<PAGE>
As filed with the Securities and Exchange Commission on May 8, 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)
---------------
Utilities HOLDRS/SM/ Trust
<TABLE>
<S> <C> <C>
yet-to-be formed
[Issuer with respect to the receipts]
Delaware 6211 13-5674085
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification Number)
---------------
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)
</TABLE>
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. [_]
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. [_]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=============================================================================================================
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>
Utilities 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
Utilities HOLDRS/SM/ Trust
The Utilities HOLDRS/SM/ Trust will issue Depositary Receipts called
Utilities HOLDRS/SM/ representing your undivided beneficial ownership in the
U.S.-traded common stock of a group of twenty specified companies that are
involved in various segments of the utilities industry. The Bank of New York
will be the trustee. You only may acquire, hold or transfer Utilities HOLDRS in
a round-lot amount of 100 Utilities HOLDRS or round-lot multiples. Utilities
HOLDRS are separate from the underlying deposited common stocks that are
represented by the Utilities HOLDRS. For a list of the names and the number of
shares of the banks that make up a Utilities HOLDR, see "Highlights of Utilities
HOLDRS--The Utilities HOLDRS" starting on page 9. The trust will issue the
additional Utilities HOLDRS on a continuous basis.
Investing in Utilities HOLDRS involves significant risks. See "Risk
factors" starting on page 4.
The initial public offering price for a round-lot of 100 Utilities 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.
Utilities 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 Utilities HOLDRS.
Application has been made to list the Utilities HOLDRS on the American Stock
Exchange under the symbol "UTH".
----------------------------
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 Utilities HOLDR........................ 2%
- ---------------------
* Includes underwriting fee.
For purchases of Utilities Utilities HOLDRS, the
HOLDRS in excess of underwriting fee will be
%.
Merrill Lynch & Co.
A.G. Edwards & Sons, Inc.
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 Utilities HOLDRS .............. 9
The Trust ................................... 15
Description of Utilities 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 Utilities 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 Utilities HOLDRS in any
jurisdiction where the offer or sale is not permitted.
The Utilities 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
Utilities HOLDRS or of the underlying securities through an investment in the
Utilities HOLDRS.
<PAGE>
SUMMARY
The Utilities 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 Utilities 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 utilities
industry. The number of shares of each common stock held by the trust with
respect to each round-lot of Utilities HOLDRS is specified under "Highlights of
Utilities HOLDRS--The Utilities 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 Utilities HOLDRS that represent your undivided
beneficial ownership interest in the shares of common stock held by the trust on
your behalf. The Utilities HOLDRS are separate from the underlying common
stocks that are represented by the Utilities HOLDRS.
3
<PAGE>
RISK FACTORS
An investment in Utilities HOLDRS involves risks similar to investing in
each of the underlying securities outside of the Utilities HOLDRS, including the
risks associated with concentrated investments in utilities.
General Risk Factors
. Loss of investment. Because the value of Utilities HOLDRS directly relates to
the value of the underlying securities, you may lose all or a substantial
portion of your investment in the Utilities HOLDRS if the underlying
securities decline in value.
. Discount trading price. Utilities HOLDRS may trade at a discount to the
aggregate value of the underlying securities.
. Not necessarily representative of the utilities industry. While the underlying
securities are common stocks of companies generally considered to be involved
in various aspects of the utilities industry, the underlying securities and
the Utilities HOLDRS may not necessarily follow the price movements of the
entire utilities industry generally. If the underlying the securities decline
in value, your investment in the utilities HOLDRS will decline in value even
if common stock prices of companies involved in the utilities 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 utilities industry. In this case, the Utilities HOLDRS may no longer
consist of securities issued only by companies involved in the utilities
industry.
. No investigation of underlying securities. The underlying securities included
in the Utilities 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 utilities industry, without regard for the
value, price performance, volatility or investment merit of the underlying
securities. Consequently, the Utilities 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.
. Loss of diversification. As a result of industry developments,
reorganizations, or market fluctuations affecting issuers of the underlying
securities, Utilities HOLDRS may not necessarily continue to be a diversified
investment in the utilities industry. As a result of market fluctuation and/or
reconstitution events, Utilities 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.
. 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
Utilities HOLDRS and receive delivery of each of the underlying securities.
The cancellation of your Utilities HOLDRS will allow you to sell individual
underlying securities or to deliver individual underlying securities in a
tender offer. The cancellation of Utilities HOLDRS will involve payment of a
cancellation fee to the trustee.
. Trading halts. Trading in Utilities 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 Utilities HOLDRS even though there is trading in some of the underlying
securities; however, you will be able to cancel your Utilities HOLDRS to
receive the underlying securities.
4
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. 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 Utilities HOLDRS. If the Utilities HOLDRS
are delisted by the American Stock Exchange, a termination event will result
unless the Utilities HOLDRS are listed for trading on another national
securities exchange or through NASDAQ within five business days from the date
the Utilities HOLDRS are delisted.
. 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 Utilities 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 Utilities 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 Utilities HOLDRS, the selection of the utilities industry, Merrill
Lynch's activity in the secondary market in the underlying securities, and the
creation and cancellation of Utilities HOLDRS by Merrill Lynch.
. 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 Utilities HOLDRS. Large volumes of purchasing activity, which
may occur in connection with the issuance of Utilities HOLDRS, particularly in
connection with the initial issuance of Utilities 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 Utilities 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 Utilities HOLDRS will also decline.
Risk Factors Specific to Companies Involved in the Utilities Industry
. The utilities industry is extremely competitive and failure of a utilities
company to maintain a customer base will adversely affect its operating
results. The operations of many utilities companies, which have traditionally
been subject to limited competitive pressures, are now subject to increased
pressures with others in the industry in supplying the energy needs of
consumers. Many utilities
5
<PAGE>
companies may not successfully develop and maintain a loyal customer base and
failure to do so could have a material adverse effect on their business.
. Utilities companies are subject to extensive regulation by various federal,
state and local governmental agencies in the conduct of their business. The
sale, marketing and distribution of a utilities companies services are subject
to regulation by all levels of governmental agencies including regulations on
rate and marketing practices, environmental and development restrictions and
regulations with respect to securities offerings. Competitive pressures by new
market participants and changing consumer demands have resulted in additional
changes in the regulatory environment, such as new regulations allowing
consumers a broader choice to select their utility provider. The failure to
obtain necessary government approvals, the restrictions contained in existing
approvals, loss of or changes to previously obtained approvals or the failure
to comply with regulatory requirements could result in fines, unanticipated
expenditures, interruption of service and even criminal prosecution. The
success of a utilities company will depend, in part, upon obtaining and
maintaining regulatory approval to offer its products and services and, once
approved, complying with the continued review by regulatory agencies.
. Many utilities companies are subject to laws relating to the protection of the
environment. The operations of many utilities companies are subject to
extensive federal, state and local laws and regulations relating to the
protection of the environment. Many utilities companies are exposed to
significant environmental costs and liabilities inherent in the industry of a
utility company and there can be no assurance that significant costs and
liabilities will not be incurred, including those relating to claims for
damages to property and persons resulting from operations. In addition,
increasingly stringent federal, state or local environmental laws and
regulations and enforcement policies will result in increased costs and
liabilities.
. The international operations of some utilities companies expose 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 utilities companies have
international development and exploration operations necessary to their
businesses. The risks of international business that the companies are exposed
to include the following:
. general economic, social and political conditions;
. the difficulty of enforcing intellectual property rights, agreements and
collecting receivables through certain foreign legal systems;
. differing tax rates, tariffs, exchange controls or other similar
restrictions;
. currency fluctuations;
. 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; and
. reduction in the number or capacity of personnel in international markets.
