<PAGE>
As filed with the Securities and Exchange Commission on March 15, 2000
Registration No. 333-31226
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
AMENDMENT NO. 1
To
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)
---------------
Broadband HOLDRS SM Trust
yet-to-be formed
Delaware [Issuer with respect to the receipts]
6211 13-5674085
(State or other (Primary Standard Industrial
jurisdiction (I.R.S. Employer
Classification Code Number)
Identification Number)
of incorporation or ---------------
organization)
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 & Smith Shearman & Sterling
Incorporated 599 Lexington Avenue
250 Vesey Street New York, New York 10022
New York, New York 10281 (212) 848-4000
(212) 449-1000
(Name, address, including zip code, and
telephone number, including area code,
of agent for service)
Approximate date of commencement of proposed sale to public:
As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act, please check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
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<CAPTION>
Proposed Maximum
Proposed Maximum Aggregate Amount of
Title of Each Class of Amount to Be Offering Price Offering Registration
Securities to Be Registered Registered Per Receipt(1) Price(1) Fee(2)(3)
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<S> <C> <C> <C> <C>
Broadband HOLDRS...................... 1,000,000,000 $100 $1,099,000,000 $290,136
receipts
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act. 10,000,000 receipts are
estimated to be offered in the initial offering at $100 per receipt and
990,000,000 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.
(3) Merrill Lynch, Pierce, Fenner & Smith Incorporated previously paid on
February 28, 2000, $2,640 of this registration fee.
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.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ +
+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. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion
Preliminary Prospectus dated March , 2000
PROSPECTUS
1,000,000,000 Depositary Receipts
Broadband HOLDRS SM Trust
The Broadband HOLDRS SM Trust will issue Depositary Receipts called
Broadband HOLDRS SM representing your undivided beneficial ownership in the
U.S.-traded common stock of a group of specified companies that, among other
things, develop, manufacture and market products and services which facilitate
the transmission of data, video and voice more quickly and more efficiently
than traditional telephone line communications. The Bank of New York will be
the trustee. You only may acquire, hold or transfer Broadband HOLDRS in a
round-lot amount of 100 Broadband HOLDRS or round-lot multiples. Broadband
HOLDRS are separate from the underlying deposited common stocks that are
represented by the Broadband HOLDRS. For a list of the names and the number of
shares of the companies that make up a Broadband HOLDR, see "Highlights of
Broadband HOLDRS--The Broadband HOLDRS" starting on page 9. The trust will
issue the additional Broadband HOLDRS on a continuous basis.
Investing in Broadband HOLDRS involves significant risks. See "Risk
factors" starting on page 4.
The initial public offering price for a round-lot of 100 Broadband 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.
Broadband 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 Broadband HOLDRS.
Application has been made to list the Broadband HOLDRS on the American Stock
Exchange under the symbol "BDH".
------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
<TABLE>
<CAPTION>
Initial Price Underwriting
to Public* Fee
------------- ------------
<S> <C> <C>
Per Broadband HOLDR........................... 2%
</TABLE>
------
* Includes underwriting fee.
For purchases of Broadband HOLDRS in excess of Broadband HOLDRS, the
underwriting fee will be %.
------------
Merrill Lynch & Co.
------------
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
<TABLE>
<CAPTION>
Page
----
<S> <C>
Summary.................................................................... 3
Risk Factors............................................................... 4
Highlights of Broadband HOLDRS............................................. 9
The Trust.................................................................. 15
Description of Broadband 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
</TABLE>
----------------
This prospectus contains information you should consider when making your
investment decision. With respect to information about Broadband 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 Broadband HOLDRS in any
jurisdiction where the offer or sale is not permitted.
2
<PAGE>
SUMMARY
The Broadband HOLDRS trust will be formed under the depositary trust
agreement, dated as of March , 2000 among The Bank of New York, as trustee,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, other depositors and the
owners of the Broadband 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 aspects of the
broadband business. Companies involved in the broadband business develop,
manufacture and market products and services which, among other things,
facilitate the transmission of data, video and voice more quickly and more
efficiently than traditional telephone line communications. The number of
shares of each common stock held by the trust with respect to each round-lot
of Broadband HOLDRS is specified under "Highlights of Broadband HOLDRS--The
Broadband 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 Broadband HOLDRS that represent your undivided
beneficial ownership interest in the shares of common stock held by the trust
on your behalf. The Broadband HOLDRS are separate from the underlying common
stocks that are represented by the Broadband HOLDRS.
3
<PAGE>
RISK FACTORS
An investment in Broadband HOLDRS involves risks similar to investing in
each of the underlying securities outside of the Broadband HOLDRS, including
the risks associated with concentrated investments in broadband companies.
General Risk Factors
. Loss of investment. Because the value of Broadband HOLDRS directly
relates to the value of the underlying securities, you may lose
all or a substantial portion of your investment in the Broadband
HOLDRS if the underlying securities decline in value.
. Discount trading price. Broadband HOLDRS may trade at a discount
to the aggregate value of the underlying securities.
. Not necessarily representative of the broadband business. While
the underlying securities are common stocks of companies generally
considered to be involved in various aspects of the broadband
business, the underlying securities and the Broadband HOLDRS may
not necessarily follow the price movements of the entire broadband
business generally. If the underlying securities decline in value,
your investment in the Broadband HOLDRS will decline in value even
if common stock prices of companies involved in the broadband
business 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 broadband business. In
this case, the Broadband HOLDRS may no longer consist of
securities issued only by companies involved in the broadband
business.
. No investigation of underlying securities. The underlying
securities included in the Broadband 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 broadband business, without regard for the
value, price performance, volatility or investment merit of the
underlying securities. Consequently, the Broadband 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 business developments,
reorganizations, or market fluctuations affecting issuers of the
underlying securities, Broadband HOLDRS may not necessarily
continue to be a diversified investment in the broadband business.
As a result of market fluctuation and/or reconstitution events,
Broadband 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 Broadband HOLDRS and receive
delivery of each of the underlying securities. The cancellation of
your Broadband HOLDRS will allow you to sell individual underlying
securities or to deliver individual underlying securities in a
tender offer. The cancellation of Broadband HOLDRS will involve
payment of a cancellation fee to the trustee.
. Trading halts. Trading in Broadband 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 Broadband HOLDRS
4
<PAGE>
even though there is trading in some of the underlying securities;
however, you will be able to cancel your Broadband HOLDRS to
receive the underlying securities.
. 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
Broadband HOLDRS. If the Broadband HOLDRS are delisted by the
American Stock Exchange, a termination event will result unless
the Broadband HOLDRS are listed for trading on another national
securities exchange or through NASDAQ within five business days
from the date the Broadband 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. In either event,
the purchases of the underlying securities will be made at various
prices. As the initial offering price for the Broadband 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 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 Broadband HOLDRS or on all of the underlying
securities in the aggregate. The potential profit of Merrill Lynch
is also 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 Broadband HOLDRS, the selection of the broadband business,
Merrill Lynch's activity in the secondary market in the underlying
securities and the creation and cancellation of Broadband 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
Broadband HOLDRS. Large volumes of purchasing activity, which may
occur in connection with the issuance of Broadband HOLDRS,
particularly in connection with the initial issuance of Broadband
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.
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 Broadband
HOLDRS will also decline.
5
<PAGE>
Risk Factors Specific to Companies Involved in the Broadband Business
. Broadband company stock prices have been and will likely continue
to be volatile, which will directly affect the price volatility of
the Broadband HOLDRS, and you could lose all or part of your
investment. The trading prices of the common stocks of broadband
companies have been and are likely to be volatile. Broadband
companies stock prices could be subject to wide fluctuations in
response to a variety of factors, including the following:
. actual or anticipated variations in companies' quarterly
operating results;
. announcements of technological innovations or new services by
broadband companies or their competitors;
. announcements by broadband companies or their competitors of
significant acquisitions, strategic partnerships, joint
ventures or capital commitments;
. failure to integrate or realize projected benefits from
acquisitions;
. unscheduled system downtime;
. changes in government regulations; and
. fluctuations in quarterly and annual operating results.
