As filed with the Securities and Exchange Commission on October 31, 2000.
Registration No. 333-45684
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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Epoch Securities, Inc.
Initial Depositor
(Exact name of registrant as specified in charter)
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Optical Equipment NETS(SM) Trust
yet-to-be formed
(Issuer with respect to the receipts)
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<TABLE>
<CAPTION>
<S> <C> <C>
Delaware 6211 94-3345622
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
151 Union Street
IceHouse Two
San Francisco, CA 94111
(415) 315-3100
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Thomas C. Janson, Jr. Copies to:
Executive Vice President Lawrence C. Tondel
Epoch Securities, Inc. Brown & Wood LLP
151 Union Street One World Trade Center
IceHouse Two New York, New York 10048
San Francisco, CA 94111 (212) 839-5300
(415) 315-3100
(Name, address, including zip code, and
telephone number, including area
code, of agent for service)
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Approximate date of commencement of proposed sale to public: As soon as
practicable after this Registration Statement becomes effective.
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If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act, please check the following box. |_|
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
================================= ====================== ====================== ====================== =====================
Proposed Maximum Proposed Maximum Amount of
Title of Each Class of Amount to Be Offering Price Aggregate Offering Registration
Securities to Be Registered Registered Per Receipt(1) Price(1) Fee(2)(3)
--------------------------------- ---------------------- ---------------------- ---------------------- ---------------------
<S> <C> <C> <C> <C>
Optical Equipment NETS ........ 500,000,000 receipts $50 $74,950,000 $19,787
============================================================================================================================
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(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457 under the Securities Act.
1,000,000 receipts are estimated to be offered in the initial offering at $50 per receipt and 499,000,000 receipts are
estimated to be offered continuously after the initial offering at $0.05 per receipt.
(2) This Registration Statement also registers, where required, an indeterminate amount of securities to be sold in
market-making transactions expected to be made by one or more of the underwriters from time to time.
(3) $2,640 of this Registration Fee was previously paid.
</TABLE>
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Commission, acting
pursuant to such Section 8(a), may determine.
<PAGE>
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Subject to Completion
Preliminary Prospectus dated October 31, 2000
PROSPECTUS
----------
Optical Equipment
[GRAPHIC OMITTED] NETS(SM)
New Era Trust Securities
500,000,000 Depositary Receipts
Optical Equipment NETS(SM) Trust
---------
The Optical Equipment NETS(SM):
o Are depositary receipts that represent your undivided beneficial
ownership in shares of U.S.-traded common stock of a group of companies
that, among other things, design, manufacture and market products that
enable voice and data transmissions across communications networks using
optical, or light-based, signals.
o Represents your ownership of the companies and the number of shares of
their common stock found on page 2 of this prospectus.
o Are separate from the underlying shares of common stock that will be held
by the Optical Equipment NETS Trust.
o May only be acquired, traded or exchanged in a round-lot amount of 100
Optical Equipment NETS or round-lot multiples.
The Optical Equipment NETS Trust:
o Has been formed to hold the underlying common stocks and issue the
Optical Equipment NETS.
o May issue additional Optical Equipment NETS on a continuous basis.
o Is not a registered investment company under the Investment Company Act
of 1940.
o Investors Bank & Trust Company will act as trustee.
o Optical Equipment NETS are interests in and obligations of the Optical
Equipment NETS Trust and not of Epoch Securities, Inc., or Investors Bank
& Trust Company or any of their affiliates.
Prior to this offering no public market existed for the Optical Equipment
NETS. Application has been made to list the Optical Equipment NETS on the
American Stock Exchange under the symbol "OPN."
---------
Investing in Optical Equipment NETS involves significant risks.
See "Risk Factors" starting on page 9 of this prospectus.
---------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
<TABLE>
<CAPTION>
Initial Price Underwriting
to Public Fee
------------- ------------
<S> <C> <C>
Per Optical Equipment NETS including the underwriting fee................. $ 2%
</TABLE>
The initial public offering price for a round-lot of 100 Optical
Equipment NETS will equal the sum of the products of the closing market prices
on the pricing date on the primary U.S. trading market and the number of
deposited shares for all of the companies in the round-lot as specified in
this prospectus, plus an underwriting fee.
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Epoch Partners
---------
The date of this prospectus is , 2000.
"NETS" and "New Era Trust Securities" are service marks of Epoch Partners,
Inc.
<PAGE>
TABLE OF CONTENTS
Page
----
Summary Information.......................................................1
Risk Factors..............................................................9
Description of the Trust.................................................18
Description of Optical Equipment NETS....................................18
Description of the Underlying Securities.................................21
Description of the Depositary Trust Agreement............................24
Federal Income Tax Consequences..........................................27
ERISA Considerations.....................................................29
Underwriting.............................................................29
Legal Matters............................................................30
Where You Can Find More Information......................................30
Exhibit A................................................................32
---------
This prospectus contains information you should consider when making your
investment decision. With respect to information about Optical Equipment NETS,
you should rely only on the information contained in this prospectus. We have
not authorized any other person to provide you with different information. If
anyone provides you with different or inconsistent information, you should not
rely on it. We are not making an offer to sell Optical Equipment NETS in any
jurisdiction where the offer or sale is not permitted.
---------
Epoch Securities, Inc. conducts a significant part of its securities
business under the name "Epoch Partners," as also used on the cover page
hereof. See "Underwriting."
---------
From time-to-time in the future, we may offer to the public new NETS
representing companies in other sectors. The terms of any future NETS, NETS
offering or NETS trust may be different from the terms of this offering.
<PAGE>
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SUMMARY INFORMATION
This discussion summarizes information regarding the Optical Equipment
NETS. This discussion is not complete, and you should read the entire
prospectus carefully before you purchase any Optical Equipment NETS.
What are the Optical Equipment NETS?
The Optical Equipment NETS are depositary receipts that represent your
undivided beneficial ownership interest in the shares of U.S.-traded common
stock held by the Optical Equipment NETS Trust. The Optical Equipment NETS
themselves are separate from the underlying securities. The specific companies
whose shares are represented by the Optical Equipment NETS are set forth in
the chart below. For the purposes of this preliminary prospectus, the number
of shares of each company's common stock represented by each round-lot of 100
Optical Equipment NETS and the initial weightings are set forth in the chart
below based on the equity market values as of October 26, 2000. The share
amounts were determined so that:
o the initial issue price will be approximately $40 - $50 per Optical
Equipment NETS,
o the initial weightings of each underlying security approximates the
relative equity market values of the specified companies, and
o the maximum initial weighting of any underlying security is 10%.
The final share amounts will be determined on _____________, 2000, the
pricing date, using the same methodology. After the pricing date, the share
amounts will not change, except for changes due to corporate events, such as
stock splits or reverse stock splits on the underlying securities, or
reconstitution events. However, the weightings are expected to change
substantially over time because of price fluctuations.
The following chart provides the:
o names of the 21 companies whose shares of common stock are
represented by the Optical Equipment NETS,
o stock ticker symbols,
o number of shares of each company represented by a round-lot of 100
Optical Equipment NETS as of October 26, 2000,
o initial weightings as of October 26, 2000, and
o primary U.S. trading market on which the shares of common stock of
the selected companies are traded.
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<PAGE>
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<TABLE>
<CAPTION>
Number of
Shares Per Initial Primary U.S.
Name of Company Ticker Round-Lot Weightings Trading Market
--------------- ------ --------- ---------- --------------
<S> <C> <C> <C> <C>
Corning Incorporated GLW 7 9.96% NYSE
Lucent Technologies Inc. LU 23 9.84 NYSE
Cisco Systems, Inc. CSCO 9 9.79 Nasdaq NMS
Nortel Networks Corporation NT 10 9.22 NYSE
JDS Uniphase Corporation JDSU 6 9.07 Nasdaq NMS
CIENA Corporation CIEN 4 8.37 Nasdaq NMS
Juniper Networks, Inc. JNPR 2 7.73 Nasdaq NMS
Sycamore Networks, Inc. SCMR 4 5.22 Nasdaq NMS
Corvis Corporation CORV 4 4.92 Nasdaq NMS
SDL, Inc. SDLI 1 4.89 Nasdaq NMS
Redback Networks Inc. RBAK 2 4.67 Nasdaq NMS
ADC Telecommunications, Inc. ADCT 10 3.82 Nasdaq NMS
ONI Systems Corp. ONIS 2 2.88 Nasdaq NMS
Newport Corporation NEWP 1 2.26 Nasdaq NMS
Avanex Corporation AVNX 1 1.86 Nasdaq NMS
New Focus, Inc. NUFO 1 1.22 Nasdaq NMS
Finisar Corporation FNSR 2 1.06 Nasdaq NMS
Digital Lightwave, Inc. DIGL 1 1.04 Nasdaq NMS
Avici Systems Inc. AVCI 1 0.90 Nasdaq NMS
MRV Communications, Inc. MRVC 1 0.72 Nasdaq NMS
Stratos Lightwave, Inc. STLW 1 0.56 Nasdaq NMS
</TABLE>
On July 10, 2000, JDS Uniphase Corporation and SDL, Inc. announced their
definitive agreement to merge. The merger agreement provides for the exchange
of 3.8 shares of JDS Uniphase common stock for each share of SDL common stock.
Completion of the transaction is subject to customary closing conditions,
including the approval of stockholders of both companies and regulatory
approvals.
On July 20, 2000, Lucent Technologies Inc. announced plans to spin off
its microelectronics business, which includes the optoelectronics components
and integrated circuits (IC) divisions, into a separate, new company to be
named later. Lucent is planning an initial public offering for up to 20
percent of the new company in the quarter ended March 31, 2001 and intends to
spin off the remaining shares in a tax-free distribution by the summer of
2001. Lucent intends to seek a ruling from the Internal Revenue Service with
respect to the tax-free treatment of the spin-off. The spin-off is subject to
certain conditions, including a favorable tax ruling.
These companies generally are considered to be among the largest and most
liquid companies with U.S.-traded common stock involved in the optical
equipment industry, as measured by equity market value and trading volume on
October 26, 2000 in the primary U.S. trading market. The equity market value
of a company is determined by multiplying the price of its common stock by the
number of outstanding shares of its common stock.
The inclusion of a company's common stock in the Optical Equipment NETS
is not a recommendation of that company or its common stock by Epoch
Securities, Inc., Advanced Clearing, Inc., Charles Schwab & Co., Inc., the
Optical Equipment NETS Trust, the trustee, or any of their affiliates.
What is the optical equipment industry? What do companies in this
industry generally do?
The optical equipment industry consists of numerous companies that
design, manufacture and market products that enable voice and data
transmissions across communications networks using optical, or light-based,
signals.
Over the last three years, the volume of traffic across communications
networks has grown dramatically. Broadband or high-speed Internet access
through cable modems and digital subscriber line, also called DSL, connections
combined with new bandwidth-intensive applications such as streaming video and
real-time electronic commerce have placed significant strains on the capacity
of existing communications network infrastructures. These networks were
initially designed for low speed voice traffic and not for large volumes of
high-speed data traffic. According to RHK, Inc., a telecommunications industry
market research firm, the data traffic across communications networks is
expected to increase from 350,000 terabytes per month in 1999 to more than 16
million terabytes per month in 2003. Ten terabytes is the equivalent of all of
the information contained in the Library of Congress.
To handle the increasing volume of communications traffic, communications
service providers are rapidly expanding their networks and adding capacity by
using optical transmission and switching equipment. Optical equipment
generally provides higher capacity and greater network reliability than older
electrical transmission equipment because light signals can travel more
quickly through optical fibers than electrical signals can travel through
copper wire, and transmitting data using light is inherently more efficient.
Demand for optical equipment has also increased due to changing market
dynamics. The deregulation of the telecommunications industry has resulted in
the creation of a new generation of communications service providers that seek
to use the latest optical equipment in their communications networks.
Incumbent communications service providers must continue to install new
optical equipment that increases the capacity and the competitiveness of their
networks while maintaining or improving network reliability. According to RHK,
Inc., the global market for optical systems and subsystems is expected to grow
31% per year from $38 billion in 1999 to $113 billion in 2003.
Optical equipment companies generally fall into three categories:
o Systems providers. Systems providers undertake the complex task of
assembling different optical equipment building blocks developed by
subsystems providers and then combining them with software and
additional proprietary hardware to create complete optical equipment
systems. These systems providers sell their products to the
communications service providers for use in their networks. Optical
systems include DWDM, or dense wave division multiplexing, transport
systems, which transmit optical signals within fiber optic networks,
and optical switches, which connect disparate optical networks and
route optical signals from one location to another. These systems
can be used in metropolitan areas or for long-haul, or long
distance, applications.
o Subsystems providers. The building blocks provided by subsystems
providers include computer chips or modules that typically perform a
specific function such as the amplification or steering of light
signals. Subsystems include erbium-doped fiber amplifiers, which
reamplify all the optical signals on an optical fiber without costly
electrical reamplification of the individual signals, optical
muliplexors, which combine individual optical signals to cost
effectively transmit them together in a single optical fiber, and
add-drop multiplexers, which manipulate optical signals to add or
drop individual signals at intermediate locations in the optical
network.
o Fiber optic cable providers. Fiber optic cable providers sell fiber
optic cable to systems providers, subsystems providers and
communications service providers for use in optical equipment or in
optical networks.
Why were the Optical Equipment NETS created?
Optical Equipment NETS are designed to achieve the following:
o Industry specific diversification. Optical Equipment NETS are
designed to allow you to diversify your investment across a
group of companies that focus on the optical equipment industry
through a single, exchange-listed instrument representing your
undivided beneficial ownership in the underlying securities.
o Ownership flexibility. The beneficial owners of Optical
Equipment NETS have undivided beneficial ownership interests in
each of the underlying securities represented by the Optical
Equipment NETS and can exchange their Optical Equipment NETS
for the underlying securities represented by the Optical
Equipment NETS at any time.
o Lower transaction costs. The expenses associated with trading
Optical Equipment NETS are expected to be less than trading
each of the underlying securities separately.
o Tax benefits. Because you indirectly own the underlying
securities, you can choose when to sell the Optical Equipment
NETS or exchange the Optical Equipment NETS for the underlying
securities and sell one or more of those securities in order to
manage the timing of your recognition of short-term or
long-term capital gains, if any. You will not recognize a gain
on the exchange of the Optical Equipment NETS for the
underlying securities.
How is the initial public offering price of the Optical Equipment NETS
determined?
The initial public offering price for a round-lot of 100 Optical
Equipment NETS will equal the sum of the products of the closing market prices
on the pricing date on the primary U.S. trading market and the number of
deposited shares for all of the companies in the round-lot, plus an
underwriting fee. We expect the initial public offering price to be between
$40 and $50 per Optical Equipment NETS.
Can I purchase Optical Equipment NETS after the initial public offering?
After the initial offering, you may acquire Optical Equipment NETS in two
ways:
o through a cash purchase in the secondary trading market, or
o after 25 days from the initial offering, through an in-kind deposit
through the Depository Trust Company, referred to as DTC, of the
required number of shares of common stock of the underlying issuers
with the trustee.
The restriction on the creation of Optical Equipment NETS through an
in-kind deposit during the 25 day period from the initial offering is intended
to reduce arbitrage-related trading that could adversely affect the prices of
the underlying securities and the Optical Equipment NETS. We cannot assure you
that this restriction will effectively reduce or eliminate this
arbitrage-related trading and its adverse affect on prices.
Will I be charged any transaction fees or expenses with respect to the
purchase or sale of the Optical Equipment NETS?
If you purchase Optical Equipment NETS in the initial public offering,
you will pay an underwriting fee equal to 2% of the initial public offering
price. You will not be charged any issuance fee or other sales commission in
connection with purchases of Optical Equipment NETS made in the initial public
offering.
After a period of twenty-five days following the initial offering, if you
wish to create Optical Equipment NETS by delivering to the Optical Equipment
NETS Trust the requisite number of shares of all of the underlying common
stocks represented by a round-lot of 100 Optical Equipment NETS, Investors
Bank & Trust Company, as trustee, will charge you an issuance fee of up to
$5.00 for each round-lot of 100 Optical Equipment NETS. If you wish to
exchange your Optical Equipment NETS for the underlying securities, Investors
Bank & Trust Company, as trustee, will charge you an exchange fee of up to
$5.00 for each round-lot of 100 Optical Equipment NETS.
You will not be able to purchase the Optical Equipment NETS through an
in-kind deposit for a period of 25 days after the initial offering. You may
exchange your Optical Equipment NETS for the underlying securities at any time
after the initial offering.
If you choose to receive Optical Equipment NETS through an in-kind
deposit of the underlying securities after the conclusion of the initial
public offering, you will not be charged the underwriting fee. However, in
addition to the issuance fee charged by the trustee described above, you will
be responsible for paying any sales commission associated with your purchase
of the underlying securities that is charged by your broker.
If you acquire Optical Equipment NETS through a cash purchase in the
secondary trading market, you will be responsible for paying any sales
commission associated with your purchase that is charged by your broker.
Investors Bank & Trust Company, as trustee and as custodian, will charge
you a quarterly custody fee of up to $1.00 for each round-lot of 100 Optical
Equipment NETS to be deducted from any cash dividend or other cash
distributions on underlying securities received by the Optical Equipment NETS
Trust. In addition, Investors Bank & Trust Company, as trustee and as
custodian, will charge you a handling fee of $.25 for each round-lot of 100
Optical Equipment NETS, when each cash dividend or other cash distribution on
the underlying securities is made. The custody fee and handling fee will be
deducted from any cash dividend or other cash distributions on underlying
securities received by the Optical Equipment NETS Trust. The quarterly custody
fee will aggregate over the course of each calendar year and unpaid fees from
previous quarters within that calendar year may be paid from cash
distributions made during the current quarter. However, no fees will accrue in
excess of the total cash dividends and other cash distributions received, or
to be received, and payable with respect to such calendar year.
What about taxes?
We recommend that you consult with your own tax advisor to insure that
you understand how the U.S. federal income tax laws may apply to your
particular situation. However, a general tax summary relating to the purchase
and ownership of Optical Equipment NETS is provided below. Please refer to the
section entitled "Federal Income Tax Consequences" on page 27 of this
prospectus for a more complete description.
A person purchasing and owning Optical Equipment NETS will be treated,
for U.S. federal income tax purposes, as directly owning a proportionate share
of the underlying securities represented by the Optical Equipment NETS. When
purchasing Optical Equipment NETS, a holder will determine its initial tax
basis in each of the underlying securities by allocating the purchase price
for the Optical Equipment NETS among the underlying securities based on their
relative fair market values at the time of the Optical Equipment NETS
purchase. Similarly, when selling Optical Equipment NETS, a holder will
determine the amount realized with respect to each security by allocating the
sales price among the underlying securities based on their relative fair
market values at the time of the Optical Equipment NETS sale. A holder's gain
or loss with respect to each underlying security will be computed by
subtracting its basis in the underlying security from the amount realized on
that security.
The brokerage fee incurred in purchasing an Optical Equipment NETS will
be treated as part of the cost of the underlying securities. Accordingly, a
holder includes this fee in its tax basis in the underlying securities. A
holder will allocate the brokerage fee among the underlying securities using
either a fair market value allocation or pro rata based on the number of
shares of each underlying security. Similarly, the brokerage fee incurred in
selling Optical Equipment NETS will reduce the amount realized with respect to
the underlying securities.
What rights do I have as a holder of the Optical Equipment NETS depositary
receipts?
You have the right to exchange the Optical Equipment NETS for all (but
not less than all) of the underlying securities upon request at any time after
the initial offering through your broker or other financial intermediary that
is a participant of DTC, subject to suspension by the trustee in certain
limited instances, by delivering a round-lot or integral multiple of a
round-lot of Optical Equipment NETS to the trustee, during the trustee's
business hours, and paying the exchange fees, taxes and any other charges. You
should receive the underlying securities no later than the business day after
the trustee receives a proper notice of exchange. The trustee will not deliver
fractional shares of underlying securities. To the extent that any exchange of
Optical Equipment NETS would otherwise require the delivery of a fractional
share, the trustee will sell such share in the market and the Optical
Equipment NETS Trust, in turn, will deliver cash in lieu of such share. In
connection with any such sale, the trustee, in its sole discretion, will take
reasonable steps to obtain best execution, and in connection therewith will
select brokers to effect such sale (which may include affiliates of the
trustee, Epoch Securities, Inc. or any other depositor). Any such distribution
of cash related to the sale of such fraction will be treated as a cash
distribution for the purposes of the determination of custody fees and
handling fees payable to the trustee. Except with respect to the right to vote
for dissolution of the Optical Equipment NETS Trust, the Optical Equipment
NETS themselves will not have voting rights.
What rights do I have relating to the underlying common stocks as a holder of
the Optical Equipment NETS?
You have the right to:
o receive all shareholder disclosure materials, including annual
reports, quarterly reports and proxy materials, distributed by the
issuers of the underlying securities,
o instruct the trustee to vote the underlying securities on all
matters or attend shareholder meetings and vote yourself, and
o receive dividends and other distributions on the underlying
securities, if any are declared and paid to the trustee by an issuer
of the underlying securities, net of any applicable taxes or fees.
If you wish to participate in a tender offer for any of the underlying
securities, you must obtain the underlying securities by surrendering your
Optical Equipment NETS and receiving all of your underlying securities.
Will the common stocks, the share amounts or the weightings underlying the
Optical Equipment NETS ever change?
The common stocks and the share amounts, set forth above, will not
change, except for changes due to corporate events, such as stock splits or
reverse stock splits on the underlying securities, or reconstitution events.
However, since the weightings depend on the prices of the underlying stocks,
these weightings are expected to change substantially over time as the prices
of the underlying stocks fluctuate.
Reconstitution events that can result in the delivery of the common
shares of a specific company represented by the Optical Equipment NETS to the
Optical Equipment NETS holders include:
o If an issuer of underlying securities no longer has a class of
common stock registered under Section 12 of the Securities Exchange
Act of 1934, then its securities will no longer be an underlying
security and the trustee will distribute the shares of that company
to the owners of the Optical Equipment NETS.
o If the Securities and Exchange Commission (the "SEC") finds that an
issuer of underlying securities should be registered as an
investment company under the Investment Company Act of 1940, and the
trustee has actual knowledge of the SEC finding, then the trustee
will distribute the shares of that company to the owners of the
Optical Equipment NETS.
o If the underlying securities of an issuer cease to be outstanding as
a result of a merger, consolidation or other corporate combination,
the trustee will distribute the consideration paid by and received
from the acquiring company to the beneficial owners of Optical
Equipment NETS unless the merger, consolidation or other corporate
combination is between companies that are already included in the
Optical Equipment NETS and the consideration paid is additional
underlying securities. In this case, the additional underlying
securities will be deposited into the Optical Equipment NETS Trust.
o If an issuer's underlying securities are delisted from trading on a
U.S. national securities exchange or Nasdaq NMS and are not listed
for trading on another U.S. national securities exchange or Nasdaq
NMS within five business days from the date such securities are
delisted.
If a reconstitution event occurs, the trustee will deliver the underlying
security to you as promptly as practicable after the date that the trustee has
knowledge of the occurrence of a reconstitution event. No other shares will be
added in substitution of this underlying security, and the number of companies
represented by the Optical Equipment NETS will be reduced accordingly.
What is the Optical Equipment NETS Trust?
The Optical Equipment NETS Trust is the issuer of the Optical Equipment
NETS. This Optical Equipment NETS Trust will be formed under the depositary
trust agreement, dated as of _________________, 2000, among Investors Bank &
Trust Company, as trustee, Epoch Securities, Inc., as initial depositor and
other depositors, if any, and the owners of the Optical Equipment NETS. The
Optical Equipment NETS Trust is not registered as an investment company under
the Investment Company Act of 1940.
The Optical Equipment NETS Trust will hold shares of common stock issued
by specified companies involved in the optical equipment industry. Except when
a reconstitution event occurs, the group of companies will not change.
Reconstitution events are described in this prospectus under the heading
"Description of the Depositary Trust Agreement -- Reconstitution events."
Under no circumstances will the common stock of a new company be added to the
common stocks underlying the Optical Equipment NETS.
The Optical Equipment NETS Trust's assets and the number of Optical
Equipment NETS outstanding may increase or decrease as a result of in-kind
deposits or exchanges of the Optical Equipment NETS for the underlying
securities.
Can the Optical Equipment NETS Trust be terminated? What happens then?
