AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 25, 1999
REGISTRATION NO. 333-74097
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------
Amendment No. 1
to
FORM S-6
For Registration Under the Securities Act
of 1933 of Securities of Unit Investment
Trusts Registered on Form N-8B-2
---------------------
A. EXACT NAME OF TRUST:
Empire State Municipal Exempt Trust, Guaranteed Series 145
B. NAME OF DEPOSITORS:
Glickenhaus & Co.
Lebenthal & Co., Inc.
C. COMPLETE ADDRESS OF DEPOSITORS' PRINCIPAL EXECUTIVE OFFICES:
Glickenhaus & Co. Lebenthal & Co., Inc.
6 East 43rd Street 120 Broadway
New York, New York 10017 New York, New York 10281
<TABLE>
<CAPTION>
D. NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE:
<S> <C> <C> <C>
COPY OF COMMENTS TO:
SETH M. GLICKENHAUS JAMES A. LEBENTHAL MICHAEL R. ROSELLA, Esq.
Glickenhaus & Co. Lebenthal & Co., Inc. Battle Fowler LLP
6 East 43rd Street 120 Broadway 75 East 55th Street
New York, New York 10017 New York, New York 10281 New York, New York 10022
(212) 856-6858
</TABLE>
E. TITLE AND AMOUNT OF SECURITIES BEING REGISTERED:
An indefinite number of Units of Empire State Municipal Exempt
Trust, Guaranteed Series 145 is being registered under the
Securities Act of 1933 pursuant to Section 24(f) of the Investment
Company Act of 1940, as amended and Rule 24f-2 thereunder.
F. PROPOSED MAXIMUM AGGREGATE OFFERING PRICE TO THE PUBLIC OF THE SECURITIES
BEING REGISTERED:
Indefinite
G. AMOUNT OF FILING FEE (computed at one-thirty-third of 1 percent of the
proposed maximum aggregate offering price to the public):
Not required
H. APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after the effective date of the Registration
Statement.
/X/Check if it is proposed that this filing will become effective
immediately upon filing pursuant to Rule 487.
396037.1
<PAGE>
5,000 UNITS
DATED: MAY 25, 1999
EMPIRE STATE MUNICIPAL EXEMPT TRUST, GUARANTEED SERIES 145
The Empire State Municipal Exempt Trust, Guaranteed Series 145, is one of a
series of similar but separate unit investment trusts the objective of which is
to seek to obtain tax-exempt interest income through an investment in a fixed
insured portfolio. The portfolio consists primarily of long-term municipal bonds
with average maturities of over 10 years. The Sponsors are Glickenhaus & Co. and
Lebenthal & Co., Inc. As of the date of deposit, all of the units and the bonds,
while in the Trust, will be rated AAA by Standard & Poor's and Moody's will
assign a rating of Aaa to all bonds in the Trust, as insured.
The minimum purchase is 1 Unit.
This Prospectus contains three parts. Part A contains the Summary of Essential
Information including summary material relating to the trusts, the Portfolios
and the Statements of Financial Condition. Part B contains more detailed
information about the Empire State Municipal Exempt Trust. Part A may not be
distributed unless accompanied by Part B.
Read and retain this Prospectus for future reference.
The Securities and Exchange Commission has not approved or disapproved these
Securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense.
840728.1
<PAGE>
EMPIRE STATE MUNICIPAL EXEMPT TRUST, GUARANTEED SERIES 145
INVESTMENT SUMMARY
- --------------------------------------------------------------------------------
Use this Investment Summary to help you decide whether an investment in this
Trust is right for you. More detailed information can be found later in this
Prospectus
Investment Objective. The Empire State Municipal Exempt Trust, Guaranteed Series
145, is a unit investment trust the objective of which is to seek to obtain
tax-exempt interest income through an investment in a fixed insured portfolio.
The portfolio consists primarily of long-term municipal bonds with average
maturities of over 10 years.
Investment Strategy. The following factors, among
others, were considered in selecting the bonds:
o whether the Bonds selected were issued by the State of New York (including
its political subdivisions or authorities) or Puerto Rico (or other United
States and their political subdivisions or authorities) so that the
interest on such Bonds would be exempt from Federal, New York State and
New York City income taxes imposed on the unit holders;
o whether the MBIA Insurance Corporation insurance for the payment of
principal and interest on the Bonds is available;
o the maturity dates of the Bonds (including whether such Bonds may be
called or redeemed prior to their stated maturity);
o the diversity of the purpose of issue of Bonds; and
o the cost of the Bonds relative to what the Sponsors believe is their
value.
Risk Factors. Investors can lose money by investing in the Trust. The value of
the units and the bonds held in the portfolio can each decline in value. An
investor should consider the following factors when deciding whether to purchase
units of the Trust:
o No assurance can be given that the Trust's objectives will be achieved.
These objectives are subject to the continuing ability of the respective
issuers of the bonds to meet their obligations or of the insurer to meet
its obligations under the insurance.
o Municipal bonds are long-term fixed rate debt obligations that decline in
value with increases in interest rates, an issuer's worsening financial
condition, a drop in bond ratings or when there is a decrease in the
federal or New York State income tax rate.
o Changes in the tax treatment of bonds may have an adverse impact on the
value of the units.
o Insurance does not protect against the risk of market fluctuations on the
underlying bonds in the Trust's portfolio and of the units of the Trust.
The ratings of the Bonds in the Trust may be adversely affected by changes
in economic, political or other conditions. However, due to the MBIA
insurance policy, all Bonds will be rated "Aaa" by Moody's and "AAA" by
Standard & Poor's so long as they remain in the Trust.
o If a decrease in net asset value occurs and units of the Trust are
tendered for redemption, the Trust may be forced to liquidate some of the
bonds at a loss. If such redemptions are substantial enough, this could
trigger a complete and unexpected liquidation of the Trust before
maturity, resulting in unanticipated losses for investors.
Taxes. Interest on all of the bonds in the Trust is generally exempt from
regular Federal income taxes and is generally exempt from certain New York state
and local personal income taxes. Each of the bonds in the Trust received an
opinion from bond counsel
A-2
840728.1
<PAGE>
EMPIRE STATE MUNICIPAL EXEMPT TRUST, GUARANTEED SERIES 145
INVESTMENT SUMMARY
- --------------------------------------------------------------------------------
rendered on the date of issuance confirming its tax- exempt status.
Distributions. The Trust will distribute interest received by the Trust
semi-annually unless the unit holder elects to receive them monthly. The Trust
pro-rates the interest distributed on an annual basis.
Each unit of the Trust at the Date of Deposit represents 1/5,000 fractional
undivided interest in the $5,000,000 face amount of underlying bonds and net
income of the Trust in the ratio of 1 unit for each $1,000 principal amount of
underlying bonds (including contracts and funds for the purchase thereof) in the
Trust.
Public Offering Price.
If the units of the Trust had been available for sale on May 24, 1999, the
Public Offering Price per unit would have been $993.39. The Public Offering
Price of the units during the initial offering period is equal
to:
o the aggregate offering price of the bonds in the Trust's portfolio divided
by the number of units outstanding, plus
o a sales charge equal to 4.9% of the aggregate offering price of Securities
per unit, and
o a pro rata portion of estimated organization costs.
During the initial offering period, sales of at least 250 units will be entitled
to a volume discount from the Public Offering Price. During the initial public
offering period of the Trust, if you are already an investor in any unit
investment trust with a fixed income portfolio and you sell units in such
portfolio, you may purchase an equal amount in value of units of the Trust at a
discount of $10.00 per unit. The amount of your purchase is limited to your
current investment.
The initial offering period lasts until all of the units have been sold, which
is usually between thirty and ninety days of the Date of Deposit.
After the initial offering period the Public Offering Price of the units is
equal to:
o the aggregate bid price of the bonds in the Trust's portfolio divided by
the units outstanding, plus
o a sales charge starting at 5.9%, which declines based upon the years to
maturity of the bonds.
The Insurer. The Insurer, MBIA Insurance Corporation, is the principal operating
subsidiary of MBIA Inc., a New York Stock Exchange listed company. MBIA Inc. is
not obligated to pay the debts of or claims against the Insurer.
Market for Units. The Sponsors currently intend to repurchase units from holders
at prices based upon the aggregate bid price of the underlying bonds. The
Sponsors are not obligated to maintain a market and may stop doing do without
prior notice for any business reason. If the Sponsors stop repurchasing units, a
unit holder may dispose of its units by redemption. The price received from the
Trustee by the unit holder for units being redeemed is also based upon the
aggregate bid price of the underlying bonds. Units can be sold at any time to
the Sponsors or the Trustee without fee or penalty.
A-3
840728.1
<PAGE>
EMPIRE STATE MUNICIPAL EXEMPT TRUST, GUARANTEED SERIES 145
FEE TABLE
- --------------------------------------------------------------------------------
This Fee Table is intended to help you to understand the costs and expenses that
you will bear directly or indirectly. See Public Offering and Expenses and
Charges. Although the Trust is a unit investment trust rather than a mutual
fund, this information is presented to permit a comparison of fees.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Unit Holder Transaction Expenses
As a % of Amounts per
Public Offering Price Unit
------------------------ --------------------
<S> <C> <C>
Maximum Sales Charge Imposed on Purchase during the Initial Offering Period (as
a percentage of offering price)................................................... 4.90% $ 48.45
========= =========
Reimbursement to Sponsors for Estimated Organization Costs........................ .452% $ 4.50
========= =========
Estimated Annual Trust Operating Expenses
(expenses deducted from Trust assets)
As a % of Amounts per
Net Assets Unit
------------------------ --------------------
Trustee's Fee...................................................................... .114% $ 1.07
Maximum Portfolio Supervision, Bookkeeping and Administrative Fees................. .027% $ 0.25
Other Operating Expenses........................................................... .107% $ 1.01
------- -------
.248% $ 2.33
======= =======
</TABLE>
<TABLE>
<CAPTION>
Example Cumulative Expenses and
Charges Paid for Period:
-------------------------------------------------
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
An investor would pay the following expenses and charges on a $10,000
investment, assuming the Trust's estimated annual operating expense ratio of
.248% and a 5% annual return on the investment throughout the periods.............. $ 553 $ 599 $ 646 $ 763
</TABLE>
The example also assumes and utilizes a 5% annual rate of return as mandated
by Securities and Exchange Commission regulations applicable to mutual funds.
The example should not be considered a representation of past or future expenses
or annual rate of return. The actual expenses and annual rate of return may be
higher or lower than those assumed for purposes of the example.
A-4
840728.1
<PAGE>
EMPIRE STATE MUNICIPAL EXEMPT TRUST, GUARANTEED SERIES 145
SUMMARY OF ESSENTIAL INFORMATION
AS OF MAY 24, 1999
<TABLE>
<CAPTION>
<S> <C>
Sponsors: Glickenhaus & Co. Annual Insurance
Lebenthal & Co., Inc. Premium: $1,500 based upon the aggregate principal
amount of the bonds in the Trust. If the
Agent for Sponsors: Glickenhaus & Co. Trustee had exercised its right to obtain
permanent insurance on all of the bonds in
Trustee and Distribution the Trust as of the Date of Deposit, the
Agent: The Bank of New York total cost of the permanent insurance
premiums would have been $17,765.
Evaluator: Muller Data Corporation Minimum Principal
Distributions: $1.00 per unit
Date of Deposit+: May 25, 1999 Minimum Value of the
Trust under which the
Trust Agreement May
Mandatory Termination Date: June 15, 2031 be Terminated: $1,000,000 or 20% of the principal
amount of the bonds deposited in Trust,
whichever is lower.
First Settlement Date: May 28, 1999 Monthly Record
Dates: 15th Day of Month.
Sales Charge and Organizational Costs:
During the initial offering period investors pay a sales charge Monthly Payment
of 4.9% of the Public Offering Price. Investors who purchase Dates: 1st Day of Month.
units during the initial offering period also pay a pro rata
share of the costs incurred in organizing the Trust. These Semi-Annual Record
organization costs include costs of preparing the registration Dates: 15th Day of November and May.
statement, the trust indenture and other closing documents,
registering units with the SEC and the states, and the initial
audit of the Trust's portfolios. The initial sales charge is paid Semi-Annual Payment
directly from the amount invested. Investors who purchase Dates: 1st Day of December and June.
shares after the initial offering period do not have to pay any
of the organization costs but will pay a variable sales charge
ranging from a maximum of 5.9% to a minimum of 1.0% Evaluator's Fee: $.55 per bond for each valuation.
based upon the maturity of each bond in the Trust.
Average Dollar Weighted Trustee's Annual
Maturity of Bonds Fee: For each $1,000 principal amount of bonds
in the Trust: 29.775 Years. in the Trust, $1.07 under the monthly and
$.67 under the semi-annual distribution
plan.
Evaluation Time: 12:00 p.m. New York Time on the Sponsors' Annual
initial Date of Deposit and 2:00 p.m. Fee: Maximum of $.25 per $1,000 principal
New York Time thereafter. amount of underlying Securities.
</TABLE>
- ----------
+ The Date of Deposit is the date on which the Trust Agreement between the
Sponsors and the Trustee was signed and the deposit with the Trustee was
made.
A-5
840728.1
<PAGE>
EMPIRE STATE MUNICIPAL EXEMPT TRUST, GUARANTEED SERIES 145
SUMMARY OF ESSENTIAL INFORMATION
AS OF MAY 24, 1999
<TABLE>
<CAPTION>
<S> <C>
Aggregate Principal Amount of Bonds in Trust: $ 5,000,000.00*
Number of Units: 5,000
Fractional Undivided Interest in Trust Per Unit: 1/5,000
Total Value of Securities in Portfolio (Based on Offering Side Valuations of Securities): $ 4,702,170.00
================
Sponsors' Initial Repurchase Price Per Unit (Total Value of Securities divided by 5,000 $ 940.44**
Units): $ 48.45
Plus Sales Charge of 4.9% (on sales of fewer than 250 Units): $ 4.50
----------------
Plus Organization Costs: $ 993.39***
----------------
Public Offering Price Per Unit: $ 932.18***
Redemption Price Per Unit: $ 61.21
Excess of Public Offering Price Over Redemption Price Per Unit: $ 52.95
Excess of Public Offering Price Over Sponsors' Initial Repurchase Price Per Unit:
$ 46,240.00
Sponsors' Profit (Loss) on Deposit:
</TABLE>
<TABLE>
<CAPTION>
Monthly Semi-Annual
------- -----------
<S> <C> <C>
Estimated Annual Interest Income Per Unit (includes cash income accrued only): $ 48.25 $ 48.25
Less Annual Premium on Portfolio Insurance: .30 .30
Less Estimated Annual Expenses (excluding insurance costs): 2.03 1.53
---------------- ----------------------
Estimated Net Annual Interest Income Per Unit: $ 45.92 $ 46.42
================ ======================
Estimated Interest Distribution Per Unit**: $ 3.82 $ 23.21
o Date of First Distribution: July 1, 1999 December 1, 1999
o Amount of First Distribution: $ 2.16 $ 21.53
o Record Date of First Distribution: November 15,
June 15, 1999 1999
o Date of Regular Distribution: August 1, 1999 June 1, 2000
and thereafter and thereafter
o Amount of Regular Distribution: $ 3.82 $ 23.21
Estimated Current Return Based on Public Offering Price (includes cash
income accrual only) (calculated after payment of insurance premiums): 4.62% 4.67%
Estimated Long-Term Return (calculated after payment of insurance premiums): 4.69% 4.75%
Estimated Daily Rate of Net Interest Accrual Per Unit: $ .127556 $ .128944
</TABLE>
- -----------------
* If a replacement bond is not acquired when a contract for the purchase of
bonds fails, the aggregate principal amount of the bonds may be reduced.
See "The Trust - General Considerations" in Part B.
** Based, during the initial offering period, solely upon the offering
prices of the Securities and thereafter on the bid prices of such
Securities.
*** No accrued interest will be added to the Public Offering Price in
connection with purchases of units contracted for on May 25, 1999. With
respect to purchases contracted for after such date, accrued interest
from May 28, 1999 to, but not including, the date of settlement (normally
three business days after order) will be added to the Public Offering
Price. In order to reduce the amount of accrued interest investors have
to pay in addition to the Public Offering Price, the Trustee has agreed
to advance to the Trust the amount of accrued interest due on Securities
through and including May 28, 1999.
**** Based solely upon the bid prices of the Securities. Upon tender for
redemption, the price to be paid will include accrued interest as
described in "Rights of Unit Holders--Redemption--Computation of
Redemption Price per Unit" in Part B.
A-6
840728.1
<PAGE>
EMPIRE STATE MUNICIPAL TRUST, GUARANTEED SERIES 145
PORTFOLIO SUMMARY AS OF MAY 25, 1999
<TABLE>
<CAPTION>
Number Percentages +
------------- ----------------
<S> <C> <C>
Number of municipal bonds...................................................................... 5 100.0%
General obligation bonds backed by the taxing power of that issuer............................. 1 20.0%
Bonds payable from the income of specific projects or authorities and not
supported by the issuer's power to levy tax.............................................. 4 80.0%
The bonds derived their income from the following primary source:
o Health Care................................................................ 2 40.0%*
o Higher Education........................................................... 1 20.0%
o Water and sewer facilities................................................. 1 20.0%
Prior to their deposit the bonds in the trust were rated as follows:...........................
o Standard & Poor's
AAA.............................................................. 5 100.0%
AA............................................................... 0 0.0%
A................................................................ 0 0.0%
--------------
Total................................................. 5 100.0%
==============
o Moody's
Aaa.............................................................. 0 0.0%
Aa............................................................... 0 0.0%
A................................................................ 0 0.0%
--------------
Total................................................. 0 0.0%
==============
Bonds initially deposited which were purchased on a "when issued" basis........................ 0 0.0%
Bonds initially deposited which were purchased on a delayed settlement basis................... 0 0.0%
Number of bonds issued with "original issue discount".......................................... 5 100.0%
Number of zero coupon bonds.................................................................... 0 0.0%
</TABLE>
- --------------------
+ Percentages based on the aggregate offering prince of the bonds in the
Trust.
* The Trust is considered to be "concentrated" in a particular category
when bonds of that type make up 25% or more of the portfolio.
A-7
840728.1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Sponsors, Trustee, and Unit Holders of Empire State Municipal Exempt Trust,
Guaranteed Series 145
We have audited the Statement of Condition of Empire State Municipal Exempt
Trust, Guaranteed Series 145, including the Portfolio as of the opening of
business on May 25, 1999. This financial statement is the responsibility of the
Sponsors. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by the
Sponsors, as well as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion. An
irrevocable letter of credit deposited on May 25, 1999 in the amount required to
purchase securities, as described in the Statement of Condition, was confirmed
to us by the Trustee.
In our opinion, the Statement of Condition referred to above presents fairly, in
all material respects, the financial position of Empire State Municipal Exempt
Trust, Guaranteed Series 145 at the opening of business on May 25, 1999 in
conformity with generally accepted accounting principles.
BDO SEIDMAN, LLP
New York, New York
May 25, 1999
A-8
840728.1
<PAGE>
EMPIRE STATE MUNICIPAL EXEMPT TRUST
GUARANTEED SERIES 145
Statement of Condition as of Date of Deposit
as of the Opening of Business, May 25, 1999
<TABLE>
<CAPTION>
TRUST PROPERTY
<S> <C>
Investment in Securities:
Contracts to purchase underlying Securities (1)(2)..................................................... $4,702,170.00
Accrued interest receivable (2).............................................................................. 85,750.00
-------------
Total.......................................................................................... $4,787,920.00
=============
LIABILITIES AND INTEREST OF UNIT HOLDERS
Liabilities:
Accrued interest receivable (2)........................................................................ $ 85,750.00
--------------
$ 85,750.00
Interest of Unit holders:
Units of fractional undivided interest outstanding (5,000):
Cost to investors (3).................................................................................. 4,966,935.00
Less-Organization Costs (4)............................................................................ 22,500.00
Less--gross underwriting commission (5)................................................................ 242,265.00
------------
Net interest of Unit holders................................................................................. 4,702,170.00
-------------
Total.......................................................................................... $4,787,920.00
=============
</TABLE>
- ----------------------
(1) Aggregate cost to the Trust of the Securities listed under
"Portfolio" is based on offering side valuation determined by the Evaluator on
the basis set forth under "Public Offering--Offering Price" in Part B. The
aggregate bid side evaluation of the Securities in the portfolio, as determined
by the Evaluator, as of the Date of Deposit was $4,660,920.00. An irrevocable
letter of credit issued by Bankers Trust, in an aggregate amount equal to or in
excess of $4,788,194.30 has been deposited with the Trustee. The amount of such
letter of credit includes: $4,702,170.00, the amount required to purchase the
tax-exempt securities listed in the related portfolio, plus $86,024.30 covering
accrued interest through expected dates of delivery.
(2) On the basis set forth under "Rights of Unit
Holders--Distribution of Interest and Principal" in Part B the Trustee will
advance an amount equal to the accrued interest on the Securities as of May 28,
1999 (the "First Settlement Date") plus any cash received by the Trustee with
respect to interest on the Securities prior to such date, and the same will be
distributed to the Sponsors on the First Settlement Date. Consequently, the
amount of interest accrued on a Unit to be added to the public offering price
thereof will include only such accrued interest from the First Settlement Date
to the date of settlement, less all withdrawals and deductions from the Interest
Account subsequent to the First Settlement Date made with respect to the Unit.
(3) Aggregate public offering price (exclusive of interest) is
computed on 5,000 Units on the basis set forth above under "Public Offering--
Offering Price" in Part B.
(4) A portion of the Public Offering Price consists of an amount
sufficient to pay for all or a portion of the costs of establishing a Trust.
These costs have been estimated at $4.50 per Unit for the Trust.
(5) A sales charge of 4.9% computed on 5,000 Units. See "Public
Offering--Offering Price" in Part B for volume discounts on sales of 250 Units
or more.
A-9
840728.1
<PAGE>
EMPIRE STATE MUNICIPAL EXEMPT TRUST
GUARANTEED SERIES 145
Portfolio as of the Opening of Business, May 25, 1999
<TABLE>
<CAPTION>
Redemption Features
Port- Coupon Ant.--Anticipated Yield Cost of
folio Rating Principal Represented by Contracts to Rate and S.F.--Sinking Fund to Securities
No. (1)(2) Amount (3) Purchase Securities (4) Maturity Opt.--Optional (5) Maturity to Trust(6)(7)
--- ------ ---------- --------------------------- -------- ----------------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
1 AAA/Aaa $1,000,000 Dormitory Authority of the State of 5.125% 07/01/25 @ 100 S.F. 5.21% $987,470
New York City University 07/01/27 01/01/08 @ 102 Opt.
Consolidated Third General
Resolution Revenue Bonds, 1997
Series 1 (MBIA Insured)
2 AAA/Aaa 1,000,000 The City of New York General 5.000 04/15/25 @ 100 S.F. 5.20 969,770
Obligation Bonds, Fiscal 1999 04/15/29 04/15/09 @ 101 Opt.
Series 1 (MBIA Insured)
3 AAA/Aaa 1,000,000 Dormitory Authority of the State of 4.750 01/15/24 @ 100 S.F. 5.24 926,610
New York Municipal Health 01/15/29 01/15/09 @ 101 Opt.
Facilities Improvement Program
Lease Revenue Bonds (New York
City Issue), 1998 Series 1 (FSA
Insured)
4 AAA/Aaa 1,000,000 New York City Municipal Water 4.750 06/15/30 @ 100 S.F. 5.23 925,730
Finance Authority Water and Sewer 06/15/31 06/15/08 @ 101 Opt.
System Revenue Bonds, Fiscal 1998
Series A (FGIC Insured)
5 AAA/Aaa 1,000,000 Dormitory Authority of the State of 4.500 02/15/19 @ 100 S.F. 5.22 892,590
New York Mental Health Service 08/15/28 08/15/08 @ 101 Opt.
Facilities Improvement Revenue
Bonds, Series 1998 F (AMBAC
Insured)
$ 5,000,000 $ 4,702,170
=========== ===========
</TABLE>
A-10
840728.1
<PAGE>
Notes to Portfolio
The symbol "NR" denotes a non-rated issue of bonds.
(1) All ratings except those identified by an asterisk (*) are by Standard
& Poor's. A Standard & Poor's corporate or municipal bond rating is a current
assessment of the creditworthiness of an obligor with respect to a specific
obligation. This assessment of creditworthiness may take into consideration
obligors such as guarantors, insurers or lessees. The bond rating is not a
recommendation to purchase, sell or hold a security, inasmuch as it does not
comment as to market price or suitability for a particular investor. A brief
description of the rating symbols and their meanings is set forth under
"Description of Bond Ratings" in Part B.
(2) Ratings in the right hand column are after deposit of these issues in
the Trust and their insurance by MBIA. Moody's has assigned its "Aaa" investment
rating to all of the bonds while in the Trust, as insured by MBIA Insurance
Corporation.
(3) All bonds are represented by contracts to purchase.
(4) All contracts to purchase the bonds were entered into from May 19, 1999
to May 21, 1999. All contracts are expected to be settled prior to or on the
First Settlement Date of the Trust which is expected to be May 28, 1999.
(5) This heading shows the year in which each issue of bonds is initially
redeemable and the redemption price for that year unless otherwise indicated.
Each such issue continues to be redeemable at declining prices thereafter, but
not below par.