Other broad market and industry factors may decrease the stock
price of broadband companies' stocks, regardless of their
operating results. Market fluctuations, as well as general
political and economic conditions, such as recession or interest
rate or currency rate fluctuations, also may decrease the market
price of broadband companies stocks.
. The ability to maintain or increase market share depends on timely
introduction and market acceptance of new products offered by
broadband companies. The Internet, cable and telecommunications
markets which broadband companies serve are characterized by
rapidly changing technology, evolving industry standards and
practices, frequent new product and service introductions and
enhancements, and changing customer demands. The success of many
broadband companies will depend on their ability to adapt to
rapidly changing technologies, to adapt their services to evolving
industry standards and to continually improve the performance,
features and reliability of their products. They must quickly
develop, introduce and deliver their products, or incur the risk
that their competitors will introduce the same or similar
products, or products which could make their products obsolete. In
addition, the widespread adoption of new technologies could
require substantial expenditures to modify or adapt the existing
products offered by many broadband companies. New product research
and development may be costly and time-consuming. Many broadband
companies may not successfully introduce new products, develop and
maintain a loyal customer base or achieve general market
acceptance for their products, and failure to do so could have a
material adverse effect on their business, results of operations
and financial condition.
. Some of the companies involved in the broadband business are also
engaged in other lines of business unrelated to the broadband
business, and they may experience problems with these lines of
business which could adversely affect their operating
results. Some of the companies which comprise the Broadband HOLDRS
have lines of business that do not relate to the broadband
business and which may present additional risks not mentioned in
this prospectus. The operating results of these broadband
companies may fluctuate as a result of these additional risks and
events in the industries of these other lines of business. Despite
a company's possible success in the broadband 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.
6
<PAGE>
. Many broadband companies have developed new technologies and
created new standards for the broadband business and currently
rely on a limited number of customers as purchasers of their
products. Several broadband companies currently rely on a limited
number of customers for their broadband products and services. If
new customers do not adopt these technologies for their own
systems, the operating results and financial condition of these
broadband companies may be adversely affected. In addition, many
broadband technologies are marketed to cable operators. The cable
industry is undergoing significant consolidation, and a limited
number of cable operators control a large percentage of the cable
industry. Therefore, the number of new customers may be limited,
and if the leading cable operators do not adopt a broadband
company's products and services, its operating results and
financial conditions may be adversely affected.
. Many broadband companies rely on a single supplier or a limited
number of suppliers for the components used in their products, and
if quality components are not delivered by the suppliers on a
timely basis, these companies will not be able to deliver their
products on a timely schedule which could adversely affect their
financial condition. Reliance on a single supplier or limited
number of suppliers subjects many broadband companies to risks of
delivery delays, price increases, receipt of non-conforming or poor
quality components and inability to obtain long-term supplies of
components. Any reduction or interruption in these third parties supply
or manufacturing could adversely affect many broadband companies ability
to deliver their products and meet customer needs. There can be no
assurance that broadband companies will not encounter problems with
suppliers which may result in harm to their reputation and adversely
affect their operations and financial condition.
. The broadband business is very competitive, and a broadband
company's failure to establish a customer base which uses its
technologies would adversely affect its operating
results. Broadband access services can be based on several
different technologies, and the competition among broadband
companies to convince a provider to select its technology can be
intense. The broadband market is new and rapidly evolving and it
is likely that competitors will expand their business to produce
existing technologies as well as continue to develop new
technologies which compete with, or make obsolete, the existing
technologies. Many broadband companies face significant
competition from other companies which have greater market share
and financial resources. These companies may be better positioned
to finance research and development activities, and they may have
greater resources with which to acquire other companies in the
industry.
. Failure to integrate acquisitions could disrupt operations and
prevent the realization of intended benefits. Many broadband
companies are active acquirers of other companies as part of their
business plans. There can be no assurance that many broadband
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 no be no assurance that many broadband
companies will be able to attract and retain qualified personnel
from acquired businesses or be successful in integrating such
personnel. Furthermore, broadband companies may suffer material
adverse short and long-term effects on operating results and
financial condition as a result of such acquisitions.
. Many broadband companies are subject to telecommunications
industry regulations, which could adversely affect the nature and
extent of the services offered. Many aspects of the
telecommunications industry are subject to regulation at the
federal, state and local levels. The regulatory entities that have
jurisdiction over many broadband companies business may adopt new
or modified regulations or take other actions as a result of their
own regulatory processes or as directed by other governmental
bodies. There can be no assurances that changes in the regulatory
environment will not adversely affect the nature and extent of the
services offered.
7
<PAGE>
. The international operations of many broadband 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 broadband companies have international operations
and derive substantial revenue from international sales. 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; and
. changes in, and compliance with, domestic and foreign laws and
regulations which impose a range of restrictions on operations,
trade practices, foreign trade and international investment
decisions.
. Many broadband companies are dependent on their ability to
continue to attract and retain highly-skilled technical and
managerial personnel to develop and generate their business. The
success of many broadband companies is highly dependent of the
experience, abilities and continued services of key executive
officers and key technical personnel. If these companies lose the
services of any of these officers or key technical personnel,
their future success could be undermined. Competition for
personnel is intense. There is no certainty that any of these
broadband companies will be able to continue to attract and retain
qualified personnel.
. Inability to adequately protect proprietary rights may harm the
competitive positions of many broadband companies. Many broadband
companies rely on a combination of copyrights, trademarks, service
marks and trade secret law and contractual restrictions to
establish and protect proprietary rights in their products and
services. There can be no assurance that these companies will be
able to protect their intellectual property if they are unable to
enforce their rights or if they do not detect unauthorized use of
their intellectual property. Furthermore, any steps taken to
protect intellectual property may be inadequate, time consuming
and expensive. In addition, broadband companies may be subject to
claims that their products and services infringe the intellectual
property rights of others. Any claim, whether meritorious or not,
could be time consuming, result in costly litigation, delay
product or service introduction or require broadband companies
into enter to royalty or licensing agreements.
8
<PAGE>
HIGHLIGHTS OF BROADBAND HOLDRS
This discussion highlights information regarding Broadband HOLDRS; we
present certain information more fully in the rest of this prospectus. You
should read the entire prospectus carefully before you purchase Broadband
HOLDRS.
Issuer......................
Broadband HOLDRS Trust.
The trust...................
The Broadband HOLDRS Trust will be formed under
the depositary trust agreement, dated as of
March , 2000, among The Bank of New York, as
trustee, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, other depositors and the owners of
the Broadband 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 Broadband Broadband HOLDRS are designed to achieve the
HOLDRS................. following:
Diversification. Broadband HOLDRS are designed
to allow you to diversify your investment in the
broadband business through a single, exchange-
listed instrument representing your undivided
beneficial ownership of the underlying
securities.
Flexibility. The beneficial owners of Broadband
HOLDRS have undivided beneficial ownership
interests in each of the underlying securities
represented by the Broadband HOLDRS, and can
cancel their Broadband HOLDRS to receive each of
the underlying securities represented by the
Broadband HOLDRS.
Transaction costs. The expenses associated with
trading Broadband 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
broadband business. 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 Broadband
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.
The Broadband HOLDRS... The trust will issue Broadband HOLDRS that
represent your undivided beneficial ownership
interest in the shares of U.S.-traded
9
<PAGE>
common stock held by the trust on your behalf.
The Broadband HOLDRS themselves are separate
from the underlying securities that are
represented by the Broadband HOLDRS.
The specific share amounts for each round-lot of
100 Broadband HOLDRS will be determined on the
pricing date so that the initial issue price
will be approximately $90-$100 per Broadband
HOLDR and the initial weightings of each
underlying security included in the Broadband
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 20%. For purposes of this
preliminary prospectus, the indicative share
amounts and the indicative weightings of each
underlying security, based on market
capitalizations as of March 14, 2000 are set
forth in the table below; however, such share
amounts and weightings are expected to change
during the period between March 14, 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 Broadband
HOLDRS,
. stock ticker symbols,
. indicative share amounts represented by a
round-lot of 100 Broadband HOLDRS as of March
14, 2000,
. indicative weightings as of March 14, 2000,
and
. principal market on which the shares of
common stock of the selected companies are
traded.