The Optical Equipment NETS Trust will terminate on December 31, 2005, or
earlier if a termination event occurs. If a termination event occurs, the
trustee will distribute the underlying securities to you as promptly as
practicable after the termination event. Termination events include:
o The Optical Equipment NETS are delisted from the American Stock
Exchange and are not listed for trading on another U.S. national
securities exchange or through Nasdaq NMS within five business days
from the date the Optical Equipment NETS are delisted.
o The trustee resigns and no successor trustee is appointed within 60
days from the date the trustee provides notice to Epoch Securities,
Inc., as initial depositor, of its intent to resign.
o More than 50% of beneficial owners of outstanding Optical Equipment
NETS vote to dissolve and liquidate the Optical Equipment NETS
Trust.
o Either Epoch Securities, Inc., as the initial depositor, or the
trustee determines, in its sole discretion, that legal or regulatory
issues (including litigation or potential litigation, patent
infringement claims arising from similar financial products
originated by unaffiliated third parties, SEC action or interpretive
developments of applicable law or regulation) make such early
termination in the best interest of the beneficial owners of the
Optical Equipment NETS, Epoch Securities, Inc. or the trustee. Epoch
Securities, Inc. is not aware of any such issue that would make such
early termination in the best interest of the beneficial owners of
the Optical Equipment NETS, Epoch Securities, Inc. or the trustee.
o Less than nine issuers of underlying securities are represented by
the Optical Equipment NETS.
o In excess of $50,000 of extraordinary trust expenses, as defined in
the depositary trust agreement, have been incurred by or on behalf
of the Optical Equipment NETS Trust since the closing date, or are
reasonably believed by the trustee to be incurred within the
succeeding 30 day period and either the trustee or Epoch Securities,
Inc. elects to terminate the Optical Equipment NETS Trust.
Will the Optical Equipment NETS be listed on a stock exchange?
Prior to this offering, no public market existed for the Optical
Equipment NETS. Application has been made to list the Optical Equipment NETS
on the American Stock Exchange under the symbol "OPN", subject to official
notice of issuance. In the event that a fractional share comes to be
represented by a round-lot of Optical Equipment NETS, the Optical Equipment
NETS Trust may require a minimum of more than one round-lot of 100 Optical
Equipment NETS for an issuance so that the Optical Equipment NETS Trust will
always receive whole share amounts for issuance of Optical Equipment NETS.
Trading will take place only in round-lots of 100 Optical Equipment NETS and
round-lot multiples. Bid and ask prices, however, will be quoted per single
Optical Equipment NETS. A minimum of 150,000 Optical Equipment NETS will be
required to be outstanding when trading begins on the American Stock Exchange.
What is the role of Epoch Securities, Inc.? Who is Epoch Securities, Inc. and
Epoch Partners?
Epoch Securities, Inc. will be the initial depositor of the underlying
common stocks to the Optical Equipment NETS Trust and the managing underwriter
for the offering of the Optical Equipment NETS. It is intended that Epoch
Securities, Inc. will have binding commitments from Advanced Clearing, Inc.
and Charles Schwab & Co., Inc. at the time it makes the initial deposit of the
underlying common stocks to the Optical Equipment NETS Trust to acquire from
Epoch Securities, Inc. all the Optical Equipment NETS that Epoch Securities,
Inc. obtains from the Optical Equipment NETS Trust upon making such deposit,
and to offer and sell directly or through their affiliates or other
broker-dealers the Optical Equipment NETS to public investors. Epoch
Securities, Inc. will not directly sell any Optical Equipment NETS. Epoch
Securities, Inc., which does business as Epoch Partners, is an investment bank
formed in November 1999. In addition to this offering, Epoch Securities, Inc.
and its affiliates have engaged in the business of public and private equity
financing, private equity investing and financial advisory services since its
inception. Epoch Securities, Inc. may provide investment banking and other
financial services to the companies that issue the underlying securities, or
other companies engaged in the optical equipment industry, in the future, for
which it will receive customary fees and commissions. See "Underwriting."
What is the role of the trustee? Who is Investors Bank & Trust Company?
The trustee will act as the custodian of the underlying securities,
generally through an account at DTC, and will perform the services specified
in the depositary trust agreement. Investors Bank & Trust Company, a
Massachusetts trust company, will be the trustee and receive compensation
including that as set forth in the depositary trust agreement. Investors Bank
& Trust Company, which is subject to supervision by the Massachusetts
Commissioner of Banks, the Federal Deposit Insurance Corporation and the Board
of Governors of the Federal Reserve System, is a subsidiary of Investors
Financial Services Corp., a bank holding company, organized under the laws of
the state of Delaware. Investors Bank & Trust Company and its affiliates
provide global custody, multi-currency accounting, institutional transfer
agency, performance measurement, cash management, foreign exchange, securities
lending, mutual fund administration, institutional trust services and
investment advisory services. These services are generally provided to
financial asset managers, such as mutual fund complexes, investment advisors,
banks and insurance companies. As of December 31, 1999, Investors Bank & Trust
Company and its affiliates provided such services for net assets totaling
approximately $290 billion, including approximately $17 billion of foreign
assets. Services are provided from offices in Boston, New York, Toronto, the
Cayman Islands and Dublin.
Are there any risks associated with my investment?
An investment in Optical Equipment NETS involves significant risks.
Please refer to the section entitled "Risk Factors" on page 9 of this
prospectus for a more complete description of these risks.
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<PAGE>
RISK FACTORS
An investment in Optical Equipment NETS involves risks similar to
investing directly in each of the underlying securities, including risks
associated with concentrated investments in the optical equipment industry.
The principal risks are described below.
Risks Specific to this Offering and Optical Equipment NETS
You may lose your investment in the Optical Equipment NETS.
Because the value of the Optical Equipment NETS is directly related to
the value of the underlying securities, which could decline in value, you may
lose all or a substantial portion of your investment in the Optical Equipment
NETS.
The Optical Equipment NETS may trade at a discount to the aggregate value of
the underlying securities.
The Optical Equipment NETS may trade in the secondary market at prices
that are lower than the aggregate value of the corresponding underlying
securities. If, in such case, an owner of Optical Equipment NETS wishes to
realize the dollar value of the underlying securities, that owner will have to
exchange the Optical Equipment NETS. Such exchange will require payment of
fees and expenses as described in "Description of the Depositary Trust
Agreement -- Exchange of Optical Equipment NETS for the underlying
securities." Also, the underlying securities for 100 Optical Equipment NETS
may be in lots of less than 100 shares (generally referred to as "odd lots")
and the cost of liquidating such odd lots will increase the cost of any such
exchange.
The Optical Equipment NETS may not be representative of the optical equipment
industry.
Although the companies whose common shares are represented by the Optical
Equipment NETS are generally considered to be involved in the optical
equipment industry, the prices of these common shares may not reflect the
price movements of the entire optical equipment industry. As a result, your
investment in the Optical Equipment NETS may decline in value as the
underlying common shares decline in value, even if the stock prices of other
companies in the optical equipment industry increase in value over the same
time period. The optical equipment industry is also characterized by
significant change. Therefore, after the initial deposit, one or more of the
issuers of the underlying securities may no longer be involved in the optical
equipment industry. In this case, the Optical Equipment NETS may no longer
consist of securities issued only by companies involved in the optical
equipment industry. In addition, the composition of the optical equipment
industry as comprised by Epoch Securities, Inc. may not reflect the
composition of similarly designated industries comprised by other parties.
Accordingly, the past performance or prospects of future performance of any
similarly designated industry is not necessarily comparable to the optical
equipment industry as comprised by Epoch Securities, Inc. and as represented
by the Optical Equipment NETS.
The investment merit of the underlying securities has not been investigated.
The underlying securities included in the Optical Equipment NETS were
selected by Epoch Securities, Inc. based on objective measurements, including
equity market value and market liquidity, without regard to their value, price
performance, volatility or investment merit. Consequently, the Optical
Equipment NETS Trust, the trustee, Epoch Securities, Inc., the other
underwriters and their affiliates, have not performed any investigation or
review of the selected companies, including any review or analysis of the
public filings by the companies in connection with the offering of the Optical
Equipment NETS. The inclusion of the common shares of any company in the
Optical Equipment NETS is not an investment recommendation by any of these
parties.
The Optical Equipment NETS may not continue to represent a diversified
investment in the optical equipment industry.
The optical equipment industry is characterized by significant change. As
a result of business developments, reorganizations or market fluctuations
affecting companies whose shares are represented by the Optical Equipment
NETS, the Optical Equipment NETS may not continue to represent a diversified
investment in the optical equipment industry. Instead, the Optical Equipment
NETS may come to represent a concentrated investment in one or more of the
underlying securities, which would reduce investment diversification and
increase your exposure to the risks of concentrated investments. New companies
within the optical equipment industry may also emerge, and these companies can
not become part of the Optical Equipment NETS.
You will not be able to purchase the Optical Equipment NETS through an in-kind
deposit for a period of 25 days after the initial offering.
You will not be able to create the Optical Equipment NETS through an
in-kind deposit for a period of 25 days after the initial offering. However,
you may exchange your Optical Equipment NETS for all (but not less than all)
of the underlying securities, at any time after the initial offering. The
restriction on the purchase of Optical Equipment NETS through an in-kind
deposit during the 25 day period from the initial offering is intended to
reduce arbitrage-related trading that could adversely affect the prices of the
underlying securities and the Optical Equipment NETS. We cannot assure you
that this restriction will effectively reduce or eliminate this
arbitrage-related trading and its adverse affect on prices. This restriction
will not apply to the underwriters creating Optical Equipment NETS to cover
short positions.
You will have to exchange your Optical Equipment NETS to sell individual
underlying securities or participate in a tender offer relating to one of the
underlying securities.
In order to sell one or more of the underlying securities individually or
to directly participate in a tender offer relating to one or more of the
underlying securities, you will be required to exchange your Optical Equipment
NETS in order to receive delivery of each of the underlying securities. The
exchange of your Optical Equipment NETS will allow you to sell individual
underlying securities or to deliver individual underlying securities in a
tender offer. The exchange of Optical Equipment NETS will involve payment of
an exchange fee to the trustee.
Trading in the Optical Equipment NETS may be halted.
If trading is halted in one or more of the underlying securities, then
trading in the Optical Equipment NETS may be halted even if trading continues
in some or all of the other underlying securities. If trading in the Optical
Equipment NETS is halted, you will still be able to exchange your Optical
Equipment NETS for the underlying securities as described in this prospectus.
Third parties may claim that the Optical Equipment NETS infringe upon their
intellectual property rights.
We cannot assure you that third parties will not assert that the Optical
Equipment NETS or the Optical Equipment NETS Trust utilizes or incorporates
certain elements, which infringe upon their rights. Third parties are
increasingly seeking broad "business method" patents which purport to cover
expansive areas of operations. We are not aware of any infringement claims
that could be made; however, we have not conducted a search to determine
whether the Optical Equipment NETS or the Optical Equipment NETS Trust may be
infringing upon patent or other proprietary rights of third parties. Any
infringement claims, regardless of whether they have merit, could result in
costly litigation and the termination of the Optical Equipment NETS Trust. The
depositary trust agreement provides that litigation expenses will constitute
extraordinary expenses, as defined in the depositary trust agreement, which
Epoch Securities, Inc. has agreed to pay in an amount not to exceed $50,000.
In the event extraordinary expenses exceed $50,000, the Optical Equipment NETS
Trust may be terminated and such expenses may reduce amounts distributable to
the NETS holders. If an infringement claim were successfully asserted against
the Optical Equipment NETS Trust, it may require that the Optical Equipment
NETS Trust be dissolved or that the Optical Equipment NETS Trust enter into an
arrangement to license the intellectual property covered by any such claim. If
so, the Optical Equipment NETS Trust may not be able to obtain acceptable
royalty or license agreements terms. The depositary trust agreement permits
Epoch Securities, Inc. or the trustee to terminate the Optical Equipment NETS
Trust in the event of any pending or threatened litigation, including any such
infringement claims and in the event extraordinary expenses exceed or are
expected to exceed $50,000. If the Optical Equipment NETS Trust were
terminated, the underlying securities would be delivered to holders of the
Optical Equipment NETS in exchange for the Optical Equipment NETS.
The Optical Equipment NETS Trust may be terminated early.
Epoch Securities, Inc., as initial depositor, or the trustee, may elect
to terminate the Optical Equipment NETS Trust early if it determines, in its
sole discretion, that legal or regulatory issues (including litigation or
potential litigation, patent infringement claims arising from similar
financial products originated by unaffiliated third parties, SEC action or
interpretive developments of applicable law or regulation) make such early
termination in the best interest of the beneficial owners of the Optical
Equipment NETS, Epoch Securities, Inc. or its affiliates or the trustee.
Termination events can result in the delivery of the underlying securities
represented by the Optical Equipment NETS to the Optical Equipment NETS
holders. If the number of companies whose common stock is held in the Optical
Equipment NETS Trust falls below nine, the Trust will terminate. Any such
early termination may have a negative economic impact on the beneficial owners
if the Optical Equipment NETS are trading at a premium over the aggregate
values of the underlying securities or to the extent that the termination
increases the expenses related to the potential sale of the underlying
securities, including expenses related to sales of underlying securities in
odd lots. See "Description of the Depositary Trust Agreement - Termination of
the Optical Equipment NETS Trust" on page 26 of this prospectus for a complete
description of termination events.
Epoch Securities, Inc. and its affiliates may face possible conflicts of
interest.
Epoch Securities, Inc. has selected the optical equipment industry and
the companies whose common shares are represented by the Optical Equipment
NETS and may face possible conflicts of interest in connection with its
activities. For example, Epoch Securities, Inc. may provide investment banking
and other services to issuers of the underlying securities in connection with
its business, or may make purchases or sales, including establishing long or
short positions, in the underlying securities for its own account, and may
issue research in respect thereof which may affect the market price of one or
more of the underlying securities. In addition, Epoch Securities, Inc., as
initial depositor, will purchase, directly or indirectly, in the secondary
market, the underlying securities that will be deposited into the Optical
Equipment NETS Trust. Epoch Securities, Inc. may make these purchases before
the deposit into the Optical Equipment NETS Trust, or it may borrow securities
for the deposit and subsequently purchase the securities to deliver to the
lenders of the securities previously borrowed. In either event, the purchases
of the underlying securities will be made at various prices. As the initial
offering price for the Optical Equipment NETS will be based on the closing
market price of each of the underlying securities on the pricing date, Epoch
Securities, Inc. may recognize a gain on its purchases of the underlying
securities. Specifically, if the closing market price for the underlying
securities on the pricing date is higher than the price at which Epoch
Securities, Inc. purchases the underlying securities then it will recognize a
gain in connection with such purchases. Epoch Securities, Inc. may recognize
this gain on any or all of the underlying securities that comprise the Optical
Equipment NETS. The potential profit of Epoch Securities, Inc. may also be
affected by any hedging activities in which it may engage while purchasing the
underlying securities in the secondary market for deposit into the Optical
Equipment NETS Trust. These activities may result in conflicts of interest for
Epoch Securities, Inc. and its affiliates in connection with the initial
selection of the underlying securities included in the Optical Equipment NETS,
the selection of the optical equipment industry, Epoch Securities, Inc.'s
activity in the secondary market in the underlying securities and the creation
and exchange of Optical Equipment NETS by the trustee.
The prices of the underlying securities may temporarily increase prior to
their acquisition by the Optical Equipment NETS Trust and may decline
immediately thereafter.
Prices for the underlying securities may decline immediately after the
pricing date. If the trading prices for the underlying securities decline, the
trading price of Optical Equipment NETS will also decline. Purchasing activity
in the secondary trading market associated with acquiring the underlying
securities for deposit into the Optical Equipment NETS Trust may temporarily
increase the market price of the deposited shares, which will result in a
higher initial offering price for the Optical Equipment NETS. Large volumes of
purchasing activity, which may occur in connection with the issuance of
Optical Equipment NETS, particularly in connection with the initial issuance
of the Optical Equipment NETS, could temporarily increase the market price of
the underlying securities, resulting in a higher price on that date. This
purchasing activity could create a temporary imbalance between the supply and
demand of the underlying securities, thereby limiting the liquidity of the
underlying securities due to a temporary increased demand for them. Temporary
increases in the market price of the underlying securities may also occur as a
result of purchasing activity by other market participants. Other market
participants may attempt to benefit from the increases in the market price of
the underlying securities that may occur as a result of the increased
purchasing activity in the underlying securities resulting from the issuance
of the Optical Equipment NETS. Consequently, prices for the underlying
securities may decline immediately after the pricing date. If the trading
prices for the underlying securities decline, the trading price of the Optical
Equipment NETS will also decline.
Potential illiquidity of the Optical Equipment NETS.
There is currently no market for the Optical Equipment NETS and no
assurance can be given that one will develop or, if an active secondary market
for the Optical Equipment NETS does develop, that it will continue to be
sufficiently active as to provide liquidity for the Optical Equipment NETS. In
the event the American Stock Exchange listing standards are not met once
trading has begun, the Optical Equipment NETS will be delisted from the
American Stock Exchange and the Optical Equipment NETS Trust may be
terminated. See "Description of the Depositary Trust Agreement - Termination
of the Optical Equipment NETS Trust."
Risk Factors Specific to Companies Involved in the Optical Equipment Industry
The stock prices of some of the companies included in the Optical Equipment
NETS have been and will likely continue to be extremely volatile, which will
directly affect the price volatility of the Optical Equipment NETS.
The trading prices of the securities of some companies included in the
Optical Equipment NETS have been volatile. These stock prices could be subject
to wide fluctuations in response to a variety of factors, including the
following:
o general market fluctuations,
o actual or anticipated variations in companies' quarterly operating
results,
o announcements of technological innovations or new products or
services offered by competitors of the companies included in the
Optical Equipment NETS, including companies whose shares are not
included in the Optical Equipment NETS,
o changes in financial estimates by securities analysts,
o legal or regulatory developments affecting the companies included in
the Optical Equipment NETS or the optical equipment industry
generally,
o announcements by competitors of the companies included in the
Optical Equipment NETS of significant acquisitions, strategic
partnerships, joint ventures or capital commitments,
o departures of key personnel, and
o sales of optical equipment companies' securities in the open market.
In addition, the trading prices of some optical equipment stocks in
general have experienced extreme price and volume fluctuations recently. These
fluctuations often have been unrelated or disproportionate to the operating
performance of these companies. The valuations of many optical equipment
stocks are high when measured by conventional valuation standards, such as
price to earnings and price to sales ratios. Some of the companies do not, or
in the future might not, have earnings. As a result, their trading prices may
decline substantially and valuations may not be sustained. Any negative change
in the public's perception of the prospects of optical equipment companies or
Internet-based companies generally could depress the stock prices of optical
equipment companies, regardless of their operating results. In addition, other
broad market and industry factors may decrease the stock prices of optical
equipment companies, regardless of their operating results. Market
fluctuations, as well as general political and economic conditions, such as an
economic slowdown, negative interest rate environments or currency rate
fluctuations, also may decrease the market price of optical equipment stocks.
The market for optical equipment is new and uncertain.
A viable market for optical equipment may not develop or be sustainable.
Most communications service providers have made substantial investments in
their current communications network infrastructure. In order to install
optical equipment, they might have to replace their current network equipment
and could choose to adopt this new equipment in limited stages or over
extended periods of time. Because the purchase of optical equipment will
involve significant capital investments, these communications service
providers could choose not to adopt optical transmission technologies. If the
optical equipment market does not develop, or develops more slowly than
expected, the businesses, financial conditions and results of operations of
optical equipment companies could be seriously harmed.
Optical equipment companies will suffer if they do not respond rapidly to
technological changes and evolving industry standards.
The market for optical equipment is characterized by rapid technological
change, frequent new product introductions and changes in customer
requirements. Optical equipment companies may be unable to respond quickly or
effectively to these developments. They may experience design, manufacturing,
marketing and other difficulties that could delay or prevent the development,
introduction or marketing of new products and enhancements. The introduction
of new products by one or several optical equipment companies, the market
acceptance of products based on new or alternative technologies or the
emergence of new industry standards could render the existing or future
products of other optical equipment companies obsolete, which would harm their
businesses, financial conditions and results of operations.
In developing products, optical equipment companies have made, and may
continue to make, assumptions about the industry standards that may be adopted
by potential customers. If the standards adopted are different from those that
a company has chosen to support, market acceptance of their products may be
significantly reduced or delayed and their businesses will be seriously
harmed. In addition, the introduction of products incorporating new
technologies and the emergence of new industry standards could render existing
products obsolete. In order to introduce products incorporating new
technologies and new industry standards, optical equipment companies must be
able to gain access to the latest technologies of their suppliers, other
network vendors and their potential customers. Any failure to gain access to
the latest technologies would seriously harm their businesses, financial
conditions and results of operations.
Optical equipment companies must also quickly develop, introduce and
deliver their products, or incur the risk that their competitors will
introduce the same or similar products or products which could make their
product obsolete. In addition, the widespread adoption of new Internet,
networking or telecommunications standards and other technological changes
could require substantial expenditures to modify or adapt the existing
products offered by optical equipment companies. Many optical equipment
companies may not successfully introduce new products, develop and maintain a
loyal customer base or achieve general market acceptance for their products,
and failure to do so could have a material adverse effect on their business,
result of operations and financial condition.
Optical equipment products have relatively short life cycles.
The products of some optical equipment companies have relatively short
life cycles that could result in significant fluctuations in their operating
results. The products of some companies included in the Optical Equipment NETS
have a limited life cycle and it is difficult to estimate when they will
become obsolete. As a result, it is difficult to forecast future revenue
growth or sources of future revenue. If an optical equipment company does not
develop and introduce new products in order to insure existing customers
continue to use their products, it may not be possible for an optical
equipment company to sustain its current level of sales.
Optical equipment companies may not be able to manage their rapid growth.
Inability to manage rapid growth could adversely affect systems,
management resources and revenues. Some optical equipment companies are, or
plan to begin, rapidly expanding their operations. Success of the marketing
strategies of many of these companies will place extraordinary demands on
their network infrastructure and technical support. This expansion has placed
and will continue to place a significant strain on the financial, operational,
management, marketing, and sales systems and resources of many optical
equipment companies. There can be no assurance that these companies will
complete the necessary improvements to their systems, procedures and controls
necessary to support their future operations in a timely manner or that
management will be able to hire, train, retain and manage required personnel
to manage such rapid growth.
If optical equipment companies are unable to expand manufacturing capacity in
a timely manner, or if they do not accurately project demand, they will have
excess capacity or insufficient capacity, either of which will seriously harm
their revenues.
Some optical equipment companies, including those companies whose shares
underlie the Optical Equipment NETS, have a limited number of manufacturing
facilities and capacity. While many of these companies plan to devote
significant resources to expand their manufacturing capacity, any delay in
adding new facilities or expanding existing facilities could result in delays
of product delivery. Furthermore, these companies could experience
difficulties and disruptions in the manufacture of their products while they
transition to new facilities, which could prevent them from achieving timely
delivery of products and could result in lost revenues. Optical equipment
companies could also be unable to procure and install the necessary capital
equipment or to hire the necessary manufacturing personnel to work in these
facilities, which would result in difficulties in achieving adequate yields or
volumes from new manufacturing lines. Any delays, disruptions, capacity
constraints or quality control problems in manufacturing operations would
result in delayed product shipments to customers, and the revenues,
competitive positions and reputations of these optical equipment companies
would be negatively impacted.
Many optical equipment companies depend on a single or a few suppliers for key
components and materials in their products, which makes them susceptible to
supply shortages or price fluctuations that could adversely affect their
operating results.
Many optical equipment companies, including some of the companies whose
common stock underlies the Optical Equipment NETS, typically purchase
components and materials through purchase orders, and in general, have no
guaranteed supply arrangements with any of these suppliers. In some cases,
these companies purchase key components and materials used in the manufacture
of their products from a single or a limited number of suppliers. These
suppliers may be unable to manufacture key components and materials that meet
the necessary specifications or may not be able to meet anticipated supply
requirements. If a relationship with a key supplier terminates, the optical
equipment company may not be able to find another manufacturer that can meet
the necessary specifications or anticipated supply requirements, in which
case, that company may experience difficulty identifying alternative sources
of supply for certain components used in its products. These optical equipment
companies also would experience further delays from evaluating and testing the
products of potential alternative suppliers. Furthermore, financial or other
difficulties faced by suppliers or significant changes in demand for these
components or materials could limit the availability. Any interruption or
delay in the supply of any key components or materials, or the inability to
obtain key components or materials from alternate sources at acceptable prices
and within a reasonable amount of time, would impair or delay scheduled
product deliveries to customers and could cause customers to cancel orders. In
addition, optical equipment companies may need to make advance payments
against future orders in order to secure supply. If any optical equipment
company is required to make advance payments to suppliers, this will reduce
its working capital.
The optical equipment market is highly competitive and many companies may not
be able to achieve or maintain profitability.
Competition in the optical equipment market is intense. Large,
well-capitalized companies historically have dominated this market and the
entry of other such companies would further increase the level of competition.