"S.F." indicates a sinking fund has been or will be established with
respect to an issue of bonds. In addition, certain bonds in the Trust may
be redeemed in whole or in part other than by operation of the stated
optional call or sinking fund provisions under certain unusual or
extraordinary circumstances specified in the instruments setting forth the
terms and provisions of such bonds. A sinking fund is a reserve fund
accumulated over a period of time for retirement of debt. A sinking fund
may be estimated based upon various factors or may be mandatory.
"Ant." indicates the existence of anticipated redemptions at a price of
100%. Under certain circumstances, these anticipated redemptions can be
altered. A callable bond is one which is subject to redemption or refunding
prior to maturity at the option of the issuer. A refunding is a method by
which a bond issue is redeemed before maturity by the proceeds of a new
bond issue.
Redemption pursuant to call provisions generally will, and redemption
pursuant to sinking fund provisions may, occur at times when the redeemed bonds
have an offering side valuation which represents a premium over par. To the
extent that the bonds were deposited in the Trust at a price higher than the
price at which they are redeemed, this will represent a loss of capital when
compared with the original Public Offering Price of the Units. Conversely, to
the extent that the bonds were acquired at a price lower than the redemption
price, this will represent an increase in capital when compared with the
original Public Offering Price of the Units. Monthly and semi-annual
distributions generally will be reduced by the amount of the income which would
otherwise have been paid with respect to redeemed bonds and there will be
distributed to Unit holders the principal amount and any premium received on
such redemption. The estimated current return in this event may be affected by
such redemptions. The Federal tax effect on Unit holders of such redemptions and
resultant distributions is described in the section entitled "Tax Status" in
Part B.
(6) See Note (1) to "Statement of Condition as of Date of Deposit"
regarding cost of bonds. The offering prices are greater than the current bid
prices of the bonds which is the basis on which Redemption Price per Unit is
determined for purposes of redemption of Units (see the first paragraphs under
"Public Offering--Offering Price" and "Rights of Unit
Holders--Redemption--Computation of Redemption Price Per Unit" in Part B). On
the business day prior to the Date of Deposit the aggregate bid side valuation
of the Securities in the Trust was lower than the aggregate offering side
valuation by .877%. Yield of bonds was computed on the basis of offering prices
on the Date of Deposit.
Bonds identified as escrowed to maturity under "Portfolio" for the Trust in
this Part A are priced to the maturity date not the call date.
(7) Annual interest income to the Trust is $241,250.
(8) Yield calculated based on a call date prior to stated maturity.
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UNDERWRITING ACCOUNT
The names and addresses of the Underwriters and the number of units
of the Trust each has agreed to purchase from the Underwriting Account are:
<TABLE>
<CAPTION>
Units
Series
------
Name Address 145
---- -------
<S> <C> <C>
Glickenhaus & Co. ................... 6 East 43rd Street, New York, New York 10017 1,500
Lebenthal & Co., Inc. ............... 120 Broadway, New York, New York 10271 1,500
Gruntal & Co. LLC.................... 1 Liberty Plaza, New York, New York 10006 1,000
Cadaret, Grant & Co., Inc. ......... 108 W. Jefferson Street, Syracuse, New York 13203 100
CIBC Oppenheimer Corp................ World Financial Center, New York, New York 10281 100
David Lerner Associates, Inc. ....... 477 Jericho Turnpike, Syosset, New York 11791 100
Ernst & Company ..................... 1 Battery Park Plaza, New York, NY 10004 100
Everen Securities, Inc. ............. 77 West Wacker Drive, Chicago, Illinois 60606 100
Kirlin Securities, Inc. ............. 6901 Jericho Turnpike, Syosset, New York 11791 100
Nathan & Lewis Securities, Inc. ..... 1140 Avenue of the Americas, New York, New York 10036 100
Sage Rutty & Co., Inc. .............. 183 East Main St., Rochester, NY 14604 100
Salomon Smith Barney Inc. .......... 388 Greenwich Street, New York, New York 10013 100
Samuel A. Ramirez & Co., Inc. ....... 61 Broadway, New York, New York 10006 100
--------------
5,000
==============
</TABLE>
A-12
840728.1
<PAGE>
EMPIRE STATE MUNICIPAL EXEMPT TRUST Prospectus Part B
Part B of this Prospectus may not be distributed unless accompanied by Part A
THE TRUST
Organization. The Empire State Municipal Exempt Trust, Guaranteed Series as
designated in Part A (the "Trust"), is one of a series of similar but separate
unit investment trusts created under the laws of the State of New York by a
Trust Indenture and Agreement* (the "Trust Agreement"). The Trust Agreement is
dated the Date of Deposit and is among Glickenhaus & Co. and Lebenthal & Co.,
Inc. as sponsors (the "Sponsors"), The Bank of New York, as trustee (the
"Trustee") and Muller Data Corporation, as evaluator (the "Evaluator").
Objectives. The objective of the Trust is to seek to obtain tax-exempt interest
income through an investment in a fixed insured portfolio consisting primarily
of long-term municipal bonds with average maturities of over ten years. No
assurance can be given that the Trust's objectives will be achieved.
Portfolio. The portfolio of the Trust consists of the Bonds described in "The
Portfolio" in Part A. As a result of the MBIA Insurance Corporation ("MBIA" or
"Insurer") insurance, Moody's Investors Service ("Moody's") has assigned a
rating of "Aaa" to all of the Bonds in the Trust, as insured and Standard &
Poor's Corporation, a division of McGraw-Hill ("Standard & Poor's") has assigned
a rating of "AAA" to the Units and Bonds while in the Trust. (See "Insurance on
the Bonds" in this Part B).
The following factors, among others, were considered in selecting the
Bonds:
o whether the Bonds selected were issued by the State of New York
(including its political subdivisions or authorities) or Puerto Rico
(or other United States and their political subdivisions or
authorities) so that the interest on such Bonds would be exempt from
Federal, New York State and New York City income taxes imposed on the
unit holders;
o whether the MBIA insurance for the payment of principal and interest
on the Bonds is available;
o the maturity dates of the Bonds (including whether such Bonds may be
called or redeemed prior to their stated maturity);
o the diversity of the purpose of issue of Bonds; and
o the cost of the Bonds relative to what the Sponsors believe is their
value.
Units. Each Unit represents the fractional undivided interest in the principal
and net income of the Trust. If any Units of the Trust are redeemed after the
date of this prospectus, the fractional undivided interest in the Trust
represented by each unredeemed Unit will increase. Units will remain outstanding
until redeemed or until the termination of the Trust Agreement for the related
Trust.
- --------
* References in this Prospectus to the Trust Agreement are qualified in their
entirety by the Trust Agreement which is incorporated herein by reference.
840829.1
<PAGE>
RISK FACTORS
An investment in Units is subject to the following risks:
Failure of Issuers to Pay Interest and/or Principal. The primary risk associated
with an investment in Bonds is that the issuer of the Bond will default on
principal and/or interest payments when due on the Bond. However, because the
Sponsors have obtained an insurance policy issued by MBIA which covers the Bonds
owned by and held in the Trust and guarantees the timely payment of the interest
and principal due on such Bonds, the risk of loss due to a default is greatly
mitigated. Such a default would have the effect of lessening the income
generated by the Trust and/or the value of the Trust's Units only if the MBIA
insurance policy fails. The bond ratings assigned by major rating organizations
are an indication of the issuer's ability to make interest and principal
payments when due on its bonds. Subsequent to the date of deposit the rating
assigned to a bond may decline. However, due to the MBIA insurance policy, all
Bonds will be rated "Aaa" by Moody's and "AAA" by Standard & Poor's so long as
they remain in the Trust. Neither the Sponsors nor the Trustee shall be liable
in any way for any default, failure or defect in any bond.
Fixed-Rate Bonds. An investment in Units of the Trust should be made with an
understanding of the risks entailed in investments in fixed-rate bonds,
including the risk that the value of such bonds (and, therefore, of the Units)
will decline with increases in interest rates or a decrease in the federal or
New York State income tax rate. Inflation and recession are two of the major
factors which contribute to fluctuations in interest rates and the values of
fixed-rate bonds.
Original Issue Discount Bonds and Zero Coupon Bonds. Certain of the Bonds in the
Trust may be original issue discount bonds and/or zero coupon bonds. Original
issue discount bonds are bonds originally issued at less than the market
interest rate. Zero coupon bonds are original issue discount bonds that do not
provide for the payment of current interest. For Federal income tax purposes,
original issue discount on such bonds must be accrued over the term of such
bonds. On sale or redemption, the difference between the (i) the amount realized
(other than amounts treated as tax-exempt income as described below) and (ii)
the tax basis of such bonds (properly adjusted, in the circumstances described
below, for the accrual of original issue discount) will be treated as taxable
income gain or loss. The Code requires the Trust (and therefore the Unitholders)
to accrue tax-exempt original issue discount by using the constant interest
method provided for the holders of taxable obligations. In addition, the Code
provides that the basis of a tax-exempt obligation is increased by the amount of
accrued tax-exempt original issue discount. These provisions are applicable to
obligations issued after September 3, 1982 and acquired after March 1, 1984. The
Trust's tax basis in a Bond (and a Unitholder's tax basis in its Units) is
increased by any accrued original issue discount. For Bonds issued after June 9,
1980 that are redeemed prior to maturity, the difference between the Trust's
basis, as adjusted, and the amount received will be taxable gain or loss to the
Unit holders. All or a portion of any gain may be taxable as ordinary income.
"When Issued" and "Delayed Delivery" Bonds. Certain Bonds in the trust may have
been purchased by the Sponsors on a "when issued" basis. Bonds purchased on a
"when issued" basis have not yet been issued by their governmental entity on the
Date of Deposit (although such governmental entity had committed to issue such
Bonds). In the case of these and/or certain other Bonds, the delivery of the
Bonds may be delayed ("delayed delivery") or may not occur. The effect of the
Trust containing "delayed delivery" or "when issued" Bonds is that Unit holders
who purchased their Units prior to the date such Bonds are actually delivered to
the Trustee may have to make a downward adjustment in the tax basis of their
Units. Such downward adjustment may be necessary to account for interest
accruing on such "when issued" or "delayed delivery" Bonds during the time
between their purchase of Units and delivery of such Bonds. Moreover, the
insurance on the Bonds in the portfolio does not cover such Bonds until they are
delivered to the Trust.
Redemption or Sale Prior to Maturity. Most of the Bonds in the Portfolio of the
Trust are subject to redemption prior to their stated maturity date pursuant to
sinking fund or call provisions. A call or redemption
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<PAGE>
provision is more likely to be exercised when the offering price valuation of a
bond is higher than its call or redemption price. Such price valuation is likely
to be higher in periods of declining interest rates. Certain of the Bonds may be
sold or redeemed or otherwise mature. In such cases, the proceeds from such
events will be distributed to Unit holders and will not be reinvested. Thus, no
assurance can be given that the Trust will retain for any length of time its
present size and composition. To the extent that a Bond was deposited in the
Trust at a price higher than the price at which it is redeemable, or at a price
higher than the price at which it is sold, a sale or redemption will result in a
loss in the value of Units. Distributions will generally be reduced by the
amount of the income which would otherwise have been paid with respect to sold
or redeemed bonds. The Estimated Current Return and Estimated Long-Term Return
of the Units may be adversely affected by such sales or redemptions.
Market Discount. The Portfolio of the Trust may consist of some Bonds whose
current market values were below face value on the Date of Deposit. A primary
reason for the market value of such Bonds being less than face value at maturity
is that the interest rate of such Bonds is at lower rates than the current
market interest rate for comparably rated Bonds. Bonds selling at market
discounts tend to increase in market value as they approach maturity. A market
discount tax-exempt Bond held to maturity will have a larger portion of its
total return in the form of taxable ordinary income and less in the form of
tax-exempt income than a comparable Bond bearing interest at current market
rates. Under the provisions of the Internal Revenue Code in effect on the date
of this Prospectus, any income attributable to market discount will be taxable
but will not be realized until maturity, redemption or sale of the Bonds or
Units. However, the Administrations's 1999 Budget proposals would require
accrual basis taxpayers to accrue market discount income with respect to
obligations acquired after the date that the proposal is enacted.
Failure of a Contract to Purchase Bonds and Substitution of Bonds. In the event
of a failure to deliver any Bond that has been purchased for the Trust under a
contract ("Failed Bonds"), the Sponsors are authorized to purchase other bonds
("Replacement Bonds"). The Trustee shall pay for Replacement Bonds out of funds
held in connection with the Failed Bonds and will accept delivery of such Bonds
to make up the original corpus of the Trust. The Replacement Bonds must be
purchased within 20 days after delivery of the notice of the failed contract,
and the purchase price (exclusive of accrued interest) may not exceed the
principal attributable to the Failed Bonds. Whenever a Replacement Bond has been
acquired for the Trust, the Trustee shall, within five days thereafter, notify
all Unit holders of the Trust of the acquisition of the Replacement Bond and
shall, on the next monthly Payment Date which is more than 30 days thereafter,
make a pro rata distribution of the amount, if any, by which the cost to the
Trust of the Failed Bond exceeded the cost of the Replacement Bond. In addition,
a Replacement Bond must:
o be a tax-exempt bond which was issued by the State of New York
(including its political subdivisions or authorities) or Puerto Rico
(or other United States and their political subdivisions or
authorities);
o have a fixed maturity or disposition date not exceeding that of the
Failed Bond it replaces;
o be purchased at a price that results in a yield to maturity and in a
current return which approximately equivalent to the yield to maturity
and current return of the Failed Bond which it replaces;
o shall not be a "when issued" Bond; and
o be rated at least equal to the Failed Bond and eligible for coverage
by the insurance policy obtained by the Trust.
If the right of limited substitution described above shall not be used to
acquire Replacement Bonds in the event of a failed contract, the Sponsors will
refund the sales charge attributable to such Failed Bonds to all Unit holders of
the Trust, and distribute the principal and accrued interest (at the coupon rate
of such Failed Bond, or earned
B-3
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<PAGE>
original issue discount in the case of zero coupon bonds, from the Deposit Date
to the date the Sponsors notify the Trustee that they will not purchase
Replacement Bonds) attributable to such Failed Bonds on the next monthly Payment
Date which is more than 30 days thereafter. In the event a Replacement Bond is
not acquired by the Trust, the Estimated Net Annual Interest Income per Unit for
the Trust would be reduced and the Estimated Current Return thereon might be
lowered.
Risk Inherent in an Investment in Different Types of Bonds. The Trust may
contain or be concentrated in one or more of the classifications of Bonds
referred to below. A Trust is considered to be "concentrated" in a particular
category when the Bonds in that category constitute 25% or more of the aggregate
value of the Portfolio. An investment in Units of the Trust should be made with
an understanding of the risks that these investments may entail, certain of
which are described below.
General Obligation Bonds. Certain of the Bonds in the Portfolio may be
general obligations of a governmental entity that are secured by the taxing
power of the entity. General obligation bonds are backed by the issuer's pledge
of its full faith, credit and taxing power for the payment of principal and
interest. The taxing power of any governmental entity may be limited, however,
by provisions of state constitutions or laws. An entity's credit will depend on
many factors: tax base, reliance on Federal or state aid, and factors which are
beyond the entity's control.
Industrial Development Revenue Bonds ("IDRs"). IDRs including pollution
control revenue bonds, are tax-exempt securities issued by states,
municipalities, public authorities or similar entities to finance the cost of
acquiring, constructing or improving various projects. These projects are
usually operated by corporate entities. IDRs are not general obligations of
governmental entities backed by their taxing power. Issuers are only obligated
to pay amounts due on the IDRs to the extent that funds are available from the
unexpended proceeds of the IDRs or receipts or revenues of the issuer. Payment
of IDRs is solely dependent upon the creditworthiness of the corporate operator
of the project or corporate guarantor. Such corporate operators or guarantors
that are industrial companies may be affected by many factors which may have an
adverse impact on the credit quality of the particular company or industry.
Hospital and Health Care Facility Bonds. The ability of hospitals and other
health care facilities to meet their obligations with respect to revenue bonds
issued on their behalf is dependent on various factors. Some such factors are
the level of payments received from private third-party payors and government
programs and the cost of providing health care services. There can be no
assurance that payments under governmental programs will remain at levels
comparable to present levels or will be sufficient to cover the costs associated
with their bonds. It also may be necessary for a hospital or other health care
facility to incur substantial capital expenditures or increased operating
expenses to effect changes in its facilities, equipment, personnel and services.
Hospitals and other health care facilities are additionally subject to claims
and legal actions by patients and others in the ordinary course of business.
There can be no assurance that a claim will not exceed the insurance coverage of
a health care facility or that insurance coverage will be available to a
facility.
Housing Bonds. Multi-family housing revenue bonds and single family
mortgage revenue bonds are state and local housing issues that have been issued
to provide financing for various housing projects. Multi-family housing revenue
bonds are payable primarily from mortgage loans to housing projects for low to
moderate income families. Single-family mortgage revenue bonds are issued for
the purpose of acquiring notes secured by mortgages on residences. The ability
of housing issuers to make debt service payments on their obligations may be
affected by various economic and non-economic factors. Such factors include:
occupancy levels, adequate rental income in multi-family projects, the rate of
default on mortgage loans underlying single family issues and the ability of
mortgage insurers to pay claims. All single family mortgage revenue bonds and
certain multi-family housing revenue bonds are prepayable over the life of the
underlying mortgage or mortgage pool. Therefore, the average life of housing
obligations cannot be determined. However, the average life of these obligations
will ordinarily be less than their stated maturities. Mortgage loans are
frequently partially or completely prepaid prior
B-4
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<PAGE>
to their final stated maturities. To the extent that these obligations were
valued at a premium when a Unit holder purchased Units, any prepayment at par
would result in a loss of capital to the Unit holder and reduce the amount of
income that would otherwise have been paid to Unit holders.
Power Facility Bonds. The ability of utilities to meet their obligations
with respect to bonds they issue is dependent on various factors. These factors
include the rates they may charge their customers, the demand for a utility's
services and the cost of providing those services. Utilities are also subject to
extensive regulations relating to the rates which they may charge customers.
Utilities can experience regulatory, political and consumer resistance to rate
increases. Utilities engaged in long-term capital projects are especially
sensitive to regulatory lags in granting rate increases. Utilities are
additionally subject to increased costs due to governmental environmental
regulation and decreased profits due to increasing competition. Any difficulty
in obtaining timely and adequate rate increases could adversely affect a
utility's results of operations. The Sponsors cannot predict at this time the
ultimate effect of such factors on the ability of any issuers to meet their
obligations with respect to Bonds.
Water and Sewer Revenue Bonds. Water and sewer bonds are generally payable
from user fees. The ability of state and local water and sewer authorities to
meet their obligations may be affected by a number of factors. Some such factors
are the failure of municipalities to utilize fully the facilities constructed by
these authorities, declines in revenue from user charges, rising construction
and maintenance costs, impact of environmental requirements, the difficulty of
obtaining or discovering new supplies of fresh water, the effect of conservation
programs, the impact of "no growth" zoning ordinances and the continued
availability of Federal and state financial assistance and of municipal bond
insurance for future bond issues.
University and College Bonds. The ability of universities and colleges to
meet their obligations is dependent upon various factors. Some of these factors
are the size and diversity of their sources of revenues, enrollment, reputation,
management expertise, the availability and restrictions on the use of endowments
and other funds, the quality and maintenance costs of campus facilities. Also,
in the case of public institutions, the financial condition of the relevant
state or other governmental entity and its policies with respect to education
may affect an institution's ability to make payment on its own.
Lease Rental Bonds. Lease rental bonds are predominantly issued by
governmental authorities that have no taxing power or other means of directly
raising revenues. Rather, the authorities are financing vehicles created solely
for the construction of buildings or the purchase or equipment that will be used
by a state or local government. Thus, the bonds are subject to the ability and
willingness of the lessee government to meet its lease rental payments which
include debt service on the bonds. Lease rental bonds are subject to the risk
that the lessee government is not legally obligated to budget and appropriate
for the rental payments beyond the current fiscal year. These bonds are also
subject to the risk of abatement in many states as rental bonds cease in the
event that damage, destruction or condemnation of the project prevents its use
by the lessee. Also, in the event of default by the lessee government, there may
be significant legal and/or practical difficulties involved in the reletting or
sale of the project.
Capital Improvement Facility Bonds. The Portfolio of a Trust may contain
Bonds which are in the capital improvement facilities category. Capital
improvement bonds are bonds issued to provide funds to assist political
subdivisions or agencies of a state through acquisition of the underlying debt
of a state or local political subdivision or agency. The risks of an investment
in such bonds include the risk of possible prepayment or failure of payment of
proceeds on and default of the underlying debt.
Solid Waste Disposal Bonds. Bonds issued for solid waste disposal
facilities are generally payable from tipping fees and from revenues that may be
earned by the facility on the sale of electrical energy generated in the
combustion of waste products. The ability of solid waste disposal facilities to
meet their obligations depends upon the continued use of the facility, the
successful and efficient operation of the facility and, in the case of
waste-to-
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<PAGE>
energy facilities, the continued ability of the facility to generate electricity
on a commercial basis. Also, increasing environmental regulation of the federal,
state and local level has a significant impact on waste disposal facilities.
While regulation requires most waste producers to use waste disposal facilities,
it also imposes significant costs on the facilities.
Moral Obligation Bonds. The Trust may also include "moral obligation"
bonds. If an issuer of moral obligation bonds is unable to meet its obligations,
the repayment of the bonds becomes a moral commitment but not a legal obligation
of the state or municipality in question. Thus, such a commitment generally
requires appropriation by the state legislature and accordingly does not
constitute a legally enforceable obligation of debt of the state. The agencies
or authorities generally have no taxing power.
Refunded Bonds. Refunded bonds are typically secured by direct obligations
of the U.S. Government, or in some cases obligations guaranteed by the U.S.
Government, placed in an escrow account maintained by an independent trustee
until maturity or a predetermined redemption date. These obligations are
generally noncallable prior to maturity or the predetermined redemption date. In
a few isolated instances to date, however, bonds which were thought to be
escrowed to maturity have been called for redemption prior to maturity.
Airport, Port and Highway Revenue Bonds. Certain facility revenue bonds are
payable from and secured by the revenues from the ownership and operation of
particular facilities, such as airports, highways and port authorities. Airport
operating income may be affected by the ability of airlines to meet their
obligations under the agreements with airports. Similarly, payment on bonds
related to other facilities is dependent on revenues from the projects, such as
use fees from ports, tolls on turnpikes and bridges and rents from buildings.
Payment may be adversely affected by reduction in revenues due to such factors
and increased cost of maintenance or decreased use of a facility. The Sponsors
cannot predict what effect conditions may have on revenues which are dependent
for payment on these bonds.
Special Tax Bonds. Special tax bonds are payable for and secured by the
revenues derived by a municipality from a particular tax. Examples of special
taxes are a tax on the rental of a hotel room, on the purchase of food and
beverages, on the rental of automobiles or on the consumption of liquor. Special
tax bonds are not secured by the general tax revenues of the municipality, and
they do not represent general obligations of the municipality. Payment on
special tax bonds may be adversely affected by a reduction in revenues realized
from the underlying special tax. Also, should spending on the particular goods
or services that are subject to the special tax decline, the municipality may be
under no obligation to increase the rate of the special tax to ensure that
sufficient revenues are raised from the shrinking taxable base.
Tax Allocation Bonds. Tax allocation bonds are typically secured by
incremental tax revenues collected on property within the areas where
redevelopment projects, financed by bond proceeds are located. Bond payments are
expected to be made from projected increases in tax revenues derived from higher
assessed values of property resulting from development in the particular project
area and not from an increase in tax rates. Special risk considerations include:
variations in taxable values of property in the project area; successful appeals
by property owners of assessed valuations; substantial delinquencies in the
payment of property taxes; or imposition of any constitutional or legislative
property tax rate decrease.
Transit Authority Bonds. Mass transit is generally not self-supporting from
fare revenues. Additional financial resources must be made available to ensure
operation of mass transit systems as well as the timely payment of debt service.
Often such financial resources include Federal and state subsidies, lease
rentals paid by funds of the state or local government or a pledge of a special
tax. If fare revenues or the additional financial resources do not increase
appropriately to pay for rising operating expenses, the ability of the issuer to
adequately service the debt may be adversely affected.
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Convention Facility Bonds. The Portfolio of a Trust may contain Bonds of
issuers in the convention facilities category. Bonds in the convention
facilities category include special limited obligation securities issued to
finance convention and sports facilities payable from rental payments and annual
governmental appropriations. The governmental agency is not obligated to make
payments in any year in which the monies have not been appropriated to make such
payments. In addition, these facilities are limited use facilities that may not
be used for purposes other than as convention centers or sports facilities.
Correctional Facility Bonds. The Portfolio of a Trust may contain Bonds of
issuers in the correctional facilities category. Bonds in the correctional
facilities category include special limited obligation securities issued to
construct, rehabilitate and purchase correctional facilities payable from
governmental rental payments and/or appropriations.
Special Factors Affecting New York. The information set forth below is derived
from the official statements and/or preliminary drafts of official statements
prepared in connection with the issuance of New York State and New York City
municipal bonds. The Sponsors have not independently verified this information.
Economic Trends. Over the long term, the State of New York (the "State")
and the City of New York (the "City") face serious potential economic problems.