. Many utilities companies are holding companies that rely on dividends from
their subsidiaries as a substantial portion of their income and the right to
receive dividends may be subordinate to the interests of third parties. Many
of the utilities companies are separate and distinct entities from their
subsidiaries that are operating utilities companies and they receive a large
portion of their revenue in dividends from these 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 utility company to participate in any distribution of assets upon
a subsidiary's liquidation
6
<PAGE>
or reorganization is subject to the prior claims of the subsidiary's
creditors. The ability of a utility company to receive dividends or other
distributions may be unpredictable, and fluctuations in income may adversely
affect your investment in the Utilities HOLDRS.
. Some of the companies involved in the utilities industry are also engaged in
other lines of business unrelated to the utilities industry, and they may
experience problems with these lines of business which could adversely affect
their operating results. Some of the companies which comprise the Utilities
HOLDRS have lines of business that do not relate to utilities activities and
which may present additional risks not mentioned in this prospectus. The
operating results of these utilities companies may fluctuate as a result of
these additional risks and events in the other lines of business which may
cause unusual volatility in the stock prices of these companies as compared to
other utilities companies. Despite a company's possible success in the
utilities business, 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.
. Failure to integrate acquisitions could disrupt operations and prevent the
realization of intended benefits. Many utilities companies are active
acquirers of other companies as part of their business plans. There can be no
assurance that many utilities companies will be able to integrate these
acquired companies, which may result in failure to realize expected cost
savings, increases in revenue and other projected benefits from such
integration. There can also be no assurance that these companies will be able
to attract and retain qualified personnel from acquired businesses or be
successful in integrating such personnel. Furthermore, utilities companies may
suffer material adverse short and long-term effects on operating results and
financial condition as a result of such acquisitions.
7
<PAGE>
HIGHLIGHTS OF UTILITIES HOLDRS
This discussion highlights information regarding Utilities HOLDRS; we
present certain information more fully in the rest of this prospectus. You
should read the entire prospectus carefully before you purchase Utilities
HOLDRS.
Issuer..................Utilities HOLDRS Trust.
The trust...............The Utilities 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 Utilities 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 Utilities
HOLDRS................Utilities HOLDRS are designed to achieve the following:
Diversification. Utilities HOLDRS are designed to
allow you to diversify your investment in the
utilities industry through a single, exchange-listed
instrument representing your undivided beneficial
ownership of the underlying securities.
Flexibility. The beneficial owners of Utilities
HOLDRS have undivided beneficial ownership interests
in each of the underlying securities represented by
the Utilities HOLDRS, and can cancel their Utilities
HOLDRS to receive each of the underlying securities
represented by the Utilities HOLDRS.
Transaction costs. The expenses associated with
trading Utilities 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 utilities 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 Utilities 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.
8
<PAGE>
The Utilities HOLDRS......The trust will issue Utilities 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 Utilities HOLDRS themselves are
separate from the underlying securities that are
represented by the Utilities HOLDRS.
The specific share amounts for each round-lot of 100
Utilities HOLDRS will be determined on the pricing
date so that the initial issue price will be
approximately $90-$100 per Utilities HOLDR and the
initial weightings of each underlying security
included in the Utilities 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
. names of the 20 issuers of the underlying securities
represented by the Utilities HOLDRS,
. stock ticker symbols,
. indicative share amounts represented by a round-lot
of 100 Utilities HOLDRS as of May 2, 2000,
. indicative weightings as of May 2, 2000, and
. principal market on which the shares of common stock
of the selected companies are traded.
Indicative Primary
Share Indicative Trading
Name of Company Ticker Amounts Weightings Market
- ---------------------- ------ ------- ----------- ------
Enron Corporation ENE 12 9.82% NYSE
Duke Energy Corporation DUK 16 9.78% NYSE
The Williams Companies, Inc. WMB 21 8.85% NYSE
The Southern Company SO 32 8.42% NYSE
PG&E Corporation PCG 19 5.30% NYSE
9
<PAGE>
Indicative Primary
Share Indicative Trading
Name of Company Ticker Amounts Weightings Market
- ---------------------- ------ ------- ----------- ------
El Paso Energy Corporation EPG 11 5.04% NYSE
Texas Utilities Company TXU 13 4.71% NYSE
Unicom Corporation UCM 11 4.63% NYSE
FPL Group, Inc. FPL 9 4.38% NYSE
Dominion Resources, Inc. D 9 4.19% NYSE
Peco Energy Company PE 9 3.94% NYSE
Reliant Energy Resources Corp. REI 14 3.90% NYSE
Public Service Enterprise Group, Inc. PEG 10 3.75% NYSE
Consolidated Edison, Inc. ED 10 3.63% NYSE
Edison International EIX 17 3.47% NYSE
American Electric Power AEP 9 3.45% NYSE
Company, Inc.
Dynegy, Inc. DYN 5 3.41% NYSE
Entergy Corporation ETR 12 3.28% NYSE
Carolina Power & Light CPL 8 3.09% NYSE
Company
FirstEnergy Corporation FE 11 2.97% NYSE
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 Utilities 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 utilities 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, Utilities
HOLDRS in a round-lot of 100 Utilities HOLDRS and
round-lot multiples. The trust will only issue
Utilities HOLDRS upon the deposit of the whole
shares represented by a round-lot of 100 Utilities
HOLDRS. In the event that a fractional share comes
to be represented by a round-lot of Utilities
HOLDRS, the trust may require a minimum of more than
one round-lot of 100 Utilities HOLDRS for an
issuance so that the trust will always receive whole
share amounts for issuance of Utilities HOLDRS.
The number of outstanding Utilities 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 Utilities 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 Utilities
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
10
<PAGE>
the pricing date, plus an underwriting fee. It is
expected that the initial public offering price will
be approximately $90-$100 per Utilities HOLDR.
Purchases...................After the initial offering, you may
acquire Utilities HOLDRS in two ways:
. through an in-kind deposit of the required number
of shares of common stock of the underlying
issuers with the trustee, or
. through a cash purchase in the secondary trading
market.
Underwriting fees...........If you purchase Utilities HOLDRS in
the initial public offering, you will pay an
underwriting fee equal to:
. For purchases of ____ Utilities HOLDRS or fewer,
2%.
. For purchases in excess of Utilities HOLDRS, %.
You will not be charged any issuance fee or other
sales commission in connection with purchases of
Utilities HOLDRS made in the initial public
offering.
Issuance and cancellation
fees......................After the initial offering, if you wish to create
Utilities HOLDRS by delivering to the trust the
requisite shares of common stock represented by a
round-lot of 100 Utilities 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 Utilities
HOLDRS. If you wish to cancel your Utilities 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
Utilities HOLDRS.
Commissions.................If you choose to deposit underlying securities in
order to receive Utilities 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, A.G. Edwards & Sons, 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 Utilities 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 Utilities
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
Utilities 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 Utilities HOLDRS
to the trustee, during the trustee's business hours,
and paying the
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cancellation fees, taxes, and other charges. You
should receive the 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 Utilities
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
Utilities HOLDRS themselves will not have voting
rights.
Rights relating to the
underlying securities......You have the right to:
. Receive all shareholder disclosure materials,
including annual and quarterly reports,
distributed by the issuers of the underlying
securities.
. 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.