In addition, a number of private companies have attracted significant
financing and have announced plans for new optical equipment products. Large
scale deployment of new optical equipment products is subject to significant
risks due to several factors including lengthy sales cycles, complex testing
and deployment processes and substantial manufacturing capacity constraints
associated with large-scale deployments of optical equipment products. As a
result, any of the companies in the Optical Equipment NETS may not be able to
achieve or maintain profitability. If any of the optical equipment companies
whose stock underlie the Optical Equipment NETS are unable to compete
successfully against their current and future competitors, they may have
difficulty obtaining customers, and they could experience price reductions,
order cancellations, increased expenses and reduced gross margins, any one of
which would harm their businesses, financial conditions and results of
operations.
Companies in the optical equipment industry may be unable to protect their
intellectual property rights.
The competitive positions of optical equipment companies that are unable
to adequately protect their proprietary rights may be harmed. Many optical
equipment companies rely on a combination of patent, copyrights, trademark,
service mark and trade secret laws and contractual restrictions to establish
and protect proprietary rights in their products and services. There can be no
assurance that these companies will be able to protect their intellectual
property if they are unable to enforce their rights or if they do not detect
unauthorized use of their intellectual property. Furthermore, any steps taken
to protect intellectual property may be inadequate, time consuming and
expensive. In addition, optical equipment companies may be subject to claims
that their products and services infringe the intellectual property rights of
others. Any claim, whether meritorious or not, could be time consuming, result
in costly litigation, delay product or service introductions or require
optical equipment companies to enter into royalty or licensing agreements.
Legal standards relating to the scope of protection of intellectual property
rights in optical equipment and related industries are still evolving, and the
future viability or value of any of the intellectual property rights of
optical equipment companies is uncertain.
The demand for optical equipment may decline.
Demand for some of the products and services of optical equipment
companies will decline if Internet use fails to grow and be accepted as a
medium for online commerce and communication. If this demand does not
materialize, future revenues and any future profits of many optical equipment
companies will be jeopardized and these companies may not be able to expand
their businesses. Rapid growth in the use of and interest in the Internet and
other online services is a relatively recent phenomenon. There is no assurance
that acceptance and use will continue to develop or that a sufficiently broad
base of consumers will adopt and continue to use the Internet and other online
services.
The communications industry is subject to government regulations that could
harm optical equipment companies.
The Federal Communications Commission, or FCC, has jurisdiction over the
entire communications industry. As a result, optical equipment products and
communications service providers, the primary purchasers of optical equipment,
are subject to FCC rules and regulations. Current and future FCC rules and
regulations affecting communications services or optical equipment products
could negatively affect the businesses of one or more of the companies whose
shares underlie the Optical Equipment NETS. In addition, international
regulatory standards could impair or delay the ability of these companies to
develop products for international service providers in the future. Delays
caused by the need to comply with regulatory requirements could result in
postponements or cancellations of product orders, which would harm their
businesses, results of operations and financial conditions. Further, any of
the optical equipment companies whose shares underlie the Optical Equipment
NETS may not be successful in obtaining or maintaining any regulatory
approvals that may, in the future, be required to operate their businesses.
New laws and regulations with respect to the Internet could slow its growth
and as a result, harm optical equipment companies.
New laws and regulations with respect to the Internet could impede its
commercial development and adversely affect the business of many optical
equipment companies. Due to the increasing popularity and use of the Internet
and other online services, it is possible that a number of laws and
regulations may be adopted with respect to the Internet or other online
services covering issues such as user privacy, pricing, content, copyrights,
distribution and characteristics and quality of products and services.
Furthermore, the growth and development of the market for online interaction
and commerce may result in more stringent consumer protection laws that may
impose additional burdens on companies conducting business online. The
adoption of any additional laws or regulations may impede the growth of the
Internet or other online services which could have a material adverse effect
on the business, results of operations and financial condition of many
companies included in the Optical Equipment NETS.
Some optical equipment companies have few customers and could be harmed if any
of these customers were to reduce their purchases.
Some companies included in the Optical Equipment NETS depend on a few
customers for a significant portion of their revenues. For these companies,
the failure to retain these customers or to replace these lost customers could
affect negatively their businesses. In addition, if any of these significant
customers were to reduce their purchases, the revenues of these companies
would be substantially affected. Some of the companies included in the Optical
Equipment NETS do not have long-term contracts or specific volume purchase
contracts with significant customers and therefore cannot be sure that these
customers will continue to purchase products at current levels and, as a
result, a customer that generates substantial revenue in a particular period
may not be a source of revenue in subsequent periods.
Some optical equipment companies have few products and if these products are
not commercially successful, their revenue will not grow and they may not
achieve profitability.
Some optical equipment companies, including some companies whose stock is
included in the Optical Equipment NETS, have only one or a few products. If
potential customers do not adopt, purchase and successfully deploy these
products in large numbers, the revenue of these optical equipment companies
may not grow and their businesses, financial conditions and results of
operations will be seriously harmed. Even if service providers do deploy these
products fully, they may not operate as expected, which could delay or prevent
its adoption.
Optical equipment companies face international risks.
Some of the optical equipment companies whose stock underlies the Optical
NETS have significant international operations that expose them to risks
associated with international political or economic instability and changes in
foreign economic and political conditions, foreign currency fluctuations,
changes in foreign regulations and other risks inherent to international
business. The risks of international business that the companies are exposed
to include the following:
o general economic, social and political conditions,
o the difficulty of enforcing intellectual property rights, agreements
and collecting receivables through certain foreign legal systems,
o differing tax rates, tariffs, exchange controls or other similar
restrictions, including the inability in some cases to repatriate
foreign earnings,
o foreign currency fluctuations, and
o changes in, and compliance with, domestic and foreign laws and
regulations which impose a range of restrictions on operations,
trade practices, foreign trade and international investment
decisions.
Many optical equipment companies are developing strategies to generate
additional revenues for their products and services outside of the United
States and Western Europe as the volume of traffic across communications
networks grows globally. The expansion into international markets will require
significant management attention and financial resources to develop and expand
international sales and marketing activities. However, many optical equipment
companies cannot be certain that investments in establishing facilities in
other countries will produce anticipated revenues as they have limited
experience developing localized versions of their products and services and
marketing products and services internationally. The inability of some optical
equipment companies, including those companies whose stock underlies the
Optical Equipment NETS, to successfully expand internationally may result in
slower revenue growth and the inability to achieve profitability.
Some of the companies included in the Optical Equipment NETS were
incorporated under the laws of a jurisdiction other than the United States and
a substantial portion of their assets are located outside the United States.
As a result, it may be impossible to effect service of process within the
United States on some of the companies included in the Optical Equipment NETS
or enforce judgments made against them in courts in the United States based on
civil liability provisions of the securities laws of the United States. In
addition, judgments obtained in the United States, especially those awarding
punitive damages, may not be enforceable in foreign countries.
Some optical equipment companies have limited operating histories and, as a
result, may be unable to make accurate financial forecasts.
Some companies included in the Optical Equipment NETS have a limited
operating history that makes financial forecasting difficult. These companies
are not able to forecast operating expenses based on their historical results.
Accordingly, these companies base their forecasts of operating expenses in
part on percentages of projected revenues. However, many expenses are fixed,
at least in the short term, and it may not be possible to quickly reduce
spending if revenues are lower than projected. Thus, lower than projected
revenue growth could result in the failure of optical equipment companies,
including those companies whose stock underlies the Optical Equipment NETS, to
meet their income or loss projections in a given quarter.
Optical equipment is complex and any defects or errors could be costly to fix.
The products of optical equipment companies are complex and must be
developed quickly to keep pace with the rapidly changing and highly
competitive optical equipment market. Despite extensive product testing,
complex optical equipment products and services are likely to contain
undetected errors or defects. In the past, some optical equipment companies
have experienced delays in releasing some versions of their products until
optical equipment problems were corrected. Some products may not be free from
errors or defects after commercial shipments have begun, which could result in
the rejection of products and damage to their reputations, as well as lost
revenues, diverted development resources, increased service and warranty costs
and significant litigation and related legal expenses, all of which could
negatively affect the revenues and expenses of a optical equipment company, as
well as the market acceptance of its products.
Optical equipment companies may be unable to attract and retain the necessary
personnel needed to develop and operate their businesses.
Many optical equipment companies are dependent on their ability to
continue to attract and retain highly skilled technical and managerial
personnel to develop and generate their businesses. Many optical equipment
companies are highly dependent on the experience, abilities and continued
services of key executive officers and key technical personnel. If these
companies lose the services of any of these officers or key technical
personnel, their future success could be undermined. Competition for skilled
personnel in the technology field generally and in the optical equipment
industry in particular is intense. These optical equipment companies may not
be able to continue to attract and retain qualified personnel.
The optical equipment industry has been characterized by frequent merger and
acquisition activity that could disrupt the businesses and financial
conditions of companies involved.
The optical equipment industry has been characterized by frequent merger
and acquisition activity. Some optical equipment companies have indicated that
they intend to make investments in complementary companies, products or
technologies. In the event of any such investments or acquisitions, these
companies could:
o issue stock that would dilute their current stockholders' percentage
ownership,
o incur debt,
o assume liabilities,
o incur amortization expenses related to goodwill and other intangible
assets, or
o incur large and immediate write-offs.
These acquisitions also involve numerous risks, including:
o problems combining the purchased operations, technologies or
products,
o unanticipated costs,
o diversion of management's attention from its core business,
o adverse effects on existing business relationships with suppliers
and customers,
o risks associated with entering markets in which the acquiring
companies have no or limited prior experience, and
o potential loss of key employees, particularly those of the acquired
organizations.
These optical equipment companies, which may include companies whose
stock underlies the Optical Equipment NETS, may not be able to successfully
integrate any businesses, products, technologies or personnel that they might
acquire in the future. As a result, their businesses and financial conditions
could be harmed.
<PAGE>
DESCRIPTION OF THE TRUST
This discussion highlights information about the Optical Equipment NETS
Trust. You should read this information, information about the depositary
trust agreement and the depositary trust agreement before you purchase Optical
Equipment NETS. The material terms of the depositary trust agreement are
described in this prospectus under the heading "Description of the Depositary
Trust Agreement."
The Optical Equipment NETS Trust will be formed pursuant to the
depositary trust agreement, dated as of __________, 2000. Investors Bank &
Trust Company will be the trustee. The Optical Equipment NETS Trust is
intended to hold deposited shares for the benefit of owners of the Optical
Equipment NETS, and the Optical Equipment NETS Trust will issue Optical
Equipment NETS. After the initial offering, the Optical Equipment NETS Trust
may issue additional Optical Equipment NETS on a continuous basis when an
investor deposits the requisite underlying securities with the trustee. The
trustee will perform only administrative and ministerial acts. The property of
the Optical Equipment NETS Trust will consist of the underlying securities and
all monies or other property, if any, received by the trustee. The Optical
Equipment NETS Trust will not publish or otherwise calculate the aggregate
value of the underlying securities represented by an Optical Equipment NETS.
The Optical Equipment NETS Trust will terminate on December 31, 2005, or
earlier if a termination event occurs. The Optical Equipment NETS Trust is not
a registered investment company under the Investment Company Act of 1940.
DESCRIPTION OF OPTICAL EQUIPMENT NETS
Optical Equipment NETS will represent your individual and undivided
beneficial ownership interest in the common stock of the specified underlying
securities. The 21 companies to be included initially in this receipt program
are listed in the section entitled "Summary Information -- What are the
Optical Equipment NETS?"
You may only acquire, hold, trade and exchange Optical Equipment NETS in
a round-lot of 100 Optical Equipment NETS and round-lot multiples. The Optical
Equipment NETS Trust will only issue Optical Equipment NETS upon the deposit
of the whole shares of underlying securities that are represented by a
round-lot of 100 Optical Equipment NETS. In the event of a stock split,
reverse stock split, or other distribution by the issuer of an underlying
security that results in a fractional share becoming represented by a
round-lot of Optical Equipment NETS, the Optical Equipment NETS Trust may
require a minimum of more than one round-lot of 100 Optical Equipment NETS for
an issuance so that the Optical Equipment NETS Trust will always receive whole
share amounts for issuance of Optical Equipment NETS.
Beneficial owners of Optical Equipment NETS will have most of the same
rights and privileges as they would have if they beneficially owned the
underlying securities outside of the Optical Equipment NETS Trust. These
include the right of investors:
o to receive all shareholder disclosure materials, including annual
reports, quarterly reports and proxy materials, distributed by the
issuers of the underlying securities,
o to instruct the trustee to vote the common stock,
o to receive dividends and other distributions on the underlying
securities, if any are declared and paid to the trustee by an issuer
of an underlying security,
o to exchange the Optical Equipment NETS for all (but not less than
all) of the underlying securities, and
o to proceed against an issuer of an underlying security without
having to act in concert with other beneficial owners of Optical
Equipment NETS or the trustee.
In order to participate in a tender offer relating to one or more of the
underlying securities, you will be required to exchange your Optical Equipment
NETS in order to receive delivery of each of the underlying securities. The
exchange of your Optical Equipment NETS will allow you to deliver individual
underlying securities in a tender offer. The exchange of Optical Equipment
NETS will involve payment of an exchange fee to the trustee. Optical Equipment
NETS are not intended to change your beneficial ownership in the underlying
securities under federal securities laws, including Sections 13(d) and 16(a)
of the Securities Exchange Act of 1934.
Optical Equipment NETS may trade in the secondary market at prices that
are lower than the aggregate value of the corresponding underlying securities.
If, in such case, an owner of Optical Equipment NETS wishes to realize the
dollar value of the underlying securities, that owner will have to exchange
the Optical Equipment NETS. Such exchange will require payment of fees and
expenses as described in "Description of the Depositary Trust Agreement --
Exchange of Optical Equipment NETS for the underlying securities." See also
"Risk Factors - Risks Specific to this Offering and Optical Equipment NETS".
Depository
Description of the global certificates. Upon issuance, all of the Optical
Equipment NETS will be represented by one or more fully registered global
certificates. Each global certificate will be deposited with, or on behalf of,
DTC, as depository, and will be registered in the name of Cede & Co., DTC's
partnership nominee. Unless and until it is exchanged in whole or in part for
the Optical Equipment NETS in definitive form, no global certificate may be
transferred except as a whole by the depository to a nominee of the depository
or by a nominee of the depository to the depository or another nominee of the
depository or by the depository or any nominee to a successor of the
depository or a nominee of that successor.
So long as DTC, or its nominee, is a registered owner of a global
certificate, DTC or its nominee, as the case may be, will be considered the
sole owner or holder of the Optical Equipment NETS represented by the global
certificate for all purposes under the depositary trust agreement. Except as
provided below, the beneficial owners of the Optical Equipment NETS will not
be entitled to have the Optical Equipment NETS represented by a global
certificate registered in their names, will not receive or be entitled to
receive physical delivery of the Optical Equipment NETS in definitive form and
will not be considered the owners or holders of the Optical Equipment NETS,
including for purposes of receiving any reports delivered by Epoch Securities,
Inc. or the trustee under the depositary trust agreement. Accordingly, each
person owning a beneficial interest in a global security must rely on the
procedures of DTC and, if that person is not a participant of DTC, on the
procedures of the participant through which that person owns its interest, to
exercise any rights of a holder under the depositary trust agreement. Epoch
Securities, Inc. understands that under existing industry practices, in the
event that Epoch Securities, Inc. requests any action of holders or that an
owner of a beneficial interest in a global certificate desires to give or take
any action which a holder is entitled to give or take under the depositary
trust agreement, DTC would authorize the participants holding the relevant
beneficial interests to give or take that action, and those participants would
authorize beneficial owners owning through those participants to give or take
that action or would otherwise act upon the instructions of beneficial owners.
Conveyance of notices and other communications by DTC to participants, by
participants to indirect participants and by participants and indirect
participants to beneficial owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
DTC procedures. The following is based on information furnished by DTC:
DTC will act as securities depository for the Optical Equipment NETS. The
Optical Equipment NETS will be issued as fully registered securities
registered in the name of Cede & Co. (DTC's partnership nominee). One or more
fully registered global certificates will be issued for the Optical Equipment
NETS in the aggregate principal amount of such issue, and will be deposited
with DTC.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934. DTC holds securities that its participants ("Direct
Participants") deposit with DTC. DTC also facilitates the settlement among
Direct Participants of securities transactions, such as transfers and pledges,
in deposited securities through electronic computerized book-entry changes in
Direct Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct Participants of DTC include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations. DTC is owned by a number of its Direct
Participants and by the New York Stock Exchange, the American Stock Exchange
and the National Association of Securities Dealers, Inc. Access to DTC's
system is also available to others such as securities brokers and dealers,
banks and trust companies that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its Direct and
Indirect Participants are on file with the SEC.
Purchases of the Optical Equipment NETS under DTC's system must be made
by or through Direct Participants, which will receive a credit for the Optical
Equipment NETS on DTC's records. The ownership interest of each beneficial
owner is in turn to be recorded on the records of Direct and Indirect
Participants. Beneficial owners will not receive written confirmation from DTC
of their purchase, but beneficial owners are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct or Indirect Participants through
which the beneficial owner entered into the transaction. Transfers of
ownership interests in the Optical Equipment NETS are to be made by entries on
the books of Direct and Indirect Participants acting on behalf of beneficial
owners.
To facilitate subsequent transfers, all the Optical Equipment NETS
deposited with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of the Optical Equipment NETS with DTC and their
registration in the name of Cede & Co. effect no change in beneficial
ownership. DTC has no knowledge of the actual beneficial owners of the Optical
Equipment NETS; DTC's records reflect only the identity of the Direct
Participants to whose accounts the Optical Equipment NETS are credited, which
may or may not be the beneficial owners. The Direct and Indirect Participants
will remain responsible for keeping account of their holdings on behalf of
their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to beneficial owners will be governed
by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to the
Optical Equipment NETS. Under its usual procedures, DTC mails an omnibus proxy
to the trustee as soon as possible after the applicable record date. The
omnibus proxy assigns Cede & Co.'s consenting or voting rights to those Direct
Participants identified in a listing attached to the omnibus proxy to whose
accounts the Optical Equipment NETS are credited on the record date.
Dividends, if any, or other payments, if any, made in cash on the Optical
Equipment NETS will be made in immediately available funds to Cede & Co. DTC's
practice is to credit Direct Participants' accounts on the applicable payment
date in accordance with their respective holdings shown on the depository's
records unless DTC has reason to believe that it will not receive payment on
that date. Payments by participants to beneficial owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the accounts of customers in bearer form or registered in "street
name", and will be the responsibility of that participant and not of DTC, the
trustee or Epoch Securities, Inc., subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of dividends, if
any, or other payments, if any, to Cede & Co. is the responsibility of the
trustee, disbursement of those payments to Direct Participants shall be the
responsibility of DTC, and disbursement of any payments to the beneficial
owners will be the responsibility of Direct Participants and Indirect
Participants.
Exchange for certificated securities. If the depository is at any time
unwilling or unable to continue as depository and a successor depository is
not appointed by Epoch Securities, Inc. within 60 days, the global
certificates will be exchangeable for the Optical Equipment NETS in definitive
form of like tenor and of an equal aggregate amount. The definitive Optical
Equipment NETS will be registered in the name or names as the depository shall
instruct the trustee. It is expected that instructions may be based upon
directions received by the depository from participants with respect to
ownership of beneficial interests in the global certificates.
The information in this section concerning DTC and DTC's system has been
obtained from sources that Epoch Securities, Inc. believes to be reliable, but
Epoch Securities, Inc. takes no responsibility for its accuracy.
<PAGE>
DESCRIPTION OF THE UNDERLYING SECURITIES
The optical equipment industry. The optical equipment industry consists
of numerous companies that design, manufacture and market products that enable
voice and data transmissions across communications networks using optical, or
light-based, signals.
Over the last three years, the volume of traffic across communications
networks has grown dramatically. Broadband or high-speed Internet access
through cable modems and digital subscriber line, also called DSL, connections
combined with new bandwidth-intensive applications such as streaming video and
real-time electronic commerce have placed significant strains on the capacity
of existing communications network infrastructures. These networks were
initially designed for low speed voice traffic and not for large volumes of
high-speed data traffic. According to RHK, Inc., a telecommunications industry
market research firm, the data traffic across communications networks is
expected to increase from 350,000 terabytes per month in 1999 to more than 16
million terabytes per month in 2003. Ten terabytes is the equivalent of all of
the information contained in the Library of Congress.
To handle the increasing volume of communications traffic, communications
service providers are rapidly expanding their networks and adding capacity by
using optical transmission and switching equipment. Optical equipment
generally provides higher capacity and greater network reliability than older
electrical transmission equipment because light signals can travel more
quickly through optical fibers than electrical signals can travel through
copper wire, and transmitting data using light is inherently more efficient.
Demand for optical equipment has also increased due to changing market
dynamics. The deregulation of the telecommunications industry has resulted in
the creation of a new generation of communications service providers that seek
to use the latest optical equipment in their communications networks.
Incumbent communications service providers must continue to install new
optical equipment that increases the capacity and the competitiveness of their
networks while maintaining or improving network reliability. According to RHK,
Inc., the global market for optical systems and subsystems is expected to grow
31% per year from $38 billion in 1999 to $113 billion in 2003.
Optical equipment companies generally fall into three categories: systems
providers, subsystems providers or fiber optic cable providers. Systems
providers undertake the complex task of assembling different optical equipment
building blocks developed by subsystems providers and then combining them with
software and additional proprietary hardware to create complete optical
equipment systems. These systems providers sell their products to the
communications service providers for use in their networks. Optical systems
include DWDM, or dense wave division multiplexing, transport systems, which
transmit optical signals within fiber optic networks, and optical switches,
which connect disparate optical networks and route optical signals from one
location to another. These systems can be used in metropolitan areas or for
long-haul, or long distance, applications. The building blocks provided by
subsystems providers include computer chips or modules that typically perform
a specific function such as the amplification or steering of light signals.
Subsystems include erbium-doped fiber amplifiers, which reamplify all the
optical signals on an optical fiber without costly electrical reamplification
of the individual signals, optical muliplexors, which combine individual
optical signals to cost effectively transmit them together in a single optical
fiber, and add-drop multiplexers, which manipulate optical signals to add or
drop individual signals at intermediate locations in the optical network.
Fiber optic cable providers sell fiber optic cable to systems providers,
subsystems providers and communications service providers for use in optical
equipment or in optical networks.
Selection criteria. The underlying securities are the common stocks of a
group of 21 specified companies involved in various aspects of the optical
equipment industry and whose common stock is registered under Section 12 of
the Securities Exchange Act of 1934. The issuers of the underlying securities
generally are considered to be among the largest capitalized, most liquid
companies with U.S.-traded common stock registered under Section 12 of the
Securities Exchange Act of 1934 that are involved in the optical equipment
industry, as measured by equity market value and trading volume. The following
criteria were used in selecting the underlying securities on October 26, 2000:
o equity market value equal to or greater than $1.5 billion,
o average daily trading volume of at least 800,000 shares over the 60
trading days before October 26, 2000,
o average daily dollar volume (that is, the average daily trading
volume multiplied by the average closing price) of at least $40
million over the 60 trading days before October 26, 2000, and
o a trading history of at least 90 calendar days.
The equity market value of a company is determined by multiplying the
price of its common stock by the number of outstanding shares of its common
stock. Epoch Securities, Inc. examined available public information about each
company, including such items as analysts' reports and other independent
market research, solely to determine whether a company actively participates
in the optical equipment industry. See "No investigation" below. The ultimate
determination of the inclusion of the 21 specified companies, however, rested
solely within the discretion of Epoch Securities, Inc.
After the initial deposit, one or more of the issuers of the underlying
securities may no longer be substantially involved in the optical equipment
industry. In this case, the Optical Equipment NETS may no longer consist of
securities issued by companies involved in the optical equipment industry.
Epoch Securities, Inc. will determine, in its sole discretion, whether the
issuer of a particular underlying security remains in the optical equipment
industry and will undertake to make adequate disclosure when necessary.
Underlying securities. For a list of the underlying securities
represented by Optical Equipment NETS, see "Summary Information -- What are
the Optical Equipment NETS?" If the underlying securities change because of a
reconstitution event, a revised list of underlying securities will be
disclosed in a related prospectus supplement and will be available from the
American Stock Exchange and through a widely-used electronic information
dissemination system such as Bloomberg or Reuters.
No investigation. In selecting the underlying securities, Epoch
Securities, Inc., the Optical Equipment NETS Trust, the trustee, the other
underwriters, and any affiliate of these entities, have not performed any
investigation or review of the selected companies, including the public
filings by the companies in connection with the offering of the Optical
Equipment NETS, other than to the extent required to determine whether the
companies satisfied the selection criteria outlined above. Accordingly, before
you acquire Optical Equipment NETS, you should consider publicly available
financial and other information about the issuers of the underlying
securities. See "Risk Factors" and "Where You Can Find More Information." The
inclusion of a company's common stock in the underlying securities of the
Optical Equipment NETS is not a recommendation to invest in that company or
its common stock by Epoch Securities, Inc., Advanced Clearing, Inc., Charles
Schwab & Co., Inc., the Optical Equipment NETS Trust, the trustee, or any of
their affiliates.
