<PAGE>
As filed with the Securities and Exchange Commission on May 5, 2000
Registration No. 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Initial Depositor
(Exact name of registrant as specified in charter)
Regional Bank HOLDRSSM Trust
yet-to-be formed
[Issuer with respect to the receipts]
<TABLE>
<S> <C> <C>
Delaware 6211 13-5674085
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
250 Vesey Street
New York, New York 10281
(212) 449-1000
(Address, including zip code, and telephone number,
including area code, of registrant's
principal executive offices)
Andrea L. Dulberg, Esq. Copies to:
Corporate Secretary Andrew B. Janszky
Merrill Lynch, Pierce, Fenner & Shearman & Sterling
Smith Incorporated 599 Lexington Avenue
250 Vesey Street New York, New York 10022
New York, New York 10281 (212) 848-4000
(212) 449-1000
(Name, address, including zip code, and
telephone number, including area code,
of agent for service)
Approximate date of commencement of proposed sale to public:
As soon as practicable after this Registration Statement becomes effective.
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. |_|
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Maximum Proposed Maximum
Title of Each Class of Amount to Be Offering Price Aggregate Offering Amount of
Securities to Be Registered Registered Per Receipt(1) Price(1) Registration Fee(2)
<S> <C> <C> <C> <C>
Regional Bank HOLDRS........................... 1,000,000,000 $100 $349,750,000 $92,334
receipts
====================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act. 2,500,000 receipts are
estimated to be offered in the initial offering at $100 per receipt and
997,500,000 receipts are estimated to be offered continuously after the
initial offering at $0.10 per receipt.
(2) This Registration Statement also registers, where required, an indeterminate
amount of securities to be sold by Merrill Lynch, Pierce, Fenner & Smith
Incorporated in market-making transactions.
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, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to such
Section 8(a), may determine.
- --------------------------------------------------------------------------------
<PAGE>
PROSPECTUS
Subject to Completion
Preliminary Prospectus dated , 2000
The information in this prospectus is not complete and may be changed. We have
filed a registration statement relating to these receipts with the Securities
and Exchange Commission. We cannot sell these receipts until the registration
statement becomes effective. This prospectus is not an offer to sell these
receipts and we are not soliciting offers to buy these receipts in any state
where such offer or sale is not permitted.
LOGO
1,000,000,000 Depositary Receipts
Regional Bank HOLDRSSM Trust
The Regional Bank HOLDRSSM Trust will issue Depositary Receipts called
Regional Bank HOLDRSSM representing your undivided beneficial ownership in the
U.S.-traded common stock of a group of specified companies that are involved in
various segments of the regional banking industry. The Bank of New York
will be the trustee. You only may acquire, hold or transfer Regional Bank HOLDRS
in a round-lot amount of 100 Regional Bank HOLDRS or round-lot multiples.
Regional Bank HOLDRS are separate from the underlying deposited common stocks
that are represented by the Regional Bank HOLDRS. For a list of the names and
the number of shares of the banks that make up a Regional Bank HOLDR, see
"Highlights of Regional Bank HOLDRS--The Regional Bank HOLDRS" starting on page
10. The trust will issue the additional Regional Bank HOLDRS on a continuous
basis.
Investing in Regional Bank HOLDRS involves significant risks. See "Risk
factors" starting on page 4.
The initial public offering price for a round-lot of 100 Regional Bank
HOLDRS will equal the sum of the closing market price on the primary trading
market on the pricing date for each deposited share multiplied by the share
amount specified in this prospectus, plus an underwriting fee.
Regional Bank HOLDRS are neither interests in nor obligations of either
the initial depositor, Merrill Lynch, Pierce, Fenner & Smith Incorporated, or
The Bank of New York, as trustee.
Before this issuance, there has been no public market for Regional Bank
HOLDRS. Application has been made to list the Regional Bank HOLDRS on the
American Stock Exchange under the symbol "[ ]".
----------
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.
Initial Price Underwriting
to Public* Fee
---------- ---
Per Regional Bank HOLDR..................... 2%
- ---------------
* Includes underwriting fee.
For purchases of Regional Bank HOLDRS in excess of Regional Bank
HOLDRS, the underwriting fee will be %.
Merrill Lynch & Co.
First Union Securities, Inc.
The date of this prospectus is , 2000.
"HOLDRS" and "HOLding Company Depositary ReceiptS" are service marks of Merrill
Lynch & Co., Inc.
<PAGE>
TABLE OF CONTENTS
Page
----
Summary.............................................................. 3
Risk Factors......................................................... 4
Highlights of Regional Bank HOLDRS................................... 9
The Trust............................................................ 15
Description of Regional Bank HOLDRS.................................. 15
Description of the Underlying Securities............................. 16
Description of the Depositary Trust Agreement........................ 18
Federal Income Tax Consequences...................................... 21
ERISA Considerations................................................. 22
Plan of Distribution................................................. 22
Legal Matters........................................................ 23
Where You Can Find More Information.................................. 23
----------
This prospectus contains information you should consider when making your
investment decision. With respect to information about Regional Bank HOLDRS, 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 Regional Bank HOLDRS in any jurisdiction
where the offer or sale is not permitted.
The Regional Bank HOLDRS are not registered for public sale outside of
the United States. Non-U.S. receipt holders should consult their tax advisors
regarding U.S. withholding and other taxes which may apply to ownership of the
Regional Bank HOLDRS or of the underlying securities through an investment in
the Regional Bank HOLDRS.
<PAGE>
SUMMARY
The Regional Bank HOLDRS trust will be formed under the depositary
trust agreement, dated as of , 2000 among The Bank of New York, as trustee,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, other depositors and the
owners of the Regional Bank HOLDRS. The trust is not a registered investment
company under the Investment Company Act of 1940.
The trust will hold shares of common stock issued by 20 specified
companies generally considered to be involved in various segments of the
regional banking industry. The number of shares of each common stock held by the
trust with respect to each round-lot of Regional Bank HOLDRS is specified under
"Highlights of Regional Bank HOLDRS--The Regional Bank HOLDRS." This group of
common stocks is referred to as the underlying securities. Except when a
reconstitution event occurs, the underlying securities will not change.
Under no circumstances will a new company be added to the group of
issuers of underlying securities.
The trust will issue Regional Bank HOLDRS that represent your undivided
beneficial ownership interest in the shares of common stock held by the trust on
your behalf. The Regional Bank HOLDRS are separate from the underlying common
stocks that are represented by the Regional Bank HOLDRS.
<PAGE>
RISK FACTORS
An investment in Regional Bank HOLDRS involves risks similar to
investing in each of the underlying securities outside of the Regional Bank
HOLDRS, including the risks associated with concentrated investments in regional
banks.
General Risk Factors
o Loss of investment. Because the value of Regional Bank HOLDRS
directly relates to the value of the underlying securities, you
may lose all or a substantial portion of your investment in the
Regional Bank HOLDRS if the underlying securities decline in
value.
Discount trading price. Regional Bank HOLDRS may trade at a
discount to the aggregate value of the underlying securities.
o Not necessarily representative of the regional banking industry.
While the underlying securities are common stocks of companies
generally considered to be involved in various aspects of the
banking industry on a regional level, the underlying securities
and the Regional Bank HOLDRS may not necessarily follow the price
movements of the entire banking industry generally. If the
underlying the securities decline in value, your investment in the
Regional Bank HOLDRS will decline in value even if common stock
prices of companies involved in the regional banking industry
generally increase in value. Furthermore, after the initial
deposit, one or more of the issuers of the underlying securities
may no longer be involved in the regional banking industry. In
this case, the Regional Bank HOLDRS may no longer consist of
securities issued only by companies involved in the regional
banking industry.
o No investigation of underlying securities. The underlying
securities included in the Regional Bank HOLDRS were selected by
Merrill Lynch, Pierce, Fenner & Smith Incorporated based on the
market capitalization of issuers and the market liquidity of
common stocks in the regional banking industry, without regard for
the value, price performance, volatility or investment merit of
the underlying securities. Consequently, the Regional Bank HOLDRS
trust, the trustee, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, and their affiliates, have not performed any
investigation or review of the selected companies, including the
public filings by the companies. Investors and market participants
should not conclude that the inclusion of a company is any form of
investment recommendation by the trust, the trustee, Merrill
Lynch, Pierce, Fenner & Smith Incorporated, or their affiliates.
o Loss of diversification. As a result of industry developments,
reorganizations, or market fluctuations affecting issuers of the
underlying securities, Regional Bank HOLDRS may not necessarily
continue to be a diversified investment in the regional banking
industry. As a result of market fluctuation and/or reconstitution
events, Regional Bank HOLDRS may 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.
o Conflicting investment choices. In order to sell one or more of
the underlying securities individually or to participate in a
tender offer relating to one or more of the underlying securities,
you will be required to cancel your Regional Bank HOLDRS and
receive delivery of each of the underlying securities. The
cancellation of your Regional Bank HOLDRS will allow you to sell
individual underlying securities or to deliver individual
underlying securities in a tender offer. The cancellation of
Regional Bank HOLDRS will involve payment of a cancellation fee to
the trustee.
o Trading halts. Trading in Regional Bank HOLDRS may be halted if
trading in one or more of the underlying securities is halted. If
so, you will not be able to trade Regional Bank HOLDRS even though
there is trading in some of the underlying securities; however,
you will be able to cancel your Regional Bank HOLDRS to receive
the underlying securities.
4
<PAGE>
o Delisting from the American Stock Exchange. If the number of
companies whose common stock is held in the trust falls below
nine, the American Stock Exchange may consider delisting the
Regional Bank HOLDRS. If the Regional Bank HOLDRS are delisted by
the American Stock Exchange, a termination event will result
unless the Regional Bank HOLDRS are listed for trading on another
national securities exchange or through NASDAQ within five
business days from the date the Regional Bank HOLDRS are delisted.
o Possible conflicts of interest. Merrill Lynch, Pierce, Fenner &
Smith Incorporated, as initial depositor, has selected the
underlying securities and may face possible conflicts of interest
in connection with its activities. For example, Merrill Lynch,
Pierce, Fenner & Smith Incorporated and its affiliates,
collectively referred to as Merrill Lynch, may engage in
investment banking and other activities, may provide 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. In addition, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as initial depositor, will purchase, in the
secondary market, the underlying securities that will be deposited
into the trust. Merrill Lynch may make these purchases before the
deposit into the trust, or it may borrow securities for the
deposit and subsequently purchase the securities to repay to the
lenders 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 Regional Bank HOLDRS
will be based on the closing market price of each of the
underlying securities on the pricing date, Merrill Lynch 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
Merrill Lynch, Pierce, Fenner & Smith Incorporated, as initial
depositor, purchases the underlying securities then it will
recognize a gain in connection with such purchases. Merrill Lynch
may recognize this gain on any of the underlying securities that
comprise the Regional Bank HOLDRS or on all of the underlying
securities in the aggregate. The potential profit of Merrill Lynch
also is affected by any hedging activities that it may engage in
while it purchases the underlying securities in the secondary
market for deposit into the trust. All of these activities may
result in conflicts of interest with respect to the financial
interest of Merrill Lynch, on the one hand, and, on the other
hand, the initial selection of the underlying securities included
in the Regional Bank HOLDRS, the selection of the regional banking
industry, Merrill Lynch's activity in the secondary market in the
underlying securities, and the creation and cancellation of
Regional Bank HOLDRS by Merrill Lynch.
o Temporary price increases in the underlying securities. Purchasing
activity in the secondary trading market associated with acquiring
the underlying securities for deposit into the trust may
temporarily increase the market price of the deposited shares,
which will result in a higher initial offering price for the
Regional Bank HOLDRS. Large volumes of purchasing activity, which
may occur in connection with the issuance of Regional Bank HOLDRS,
particularly in connection with the initial issuance of Regional
Bank HOLDRS, 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 underlying securities. Temporary
increases in the market price of the underlying securities may
also occur as a result of the purchasing activity of other market
participants. Other market participants may attempt to benefit
from increases in the market price of the underlying securities
that may occur as result of the increased purchasing activity in
the underlying securities resulting from the issuance of the
Regional Bank HOLDRS. 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 Regional Bank HOLDRS will also decline.
Risk Factors Specific to Companies Involved in the Regional Bank Industry
o The banking industry is heavily regulated on the federal and state
levels, and modifications to existing banking laws and regulations
or the adoption of new laws may adversely affect the operations of
banking and financial institutions. There are numerous federal and
state laws with
5
<PAGE>
which banking and financial institutions must comply. Non-
compliance with any of these requirements may result in sanctions
by regulatory agencies and damage to the reputation of a bank.
Additionally, government regulation of regional banking companies
is intended primarily for the protection of consumers, borrowers
and depositors of the banks, rather than of the stockholders of
the institutions. Changes to the laws and regulations in the
states where the regional banks and their subsidiaries do business
can affect their operating environment in substantial and
unpredictable ways. These changes may adversely affect the nature
and scope of banking and financial activities and may have a
negative effect on the financial condition and results of
operations of a bank or financial institution.
o Many regional banking companies are holding companies that rely on
dividends from their subsidiaries as a substantial portion of
their income and their rights may be subordinate to the interests
of third parties. Bank holding companies are separate and distinct
entities from their banking and non-banking subsidiaries and
receive a large portion of their revenue in dividends from their
subsidiaries. The payment of dividends by these subsidiaries is
subject to federal law restrictions as well as the laws of the
respective state of incorporation. In addition, the right of a
parent bank holding company to participate in any distribution of
assets upon a subsidiaries' liquidation or reorganization is
subject to the prior claims of the subsidiaries' creditors. The
ability of a bank holding company to receive dividends or other
distributions is unpredictable, and fluctuations in income may
adversely affect your investment in the Regional Bank HOLDRS.
o The ability to maintain or increase market share depends on market
acceptance and regulatory approval of new products and services
offered by regional banks. There is increasing pressure in the
banking industry for banks to adapt to changing technologies.
Regional banks must adapt services to evolving industry standards
which are continually changing product and service offerings and
providing more cost efficient services. The widespread adoption of
new technologies, including Internet-based services, could require
substantial expenditures to modify or adapt the existing products
and services offered by many regional banks. In addition, new
product research and development may be costly and time-consuming.
Many regional banks may not successfully introduce new products,
achieve general market acceptance of their services or develop and
maintain a loyal customer base. Failure to do so could have a
material adverse effect on their business, results of operations
and financial condition.
o Some of the companies involved in the regional banking industry
are also engaged in other lines of business unrelated to the
regional banking business, and they may experience problems with
these lines of business which could adversely affect their
operating results. Some of the companies which comprise the
Regional Bank HOLDRS have lines of business such as insurance,
securities offerings and credit card offerings that do not relate
to traditional banking activities and which may present additional
risks not mentioned in this prospectus. The operating results of
these regional banks may fluctuate as a result of these additional
risks and events in the other lines of business. In addition, a
regional bank's ability to engage in new activities may expose it
to business risks with which it has less experience than it has
with the business risks associated with its traditional
businesses. Despite a company's possible success in traditional
banking activities, there can be no assurance that the other lines
of business in which these companies are engaged will not have an
adverse effect on a company's business or financial condition.
o The regional banking industry is very competitive, and a regional
banking company's failure to establish a customer base will
adversely affect its operating results. The competition among
regional banks to develop and maintain a customer base can be
intense. Customer loyalty can be easily influenced by a
competitor's new offerings, especially those offerings which
provide cost savings. Many regional banks face significant
competition from other banks, financial institutions and companies
which have greater market share and financial resources, including
banks which operate on a national or international level. These
companies may be better positioned to finance research and
development activities, provide a wider range of products and
services over a greater geographic area and may have greater
resources with which to acquire other companies in the industry.
In
6
<PAGE>
addition, the Gramm-Leach-Bliley Act of 1999 broadens the scope of
activities for regional banks meeting certain criteria. Regional
banks that meet this criteria, referred to as "financial holding
companies," have larger capital bases and may be able to offer a
wider range of products and services, perhaps at a more
competitive rate, and may realize a competitive advantage over
other regional banks.
o Failure to integrate acquisitions could disrupt operations and
prevent the realization of intended benefits. In recent years,
there has been substantial consolidation among companies in the
financial services industry. In particular, a number of large
commercial banks, insurance companies and other financial services
firms have established or acquired broker-dealers or have merged
with other financial institutions. Many of these firms have the
ability to offer a wide range of products, which may enhance their
competitive position and result in pricing pressure on traditional
banking businesses. The ability of a bank to successfully complete
an acquisition is subject to regulatory approval and there can be
no assurance that approval will be granted. Many regional banks
may have difficulty integrating acquired companies, which
frequently operate in different markets than the acquiring bank.
This may result in failure to realize expected cost savings,
increases in geographic presence, increases in revenue and other
projected benefits from such integration. Furthermore, regional
banks may suffer material adverse short and long-term effects on
operating results and financial condition as a result of such
acquisitions.
o The international operations of many banks exposes them to risks
associated with instability and changes in economic and political
conditions, foreign currency fluctuations, changes in foreign
regulations and other risks inherent to international business.
Many banks have international operations or investments. 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;
o volatility of currency markets and value of worldwide
financial markets;
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.
o Regional bank stock prices may be volatile, which will directly
affect the price volatility of the Regional Bank HOLDRS, and you
could lose all or part of your investment. The trading prices of
the common stocks of regional banks can be volatile. Regional bank
stock prices could be subject to wide fluctuations in response to
a variety of factors, including the following:
o actual or anticipated variations in the banks' quarterly
operating results;
o announcements of technological innovations or new services
by regional banks or their competitors;
o announcements by regional banks or their competitors of
significant acquisitions, strategic partnerships, joint
ventures or capital commitments;
o failure to integrate or realize projected benefits from
acquisitions;
o changes in government regulations; and
7
<PAGE>
o fluctuations in quarterly and annual operating results.
Other broad market and industry factors may decrease the stock
price of regional banks' stocks, regardless of their operating
results. Market fluctuations, as well as general political and
economic conditions, such as recession or interest rate or
currency rate fluctuations, also may decrease the market price of
regional banks' stocks.
o Many regional banks are dependent on their ability to continue to
attract and retain highly-skilled technical and managerial
personnel to develop and generate their business. Many regional
banks are highly dependent of the experience, abilities and
continued services of key executive officers and key technical
personnel. If these banks lose the services of any of these
officers or key technical personnel, their future success could be
undermined. Competition for personnel is intense. There is no
certainty that any of these regional banks will be able to
continue to attract and retain qualified personnel.
8
<PAGE>
HIGHLIGHTS OF REGIONAL BANK HOLDRS
This discussion highlights information regarding Regional Bank HOLDRS;
we present certain information more fully in the rest of this prospectus. You
should read the entire prospectus carefully before you purchase Regional Bank
HOLDRS.
<TABLE>
<S> <C>
Issuer................................... Regional Bank HOLDRS Trust.
The trust................................ The Regional Bank HOLDRS Trust will be formed under the
depositary trust agreement, dated as of , 2000 among The Bank
of New York, as trustee, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, other depositors and the owners of the Regional Bank
HOLDRS. The trust is not a registered investment company under the
Investment Company Act of 1940.
Initial depositor........................ Merrill Lynch, Pierce, Fenner & Smith Incorporated.
Trustee.................................. The Bank of New York, a New York state-chartered banking
organization, will be the trustee and receive compensation as set forth
in the depositary trust agreement.
Purpose of Regional Bank
HOLDRS................................ Regional Bank HOLDRS are designed to achieve the following:
Diversification. Regional Bank HOLDRS are designed to allow you to diversify your
investment in the regional banking industry through a single, exchange-listed instrument
representing your undivided beneficial ownership of the underlying securities.
Flexibility. The beneficial owners of Regional Bank HOLDRS have undivided beneficial
ownership interests in each of the underlying securities represented by the Regional
Bank HOLDRS, and can cancel their Regional Bank HOLDRS to receive each of the underlying
securities represented by the Regional Bank HOLDRS.
Transaction costs. The expenses associated with trading Regional Bank HOLDRS are
expected to be less than trading each of the underlying securities separately.
Trust assets............................. The trust will hold shares of common stock issued by specified
companies involved in the regional banking 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
Regional Bank HOLDRS.
The trust's assets may increase or decrease as a result of in-kind deposits and
withdrawals of the underlying securities during the life of the trust.
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
The Regional Bank HOLDRS................. The trust will issue Regional Bank HOLDRS that represent your
undivided beneficial ownership interest in the shares of U.S.-traded
common stock held by the trust on your behalf. The Regional Bank
HOLDRS themselves are separate from the underlying securities that
are represented by the Regional Bank HOLDRS.
The specific share amounts for each round-lot of 100 Regional Bank HOLDRS
will be determined on the pricing date so that the initial issue price
will be approximately $90-$100 per Regional Bank HOLDR and the initial
weightings of each underlying security included in the Regional Bank
HOLDRS approximates the relative market capitalizations of the specified
companies (based on the closing market prices of the underlying securities
on the trading day immediately preceding the pricing date), subject to a
maximum weight of 10%. For purposes of this preliminary prospectus, the
indicative share amounts and the indicative weightings of each underlying
security, based on market capitalizations as of May 2, 2000, are set forth
in the table below; however, such share amounts and weightings are expected
to change during the period between May 2, 2000, and the pricing date.
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 20 issuers of the underlying securities represented by
the Regional Bank HOLDRS,
o stock ticker symbols,
o indicative share amounts represented by a round-lot of 100
Regional Bank HOLDRS as of May 2, 2000,
o indicative weightings as of May 2, 2000, and
o principal market on which the shares of common stock of the selected
companies are traded.
</TABLE>
Indicative Primary
Share Indicative Trading
Name of Company Ticker Amounts Weightings Market
- -------------------------- ------ ---------- ---------- -------
Wells Fargo & Co. WFC 22 9.87% NYSE
Bank One Corporation ONE 29 9.79% NYSE
First Union Corporation FTU 25 8.90% NYSE
FleetBoston Financial FBF 23 8.76% NYSE
Corporation
Bank of New York Company, BK 19 8.63% NYSE
Inc.
10
<PAGE>
Indicative Primary
Share Indicative Trading
Name of Company Ticker Amounts Weightings Market
- -------------------------- ------ ---------- ---------- -------
Firstar Corporation FSR 25 7.00% NYSE
Fifth Third Bancorp FITB 8 5.50% NASDAQ
Mellon Financial Corporation MEL 13 4.62% NYSE
SunTrust Banks, Inc. STI 8 4.51% NYSE
State Street Corporation STT 4 4.48% NYSE
United States Bancorp USB 19 4.34% NYSE
Northern Trust Corporation NTRS 6 4.21% NASDAQ
Wachovia Corporation WB 5 3.45% NYSE
PNC Financial Services Group, PNC 7 3.26% NYSE
Inc.
National City Corporation NCC 15 2.82% NYSE
BB&T Corporation BBT 9 2.62% NYSE
Key Corporation KEY 11 2.21% NYSE
Comercia, Inc. CMA 4 1.85% NYSE
Amsouth Bancorporation ASO 10 1.68% NYSE
Synovus Financial Corp. SNV 7 1.48% NYSE
<TABLE>
<S> <C>
The actual share amounts and weightings will be determined on the pricing date and will
appear in the final prospectus delivered in connection with sales of the Regional Bank
HOLDRS. These companies generally are considered to be 20 of the largest and most
liquid companies with U.S.- traded common stock involved in the regional banking
industry, as measured by market capitalization and trading volume on May 2, 2000
The market capitalization of a company is determined by multiplying the price of its
common stock by the number of outstanding shares of its common stock.