<TABLE>
<CAPTION>
Indicative Primary
Share Indicative Trading
Name of Company Ticker Amounts Weightings Market
---------------- ------ ---------- ---------- -------
<S> <C> <C> <C> <C>
Lucent
Technologies,
Inc. LU 26 18.84% NYSE
Nortel Networks
Corporation NT 13 17.30% NYSE
Motorola, Inc. MOT 6 10.40% NYSE
Qualcomm, Inc QCOM 7 9.42% NASDAQ
JDS Uniphase
Corporation JDSU 7 9.41% NASDAQ
Broadcom
Corporation BRCM 2 4.32% NASDAQ
Corning,
Incorporated GLW 2 3.84% NYSE
Sycamore
Networks, Inc. SCMR 2 3.07% NASDAQ
Applied Micro
Circuits
Corporation AMCC 1 2.72% NASDAQ
Tellabs, Inc. TLAB 4 2.45% NASDAQ
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Indicative Primary
Share Indicative Trading
Name of Company Ticker Amounts Weightings Market
--------------- ------ ---------- ---------- -------
<S> <C> <C> <C> <C>
Terayon
Communications
Systems, Inc. TERN 1 2.38% NASDAQ
PMC-Sierra, Inc. PMCS 1 2.34% NASDAQ
Comverse
Technology,
Inc. CMVT 1 2.17% NASDAQ
SDL, Inc. SDLI 1 2.00% NASDAQ
Conexant
Systems, Inc. CNXT 2 1.82% NASDAQ
Next Level
Communications,
Inc. NXTV 1 1.71% NASDAQ
RF Micro
Devices, Inc. RFMD 1 1.70% NASDAQ
Scientific-
Atlanta, Inc. SFA 1 1.59% NYSE
CIENA
Corporation CIEN 1 1.44% NASDAQ
Copper Mountain
Networks, Inc CMTN 1 1.07% NASDAQ
</TABLE>
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 Broadband 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 broadband business,
as measured by market capitalization and trading
volume on March 14, 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,
Broadband HOLDRS in a round-lot of 100 Broadband
HOLDRS and round-lot multiples. The trust will
only issue Broadband HOLDRS upon the deposit of
the whole shares represented by a round-lot of
100 Broadband HOLDRS. In the event that a
fractional share comes to be represented by a
round-lot of Broadband HOLDRS, the trust may
require a minimum of more than one round-lot of
100 Broadband HOLDRS for an issuance so that the
trust will always receive whole share amounts
for issuance of Broadband HOLDRS.
The number of outstanding Broadband 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 Broadband 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
Broadband HOLDRS will equal the sum of the
closing market price on the primary trading
market on the pricing date for each underlying
security multiplied by the share amount to be
determined on the pricing date, plus an
underwriting fee. It is expected that the
initial public offering price will be
approximately $90-$100 per Broadband HOLDR.
Purchases...................
After the initial offering, you may acquire
Broadband 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
11
<PAGE>
. through a cash purchase in the secondary
trading market.
Underwriting fees...........
If you purchase Broadband HOLDRS in the initial
public offering, you will pay Merrill Lynch,
Pierce, Fenner & Smith Incorporated, in its role
as underwriter, an underwriting fee equal to:
.For purchases of Broadband HOLDRS or fewer,
2%.
.For purchases in excess of Broadband
HOLDRS, %.
You will not be charged any issuance fee or
other sales commission in connection with
purchases of Broadband HOLDRS made in the
initial public offering.
Issuance and cancellation
fees........................ After the initial offering, if you wish to
create Broadband HOLDRS by delivering to the
trust the requisite shares of common stock
represented by a round-lot of 100 Broadband
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 Broadband HOLDRS. If you
wish to cancel your Broadband 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 Broadband HOLDRS.
Commissions.................
If you choose to deposit underlying securities
in order to receive Broadband 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 Incorporated 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 Broadband
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 Broadband 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
Broadband 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
Broadband HOLDRS to the trustee, during the
trustee's business hours, and paying the
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 Broadband HOLDRS would otherwise
require the delivery of a fractional share, the
trustee will sell such share in the market and
the
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<PAGE>
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 Broadband
HOLDRS themselves will not have voting rights.
Rights relating to the You have the right to:
underlying securities.......
. 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
Broadband 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 Broadband
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 Broadband
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
Broadband HOLDRS, unless the merger,
consolidation or other corporate combination
is between companies that are already
included in the Broadband 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 issuers 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.
13
<PAGE>
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 Broadband 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 Broadband
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
Broadband 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 Broadband HOLDRS as directly owning
the underlying securities. The Broadband 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 Broadband
HOLDRS on the American Stock Exchange under the
symbol "BDH". Trading will take place only in
round-lots of 100 Broadband HOLDRS and round-lot
multiples. A minimum of 150,000 Broadband 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
Broadband HOLDRS. Bid and ask prices, however,
will be quoted per single Broadband HOLDRS.
Clearance and settlement....
The trust will issue Broadband HOLDRS in book-
entry form. Broadband 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 Broadband
HOLDRS."
14
<PAGE>
THE TRUST
General. This discussion highlights information about the Broadband
HOLDRS trust. You should read this information, information about the
depositary trust agreement as well as the depositary trust agreement before you
purchase Broadband HOLDRS. The material terms of the depositary trust agreement
are described in this prospectus under the heading "Description of the
depositary trust agreement."
The Broadband HOLDRS trust. The trust will be formed pursuant to the
depositary trust agreement, dated as of March , 2000. The Bank of New York
will be the trustee. The Broadband HOLDRS trust is not a registered investment
company under the Investment Company Act of 1940.
The Broadband HOLDRS trust is intended to hold deposited shares for the
benefit of owners of Broadband 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 BROADBAND HOLDRS
The trust will issue Broadband 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 Broadband HOLDRS on a continuous basis when an investor deposits the
requisite underlying securities with the trustee.
You may only acquire, hold, trade and surrender Broadband HOLDRS in a
round-lot of 100 Broadband HOLDRS and round-lot multiples. The trust will only
issue Broadband HOLDRS upon the deposit of the whole shares of underlying
securities that are represented by a round-lot of 100 Broadband 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 Broadband HOLDRS, the trust may require a minimum
of more than one round-lot of 100 Broadband HOLDRS for an issuance so that the
trust will always receive whole share amounts for issuance of Broadband HOLDRS.
Broadband 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 Broadband HOLDRS--The Broadband HOLDRS."
Beneficial owners of Broadband 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 Broadband HOLDRS to receive the underlying securities. See "Description
of the depositary trust agreement." Broadband 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. Broadband 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
Broadband HOLDRS wishes to realize the dollar value of the underlying
securities, that owner will have to cancel the Broadband HOLDRS. Such
cancellation will require payment of fees and expenses as described in
"Description of the depositary trust agreement--Withdrawal of underlying
securities."
15
<PAGE>
Broadband 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. Broadband HOLDRS will be available only in book-entry form.
Owners of Broadband HOLDRS may hold their Broadband 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 broadband
business 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 broadband business
as measured by market capitalization and trading volume. The following criteria
were used in selecting the underlying securities on March 14, 2000:
. Market capitalization equal to or greater than $4.5 billion;
. Average daily trading volume of at least 330,000 shares over the
60 trading days before March 14, 2000;
. Average daily dollar volume (that is, the average daily trading
volume multiplied by the average closing price over the 60 trading
day period prior to March 14, 2000) of at least $33 million over
the 60 trading days before March 14, 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 Broadband 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 broadband business.
In this case, the Broadband HOLDRS may no longer consist of securities issued
by companies involved in the broadband business. Merrill Lynch, Pierce, Fenner
& Smith Incorporated will determine, in its sole discretion, whether the issuer
of a particular underlying security remains in the broadband business and will
undertake to make adequate disclosure when necessary.