General background and historical information. For a brief description of
the business of each of the issuers of the underlying securities and monthly
pricing information showing the historical performance of each underlying
issuer's securities see "Exhibit A."
The following table and graph set forth the composite performance of the
underlying securities represented by a single Optical Equipment NETS as of the
pricing date based upon the share amounts set forth in the table on page 1 of
this prospectus, measured at the close of each business day from January 1,
1999 to the pricing date. The graph shows the performance of the underlying
securities represented by a single Optical Equipment NETS relative to the
Nasdaq Composite with both indexed to 100. The performance table and graph
data are adjusted for any splits that may have occurred over the measurement
period.
On January 4, 1999, ten of the underlying securities represented by the
Optical Equipment NETS were not publicly traded. In order to present the
historical performance of optical equipment companies' stocks beginning on
January 4, 1999, the composite price of the thirteen underlying securities
that were publicly traded on January 4, 1999 was calculated using the number
of shares per Optical Equipment NETS as shown in the table on page 2 increased
on a pro-rata basis using these thirteen securities' respective weightings on
January 4, 1999 to represent an initial investment of $2,427. On the day each
of the additional ten underlying securities represented by the Optical
Equipment NETS became publicly traded, these securities were added to the
composite performance. On the day each security was added, the number of
shares of this security equaled the number of shares per Optical Equipment
NETS as shown in the table on page 2 increased on a pro-rata basis using this
security's respective weightings calculated using the closing prices on the day
it began trading publicly. At the same time, the other securities already
included in the composite price were adjusted, pro-rata for the inclusion of
this new security. As a result of these calculations, the number of shares
used to calculate the composite performance of the underlying securities
represented by a single Optical Equipment NETS equals the number of shares
underlying a single Optical Equipment NETS based on the table on page 2 on the
day that all were publicly traded.
Because on January 4, 1999, ten of the twenty-one underlying securities
were not publicly traded, the following table and graph only approximate the
historical performance of all the optical equipment companies' stocks that are
represented by the Optical Equipment NETS, and this information is not an
exact representation of how the Optical Equipment NETS would have traded if
created on January 4, 1999. Furthermore past performance of any security or
composite of securities, including the information provided in the table and
graph below, is not necessarily indicative of their future performance, and
the table and graph, set forth below, are not necessarily indicative of future
Optical Equipment NETS values.
<PAGE>
Composite Performance of the Securities Represented by a Single Optical
Equipment NETS From January 4, 1999 to October 26, 2000
[Graphic Omitted]
<TABLE>
<CAPTION>
Indexed Indexed
Optical Optical Optical Optical
Indexed Equipment Equipment Indexed Equipment Equipment
Nasdaq NETS NETS Nasdaq NETS NETS
Nasdaq Composite Composite Composite Nasdaq Composite Composite Composite
1999 Composite Performance Prices Prices 2000 Composite Performance Price Prices
---- --------- ----------- ------ ------ ---- --------- ----------- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 4 2,208.05 100% $24.27 100% January 3 4,131.15 187% $55.32 228%
February 1 2,510.09 114 25.40 105 February 1 4,051.98 184 51.71 213
March 1 2,295.18 104 24.09 99 March 1 4,784.08 217 73.28 302
April 1 2,493.37 113 26.53 109 April 3 4,223.68 191 61.75 254
May 3 2,535.58 115 27.90 115 May 1 3,958.08 179 62.39 257
June 1 2,412.03 109 27.22 112 June 1 3,582.50 162 60.05 247
July 1 2,706.18 123 32.82 135 July 3 3,991.93 181 73.94 305
August 2 2,623.63 119 32.95 136 August 1 3,685.52 167 66.94 276
September 1 2,750.80 125 32.95 136 September 1 4,234.33 192 80.06 330
October 1 2,736.85 124 33.48 138 October 2 3,568.90 162 63.38 261
November 1 2,967.65 134 38.29 158
December 1 3,353.71 152 46.02 190
</TABLE>
<PAGE>
DESCRIPTION OF THE DEPOSITARY TRUST AGREEMENT
General. The depositary trust agreement, dated as of ________________,
2000, among Epoch Securities, Inc., Investors Bank & Trust Company, as
trustee, other depositors and the owners of the Optical Equipment NETS,
provides that Optical Equipment NETS will represent an owner's undivided
beneficial ownership interest in the common stock of the underlying companies.
The trustee. Investors Bank & Trust Company, a Massachusetts trust
company, will serve as trustee under the depositary trust agreement. Investors
Bank & Trust Company, which is subject to supervision by the Massachusetts
Commissioner of Banks, the Federal Deposit Insurance Corporation and the Board
of Governors of the Federal Reserve System, is a subsidiary of Investors
Financial Services Corp., a bank holding company organized under the laws of
the state of Delaware. Investors Bank & Trust Company and its affiliates
provide global custody, multi-currency accounting, institutional transfer
agency, performance measurement, cash management, foreign exchange, securities
lending, mutual fund administration, institutional trust services and
investment advisory services. These services are generally provided to
financial asset managers, such as mutual fund complexes, investment advisors,
banks and insurance companies. As of December 31, 1999, Investors Bank & Trust
Company and its affiliates provided such services for net assets totaling
approximately $290 billion, including approximately $17 billion of foreign
assets. Services are provided from offices in Boston, New York, Toronto, the
Cayman Islands and Dublin, Ireland.
Creation and issuance of Optical Equipment NETS. If you are a DTC
accountholder or have made arrangements satisfactory to the trustee for the
deposit of the requisite underlying securities in the Optical Equipment NETS
Trust through DTC, you may create Optical Equipment NETS in round-lots of 100
Optical Equipment NETS by delivering to the trustee the requisite underlying
securities. You will not be able to create the Optical Equipment NETS through
an in-kind deposit for a period of 25 days after the initial offering. This
restriction will not apply to underwriters creating Optical Equipment NETS to
cover short positions. The Optical Equipment NETS Trust will only issue
Optical Equipment NETS upon the deposit of the whole shares represented by a
round-lot of 100 Optical Equipment NETS. In the event that a fractional share
comes to be represented by a round-lot of Optical Equipment NETS, the Optical
Equipment NETS Trust may require a minimum of more than one round-lot of 100
Optical Equipment NETS for an issuance so that the Optical Equipment NETS
Trust will always receive whole share amounts for issuance of Optical
Equipment NETS. The depositary trust agreement provides for further issuances
of Optical Equipment NETS on a continuous basis without your consent, subject
to suspension by the trustee in certain limited instances.
If you create Optical Equipment NETS, you will be required to represent
and warrant that the securities deposited are validly issued and fully paid,
that you are duly authorized to make such deposit and that, at the time of
delivery, such securities are free and clear of any lien, pledge, encumbrance,
right, charge or claim and further that such securities are not, and Optical
Equipment NETS representing such securities would not be, "restricted
securities" under the Securities Act of 1933. If such representations and
warranties are determined by the trustee, in its sole discretion, to be
materially inaccurate at the time deemed given and that the inaccuracy has or
may adversely affect other beneficial owners in any material respect, the
depositary trust agreement provides that the related deposit of securities
will be null and void and, to the extent lawful and feasible, the trustee will
cause the related securities to be redelivered to the party depositing such
securities. The depositary trust agreement also provides that any expense
related to the trustee's actions in this regard will be treated as
extraordinary expenses, as defined in the depositary trust agreement.
Exchange of Optical Equipment NETS for the underlying securities. You may
exchange Optical Equipment NETS in integral multiples of 100 Optical Equipment
NETS by surrendering them to the Optical Equipment NETS Trust in order to
receive all (but not less than all) of the deposited shares from the Optical
Equipment NETS Trust. You may exchange your Optical Equipment NETS for the
underlying securities at any time after the initial offering, subject to
suspension by the trustee in certain limited instances. The trustee will not
deliver fractional shares of underlying securities, to the extent that any
exchange of Optical Equipment NETS would otherwise require the delivery of
fractional shares. The Optical Equipment NETS Trust will deliver cash in lieu
of such shares. You may exchange your Optical Equipment NETS for the
underlying securities, during the trustee's normal business hours and upon the
payment of applicable fees, taxes or governmental charges, if any. Exchanges
of Optical Equipment NETS may only be accomplished through your broker or
other financial intermediary who is a participant of DTC, acting on your
behalf. You should receive your underlying securities no later than the
business day after the trustee receives your request.
Commissions, issuance and exchange fees. If you choose to create Optical
Equipment NETS through an in-kind deposit twenty-five days after the
conclusion of the initial public offering, you will not be charged the
underwriting fee. However, in addition to the issuance and exchange fees
described below, you will be responsible for paying any sales commissions
associated with your purchase of the underlying securities that is charged by
your broker.
If you wish to create Optical Equipment NETS by delivering to the Optical
Equipment NETS Trust the requisite underlying securities, the trustee will
charge you an issuance fee of up to $5.00 for each round-lot of 100 Optical
Equipment NETS. If you wish to exchange your Optical Equipment NETS for the
underlying securities, the trustee will charge you an exchange fee of up to
$5.00 for each round-lot of 100 Optical Equipment NETS issued.
Custody and handling fees. Investors Bank & Trust Company, as trustee and
as custodian, will charge you a quarterly custody fee of up to $1.00 for each
round-lot of 100 Optical Equipment NETS to be deducted from any cash dividend
or other cash distributions on underlying securities received by the Optical
Equipment NETS Trust. In addition, Investors Bank & Trust Company, as trustee
and as custodian, will charge you a handling fee of $.25 for each round-lot of
100 Optical Equipment NETS, when each cash dividend or other cash distribution
on the underlying securities is made. The custody fee and handling fee will be
deducted from any dividend payments or other cash distributions on underlying
securities, including any cash resulting from the sale of fractional shares,
or any cash distribution resulting from a merger or other corporate
transaction received by the trustee. The aggregate custody fee payable in any
calendar year will not accrue in excess of the total cash dividends and other
cash distributions received, or to be received, and payable with respect to
such calendar year. The trustee cannot recapture unpaid custody fees from
prior years.
Voting rights. The trustee will deliver to you proxy-soliciting materials
provided by issuers of the deposited shares so as to permit you to give the
trustee instructions as to how to vote on matters to be considered at any
annual or special meetings held by issuers of the underlying securities or to
vote directly on such matters. If you wish to participate in a tender offer
for underlying securities, you must obtain the underlying securities by
surrendering your Optical Equipment NETS and receiving all of your underlying
securities.
Under the depositary trust agreement, any beneficial owner of Optical
Equipment NETS, other than Epoch Securities, Inc., owning Optical Equipment
NETS for its own proprietary account as principal, will have the right to vote
to dissolve and liquidate the Optical Equipment NETS Trust.
Distributions. You will be entitled to receive, net of trustee fees and
taxes, if any, distributions of cash, including dividends, securities or
property, if any, made with respect to the underlying securities. The trustee
will use its reasonable efforts to make distributions as promptly as
practicable after receipt from the issuers of the related underlying
securities. Nevertheless, you may receive your distributions later than you
would have had you held the underlying securities directly. You will be
obligated to pay any tax or other charge that may become due with respect to
Optical Equipment NETS. The trustee may deduct the amount of any tax or other
governmental charge from a distribution before making payment to you. In
addition, the trustee will deduct its quarterly custody fee and handling fee
as described in "Custody and handling fees" above.
Record dates. With respect to dividend payments and voting instructions,
the trustee expects to fix the Optical Equipment NETS Trust's record dates as
close as possible to the record date fixed by the issuer of the underlying
securities.
Shareholder communications. The trustee promptly will forward to you all
shareholder communications that it receives from issuers of the underlying
securities.
Reconstitution events. The depositary trust agreement provides for the
automatic distribution of underlying securities of a specific company to you
in the following circumstances:
o If an issuer of underlying securities no longer has a class of
common stock registered under Section 12 of the Securities Exchange
Act of 1934, then its securities will no longer be an underlying
security and the trustee will distribute the shares of that company
to the owners of the Optical Equipment NETS.
o If the SEC finds that an issuer of underlying securities should be
registered as an investment company under the Investment Company Act
of 1940, and the trustee has actual knowledge of the SEC finding,
then the trustee will distribute the shares of that company to the
owners of the Optical Equipment NETS.
o If the underlying securities of an issuer cease to be outstanding as
a result of a merger, consolidation or other corporate combination,
the trustee will distribute the consideration paid by and received
from the acquiring company to the beneficial owners of Optical
Equipment NETS, unless the merger, consolidation or other corporate
combination is between companies that are already included in the
Optical Equipment NETS and the consideration paid is additional
underlying securities. In this case, the additional underlying
securities will be deposited into the Optical Equipment NETS Trust.
o If an issuer's underlying securities are delisted from trading on a
U.S. national securities exchange or Nasdaq NMS and are not listed
for trading on another U.S. national securities exchange or Nasdaq
NMS within 5 business days from the date such securities are
delisted.
If a reconstitution event occurs, the trustee will deliver the underlying
security to you as promptly as practicable after the date that the trustee has
knowledge of the occurrence of a reconstitution event.
Termination of the Optical Equipment NETS Trust. The Optical Equipment
NETS Trust will terminate on December 31, 2005, or earlier if a termination
event occurs. If a termination event occurs, the trustee will distribute the
underlying securities to you as promptly as practicable after the termination
event. These termination events include:
o The Optical Equipment NETS are delisted from the American Stock
Exchange and are not listed for trading on another U.S. national
securities exchange or Nasdaq NMS within five business days from the
date the Optical Equipment NETS are delisted.
o The trustee resigns and no successor trustee is appointed within 60
days from the date the trustee provides notice to Epoch Securities,
Inc., as initial depositor, of its intent to resign.
o More than 50% of beneficial owners of outstanding Optical Equipment
NETS, other than Epoch Securities, Inc., vote to dissolve and
liquidate the Optical Equipment NETS Trust.
o Either Epoch Securities, Inc., as the initial depositor, or the
trustee determines, in its sole discretion, that legal or regulatory
issues (including litigation, patent infringement claims arising
from similar financial products originated by unaffiliated third
parties, SEC action or interpretive developments of applicable law
or regulation) make such early termination in the best interest of
the beneficial owners of the Optical Equipment NETS, Epoch
Securities, Inc. or the trustee. Epoch Securities, Inc. is not aware
of any such issue which would make such early termination in the
best interest of the beneficial owners of the Optical Equipment
NETS, Epoch Securities, Inc. or the trustee.
o Less than nine issuers of underlying securities are represented by
the Optical Equipment NETS.
o In excess of $50,000 of extraordinary trust expenses, as defined in
the depositary trust agreement, have been incurred by or on behalf
of the Optical Equipment NETS Trust since the closing date, or are
reasonably believed by the trustee to be incurred within the
succeeding 30 day period and either the trustee or Epoch Securities,
Inc. elects to terminate the Optical Equipment NETS Trust.
Upon termination, the trustee will distribute the underlying securities
to the owners subject to the payment of any trustee fees, applicable taxes or
governmental charges.
Amendment of the depositary trust agreement. The trustee and Epoch
Securities, Inc., as initial depositor, may amend any provisions of the
depositary trust agreement without the consent of any other depositor or any
of the owners of the Optical Equipment NETS. Promptly after the execution of
any amendment to the agreement, the trustee must furnish or cause to be
furnished written notification of the substance of the amendment to each owner
of Optical Equipment NETS. Any amendment that imposes or increases any fees or
charges, subject to exceptions, or that otherwise prejudices any substantial
existing right of the beneficial owners of Optical Equipment NETS will not
become effective until 30 days after notice of the amendment is given to the
owners of Optical Equipment NETS.
Address of the trustee. Investors Bank & Trust Company, Hancock Tower,
200 Clarendon Street, Boston, Massachusetts 02116.
Governing law. The depositary trust agreement and Optical Equipment NETS
will be governed by the laws of the State of New York. The trustee will
provide the depositary trust agreement to any beneficial owner of the Optical
Equipment NETS free of charge upon written request.
Duties and immunities of the trustee. The trustee will act as fiduciary
to the Optical Equipment NETS Trust to the extent provided by the terms of the
depositary trust agreement. The trustee will assume no responsibility or
liability for, and makes no representations as to, the validity or
sufficiency, or as to the accuracy of the recitals, if any, set forth in the
Optical Equipment NETS.
The trustee undertakes to perform only those duties as are specifically
set forth in the depositary trust agreement and will not incur any liability
if it is delayed in or prevented from performing these duties because of any
law or regulation, corporate restriction of any company whose common stock is
represented by the Optical Equipment NETS or other circumstance beyond its
control, or if it may become subject to any penalty on account of so acting.
Subject to the preceding sentence, the trustee will be liable for its own
negligence or bad faith. The depositary trust agreement contains other
customary provisions limiting the liability of the trustee. In performing its
obligations under the depositary trust agreement, the trustee may consult with
Epoch Securities, Inc., in its sole discretion, from time to time, in its
determination of various matters arising under the terms of the depositary
trust agreement.
Epoch Securities, Inc. has agreed to indemnify the trustee against
certain civil liabilities related to acts performed or not performed by the
trustee in accordance with the depositary trust agreement and in connection
with periodic reports filed or not filed with the SEC with respect to the
Optical Equipment NETS. Should a court determine not to enforce the
indemnification provision, Epoch Securities, Inc. also has agreed to
contribute to payments the trustee may be required to make with respect to
such liabilities.
FEDERAL INCOME TAX CONSEQUENCES
General
The following is a summary of the U.S. federal income tax consequences
relating to the Optical Equipment NETS for:
o a citizen or resident of the United States;
o a corporation or partnership, including any entity treated as a
corporation or partnership for U.S. federal income tax purposes,
created in or organized under the laws of the United States, any
state thereof or the District of Columbia;
o an estate, the income of which is includible in gross income for
U.S. federal income tax purposes regardless of its source;
o a trust, if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or
more U.S. persons have the authority to control all substantial
decisions of the trust (each of the above, a "U.S. holder"); and
o any person other than a U.S. holder (a "Non-U.S. holder").
This summary is based upon laws, regulations, rulings and decisions
currently in effect, all of which are subject to change, possibly on a
retroactive basis. The discussion does not deal with all U.S. federal income
tax consequences applicable to all categories of investors, some of which may
be subject to special rules. In addition, this summary generally is limited to
investors who will hold the Optical Equipment NETS as "capital assets"
(generally, property held for investment) within the meaning of Section 1221
of the Internal Revenue Code of 1986, as amended. This summary does not
address any state, local or foreign tax consequences of an investment in the
Optical Equipment NETS. We strongly suggest that you consult with your own tax
advisor to ensure that you correctly understand how the U.S. federal income
tax laws will apply to your particular situation.
Taxation of the Optical Equipment NETS Trust
The Optical Equipment NETS Trust will be treated as a grantor trust or
custodial arrangement for United States federal income tax purposes. This
means that the Optical Equipment NETS Trust will not be taxed, but any tax
consequences will flow through to the holders of the Optical Equipment NETS.
Taxation of Optical Equipment NETS
A holder purchasing and owning Optical Equipment NETS will be treated,
for U.S. federal income tax purposes, as directly owning a proportionate share
of the underlying securities represented by the Optical Equipment NETS. Thus,
a holder will be taxed in the same manner as such holder would have been taxed
if the holder directly owned the underlying securities. Consequently, if there
is a taxable cash distribution on an underlying security, a holder will
recognize income with respect to the distribution at the time the distribution
is received by the trustee, not at the time that the holder receives the cash
distribution from the trustee.
When purchasing Optical Equipment NETS, a holder will determine its
initial tax basis in each of the underlying securities by allocating the
purchase price for the Optical Equipment NETS among the underlying securities
based on their relative fair market values at the time of the Optical
Equipment NETS purchase. Similarly, when selling Optical Equipment NETS, a
holder will determine the amount realized with respect to each security by
allocating the sales price among the underlying securities based on their
relative fair market values at the time of the Optical Equipment NETS sale.
When a holder creates Optical Equipment NETS through an in-kind deposit of the
requisite number of underlying securities with the trustee, the holder's
initial tax basis in the underlying securities represented by such Optical
Equipment NETS will equal such holder's tax basis in such underlying
securities immediately prior to their delivery to the trustee. A holder's gain
or loss with respect to each underlying security will be computed by
subtracting its basis in the underlying security from the amount realized on
that security. Any such gain or loss for each underlying security will be a
long-term or short-term capital gain or loss, depending upon the holder's
holding period with respect to that underlying security. In general, a
holder's holding period with respect to each underlying security will include
any period during which the holder directly held that underlying security or
held the Optical Equipment NETS that represented the underlying security.
The distribution of any securities by the Optical Equipment NETS Trust
upon the surrender of Optical Equipment NETS, the occurrence of a
reconstitution event, or a termination event will not be a taxable event. The
holder's holding period with respect to the distributed securities will
include the period that the holder held the securities through the Optical
Equipment NETS Trust, and, in the case of a holder that created Optical
Equipment NETS by delivering the requisite number of underlying securities to
the trustee, the period that the holder held the underlying securities prior
to delivering such underlying securities to the trustee. The holder's tax
basis in each of the distributed securities will equal the holder's tax basis
in that security immediately prior to such distribution.
Brokerage fees and custodian fees
The brokerage fee incurred in purchasing an Optical Equipment NETS will
be treated as part of the cost of the underlying securities. Accordingly, a
holder includes this fee in its tax basis in the underlying securities. A
holder will allocate the brokerage fee among the underlying securities using
either a fair market value allocation or pro rata based on the number of
shares of each underlying security. Similarly, the brokerage fee incurred in
selling Optical Equipment NETS will reduce the amount realized with respect to
the underlying securities.
A holder will be required to include in its income the full amount of
dividends paid on the underlying securities, even though the depositary trust
agreement provides that the custodian fees will be deducted directly from any
dividends paid. These custodian fees will be treated as an expense incurred in
connection with a holder's investment in the underlying securities and may be
deductible. If a holder is an individual, estate or trust, however, the
deduction of its share of custodian fees will be a miscellaneous itemized
deduction that may be disallowed in whole or in part.
Special considerations with respect to underlying securities of foreign issuers
With respect to underlying securities of foreign issuers, the gross
amount of any taxable cash distribution will not be eligible for the dividends
received deduction generally allowed to corporate U.S. holders.
If a foreign issuer pays a dividend in a currency other than in U.S.
dollars, the amount of the dividend for U.S. federal income tax purposes will
be the U.S. dollar value (determined at the spot rate on the date of the
payment) of the currency payment, regardless of whether the payment is later
converted into U.S. dollars. In this case, the U.S. holder may recognize
ordinary income or loss as a result of currency fluctuations between the date
on which the dividend is paid and the date the dividend amount is converted
into U.S. dollars.
Subject to conditions and limitations, any foreign tax withheld on
dividends may be deducted from taxable income or credited against a U.S.
holder's U.S. federal tax liability. The limitation on foreign taxes eligible
for the U.S. foreign tax credit is calculated separately with respect to
specific classes of income. For this purpose, dividends distributed by a
foreign issuer generally will constitute passive income or, in the case of
some U.S. holders, financial services income. For purposes of the U.S. foreign
tax credit limitation, dividends received by a U.S. holder with respect to an
underlying security of a foreign issuer generally will be treated as foreign
source income while any gain or loss recognized from the sale of such security
generally will be treated as from sources within the United States. The rules
relating to the determination of the foreign tax credit are complex and we
recommend that U.S. holders consult their own tax advisors to determine
whether and to what extent a credit would be available.
Dividends and distributions made by a foreign issuer may be subject to a
withholding tax. Some foreign issuers have made arrangements through which
holders of their American depositary shares can apply for a refund of withheld
taxes. It is expected that holders of Optical Equipment NETS will be able to
use these arrangements to apply for a refund of withheld taxes.
Additionally, special U.S. federal income tax rules apply to U.S. persons
owning shares of a "passive foreign investment company" (a "PFIC"). We do not
believe that any of the foreign issuers of the underlying securities is
currently a PFIC and do not anticipate that any issuer will become a PFIC in
the future, although no assurances can be made that the applicable tax law or
other relevant circumstances will not change in a manner which affects the
PFIC determination. A foreign corporation generally will be classified as a
PFIC for U.S. federal income tax purposes in any taxable year in which, after
applying relevant look-through rules, either:
o at least 75% of its gross income is "passive income"; or
o on average at least 50% of the gross value of its assets is
attributable to assets that produce "passive income" or are held for
the production of passive income.
Passive income for this purpose generally includes dividends, interest,
royalties, rents, and gains from commodities and securities transactions.
If a corporation were classified as a PFIC, a U.S. holder could be
subject to increased tax liability, possibly including an interest charge,
upon the sale or other disposition of the Optical Equipment NETS or of the
underlying securities or upon the receipt of "excess distributions", unless
the U.S. holder elected to be taxed currently on it pro rata portion of the
corporation's income, whether or not the income was distributed in the form of
dividends or otherwise.