. 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 Utilities
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 Utilities 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
Utilities 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 Utilities HOLDRS, unless the
merger, consolidation or other corporate
combination is between companies that are already
included in the Utilities HOLDRS and the
consideration paid is additional
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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 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 Utilities 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 Utilities 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 Utilities
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 Utilities HOLDRS as directly owning the
underlying securities. The Utilities 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 Utilities
HOLDRS on the American Stock Exchange under the
symbol "UTH". Trading will take place only in
round-lots of 100 Utilities HOLDRS and round-lot
multiples. A minimum of 150,000 Utilities 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 Utilities
HOLDRS. Bid and ask prices, however, will be quoted
per single Utilities HOLDRS.
Clearance and settlement....The trust will issue Utilities HOLDRS in book-entry
form. Utilities 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 Utilities HOLDRS."
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THE TRUST
General. This discussion highlights information about the Utilities HOLDRS
trust. You should read this information, information about the depositary trust
agreement as well as the depositary trust agreement before you purchase
Utilities HOLDRS. The material terms of the depositary trust agreement are
described in this prospectus under the heading "Description of the depositary
trust agreement."
The Utilities 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 Utilities HOLDRS trust is not a registered investment
company under the Investment Company Act of 1940.
The Utilities HOLDRS trust is intended to hold deposited shares for the
benefit of owners of Utilities 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 UTILITIES HOLDRS
The trust will issue Utilities 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
Utilities HOLDRS on a continuous basis when an investor deposits the requisite
underlying securities with the trustee.
You may only acquire, hold, trade and surrender Utilities HOLDRS in a
round-lot of 100 Utilities HOLDRS and round-lot multiples. The trust will only
issue Utilities HOLDRS upon the deposit of the whole shares of underlying
securities that are represented by a round-lot of 100 Utilities 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 Utilities HOLDRS, the trust may require a minimum
of more than one round-lot of 100 Utilities HOLDRS for an issuance so that the
trust will always receive whole share amounts for issuance of Utilities HOLDRS.
Utilities 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 Utilities HOLDRS--The Utilities HOLDRS."
Beneficial owners of Utilities 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 Utilities HOLDRS to receive the underlying securities. See "Description
of the depositary trust agreement." Utilities 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. Utilities 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 Utilities
HOLDRS wishes to realize the dollar value of the underlying securities, that
owner will have to cancel the Utilities HOLDRS. Such cancellation will require
payment of fees and expenses as described in "Description of the depositary
trust agreement--Withdrawal of underlying securities."
Utilities 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. Utilities HOLDRS will be available only in book-entry form.
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<PAGE>
Owners of Utilities HOLDRS may hold their Utilities 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 utilities
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
utilities industry as measured by market capitalization and trading volume. The
following criteria were used in selecting the underlying securities on May 2,
2000:
. Market capitalization equal to or greater than $2 billion;
. Average daily trading volume of at least 500,000 shares over the 60
trading days before May 2, 2000;
. 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 $10 million over the 60 trading days before May
2, 2000; and
. 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 Utilities 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 utilities industry.
In this case, the Utilities HOLDRS may no longer consist of securities issued by
companies involved in the utilities industry. Merrill Lynch, Pierce, Fenner &
Smith Incorporated will determine, in its sole discretion, whether the issuer of
a particular underlying security remains in the utilities industry and will
undertake to make adequate disclosure when necessary.
Underlying securities. For a list of the underlying securities represented
by Utilities HOLDRS, please refer to "Highlights of Utilities HOLDRS--The
Utilities 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 Utilities 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.
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<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 Utilities 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.
--------- --------- --------- --------- --------- ---------
Utilities Utilities Utilities
1995 HOLDRS 1996 HOLDRS 1997 HOLDRS
--------- --------- --------- --------- --------- ---------
January 62.43 January 75.31 January 72.71
February 61.66 February 72.40 February 72.42
March 59.76 March 71.49 March 69.43
April 61.81 April 69.09 April 68.04
May 65.87 May 69.76 May 70.17
June 65.36 June 73.13 June 71.74
July 65.22 July 68.24 July 73.57
August 64.45 August 68.79 August 71.57
September 68.29 September 69.09 September 74.76
October 69.74 October 72.13 October 76.23
November 69.45 November 72.74 November 81.12
December 73.09 December 72.40 December 86.89
--------- --------- --------- --------- --------- ---------
Utilities Utilities Utilities
1998 HOLDRS 1999 HOLDRS 2000 HOLDRS
--------- --------- --------- --------- --------- ---------
January 4.25 January 93.99 January 89.91
February 86.49 February 90.50 February 83.14
March 92.17 March 89.42 March 85.90
April 90.04 April 96.41 April 93.07
May 89.82 May 102.37
June 92.79 June 95.74
July 88.16 July 94.80
August 89.56 August 94.80
September 96.67 September 89.71
October 94.62 October 91.24
November 95.33 November 82.55
December 97.79 December 81.53
[GRAPH]
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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 Utilities HOLDRS, provides
that Utilities 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 Utilities HOLDRS. You may create and
cancel Utilities HOLDRS only in round-lots of 100 Utilities HOLDRS. You may
create Utilities HOLDRS by delivering to the trustee the requisite underlying
securities. The trust will only issue Utilities HOLDRS upon the deposit of the
whole shares represented by a round-lot of 100 Utilities HOLDRS. In the event
that a fractional share comes to be represented by a round-lot of Utilities
HOLDRS, the trust may require a minimum of more than one round-lot of 100
Utilities HOLDRS for an issuance so that the trust will always receive whole
share amounts for issuance of Utilities HOLDRS. Similarly, you must surrender
Utilities HOLDRS in integral multiples of 100 Utilities 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 Utilities
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 Utilities
HOLDRS, other than Merrill Lynch, Pierce, Fenner & Smith Incorporated owning
Utilities 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 Utilities 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 Utilities 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 Utilities 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.
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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.
Withdrawal of underlying securities. You may surrender your Utilities
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 Utilities 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 Utilities HOLDRS.
Further issuances of Utilities HOLDRS. The depositary trust agreement
provides for further issuances of Utilities 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 Utilities 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
Utilities 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 Utilities HOLDRS, unless
the merger, consolidation or other corporate combination is between
companies that are already included in the Utilities 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 Utilities HOLDRS will surrender their Utilities 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 Utilities
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 Utilities HOLDRS are delisted. Finally, the
trust will terminate if 75% of the owners of outstanding Utilities HOLDRS other
than Merrill Lynch, Pierce, Fenner & Smith Incorporated vote to dissolve and
liquidate the trust.
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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 Utilities HOLDRS. Promptly after the
execution of any amendment to the agreement, the trustee must furnish or cause
to be furnished written notification of the substance of the amendment to each
owner of Utilities 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 Utilities HOLDRS will not become effective until
30 days after notice of the amendment is given to the owners of Utilities
HOLDRS.
Issuance and cancellation fees. After the initial public offering, the
trust expects to issue more Utilities HOLDRS. If you wish to create Utilities
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 Utilities HOLDRS. If you wish to cancel your Utilities 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 Utilities 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 Utilities 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 a member 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 Utilities
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 Utilities 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 Utilities 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 Utilities 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.