The trust only will issue and cancel, and you only may obtain, hold, trade or
surrender, Regional Bank HOLDRS in a round-lot of 100 Regional Bank HOLDRS and round-
lot multiples. The trust will only issue Regional Bank HOLDRS upon the deposit of the
whole shares represented by a round-lot of 100 Regional Bank HOLDRS. In the event that
a fractional share comes to be represented by a round-lot of Regional Bank HOLDRS, the
trust may require a minimum of more than one round-lot of 100 Regional Bank HOLDRS for
an issuance so that the trust will always receive whole share amounts for issuance of
Regional Bank HOLDRS.
The number of outstanding Regional Bank HOLDRS will increase and decrease as a result
of in-kind deposits and withdrawals of the underlying securities. The trust will stand
ready to issue additional Regional Bank HOLDRS on a continuous basis when an investor
deposits the required shares of common stock with the trustee.
Public offering price............... The initial public offering price for 100 Regional Bank HOLDRS will equal
the sum of the closing market price on the primary trading market on the
pricing date for each underlying security multiplied by the share amount to
be determined on the pricing date, plus an underwriting fee. It is expected
that the initial public offering price will be approximately $90-$100 per
Regional Bank HOLDR.
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
Purchases........................... After the initial offering, you may acquire Regional Bank HOLDRS in two
ways:
o through an in-kind deposit of the required number of shares of
common stock of the underlying issuers with the trustee, or
o through a cash purchase in the secondary trading market.
Underwriting fees................... If you purchase Regional Bank HOLDRS in the initial public offering, you
will pay an underwriting fee equal to:
o For purchases of Regional Bank HOLDRS or fewer, 2%.
o For purchases in excess of Regional Bank HOLDRS, %.
You will not be charged any issuance fee or other sales commission in connection with
purchases of Regional Bank HOLDRS made in the initial public offering.
Issuance and cancellation
fees............................. After the initial offering, if you wish to create Regional Bank HOLDRS by
delivering to the trust the requisite shares of common stock represented by a
round-lot of 100 Regional Bank HOLDRS, The Bank of New York as
trustee will charge you an issuance fee of up to $10.00 for each round-lot of
100 Regional Bank HOLDRS. If you wish to cancel your Regional Bank
HOLDRS and withdraw your underlying securities, The Bank of New York
as trustee will charge you a cancellation fee of up to $10.00 for each round-
lot of 100 Regional Bank HOLDRS.
Commissions......................... If you choose to deposit underlying securities in order to receive Regional
Bank HOLDRS 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, whether it be Merrill
Lynch, Pierce, Fenner & Smith, Inc. or First Union Securities, Inc.,
collectively, the selling group, or another broker.
Custody fees........................ The Bank of New York, as trustee and as custodian, will charge you a
quarterly custody fee of $2.00 for each round-lot of 100 Regional Bank
HOLDRS, to be deducted from any cash dividend or other cash distributions
on underlying securities received by the trust. With respect to the aggregate
custody fee payable in any calendar year for each Regional Bank HOLDR,
the Trustee will waive that portion of the fee which exceeds the total cash
dividends and other cash distributions received, or to be received, and
payable with respect to such calendar year.
Rights relating to Regional Bank
HOLDRS........................... You have the right to withdraw the underlying securities upon request by
delivering a round-lot or integral multiple of a round-lot of Regional Bank
HOLDRS to the trustee, during the trustee's business hours, and paying the
cancellation fees, taxes, and other charges. You should receive the
</TABLE>
12
<PAGE>
<TABLE>
<S> <C>
underlying securities no later than the business day after the trustee receives a
proper notice of cancellation. The trustee will not deliver fractional shares of
underlying securities. To the extent that any cancellation of Regional Bank HOLDRS
would otherwise require the delivery of a fractional share, the trustee will sell such
share in the market and the trust, in turn, will deliver cash in lieu of such share.
Except with respect to the right to vote for dissolution of the trust, the Regional
Bank HOLDRS themselves will not have voting rights.
Rights relating to the underlying
securities....................... You have the right to:
o Receive all shareholder disclosure materials, including annual and quarterly
reports, distributed by the issuers of the underlying securities.
o Receive all proxy materials distributed by the issuers of the underlying
securities and will have the right to instruct the trustee to vote the
underlying securities or may attend shareholder meetings yourself.
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 underlying securities, you must obtain
the underlying securities by surrendering your Regional Bank HOLDRS and receiving all
of your underlying securities. For specific information about obtaining your underlying
securities, you should read the discussion under the caption "Description of the
depositary trust agreement."
Reconstitution events............... A. 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 Regional Bank HOLDRS.
B. 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 Regional Bank
HOLDRS.
C. 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 Regional Bank HOLDRS, unless the merger, consolidation
or other corporate combination is between companies that are already included
in the Regional Bank HOLDRS and the consideration
</TABLE>
13
<PAGE>
<TABLE>
<S> <C>
D. paid is additional underlying securities. In this case, the additional
underlying securities will be deposited into the trust. If an issuer's
underlying securities are delisted from trading on a national securities
exchange or NASDAQ and are not listed for trading on another national
securities exchange or through NASDAQ 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.
Termination events.................. A. The Regional Bank HOLDRS are delisted from the American Stock
Exchange and are not listed for trading on another national
securities exchange or through NASDAQ within five business days
from the date the Regional Bank HOLDRS are delisted.
B. The trustee resigns and no successor trustee is appointed within 60 days from
the date the trustee provides notice to Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as initial depositor, of its intent to resign.
C. 75% of beneficial owners of outstanding Regional Bank HOLDRS vote to dissolve
and liquidate the trust.
If a termination event occurs, the trustee will distribute the underlying securities to
you as promptly as practicable after the termination event.
Federal income
tax consequences................. The federal income tax laws will treat a U.S. holder of Regional Bank
HOLDRS as directly owning the underlying securities. The Regional Bank
HOLDRS themselves will not result in any federal tax consequences
separate from the tax consequences associated with ownership of the
underlying securities.
Listing............................. Application has been made to list the Regional Bank HOLDRS on the
American Stock Exchange under the symbol "[ ]". Trading will take
place only in round-lots of 100 Regional Bank HOLDRS and round-lot
multiples. A minimum of 150,000 Regional Bank HOLDRS will be
required to be outstanding when trading begins.
Trading..................................... Investors only will be able to acquire, hold, transfer and surrender a round-
lot of 100 Regional Bank HOLDRS. Bid and ask prices, however, will be
quoted per single Regional Bank HOLDRS.
Clearance and settlement............ The trust will issue Regional Bank HOLDRS in book-entry form. Regional
Bank HOLDRS will be evidenced by one or more global certificates that the
trustee will deposit with The Depository Trust Company, referred to as DTC.
Transfers within DTC will be in accordance with DTC's usual rules and
operating procedures. For further information see "Description of Regional
Bank HOLDRS."
</TABLE>
14
<PAGE>
THE TRUST
General. This discussion highlights information about the Regional Bank
HOLDRS trust. You should read this information, information about the depositary
trust agreement as well as the depositary trust agreement before you purchase
Regional Bank HOLDRS. The material terms of the depositary trust agreement are
described in this prospectus under the heading "Description of the depositary
trust agreement."
The Regional Bank HOLDRS trust. The trust will be formed pursuant to
the depositary trust agreement, dated as of , 2000. The Bank of New York will be
the trustee. The Regional Bank HOLDRS trust is not a registered investment
company under the Investment Company Act of 1940.
The Regional Bank HOLDRS trust is intended to hold deposited shares for
the benefit of owners of Regional Bank HOLDRS. The trustee will perform only
administrative and ministerial acts. The property of the trust will consist of
the underlying securities and all monies or other property, if any, received by
the trustee. The trust will terminate on December 31, 2040, or earlier if a
termination event occurs.
DESCRIPTION OF REGIONAL BANK HOLDRS
The trust will issue Regional Bank HOLDRS under the depositary trust
agreement described in this prospectus under the heading "Description of the
depositary trust agreement." After the initial offering, the trust may issue
additional Regional Bank HOLDRS on a continuous basis when an investor deposits
the requisite underlying securities with the trustee.
You may only acquire, hold, trade and surrender Regional Bank HOLDRS in
a round-lot of 100 Regional Bank HOLDRS and round-lot multiples. The trust will
only issue Regional Bank HOLDRS upon the deposit of the whole shares of
underlying securities that are represented by a round-lot of 100 Regional Bank
HOLDRS. 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 Regional Bank HOLDRS,
the trust may require a minimum of more than one round-lot of 100 Regional Bank
HOLDRS for an issuance so that the trust will always receive whole share amounts
for issuance of Regional Bank HOLDRS.
Regional Bank HOLDRS will represent your individual and undivided
beneficial ownership interest in the common stock of the specified underlying
securities. The 20 companies selected as part of this receipt program are listed
above in the section entitled "Highlights of Regional Bank HOLDRS--The Regional
Bank HOLDRS."
Beneficial owners of Regional Bank HOLDRS will have the same rights and
privileges as they would have if they beneficially owned the underlying
securities outside of the trust. These include the right of investors to
instruct the trustee to vote the common stock, and 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, as well as the right to
cancel Regional Bank HOLDRS to receive the underlying securities. See
"Description of the depositary trust agreement." Regional Bank HOLDRS 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.
The trust will not publish or otherwise calculate the aggregate value
of the underlying securities represented by a receipt. Regional Bank HOLDRS 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
Regional Bank HOLDRS wishes to realize the dollar value of the underlying
securities, that owner will have to cancel the Regional Bank HOLDRS. Such
cancellation will require payment of fees and expenses as described in
"Description of the depositary trust agreement--Withdrawal of underlying
securities."
15
<PAGE>
Regional Bank HOLDRS will be evidenced by one or more global
certificates that the trustee will deposit with DTC and register in the name of
Cede & Co., as nominee for DTC. Regional Bank HOLDRS will be available only in
book-entry form. Owners of Regional Bank HOLDRS may hold their Regional Bank
HOLDRS through DTC, if they are participants in DTC, or indirectly through
entities that are participants in DTC.
DESCRIPTION OF THE UNDERLYING SECURITIES
Selection criteria. The underlying securities are the common stocks of
a group of 20 specified companies involved in various aspects of the banking
industry on a regional level and whose common stock is registered under Section
12 of the Exchange Act. The issuers of the underlying securities are considered
to be 20 of the largest capitalized, most liquid companies involved in the
regional banking industry as measured by market capitalization and trading
volume. The following criteria were used in selecting the underlying securities
on May 2, 2000:
o Market capitalization equal to or greater than $5 billion;
o Average daily trading volume of at least 250,000 shares over
the 60 trading days before May 2, 2000;
o Average daily dollar volume (that is, the average daily
trading volume multiplied by the average closing price over
the 60 day period prior to May 2, 2000) of at least $5 million
over the 60 trading days before May 2, 2000; and
o A trading history of at least 90 calendar days.
The market capitalization of a company is determined by multiplying the
price of its common stock by the number of shares of its common stock that are
held by stockholders. In determining whether a company was to be considered for
inclusion in the Regional Bank HOLDRS, Merrill Lynch, Pierce, Fenner & Smith
Incorporated examined available public information about the company, including
analysts' reports and other independent market sources. The ultimate
determination of the inclusion of the 20 specified companies, however, rested
solely within the discretion of Merrill Lynch, Pierce, Fenner & Smith
Incorporated.
After the initial deposit, one or more of the issuers of the underlying
securities may no longer be substantially involved in the regional banking
industry. In this case, the Regional Bank HOLDRS may no longer consist of
securities issued by companies involved in the regional banking industry.
Merrill Lynch, Pierce, Fenner & Smith Incorporated will determine, in its sole
discretion, whether the issuer of a particular underlying security remains in
the regional banking industry and will undertake to make adequate disclosure
when necessary.
Underlying securities. For a list of the underlying securities
represented by Regional Bank HOLDRS, please refer to "Highlights of Regional
Bank HOLDRS--The Regional Bank HOLDRS." If the underlying securities change
because of a reconstitution event, a revised list of underlying securities will
be set forth in a 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, the trust,
the trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated, and any
affiliate of these entities, have not performed any investigation or review of
the selected companies, including the public filings by the companies, other
than to the extent required to determine whether the companies satisfied the
program's stated selection criteria. Accordingly, before you acquire Regional
Bank HOLDRS, 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." Investors and market participants
should not conclude that the inclusion of a company in the list is any form of
investment recommendation of that company by the trust, the trustee, Merrill
Lynch, Pierce, Fenner & Smith Incorporated, the selling group or any of their
affiliates.
16
<PAGE>
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 "Annex A."
The following table and graph set forth the composite performance of
all of the underlying securities represented by a single Regional Bank HOLDR
based upon the indicative share amounts set forth in the table on page 10 of
this preliminary prospectus, measured at the close of each month from January
1995 to April, 2000. The performance table and graph data are adjusted for any
splits that may have occurred over the measurement period. Past movements of the
underlying securities are not necessarily indicative of future values. The
actual share amounts will be determined on the pricing date and may differ from
the indicative share amounts.
1995
- ----
January............... 38.62
February.............. 40.23
March................. 39.91
April................. 40.55
May................... 44.60
June.................. 43.90
July.................. 44.60
August................ 46.61
September............. 48.86
October............... 47.95
November.............. 52.20
December.............. 52.42
1996
- ----
January............... 52.98
February.............. 54.99
March................. 55.48
April................. 55.55
May................... 56.50
June.................. 55.41
July.................. 55.65
August................ 58.89
September............. 62.94
October............... 67.42
November.............. 73.39
December.............. 69.11
1997
- ----
January............... 74.83
February.............. 78.26
March................. 72.29
April................. 77.00
May................... 80.09
June.................. 84.08
July.................. 93.91
August................ 89.28
September............. 95.28
October............... 94.07
November.............. 100.21
December.............. 106.19
1998
- ----
January............... 102.11
February.............. 110.53
March................. 118.27
April................. 118.58
May................... 112.66
June.................. 116.23
July.................. 115.55
August................ 90.80
September............. 100.39
October............... 111.03
November.............. 114.19
December.............. 121.12
1999
- ----
January............... 115.09
February.............. 115.04
March................. 113.72
April................. 122.87
May................... 114.79
June.................. 117.06
July.................. 109.36
August................ 102.53
September............. 97.28
October............... 112.76
November.............. 104.37
December.............. 93.88
2000
- ----
January............... 91.80
February.............. 77.60
March................. 94.65
April................. 90.54
17
<PAGE>
DESCRIPTION OF THE DEPOSITARY TRUST AGREEMENT
General. The depositary trust agreement, dated as of , 2000, among
Merrill Lynch, Pierce, Fenner & Smith Incorporated, The Bank of New York, as
trustee, other depositors and the owners of the Regional Bank HOLDRS, provides
that Regional Bank HOLDRS will represent an owner's undivided beneficial
ownership interest in the common stock of the underlying companies.
The trustee. The Bank of New York will serve as trustee. The Bank of
New York, which was founded in 1784, was New York's first bank and is the oldest
bank in the country still operating under its original name. The Bank is a
state-chartered New York banking corporation and a member of the Federal Reserve
System. The Bank conducts a national and international wholesale banking
business and a retail banking business in the New York City, New Jersey and
Connecticut areas, and provides a comprehensive range of corporate and personal
trust, securities processing and investment services.
Issuance, transfer and surrender of Regional Bank HOLDRS. You may
create and cancel Regional Bank HOLDRS only in round-lots of 100 Regional Bank
HOLDRS. You may create Regional Bank HOLDRS by delivering to the trustee the
requisite underlying securities. The trust will only issue Regional Bank HOLDRS
upon the deposit of the whole shares represented by a round-lot of 100 Regional
Bank HOLDRS. In the event that a fractional share comes to be represented by a
round-lot of Regional Bank HOLDRS, the trust may require a minimum of more than
one round-lot of 100 Regional Bank HOLDRS for an issuance so that the trust will
always receive whole share amounts for issuance of Regional Bank HOLDRS.
Similarly, you must surrender Regional Bank HOLDRS in integral multiples of 100
Regional Bank HOLDRS to withdraw deposited shares from the trust. The trustee
will not deliver fractional shares of underlying securities, to the extent that
any cancellation of Regional Bank HOLDRS would otherwise require the delivery of
fractional shares, the trust will deliver cash in lieu of such shares. You may
request withdrawal of your deposited shares during the trustee's normal business
hours. The trustee expects that in most cases it will deliver your deposited
shares within one business day of your withdrawal request.
Voting rights. The trustee will deliver 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.
Under the depositary trust agreement, any beneficial owner of Regional
Bank HOLDRS, other than Merrill Lynch, Pierce, Fenner & Smith Incorporated
owning Regional Bank HOLDRS for its own proprietary account as principal, will
have the right to vote to dissolve and liquidate the trust.
Distributions. You will be entitled to receive, net of trustee fees,
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 ensure that it distributes these distributions as promptly as
practicable after the date on which it receives the distribution. Therefore, you
may receive your distributions substantially 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 Regional Bank HOLDRS. 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 of $2.00 for each round-lot of 100 Regional Bank
HOLDRS from quarterly dividends, if any, paid to the trustee by the issuers of
the underlying securities. With respect to the aggregate custody fee payable in
any calendar year for each Regional Bank HOLDR, the trustee will waive that
portion of the fee which exceeds the total cash dividends and other cash
distributions received, or to be received, and payable with respect to such
calendar year.
Record dates. With respect to dividend payments and voting
instructions, the trustee expects to fix the 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.
18
<PAGE>
Withdrawal of underlying securities. You may surrender your Regional
Bank HOLDRS and receive underlying securities during the trustee's normal
business hours and upon the payment of applicable fees, taxes or governmental
charges, if any. You should receive your underlying securities no later than the
business day after the trustee receives your request. If you surrender Regional
Bank HOLDRS in order to receive underlying securities, you will pay to the
trustee a cancellation fee of up to $10.00 per round-lot of 100 Regional Bank
HOLDRS.
Further issuances of Regional Bank HOLDRS. The depositary trust
agreement provides for further issuances of Regional Bank HOLDRS on a continuous
basis without your consent.
Reconstitution events. The depositary trust agreement provides for the
automatic distribution of underlying securities to you in four circumstances.
A. 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 Regional Bank HOLDRS.
B. 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 Regional Bank
HOLDRS.
C. 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 Regional Bank HOLDRS, unless the
merger, consolidation or other corporate combination is
between companies that are already included in the Regional
Bank HOLDRS and the consideration paid is additional
underlying securities. In this case, the additional underlying
securities will be deposited into the trust.
D. If an issuer's underlying securities are delisted from trading
on a national securities exchange or NASDAQ and are not listed
for trading on another national securities exchange or through
NASDAQ 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 trust. The trust will terminate if the trustee
resigns and no successor trustee is appointed by Merrill Lynch, Pierce, Fenner &
Smith Incorporated, as initial depositor, within 60 days from the date the
trustee provides notice to Merrill Lynch, Pierce, Fenner & Smith Incorporated,
as initial depositor, of its intent to resign. Upon termination, the beneficial
owners of Regional Bank HOLDRS will surrender their Regional Bank HOLDRS as
provided in the depositary trust agreement, including payment of any fees of the
trustee or applicable taxes or governmental charges due in connection with
delivery to the owners of the underlying securities. The trust also will
terminate if Regional Bank HOLDRS are delisted from the American Stock Exchange
and are not listed for trading on another national securities exchange or
through NASDAQ within 5 business days from the date the Regional Bank HOLDRS are
delisted. Finally, the trust will terminate if 75% of the owners of outstanding
Regional Bank HOLDRS other than Merrill Lynch, Pierce, Fenner & Smith
Incorporated vote to dissolve and liquidate the trust.
If a termination event occurs, the trustee will distribute the
underlying securities to you as promptly as practicable after the termination
event occurs.
Amendment of the depositary trust agreement. The trustee and Merrill
Lynch, Pierce, Fenner & Smith Incorporated, 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 Regional Bank HOLDRS. Promptly after the
execution of any
19
<PAGE>
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 Regional
Bank HOLDRS. Any amendment that imposes or increases any fees or charges,
subject to exceptions, or that otherwise prejudices any substantial existing
right of the owners of Regional Bank HOLDRS will not become effective until 30
days after notice of the amendment is given to the owners of Regional Bank
HOLDRS.
Issuance and cancellation fees. After the initial public offering, the
trust expects to issue more Regional Bank HOLDRS. If you wish to create Regional
Bank HOLDRS by delivering to the trust the requisite underlying securities, the
trustee will charge you an issuance fee of up to $10.00 for each round-lot of
100 Regional Bank HOLDRS. If you wish to cancel your Regional Bank HOLDRS and
withdraw your underlying securities, the trustee will charge you a cancellation
fee of up to $10.00 for each round-lot of 100 Regional Bank HOLDRS issued. The
trustee may negotiate either of these fees depending on the volume, frequency
and size of the issuance or cancellation transactions.
Commissions. If you choose to create Regional Bank HOLDRS after the
conclusion of the initial public offering, you will not be charged the
underwriting fee. However, in addition to the issuance and cancellation fees
described above, you will be responsible for paying any sales commissions
associated with your purchase of the underlying securities that is charged by
your broker, whether it be any of the members of the selling group or another
broker.
Custody fees. The Bank of New York, as trustee and as custodian, will
charge you a quarterly custody fee of $2.00 for each round-lot of 100 Regional
Bank HOLDRS to be deducted from any dividend payments or other cash
distributions on underlying securities received by the trustee. With respect to
the aggregate custody fee payable in any calendar year for each Regional Bank
HOLDR, the Trustee will waive that portion of the fee which exceeds 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.
Address of the trustee. The Bank of New York, ADR Department, 101
Barclay Street, New York, New York 10286.
Governing law. The depositary trust agreement and Regional Bank HOLDRS
will be governed by the laws of the State of New York. The trustee will provide
the depositary trust agreement to any owner of the underlying securities free of
charge upon written request.
Duties and immunities of the trustee. 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 Regional Bank HOLDRS.
The trustee undertakes to perform only those duties as are specifically
set forth in the depositary trust agreement. Subject to the preceding sentence,
the trustee will be liable for its own negligence or misconduct except for good
faith errors in judgment so long as the trustee was not negligent in
ascertaining the relevant facts.
20
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
General
The following is a summary of the U.S. federal income tax consequences
relating to the Regional Bank HOLDRS for:
o a citizen or resident of the United States;
o a corporation or partnership created or organized in the
United States or under the laws of the United States;
o an estate, the income of which is includible in gross income
for U.S. federal income tax purposes regardless of its source;
o or 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. receipt holder"); and
o any person other than a U.S. receipt holder (a "Non-U.S.
receipt 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 Regional Bank HOLDRS as "capital assets" (generally,
property held for investment) within the meaning of Section 1221 of the Internal
Revenue Code of 1986, as amended. We suggest that you consult with your own tax
advisor.
Taxation of the trust
The trust will provide for flow through tax consequences as it will be
treated as a grantor trust or custodial arrangement for United States federal
income tax purposes.