Non-U.S. holders
Non-U.S. holders should consult their tax advisors regarding U.S.
withholding and other taxes that may apply to an investment in the underlying
securities through an investment in the Optical Equipment NETS.
ERISA CONSIDERATIONS
Any plan fiduciary which proposes to have a plan acquire Optical
Equipment NETS should consult with its counsel with respect to the potential
applicability of ERISA and the Internal Revenue Code of 1986, as amended, to
this investment and whether any exemption would be applicable and determine on
its own whether all conditions have been satisfied. Moreover, each plan
fiduciary should determine whether, under the general fiduciary standards of
investment prudence and diversification, an acquisition of Optical Equipment
NETS is appropriate for the plan, taking into account the overall investment
policy of the plan and the composition of the plan's investment portfolio.
UNDERWRITING
In accordance with the depositary trust agreement on the closing date,
the Optical Equipment NETS Trust will issue to Epoch Securities, Inc., as
representative of the several underwriters, the Optical Equipment NETS after
Epoch Securities, Inc., as initial depositor, deposits the underlying
securities in the Optical Equipment NETS Trust. The underwriters, which
include Advanced Clearing, Inc. and Charles Schwab & Co., Inc., propose to
offer the Optical Equipment NETS to the public at the offering price set forth
on the cover page of this prospectus. Epoch Securities, Inc. expects the
Optical Equipment NETS Trust to deliver the initial Optical Equipment NETS
against deposit of the underlying securities through the facilities of DTC in
New York, New York on __________, 2000. After the initial offering, the public
offering price may be changed. The Optical Equipment NETS Trust may continue
to issue Optical Equipment NETS, in connection with deposits of underlying
securities. The underwriters do not expect any sales made to discretionary
accounts to exceed 5% of the total number of Optical Equipment NETS offered.
The corporate parents of Charles Schwab & Co., Inc., Advanced Clearing
Inc., Ameritrade (Inc.), a broker-dealer affiliated with and whose
transactions are cleared on a fully disclosed basis through Advanced Clearing,
Inc., and TD Waterhouse Investor Services, Inc. are equity investors in Epoch
Securities, Inc.'s corporate parent, Epoch Partners, Inc. Charles Schwab &
Co., Inc. and Advanced Clearing, Inc. will commit to purchase from Epoch
Securities, Inc., prior and subject to Epoch Securities, Inc.'s initial
deposit of the underlying securities in the Optical Equipment NETS Trust, all
of the Optical Equipment NETS acquired by Epoch Securities, Inc. as a result
of such deposit, in the amounts set forth below at the initial offering price,
less a portion of the underwriting fee, and to offer and sell the Optical
Equipment NETS to public investors or to other broker-dealers who will sell to
public investors. It is not intended that Epoch Securities, Inc. will directly
sell any Optical Equipment NETS. It is anticipated that a portion of the
Optical Equipment NETS acquired by Advanced Clearing, Inc. will be resold to
TD Waterhouse Investor Services, Inc., as dealer, at the initial public
offering price less a portion of the underwriting fee. The Optical Equipment
Nets retained by Advanced Clearing, Inc. will be redistributed through
Ameritrade (Inc.). Ameritrade (Inc.) and TD Waterhouse Investor Services,
Inc. are not underwriters under the purchase agreement. Because of
their current relationship to Epoch Securities, Inc. and their role in the
distribution of the Optical Equipment NETS, however, Ameritrade (Inc.) and TD
Waterhouse Investor Services, Inc. may be deemed to be underwriters as that
term is defined in the Securities Act of 1933, in connection with this
offering. They believe their activities fall within the selling group
exception to the definition and, therefore, believe they are not
"underwriters" under the Securities Act of 1933.
Number of
Optical Equipment
NETS
-----------------
Advanced Clearing, Inc. ...........................
Charles Schwab & Co., Inc. ........................
TOTAL .............................................
A prospectus in electronic format will be made available on the Internet
at www.epochnets.com and may also be made available on websites maintained by
other underwriters or dealers for sale to their online brokerage account
holders.
Epoch Securities, Inc. will be the initial depositor of the underlying
common stocks to the Optical Equipment NETS Trust and the managing underwriter
for the offering of the Optical Equipment NETS. Epoch Securities, Inc. is an
investment bank formed in November 1999. In addition to this offering, Epoch
Securities, Inc. has engaged in the business of public and private equity
financing, private equity investing and financial advisory services since its
inception. The five senior members of Epoch Securities, Inc.'s investment
banking team have in the aggregate 40 years of investment banking experience
in the securities business. Epoch Securities, Inc. may provide investment
banking and other financial services to certain of these companies in the
future, for which it will receive customary fees and commissions.
Advanced Clearing, Inc. and Charles Schwab & Co., Inc. may use this
prospectus, as updated from time to time, in connection with offers and sales
related to market-making transactions in the Optical Equipment NETS; however,
any such delivery is not an admission of affiliation with the Optical
Equipment NETS Trust as that term is used in applicable securities laws and
the regulations thereunder. Advanced Clearing, Inc. and Charles Schwab & Co.,
Inc. may act as principal or agent in such transactions. Market-making sales
will be made at prices related to prevailing market prices at the time of
sale.
LEGAL MATTERS
The validity of the Optical Equipment NETS, will be passed upon for Epoch
Securities, Inc., as the initial depositor and as the representative of the
several underwriters, by Brown & Wood LLP, New York, New York. Brown & Wood
LLP, New York, New York, as special U.S. tax counsel to the Optical Equipment
NETS Trust, also will render an opinion regarding the material federal income
tax consequences relating to the Optical Equipment NETS.
WHERE YOU CAN FIND MORE INFORMATION
A registration statement on Form S-1 has been filed with the SEC covering
the Optical Equipment NETS. While this prospectus is a part of the
registration statement, it does not contain all the exhibits filed as part of
the registration statement. You should consider reviewing the full text of
those exhibits.
The registration statement is available over the Internet at the SEC's
Web site at http://www.sec.gov. You also may read and copy the registration
statement at the SEC's public reference rooms in Washington, D.C., New York,
New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for more
information on the public reference rooms and their copy charges. Epoch
Securities, Inc. will not file any reports pursuant to the Securities Exchange
Act of 1934 and the Optical Equipment NETS Trust will file modified reports
pursuant to the Securities Exchange Act of 1934.
Because the common stock of the issuers of the underlying securities is
registered under the Securities Exchange Act of 1934, the issuers of the
underlying securities are required to file periodically financial and other
information specified by the SEC. For more information about the issuers of
the underlying securities, information provided to or filed with the SEC by
the issuers of the underlying securities with respect to their registered
securities can be inspected at the SEC's public reference facilities or
accessed through the SEC's Web site referenced above.
However, some of the issuers of the underlying securities are considered
foreign issuers. The requirements for filing periodic financial and other
information for foreign issuers differ from that of domestic issuers. In
particular, foreign issuers are not required to file quarterly reports with
the SEC and are not required to file periodic financial and other information
on EDGAR. Therefore, this information may not be accessible through the SEC's
Web site. Information regarding the issuers of the underlying securities may
also be obtained from other sources including, but not limited to, press
releases, newspaper articles and other publicly disseminated information.
Epoch Securities, Inc., the Optical Equipment NETS Trust, the trustee and
their affiliates are not affiliated with the issuers of the underlying
securities, and the issuers of the underlying securities have no obligations
with respect to Optical Equipment NETS. This prospectus relates only to
Optical Equipment NETS and does not relate to the common stock or other
securities of the issuers of the underlying securities. The information in
this prospectus regarding the issuers of the underlying securities has been
derived from the publicly available documents described in the preceding
paragraph. We have not participated in the preparation of these documents or
made any due diligence inquiries with respect to the issuers of the underlying
securities in connection with Optical Equipment NETS. We make no
representation that these publicly available documents or any other publicly
available information regarding the issuers of the underlying securities are
accurate or complete. Furthermore, we cannot assure you that all events
occurring prior to the date of this prospectus, including events that would
affect the accuracy or completeness of the publicly available documents
described above, that would affect the trading price of the common stock of
the issuers of the underlying securities, and therefore the offering and
trading prices of the Optical Equipment NETS, have been publicly disclosed.
<PAGE>
EXHIBIT A
This exhibit forms an integral part of the prospectus.
The following tables provide a brief description of the business of each
of the issuers of the underlying securities and set forth the split-adjusted
closing market prices as of the last trading day of each month, as reported on
the applicable primary U.S. trading market, of each of the underlying
securities in each month during 1995, 1996, 1997, 1998, 1999 and 2000 through
October 26, 2000. All market prices in excess of one dollar are rounded to the
nearest one sixty-fourth of a dollar. A table outlining the primary U.S. stock
market on which the securities of the issuers are listed can be found on page
2 of this prospectus. An asterisk (*) indicates that no shares of the issuer
were trading on a U.S. stock market during that month. The historical prices
of the underlying securities should not be taken as an indication of future
performance.
ADC TELECOMMUNICATIONS, INC. (ADCT)
ADC Telecommunications, Inc., or ADC, offers a broad range of network
equipment, software and integration services for broadband, multi-service
networks that deliver Internet/data, video and voice communications over
telephone, cable television, Internet, broadcast, wireless and enterprise
networks. ADC's broadband, multi-service network solutions enable local
access, high-speed transmission and software management of communications
services from service providers to consumers and businesses over fiber-optic,
copper, coaxial and wireless media.
ADC offers network equipment, software and integration services within
the following three product groups: Broadband Connectivity, Broadband Access
and Transport, and Integrated Solutions. Broadband Connectivity products
include broadband connection and access devices for copper, coaxial,
fiber-optic, wireless and broadcast communications networks. The group also
supplies fiber-optic and wireless components. Fiber-optic components include
phase masks, tunable laser, pump lasers, connectors, isolators, circulators,
collimators, couplers, splitters, and dense wavelength division multiplexing
devices. Broadband Access and Transport products include access and transport
systems that deliver broadband, multi-service communications to residences and
businesses over copper, coaxial, fiber-optic and wireless networks. ADC
provides the Optiworx family of fiber-optic transmitter and node products,
along with coaxial amplifiers that cable television operators use to upgrade
their networks to broader bandwidths for digital Internet/data, video, and
voice services. The DV6000 system transmits a variety of signal types using a
high-speed, uncompressed digital format over fiber facilities, and is used in
the long haul portions of cable television, broadcast and interactive video
networks, including distance learning, government and campus networks.
Integrated Solutions products and services consist of systems integration
services, operations support systems software and enhanced
services/intelligent network software that position service providers to
deliver broadband, multiservice communications over wireline and wireless
networks.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January $3 1/16 January $4 53/64 January $8 31/32 January $4 49/64 January $ 9 61/64 January $16 31/64
February 3 31/64 February 4 31/32 February 6 3/4 February 6 29/64 February 10 1/8 February 22 7/16
March 3 11/16 March 4 5/16 March 6 23/32 March 6 57/64 March 11 59/64 March 26 15/16
April 4 1/8 April 5 1/4 April 6 17/32 April 7 31/64 April 11 61/64 April 30 3/8
May 3 7/8 May 5 3/4 May 8 9/16 May 7 1/32 May 12 7/32 May 33 19/32
June 4 15/32 June 5 5/8 June 8 11/32 June 9 9/64 June 11 25/64 June 41 15/16
July 4 27/32 July 5 9/32 July 10 3/32 July 8 3/8 July 11 1/8 July 41 15/16
August 4 27/32 August 7 3/32 August 9 9/32 August 5 35/64 August 9 17/64 August 40 15/16
September 5 11/16 September 8 September 8 1/8 September 5 9/32 September 10 31/64 September 26 57/64
October 5 October 8 35/64 October 8 9/32 October 5 3/4 October 11 59/64
November 5 11/16 November 9 1/16 November 9 19/64 November 7 15/32 November 13 21/64
December 4 9/16 December 7 25/32 December 10 7/16 December 8 11/16 December 18 9/64
</TABLE>
The closing price on October 26, 2000 was $18 13/16.
AVANEX CORPORATION (AVNX)
Avanex Corporation, or Avanex, designs, manufactures and markets fiber
optic-based products, known as photonic processors, which are designed to
increase the performance of optical networks. Avanex's photonic processors
offer communications service providers and optical systems manufacturers
greater levels of performance and miniaturization, reduced complexity and
increased cost-effectiveness as compared to current alternatives. Avanex's
products are designed to enable the transmission of more data in a wavelength
of light, at higher speeds and across greater distances in a network, than
currently available optical technologies. Avanex's PowerFilter and PowerMux
products are designed to overcome the technological challenges, such as
chromatic dispersion and attenuation, and the cost and deployment challenges
inherent in optical networks.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January * January * January *
February * February * February * February * February * February $208 3/8
March * March * March * March * March * March 151 3/4
April * April * April * April * April * April 121 7/8
May * May * May * May * May * May 68
June * June * June * June * June * June 95 1/2
July * July * July * July * July * July 126 15/16
August * August * August * August * August * August 151 15/32
September * September * September * September * September * September 107 11/16
October * October * October * October * October *
November * November * November * November * November *
December * December * December * December * December *
</TABLE>
The closing price on October 26, 2000 was $91 3/8.
AVICI SYSTEMS INC. (AVCI)
Avici Systems Inc, or Avici, develops and sells high-speed data
networking equipment that enables communications service providers to transmit
high volumes of information across their fiber optic networks. Avici's
high-performance solution is being marketed to telecommunications companies
and Internet service providers, referred to as carriers, that are creating
next-generation optical networks to address the increasing data traffic across
the Internet. The Avici Terabit Switch Router product, known as the TSR, is
designed to address the critical needs of carriers by:
o managing high volumes of network traffic at high speeds;
o providing the ability to incrementally add capacity to the network
without disrupting network performance, which Avici refers to as
in-service scalability;
o demonstrating high levels of operational availability and
redundancy, which Avici refers to as carrier-class reliability;
o prioritizing traffic types to facilitate the provisioning of new
revenue-generating services, such as video streaming and the
transmission of telephone calls over the Internet, referred to as
voice-over-Internet Protocol;
o operating with existing carrier equipment; and
o reducing network cost and complexity.
Avici's TSR provides these benefits through proprietary technologies,
including their application specific integrated circuits and distributed system
architecture, as well as its Composite Link technology, which enables the
addition of incremental bandwidth between the TSR and the carrier's network.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January * January * January *
February * February * February * February * February * February *
March * March * March * March * March * March *
April * April * April * April * April * April *
May * May * May * May * May * May *
June * June * June * June * June * June *
July * July * July * July * July * July $ 98 3/8
August * August * August * August * August * August 149 13/16
September * September * September * September * September * September 95 1/8
October * October * October * October * October *
November * November * November * November * November *
December * December * December * December * December *
</TABLE>
The closing price on October 26, 2000 was $44 1/8.
<PAGE>
CIENA CORPORATION (CIEN)
CIENA Corporation, or CIENA, is a leader in the rapidly growing
intelligent optical networking equipment market. CIENA offers a comprehensive
portfolio of products for tele- and data-communications service providers
worldwide. CIENA's customers include long-distance carriers, competitive local
exchange carriers, Internet service providers and wholesale carriers. CIENA
offers optical transport, intelligent switching and multi-service delivery
systems that enable service providers to provision, manage and deliver
high-bandwidth services to their customers.
During its fiscal 1999 CIENA announced its LightWorks(TM) Initiative.
CIENA LightWorks is an optical networking architecture designed to change the
fundamental economics of building service provider networks. LightWorks
focuses on the three critical areas of optical networking: optical transport,
core switching and service delivery. The products in CIENA's LightWorks
combine the functionality of several current network elements into a single
network element, thereby lowering the capital equipment requirements of a
service provider and simplifying the network, in order to reduce a carrier's
network operating costs. The products of CIENA's LightWorks architecture can
be sold together as a complete network solution or separately as best-of-breed
solutions. Products include four generations of long distance optical
transport systems: MultiWave 1600(TM), MultiWave Sentry 1600(TM), MultiWave
Sentry 4000(TM), and MultiWave CoreStream(TM). LightWorks also includes
CIENA's short distance optical transport products: MultiWave Firefly(TM) and
MultiWave Metro(TM). CIENA's LightWorks architecture also includes MultiWave
CoreDirector. The MultiWave CoreDirector is an intelligent optical core switch
that allows carriers to deliver a full range of transport services, without
costly SONET/SDH (synchronous optical networks/synchronous digital hierarchy)
multiplexers or inflexible "wavelength only" devices.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January $ 27 17/32 January $10 3/32 January $32 13/16
February * February * February $19 5/8 February 20 31/32 February 13 15/16 February 79 29/32
March * March * March 14 7/32 March 21 5/16 March 11 1/4 March 63 1/16
April * April * April 15 5/8 April 27 7/8 April 11 3/4 April 61 13/16
May * May * May 23 3/8 May 26 May 14 3/8 May 59 27/32
June * June * June 23 9/16 June 34 13/16 June 15 3/32 June 83 11/32
July * July * July 28 1/16 July 37 1/32 July 16 7/8 July 71 1/16
August * August * August 23 7/8 August 14 1/16 August 17 9/16 August 110 27/32
September * September * September 24 49/64 September 7 5/32 September 18 1/4 September 122 13/16
October * October * October 27 1/2 October 8 19/32 October 17 5/8
November * November * November 27 November 8 1/2 November 21 31/32
December * December * December 30 9/16 December 7 5/16 December 28 3/4
</TABLE>
The closing price on October 26, 2000 was $103.
CISCO SYSTEMS, INC (CSCO)
Cisco Systems, Inc., or Cisco, is the worldwide leader in networking for
the Internet. Cisco's hardware, software, and service offerings are used to
create Internet solutions so that individuals, companies, and countries have
seamless access to information -- regardless of differences in time and place.
Cisco solutions provide competitive advantage to their customers through more
efficient and timely exchange of information, which in turn leads to cost
savings, process efficiencies, and closer relationships with their customers,
prospects, business partners, suppliers, and employees. These solutions form
the networking foundation for companies, universities, utilities, and
government agencies worldwide.
The Cisco strategy is to provide end-to-end networking solutions to
help its customers improve productivity and gain a competitive advantage in
today's global economy. Cisco's acquisitions have furthered its commitment
towards providing this end-to-end networking solution. Cisco now has a broad
set of product offerings and technologies, which include Ethernet, Gigabit
Ethernet switching, Token Ring, ATM switching, SONET/SDH, xDSL, dial-up
access, converged data, voice, and video technologies, Tag Switching
(currently also known as multi-protocol label switching, optical transport,
wireless, content networking, call center and unified messaging solutions,
network security, and network management software solutions, among others.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January $1 55/64 January $4 5/8 January $7 3/4 January $10 33/64 January $27 57/64 January $54 3/4
February 1 7/8 February 5 9/32 February 6 3/16 February 10 63/64 February 24 29/64 February 66 3/32
March 2 1/8 March 5 5/32 March 5 11/32 March 11 25/64 March 27 25/64 March 77 5/16
April 2 7/32 April 5 49/64 April 5 3/4 April 12 13/64 April 28 33/64 April 69 21/64
May 2 7/16 May 6 5/64 May 7 17/32 May 12 39/64 May 27 1/4 May 56 15/16
June 2 13/16 June 6 19/64 June 7 29/64 June 15 11/32 June 32 7/32 June 63 9/16
July 3 3/32 July 5 3/4 July 8 27/32 July 15 61/64 July 31 1/16 July 65 7/16
August 3 41/64 August 5 55/64 August 8 3/8 August 13 41/64 August 33 29/32 August 68 5/8
September 3 53/64 September 6 57/64 September 8 1/8 September 15 29/64 September 34 9/32 September 55 1/4
October 4 5/16 October 6 7/8 October 9 7/64 October 15 3/4 October 37
November 4 43/64 November 7 35/64 November 9 37/64 November 18 27/32 November 44 19/32
December 4 9/64 December 7 1/16 December 9 19/64 December 23 13/64 December 53 9/16
</TABLE>
The closing price on October 26, 2000 was $53 9/16.
CORNING INCORPORATED (GLW)
Corning Incorporated, or Corning, is a global, technology-based
corporation, which operates in three broadly based business segments:
Telecommunications, Advanced Materials and Information Display. The
Telecommunications Segment produces optical fiber and cable, optical hardware
and equipment and photonic modules and components for the worldwide
telecommunications industry. The Advanced Materials Segment manufactures
specialized products with unique properties for customer applications
utilizing glass, glass ceramic and polymer technologies. The Information
Display Segment manufactures glass panels and funnels for televisions and
CRTs, liquid crystal display glass for flat panel displays and projection
video lens assemblies.
Corning's Telecommunications segment offers a wide selection of fibers
for use in long-haul, utility, submarine, local exchange, cable TV and
premises applications. Corning provides a substantial portion of the world's
optical fiber, including LEAF-Registered Trademark- optical fiber, a
technologically advanced high-speed, high-data-rate fiber. The Photonics
Technologies business, which is part of the Telecommunications segment,
provides products that maximize the capacity, flexibility, performance and
reliability of communications networks worldwide. Corning's photonics products
boost, combine, separate and connect optical signals transmitted over
fiber-optic telecommunications networks. Corning is a leading supplier of
optical amplifiers and were among the first to offer an innovative multiplexer
module that allows optical signals to be added or dropped as they travel
through a communications network. Corning's photonics products, primarily
intended to enable the use of dense wavelength division multiplexing
technology, include cutting-edge PureGain(TM)-EDFA modules,
PureGain(TM)-DCM(R)-modules and PurePass(TM)-optical routing modules. Corning
also offers MultiClad(R)-couplers, variable optical attenuators, micro-optic
filters and PureMode(TM)- engineered fibers.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January $ 8 49/64 January $ 8 49/64 January $ 11 7/8 January $ 11 25/64 January $ 16 1/4 January $ 51 27/64
February 9 1/64 February 9 1/8 February 12 35/64 February 13 35/64 February 17 53/64 February 62 43/64
March 10 7/64 March 9 53/64 March 14 51/64 March 14 3/4 March 20 March 64 43/64
April 9 13/32 April 9 3/4 April 16 5/64 April 13 21/64 April 19 5/64 April 65 53/64
May 8 63/64 May 10 47/64 May 16 51/64 May 13 9/64 May 18 13/64 May 64 21/64
June 9 3/16 June 10 49/64 June 18 35/64 June 11 37/64 June 23 3/8 June 89 61/64
July 8 63/64 July 10 11/32 July 20 5/8 July 10 15/64 July 23 21/64 July 77 63/64
August 9 5/32 August 10 29/64 August 17 5/8 August 8 13/64 August 22 11/64 August 109 5/16
September 8 1/32 September 10 15/16 September 15 3/4 September 9 13/16 September 22 55/64 September 99
October 7 21/64 October 10 7/8 October 15 3/64 October 12 3/64 October 26 13/64
November 8 31/64 November 11 23/64 November 14 9/64 November 13 3/8 November 31 15/64
December 8 63/64 December 12 63/64 December 12 3/8 December 15 December 42 63/64
</TABLE>
The closing price on October 26, 2000 was $70.
CORVIS CORPORATION (CORV)
Corvis Corporation, or Corvis, designs, manufactures and markets products
that enable a fundamental shift in the design and efficiency of long distance,
fiber optic communication networks, or backbone networks, by allowing for the
transmission, switching and management of communications traffic entirely as
optical signals. Corvis's products enable the creation of these all-optical
backbone networks that support transmission over long distances and eliminate
the need for expensive and capacity-limiting electrical transmission and
switching equipment. Corvis's products include ultra-long distance optical
signal transmission, reception and amplification equipment, all-optical
switching equipment and software that enable the creation of all-optical
backbone networks that support transmission over long distances. Corvis's
products integrate three key technologies that enable the deployment of
all-optical backbone networks: ultra-long distance optical transmission,
all-optical switching and integrated network management.
Corvis's products include:
o Optical Network Gateway--provides access to an all-optical network
from other networks.
o Optical Amplifier--employs various amplification technologies to
support high capacity transmission over diverse fiber types.
Corvis's distributed and discrete amplification technologies allow
them to tailor their amplifiers to customers' fiber types and to
provide longer optical transmission distances than currently
possible.
o Optical Add/Drop Multiplexer--enables traffic to enter and exit the
network at a network intersection without requiring an
optical-to-electrical-to-optical conversion of traffic passing
through the intersection.
o Optical Switch--provisions routes and has been designed to optically
switch up to 2.4 terabits per second of traffic between routes to
provision services, reconfigure the network or to restore services
in the event of a fiber cut. Corvis's Optical Switch is currently in
trial and is expected to be commercially available in the second
half of 2000.
o CorManager Network Management System--provides software-based
network management that is fully integrated with their transmission
and switching products.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January * January * January *
February * February * February * February * February * February *
March * March * March * March * March * March *
April * April * April * April * April * April *
May * May * May * May * May * May *
June * June * June * June * June * June *
July * July * July * July * July * July $82 21/64
August * August * August * August * August * August 103 13/16
September * September * September * September * September * September 61 3/64
October * October * October * October * October *
November * November * November * November * November *
December * December * December * December * December *
</TABLE>
The closing price on October 26, 2000 was $60 1/2.