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FEDERAL INCOME TAX CONSEQUENCES
General
The following is a summary of the U.S. federal income tax consequences
relating to the Utilities HOLDRS for:
. a citizen or resident of the United States;
. a corporation or partnership created or organized in the United States
or under the laws of the United States;
. an estate, the income of which is includible in gross income for U.S.
federal income tax purposes regardless of its source;
. 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
. 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 Utilities 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 Utilities HOLDRS
A receipt holder purchasing and owning Utilities HOLDRS will be treated,
for U.S. federal income tax purposes, as directly owning a proportionate share
of the underlying securities represented by Utilities 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 Utilities 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 Utilities 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
Utilities HOLDRS. Similarly, with respect to sales of Utilities HOLDRS for cash
in the secondary market, the amount realized with respect to a sale of Utilities
HOLDRS will be equal to the aggregate amount realized with respect to each of
the underlying securities.
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The distribution of any securities by the trust upon the surrender of
Utilities 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 Utilities 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 Utilities HOLDRS
or of the underlying securities through an investment in the Utilities HOLDRS.
ERISA CONSIDERATIONS
Any plan fiduciary which proposes to have a plan acquire Utilities 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 Utilities 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
Utilities HOLDRS. The selling group proposes to offer the Utilities 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 Utilities HOLDRS to A.G. Edwards & Sons, Inc. and
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%.
We expect the trust to deliver the initial distribution of Utilities 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 Utilities 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 Utilities HOLDRS.
21
<PAGE>
Members of the selling group have from time to time provided investment
banking and other financial services to certain of the issuers of the underlying
securities and expect in the future to provide these services, for which they
have received and will receive customary fees and commissions. They also may
have served as counterparties 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 Utilities 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 Utilities
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 Utilities 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 Utilities 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 Utilities 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 its affiliates are not affiliated with
the issuers of the underlying securities, and the issuers of the underlying
securities have no obligations with respect to Utilities HOLDRS. This prospectus
relates only to Utilities 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 in the preparation of these documents or
made any due diligence inquiries with respect to the issuers of the underlying
securities in connection with Utilities HOLDRS. We make no representation that
these publicly available documents or any other publicly available
22
<PAGE>
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 Utilities HOLDRS, have been publicly disclosed.
23
<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.
AMERICAN ELECTRIC POWER COMPANY, INC. (AEP)
American Electric Power Company, Inc. is a public utility holding
company engaged in the generation, purchase, transmission and distribution of
electric power. American Electric's service areas cover portions of the states
of Indiana, Kentucky, Michigan, Ohio, Tennessee, Virginia and West Virginia.
American Electric also provides energy consulting, engineering and technical
services.
<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 35 January 44 1/4 January 41 3/8 January 49 5/16 January 43 13/16 January 33 1/2
February 33 7/8 February 42 7/8 February 41 3/4 February 48 February 41 5/8 February 28 1/8
March 31 3/4 March 41 3/4 March 41 3/4 March 50 1/4 March 39 11/16 March 29 13/16
April 32 3/4 April 40 5/8 April 40 1/2 April 47 3/4 April 41 7/16 April 36 5/18
May 34 1/4 May 40 1/8 May 40 5/8 May 45 3/8 May 43 3/8
June 35 1/8 June 42 5/8 June 41 15/16 June 45 3/8 June 37 9/16
July 34 1/2 July 41 1/2 July 44 3/4 July 42 15/16 July 35 3/8
August 34 1/8 August 41 1/2 August 43 11/16 August 45 1/4 August 36 5/16
September 36 3/8 September 40 5/8 September 45 1/2 September 48 13/16 September 34 1/8
October 38 1/8 October 41 5/8 October 47 1/4 October 48 15/16 October 34 1/2
November 37 3/4 November 41 1/2 November 49 9/16 November 46 3/8 November 31 3/8
December 40 1/2 December 41 1/8 December 51 5/8 December 47 1/16 December 32 1/8
</TABLE>
The closing price on , 2000 was .
A-1
<PAGE>
CAROLINA POWER & LIGHT COMPANY (CPL)
Carolina Power & Light Company is a energy provider engaged in the
generation, transmission, distribution and sale of electricity in portions of
North and South Carolina and the transmission, distribution and sale of natural
gas in portions of North Carolina. Carolina Power & Light also provides
telecommunication and energy management services and is also engaged in propane
and miscellaneous non-regulated activities.
<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 28 3/8 January 37 January 37 5/8 January 40 5/8 January 41 5/8 January 32 1/4
February 27 1/2 February 36 1/2 February 37 1/8 February 41 3/4 February 39 7/8 February 29 3/4
March 27 1/8 March 37 1/4 March 36 1/4 March 45 1/4 March 37 13/16 March 32 7/16
April 27 1/2 April 36 April 34 April 43 1/16 April 40 3/8 April 36 9/16
May 29 7/8 May 36 1/8 May 34 3/4 May 41 May 43 3/4
June 30 1/4 June 38 June 35 7/8 June 43 3/8 June 42 13/16
July 30 3/8 July 36 July 35 5/8 July 40 5/8 July 41 1/8
August 30 5/8 August 34 7/8 August 33 3/4 August 43 1/16 August 36 3/8
September 33 5/8 September 34 1/2 September 36 September 43 3/16 September 35 3/8
October 32 3/4 October 36 1/8 October 35 3/4 October 45 7/8 October 34 1/2
November 32 7/8 November 36 5/8 November 37 3/8 November 46 3/8 November 30 1/8
December 34 1/2 December 36 1/2 December 42 3/8 December 47 1/16 December 30 7/16
</TABLE>
The closing price on , 2000 was .
A-2
<PAGE>
CONSOLIDATED EDISON, INC. (ED)
Consolidated Edison, Inc. is a public utility holding company which
provides electric, gas and steam transmission and distribution services in
portions of New York and northern New Jersey and northeastern Pennsylvania. In
addition, Consolidated Edison operates a telecommunications infrastructure
company, a retail energy supply company, a wholesale energy supply company and
an infrastructure development 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 28 1/4 January 33 3/4 January 31 January 41 5/16 January 49 7/16 January 32 11/16
February 27 5/8 February 32 3/8 February 30 7/8 February 42 1/2 February 46 3/4 February 27 9/16
March 27 1/4 March 31 7/8 March 30 March 46 3/4 March 45 5/16 March 29 1/8
April 27 3/4 April 29 3/8 April 27 3/4 April 45 1/4 April 45 7/16 April 35 3/16
May 29 7/8 May 27 7/8 May 29 1/8 May 42 13/16 May 48 9/16
June 29 1/2 June 29 1/4 June 29 7/16 June 46 1/16 June 45 1/4
July 29 July 27 July 31 5/8 July 42 5/16 July 43 1/2
August 28 1/14 August 26 1/8 August 30 5/8 August 47 5/16 August 44
September 30 3/8 September 27 3/4 September 34 September 52 September 41 1/2
October 30 3/8 October 29 1/4 October 34 1/4 October 50 1/8 October 38 3/16
November 28 3/4 November 29 November 37 15/16 November 50 13/16 November 34 1/2
December 31 3/4 December 29 1/8 December 41 December 52 7/8 December 34 1/2
</TABLE>
The closing price on , 2000 was .