Taxation of Regional Bank HOLDRS
A receipt holder purchasing and owning Regional Bank HOLDRS will be
treated, for U.S. federal income tax purposes, as directly owning a
proportionate share of the underlying securities represented by Regional Bank
HOLDRS. 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.
A receipt holder will determine its initial tax basis in each of the
underlying securities by allocating the purchase price for the Regional Bank
HOLDRS among the underlying securities based on their relative fair market
values at the time of purchase. Similarly, when a holder sells a receipt, it
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 sale. A holder's gain or loss with respect to each
security will be computed by subtracting its basis in the security from the
amount realized on the security. With respect to purchases of Regional Bank
HOLDRS for cash in the secondary market, a receipt holder's aggregate tax basis
in each of the underlying securities will be equal to the purchase price of the
Regional Bank HOLDRS. Similarly, with respect to sales of Regional Bank HOLDRS
for cash in the secondary market, the amount realized with respect to a sale of
Regional Bank HOLDRS will be equal to the aggregate amount realized with respect
to each of the underlying securities.
21
<PAGE>
The distribution of any securities by the trust upon the surrender of
Regional Bank HOLDRS, the occurrence of a reconstitution event, or a termination
event will not be a taxable event. The receipt holders holding period with
respect to the distributed securities will include the period that the holder
held the securities through the trust.
Brokerage fees and custodian fees
The brokerage fee incurred in purchasing a receipt 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 Regional Bank HOLDRS
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.
Non-U.S. receipt holders
Non-U.S. receipt holders should consult their tax advisors regarding
U.S. withholding and other taxes which may apply to ownership of the Regional
Bank HOLDRS or of the underlying securities through an investment in the
Regional Bank HOLDRS.
ERISA CONSIDERATIONS
Any plan fiduciary which proposes to have a plan acquire Regional Bank
HOLDRS should consult with its counsel with respect to the potential
applicability of ERISA and the Internal Revenue Code 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 Regional Bank HOLDRS is appropriate for the
plan, taking into account the overall investment policy of the plan and the
composition of the plan's investment portfolio.
PLAN OF DISTRIBUTION
In accordance with the depositary trust agreement, the trust will issue
to Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Merrill Lynch,
Pierce, Fenner & Smith Incorporated will deposit the underlying securities to
receive Regional Bank HOLDRS. The selling group proposes to offer the Regional
Bank HOLDRS to the public at the offering price set forth on the cover page of
this prospectus, which includes an underwriting fee of 2%. Merrill Lynch,
Pierce, Fenner & Smith Incorporated will provide Regional Bank HOLDRS to First
Union Securities, Inc. at the public offering price, as set forth on the cover
page of this prospectus, less a concession that is not in excess of 1.5%. First
Union Securities, Inc. is a subsidiary of First Union Corporation, one of the
twenty underlying securities of Regional Bank HOLDRS. We expect the trust to
deliver the initial distribution of Regional Bank HOLDRS against deposit of the
underlying securities in New York, New York on , 2000. After the initial
offering, the public offering price, concession and discount may be changed. The
trust will continue to issue Regional Bank HOLDRS, in connection with deposits
of underlying securities. This offering is being made in compliance with Conduct
Rule 2810 of the National Association of Securities Dealers, Inc. Accordingly,
sales will not be made to a discretionary account without the prior written
approval of a purchaser of Regional Bank HOLDRS.
22
<PAGE>
The selling group and their affiliates have from time to time provided
investment banking and other financial services to certain of the issuers of the
underlying securities and expects in the future to provide these services, for
which it has received and will receive customary fees and commissions. It also
may have served as counterparty in other transactions with certain of the
issuers of the underlying securities.
Merrill Lynch, Pierce, Fenner & Smith Incorporated may use this
prospectus, as updated from time to time, in connection with offers and sales
related to market-making transactions in the Regional Bank HOLDRS. Merrill
Lynch, Pierce, Fenner & Smith Incorporated 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.
Merrill Lynch, Pierce, Fenner & Smith Incorporated 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 or periodic reports filed or not filed with the SEC with respect
to the Regional Bank HOLDRS. Should a court determine not to enforce the
indemnification provision, Merrill Lynch, Pierce, Fenner & Smith Incorporated
also has agreed to contribute to payments the trustee may be required to make
with respect to such liabilities.
LEGAL MATTERS
Legal matters, including the validity of the Regional Bank HOLDRS will
be passed upon for Merrill Lynch, Pierce, Fenner & Smith Incorporated, the
initial depositor and the underwriters, by Shearman & Sterling, New York, New
York. Shearman & Sterling, as special U.S. tax counsel to the trust, also will
render an opinion regarding the material federal income tax consequences
relating to the Regional Bank HOLDRS.
WHERE YOU CAN FIND MORE INFORMATION
Merrill Lynch, Pierce, Fenner & Smith Incorporated has filed a
registration statement on Form S-1 with the SEC covering the Regional Bank
HOLDRS. 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. Merrill Lynch,
Pierce, Fenner & Smith Incorporated will not and the trust may not be subject to
the requirements of the Exchange Act and accordingly may not file periodic
reports.
Because the common stock of the issuers of the underlying securities is
registered under the Exchange Act, 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. In addition, information regarding the issuers of the
underlying securities may be obtained from other sources including, but not
limited to, press releases, newspaper articles and other publicly disseminated
information.
The trust and the selling group 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 Regional Bank HOLDRS. This
prospectus relates only to Regional Bank HOLDRS 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
23
<PAGE>
in the preparation of these documents or made any due diligence inquiries with
respect to the issuers of the underlying securities in connection with Regional
Bank HOLDRS. 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 in the preceding paragraph, 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 Regional Bank HOLDRS, have been
publicly disclosed.
24
<PAGE>
ANNEX A
This annex 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 reported on the applicable primary
trading market, of each of the underlying securities in each month during 1995,
1996, 1997, 1998, 1999 and 2000 through April 2000. All market prices in excess
of one dollar are rounded to the nearest one sixty-fourth of a dollar.
The historical prices of the underlying securities should not be taken as
an indication of future performance.
AMSOUTH BANCORPORATION (ASO)
AmSouth Bancorporation is a bank holding company that through its
subsidiaries, provides a broad array of financial products and services through
banking offices. AmSouth's principal activities include consumer and commercial
banking and capital management. Amsouth operates out of in nine Southeastern
states with leading market positions in Tennessee, Florida, Alabama, and
Mississippi. In addition, AmSouth provides select financial services outside of
its banking markets through non-bank subsidiaries.
<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>
January 8 5/64 January 11 47/64 January 15 17/64 January 24 January 29 3/8 January 17 7/16
February 8 5/8 February 11 43/64 February 15 3/16 February 24 31/32 February 31 21/64 February 14 5/16
March 9 21/64 March 11 33/64 March 14 19/64 March 26 1/4 March 30 21/64 March 14 15/16
April 9 17/64 April 11 3/8 April 15 5/8 April 27 23/32 April 31 45/64 April 14 9/16
May 9 57/64 May 11 17/64 May 17 25/64 May 25 5/8 May 28 3/8
June 9 43/64 June 10 45/64 June 16 13/16 June 26 13/64 June 23 3/16
July 10 13/32 July 10 59/64 July 19 11/64 July 26 29/64 July 22 7/8
August 11 5/64 August 11 43/64 August 18 11/16 August 22 59/64 August 21 7/8
September 11 17/64 September 13 3/16 September 21 17/32 September 22 3/4 September 23 7/16
October 11 13/16 October 13 47/64 October 21 23/64 October 26 51/64 October 25 5/8
November 11 45/64 November 14 25/32 November 23 9/64 November 28 11/64 November 22 9/16
December 11 31/32 December 14 21/64 December 24 9/64 December 30 27/64 December 19 5/16
</TABLE>
The closing price on , 2000 was .
A-1
<PAGE>
BANK OF NEW YORK COMPANY, INC. (BK)
Bank of New York Company, Inc. is a bank holding company which provides
a variety of banking and financial services to individuals and institutions
through its wholly owned subsidiary, The Bank of New York. Bank of New York
operates wholesale and retail banking businesses and provides a range of
corporate and personal trust, securities processing and investment services.
Bank of New York offers its services primarily in New Jersey, Connecticut and
the city of New York. The Bank of New York acts as trustee in connection with
issuances of HOLDRS, including the Regional Banking HOLDRS offered by this
prospectus.
<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 7/16 January 12 3/16 January 18 3/16 January 27 3/32 January 35 1/2 January 40 5/8
February 7 1/2 February 12 31/32 February 19 5/16 February 29 9/32 February 34 15/16 February 33 1/4
March 8 3/8 March 12 7/8 March 18 3/8 March 31 13/32 March 35 15/16 March 41 9/16
April 8 1/4 April 12 5/32 April 19 3/4 April 29 17/32 April 39 3/4 April 41 1/16
May 8 7/32 May 12 31/32 May 21 5/16 May 30 9/16 May 35 3/4
June 10 3/16 June 12 13/16 June 21 13/16 June 30 7/16 June 36 11/16
July 10 3/32 July 12 7/8 July 24 5/16 July 32 July 36 15/16
August 10 1/32 August 13 15/16 August 22 5/16 August 24 1/2 August 35 3/4
September 10 7/8 September 14 11/16 September 24 September 27 3/8 September 33 7/16
October 11 5/8 October 16 9/16 October 23 17/32 October 31 9/16 October 41 7/8
Novemberr 10 1/2 November 17 15/16 November 26 7/8 November 34 9/16 November 39 15/16
December 11 25/32 December 16 7/8 December 28 29/32 December 40 1/4 December 40
</TABLE>
The closing price on , 2000 was .
A-2
<PAGE>
BANK ONE CORPORATION (ONE)
Bank One Corporation is a bank holding company which, through its
subsidiaries, provides retail banking, worldwide corporate and institutional
banking and trust and investment management services. Bank One also engages in
credit card processing, mortgage lending and servicing, insurance, venture
capital financing, investment and merchant banking, trust, brokerage and
investment management services and data processing. Bank One operates banking
offices in Florida and the midwest and southwest United States.
<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>
January 24 3/8 January 31 19/64 January 41 1/4 January 50 51/64 January 52 3/8 January 29 13/16
February 24 11/64 February 32 25/64 February 40 7/64 February 56 1/2 February 53 3/4 February 25 7/8
March 23 35/64 March 32 25/64 March 36 9/64 March 63 1/4 March 55 1/16 March 34 3/8
April 24 3/8 April 31 19/32 April 38 33/64 April 58 13/16 April 58 3/32 April 30 1/2
May 28 23/32 May 33 41/64 May 39 5/16 May 55 1/8 May 56 9/16
June 26 21/32 June 30 29/32 June 44 1/32 June 55 13/16 June 59 9/16
July 26 15/64 July 31 23/64 July 51 1/64 July 51 11/16 July 54 9/16
August 27 51/64 August 34 57/64 August 48 11/16 August 38 1/16 August 40 1/8
September 30 11/64 September 37 17/64 September 50 29/32 September 42 7/16 September 34 13/16
October 27 57/64 October 38 3/4 October 47 25/64 October 48 3/4 October 37 13/16
November 31 39/64 November 43 19/64 November 46 45/64 November 51 1/2 November 35 5/16
December 31 3/32 December 39 3/32 December 49 3/8 December 51 1/16 December 32
</TABLE>
The closing price on , 2000 was .
A-3
<PAGE>
BB&T CORPORATION (BBT)
BB&T Corporation is a bank holding company which, through its
subsidiaries, provides a full range of traditional commercial banking services
and related financial services including investment brokerage, investment
banking, trust, insurance and leasing services. BB&T operates in North Carolina,
South Carolina, Virginia, Maryland, Georgia, West Virginia, Kentucky and the
metropolitan Washington, D.C. area.
<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 10 1/8 January 14 9/16 January 19 3/8 January 29 15/32 January 38 1/4 January 28 1/8
February 11 3/16 February 14 February 19 7/16 February 31 1/32 February 37 7/8 February 23 1/2
March 9 15/16 March 13 7/8 March 18 5/8 March 33 27/32 March 36 3/16 March 28 1/16
April 10 1/4 April 13 15/16 April 19 5/8 April 33 5/8 April 39 15/16 April 26 5/8
May 10 7/8 May 14 5/8 May 20 May 33 3/32 May 36 1/2
June 12 June 15 7/8 June 22 1/2 June 33 13/16 June 36 11/16
July 12 July 14 5/8 July 25 9/16 July 35 1/8 July 35 1/4
August 13 3/8 August 15 5/8 August 25 7/8 August 28 August 33 1/2
September 13 1/8 September 16 5/8 September 26 23/32 September 29 15/16 September 32 3/8
October 12 7/8 October 17 5/16 October 27 7/32 October 35 3/4 October 36 3/8
November 13 1/8 November 18 3/8 November 27 1/4 November 36 15/16 November 32 1/4
December 13 1/8 December 18 1/8 December 32 1/32 December 40 5/16 December 27 3/8
</TABLE>
The closing price on , 2000 was .
A-4
<PAGE>
COMERICA, INC. (CMA)
Comerica, Inc. is a bank holding company which offers consumer banking,
business banking and investment services. Comerica's consumer banking services
include lending, mortgage services, deposit service, small business banking and
private banking. Its business banking services include large corporate banking,
treasury management and international financial services. Comerica's investment
services include the sale of mutual fund and annuity products and disability and
long-term care insurance products. Comerica operates primarily in Michigan,
Texas, California and Florida.
<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 16 3/4 January 26 1/2 January 38 5/64 January 62 59/64 January 62 7/16 January 44 3/16
February 18 53/64 February 25 59/64 February 40 5/64 February 67 13/64 February 66 1/4 February 36 13/16
March 18 21/64 March 27 53/64 March 37 37/64 March 70 35/64 March 62 7/16 March 41 7/8
April 19 11/64 April 29 April 39 April 66 15/16 April 65 1/16 April 42 3/8
May 21 5/64 May 29 11/64 May 41 43/64 May 66 3/4 May 60 7/16
June 21 27/64 June 29 3/4 June 45 21/64 June 66 1/8 June 59 7/16
July 23 21/64 July 29 1/4 July 50 27/64 July 67 3/8 July 55 1/2
August 23 3/4 August 32 1/2 August 47 13/64 August 52 1/4 August 52 3/32
September 24 1/4 September 34 21/64 September 52 5/8 September 54 13/16 September 50 5/8
October 22 27/64 October 35 27/64 October 52 45/64 October 64 1/2 October 59 7/16
November 24 59/64 November 39 November 56 51/64 November 64 1/2 November 53
December 26 43/64 December 34 59/64 December 60 11/64 December 68 3/16 December 46 11/16
</TABLE>
The closing price on , 2000 was .
A-5
<PAGE>
FIFTH THIRD BANCORP (FITB)
Fifth Third Bancorp is a bank holding company which provides
commercial, retail and trust banking services, data processing services,
investment services, leasing and insurance services. Fifth Third provides its
financial products and services, which include consumer banking and credit card
services, mortgage services and leasing, to the retail, commercial, financial,
governmental, educational and medical sectors. Fifth Thirds' operations are
primarily located in the midwestern United States.
<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 14 57/64 January 21 1/32 January 34 25/64 January 50 53/64 January 68 7/16 January 16 3/8
February 15 17/64 February 22 25/32 February 37 1/16 February 52 43/64 February 66 1/16 February 52 1/16
March 15 21/64 March 25 25/32 March 34 7/16 March 57 March 65 15/16 March 63
April 14 17/64 April 24 9/16 April 33 11/64 April 55 April 71 11/16 April 63 1/8
May 15 25/32 May 24 7/32 May 34 21/64 May 49 1/4 May 68 3/16
June 16 43/64 June 24 June 36 15/32 June 63 June 66 9/16
July 16 57/64 July 23 July 42 1/8 July 62 1/4 July 65 1/16
August 16 43/64 August 23 9/16 August 39 August 53 3/16 August 66 1/4
September 17 September 25 53/64 September 43 37/64 September 57 1/2 September 60 27/32
October 19 59/64 October 27 53/64 October 42 3/4 October 66 1/4 October 73 13/16
November 21 43/64 November 31 7/64 November 47 November 66 3/8 November 70
December 21 45/64 December 27 59/64 December 54 1/2 December 71 5/16 December 73 3/8
</TABLE>
The closing price on , 2000 was .
A-6
<PAGE>
FIRSTAR CORPORATION (FSR)
Firstar Corporation is a bank holding company which provides a range of
financial services and activities, including traditional retail banking services
and credit card services. Firstar also provides trust and investment management
services to individuals and corporations. Firstar offers retail brokerage
services, trust and investment management services, residential mortgages and
insurance. Firstar banking services are primarily located throughout the
midwestern United States.
<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 15/64 January 6 15/16 January 12 19/64 January 18 23/64 January 29 25/64 January 23 7/8
February 4 47/64 February 7 February 13 5/64 February 19 5/8 February 27 59/64 February 17 13/16
March 4 21/32 March 7 11/64 March 13 19/64 March 19 45/64 March 29 53/64 March 22 15/16
April 4 41/64 April 7 5/16 April 14 11/64 April 21 1/16 April 30 1/16 April 24 7/8
May 4 13/16 May 7 23/32 May 13 3/4 May 20 21/64 May 28 13/16
June 5 7/64 June 7 31/64 June 14 5/64 June 21 19/64 June 28
July 5 39/64 July 8 21/64 July 15 11/16 July 23 13/64 July 26 1/16
August 5 57/64 August 8 3/4 August 15 1/16 August 18 19/64 August 26 13/16
September 5 15/16 September 9 29/64 September 15 5/16 September 22 3/64 September 25 5/8
October 6 5/32 October 10 October 16 23/64 October 25 13/64 October 29 3/8
November 6 21/32 November 10 5/16 November 18 November 24 27/64 November 26
December 6 39/64 December 10 13/64 December 19 1/8 December 31 December 21 1/8
</TABLE>
The closing price on , 2000 was .
A-7
<PAGE>
FIRST UNION CORPORATION (FTU)
First Union Corporation is a bank holding company and a financial
holding company which engages in a range of financial services. In addition to
providing commercial, retail banking and trust services, First Union provides
various other financial services, including mortgage banking, home equity
lending, leasing, investment banking, insurance and securities brokerage
services. First Union operates primarily on the east coat of the United States.
<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 21 3/8 January 28 15/16 January 41 13/16 January 47 7/8 January 52 1/2 January 33 7/16
February 22 5/16 February 30 1/4 February 43 7/8 February 52 5/8 February 53 5/16 February 29 1/2
March 21 11/16 March 30 3/16 March 40 9/16 March 56 13/16 March 53 7/16 March 37 1/4
April 22 5/8 April 30 3/4 April 42 April 60 3/8 April 55 1/8 April 31 7/8
May 24 1/2 May 30 9/16 May 42 15/16 May 55 1/4 May 46 3/16
June 22 5/8 June 30 7/16 June 46 1/4 June 58 1/4 June 47 1/8
July 24 7/16 July 31 3/4 July 50 23/32 July 60 1/4 July 46
August 25 1/16 August 31 15/16 August 48 1/16 August 48 1/8 August 41 1/2
September 25 1/2 September 33 3/8 September 50 1/16 September 51 3/16 September 35 5/8
October 24 13/16 October 36 3/8 October 49 1/16 October 58 October 42 3/4
November 27 5/16 November 38 3/16 November 48 3/4 November 60 3/4 November 38 3/4
December 27 13/16 December 37 December 51 1/4 December 60 13/16 December 32 15/16
</TABLE>
The closing price on , 2000 was .
A-8
<PAGE>
FLEETBOSTON FINANCIAL CORPORATION (FBF)
FleetBoston Financial Corporation is a financial services company
engaged in the commercial banking and investment management business.
FleetBoston provides a variety of financial services, including institutional
and investment banking, cash management, trade services, mortgage banking,
discount brokerage services and other retail financial services. FleetBoston
primarily operates in the northeastern United States and Latin America.
<TABLE>
<CAPTION>
Closing Closing Closing Closing 1999 Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price Price 2000 Price
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 15 3/4 January 20 January 27 January 35 13/16 January 44 5/16 January 31 7/16
February 15 9/16 February 20 9/16 February 30 1/2 February 39 13/32 February 42 15/6 February 27 1/4
March 16 3/16 March 20 1/4 March 28 9/16 March 42 17/32 March 37 5/8 March 36 1/2
April 16 3/8 April 21 1/2 April 30 1/2 April 43 3/16 April 43 /16 April 35 9/16
May 17 7/16 May 22 1/16 May 30 9/16 May 41 May 41 1/8
June 18 9/16 June 21 3/4 June 31 5/8 June 41 3/4 June 44 3/8
July 17 13/16 July 20 1/4 July 33 27/32 July 42 31/32 July 40 1/2
August 18 1/2 August 20 7/8 August 32 1/4 August 32 25/32 August 39 13/16
September 18 7/8 September 22 1/4 September 32 25/32 September 36 23/32 September 36 5/8
October 19 3/8 October 24 15/16 October 32 5/32 October 40 October 43 5/8
November 20 7/8 November 27 11/16 November 33 1/16 November 41 11/16 November 37 13/16
December 20 3/8 December 24 15/16 December 37 9/16 December 44 11/16 December 34 13/16
</TABLE>
The closing price on , 2000 was .
A-9
<PAGE>
KEY CORPORATION (KEY)
Key Corporation is a financial services company which, through its
subsidiaries, provides a wide range of investment management, retail and
commercial banking, consumer finance and investment banking products and
services to corporate, individual and institutional clients. In addition to the
traditional banking services, KeyCorp also provides specialized services,
including personal and corporate trust services, personal financial services,
mutual fund services, cash management services, investment banking and capital
markets products and international banking services. KeyCorp provides services
throughout the United States.
<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 13 15/16 January 18 5/16 January 26 3/16 January 32 1/2 January 31 7/8 January 21
February 14 1/2 February 18 13/16 February 26 3/4 February 35 1/32 February 32 1/4 February 16 15/16
March 14 1/8 March 19 5/16 March 24 3/8 March 37 13/16 March 30 5/16 March 19
April 13 3/8 April 19 5/16 April 26 1/16 April 39 3/4 April 51 15/16 April 18 1/2
May 15 1/4 May 19 3/8 May 27 3/16 May 37 15/16 May 34 3/4
June 15 11/16 June 19 3/8 June 27 15/16 June 35 5/8 June 32 1/8
July 16 July 19 5/16 July 31 3/32 July 34 July 31 1/2
August 15 1/2 August 20 1/16 August 30 5/16 August 25 1/2 August 29
September 17 1/8 September 22 September 31 13/32 September 28 7/8 September 25 13/16
October 16 7/8 October 23 5/16 October 30 19/32 October 30 5/16 October 27 15/16
November 18 7/16 November 26 3/16 November 33 23/32 November 30 11/16 November 27
December 18 1/8 December 25 1/4 December 35 13/32 December 32 December 22 1/8
</TABLE>
The closing price on , 2000 was .
A-10
<PAGE>
MELLON FINANCIAL CORPORATION (MEL)
Mellon Financial Corporation is a financial holding company which
provides a range of financial services and products. Mellon provides a variety
of retail and commercial banking services, wealth management and global
investment management services for individual and institutional investors,
global investment services for businesses and institutions and mutual fund
management services. Mellon's regional banking services are primarily offered in
the mid- Atlantic region of the United States.
