liability to any third person by reason of any action taken by
the parties to the Trust Agreement pursuant to any provision
thereof.
(c) No Unitholder shall have any right by virtue of any
provision of the Trust Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to
the Trust Agreement.
SECTION 12.04. Governing Law. The Trust Agreement and each
Unit issued thereunder shall be governed by and construed in
accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely therein without
reference to such State' principles of conflicts of law to the
extent that the application of the laws of another jurisdiction
would be required thereby, and the obligations, rights and
remedies of the parties thereunder shall be determined in
accordance with such laws.
SECTION 12.05. Notices. All directions, demands and notices
under the Trust Agreement shall be in writing and shall be
delivered to the offices of the Trustee specified in the offering
documents dated as of the Closing Date. Unless otherwise provided
in the Terms Schedule, any notice required to be given to a
holder of a Registered Unit will be given by facsimile to such
number as may be provided to the Trustee or be mailed to the last
address of such holder set forth in the applicable Unit Register.
Any notice so mailed within the time prescribed in the Trust
Agreement shall be conclusively presumed to have been duly given
when mailed, whether or not the Unitholder receives such notice.
Notices given by facsimile will be effective upon confirmation
(including electronic confirmation) of effective transmission.
Notice shall be sufficiently given to Holders of Bearer
Units if (i) published in an "Authorized Newspaper" (which shall
be a leading daily newspaper of general circulation in such
56
<PAGE>
city or cities as may be specified in such Units) on a Business
Day and (ii) in the case of a Global Security, if also delivered
to Euroclear or CEDEL, as applicable for communication by them to
the persons shown in their respective records as having interests
therein. In case by reason of suspension of publication of any
Authorized Newspaper or Authorized Newspapers or by reason of any
other cause it shall be impracticable to publish any notice to
Holders of Bearer Units as provided above, then such notification
to Holders of Bearer Units shall be published as provided above
in an Authorized Newspaper of general circulation in Europe or,
if such publication shall also be impracticable, such
notification shall be given in such manner as shall be approved
by the Trustee and the Depositor.
SECTION 12.06. Severability of Terms. If any one or more of
the covenants, agreements or terms of the Trust Agreement shall
be for any reason whatsoever held invalid, then such covenants,
agreements or terms shall be deemed severable from the remaining
covenants, agreements or terms of the Trust Agreement and shall
in no way affect the validity or enforceability of the other
terms of the Trust Agreement or of the Units or the rights of the
Holders thereof.
SECTION 12.07. Notice to Rating Agencies. The Trustee shall
use its best efforts promptly to provide notice to the Rating
Agencies with respect to each of the following of which it has
actual knowledge:
(i) any material change or amendment to the Trust
Agreement;
(ii) the occurrence of any Swap Default or Termination
Event;
(iii) the resignation or termination of the Trustee;
(iv) the final payment to Holders of the Units;
(v) any change in the location of the Unit Account;
and
(vi) any Debt Security Default.
In addition, the Trustee shall promptly furnish to the Rating
Agencies copies of each report to Unitholders described in
Section 4.02. Any such notice pursuant to this Section shall be
in writing and shall be deemed to have been duly given if
personally delivered or mailed by first class mail, postage
prepaid, or by express delivery service to the Rating Agencies at
the addresses set forth in the Terms Schedule
SECTION 12.08. Perfection of Swap Counterparty Security
Interest. At the request of the Swap Counterparty, the Trustee
will assist the Swap Counterparty in the perfection of the
security interest in the Trust Property described in Section 3.04
and granted by the Trust to the Counterparty under the Swap
Agreement.
57
<PAGE>
SECTION 12.09. No Recourse. Each Unitholder by accepting a
Unit acknowledges that such Unitholder's Units represent
beneficial interests in the Trust only and do not represent
interests in or obligations of the Depositor, the Trustee, the
Swap Counterparty, the Guarantor or any Affiliate of the
foregoing Persons and no recourse may be had against such Persons
or their respective assets, except as may be expressly set forth
in the Trust Agreement, the Swap Agreement or the Units.
SECTION 12.10. Conflict With Trust Indenture Act . (a) If
any provision hereof limits, qualifies or conflicts with another
provision hereof that is required to be included in this
Agreement by any of the provisions of the TIA, such required
provision shall control.
b) The provisions of the TIA Sections 310 through 317 that
impose duties on any Person (including the provisions
automatically deemed included herein unless expressly excluded by
this Agreement) are a part of and govern this Agreement, whether
or not physically contained herein.
(c) Except as expressly provided in this Agreement, all
provisions specifically referencing the TIA shall be inapplicable
until such time as this Agreement is qualified under the TIA.
58
<PAGE>
IN WITNESS WHEREOF, the Depositor and the Trustee have
caused this instrument to be duly executed by their respective
officers thereunto duly authorized as of the date first above
written.
MSDW STRUCTURED ASSET CORP.
By________________________________
Name:
Title:
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, as Trustee on
behalf of the Trust identified
in Schedule I to the Trust
Agreement dated today's date,
and not in its individual
capacity
By________________________________
Name:
Title:
59
<PAGE>
EXHIBIT A
TRUST AGREEMENT
TRUST AGREEMENT made as of the date set forth in
Schedule I attached hereto, which Schedule together with
Schedules II and III attached hereto, are made a part hereof and
are hereinafter referred to collectively as the "Terms Schedule".
The terms of the Standard Terms for Trust Agreements, dated
September __, 1998 (the "Standard Terms"), executed by Chase Bank
of Texas, National Association, as trustee (the "Trustee"), and
MSDW Structured Asset Corp. (the "Depositor") are, except to the
extent otherwise expressly stated, hereby incorporated by
reference herein in their entirety with the same force and effect
as though set forth herein. Capitalized terms used herein and not
defined shall have the meanings defined in the Standard Terms.
References to "herein", "hereunder", "this Trust Agreement" and
the like shall include the Terms Schedule attached hereto and the
Standard Terms so incorporated by reference.
WHEREAS, the Depositor and the Trustee desire to
establish the Trust identified in Schedule I attached hereto (the
"Trust") for the primary purposes of (i) holding the Debt
Securities, (ii) entering into any Swap Agreement with the Swap
Counterparty and (iii) issuing the Units;
WHEREAS, the Depositor desires that the respective
beneficial interests in the Trust be divided into transferable
fractional shares, such shares to be represented by the Units;
and
WHEREAS, the Depositor desires to appoint the Trustee
as trustee of the Trust and the Trustee desires to accept such
appointment;
WHEREAS, the Depositor shall transfer, convey and
assign to the Trust without recourse, and the Trust shall
acquire, all of the Depositor's right, title and interest in and
under the Debt Securities and other property identified in
Schedule II to the Trust Agreement (the "Trust Property"); and
WHEREAS, the Trust agrees to acquire the Trust
Property specified herein in consideration for Units having an
initial Unit Principal Balance identified in Schedule I attached
hereto, subject to the terms and conditions specified in the
Trust Agreement;
NOW THEREFORE, the Depositor hereby appoints the
Trustee as trustee hereunder and hereby requests the Trustee to
receive the Debt Securities from the Depositor and to issue in
accordance with the instructions of the Depositor Units having an
initial Unit Principal Balance identified in Schedule I attached
hereto, and the Trustee accepts such appointment and, for itself
and its successors and assigns, hereby declares that it shall
hold all the estate, right, title and interest in any property
contributed to the trust account established hereunder (except
property to be applied to the payment or reimbursement of or by
the Trustee for any fees or expenses which under the terms hereof
is to be so applied) in trust for the benefit of all present and
future Holders of the
<PAGE>
fractional shares of beneficial interest issued hereunder,
namely, the Unitholders, and subject to the terms and provisions
hereof and of the Standard Terms.
IN WITNESS WHEREOF, each of the undersigned has
executed this instrument as of the date set forth in the Terms
Schedule attached hereto.
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION as Trustee on behalf of
the Trust identified in Schedule I
hereto, and not in its individual
capacity
By: ____________________________
Name:
Title:
MSDW STRUCTURED ASSET CORP.
By: ____________________________
Name:
Title:
Attachments: Terms Schedule (consisting
of Schedules I, II and III)
A-2
<PAGE>
Schedule I
(Terms of Trust and Units)
Trust: Structured Asset Trust Unit
Repackagings Series 199_-_
Date of Trust Agreement:
Trustee:
Initial Unit Principal
Balance:
Issue Price:
Cut-off Date:
Closing Date:
Specified Currency:
Business Day:
Pass Through Rate: [Swap Rate]
Interest Reset Period: [Each Swap Rate Accrual Period]
Rating:
Rating Agencies:
Scheduled Final
Distribution Date:
Swap Agreement: [The ISDA Agreement referred
to in Schedule III]
Swap Counterparty: [Party A to the Swap Agreement
referred to in Schedule III]
Guarantee:
Swap Notional Amount: [The Notional Amount specified
in Schedule III]
Swap Payment Date: [Each Payment Date specified
in Schedule III for Party A]
A-3
<PAGE>
Swap Rate: [The [Fixed][Floating] Rate
specified in Schedule III for
the applicable Calculation
Period under the Swap Agreement,
plus or minus the Spread
specified in Schedule III].