The City accounts for approximately 41% of the State's population and personal
income, and the City's financial health affects the State in numerous ways. The
State historically has been one of the wealthiest states in the nation. For
decades, however, the State has grown more slowly than the nation as a whole,
gradually eroding its relative economic affluence. Statewide, urban centers have
experienced significant changes involving migration of the more affluent to the
suburbs and an influx of generally less affluent residents. Regionally, the
older Northeast cities have suffered because of the relative success that the
South and the West have had in attracting people and business. The City has also
had to face greater competition as other major cities have developed financial
and business capabilities which make them less dependent on the specialized
services traditionally available almost exclusively in the City.
The State has for many years had a very high State and local tax burden
relative to other states. The State and its localities have used these taxes to
develop and maintain their transportation networks, public schools and colleges,
public health systems, other social services and recreational facilities.
Despite these benefits, the burden of State and local taxation, in combination
with the many other causes of regional economic dislocation, has contributed to
the decisions of some businesses and individuals to relocate outside, or not
locate within, the State.
Notwithstanding the numerous initiatives that the State and its localities
may take to encourage economic growth and achieve balanced budgets, reductions
in Federal spending could materially and adversely affect the financial
condition and budget projections of the State and its localities.
New York City. The City, with a population of approximately 7.4 million, is
an international center of business and culture. Its non-manufacturing economy
is broadly based, with the banking and securities, life insurance,
communications, publishing, fashion design, retailing and construction
industries accounting for a significant portion of the City's total employment
earnings. Additionally, the City is the nation's leading tourist destination.
Manufacturing activity in the City is conducted primarily in apparel and
printing.
For each of the 1981 through 1998 fiscal years, the City had an operating
surplus, before discretionary transfers, and achieved balanced operating results
as reported in accordance with then applicable generally accepted accounting
principles ("GAAP"), after discretionary transfers. The City has been required
to close substantial gaps between forecast revenues and forecast expenditures in
order to maintain balanced operating results. There can be no assurance that the
City will continue to maintain balanced operating results as required by State
law without tax or other revenue increases or reductions in City services or
entitlement programs, which could adversely affect the City's economic base.
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As required by law, the City prepares a four-year annual financial plan,
which is reviewed and revised on a quarterly basis and which includes the City's
capital, revenue and expense projections and outlines proposed gap-closing
programs for years with projected budget gaps. The City's current financial plan
projects a surplus in the 1999 fiscal year, before discretionary transfers, and
budget gaps for each of the 2000, 2001 and 2002 fiscal years. This pattern of
current year surplus operating results and projected subsequent year budget gaps
has been consistent through the entire period since 1982, during which the City
has achieved surplus operating results, before discretionary transfers, for each
fiscal year.
The City depends on aid from the State both to enable the City to balance
its budget and to meet its cash requirements. There can be no assurance that
there will not be reductions in State aid to the City from amounts currently
projected; that State budgets will be adopted by the April 1 statutory deadline,
or interim appropriations enacted; or that any such reductions or delays will
not have adverse effects on the City's cash flow or expenditures. In addition,
the Federal budget negotiation process could result in a reduction in or a delay
in the receipt of Federal grants which could have additional adverse effects on
the City's cash flow or revenues.
The Mayor is responsible for preparing the City's financial plan, including
the City's current financial plan for the 1999 through 2002 fiscal years (the
"1999-2002 Financial Plan" or "Financial Plan"). The City's projections set
forth in the Financial Plan are based on various assumptions and contingencies
which are uncertain and which may not materialize. Such assumptions and
contingencies include the condition of the regional and local economies, the
provision of State and Federal aid and the impact on City revenues and
expenditures of any future Federal or State policies affecting the City.
Implementation of the Financial Plan is dependent upon the City's ability
to market its securities successfully. The City's financing program for fiscal
years 1999 through 2002 contemplates the issuance of $5.2 billion of general
obligation bonds and $5.4 billion of bonds to be issued by the New York City
Transitional Finance Authority (the "Finance Authority") to finance City capital
projects. The Finance Authority was created as part of the City's effort to
assist in keeping the City's indebtedness within the forecast level of the
constitutional restrictions on the amount of debt the City is authorized to
incur. In addition, the City issues revenue and tax anticipation notes to
finance its seasonal working capital requirements. The success of projected
public sales of City bonds and notes, New York City Municipal Water Finance
Authority ("Water Authority") bonds and Finance Authority bonds will be subject
to prevailing market conditions. The City's planned capital and operating
expenditures are dependent upon the sale of its general obligation bonds and
notes, and the Water Authority and Finance Authority bonds. Future developments
concerning the City and public discussion of such developments, as well as
prevailing market conditions, may affect the market for outstanding City general
obligation bonds and notes.
For the 1998 fiscal year, the City had a operating surplus, before
discretionary and other transfers, and achieved balanced operating results,
after discretionary and other transfers, in accordance with GAAP. The 1998
fiscal year is the eighteenth year that the City has achieved an operating
surplus, before discretionary and other transfers, and balanced operating
results, after discretionary and other transfers.
On November 18, 1998, the City released the Financial Plan for the 1999
through 2002 fiscal years, which relates to the City and certain entities which
receive funds from the City. The Financial Plan is a modification to the
financial plan submitted to the Control Board on June 26, 1998 (the "June
Financial Plan"). The Financial Plan projects revenues and expenditures for the
1999 fiscal year balanced in accordance with GAAP, and projects gaps of $2.2
billion and $2.4 billion for the 2000 through 2002 fiscal years, respectively,
after implementation of a gap closing program to reduce agency expenditures by
$200 million in the 1999 fiscal year and approximately $80 million in each of
fiscal years 2000 through 2002.
Changes since the June Financial Plan include: (i) an increase in projected
tax revenues of $288 million and $8 million in fiscal years 1999 and 2000,
respectively, and a decrease in projected tax revenues of $23 million and $66
million in fiscal years 2001 and 2002, respectively; (ii) an increase in planned
expenditures for health insurance of
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approximately $60 million in each of fiscal years 1999 through 2002; (iii) a
decrease in projected pension expenditures due to higher than planned increases
in the value of the assets of the retirement systems of $67 million, $171
million, $264 million and $372 million in the fiscal years 1999 through 2002,
respectively; (iv) other agency spending increases of $76 million, $101 million,
$78 million, and $70 million in fiscal years 1999 through 2002, respectively;
and (v) an increase in agency expenditures of $227 million, $295 million, $295
million and $294 million in fiscal years 1999 through 2002, respectively, due to
a reduction in the agency gap closing program.
The 1999-2002 Financial Plan includes a proposed discretionary transfer in
the 1999 fiscal year of $465 million to pay debt service due in fiscal year
2000. In addition, the Financial Plan reflects enacted and proposed tax
reduction programs totaling $429 million, $604 million and $606 million in
fiscal years 2000 through 2002, respectively, including the elimination of the
city sales tax on all clothing as of December 1, 1999, the extension of current
tax reductions for owners of cooperative and condominium apartments starting in
fiscal year 2000 and a personal income tax credit for child care and for
resident holders of Subchapter S corporations starting in fiscal year 2000,
which are subject to State legislative approval, and reduction of the commercial
rent tax commencing in fiscal year 2000.
The Financial Plan assumes (i) approval by the Governor and the State
Legislature of the extension of the 14% personal income tax surcharge, which is
scheduled to expire on December 31, 1999, and which is projected to provide
revenue of $183 million, $524 million and $544 million in the 2000, 2001 and
2002 fiscal years, respectively; and (ii) collection of the projected rent
payments for the City's airports, totaling $6 million, $365 million, $155
million and $185 million in the 1999 through 2002 fiscal years, respectively, a
substantial portion of which may depend on the successful completion of
negotiations with The Port Authority of New York and New Jersey or the
enforcement of the city's rights under the existing leases through pending legal
actions. The Financial Plan provides no additional wage increases for City
employees after their contracts expire in fiscal years 2000 and 2001. In
addition, the economic and financial condition of the City may be affected by
various financial, social, economic and political factors which could have a
material effect on the City.
In January, the mayor is expected to publish a Modification (the "January
Modification") to the Financial Plan for the City's 1999 through 2003 fiscal
years and a preliminary budget for the City's fiscal year 2000. The January
Modification will include changes since the Financial Plan and the City's
program to address the currently forecast $2.2 billion gap in fiscal year 2000.
As in prior years, the City's gap-closing program could include a program to
substantially reduce projected agency spending and City proposals for increased
Federal and State aid and other non-tax revenues.
The 1998 modification of the City's financial plan and the 1999-2002
Financial Plan include a proposed discretionary transfer in the 1998 fiscal year
of approximately $2.0 billion to pay debt service due in the 1999 fiscal year,
and a proposed discretionary transfer in the 1999 fiscal year of $416 million to
pay debt service due in fiscal year 2000, included in the Budget Stabilization
Accounts for the 1998 and 1999 fiscal years, respectively. In addition, the
Financial Plan reflects proposed tax reduction programs totaling $237 million,
$537 million, $657 million and $666 million in fiscal years 1999 through 2002,
respectively, including the elimination of the City sales tax on all clothing as
of December 1, 1999, a City-funded acceleration of the State funded personal
income tax reduction for the 1999 through 2001 fiscal years, the extension of
current tax reductions for owners of cooperative and condominium apartments
starting in fiscal year 2000 and a personal income tax credit for child care and
for resident holders of Subchapter S corporations, which are subject to State
legislative approval, and reduction of the commercial rent tax commencing in
fiscal year 2000.
On June 5, 1998, the City Council adopted a budget which re-allocated
expenditures from those provided in the Executive Budget in the amount of $409
million. The re-allocated expenditures, which include $116 million from the
Budget Stabilization Account, $82 million from debt service, $45 million from
pension contributions, $54 million from social services spending and $112
million from other spending, were re-allocated to uses set forth in the City
Council's adopted budget. Such uses include a revised tax reduction program at a
revenue cost in the 1999
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fiscal year of $45 million, additional expenditures for various programs of $199
million and provision of $165 million to retire high interest debt. The revised
tax reduction program in the City Council's adopted budget assumes the
expiration of the 12.5% personal income tax surcharge, rather than the
implementation of the personal income tax reduction program proposed in the
Executive Budget. The changes reflected in the City Council's adopted budget
would increase the gaps forecast between revenues and expenditures in the future
years of the Financial Plan.
On June 5, 1998, in accordance with the City Charter, the Mayor certified
to the City Council revised estimates of the City's revenues (other than
property tax) for fiscal year 1999. Consistent with this certification, the
property tax levy was estimated by the Mayor to require an increase to realize
sufficient revenue from this source to produce a balanced budget within
generally accepted accounting principles. On June 8, 1998, the City Council
adopted a property tax levy that was $237.7 million lower than the levy
estimated to be required by the Mayor. The City Council, however, maintained
that the revenue to be derived from the levy it adopted would be sufficient to
achieve a balanced budget because the property tax reserve for uncollectibles
could be reduced. Property tax bills for fiscal year 1999 are expected to be
mailed in the near future by the City's Department of Finance at the rates
adopted by the City Council for fiscal year 1998, subject to later adjustment.
On July 10, 1995, Standard & Poor's revised its rating of City bonds
downward to BBB+. On February 3, 1998, Standard & Poor's placed its BBB+ rating
of City bonds on CreditWatch with positive implications. Moody's rating of City
bonds was revised in February 1998 to A3 from Baa1. Moody's, Standard & Poor's
and Fitch currently rate the City's outstanding general obligation bonds A3,
BBB+ and A-, respectively.
New York State and its Authorities. The State Financial Plan for the
1998-1999 fiscal year projects balance on a cash basis for the 1998-1999 fiscal
year, as modified on July 30, 1998, with a closing balance in the General Fund
of $1.67 billion. The State Financial Plan contains projections of a potential
imbalance in the 1999-2000 fiscal year of $1.3 billion, assuming implementation
of unspecified efficiency actions, the receipt of funds from the tobacco
settlement and the application of certain reserves established in the 1998-1999
State Financial Plan. the Executive Budget submitted in February 1998 contained
projections at that time of a potential imbalance in the 2000-2001 fiscal year
of $3.72 billion, assuming implementation of unspecified efficiency initiatives
and other actions in the 2000-2001 fiscal year.
The 1999-2002 Financial Plan is based on numerous assumptions, including
the condition of the City's and the region's economy and a modest employment
recovery and the concomitant receipt of economically sensitive tax revenues in
the amounts projected. The 1999-2002 Financial Plan is subject to various other
uncertainties and contingencies relating to, among other factors, the extent, if
any, to which wage increases for City employees exceed the annual wage costs
assumed for the 1999 through 2002 fiscal years; continuation of projected
interest earnings assumptions for pension fund assets and current assumptions
with respect to wages for City employees affecting the City's required pension
fund contributions; the willingness and ability of the State to provide the aid
contemplated by the Financial Plan and to take various other actions to assist
the City; the ability of State agencies to maintain balanced budgets; the
willingness of the Federal government to provide the amount of Federal aid
contemplated in the Financial Plan; the impact on City revenues and expenditures
of Federal and State welfare reform and any future legislation affecting
Medicare or other entitlement programs; adoption of the City's budgets by the
City Council in substantially the forms submitted by the Mayor; the ability of
the City to implement cost reduction initiatives, and the success with which the
City controls expenditures; the impact of conditions in the real estate market
on real estate tax revenues; the City's ability to market its securities
successfully in the public credit markets; and unanticipated expenditures that
may be incurred as a result of the need to maintain the City's infrastructure.
Certain of these assumptions have been questioned by the City Comptroller and
other public officials.
The Legislature passed a State budget for the 1998-1999 fiscal year on
April 18, 1998, and on April 26, 1998 the Governor vetoed certain of the
increased spending in the State budget passed by the Legislature. The
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Legislature did not override any of the Governor's vetoes. The State Financial
Plan for the 1998-1999 fiscal year, as modified on July 30, 1998, projects
balance on a cash basis for the 1998-1999 fiscal year, with a closing balance in
the General Fund of $1.67 billion. The State Financial Plan contains projections
of a potential imbalance in the 1999-2000 fiscal year of $1.3 billion, assuming
implementation of $600 million of unspecified efficiency actions, the receipt of
$250 million in funds from the tobacco settlement and the application of certain
reserves established in the 1998-1999 State Financial Plan. The Executive Budget
submitted in February 1998 contained projections at that time of a potential
imbalance in the 2000-2001 fiscal year of $3.72 billion, assuming implementation
of $800 million of unspecified efficiency initiatives in the 2000-2001 fiscal
year and $250 million in funds from the tobacco settlement. The State Financial
Plan for the 1998-1999 fiscal year includes multi-year tax reductions and
significant increases in spending which will affect the 2000-2001 fiscal year.
The various elements of the State and local tax and assessments reductions
enacted during the last several fiscal years will reduce projected revenues by
more than $4 billion in the 2002-2003 fiscal year as measured from the current
1998-1999 base.
On July 23, 1998, the New York State Comptroller issued a report which
noted that a significant cause for concern is the budget gaps in the 1999-2000
and 2000-2001 fiscal years, which the State Comptroller projected at $1.8
billion and $5.5 billion, respectively, after excluding the uncertain receipt by
State of $250 million of funds from the tobacco settlement assumed for each of
such fiscal years, as well as the unspecified actions assumed in the State's
projections. The State Comptroller also stated that if the securities industry
or economy slows, the size of the gaps would increase.
Standard & Poor's rates the State's general obligation bonds A, and Moody's
rates the State's general obligation bonds A2. On August 28, 1997, Standard &
Poor's revised its rating on the State's general obligation bonds from A- to A.
Litigation. The court actions in which the State is a defendant generally
involve State programs and miscellaneous tort, real property, and contract
claims. While the ultimate outcome and fiscal impact, if any, on the State of
those proceedings and claims are not currently predictable, adverse
determinations in certain of them might have a material adverse effect upon the
State's ability to carry out the 1999-2002 Financial Plan. The City has
estimated that its potential future liability on account of outstanding claims
against it as of June 30, 1998 amounted to approximately $3.5 billion.
Year 2000 Issue. The Trust, like other businesses and entities, could be
adversely affected if the computer systems used by the Sponsors and Trustee or
other service providers to the Trust do not properly process and calculate
date-related information and data from and after January 1, 2000. This is
commonly known as the "Year 2000 Problem." The Sponsors and Trustee are taking
steps that they believe are reasonably designed to address the Year 2000 Problem
with respect to their computer systems. The Sponsors and Trustee are also
seeking to obtain reasonable assurances that comparable steps are being taken by
the Trust's other service providers. The actions of the Trustee with respect to
the Year 2000 Problem are fully detailed in its corporate parent's SEC filings.
Such filings are available from the Trustee upon request. However, there can be
no assurance that the Year 2000 Problem will be properly or timely resolved so
to avoid any adverse impact to the Trust. The Year 2000 Problem may also
adversely affect the issuers of the Bonds contained in the Trust to varying
degrees based upon various factors. At this time, it is generally believed that
municipal issuers may be more vulnerable to Year 2000 issues or problems than
will other issuers. The Sponsors are unable to predict what affect, if any, the
Year 2000 Problem will have on such issuers.
Litigation and Legislation. To the best knowledge of the Sponsors, there is no
litigation pending as of the Date of Deposit in respect of any Bonds which might
reasonably be expected to have a material adverse effect upon the Trust. At any
time after the Date of Deposit, litigation may be initiated on a variety of
grounds, or legislation may be enacted, with respect to Bonds in the Trust.
Litigation, for example, challenging the issuance of pollution control revenue
bonds under environmental protection statutes may affect the validity of Bonds
or the tax-free nature of their interest. While the outcome of litigation of
this nature can never be entirely predicted, opinions of
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bond counsel are delivered on the date of issuance of each Bond to the effect
that the Bond has been validly issued and that the interest thereon is exempt
from New York State, New York City and regular Federal income tax. In addition,
other factors may arise from time to time which potentially may impair the
ability of issuers to make payments due on the Bonds.
Tax Exemption. From time to time Congress considers proposals to tax the
interest on state and local obligations, such as the Bonds. The Supreme Court
has concluded that the U.S. Constitution does not prohibit Congress from passing
a nondiscriminatory tax on interest on state and local obligations. This type of
legislation, if enacted into law, could adversely affect an investment in Units.
See "Tax Status" herein for a more detailed discussion concerning the tax
consequences of an investment in Units. Unit holders are urged to consult their
own tax advisers.
INSURANCE ON THE BONDS
Insurance guaranteeing the timely payment, when due, of all principal and
interest on the Bonds in the Trust has been obtained from the Insurer by the
Trust. The Insurer has issued a policy of insurance covering each of the Bonds
in the Trust, including Pre-insured Bonds. The insurance obtained by the Trust
from the Insurer is only effective as to Bonds owned by and held in the Trust
and, consequently, does not cover Bonds for which the contract for purchase
fails. A "when issued" Bond will be covered under the MBIA policy upon the
settlement date of the issue of such "when issued" Bond. The MBIA policy shall
continue in force only with respect to Bonds held in and owned by the Trust. The
Insurer shall not have any liability under the policy with respect to any Bonds
which do not constitute part of the Trust. In determining to insure the Bonds,
the Insurer has applied its own standards which generally correspond to the
standards it has established for determining the insurability of new issues of
municipal bonds.
By the terms of its policy, the Insurer will unconditionally guarantee to
the Trust the payment, when due, required of the issuer of the Bonds of an
amount equal to the principal of (either at the stated maturity or at the time a
mandatory sinking fund payment becomes due) and interest on the Bonds as such
payments shall become due but are not paid. No representation is made as to the
ability of the insurer to meet its commitments. Except as provided below with
respect to issues of small issue industrial development Bonds and pollution
control revenue Bonds, in the event of any acceleration of the due date of
principal by reason of mandatory or optional redemption (other than mandatory
sinking fund redemption), default or otherwise, the payments guaranteed will be
made in such amounts and at such times as would have been due had there not been
an acceleration of payment. The Insurer will be responsible for such payments
less any amounts received by the Trust from any trustee for the Bond issuers or
from any other source. Except as provided below, the insurance policy does not
guarantee payment on an accelerated basis, the payment of any redemption premium
or the value of the Units of the Trust. The MBIA policy also does not insure
against nonpayment of principal or interest on the Bonds resulting from the
insolvency, negligence or any other act or omission of the Trustee or other
paying agent for the Bonds. However, with respect to small issue industrial
development Bonds and pollution control revenue Bonds covered by the policy, the
Insurer guarantees any accelerated payments required to be made by or on behalf
of an issuer of such Bonds if there occurs, pursuant to the terms of the Bonds,
an event which results in the loss of the tax-exempt status of interest on such
Bonds. The Insurer may not insure the payment of principal or interest on Bonds
which is not required to be paid by the issuer because the Bonds were not
validly issued. At the respective times of issuance of the Bonds, opinions
relating to their validity were rendered by bond counsel to their respective
issuing authorities.
If an issue is accepted for MBIA insurance, a non-cancelable policy for the
payment of interest on and principal of the bonds is issued by the Insurer. A
single or annual premium is paid by the issuer or any other party for its
insurance on Pre-insured Bonds, and a monthly premium is paid by the Trust for
the insurance it obtains from the Insurer on the Bonds in the Trust that are not
also MBIA Pre-insured Bonds or Municipal Bond Insurance Association Pre-insured
Bonds. No premium will be paid by the Trust for the insurance it obtains from
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the Insurer on Bonds that are also MBIA Pre-insured Bonds or Municipal Bond
Insurance Association Pre-insured Bonds.
The policy is non-cancelable and will continue in force so long as the
Trust is in existence and the Securities described in the policy continue to be
held in and owned by the Trust. Failure to pay premiums on the MBIA policy
obtained by the Trust will not result in the cancellation of insurance but will
force the Insurer to take action against the Trustee to recover premium payments
due it. The Trustee in turn will be entitled to recover such payments from the
Trust.
The policy shall terminate as to any Bond which has been redeemed from the
Trust or sold by the Trustee on the date of such redemption or on the settlement
date of such sale, and the Insurer shall not have any liability under the policy
as to any such Bond thereafter. If the date of such redemption or the settlement
date of such sale occurs between a record date and a date of payment of any such
Bonds, the policy will terminate as to such Bond on the business day next
succeeding such date of payment. The termination of the policy as to any Bond
shall not affect the Insurer's obligations regarding any other Bond in the Trust
or any other trust which has obtained a MBIA insurance policy. The policy will
terminate as to all Bonds on the date on which the last of the Bonds matures, is
redeemed or is sold by the Trust.
Pursuant to an irrevocable commitment of the Insurer, the Trustee upon the
sale of a Bond in the Trust has the right to obtain permanent insurance with
respect to such Bond (i.e., insurance to maturity of the Bond) (the "Permanent
Insurance") upon the payment of a single predetermined insurance premium from
the proceeds of the sale of such Bond. Accordingly, any Bond in the Trust is
eligible to be sold on an insured basis. It is expected that the Trustee will
exercise the right to obtain Permanent Insurance for a Bond in the Trust upon
instruction from the Sponsors only if upon such exercise the Trust would receive
net proceeds (sale of Bond proceeds less the insurance premium attributable to
the Permanent Insurance and the related custodial fee) from such sale in excess
of the sale proceeds if such Bond were sold on an uninsured basis.
Battle Fowler LLP, special counsel for the Sponsors, have rendered an
opinion to the effect that the payment of proceeds from the insurance will be
excludable from Federal gross income if, and to the same extent as, such
interest would have been so excludable if paid by the issuer of the defaulted
obligations.
The contract of insurance relating to the Trust, certain agreements
relating to the Permanent Insurance and the negotiations in respect thereof
represent the only significant relationship between the Insurer and the Trust.
Otherwise, neither the Insurer nor any associate thereof has any material
business relationship, direct or indirect, with the Trust or the Sponsors,
except that the Sponsors may from time to time in the normal course of their
business, participate as underwriters or as managers or as members of
underwriting syndicates in the distribution of new issues of municipal bonds for
which a policy of insurance guaranteeing the payment of interest and principal
has been obtained from the Insurer, and except that James A. Lebenthal, Chairman
of the Board of Directors of Lebenthal & Co., Inc., is a Director of the
Insurer's parent company, MBIA Inc. Although all issues contained in the Trust
are individually insured, neither the Trust, the Units nor the portfolio is
insured directly or indirectly by the Insurer.
A purpose of the insurance on the Bonds in the portfolio obtained by the
Trust is to obtain a higher yield on the Trust portfolio than would be available
if all the Securities in such portfolio had Standard & Poor's "AAA" rating
and/or Moody's "Aaa" rating but were uninsured and yet at the same time to have
the protection of insurance of payment of interest and principal on the
Securities. There is, of course, no certainty that this result will be achieved.
Any Pre-insured Bonds in the Trust (all of which are rated "AAA" by Standard &
Poor's and/or "Aaa" by Moody's, respectively) may or may not have a higher yield
than uninsured bonds rated "AAA" by Standard & Poor's and/or "Aaa" by Moody's,
respectively. In selecting Pre-insured Bonds for the portfolio of the Trust, the
Sponsors have applied the criteria hereinbefore described.
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Because the Securities in the Trust are insured by MBIA as to the payment
of principal and interest, Standard & Poor's has assigned its "AAA" investment
rating to the Units and Bonds in the Trust and Moody's has assigned a rating of
"Aaa" to all of the Bonds in the Trust, as insured. See "Notes to Portfolio" in
Part A. These ratings apply to the Bonds only while they are held in the Trust.
Also, these ratings reflect Standard & Poor's and Moody's current assessments of
the creditworthiness of the Insurer and their ability to pay claims on their
policies of insurance. The obtaining of these ratings by the Trust should not be
construed as an approval of the offering of the Units by Standard & Poor's or
Moody's or as a guarantee of the market value of the Trust or of the Units.