Underlying securities. For a list of the underlying securities
represented by Broadband HOLDRS, please refer to "Highlights of Broadband
HOLDRS--The Broadband 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 Broadband
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, and any of their affiliates.
16
<PAGE>
General background and historical information. For a brief description
of the business of each of the issuers of the underlying securities and monthly
pricing information showing the historical performance of each underlying
issuer's securities see "Annex A."
The following table and graph set forth the composite performance of all
of the underlying securities represented by a single Broadband 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 business day from
November 10, 1999, the first date when all of the underlying securities were
publicly traded, to March 14, 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.
<TABLE>
<CAPTION>
Broadband Broadband Broadband Broadband Broadband
1999 HOLDRS 1999 HOLDRS 2000 HOLDRS 2000 HOLDRS 2000 HOLDRS
- ---- --------- ---- --------- ---- --------- ---- --------- ---- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
November 10 59.86 December 1 63.16 January 3 80.94 February 1 73.50 March 1 95.93
November 11 60.96 December 2 65.16 January 4 75.80 February 2 76.65 March 2 96.43
November 12 61.49 December 3 67.01 January 5 73.03 February 3 79.29 March 3 98.57
November 15 61.53 December 6 68.35 January 6 65.42 February 4 81.43 March 6 102.06
November 16 63.26 December 7 68.75 January 7 69.96 February 7 81.72 March 7 98.64
November 17 62.76 December 8 68.93 January 10 74.79 February 8 82.95 March 8 96.98
November 18 65.04 December 9 68.33 January 11 71.02 February 9 81.92 March 9 98.30
November 19 65.65 December 10 68.70 January 12 69.63 February 10 83.37 March 10 99.22
November 22 65.13 December 13 69.02 January 13 71.88 February 11 81.33 March 13 95.64
November 23 64.01 December 14 66.69 January 14 71.67 February 14 81.75 March 14 92.99
November 24 64.53 December 15 67.71 January 18 72.40 February 15 81.96
November 26 66.11 December 16 69.39 January 19 74.36 February 16 82.92
November 29 64.66 December 17 70.33 January 20 77.21 February 17 85.08
November 30 61.49 December 20 71.99 January 21 77.61 February 18 83.66
December 21 73.60 January 24 74.65 February 22 84.56
December 22 73.24 January 25 77.63 February 23 87.11
December 23 74.14 January 26 74.28 February 24 88.57
December 27 75.78 January 27 73.90 February 25 88.89
December 28 75.07 January 28 70.20 February 28 89.05
December 29 78.07 January 31 72.79 February 29 91.46
December 30 77.20
December 31 78.98
</TABLE>
[GRAPH]
17
<PAGE>
DESCRIPTION OF THE DEPOSITARY TRUST AGREEMENT
General. The depositary trust agreement, dated as of March , 2000,
among Merrill Lynch, Pierce, Fenner & Smith Incorporated, The Bank of New York,
as trustee, other depositors and the owners of the Broadband HOLDRS, provides
that Broadband 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 Broadband HOLDRS. You may create and
cancel Broadband HOLDRS only in round-lots of 100 Broadband HOLDRS. You may
create Broadband HOLDRS by delivering to the trustee the requisite underlying
securities. The trust will only issue Broadband HOLDRS upon the deposit of the
whole shares represented by a round-lot of 100 Broadband HOLDRS. In the event
that a fractional share comes to be represented by a round-lot of Broadband
HOLDRS, the trust may require a minimum of more than one round-lot of 100
Broadband HOLDRS for an issuance so that the trust will always receive whole
share amounts for issuance of Broadband HOLDRS. Similarly, you must surrender
Broadband HOLDRS in integral multiples of 100 Broadband 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 Broadband
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 Broadband
HOLDRS, other than Merrill Lynch, Pierce, Fenner & Smith Incorporated, owning
Broadband 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
Broadband 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 Broadband 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 Broadband HOLDR,
the trustee will waive that portion of the fee which exceeds the total cash
dividends and other cash distributions received, or to be received, and payable
with respect to such calendar year.
Record dates. With respect to dividend payments and voting instructions,
the trustee expects to fix the trust's record dates as close as possible to the
record date fixed by the issuer of the underlying securities.
Shareholder communications. The trustee promptly will forward to you all
shareholder communications that it receives from issuers of the underlying
securities.
18
<PAGE>
Withdrawal of underlying securities. You may surrender your Broadband
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
Broadband 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 Broadband
HOLDRS.
Further issuances of Broadband HOLDRS. The depositary trust agreement
provides for further issuances of Broadband 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 Broadband 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 Broadband 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 Broadband
HOLDRS, unless the merger, consolidation or other corporate
combination is between companies that are already included in the
Broadband 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 Broadband HOLDRS will surrender their Broadband 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 Broadband
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 Broadband HOLDRS are delisted. Finally, the
trust will terminate if 75% of the owners of outstanding Broadband HOLDRS other
than Merrill Lynch, Pierce, Fenner & Smith Incorporated vote to dissolve and
liquidate the trust.
If a termination event occurs, the trustee will distribute the underlying
securities to you as promptly as practicable after the termination event
occurs.
Amendment of the depositary trust agreement. The trustee and Merrill
Lynch, Pierce, Fenner & Smith Incorporated, as initial depositor, may amend any
provisions of the depositary trust agreement without
19
<PAGE>
the consent of any other depositor or any of the owners of the Broadband
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 Broadband 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 Broadband
HOLDRS will not become effective until 30 days after notice of the amendment is
given to the owners of Broadband HOLDRS.
Issuance and cancellation fees. After the initial public offering, the
trust expects to issue more Broadband HOLDRS. If you wish to create Broadband
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 Broadband HOLDRS. If you wish to cancel your Broadband 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 Broadband 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 Broadband 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 Merrill Lynch, Pierce, Fenner & Smith Incorporated
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 Broadband
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 Broadband 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 Broadband 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 Broadband HOLDRS.
The trustee undertakes to perform only those duties as are specifically
set forth in the depositary trust agreement. Subject to the preceding sentence,
the trustee will be liable for its own negligence or misconduct except for good
faith errors in judgment so long as the trustee was not negligent in
ascertaining the relevant facts.
20
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
General
The following is a summary of the U.S. federal income tax consequences
relating to the Broadband HOLDRS for:
. citizen or resident of the United States;
. 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 Broadband 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 Broadband HOLDRS
A receipt holder purchasing and owning Broadband HOLDRS will be treated,
for U.S. federal income tax purposes, as directly owning a proportionate share
of the underlying securities represented by Broadband 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 Broadband 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 Broadband 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
Broadband HOLDRS. Similarly, with respect to sales of Broadband HOLDRS for cash
in the secondary market, the amount realized with respect to a sale of
Broadband HOLDRS will be equal to the aggregate amount realized with respect to
each of the underlying securities.
The distribution of any securities by the trust upon the surrender of
Broadband 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.
21
<PAGE>
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 Broadband 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 an investment in the underlying
securities.
ERISA CONSIDERATIONS
Any plan fiduciary which proposes to have a plan acquire Broadband 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 Broadband 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 Broadband HOLDRS. Merrill Lynch & Co., as underwriter, proposes to
offer the Broadband HOLDRS to the public at the offering price set forth on the
cover page of this prospectus. Merrill Lynch expects the trust to deliver the
initial distribution of Broadband 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 Broadband 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, Merrill Lynch
will not make any sales to a discretionary account without the prior written
approval of a purchaser of Broadband HOLDRS.
Merrill Lynch has from time to time provided investment banking and other
financial services to certain of the issuers of the underlying securities and
expects in the future to provide these services, for which it has received and
will receive customary fees and commissions. It also may have served as
counterparty in other transactions with certain of the issuers of the
underlying securities.
Merrill Lynch, Pierce, Fenner & Smith Incorporated may use this
prospectus, as updated from time to time, in connection with offers and sales
related to market-making transactions in the Broadband 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.