<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 3/4 January 13 3/16 January 18 21/32 January 30 3/16 January 33 1/2 January 34 5/16
February 9 17/32 February 13 31/32 February 20 3/32 February 31 5/32 February 33 13/16 February 30 1/8
March 10 3/16 March 13 13/16 March 18 3/16 March 31 3/4 March 35 3/16 March 29 3/4
April 91 3/16 April 13 7/16 April 20 25/32 April 36 April 37 5/32 April 32 1/8
May 10 11/16 May 14 9/32 May 21 7/8 May 33 23/32 May 35 11/16
June 10 13/32 June 14 1/4 June 22 9/16 June 34 27/32 June 36 3/8
July 10 1/32 July 13 3/16 July 25 7/32 July 33 11/16 July 33 3/4
August 11 27/32 August 13 27/32 August 24 1/16 August 26 August 33 3/8
September 11 3/16 September 14 13/16 September 27 3/8 September 27 1/2 September 33 5/8
October 12 1/2 October 16 1/4 October 26 October 30 1/16 October 36 15/16
November 13 15/32 November 18 1/16 November 28 11/32 November 31 19/32 November 36 7/16
December 13 7/16 December 17 3/4 December 30 5/16 December 34 3/8 December 34 1/16
</TABLE>
The closing price on , 2000 was .
A-11
<PAGE>
NATIONAL CITY CORPORATION (NCC)
National City Corporation is a bank holding company engaged in a
variety of financial services businesses. In addition to providing general
retail and commercial banking services, National City is engaged in retail sales
and distribution, consumer finance, asset management and mortgage processing.
National City primarily operates in Ohio, Kentucky, Illinois, Indiana, Michigan
and Pennsylvania.
<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 13 1/4 January 16 5/16 January 22 11/16 January 30 3/32 January 35 17/32 January 21 11/16
February 13 7/8 February 17 3/8 February 25 1/4 February 32 5/8 February 34 15/16 February 19 1/4
March 13 5/16 March 17 9/16 March 23 5/16 March 36 21/32 March 33 3/16 March 20 5/8
April 13 11/16 April 18 7/16 April 24 3/8 April 34 5/8 April 35 7/8 April 17
May 15 3/16 May 17 13/16 May 25 3/4 May 33 7/8 May 33 3/32
June 14 11/16 June 17 9/16 June 26 1/4 June 35 1/2 June 32 3/4
July 15 5/16 July 17 5/16 July 29 3/4 July 33 7/16 July 29 3/4
August 14 7/8 August 18 13/16 August 28 1/4 August 29 3/8 August 27 5/8
September 15 7/16 September 21 1/16 September 30 25/32 September 32 31/32 September 26 11/16
October 15 7/16 October 21 11/16 October 29 7/8 October 32 5/32 October 29 1/2
November 16 3/16 November 23 3/16 November 33 3/8 November 33 5/8 November 24 15/16
December 16 9/16 December 22 7/16 December 32 7/8 December 36 1/4 December 23 11/16
</TABLE>
The closing price on , 2000 was .
A-12
<PAGE>
NORTHERN TRUST CORPORATION (NTRS)
Northern Trust Corporation is a bank holding company that provides
trust services, retail and commercial banking and treasury management services,
securities lending and asset management services and financial record keeping
services. Northern Trust operates banking subsidiaries in Arizona, California,
Colorado, Florida, Texas and Michigan, trust companies in Connecticut and New
York and various other nonbank subsidiaries, including a securities brokerage
firm, a registered investment adviser and a retirement services company.
<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 1/4 January 13 1/4 January 20 1/2 January 33 11/16 January 43 9/32 January 60 3/8
February 8 1/2 February 13 3/16 February 21 1/4 February 38 1/32 February 44 11/16 February 56 1/2
March 8 25/32 March 13 1/2 March 18 3/4 March 37 3/8 March 44 13/32 March 67 9/16
April 9 9/64 April 14 1/16 April 22 1/4 April 36 1/2 April 46 9/16 April 64 1/8
May 9 11/16 May 13 11/16 May 24 9/16 May 35 17/64 May 45 3/16
June 10 1/16 June 14 7/16 June 24 3/16 June 38 1/8 June 48 1/2
July 9 31/32 July 14 25/32 July 27 1/2 July 36 13/16 July 43 1/2
August 11 1/4 August 16 13/32 August 26 9/16 August 27 7/8 August 42 13/32
September 11 1/2 September 16 7/16 September 29 9/16 September 34 1/8 September 41 3/4
October 11 15/16 October 17 5/16 October 29 1/4 October 36 7/8 October 48 9/32
November 13 1/16 November 18 5/32 November 31 1/8 November 40 3/8 November 48 13/32
December 14 December 18 1/8 December 34 7/8 December 43 21/32 December 53
</TABLE>
The closing price on , 2000 was .
A-13
<PAGE>
PNC FINANCIAL SERVICES GROUP, INC. (PNC)
PNC Financial Services Group, Inc. is a bank holding company and a
financial holding company. PNC operates regional retail banking, wholesale
banking and asset management businesses that provide financial products and
services locally and nationally. PNC's primary geographic markets include
Pennsylvania, New Jersey, Delaware, Ohio and Kentucky.
<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 23 1/2 January 30 January 39 3/4 January 51 9/6 January 51 3/16 January 48
February 25 1/2 February 30 5/8 February 42 1/4 February 55 1/2 February 52 1/16 February 38 11/16
March 24 3/8 March 30 3/4 March 40 March 59 15/16 March 55 9/16 March 45 1/16
April 25 1/8 April 30 1/4 April 41 1/8 April 60 7/16 April 57 7/8 April 43 5/8
May 27 May 30 3/8 May 41 7/8 May 57 3/4 May 57 1/4
June 26 3/8 June 29 3/4 June 41 3/4 June 53 7/8 June 57 5/8
July 24 3/4 July 29 1/8 July 45 3/4 July 53 15/16 July 52 7/8
August 26 1/4 August 31 1/4 August 43 1/4 August 43 August 52 5/16
September 27 7/8 September 33 3/8 September 48 13/16 September 45 September 52 11/16
October 26 1/4 October 36 1/4 October 47 1/2 October 50 October 59 5/8
November 29 1/4 November 39 1/2 November 53 13/16 November 51 9/16 November 55 3/4
December 32 1/4 December 37 5/8 December 56 15/16 December 54 December 44 1/2
</TABLE>
The closing price on , 2000 was .
A-14
<PAGE>
STATE STREET CORPORATION (STT)
State Street Corporation is a bank holding company specializing in
serving institutional investors such as mutual funds. Services for institutional
investors include foreign exchange, cash management, securities lending, fund
administration, daily pricing, portfolio accounting, banking services and
deposit and short-term investment facilities. State Street also provides
investment management and commercial lending services. State Street operates
offices throughout the United States.
<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 16 7/16 January 22 11/16 January 36 9/16 January 56 January 71 1/2 January 80 3/16
February 15 15/16 February 22 5/8 February 40 3/16 February 61 13/16 February 76 11/16 February 72 7/8
March 15 15/16 March 25 March 34 11/16 March 68 1/16 March 82 1/4 March 96 7/8
April 15 7/8 April 24 15/16 April 39 3/8 April 71 1/2 April 87 1/2 April 96 7/8
May 16 13/16 May 26 1/16 May 44 5/8 May 68 15/16 May 76 1/4
June 18 7/16 June 25 1/2 June 46 1/4 June 69 1/2 June 85 3/8
July 17 11/16 July 25 1/8 July 56 1/16 July 69 7/16 July 70 7/8
August 18 7/16 August 27 1/16 August 49 7/8 August 52 1/16 August 59 7/8
September 20 September 28 11/16 September 60 15/16 September 54 9/16 September 64 5/8
October 19 1/2 October 31 11/16 October 55 3/4 October 62 3/8 October 76 1/8
November 22 1/2 November 33 13/16 November 59 1/2 November 68 5/8 November 73 7/16
December 22 1/2 December 32 5/16 December 58 3/16 December 70 1/8 December 73 1/16
</TABLE>
The closing price on , 2000 was .
A-15
<PAGE>
SUNTRUST BANKS, INC. (STI)
SunTrust Banks, Inc. is a bank holding company which provides consumer
and commercial banking services, including traditional deposit and credit
services and trust and investment services. SunTrust offers credit cards,
mortgage services, insurance, data processing and information services, discount
brokerage and investment banking services. SunTrust's operations are located
primarily in the southern United States.
<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 25 15/16 January 34 9/16 January 50 January 69 1/4 January 70 7/16 January 59 9/16
February 26 15/16 February 35 15/16 February 51 3/8 February 73 3/4 February 67 15/16 February 50 13/16
March 26 3/4 March 35 March 46 3/8 March 75 3/8 March 62 1/4 March 57 3/4
April 27 1/8 April 35 1/4 April 50 3/4 April 81 7/16 April 71 1/2 April 50 3/4
May 29 May 36 1/2 May 53 3/8 May 79 May 67 1/2
June 29 1/8 June 37 June 55 1/16 June 81 5/16 June 69 7/16
July 30 3/16 July 36 3/4 July 64 3/16 July 73 July 64 1/2
August 30 11/16 August 38 3/8 August 62 1/2 August 56 1/16 August 64 5/16
September 33 1/16 September 41 September 67 15/16 September 62 September 65 3/4
October 32 1/4 October 46 5/8 October 64 13/16 October 69 11/16 October 73 3/16
November 34 1/8 November 50 3/4 November 71 November 69 13/16 November 69 7/8
December 34 1/4 December 49 1/4 December 71 3/8 December 76 1/2 December 68 13/16
</TABLE>
The closing price on , 2000 was .
A-16
<PAGE>
SYNOVUS FINANCIAL CORP. (SNV)
Synovus Financial Corp. is a bank holding company that conducts a broad
range of financial services.. Synovus is primarily engaged in commercial,
mortgage and retail banking, trust, securities brokerage and insurance services.
Synovus is also engaged in transaction processing which includes credit, debit,
commercial and retail card processing and related services and debt collection
and bankruptcy management services. Synovus primarily offers its banking
services in the southeastern United States.
<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 5 31/64 January 8 21/64 January 14 7/16 January 21 61/64 January 24 7/8 January 19
February 5 55/64 February 8 43/64 February 15 1/2 February 23 1/2 February 23 13/16 February 16 3/8
March 5 25/32 March 10 March 13 7/64 March 24 3/4 March 20 1/2 March 16 7/8
April 6 7/64 April 10 April 16 11/64 April 23 29/64 April 22 1/8 April 18 9/16
May 6 7/32 May 10 7/32 May 17 11/64 May 22 7/16 May 20 1/8
June 6 47/64 June 9 39/64 June 18 3/8 June 23 3/4 June 19 7/8
July 7 9/64 July 10 11/64 July 18 51/64 July 22 1/4 July 18 5/16
August 7 9/16 August 10 39/64 August 17 29/64 August 18 3/16 August 18 13/16
September 7 47/64 September 11 9/16 September 14 53/64 September 19 3/4 September 18 11/16
October 7 33/64 October 13 9/32 October 14 1/2 October 23 3/16 October 21 7/16
November 8 19/32 November 14 9/16 November 21 19/64 November 22 1/16 November 20
December 8 7/16 December 14 9/32 December 21 53/64 December 24 December 19 7/8
</TABLE>
The closing price on , 2000 was .
A-17
<PAGE>
UNITED STATES BANCORP (USB)
United States Bancorp is a bank holding company engaged in a general
retail and commercial banking business through which it provides a variety of
financial services to individuals, businesses, governmental entities and other
financial institutions. U.S. Bancorp's bank and trust subsidiaries provide a
range of fiduciary activities for individuals, estates, foundations,
corporations and charitable organizations. United States Bancorp also provides
investment services, data processing, leasing and brokerage services. United
States Bancorp primarily operates in midwestern and western United States.
<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 12 3/64 January 17 1/2 January 25 21/64 January 36 1/2 January 33 11/16 January 22 3/16
February 12 61/64 February 19 13/64 February 26 11/64 February 38 23/64 February 32 5/16 February 18 5/16
March 13 29/64 March 19 7/8 March 24 21/64 March 41 37/64 March 34 1/16 March 21 7/8
April 13 1/2 April 20 5/64 April 25 37/64 April 42 21/64 April 37 1/16 April 20 5/16
May 14 May 20 1/8 May 27 21/64 May 39 1/8 May 32 1/2
June 13 43/64 June 19 21/64 June 28 29/64 June 43 June 33 3/8
July 14 29/64 July 20 27/64 July 29 43/64 July 46 July 31 1/8
August 15 13/64 August 21 27/64 August 29 3/16 August 34 1/8 August 30 7/8
September 16 3/64 September 22 19/64 September 32 11/64 September 35 5/8 September 30 3/16
October 16 37/64 October 22 October 33 57/64 October 36 7/16 October 37 1/16
November 17 13/64 November 24 19/64 November 35 51/64 November 37 November 34 3/16
December 16 35/64 December 22 3/4 December 37 5/16 December 35 1/2 December 23 13/16
</TABLE>
The closing price on , 2000 was .
A-18
<PAGE>
WACHOVIA CORPORATION (WB)
Wachovia Corporation is a bank holding company which provides a variety
of consumer and business banking products and services, credit card services and
treasury and trust administration and investment services. Wachovia offers its
services in Florida, Georgia, North Carolina, South Carolina and Virginia.
<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 33 5/8 January 44 3/4 January 57 5/8 January 77 3/4 January 88 5/8 January 64 1/16
February 34 3/4 February 46 1/2 February 60 7/8 February 79 1/2 February 85 1/16 February 57 3/16
March 35 1/2 March 44 3/4 March 54 1/2 March 84 13/16 March 81 3/16 March 67 9/16
April 35 1/8 April 44 April 58 1/2 April 84 15/16 April 87 7/8 April 62 11/16
May 37 7/8 May 42 7/8 May 60 7/8 May 80 1/16 May 88 1/4
June 35 3/4 June 43 3/4 June 58 5/16 June 84 1/2 June 85 9/16
July 38 1/8 July 44 1/4 July 64 1/2 July 85 3/8 July 78 1/16
August 39 3/4 August 45 3/4 August 62 1/4 August 73 5/16 August 78 3/8
September 43 1/8 September 49 1/2 September 72 September 85 1/4 September 78 5/8
October 44 1/8 October 53 3/4 October 75 5/16 October 90 7/8 October 86 1/4
November 45 November 60 November 77 November 87 5/16 November 77 7/16
December 45 3/4 December 56 1/2 December 81 1/8 December 87 7/16 December 68
</TABLE>
The closing price on , 2000 was .
A-19
<PAGE>
WELLS FARGO & CO. (WFC)
Wells Fargo & Co. is a financial services company and a bank holding
company which engages in retail, commercial and corporate banking activities.
Wells Fargo also engages in mortgage banking, leasing, securities brokerage,
venture capital and investment banking activities and trust services. Wells
Fargo primarily operates in the midwestern and western United States.
<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 12 January 17 3/16 January 23 13/16 January 36 7/16 January 35 January 40
February 12 7/8 February 18 1/4 February 24 7/8 February 41 February 36 3/4 February 33 1/16
March 12 11/16 March 18 3/8 March 23 1/8 March 41 9/16 March 35 1/16 March 40 3/4
April 13 1/4 April 18 1/16 April 24 15/16 April 39 7/8 April 43 3/16 April 41 1/16
May 14 3/16 May 17 7/16 May 26 3/4 May 38 7/8 May 40
June 14 3/8 June 17 7/16 June 28 1/8 June 37 1/2 June 42 3/4
July 14 1/8 July 17 3/4 July 31 17/32 July 36 1/8 July 39
August 15 1/16 August 18 13/16 August 28 23/32 August 29 3/4 August 39 13/16
September 16 1/4 September 20 3/8 September 30 5/8 September 36 September 39 5/8
October 14 3/4 October 21 15/16 October 32 1/16 October 37 3/16 October 47 7/8
November 16 1/2 November 23 3/8 November 37 7/16 November 36 1/8 November 46 1/2
December 16 1/2 December 21 3/4 December 38 3/4 December 39 15/16 December 40 7/16
</TABLE>
The closing price on , 2000 was .
A-20
<PAGE>
================================================================================
LOGO
1,000,000,000 Depositary Receipts
Regional Bank HOLDRS SM Trust
-----------------------
P R O S P E C T U S
-----------------------
Merrill Lynch & Co.
First Union Securities, Inc.
, 2000
Until , 2000 (25 days after the date of this prospectus), all dealers
effecting transactions in the offered Regional Bank HOLDRS, 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.
- --------------------------------------------------------------------------------
<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....$ 92,334
Printing and engraving expenses........................
Legal fees and expenses................................
Rating agency fees.....................................
Miscellaneous..........................................
------------------
Total...............................................$
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.
Article XIV, Section 2 of the Restated Certificate of Incorporation of
Merrill Lynch, Pierce, Fenner & Smith Incorporated provides in effect that,
subject to certain limited exceptions, Merrill Lynch, Pierce, Fenner & Smith
Incorporated shall indemnify its directors and officers to the full extent
authorized or permitted by law.
The directors and officers of Merrill Lynch, Pierce, Fenner & Smith
Incorporated are insured under policies of insurance maintained by Merrill
Lynch, Pierce, Fenner & Smith Incorporated, 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. In addition, Merrill
Lynch, Pierce, Fenner & Smith Incorporated has entered into contracts with all
of its directors providing for indemnification of such persons by Merrill Lynch,
Pierce, Fenner & Smith Incorporated to the full extent authorized or permitted
by law, subject to certain limited exceptions.
Item 16. Exhibits.
See Exhibit Index.
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
II-1
<PAGE>
(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 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 Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
II-2
<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
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, on May 5, 2000.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ AHMASS L. FAKAHANY
-----------------------
Ahmass L. Fakahany
Senior Vice President and
Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Joseph Moglia and Stephen G. Bodurtha and each of
them, with full power to act without the other, his true and lawful
attorneys-in-fact and agents with full and several power of substitution, for
him and in his name, place and stead, in any and all capacities, to sign any and
all amendments, including post-effective amendments, and supplements to this
Registration Statement, and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on May 5, 2000.
Signature Title
--------- -----
/s/ JOHN L. STEFFENS
- ---------------------------
John L. Steffens Chief Executive Officer,
Chairman of the Board
and Director
/s/ E. STANLEY O'NEAL
- ----------------------------
E. Stanley O'Neal Director
/s/ GEORGE A. SCHIEREN
- ---------------------------
George A. Schieren Director
/s/ THOMAS H. PATRICK
- ---------------------------
Thomas H. Patrick Director
/s/ AHMASS L. FAKAHANY
- ---------------------------
Ahmass L. Fakahany Senior Vice President and
Chief Financial Officer
<PAGE>
INDEX TO EXHIBITS
Exhibits
4.1 4.1 Standard Terms for Depositary Trust Agreements between Merrill
Lynch, Pierce, Fenner & Smith Incorporated and The Bank of Bank of New
York, as Trustee dated as of September 2, 1999, and included as
exhibits thereto, form of Depositary Trust Agreement and form of HOLDRS
5.1 Opinion of Shearman & Sterling regarding the validity
of the ABC HOLDRS Receipts
8.1 Opinion of Shearman & Sterling, 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)
<PAGE>
S&C Draft of 8/31/99
Exhibit 4.1
STANDARD TERMS FOR DEPOSITARY TRUST AGREEMENTS
between
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
and
THE BANK OF NEW YORK,
as Trustee
Dated as of ______________, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1 DEFINITIONS AND ASSUMPTIONS
Section 1.1. Definitions................................................................................1
Section 1.2. Rules of Construction......................................................................5
ARTICLE 2 FORM OF RECEIPTS, DEPOSIT OF SECURITIES, DELIVERY,
REGISTRATION OF TRANSFER AND SURRENDER OF RECEIPTS
Section 2.1. Depositary Trust Agreements................................................................6
Section 2.2. Creation and Declaration of Trusts; Deposit of Securities..................................6
Section 2.3. Acceptance by Trustee......................................................................8
Section 2.4. Form and Transferability of Receipts.......................................................8
Section 2.5. Delivery of Receipts.....................................................................10
Section 2.6. Registration; Registration of Transfer; Combination and Split-up of Certificates..........11
Section 2.7. Surrender of Receipts and Withdrawal of Underlying Securities.............................12
Section 2.8. Limitations on Delivery, Registration of Transfer and Surrender of Receipts...............13
Section 2.9. Lost Certificates, Etc....................................................................14
Section 2.10. Cancellation and Destruction of Surrendered Certificates.................................14
Section 2.11. Reconstitution Events....................................................................14
ARTICLE 3 CERTAIN OBLIGATIONS OF OWNERS OF RECEIPTS
Section 3.1. Filing Proofs, Certificates and Other Information.........................................16
Section 3.2. Liability of Owner for Taxes..............................................................16
Section 3.3. Warranties on Deposit of Shares...........................................................17
ARTICLE 4 THE UNDERLYING SECURITIES
Section 4.1. Cash Distributions........................................................................17
Section 4.2. Distributions Other Than Cash or Securities...............................................17
Section 4.3. Distributions in Securities...............................................................18
Section 4.4. Rights Offerings..........................................................................19
Section 4.5. Fixing of Record Date.....................................................................19
Section 4.6. Reports...................................................................................20
Section 4.7. Voting Instructions for Underlying Securities.............................................20
Section 4.8. Changes Affecting Underlying Securities...................................................21
Section 4.9. Withholding...............................................................................22
Section 4.10. Limitation on Distributions..............................................................22
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
ARTICLE 5 THE TRUSTEE AND THE INITIAL DEPOSITOR
<S> <C>
Section 5.1. Maintenance of Office and Transfer Books by the Trustee...................................22
Section 5.2. Prevention or Delay in Performance by the Initial Depositor or the Trustee................23
Section 5.3. Obligations of the Initial Depositor and the Trustee......................................24
Section 5.4. Resignation or Removal of the Trustee; Appointment of Successor Trustee...................26
Section 5.5. Indemnification...........................................................................27
Section 5.6. Charges of Trustee........................................................................29
Section 5.7. Retention of Trust Documents..............................................................30
Section 5.8. Federal Securities Law Filings............................................................30
Section 5.9. Prospectus Delivery.......................................................................30
ARTICLE 6 AMENDMENT AND TERMINATION
Section 6.1. Amendment.................................................................................31
Section 6.2. Early Termination.........................................................................31
ARTICLE 7 MISCELLANEOUS
Section 7.1. Counterparts.............................................................................33
Section 7.2. Third-Party Beneficiaries................................................................33
Section 7.3. Severability.............................................................................34
Section 7.4. Owners and Beneficial Owners as Parties; Binding Effect..................................34
Section 7.5. Notices..................................................................................34
Section 7.6. Governing Law............................................................................35
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
EXHIBIT A
FORM OF DEPOSITARY TRUST AGREEMENT.....................................................................A-1
EXHIBIT B
FORM OF CERTIFICATE EVIDENCING RECEIPTS................................................................B-1
</TABLE>
-iii-
<PAGE>
STANDARD TERMS FOR DEPOSITARY TRUST AGREEMENTS agreed to as of
_______________, 1999 (these "Standard Terms"), between MERRILL LYNCH, PIERCE,
FENNER & SMITH INCORPORATED, a Delaware corporation (the "Initial Depositor")
and THE BANK OF NEW YORK, a New York banking corporation, as trustee (the
"Trustee").