Distribution Date:
Record Date:
Form: [Global/Definitive]
[Registered/Bearer]
Depositary:
Alternative ERISA
Restrictions: [Apply][Do Not Apply]
Deemed Representations: [Apply][Do Not Apply]
Additional Trust
Wind-Up Event:
Exchangeable Series
Terms:
Terms of Retained
Interest:
Call Option Terms:
Other Terms:
A-4
<PAGE>
Schedule II
(Terms of Trust Property)
Concentrated Debt Securities:
Debt Securities:
Debt Security Issuer:
Principal Amount:
Debt Security Rate:
Credit Ratings:
Listing:
Debt Security Agreement:
Events of Default:
Form:
Currency of
Denomination:
Acquisition Price Units having an initial
by Trust: Unit Principal Balance of
[$______].
Debt Security Payment Date:
Original Issue Date:
Maturity Date:
Sinking Fund Terms:
Redemption Terms:
CUSIP No.:/ISIN No.
Debt Security Trustee:
A-5
<PAGE>
Available Information [[name of issuer of Debt Securi-
Regarding the Debt ties] is subject to the informa-
Security Issuer. tional requirements of the Secu-
(if other than U.S rities Exchange Act of 1934, as
Treasury obligations): amended, and in accordance
therewith files reports and
other information with the
Securities and Exchange
Commission (the "Commission").
Such reports and other
information can be inspected and
copied at the public reference
facilities maintained by the
Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549 and
at the following Regional
Offices of the Commission: 7
World Trade Center, 13th Floor,
New York, New York 10048 and
Northwest Atrium Center, 500
West Madison Street, Chicago,
Illinois 60661. Copies of such
materials can be obtained from
the Public Reference Section of
the Commission at 450 Fifth
Street, N.W., Washington, D.C.
20549 at prescribed rates.] [In
addition, [attached to the
Prospectus is a copy of] [[name
of issuer of Debt Securities]
has also filed with the
Commission] a Prospectus, dated
________ __, 19__, relating to
the original offering of the
Debt Securities.] Cut-Off Date:
Description of Credit
Support:
Other Trust Property:
A-6
<PAGE>
Schedule III
(Swap Terms)
A-7
<PAGE>
EXHIBIT B1
FORM OF REGISTERED UNIT
STRUCTURED ASSET TRUST UNIT REPACKAGINGS ("SATURNS")
TRUST UNITS, SERIES ____
[THIS CERTIFICATE IS A GLOBAL SECURITY WITHIN THE
MEANING OF THE TRUST AGREEMENT HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A
DEPOSITARY. THIS UNIT IS EXCHANGEABLE FOR UNITS REGISTERED IN THE
NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE TRUST AGREEMENT AND
MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY.]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO TRUSTEE OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.]
THIS UNIT MAY BE SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER AS PROVIDED IN THE TRUST AGREEMENT FOR THE TRUST TO WHICH
THIS UNIT RELATES.
THIS UNIT SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, APPLICABLE TO AGREEMENTS MADE AND
TO BE PERFORMED THEREIN AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
UNLESS THE TERMS SCHEDULE TO THE TRUST AGREEMENT
PROVIDES THAT THE ALTERNATIVE ERISA RESTRICTIONS OR DEEMED
REPRESENTATIONS APPLY, EACH PURCHASER OR TRANSFEREE OF THIS UNIT
OR ANY INTEREST HEREIN REPRESENTS AND WARRANTS THAT IT IS NOT AN
EMPLOYEE BENEFIT PLAN, DOMESTIC OR FOREIGN, WHETHER OR NOT
SUBJECT TO ERISA, OR DESCRIBED IN SECTION 4975(E)(1) OF THE CODE,
OR COMPARABLE
<PAGE>
PROVISIONS OF ANY SUBSEQUENT ENACTMENTS, OR A TRUSTEE OF ANY SUCH
PLAN, OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE THE ASSETS OF
ANY SUCH PLAN (EACH OF THE FOREGOING A "BENEFIT PLAN"), UNLESS
THE BENEFIT PLAN IS NOT SUBJECT TO THE FIDUCIARY RESPONSIBILITY
PROVISIONS OF PART 4, SUBTITLE A, TITLE I OF ERISA, DESCRIBED IN
SECTION 4975(E)(1) OF THE CODE OR SUBJECT TO SUBSTANTIALLY
SIMILAR LEGAL REQUIREMENTS (AN "ERISA BENEFIT PLAN"). AS USED
HEREIN, THE TERM "CODE" MEANS THE INTERNAL REVENUE CODE OF 1986,
AS AMENDED, AND "ERISA" MEANS THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED, IN EACH CASE INCLUDING ANY
SUCCESSOR OR AMENDATORY STATUTES.
IF THE TERMS SCHEDULE TO THE TRUST AGREEMENT PROVIDES
THAT DEEMED REPRESENTATIONS APPLY, EACH PURCHASER OR TRANSFEREE
OF THIS UNIT OR ANY INTEREST HEREIN REPRESENTS AND WARRANTS THAT
EITHER (A) THE PURCHASER IS NOT AN ERISA PLAN OR OTHER PLAN, AN
ENTITY WHOSE UNDERLYING ASSETS INCLUDE THE ASSETS OF ANY SUCH
ERISA PLAN OR OTHER PLAN, OR A GOVERNMENTAL PLAN WHICH IS SUBJECT
TO ANY FEDERAL, STATE OR LOCAL LAW THAT IS SUBSTANTIALLY SIMILAR
TO THE PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE
CODE OR (B) ITS PURCHASE, HOLDING AND DISPOSITION OF A UNIT WILL
NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA
OR SECTION 4975 OF THE CODE (OR, IN THE CASE OF A GOVERNMENTAL
PLAN, ANY SUBSTANTIALLY SIMILAR FEDERAL, STATE, OR LOCAL LAW) FOR
WHICH AN EXEMPTION IS NOT AVAILABLE OR (C) THE PURCHASER IS AN
INSURANCE COMPANY ACQUIRING THE UNIT(S) FOR ITS GENERAL ACCOUNT
WHICH IS AN INSURANCE COMPANY GENERAL ACCOUNT AS SUCH TERM IS
USED IN PTCE 95-60 ISSUED BY THE UNITED STATES DEPARTMENT OF
LABOR AND THERE IS NO EMPLOYEE BENEFIT PLAN (TREATING AS A SINGLE
PLAN ALL PLANS MAINTAINED BY THE SAME EMPLOYER OR EMPLOYEE
ORGANIZATION) WITH RESPECT TO WHICH THE AMOUNT OF THE GENERAL
ACCOUNT RESERVES AND LIABILITIES FOR ALL CONTRACTS HELD BY OR ON
BEHALF OF SUCH PLAN EXCEEDS 10% OF THE TOTAL RESERVES AND
LIABILITIES OF SUCH GENERAL ACCOUNT (EXCLUSIVE OF SEPARATE
ACCOUNT LIABILITIES) PLUS SURPLUS, AS SET FORTH IN THE NAIC
ANNUAL STATEMENTS FILED WITH ITS STATE OF DOMICILE.
UNLESS THE ALTERNATIVE ERISA RESTRICTIONS OR DEEMED
REPRESENTATIONS APPLY, THE PURCHASER AND EACH OTHER PERSON WHO
ACQUIRES A UNIT, AND EACH FIDUCIARY WHICH CAUSES A PERSON TO
ACQUIRE A UNIT, IN SUCH FIDUCIARY'S INDIVIDUAL CAPACITY, HEREBY
AGREES TO INDEMNIFY AND HOLD HARMLESS THE DEPOSITOR, THE SWAP
COUNTERPARTY, THE TRUSTEE AND THEIR AFFILIATES FROM ANY COST,
DAMAGE, LOSS OR EXPENSE INCURRED BY THEM AS A RESULT OF SUCH
PERSON BEING OR BEING DEEMED TO BE AN ERISA BENEFIT PLAN.
B1-2
<PAGE>
IF THE TERMS SCHEDULE TO THE TRUST AGREEMENT PROVIDES THAT THE
ALTERNATIVE ERISA RESTRICTIONS APPLY, EACH PROSPECTIVE TRANSFEREE
OF THE UNITS PURCHASED PURSUANT TO THIS PURCHASE AGREEMENT SHALL
BE REQUIRED TO CERTIFY WHETHER OR NOT IT IS A BENEFIT PLAN OR AN
ERISA BENEFIT PLAN.
B1-3
<PAGE>
REGISTERED INITIAL AMOUNT: $__________
No. ______ AGGREGATE INITIAL
CUSIP No. ___________ AMOUNT OF ALL UNITS: $_________
FRACTIONAL SHARE: ___%
STRUCTURED ASSET TRUST UNIT REPACKAGINGS ("SATURNS")
SERIES ___
This certifies that _________________________ is the
registered owner of an undivided fractional interest in the Trust
Property referred to below. The amount due on this Unit on any
Distribution Date is determined by multiplying the Fractional
Share hereby represented by the amount of Distribution, reduced
by prior payments of the fees and expenses of and any other
applicable amounts payable to the Trustee and Depositor out of
Available Funds, on such Distribution Date.
The Trust Property will be held in trust by the
Trustee identified in Schedule I hereto (the "Trust"). The Trust
has been created pursuant to a Trust Agreement (the "Trust
Agreement"), executed as of the date set forth in Schedule I
hereto between Chase Bank of Texas, National Association, as
Trustee of the Trust (the "Trustee"), and MSDW Structured Asset
Corp.
To the extent not defined herein, all capitalized
terms shall have the meanings assigned to such terms in the Trust
Agreement and the Terms Schedule attached thereto. This Unit is
one of the Units described in the Trust Agreement and is issued
under and subject to the terms, provisions and conditions of the
Trust Agreement. Certain of those terms are set forth in Schedule
I hereto. By acceptance of this Unit, the Holder assents to and
becomes bound by the Trust Agreement.