22
<PAGE>
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 Broadband 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 Broadband HOLDRS will be
passed upon for Merrill Lynch, Pierce, Fenner & Smith Incorporated, the initial
depositor and the underwriter, 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 Broadband 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 Broadband 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 Merrill Lynch, Pierce, Fenner & Smith Incorporated 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 Broadband HOLDRS. This prospectus relates only to Broadband 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 Broadband
HOLDRS. We make no representation that these publicly available documents or
any other publicly available information regarding the issuers of the
underlying securities are accurate or complete. Furthermore, we cannot assure
you that all events occurring prior to the date of this prospectus, including
events that would affect the accuracy or completeness of the publicly available
documents described in the preceding paragraph, that would affect the trading
price of the common stock of the issuers of the underlying securities, and
therefore the offering and trading prices of the Broadband 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 February 2000. All market prices in excess of one dollar
are rounded to the nearest one sixty-fourth of a dollar. An asterisk (*)
denotes that no shares of the issuer were outstanding during that month. The
historical prices of the underlying securities should not be taken as an
indication of future performance.
APPLIED MICRO CIRCUITS CORPORATION (AMCC)
Applied Micro Circuits Corporation designs, develops, manufacturers and
markets components that are used in communications products and in the
infrastructure for network communications products which greater bandwidth to
allow for larger information carrying capacity. Applied Micro Circuits focuses
on developing technology for the high speed network applications which are used
to connect companies networks to each other and to the Internet. Applied Micro
Circuits markets its products primarily through a direct sales organization
that consists of a network of independent manufacturers' representatives in
different geographic areas that work under the direction of its direct sales
force.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- ------- --------- ------- --------- ------- --------- -------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January 9 9/16 January 21 January 147 3/4
February * February * February * February 9 3/8 February 19 5/8 February 275 1/16
March * March * March * March 11 1/4 March 21 3/8
April * April * April * April 13 13/16 April 26 21/32
May * May * May * May 11 1/4 May 29 9/16
June * June * June * June 12 15/16 June 41 1/8
July * July * July * July 11 11/32 July 47
August * August * August * August 9 1/2 August 46 1/8
September * September * September * September 7 7/16 September 57
October * October * October * October 12 October 77 13/16
November * November * November 5 1/2 November 16 3/4 November 83 1/8
December * December * December 6 3/16 December 16 63/64 December 127 1/4
</TABLE>
The closing price on , 2000 was .
A-1
<PAGE>
BROADCOM CORPORATION (BRCM)
Broadcom Corporation develops and markets products which facilitate high-
speed digital data transmission to homes and businesses using existing
communications infrastructure. Broadcom designs and develops integrated
circuits for several communications markets, including television cable set-top
boxes, cable modems for Internet access, high-speed networking for businesses
private networks, digital broadcast of satellite and free terrestrial
television signals and digital subscriber lines. Broadcom markets and sells its
products through its own direct sales force as well as third-party distributors
and representatives.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- ------- --------- ------- --------- ------- --------- -------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January * January 33 9/32 January 144 21/32
February * February * February * February * February 30 3/32 February 197 3/8
March * March * March * March * March 30 13/16
April * April * April * April 12 April 38 9/16
May * May * May * May 12 25/32 May 47 7/8
June * June * June * June 18 13/32 June 72 9/32
July * July * July * July 15 11/16 July 60 1/4
August * August * August * August 12 13/16 August 64 3/8
September * September * September * September 17 3/4 September 54 1/2
October * October * October * October 20 47/64 October 63 29/32
November * November * November * November 22 21/64 November 89 17/32
December * December * December * December 30 3/16 December 136 3/16
</TABLE>
The closing price on , 2000 was .
CIENA CORPORATION (CIEN)
Ciena Corporation develops and markets products for the optical
networking equipment market. Optical networking equipment uses fiber optic
cables, which can transmit larger volumes of data at higher transmission speeds
and more efficiently, to facilitate the transmission of data and telephone
communications. Ciena provides products such as systems based on fiber optic
cables, switches to manage network data traffic and other multi-purpose data
delivery systems to its customers, who include local and long-distance
telephone carriers and Internet service providers, who provide Internet access
to individuals and businesses. Ciena markets and sells its products through its
own direct sales force, distributors and third-party representatives.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- ------- --------- ------- --------- -------- --------- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January 55 1/16 January 20 3/16 January 65 5/8
February * February * February 39 1/4 February 41 15/16 February 27 7/8 February 159 13/16
March * March * March 28 7/16 March 42 5/8 March 22 1/2
April * April * April 31 1/4 April 55 3/4 April 23 1/2
May * May * May 46 3/4 May 52 May 28 3/4
June * June * June 47 1/8 June 69 5/8 June 30 3/16
July * July * July 56 1/8 July 74 1/16 July 33 3/4
August * August * August 47 3/4 August 28 1/8 August 35 1/8
September * September * September 49 17/32 September 14 5/16 September 36 1/2
October * October * October 55 October 17 3/16 October 35 1/4
November * November * November 54 November 17 November 43 15/16
December * December * December 61 1/8 December 14 5/8 December 57 1/2
</TABLE>
The closing price on , 2000 was .
A-2
<PAGE>
COMVERSE TECHNOLOGY, INC. (CMVT)
Comverse Technology, Inc. designs, develops, manufactures, markets and
supports computer and telecommunications systems and software for data
processing and multimedia applications, which include video, graphics and
animation. Comverse products are designed to allow telecommunications operators
to provide services such as messaging, data distribution, call answering, voice
and fax mail and Internet services. Comverse's customers include fixed and
wireless telephone network operators, government agencies, call centers,
financial institutions and businesses. Comverse also manufactures digital
monitoring systems which provide monitoring, recording, surveillance and
information gathering capabilities for law enforcement and intelligence
agencies. Comverse markets and sells its products through its own direct sales
force and through vendors or telecommunications infrastructure equipment.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- -------- --------- -------- --------- -------- --------- -------- --------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 8 1/4 January 12 59/64 January 30 January 22 29/64 January 56 January 143 3/8
February 7 21/64 February 16 37/64 February 29 5/64 February 31 11/64 February 47 53/64 February 196 7/8
March 9 11/64 March 16 5/64 March 26 21/64 March 32 37/64 March 56 43/64
April 10 April 15 37/64 April 26 11/64 April 31 37/64 April 64 1/8
May 9 61/64 May 19 37/64 May 30 1/2 May 33 5/16 May 67 9/16
June 11 53/64 June 20 21/64 June 34 43/64 June 34 37/64 June 75 1/2
July 12 1/4 July 20 37/64 July 32 1/2 July 34 3/64 July 75 9/16
August 13 21/64 August 23 1/2 August 30 5/8 August 25 43/64 August 78
September 14 1/2 September 25 59/64 September 35 11/64 September 27 1/4 September 94 5/16
October 15 11/64 October 23 21/64 October 27 1/2 October 30 43/64 October 113 1/2
November 15 November 22 43/64 November 22 29/64 November 38 21/64 November 120 7/8
December 13 21/64 December 25 13/64 December 26 December 47 21/64 December 144 3/4
</TABLE>
The closing price on , 2000 was .
CONEXANT SYSTEMS, INC. (CNXT)
Conexant Systems, Inc. develops and markets semiconductors for
communications electronic systems. Conexant semiconductor products facilitate
communications through wireline voice and data networks, cordless and cellular
wireless telephony systems, and cable and wireless multi-channel communications
networks. Conexant's primary customers are communications equipment
manufacturers. Conexant markets and sells its products through its own direct
sales force and distributors.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- ------- --------- ------- --------- ------- --------- ------- --------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January * January 9 3/32 January 84 1/2
February * February * February * February * February 8 1/2 February 98 1/4
March * March * March * March * March 13 27/32
April * April * April * April * April 20 3/8
May * May * May * May * May 19 3/8
June * June * June * June * June 29 1/32
July * July * July * July * July 31 7/16
August * August * August * August * August 35 15/16
September * September * September * September * September 36 21/64
October * October * October * October * October 46 11/16
November * November * November * November * November 59 1/4
December * December * December * December 8 3/8 December 66 3/8
</TABLE>
The closing price on , 2000 was .