W I T N E S S E T H :
WHEREAS, from time to time, the Initial Depositor and the Trustee may
enter into one or more depositary trust agreements providing for the deposit
with the Trustee of specified Securities (as hereinafter defined), the creation
of Depositary Trust Receipts representing the Securities so deposited and the
execution and delivery of certificates evidencing the Depositary Trust Receipts;
and
WHEREAS, the Initial Depositor and the Trustee wish to establish the
general terms and conditions of such depositary trust agreements and the form of
the certificates evidencing Depositary Trust Receipts;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in these Standard Terms, the parties hereby agree as
follows:
ARTICLE 1
DEFINITIONS AND ASSUMPTIONS
Section 1.1. Definitions. Except as otherwise specified in these
-----------
Standard Terms or in the applicable Depositary Trust Agreement or as the context
may otherwise require, the following terms have the respective meanings set
forth below for all purposes of these Standard Terms and the applicable
Depositary Trust Agreement.
<PAGE>
"Beneficial Owner" means any Person owning a beneficial interest in
any Receipt.
"Closing Date" means the day on which the initial deposit of
Securities is to be made, which date may be specified in the applicable
Depositary Trust Agreement.
"Commission" means the Securities and Exchange Commission of the
United States or any successor governmental agency in the United States.
"Corporate Trust Office" means the office of the Trustee at which its
depositary receipt business is administered which, at the date of these Standard
Terms, is 101 Barclay Street, New York, New York 10286.
"Deliver" means (a) when used with respect to Securities, either (i)
one or more book-entry transfers of such Securities to an account at DTC
designated by the Person entitled to such delivery for further credit as
specified by such Person or (ii) in the case of Securities for which DTC book-
entry settlement is not available, the delivery of certificates evidencing such
Securities to the Person entitled to such delivery, duly endorsed for transfer
or accompanied by proper instruments of transfer and (b) when used with respect
to Receipts, either (i) one or more book-entry transfers of Receipts to an
account at DTC designated by the Person entitled to such delivery for further
credit as specified by such Person or (ii) in the event DTC ceases to make its
book-entry settlement system available for the Receipts, execution and delivery
at the Corporate Trust Office of the Trustee of one or more certificates
evidencing such Receipts.
-2-
<PAGE>
"Depositary Trust Agreement" means a depositary trust agreement
entered into by the Initial Depositor and the Trustee pursuant to these Standard
Terms which incorporates by reference these Standard Terms.
"Depositor" means any Person who deposits Securities into the Trust,
either for its own account or on behalf of another Person who is the owner
or beneficial owner of such Securities.
"Depositor Order" means a written order or request signed in the name
of the Initial Depositor or any other Depositor, as applicable.
"DTC" means The Depository Trust Company, its nominees and their
respective successors.
"Initial Depositor" means Merrill Lynch, Pierce, Fenner & Smith
Incorporated, a Delaware corporation, or its successor.
"Issuance Denomination" is defined in Section 2.4, subject to increase
as provided in Sections 4.3 and 4.8.
"Owner" means the Person in whose name a Receipt is registered in the
books of the Trustee maintained for that purpose.
"Person" means any individual, limited liability company, corporation,
partnership, joint venture, association, joint stock company, trust (including
any trust beneficiary), unincorporated organization or government or any agency
or political subdivision thereof.
-3-
<PAGE>
"Receipt" means a depositary trust receipt which is issued under the
Depositary Trust Agreement and which represents the Owner's right to receive
the Underlying Securities which must be deposited into the Trust for issuance of
a Receipt plus any other Underlying Securities received by the Trustee with
respect to such Underlying Securities and held by the Trustee under the
Depositary Trust Agreement at such time. The Trustee shall only accept for
deposit whole Securities and shall not issue Receipts except to the extent
such Receipts represent, in the aggregate, whole Underlying Securities.
"Registrar" means any bank or trust company having an office in the
Borough of Manhattan, The City of New York, which shall be appointed to register
Receipts and transfers of Receipts as herein provided.
"Restricted Securities" means Securities, or Receipts representing
such Securities, which are acquired directly or indirectly from the issuer or
its affiliates (as defined in Rule 144 under the Securities Act of 1933) in a
transaction or chain of transactions not involving any public offering, or which
are held by an officer or director (or person performing similar functions) or
other affiliate of the issuer, or which would require registration under the
Securities Act of 1933 in connection with the public offer and sale thereof in
the United States, or which are subject to other restrictions on sale or deposit
under the federal securities laws of the United States, a shareholder agreement
or the corporate documents of the issuer.
"Round Lot" means 100.
-4-
<PAGE>
"Securities" means any shares of a class of securities which must be
deposited for issuance of Receipts.
"Securities Issuer" means, as of any time, the issuer of a class of
Securities.
"Securities Registrar" means the entity that presently carries out the
duties of registrar for any Securities or any successor as registrar for any
Securities and any other appointed agent of a Securities Issuer for the transfer
and registration of Securities.
"Surrender" means, when used with respect to Receipts, (a) one or more
book-entry transfers of Receipts to the DTC account of the Trustee or (b)
surrender to the Trustee at its Corporate Trust Office of one or more
certificates evidencing such Receipts, in each case in a Round Lot or an
integral multiple thereof.
"Trust" means the trust entity created by the Depositary Trust
Agreement.
"Trustee" means The Bank of New York, a New York banking corporation,
in its capacity as Trustee under the Depositary Trust Agreement, or any
successor as Trustee thereunder.
"Underlying Securities" means, as of any time, Securities of each of
the classes and in the quantities required by the Depositary Trust Agreement to
be deposited in the Trust for the issuance of Receipts and which are at such
time deposited under the applicable Depositary Trust Agreement and any other
securities, property or cash received by the Trustee in respect thereof and at
such time held hereunder.
-5-
<PAGE>
Section 1.2. Rules of Construction. Unless the context otherwise
---------------------
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning assigned
to it in accordance with generally accepted accounting principles as in effect
in the United States from time to time;
(iii) "or" is not exclusive;
(iv) the words "herein", "hereof", "hereunder" and other words of
similar import refer to these Standard Terms or the Depositary Trust Agreement
as a whole and not to any particular Article, Section or other subdivision;
(v) "including" means including without limitation; and
(vi) words in the singular include the plural and words in the plural
include the singular.
ARTICLE 2
FORM OF RECEIPTS, DEPOSIT OF SECURITIES, DELIVERY,
REGISTRATION OF TRANSFER AND SURRENDER OF RECEIPTS
Section 2.1. Depositary Trust Agreements. Each Depositary Trust
---------------------------
Agreement entered into between the Initial Depositor and the Trustee for the
purposes set
-6-
<PAGE>
forth herein shall be in substantially the form of Exhibit A to these Standard
Terms and shall provide that these Standard Terms shall be incorporated by
reference into, and form a part of, such Depositary Trust Agreement.
Section 2.2. Creation and Declaration of Trusts; Deposit of
----------------------------------------------
Securities. (a) The Initial Depositor, concurrently with the execution and
- ----------
delivery of the Depositary Trust Agreement, does hereby agree to deposit with
the Trustee under the Depositary Trust Agreement all the right, title and
interest of the Initial Depositor in, to and under Securities, of each of
the classes and in the quantities necessary to create Receipts in accordance
with Section 2 of the Depositary Trust Agreement in effect at the time of
deposit. Unless otherwise specified in the Depositary Trust Agreement, such
deposit shall include all cash dividends and distributions in respect of such
Securities. The Initial Depositor shall make such deposit on or prior to the
Closing Date.
(b) From time to time after the date of the Depositary Trust
Agreement, a Depositor may deposit with the Trustee, in the manner specified in
subsection (a), Securities, of each of the classes and in the quantities
necessary to create Receipts in accordance with Section 2 of the Depositary
Trust Agreement in effect at the time of deposit by Delivery of such Securities
to the Trustee.
(c) The Trustee shall only accept for deposit whole Securities and
shall not issue Receipts except to the extent such Receipts represent, in the
aggregate, whole Underlying Securities.
(d) The Trust shall not engage in any business or activities
other than those required or authorized by these Standard Terms or incidental
and necessary to carry out the duties and responsibilities set forth in the
Depositary Trust
-7-
<PAGE>
Agreement. Other than issuance of the Receipts, the Trust shall not issue or
sell any certificates or other obligations or otherwise incur, assume or
guarantee any indebtedness for money borrowed.
(e) Anything herein to the contrary notwithstanding, the Trustee
does not assume any of the duties, responsibilities, obligations or liabilities
of the Initial Depositor or any other Depositor in respect of the Underlying
Securities.
(f) Underlying Securities shall be held by the Trustee at such
place and in such manner as the Trustee shall determine.
Section 2.3. Acceptance by Trustee. The Trustee will hold the
---------------------
Underlying Securities for the benefit of the Owners for the purposes, and
subject to and limited by the terms and conditions, set forth in these Standard
Terms and the applicable Depositary Trust Agreement.
Section 2.4. Form and Transferability of Receipts. (a) The
------------------------------------
certificates evidencing Receipts shall be substantially in the form set forth in
Exhibit B annexed to these Standard Terms, with appropriate insertions,
modifications and omissions, as hereinafter provided or as may be provided in
the Depositary Trust Agreement. The Issuance Denominations of a certificate
shall be any integral multiple of a Round Lot of Receipts, subject to increase
or decrease as provided in Sections 4.3 and 4.8. No Receipt shall be entitled
to any benefits under the Depositary Trust Agreement or be valid or obligatory
for any purpose unless a certificate evidencing such Receipt shall have been
executed by the Trustee by the manual or facsimile signature
-8-
<PAGE>
of a duly authorized signatory of the Trustee and, if a Registrar (other than
the Trustee) for the Receipts shall have been appointed, countersigned by the
manual or facsimile signature of a duly authorized officer of the Registrar. The
Trustee shall maintain books on which the registered ownership of each Receipt
and transfers, if any, of such registered ownership shall be recorded.
Certificates evidencing Receipts bearing the manual or facsimile signature of a
duly authorized signatory of the Trustee and Registrar, if applicable, who was
at the time such certificates were executed a proper signatory of the Trustee or
Registrar, if applicable, shall bind the Trustee, notwithstanding that such
signatory has ceased to hold such office prior to the delivery of such
certificates.
(b) The certificates evidencing Receipts may be endorsed with or have
incorporated in the text thereof such legends or recitals or modifications not
inconsistent with the provisions of the Depositary Trust Agreement as may be
required by the Trustee or required to comply with any applicable law or
regulations thereunder or with the rules and regulations of any securities
exchange upon which Receipts may be listed or to conform with any usage with
respect thereto, or to indicate any special limitations or restrictions to which
any particular Receipts are subject by reason of the date of issuance of the
Underlying Securities or otherwise.
(c) The Initial Depositor and the Trustee will apply to DTC for
acceptance of the Receipts in its book-entry settlement system. Receipts
deposited with DTC shall be represented by one or more global certificates which
shall be registered in the name of Cede & Co., as nominee for DTC, and shall
bear the following legend:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
THE AGENT AUTHORIZED BY THE ISSUER FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF
-9-
<PAGE>
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
(d) So long as the Receipts are eligible for book-entry settlement
with DTC and such settlement is available, unless otherwise required by law,
notwithstanding anything to the contrary in the Depositary Trust Agreement, all
Receipts shall be evidenced by one or more global certificates registered in the
name of a nominee of DTC and no person acquiring beneficial ownership of such
Receipts shall receive or be entitled to receive physical delivery of Receipts.
Ownership of beneficial interests in Receipts evidenced by such global
certificate or certificates shall be shown on, and the transfer of such
ownership shall be effected only through, records maintained by (i) DTC or (ii)
institutions that have accounts with DTC.
(e) If, at any time when Receipts are evidenced by a global
certificate, DTC ceases to make its book-entry settlement system available for
such Receipts, the Trustee shall issue separate certificates evidencing Receipts
to the DTC book-entry settlement system participants entitled thereto, with such
additions, deletions and modifications to the Depositary Trust Agreement and to
the form of certificate evidencing Receipts as the Initial Depositor and the
Trustee may, from time to time, agree.
(f) Title to a certificate evidencing Receipts (and to the Receipts
evidenced thereby), when properly endorsed or accompanied by proper
instruments of transfer, shall be transferable by delivery with the same effect
as in the case of a negotiable instrument under the laws of New York; provided,
--------
however, that the Trustee, notwithstanding any notice to the contrary, may treat
- -------
the Owner of Receipts as the
-10-
<PAGE>
absolute owner thereof for the purpose of determining the person entitled to
distribution of dividends or other distributions or to any notice provided for
in the Depositary Trust Agreement and for all other purposes.
Section 2.5. Delivery of Receipts. Upon receipt by the Trustee of
---------------------
any deposit pursuant to Section 2.2, together with a Depositor Order and the
other documents required as above specified, if any, the Trustee, subject to the
terms and conditions of the applicable Depositary Trust Agreement, shall Deliver
to or upon the written order of the Depositor the number of Receipts issuable in
respect of such deposit, provided such number is an integral multiple of an
Issuance Denomination, but only upon payment to the Trustee of the fees and
expenses of the Trustee as provided in Section 5.6 and of all taxes and
governmental charges and fees payable in connection with such deposit and the
transfer of the Underlying Securities.
Section 2.6. Registration; Registration of Transfer; Combination and
-------------------------------------------------------
Split-up of Certificates. (a) The Trustee shall keep or cause to be kept a
- -------------------------
register of Owners of Receipts and shall provide for the registration of
Receipts and the registration of transfers and exchanges of Receipts.
(b) The Trustee, subject to the terms and conditions of these Standard
Terms and the applicable Depositary Trust Agreement, shall register transfers of
ownership of Receipts on its transfer books from time to time, upon any
Surrender of a certificate evidencing such Receipts in any integral multiple of
a Round Lot, by the Owner in person or by a duly authorized attorney, properly
endorsed or accompanied by proper instruments of transfer, and duly stamped as
may be required by the laws of the State of New York and of the United States of
America. Thereupon the Trustee shall execute a new certificate or certificates
evidencing such Receipts in any integral multiple
-11-
<PAGE>
of a Round Lot requested, and deliver the same to or upon the order of the
Person entitled thereto.
(c) The Trustee, subject to the terms and conditions of these Standard
Terms and the applicable Depositary Trust Agreement, shall, upon Surrender of a
certificate evidencing Receipts for the purposes of effecting a split-up or
combination of such certificate or certificates, execute and deliver one or more
new certificate or certificates evidencing such Receipts in any integral
multiple of a Round Lot requested.
(d) The Trustee may appoint one or more co-transfer agents for the
purpose of effecting transfers, combinations and split-ups of Receipts at
designated transfer offices on behalf of the Trustee. In carrying out its
functions, a co-transfer agent may require evidence of authority and compliance
with applicable laws and other requirements by Owners or Persons entitled to
Receipts and will be entitled to protection and indemnity to the same extent as
the Trustee.
Section 2.7. Surrender of Receipts and Withdrawal of Underlying
--------------------------------------------------
Securities. (a) Upon Surrender at the Corporate Trust Office of the Trustee
- ----------
of a Round Lot of Receipts or integral multiple thereof for the purpose of
withdrawal of the Underlying Securities represented thereby, and upon payment of
the fee of the Trustee in connection with the Surrender of Receipts as provided
in Section 5.6 and payment of all taxes and charges payable in connection with
such Surrender and withdrawal of the Underlying Securities, and subject to the
terms and conditions of the applicable Depositary Trust Agreement, including,
without limitation, Section 4.10, the Owner of such Receipts shall be entitled
to Delivery of the amount of Underlying Securities at the time represented by
such Receipts. Delivery of such Underlying Securities may be made by (i)
Delivery of Securities to such Owner or as ordered by such Owner and (ii) any
-12-
<PAGE>
available form of delivery of any other securities, property and cash to which
such Owner is then entitled to such Owner or as ordered by such Owner. The
Trustee shall make such delivery as promptly as practicable.
(b) A certificate evidencing Receipts Surrendered for such purposes
may be required by the Trustee to be properly endorsed in blank or accompanied
by proper instruments of transfer in blank, and if the Trustee so requires, the
Owner thereof shall execute and deliver to the Trustee a written order directing
the Trustee to cause the Underlying Securities being withdrawn to be delivered
to or upon the written order of a Person or Persons designated in such order.
Thereupon the Trustee shall Deliver through the facilities of DTC or, if
applicable, at its Corporate Trust office, subject to Sections 2.8, 3.1, 3.2 and
4.10 and to the other terms and conditions of the Depositary Trust Agreement, to
or upon the written order of the Person or Persons designated in the order
delivered to the Trustee as above provided, the amount of Underlying Securities
represented by such Receipts.
Section 2.8. Limitations on Delivery, Registration of Transfer and
-----------------------------------------------------
Surrender of Receipts. (a) As a condition precedent to the Delivery,
- ---------------------
registration of transfer, split-up, combination or Surrender (including, for the
avoidance of doubt, any Surrender in connection with an exchange) of any Receipt
or withdrawal of any Underlying Securities, the Trustee or Registrar may require
payment from the Depositor of Securities or the presentor of the Receipts of a
sum sufficient to reimburse it for any tax or other charge and any stock
transfer or registration fee with respect thereto (including any such tax or
charge and fee with respect to Securities being deposited or withdrawn) and
payment of any applicable fees as herein provided, may require the production of
proof satisfactory to it as to the identity and genuineness of any signature and
may also require compliance with any regulations the Trustee may establish
-13-
<PAGE>
consistent with the provisions of the Depositary Trust Agreement, including,
without limitation, this Section 2.8.
(b) The Delivery of Receipts against deposits of Securities, the
registration of transfer of Receipts or the Surrender of Receipts for the
purpose of withdrawal of Underlying Securities may be suspended, generally or in
particular instances, during any period when the transfer books of the Trustee
are closed or the transfer books of a Securities Issuer are closed or if any
such action is deemed necessary or advisable by the Trustee at any time or from
time to time, subject to the provisions of the following sentence.
Notwithstanding any other provision of any applicable Depositary Trust Agreement
or the Receipts, the Surrender of Receipts and withdrawal of Underlying
Securities may not be suspended except for (i) temporary delays caused by
closing the transfer books of the Trustee or a Securities Issuer, (ii) the
payment of fees, taxes and applicable charges, and (iii) compliance with any
U.S. laws or governmental regulations relating to the Receipts or to the
withdrawal of the Underlying Securities. Without limitation of the foregoing,
the Trustee shall not knowingly accept for deposit under the Depositary Trust
Agreement any Securities required to be registered under the provisions of the
Securities Act of 1933, as amended, for the public offer and sale thereof in the
United States unless a registration statement is in effect as to such Securities
for such offer and sale.
Section 2.9. Lost Certificates, Etc. In case any certificate
----------------------
evidencing Receipts shall be mutilated, destroyed, lost or stolen, the Trustee
shall execute and deliver a new certificate of like tenor in exchange and
substitution for such mutilated certificate upon cancellation thereof, or in
lieu of and in substitution for such destroyed, lost or stolen certificate.
Before the Trustee shall execute and deliver a new certificate in substitution
for a destroyed, lost or stolen certificate, the Owner thereof shall have (a)
-14-
<PAGE>
filed with the Trustee (i) a request for such execution and delivery before the
Trustee has notice that the Receipts have been acquired by a bona fide purchaser
and (ii) a sufficient indemnity bond, and (b) satisfied any other reasonable
requirements imposed by the Trustee.
Section 2.10. Cancellation and Destruction of Surrendered
-------------------------------------------
Certificates. All certificates evidencing Receipts Surrendered to the Trustee
- ------------
shall be canceled by the Trustee. The Trustee is authorized to destroy
certificates so canceled.
Section 2.11. Reconstitution Events. (a) If any class of Securities
---------------------
ceases to be outstanding as a result of a merger, consolidation or other
corporate combination of the Securities Issuer and Section 4.8 does not apply,
the Trustee shall, if it has actual knowledge of such event, to the extent
lawful and feasible and subject to Section 4.10, distribute any securities
which shall be received by the Trustee in exchange for or in conversion of or in
respect of Underlying Securities which are not Securities issued by a Securities
Issuer to the Owners in proportion to their ownership of Receipts. Effective on
the date that such Securities cease to be outstanding, such class of Securities
shall cease to be part of the Securities which must be deposited for
issuance of Receipts.
(b) If any class of Securities is delisted from trading on its
primary exchange or market and is not listed for trading on another national
securities exchange or through NASDAQ within five business days from the date of
such delisting, the Trustee shall, if it has actual knowledge of such event, to
the extent lawful and feasible and subject to Section 4.10, distribute the
Underlying Securities of such class to the Owners in proportion to their
ownership of Receipts. Effective on the date of such distribution,
-15-
<PAGE>
such class of Securities shall cease to be a part of the securities which must
be deposited for issuance of Receipts.
(c) In the event that any Securities Issuer no longer has a class of
common stock registered under section 12 of the Securities Exchange Act of 1934,
as amended, the Trustee shall, if it has actual knowledge of such event, to the
extent lawful and feasible and subject to Section 4.10, distribute the
Underlying Securities of such Securities Issuer to the Owners in proportion to
their ownership of Receipts. Effective on the date of such distribution, such
class of Securities shall cease to be part of the securities which must be
deposited for issuance of Receipts.
(d) If the Commission determines that a Securities Issuer is an
investment company under the Investment Company Act of 1940, and the Trustee has
actual knowledge of such Commission determination, then the Trustee shall, to
the extent lawful and feasible and subject to Section 4.10, distribute the
Underlying Securities of such Securities Issuer to the Owners in proportion to
their ownership of Receipts. Effective on the date of such distribution, such
class of Securities shall cease to be part of the securities which must be
deposited for issuance of Receipts.
-16-
<PAGE>
ARTICLE 3
CERTAIN OBLIGATIONS OF OWNERS OF RECEIPTS
Section 3.1. Filing Proofs, Certificates and Other Information. Any
-------------------------------------------------
Person presenting Securities for deposit or any Owner of Receipts may be
required from time to time to file with the Trustee such proof of citizenship or
residence, exchange control approval, or such information relating to the
registration on the books of any Securities Issuer or Securities Registrar, if
applicable, to execute such certificates and to make such representations and
warranties, as the Trustee may require. The Trustee may withhold the Delivery
or registration of transfer of any Receipts or the delivery of any Underlying
Securities until such proof or other information is filed or such certificates
are executed or such representations and warranties made.
Section 3.2. Liability of Owner for Taxes. If any tax or other
----------------------------
charge shall become payable with respect to any Receipts or any Underlying
Securities represented thereby, such tax or other charge shall be payable by the
Owner of such Receipts to the Trustee. The Trustee shall refuse to effect
any registration of transfer of such Receipts or any withdrawal of
Underlying Securities represented by such Receipt until such payment is made,
and may withhold any dividends or other distributions, or may sell for the
account of the Owner thereof Underlying Securities constituting any multiples of
the securities which must be deposited for issuance of Receipts, and may
apply such dividends or other distributions or the proceeds of any such sale in
payment of such tax or other charge and the Owner of such Receipt shall remain
liable for any deficiency.