<PAGE>
DIGITAL LIGHTWAVE, INC. (DIGL)
Digital Lightwave, Inc., or Digital Lightwave, designs, develops,
markets and supports diagnostic products that monitor, maintain and manage
fiber optic-based networks. Digital Lightwave's products provide
telecommunications service providers and equipment manufacturers with
capabilities to cost-effectively deploy and manage fiber optic networks to
address the rapidly increasing demand for bandwidth. In addition, Digital
Lightwave's products are used to qualify and verify service during network
installation and to provide ongoing real-time quality assurance for deployed
networks. In contrast to most existing telecommunications test equipment,
Digital Lightwave's products are based on modular and scaleable hardware and
software platforms with a flexible architecture that allows customers to
readily upgrade existing systems to accommodate new technologies.
Digital Lightwave's ASA 312 Network Information Computer provides
engineers and technicians with a truly portable, easy-to-use diagnostic
product that offers increased functionality for the installation and
maintenance testing of advanced, high-speed networks and transmission
equipment. In 1998, Digital Lightwave introduced its initial Network Access
Agent, which incorporates the technology developed for the Network Information
Computer and is an unattended, software-controlled performance monitoring and
diagnostic product permanently installed within optical-based networks for
management from a central location.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January $3 13/16 January $4 January $ 59
February * February * February $8 February 3 3/4 February 3 13/16 February 83 1/4
March * March * March 7 5/8 March 6 3/32 March 2 3/4 March 62 5/16
April * April * April 5 1/4 April 5 April 4 April 68 1/2
May * May * May 7 1/4 May 4 May 6 1/8 May 54 15/16
June * June * June 8 3/4 June 3 1/4 June 6 June 100 9/16
July * July * July 12 5/8 July 3 7/32 July 7 1/4 July 87 7/16
August * August * August 15 3/8 August 1 7/8 August 6 15/16 August 87 3/4
September * September * September 16 1/4 September 1 27/32 September 7 1/8 September 72 5/8
October * October * October 18 1/4 October 2 19/32 October 17 1/4
November * November * November 20 1/2 November 2 1/8 November 31 3/4
December * December * December 13 1/8 December 2 5/16 December 64
</TABLE>
The closing price on October 26, 2000 was $51 3/16.
FINISAR CORPORATION (FNSR)
Finisar Corporation, or Finisar, is a leading provider of fiber optic
subsystems and network performance test systems which enable high-speed data
communications over local area networks, or LANs, and storage area networks,
or SANs. Additionally, Finisar has recently developed products for digitizing
the return path of a cable television, or CATV, network and for aggregating
data traffic in extended networks. Finisar is focused on providing
high-performance, reliable, value-added optical subsystems, which convert
electrical signals into optical signals, for networking and storage equipment
manufacturers that develop and market systems based on Gigabit Ethernet and
Fibre Channel, which are advanced transmission protocols used in LAN and SAN
applications.
Finisar's optical subsystems product line consists of three product
families--optical data links, optical link extenders and Opticity 3000.
Finisar's optical data links are integrated into its customers' systems and
used for both short- and long-distance fiber optic communications. Finisar's
FLX-2000 family of optical link extenders allows enterprises to extend the
distance of fiber optic links in Gigabit Ethernet and Fibre Channel-based
networks while preserving data integrity and reliability. Introduced in
September 1999, Finisar's Opticity 3000 is now being evaluated by several
network service providers ranging from application service providers to
competitive local exchange carriers and CATV operators. The Opticity 3000
combines cost-effective wavelength division multiplexing with the ability to
create reliable ring network topologies. The Opticity 3000 allows enterprises
and service providers to build gigabit metropolitan data networks.
Finisar's GTX, GST and GLA family of network performance test systems
assist networking and storage system manufacturers in the efficient design of
reliable, high-speed networking systems and the testing and monitoring of the
performance of these systems.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January * January * January $20 3/16
February * February * February * February * February * February 47 5/64
March * March * March * March * March * March 48 27/32
April * April * April * April * April * April 37 5/16
May * May * May * May * May * May 22 5/16
June * June * June * June * June * June 26 3/16
July * July * July * July * July * July 26 9/16
August * August * August * August * August * August 46 3/8
September * September * September * September * September * September 48 3/8
October * October * October * October * October *
November * November * November * November * November $38 27/64
December * December * December * December * December 29 61/64
</TABLE>
The closing price on October 26, 2000 was $26.
JDS UNIPHASE CORPORATION (JDSU)
JDS Uniphase Corporation, or JDS Uniphase, is the leading provider of
advanced fiber optic components and modules. These products are sold to
leading telecommunications and cable television system providers worldwide.
JDS Uniphase's components and modules are basic building blocks for fiber
optic networks and perform both optical-only (passive) and optoelectronic
(active) functions within these networks. JDS Uniphase's products include
semiconductor lasers, high-speed external modulators, transmitters,
amplifiers, couplers, multiplexers, circulators, tunable filters, optical
switches and isolators for fiber optic applications. JDS Uniphase also
supplies its customers with test instruments for both system production
applications and network installation. In addition, JDS Uniphase designs,
manufactures and markets laser subsystems for a broad range of OEM
applications, optical display and projection products used in computer
displays and other similar applications and light interference pigments used
in security products and decorative surface treatments.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January $7/16 January $1 3/32 January $2 47/64 January $4 19/32 January $11 25/64 January $101 31/32
February 35/64 February 1 7/32 February 2 3/64 February 5 1/64 February 11 1/64 February 131 13/16
March 39/64 March 1 7/32 March 2 5/16 March 5 17/64 March 14 25/64 March 120 9/16
April 5/8 April 1 21/32 April 2 31/64 April 6 25/32 April 15 11/64 April 103 11/16
May 5/8 May 2 3/64 May 3 9/32 May 6 3/8 May 16 3/4 May 88
June 43/64 June 2 7/32 June 3 41/64 June 7 27/32 June 20 3/4 June 119 7/8
July 45/64 July 1 5/8 July 4 17/64 July 6 1/4 July 22 19/32 July 118 118
August 63/64 August 2 21/64 August 4 17/64 August 5 August 26 33/64 August 124 31/64
September 1 7/64 September 2 41/64 September 4 31/32 September 5 1/8 September 28 29/64 September 94 11/16
October 59/64 October 3 1/64 October 4 13/64 October 6 3/16 October 41 23/32
November 1 7/64 November 3 23/32 November 5 1/64 November 6 25/32 November 57 3/16
December 1 1/8 December 3 9/32 December 5 11/64 December 8 43/64 December 80 21/32
</TABLE>
The closing price on October 26, 2000 was $74 7/16.
JUNIPER NETWORKS, INC. (JNPR)
Juniper Networks, Inc., or Juniper Networks, is a leading provider of
Internet Protocol, or IP, infrastructure solutions that enable Internet
service providers and other telecommunications service providers, to meet the
demands of the rapidly evolving optically-enabled IP networks. Juniper
Networks' Internet backbone routers are specifically designed and
purpose-built, for service provider networks and offer customers increased
reliability, performance, scalability, interoperability and flexibility, and
reduced complexity and cost compared to current alternatives. Juniper
Networks' flagship product is the M40 Internet backbone router, and Juniper
Networks recently introduced the M20, an Internet backbone router
purpose-built for emerging service providers. These Internet backbone routers
combine the features of Juniper Networks' JUNOS Internet Software, high
performance ASIC-based packet forwarding technology and Internet-optimized
architecture into a purpose-built solution for service providers.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January * January * January $ 67 21/32
February * February * February * February * February * February 137 5/32
March * March * March * March * March * March 131 25/32
April * April * April * April * April * April 106 11/32
May * May * May * May * May * May 87 19/32
June * June * June * June * June $24 53/64 June 145 9/16
July * July * July * July * July 27 5/64 July 142 7/16
August * August * August * August * August 34 11/64 August 213 3/4
September * September * September * September * September 30 11/32 September 218 15/16
October * October * October * October * October 45 15/16
November * November * November * November * November 46 3/16
December * December * December * December * December 56 43/64
</TABLE>
The closing price on October 26, 2000 was $190 1/8.
LUCENT TECHNOLOGIES INC. (LU)
Lucent Technologies Inc., or Lucent, is one of the world's leading
designers, developers and manufacturers of communications systems, software
and products. Lucent is a global leader in the sale of public and private
communications systems, supplying systems and software to most of the world's
largest communications network operators and service providers. Lucent is also
a global leader in the sale of business communications systems and in the sale
of microelectronic components for communications applications to manufacturers
of communications systems and computers. Lucent's research and development
activities are conducted through Bell Laboratories, one of the world's
foremost industrial research and development organizations.
On April 9, 2000, Lucent and TeraBeam Corporation entered into an
agreement to develop TeraBeam's fiberless optical networking system that
provides high-speed data networking between local and wide area networks. On
June 16, 2000, Lucent acquired Herrmann, a supplier of optical devices for
next generation dense wave division multiplexing ("DWDM") networks. On June
28, 2000, Lucent acquired Chromatis, a developer of metro optical networking
products.
On July 20, 2000, Lucent announced plans to spin off its microelectronics
business, which includes the optoelectronics components and integrated
circuits (IC) divisions, into a separate, new company to be named later.
Lucent is planning an initial public offering for up to 20 percent of the new
company in the quarter ended March 31, 2001 and intends to spin off the
remaining shares in a tax-free distribution by the summer of 2001. Lucent
intends to seek a ruling from the Internal Revenue Service with respect to the
tax-free treatment of the spin-off. The spin-off is subject to certain
conditions, including a favorable tax ruling. The new company will include
Lucent's microelectronics business which makes silicon chips and
optoelectronic components, such as lasers, that are the building blocks for
communications systems ranging from wireless phones and modems to Internet
equipment and optical networking systems.
On August 31, 2000, Lucent announced a 1 per 12 stock spin-off of Avaya
Inc. on its common stock to shareholders of record on September 20, 2000. This
spin-off is payable on September 29, 2000. The following table does not take
into account any adjustments for this spin-off.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January $12 25/32 January $ 20 27/32 January $53 1/64 January $52 9/32
February * February * February 12 11/16 February 25 33/64 February 47 53/64 February 56 3/64
March * March * March 12 23/64 March 30 7/64 March 50 55/64 March 57 11/16
April * April $8 17/64 April 13 57/64 April 35 29/32 April 56 33/64 April 58 37/64
May * May 8 61/64 May 14 61/64 May 33 13/32 May 53 37/64 May 53 59/64
June * June 8 59/64 June 16 31/32 June 39 11/64 June 63 33/64 June 55 13/16
July * July 8 23/32 July 19 63/64 July 43 1/2 July 61 9/32 July 41 13/64
August * August 8 11/16 August 18 11/32 August 33 3/8 August 60 11/32 August 39 25/64
September * September 10 51/64 September 19 5/32 September 32 39/64 September 61 7/64 September 28 25/32
October * October 11 1/8 October 19 25/64 October 37 49/64 October 60 33/64
November * November 12 1/16 November 18 7/8 November 40 17/32 November 68 7/8
December * December 10 57/64 December 18 13/16 December 51 25/32 December 70 41/64
</TABLE>
The closing price on October 26, 2000 was $21 1/16.
<PAGE>
MRV COMMUNICATIONS, INC (MRVC)
MRV Communications, Inc.'s or MRV's core operations include the design,
manufacture and sale of two groups of products:
o optical networking and internet infrastructure products, primarily
subscribers' management, network element management, and physical
layer, switching and routing management systems in fiber optic
metropolitan networks, and
o fiber optic components for the transmission of voice, video and data
across enterprise, telecommunications and cable TV networks.
MRV's advanced optical networking and Internet infrastructure solutions
greatly enhance the functionality of carrier and network service provider
networks. MRV's fiber optic components incorporate proprietary technology,
which delivers high performance under demanding environmental conditions.
MRV's business units offer active optical components, optical networking
and Internet infrastructure products, including network element management and
physical layer management in fiber optic metropolitan networks. MRV's In-Reach
product line manages Internet elements through secure remote monitoring of
large service providers' sites. MRV's Optical Networks family of products
consist of multi-layer traffic management: at Layer 1 with the Fiber Driver,
at Layer 2 with the OptiSwitch and at Layer 3 and above, with the OSR8000,
Linux Router. MRV complements its optical networking and Internet
infrastructure products with a family of optical transmission components and
modules designed for transmission over fiber optic cable. These products
enable the transmission of voice, data, and video across fiber and are also
used in optical fiber test equipment. MRV's products include discrete
components, such as laser diodes and LEDs, and integrated components such as
transmitters, receivers and transceivers.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January $2 1/16 January $5 43/64 January $13 13/16 January $11 23/32 January $4 9/16 January $36 3/8
February 2 1/4 February 6 15/64 February 12 1/8 February 11 5/8 February 3 11/32 February 78 13/32
March 2 29/64 March 7 59/64 March 11 1/8 March 11 11/16 March 3 1/64 March 45 13/16
April 2 25/64 April 10 3/8 April 10 5/16 April 13 7/16 April 5 April 34 15/32
May 2 21/64 May 16 13/16 May 12 3/8 May 11 5/8 May 5 27/32 May 26 5/8
June 2 15/64 June 10 11/16 June 14 3/4 June 10 3/8 June 6 9/16 June 67 1/4
July 2 13/16 July 9 5/32 July 15 7/16 July 10 11/32 July 7 5/8 July 57 7/8
August 3 37/64 August 10 August 14 11/16 August 2 51/64 August 9 7/32 August 77 1/16
September 3 9/16 September 12 7/8 September 18 1/4 September 3 3/32 September 11 27/32 September 45 5/16
October 3 11/64 October 10 7/8 October 14 5/8 October 3 15/32 October 10 27/32
November 4 23/64 November 11 7/16 November 14 1/8 November 3 9/32 November 16
December 4 15/64 December 10 7/8 December 11 15/16 December 3 3/32 December 31 7/16
</TABLE>
The closing price on October 26, 2000 was $35 7/16.
NEW FOCUS, INC (NUFO)
New Focus, Inc. or New Focus, designs, manufactures and markets
innovative fiber optic products for next-generation optical networks under the
Smart Optics for Networks(TM) brand. New Focus leverages their ten years of
experience in developing advanced optical products to enable networking
solutions with increased channel counts, higher data rates, longer reach
lengths and new services, all of which reduce overall network cost of
ownership. New Focus's high performance products are compact, consume less
power and are designed to be manufacturable in high volumes.
New Focus's Smart Optics for Networks(TM) products enable systems providers
to meet the dynamic demands of next-generation optical networks. New Focus's
fiber amplifier products are widely deployed in optical networks to enable the
transmission of an increased amount of information at very high speeds over
extended distances. New Focus's wavelength management products, which process
and control the many wavelengths on an optical fiber, enable network equipment
providers to increase the number of channels transmitted and to accurately,
efficiently and reliably manage a vast number of optical signals. New Focus
offers high-speed opto-electronic products, or products that process both
optical and electrical signals, that enable interconnections between equipment
in a network service provider's site at 10 gigabits per second. New Focus's
high performance tunable laser modules, or laser modules that have a
dynamically adjustable wavelength, enable rapid development, manufacturing and
testing of fiber optic components and systems. New Focus also offers advanced
photonics, or optical, tools that enable network service and equipment
providers to develop their next-generation products.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January * January * January *
February * February * February * February * February * February *
March * March * March * March * March * March *
April * April * April * April * April * April *
May * May * May * May * May * May $ 64 5/8
June * June * June * June * June * June 82 1/8
July * July * July * July * July * July 100 3/8
August * August * August * August * August * August 138 1/16
September * September * September * September * September * September 79 1/16
October * October * October * October * October *
November * November * November * November * November *
December * December * December * December * December *
</TABLE>
The closing price on October 26, 2000 was $60.
NEWPORT CORPORATION (NEWP)
Newport Corporation, or Newport, is a global supplier of high-precision
test, measurement and automation systems and subsystems that enable
manufacturers of fiber optic components, semiconductor capital equipment,
industrial metrology, aerospace and other high-precision products to automate
their manufacturing processes, enhance product performance, and improve
manufacturing efficiencies and yields. Using Newport's systems and subsystems,
manufacturers of fiber optic components, semiconductors, computer peripherals
and other high precision products can reduce the need for labor-intensive
manual manufacturing tasks and implement new technologies and designs more
readily, thereby reducing manufacturing costs and shortening time to market.
Newport develops and manufactures its products within three distinct
business units, organized around customer and manufacturing requirements:
o Fiber Optics and Photonics. This division offers a complete suite of
automated manufacturing solutions. These products address a broad
spectrum of applications in the fiber optic component manufacturing
process, from Pre-Test to Assembly and Packaging to Final Device
Testing and Burn-In.
o Video Metrology. These systems and subsystems provide a broad range
of non-contact video-based measurement and inspection products for
the semiconductor equipment manufacturing market as well as other
industrial markets, such as computer peripherals and life and health
sciences markets.
o Industrial and Scientific Technologies. This division sells elements
of Newport's core technology such as micropositioning, vibration
isolation and optical components, systems, and accessories. These
products are used across a wide range of industrial markets for
applications that range from basic research and development
activities to high-precision, low-volume manufacturing. As part of
this division, Newport manufactures and markets a line of
high-precision optics and optomechanical components. These products
include lenses, mirrors, prisms, laser beam expanders, collimators,
attenuators, variable beam splitters and spatial filters. Newport
has the capability to produce custom optical designs and coatings
for specific applications.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January $2 29/64 January $2 35/64 January $2 15/16 January $4 7/8 January $4 61/64 January $ 23 45/64
February 2 1/2 February 2 59/64 February 3 February 6 19/64 February 5 11/16 February 53 21/64
March 2 7/8 March 3 3/64 March 3 March 6 37/64 March 4 1/8 March 45
April 2 51/64 April 3 13/64 April 2 3/4 April 6 51/64 April 4 11/64 April 40 7/16
May 2 35/64 May 3 3/16 May 4 May 7 19/64 May 5 3/64 May 56 55/64
June 3 1/8 June 3 19/64 June 3 3/4 June 6 37/64 June 5 11/64 June 107 3/8
July 3 27/64 July 2 1/2 July 4 9/16 July 5 53/64 July 5 1/4 July 97 7/8
August 3 1/4 August 2 43/64 August 4 21/64 August 3 37/64 August 6 19/64 August 159
September 3 5/64 September 2 53/64 September 5 11/64 September 4 43/64 September 5 35/64 September 159 17/64
October 2 51/64 October 2 3/4 October 5 27/64 October 4 3/4 October 6 1/2
November 2 3/4 November 2 61/64 November 5 43/64 November 5 43/64 November 8 31/64
December 2 45/64 December 2 61/64 December 4 11/16 December 5 5/8 December 15 1/4
</TABLE>
The closing price on October 26, 2000 was $111 7/16.
NORTEL NETWORKS CORPORATION (NT)
Nortel Networks Corporation, or Nortel, is a leading global supplier of
networking solutions and services that support voice, data and video
transmission over wireless and wireline technologies. Nortel is focused on
building the infrastructure service enabling solutions and applications for
the new, high-performance Internet. Nortel's business consists of the design,
development, assembly, manufacture, marketing, sale, financing, installation,
servicing and support of network solutions and services for Service Provider
and Carrier customers and Enterprise customers.
Nortel carries on business in two operating segments:
o Service Provider and Carrier Segment. Key products include:
high-capacity fiber-optic systems that incorporate dense wavelength
division multiplexing, synchronous optical network and synchronous
digital hierarchy capabilities; high-end packet switching platforms
that include frame-relay and asynchronous transfer mode switching
fabrics, high-speed Internet Protocol routing and packet telephony
gateways; wireless voice and data networking solutions; high-speed
access networking solutions that include remote access switches and
solutions utilizing copper wire, coaxial cable, or wireless media;
and software for the management of network infrastructure and
service.
o Enterprise Segment. Key products include: solutions for electronic
business, including customer relationship management solutions, call
center products, voice messaging solutions and interactive voice
response systems; Internet and data networking solutions, including
high-speed frame and cell switching products; Open IP systems,
including routing products, virtual private network products and
wide area network switches; Enterprise telephony solutions,
including digital switches and key systems; in-building wireless
data and telephony solutions; and a broad range of voice and data
communications solutions for small business.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January $4 17/64 January $5 5/8 January $9 13/64 January $11 9/32 January $15 25/32 January $47 3/4
February 4 17/64 February 5 15/16 February 8 63/64 February 13 5/16 February 14 33/64 February 55 7/8
March 4 47/64 March 5 31/32 March 8 11/64 March 16 5/32 March 15 17/32 March 63 1/16
April 4 35/64 April 6 7/16 April 9 5/64 April 15 7/32 April 17 3/64 April 56
May 4 51/64 May 6 25/32 May 10 1/2 May 16 May 18 3/4 May 54 1/8
June 4 9/16 June 6 51/64 June 11 3/8 June 14 3/16 June 21 45/64 June 68 1/4
July 4 45/64 July 5 7/8 July 13 5/64 July 14 23/32 July 22 5/32 July 74 3/8
August 4 19/32 August 6 15/64 August 12 25/64 August 11 7/8 August 20 17/32 August 81 9/16
September 4 29/64 September 7 7/32 September 13 September 8 1/64 September 25 1/2 September 59 9/16
October 4 1/2 October 8 9/64 October 11 7/32 October 10 45/64 October 30 31/32
November 5 3/64 November 8 7/32 November 11 15/64 November 11 43/64 November 36 15/16
December 5 3/8 December 7 47/64 December 11 3/32 December 12 1/2 December 50 1/2
</TABLE>
The closing price on October 26, 2000 was $45 3/8.
ONI SYSTEMS CORP (ONIS)
ONI Systems Corp., or ONI Systems, develops, markets and sells
communications networking equipment, based entirely on optical technology, for
metropolitan area and regional networks. ONI Systems' customers are
communication service providers. ONI Systems' products enable customers to
relieve traffic bottlenecks in their metropolitan and regional networks and to
deliver new data communication services sought by their subscribers. ONI
Systems also helps customers to rapidly build high-capacity metro networks
that are flexible, easy to expand and capable of supporting multiple services
for end-users.
ONI Systems' first product, the ONLINE 9000TM, has been generally
available since January 2000. ONI Systems' second product, the ONLINE 7000TM,
has been generally available since June 2000. These products incorporate ONI
Systems' OPTXTM network operating system, its OPTXTM inter-network operating
system and its OLMPTM inter-network communications protocol to manage and
support a diverse mix of service offerings by its customers. The benefits of
these products include:
o Multi-service capability. ONI Systems' products allow service
providers to introduce and support a changing mix of services
without deploying dedicated equipment for each service type. ONI
Systems' products are also compatible with existing services based
on the synchronous optical network, or SONET, standard.
o Manageability and flexibility. ONI Systems' products enable real
time end-to-end management, surveillance, service activation,
network inventory management and billing within the OPTX network
operating system.
o Cost effectiveness and scalability. ONI Systems' products eliminate
costly optical-to-electrical conversions within a metro network, and
the scalability of ONI Systems' products allows service providers to
build metro networks in a pay-as-you-grow fashion.
o Rapid and efficient service restoration. ONI Systems' products
provide for rapid restoration of mission critical services without
the need to dedicate network capacity carrying duplicated traffic
for this capability.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January * January * January *
February * February * February * February * February * February *
March * March * March * March * March * March *
April * April * April * April * April * April *
May * May * May * May * May * May *
June * June * June * June * June * June $117 13/64
July * July * July * July * July * July 88 9/16
August * August * August * August * August * August 95 5/16
September * September * September * September * September * September 86 5/16
October * October * October * October * October *
November * November * November * November * November *
December * December * December * December * December *
</TABLE>
The closing price on October 26, 2000 was $70 7/8.
REDBACK NETWORKS, INC. (RBAK)
Redback Networks, Inc., or Redback, is a leading provider of advanced
networking systems that enable carriers, cable operators and service providers
to rapidly deploy high-speed access to the Internet and corporate networks.
Redback's product lines, which consist of the Subscriber Management SystemTM
family combine, and the SmartEdgeTM family will combine, networking hardware
with sophisticated software. Together, these product families are designed to
enable customers to create end-to-end regional networks that will support all
major broadband access technologies, as well as the new services that these
high-speed connections will enable. Redback's Subscriber Management System, or
(SM)S, products connect and manage large numbers of subscribers across all
major high-speed access technologies, including digital subscriber line, cable
and wireless. Redback's SmartEdge optical networking and multi-service
products are being developed to simplify the architecture of today's regional
voice and data networks, as well as improve their capacity and performance.