The Trust Property consists of the Debt Securities,
the Swap Agreement and any Permitted Investments. Pursuant to the
Trust Agreement, the Trust has granted a first priority security
interest in such Trust Property to the Swap Counterparty to
secure the payment of any amounts owed by the Trust to the Swap
Counterparty pursuant to the Swap Agreement.
Subject to the terms and conditions of the Trust
Agreement (including the availability of funds for distributions
and any grace period or cure period applicable to the Trust
Property) and to the prior obligation of the Trust to pay (i) all
amounts due to the Swap Counterparty pursuant to the Swap
Agreement and (ii) all unpaid Extraordinary Trust Expenses, and
until the obligations created by the Trust Agreement shall have
terminated in accordance therewith, there will be distributed on
each Distribution Date specified in Schedule I hereto, to the
Person in whose name this Unit is registered at the close of
business on the second Business Day immediately preceding such
Distribution Date (the "Record Date"), such Unitholder's
fractional undivided interest in the amounts to be distributed to
Unitholders pursuant to the Trust Agreement on such Distribution
Date. The amount to be distributed on the Scheduled Final
Distribution Date will include the full repayment of principal;
provided, however, that if the
B1-4
<PAGE>
applicable Debt Securities are not redeemed on the Scheduled
Final Distribution Date, a Unitholder will be entitled to receive
an in kind distribution of the Notes.
Distributions on this Certificate (so long as the
original principal amount hereof is not less than $10,000,000)
will be made by wire transfer in accordance with a written notice
to the Trustee providing appropriate wire transfer instructions
given no later than 15 calendar days prior to the applicable
Distribution Date. If no such notice has been given,
distributions will be made by the Trustee by check mailed to the
Unitholder of record at its address as it appears in the Unit
Register without the presentation or surrender of this
Certificate or the making of any notation hereon, by wire
transfer of immediately available funds. Except as otherwise
provided in the Trust Agreement and notwithstanding the above,
the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the
office or agency maintained for that purpose by the Trustee in
the Borough of Manhattan, The City of New York.
This Certificate does not purport to summarize the
Trust Agreement and reference is hereby made to the Trust
Agreement for information with respect to the rights, benefits,
obligations and duties evidenced thereby. A copy of the Trust
Agreement may be examined during normal business hours at the
Corporate Trust Office of the Trustee, located at 600 Travis
Street, 8th Floor, Chase Tower, Houston, Texas 77002, the
Trustee's offices at 55 Water Street, North Building, Room 234,
Windows 20 and 21, New York, New York 10041, and at such other
places, if any, designated by the Trustee, by any Unitholder upon
request.
This Certificate and the Units represented hereby are
subject to redenomination in connection with European Monetary
Union as provided in Section 5.08 of the Trust Agreement.
Reference is hereby made to the further terms of this
Certificate set forth on the reverse hereof, which further terms
shall for all purposes have the same effect as if set forth at
this place.
Unless the certificate of authentication hereon shall
have been executed by an authorized officer of the Trustee, by
manual signature, this Certificate shall not entitle the Holder
hereof to any benefit under the Trust Agreement or be valid for
any purpose.
B1-5
<PAGE>
IN WITNESS WHEREOF, the Trustee, on behalf of the
Trust, and not in its individual capacity, has caused this
Certificate to be duly executed.
SETS TRUST NO. ___
By: CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, as Trustee
By: ______________________________
Authorized Signatory
DATED:
[SEAL]
Trustee's Certificate of
Authentication:
This is one of the Units referred to in the
within-mentioned Agreement.
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, as Trustee
By: ____________________________
Authorized Signatory
Attachment: Schedule I
[Schedule I, not repeated here, shall be identical to the
Schedule I attached to the Trust Agreement, a form of which is
Exhibit A to the Standard Terms.]
B1-6
<PAGE>
[REVERSE OF UNIT CERTIFICATE]
STRUCTURED ASSET TRUST UNIT REPACKAGINGS ("SATURNS")
SERIES ___
The Trust Agreement permits the amendment thereof, in
certain circumstances, without the consent of the Holders of any
of the Certificates.
As provided in the Trust Agreement and subject to
certain limitations therein set forth, the transfer of this
Certificate is registerable in the Unit Register upon surrender
of this Certificate for registration of transfer at the office or
agency maintained by the Trustee in the Borough of Manhattan, The
City of New York, accompanied by a written instrument of transfer
and a Distribution Agreement in form and substance satisfactory
to the Trustee duly completed and executed by the Holder hereof
or such Holder' attorney duly authorized in writing, and
thereupon one or more new Certificates of authorized
denominations evidencing the same aggregate interest in the Trust
will be issued to the designated transferee.
As provided in the Trust Agreement and subject to
certain limitations therein set forth, Certificates are
exchangeable for new Certificates representing different numbers
of Units which evidence the same aggregate interest in the Trust,
as requested by the Holder surrendering the same. No service
charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient
to cover any tax or governmental charges payable in connection
therewith.
The Depositor, the Trustee and any agent of the
Depositor or the Trustee may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes,
and none of the Depositor, the Trustee, or any such agent shall
be affected by any notice to the contrary.
The obligations and responsibilities created by the
Trust Agreement and the Trust created thereby will terminate upon
the payment to Unitholders of all amounts required to be paid to
them pursuant to the Trust Agreement.
Notwithstanding anything contained in the Trust
Agreement to the contrary the Trust Agreement has been accepted
by Chase Bank of Texas, National Association not in its
individual capacity but solely as Trustee and in no event shall
Chase Bank of Texas, National Association have any liability for
the representations, warranties, covenants, agreements or other
obligations of the Depositor thereunder or in any of the
certificates, notices or agreements delivered pursuant thereto,
as to all of which recourse shall be had solely to the assets of
the Depositor, and under no circumstances shall Chase Bank of
Texas, National Association be personally liable for the payment
of any indebtedness or expenses of the Trust. The Units do not
represent interests in or obligations of the Trustee and the
Trustee shall not be responsible or accountable for any tax,
accounting or other treatment proposed to be applied to the Units
or any interest therein except as expressly provided in the Trust
Agreement.
B1-7
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells,
assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
_________________________________________________________________
(Please print or typewrite name and address,
including postal zip code, of assignee)
_________________________________________________________________
the within Certificate, and all rights thereunder,
hereby irrevocably constituting and appointing
_________________________________________________________________
Attorney to transfer said Certificate on the books of the
Certificate Registrar, with full power of substitution in the
premises.
Dated:
_______________________________ */
Signature Guaranteed:
_______________________________ */
- ---------------
*/ NOTICE: The signature to this assignment must correspond
with the name as it appears upon the face of the within
Certificate in every particular, without alteration, enlargement
or any change whatever. Such signature must be guaranteed by a
member of the New York Stock Exchange or a commercial bank or
trust company.
B1-8
<PAGE>
OPTION TO ELECT EXCHANGE
The undersigned hereby irrevocably requests and
instructs the Trustee to effect exchange of this Unit for the
Trust Property in which this Unit evidences a beneficial interest
(or portion thereof specified below) pursuant to its terms and in
accordance with the Term Schedule and Section 5.12 of the Trust
Agreement, to be delivered to the undersigned, at
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
(Please print or typewrite name and address of the
undersigned.)
If less than the entire Unit Principal Balance of this
Unit is to be redeemed, specify the portion thereof which the
Holder elects to have exchanged: ___________________; and specify
the denomination or denominations (which shall not be less than
the minimum authorized denomination) of the Units to be issued to
the Holder for the portion of the within Units not being
exchanged (in the absence of any such specification, one such
Unit will be issued for the portion not being redeemed):
Dated: __________________
B1-9
<PAGE>
EXHIBIT B2
FORM OF BEARER UNIT
STRUCTURED ASSET TRUST UNIT REPACKAGINGS ("SATURNS")
TRUST UNITS, SERIES ____
[THIS CERTIFICATE IS A GLOBAL SECURITY WITHIN THE MEANING
OF THE TRUST AGREEMENT HEREINAFTER REFERRED TO. THIS UNIT IS
EXCHANGEABLE FOR DEFINITIVE BEARER UNITS ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE TRUST AGREEMENT AND MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF
THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE
DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY. FOLLOWING THE
AVAILABILITY OF A PERMANENT GLOBAL SECURITY IN BEARER FORM (IF
THIS UNIT IS A TEMPORARY GLOBAL SECURITY) OR DEFINITIVE BEARER
UNITS, AND SUBJECT TO ANY FURTHER LIMITATIONS DESCRIBED IN THE
TERMS SCHEDULE, THIS GLOBAL SECURITY WILL BE EXCHANGEABLE FOR
INTERESTS IN SUCH PERMANENT GLOBAL SECURITY OR FOR DEFINITIVE
BEARER UNITS, RESPECTIVELY, ONLY UPON RECEIPT OF A CERTIFICATE
ACCEPTABLE TO THE DEPOSITOR AND THE TRUSTEE TO THE EFFECT THAT A
BENEFICIAL INTEREST IN THIS GLOBAL SECURITY IS OWNED BY A PERSON
THAT IS NOT A U.S. PERSON OR IS OWNED BY OR THROUGH A FINANCIAL
INSTITUTION IN COMPLIANCE WITH APPLICABLE U.S. TREASURY
REGULATIONS (A "CERTIFICATE OF NON-U.S. BENEFICIAL OWNERSHIP").]