A-3
<PAGE>
DOMINION RESOURCES, INC. (D)
Dominion Resources, Inc. is a diversified utility holding company whose
subsidiaries are public utilities engaged in the generation, transmission,
distribution and sale of electric energy. These electric power subsidiaries
operate in Virginia and northeastern North Carolina. It also produces,
transports, distributes and markets natural gas to customers in Pennsylvania,
Ohio, Virginia, West Virginia, New York and other cities in the mid-Atlantic and
northeastern 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 38 1/8 January 42 7/8 January 39 5/8 January 39 15/16 January 44 3/4 January 41 3/4
February 38 February 39 1/2 February 40 1/4 February 39 7/8 February 38 5/8 February 36 11/16
March 36 March 39 1/2 March 36 3/8 March 41 13/16 March 36 15/16 March 38 7/16
April 36 1/2 April 38 1/2 April 34 3/8 April 39 9/16 April 41 1/8 April 45
May 37 1/8 May 37 7/8 May 34 5/8 May 39 11/16 May 43 3/16
June 36 1/2 June 40 June 36 5/8 June 40 3/4 June 43 5/16
July 35 5/8 July 37 5/8 July 36 3/4 July 40 3/4 July 44 1/16
August 36 1/8 August 37 3/8 August 36 August 41 11/16 August 46 1/4
September 37 5/8 September 37 3/4 September 37 7/8 September 44 5/8 September 45 1/8
October 39 3/4 October 37 3/4 October 37 3/16 October 46 1/8 October 48 1/8
November 39 5/8 November 38 1/8 November 38 7/8 November 46 3/16 November 45 3/8
December 41 1/4 December 38 1/2 December 42 9/16 December 46 3/4 December 39 1/4
</TABLE>
The closing price on ,2000 was .
A-4
<PAGE>
DUKE ENERGY CORPORATION (DUK)
Duke Energy Corporation generates, transmits, distributes and sells
electricity in central and western North Carolina and the western portion of
South Carolina. Its natural gas operations provide interstate transportation and
storage of natural gas for customers primarily in the mid-Atlantic and New
England states and gathers, processes, transports and markets natural gas and
produces, transports and markets natural gas liquids. Duke Energy also develops,
owns and operates energy-related facilities throughout the world.
<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 40 3/8 January 49 3/4 January 46 7/8 January 54 3/16 January 61 13/16 January 57 3/4
February 39 1/4 February 48 7/8 February 44 1/4 February 55 9/16 February 56 7/8 February 48 1/2
March 38 1/4 March 50 1/2 March 44 1/8 March 59 9/16 March 54 13/16 March 52 1/2
April 39 1/2 April 47 April 43 7/8 April 57 7/8 April 56 April 57 1/2
May 41 3/4 May 48 1/4 May 45 1/8 May 57 5/8 May 60 5/16
June 41 1/2 June 51 1/4 June 47 15/16 June 59 1/4 June 54 7/16
July 41 1/2 July 47 7/8 July 50 11/16 July 57 1/8 July 52 15/16
August 40 5/8 August 46 3/4 August 48 7/16 August 62 3/8 August 57 1/2
September 43 3/8 September 46 5/8 September 49 7/16 September 66 3/16 September 55 1/8
October 44 3/4 October 48 7/8 October 48 1/2 October 64 11/16 October 56 9/16
November 44 7/8 November 46 3/8 November 52 November 62 9/16 November 50 11/16
December 47 3/8 December 46 1/4 December 55 3/8 December 64 1/16 December 50 1/8
</TABLE>
The closing price on , 2000 was .
A-5
<PAGE>
DYNEGY, INC. (DYN)
Dynegy, Inc. is a holding company whose subsidiaries provide energy
products and services in North America and the United Kingdom. Dynegy markets
products through its wholesale marketing operations which include natural gas,
electricity, coal, natural gas liquids, crude oil, liquid petroleum gas and
related services. These operations are supported by subsidiaries that provide
power generation, gas and liquids storage capacity and transportation. Dynegy
operates an electric and natural gas utility engaged in the transmission,
distribution and sale of electricity and natural gas.
<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 5/8 January 10 1/4 January 21 1/2 January 16 January 10 5/8 January 31
February 10 1/2 February 11 3/8 February 19 3/4 February 15 1/2 February 12 February 46 7/8
March 9 1/8 March 12 3/4 March 15 3/4 March 14 5/8 March 14 1/16 March 62 47/64
April 9 5/8 April 15 April 17 5/64 April 14 3/4 April 17 3/8 April 65 7/16
May 8 3/4 May 15 1/2 May 18 May 15 3/16 May 17 1/8
June 10 1/4 June 15 June 15 1/2 June 12 1/2 June 20 3/8
July 10 July 16 1/4 July 16 3/16 July 13 7/8 July 24
August 9 1/2 August 15 1/8 August 16 3/8 August 99 /16 August 23 1/2
September 9 September 15 5/8 September 17 3/4 September 13 7/16 September 20 11/16
October 9 October 18 October 19 October 15 October 22 7/8
November 8 7/8 November 21 3/4 November 16 1/2 November 13 November 22 1/2
December 8 7/8 December 23 1/4 December 17 1/2 December 10 15/16 December 24 5/16
</TABLE>
The closing price on , 2000 was .
A-6
<PAGE>
EDISON INTERNATIONAL (EIX)
Edison International is the parent holding company of a public utility
company as well as other non-utility companies. Edison's non-utility companies
are engaged in developing, acquiring, owning and operating electric power
generation facilities throughout the world. They also provide capital and
financial services for energy and infrastructure projects, manage and sell real
estate projects and provide energy services, utility outsourcing and consumer
products and services.
<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 1/4 January 18 1/2 January 21 3/8 January 26 7/8 January 27 13/16 January 29 1/8
February 16 3/8 February 17 1/2 February 21 1/2 February 27 5/8 February 25 1/2 February 26 1/4
March 15 5/8 March 17 1/8 March 22 1/2 March 29 3/8 March 22 1/4 March 16 9/16
April 16 3/4 April 16 April 21 April 29 13/16 April 24 1/2 April 19 1/16
May 17 3/8 May 16 1/2 May 23 3/8 May 29 3/8 May 27 1/2
June 17 1/8 June 17 5/8 June 24 7/8 June 29 9/16 June 26 3/4
July 17 1/8 July 15 3/8 July 25 1/4 July 27 3/4 July 25 5/16
August 16 5/8 August 17 3/8 August 24 1/8 August 28 7/16 August 25 3/8
September 17 3/4 September 17 7/8 September 25 1/4 September 25 11/16 September 24 5/16
October 17 October 19 5/8 October 25 5/8 October 26 3/8 October 29 5/8
November 15 3/4 November 19 7/8 November 26 13/16 November 27 1/2 November 26 1/2
December 17 5/8 December 19 7/8 December 27 3/16 December 27 7/8 December 26 3/16
</TABLE>
The closing price on , 2000 was .
A-7
<PAGE>
EL PASO ENERGY CORPORATION (EPG)
El Paso Energy Corporation's principal operations include the
transportation, gathering, processing, and storage of natural gas and the
marketing of natural gas, power, and other energy-related commodities. El Paso
Energy also assists in the development and operation of energy infrastructure
facilities worldwide and the domestic exploration and production of natural gas
and oil. On January 18, 2000, Coastal Corporation and El Paso Energy announced
the execution of a definitive merger agreement. The merger will be submitted for
approval to the joint shareholders of the companies on May 5, 2000. This
transaction remains subject to this shareholder approval and other customary
closing conditions.
<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 15 January 161/8 January 26 15/16 January 32 January 33 January 32 1/4
February 15 3/8 February 167/8 February 26 13/16 February 33 3/16 February 36 7/16 February 37 1/16
March 14 5/16 March 181/2 March 28 5/16 March 35 5/16 March 32 11/16 March 40 3/8
April 14 5/8 April 181/2 April 29 April 36 15/16 April 36 3/4 April 42 3/8
May 14 May 181/8 May 29 5/8 May 38 5/8 May 36 1/16
June 14 1/4 June 191/4 June 27 1/2 June 38 1/4 June 35 3/16
July 12 11/16 July 191/2 July 28 29/32 July 34 July 36
August 14 1/16 August 2013/16 August 28 1/8 August 25 August 36 9/16
September 13 3/4 September 22 September 30 9/32 September 32 7/16 September 40 1/4
October 13 1/2 October 241/4 October 29 31/32 October 35 7/16 October 41
November 15 3/8 November 25 November 30 11/16 November 34 1/8 November 38 1/2
December 14 3/8 December 251/4 December 33 1/4 December 34 13/16 December 38 13/16
</TABLE>
The closing price on , 2000 was .