Redback announced its new family of SmartEdge products during the second
quarter of 2000 and anticipates its first customer shipments to begin in the
second half of 2000. The SmartEdge family will enable carriers, cable
operators and service providers to create high capacity, very flexible
regional fiber optic networks. Telecommunications providers will be able to
use the SmartEdge platform to upgrade their regional voice and data networks
to support the extra traffic generated by the growing availability of
broadband Internet access. Additionally, regional networks based on the
SmartEdge products will be less complex and more flexible in design, and thus
telecommunications providers will be able to deliver high-speed data services
more rapidly.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January * January * January $93 3/32
February * February * February * February * February * February 149 1/4
March * March * March * March * March * March 149 31/32
April * April * April * April * April * April 79 3/8
May * May * May * May * May $27 3/8 May 83 7/8
June * June * June * June * June 31 25/64 June 179 1/8
July * July * July * July * July 38 11/16 July 130
August * August * August * August * August 53 3/4 August 149 3/8
September * September * September * September * September 54 September 164
October * October * October * October * October 57 3/4
November * November * November * November * November 69 31/32
December * December * December * December * December 88 3/4
</TABLE>
The closing price on October 26, 2000 was $114 13/16.
SDL, INC. (SDLI)
SDL, Inc., or SDL, is a leader in providing products for optical
communications and related markets worldwide. SDL designs, manufactures and
markets semiconductor lasers, fiber optic related products and optoelectronic
modules and systems. SDL's products enable the transmission of data, voice,
and Internet information over fiber optic networks to meet the needs of
telecommunication, cable television and metro communications applications
primarily using technologies relating to dense wavelength division
multiplexing, or DWDM. SDL's products enable customers to meet the growing
need for increasing bandwidth by expanding their fiber optic communication
networks more quickly and efficiently than by using conventional electronic
and optical technologies.
SDL derives revenue from two principal markets:
Fiber Optic Communications. SDL supplies Erbium-Doped Fiber Amplifiers
(EDFA) that are designed for OEM integration into high performance analog or
digital communications systems. SDL supplies high power 980nm single mode pump
lasers to provide power to optical amplifiers used in terrestrial and undersea
fiber optic systems. As new high power DWDM optical amplifier technology has
developed, SDL has introduced pump lasers to meet the needs of this emerging
technology. SDL supplies 980nm pump modules that lead the industry in output
power and uses fiber Bragg grating technology to stabilize the pump module.
Grating stabilization delivers superior wavelength stability and enables
precise wavelength specification. During 1999, SDL introduced a Raman
amplifier pump module that won the Laser Focus World Optical Product of the
Year Award. These amplifiers, designed to work in both the 1310nm and 1550nm
windows, offer higher power potential and lower crosstalk potential than
EDFAs. With SDL's acquisition of IOC International in May 1999, SDL expanded
into the transmission sector of DWDM systems with lithium niobate external
modulators and drivers. The use of external modulation enables very high
channel count systems and very long propagation distances.
Industrial Products. The tremendous growth of the fiber optic market has
tended to overshadow the non-communications applications where SDL's
semiconductor lasers, fiber lasers and laser-based systems have historically
enjoyed success. It is important to note, however, that revenues from these
segments of SDL's business grew at 9 percent in 1999. These markets include
such applications as printing and materials processing.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January $4 11/64 January $5 11/16 January $4 25/64 January $ 12 1/2 January $129 19/32
February * February 5 1/16 February 5 1/8 February 5 3/16 February 13 5/8 February 205
March $4 19/64 March 5 March 4 9/32 March 5 15/16 March 22 11/16 March 212 7/8
April 4 1/4 April 6 51/64 April 3 1/4 April 6 3/16 April 27 5/16 April 195
May 4 5/16 May 7 5/64 May 5 May 5 1/2 May 23 1/4 May 226 9/16
June 5 June 6 15/16 June 4 25/32 June 5 31/32 June 25 17/32 June 285 3/16
July 5 3/4 July 6 1/8 July 5 3/16 July 4 31/32 July 33 31/32 July 347 1/16
August 5 19/64 August 4 13/16 August 4 7/16 August 4 1/4 August 40 15/16 August 397 5/16
September 4 45/64 September 5 1/8 September 5 1/16 September 3 1/8 September 38 5/32 September 309 5/16
October 4 1/4 October 4 1/4 October 4 1/2 October 5 1/2 October 61 21/32
November 3 3/4 November 5 3/4 November 4 5/32 November 5 37/64 November 81 3/8
December 4 December 6 9/16 December 3 5/8 December 9 29/32 December 109
</TABLE>
The closing price on October 26, 2000 was $240 9/16.
STRATOS LIGHTWAVE, INC. (STLW)
Stratos Lightwave, Inc., or Stratos, develops, manufactures and sells
optical subsystems and components for high data rate networking, data storage
and telecommunication applications. Stratos' optical subsystems convert
electronic signals into optical signals and back into electronic signals,
thereby facilitating the transmission of information over optical
communication networks. These optical subsystems are designed for use in local
area networks, storage area networks, metropolitan area networks, wide area
networks and central office networking in telecommunication markets. Stratos'
optical subsystems are compatible with the transmission protocols used in
these networks, including Gigabit Ethernet, Fast Ethernet, Fibre Channel and
asynchronous transfer mode. Stratos also designs, manufactures, and sells a
full line of optical components and cable assemblies for use in these
networks.
Stratos' products are designed for the various fiber optic interfaces on
the market today, including the SC and LC interfaces. The SC fiber optic
interface is one of the most common interfaces used in optical network
applications. This interface was designed to be used over the entire range of
optical network applications. The LC fiber optic interface is one-half the
size of the SC interface and was designed to meet the higher port density
requirements of space restricted applications. The LC interface is an
evolutionary version of the SC interface that shares proven connector
technology.
Stratos' product can be divided into two categories:
o Optical Subsystems. Stratos' optical subsystems consist of a broad
range of optical transceivers. Stratos' optical transceivers serve
as high data rate interconnects between network devices, such as
hubs, switches, servers and storage elements. Stratos' broad line of
optical transceivers are available in a variety of fiber optic
interfaces, or form factors, and support a wide range of data rates,
protocols, wavelengths, modes and transmission distances.
o Optical Components. Stratos' optical components include an extensive
range of fiber optic connectors, cable assemblies and related
accessories. Stratos' connector products include a variety of form
factors for single and multi-fiber applications. In addition to
standard SC connectors and legacy standard connectors, Stratos
offers small form factor LC and MT-RJ connectors that meet the needs
of Stratos' customers to connect higher numbers of interface ports
in the same or smaller space.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January * January * January *
February * February * February * February * February * February *
March * March * March * March * March * March *
April * April * April * April * April * April *
May * May * May * May * May * May *
June * June * June * June * June * June $27 7/8
July * July * July * July * July * July 37 1/2
August * August * August * August * August * August 47
September * September * September * September * September * September 32 1/4
October * October * October * October * October *
November * November * November * November * November *
December * December * December * December * December *
</TABLE>
The closing price on October 26, 2000 was $27 51/64.
SYCAMORE NETWORKS, INC (SCMR)
Sycamore Networks, Inc., or Sycamore, develops and markets software-based
intelligent optical networking products that enable network providers to
quickly and cost effectively provide bandwidth and create new high-speed data
services. Sycamore's intelligent optical networking products are designed to
allow service providers to deploy, manage and optimize the performance of
their fiber optic networks. Sycamore has designed its products to protect
service providers' existing investment in fiber optic and transmission
equipment and provide a migration path to the next generation optical public
network infrastructure.
Sycamore's intelligent optical networking products incorporate the
following features:
o Intelligent Optical Networking Software. Sycamore's entire product
line shares a common software base. This software foundation allows
it to minimize product development time by leveraging its software
architecture across multiple product lines.
o SONET/SDH Functionality. Sycamore's products are designed to provide
the optical interfaces and management and restoration capabilities
traditionally offered on SONET/SDH equipment.
o DWDM Technology. Sycamore integrates commercially available DWDM
optical technology into its products, providing a comprehensive
solution for its customers' multiplexing needs.
o Network Management. Sycamore's network management products will
provide end-to-end management and control of the intelligent optical
network. Network management functions include fault management,
configuration management, accounting management, performance
management and security management. Comprised of SilvxManager, a
network management platform, and SilvxSource, a system-resident
management application, Sycamore's network management products
constitute a distributed solution designed to provide end-to-end
management of the intelligent optical network.
Sycamore has offers or will offer the following current and planned
products:
o SN 6000. The SN 6000 is an intelligent optical transport product
designed specifically to work within an existing SONET/SDH network.
o SN 8000. The SN 8000 is an intelligent optical network node that
will be used to provide high speed services over fiber optic
wavelengths for access, interoffice, regional and backbone networks.
o SilvxSource and SilvxManager. The SILVX optical network management
system provides end-to-end management of data communications
services across a service provider's optical network. SILVX
simplifies network configuration, network provisioning and network
management by implementing many of today's manual and
labor-intensive network management processes within software.
o SN 16000. The SN 16000 is an intelligent optical switch for
end-to-end wavelength switching and routing, which is necessary for
the creation of a meshed topology network.
SN 10000. The SN 10000 is an intelligent optical network node that will
be used to provide high speed services over fiber optic wavelengths in long
distance backbone networks. The SN 10000 is being designed to provide a
complete stand-alone optical networking solution and to be capable of being
configured in point-to-point, linear, ring or mesh applications. This product
is currently in development.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January * January * January $106 21/64
February * February * February * February * February * February 148
March * March * March * March * March * March 129
April * April * April * April * April * April 78 1/2
May * May * May * May * May * May 83 5/8
June * June * June * June * June * June 110 3/8
July * July * July * July * July * July 123 5/16
August * August * August * August * August * August 137 1/2
September * September * September * September * September * September 108
October * October * October * October * October $71 43/64
November * November * November * November * November 74
December * December * December * December * December 102 43/64
</TABLE>
The closing price on October 26, 2000 was $64 1/4.
<PAGE>
[GRAPHIC OMITTED] NETS(SM)
New Era Trust Securities
500,000,000 Depositary Receipts
Optical Equipment NETS(SM) Trust
------------
PROSPECTUS
------------
[GRAPHIC OMITTED]
, 2000
Until ________________ , 2000 (25 days after the date of this
prospectus), all dealers effecting transactions in the offered Optical
Equipment NETS, whether or not participating in this distribution, may be
required to deliver a prospectus. This requirement is in addition to the
obligations of dealers to deliver a prospectus when acting as underwriters and
with respect to unsold allotments or subscriptions.
ATTACHMENT A
Prospective investors will be able to view a website at
www.epochnets.com, maintained by Epoch Securities, Inc., where a prospectus
will be available for review. The text set forth below will be included as
Attachment A to the prospectus. A description of this website and the text of
this website is set forth below. Each page of this website will contain a
hyperlink to a copy of the entire prospectus in a Portable Document Format, or
PDF, and a hyperlink to the Meet the Product Presentation that will provide
access to the online multimedia presentation of the information set forth in
textual format in Attachment B. This website summarizes information regarding
the Optical Equipment NETS and is not complete. You should read the entire
prospectus carefully before you purchase any Optical Equipment NETS.
Web Page 1: Optical Equipment NETS Main Page
Imagery: NETS logo in the upper left corner. A tab labeled "Optical
Equipment" highlighted on the upper right of the page. A square icon
consisting of three touching sphere shapes provides a link to the Optical
Equipment NETS presentation. A square icon consisting of two intertwined
arrows provides a link to the prospectus in a PDF. Border around the web page.
Hyperlinks: On the left of the page below the NETS logo are hyperlinks to
the web pages listed below. These hyperlinks are labeled based on the page to
which they link. These hyperlinks include: "What are they?," "What companies'
stocks are represented by them?," "What is the optical equipment industry?,"
"What features do they offer investors?," "Who should consider investing in
them?" and "What are the risks of this investment?" The middle right of the
page contains hyperlinks to the Optical Equipment NETS presentation and the
prospectus in a PDF. These hyperlinks include the icons described above and
are labeled respectively as follows: "View the Optical Equipment NETS
presentation" and "Download the pdf format prospectus."
Text: Title: "Optical Equipment NETS were created to provide." Below this
title are the following bullet pointed items: "Industry specific
diversification," "Ownership flexibility," "Lower transaction fees," "Reduced
annual fees and no hidden costs" and "Tax benefits."
The bottom right of the page reads: "This website summarizes information
regarding the Optical Equipment NETS and is not complete. You should read the
entire prospectus carefully before you purchase any Optical Equipment NETS."
And below this text, the web page border contains the text: "NETS and New Era
Trust Securities are service markets of Epoch Partners, Inc. Copyright (C)
2000."
General: General items included on web pages 2 - 7 below
Imagery: NETS logo in the upper left corner. A tab labeled "Optical
Equipment" highlighted on the upper right of the page. A square icon
consisting of three touching sphere shapes provides a link to the Optical
Equipment NETS presentation. A square icon consisting of two intertwined
arrows provides a link to the prospectus in a PDF. Border around the web page.
Hyperlinks: On the left of the web page below the NETS logo are
hyperlinks to the web pages listed below. These hyperlinks are labeled based
on the web page to which they link. These hyperlinks include: "What are
they?," "What companies' stocks are represented by them?," "What is the optical
equipment industry?," "What features do they offer investors?," "Who should
consider investing in them?" and "What are the risks of this investment?" On
the bottom left of the web page are hyperlinks to the Optical Equipment NETS
presentation and the prospectus in a PDF. These hyperlinks include the icons
described above and are labeled respectively as follows: "View the Optical
Equipment NETS presentation" and "Download the pdf format prospectus."
Text: The bottom left of the web page reads: "This website summarizes
information regarding the Optical Equipment NETS and is not complete. You
should read the entire prospectus carefully before you purchase any Optical
Equipment NETS." The web page border on the bottom right contains the text:
"NETS and New Era Trust Securities are service markets of Epoch Partners, Inc.
Copyright (C) 2000."
Web Page 2: What are the Optical Equipment NETS?
Imagery: See General.
Hyperlinks: See General. Below the text on the right of the web page,
described below, a hyperlink labeled, "next" with two arrows pointing right,
hyperlinks to Web Page 3.
Text: Title: "Optical Equipment NETS," Subtitle: "What are the Optical
Equipment NETS?" Below this title on the right side of the web page is the
following text: "NETS are depositary receipts that represent your ownership of
a group of companies' common stocks. These companies generally are considered
to be among the largest and most liquid companies with U.S.-traded common
stock in a particular industry.
NETS are NOT index funds, exchange traded funds or mutual funds. The NETS
structure enables you to own a single security that represents a diversified
portfolio of stocks in a specific industry. But unlike an actively managed
fund, the stocks represented by the NETS will not change based on the
decisions of an investment manager, to match an index or to satisfy fund
investment constraints, which eliminates the hidden costs associated with the
turnover of stocks in managed funds and the associated tax consequences.
The Optical Equipment NETS represent a group of 21 companies involved in
the optical equipment industry."
Web Page 3: What companies' stocks are represented by the Optical Equipment
NETS?
Imagery: See General.
Hyperlinks: See General. Below the text on the right of the web page,
described below, a link labeled, "next" with two arrows pointing right,
hyperlinks to Web Page 4.
Text: Title: "Optical Equipment NETS." Subtitle: "What Companies' Stocks
are Represented by the Optical Equipment NETS?" Below this title on the right
side of the web page is the following text and table: "For illustration
purposes, the number of shares of each company's common stock represented by
each round-lot of 100 Optical Equipment NETS and the initial weightings are
set forth in the chart below based on the equity market values as of October
26, 2000.
<TABLE>
<CAPTION>
Number of
Shares Per Initial Primary U.S.
Name of Company Ticker Round-Lot Weightings Trading Market
--------------- ------ --------- ---------- --------------
<S> <C> <C> <C> <C>
Corning Incorporated GLW 7 9.96% NYSE
Lucent Technologies Inc. LU 23 9.84 NYSE
Cisco Systems, Inc. CSCO 9 9.79 Nasdaq NMS
Nortel Networks Corporation NT 10 9.22 NYSE
JDS Uniphase Corporation JDSU 6 9.07 Nasdaq NMS
CIENA Corporation CIEN 4 8.37 Nasdaq NMS
Juniper Networks, Inc. JNPR 2 7.73 Nasdaq NMS
Sycamore Networks, Inc. SCMR 4 5.22 Nasdaq NMS
Corvis Corporation CORV 4 4.92 Nasdaq NMS
SDL, Inc. SDLI 1 4.89 Nasdaq NMS
Redback Networks Inc. RBAK 2 4.67 Nasdaq NMS
ADC Telecommunications, Inc. ADCT 10 3.82 Nasdaq NMS
ONI Systems Corp. ONIS 2 2.88 Nasdaq NMS
Newport Corporation NEWP 1 2.26 Nasdaq NMS
Avanex Corporation AVNX 1 1.86 Nasdaq NMS
New Focus, Inc. NUFO 1 1.22 Nasdaq NMS
Finisar Corporation FNSR 2 1.06 Nasdaq NMS
Digital Lightwave, Inc. DIGL 1 1.04 Nasdaq NMS
Avici Systems Inc. AVCI 1 0.90 Nasdaq NMS
MRV Communications, Inc. MRVC 1 0.72 Nasdaq NMS
Stratos Lightwave, Inc. STLW 1 0.56 Nasdaq NMS
</TABLE>
The share amounts were determined so that:
o the initial issue price will be approximately $40 - $50 per Optical
Equipment NETS,
o the initial weightings of each underlying security approximates the
relative equity market values of the specified companies, and
o the maximum initial weighting of any underlying security is 10%.
The final share amounts will be determined on the pricing date, using the
same methodology. After the pricing date, the share amounts will not change,
except for changes due to corporate events, such as stock splits or reverse
stock splits on the underlying securities, or reconstitution events. However,
the weightings are expected to change substantially over time because of price
fluctuations.
On July 10, 2000, JDS Uniphase Corporation and SDL, Inc. announced their
defiinitive agreement to merge. The merger agreement provides for the
exchange of 3.8 shares of JDS Uniphase common stock for each common share of
SDL. Completion of the transaction is subject to customary closing conditions,
including the approval of stockholders of both companies and regulatory
approvals.
On July 20, 2000, Lucent Technologies Inc. announced plans to spin off
its microelectronics business, which includes the optoelectronics components
and integrated circuits (IC) divisions, into a separate, new company to be
named later. Lucent is planning an initial public offering for up to 20
percent of the new company in the quarter ended March 31, 2001 and intends to
spin off the remaining shares in a tax-free distribution by the summer of
2001.
The inclusion of a company's common stock in the Optical Equipment NETS
is not a recommendation of that company or its common stock by Epoch
Securities, Inc., Advanced Clearing, Inc., Charles Schwab & Co., Inc., the
Optical Equipment NETS Trust, the trustee or any of their affiliates."
Web Page 4: What is the optical equipment industry?
Imagery: See General.
Hyperlinks: See General. Below the text on the right of the web page,
described below, a link labeled, "next" with two arrows pointing right,
hyperlinks to Web Page 5.
Text: Title: "Optical Equiment NETS." Subtitle: "What is the optical
equipment industry?" Below this title on the right side of the web page is the
following text: "The optical equipment industry consists of numerous companies
that design, manufacture and market products that enable voice and data
transmissions across communications networks using optical, or light-based,
signals. According to RHK, Inc., a telecommunications industry market research
firm, the global market for optical systems and subsystems is expected to grow
31% per year from $38 billion in 1999 to $113 billion in 2003.
Over the last three years, the volume of traffic across communications
networks has grown dramatically. Broadband or high-speed Internet access
through cable modems and digital subscriber line, also called DSL, connections
combined with new bandwidth-intensive applications such as streaming video and
real-time electronic commerce have placed significant strains on the capacity
of existing communications network infrastructures. These networks were
initially designed for low speed voice traffic and not for large volumes of
high-speed data traffic. According to RHK, Inc., the data traffic across
communications networks is expected to increase from 350,000 terabytes per
month in 1999 to more than 16 million terabytes per month in 2003. Ten
terabytes is the equivalent of all of the information contained in the Library
of Congress.
To handle the increasing volume of communications traffic, communications
service providers are rapidly expanding their networks and adding capacity by
using optical transmission and switching equipment. Optical equipment
generally provides higher capacity and greater network reliability than older
electrical transmission equipment because light signals can travel more
quickly through optical fibers than electrical signals can travel through
copper wire, and transmitting data using light is inherently more efficient.
Optical equipment companies generally fall into three categories:
o Systems providers undertake the complex task of assembling different
optical equipment building blocks and then combining them with
software and additional proprietary hardware to create complete
optical equipment systems. These systems providers sell their
products to the communications service providers for use in their
networks. Optical systems include DWDM, or dense wave division
multiplexing, transport systems, which transmit optical signals
within fiber optic networks, and optical switches, which connect
disparate optical networks and route optical signals from one
location to another. These systems can be used in metropolitan areas
or for long-haul, or long distance, applications.
o Subsystems providers develop the building blocks used by systems
providers. These building blocks include computer chips or modules
that typically perform a specific function such as the amplification
or steering of light signals. Subsystems include erbium-doped fiber
amplifiers, which reamplify all the optical signals on an optical
fiber without costly electrical reamplification of the individual
signals, optical muliplexors, which combine individual optical
signals to cost effectively transmit them together in a single
optical fiber, and add-drop multiplexers, which manipulate optical
signals to add or drop individual signals at intermediate locations
in the optical network.
o Fiber optic cable providers sell fiber optic cable to systems
providers, subsystems providers and communications service providers
for use in optical equipment or in optical networks."
Web Page 5: What are the features of Optical Equipment NETS?
Imagery: See General.
Hyperlinks: See General. Below the text on the right of the web page,
described below, a link labeled, "next" with two arrows pointing right,
hyperlinks to Web Page 6.
Text: Title: "Optical Equipment NETS." Subtitle: "What are the features
of Optical Equipment NETS?" Below this title on the right side of the web page
is the following text: "Optical Equipment NETS enable investors to easily
diversify their holdings through the purchase of a single security that
represents a group of companies involved in the optical equipment industry.
Optical Equipment NETS are not mutual funds, index funds or exchange traded
funds. Instead, Optical Equipment NETS give you control over your investments.
Optical Equipment NETS offer investors:
o Industry specific diversification
Optical Equipment NETS are designed to enable you to diversify your
investment across a group of companies that focus on the optical equipment
industry through a single security.
o Investor control
Unlike index and exchange traded funds, these companies and the number of
shares represented by the Optical Equipment NETS will not change to satisfy
changes in an index or any market value limits if a stock appreciates too
much. Because Optical Equipment NETS are not mutual funds, no portfolio
manager will be making decisions on where to invest your money and you will
always know which stocks are represented by the Optical Equipment NETS.
o Ownership flexibility
The owners of Optical Equipment NETS can exchange their Optical Equipment
NETS for the underlying stocks at any time.
o Lower transaction fees
The expenses associated with trading Optical Equipment NETS are expected
to be less than trading each of the underlying securities separately.
o Reduced annual fees and no hidden costs
Optical Equipment NETS minimize annual fees. Only 4 cents per Optical
Equipment NETS will be deducted from any cash dividends and cash distributions
you receive in any calendar year plus 1/4 cent per Optical Equipment NETS each
time a cash dividend or cash distribution is paid. Unlike an actively managed
fund, the stocks represented by the NETS will not change based on the
decisions of an investment manager, to match an index or to satisfy fund
investment constraints, which eliminates the hidden costs associated with the
turnover of stocks in managed funds and the associated tax consequences.
o Tax benefits
Because you indirectly own the underlying securities, you can choose when
to sell the Optical Equipment NETS or exchange the Optical Equipment NETS for
the underlying securities and sell one or more of those securities in order to
better manage tax gains or losses. You will not recognize a gain on the
exchange of the Optical Equipment NETS for the underlying stocks under U.S.
Federal income tax law."
Web Page 6: Who should consider Optical Equipment NETS?
Imagery: See General.
Hyperlinks: See General. Below the text on the right of the web page,
described below, a link labeled, "next" with two arrows pointing right,
hyperlinks to Web Page 7.
Text: Title: "Optical Equipment NETS." Subtitle: "Who should consider
Optical Equipment NETS?" Below this title on the right side of the web page is
the following text: "Since the performance of the Optical Equipment NETS
depends on the performance of companies in the optical equipment industry and,
in particular, the group of underlying companies and their stocks, they may be
appropriate for investors who seek:
o a diversified investment in the optical equipment industry,
o equity returns from U.S.-traded common stocks,
o control over their investments, and
o lower transaction fees and annual fees related to trading and owning
groups of stocks.
Web Page 7: What are the risks of investing in the Optical Equipment NETS?
Imagery: See General.
Hyperlinks: See General. Below the text on the right of the web page,
described below, a link labeled, "next" with two arrows pointing right,
hyperlinks to Web Page 1.