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE
SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS,
INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(J) AND 1287(A)
OF THE INTERNAL REVENUE CODE.
THIS UNIT MAY BE SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER AS PROVIDED IN THE TRUST AGREEMENT FOR THE TRUST TO
WHICH THIS UNIT RELATES.
THIS UNIT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED THEREIN AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
[IF SO SPECIFIED IN THE TERMS SCHEDULE, INTEREST ON THIS
TEMPORARY GLOBAL SECURITY WILL BE DISTRIBUTED TO EACH OF
EUROCLEAR AND CEDEL WITH RESPECT TO THAT PORTION OF SUCH
TEMPORARY GLOBAL SECURITY HELD FOR ITS ACCOUNT, BUT ONLY UPON
RECEIPT AS OF THE RELEVANT DISTRIBUTION DATE OF A CERTIFICATE OF
NON- U.S. BENEFICIAL OWNERSHIP.]
<PAGE>
UNLESS THE TERMS SCHEDULE TO THE TRUST AGREEMENT
PROVIDES THAT THE DEEMED REPRESENTATIONS APPLY, EACH PURCHASER OR
TRANSFEREE OF THIS UNIT OR ANY INTEREST HEREIN REPRESENTS AND
WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT PLAN, DOMESTIC OR
FOREIGN, WHETHER OR NOT SUBJECT TO ERISA, OR DESCRIBED IN SECTION
4975(E)(1) OF THE CODE, OR COMPARABLE PROVISIONS OF ANY
SUBSEQUENT ENACTMENTS, OR A TRUSTEE OF ANY SUCH PLAN, OR AN
ENTITY WHOSE UNDERLYING ASSETS INCLUDE THE ASSETS OF ANY SUCH
PLAN (EACH OF THE FOREGOING A "BENEFIT PLAN"), UNLESS THE BENEFIT
PLAN IS NOT SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF
PART 4, SUBTITLE A, TITLE I OF ERISA, DESCRIBED IN SECTION
4975(E)(1) OF THE CODE OR SUBJECT TO SUBSTANTIALLY SIMILAR LEGAL
REQUIREMENTS (AN "ERISA BENEFIT PLAN"). AS USED HEREIN, THE TERM
"CODE" MEANS THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, AND
"ERISA" MEANS THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED, IN EACH CASE INCLUDING ANY SUCCESSOR OR
AMENDATORY STATUTES.
IF THE TERMS SCHEDULE TO THE TRUST AGREEMENT PROVIDES THAT DEEMED
REPRESENTATIONS APPLY, EACH PURCHASER OR TRANSFEREE OF THIS UNIT
OR ANY INTEREST HEREIN REPRESENTS AND WARRANTS THAT EITHER (A)
THE PURCHASER IS NOT AN ERISA PLAN OR OTHER PLAN, AN ENTITY WHOSE
UNDERLYING ASSETS INCLUDE THE ASSETS OF ANY SUCH ERISA PLAN OR
OTHER PLAN, OR A GOVERNMENTAL PLAN WHICH IS SUBJECT TO ANY
FEDERAL, STATE OR LOCAL LAW THAT IS SUBSTANTIALLY SIMILAR TO THE
PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR
(B) ITS PURCHASE, HOLDING AND DISPOSITION OF A UNIT WILL NOT
RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR
SECTION 4975 OF THE CODE (OR, IN THE CASE OF A GOVERNMENTAL PLAN,
ANY SUBSTANTIALLY SIMILAR FEDERAL, STATE, OR LOCAL LAW) FOR WHICH
AN EXEMPTION IS NOT AVAILABLE OR (C) THE PURCHASER IS AN
INSURANCE COMPANY ACQUIRING THE UNIT(S) FOR ITS GENERAL ACCOUNT
WHICH IS AN INSURANCE COMPANY GENERAL ACCOUNT AS SUCH TERM IS
USED IN PTCE 95-60 ISSUED BY THE UNITED STATES DEPARTMENT OF
LABOR AND THERE IS NO EMPLOYEE BENEFIT PLAN (TREATING AS A SINGLE
PLAN ALL PLANS MAINTAINED BY THE SAME EMPLOYER OR EMPLOYEE
ORGANIZATION) WITH RESPECT TO WHICH THE AMOUNT OF THE GENERAL
ACCOUNT RESERVES AND LIABILITIES FOR ALL CONTRACTS HELD BY OR ON
BEHALF OF SUCH PLAN EXCEEDS 10% OF THE TOTAL RESERVES AND
LIABILITIES OF SUCH GENERAL ACCOUNT (EXCLUSIVE OF SEPARATE
ACCOUNT LIABILITIES) PLUS SURPLUS, AS SET FORTH IN THE NAIC
ANNUAL STATEMENTS FILED WITH ITS STATE OF DOMICILE.
NOTWITHSTANDING THE TWO PRECEDING SECTIONS, UNLESS THE DEEMED
REPRESENTATIONS APPLY, THE PURCHASER AND EACH OTHER PERSON WHO
ACQUIRES A UNIT, AND EACH FIDUCIARY WHICH CAUSES A PERSON TO
ACQUIRE A UNIT, IN SUCH FIDUCIARY'S INDIVIDUAL CAPACITY, HEREBY
AGREES TO
B2-2
<PAGE>
INDEMNIFY AND HOLD HARMLESS THE DEPOSITOR, THE SWAP COUNTERPARTY,
THE TRUSTEE AND THEIR AFFILIATES FROM ANY COST, DAMAGE, LOSS OR
EXPENSE INCURRED BY THEM AS A RESULT OF SUCH PERSON BEING OR
BEING DEEMED TO BE AN ERISA BENEFIT PLAN.
B2-3
<PAGE>
INITIAL AMOUNT: $__________
No. ______ AGGREGATE INITIAL
CUSIP No. ___________ AMOUNT OF ALL UNITS: $_________
FRACTIONAL SHARE: ___%
STRUCTURED ASSET TRUST UNIT REPACKAGINGS ("SATURNS")
SERIES ___
This certifies that the bearer hereof is the owner of
an undivided fractional interest in the Trust Property referred
to below. The amount due on this Unit on any Distribution Date is
determined by multiplying the Fractional Share hereby represented
by the amount of Distribution, reduced by prior payments of the
fees and expenses of and any other applicable amounts payable to
the Trustee and Depositor out of Available Funds, on such
Distribution Date.
The Trust Property will be held in trust by the
Trustee identified in Schedule I hereto (the "Trust"). The Trust
has been created pursuant to a Trust Agreement (the "Trust
Agreement"), executed as of the date set forth in Schedule I
hereto between Chase Bank of Texas, National Association, as
Trustee of the Trust (the "Trustee"), and MSDW Structured Asset
Corp.
To the extent not defined herein, all capitalized
terms shall have the meanings assigned to such terms in the Trust
Agreement and the Terms Schedule attached thereto. This Unit is
one of the Units described in the Trust Agreement and is issued
under and subject to the terms, provisions and conditions of the
Trust Agreement. Certain of those terms are set forth in Schedule
I hereto. By acceptance of this Unit, the Holder assents to and
becomes bound by the Trust Agreement.
The Trust Property consists of the Debt Securities,
the Swap Agreement and any Permitted Investments. Pursuant to the
Trust Agreement, the Trust has granted a first priority security
interest in such Trust Property to the Swap Counterparty to
secure the payment of any amounts owed by the Trust to the Swap
Counterparty pursuant to the Swap Agreement.
Subject to the terms and conditions of the Trust
Agreement (including the availability of funds for distributions
and any grace period or cure period applicable to the Trust
Property) and to the prior obligation of the Trust to pay (i) all
amounts due to the Swap Counterparty pursuant to the Swap
Agreement and (ii) all unpaid Extraordinary Trust Expenses, and
until the obligations created by the Trust Agreement shall have
terminated in accordance therewith, there will be distributed on
each Distribution Date specified in Schedule I hereto, to the
bearer of this Unit, against the presentation hereof at an office
or agency of the Trustee outside the United States, such
Unitholder's fractional undivided interest in the amounts to be
distributed to Unitholders pursuant to the Trust Agreement on
such Distribution Date. The amount to be distributed on the
Scheduled Final Distribution Date will include the full repayment
of principal; provided, however, that if the applicable Debt
Securities are not redeemed on the Scheduled Final Distribution
Date, a Unitholder will be entitled to receive an in kind
distribution of the Notes.
B2-4
<PAGE>
Distributions on this Certificate (so long as the
original principal amount hereof is not less than $10,000,000)
will be by check or by wire transfer in accordance with a written
instruction of the bearer hereof on the applicable Distribution
Date. Except as otherwise provided in the Trust Agreement and
notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Trustee of the
pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency maintained
for that purpose by the Trustee outside the United States.
This Certificate does not purport to summarize the
Trust Agreement and reference is hereby made to the Trust
Agreement for information with respect to the rights, benefits,
obligations and duties evidenced thereby. A copy of the Trust
Agreement may be examined during normal business hours at the
Corporate Trust Office of the Trustee, located at 600 Travis
Street, 8th Floor, Chase Tower, Houston, Texas 77002, the
Trustee's offices at 55 Water Street, North Building, Room 234,
Windows 20 and 21, New York, New York 10041, and at such other
places, if any, designated by the Trustee, by any Unitholder upon
request.