These ratings are not a recommendation to buy, hold or sell and do not take into
account the extent to which Trust expenses or portfolio asset sales for less
than the Trust's acquisition price will reduce payment to the Unit holders of
the interest or principal.
As of December 31, 1998, the Insurer had admitted assets of $6.5
billion (audited), total liabilities of $4.2 billion (audited), and total
capital and surplus of $2.3 billion (audited) determined in accordance with
statutory accounting practices prescribed or permitted by insurance regulatory
authorities. Copies of the Insurer's year end financial statements prepared in
accordance with statutory accounting practices are available from the Insurer.
The address of the Insurer is 113 King Street, Armonk, New York 10504.
No representation is made herein as to the accuracy or adequacy of such
information or as to the absence of material adverse changes in such information
subsequent to the date thereof. The Sponsors are not aware that the information
herein is inaccurate or incomplete as of the date hereof.
PUBLIC OFFERING
Offering Price. The price of the Units of the Trust as of the Date of Deposit
was determined by adding to the Evaluator's determination of the aggregate
offering price of the Securities per Unit a sales charge of 5.152% thereof equal
to 4.9% of the aggregate offering price of the Securities per Unit and a pro
rata portion of estimated organization costs. During the initial public offering
period, sales of at least 250 Units will be entitled to a volume discount from
the Public Offering Price as described below. For purchases settling after the
First Settlement Date, a proportionate share of accrued and undistributed
interest on the Securities at the date of delivery of the Units to the purchaser
is also added to the Public Offering Price. However, after the initial offering
period the Public Offering Price of the Units will not include a pro rata
portion of estimated organizational costs.
During the initial offering period the aggregate offering price of the
Securities in the Trust is determined by the Evaluator (1) on the basis of
current offering prices for the Securities,* (2) if offering prices are not
available for any Securities, on the basis of current offering prices for
comparable securities, (3) by making an appraisal of the value of the Securities
on the basis of offering prices in the market, or (4) by any combination of the
above. Such determinations are made each business day during the initial public
offering period as of the Evaluation Time set forth in the "Summary of Essential
Information" in Part A, effective for all sales made subsequent to the last
preceding determination. For information relating to the calculation of the
Redemption Price, which is based upon the aggregate bid price of the underlying
Securities and which may be expected to be less than the aggregate offering
price, see "Rights of Unit Holders--Redemption" in Part B. Unless Securities are
in default in payment of principal or interest or in significant risk of such
default, the Evaluator will not attribute any value to the Units
- --------
* With respect to the evaluation of Bonds during the initial syndicate
offering period for such Bonds, the "current offering price," as determined
by the Evaluator, will normally be equal to the syndicate offering price as
of the Evaluation Time, unless the Evaluator determines that a material
event has occurred which it believes may result in the syndicate offering
price not accurately reflecting the market value of such Bonds, in which
case the Evaluator, in making its determination with respect to such Bonds,
will consider not only the syndicate offering price but also the factors
described in (2) and (3) herein.
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due to the MBIA insurance obtained by the Trust. See also "Rights of Unit
Holders--Certificates" and "Rights of Unit Holders--Redemption" in Part B for
information relating to redemption of Units.
The Evaluator will consider in its evaluation of Securities which are in
default in payment of principal or interest or, in the Sponsors' opinion, in
significant risk of such default ("Defaulted Bonds") and which are covered by
insurance obtained by the Trust the value of the insurance guaranteeing interest
and principal payments. The value of the insurance will be equal to the
difference between (i) the market value of Defaulted Bonds assuming the exercise
of the right to obtain Permanent Insurance (less the insurance premium
attributable to the purchase of Permanent Insurance and the related custodial
fee) and (ii) the market value of such Defaulted Bonds not covered by Permanent
Insurance. In any case the Evaluator will consider the ability of MBIA to meet
its commitments under the Trust's insurance policy, including the commitment to
issue Permanent Insurance. The Evaluator intends to use a similar valuation
method with respect to Securities insured by the Trust if there is a significant
risk of default and a resulting decrease in the market value. For a description
of the circumstances under which a full or partial suspension of the right of
Unit holders to redeem their Units may occur, see "Rights of Unit
Holders--Redemption" in Part B.
If the Trustee does not exercise the right to obtain Permanent Insurance as
to any Defaulted Bonds in the Trust, it is the present intention of the Trustee,
so long as the Trust contains either some Bonds not in default or any
Pre-insured Bonds, not to sell Defaulted Bonds to effect redemptions or for any
other reason but rather to retain them in the portfolio BECAUSE VALUE
ATTRIBUTABLE TO THE INSURANCE OBTAINED BY THE TRUST CANNOT BE REALIZED UPON
SALE. Insurance obtained by the issuer of a Pre-insured Bond, or by some party
other than the Trust, is effective so long as such Pre-insured Bond is
outstanding and the insurer of such Bond continues to fulfill its obligations.
Therefore, any such insurance may be considered to represent an element of
market value in regard to the Pre-insured Bond, but the exact effect, if any, of
this insurance on such market value cannot be predicted. Regardless of whether
the insurer of a Pre-insured Bond continues to fulfill its obligations, however,
such Bond will in any case continue to be insured under the policy obtained by
the Trust from MBIA as long as the Bond is held in the Trust.
No value has been ascribed to the MBIA insurance obtained by the Trust as
of the date of this Prospectus.
The secondary market Public Offering Price of the Units of the Trust is
based on the aggregate bid price of the Bonds in the Trust (as determined by the
Evaluator) plus a sales charge determined in accordance with the schedule set
forth below, which is based upon the maturities of each Bond in the Trust. The
Sponsors have implemented this variable format as a more equitable method of
assessing the sales charge for secondary market purchases. For purposes of
computation, Bonds will be deemed to mature on their expressed maturity dates
unless the Evaluator evaluates the price of the Bonds to a different date such
as a call date or a mandatory tender date, in which case the maturity will be
deemed to be such other date.
This method of sales charge computation will apply different sales charge
rates to each Bond in the Trust based upon the maturity of each such Bond in
accordance with the following schedule:
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<TABLE>
<CAPTION>
Secondary Market
Period Sales Change
--------------------------------------------------
Percentage of Percentage of
Public Offering Net Amount
Per Bond Price Invested
----------------------- --------------------
<S> <C> <C>
Years to Maturity Per Bond
- --------------------------
0 months to 2 years................................................... 1.0% 1.010%
2 but less than 3..................................................... 2.0% 2.091%
3 but less than 4..................................................... 3.0% 3.093%
4 but less than 8..................................................... 4.0% 4.167%
8 but less than 12.................................................... 5.0% 5.363%
12 but less than 15................................................... 5.5% 5.820%
15 or more............................................................ 5.9% 6.270%
</TABLE>
A minimum sales charge of 1.0% of the Public Offering Price will be
applied to all secondary market unit purchases.
During the initial public offering period, purchasers of 250 Units or
more will be entitled to a volume discount from the Public Offering Price as set
forth in the table below:
<TABLE>
<CAPTION>
Discount From
Public Offering
Number of Units Price Per Unit
--------------- -----------------
<S> <C> <C>
250-499............................................................................... $ 2.50
500-999............................................................................... 7.50
1,000-1,999........................................................................... 15.00
2,000 or more......................................................................... 20.00
</TABLE>
Except as discussed under "Distribution of Units" below, the above volume
discount will be the responsibility of the Selling Underwriter or dealer and
will apply on all purchases at any one time by the same person of Units in the
Trust in the amounts stated. Units held in the name of the spouse of the
purchaser or in the name of a child of the purchaser under 21 years of age are
deemed for the purposes hereof to be registered in the name of the purchaser.
The graduated sales charges are also applicable to a trustee or other fiduciary
purchasing Units for a single trust estate or single fiduciary account.
Certain commercial banks are making Units of the Trust available to their
customers on an agency basis. A portion of the sales charge discussed above is
retained by or remitted to the banks. Under the Glass-Steagall Act, banks are
prohibited from underwriting Trust Units; however, the Glass-Steagall Act does
permit certain agency transactions, and banking regulators have not indicated
that these particular agency transactions are not permitted under such Act.
Market for Units. Although they are not obligated to do so, the Sponsors
intend to maintain a market for the Units of the Trust and continuously to offer
to purchase Units of the Trust during the initial offering period at prices
based upon the aggregate offering price of the Securities in the Trust; and
thereafter at prices based on the aggregate bid price of the related Securities.
After the initial offering period the Sponsors' Repurchase Price shall
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be not less than the Redemption Price plus accrued interest through the expected
date of settlement. (See "Rights of Unit Holders--Redemption-- Computation of
Redemption Price per Unit" in Part B). There is no sales charge incurred when a
Unit holder sells Units back to the Sponsors. Any Units repurchased by the
Sponsors may be reoffered to the public by the Sponsors at the Public Offering
Price at such time, plus accrued interest.
If the supply of Units of any Series exceeds demand, or for some other
business reason, the Sponsors may discontinue purchases of Units of such Series
at prices based on the aggregate bid price of the Securities. The Sponsors do
not in any way guarantee the enforceability, marketability, or price of any
Security in the portfolio or of the Units of the Trust. In the event that a
market is not maintained for the Units of the Trust, a Unit holder desiring to
dispose of his Units may be able to do so only by tendering such Units to the
Trustee for redemption at the Redemption Price, which is based upon the
aggregate bid price of the underlying Securities. The aggregate bid price of the
Securities in the Trust may be expected to be less than the aggregate offering
price. If a Unit holder wishes to dispose of his Units, he should inquire of the
Sponsors as to current market prices prior to making a tender for redemption to
the Trustee. See "Rights of Unit Holders--Redemption" and "Sponsors" in Part B.
Employees (and their immediate families) of Glickenhaus & Co. and Lebenthal
& Co., Inc. may, pursuant to employee benefit arrangements, purchase Units of
the Trust at a price equal to the offering side evaluation of the underlying
Securities in the Trust during the initial offering period and at the bid side
thereafter, divided by the number of Units outstanding plus a reduced sales
charge of 1.5% of the Public Offering Price. Such arrangements result in less
selling effort and selling expenses than sales to employee groups of other
companies. Resales or transfers of Units purchased under the employee benefit
arrangements may only be made through the Sponsors' secondary market, so long as
it is being maintained.
Distribution of Units. The Underwriters of the Units of the Trust are listed in
the Underwriting Account (see "Underwriting Account" in Part A). It is the
Underwriters' intention to qualify Units of the Trust for sale in certain of the
states and to effect a public distribution of the Units solely through their own
organizations. However, Units may be sold to dealers who are members of the
National Association of Securities Dealers, Inc. at prices which represent a
concession equal to $32.00 per Unit from the related Public Offering Price
applicable to sales of fewer than 500 Units subject in each case to change from
time to time by the Agent for the Sponsors. Any volume discount (see "Offering
Price" in Part B) offered to investors will be borne by the selling Underwriter
or dealer except that, during the initial public offering period, the Sponsors
may pay the selling Underwriter or dealer $2.50 per Unit for individual sales of
more than 500 Units.
Sales will be made only with respect to whole Units, and the Sponsors
reserve the right to reject, in whole or in part, any order for the purchase of
Units.
Underwriters and broker-dealers of the Trust, banks and/or others are
eligible to participate in a program in which such firms receive from the
Sponsors a nominal award for each of their registered representatives who have
sold a minimum number of units of unit investment trusts created by the Sponsors
during a specified time period. In addition, at various times the Sponsors may
implement other programs under which the sales forces of Underwriters, brokers,
dealers, banks and/or others may be eligible to win other nominal awards for
certain sales efforts, or under which the Sponsors will reallow to any such
Underwriters, brokers, dealers, banks and/or others that sponsor sales contests
or recognition programs conforming to criteria established by the Sponsors, or
participate in sales programs sponsored by the Sponsors, an amount not exceeding
the total applicable sales charges on the sales generated by such person at the
public offering price during such programs. Also, the Sponsors in their
discretion may from time to time, pursuant to objective criteria established by
the Sponsors, pay fees to qualifying Underwriters, brokers, dealers, banks
and/or others for certain services or activities which are primarily intended to
result in sales of Units of the Trust. Such payments are made by the Sponsors
out of their own assets and not out of the assets of the Trust. These programs
will not change the price Unit holders pay for their Units or the amount that
the Trust will receive from the Units sold.
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Sponsors' and Underwriters' Profits. As set forth under "Public
Offering--Offering Price" in Part B, the Underwriters will receive gross
commissions equal to the specified percentages of the Public Offering Price of
the Units of the Trust. The Sponsors will receive from the Underwriters the
excess of such gross sales commission over $35 per Unit from Underwriters
underwriting 100 to 249 Units, will receive the excess over $36 per Unit from
Underwriters underwriting 250 to 499 Units, will receive the excess over $37 per
Unit from Underwriters underwriting 500 to 749 Units, will receive the excess
over $38 per Unit from Underwriters underwriting 750 to 999 Units, will receive
the excess over $39 per Unit from Underwriters underwriting 1,000 or more Units
and will receive the excess over $40 per Unit from Underwriters who underwrite
15% or more of the Units of the Trust. In addition, the Sponsors may, during the
initial public offering period, pay any Underwriter an additional $2.50 per Unit
for sales to individual purchasers of 500 or more Units. The Sponsors may also
from time to time pay, in addition to the amounts referenced above, an
additional concession, in the form of cash or other compensation, any
Underwriter who underwrites or sells, during a specific period, minimum dollar
amounts of the Units of the Trust. In no event will such additional concession
paid by the Sponsors to the Underwriter exceed the difference between the sales
charge and the Underwriter's allowance in respect of Units underwritten by the
Underwriter. Such Units then may be distributed to the public by the dealers at
the Public Offering Price then in effect.
In addition, the Sponsors realize a profit or sustain a loss, as the case
may be, in the amount of any difference between the cost of the Securities to
the Trust (which is based on the aggregate offering price of the Securities on
the Date of Deposit) and the purchase price of such Securities to the Sponsors
(which is the cost of such Securities at the time they were acquired for the
account of the Trust). The Underwriters share in the profits, if any, described
in the preceding sentence. See "Summary of Essential Information" in Part A. In
addition, the Sponsors may realize profits or sustain losses with respect to
Bonds deposited in the Trust which were acquired from one or more of the
Sponsors or from underwriting syndicates of which they were members. During the
initial offering period, the Underwriters also may realize profits or sustain
losses as a result of fluctuations after the Date of Deposit in the offering
prices of the Securities and hence in the Public Offering Price received by the
Underwriters for Units. Cash, if any, made available to the Sponsors prior to
the settlement date for the purchase of Units of the Trust may be used in the
Sponsors' businesses, subject to the limitations of the Securities Exchange Act
of 1934 and may be of benefit to the Sponsors.
The Sponsors may have participated as underwriters or as managers or
members of underwriting syndicates from which some of the aggregate principal
amount of the Bonds were acquired for the Trust in the amounts set forth in Part
A. The Sponsors have not purchased any of the Securities in the Trust from their
managed accounts.
In maintaining a market for the Units of the Trust (see "Market for Units")
the Sponsors and Underwriters will also realize profits or sustain losses in the
amount of any difference between the price at which they buy Units and the price
at which they resell or redeem such Units and to the extent they earn sales
charges on resales.
ESTIMATED CURRENT RETURN AND ESTIMATED LONG-TERM RETURN TO UNIT HOLDERS
Units of the Trust are offered on a "dollar price" basis. In contrast,
tax-exempt bonds customarily are offered on a "yield price" basis. Therefore,
the rate of return on each Unit is measured in terms of both Estimated Current
Return and Estimated Long-Term Return. Estimated Current Return based on the
Public Offering Price per Unit and Estimated Long-Term Return per Unit, each as
of the business day prior to the Date of Deposit, is set forth under "Summary of
Essential Information " in Part A. Information regarding the estimated monthly
distributions of principal and interest to Unit holders of the Trust is
available from the Sponsors on request.
Estimated Current Return is computed by dividing the Estimated Net Annual
Interest Income per Unit by the Public Offering Price. Estimated Net Annual
Interest Income per Unit will vary with changes in fees and expenses of the
Trustee and the Evaluator and with principal prepayment, redemption, maturity,
exchange or sale
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of Bonds. The Public Offering Price per Unit will vary with changes in the
offering price of the Bonds. Estimated Current Return takes into account only
the interest payable on the Bonds and does not involve a computation of yield to
maturity or to an earlier redemption date nor does it reflect any amortization
of premium or discount from par value on the Bond's purchase price. Moreover,
because interest rates on Bonds purchased at a premium are generally higher than
current interest rates on newly issued bonds of a similar type with comparable
ratings, the Estimated Current Return per Unit may be affected adversely if such
Bonds are redeemed prior to their maturity. Therefore, there is no assurance
that the Estimated Current Return as set forth under "Summary of Essential
Information" in Part A will be realized in the future.
Estimated Long-Term Return is calculated using a formula that (i) takes
into consideration, and determines and factors in the relative weightings of,
the market values, yields (taking into account the amortization of premiums and
the accretion of discounts) and estimated retirements of all the Bonds in the
Trust and (ii) takes into account the expenses and sales charge associated with
each Unit of the Trust. The Estimated Long-Term Return assumes that each Bond is
retired on its pricing life date (i.e., that date which produces the lowest
dollar price when yield price calculations are done for each optional call date
and the maturity date of a callable security). If the Bond is retired on any
optional call or maturity date other than the pricing life date, the yield to
the holder of that Bond will be greater than the initial quoted yield. Since the
market values and estimated retirements of the Bonds, the expenses of the Trust
and the Net Annual Interest Income and Public Offering Price per Unit may
change, there is no assurance that the Estimated Long-Term Return as set forth
under "Summary of Essential Information" in Part A will be realized in the
future.
TAX STATUS
This is a general discussion of some of the income tax consequences of the
ownership of the Units. It applies only to investors who hold the Units as
capital assets. It does not discuss rules that apply to investors subject to
special tax treatment, such as securities dealers, financial institutions and
insurance companies.
The Bonds
In the opinions of bond counsel delivered on the dates the Bonds were
issued (or in opinions to be delivered, in the case of when issued Bonds), the
interest on the Bonds is excludable from gross income for regular Federal income
tax purposes under the law in effect at that time (except in certain
circumstances because of the identity of the holder). In the opinion of such
bond counsel, an individual holder who resides in New York State or City will
not be subject to State or City tax on interest income derived from the Bonds
held in the Trust (except in certain limited circumstances), although such an
individual will be subject to New York State and (if a City resident), City tax,
with respect to any gains realized when Bonds or Units are sold, redeemed or
paid at maturity. However, interest on the Bonds may be subject to other state
and local taxes. Interest on the Bonds is not excludable from net income in
determining New York State or New York City franchise taxes on corporations or
financial institutions. The Sponsors and Battle Fowler LLP have not made and
will not make any review of the procedures for the issuance of the Bonds or the
basis for these opinions.
In the opinions of bond counsel referred to above, none of the interest
received on the Bonds is subject to the alternative minimum tax for individuals.
However, the interest is includible in the calculation of a corporation's
alternative minimum tax.
In the case of certain of the Bonds, the opinions of bond counsel indicate
that interest received by a substantial user of the facilities financed with
proceeds of the Bonds, or persons related thereto, will not be exempt from
regular Federal income taxes, although interest on those Bonds received by
others would be exempt. The term substantial user includes only a person whose
gross revenue derived with respect to the facilities financed by the
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issuance of the Bonds is more than 5% of the total revenue derived by all users
of those facilities, or who occupies more than 5% of the usable areas of those
facilities or for whom those facilities or a part thereof were specifically
constructed, reconstructed or acquired. Related persons are defined to include
certain related natural persons, affiliated corporations, partners and
partnerships. Similar rules may be applicable for state tax purposes.
The opinions of bond counsel may be limited to law existing at the time the
Bonds were issued, and may not apply to the extent that future changes in law,
regulations or interpretations affect such Bonds. Interest on some or all of the
Bonds may become subject to regular Federal income tax, perhaps retroactively to
their dates of issuance, as a result of changes in Federal law or as a result of
the failure of issuers (or other users of the proceeds of the bonds) to comply
with certain ongoing requirements. Failure to meet these requirements could
cause the interest on the Bonds to become taxable, thereby reducing the value of
the Bonds, subjecting holders of the Bonds to unanticipated tax liabilities and
possibly requiring the Trustee to sell the Bonds at reduced values.
The Sponsors and Battle Fowler LLP have not made any investigation as to
the current or future owners or users of the facilities financed by the Bonds,
the amount of such persons' outstanding tax-exempt private activity bonds, or
the facilities themselves, and no one can give any assurance that future events
will not affect the tax-exempt status of the Bonds.
From time to time Congress considers proposals to tax the interest on state
and local obligations, such as the Bonds and it can be expected that similar
proposals, including proposals for a flat tax or consumption tax, may be
introduced in the future. The Sponsors cannot predict whether additional
legislation in respect of the Federal income tax status of interest on state and
local obligations may be enacted and what the effect of such legislation would
be on Bonds in the Trust. The Supreme Court has concluded that the U.S.
Constitution does not prohibit Congress from passing a nondiscriminatory tax on
interest on state and local obligations. This type of legislation, if enacted,
could adversely affect an investment in Units. The decision does not, however,
affect the current exemption from taxation of the interest earned on the Bonds
in the Trust.
The Internal Revenue Service has expanded, and is continuing to expand, its
examination program with respect to tax-exempt bonds. The expanded examination
program consists of, among other measures, increased enforcement against abusive
transactions, broader audit coverage and more comprehensive information
reporting on the tax-exempt bond information returns. These developments could
affect the Bonds.
Investors should consult their tax advisors for advice with respect to the
effect of these provisions on their particular tax situation.
The Trust
In the opinion of Battle Fowler LLP, special counsel for the Sponsors,
under existing law:
The Trust is not an association taxable as a corporation for Federal income
tax purposes, and interest on the Bonds that is excludible from Federal
gross income when received by the Trust will be excludible from the Federal
gross income of the Unit holders. Any proceeds paid under the insurance
policy described above issued to the Trust with respect to the Bonds and
any proceeds paid under individual policies obtained by issuers of Bonds or
other parties that represent maturing interest on defaulted obligations
held by the Trust will be excludible from Federal gross income and from New
York State and City personal income to the same extent as such interest
would have been excludable if paid in the normal course by the issuer of
the defaulted obligations.
Each Unit holder will be considered the owner of a pro rata portion of the
Bonds and any other assets held in the Trust under the grantor trust rules
of the Code. Each Unit holder will be considered to have received its pro
rata share of income from Bonds held by the Trust on receipt by the Trust
(or earlier accrual, depending
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on the Unit holder's method of accounting and depending on the existence of
any original issue discount), and each Unit holder will have a taxable
event when an underlying Bond is disposed of (whether by sale, redemption,
or payment at maturity) or when the Unit holder redeems or sells its Units.
Under the income tax laws of the State and City of New York, the Trust is
not an association taxable as a corporation and the income of the Trust
will be treated as the income of the Unit holders.
A Unit holder who is a non-resident of New York will not be subject to New
York State or City income tax on any interest or gain derived from its
interest in the Trust's assets or upon any gain from the sale of its Units
except to the extent that such interest or gain is from property employed
in a business, trade, profession or occupation carried on in the State of
New York.
The opinion of Battle Fowler LLP as to the tax status of the Trust is not
affected by the provision of the Trust Agreement that authorizes the acquisition
of Replacement Bonds or by the implementation of the option automatically to
reinvest principal and interest distributions from the Trust pursuant to the
Automatic Accumulation Plan, described under "Automatic Accumulation Account" in
this Part B.
Other Tax Issues
The Trust may contain Bonds issued with original issue discount. The Code
requires Unit holders to accrue tax-exempt original issue discount by using the
constant interest method provided for the holders of taxable obligations and to
increase the basis of a tax-exempt obligation by the amount of accrued
tax-exempt original issue discount. These provisions are applicable to
obligations issued after September 3, 1982 and acquired after March 1, 1984. The
Trust's tax basis (and the Unit holder's tax basis) in a Bond is increased by
any accrued original issue discount. For Bonds issued after June 9, 1980 that
are redeemed prior to maturity, the difference between the Trust's basis, as
adjusted, and the amount received will be taxable gain or loss to the Unit
holders.
Unit holders should consult their own tax advisors with respect to the
state and local tax consequences of owning original issue discount bonds. It is
possible that in determining state and local taxes, interest on tax-exempt bonds
issued with original issue discount may be deemed to be received in the year of
accrual even though there is no corresponding cash payment.
The total cost of a Unit to a Unit holder, including sales charge, is
allocated among the Bonds held in the Trust (in proportion to the values of each
Bond) in order to determine the Unit holder's per Unit tax basis for each Bond.
The tax basis reduction requirements of the Code relating to amortization of
bond premium discussed below will apply separately to the per Unit cost of each
such Bond. A New York State or City resident should determine its basis and
holding period for its Units for New York State and City tax purposes in the
same manner as for Federal tax purposes.
A Unit holder will be considered to have purchased its pro rata interest in
a Bond at a premium when it acquires a Unit if its tax cost for its pro rata
interest in the Bond exceeds its pro rata interest in the Bond's face amount (or
the issue price plus accrued original issue discount of an original issue
discount bond). The Unit holder will be required to amortize any premium over
the period remaining before the maturity or call date of the Bond. Amortization
of premium on a Bond will reduce a Unit holder's tax basis for its pro rata
interest in the Bond, but will not result in any deduction from the Unit
holder's income. Thus, for example, a Unit holder who purchases a Unit at a
price that results in a Bond premium and resells it at the same price will
recognize taxable gain equal to the portion of the premium that was amortized
during the period the Unit holder is considered to have held such interest.