A-3
<PAGE>
COPPER MOUNTAIN NETWORKS, INC. (CMTN)
Copper Mountain Networks, Inc. supplies high-speed digital communications
products enabling telecommunications service providers to provide high-speed
connections to businesses and residences over existing copper wire telephone
infrastructure. Copper Mountain produces equipment that supports large-scale
digital subscriber line services to businesses and their employees, including
access from remote locations. Copper Mountain markets and sells its products to
telecommunications service providers through its own direct sales force,
selected original equipment manufacturers and distributors.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- ------- --------- ------- --------- ------- --------- ------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January * January * January 55 1/4
February * February * February * February * February * February 86 15/16
March * March * March * March * March *
April * April * April * April * April *
May * May * May * May * May 32
June * June * June * June * June 38 5/8
July * July * July * July * July 60 1/2
August * August * August * August * August 58 1/2
September * September * September * September * September 43 13/16
October * October * October * October * October 36 7/8
November * November * November * November * November 41 23/32
December * December * December * December * December 48 3/4
</TABLE>
CORNING, INC. (GLW)
Corning, Inc. develops and markets telecommunications and information
display products and services. Corning's telecommunications products are
designed to increase the capacity and efficiency of communications networks,
such as optical fibers, cables and hardware, which are used by utilities,
telephone exchanges and cable television. Corning's information display
products include projection equipment and glass panels for use in televisions,
notebook and desktop computers and automobiles. It also creates components out
of advanced materials, which include glass, glass ceramic and polymer
technologies, for use in environmental and science applications, semiconductors
and optical and lighting products. Corning markets and sells its products
primarily through its direct sales force.
<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 31 1/4 January 31 1/4 January 35 5/8 January 34 3/16 January 48 3/4 January 154 1/4
February 32 1/8 February 32 1/2 February 37 5/8 February 40 5/8 February 53 1/2 February 188
March 36 March 35 March 44 3/8 March 44 1/4 March 60
April 33 1/2 April 34 3/4 April 48 1/4 April 40 April 57 1/4
May 32 May 38 1/4 May 50 3/8 May 39 7/16 May 54 5/8
June 32 3/4 June 38 3/8 June 55 5/8 June 34 3/4 June 70 1/8
July 32 July 36 7/8 July 61 7/8 July 30 11/16 July 70
August 32 5/8 August 37 1/4 August 52 7/8 August 24 5/8 August 66 1/2
September 28 5/8 September 39 September 47 1/4 September 29 7/16 September 68 9/16
October 26 1/8 October 38 3/4 October 45 1/8 October 36 1/8 October 78 5/8
November 30 1/4 November 40 1/2 November 42 7/16 November 40 1/8 November 93 11/16
December 32 December 46 1/4 December 37 1/8 December 45 December 128 15/16
</TABLE>
The closing price on , 2000 was .
A-4
<PAGE>
JDS UNIPHASE (JDSU)
JDS Uniphase Corporation designs, develops and markets the components
which provide the framework for fiber optic networks, which are used for the
transmission of data and other information. Fiber optic networks are designed
to provide faster and more efficient data and information transmission than
traditional copper wiring. These products are sold primarily to
telecommunications and cable television system providers. JDS also designs,
manufactures and markets laser technology products for its customers in the
biotechnology, industrial process control, graphics, printing and semiconductor
equipment industries. JDS markets and sells its products primarily through its
own direct sales force. On January 17, 2000, JDS and E-TEK Dynamics, Inc.
agreed to a merger in which E-TEK will become a wholly owned subsidiary of JDS.
E-TEK designs, develops and markets high quality components and modules used in
fiber optic information transmission. This transaction remains subject to
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 7/16 January 1 3/32 January 2 47/64 January 4 19/32 January 11 25/64 January 101 31/32
February 35/64 February 1 7/32 February 2 3/64 February 5 1/64 February 11 1/64 February 131 15/16
March 39/64 March 1 7/32 March 2 5/16 March 5 17/64 March 14 25/64
April 5/8 April 1 21/32 April 2 31/64 April 6 25/32 April 15 11/64
May 5/8 May 2 3/64 May 3 9/32 May 6 3/8 May 16 3/4
June 43/64 June 2 7/32 June 3 41/64 June 7 27/32 June 20 3/4
July 45/64 July 1 5/8 July 4 17/64 July 6 1/4 July 22 19/32
August 63/64 August 2 21/64 August 4 17/64 August 5 August 26 33/64
September 1 7/64 September 2 41/64 September 4 31/32 September 5 1/8 September 28 29/64
October 59/64 October 3 1/64 October 4 13/64 October 6 11/64 October 41 23/32
November 1 7/64 November 3 23/32 November 5 1/64 November 6 25/32 November 57 3/16
December 1 1/8 December 3 9/32 December 5 11/64 December 8 43/64 December 80 21/32
</TABLE>
The closing price on , 2000 was .
LUCENT TECHNOLOGIES, INC. (LU)
Lucent Technologies, Inc. develops, manufactures and markets public and
private communications systems, software and products. Lucents primary customer
base includes communications network operators and service providers. Lucent
provides wireless networks services, local and long distance voice, data, video
and cable services, optical networking for the transmission of data, switches
to route and control network traffic and software products that manage voice
and data communications networks. Lucent markets and sells is products through
its own direct sales force and through arrangements with third-party dealers
and distributors.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- ------- --------- -------- --------- -------- --------- -------- --------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January 13 9/16 January 22 1/8 January 56 9/32 January 55 1/2
February * February * February 13 15/32 February 27 3/32 February 50 25/32 February 59 1/2
March * March * March 13 1/8 March 31 31/32 March 54
April * April 8 25/32 April 14 3/4 April 38 1/8 April 60
May * May 9 1/2 May 15 7/8 May 35 15/32 May 56 7/8
June * June 9 15/32 June 18 1/64 June 41 19/32 June 67 7/16
July * July 9 1/4 July 21 7/32 July 46 3/16 July 65 1/16
August * August 9 7/32 August 19 15/32 August 35 7/16 August 64 1/16
September * September 11 15/32 September 20 11/32 September 34 5/8 September 64 7/8
October * October 11 13/16 October 20 19/32 October 40 3/32 October 64 1/4
November * November 12 13/16 November 20 1/32 November 43 1/32 November 74 1/2
December * December 11 9/16 December 19 31/32 December 54 31/32 December 75
</TABLE>
The closing price on , 2000 was .
A-5
<PAGE>
MOTOROLA, INC. (MOT)
Motorola, Inc. develops, manufactures and markets communications and
electronic products and systems. Motorola offers wireless telephones, satellite
communications products and systems, network and Internet access products,
semiconductors to control and amplify electrical signals in computers,
transportation, space vehicles, major home appliances and electronic systems
for use in the automotive, communications, manufacturing and computer
industries. Motorola markets and sells its products through its own sales force
as well as through distributors, retailers and value-added resellers.
<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 59 1/4 January 54 January 68 1/4 January 59 9/16 January 72 1/4 January 136 1/2
February 57 1/2 February 54 1/4 February 56 February 55 5/8 February 70 1/4 February 170 1/2
March 54 5/8 March 53 March 60 1/2 March 60 3/4 March 73 1/4
April 56 7/8 April 61 1/4 April 57 1/8 April 55 3/4 April 80
May 59 7/8 May 66 3/4 May 66 3/8 May 53 May 82 13/16
June 67 1/8 June 62 3/4 June 76 1/8 June 52 9/16 June 94 3/4
July 76 1/2 July 54 July 80 3/8 July 52 1/4 July 91 1/4
August 74 5/8 August 53 3/8 August 73 3/8 August 42 15/16 August 92 1/4
September 76 3/8 September 51 1/2 September 71 7/8 September 42 7/8 September 88
October 65 3/4 October 46 October 62 October 52 October 97 5/16
November 61 1/2 November 55 3/8 November 62 7/8 November 61 7/8 November 114 1/4
December 57 December 61 1/4 December 57 3/16 December 61 1/16 December 147 1/4
</TABLE>
The closing price on , 2000 was .