This Certificate and the Units represented hereby are
subject to redenomination in connection with European Monetary
Union as provided in Section 5.08 of the Trust Agreement.
The city or cities with respect to which notice may be
given, subject to Section 12.05 of the Trust Agreement, by
publication in an Authorized Newspaper in connection with this
Unit and the Trust Agreement are ________________.
Reference is hereby made to the further terms of this
Certificate set forth on the reverse hereof, which further terms
shall for all purposes have the same effect as if set forth at
this place.
Unless the certificate of authentication hereon shall
have been executed by an authorized officer of the Trustee, by
manual signature, this Certificate shall not entitle the Holder
hereof to any benefit under the Trust Agreement or be valid for
any purpose.
B2-5
<PAGE>
IN WITNESS WHEREOF, the Trustee, on behalf of the
Trust, and not in its individual capacity, has caused this
Certificate to be duly executed.
SETS TRUST NO. ___
By: CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, as Trustee
By: ______________________________
Authorized Signatory
DATED:
[SEAL]
Trustee's Certificate of
Authentication:
This is one of the Units referred to in the
within-mentioned Agreement.
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, as Trustee
By: ____________________________
Authorized Signatory
Attachment: Schedule I
[Schedule I, not repeated here, shall be identical to the
Schedule I attached to the Trust Agreement, a form of which is
Exhibit A to the Standard Terms.]
B2-6
<PAGE>
[REVERSE OF UNIT CERTIFICATE]
STRUCTURED ASSET TRUST UNIT REPACKAGINGS ("SATURNS")
SERIES ___
The Trust Agreement permits the amendment thereof, in
certain circumstances, without the consent of the Holders of any
of the Certificates.
As provided in the Trust Agreement and subject to
certain limitations therein set forth, Certificates are
exchangeable for new Certificates representing different numbers
of Units which evidence the same aggregate interest in the Trust,
as requested by the Holder surrendering the same. No service
charge will be made for any such exchange, but the Trustee may
require payment of a sum sufficient to cover any tax or
governmental charges payable in connection therewith.
The obligations and responsibilities created by the
Trust Agreement and the Trust created thereby will terminate upon
the payment to Unitholders of all amounts required to be paid to
them pursuant to the Trust Agreement.
Notwithstanding anything contained in the Trust
Agreement to the contrary the Trust Agreement has been accepted
by Chase Bank of Texas, National Association not in its
individual capacity but solely as Trustee and in no event shall
Chase Bank of Texas, National Association have any liability for
the representations, warranties, covenants, agreements or other
obligations of the Depositor thereunder or in any of the
certificates, notices or agreements delivered pursuant thereto,
as to all of which recourse shall be had solely to the assets of
the Depositor, and under no circumstances shall Chase Bank of
Texas, National Association be personally liable for the payment
of any indebtedness or expenses of the Trust. The Units do not
represent interests in or obligations of the Trustee and the
Trustee shall not be responsible or accountable for any tax,
accounting or other treatment proposed to be applied to the Units
or any interest therein except as expressly provided in the Trust
Agreement.
B2-7
<PAGE>
OPTION TO ELECT EXCHANGE
The undersigned hereby irrevocably requests and
instructs the Trustee to effect exchange of this Unit for the
Trust Property in which this Unit evidences a beneficial interest
(or portion thereof specified below) pursuant to its terms and in
accordance with the Term Schedule and Section 5.12 of the Trust
Agreement, to be delivered to the undersigned, at
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
(Please print or typewrite name and address of the
undersigned.)
If less than the entire Unit Principal Balance of this
Unit is to be redeemed, specify the portion thereof which the
Holder elects to have exchanged: ___________________; and specify
the denomination or denominations (which shall not be less than
the minimum authorized denomination) of the Units to be issued to
the Holder for the portion of the within Units not being
exchanged (in the absence of any such specification, one such
Unit will be issued for the portion not being redeemed):
Dated: __________________
September __, 1998
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
MSDW Structured Asset Corp.
1585 Broadway
New York, New York 10036
Ladies and Gentlemen:
We have acted as special counsel to MSDW Structured
Asset Corp., a Delaware corporation (the "Company"), in
connection with the Company's registration statement on Form S-3,
first filed September 30, 1998 of the Structured Asset Trust
Unit Repackagings (the "Units") to be issued from time to time
under Trust Agreements (each a "Trust Agreement") incorporating
Standard Terms of Trust Agreements (the "Standard Terms") between
the Company and Chase Bank of Texas, National Association, as
Trustee in the form included as an exhibit to the Registration
Statement.
In arriving at the opinions expressed below, we have
reviewed the following documents:
(a) the Registration Statement and the related
Prospectus and the documents
incorporated by reference therein;
(b) the Standard Terms;
(c) a form of the Units;
<PAGE>
In addition, we have reviewed the originals or copies
certified or otherwise identified to our satisfaction of all such
corporate records of the Company and such other instruments and
other certificates of public officials, officers and
representatives of the Company and such other persons, and we
have made such investigations of law, as we have deemed
appropriate as a basis for the opinions expressed below.
In rendering the opinions expressed below, we have
assumed the authenticity of all documents submitted to us as
originals and the conformity to the originals of all documents
submitted to us as copies. In addition, we have assumed and have
not verified the accuracy as to factual matters of each document
we have reviewed.
Based on the foregoing, and subject to the further
assumptions and qualifications set forth below, it is our opinion
that:
1. The Company is validly existing as a corporation in
good standing under the laws of its jurisdiction of
incorporation.
2. The Company has corporate power to own its
properties and conduct its business as described in the
Registration Statement, and the Company has corporate power to
issue the Units, to enter into the Trust Agreement and to perform
its obligations thereunder.
3. The statements set forth under the headings
"Description of Trust Agreements" and "Description of Units" in
the Prospectus, insofar as such statements purport to summarize
certain provisions of the Units, and Trust Agreement and the
Certificate of Incorporation of the Company, provide a fair
summary of such provisions.
4. The Units in the form provided by the Standard
Terms will, when duly and validly authorized, executed, delivered
and issued by the Trustee, and when authenticated as
2
<PAGE>
specified in the Standard Terms and delivered to the Depositor,
be entitled to the benefits of the Trust Agreement.
Insofar as the foregoing opinions relate to the valid
existence and good standing of the Company, they are based solely
on a certificate of good standing received from the Secretary of
State of the State of Delaware and on a telephonic confirmation
from such Secretary of State. Insofar as the foregoing opinions
relate to the validity, binding effect or enforceability of any
agreement or obligation of the Company, (a) we have assumed that
each other party to such agreement or obligation has satisfied
those legal requirements that are applicable to it to the extent
necessary to make such agreement or obligation enforceable
against it, and (b) such opinions are subject to applicable
bankruptcy, insolvency and similar laws affecting creditors'
rights generally and to general principles of equity.
The foregoing opinions are limited to the federal law
of the United States of America, and the law of the State of New
York and the General Corporation Law of the State of Delaware.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement. By giving such consent, we do not
admit that we are "experts" within the meaning of the Securities
Act of 1933, as amended, or the rules and regulations of the
Commission issued thereunder with respect to any part of the
Registration Statement, including this exhibit.
We are furnishing this opinion letter to you solely
for your benefit in connection with the offering of the Units.
This opinion letter is not to be used, circulated, quoted or
otherwise referred to for any other purpose.
Very truly yours,
CLEARY, GOTTLIEB, STEEN & HAMILTON
By________________________________
3
Exhibit [ ]
[Letterhead of Cleary, Gottlieb, Steen & Hamilton]
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
MSDW Structured Asset Corp.
1585 Broadway
New York, New York 10036
Ladies and Gentlemen:
We have acted as special counsel to MSDW Structured
Asset Corp., a Delaware corporation (the "Company"), in
connection with the Company's preparation and filing with the
Securities and Exchange Commission (the "Commission") of a
registration statement on Form S-3 dated the date hereof (the
"Registration Statement") and the related prospectus (the
"Prospectus") with respect to the offering of Structured Asset
Trust Unit Repackagings (the "Units"). The Units will be issued
under the Standard Terms of Trust Agreements dated as of
________, 1998 (the "Trust Agreement") between the Company and
Chase Bank of Texas, National Association, as trustee.
In arriving at the opinion expressed below, we have
reviewed the following documents:
(a) the Registration Statement and the related
Prospectus and the documents
incorporated by reference therein;
(b) the Trust Agreement;
(c) a form of the Units;
<PAGE>
In rendering the opinions expressed below, we have
assumed, without independent investigation, that all such
documents furnished to us are complete and authentic and that
all such documents have been duly authorized, executed and
delivered. We have further assumed that the respective parties
thereto and all persons having obligations thereunder or making
representations therein will act in all respects and at all
relevant times in conformity with the requirements and provisions
of such documents and all representations contained therein. We
have made such investigations of law as we have deemed
appropriate as a basis for the opinion expressed below.
On the basis of and subject to the foregoing, we are
of the opinion that each Trust, when it is formed in accordance
with the documents referenced above, will not be classified as a
corporation or as an association taxable as a corporation for
U.S. federal income tax purposes.
The foregoing opinion is based on the Internal Revenue
Code of 1986 (the "Code") and applicable regulations, rulings and
judicial decisions, in each case as in effect on the date hereof.
This opinion may be affected by amendments to the Code or to the
regulations thereunder or by subsequent judicial or
administrative interpretations thereof. We express no opinion
other than as to the federal income tax laws of the United States
of America.