A-8
<PAGE>
ENRON CORPORATION (ENE)
Enron Corporation, through its subsidiaries, is principally engaged in
the generation, transmission and distribution of electricity to markets in the
northwestern United States and the transportation of natural gas through
pipelines to markets throughout the United States. Enron also markets natural
gas, electricity and other commodities and assists in the development,
construction and operation of power plants, pipelines and other energy related
assets throughout the world.
<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 9/16 January 18 1/2 January 20 5/8 January 20 23/32 January 33 January 677/8
February 16 1/2 February 18 5/16 February 19 15/16 February 23 1/2 February 321/2 February 683/4
March 16 1/2 March 18 7/16 March 19 1/16 March 23 3/16 March 321/8 March 747/8
April 17 April 20 1/8 April 18 13/16 April 24 19/32 April 375/8 April 6911/16
May 18 1/4 May 20 May 20 3/8 May 25 1/16 May 3511/16
June 17 9/16 June 20 7/16 June 20 13/32 June 27 1/32 June 407/8
July 17 3/8 July 19 11/16 July 18 15/16 July 26 15/32 July 4219/32
August 16 13/16 August 20 1/16 August 19 1/4 August 21 5/32 August 417/8
September 16 3/4 September 20 3/8 September 19 1/4 September 26 3/4 September 411/16
October 17 3/16 October 23 1/4 October 19 October 26 3/8 October 3915/16
November 18 3/4 November 22 15/16 November 19 11/32 November 26 1/4 November 381/16
December 19 1/16 December 21 9/16 December 20 25/32 December 28 17/32 December 443/8
</TABLE>
The closing price on , 2000 was .
A-9
<PAGE>
ENTERGY CORPORATION (ETR)
Entergy Corporation is a registered public utility holding company
primarily engaged, through its subsidiaries, in domestic utility operations,
power marketing and trading, global power development and domestic non-utility
nuclear operations. Entergy's major customers include the chemical, petroleum
refining, paper and food products industries. Entergy's utility services are
primarily provided in Arkansas, Louisiana, Mississippi and Texas.
<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 24 3/8 January 29 5/8 January 27 1/4 January 28 5/8 January 29 7/16 January 24 15/6
February 22 3/8 February 28 3/8 February 26 3/8 February 28 15/16 February 28 1/4 February 20 1/4
March 20 7/8 March 28 March 24 1/2 March 29 3/4 March 27 1/2 March 20 3/16
April 21 3/4 April 26 3/8 April 23 3/8 April 24 7/8 April 31 1/4 April 25 7/16
May 24 3/4 May 26 1/4 May 26 3/8 May 26 5/16 May 32 7/16
June 24 1/8 June 28 3/8 June 27 1/2 June 28 3/4 June 31 1/4
July 23 3/4 July 25 1/2 July 27 5/16 July 27 3/8 July 30 5/16
August 24 1/8 August 25 3/8 August 24 13/16 August 28 13/16 August 29 13/16
September 26 1/8 September 27 September 26 1/16 September 30 3/4 September 28 15/16
October 28 1/2 October 28 October 24 3/8 October 28 3/4 October 29 15/16
November 27 7/8 November 27 1/8 November 26 November 29 5/16 November 27 9/16
December 29 1/4 December 27 5/8 December 29 15/16 December 31 1/8 December 25 3/4
</TABLE>
The closing price on ,2000 was .
A-10
<PAGE>
FIRSTENERGY CORPORATION (FE)
FirstEnergy Corporation is a holding company of four principal electric
utility operating subsidiaries. FirstEnergy's subsidiaries furnish electric
service and provide transmission services and electric energy to municipalities
primarily in Pennsylvania and Ohio. Its other subsidiaries provide energy-
related products and services. It also engages in the sale, purchase and
interchange of electric energy with other electric companies.
<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 1/8 January 23 7/8 January 23 1/8 January 29 January 31 1/16 January 22 3/4
February 20 7/8 February 23 3/4 February 22 1/2 February 28 15/16 February 29 1/4 February 18 1/2
March 20 March 22 5/8 March 21 March 30 13/16 March 28 March 20 5/8
April 20 1/8 April 20 7/8 April 20 April 30 1/4 April 29 11/16 April 25 7/16
May 21 7/8 May 21 7/8 May 21 1/4 May 29 11/16 May 31 13/16
June 22 5/8 June 21 7/8 June 21 3/4 June 30 3/4 June 31
July 22 July 21 July 22 1/4 July 27 9/16 July 28 9/16
August 21 5/8 August 21 August 22 August 28 7/8 August 28 9/16
September 22 3/4 September 19 3/8 September 23 7/16 September 31 1/16 September 25 5/16
October 22 7/8 October 20 7/8 October 24 3/4 October 30 October 26 1/16
November 22 3/4 November 23 November 27 November 30 15/16 November 23 5/16
December 23 1/2 December 22 3/4 December 29 December 32 9/16 December 22 11/16
</TABLE>
The closing price , 2000 was .
A-11
<PAGE>
FPL GROUP, INC. (FPL)
FPL Group, Inc. is a public utility holding company engaged in the
generation, transmission, distribution and sale of electric energy throughout
most of the east and southwestern coasts of Florida. FPL is also involved in
producing electrcity from renewable fuels and in non-utilities related
businesses, such as the sale and marketing of fiber-optic network capacity.
<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 36 5/8 January 46 3/8 January 44 1/4 January 57 3/8 January 54 7/8 January 42 3/16
February 35 7/8 February 44 5/8 February 45 1/2 February 58 1/16 February 51 7/16 February 38 5/8
March 36 3/8 March 45 1/4 March 44 1/8 March 64 1/4 March 53 1/4 March 46 1/16
April 36 3/4 April 43 1/8 April 44 5/8 April 62 1/16 April 56 3/8 April 45 1/4
May 39 1/4 May 42 3/4 May 46 3/8 May 61 7/16 May 58 3/16
June 38 5/8 June 46 June 46 1/16 June 63 June 54 5/8
July 38 1/4 July 45 3/8 July 47 7/8 July 60 13/16 July 53 15/16
August 38 7/8 August 44 1/4 August 46 5/16 August 66 9/16 August 54
September 40 7/8 September 43 1/4 September 51 5/16 September 69 11/16 September 50 3/8
October 41 7/8 October 45 7/8 October 51 11/16 October 62 9/16 October 50 5/16
November 43 3/8 November 46 1/8 November 55 15/16 November 61 1/4 November 43 3/4
December 46 3/8 December 46 December 59 3/16 December 61 5/8 December 42 13/16
</TABLE>
The closing price on , 2000 was .
A-12
<PAGE>
PECO ENERGY COMPANY (PE)
PECO Energy Company is a public transmitting utility and electric
utility. PECO is principally engaged in the production, purchase, transmission,
distribution and sale of electricity to residential, commercial, industrial and
wholesale customers. PECO also distributes and sells natural gas to residential,
commercial and industrial customers.