Bond premium must be amortized under the method the Unit holder regularly
employs for amortizing bond premium (assuming such method is reasonable). With
respect to a callable bond, the premium must be computed
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with respect to the call price and be amortized to the first call date (and
successively to later call dates based on the call prices for those dates).
Gain (or loss) realized on a sale, maturity or redemption of the Bonds or
on a sale or redemption of a Unit is includible in gross income for Federal,
state and local income tax purposes. That gain will be capital gain (or loss),
assuming that the Unit is held as a capital asset, except for any accrued
interest, accrued original issue discount or accrued market discount. When a
Bond is sold by the Trust, taxable gain or loss will be realized by the Unit
holder equal the difference between (i) the amount received (excluding the
portion representing accrued interest) and (ii) the adjusted basis (including
any accrued original issue discount). Taxable gain (or loss) will also result if
a Unit is sold or redeemed for an amount different from its adjusted basis to
the Unit holder. The amount received when a Unit is sold or redeemed is
allocated among all the Bonds in the Trust in the same manner if the Trust had
disposed of the Bonds, and the Unit holder may exclude accrued interest,
including any accrued original issue discount, but not amounts attributable to
market discount. The return of a Unit holder's tax basis is otherwise a tax-free
return of capital.
A Unit holder may acquire its Units, or the Trust may acquire Bonds at a
price that represents a market discount for the Bonds. Bonds purchased at a
market discount tend to increase in market value as they approach maturity, when
the principal amount is payable, thus increasing the potential for taxable gain
(or reducing the potential for loss) on their redemption, maturity or sale. Gain
on the disposition of a Bond purchased at a market discount generally will be
treated as ordinary income, rather than capital gain, to the extent of accrued
market discount.
Long-term capital gains realized by non-corporate Unit holders (with
respect to Units and Bonds held for more than one year) will be taxed at a
maximum federal income tax rate of 20%, while ordinary income received by
non-corporate Unit holders will be taxed at a maximum federal income tax rate of
39.6%. The deductibility of capital losses is limited to the amount of capital
gain; in addition, up to $3,000 of capital losses of noncorporate Unit holders
($1,500 in the case of married individuals filing separate returns) may be
deducted against ordinary income. Since the proceeds from sales of Bonds, under
certain circumstances, may not be distributed pro-rata, a Unit holder's taxable
income or gain for any year may exceed its actual cash distributions in that
year.
If the Trust purchases any units of a previously issued series, based on
the opinion of counsel with respect to such series the Trust's pro rata
ownership interest in the bonds of such series (or any previously issued series)
will be treated as though it were owned directly by the Trust.
Among other things, the Code provides for the following: (1) interest on
certain private activity bonds is an item of tax preference included in the
calculation of alternative minimum tax, however none of the Bonds in the Trust
is covered by this provision; (2) 75% of the amount by which adjusted current
earnings (including interest on all tax-exempt bonds) exceed alternative minimum
taxable income, as modified for this calculation, will be included in corporate
alternative minimum taxable income; (3) subject to certain exceptions, no
financial institution is allowed a deduction for interest expense allocable to
tax-exempt interest on bonds acquired after August 7, 1986; (4) the amount of
the deduction allowed to property and casualty insurance companies for
underwriting loss is decreased by an amount determined with regard to tax-exempt
interest income and the deductible portion of dividends received by such
companies; (5) an issuer must meet certain requirements on a continuing basis in
order for interest on a bond to be tax-exempt, with failure to meet such
requirements resulting in the loss of tax exemption; and (6) the branch profits
tax on U.S. branches of foreign corporations may have the effect of taxing a
U.S. branch of a foreign corporation on the interest on bonds otherwise exempt
from tax.
The Code provides that a portion of social security benefits is includible
in taxable income for taxpayers whose "modified adjusted gross income" combined
with a portion of their social security benefits exceeds a base amount. The base
amount is $25,000 for an individual, $32,000 for a married couple filing a joint
return and
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zero for married persons filing separate returns. Interest on tax-exempt bonds
is added to adjusted gross income for purposes of determining whether an
individual's income exceeds this base amount.
Certain S corporations, with accumulated earnings and profits from years in
which they were subject to regular corporate tax, may be subject to minimum tax
on excess passive income, including tax-exempt interest.
If borrowed funds are used by a Unit holder to purchase or carry Units of
the Trust, interest on such indebtedness will not be deductible for Federal
income tax purposes. Fees and expenses of the Trust will also not be deductible
by noncorporate Unit holders. Under rules used by the Internal Revenue Service,
the purchase of Units may be considered to have been made with borrowed funds
even though the borrowed funds are not directly traceable to the purchase of
Units. Similar rules are applicable for purposes of state and local taxation.
After the end of each calendar year, the Trustee will furnish to each Unit
holder an annual statement containing information relating to the interest
received by the Trust on the Bonds, the gross proceeds received by the Trust
from the disposition of any Bond (resulting from redemption or payment at
maturity of any Bond or the sale by the Trust of any Bond), and the fees and
expenses paid by the Trust. The Trustee will also furnish annual information
returns to each Unit holder and to the Internal Revenue Service. Unit holders
are required to report to the Internal Revenue Service the amount of tax-exempt
interest received during the year.
RIGHTS OF UNIT HOLDERS
Certificates. Ownership of Units of the Trust is evidenced by registered
certificates executed by the Trustee and the Sponsors. The Trustee is authorized
to treat as the record owner of Units that person who is registered as such
owner on the books of the Trustee. Certificates are transferable by presentation
and surrender to the Trustee properly endorsed and accompanied by a written
instrument or instruments of transfer.
Certificates may be issued in denominations of one Unit or any multiple
thereof. A Unit holder may be required to pay $2.00 per certificate reissued or
transferred and to pay any governmental charge that may be imposed in connection
with each such transfer or interchange. For new certificates issued to replace
destroyed, stolen or lost certificates, the Unit holder must furnish indemnity
satisfactory to the Trustee and must pay such expenses as the Trustee may incur.
Mutilated certificates must be surrendered to the Trustee for replacement.
Distribution of Interest and Principal. While interest will be distributed
semi-annually or monthly, depending on the method of distribution chosen,
principal, including capital gains, will be distributed only semi-annually;
provided, however, that, other than for purposes of redemption, no distribution
need be made from the Principal Account if the balance therein is less than
$1.00 per Unit then outstanding, and that, if at any time the pro rata share
represented by the Units of cash in the Principal Account exceeds $10.00 as of a
Monthly Record Date, the Trustee shall, on the next succeeding Monthly
Distribution Date, distribute the Unit holder's pro rata share of the balance of
the Principal Account. Interest (semi-annually or monthly) and principal,
including capital gains, if any (semi-annually), received by the Trust will be
distributed on each Distribution Date to Unit holders of record of the Trust as
of the preceding Record Date who are entitled to such distributions at that time
under the plan of distribution chosen. All distributions will be net of
applicable expenses and funds required for the redemption of Units. See "Summary
of Essential Information" in Part A, "Rights of Unit Holders--Expenses and
Charges" and "Rights of Unit Holders--Redemption" in Part B.
The Trustee will credit to the Interest Account for the Trust all interest
received by the Trust, including that part of the proceeds of any disposition of
Securities which represents accrued interest. Other receipts of the Trust will
be credited to the Principal Account for the Trust. The pro rata share of the
Interest Account of the Trust and the pro rata share of cash in the Principal
Account (other than amounts representing failed contracts as previously
discussed) represented by each Unit thereof will be computed by the Trustee each
month as of the
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Record Date. See "Summary of Essential Information" in Part A. Proceeds received
from the disposition of any of the Securities subsequent to a Record Date and
prior to the next succeeding Distribution Date will be held in the Principal
Account for the Trust and will not be distributed until the second succeeding
Distribution Date. Because interest on the Securities is not received by the
Trust at a constant rate throughout the year, any particular interest
distribution may be more or less than the amount credited to the Interest
Account of the Trust as of the Record Date. See "Summary of Essential
Information" in Part A. Persons who purchase Units between a Record Date and a
Distribution Date will receive their first distribution on the second
Distribution Date following their purchase of Units under the applicable plan of
distribution.
The difference between the estimated net interest accrued to the first
Record Date and to the related Distribution Date is an asset of the respective
Unit holder and will be realized in subsequent distributions or upon the earlier
of the sale of such Units or the maturity, redemption or sale of Securities in
the Trust.
Purchasers of Units who desire to receive distributions on a monthly basis
may elect to do so at the time of purchase during the initial public offering
period. Those indicating no choice will be deemed to have chosen the semi-annual
distribution plan. Record dates for monthly distributions will be the fifteenth
day of the preceding month and record dates for semi-annual distributions will
be the fifteenth day of May and November.
Details of estimated interest distributions under the payment plans, on a
per Unit basis, appear in the footnotes to the "Summary of Essential
Information" in Part A.
The plan of distribution selected by a Unit holder will remain in effect
until changed. Unit holders purchasing Units in the secondary market will
initially receive distributions in accordance with the election of the prior
owner. Each April, the Trustee will furnish each Unit holder a card to be
returned together with the Certificate by May 15 of such year if the Unit holder
desires to change his plan of distribution, and the change will become effective
on May 16 of such year for the ensuing twelve months. For a discussion of
redemption of Units, see "Rights of Unit Holders--Redemption--Tender of Units"
in Part B.
The Trustee will, as of the fifteenth day of each month, deduct from the
Interest Account and, to the extent funds are not sufficient therein, from the
Principal Account, amounts necessary to pay the expenses of the Trust as of the
first day of such month. See "Rights of Unit Holders--Expenses and Charges" in
Part B. The Trustee also may withdraw from said accounts such amounts, if any,
as it deems necessary to establish a reserve for any governmental charges
payable out of the Trust. Amounts so withdrawn shall not be considered a part of
the Trust's assets until such time as the Trustee shall return all or any part
of such amounts to the appropriate account. In addition, the Trustee may
withdraw from the Interest Account and the Principal Account such amounts as may
be necessary to cover redemption of Units by the Trustee. See "Rights of Unit
Holders-- Redemption" in Part B. Funds which are available for future
distributions, payments of expenses and redemptions are in accounts which are
non-interest bearing to the Unit holders and are available for use by the
Trustee pursuant to normal banking procedures.
Because interest on Securities in the Trust is payable at varying
intervals, usually in semi-annual installments, the interest accruing to the
Trust will not be equal to the amount of money received and available monthly
for distribution from the Interest Account to Unit holders choosing the monthly
payment plan. Therefore, on each monthly Distribution Date, the amount of
interest actually deposited in the Interest Account and available for
distribution may be slightly more or less than the monthly interest distribution
made. In order to eliminate fluctuations in monthly interest distributions
resulting from such variances during the first year of the Trust, the Trustee is
required by the Trust Agreement to advance such amounts as may be necessary to
provide monthly interest distributions of approximately equal amounts. In
addition, the Trustee has agreed to advance sufficient funds to the Trust in
order to reduce the amount of time before monthly distributions of interest to
Unit holders commence. The Trustee will be reimbursed, without interest, for any
such advances from funds available from
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the Interest Account of the Trust. The Trustee's fee takes into account the
costs attributable to the outlay of capital needed to make such advances.
In order to acquire certain of the Securities subject to contract, it may
be necessary to pay on the settlement dates for delivery of such Securities
amounts covering accrued interest on such Securities which exceed the amounts
paid by Unit holders (which excess will be made available under a letter of
credit furnished by the Sponsors on the Date of Deposit). The Trustee has agreed
to pay for any amounts necessary to cover any such excess and will be reimbursed
therefor (without interest) when funds become available from interest payments
on the particular Securities with respect to which such payments may have been
made. Also, since interest on such Securities in the portfolio of the Trust (see
"The Portfolio" in Part A) does not begin accruing as tax-exempt interest income
to the benefit of Unit holders until such Bonds' respective dates of delivery
(accrued interest prior to delivery being treated under the Code as a return of
principal), the Trustee will, in order to cover interest treated as a return of
principal, adjust its fee downward in an amount equal to the amount of interest
that would have so accrued as tax-exempt interest (if not treated as a return of
principal) on such Securities between the date of settlement for the Units and
such dates of delivery.
In addition, because of the varying interest payment dates of the
Securities comprising the Trust portfolio, accrued interest at any point in
time, subsequent to the recovery of any advancements of interest made by the
Trustee, will be greater than the amount of interest actually received by the
Trust and distributed to Unit holders. Therefore, there will usually remain an
item of accrued interest that is added to the value of the Units. If a Unit
holder sells all or a portion of his Units he will be entitled to receive his
proportionate share of the accrued interest from the purchaser of his Units.
Similarly, if a Unit holder redeems all or a portion of his Units, the
Redemption Price per Unit which he is entitled to receive from the Trustee will
also include accrued interest on the Securities. Thus, the accrued interest
attributable to a Unit will not be entirely recovered until the Unit holder
either redeems or sells such Unit or until the Trust is terminated.
Expenses and Charges. Initial Expenses. Investors will bear all or a portion of
the costs incurred in organizing the Trust -- including costs of preparing the
registration statement, the trust indenture and other closing documents,
registering units with the SEC and the states and the initial audit of the
Trust's portfolio. During the initial public offering period only, a pro rata
portion of such organization costs will be charged upon the investor's purchase
of Units.
Fees. The Trustee's, Sponsors' and Evaluator's fees are set forth under the
"Summary of Essential Information" in Part A. The Sponsors' fee, which is earned
for portfolio supervisory services, is based on the face amount of Securities in
the Trust at December 1 of each year. The Sponsors' fee, which is not to exceed
the maximum amount set forth under the "Summary of Essential Information" for
the Trust, may exceed the actual costs of providing portfolio supervisory
services for the Trust, but at no time will the total amount the Sponsors
receive for portfolio supervisory services rendered to all series of Empire
State Municipal Exempt Trust in any calendar year exceed the aggregate cost to
them of supplying such services in such year.
The Trustee will receive for its ordinary recurring services to the Trust
an annual fee in the amount set forth in the "Summary of Essential Information"
for the Trust; provided, however, that such fees may be adjusted as set forth
under the "Summary of Essential Information". There is no minimum fee and,
except as hereinafter set forth, no maximum fee. For a discussion of certain
benefits derived by the Trustee from the Trust's funds, see "Rights of Unit
Holders--Distribution of Interest and Principal" in Part B. For a discussion of
the services performed by the Trustee pursuant to its obligations under the
Trust Agreement, reference is made to the material set forth under "Rights of
Unit Holders" in Part B.
The Trustee's and Evaluator's fees are payable monthly on or before each
Distribution Date and the Sponsors' annual fee is payable annually on December
1, each from the Interest Account to the extent funds are available and then
from the Principal Account. These fees may be increased without approval of the
Unit holders by
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amounts not exceeding proportionate increases in consumer prices for services as
measured by the United States Department of Labor's Consumer Price Index
entitled "All Services Less Rent"; except no such increase in the Trustee's fee
will be so made for the sole purpose of making up any downward adjustment
therein as described in "Summary of Essential Information". If the balances in
the Principal and Interest Accounts are insufficient to provide for amounts
payable by the Trust, or amounts payable to the Trustee which are secured by its
prior lien on the Trust, the Trustee is permitted to sell Bonds to pay such
amounts.
Insurance Premiums. The cost of the MBIA insurance obtained by the Trust,
based on the aggregate amount of Bonds in the Trust as of the Date of Deposit,
is set forth in the "Summary of Essential Information". Premiums, which are
obligations of the Trust, are payable monthly by the Trustee on behalf of the
Trust. As Securities in the portfolio mature, are redeemed by their respective
issuers or are sold by the Trustee, the amount of the premium will be reduced in
respect of those Securities no longer owned by and held in the Trust. The Trust
does not incur any premium expense for any insurance which has been obtained by
an issuer of a Pre- insured Bond, since the premium or premiums for such
insurance have been paid by such issuer or other party. Pre-insured Bonds,
however, are additionally insured by the Trust. No premium will be paid by the
Trust on Bonds which are also MBIA Pre-insured Bonds or Municipal Bond Insurance
Association Pre-insured Bonds. The premium payable for Permanent Insurance and
the related custodial fee will be paid solely from the proceeds of the sale of a
Bond from the Trust in the event the Trustee exercises the right to obtain
Permanent Insurance on such Bond.
Other Charges. The following additional charges are or may be incurred by the
Trust: all expenses (including audit and counsel fees) of the Trustee incurred
in connection with its activities under the Trust Agreement, including annual
audit expenses by independent public accountants selected by the Sponsors (so
long as the Sponsors maintain a secondary market, the Sponsors will bear any
audit expense which exceeds 50 cents per Unit), the expenses and costs of any
action undertaken by the Trustee to protect the Trust and the rights and
interests of the Unit holders; fees of the Trustee for any extraordinary
services performed under the Trust Agreement; indemnification of the Trustee for
any loss or liability accruing to it without willful misconduct, bad faith, or
gross negligence on its part, arising out of or in connection with its
acceptance or administration of the Trust; and all taxes and other governmental
charges imposed upon the Securities or any part of the Trust (no such taxes or
charges are being levied or made or, to the knowledge of the Sponsors,
contemplated). To the extent lawful, the Trust shall bear the expenses
associated with updating the Trust's registration statement and maintaining
registration or qualification of the Units and/or a Trust under Federal or state
securities laws subsequent to initial registration. Such expenses shall include
legal fees, accounting fees, typesetting fees, electronic filing expenses and
regulatory filing fees. The expenses associated with updating registration
statements have been historically paid by a unit investment trust's sponsor. All
direct distribution expenses of the trusts (including the costs of maintaining
the secondary market for the trusts), such as printing and distributing
prospectuses, and preparing, printing and distributing any advertisements or
sales literature will be paid at no cost to the Trust. Any payments received by
the Sponsors reimbursing it for payments made to update the Trust's registration
statement will not exceed the costs incurred by the Sponsors. The above
expenses, including the Trustee's fee, when paid by or owing to the Trustee, are
secured by a lien on the Trust. In addition, the Trustee is empowered to sell
Securities in order to make funds available to pay all expenses.
Reports and Records. The Trustee shall furnish Unit holders of the Trust in
connection with each distribution a statement of the amount of interest, if any,
and the amount of other receipts, if any, which are being distributed, expressed
in each case as a dollar amount per Unit. Within a reasonable time after the end
of each calendar year, the Trustee will furnish to each person who at any time
during the calendar year was a Unit holder of record, a statement providing the
following information: (1) as to the Interest Account: interest received
(including amounts representing interest received upon any disposition of
Securities and any earned original issue discount), and, if the issuers of the
Securities are located in different states or territories, the percentage of
such interest by such states or territories, deductions for payment of
applicable taxes and for fees and expenses of the Trust (including insurance
costs), redemptions of Units and the balance remaining after such distributions
and deductions,
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expressed both as a total dollar amount and as a dollar amount representing the
pro rata share of each Unit outstanding on the last business day of such
calendar year; (2) as to the Principal Account: the dates of disposition of any
Securities and the net proceeds received therefrom (including any unearned
original issue discount but excluding any portion representing interest, with
respect to the Trust the premium attributable to the Trustee's exercise of the
right to obtain Permanent Insurance and any related custodial fee), deductions
for payments of applicable taxes and for fees and expenses of the Trust,
purchase of Replacement Bonds, redemptions of Units, the amount of any "when
issued" interest treated as a return of capital and the balance remaining after
such distributions and deductions, expressed both as a total dollar amount and
as a dollar amount representing the pro rata share of each Unit outstanding on
the last business day of such calendar year; (3) a list of the Securities held
and the number of Units outstanding on the last business day of such calendar
year; (4) the Redemption Price per Unit based upon the last computation thereof
made during such calendar year; and (5) amounts actually distributed during such
calendar year from the Interest Account and from the Principal Account,
separately stated, expressed both as total dollar amounts and as dollar amounts
representing the pro rata share of each Unit outstanding.
The Trustee shall keep available for inspection by Unit holders at all
reasonable times during usual business hours, books of record and account of its
transactions as Trustee including records of the names and addresses of Unit
holders of the Trust, certificates issued or held, a current list of Securities
in the Trust and a copy of the Trust Agreement.
Redemption. Tender of Units. While it is anticipated that Units can be sold in
the secondary market, Units may also be tendered to the Trustee for redemption
at its corporate trust office at 101 Barclay Street, New York, New York 10286,
upon payment of any applicable tax. At the present time there are no specific
taxes related to the redemption of the Units. No redemption fee will be charged
by the Sponsors or the Trustee. Units redeemed by the Trustee will be canceled.
Certificates for Units to be redeemed must be delivered to the Trustee and
must be properly endorsed and accompanied by a written instrument of transfer.
Thus, redemption of Units cannot be effected until certificates representing
such Units have been delivered by the person seeking redemption (see "Rights of
Unit Holders-- Certificates" in Part B). Unit holders must sign exactly as their
names appear on the face of the certificate with signature(s) guaranteed by an
officer of a national bank or trust company, a member firm of either the New
York, Midwest or Pacific Stock Exchange, or in such other manner as may be
acceptable to the Trustee. In certain instances the Trustee may require
additional documents such as, but not limited to, trust instruments,
certificates of death, appointments as executor or administrator or certificates
of corporate authority.
Within seven calendar days following such tender, or if the seventh
calendar day is not a business day, on the first business day prior thereto, the
Unit holder will be entitled to receive in cash an amount for each Unit tendered
equal to the Redemption Price per Unit computed as of the Evaluation Time set
forth in the "Summary of Essential Information" as of the next subsequent
Evaluation Time. See "Redemption--Computation of Redemption Price per Unit." The
"date of tender" is deemed to be the date on which Units are received by the
Trustee, except that as regards Units received after the Evaluation Time on the
New York Stock Exchange, the date of tender is the next day on which such
Exchange is open for trading or the next day on which there is a sufficient
degree of trading in Units of the Trust, and such Units will be deemed to have
been tendered to the Trustee on such day for redemption at the Redemption Price
computed on that day. For information relating to the purchase by the Sponsors
of Units tendered to the Trustee for redemption at prices in excess of the
Redemption Price, see "Rights of Unit Holders--Redemption--Purchase by the
Sponsors of Units Tendered for Redemption" in Part B.
Accrued interest paid on redemption shall be withdrawn from the Interest
Account, or, if the balance therein is insufficient, from the Principal Account.
All other amounts paid on redemption shall be withdrawn from the Principal
Account. The Trustee is empowered to sell Securities in order to make funds
available for redemption. Such sales, if required, could result in a sale of
Securities by the Trustee at a loss. To the extent Securities are sold, the size
and diversity of the Trust will be reduced.
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If the Trustee exercises the right to obtain Permanent Insurance on a Bond
in the Trust, such Bond will be sold from the Trust on an insured basis. In the
event that the Trustee does not exercise the right to obtain Permanent Insurance
on a Bond, such Bond will be sold from the Trust on an uninsured basis, since
the MBIA insurance obtained by the Trust covers the timely payment of principal
and interest when due on the Bonds only while the Bonds are held in and owned by
the Trust. If the Trustee does not obtain Permanent Insurance on a Defaulted
Bond, to the extent that Bonds which are current in payment of interest are sold
from the Trust portfolio in order to meet redemption requests and Defaulted
Bonds are retained in the Portfolio in order to preserve the related insurance
protection applicable to said Bonds, the overall value of the Bonds remaining in
the Trust will tend to diminish. See "Sponsors--Responsibility" in Part B for
the effect of selling Defaulted Bonds to meet redemption requests.
The Trustee reserves the right to suspend the right of redemption and to
postpone the date of payment of the Redemption Price per Unit for any period
during which the New York Stock Exchange is closed, other than weekend and
holiday closings, or during which trading on that Exchange is restricted or
during which (as determined by the Securities and Exchange Commission by rule or
regulation) an emergency exists as a result of which disposal or evaluation of
the underlying Bonds is not reasonably practicable, or for such other periods as
the Securities and Exchange Commission has by order permitted.
Because insurance obtained by the Trust terminates as to Bonds which are
sold by the Trustee, and because the insurance obtained by the Trust does not
have a realizable cash value which can be used by the Trustee to meet
redemptions of Units, under certain circumstances the Sponsors may apply to the
Securities and Exchange Commission for an order permitting a full or partial
suspension of the right of Unit holders to redeem their Units if a significant
portion of the Bonds in the Trust is in default in payment of principal or
interest or in significant risk of such default. No assurances can be given that
the Securities and Exchange Commission will permit the Sponsors to suspend the
rights of Unit holders to redeem their Units, and without the suspension of such
redemption rights when faced with excessive redemptions the Sponsors may not be
able to preserve the benefits of the Trust's insurance on Defaulted Bonds.
Computation of Redemption Price per Unit. The Redemption Price per Unit is
determined by the Trustee on the basis of the bid prices of the Securities in
the Trust, while the Public Offering Price of Units during the initial offering
period is determined on the basis of the offering prices of the Securities, both
as of the Evaluation Time on the day any such determination is made. The bid
prices of the Securities may be expected to be less than the offering prices.