Based on the foregoing, please be advised that the
statements made in the section in the Prospectus entitled
"Certain Federal Income Tax Consequences," fairly and accurately
summarize the specific tax matters addressed therein, based upon
current law and the
2
<PAGE>
assumptions stated or referred to therein. We hereby consent to
the filing of this opinion as an exhibit to the Registration
Statement. By giving such consent, we do not admit that we are
"experts" within the meaning of the Securities Act of 1933, as
ameded, or the rules and regulations of the Commission issued
thereunder with respect to any part of the Registration
Statement, including this exhibit.
We are furnishing this opinion letter to you, the
Underwriter, solely for your benefit in connection with the
offering of the Units. This opinion letter is not to be used,
circulated, quoted or otherwise referred to for any other
purpose, except that this opinion letter may be relied upon by
(i) the Trustee in its capacity as such and (ii) _____ in
connection with their rating of the Units.
Very truly yours,
CLEARY, GOTTLIEB, STEEN & HAMILTON
By:_____________________________________
James M. Peaslee, a Partner
3
SCHEDULE
TO THE
MASTER AGREEMENT
dated as of ________, ____
between
[MORGAN STANLEY CAPITAL SERVICES INC.]
("Party A")
and
SATURNS TRUST NO. _____
("Party B" or the "Trust")
Part 1. Termination Provisions.
(a) "Specified Entity" means in relation to Party A for the
purpose of:-
Section 5(a)(v), None Specified
Section 5(a)(vi), None Specified
Section 5(a)(vii), None Specified
Section 5(b)(iv), None specified
and in relation to Party B for the purpose of:-
Section 5(a)(v), None Specified
Section 5(a)(vi), None Specified
Section 5(a)(vii), None Specified
Section 5(b)(iv), None Specified
(b) "Specified Transaction" means, in lieu of the meaning
specified in Section 14, any contract or transaction
(whether or not documented under or effected pursuant to a
master agreement) now existing or hereafter entered into
between Party A, any Credit Support Provider of Party A or
any Affiliate of Party A, and Party B, any Credit Support
Provider of Party B or any Affiliate of Party B, provided
however, that (i) Specified Transaction shall exclude any
contract or transaction for Specified Indebtedness and any
securities repurchase or reverse repurchase agreement or
similar transaction, and (ii) for the purposes of Section
5(a)(v), Specified Transaction shall also exclude any
contract or transaction not documented under or effected
pursuant to a master agreement.
(c) "Failure to Pay or Deliver", "Breach of Agreement", "Credit
Support Default" "Misrepresentation", "Default Under
Specified Transaction" and "Cross- Default": Section
5(a)(i) is amended by deleting the words "if such failure
is not remedied on or before the third Local Business Day
after notice of such failure is given to the party."
Sections 5(a)(ii), 5(a)(iv), 5(a)(v) and 5(a)(vi) will not
apply to Party A or Party B (provided that a default by
Party B under a Specified Transaction may independently
give rise to a Trust Wind Up Event under the terms of the
Trust Agreement dated ______, _____ between MSDW Structured
Asset Corp. as Depositor
1
<PAGE>
and Chase Bank of Texas, National Association, as Trustee
(the "Trust Agreement")). Section 5(a)(iii) will not apply
to Party B.
(d) "Specified Indebtedness" has the meaning specified in
Section 14.
(e) "Threshold Amount" means, with respect to a party, U.S.
$10,000,000 (or the equivalent in another currency,
currency unit or combination thereof).
(f) "Credit Event Upon Merger"; "Tax Event Upon Merger":
Sections 5(b)(iii) and 5(b)(iv) shall not apply.
(g) The "Automatic Early Termination" provisions of Section
6(a) will not apply to Party A and will not apply to Party
B; provided, however, where the Event of Default is
specified in Sections 5(a)(vii)(1),(3),(4),(5),(6) or to
the extent analogous thereto, (8) is governed by a system
of laws which does not permit termination to take place
upon or after the occurrence of the relevant Event of
Default in accordance with the terms of this Agreement,
then the Automatic Early Termination provision of Section
6(a) will apply to Party A and Party B.
(h) Payments on Early Termination. "Market Quotation" and
"Second Method" will apply for purposes of Section 6(e) of
this Agreement; provided, however, that notwithstanding any
other provision of this Agreement, the claim of Party A for
any Settlement Amount arising other than as a result of a
Debt Security Default as defined in the Trust Agreement
shall be limited in accordance with the provisions of the
Trust Agreement to a claim pro rata with that of the
Unitholders under the Trust Agreement for their Unit
Principal Balance plus accrued interest (but this proviso
shall not apply if the Trust Agreement does not provide for
such limitation).
(i) "Termination Currency" means United States Dollars.
(j) Additional Termination Event will apply. Each of the
following shall constitute an Additional Termination Event,
with Party B as the Affected Party:
(i) Trust Wind-Up Event. Any "Trust Wind-Up Event" shall
occur in respect of Party B in accordance with Section 9.01
of the Trust Agreement:
(ii) Debt Security Default. A "Debt Security Default" shall
occur as defined in the Trust Agreement.
In the case of a Trust Wind-Up Event, all Transactions
shall be Affected Transactions. In the case of a Debt
Security Default, unless otherwise provided in the related
Confirmation, only the specific Transaction related to such
Debt Security shall be an Affected Transaction.
(k) Events of Default with respect to Party B. With respect to
Party B only, Section 5(a)(vii) shall apply with the
following amendments:
(i) Section 5(a)(vii)(2) shall not apply;
2
<PAGE>
(ii) Section 5(a)(vii)(3) shall take effect with the
words "the Unitholders" substituted for "its
creditors"; and
(iii) Sections 5(a)(vii)(6) and (7) shall take effect with
the words "assets comprising the property of the
Trust, otherwise than in accordance with the Trust
Agreement" substituted for "all or substantially all
its assets".
Part 2. Tax Representations.
(a) Payer Tax Representations. For the purpose of Section 3(e),
Party A and Party B each makes the following
representation:-
It is not required by any applicable law, as modified by
the practice of any relevant governmental revenue
authority, of any Relevant Jurisdiction to make any
deduction or withholding for or on account of any Tax from
any payment (other than interest under Section 2(a)(iii),
2(e), 6(d)(ii) or 6(e)) to be made by it to the other party
under this Agreement. In making this representation, it may
rely on:-
(i) the accuracy of any representation made by the other
party pursuant to Section 3(f);
(ii) the satisfaction of the agreement of the other party
contained in Section 4(a)(i) or 4(a)(iii) and the
accuracy and effectiveness of any document provided
by the other party pursuant to Section 4(a)(i) or
4(a)(iii); and
(iii) the satisfaction of the agreement of the other party
contained in Section 4(d);
provided that it shall not be a breach of this
representation where reliance is placed on clause (ii), and
the other party does not deliver a form or document under
Section 4(a)(iii) by reason of material prejudice to its
legal or commercial position.
(b) Payee Tax Representations. There are no payee
representations.
Part 3. Agreement to Deliver Documents.
P<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Party required
to deliver Form/Document/ Date by which Covered by Section
document Certificate to be delivered 3(d) Representation
- -------------- -------------- --------------- -------------------
Party A and Party B Either (1) a signature The earlier of the fifth Yes
booklet containing Business Day after the
secretary's certificate Trade Date of the first
and resolutions Transaction or upon
("authorizing execution of this
resolutions") authorizing Agreement and as deemed
the party to enter into necessary for any further
3
<PAGE>
derivatives transactions documentation.
of the type contemplated
by the parties or (2) a
secretary's certificate,
authorizing resolutions
and incumbency
certificate for such
party and any Credit
Support Provider of such
party reasonably
satisfactory in form and
substance to the other
party.
Party B Certified copies As soon as practicable Yes
of documents evidencing after the execution of
Party B's capacity to this Agreement.
execute this Agreement,
each Confirmation and any
Credit Support Document
(if applicable) and to
perform its obligations
hereunder and thereunder.
Party B A written opinion of Upon execution of this No
legal counsel to Party B, Agreement and as deemed
reasonably satisfactory necessary for any further
in form and substance to documentation.
Party A.
Party A and Party B Such other documents as Upon request. No
the other party may
reasonably request
</TABLE>
Part 4. Miscellaneous.
(a) Addresses for Notices. For the purpose of Section 12(a):-
(i) Address for notice or communications to Party A:-
[Morgan Stanley Capital Services Inc.
1585 Broadway
New York, New York 10036
Attention: Derivative Products Group - 3rd floor - Swaps
Facsimile No.: 212-761-0580 Telephone No.: 212-761-2566]
(ii) Address for notice or communications to Party B:-
SATURNS Trust No. ______
c/o Chase Bank of Texas, National Association, as Trustee
55 Water Street, North Building Room 234, Windows 20 and 21
4
<PAGE>
New York, New York 10041
Attn: Global Trust Services -- SATURNS Trust No. ______
Facsimile No.: (713) 216-2101 Telephone No.: (713) 216-4181
(b) Notices. Section 12(a) is amended by adding in the third
line thereof after the phrase "messaging system" and before
the ")" the words, "; provided, however, any such notice or
other communication may be given by facsimile transmission
if telex is unavailable, no telex number is supplied to the
party providing notice, or if answer back confirmation is
not received from the party to whom the telex is sent."
(c) Process Agent. For the purpose of Section 13(c) of this
Agreement, Party B irrevocably appoints as its Process
Agent:
Same as above address for notices
(d) Offices. The provisions of Section 10(a) will apply to
Party A and to Party B.