Section 3.3. Warranties on Deposit of Shares.
-------------------------------
-17-
<PAGE>
Every Person depositing Securities under the Depositary Trust Agreement shall
be deemed thereby to represent and warrant that such Securities and each
certificate therefor are validly issued and fully paid, that the person making
such deposit is duly authorized to do so and that at the time of delivery, such
Securities are free and clear of any lien, pledge, encumbrance, right, charge or
claim (other than the rights created by the Depositary Trust Agreement). Every
such person shall also be deemed to represent that such Securities are not, and
Receipts representing such Securities would not be, Restricted Securities. Such
representations and warranties shall survive the deposit of Securities, issuance
of Receipts or termination of the Depositary Trust Agreement.
ARTICLE 4
THE UNDERLYING SECURITIES
Section 4.1. Cash Distributions. Whenever the Trustee shall receive
------------------
any cash dividend or other cash distribution on any Underlying Securities, the
Trustee shall distribute the amount thus received (net of the fees of the
Trustee as provided in Section 5.6, if applicable) to the Owners entitled
thereto, in proportion to the number of Receipts held by them respectively;
provided, however, that in the event that the respective Securities Issuer or
- -------- -------
the Trustee shall be required to withhold and does withhold from such cash
dividend or such other cash distribution an amount on account of taxes, the
amount distributed to the Owners shall be reduced accordingly. The Trustee
shall distribute only such amount, however, as can be distributed without
attributing to any Owner a fraction of one cent. Any such fractional amounts
shall be rounded to the nearest whole cent and so distributed to Owners entitled
thereto.
Section 4.2. Distributions Other Than Cash or Securities. Subject to
-------------------------------------------
the provisions of Sections 4.8 and 5.6, whenever the Trustee shall receive any
distribution other than a distribution described in Sections 4.1, 4.3 or 4.4
or any distribution
-18-
<PAGE>
which would otherwise be distributed hereunder except that the Trustee deems
such distribution not to be lawful and feasible, the Trustee shall, subject to
Section 4.10, cause the securities or property received by it to be distributed
to the Owners entitled thereto, in proportion to the number of Receipts held by
them respectively, in any manner that the Trustee may deem equitable and
practicable for accomplishing such distribution;
provided, however, that if in the opinion of the Trustee such distribution
- -------- -------
cannot be made proportionately among the Owners entitled thereto, or if for any
other reason (including, but not limited to, any requirement that a Securities
Issuer or the Trustee withhold an amount on account of taxes or other
governmental charges or that such securities must be registered under the
Securities Act of 1933 in order to be distributed to Owners) the Trustee deems
such distribution not to be feasible, the Trustee shall adopt such method as it
deems equitable and practicable for the purpose of effecting such distribution,
including, but not limited to, the public or private sale of the securities or
property thus received, or any part thereof, and the net proceeds of any such
sale (net of the fees of the Trustee as provided in Section 5.6) shall be
distributed by the Trustee to the Owners entitled thereto as in the case of a
distribution received in cash.
Section 4.3. Distributions in Securities. If any distribution upon
---------------------------
any Underlying Securities consists of a dividend in, or free distribution of,
Securities, the Trustee shall, to the extent lawful and feasible, retain
such Securities under the Depositary Trust Agreement, and, in such case, the
(i) the amount of such Securities so retained in respect of each Receipt shall
be added to the classes and quantities of securities which must be deposited for
issuance of Receipts and (ii) the number of Receipts in an Issuance
Denomination may be increased or decreased by the Trustee to the lowest multiple
of 100 Receipts such that no fractional shares are thereby represented in such
Issuance Denomination.
-19-
<PAGE>
Section 4.4. Rights Offerings. (a) If a Securities Issuer offers
----------------
or causes to be offered to the holders of any Underlying Securities any rights
to subscribe for additional Securities or other securities, the Trustee shall
have discretion in accordance with this Section 4.4 as to the procedure to be
followed in making such rights available to any Owners or in disposing of such
rights on behalf of Owners and making the net proceeds available to Owners or,
if by the terms of such rights offering or for any other reason (including the
absence of an effective registration statement covering the distribution of
securities underlying the rights), the Trustee may not make such rights
available to any Owners or dispose of such rights and make the net proceeds
available to Owners, then the Trustee shall allow the rights to lapse.
(b) The Trustee will not offer rights to Owners unless both the rights
and the securities to which such rights relate are either exempt from
registration under the Securities Act of 1933 with respect to a distribution to
all Owners or are registered under the provisions of such Act.
(c) The Trustee shall not be responsible for any failure to determine
that it may be lawful or feasible to make such rights available to Owners in
general or any Owner in particular.
Section 4.5. Fixing of Record Date. Whenever any cash dividend or
---------------------
other cash distribution shall become payable or any distribution other than cash
shall be made, or whenever the Trustee receives notice of any meeting of or
solicitation of proxies from holders of any Underlying Securities, or whenever a
fee shall be charged by the Trustee under Section 5.6, or whenever for any
reason there is a reconstitution or other event under the Depositary Trust
Agreement that causes a change in the composition of the securities which must
be deposited for issuance of Receipts, or whenever the Trustee
-20-
<PAGE>
shall find it necessary or convenient in respect of any matter, the Trustee
shall fix a record date (a) for the determination of the Owners who shall be (i)
entitled to receive such dividend or distribution or the net proceeds of the
sale thereof, (ii) entitled to give instructions to the Trustee for the exercise
of voting rights at any such meeting or solicitation or (iii) required to pay
such fee, or (b) on or after which each Receipt will represent such changed
group of Securities. In the case of subsections (a)(i) and (a)(ii) of this
Section 4.5, the Trustee shall use its reasonable efforts to ensure that, to the
extent practicable, the record date set hereunder will be the same as the record
date set by the Securities Issuer. Subject to the terms and conditions of the
Depositary Trust Agreement, the Owners on such record date shall be entitled, as
the case may be, to receive the amount distributable by the Trustee with respect
to such dividend or other distribution or the net proceeds of sale thereof, or
to give voting instructions, or to act in respect of any other such matter, or
shall be obligated to pay such fee.
Section 4.6. Reports. The Trustee shall, to the extent lawful,
-------
forward to Owners any reports and communications, including any proxy statement
or other soliciting material, received from a Securities Issuer which are
received by the Trustee as the holder of the Underlying Securities or its
appointed agent, unless such reports and communications have been forwarded
directly to Owners by such Securities Issuer or its appointed agent.
Section 4.7. Voting Instructions for Underlying Securities. Upon
---------------------------------------------
receipt by the Trustee or its appointed agent of notice of any meeting of, or
solicitation of proxies from, holders of Underlying Securities, the Trustee
shall, to the extent lawful, mail to the Owners a notice, the form of which
notice shall be in the sole discretion of the Trustee, which shall contain (a)
such information as is contained in such notice of meeting or solicitation, and
(b) a statement that the Owners as of the close of business on a specified
-21-
<PAGE>
record date will be entitled, subject to applicable law and the provisions of
the corporate documents of the Securities Issuer, to instruct the Trustee as to
the exercise of the voting rights, if any, or giving of proxies, as applicable,
in respect of the amount of Underlying Securities represented by their
respective Receipts and (c) a statement as to the manner in which such
instructions may be given. Upon the written request of an Owner of a Receipt on
such record date, received on or before the date established by the Trustee for
such purpose, the Trustee shall endeavor, insofar as practicable, to vote or
cause to be voted, or to give a proxy, as applicable, in respect of the amount
of Underlying Securities represented by such Receipt in accordance with the
instructions set forth in such request. The Trustee shall not vote or attempt
to exercise the right to vote that attaches to, or give a proxy with respect to,
Underlying Securities other than in accordance with such instructions.
Section 4.8. Changes Affecting Underlying Securities. (a) In
---------------------------------------
circumstances where the provisions of Sections 2.11 and 4.3 do not apply, upon
any change in nominal value, change in par value, split-up, consolidation or any
other reclassification of any Underlying Securities, or upon any
recapitalization, reorganization, merger or consolidation or sale of assets
affecting the issuer of any Underlying Security, if the relevant Securities
Issuer survives such event, the Trustee shall, to the extent lawful and
feasible, retain such Securities under the Depositary Trust Agreement, and, in
such case, the (A) the amount of such Securities so retained in respect of
each Receipt shall be added to the classes and quantities of securities which
must be deposited for issuance of Receipts and (B) the number of Receipts
in an Issuance Denomination may be increased or decreased by the Trustee to the
lowest multiple of 100 Receipts such that no fractional shares are thereby
represented in such Issuance Denomination.
-22-
<PAGE>
(b) Securities of any class which are surrendered by the Trustee in
connection with any such conversion or exchange shall, effective on the date of
such surrender, no longer be part of the securities which must be deposited
for issuance of Receipts. In any such case, or in the case of an event to which
Section 2.11 applies, the Trustee may call for the Surrender of outstanding
certificates evidencing Receipts to be exchanged for new certificates
specifically describing any applicable change in the classes and quantities of
securities which must be deposited for issuance of Receipts.
Section 4.9. Withholding. In the event that the Trustee determines
-----------
that any distribution in property (including Securities and rights to subscribe
therefor) is subject to any tax or other charge which the Trustee is obligated
to withhold, notwithstanding anything to the contrary in these Standard Terms or
the applicable Depositary Trust Agreement, the Trustee may by public or private
sale dispose of all or a portion of such property (including Securities and
rights to subscribe therefor) in such amounts and in such manner as the Trustee
deems necessary and practicable to pay any such taxes or charges and the
Trustee shall distribute the net proceeds of any such sale after deduction of
such taxes or charges to the Owners entitled thereto in proportion to the number
of Receipts held by them respectively.
Section 4.10. Limitation on Distributions. Notwithstanding any
---------------------------
provision of the Depositary Trust Agreement which requires or permits the
Trustee to distribute or Deliver any securities to Owners, the Trustee shall not
distribute to any Owner any fraction of a share. Instead, the Trustee shall, to
the extent lawful, sell the aggregate of such fractions and distribute the net
proceeds to the Owners entitled thereto as in the case of a distribution
received in cash.
-23-
<PAGE>
ARTICLE 5
THE TRUSTEE AND THE INITIAL DEPOSITOR
Section 5.1. Maintenance of Office and Transfer Books by the Trustee.
-------------------------------------------------------
(a) Until termination of this Depositary Trust Agreement in accordance with its
terms, the Trustee shall maintain in the Borough of Manhattan, The City of New
York, facilities for the execution and Delivery, registration, registration of
transfers and Surrender of Receipts in accordance with the provisions of these
Standard Terms and the applicable Depositary Trust Agreement.
(b) The Trustee shall keep books for the registration of Receipts and
transfers of Receipts which at all reasonable times shall be open for inspection
by the Owners.
(c) The Trustee may close the transfer books at any time or from time
to time.
(d) If any Receipts evidenced thereby are listed on one or more stock
exchanges in the United States, the Trustee shall act as Registrar or appoint a
registrar or one or more co-registrars for registry of such receipts in
accordance with any requirements of such exchange or exchanges.
Section 5.2. Prevention or Delay in Performance by the Initial
-------------------------------------------------
Depositor or the Trustee. Neither the Initial Depositor nor the Trustee nor any
- ------------------------
of their respective directors, employees, agents or affiliates shall incur any
liability to any Owner or Beneficial Owner of any Receipt, if by reason of any
provision of any present or future
-24-
<PAGE>
law or regulation of the United States or any other country, or of any
governmental or regulatory authority or stock exchange, or by reason of any
provision, present or future, of the corporate documents of any Securities
Issuer, or by reason of any provisions of any securities issued or distributed
by any Securities Issuer, or any offering or distribution thereof, or by reason
of any act of God or war or other circumstances beyond its control, the Initial
Depositor or the Trustee shall be prevented or forbidden from, or be subject to
any civil or criminal penalty on account of, doing or performing any act or
thing which by the terms of these Standard Terms or the applicable Depositary
Trust Agreement it is provided shall be done or performed; nor shall the Initial
Depositor or the Trustee incur any liability to any Owner or Beneficial Owner of
any Receipt by reason of any non-performance or delay, caused as aforesaid, in
the performance of any act or thing which by the terms of these Standard Terms
or the applicable Depositary Trust Agreement it is provided shall or may be done
or performed, or by reason of any exercise of, or failure to exercise, any
discretion provided for in these Standard Terms or the applicable Depositary
Trust Agreement. Where, by the terms of an offering or distribution to which
Sections 2.11, 4.2 or 4.4 applies, or for any other reason, it is not lawful and
feasible to make such distribution or offering available to Owners, and the
Trustee may not dispose of such distribution or offering on behalf of such
Owners and make the net proceeds available to such Owners, then the Trustee
shall not make such distribution or offering available to Owners and shall allow
any rights, if applicable, to lapse.
Section 5.3. Obligations of the Initial Depositor and the Trustee.
----------------------------------------------------
(a) Neither the Initial Depositor nor the Trustee assumes any obligation nor
shall they be subject to any liability under these Standard Terms or the
applicable Depositary Trust Agreement to any Owner or Beneficial Owner of any
Receipt (including, without limitation, liability with respect to the validity
or worth of the Underlying Securities),
-25-
<PAGE>
except that each agrees to perform its respective obligations specifically set
forth in these Standard Terms and the applicable Depositary Trust Agreement
without negligence or bad faith.
(b) Neither the Initial Depositor nor the Trustee shall be under any
obligation to prosecute any action, suit or other proceeding in respect of any
Underlying Securities or in respect of the Receipts.
(c) Neither the Initial Depositor nor the Trustee shall be liable for
any action or non-action by it in reliance upon the advice of or information
from legal counsel, accountants, any person presenting Securities for deposit,
any Owner or any other person believed by it in good faith to be competent to
give such advice or information.
(d) The Trustee shall not be liable for any acts or omissions made by
a successor Trustee whether in connection with a previous act or omission of the
Trustee or in connection with any matter arising wholly after the resignation of
the Trustee, provided that in connection with the issue out of which such
potential liability arises the Trustee performed its obligations without
negligence or bad faith while it acted as Trustee.
(e) The Trustee shall not be responsible for any failure to carry out
any instructions to vote any of the Underlying Securities, or for the manner in
which any such vote is cast or the effect of any such vote, provided that any
such action or non-action is without negligence or bad faith.
(f) Except as specifically provided in Section 4.6, the Trustee shall
have no obligation to monitor or to obtain any information concerning the
business or
-26-
<PAGE>
affairs of any Securities Issuer or to advise Owners or Beneficial Owners of any
event or condition affecting any Securities Issuer.
(g) The Trustee shall have no obligation to comply with any direction
or instruction from any Owner or Beneficial Owner regarding Receipts except to
the extent specifically provided in these Standard Terms or any applicable
Depositary Trust Agreement.
(h) The Trustee shall be a fiduciary under these Standard Terms and
the applicable Depositary Trust Agreement; provided, however, that the fiduciary
-------- -------
duties and responsibilities and liabilities of the Trustee shall be limited by,
and shall be only those specifically set forth in, these Standard Terms and the
applicable Depositary Trust Agreement.
Section 5.4. Resignation or Removal of the Trustee; Appointment of
-----------------------------------------------------
Successor Trustee. (a) The Trustee may at any time resign as Trustee hereunder
- -----------------
by written notice of its election so to do, delivered to the Initial Depositor,
and such resignation shall take effect upon the appointment of a successor
Trustee and its acceptance of such appointment as hereinafter provided.
(b) If at any time the Trustee is in material breach of its
obligations under the Depositary Trust Agreement and the Trustee fails to cure
such breach within 30 days after receipt by the Trustee of written notice from
the Initial Depositor or Owners of 25% or more of the outstanding Receipts
specifying such default and requiring the Trustee to cure such default, the
Initial Depositor, acting on behalf of the Owners, may remove the Trustee by
written notice delivered to the Trustee in the manner provided
-27-
<PAGE>
in Section 7.5, and such removal shall take effect upon the appointment of the
successor Trustee and its acceptance of such appointment as hereinafter
provided.
(c) In case at any time the Trustee acting hereunder shall resign or
be removed, the Initial Depositor, acting on behalf of the Owners, shall use its
reasonable efforts to appoint a successor Trustee, which shall be a bank or
trust company having an office in the Borough of Manhattan, The City of New
York. Every successor Trustee shall execute and deliver to its predecessor and
to the Initial Depositor, acting on behalf of the Owners, an instrument in
writing accepting its appointment hereunder, and thereupon such successor
Trustee, without any further act or deed, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor; but such predecessor,
nevertheless, upon payment of all sums due it and on the written request of the
Initial Depositor, acting on behalf of the Owners, shall execute and deliver an
instrument transferring to such successor all rights and powers of such
predecessor hereunder, shall duly assign, transfer and deliver all right, title
and interest in the Underlying Securities to such successor, and shall deliver
to such successor a list of the Owners of all outstanding Receipts. The Initial
Depositor or any such successor Trustee shall promptly mail notice of the
appointment of such successor Trustee to the Owners.
(d) Any corporation into or with which the Trustee may be merged,
consolidated or converted shall be the successor of such Trustee without the
execution or filing of any document or any further act.
Section 5.5. Indemnification. (a) The Initial Depositor shall indemnify
---------------
the Trustee, its directors, employees, agents and affiliates against, and hold
each of them harmless from, any loss, liability, cost, expense or judgment
(including, but not limited to, the fees and expenses of counsel) (collectively
"Indemnified Amounts") which is
-28-
<PAGE>
incurred by any of them and which arises out of acts performed or omitted
pursuant to the provisions of these Standard Terms or any Depositary Trust
Agreement, as the same may be amended, modified or supplemented from time to
time, or any filings with or submissions to the Commission in connection with or
with respect to such Receipts (which by way of illustration and not by way of
limitation, include any registration statement and any amendments or supplements
thereto filed with the Commission or any periodic reports or updates that may be
filed under the Securities Exchange Act of 1934, as amended, or any failure to
make any filings or submissions to the Commission which are required to be made
in connection with or with respect to such Receipts), except that the Initial
Depositor shall not have any obligations under this Section 5.5(a) to pay
Indemnified Amounts incurred as a result of and attributable to (i) the
negligence or bad faith of, or material breach of the terms of this Agreement
by, the Trustee, (ii) written information regarding the name and address of the
Trustee furnished in writing to the Initial Depositor (and not materially
changed or altered) expressly for use in the registration statement filed with
the Commission relating to the Receipts, or (iii) any misrepresentations or
omissions made by a Depositor (other than Initial Depositor) in connection with
such Depositor's offer and sale of Receipts.
(b) The Trustee shall indemnify the Initial Depositor, its directors,
employees, agents and affiliates against, and hold each of them harmless from,
any Indemnified Amounts (i) caused by the negligence or bad faith of the Trustee
or (ii) arising out of any written information regarding the name and address of
the Trustee furnished in writing to the Initial Depositor (and not materially
changed or altered) expressly for use in the registration statement filed with
the Commission relating to the Receipts.
-29-
<PAGE>
[(c) If the indemnification provided for in this Section 5.5 is
unavailable or insufficient to hold harmless the indemnified party under
subsection (a) or (b) above, then the indemnifying party shall contribute to the
Indemnified Amounts referred to in subsection (a) or (b) above (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Initial Depositor on the one hand and the Trustee on the other hand from the
offering of the Receipts which are the subject of the action or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Initial
Depositor on the one hand and the Trustee on the other hand in connection with
the action, statement or omission which resulted in such Indemnified Amount as
well as any other relevant equitable considerations. The relative benefits
received by the Initial Depositor on the one hand and the Trustee on the other
shall be deemed to be in the same proportions as the total commissions from the
offering of the Receipts which are the subject of the action (before deducting
expenses) received by the Initial Depositor bear to the total fees received by
the Trustee from the offering of such Receipts. The relative fault shall be
determined by reference to, among other things, whether any untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact which from which the action arises relates to information
supplied by the Initial Depositor or the Trustee and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission or the act or omission from which the action
arises. The amount of Indemnified Amounts referred to in the first sentence of
this subsection (c) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any action or claim which is the subject of this subsection (c).]
-30-
<PAGE>
Section 5.6. Charges of Trustee. The following charges shall be
------------------
incurred by any party depositing or withdrawing Securities or by any party
Surrendering Receipts or to whom Receipts are Delivered or any Owner, as
applicable: (1) taxes and charges and other fees payable in respect of the
Underlying Securities assessed by third-party custodians, depositories, transfer
agents, and other service providers in the ordinary course of their
respective businesses (whether in connection with the deposit of Securities or
withdrawal of Underlying Securities or otherwise), (2) a fee of $10 or less per
100 Receipts for the execution and Delivery of Receipts pursuant to Section 2.5,
and the Surrender of Receipts pursuant to Section 2.7, and (3) a fee which
shall accrue on the first day of each calendar quarter at a rate of $.02 or less
per Receipt per quarter for the Trustee's services as such under the Depositary
Trust Agreement (which fee shall be assessed against Owners of record as of the
date or dates set by the Trustee in accordance with Section 4.5 and shall be
collected at the Trustee's discretion by deducting such fee from one or more
cash dividends or other cash distributions); provided, however, that with
-------- -------
respect to the aggregate fee accrued in any calendar year under this clause
(3) with respect to each Receipt, the Trustee will waive that portion which
exceeds the total cash dividends and other cash distributions the record
date for which falls in such calendar year and payable with respect to such
Receipt.
Section 5.7. Retention of Trust Documents. The Trustee is authorized
----------------------------
to destroy those documents, records, bills and other data compiled during the
term of the Depositary Trust Agreement at the times permitted by the laws or
regulations governing the Trustee.
-31-
<PAGE>
Section 5.8. Federal Securities Law Filings. The Initial
------------------------------
Depositor shall (i) prepare and file a registration statement with the
Commission and take such action as is necessary from time to time to qualify the
Receipts for offering and sale under the federal securities laws of the United
States, including the preparation and filing of amendments and supplements to
such registration statement, (ii) promptly notify the Trustee of any amendment
or supplement to the registration statement or prospectus, of any order
preventing or suspending the use of any prospectus, of any request for the
amending or supplementing of the registration statement or prospectus or if
any event or circumstance occurs as a result of which the registration statement
or prospectus, as then amended or supplemented, would include an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, (iii) provide the Trustee from time to time with
copies, including copies in electronic form, of the prospectus, as amended and
supplemented, in such quantities as the Trustee may request and (iv) prepare and
file any periodic reports or updates that may be required under the Securities
Exchange Act of 1934, as amended.
Section 5.9. Prospectus Delivery. The Trustee shall, if required by
-------------------
the federal securities laws of the United States, in any manner permitted by
such laws, deliver at the time of issuance of Receipts, a copy of the relevant
prospectus, as amended and supplemented at such time, to each Person depositing
Underlying Securities into the Trust for issuance of Receipts.