NEXT LEVEL COMMUNICATIONS, INC. (NXTV)
Next Level Communications, Inc. develops and markets high-speed, high-
volume communications equipment that enables telephone companies and other
communications service providers to deliver a full range of voice, data and
video services over the existing copper telephone wire infrastructure. Next
Level equipment and technology has the capability to offer voice, data and
video services in a single product offering or offer each service separately
depending on subscriber demand and the objectives of the service provider. Next
Level markets and sells its products through its own direct sales force.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January * January * January 80 5/8
February * February * February * February * February * February 134 1/2
March * March * March * March * March *
April * April * April * April * April *
May * May * May * May * May *
June * June * June * June * June *
July * July * July * July * July *
August * August * August * August * August *
September * September * September * September * September *
October * October * October * October * October *
November * November * November * November * November 64 9/16
December * December * December * December * December 74 7/8
</TABLE>
The closing price on , 2000 was .
A-6
<PAGE>
NORTEL NETWORKS CORPORATION (NT)
Nortel Networks Corporation designs, develops, manufactures and markets
data and telephony networks for telecommunications systems and for the
Internet. Nortel products include systems and services which connect users to
telecommunications networks and the Internet, wireless and wireline
applications for the Internet, optical technology for the transmission of data
on the Internet, Internet access solutions and Internet voice
telecommunications services. Nortel also develops switches and routers which
control and connect network traffic, and it also manufactures telephones and
telecommunications equipment. Nortel's customers include public institutions,
private businesses, local and long-distance telephone carriers, personal
communications services, cellular mobile communications companies, cable
television companies and Internet service providers. Nortel markets and sells
its products through its own direct sales force, distributors and value-added
resellers.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- -------- --------- -------- --------- -------- --------- -------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 8 17/32 January 11 1/4 January 18 13/32 January 22 9/16 January 31 9/16 January 95 1/2
February 8 17/32 February 11 7/8 February 17 31/32 February 26 5/8 February 29 1/32 February 115 25/32
March 9 15/32 March 11 15/16 March 16 11/32 March 32 5/16 March 31 1/16
April 9 3/32 April 12 7/8 April 18 5/32 April 30 7/16 April 34 3/32
May 9 19/32 May 13 9/16 May 21 May 32 May 37 1/2
June 9 1/8 June 13 19/32 June 22 3/4 June 28 3/8 June 43 13/32
July 9 13/32 July 11 3/4 July 26 9/64 July 29 7/16 July 44 5/16
August 9 3/16 August 12 15/32 August 24 25/32 August 23 3/4 August 41 1/16
September 8 29/32 September 14 7/16 September 25 63/64 September 16 1/32 September 51
October 9 October 16 9/32 October 22 27/64 October 21 13/32 October 61 15/16
November 10 3/32 November 16 7/16 November 22 29/64 November 23 11/32 November 73 7/8
December 10 3/4 December 15 15/32 December 22 3/16 December 25 December 101
</TABLE>
The closing price on , 2000 was .
PMC-SIERRA, INC. (PMCS)
PMC-Sierra, Inc. develops and markets Internet and network semiconductor
systems designed to assist in the high speed transmission of information. PMC-
Sierra's products and services are used in developing and maintaining the
private networks of a company, connecting these private networks to other
private networks and to the Internet and providing remote Internet access. PMC-
Sierra markets its products and services to directly through its own sales
staff and through third-party distributors.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ------- --------- ------- --------- ------- --------- -------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 2 7/32 January 4 3/16 January 3 27/32 January 8 1/2 January 18 37/64 January 90 1/4
February 2 27/32 February 5 3/4 February 4 February 9 February 17 23/32 February 193 1/16
March 3 7/32 March 4 3/4 March 4 1/32 March 9 1/2 March 17 51/64
April 3 3/16 April 4 3/32 April 4 7/32 April 11 3/8 April 23 31/32
May 3 5/8 May 3 11/16 May 6 1/32 May 9 47/64 May 24 9/32
June 3 31/32 June 2 29/32 June 6 9/16 June 11 23/32 June 29 15/32
July 5 9/16 July 2 15/32 July 8 3/16 July 10 7/32 July 39 1/8
August 6 11/64 August 2 29/32 August 7 11/64 August 7 41/64 August 46 1/2
September 6 9/64 September 3 September 6 3/8 September 7 31/32 September 46 1/4
October 4 15/32 October 3 17/64 October 6 19/32 October 11 7/32 October 47 1/8
November 4 5/8 November 3 19/32 November 6 7/8 November 13 15/32 November 51 17/32
December 3 15/32 December 3 3/4 December 7 3/4 December 15 25/32 December 80 5/32
</TABLE>
The closing price on , 2000 was .
A-7
<PAGE>
QUALCOMM, INC. (QCOM)
Qualcomm, Inc. develops and markets digital wireless communications
products, technologies and services for use in wireless networks. Digital
wireless communication provides technology that increases system capacity,
provides more secure communication channels and improves reliability. Several
of Qualcomm's major product lines are based on its own Code Division Multiple
Access, or CMDA, technology. CMDA technology is a communications industry
standard for digital cellular, personal communications services and wireless
services. In addition to developing, manufacturing and marketing CMDA products
and services, Qualcomm also licenses this technology to telecommunications
equipment suppliers and develops and manufactures products based on this
technology for use in satellite systems. Qualcomm markets and sells its
technology and products through its own direct sales force and through
licensing arrangements and joint ventures with third parties.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- ------- --------- ------- --------- ------- --------- ------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 3 5/16 January 5 19/32 January 7 January 6 31/64 January 8 15/64 January 127
February 3 21/32 February 4 15/16 February 6 31/32 February 6 3/8 February 9 1/8 February 142 7/16
March 4 3/32 March 5 3/16 March 7 3/64 March 6 11/16 March 15 35/64
April 3 9/32 April 4 27/32 April 5 27/32 April 7 1/32 April 25
May 3 13/64 May 6 13/16 May 6 1/32 May 6 33/64 May 24 5/16
June 4 21/64 June 6 41/64 June 6 23/64 June 7 1/32 June 35 7/8
July 5 11/32 July 5 27/64 July 5 25/32 July 7 51/64 July 39
August 6 3/32 August 5 27/64 August 5 25/32 August 5 1/2 August 48 3/64
September 5 47/64 September 5 5/16 September 7 31/32 September 6 September 47 19/64
October 4 13/16 October 4 31/32 October 7 3/64 October 6 61/64 October 55 11/16
November 5 11/64 November 5 1/4 November 8 15/32 November 6 55/64 November 90 37/64
December 5 3/8 December 4 63/64 December 6 5/16 December 6 31/64 December 176 1/8
</TABLE>
The closing price on , 2000 was .
RF MICRO DEVICES, INC. (RFMD)
RF Micro Devices, Inc. designs, manufactures and markets radio frequency
integrated circuits, which are the physical pathways for the transmission of
information, for cellular and cordless telephones, wireless networks,
industrial radios and wireless security systems. RF Micro Devices' products
include amplifiers, transmitters and receivers, which allow data to be
converted so that it can be transmitted across telecommunications lines. RF
Micro Devices markets and sells its products through its own direct sales force
and through third-party representatives.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- ------- --------- ------- --------- ------- --------- -------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January 2 37/64 January 18 3/32 January 81
February * February * February * February 3 45/64 February 19 1/4 February 138 5/16
March * March * March * March 3 21/32 March 23 59/64
April * April * April * April 4 April 27 15/16
May * May * May * May 5 13/64 May 21 5/16
June * June * June 4 25/32 June 2 23/32 June 37 5/16
July * July * July 4 7/32 July 4 5/16 July 38 7/32
August * August * August 4 11/16 August 3 1/4 August 43 15/16
September * September * September 4 21/32 September 4 17/32 September 45 3/4
October * October * October 3 47/64 October 5 15/16 October 51 5/8
November * November * November 3 17/32 November 7 25/64 November 67 15/16
December * December * December 3 5/64 December 11 19/32 December 68 7/16
</TABLE>
The closing price on , 2000 was .