This Redemption Price per Unit is each Unit's pro rata share, determined by the
Trustee, of: (1) the aggregate value of the Securities in the Trust (determined
by the Evaluator as set forth below), except for those cases in which the value
of insurance has been included, (2) cash on hand in the Trust (other than cash
covering contracts to purchase Securities), and (3) accrued and unpaid interest
on the Securities as of the date of computation, less (a) amounts representing
taxes or governmental charges payable out of the Trust, (b) the accrued expenses
of the Trust, and (c) cash held for distribution to Unit holders of record as of
a date prior to the evaluation. The Evaluator may determine the value of the
Securities in the Trust (1) on the basis of current bid prices for the
Securities, (2) if bid prices are not available for any Securities, on the basis
of current bid prices for comparable bonds, (3) by appraisal, or (4) by any
combination of the above. In determining the Redemption Price per Unit no value
will be assigned to the portfolio insurance obtained by the Trust on the Bonds
in the Trust unless such Bonds are in default in payment of principal or
interest or in significant risk of such default. On the other hand, Pre-insured
Bonds in the Trust are entitled at all times to the benefits of insurance
obtained by their respective issuers so long as the Pre-insured Bonds are
outstanding and the insurer continues to fulfill its obligations, and such
benefits are reflected and included in the market value of Pre-insured Bonds.
For a description of the situations in which the Evaluator may value the
insurance obtained by the Trust, see "Public Offering--Offering Price" in this
Part B.
The difference between the bid and offering prices of the Securities may be
expected to average 1 1/2% of face amount. In the case of actively traded bonds,
the difference may be as little as 1/2 of 1%, and in the case of
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inactively traded bonds such difference usually will not exceed 3%. On the
business day prior to the date of this Prospectus, the aggregate bid side
evaluation was lower than the aggregate offering side evaluation by the amount
set forth in the footnotes to the "Portfolio". For this reason, among others,
the price at which Units may be redeemed could be less than the price paid by
the Unit holder. On the Date of Deposit the aggregate current offering price of
such Securities per Unit exceeded the bid price of such Securities per Unit by
the amount set forth under "Summary of Essential Information".
Purchase by the Sponsors of Units Tendered for Redemption. The Trust
Agreement requires that the Trustee notify the Sponsors of any tender of Units
for redemption. So long as the Sponsors are maintaining a bid in the secondary
market, the Sponsors, prior to the close of business on the second succeeding
business day, will purchase any Units tendered to the Trustee for redemption at
the price so bid by making payment therefor to the Unit holder in an amount not
less than the Redemption Price on the date of tender not later than the day on
which the Units would otherwise have been redeemed by the Trustee (see "Public
Offering--Offering Price--Market for Units" in this Part B). Units held by the
Sponsors may be tendered to the Trustee for redemption as any other Units,
provided that the Sponsors shall not receive for Units purchased as set forth
above a higher price than they paid, plus accrued interest.
The offering price of any Units resold by the Sponsors will be the Public
Offering Price determined in the manner provided in this Prospectus (see "Public
Offering--Offering Price" in Part B). Any profit resulting from the resale of
such Units will belong to the Sponsors which likewise will bear any loss
resulting from a lower offering or redemption price subsequent to their
acquisition of such Units (see "Public Offering--Sponsors' and Underwriters'
Profits" in this Part B).
Exchange Option. The Sponsors of the series of Empire State Municipal Exempt
Trust, (including the series of Municipal Exempt Trust, the predecessor trust to
Empire State Municipal Exempt Trust) (the "Exchange Trusts") are offering Unit
holders of the Exchange Trusts for which the Sponsors are maintaining a
secondary market an option to exchange a Unit of any series of the Exchange
Trusts for a Unit of a different series of the Exchange Trusts being offered by
the Sponsors (other than in the initial offering period) at a Public Offering
Price generally based on the bid prices of the underlying Securities divided by
the number of Units outstanding (see "Public Offering--Offering Price--Markets
for Units") plus a fixed sales charge of $15 per Unit (in lieu of the normal
sales charge). However, a Unit holder must have held his Unit for a period of at
least six months in order to exercise the exchange option or agree to pay a
sales charge based on the greater of $15 per Unit or an amount which together
with the initial sales charge paid in connection with the acquisition of Units
being exchanged equals the normal sales charge of the series into which the
investment is being converted, determined as of the date of the exchange. Such
exchanges will be effected in whole Units only. Any excess proceeds from the
Units being surrendered will be returned, and the Unit holder will not be
permitted to advance any new money in order to complete an exchange. The
Sponsors reserve the right to modify, suspend or terminate this plan at any time
without further notice to the Unit holders. In the event the exchange option is
not available to a Unit holder at the time he wishes to exercise it, the Unit
holder will be immediately notified and no action will be taken with respect to
his Units without further instructions from the Unit holder.
Unit holders are urged to consult their own tax advisors as to the tax
consequences of exchanging Units.
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AUTOMATIC ACCUMULATION ACCOUNT
The Sponsors have entered into an arrangement (the "Plan") with Empire
Builder Tax Free Bond Fund (the "Empire Builder") which permits Unit holders of
the Trust to elect to have distributions from Units in the Trust automatically
reinvested in shares of the Empire Builder. The Empire Builder is an open-end,
non-diversified investment company whose investment objective is to seek as high
a level of current income exempt from Federal income tax, New York State and New
York City income taxes as is believed to be consistent with preservation of
capital. It is the policy of the Empire Builder to invest primarily in debt
securities the interest income from which is exempt from such taxes.
The Empire Builder has an investment objective which differs in certain
respects from that of the Trust. The bonds purchased by the Empire Builder will
be of "investment grade" quality--that is, at the time of purchase by the Empire
Builder, such bonds either will be rated not lower than the four highest ratings
of either Moody's (Aaa, Aa, A or Baa) or Standard & Poor's (AAA, AA, A or BBB)
or will be unrated bonds which at the time of purchase are judged by the Empire
Builder's investment advisor to be of comparable quality to bonds rated within
such four highest grades. It is a fundamental policy of the Empire Builder that
under normal market conditions at least 90% of the income distributed to its
shareholders will be exempt from Federal income tax, New York State and New York
City personal income taxes. However, during times of adverse market conditions,
when the Empire Builder is investing for temporary defensive purposes in
obligations other than New York tax-exempt bonds, more than 10% of the Empire
Builder's income distributions could be subject to Federal income tax, New York
State and/or New York City income taxes, as described in the current prospectus
relating to the Empire Builder (the "Empire Builder Prospectus"). Glickenhaus &
Co. ("Glickenhaus"), a sponsor of the Trust, acts as the investment adviser and
distributor for the Empire Builder.
Each Unit holder may request from The Bank of New York (the "Plan Agent"),
a copy of the Empire Builder Prospectus describing the Empire Builder and a form
by which such Unit holder may elect to become a participant ("Participant") in
the Plan. Thereafter, as directed by such person, distributions on the
Participant's Units will, on the applicable distribution date, automatically be
applied as of that date by the Trustee to purchase shares (or fractions thereof)
of the Empire Builder at a net asset value as computed as of the close of
trading on the New York Stock Exchange on such date, as described in the Empire
Builder Prospectus. Unless otherwise indicated, new Participants in the Empire
Builder Plan will be deemed to have elected the monthly distribution plan with
respect to their Units. Confirmations of all transactions undertaken for each
Participant in the Plan will be mailed to each Participant by the Plan Agent
indicating distributions and shares (or fractions thereof) of the Empire Builder
purchased on his behalf. A Participant may at any time prior to ten days
preceding the next succeeding distribution date, by so notifying the Plan Agent
in writing, elect to terminate his participation in the Plan and receive future
distributions on his Units in cash. There will be no charge or other penalty for
such termination. The Sponsors, the Trustee, the Empire Builder and Glickenhaus,
as investment advisor for Empire Builder, each will have the right to terminate
or modify this Plan at any time for any reason. The reinvestment of
distributions from the Trust through the Plan will not affect the income tax
status of such distributions. For more complete information about investing in
the Empire Builder through the Plan, including charges and expenses, return the
enclosed card for a copy of the Empire Builder Prospectus. Read it carefully
before you decide to participate.
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[ALTERNATE PAGE]
AUTOMATIC ACCUMULATION ACCOUNT
For Unit holders of the Trust who are clients of Lebenthal & Co., Inc., the
Sponsors have entered into an arrangement (the "Plan") with Lebenthal New York
Municipal Bond Fund (the "Bond Fund") which permits Unit holders of the Trust
who receive distributions from the Trust on a semi-annual basis to elect to have
distributions from Units in the Trust automatically reinvested in shares of the
Bond Fund. The Bond Fund is an open-end, non-diversified investment company
whose investment objective is to maximize current income exempt from regular
Federal income tax, and from New York State and New York City income taxes,
consistent with preservation of capital and with consideration given to
opportunities for capital gain. It is the policy of the Bond Fund to invest
primarily in long term investment grade tax-exempt securities the interest
income from which is exempt from such taxes.
The Bond Fund has an investment objective which differs in certain respects
from that of the Trust. The bonds purchased by the Bond Fund will be of
"investment grade" quality--that is, at the time of purchase by the Bond Fund,
such bonds either will be rated not lower than the four highest ratings of
either Moody's (Aaa, Aa, A or Baa) or Standard & Poor's (AAA, AA, A or BBB) or
will be unrated bonds which at the time of purchase are judged by the Bond
Fund's investment advisor to be of comparable quality to bonds rated within such
four highest grades. It is a fundamental policy of the Bond Fund that under
normal market conditions at least 80% of the income distributed to its
shareholders will be exempt from regular Federal income tax, and from New York
State and New York City personal income taxes. However, during times of adverse
market conditions, more than 20% of the Bond Fund's income distributions could
be subject to Federal income tax, New York State and/or New York City income
taxes, as described in the current prospectus relating to the Bond Fund (the
"Bond Fund Prospectus"). Lebenthal & Co., Inc., a sponsor of the Trust, acts as
the manager and distributor for the Bond Fund.
A Unit holder who receives distributions from the Trust on a semi-annual
basis may request from The Bank of New York (the "Plan Agent"), a copy of the
Bond Fund Prospectus describing the Bond Fund and a form by which such Unit
holder may elect to become a participant ("Participant") in the Plan.
Thereafter, as directed by such person, distributions on the Participant's Units
will, on the applicable distribution date, automatically be applied as of that
date by the Trustee to purchase shares (or fractions thereof) of the Bond Fund
at a net asset value as computed as of the close of trading on the New York
Stock Exchange on such date, as described in the Bond Fund Prospectus.
Confirmations of all transactions undertaken for each Participant in the Plan
will be mailed to each Participant by the Plan Agent indicating distributions
and shares (or fractions thereof) of the Bond Fund purchased on his behalf. A
Participant may at any time prior to ten days preceding the next succeeding
distribution date, by so notifying the Plan Agent in writing, elect to terminate
or modify his participation in the Plan and receive future distributions on his
Units in cash. There will be no charge or other penalty for such termination.
The Sponsors, the Trustee, the Bond Fund and Lebenthal & Co. Inc., as manager
for the Bond Fund, each will have the right to terminate or modify this Plan at
any time for any reason. The reinvestment of distributions from the Trust
through the Plan will not affect the income tax status of such distributions.
For more complete information about investing in the Bond Fund through the Plan,
including charges and expenses, return the enclosed card for a copy of the Bond
Fund Prospectus. Read it carefully before you decide to participate.
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SPONSORS
Glickenhaus and Lebenthal are the Sponsors of Empire State Municipal Exempt
Trust, Series 10 and all subsequent series.
Glickenhaus, a New York limited partnership, is engaged in the underwriting
and securities brokerage business, and in the investment advisory business. It
is a member of the New York Stock Exchange, Inc. and the National Association of
Securities Dealers, Inc. and is an associate member of the American Stock
Exchange. Glickenhaus acts as a sponsor for successive Series of The Glickenhaus
Value Portfolios and The Municipal Insured National Trusts, and for the prior
series of Empire State Municipal Exempt Trust including those sold under the
name of Municipal Exempt Trust, New York Exempt Series 1, New York Series 2 and
New York Series 3. Glickenhaus, in addition to participating as a member of
various selling groups of other investment companies, executes orders on behalf
of investment companies for the purchase and sale of securities of such
companies and sells securities to such companies in its capacity as a broker or
dealer in securities.
Lebenthal, a New York corporation originally organized as a New York
partnership in 1925, has been buying and selling municipal bonds for its own
account as a dealer for over 68 years; Lebenthal also buys and sells securities
as an agent and participates as an underwriter in public offerings of municipal
bonds. It acted as a sponsor of Empire State Tax Exempt Bond Trust, Series 8 and
successive Series of The Municipal Insured National Trust through Series 28.
Lebenthal is registered as a broker/dealer with the Securities and Exchange
Commission and various state securities regulatory agencies and is a member of
the National Association of Securities Dealers, Inc. and Securities Investors
Protection Corp.
Limitations on Liability. The Sponsors are jointly and severally liable for the
performance of their obligations arising from their responsibilities under the
Trust Agreement, but will be under no liability to the Unit holders for taking
any action or refraining from any action in good faith or for errors in
judgment; nor will they be responsible in any way for depreciation or loss
incurred by reason of the sale of any Bonds, except in cases of their willful
misconduct, bad faith, gross negligence or reckless disregard for their
obligations and duties. See "The Trust--Portfolio" and
"Sponsors--Responsibility" in Part B.
Responsibility. The Trustee shall sell, for the purpose of redeeming Units
tendered by any Unit holder and for the payment of expenses for which funds are
not available, such of the Bonds in a list furnished by the Sponsors as the
Trustee in its sole discretion may deem necessary. In the event the Trustee does
not exercise the right to obtain Permanent Insurance on a Defaulted Bond or
Bonds in the Trust, to the extent that Bonds are sold which are current in
payment of principal and interest in order to meet redemption requests and
Defaulted Bonds are retained in the Trust in order to preserve the related
insurance protection applicable to said Bonds, the overall value of the Bonds
remaining in the Trust's Portfolio will tend to diminish. In the event the
Trustee does not exercise the right to obtain Permanent Insurance on a Defaulted
Bond or Bonds, except as described below and in certain other unusual
circumstances for which it is determined by the Trustee to be in the best
interests of the Unit holders or if there is no alternative, the Trustee is not
empowered to sell Defaulted Bonds for which value has been attributed for the
insurance obtained by the Trust. Because of such restrictions on the Trustee,
under certain circumstances the Sponsors may seek a full or partial suspension
of the right of Unit holders to redeem their Units. See "Rights of Unit
Holders--Redemption" in Part B. The Sponsors are empowered, but not obligated,
to direct the Trustee to dispose of Bonds in the event of advanced refunding.
It is the responsibility of the Sponsors to instruct the Trustee to reject
any offer made by an issuer of any of the Securities to issue new obligations in
exchange and substitution for any Securities pursuant to a refunding or
refinancing plan, except that the Sponsors may instruct the Trustee to accept
such an offer or to take any other action with respect thereto as the Sponsors
may deem proper if the issuer is in default with respect to such Securities or
in the judgment of the Sponsors the issuer will probably default in respect to
such Securities in the foreseeable future.
B-31
840829.1
<PAGE>
Any obligations so received in exchange or substitution will be held by the
Trustee subject to the terms and conditions of the Trust Agreement to the same
extent as Securities originally deposited thereunder. Within five days after the
deposit of obligations in exchange or substitution for underlying Securities,
the Trustee is required to give notice thereof to each Unit holder, identifying
the obligations eliminated and the Securities substituted therefor. Except as
stated in this and the preceding paragraph and in the discussion under "Risk
Factors-Failure of a Contract to Purchase Bonds and Substitution of Bonds" in
Part B regarding the substitution of Replacement Bonds for Failed Bonds, the
acquisition by the Trust of any securities other than the Securities initially
deposited is prohibited.
If any default in the payment of principal or interest on any Bond occurs
and no provision for payment is made therefor either pursuant to the portfolio
insurance with respect to the Trust or otherwise within 30 days, the Trustee is
required to notify the Sponsors thereof. If the Sponsors fail to instruct the
Trustee to sell or to hold such Bond within 30 days after notification by the
Trustee to the Sponsors of such default, the Trustee may in its discretion sell
the defaulted Bond and not be liable for any depreciation or loss thereby
incurred. See "Insurance on the Bonds" in Part B.
The Sponsors may direct the Trustee to dispose of Bonds upon default in the
payment of principal or interest, institution of certain legal proceedings or
the existence of certain other impediments to the payment of Bonds, default
under other documents which may adversely affect debt service, default in the
payment of principal or interest on other obligations of the same issuer,
decline in projected income pledged for debt service on revenue Bonds, or
decline in price or the occurrence of other market factors, including advance
refunding, so that in the opinion of the Sponsors the retention of such Bonds in
the Trust would be detrimental to the interest of the Unit holders. The proceeds
from any such sales will be credited to the Principal Account for distribution
to the Unit holders.
Notwithstanding the foregoing, in connection with final distributions to
Unit holders, if the Trustee does not exercise the right to obtain Permanent
Insurance on any Defaulted Bond, because the portfolio insurance obtained by the
Trust is applicable only while Bonds so insured are held by the Trust, the price
to be received by the Trust upon the disposition of any such Defaulted Bond will
not reflect any value based on such insurance. Therefore, in connection with any
liquidation prior to the Mandatory Termination Date, with respect to the Trust,
it shall not be necessary for the Trustee to, and the Trustee does not currently
intend to, dispose of any Bonds if retention of such Bonds, until due, shall be
deemed to be in the best interest of Unit holders, including, but not limited
to, situations in which Bonds so insured are in default and situations in which
Bonds so insured have a deteriorated market price resulting from a significant
risk of default. Since the Pre-insured Bonds in the Trust will reflect the value
of the insurance obtained by the Bond issuer, it is the present intention of the
Sponsors not to direct the Trustee to hold any Pre-insured Bonds after the date
of termination. All proceeds received, less applicable expenses, from insurance
on Defaulted Bonds in the Trust not disposed of at the date of termination will
ultimately be distributed to Unit holders of record as of such date of
termination as soon as practicable after the date such Defaulted Bonds become
due and applicable insurance proceeds have been received by the Trustee (see
"Summary of Essential Information").
Agent for Sponsors. The Sponsor named as Agent for Sponsors under "Summary of
Essential Information" has been appointed by the other Sponsors as agent for
purposes of taking action under the Trust Agreement. If the Sponsors are unable
to agree with respect to action to be taken jointly by them under the Trust
Agreement and they cannot agree as to which Sponsors shall act as sole Sponsor,
then the Agent for Sponsors shall act as sole Sponsor. If one of the Sponsors
fails to perform its duties under the Trust Agreement or becomes incapable of
acting or becomes bankrupt or its affairs are taken over by public authorities,
that Sponsor is automatically discharged under the Trust Agreement and the other
Sponsor act as the sole Sponsor.
B-32
840829.1
<PAGE>
Resignation. Any Sponsor may resign at any time provided that at the time of
such resignation one remaining Sponsor maintains a net worth of $1,000,000 and
all the remaining Sponsor is agreeable to such resignation. Concurrent with or
subsequent to such resignation a new Sponsor may be appointed by the remaining
Sponsor and the Trustee to assume the duties of the resigning Sponsor. If, at
any time, only one Sponsor is acting under each Trust Agreement and that Sponsor
shall resign or fail to perform any of its duties thereunder or becomes
incapable of acting or becomes bankrupt or its affairs are taken over by public
authorities, then the Trustee may appoint a successor sponsor or terminate the
Trust Agreement and liquidate the Trust.
Financial Information. The total partners' capital of Glickenhaus at September
30, 1998 was $185,620,531 (audited); and the total stockholders' equity of
Lebenthal at March 31, 1998 was $6,083,285 (audited).
The foregoing information with regard to the Sponsors relates to the
Sponsors only, and not to any series of Empire State Municipal Exempt Trust.
Such information is included in this Prospectus only for the purpose of
informing investors as to the financial responsibility of the Sponsors and their
ability to carry out their contractual obligations shown herein. More
comprehensive financial information can be obtained upon request from any
Sponsors.
TRUSTEE
The Trustee is The Bank of New York, a trust company organized under the
laws of New York, having its offices at 101 Barclay Street, New York, New York
10286. The Bank of New York is subject to supervision and examination by the
Superintendent of Banks of the State of New York and the Board of Governors of
the Federal Reserve System, and its deposits are insured by the Federal Deposit
Insurance Corporation to the extent permitted by law. The Trustee must be a
banking corporation organized under the laws of the United States or any state
which is authorized under such laws to exercise corporate trust powers and must
have at all times an aggregate capital, surplus and undivided profits of not
less than $5,000,000. The duties of the Trustee are primarily ministerial in
nature. The Trustee did not participate in the selection of Securities for the
Trust. Monies held by the Trustee for the Trust will be held in a non-interest
bearing account at the Trustee.
Limitations on Liability. The Trustee shall not be liable or responsible in any
way for depreciation or loss incurred by reason of the disposition of any
monies, Securities or certificates or in respect of any evaluation or for any
action taken in good faith reliance on prima facie properly executed documents
except in cases of its willful misconduct, bad faith, gross negligence or
reckless disregard for its obligations and duties. In addition, the Trustee
shall not be personally liable for any taxes or other governmental charges
imposed upon or in respect of the Trust which the Trustee may be required to pay
under current or future law of the United States or any other taxing authority
having jurisdiction. See "Portfolio" in Part A.
Responsibility. For information relating to the responsibilities of the Trustee
under the Trust Agreement, reference is made to the material set forth under
"Rights of Unit Holders," "Sponsors--Responsibility" and "Sponsors--Resignation"
in this Part B.
Resignation. By executing an instrument in writing and filing the same with the
Sponsors, the Trustee and any successor may resign. In such an event the
Sponsors are obligated to appoint a successor trustee as soon as possible. If
the Trustee becomes incapable of acting or becomes bankrupt or its affairs are
taken over by public authorities, or if the Sponsors deem it to be in the best
interest of the Unit holders, the Sponsors may remove the Trustee and appoint a
successor as provided in the Trust Agreement. Such resignation or removal shall
become effective upon the acceptance of appointment by the successor trustee.
If, upon resignation or removal of a trustee, no successor has been appointed
and has accepted the appointment within thirty days after notification, the
retiring trustee may apply to a court of competent jurisdiction for the
appointment of a successor. The resignation or removal of a trustee becomes
effective only when the successor trustee accepts its appointment as such or
when a court of competent jurisdiction appoints a successor trustee.
B-33
840829.1
<PAGE>
EVALUATOR
Both during and after the initial offering period, the Evaluator shall be
Muller Data Corporation ("Muller Data"), a New York corporation with main
offices located at 395 Hudson Street, New York, New York 10014. Muller Data is a
wholly owned subsidiary of Thomson Publishing Corporation, a Delaware
corporation.
Limitations on Liability. The Trustee and the Sponsors may rely on any
evaluation furnished by the Evaluator and shall have no responsibility for the
accuracy thereof. Determinations by the Evaluator under the Trust Agreement
shall be made in good faith upon the basis of the best information available to
it; provided, however, that the Evaluator shall be under no liability to the
Trustee, the Sponsors or Unit holders for errors in judgement. But this
provision shall not protect the Evaluator in cases of its willful misconduct,
bad faith, gross negligence or reckless disregard of its obligations and duties.
Responsibility. The Trust Agreement requires the Evaluator to evaluate the
Securities on the basis of their bid prices on each business day after the
initial offering period, when any Unit is tendered for redemption and on any
other day such evaluation is desired by the Trustee or is requested by the
Sponsors. For information relating to the responsibility of the Evaluator to
evaluate the Securities on the basis of their offering prices, see "Public
Offering--Offering Price" in Part B.
Resignation. The Evaluator may resign or may be removed by the Sponsors and the
Trustee, and the Sponsors and the Trustee are to use their best efforts to
appoint a satisfactory successor. Such resignation or removal shall become
effective upon the acceptance of appointment by the successor evaluator. If upon
resignation of the Evaluator no successor has accepted appointment within thirty
days after notice of resignation, the Evaluator may apply to a court of
competent jurisdiction for the appointment of a successor.
AMENDMENT AND TERMINATION OF THE TRUST AGREEMENT
The Sponsors and the Trustee have the power to amend the Trust Agreement
without the consent of any of the Unit holders when such an amendment is (1) to
cure any ambiguity or to correct or supplement any provision of the Trust
Agreement which may be defective or inconsistent with any other provision
contained therein, or (2) to make such other provisions as shall not adversely
affect the interest of the Unit holders; and the Sponsors and the Trustee may
amend the Trust Agreement with the consent of the holders of Certificates
evidencing 66 2/3% of the Units then outstanding, provided that no such
amendment will reduce the interest in the Trust of any Unit holder without the
consent of such Unit holder or reduce the percentage of Units required to
consent to any such amendment without the consent of all the Unit holders. In no
event shall the Trust Agreement be amended to increase the number of Units
issuable thereunder or to permit the deposit or acquisition of securities either
in addition to or in substitution for any of the Bonds initially deposited in
the Trust, except in accordance with the provisions of each Trust Agreement. In
the event of any amendment, the Trustee is obligated to notify promptly all Unit
holders of the substance of such amendment.