(e) Multibranch Party. For the purpose of Section 10(c):- Party
A is not a Multibranch Party.
Party B is not a Multibranch Party.
(f) "Calculation Agent" means Party A.
(g) "Credit Support Document" means any credit support annex,
any Confirmation and any other document any of which by its
terms secures, guarantees or otherwise supports either or
both parties' obligations under this Agreement[, including,
but not limited to, the guarantee of Morgan Stanley Dean
Witter & Co. set forth in a letter to the Trust.]
(h) Credit Support Provider means in relation to Party A:
[Morgan Stanley Dean Witter & Co.]
(i) Governing Law; Jurisdiction. This Agreement, any Credit
Support Document and each Confirmation will be governed by
and constructed in accordance with the laws of the State of
New York, without reference to its choice of law doctrine.
Section 13(b) is amended by: (1) deleting "non-" from the
second line of clause (i); and (2) deleting the final
paragraph.
(j) Waiver of Jury Trial. Each party waives, to the fullest
extent permitted by applicable law, any right it may have
to a trial by jury in respect of any Proceedings relating
to this Agreement or any Credit Support Document.
(k) Netting of Payment. Clause (ii) of Section 2(c) will not
apply to any amounts payable with respect to Transactions
from the date of this Agreement.
(l) "Affiliate" has the meaning specified in Section 14, but
excludes Morgan Stanley Derivative Products Inc.
5
<PAGE>
Part 5. Other Provisions.
(a) Trustee Capacity. It is expressly understood and agreed by
the parties hereto that insofar as this Agreement is
executed on behalf of the Trust (i) this Agreement is
executed and delivered by Chase Bank of Texas, National
Association, not in its individual capacity but solely as
Trustee under the Trust Agreement in the exercise of the
powers and authority conferred and vested in it, (ii) each
of the representations, undertakings and agreements herein
made on the part of the Trust is made and intended not as
representations, warranties, covenants, undertakings and
agreements by Chase Bank of Texas, National Association in
its individual capacity but is made and intended for the
purpose of binding only the Trust and (iii) under no
circumstances shall Chase Bank of Texas, National
Association in its individual capacity be personally liable
for the payment of any indebtedness or expenses of the
Trust or be liable for the breach or failure of any
obligation, representation, warranty or covenant made or
undertaken by the Trust under this Agreement.
(b) Additional Representations. Section 3 is hereby amended by
adding at the end thereof the following Subparagraphs:
"(g) It is an "eligible swap participant" under, and as
defined in, 17 C.F.R. ss.35.1 and was not formed solely for
the purposes of constituting an "eligible swap
participant."
(h) It has entered into this Agreement (including each
Transaction evidenced hereby) in conjunction with its line
of business (including financial intermediation services)
or the financing of its business.
(i) Non-Reliance. It is acting for its own account, and it
has made its own independent decisions to enter into that
Transaction and as to whether that Transaction is
appropriate or proper for it based upon its own judgment
and upon advice from such advisers as it has deemed
necessary. It is not relying on any communication (written
or oral) of the other party as investment advice or as a
recommendation to enter into that Transaction; it being
understood that information and explanations related to the
terms and conditions of a Transaction shall not be
considered investment advice or a recommendation to enter
into that Transaction. No communication (written or oral)
received from the other party shall be deemed to be an
assurance or guarantee as to the expected results of that
Transaction.
(j) Assessment and Understanding. It is capable of
assessing the merits of and understanding (on its own
behalf or through independent professional advice), and
understands and accepts, the terms, conditions and risks of
that Transaction. It is also capable of assuming, and
assumes, the risks of that Transaction.
(k) Status of Parties. The other party is not acting as a
fiduciary for or adviser to it in respect of that
Transaction. It is entering into this Agreement, any Credit
Support
6
<PAGE>
Document to which it is a party, each Transaction and any
other documentation relating to this Agreement or any
Transaction as principal (and not as agent or in any other
capacity, fiduciary or otherwise)."
(c) Setoff and Related Matters.
(i) The occurrence or designation of an Early Termination
Date on account of an Event of Default with respect to a
party hereto ("Y") shall constitute a material breach and
event of default (howsoever described) under all Specified
Transactions to which Y is a party, whereupon the
Nondefaulting Party ("X") or any Affiliate X shall have the
right to terminate, liquidate and otherwise close out any
such Specified Transactions
(and Y shall be liable for any damages suffered by X and
any Affiliate of X as a result thereof). For purposes of
Section 6(a) of this Agreement, each Transaction will be
deemed to be outstanding until all obligations (including
payment, delivery and exchange obligations) in respect of
such Transaction have been fully discharged and satisfied.
(ii) Upon such occurrence, or designation of any Early
Termination Date on account on an Event of Default, any
amount payable by X or any Affiliate of X under this
Agreement, any Specified Transaction with Y, or in respect
of any other matured, liquidated or terminated obligation
to Y will, at the option of X or any Affiliate of X (and
without prior notice to Y), be reduced by its setoff and
recoupment against any amount(s) payable by Y to X or any
Affiliate of X under this Agreement, any Specified
Transaction with Y or in respect of any other matured,
liquidated or terminated obligation of Y (and any such
amount(s) payable by Y will be discharged promptly and in
all respects to the extent it is so setoff). X or an
Affiliate of X, as appropriate, will give notice to Y after
any setoff and recoupment is effected under this paragraph.
For purposes of the foregoing, X and any Affiliate of X
shall be entitled to convert any obligations denominated in
one currency into another at such rates of exchange as it
deems appropriate in good faith and in a commercially
reasonable manner, and amounts may be set off and recouped
irrespective of the currency, place of payment or booking
office of any obligation to or from Y. If an obligation is
unascertained, X or any Affiliate of X, as appropriate, may
in good faith estimate that obligation and setoff and
recoup in respect of that estimate, subject to the relevant
party's accounting to the other(s) when the obligation is
ascertained. All obligations of X and any Affiliate of X
under this Agreement, any Specified Transaction with Y or
in respect of any other matured, liquidated or terminated
obligation to Y are subject to the condition precedent that
Y shall have performed all of its obligations to X and any
Affiliate of X under this Agreement, any Specified
Transaction with X and in respect of any other matured,
liquidated or terminated obligation of Y. Party A and Party
B and their Affiliates intend that all Transactions and
Specified Transactions be treated as mutual and part of a
single, indivisible contractual and business relationship.
(iii) If either party ("C"), its Credit Support Provider or
any Affiliate of C has reasonable grounds for insecurity
regarding a potential default under this Agreement or any
Specified Transaction by the other party ("D"), any Credit
Support Provider or
7
<PAGE>
any Affiliate of D, then C or any Affiliate of C may
transfer its rights and obligations under this Agreement or
any agreement for a Specified Transaction to any Affiliate
of C or to C, and each of the parties hereto agrees to such
transfer and to use its best efforts to obtain any required
consents from its relevant Affiliate to any such transfer.
(iv) Nothing in this Part 5(c) shall be effective to create
a charge or other security interest. This Part 5(c) shall
be without prejudice and in addition to any right of
setoff, recoupment, combination of accounts, lien or other
right to which any party or any of its Affiliates is at any
time otherwise entitled (whether by operation of law,
contract or otherwise).
(d) Confirmations. Party A will deliver to Party B a
Confirmation relating to each Transaction.
(e) Security. As collateral security for the prompt and
complete payment and performance when due of the
obligations of Party B hereunder, Party B hereby grants to
Party A a continuing security interest in all of Party B's
right, title and interest in the Trust Property as such
term is defined in the Trust Agreement pursuant to which
Party B was formed. Such security interest shall remain in
full force and effect until Party A has received amounts
due to it hereunder.
(f) Further Acknowledgments. Each party agrees and
acknowledges that:
(i) Each transfer of funds, securities or other property
under this Agreement or any Transaction hereunder
constitutes a transfer that may not be avoided under
Sections 544, 545, 547, 548(a)(2) or 548(b) of Title
11 of the United States Code (the "Bankruptcy Code").
(ii) The rights given to each party hereunder upon an
Event of Default by the other to cause the
liquidation and termination of this Agreement and
each Transaction hereunder, and to set off mutual
debts and claims in connection therewith, may not be
stayed, limited or avoided under the Bankruptcy Code,
including, without limitation, Section 362, 365(c) or
105(a) thereof.
(g) Non-Petition. Prior to the date that is one year and one
day after all distributions in respect of the Units issued
by the Trust have been made, Party A shall not take any
action or institute any proceeding against the Trust under
the United States Bankruptcy Code or any other liquidation,
insolvency, bankruptcy, moratorium, reorganization or
similar law ("Insolvency Law") applicable to the Trust, now
or hereafter in effect, or which would be reasonably likely
to cause the Trust to be subject to, or seek the protection
of, any such Insolvency Law.
(h) Rating Agency Confirmation. No amendment to this Agreement
shall take effect unless and until the Rating Agencies
Condition specified in the Trust Agreement shall be
satisfied with respect to such amendment.
8
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Schedule
by their duly authorized officers as of the date hereof.
[MORGAN STANLEY CAPITAL SERVICES INC.]
By: ______________________________
Name:
Title:
Date:
SATURNS TRUST NO. ______
By: Chase Bank of Texas, National
Association, as Trustee
By: ____________________________
Name:
Title:
Date:
9
=================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)______
--------------
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
74-0800980
(I.R.S. Employer
Identification No.)