<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 26 3/4 January 30 3/4 January 23 January 18 15/16 January 38 3/16 January 41 3/4
February 26 3/4 February 28 1/4 February 22 1/2 February 19 13/16 February 35 5/8 February 37 5/16
March 25 1/8 March 26 5/8 March 20 3/8 March 22 1/8 March 46 1/4 March 36 7/8
April 25 3/4 April 24 3/4 April 19 3/4 April 23 13/16 April 47 7/16 April 41 11/16
May 28 1/8 May 24 5/8 May 19 May 28 1/4 May 48 15/16
June 27 5/8 June 26 June 21 June 29 3/16 June 41 7/8
July 28 5/8 July 23 1/2 July 23 1/2 July 29 15/16 July 42 3/8
August 26 5/8 August 23 1/2 August 23 13/16 August 34 1/4 August 40 5/8
September 28 5/8 September 23 3/4 September 23 7/16 September 36 3/4 September 37 1/2
October 29 1/4 October 25 1/4 October 22 3/4 October 38 3/4 October 38 3/16
November 29 November 25 1/2 November 24 5/16 November 40 1/8 November 32 15/16
December 30 1/8 December 25 1/4 December 24 1/4 December 41 3/4 December 34 3/4
</TABLE>
closing price on , 2000 was .
A-13
<PAGE>
PG&E CORPORATION (PCG)
PG&E Corporation is an energy-based holding company whose subsidiaries
operate public utilities engaged principally in providing electricity and
natural gas distribution and transmission services throughout most of northern
and central California. PG&E also provides energy products and services
throughout North America including the development, construction and operation
of independent power generation facilities that serve wholesale and industrial
customers. Through its subsidiaries, PG&E also owns and operates natural gas
pipelines and storage facilities, buys and sells energy commodities, provides
risk management services and provides electricity, natural gas, and related
services to industrial, commercial and institutional customers.
<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 1/4 January 27 3/4 January 22 7/8 January 29 13/16 January 31 15/16 January 21 15/16
February 25 5/8 February 25 5/8 February 23 February 30 1/8 February 31 1/2 February 20 5/8
March 24 7/8 March 22 3/8 March 23 1/2 March 33 March 31 1/16 March 21
April 26 7/8 April 22 3/4 April 24 April 32 3/8 April 31 1/16 April 25 15/16
May 29 May 23 1/4 May 23 1/8 May 31 1/2 May 33 3/4
June 29 June 23 1/4 June 24 1/4 June 31 9/16 June 32 7/16
July 29 1/2 July 19 3/4 July 24 13/16 July 30 7/16 July 31 5/8
August 28 3/4 August 22 5/8 August 23 1/8 August 32 1/8 August 30 5/16
September 30 September 21 3/4 September 23 3/16 September 31 7/8 September 25 7/8
October 29 3/8 October 23 3/8 October 25 9/16 October 30 7/16 October 22 15/16
November 27 1/2 November 24 1/8 November 28 1/4 November 30 15/16 November 22 3/8
December 28 3/8 December 21 December 30 5/16 December 31 1/2 December 20 1/2
</TABLE>
The closing price on , 2000 was .
A-14
<PAGE>
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED (PEG)
Public Service Enterprise Group Incorporated. is a public utility
holding company engaged primarily in the generation, transmission, distribution
and sale of electric energy and gas services. Public Service Enterprise
primarily operates in New Jersey and also markets electricity, natural gas,
capacity and related services throughout the eastern United States. Public
Service Enterprise also develops, acquires and operates electric generation and
distribution facilities and engages in wholesale and retail sales in selected
domestic and international markets.
<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 28 3/4 January 31 1/4 January 27 3/8 January 31 January 39 9/16 January 34 3/8
February 29 1/8 February 28 1/8 February 28 1/4 February 32 1/4 February 38 February 29
March 27 3/8 March 27 3/8 March 26 1/4 March 37 3/4 March 38 3/16 March 29 5/8
April 27 1/2 April 26 1/8 April 24 1/8 April 33 9/16 April 40 April 35 7/8
May 29 3/4 May 26 1/2 May 24 3/4 May 33 1/8 May 41 15/16
June 27 3/4 June 27 1/2 June 25 June 34 7/16 June 40 13/16
July 27 3/4 July 26 July 24 3/4 July 32 11/16 July 40 5/16
August 27 1/2 August 27 1/8 August 24 13/16 August 36 1/2 August 41
September 29 3/4 September 26 3/4 September 25 3/4 September 39 5/16 September 38 5/8
October 29 3/8 October 26 7/8 October 25 15/16 October 38 October 39 9/16
November 29 5/8 November 28 5/8 November 29 3/16 November 39 November 35
December 30 5/8 December 27 1/4 December 31 13/16 December 40 December 34 13/16
</TABLE>
The closing price on , 2000 was .
A-15
<PAGE>
RELIANT ENERGY RESOURCES CORP. (REI)
Reliant Energy Resources Corp. is an international energy services
company that provides energy and energy services in North America, western
Europe and Latin America. Reliant's services include electric operations and
natural gas distribution. Reliant also acquires, develops and operates
unregulated power generation facilities which sell capacity, energy and related
services.
<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 19 15/16 January 24 January 22 5/8 January 26 1/8 January 30 1/4 January 22 13/16
February 19 1/8 February 22 5/8 February 23 1/4 February 25 7/8 February 26 13/16 February 20 9/16
March 19 1/16 March 21 5/8 March 20 7/8 March 28 3/4 March 26 1/16 March 23 9/16
April 19 11/16 April 21 3/8 April 20 April 29 1/16 April 28 5/16 April 26 5/8
May 21 1/2 May 21 7/8 May 20 3/4 May 28 5/8 May 30 1/2
June 21 1/16 June 24 5/8 June 21 7/16 June 30 13/16 June 27 5/8
July 21 7/8 July 22 5/8 July 20 15/16 July 27 15/16 July 27 5/16
August 21 1/4 August 21 3/4 August 20 1/4 August 28 13/16 August 27 11/16
September 22 1/16 September 22 1/8 September 21 3/4 September 31 1/8 September 27 1/16
October 23 3/16 October 22 7/8 October 21 3/4 October 31 1/16 October 27 1/4
November 22 7/8 November 22 November 23 11/16 November 31 5/8 November 24 13/16
December 24 1/4 December 22 5/8 December 26 3/4 December 32 1/16 December 22 7/8
</TABLE>
The closing price on , 2000 was .
A-16
<PAGE>
THE SOUTHERN COMPANY (SO)
The Southern Company acquires, develops, builds and operates power
production and delivery facilities primarily in the southeastern United States.
The Southern Company also provides a range of energy-related services to
utilities and industrial companies in countries throughout the world. Its
businesses include independent power projects, integrated utilities, a
distribution company, and energy trading and marketing businesses. The Southern
Company's subsidiaries market and provide digital wireless communications
services to the public and to utilities companies within 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 20 7/8 January 25 3/8 January 21 7/8 January 24 5/16 January 26 15/16 January 25 11/16
February 20 5/8 February 23 7/8 February 21 3/4 February 24 11/16 February 25 1/16 February 22 3/16
March 20 3/8 March 23 7/8 March 21 1/8 March 27 11/16 March 23 5/16 March 21 3/4
April 20 5/8 April 22 April 20 3/8 April 26 1/2 April 27 1/16 April 24 15/16
May 22 1/8 May 23 1/8 May 21 1/8 May 26 9/16 May 28 3/8
June 22 3/8 June 24 5/8 June 21 7/8 June 27 11/16 June 26 1/2
July 22 July 22 5/8 July 21 15/16 July 25 1/2 July 26 3/8
August 21 1/8 August 22 1/2 August 21 1/16 August 28 1/8 August 27 1/16
September 23 1/2 September 22 1/2 September 22 9/16 September 29 7/16 September 25 3/4
October 23 7/8 October 22 1/8 October 22 15/16 October 28 3/16 October 26 9/16
November 22 7/8 November 22 1/4 November 24 November 29 1/2 November 23 3/8
December 24 5/8 December 22 5/8 December 25 7/8 December 29 1/16 December 23 1/2
</TABLE>
The closing price on , 2000 was .