ARTICLE 6
AMENDMENT AND TERMINATION
-32-
<PAGE>
Section 6.1. Amendment. The Trustee and the Initial Depositor may
---------
amend any provisions of the Depositary Trust Agreement without the consent of
any Owner. Any amendment that imposes or increases any fees or charges
(other than taxes and other charges, registration fees or other
such expenses), or that otherwise prejudices any substantial existing right
of the Owners will not become effective until 30 days after notice of such
amendment is given to the Owners. Every Owner and Beneficial Owner, at the time
any amendment so becomes effective, shall be deemed, by continuing to hold any
Receipt or an interest therein, to consent and agree to such amendment and to be
bound by the Depositary Trust Agreement as amended thereby. In no event shall
any amendment impair the right of the Owner of any Receipt to Surrender such
Receipt and receive therefor the Underlying Securities represented thereby,
except in order to comply with mandatory provisions of applicable law.
Section 6.2. Early Termination. (a) The Trust shall terminate by
-----------------
the Trustee mailing notice of such termination to the Owners of all Receipts
then outstanding at least 30 days prior to the date set for termination if any
of the following occurs:
(i) The Trustee is notified that the Receipts are delisted from a
national securities exchange and are not approved for listing on another
national securities exchange within 5 business days of their delisting;
(ii) Owners of at least 75% of the outstanding Receipts notify the
Trustee that they elect to terminate the Trust; or
(iii) 60 days shall have expired after the Trustee shall have
delivered to the Initial Depositor and the Owners a written notice of its
election to resign and a
-33-
<PAGE>
successor trustee shall not have been appointed and accepted its
appointment as provided in Section 5.4.
(b) On and after the date of termination, the Owner of a Receipt will, upon
(i) Surrender of such Receipt at the Corporate Trust Office of the Trustee, (ii)
payment of the fee of the Trustee for the Surrender of Receipts referred to in
Section 2.7, and (iii) payment of any applicable taxes or charges, be entitled
to Delivery, to him or upon his order, of the amount of Underlying Securities
evidenced by such Receipt. If any Receipts shall remain outstanding after the
date of termination, the Trustee thereafter shall discontinue the registration
of transfers of Receipts, shall suspend the distribution of dividends or other
distribution to the Owners thereof, and shall not give any further notices or
perform any further acts under these Standard Terms or the applicable Depositary
Trust Agreement, except that the Trustee shall continue to collect dividends and
other distributions pertaining to Underlying Securities and hold the same
uninvested and without liability for interest, shall sell rights as provided in
these Standard Terms or the applicable Depositary Trust Agreement, and shall
continue to deliver Underlying Securities, together with any dividends or other
distributions received with respect thereto and the net proceeds of the sale of
any rights or other property, in exchange for Receipts Surrendered to the
Trustee (after deducting or upon payment of, in each case, the fee of the
Trustee set forth in 5.6 for the Surrender of Receipts, any expenses for the
account of the Owner of such Receipts in accordance with the terms and
conditions of the Depositary Trust Agreement, and any applicable taxes or
charges). At any time after the expiration of one year following the date of
termination, the Trustee may sell the Underlying Securities then held hereunder
and may thereafter hold uninvested the net proceeds of any such sale, together
with any other cash then held by it hereunder, unsegregated and without
liability for interest, for the pro rata benefit of the Owners of Receipts which
--- ----
have not theretofore been Surrendered, such Owners thereupon becoming
-34-
<PAGE>
general creditors of the Trustee with respect to such net proceeds. After making
such sale, the Trustee shall be discharged from all obligations under these
Standard Terms with respect to the Receipts and the applicable Depositary Trust
Agreement, except to account for such net proceeds and other cash (after
deducting, in each case, the fee of the Trustee for the Surrender of Receipts,
any fees of the Trustee due and owing from the Owner of such Receipts pursuant
to Section 5.6, any expenses for the account of the Owner of such Receipts in
accordance with the terms and conditions of the Depositary Trust Agreement, and
any applicable taxes or governmental charges). Upon the termination of the
applicable Depositary Trust Agreement, the Initial Depositor shall be discharged
from all obligations under such Depositary Trust Agreement except for its
obligations to the Trustee under Section 5.5.
ARTICLE 7
MISCELLANEOUS
Section 7.1. Counterparts. These Standard Terms and each Depositary
------------
Trust Agreement may be executed in any number of counterparts, each of which
shall be deemed an original and all of such counterparts shall constitute one
and the same instrument. Copies of these Standard Terms and the applicable
Depositary Trust Agreement shall be filed with the Trustee and shall be open to
inspection by any Owner of a Receipt during business hours.
Section 7.2. Third-Party Beneficiaries. These Standard Terms and
--------------------------
each Depositary Trust Agreement are for the exclusive benefit of the respective
parties hereto and thereto, and shall not be deemed to give any legal or
equitable right, remedy or claim whatsoever to any other person.
-35-
<PAGE>
Section 7.3. Severability. In case any one or more of the
------------
provisions contained in these Standard Terms or the applicable Depositary Trust
Agreement or in the Receipts should be or become invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein or therein shall in no way be affected,
prejudiced or disturbed thereby.
Section 7.4. Owners and Beneficial Owners as Parties; Binding
------------------------------------------------
Effect. The Owners, Beneficial Owners and Depositors from time to time
shall be parties to the applicable Depositary Trust Agreement and shall be
bound by all of the terms and conditions hereof and thereof and of the Receipts
by their acceptance of Receipts or any interest therein or by their depositing
Securities, as the case may be.
Section 7.5. Notices. (a) Any and all notices to be given to the
-------
Initial Depositor shall be deemed to have been duly given if personally
delivered or sent by mail or cable, telex or facsimile transmission confirmed by
letter, addressed to Merrill Lynch, Pierce, Fenner & Smith Incorporated,
World Financial Center, New York, New York 10281, Attention: Director,
Customized Investments, or any other place to which the Initial Depositor may
have transferred its principal office with notice to the Trustee.
(b) Any and all notices to be given to the Trustee shall be deemed to
have been duly given if personally delivered or sent by mail or cable, telex or
facsimile transmission confirmed by letter, addressed to The Bank of New York,
101 Barclay Street, 22-W, New York, New York 10286, Attention: ADR
Administration, or any other place to which the Trustee may have transferred its
Corporate Trust Office with notices to the Initial Depositor.
-36-
<PAGE>
(c) Any and all notices to be given to any Owner shall be deemed to
have been duly given if personally delivered or sent by mail or cable, telex or
facsimile transmission confirmed by letter, addressed to such Owner at the
address of such Owner as it appears on the transfer books of the Trustee, or, if
such Owner shall have filed with the Trustee a written request that notices
intended for such Owner be mailed to some other address, at the address
designated in such request.
(d) Delivery of a notice sent by mail or cable, telex or facsimile
transmission shall be deemed to be effected at the time when a duly addressed
letter containing the same (or a confirmation thereof in the case of a cable,
telex or facsimile transmission) is deposited, postage prepaid, in a post-office
letter box. The Trustee may, however, act upon any cable, telex or facsimile
transmission received by them, notwithstanding that such cable, telex or
facsimile transmission shall not subsequently be confirmed by letter as
aforesaid.
Section 7.6. Governing Law. This Depositary Trust Agreement and the
-------------
Receipts shall be interpreted and all rights hereunder and thereunder and
provisions hereof and thereof shall be governed by the substantive laws (but not
the choice of law rules) of the State of New York.
-37-
<PAGE>
IN WITNESS WHEREOF, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
and THE BANK OF NEW YORK have duly executed these Standard Terms as of the day
and year first set forth above.
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
By:
--------------------------------
Steven G. Budurtha
First Vice President
THE BANK OF NEW YORK,
as Trustee
By:
--------------------------------
Name:
Title:
-38-
<PAGE>
EXHIBIT A
[NAME OF TRUST]
[FORM OF] DEPOSITARY TRUST AGREEMENT
DEPOSITARY TRUST AGREEMENT dated as of __________ (this "Depositary
Trust Agreement"), between MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, a
Delaware corporation (the "Initial Depositor"), THE BANK OF NEW YORK, a New York
banking corporation, as trustee (the "Trustee"), and all Holders and Beneficial
Owners (each as hereinafter defined) from time to time of Depositary Trust
Receipts issued hereunder and all Depositors (as hereinafter defined) from time
to time.
Section 1. Incorporation of Standard Terms. The Standard Terms for
-------------------------------
Depositary Trust Agreements agreed to as of ____________, 1999 (the "Standard
Terms"), between the Initial Depositor and the Trustee are hereby incorporated
by reference into and made a part of this Depositary Trust Agreement. If there
is any conflict between the provisions of this Depositary Trust Agreement and
the Standard Terms, the provisions of this Depositary Trust Agreement shall
control.
Section 2. Securities to be Deposited. Initially, the securities
--------------------------
which must be deposited for issuance of one Receipt and which shall be
represented thereby shall be as follows:
Quantity which
must be deposited
Issuer and Title of Security per Receipt
---------------------------- ---------------------
[Issuer and title of security] [Quantity]
[Issuer and title of security] [Quantity]
; provided, however, that if an event to which Section 2.11 of the Standard
-------- -------
Terms applies or an event described in Sections 4.3 or 4.8 of the Standard Terms
occurs, the definition of the securities that must be deposited for issuance of
one Receipt shall be changed as provided in such Sections, if applicable.
Section 3. Creation and Declaration of Trust; Termination Date. The
---------------------------------------------------
trust created hereby shall be known as [Name of Trust], for which the Trustee,
-------------
or the Initial Depositor to the extent provided herein, may conduct the business
of the Trust, make and
A-1
<PAGE>
execute contracts, and sue and be sued. [The termination date of the Trust will
be December 31, 2039].
Section 4. Closing. The "Closing Date" shall be [specify date].
------- ------------
IN WITNESS WHEREOF, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
and THE BANK OF NEW YORK have duly executed this agreement as of the day and
year first set forth above. All Owners and Beneficial Owners shall become
parties hereto upon acceptance by them of Receipts issued in accordance with the
terms hereof or any interest therein, and all Depositors shall become parties
hereto upon depositing any Securities hereunder.
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
By:
---------------------------------
Name:
Title:
THE BANK OF NEW YORK,
as Trustee
By:
---------------------------------
Name:
Title:
A-2
<PAGE>
EXHIBIT B
[Form of Receipt]
THE RECEIPTS EVIDENCED HEREBY REPRESENT RIGHTS WITH RESPECT TO UNDERLYING
SECURITIES (AS DEFINED IN THE DEPOSITARY TRUST AGREEMENT REFERRED TO HEREIN)
HELD BY THE TRUST AND DO NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, AND
ARE NOT GUARANTEED BY THE INITIAL DEPOSITOR OR THE TRUSTEE OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THE RECEIPTS NOR THE UNDERLYING SECURITIES ARE
INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR ANY OTHER PERSON.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE AGENT
AUTHORIZED BY THE ISSUER FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
B-1
<PAGE>
DEPOSITARY TRUST RECEIPTS
ISSUED BY
[NAME OF TRUST]
REPRESENTING [COMMON STOCK] OF
[LIST COMPANIES HERE]
THE BANK OF NEW YORK, as Trustee
No. CUSIP NO.
THE BANK OF NEW YORK, as Trustee (hereinafter called the "Trustee"),
hereby certifies that CEDE & CO., as nominee of the Depositary Trust Company, or
registered assigns, IS THE OWNER OF * Depositary Trust Receipts issued by
[Name of Trust], each representing the securities described in the within-
- --------------
mentioned Depositary Trust Agreement. At the date hereof, each Receipt
represents the right to receive the following securities:
Quantity Initially
Issuer and Title Represented by
of Security Each Receipt
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
which are deposited under the Depositary Trust Agreement referred to herein at
the Corporate Trust Office of the Trustee. The specification of the securities
represented by each Receipt is subject to change as provided in the Depositary
Trust Agreement. The Trustee's Corporate Trust Office is located at a different
address than its principal executive office. Its Corporate Trust Office is
located at 101 Barclay Street, New York, New York 10286, and its principal
executive office is located at One Wall Street, New York, New York 10286.
THE TRUSTEE'S CORPORATE TRUST OFFICE ADDRESS IS
101 BARCLAY STREET, NEW YORK, NEW YORK 10286
- ------------------
* That number of Receipts held at The Depository Trust Company at any given
point in time.
B-2
<PAGE>
(1) THE DEPOSITARY TRUST AGREEMENT.
------------------------------
This Receipt is issued upon the terms and conditions set forth in the
Depositary Trust Agreement, dated as of _________, 1999 (the "Depositary Trust
Agreement"), agreed to by and among the Initial Depositor, the Trustee, all
Owners and Beneficial Owners from time to time of Receipts issued thereunder and
all Depositors. By becoming an Owner or Beneficial Owner, or by depositing
Securities, such Person agrees to become a party to the Depositary Trust
Agreement and become bound by all the terms and conditions thereof. The
Depositary Trust Agreement sets forth the rights of Owners and the rights and
duties of the Trustee in respect of the Securities deposited thereunder and any
and all other securities, property and cash from time to time received in
respect of such Securities and held thereunder (such Securities, other
securities, property, and cash are herein called "Underlying Securities").
Copies of the Depositary Trust Agreement are on file at the Trustee's Corporate
Trust Office in New York City.
The statements made on the face and reverse of this Receipt are summaries
of certain provisions of the Depositary Trust Agreement and are qualified by and
subject to the detailed provisions of the Depositary Trust Agreement, to which
reference is hereby made. Capitalized terms not defined herein shall have the
meanings set forth in the Depositary Trust Agreement.
(2) SURRENDER OF RECEIPTS AND WITHDRAWAL OF SECURITIES.
--------------------------------------------------
Upon Surrender at the Corporate Trust Office of the Trustee of a Round Lot
of Receipts or integral multiples thereof for the purpose of withdrawal of the
Underlying Securities represented thereby, and upon payment of the fee of the
Trustee in connection with the Surrender of Receipts as provided in Section 5.6
of the Standard Terms and payment of all taxes and charges payable in connection
with such Surrender and withdrawal of the Underlying Securities, and subject to
the terms and conditions of the applicable Depositary Trust Agreement,
including, without limitation, Section 4.10 thereof, the Owner of such Receipts
shall be entitled to Delivery of the amount of Underlying Securities at the time
represented by such Receipts. Delivery of such Underlying Securities may be
made by (i) Delivery of Securities to such Owner or as ordered by such Owner and
(ii) any available form of delivery of any other securities, property and cash
to which such Owner is then entitled to such Owner or as ordered by such Owner.
The Trustee shall only deliver whole Underlying Securities upon Surrender of
Receipts representing such Underlying Securities.
(3) REGISTRATION OF TRANSFERS, SPLIT-UPS AND COMBINATIONS OF CERTIFICATES;
----------------------------------------------------------------------
LIMITATIONS.
-----------
The transfer of ownership of Receipts evidenced by this certificate is
registrable on the books of the Trustee at its Corporate Trust Office by the
Owner hereof in person or by a duly authorized attorney, upon Surrender of this
certificate evidencing Receipts,
B-3
<PAGE>
properly endorsed or accompanied by proper instruments of transfer, and duly
stamped as may be required by the laws of the State of New York and of the
United States of America. This certificate evidencing Receipts may be split up
into other such certificates, each evidencing any integral multiple of a Round
Lot of Receipts, or may be combined with other certificates evidencing Receipts
into one such certificate, in each case evidencing the same aggregate number of
Receipts as the certificate or certificates Surrendered.
As a condition precedent to the Delivery, registration of transfer, split-
up, combination or Surrender (including, for the avoidance of doubt, any
Surrender in connection with an exchange) of any Receipt or withdrawal of any
Underlying Securities, the Trustee or Registrar may require payment from the
Depositor of Securities or the presentor of the Receipts of a sum sufficient to
reimburse it for any tax or other charge and any stock transfer or registration
fee with respect thereto (including any such tax or charge and fee with respect
to Securities being deposited or withdrawn) and payment of any applicable fees
as herein provided, may require the production of proof satisfactory to it as to
the identity and genuineness of any signature and may also require compliance
with any regulations the Trustee may establish consistent with the provisions of
the Depositary Trust Agreement, including, without limitation, Section 2.8 of
the Standard Terms.
The Delivery of Receipts against deposits of Securities, the registration
of transfer of Receipts or the Surrender of Receipts for the purpose of
withdrawal of Underlying Securities may be suspended, generally or in particular
instances, during any period when the transfer books of the Trustee are closed
or the transfer books of a Securities Issuer are closed or if any such action is
deemed necessary or advisable by the Trustee at any time or from time to time
for any reason, subject to the provisions of the following sentence.
Notwithstanding any other provision of any applicable Depositary Trust Agreement
or the Receipts, the Surrender of Receipts and withdrawal of Underlying
Securities may not be suspended subject to only (i) temporary delays caused by
closing the transfer books of the Trustee or a Securities Issuer, (ii) the
payment of fees, taxes and similar charges, and (iii) compliance with any U.S.
laws or governmental regulations relating to the Receipts or to the withdrawal
of the Underlying Securities. Without limitation of the foregoing, the Trustee
shall not knowingly accept for deposit under the Depositary Trust Agreement any
Securities required to be registered under the provisions of the Securities Act
of 1933, as amended, for the public offer and sale thereof in the United States
unless a registration statement is in effect as to such Securities for such
offer and sale.
(4) RECONSTITUTION EVENTS
---------------------
B-4
<PAGE>
If any class of Securities ceases to be outstanding as a result of
a merger, consolidation or other corporate combination of the Securities Issuer
and Section 4.8 of the Standard Terms does not apply, the Trustee shall, if
it has actual knowledge of such event, to the extent lawful and feasible and
subject to Section 4.10 of the Standard Terms, distribute any securities
which shall be received by the Trustee in exchange for or in conversion of or in
respect of Underlying Securities which are not Securities issued by a Securities
Issuer to the Owners in proportion to their ownership of Receipts. Effective on
the date that such Securities cease to be outstanding, such class of Securities
shall cease to be part of the securities which must be deposited for
issuance of Receipts.
(b) If any class of Securities is delisted from trading on its
primary exchange or market and is not listed for trading on another national
securities exchange or through NASDAQ within five business days from the date of
such delisting, the Trustee shall, if it has actual knowledge of such event, to
the extent lawful and feasible and subject to Section 4.10 of the Standard
Terms, distribute the Underlying Securities of such class to the Owners in
proportion to their ownership of Receipts. Effective on the date of such
distribution, such class of Securities shall cease to be a part of the
securities which must be deposited for issuance of Receipts.
(c) In the event that any Securities Issuer no longer has a class of
common stock registered under section 12 of the Securities Exchange Act of 1934,
as amended, the Trustee shall, if it has actual knowledge of such event, to the
extent lawful and feasible and subject to Section 4.10 of the Standard Terms,
distribute the Underlying Securities of such Securities Issuer to the Owners in
proportion to their ownership of Receipts. Effective on the date of such
distribution, such class of Securities shall cease to be part of the
securities which must be deposited for issuance of Receipts.
(d) If the Commission determines that a Securities Issuer is an
investment company under the Investment Company Act of 1940, and the Trustee has
actual knowledge of such Commission determination, then the Trustee shall, to
the extent lawful and feasible and subject to Section 4.10 of the Standard
Terms, distribute the Underlying Securities of such Securities Issuer to the
Owners in proportion to their ownership of Receipts. Effective on the date of
such distribution, such class of Securities shall cease to be part of the
securities which must be deposited for issuance of Receipts.
(5) LIABILITY OF OWNER FOR TAXES.
----------------------------
If any tax or other governmental charge shall become payable with respect
to any Receipts or any Underlying Securities represented thereby, such tax or
other governmental charge shall be payable by the Owner hereof to the Trustee.
The Trustee
B-5
<PAGE>
shall refuse to effect any registration of transfer of such Receipts
or any withdrawal of Underlying Securities represented by such Receipt until
such payment is made, and may withhold any dividends or other distributions, or
may sell for the account of the Owner hereof Underlying Securities constituting
any multiples of the securities which must be deposited for issuance of
Receipts, and may apply such dividends or other distributions of the proceeds of
any such sale in payment of such tax or other charge and the Owner hereof shall
remain liable for any deficiency.
(6) WARRANTIES ON DEPOSIT OF SECURITIES.
-----------------------------------
Every Person depositing Securities under the Depositary Trust Agreement
shall be deemed thereby to represent and warrant that such Receipts and each
certificate therefor are validly issued and fully paid, that the person making
such deposit is duly authorized to do so and that at the time of delivery, such
Securities are free and clear of any lien, pledge, encumbrance, right, charge or
claim (other than the rights created by the Depositary Trust Agreement). Every
such person shall also be deemed to represent that such Securities are not, and
Receipts representing such Securities would not be, Restricted Securities. Such
representations and warranties shall survive the deposit of Securities, issuance
of Receipts or termination of the Depositary Trust Agreement.
(7) FILING PROOFS, CERTIFICATES AND OTHER INFORMATION.
-------------------------------------------------
Any person presenting Securities for deposit or any Owner of a Receipt may
be required from time to time to file with the Trustee such proof of citizenship
or residence, exchange control approval, or such information relating to the
registration on the books of any Securities Issuer or Securities Registrar, if
applicable, to execute such certificates and to make such representations and
warranties, as the Trustee may require. The Trustee may withhold the Delivery
or registration of transfer of any Receipts or the delivery of any Underlying
Securities until such proof or other information is filed or such certificates
are executed or such representations and warranties made.
(8) CHARGES OF TRUSTEE. The following charges shall be incurred by any party
------------------
depositing or withdrawing Securities or by any party Surrendering Receipts or to
whom Receipts are Delivered or any Owner, as applicable: (1) taxes and charges
and other fees payable in respect of the Underlying Securities assessed by
third-party custodians, depositories, transfer agents, and other service
providers in the ordinary course of their respective businesses (whether in
connection with the deposit of Securities or withdrawal of Underlying Securities
or otherwise), (2) a fee of $10 or less per 100 Receipts for the execution and
Delivery of Receipts pursuant to Section 2.5 of the Standard Terms, and the
Surrender of Receipts pursuant to Section 2.7 Standard Terms, and (3) a fee
which shall accrue on the first day of each calendar quarter at a rate of $.02
or less per Receipt per quarter for the Trustee's services as such under the
Depositary Trust Agreement (which fee shall be assessed against Owners of
B-6
<PAGE>
record as of the date or dates set by the Trustee in accordance with
Section 4.5 of the Standard Terms and shall be collected at the Trustee's
discretion by deducting such fee from one or more cash dividends or other
cash distributions); provided, however, that with respect to the aggregate
-------- -------
fee accrued in any calendar year under this clause (3) with respect to each
Receipt, the Trustee will waive that portion which exceeds the total cash
dividends and other cash distributions the record date for which falls in
such calendar year and payable with respect to such Receipt.
(9) TITLE TO RECEIPTS.
-----------------
It is a condition of the Receipts and every successive Owner of the
Receipts by accepting or holding a certificate for Receipts consents and agrees,
that title to such certificate (and the Receipts evidenced thereby) , when
properly endorsed or accompanied by proper instruments of transfer, is
transferable by delivery with the same effect as in the case of a negotiable
instrument under the laws of New York; provided, however, that the Trustee,
-------- -------
notwithstanding any notice to the contrary, may treat the person in whose name
Receipts are registered on the books of the Trustee as the absolute owner
thereof for the purpose of determining the person entitled to distribution or
dividends or other distributions or to any notice provided for in the Depositary
Trust Agreement and for all other purposes.
(10) VALIDITY OF RECEIPTS.