The Trust shall terminate upon the maturity, redemption, sale or other
disposition, as the case may be, of the last of the Securities. The Trustee
shall notify all Unit holders when the value of the Trust as shown by any
evaluation is less than $2,000,000 or less than 20% of the value of the Trust as
of the date hereof, whichever is lower, at which time the Trust may be
terminated (i) by the consent of 66 2/3% of the Units or (ii) by the Trustee;
provided, however, that upon affirmative written notice to the Sponsors and the
holders at least 33 1/3% of the Units may instruct the Trustee not to terminate
the Trust. In no event, however, may the Trust continue beyond the Mandatory
Termination Date set forth in Part A; provided, however, that prior to such
date, the Trustee shall not dispose of any Bonds if the retention of such Bonds,
until due, shall be deemed to be in the best interest of the Unit holders. In
the event of termination, written notice thereof will be sent by the Trustee to
all
B-34
840829.1
<PAGE>
Unit holders. Within a reasonable period after termination, the Trustee will
sell any remaining Securities, and, after paying all expenses and charges
incurred by the Trust, will distribute to each Unit holder, upon surrender for
cancellation of his certificate for Units, his pro rata share of the balances
remaining in the Interest and Principal Accounts of the Trust.
LEGAL OPINIONS
Certain legal matters will be passed upon by Battle Fowler LLP, 75 East
55th Street, New York, New York 10022, as special counsel for the Sponsors, and
Winston & Strawn, 200 Park Avenue, New York, New York 10166, acting as counsel
for the Trustee.
AUDITORS
The statement of condition of the Trust included in this Prospectus has
been audited by BDO Seidman, LLP, independent certified public accountants, as
stated in their report appearing herein, and has been so included in reliance
upon such report given upon the authority of that firm as experts in accounting
and auditing.
DESCRIPTION OF BOND RATINGS
Standard & Poors Rating. The ratings are based on current information
furnished to Standard & Poor's by the issuer and obtained by Standard & Poor's
from other sources it considers reliable. Standard & Poor's does not perform an
audit in connection with any rating and may, on occasion, rely on unaudited
financial information. The ratings may be changed, suspended, or withdrawn as a
result of changes in, or unavailability of, such information or for other
circumstances.
The ratings are based, in varying degrees, on the following considerations:
I. Likelihood of default-capacity and willingness of the obligor as to the
timely payment of interest and repayment of principal in accordance with the
terms of the obligation;
II. Nature of and provisions of the obligation;
III. Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization or other arrangement under the laws of
bankruptcy and other laws affecting creditors' rights.
AAA--Bonds rated AAA have the highest rating assigned by Standard & Poor's
to a debt obligation. Capacity to pay interest and repay principal is extremely
strong.
AA--Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
A--Bonds rated A have a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing
B-35
840829.1
<PAGE>
circumstances are more likely to lead to a weakened capacity to pay interest and
repay principal for bonds in this category than for bonds in higher rated
categories.
BB, B, CCC, CC--Bonds rated BB, B, CCC and CC are regarded on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
Plus (+) or Minus (-): to provide more detailed indications of credit
quality, the ratings from "AA" to "B" may be modified by the addition of a plus
or minus sign to show relative standing within the major rating categories.
Provisional Ratings: The letter "p" indicates that the rating is
provisional. A provisional rating assumes the successful completion of the
project being financed by the bonds being rated and indicates that payment of
debt service requirements is largely or entirely dependent upon the successful
and timely completion of the project. This rating, however, while addressing
credit quality subsequent to completion of the project, makes no comment on the
likelihood of, or the risk of default upon failure of, such completion.
Accordingly, the investor should exercise his own judgment with respect to such
likelihood and risk.
NR--Indicates that no rating has been requested, that there is
insufficient information on which to base a rating or that Standard & Poor's
does not rate a particular type of obligation as a matter of policy.
SP-1: Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be given a
plus (+) designation.
SP-2: Satisfactory capacity to pay principal and interest. SP-3:
Speculative capacity to pay principal and interest.
* Moody's Investors Service Rating. A summary of the meaning of the
applicable rating symbols as published by Moody's follows:
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa--Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
B-36
840829.1
<PAGE>
Ba--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or maintenance of other
terms of the contract over any long period of time may be small.
Con. (. . .)--Bonds for which the security depends upon the completion of
some act or the fulfillment of some condition are rated conditionally. These are
bonds secured by: (a) earnings of projects under construction, (b) earnings of
projects unseasoned in operating experience, (c) rentals which begin when
facilities are completed, or (d) payments to which some other limiting condition
attaches. Parenthetical rating denotes probable credit stature upon completion
of construction or elimination of basis of condition.
Moody's applies numerical modifiers 1, 2 and 3 in each rating
classification from "Aa" through "B" in its corporate rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the security ranks in the lower end of its generic rating
category.
B-37
840829.1
<PAGE>
TAX EQUIVALENT YIELDS
The following tables indicate the approximate yield resident individuals in
various income brackets must earn on a security subject to Federal, New York
State and New York City income taxes to receive an after-tax yield equivalent to
that provided by a tax-exempt bond yielding from 4.0% to 8.0%, based on
anticipated 1999 Federal, New York State and New York City marginal tax rates.
New York City taxpayers should refer to Table I. New York State taxpayers
outside of New York City should refer to Table II.
TABLE I. COMBINED EFFECT OF FEDERAL, NEW YORK STATE AND NEW YORK CITY
INCOME TAXES
<TABLE>
<CAPTION>
Approx.
1999 To equal a tax-exempt yield of:
--------------------------------------------------------------
Federal,
NYS 4.00% 4.50% 5.00% 5.50% 6.00% 6.50% 7.00% 7.50% 8.00%
--------------------------------------------------------------
If your net taxable income1 & NYC
is approximately2 Marginal
Joint Return Single Return Tax Rates4 A taxable investment would have to pay you:3
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$21,601-$43,050 $12,001-$25,750 24.10% 5.3% 5.9% 6.6% 7.2% 7.9% 8.6% 9.2% 9.9% 10.5%
- -------------------------------------------------------------------------------------------------------------------
$43,051-$104,050 $25,751-$62,450 35.75% 6.2% 7.0% 7.8% 8.6% 9.3% 10.1% 10.9% 11.7% 12.5%
- -------------------------------------------------------------------------------------------------------------------
$104,051-$158,550 $62,451-$130,250 39.42% 6.6% 7.4% 8.3% 9.1% 9.9% 10.7% 11.6% 12.4% 13.2%
- -------------------------------------------------------------------------------------------------------------------
$158,551-$283,150 $130,251-$283,150 43.89% 7.1% 8.0% 8.9% 9.8% 10.7% 11.6% 12.5% 13.4% 14.3%
- -------------------------------------------------------------------------------------------------------------------
$283,151+ $283,151+ 47.30% 7.6% 8.5% 9.5% 10.4% 11.4% 12.3% 13.3% 14.2% 15.2%
- -------------------------------------------------------------------------------------------------------------------
TABLE II. COMBINED EFFECT OF FEDERAL AND NEW YORK STATE INCOME TAXES
Approx.
1999 To equal a tax-exempt yield of:
-----------------------------------------------------------------
If your net taxable Federal &
income1 is NYS 4.00% 4.50% 5.00% 5.50% 6.00% 6.50% 7.00% 7.50% 8.00%
-----------------------------------------------------------------
approximately2 Marginal
Joint Return Single Return Tax Rates5 A taxable investment would have to pay you:3
- --------------------------------------------------------------------------------------------------------------------
$21,601-$43,050 $12,001-$25,750 20.82% 5.1% 5.7% 6.3% 7.0% 7.6% 8.2% 8.8% 9.5% 10.1%
- --------------------------------------------------------------------------------------------------------------------
$43,051-$104,050 $25,751-$62,450 32.93% 6.0% 6.7% 7.5% 8.2% 9.0% 9.7% 10.4% 11.2% 11.9%
- --------------------------------------------------------------------------------------------------------------------
$104,051-$158,550 $62,451-$130,250 36.59% 6.3% 7.1% 7.9% 8.7% 9.5% 10.3% 11.0% 11.8% 12.6%
- --------------------------------------------------------------------------------------------------------------------
$158,551-$283,150 $130,251-$283,150 41.39% 6.8% 7.7% 8.5% 9.4% 10.2% 11.1% 11.9% 12.8% 13.7%
- --------------------------------------------------------------------------------------------------------------------
$283,151+ $283,151+ 44.85% 7.3% 8.2% 9.1% 10.0% 10.9% 11.8% 12.7% 13.6% 14.5%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
1 After exemptions and deductions other than state and local tax
deductions.
2 The tables cover only a representative range of incomes,
and income brackets have been rounded off to facilitate
illustration. Actual Federal, New York State and New York
City income brackets may differ slightly from those in the
table.
3 Yields on taxable investments have been rounded off to facilitate
illustration.
4 This rate is calculated by using the highest New York State and New
York City marginal tax rates that apply to the bracket.
5 This rate is calculated by using the highest New York State marginal
tax rate that applies to the bracket.
B-38
840829.1
<PAGE>
[This page intentionally left blank]
B-39
369165.4
<PAGE>
EMPIRE STATE MUNICIPAL EXEMPT TRUST, GUARANTEED SERIES 145
- --------------------------------------------------------------------------------
5,000 Units Dated: May 25, 1999
This Prospectus does not contain all of the information with respect to the
Trust set forth in its registration statements filed with the Securities and
Exchange Commission, Washington, D.C. under the Securities Act of 1933 (file no.
33- 74097) and the Investment Company Act of 1940 (file no. 811-2838), and to
which reference is hereby made. Copies may be reviewed at the Commission or on
the Internet, or obtained from the Commission at prescribed rates by:
o calling: 1-800-SEC-0330
o visiting the SEC Internet address: http://www.sec.gov.
o writing: Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549-6009
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Table of Contents Sponsors:
Part A
<S> <C> <C>
Investment Summary A-2 Glickenhaus & Co.
Fee Table A-4 6 East 43rd Street
Summary of Essential Information A-5 New York, New York 10017
Portfolio Summary A-7
Report of Independent Auditors A-8 Lebenthal & Co., Inc.
Statement of Condition A-9 120 Broadway
Portfolio A-10 New York, New York 10271
Underwriting Account A-12
Part B
The Trust B-1
Risk Factors B-2 Trustee:
Insurance on the Bonds B-12
Public Offering B-14 The Bank of New York
Estimated Current Return and 101 Barclay Street
Estimated Long-Term Return to Unit Holders B-18 New York, New York 10286
Tax Status B-19
Rights of Unit Holders B-23
Automatic Accumulation Account B-30
Sponsors B-31
Trustee B-33
Evaluator B-34
Amendment and Termination of the
Trust Agreement B-34
Legal Opinions B-35
Auditors B-35
Description of Bond Ratings B-35
Tax Equivalent Yields B-38
</TABLE>
- --------------------------------------------------------------------------------
No person is authorized to give any information or to make any representations
with respect to this Trust, not contained in this Prospectus and you should not
rely on any other information.
- --------------------------------------------------------------------------------
369165.4
<PAGE>
PART II--ADDITIONAL INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM A--BONDING ARRANGEMENTS
The employees of Glickenhaus & Co. and Lebenthal & Co., Inc. are covered
under Brokers' Blanket Policy, Standard Form 14, in the respective amounts of
$5,000,000 and $10,000,000.
ITEM B--CONTENTS OF REGISTRATION STATEMENT
This Registration Statement on Form S-6 comprises the following papers
and documents:
The facing sheet on Form S-6.
The Cross-Reference Sheet (incorporated by reference to the Cross-
Reference Sheet to the Registration Statement of Empire State
Municipal Exempt Trust, Guaranteed Series 133).
The Prospectus consisting of pages.
Undertakings.
Signatures.
Written consents of the following persons:
Battle Fowler LLP (included in Exhibit 99.3.1)
BDO Seidman, LLP
Muller Data Corporation (included in Exhibit 99.5.1)
The following exhibits:
<TABLE>
<S> <C> <C> <C>
*99.1.1 -- Reference Trust Agreement including certain Amendments to the Trust Indenture and Agreement
referred to under Exhibit 99.1.1 below.
+99.1.1.1 -- Trust Indenture and Agreement dated December 18, 1990.
99.1.3 -- Form of Agreement Among Underwriters and Selected Dealers Agreement (filed as Exhibit 1.8 to
Amendment No. 1 to Form S-6 Registration Statement No. 33-28268 of Empire State Municipal Exempt
Trust, Guaranteed Series 49 on July 18, 1989, and incorporated herein by reference).
99.1.6(a) -- Eighth Agreement of Amendment to Fourth Amended and Restated Agreement of Limited Partnership of
Glickenhaus & Co. (filed as Exhibit 1.6(a) to Amendment No. 1 to Form S-6 Registration Statement
No. 333-30481 of Empire State Municipal Exempt Trust, Guaranteed Series 138 on November 25, 1997).
+99.1.6.1 -- Certificate of Incorporation of Lebenthal & Co., Inc. as amended on October 23, 1981.
+99.1.6.2 -- By-Laws of Lebenthal & Co., Inc.
*99.1.7 -- Form of Insurance Policy obtained by the Trust.
- ------------
* Filed herewith.
+ Filed with Amendment No. 1 to Form S-6 Registration Statement No.
333-17307 of Empire State Municipal Exempt Trust, Guaranteed Series 134
on April 2, 1997 and incorporated herein by reference.
II-i
396037.1
<PAGE>
99.1.7(a) -- Master Letter Agreement of Municipal Bond Investors Assurance Corporation (filed as Exhibit 1.7(a)
to Amendment No. 1 to Form S-6 Registration Statement No. 33-35124 of Empire State Municipal Exempt
Trust, Guaranteed Series 59 on July 1, 1990, and incorporated herein by reference).
99.1.7(b) -- Form of Permanent Insurance Policy of Municipal Bond Investors Assurance Corporation (filed as
Exhibit 1.7.1 to Amendment No. 1 to Form S-6 Registration Statement No. 33- 10860 of Empire State
Municipal Exempt Trust, Guaranteed Series 31 on June 10, 1987, and incorporated herein by
reference).
+99.2.1 -- Form of Certificate.
*99.3.1 -- Opinion of Battle Fowler LLP as to the legality of the securities being registered.
99.4.1 -- Information as to Partners of Glickenhaus & Co. (filed as Exhibit 4.1 to Amendment No. 1 to Form
S-6 Registration Statement No. 33-26577 of Empire State Municipal Exempt Trust, Guaranteed Series
46 on April 19, 1989, and incorporated herein by reference).
99.4.2 -- Information as to Officers and Directors of Lebenthal & Co., Inc. (filed as Exhibit 4.2 to
Amendment No. 1 to Form S-6 Registration Statement No. 33-22568 of Empire State Municipal Exempt
Trust, Guaranteed Series 39 on August 9, 1988, and incorporated herein by reference).
99.4.3 -- Affiliations of Sponsors with other investment companies (filed as Exhibit 4.6 to Amendment No. 1
to Form S-6 Registration Statement No. 2-95041 of Municipal Insured National Trust Series 1 on
March 21, 1985, and incorporated herein by reference).
99.4.4 -- Stockbrokers' Bond and Policy, Form B for Glickenhaus & Co. (filed as Exhibit 4.7 to Form S-6
Registration Statement No. 2-95041 of Municipal Insured National Trust Series 1 on December 21,
1984, and incorporated herein by reference).
+99.4.5 -- Stockbrokers' Blanket Bond Policy, Standard Form No. 14 for Lebenthal & Co., Inc. dated April 5,
1983.
*99.5.1 -- Consent To Be Evaluator of Muller Data Corporation and Affirmation Letter of Standard & Poor's
Corporation.
*99.5.2 -- Affirmation Letter of Moody's Investors Service.
99.6.1 -- Copies of Powers of Attorney of General Partners of Glickenhaus & Co. (filed with Amendment No. 1
to Form S-6 Registration Statement No. 333-17307 of Empire State Municipal Exempt Trust, Guaranteed
Series 134 on April 2, 1997 and Post-Effective Amendment No. 7 to Form S-6 Registration Statement
No. 33-40723 on November 25, 1997 and incorporated herein by reference).
- --------
+ Filed with Amendment No. 1 to Form S-6 Registration Statement No. 333-17307 of Empire State Municipal Exempt Trust, Guaranteed
Series 134 on April 2, 1997 and incorporated herein by reference.
* Filed herewith.
II-ii
396037.1
<PAGE>
99.6.2 -- Copies of Powers of Attorney of Directors and certain officers of Lebenthal & Co., Inc. (filed
herewith and as Exhibit 6.2 to Amendment No. 1 to Form S-6 Registration No. 333-42453 of Empire
State Municipal Exempt Trust, Guaranteed Series 140 on May 18, 1998; and Exhibit 6.2 to Amendment
No. 1 to Form S-6 Registration Statement No. 33- 55385 of Empire State Municipal Exempt Trust,
Guaranteed Series 109 on November 2, 1994, and incorporated herein by reference).
</TABLE>
II-iii
396037.1
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the
Securities Exchange Act of 1934, the undersigned registrant hereby undertakes to
file with the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
SIGNATURES
The registrant hereby identifies Empire State Municipal Exempt
Trust, Guaranteed Series 141 for the purposes of the representations required by
Rule 487 and represents the following:
1) That the portfolio securities deposited in the Series as
to the securities of which this registration statement is
being filed do not differ materially in type or quality
from those deposited in such previous series;
2) That, except to the extent necessary to identify the
specific portfolio securities deposited in, and to provide
essential financial information for, the Series with
respect to the securities of which this registration
statement is being filed, this registration statement does
not contain disclosures that differ in any material
respect from those contained in the registration
statements for such previous Series as to which the
effective date was determined by the Commission or the
staff; and
3) That it has complied with Rule 460 under the Securities
Act of 1933.
Pursuant to the requirements of the Securities Act of 1933, the
registrant, Empire State Municipal Exempt Trust, Guaranteed Series 145 has duly
caused this Amendment to the Registration Statement to be signed on its behalf
by the undersigned, hereunto duly authorized, in the City of New York and State
of New York on the 25th day of May 1999.
EMPIRE STATE MUNICIPAL EXEMPT TRUST,
GUARANTEED SERIES 145
By: GLICKENHAUS & CO.
------------------------------------------
(Sponsor)
By: /S/ MICHAEL J. LYNCH
------------------------------------------
(Michael J. Lynch, Attorney-in-Fact)
Pursuant to the requirements of the Securities Act of 1933,
this Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
NAME TITLE DATE
- ---- ----- ----
ALFRED FEINMAN* General Partner
- --------------------------
(Alfred Feinman)
JAMES M. GLICKENHAUS* General Partner
- --------------------------
(James M. Glickenhaus)
SETH M. GLICKENHAUS* General Partner,
- -------------------------- Chief Investment Officer
(Seth M. Glickenhaus)
*By: /S/ MICHAEL J. LYNCH May 25, 1999
-----------------------------------
(Michael J. Lynch, Attorney-in-Fact)
- --------
* Executed copy of powers of attorney was filed as Exhibit 6.1 to
Registration Statement No. 333-17307 on April 2, 1997 and Post-Effective
Amendment No. 7 to Registration Statement No. 33-40723 on November 25,
1997.
II-iv
396037.1
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the
Securities Exchange Act of 1934, the undersigned registrant hereby undertakes to
file with the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
SIGNATURES
The registrant hereby identifies Empire State Municipal Exempt
Trust, Guaranteed Series 141 for the purposes of the representations required by
Rule 487 and represents the following:
1) That the portfolio securities deposited in the Series as
to the securities of which this registration statement is
being filed do not differ materially in type or quality
from those deposited in such previous series;
2) That, except to the extent necessary to identify the
specific portfolio securities deposited in, and to provide
essential financial information for, the Series with
respect to the securities of which this registration
statement is being filed, this registration statement does
not contain disclosures that differ in any material
respect from those contained in the registration
statements for such previous Series as to which the
effective date was determined by the Commission or the
staff; and
3) That it has complied with Rule 460 under the Securities
Act of 1933.
Pursuant to the requirements of the Securities Act of 1933, the
registrant, Empire State Municipal Exempt Trust, Guaranteed Series 145 has duly
caused this Amendment to the Registration Statement to be signed on its behalf
by the undersigned thereunto duly authorized, in the City of New York and State
of New York on the 25th day of May 1999.
EMPIRE STATE MUNICIPAL EXEMPT TRUST,
GUARANTEED SERIES 145
By: LEBENTHAL & CO., INC.
----------------------------------------
(Sponsor)
By: /s/ D. WARREN KAUFMAN
----------------------------------------
(D. Warren Kaufman, Attorney-in-Fact)
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
NAME TITLE DATE
- ---- ----- ----
H. GERARD BISSINGER, II* Director
- -----------------------------
(H. Gerard Bissinger, II)
JEFFREY M. JAMES* Director
- -----------------------------
(Jeffrey M. James)
/s/ D. WARREN KAUFMAN* Director May 25, 1999
- -----------------------------
(D. Warren Kaufman)
ALEXANDRA LEBENTHAL* Director, President
- -----------------------------
(Alexandra Lebenthal)
JAMES A. LEBENTHAL* Director, Chief Executive Officer
- -----------------------------
(James A. Lebenthal)
JAMES E. McGRATH** Director
- -----------------------------
(James E. McGRATH)
DUNCAN K. SMITH* Director
- -----------------------------
(Duncan K. Smith)
*By: /s/ D. WARREN KAUFMAN May 25, 1999
------------------------------------
(D. Warren Kaufman, Attorney-In-Fact)
- -------------
* An executed copy of the power of attorney was filed as Exhibit 6.2 to
Amendment No. 1 to Registration Statement No. 33-55385 on November 2,
1994.
** An executed copy of the power of attorney is filed as Exhibit 6.2 to
Amendment No. 1 to Registration Statement No. 333-42453 on May 18, 1998.
II-v
396037.1
<PAGE>
CONSENT OF COUNSEL
The consent of counsel to the use of their name in the Prospectus included in
this Registration Statement is contained in their opinion filed as Exhibit
99.3.1 to this Registration Statement.
CONSENT OF INDEPENDENT AUDITORS
The Sponsors and Trustee of Empire State Municipal Exempt Trust,
Guaranteed Series 145
We hereby consent to the use in this Amendment No. 1 to the Registration
Statement No. 333-74097 of our report dated May 25, 1999, relating to the
Statement of Condition of Empire State Municipal Exempt Trust, Guaranteed Series
145 and to the reference to our firm under the heading "Auditors" in the
Prospectus which is a part of such Registration Statement.
BDO SEIDMAN, LLP
New York, New York
May 25, 1999
II-vi
396037.1
<PAGE>
EMPIRE STATE MUNICIPAL EXEMPT TRUST
GUARANTEED SERIES 145
REFERENCE TRUST AGREEMENT
This Reference Trust Agreement dated May 25, 1999 among
Glickenhaus & Co. and Lebenthal & Co., Inc., as Depositors, The Bank of New
York, as Trustee and Muller Data Corporation, as Evaluator, sets forth certain
provisions in full and incorporates other provisions by reference to the
document entitled "Empire State Municipal Exempt Trust, Guaranteed Series 66,
Trust Indenture and Agreement" dated December 18, 1990 as amended in part by
this Reference Trust Agreement (herein as amended or supplemented called the
"Indenture"). This Reference Trust Agreement and the Indenture, as incorporated
by reference herein, will constitute a single instrument.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Depositors, the Trustee, and the Evaluator agree as follows:
Part I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II hereof, all the provisions
contained in the Indenture are herein incorporated by reference in their
entirety and shall be deemed to be a part of this instrument as fully and to the
same extent as though said provisions had been set forth in full in this
instrument except that for all purposes of this Empire State Municipal Exempt
Trust, Guaranteed Series 145, and all subsequent Series, the following sections
of the Indenture are amended as follows:
(a) Section 1.1(8) is hereby amended in its entirety to read as
follows:
"(8) "Evaluation Time" shall mean 12:00 p.m. New York Time on the
Business Day prior to the Date of Deposit and 2:00 p.m. New York
Time thereafter."
(b) Section 1.1(9) is hereby amended by deleting the words "Standard
and Poor's Corporation" therein and substituting the words "Muller Data
Corporation" in place thereof.
295222.1
<PAGE>
(c) Section 3.1 is hereby amended by revising it in its entirety to
read as follows:
"Section 3.1. Initial Cost. Subject to reimbursement by Unitholders
to the Depositors of the estimated per-Unit amount set forth in the
Prospectus, the cost of organizing the Trust and sale of the Trust
Units shall be borne by the Depositors, provided, however, that the
liability on the part of the Depositors under this section shall
not include any fees or other expenses incurred in connection with
the administration of the Trust subsequent to the deposit referred
to in Section 2.1. As used herein, the Depositors' reimbursable
expenses of organizing the Trust and sale of the Trust Units shall
include the cost of the initial preparation and typesetting of the
registration statement, prospectuses (including preliminary
prospectuses), the indenture, and other documents relating to the
Trust, SEC and state blue sky registration fees, the cost of the
initial valuation of the portfolio and audit of the Trust, the
initial fees and expenses of the Trustee, and legal and other
out-of-pocket expenses related thereto but not including the
expenses incurred in the printing of preliminary prospectuses and
prospectuses, expenses incurred in the preparation and printing of
brochures and other advertising materials and any other selling
expenses."