Text: Title: "What are the risks of investing in the Optical Equipment
NETS?" Below this title on the right side of the web page is the following
text: "An investment in Optical Equipment NETS involves risks similar to
investing directly in each of the underlying securities, including risks
associated with concentrated investments in the optical equipment industry. In
addition, investment in the Optical Equipment NETS involves industry-specific
risks. Please refer to the section entitled "Risk Factors" in the prospectus
for a more complete description of these risks."
<PAGE>
ATTACHMENT B
Prospective investors will be able to view a website at
www.epochnets.com, maintained by Epoch Securities, Inc., where a prospectus
will be available for review. A description of this website has been included
as Attachment A to the prospectus. Each page of the website will contain a
hyperlink to a copy of the entire prospectus in a Portable Document Format, or
PDF, and a hyperlink to the Meet the Product Presentation, an online
multimedia presentation. The text set forth below provides a description of
the Meet the Product Presentation and will be included as Attachment B to the
prospectus. The Meet the Product Presentation summarizes information regarding
the Optical Equipment NETS and is not complete. You should read the entire
prospectus carefully before you purchase any Optical Equipment NETS.
Visual 1: Disclaimer
Imagery: NETS logo in upper right corner, Epoch Partners logo in bottom left
corner and border.
Visual Text: Title Disclaimer, Slide Text: "The Meet the Product Presentation
is part of our prospectus. This presentation summarizes information regarding
the Optical Equipment NETS and is not complete. You should read the entire
prospectus carefully before you purchase any Optical Equipment NETS." Below
this disclaimer is the following text: ""NETS" and "New Era Trust Securities"
are service marks of Epoch Partners, Inc."
Script: The Meet the Product Presentation is part of our prospectus. The
presentation summarizes information regarding the Optical Equipment NETS and
is not complete. You should read the entire prospectus carefully before you
purchase any Optical Equipment NETS.
Visual 2: What are Optical Equipment NETS?
Imagery: NETS logo in upper right corner, Epoch Partners logo in bottom left
corner and border.
Visual Text: Title. What are the Optical Equipment NETS? Slide text contains
the following bullet points: "Depositary receipts that represent your
undivided beneficial ownership in the shares of the U.S.-traded common stock
of 21 companies involved in the optical equipment industry." "The underlying
securities are brought in the public market and deposited into a trust," "The
trust then issues the Optical Equipment NETS." "Initial issue price will be
approximately $40-$50 per Optical Equipment NETS." "Application has been made
to list them on the American Stock Exchange under the symbol "OPN.""
Script: Welcome to the Optical Equipment NETS "Meet the Product" Presentation,
my name is [ ] from Epoch Partners. Today I am going to talk about a new
issuance of securities called Optical Equipment NETS. NETS stands for "New Era
Trust Securities." In this presentation, we will talk about why Optical
Equipment NETS were created, the optical equipment industry, which securities
are represented by the Optical Equipment NETS, how the securities were chosen,
how you can purchase the Optical Equipment NETS, related fees, certain tax
considerations and the risks related to the Optical Equipment NETS.
First, let's summarize the Optical Equipment NETS. Optical Equipment NETS
are depositary receipts that represent ownership in the shares of 21
U.S.-traded common stocks involved in the optical equipment industry. To
create this product, these 21 stocks will be bought in the public market by
Epoch Securities, Inc. and deposited into the Optical Equipment NETS Trust.
The Trust then issues a receipt. Your purchase of this receipt represents your
ownership of these 21 companies. In short, the Trust is created to simplify
your ownership of these 21 stocks into a single security.
The final number of shares of each of the 21 companies will be determined
so the initial issue price will be approximately $40 to $50 per Optical
Equipment NETS. However, you may only purchase this product in round-lots of
100 Optical Equipment NETS or multiples thereof. Application has been made to
list the Optical Equipment NETS on the American Stock Exchange under the
symbol "OPN."
Visual 3: Securities Underlying the Optical Equipment NETS
Imagery: NETS logo in upper right corner, Epoch Partners logo in bottom left
corner and border. Table with text in center of page.
Visual Text: Title: Securities Underlying the Optical Equipment NETS. A table
containing the following text:
<TABLE>
Primary U.S.
Number of Shares Initial Trading
Name of Company Ticker Per Round-Lot Weightings Market
---------------------------- ------ ---------------- ---------- ------------
<S> <C> <C> <C> <C>
Corning Incorporated GLW 7 9.96% NYSE
Lucent Technologies Inc. LU 23 9.84 NYSE
Cicso Systems, Inc. CSCO 9 9.79 Nasdaq NMS
Nortel Networks Corporation NT 10 9.22 NYSE
JDS Uniphase Corporation JDSU 6 9.07 Nasdaq NMS
CIENA Corporation CIEN 4 8.37 Nasdaq NMS
Juniper Networks, Inc. JNPR 2 7.73 Nasdaq NMS
Sycamore Networks, Inc. SCMR 4 5.22 Nasdaq NMS
Corvis Corporation CORV 4 4.92 Nasdaq NMS
SDL, Inc. SDLI 1 4.89 Nasdaq NMS
Redback Networks Inc. RBAK 2 4.67 Nasdaq NMS
ADC Telecommunications, Inc. ADCT 10 3.82 Nasdaq NMS
ONI Systems Corp. ONIS 2 2.88 Nasdaq NMS
Newport Corporation NEWP 1 2.26 Nasdaq NMS
Avanex Corporation AVNX 1 1.86 Nasdaq NMS
New Focus, Inc. NUFO 1 1.22 Nasdaq NMS
Finisar Corporation FNSR 2 1.06 Nasdaq NMS
Digital Lightwave, Inc. DIGL 1 1.04 Nasdaq NMS
Avici Systems Inc. AVCI 1 0.90 Nasdaq NMS
MRV Communications, Inc. MRVC 1 0.72 Nasdaq NMS
Stratos Lightwave, Inc. STLW 1 0.56 Nasdaq NMS
</TABLE>
Script: The Optical Equipment NETS represent your ownership of the following
21 common stocks in the amounts shown. These companies generally are
considered to be among the largest and most liquid companies with U.S.-traded
common stock involved in the optical equipment industry as measured on October
26, 2000. The number of shares of the companies, and thus their weightings,
will be changed at the time of pricing to approximate their relative equity
market values subject to a maximum weighting of 10% for any one company. The
number of shares of the companies will not change thereafter except for
changes due to corporate events, such as stock splits or reconstitution
events, such as JDS Uniphase's proposed merger with SDL. Of course, the
weightings are expected to change substantially over time because of price
fluctuations in the underlying securities.
Visual 4: Illustrative Historical Performance
Imagery: NETS logo in upper right corner, Epoch Partners logo in bottom left
corner and border. Chart as shown on Page 23 of the prospectus in the center
of page.
Visual Text: (See "Description of the Underlying Securities," the graph of
historical Optical Equipment NETS performance). Title: Illustrative Historical
Performance. Chart title: Composite Performance of the Securities Represented
by a Single Optical Equipment NETS.(1) Footnote at bottom of page: (1)
Measured from the close of each business day from January 4, 1999 to October
26, 2000. In the event that an underlying security was not publicly traded on
January 4, 1999, the value of that security on the day it became publicly
traded was distributed, pro-rata, among the other publicly traded constituent
stocks. Constituent stocks that were added after January 4, 1999 were
incorporated into the graph as of their IPO date.
Script: The chart you are looking at depicts the performance of the Optical
Equipment stocks in the Optical Equipment NETS since January 4, 1999. You will
notice that it is benchmarked against the Nasdaq Composite Index. Not all 21
stocks of the Optical Equipment NETS were public since January 4, 1999. For
purposes of calculating this graph, if a constituent stock became public after
January 4, 1999, it was added at that time to the value of the Optical
Equipment NETS.
Visual 5: Why were the Optical Equipment NETS Created?
Imagery: NETS logo in upper right corner, Epoch Partners logo in bottom left
corner and border.
Visual Text: Title: Why were the Optical Equipment NETS Created? To the right
of the first bullet reads, "Industry Specific Diversification. The Optical
Equipment NETS are designed to allow you to diversify your investment in
optical equipment companies through a single, exchange-listed instrument
representing your undivided beneficial ownership of the underlying
securities." To the right of the second bullet reads, "Transaction Fees. The
expenses associated with trading the Optical Equipment NETS are expected to be
less than trading each of the underlying securities separately." To the right
of the third bullet reads, "Flexibility and Control. The beneficial owners of
Optical Equipment NETS have ownership interests in each of the underlying
securities represented by the Optical Equipment NETS, can exchange their
Optical Equipment NETS for the underlying securities represented by the
Optical Equipment NETS, and can control ownership of constituent stocks and
manage the timing of taxable events." To the right of the fourth bullet reads,
"Low Fees and Taxes. Unlike index or exchange listed funds, which have to
change stocks to match an index, the NETS have no ongoing management,
minimizing costs and taxes that result from turnover."
Script: The Optical Equipment NETS were created for several reasons. The first
is diversification. Optical Equipment NETS allows for diversification in the
optical equipment sector. As we all are aware, certain stock and their
representative sectors are very volatile these days. Investing in a sector by
purchasing a single stock is very risky because you are subject not only to
the risks of the sector, but also to the company specific risks. Optical
Equipment NETS allow you to purchase a diversified group of stocks in a sector
through one instrument.
Second, the Optical Equipment NETS may allow for lower transaction costs.
If an individual attempted to diversify himself or herself among the
constituent stocks of the optical equipment sector, that individual would pay
commission on all the stocks, increasing brokerage costs by more than 4 times.
However, because the Optical Equipment NETS trades as a single instrument,
that cost is reduced.
Third, Optical Equipment NETS give you flexibility and control. Since you
hold a receipt representing your ownership of the 21 optical equipment stocks,
you can, at any time turn in that receipt and receive the underlying
securities. This gives you flexibility over trading and timing of taxable
events. You can also create new Optical Equipment NETS by depositing to the
trustee the approximate number of shares.
The NETS may also have lower costs compared to most mutual funds and
exchange traded funds. Typical mutual funds may have one or more of the
following: ongoing management fees, 12-b-1 fees, trailers and expenses. The
NETS have none of these. The Trust has up to a $1.00 per quarter custody fee
and a $.25 handling fee per 100 shares which is only taken if there are
sufficient distributions from the underlying stocks. Only $.04 per Optical
Equipment NETS will be deducted from any cash dividends or cash distributions
you receive in any calendar year plus $.0025 per Optical Equipment NETS each
time a cash dividend or cash distribution is paid.
Finally, as most of us are aware, managers of mutual funds and exchange
traded funds trade their underlying stocks. A Portfolio Manager does this when
he or she changes stocks. An Index Fund is forced to buy or sell when the index
changes. This has two adverse impacts. First, it creates more hidden costs
since the managers pays commissions. Second, it can create adverse taxable
distributions at the end of the year. The NETS have a static portfolio and
will not generate the adverse costs or taxes associated with trading the
underlying constituent stocks.
Visual 6: Optical Equipment Industry Overview
Imagery: NETS logo in upper right corner, Epoch Partners logo in bottom left
corner and border.
Visual Text: Title: Optical Equipment Industry Overview. To the right of the
first bullet reads, "The Optical Equipment NETS are composed of companies
that, among other things, design, manufacture and market products that enable
the transmission of communications traffic using optical, or light based
signals." To the right of the second bullet reads, "The volume growth of
traffic and new bandwidth intensive applications have placed significant
strains on the capacity of existing communications infrastructures." To the
right of the third bullet reads, "Optical equipment generally provides higher
capacity and greater network reliability than older electronic transmission
equipment." To the right of the fourth bullet reads, "According to RHK, Inc.
the data traffic across communications networks is expected to increase from
350,000 terabytes per month from 1999 to 16 million terabytes per month in
2003. 10 terabytes is equal to all the information in the Library of
Congress." To the right of the fifth bullet reads, "According to RHK, Inc. the
global market for optical systems and subsystems is expected to grow 31% per
year from $38 billion in 1999 to $113 billion in 2003."
Script: The Optical Equipment NETS are composed of companies that design,
manufacture and market products that enable the transmission of communications
traffic using optical, or light based signals. Broadband or high-speed
Internet access through cable modems and digital subscriber line, also called
DSL, connections combined with new bandwidth-intensive applications such as
streaming video and real-time electronic commerce have placed significant
strains on the capacity of existing communications network infrastructures.
These networks were initially designed for low speed voice traffic and not for
large volumes of high-speed data traffic. According to RHK, Inc., a
telecommunications industry market research firm, the data traffic across
communications networks is expected to increase from 350,000 terabytes per
month in 1999 to more than 16 million terabytes per month in 2003. Ten
terabytes is the equivalent of all of the information contained in the Library
of Congress.
Fiber optics competes with copper wire, coaxial cable, and wireless
communications technologies. Optical equipment generally provides higher
capacity and greater network reliability than older electrical transmission
equipment because light signals can travel more quickly through optical fibers
than electrical signals can travel through copper wire. According to RHK,
Inc., the global market for optical systems and subsystems is expected to grow
31% per year from $38 billion in 1999 to $113 billion in 2003.
Visual 7: Selection Criteria
Imagery: NETS logo in upper right corner, Epoch Partners logo in bottom left
corner and border.
Visual Text: Title: Selection Criteria. To the right of the first bullet
reads, "The common stocks of 21 specified companies involved in various
aspects of the optical equipment industry." To the right of the second bullet
reads, "Considered to be among the largest capitalized, most liquid companies
with U.S.-traded common stock involved in the optical equipment industry, as
measured by equity market value and trading volume on October 26, 2000." To
the right of the third bullet point reads, "The following criteria were used
in selecting the underlying securities on October 26, 2000." The first
indentation under the third bullet reads, "Equity market value equal to or
greater than $1.5 billion." The second indentation under the third bullet
reads, "Average daily trading volume of at least 800,000 shares over the 60
trading days before October 26, 2000." The third indentation under the third
bullet reads, "Average daily dollar volume of at least $40 million over the 60
trading days before October 26, 2000." The fourth indentation under the third
bullet reads, "A trading history of at least 90 calendar days."
Script: The 21 component stocks of the Optical Equipment NETS are involved in
various aspects of the optical equipment industry. They are considered to be
among the largest capitalized, most liquid companies with U.S.-traded common
stock involved in this industry.
The constituent stocks were selected using several criteria: 1) An equity
market value equal to or greater than $1.5 billion. 2) An average daily
trading volume of at least 800,000 shares over 60 trading days before October
26, 2000. 3) An average daily dollar volume of at least $40 million over 60
trading days before October 26, 2000. The equity market value of a company is
determined by multiplying the price of its common stock by the number of
outstanding shares of its common stock. Finally, a constituent stock must have
a trading history of at least 90 calendar days.
Visual 8: Your Rights as an Owner of NETS
Imagery: NETS logo in upper right corner, Epoch Partners logo in bottom left
corner and border.
Visual Text: Title: Your Rights as an Owner of NETS. To the right of the first
bullet reads, "No active management of the Optical Equipment NETS." To the
right of the second bullet reads, "Investors in Optical Equipment NETS have
the right to:." The first indentation under the second bullet reads, "Receive
company reports." The second indentation under the second bullet reads,
"Receive dividends and other distributions on the underlying securities (net
of fees or expenses)." The third indentation under the second bullet reads,
"Instruct the trustee to vote the underlying securities on all matters or
attend shareholder meetings and vote yourself." The fourth indentation under
the second bullet reads, "Participate in a tender offer for underlying
securities by obtaining all of the underlying securities." To the right of the
third bullet reads, "See "Description of Optical Equipment NETS" in the
prospectus for more information."
Script: There will be no active management of the Optical Equipment NETS and
therefore no management fees charged to Optical Equipment NETS owners. The
companies and share amounts will remain fixed; changes will generally only be
made due to reconstitution events or corporate actions.
Investors in Optical Equipment NETS will have the same rights as owners
of the underlying securities. An Optical Equipment NETS investor has the right
to receive company reports including annual reports, quarterly reports and
proxy materials, which will be distributed by the issuer of the underlying
securities. Investors will be able to instruct the trustee to vote on the
underlying securities on all matters. If any dividends or distributions are
declared and paid to the trustee by an issuer, Optical Equipment NETS owners
will receive those distributions, net of any fees or expenses. Investors will
be able to participate in tender offers for underlying securities by
surrendering their Optical Equipment NETS to receive all of their underlying
securities.
Visual 9: How can I purchase Optical Equipment NETS
Imagery: NETS logo in upper right corner, Epoch Partners logo in bottom left
corner and border.
Visual Text: Title: How Can I Purchase Optical Equipment NETS? The first
bullet point reads, "The NETS are expected to price the week of [ ]." The
second bullet reads, "The initial public offering price for an Optical
Equipment NETS will approximately be $40 to $50." The third bullet reads, "You
can purchase the NETS in round-lots of 100." The fourth bullet reads, "The
initial public offering price for a round-lot of 100 Optical Equipment NETS
will equal the sum of the products of the closing market prices on the pricing
date on the primary U.S. trading market and the number of deposited shares for
all of the companies in the round-lot, plus an underwriting fee." The fifth
bullet reads, "After the initial offering the NETS will trade on the American
Stock Exchange." The sixth bullet reads, "After twenty-five (25) days from the
initial offering you can make an in-kind deposit of the required number of
shares of common stock of the underlying issuers with the trustee in order to
receive NETS." Below the bullets points the footnote reads, "The restriction
on the purchase of Optical Equipment NETS through an in-kind deposit during
the twenty-five (25) day period from the initial offering is intended to
reduce arbitrage-related trading that could adversely affect the prices of the
underlying securities and the Optical Equipment NETS."
Script: Optical Equipment NETS can be purchased at the Initial Offering which
is expected the week of [ ]. The initial public offering price for the Optical
Equipment NETS is expected to be between $40 and $50 and they can only be
purchased in round-lots of 100. The initial price of a round-lot of Optical
Equipment NETS was determined by simply multiplying a constituent stock's
value on the pricing date times the number of shares of that constituent stock
in a round-lot of Optical Equipment NETS. This will give you the individual
company's stock value as a part of the Optical Equipment NETS. If you add all
21 individual stock values and the gross spread, you will have the value of a
round-lot of 100 Optical Equipment NETS.
After the initial offering, the Optical Equipment NETS will trade on the
American Stock Exchange. After twenty-five days from the initial offering, you
can make an in-kind deposit of the required number of shares of common stock
of the underlying issuers with the trustee in order to receive NETS.
The restriction on the purchase of Optical Equipment NETS through an
in-kind deposit during the twenty-five (25) day period from the initial
offering is intended to reduce arbitrage-related trading that could adversely
affect the prices of the underlying securities and the Optical Equipment NETS.
Visual 10: Fees and Taxes
Imagery: NETS logo in upper right corner, Epoch Partners logo in bottom left
corner and border.
Visual Text: Title: Fees and Taxes. To the right of the first bullet reads,
"Fees." The first indentation under the first bullet point reads, "Unlike
mutual funds, the NETS have no ongoing management fee." The second indentation
under the first bullet point reads, "Underwriting fee: 2%." The third
indentation under the first bullet point reads, "Ongoing maintenance costs per
100 NETS: Quarterly custody fees of up to $1.00, and a $0.25 handling fee for
each cash dividend and other cash distributions made on the underlying shares.
(This fee is deducted from dividends and other cash distributions paid on the
underlying shares.)" The fourth indentation under the first bullet point
reads, "Creation/Cancellation Fees: This fee is approximately $5 per 100
NETS." To the right of the second bullet point reads, "Tax Structure." The
first indentation under the second bullet point reads, "For U.S. federal
income tax purposes: Directly owning a proportionate share of the underlying
securities." The second indentation under the second bullet point reads, "When
purchasing or selling the Optical Equipment NETS, a holder will determine its
initial tax basis in each of the underlying securities." The third indentation
under the second bullet point reads, "It is not contemplated that NETS will
have tax distributions, in the manner that some mutual funds do."
Script: Unlike mutual funds, the Optical Equipment NETS have no ongoing
management fee. Optical Equipment NETS investors will pay an upfront fee,
instead of a sales commission or issuance fee, at the initial offering to
purchase the Optical Equipment NETS. This 2% fee compensates the Underwriter
and Trustee for the cost associated with creating and marketing the Optical
Equipment NETS.
Ongoing maintenance costs of administering the program are borne by the
Trustee. The Trustee will charge ongoing quarterly custody fees of up to $1.00
and a $.25 handling fee per 100 shares. These fees are deducted from dividends
and other cash distributions made on the underlying shares. In this way, the
owner of the Optical Equipment NETS only pays a custody fee if a distribution
is made. The Trustee will typically charge a fee for creation and/or
cancellation of the Receipts. This fee is approximately $5 per 100 NETS.
A person purchasing and owning Optical Equipment NETS will be treated,
for U.S. federal income tax purposes, as directly owning a proportionate share
of the underlying securities represented by the Optical Equipment NETS. When
purchasing or selling Optical Equipment NETS, a holder will determine its
initial tax basis in each of the underlying securities by allocating the
purchase price for the Optical Equipment NETS among the underlying securities
based on their relative fair market values at the time of the Optical
Equipment NETS purchase. It is not contemplated that NETS will have tax
distributions, in the manner that some mutual funds do.
Visual 11: Risk Factors
Imagery: NETS logo in upper right corner, Epoch Partners logo in bottom left
corner and border.
Visual Text: Title: Risk Factors. The center of the page reads: "An investment
in the Optical Equipment NETS involves risks similar to investing in each of
the underlying securities outside of the Optical Equipment NETS, including the
risk associated with concentrated investments in the optical equipment
industry. In addition, an investment in the Optical Equipment NETS involves
industry-specific risks. Please refer to the section entitled "Risk Factors"
of the prospectus for a more complete description of these risks. "
Script: An investment in the Optical Equipment NETS involves risks similar to
investing in each of the underlying securities outside of the Optical
Equipment NETS, including the risk associated with concentrated investments in
the optical equipment industry. In addition, an investment in the Optical
Equipment NETS involves industry-specific risks. Please refer to the section
entitled "Risk Factors" of the prospectus for a more complete description of
these risks.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses expected to be incurred in connection with the issuance and
distribution of the securities being registered, other than underwriting
compensation, are as set forth below. Except for the registration fee payable
to the Securities and Exchange Commission, all such expenses are estimated:
Securities and Exchange Commission registration fee..... $19,787
Printing and engraving expenses......................... 50,000
Legal fees and expenses................................. *
Miscellaneous........................................... *
----------
Total................................................ $*
==========
---------
*To be added by amendment
Item 15. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of Delaware, as
amended, provides that under certain circumstances a corporation may indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that such
person is or was a director, officer, employee or agent of the corporation or
is or was serving at its request in such capacity in another corporation or
business association, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding if such person acted
in good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe such
person's conduct was unlawful.
Paragraph Ninth of the Certificate of Incorporation of Epoch Securities,
Inc. provides in effect that, subject to certain limited exceptions, Epoch
Securities, Inc. shall indemnify its directors and officers to the full extent
authorized or permitted by law.
The directors and officers of Epoch Securities, Inc. are insured under
policies of insurance maintained by Epoch Securities, Inc., subject to the
limits of the policies, against certain losses arising from any claim made
against them by reason of being or having been such directors or officers.
Item 16. Exhibits.
See Exhibit Index.
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be
reflected in the form of the prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than 20
percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in
the effective registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(4) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus
filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act of 1933 shall be deemed to be
part of this registration statement as of the time it was
declared effective.
(5) For purposes of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(6) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to Item 15
of this registration statement, or otherwise, the registrant
has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant hereby certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-1 and has duly caused this
Amendment No. 1 to the Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of New York, on
October 31, 2000.
Epoch Securities, Inc.
By: /s/ STANTON GREEN
------------------
Name: Stanton Green
Title: Managing Director
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed by the following
persons in the capacities indicated on October 31, 2000.
Signature Title
--------- -----
* President, Chief Executive
------------------------------------- Officer and Director
SCOTT RYLES
* Controller and Financial
------------------------------------- Operations Principal
RANDALL SCHWED,
chief financial officer
*By: /s/ STANTON GREEN Attorney-in-fact
---------------------------------
Stanton Green
<PAGE>
INDEX TO EXHIBITS
Exhibits
--------
1.1 Form of Underwriting Agreement
4.1 Standard Terms for Depositary Trust Agreements between Epoch
Securities, Inc. and Investors Bank & Trust Company, as trustee,
dated as of , 2000, and included as exhibits thereto, form of
Depositary Trust Agreement and form of NETS
**5.1 Opinion of Brown & Wood LLP regarding the validity of the Optical
Equipment NETS Receipts
**8.1 Opinion of Brown & Wood LLP, as special U.S. tax counsel regarding
the material federal income tax consequences
*24.1 Power of Attorney (included in Part II of Registration Statement)
---------
* Previously filed.
** To be filed by amendment.