712 Main Street
Houston, Texas 77002
(Address of principal (Zip Code)
executive offices)
--------------
MSDW STRUCTURED ASSET CORP.
(Exact name of obligor as specified in its charter)
Delaware Applied For
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1585 Broadway
New York, New York 10036
(Address of principal (Zip Code)
executive offices)
Structured Asset Trust Units Repackagings
(Title of the indenture securities)
=================================================================
<PAGE>
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising
authority to which it is subject.
Comptroller of the Currency, Washington, D.C.
Federal Deposit Insurance Corporation,
Washington, D.C.
Board of Governors of The Federal Reserve System,
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust
powers.
Yes.
Item 2. Affiliations with the obligor.
If the obligor is an affiliate of the trustee, describe
each such affiliation.
The obligor is not an affiliate of the trustee.
(See Note on Page 5.)
Item 3. Voting securities of the trustee.
Furnish the following information as to each class of
voting securities of the trustee:
Col. A Col. B
Title of Class Amount outstanding
-------------- ------------------
Not applicable by virtue of Form T-1 General Instruction
B and response to Item 13.
Item 4. Trusteeships under other indentures.
If the trustee is a trustee under another indenture
under which any other securities, or certificates of interest or
participation in any other securities, of the obligor are
outstanding, furnish the following information:
(a) Title of the securities outstanding under each such
other indenture.
Not applicable by virtue of Form T-1 General Instruction
B and response to Item 13.
(b) A brief statement of the facts relied upon as a
basis for the claim that no conflicting interest within the
meaning of Section 310(b)(1) of the Act arises as a result of the
trusteeship under any such other indenture, including a statement
as to how the indenture securities will rank as compared with the
securities issued under such other indenture.
Not applicable by virtue of Form T-1 General Instruction
B and response to Item 13.
<PAGE>
Item 5. Interlocking directorates and similar relationships with
the obligor or underwriters.
If the trustee or any of the directors or executive
officers of the trustee is a director, officer, partner,
employee, appointee or representative of the obligor or of any
underwriter for the obligor, identify each such person having any
such connection and state the nature of each such connection.
Not applicable by virtue of Form T-1 General Instruction
B and response to Item 13.
Item 6. Voting securities of the trustee owned by the obligor or
its officials.
Furnish the following information as to the voting
securities of the trustee owned beneficially by the obligor and
each director, partner and executive officer of the obligor.
Col. A Col. B Col. C Col. D
Percentage of
voting securities
represented by
Amount owned amount given
Name of owner Title of class beneficially in Col. C
------------- -------------- ------------ -----------------
Not applicable by virtue of Form T-1 General Instruction
B and response to Item 13.
Item 7. Voting securities of the trustee owned by underwriters
or their officials.
Furnish the following information as to the voting
securities of the trustee owned beneficially by each underwriter
for the obligor and each director, partner and executive officer
of each such underwriter.
Col. A Col. B Col. C Col. D
Percentage of
voting securities
represented by
Amount owned amount given
Name of owner Title of class beneficially in Col. C
------------- -------------- ------------ -----------------
Not applicable by virtue of Form T-1 General Instruction
B and response to Item 13.
Item 8. Securities of the obligor owned or held by the trustee.
Furnish the following information as to securities of
the obligor owned beneficially or held as collateral security for
obligations in default by the trustee.
Col. A Col. B Col. C Col. D
Amount owned
beneficially
or held Percent of
Whether the as collateral class
are voting security represented by
or nonvoting for obligations amount given
Title of class securities in default in Col. C
-------------- ------------ --------------- --------------
Not applicable by virtue of Form T-1 General Instruction
B and response to Item 13.
<PAGE>
Item 9. Securities of underwriters owned or held by the trustee.
If the trustee owns beneficially or holds as collateral
security for obligations in default any securities of an
underwriter for the obligor, furnish the following information as
to each class of securities of such underwriter any of which are
so owned or held by the trustee.
Col. A Col. B Col. C Col. D
Amount owned
beneficially
or held Percent of
as collateral class repre-
Name of security for sented by
issuer and Amount obligations in amount given
title of class outstanding default by trustee in Col. C
-------------- ----------- ------------------ ------------
Not applicable by virtue of Form T-1 General Instruction
B and response to Item 13.
Item 10. Ownership or holdings by the trustee of voting
securities of certain affiliates or security holders of
the obligor.
If the trustee owns beneficially or holds as collateral
security for obligations in default voting securities of a person
who, to the knowledge of the trustee (1) owns 10 percent or more
of the voting securities of the obligor or (2) is an affiliate,
other than a subsidiary, of the obligor, furnish the following
information as to the voting securities of such person:
Col. A Col. B Col. C Col. D
Amount owned
beneficially
or held Percent of
as collateral class repre-
Name of security for sented by
issuer and Amount obligations in amount given
title of class outstanding default by trustee in Col. C
-------------- ----------- ------------------ ------------
Not applicable by virtue of Form T-1 General Instruction
B and response to Item 13.
Item 11. Ownership or holdings by the trustee of any
securities of a person owning 50 percent or more of the
voting securities of the obligor.
If the trustee owns beneficially or holds as collateral
security for obligations in default any securities of a person
who, to the knowledge of the trustee, owns 50 percent or more of
the voting securities of the obligor, furnish the following
information as to each class of securities of such person any of
which are so owned or held by the trustee.
Col. A Col. B Col. C Col. D
Amount owned
beneficially
or held Percent of
as collateral class repre-
Name of security for sented by
issuer and Amount obligations in amount given
title of class outstanding default by trustee in Col. C
-------------- ----------- ------------------ ------------
Not applicable by virtue of Form T-1 General Instruction
B and response to Item 13.
<PAGE>
Item 12. Indebtedness of the obligor to the trustee.
Except as noted in the instructions, if the obligor is
indebted to the trustee, furnish the following information:
Col. A Col. B Col. C
Nature of Amount
Indebtedness Outstanding Date Due
------------ ----------- --------
Not applicable by virtue of Form T-1 General Instruction
B and response to Item 13.
Item 13. Defaults by the obligor.
(a) State whether there is or has been a default with
respect to the securities under this indenture. Explain the
nature of any such default.
There is not, nor has there been, a default with respect
to the securities under this indenture. (See Note on Page
5.)
(b) If the trustee is a trustee under another indenture
under which any other securities, or certificates of interest or
participation in any other securities, of the obligor are
outstanding, or is trustee for more than one outstanding series
of securities under the indenture, state whether there has been a
default under any such indenture or series, identify the
indenture or series affected, and explain the nature of any such
default.
There has not been a default under any such indenture or
series. (See Note on Page 5.)
Item 14. Affiliations with the underwriters.
If any underwriter is an affiliate of the trustee,
describe each such affiliation.
Not applicable by virtue of Form T-1 General Instruction
B and response to Item 13.
Item 15. Foreign trustee.
Identify the order or rule pursuant to which the foreign
trustee is authorized to act as sole trustee under indentures
qualified or to be qualified under the Act.
Not applicable.
<PAGE>
Item 16. List of exhibits.
List below all exhibits filed as a part of this
statement of eligibility.
M1 -- A copy of the articles of association of the trustee
as now in effect.
#2 -- A copy of the certificate of authority of the
trustee to commence business.
*3 -- A copy of the certificate of authorization of the
trustee to exercise corporate trust powers issued by
the Board of Governors of the Federal Reserve System
under date of January 21, 1948.
R4 -- A copy of the existing by-laws of the trustee.
5 -- Not applicable.
*6 -- The consent of the United States institutional
trustees required by Section 321(b) of the Act.
E7 -- A copy of the latest report of condition of the
trustee published pursuant to law or the
requirements of its supervising or examining
authority.
8 -- Not applicable.
9 -- Not applicable.
- -------------
M Incorporated by reference to exhibit bearing the
same designation and previously filed with the
Securities and Exchange Commission as an exhibit to
the Form S-3 File No. 33-56195.
# Incorporated by reference to exhibit bearing the
same designation and previously filed with the
Securities and Exchange Commission as an exhibit to
the Form S-3 File No. 33-42814.
* Incorporated by reference to exhibit bearing the
same designation and previously filed with the
Securities and Exchange Commission as exhibits to
the Form S-11 File No. 33-25132.
R Incorporated by reference to exhibit bearing the
same designation and previously filed with the
Securities and Exchange Commission as an exhibit to
the Form S-3 File No. 33-65055.
E Incorporated by reference to exhibit bearing the
same designation and previously filed with the
Securities and Exchange Commission as an exhibit to
the Form S-4 File No. 333-6374.
-------------------------------
NOTE
Inasmuch as this Form T-1 is filed prior to the
ascertainment by the trustee of all facts on which to base
responsive answers to Items 2 and 13, the answers to said Items
are based on incomplete information. Such Items may, however, be
considered as correct unless amended by an amendment to this Form
T-1.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture
Act of 1939 the trustee, Chase Bank of Texas, National
Association, a national banking association organized and
existing under the laws of the United States of America, has duly
caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in the City of
Houston and State of Texas, on the ___ day of September, 1998.
CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION
By:
---------------------
Bruce C. Boyd
Vice President
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture
Act of 1939 the trustee, Texas Commerce Bank National
Association, a national banking association organized and
existing under the laws of the United States of America, has duly
caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in the City of
Houston and State of Texas, on the 1st day of August, 1997.
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
By: /s/ Bruce C. Boyd
---------------------
Bruce C. Boyd
Vice President