(d) Section 3.1.1 is hereby added, to read as follows:
"Section 3.1.1 Update Cost. To the extent permitted by an opinion
of independent counsel or in reliance on No-Action letters issued
by the staff of the Securities and Exchange Commission, the Trust
shall bear the expenses associated with updating the Trusts'
registration statements and maintaining registration or
qualification of the Units and/or a Trust under Federal or state
securities laws subsequent to initial registration. Such expenses
shall include legal fees, accounting fees, typesetting fees,
electronic filing expenses and regulatory filing fees. However, all
direct distribution expenses of the Trusts (including the costs of
maintaining the secondary market for the Trusts), such as printing
and distributing prospectuses, and preparing, printing and
distributing any advertisements or sales literature will be paid at
no cost to the Trusts. Any payments received by the Sponsor
reimbursing it for payments made to update Trusts' registration
statements will not exceed the costs incurred by the Sponsors. The
Trusts shall further incur expenses associated with all taxes and
other governmental charges imposed upon the Bonds or any part of a
Trust (no such taxes or charges are being levied or made or, to the
knowledge of the Sponsor, contemplated). The above expenses,
including the Trustee's fees, when paid by or owing to the Trustee,
are secured by a lien on the Trust. In addition, the Trustee is
empowered to sell Bonds in order to make funds available to pay all
expenses."
-2-
295222.1
<PAGE>
Part II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed to:
(a) The interest-bearing obligations listed in the Prospectus related
to Empire State Municipal Exempt Trust, Guaranteed Series 145 have been
deposited in trust under this Indenture (See "Portfolio" in Part A of the
Prospectus which for purposes of this Indenture is the Schedule of Securities or
Schedule A).
(b) For the purposes of the definition of the Unit in item (28) of
Section 1.1, the fractional undivided interest in and ownership of the Trust is
5,000.
(c) The fiscal year for the Trust shall end on September 30 of each
year.
(d) All Certificateholders of record on March 15, 1999 (the "First
Monthly Record Date") who have selected the monthly distribution plan, will
receive a distribution to be made on or shortly after April 1, 1999 (the "First
Distribution Date"), and thereafter distributions will be made monthly. The
first semi-annual distribution will be made on or shortly after June 1, 1999 to
all Certificateholders of record on May 15, 1999 who have selected the
semi-annual distribution plan, and thereafter distributions will be made
semi-annually.
(e) The First Settlement Date shall mean May 28, 1999.
(f) The number of Units referred to in Section 2.3 is 5,000.
(g) For the purposes of Section 4.3, the Evaluator shall receive for
each evaluation of the Bonds in the Trust $.55 per Bond for each valuation.
(h) For purposes of Section 6.4, the Trustee shall be paid per annum
$1.14 per $1,000 principal amount of Bonds for that portion of the Trust under
the monthly distribution plan and $.74 per $1,000 principal amount of Bonds for
that portion of the Trust under the semi-annual distribution plan.
(i) For purposes of Section 8.6, the Depositors' maximum annual fee is
hereby specified to be $.25 per $1,000 principal amount of Bonds in the Trust.
(j) For purposes of Section 9.2, the Mandatory Termination Date for the
Trust is June 15, 2031.
-3-
295222.1
<PAGE>
(k) For purposes of this Series of Empire State Municipal Exempt Trust,
the form of Certificate set forth in this Indenture shall be appropriately
modified to reflect the title of this Series as set forth above.
(l) For purposes of this Series of Empire State Municipal Exempt Trust,
the execution date of this Indenture shall be the date first written above.
IN WITNESS WHEREOF, the parties hereto have caused this Reference Trust
Agreement to be duly executed on the date first above written.
[Signatures on separate pages]
-4-
295222.1
<PAGE>
GLICKENHAUS & CO.
By /s/ Michael Lynch
----------------------------
Attorney-in-Fact
for each of the
General Partners
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
I, Carla Vogel, a Notary Public in and for the said County in the State
aforesaid, do hereby certify that Michael Lynch, personally known to me to be
the same whose name is subscribed to the foregoing instrument, appeared before
me this day in person, and acknowledged that he signed and delivered the said
instrument as his free and voluntary act as Attorney-in-Fact for each of the
General Partners, and as the free and voluntary act of said GLICKENHAUS & CO.,
for the uses and purposes therein set forth.
GIVEN, under my hand and notarial seal this 17th day of May, 1999.
/s/ Carla Vogel
---------------------------
Notary Public
[SEAL]
CARLA VOGEL
Notary Public, State of New York
No. 02V05019906
Qualified in Bronx County
Commission Expires November 1, 1999
313665.1
<PAGE>
Lebenthal & Co., Inc.
By: /s/James McGrath
---------------------------
Authorized Officer
ATTEST:
By: /s/D. Warren Kaufman
----------------------------
Secretary
[CORPORATE SEAL]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
I, Carla Vogel, a Notary Public in and for the said County in the State
aforesaid, do hereby certify that James McGrath and D. Warren Kaufman personally
known to me to be the same persons whose names are subscribed to the foregoing
instrument and personally known to me to be the Authorized Officer and
Secretary, respectively, of LEBENTHAL & CO., INC., appeared before me this day
in person, and acknowledged that they signed, sealed with the corporate seal of
LEBENTHAL & CO., INC., and delivered the said instrument as their free and
voluntary act as such Authorized Officer and Secretary, respectively, and as the
free and voluntary act of said LEBENTHAL & CO., INC., for the uses and purposes
therein set forth.
GIVEN, under my hand and notarial seal this 17th day of May, 1999.
/s/ Carla Vogel
--------------------------
Notary Public
[SEAL]
CARLA VOGEL
Notary Public, State of New York
No. 02V05019906
Qualified in Bronx County
Commission Expires November 1, 1999
313665.1
<PAGE>
THE BANK OF NEW YORK, Trustee
By: /s/ Thomas Centrone
--------------------------
Vice President
ATTEST:
By: /s/Linda Bommer
(CORPORATE SEAL)
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
I, Emmanual T. Lytle, Jr., a Notary Public in and for the said County in
the State aforesaid, do hereby certify that Thomas Centrone and Linda Bommer,
personally known to me to be the same persons whose names are subscribed to the
foregoing instrument and personally known to me to be a Vice President and
Assistant Vice President, respectively, of The Bank of New York, appeared before
me this day in person, and acknowledge that they signed, sealed with the
corporate seal of The Bank of New York and delivered the said instrument as
their free and voluntary act as such Vice President and Vice President,
respectively, and as the free and voluntary act of said The Bank of New York for
the uses and purposes therein set forth.
GIVEN, under my hand and notarial seal this 17th day of May, 1999.
/s/ Emmanual T. Lytle, Jr.
--------------------------
Notary Public
[SEAL]
My commission expires: April 30, 2001
313665.1
<PAGE>
MULLER DATA CORPORATION, Evaluator
By: /s/Art Brasch
-----------------------------
Vice President
[Seal]
ATTEST:
By: /s/ Richard Birnbaum
----------------------------
Vice President
EXHIBIT 99.1.7
MBIA
FINANCIAL GUARANTY MASTER
WHILE IN TRUST WITH A PERMANENT OPTION
UNIT INVESTMENT TRUST INSURANCE POLICY
MBIA Insurance Corporation
Armonk, New York 10504
Policy No. ESGT-147-1010
MBIA Insurance Corporation (the "Insurer"), in consideration of the payment of
the premium and subject to the terms of this policy, hereby unconditionally and
irrevocably guarantees to the Trust, as hereinafter defined, the full and
complete payment required to be made by or on behalf of the issuer(s) to the
applicable Paying Agent(s) or its/their successor(s) (the "Paying Agent") of an
amount equal to (i) the principal of (either at the stated maturity or by any
advancement of maturity pursuant to a mandatory sinking fund payment) and
interest on the obligations described in Exhibit A attached hereto (referred to
herein as the "Obligations"), as such payments shall become due but shall not be
so paid (except that in the event of any acceleration of the due date of such
principal by reason of mandatory or optional redemption or acceleration
resulting from default or otherwise, other than any advancement of maturity
pursuant to a mandatory sinking fund payment, the payments guaranteed hereby
shall be made in such amounts and at such times as such payments of principal
would have been due had there not been any such acceleration); and (ii) the
reimbursement of any such payment which is subsequently recovered from the Trust
pursuant to a final judgment by a court of competent jurisdiction that such
payment constitutes an avoidable preference to the Trust within the meaning of
any applicable bankruptcy law. The amounts referred to in clauses (i) and (ii)
of the preceding sentence shall be referred to herein collectively as the
"Insured Amounts."
Upon receipt of telephonic or telegraphic notice, such notice subsequently
confirmed in writing by registered or certified mail, or upon receipt of written
notice by registered or certified mail, by the Insurer or its designee from the
Paying Agent or the Trust, that required payment of any Insured Amount has not
been made, the Insurer on the due date of such payment or within one business
day after receipt of notice of such nonpayment, whichever is later, will make a
deposit of funds, in an account with State Street Bank and Trust Company, N.A.,
in New York, New York, or its successor, sufficient for the payment of any such
Insured Amounts which are then due. Upon presentment and surrender of such
Obligations or coupons or presentment of such other proof of ownership of the
Obligations registered as to principal or as to principal and interest, together
with evidence satisfactory to State Street Bank and Trust Company, N.A. that (i)
in the case of Pre-Insured Obligations, as hereinafter defined, that demand for
payment has been made from the other insurer, and (ii) in all cases, that such
Obligations or coupons are the Obligations or coupons described in this policy
or replacements or successors thereto, and any appropriate instruments of
assignment to evidence the assignment of the Insured Amounts due on the
Obligations as are paid by the Insurer, and appropriate instruments to effect
the appointment of the Insurer as agent for the Trust in any legal proceeding
related to payment of Insured Amounts on the Obligations or coupons, such
instruments being in a form satisfactory to State Street Bank and Trust Company,
N.A., State Street Bank and Trust Company, N.A. shall disburse to the Trust or
the Paying Agent making such presentment and/or surrender payment of the Insured
Amounts due on such Obligations and coupons, less any amount held by the Paying
Agent for the payment of such Insured Amounts and legally available therefor.
This policy does not insure against loss of any prepayment premium which may at
any time be payable with respect to any Obligation or coupon.
The term "Depositor" shall mean Glickenhaus & Co. and Lebenthal & Co., Inc. and
its successors or any successor Depositor.
The term "Pre-Insured Obligations" shall mean obligations, if any, on which the
payment of principal of and/or interest on shall have been insured prior to the
issuance of this policy by the Insurer.
The term "Trust" shall mean the Empire State Municipal Exempt Trust, Guaranteed
Series 145, created pursuant to the Trust Indenture and Agreement dated December
18, 1990, among the Depositor, the Trustee and Standard & Poor's Corporation, as
supplemented and amended as of May 24, 1999 by the Reference Trust
Agreement dated as of May 24, 1999, among the Depositor, the Trustee and
Muller Data Corporation.
The term "Trustee" shall mean Bank of New York, or any successor trustee or
co-trustee.
Any service of process on the Insurer may be made to the Insurer at its offices
located at 113 King Street, Armonk, New York 10504, and such service of process
shall be valid and binding.
<PAGE>
MBIA
This policy shall only apply to Obligations held in and owned by the Trust and
shall not apply to any Obligations not deposited therein by the Depositor. This
policy shall continue in force only with respect to Obligations held in and
owned by the Trust, and, subject to the provisions of this paragraph, the
Insurer shall not have any liability under this policy with respect to any
Obligations which do not constitute part of the Trust. This policy is
non-cancellable during the term hereof for any reason, but shall terminate as to
any Obligation which has been redeemed from or sold by the Trustee or the Trust
on the date of such redemption or on the settlement date of such sale, and the
Insurer shall not have any liability under this policy as to any such Obligation
thereafter. If the date of such redemption or the settlement date of such sale
occurs between a record date and a date of payment of any such Obligation, this
policy shall terminate as to such Obligation on the business day next succeeding
such date of payment. Notwithstanding the foregoing provisions of this
paragraph, the termination of this policy as to any Obligation shall not affect
the obligations of the Insurer regarding any other Obligation in the Trust. This
policy shall terminate as to all Obligations on the date on which the last of
the Obligations mature, are redeemed or are sold by the Trust.
The premium on this policy is not refundable for any reason, including the
payment prior to maturity of the Obligations.
This policy is issued only to the Trust and is nontransferable.
This policy shall be governed by and construed under the laws of the State of
New York.
This policy is not covered by the Property/Casualty Insurance Security Fund
specified in Article 76 of the New York Insurance Law.
IN WITNESS WHEREOF, the Insurer has caused this policy to be executed in
facsimile on its behalf by its President and its Assistant Secretary, this 24th
day of May, 1999.
MBIA INSURANCE CORPORATION
/s/
- ----------------------------
President
Attest: /s/Anne McKenna
--------------------
Assistant Secretary
<PAGE>
MBIA
E N D O R S E M E N T
Attached to Policy No. ESGT-147-1010
issued by MBIA Insurance Corporation (the "Insurer"), to the Trust, as defined
in the policy issued with respect to the small issue industrial development
bonds and pollution control revenue bonds listed in Exhibit A (the "Bonds").
It is further understood that this policy shall guarantee to the Trust, as
defined in the policy, the full and complete payments required to be made by or
on behalf of the Issuer if there occurs pursuant to the terms of the Bonds an
event which results in the loss of the tax exempt status of the interest on the
Bonds, including any principal, interest or premium payments payable thereon, if
any, as and when thereby required.
This endorsement forms a part of the policy to which it is attached, effective
on the inception date of the policy.
IN WITNESS WHEREOF, the Insurer has caused this endorsement to be executed in
facsimile on its behalf by its President and its Assistant Secretary this 24th
day of May, 1999.
MBIA INSURANCE CORPORATION
/s/
- ----------------------------
President
Attest: /s/Anne McKenna
-----------------------
Assistant Secretary
<PAGE>
MBIA
CERTIFICATE OF MBIA INSURANCE CORPORATION
(EMPIRE STATE MUNICIPAL EXEMPT TRUST, GUARANTEED SERIES 145)
This Certificate is being delivered in connection with the issuance by MBIA
Insurance Corporation (the "Corporation") of a Municipal Bond Guaranty Insurance
Policy relating to EMPIRE STATE MUNICIPAL EXEMPT TRUST, GUARANTEED SERIES 145
(the "Policy"). The undersigned hereby certifies that she is qualified and
acting as Assistant Secretary of the Corporation.
The undersigned hereby certifies that:
(a) The Policy has been duly executed, is a valid and binding obligation of the
Corporation enforceable in accordance with its terms except that the enforcement
of the Policy may be limited by laws relating to bankruptcy, insolvency,
reorganization, moratorium, receivership and other similar laws affecting
creditors' rights generally and by general principles of equity;
(b) The information concerning the Corporation and its policy or policies as set
forth in the prospectus of the Trust filed as part of a Registration Statement
dated May 24, 1999, under the caption entitled "The Trust - Insurance on the
Bonds," regarding Empire State Municipal Exempt Trust, Guaranteed Series 145, is
accurate; and
(c) The financial information as of March 31, 1999 for the Corporation supplied
to the Sponsors is true and correct financial information provided to the New
York Insurance Department in connection with the licensing of the Corporation,
and such financial information is the most recent financial information
available.
IN WITNESS WHEREOF, the undersigned has herewith set her hand and caused her
signature to be affixed hereto on this 24th day of May, 1999.
By /s/Anne McKenna
--------------------------
Assistant Secretary
BATTLE FOWLER LLP
A LIMITED LIABILITY PARTNERSHIP
75 East 55th Street
New York, New York 10022
(212) 856-7000
May 25, 1999
Glickenhaus & Co.
6 East 43rd Street
New York, New York 10017
Lebenthal & Co., Inc.
120 Broadway
New York, New York 10271-0005
Re: Empire State Municipal Exempt Trust,
Guaranteed Series 145
Dear Sirs:
We have acted as special counsel for Glickenhaus & Co. and Lebenthal
& Co., Inc., as Depositors, Sponsors and Principal Underwriters (collectively,
the "Depositors") of Empire State Municipal Exempt Trust, Guaranteed Series 145
(the "Trust") in connection with the issuance by the Trust of 5,000 units of
fractional undivided interest (collectively, the "Units") in the Trust. Pursuant
to the Trust Agreement referred to below, the Depositors have transferred to the
Trust certain long-term bonds and contracts to purchase certain long-term bonds
together with an irrevocable letter of credit to be held by the Trustee upon the
terms and conditions set forth in the Trust Agreement. (All bonds to be acquired
by the Trust are collectively referred to as the "Bonds").
In connection with our representation, we have examined copies of the
following documents relating to the creation of the Trust and the issuance and
sale of the Units: (a) the Trust Indenture and Agreement and related Reference
Trust Agreement, each of even date herewith, relating to the Trust (the "Trust
Agreements") among the Depositors, the Bank of New York, as Trustee, and Muller
Data Corporation, as Evaluator; (b) the notification of registration on Form
N-8A and the Registration Statement on Form N-8B-2, as amended, relating to the
Trust, as filed with the Securities and Exchange Commission (the "Commission")
pursuant to the Investment Company Act of 1940 (the "1940 Act"); (c) the
Registration Statement on Form S-6 (Registration No. 333-74097) filed with the
Commission pursuant to the
207440.1
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Glickenhaus & Co.
May 25, 1999
Securities Act of 1933 (the "1933 Act"), and Amendment No. 1 thereto (said
Registration Statement, as amended by said Amendment No. 1, being herein called
the "Registration Statement"); (d) the proposed form of final Prospectus (the
"Prospectus") relating to the Units, which is expected to be filed with the
Commission this day; (e) certified resolutions of Lebenthal & Co. Inc.,
authorizing the execution and delivery by it of the Trust Agreements and the
consummation of the transactions contemplated thereby; (f) the Certificate of
Incorporation and By-Laws of Lebenthal & Co., Inc. and the Restated Agreement of
Limited Partnership of Glickenhaus & Co.; and (g) a certificate of an authorized
officer or partner of each of the Depositors with respect to certain factual
matters contained therein.
We have also examined the applications for orders of exemption from
certain provisions of the 1940 Act, and the amendments thereto, filed with the
Commission on May 23, 1978 (file no. 812-4315), on November 7, 1978 (file no.
812-4389), on September 10, 1980 (file no. 812-4334) and on November 9, 1984
(file no. 812-5980) and the related orders issued by the Commission with respect
thereto on June 20, 1978, January 10, 1979, December 31, 1980 and February 22,
1985, respectively.
We have not reviewed the financial statements, compilation of the
Bonds held by the Trust, or other financial or statistical data contained in the
Registration Statement and the Prospectus, as to which you have been furnished
with the reports of the accountants appearing in the Registration Statement and
the Prospectus.
In addition, we have assumed the genuineness of all agreements,
instruments and documents submitted to us as originals and the conformity to
originals of all copies thereof submitted to us. We have also assumed the
genuineness of all signatures and the legal capacity of all persons executing
agreements, instruments and documents examined or relied upon by us.
In addition, with respect to the opinion set forth in paragraph (1)
below, and insofar as that opinion relates to Glickenhaus & Co., we have relied,
with their approval, on the opinion of Newman Tannenbaum Helpern Syracuse &
Hirsctritt dated of even date herewith.
Statements in this opinion as to the validity, binding effect and
enforceability of agreements, instruments and documents are subject: (i) to
limitations as to enforceability imposed by bankruptcy, reorganization,
moratorium, insolvency and other laws of general application relating to or
affecting the enforceability of creditors' rights, and (ii) to limitations under
equitable principles governing the availability of equitable remedies.
We are not admitted to the practice of law in any jurisdiction but
the State of New York and we do not hold ourselves out as experts in or express
any opinion as to the laws of other states or jurisdictions except as to matters
of Federal and Delaware corporate law.
Based exclusively on the foregoing, we are of the opinion that under
existing law:
207440.1
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Glickenhaus & Co.
May 25, 1999
(1) The Trust Agreements have been duly authorized and entered into
by an authorized officer or General Partner of each of the Depositors and are
valid and binding obligations of the Depositors in accordance with their terms.
(2) The execution and delivery of the Certificates evidencing the
Units has been duly authorized by the Depositors and such Certificates, when
executed by the Depositors and the Trustee in accordance with the provisions of
the Certificates and the Trust Agreements and issued for the consideration
contemplated therein, will constitute fractional undivided interests in the
Trust, will be entitled to the benefits of the Trust Agreements, will conform in
all material respects to the description thereof for the Units as provided in
the Trust Agreements and the Registration Statement, and the Units will be fully
paid and non-assessable by the Trust.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name in the Registration Statement
and in the Prospectus under the headings "Tax Status" and "Legal Opinions". We
authorize you to deliver copies of this opinion to the Trustee and the
Underwriters named in Schedule A to the Master Agreement Among Underwriters
relating to the Trust and the Trustee may rely on this opinion as fully and to
the same extent as if it had been addressed to it.
This opinion is intended solely for the benefit of the addressees
and the Trustee in connection with the issuance of the Units of the Trust and
may not be relied upon in any other manner or by any other person without our
express written consent.
Very truly yours,
Battle Fowler LLP
207440.1
MULLER DATA CORPORATION
Thomson Financial Services
May 20, 1999
Glickenhaus & Co.
6 East 43rd Street
New York, New York 10017
Lebenthal & Co., Inc.
120 Broadway
New York, New York 10271
RE: Empire State Municipal Exempt Trust,
Guaranteed Series 145
Gentlemen:
We have examined the Registration Statement File No.333-74097 for the referenced
Trust and acknowledge that Muller Data Corporation is currently acting as the
evaluator for Empire State Municipal Exempt Trust Guaranteed Series 145.
Subsequently, we hereby consent to the reference to Muller Data Corporation as
Trust evaluator.
In addition, we confirm that the ratings of the bonds comprising the Portfolio
of the Trust, as indicated in the Registration Statement, are the ratings
currently indicated in our Muniview database as of the date of the evaluation
report.
You are hereby authorized to file a copy of this letter with the Securities
and Exchange Commission.
Sincerely,
/s/ Art Brasch
Vice President
395 Hudson Street
New York, NY 10014
Ph. 212-807-3840 Fx. 212-989-1938
www.muller.com
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Standard & Poor's
A Division of The McGraw-Hill Companies, Inc.
Managed Fund Ratings
25 Broadway
New York, New York 10004-1064
Telephone 212/208-8000
FAX 212/208-8034
May 25, 1999
Glickenhaus & Company
6 East 43rd Street
New York, New York 10017
Re: Empire State Municipal Exempt Trust, Guaranteed Series 145
Pursuant to your request for a Standard & Poor's rating on the units of the
above-captioned Trust, SEC #333-74097, we have reviewed the information
presented to us and have assigned a 'AAA' rating to the units of the Trust and a
'AAA' rating to the securities contained in the Trust. The ratings are direct
reflections of the portfolios of the Trust, which will be composed solely of
securities covered by bond insurance policies that insure against default in the
payment of principal and interest on the securities. Since such policies have
been issued by MBIA, which has been assigned a 'AAA' claims paying ability
ratings by Standard & Poor's, Standard & Poor's has assigned a 'AAA' rating to
the units of the Trust and to the securities contained in the Trust. Please note
that securities covered by bond insurance policies that insure such securities
only as long as they remain in the Trust are rated 'AAA' only as long as they
remain in the Trust.
Standard & Poor's will maintain serveillance on the 'AAA' rating until June 24,
2000. On this date, the rating will be automatically withdrawn by Standard &
Poor's unless a post effective letter is requested by the Trust.
You have permission to use the name of Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc. and the above-assigned ratings in
connection with your dissemination of information relating to these units,
provided that it is understood that the ratings are not "market" ratings nor
recommendations to buy, hold, or sell the units of the Trust or the securities
contained in the Trust. Further, it should be understood the rating on the units
does not take into account the extent to which fund expenses or portfolio asset
sales for less than the fund's purchase price will reduce payment to the unit
holders of the interest and principal required to be paid on the portfolio
assets. Standard & Poor's reserves the right to advise its own clients,
subscribers, and the public of the ratings. Standard & Poor's relies on the
sponsor and its counsel, accountants, and other experts for the accuracy and
completeness of the information submitted in connection with the ratings.
Standard & Poor's does not independently verify the truth or accuracy of any
such information.
This letter evidences our consent to the use of the name of Standard & Poor's
Ratings Services, a division of The McGraw-Hill Companies, Inc. in connection
with the rating assigned to the units in the registration statement or
prospectus relating to the units or the Trust. However, this letter should not
be construed as a consent by us, within the meaning of Section 7 of the
Securities Act of 1933, to the use of the name of Standard & Poor's Ratings
Services, a division of The McGraw-Hill Companies, Inc. in connection with the
ratings assigned to the securities contained in the Trust. You are hereby
authorized to file a copy of this letter with the Securities and Exchange
Commission.
Please be certain to send us a copy of your final prospectus as soon as it
becomes available. Should we not receive it within a reasonable time after the
closing or should it not conform to the representations made to us, we reserve
the right to withdraw the rating.
We are pleased to have had the opportunity to be of service to you. If we can be
of further help, please do not hesitate to call upon us.
Sincerely,
/s/ Sanford B. Bragg
Sanford B. Bragg
Managing Director
EXHIBIT 99.5.2
Moody's Investors Service
99 Church Street
New York, NY 10007
www.moodys.com
February 16th, 1999
MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
RE: Empire State Municipal Exempt
Trust, Guaranteed Series 145
To Whom It May Concern:
Moody's Investors Service has assigned the rating of Aaa (MBIA Insurance Corp.)
to each of the bonds insured by MBIA Insurance Corporation, comprising Empire
State Municipal Exempt Trust, Guaranteed Series 145. The rating is based upon an
insurance policy provided by MBIA Insurance Corporation. The rating applies to
each bond only while it is held in such trust.
Please send us a final Prospectus when available. Should you have any questions
regarding the above, please do not hesitate to contact the assigned analyst,
Margaret Kessler, at (212) 553-7884.
Sincerely yours,
Laura Levenstein
Vice President and Managing
Director
LL:sy
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