--------------------
Receipts shall not be entitled to any benefits under the Depositary Trust
Agreement or be valid or obligatory for any purpose, unless a certificate
evidencing such Receipts shall have been executed by the Trustee by the manual
or facsimile signature of a duly authorized signatory of the Trustee and, if a
Registrar for the Receipts shall have been appointed, countersigned by the
manual or facsimile signature of a duly authorized officer of the Registrar.
(11) REPORTS; INSPECTION OF TRANSFER BOOKS.
-------------------------------------
The issuer of each class of Securities is subject to the periodic reporting
requirements of the Securities Exchange Act of 1934 and, accordingly, files
certain reports with the Securities and Exchange Commission (herein called the
"Commission"). Such reports will be available for inspection and copying at the
public reference facilities maintained by the Commission located at 450 Fifth
Street, NW, Washington, DC 20549.
The Trustee shall, to the extent lawful, forward to Owners, any reports
and communications, including any proxy statement or other soliciting material,
received from a Securities Issuer which are received by the Trustee as the
holder of the Underlying Securities, unless such reports and communications have
been forwarded directly to Owners by such Securities Issuer.
B-7
<PAGE>
The Trustee shall keep books for the registration of Receipts and transfers
of Receipts which at all reasonable times shall be open for inspection by the
Owners.
(12) DIVIDENDS AND DISTRIBUTIONS.
---------------------------
Whenever the Trustee shall receive any cash dividend or other cash
distribution on any Underlying Securities, the Trustee shall, subject to the
Depositary Trust Agreement, distribute the amount thus received (net of the fees
of the Trustee as provided in the Depositary Trust Agreement, if applicable) to
the Owners of Receipts entitled thereto; provided, however, that in the event
-------- -------
that the respective Securities Issuer or the Trustee shall be required to
withhold and does withhold from such cash dividend or such other cash
distribution in respect of any Underlying Securities an amount on account of
taxes, the amount distributed to the Owners of the Receipts representing such
Underlying Securities shall be reduced accordingly.
Subject to the provisions of Sections 4.8 and 5.6 of the Standard Terms,
whenever the Trustee shall receive any distribution other than a distribution
described in Sections 4.1, 4.3 or 4.4 of the Standard Terms or a
distribution which would otherwise be distributed under the Depositary Trust
Agreement except that the Trustee deems such distribution not to be lawful and
feasiable, the Trustee shall, subject to Section 4.10 of the Standard Terms,
cause the securities or property received by it to be distributed to the Owners
of Receipts entitled thereto, in any manner that the Trustee may deem equitable
and practicable for accomplishing such distribution; provided, however, that if
-------- -------
in the opinion of the Trustee such distribution cannot be made proportionately
among the Owners of Receipts entitled thereto, or if for any other reason
(including, but not limited to, any requirement that a Securities Issuer or the
Trustee withhold an amount on account of taxes or other governmental charges or
that such securities must be registered under the Securities Act of 1933 in
order to be distributed to Owners) the Trustee deems such distribution not to be
feasible, the Trustee shall adopt such method as it deems equitable and
practicable for the purpose of effecting such distribution, including, but not
limited to, the public or private sale of the securities or property thus
received, or any part thereof, and the net proceeds of such sale (net of the
fees of the Trustee as provided in Section 5.6 of the Standard Terms) shall be
distributed by the Trustee to the Owners entitled thereto as in the case of a
distribution received in cash.
If any distribution upon any Underlying Securities consists of a dividend
in, or free distribution of, Securities, the Trustee shall, to the extent
lawful and feasible, retain such Securities under the Depositary Trust
Agreement, and, in such case, the (i) the amount of such Securities so retained
in respect of each Receipt shall be added to the classes and quantities of
securities which must be deposited for issuance of Receipts and (ii) the
number of Receipts in an Issuance Denomination may be increased
B-8
<PAGE>
or decreased by the Trustee to the lowest multiple of 100 Receipts such that no
fractional shares are thereby represented in such Issuance Denomination.
In the event that the Trustee determines that any distribution in property
(including Securities and rights to subscribe therefor) is subject to any tax or
other charge which the Trustee is obligated to withhold, notwithstanding
anything to the contrary in the Standard Terms or the applicable Depositary
Trust Agreement, the Trustee may by public or private sale dispose of all or a
portion of such property (including Securities and rights to subscribe therefor)
in such amounts and in such manner as the Trustee deems necessary and
practicable to pay any such taxes or charges and the Trustee shall distribute
the net proceeds or any such sale after deduction of such taxes or charges to
the Owners entitled thereto.
(13) RIGHTS OFFERINGS.
----------------
(a) If a Securities Issuer offers or cause to be offered to the holders of
any Underlying Securities any rights to subscribe for additional Securities or
other securities, the Trustee shall have discretion in accordance with Section
4.4 of the Standard Terms as to the procedure to be followed in making such
rights available to any Owners or in disposing of such rights on behalf of
Owners and making the net proceeds available to Owners or, if by the terms of
such rights offering or for any other reason (including the absence of an
effective registration statement covering the distribution of securities
underlying the rights), the Depositary may not make such rights available to any
Owners or dispose of such rights and make the net proceeds available to Owners,
then the Trustee shall allow the rights to lapse.
(b) The Trustee will not offer rights to Owners unless both the rights and
the securities to which such rights relate are either exempt from registration
under the Securities Act of 1933 with respect to a distribution to all Owners or
are registered under the provisions of such Act.
(c) The Trustee shall not be responsible for any failure to determine that
it may be lawful or feasible to make such rights available to Owners in general
or any Owner in particular.
(14) RECORD DATES.
------------
Whenever any cash dividend or other cash distribution shall become payable
or any distribution other than cash shall be made, or whenever the Trustee
receives notice of a meeting of or solicitation of proxies from holders of any
Underlying Securities, or whenever a fee shall be changed by the Trustee under
Section 5.6 of the Standard Terms, or whenever for any reason there is a
reconstitution or other event under the Depositary Trust Agreement that causes a
change in the composition of the Securities which must be
B-9
<PAGE>
deposited for issuance of Receipts, or whenever the Trustee shall find it
necessary or convenient in respect of any matter, the Trustee shall fix a record
date (a) for the determination of the Owners who shall be (i) entitled to
receive such dividend, distribution or rights or the net proceeds of the sale
thereof or (ii) entitled to give instructions for the exercise of voting rights
at any such meeting or solicitation, or (iii) required to pay such fee, or (b)
on or after which each Receipt will represent such changed group of Securities,
subject to the provisions of the Depositary Trust Agreement. In the case of
subsections (a)(i) and (a)(ii) of this Article (13), the Trustee shall use its
reasonable efforts to ensure that, to the extent practicable, the record date
set under the Depositary Trust Agreement will be the same as the record date set
by the Securities Issuer.
(15) VOTING OF UNDERLYING SECURITIES.
-------------------------------
Upon receipt by the Trustee or its appointed agent of notice of any meeting
of, or solicitation of proxies from, holders of Underlying Securities, the
Trustee shall, to the extent lawful, mail to the Owners a notice which shall
contain (a) such information as is contained in such notice of meeting or
solicitation, (b) a statement that the Owners of Receipts as of the close of
business on a specified record date will be entitled, subject to applicable law
and the provisions of the corporate documents of the Securities Issuer, to
instruct the Trustee as to the exercise of the voting rights, if any, or giving
of proxies, as applicable, in respect of the amount of Underlying Securities
represented by their respective Receipts and (c) a statement as to the manner in
which such instructions may be given. Upon the written request of an Owner of a
Receipt on such record date, received on or before the date established by the
Trustee, the Trustee shall endeavor, insofar as practicable, to vote or cause to
be voted, or to give a proxy, as applicable, in respect of the amount of
Underlying Securities represented by such Receipt in accordance with the
instructions set forth in such request. The Trustee shall not vote or attempt
to exercise the right to vote that attaches to, or give a proxy with respect to,
Underlying Securities other than in accordance with such instructions.
(16) CHANGES AFFECTING UNDERLYING SECURITIES.
---------------------------------------
(a) In circumstances where the provisions of Sections 2.11 and 4.3 of the
Standard Terms do not apply, upon any change in nominal value, change in par
value, split-up, consolidation or any other reclassification of any Underlying
Securities, or upon any recapitalization, reorganization, merger or
consolidation or sale of assets affecting the issuer of any Underlying Security,
if the relevant Securities Issuer survives such event, the Trustee shall, to the
extent lawful and feasible, retain such Securities under the Depositary Trust
Agreement, and, in such case, the (A) the amount of such Securities so retained
in respect of each Receipt shall be added to the classes and quantities of
Securities which must be deposited for issuance of Receipts and (B) the number
of Receipts in an Issuance Denomination may be increased or decreased
B-10
<PAGE>
by the Trustee to the lowest multiple of 100 Receipts such that no fractional
shares are thereby represented in such Issuance Denomination.
(b) Securities of any class which are surrendered by the Trustee in
connection with any such conversion or exchange shall, effective on the date of
such surrender, no longer be part of the securities which must be deposited for
issuance of Receipts. In any such case, or in the case of an event to which
Section 2.11 of the Standard Terms applies, the Trustee may call for the
Surrender of outstanding certificates evidencing Receipts to be exchanged for
new certificates specifically describing any applicable change in the classes
and quantities of securities which must be deposited for issuance of
Receipts.
(17) LIABILITY OF THE INITIAL DEPOSITOR AND THE TRUSTEE.
--------------------------------------------------
Neither the Initial Depositor nor the Trustee nor any of their respective
directors, employees, agents or affiliates shall incur any liability to any
Owner or Beneficial Owner of any Receipt, if by reason of any provision of any
present or future law or regulation of the United States or any other country,
or of any governmental or regulatory authority or stock exchange, or by reason
of any act of God or war or other circumstances beyond its control, the Initial
Depositor or the Trustee shall be prevented or forbidden from, or be subject to
any civil or criminal penalty on account of, doing or performing any act or
thing which by the terms of the Standard Terms or the applicable Depositary
Trust Agreement it is provided shall be done or performed; nor shall the Initial
Depositor or the Trustee incur any liability to any Owner or Beneficial Owner of
any Receipt by reason of any non-performance or delay, caused as aforesaid, in
the performance of any act or thing which by the terms of the Standard Terms or
the applicable Depositary Trust Agreement it is provided shall or may be done or
performed, or by reason of any exercise of, or failure to exercise, any
discretion provided for in the Standard Terms or the applicable Depositary Trust
Agreement. Where, by the terms of an offering or distribution to which
Sections 2.11, 4.2 or 4.4 of the Standard Terms applies, or for any
other reason, it is not lawful and feasible to make such distribution or
offering available to Owners, and the Trustee may not dispose of such
distribution or offering on behalf of such Owners and make the net proceeds
available to such Owners, then the Trustee shall not make such distribution or
offering available to Owners and shall allow any rights, if applicable, to
lapse. The Trustee shall not be subject to any liability with respect to the
validity or worth of the Underlying Securities. Neither the Initial Depositor
nor the Trustee shall be under any obligation to prosecute any action, suit or
other proceeding in respect of any Underlying Securities or in respect of the
Receipts. Neither the Initial Depositor nor the Trustee shall be liable for any
action or non-action by it in reliance upon the advice of or information
from legal counsel, accountants, any person presenting Securities for deposit,
any Owner or Beneficial Owner, or any other person believed by it in good faith
to be competent to give such advice or information.
B-11
<PAGE>
The Trustee shall not be liable for any acts or omissions made by a successor
depositary whether in connection with a previous act or omission of the Trustee
or in connection with any matter arising wholly after the resignation of the
Trustee, provided that in connection with the issue out of which such potential
liability arises the Trustee performed its obligations without negligence or bad
faith while it acted as Trustee. The Trustee shall not be responsible for any
failure to carry out any instructions to vote any of the Underlying Securities,
or for the manner in which any such vote is cast or the effect of any such vote,
provided that any such action or non-action is without negligence or bad faith.
Except as specifically provided in Section 4.6 of the Standard Terms, the
Trustee shall have no obligation to monitor or to obtain any information
concerning the business or affairs of any Securities Issuer or to advise Owners
or Beneficial Owners of any event or condition affecting any Securities Issuer.
The Trustee shall have no obligation to comply with any direction or instruction
from any Owner or Beneficial Owner regarding Receipts except to the extent
specifically provided in the Standard Terms or any applicable Depositary Trust
Agreement. The Trustee shall be a fiduciary under the Standard Terms and the
applicable Depositary Trust Agreement; provided, however, that the fiduciary
duties and responsibilities and liabilities of the Trustee shall be limited by,
and shall be only those specifically set forth in, the Standard Terms and the
applicable Depositary Trust Agreement. No disclaimer of liability under the
Securities Act of 1933 is intended by any provision of the Depositary Trust
Agreement.
(18) RESIGNATION OR REMOVAL OF THE TRUSTEE.
-------------------------------------
(a) The Trustee may at any time resign as Trustee under the Depositary
Trust Agreement by written notice of its election so to do, delivered to the
Initial Depositor, and such resignation shall take effect upon the appointment
of a successor Trustee and its acceptance of such appointment.
(b) If at any time the Trustee is in material breach of its obligations
under the Depositary Trust Agreement and the Trustee fails to cure such breach
within 30 days after receipt by the Trustee of written notice from the Initial
Depositor or the Owners of 25% or more of the outstanding Receipts
specifying such default and requiring the Trustee to cure such default, the
Initial Depositor, acting on behalf of the Owners, may remove the Trustee by
written notice delivered to the Trustee, and such removal shall take effect upon
the appointment of the successor Trustee and its acceptance of such appointment.
(c) In case at any time the Trustee acting hereunder shall resign or be
removed, the Initial Depositor, acting on behalf of the Owners, shall use its
reasonable efforts to appoint a successor Trustee, which shall be a bank or
trust company having an office in the Borough of Manhattan, The City of New
York.
B-12
<PAGE>
(19) AMENDMENT.
---------
The Trustee and the Initial Depositor may amend any provisions of the
Depositary Trust Agreement without the consent of any Owner. Any amendment that
imposes or increases any fees or charges (other than taxes and other
charges, registration fees or other such expenses), or that otherwise
prejudices any substantial existing right of the Owners will not become
effective until 30 days after notice of such amendment is given to the Owners.
Every Owner and Beneficial Owner, at the time any amendment so becomes
effective, shall be deemed, by continuing to hold any Receipt or an interest
therein, to consent and agree to such amendment and to be bound by the
Depositary Trust Agreement as amended thereby. In no event shall any amendment
impair the right of the Owner of any Receipt to Surrender such Receipt and
receive therefor the Underlying Securities represented thereby, except in order
to comply with mandatory provisions of applicable law.
B-13
<PAGE>
(20) EARLY TERMINATION OF DEPOSITARY TRUST AGREEMENT.
-----------------------------------------------
(a) The Trust shall terminate by the Trustee mailing notice of such
termination to the Owners of all Receipts then outstanding at least 30 days
prior to the date set for termination if any of the following occurs:
(i) The Trustee is notified that the Receipts are delisted from a
national securities exchange and are not approved for listing on another
national securities exchange within 5 business days of their
delisting;
(ii) Owners of at least 75% of the outstanding Receipts notify the
Trustee that they elect to terminate the Trust; or
(iii) 60 days shall have expired after the Trustee shall have
delivered to the Initial Depositor and the Owners a written notice of its
election to resign and a successor trustee shall not have been appointed
and accepted its appointment.
(b) On and after the date of termination, the Owner of a Receipt will, upon
(a) Surrender of such Receipt at the Corporate Trust Office of the Trustee, (b)
payment of the fee of the Trustee for the Surrender of Receipts referred to in
Section 2.7 of the Standard Terms, and (c) payment of any applicable taxes or
charges, be entitled to Delivery, to him or upon his order, of the amount of
Underlying Securities evidenced by such Receipt. If any Receipts shall remain
outstanding after the date of termination, the Trustee thereafter shall
discontinue the registration of transfers of Receipts, shall suspend the
distribution of dividends or other distribution to the Owners thereof, and shall
not give any further notices or perform any further acts under these Standard
Terms or the applicable Depositary Trust Agreement, except that the Trustee
shall continue to collect dividends and other distributions pertaining to
Underlying Securities and hold the same uninvested and without liability for
interest, shall sell rights as provided in these Standard Terms or the
applicable Depositary Trust Agreement, and shall continue to deliver Underlying
Securities, together with any dividends or other distributions received with
respect thereto and the net proceeds of the sale of any rights or other
property, in exchange for Receipts Surrendered to the Trustee (after deducting
or upon payment of, in each case, the fee of the Trustee set forth in 5.6 of the
Standard Terms for the Surrender of Receipts, any expenses for the account of
the Owner of such Receipts in accordance with the terms and conditions of the
Depositary Trust Agreement, and any applicable taxes or charges). At any time
after the expiration of one year following the date of termination, the Trustee
may sell the Underlying Securities then held hereunder and may thereafter hold
uninvested the net proceeds of any such sale, together with any other cash then
held by it hereunder, unsegregated and without liability for interest, for the
pro rata benefit of the Owners of Receipts which have not theretofore been
- --- ----
Surrendered, such Owners thereupon becoming general creditors of the Trustee
with respect to such net proceeds.
B-14
<PAGE>
After making such sale, the Trustee shall be discharged from all obligations
under these Standard Terms with respect to the Receipts and the applicable
Depositary Trust Agreement, except to account for such net proceeds and other
cash (after deducting, in each case, the fee of the Trustee for the Surrender of
Receipts, any fees of the Trustee due and owing from the Owner of such Receipts
pursuant to Section 5.6 of the Standard Terms, any expenses for the account of
the Owner of such Receipts in accordance with the terms and conditions of the
Depositary Trust Agreement, and any applicable taxes or charges). Upon the
termination of the applicable Depositary Trust Agreement, the Initial Depositor
shall be discharged from all obligations under such Depositary Trust Agreement
except for its obligations to the Trustee under Section 5.5 of the Standard
Terms.
B-15
<PAGE>
EXHIBIT 5.1
May 5, 2000
Merrill Lynch, Pierce, Fenner & Smith Incorporated
250 Vesey Street
New York, New York 10281
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Regional Bank HOLDRSSM Trust
Registration Statement on Form S-1
-------------------------------------
Ladies and Gentlemen:
We are acting as counsel to Merrill Lynch, Pierce, Fenner & Smith
Incorporated, a Delaware corporation (the "Initial Depositor"), and as special
counsel to the Regional Bank HOLDRSSM Trust (the "Trust") in connection with
the preparation and filing with the Securities and Exchange Commission (the
"Commission") of the Registration Statement on Form S-1, as amended from time
to time and filed by the Initial Depositor (the "Registration Statement"), of
which the prospectus forms a part (the "Prospectus"), for the registration
under the Securities Act of 1933, as amended (the "Securities Act"), of
1,000,000,000 Regional Bank HOLDRSSM (the "HOLDRSSM") to be issued by the
Trust.
In this capacity, we have examined (a) a signed copy of the Registration
Statement and (b) a copy of the depositary trust agreement between The Bank of
New York, as trustee (the "Trustee"), and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as initial depositor (the "Depositary Trust Agreement"). We have
also examined originals, or copies certified or otherwise identified to our
satisfaction, of such other corporate records of the Initial Depositor, such
other certificates and advice of public officials and of officers of the
Initial Depositor, and such other agreements, instruments and documents as we
have deemed necessary as a basis for the opinions expressed below. In such
examination we have assumed the genuineness of all signatures, the authenticity
of all documents submitted to us as originals, and the conformity with the
originals of all documents submitted to us as copies. As to questions of fact
material to such opinions, we have relied upon such certificates and advice.
The opinions set forth below are also based upon the assumptions that: (i) the
Registration Statement, as finally amended (including any post-effective
amendments), has become effective under the Securities Act; (ii) the amount,
price, and other principal terms of the HOLDRSSM have been approved by the
Board of Directors of the Initial Depositor or an authorized designee thereof;
(iii) the Depositary Trust Agreement will be duly authorized, executed and
delivered by the parties thereto substantially in the form filed as an exhibit
to the Registration Statement; and (iv) the HOLDRSSM will be duly authenticated
by the Trustee in accordance with the Depositary Trust Agreement and sold and
delivered by the Initial Depositor against payment therefor.
Our opinions expressed herein are limited to the laws of the State of New
York and to the extent relevant, the General Corporation Law of the State of
Delaware, and the Federal law of the United States, and we do not express any
opinion herein concerning any other law.
Based upon and subject to the foregoing, and having regard for such legal
considerations as we have deemed relevant, we are of the opinion that the
HOLDRSSM will be legally issued, fully paid and nonassessable, will be legal,
valid and binding obligations of the Trust, enforceable against the Trust in
accordance with their terms, except as enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and except as enforcement thereof is
subject to
<PAGE>
general principles of equity (regardless of whether enforcement is considered
in a proceeding at law or in equity).
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the use of our name under the heading "Legal
Matters" in the Prospectus. In giving this consent, we do not thereby concede
that we come within the category of persons whose consent is required by the
Securities Act or the General Rules and Regulations promulgated thereunder.
Very truly yours,
/s/ Shearman & Sterling
<PAGE>
EXHIBIT 8.1
May 5, 2000
Merrill Lynch, Pierce, Fenner & Smith Incorporated
World Financial Center
North Tower--4th Floor
New York, New York 10281
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Regional Bank HOLDRSSM Trust
Registration Statement on Form S-1
-------------------------------------
Ladies and Gentlemen:
We have acted as special Tax Counsel to Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch"), as Initial Depositor, and the Regional
Bank HOLDRSSM Trust in connection with the preparation and filing of a
Prospectus and Registration Statement on Form S-1, as amended from time to time
and filed by the Initial Depositor (the "Registration Statement"), of which the
prospectus forms a part (the "Prospectus"), for the registration under the
Securities Act of 1933, as amended (the "Securities Act"), of 1,000,000,000
Regional Bank HOLDRSSM (the "HOLDRSSM") to be issued by the Trust. Capitalized
terms used herein have the meaning ascribed to them in the Prospectus. The
HOLDRSSM are being issued pursuant to the Depositary Trust Agreement between the
Initial Depositor, The Bank of New York, as trustee (in such capacity, the
"Trustee"), other depositors and owners of HOLDRSSM (the "Trust Agreement").
In connection with the preparation of this opinion, we have examined and
relied on such documents as we have deemed appropriate, including, inter alia,
(i) the Trust Agreement and (ii) the Prospectus. We have made such
investigations of law as we have deemed appropriate as a basis for the opinion
expressed below.
Based on the foregoing, it is our opinion that the Trust will provide for
flow through tax consequences since it will be treated as a grantor trust or
custodial arrangement for United States Federal income tax purposes. Moreover,
the discussion set forth under the caption "Federal Income Tax Consequences" in
the Prospectus represents our opinion of and, subject to the limitations
contained therein, accurately describes, the principal United States Federal
income tax consequences to a holder of HOLDRSSM receipts. The foregoing opinion
is based upon provisions of the Internal Revenue Code of 1986, as amended,
Treasury regulations and administrative and judicial interpretations as of the
date hereof (all of which are subject to change, possibly with retroactive
effect, or different interpretations).
We consent to the use of this opinion as an exhibit to the Registration
Statement and to the reference to our firm under the caption "Legal Matters" in
the Prospectus.
Very truly yours,
/s/ Shearman & Sterling