A-17
<PAGE>
TEXAS UTILITIES COMPANY (TXU)
Texas Utilities Company is primarily engaged in the generation,
purchase, transmission, distribution and sale of electricity and the gathering,
processing, transmission and distribution of natural gas. Its utilities
operations are located primarily in Texas. Its energy marketing division is a
wholesale and retail marketer of natural gas and electricity throughout the
United States. Texas Utilities is also engaged in the purchase, transmission,
distribution and sale of telecommunications, retail energy and power
development.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 34 3/4 January 40 3/4 January 40 1/2 January 41 1/8 January 43 15/16 January 35 3/8
February 32 3/4 February 40 3/4 February 40 3/8 February 40 7/16 February 42 7/16 February 32 5/8
March 31 3/4 March 41 3/8 March 34 1/4 March 39 5/16 March 42 March 29 11/16
April 32 5/8 April 40 1/4 April 33 1/4 April 40 April 39 7/8 April 33 11/16
May 36 1/8 May 40 7/8 May 34 1/4 May 39 1/2 May 45 1/4
June 34 3/8 June 42 3/4 June 34 7/16 June 41 5/8 June 41 7/16
July 33 7/8 July 42 July 35 7/16 July 40 1/16 July 42 1/2
August 34 5/8 August 41 August 34 7/8 August 42 1/2 August 40 7/16
September 34 7/8 September 39 3/4 September 36 September 46 9/16 September 37 5/16
October 36 3/4 October 40 1/2 October 35 7/8 October 43 3/4 October 38 3/4
November 38 1/2 November 39 1/2 November 40 November 44 9/16 November 35 13/16
December 41 December 40 3/4 December 41 1/2 December 46 11/16 December 35 9/16
</TABLE>
The closing price on , 2000 was .
A-18
<PAGE>
UNICOM CORPORATION (UCM)
Unicom Corporation is involved in the production, purchase,
transmission, distribution and sale of energy only related services. Unicom's
subsidiary is ComEd which is engaged principally in the production, purchase,
transmission, distribution and sale of electricity to residential, commercial,
industrial and wholesale customers. Through other subsidiaries, Unicom is also
engaged in providing energy services, including gas services, energy management
systems and retail gas services. Unicom also designs, installs and services
heating, ventilation and air conditioning facilities for commercial and
industrial customers. Unicom primarily operates 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 26 January 33 5/8 January 23 5/8 January 31 January 35 5/8 January 39 1/8
February 25 3/8 February 32 February 22 1/4 February 32 1/16 February 35 9/16 February 37 13/16
March 23 3/4 March 27 March 19 1/2 March 35 March 36 9/16 March 36 1/2
April 26 1/4 April 27 1/2 April 21 3/4 April 34 3/4 April 38 13/16 April 39 3/4
May 27 1/8 May 27 5/8 May 22 3/4 May 34 3/8 May 42 5/16
June 26 5/8 June 27 3/8 June 22 1/4 June 35 1/16 June 38 9/16
July 27 3/4 July 23 1/2 July 22 11/16 July 34 9/16 July 39 1/4
August 28 August 23 August 23 5/8 August 35 5/8 August 38 5/8
September 30 1/4 September 25 1/8 September 23 3/8 September 37 7/8 September 36 15/16
October 32 3/4 October 26 October 28 October 37 11/16 October 38 5/16
November 32 November 26 5/8 November 29 1/8 November 37 11/16 November 31 15/16
December 32 3/4 December 27 1/8 December 30 3/4 December 38 9/16 December 33 1/2
</TABLE>
The closing price on , 2000 was .
A-19
<PAGE>
THE WILLIAMS COMPANIES, INC. (WMB)
The Williams Companies, Inc. owns and operates oil and natural gas
pipelines and engages in transportation and storage activities and engages in
the exploration and production of oil and gas and natural gas gathering and
processing. Williams also engages in communications-related activities such as
operating a telecommunications fiber optic network and providing data, voice and
video transmission and other multimedia services for the broadcast industry.
Williams also invests in energy and telecommunications projects primarily in
Canada, South America, Australia and Lithuania.
<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 9 January 15 45/64 January 20 January 28 1/2 January 33 January 38 1/16
February 9 37/64 February 15 53/64 February 21 15/16 February 32 13/16 February 37 February 41 13/16
March 10 13/64 March 16 51/64 March 22 5/16 March 32 March 39 1/2 March 43 15/16
April 10 61/64 April 17 3/64 April 22 April 31 13/16 April 47 1/4 April 37 1/2
May 11 21/64 May 16 3/4 May 22 1/16 May 32 7/16 May 51 13/16
June 11 5/8 June 16 1/2 June 21 7/8 June 33 3/4 June 42 9/16
July 12 21/64 July 15 1/4 July 22 7/8 July 32 1/8 July 42 1/16
August 12 1/4 August 16 5/8 August 23 11/32 August 23 August 41 1/4
September 13 September 17 September 23 13/32 September 28 3/4 September 37 5/8
October 12 7/8 October 17 27/64 October 25 15/32 October 27 3/8 October 37 1/2
November 14 November 18 45/64 November 26 23/32 November 28 13/16 November 33 3/4
December 14 5/8 December 18 3/4 December 28 1/2 December 31 3/16 December 30 9/16
</TABLE>
closing price on , 2000 was .
A-20
<PAGE>
LOGO
1,000,000,000 Depositary Receipts
Utilities HOLDRS /SM/ Trust
-----------------------------------------------
P R O S P E C T U S
-----------------------------------------------
Merrill Lynch & Co.
A.G. Edwards & Sons, Inc.
First Union Securities, Inc.
, 2000
Until , 2000 (25 days after the date of this
prospectus), all dealers effecting transactions in the offered Utilities 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:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee....$92,334
Printing and engraving expenses........................
Legal fees and expenses................................
Rating agency fees.....................................
Miscellaneous..........................................
---------
Total................................................$
</TABLE>
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 8, 2000.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By: /s/ AHMASS L. FAKAHANY
-------------------------
Ahmass L. Fakahany
Senior Vice President and
Chief Financial Officer
<PAGE>
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 8, 2000.
Signature Title
--------- -----
/s/ JOHN L. STEFFENS
- ---------------------------
John L. Steffens Chief Executive Officer,
Chairman of the Board
and Director
/s/ 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 Standard Terms for Depositary Trust Agreements between Merrill Lynch,
Pierce, Fenner & Smith Incorporated and The 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 Utilities 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.
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<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.
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<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.
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<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.
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<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
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<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
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<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
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<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
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<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
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<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
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<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)
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<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,
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<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.
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<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.
-------------------------------
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<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
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<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.
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<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
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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
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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.
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(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.
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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
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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),
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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
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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
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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
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<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.
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<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).]
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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.
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<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
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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
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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
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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.
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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.
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(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.
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<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:
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<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
Utilities 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 Utilities 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 Utilities 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 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
Utilities 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 Utilities
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
Utilities 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