A-8
<PAGE>
SCIENTIFIC ATLANTA, INC. (SFA)
Scientific-Atlanta, Inc. develops and markets products and services for
communications networks which deliver voice, data and video that connect
information providers with users through free terrestrial television and
satellite broadband networks. Scientific-Atlanta also provides applications for
integrating cable, telephone and data networks into one system. Scientific-
Atlanta, Inc. markets and sells its products to operators of transmission
systems, satellite network and satellite television network systems primarily
through its own direct force and distributors. On February 22, 2000 Scientific-
Atlanta announced a 2-for-1 stock split on its common stock for shareholders of
record on March 10, 2000. The shares will begin trading on a split-adjusted
basis on March 27, 2000. The following table does not take into account any
adjustments for this stock-split.
<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 1/8 January 15 3/4 January 19 January 15 9/16 January 31 1/8 January 77 1/16
February 23 3/8 February 16 7/8 February 16 3/4 February 17 1/2 February 32 7/16 February 102 11/16
March 23 3/8 March 17 3/4 March 15 1/4 March 19 9/16 March 27 1/4
April 22 3/4 April 18 1/2 April 15 7/8 April 23 7/8 April 31 3/4
May 18 5/8 May 18 7/8 May 18 1/8 May 22 1/16 May 35 5/16
June 22 June 15 1/2 June 21 7/8 June 25 3/8 June 36
July 21 1/2 July 13 3/8 July 21 July 24 1/16 July 36 1/2
August 20 1/8 August 13 1/2 August 21 3/4 August 17 11/16 August 51 1/4
September 16 7/8 September 15 7/8 September 22 5/8 September 21 1/8 September 49 9/16
October 12 3/8 October 14 1/2 October 18 9/16 October 14 15/16 October 57 1/4
November 15 7/8 November 15 1/2 November 20 November 19 3/8 November 58 7/16
December 15 December 15 December 16 3/4 December 22 13/16 December 55 7/8
</TABLE>
The closing price on , 2000 was .
SDL, INC. (SDLI)
SDL, Inc. designs, manufacturers and markets semiconductor lasers and
fiber optic-related products and services for the communications industry,
including the telecommunications, cable television and satellite transmission
industries, and for printing and data storage applications. Fiber optic
technology allows for the faster and more efficient transmission of data, and
semiconductor lasers are the major light source for this technology. SDL
markets its products and services through its own direct sales force and
through value-added resellers, distributors and third-party representatives.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- -------- --------- -------- --------- ------- --------- -------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January 8 21/64 January 11 3/8 January 8 25/32 January 25 January 259 3/16
February * February 10 1/8 February 10 1/4 February 10 3/8 February 27 1/4 February 410
March 8 37/64 March 10 37/64 March 8 9/16 March 11 7/8 March 45 3/8
April 8 1/2 April 13 37/64 April 6 1/2 April 12 3/8 April 54 5/8
May 8 5/8 May 14 11/64 May 10 May 11 May 46 1/2
June 10 June 13 7/8 June 9 9/16 June 11 15/16 June 51 1/16
July 11 1/2 July 12 1/4 July 10 3/8 July 9 15/16 July 67 15/16
August 10 37/64 August 9 5/8 August 8 7/8 August 8 1/2 August 81 7/8
September 9 27/64 September 10 1/4 September 10 1/8 September 6 1/4 September 76 5/16
October 8 1/2 October 8 1/2 October 9 October 11 October 123 5/16
November 7 1/2 November 11 1/2 November 8 5/16 November 11 5/32 November 162 3/4
December 8 December 13 1/8 December 7 1/4 December 19 13/16 December 218
</TABLE>
The closing price on , 2000 was .
A-9
<PAGE>
SYCAMORE NETWORKS, INC. (SCMR)
Sycamore Networks, Inc. creates optical networking products which
facilitate the transmission of voice and data on fiber optic networks. Fiber
optic networks allow for the transmission of larger volumes of data at faster
transmission speeds and more efficiently. Sycamore's products use existing
fiber optic systems to provide enhanced high-speed data services such as access
to the Internet, video conferencing and remote access to corporate databases.
Sycamore also collaborates with its customers to identify new high-speed data
services. Sycamore markets its products through its own direct sales force.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- ------- --------- ------- --------- ------- --------- ------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January * January * January 106 21/64
February * February * February * February * February * February 148
March * March * March * March * March *
April * April * April * April * April *
May * May * May * May * May *
June * June * June * June * June *
July * July * July * July * July *
August * August * August * August * August *
September * September * September * September * September *
October * October * October * October * October 71 43/64
November * November * November * November * November 74
December * December * December * December * December 102 21/64
</TABLE>
The closing price on , 2000 was .
TELLABS, INC. (TLAB)
Tellabs, Inc. develops, manufactures and markets network systems and
voice, data and video transmission systems. Tellabs products include digital
networks, fiber optic systems and products which connect and access network
systems. These products build and control transmission infrastructure for
telecommunications providers, transport data digitally and provide other
digital services such as paging and messaging. Tellabs' customers are local and
long-distance telephone carriers, cellular and wireless service providers,
cable operators, utilities, government agencies and businesses. Tellabs markets
and sells its products through its own direct sales force and through
distributors.
<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 6 7/32 January 11 January 20 19/32 January 25 19/32 January 42 7/8 January 54
February 6 1/2 February 11 13/16 February 19 15/16 February 30 3/16 February 40 1/32 February 48
March 7 9/32 March 12 3/32 March 18 1/16 March 33 9/16 March 48 7/8
April 8 5/8 April 13 13/16 April 19 15/16 April 35 7/16 April 54 45/64
May 8 1/4 May 16 1/8 May 25 1/8 May 34 23/64 May 58 1/2
June 12 1/32 June 16 23/32 June 27 15/16 June 35 13/16 June 67 9/16
July 11 1/8 July 14 15/16 July 29 15/16 July 37 41/64 July 61 9/16
August 11 11/16 August 15 27/32 August 29 27/32 August 21 1/8 August 59 9/16
September 10 17/32 September 17 21/32 September 25 3/4 September 19 29/32 September 56 15/16
October 8 1/2 October 21 9/32 October 27 October 27 1/2 October 63 1/4
November 9 13/16 November 19 7/8 November 26 November 27 1/32 November 64 7/8
December 9 1/4 December 18 13/16 December 26 7/16 December 34 9/32 December 64 3/16
</TABLE>
The closing price on , 2000 was .
A-10
<PAGE>
TERAYON COMMUNICATIONS SYSTEMS, INC. (TERN)
Terayon Communications Systems, Inc. develops and markets broadband
access services, which include services that allow cable operators to have two-
way traffic on their cable systems. Terayon's systems allow cable operators to
maximize broadband capacity using existing cable network infrastructure,
thereby minimizing the need for infrastructure upgrades. Terayon markets and
sells its products through its own direct sales force, distributors and system
integrators.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- ------- --------- ------- --------- ------- --------- ------- --------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January * January 40 1/2 January 107
February * February * February * February * February 31 1/16 February 257 1/8
March * March * March * March * March 40
April * April * April * April * April 40 3/8
May * May * May * May * May 32 1/8
June * June * June * June * June 55 7/8
July * July * July * July * July 39 1/8
August * August * August * August 9 5/8 August 36
September * September * September * September 12 5/8 September 48 7/8
October * October * October * October 12 October 43 3/4
November * November * November * November 30 5/8 November 62 1/16
December * December * December * December 37 December 62 13/16
</TABLE>
The closing price on , 2000 was .
A-11
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[LOGO Broadband HOLDRS SM]
1,000,000,000 Depositary Receipts
Broadband HOLDRS SM Trust
---------------------
P R O S P E C T U S
---------------------
Merrill Lynch & Co.
, 2000
Until , 2000 (25 days after the date of this prospectus), all dealers
effecting transactions in the offered Broadband 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............. $290,136
Printing and engraving expenses................................. 150,000
Legal fees and expenses......................................... 200,000
Rating agency fees.............................................. 0
Miscellaneous................................................... 9,864
--------
Total......................................................... $650,000
</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 attorney's 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:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement:
II-1
<PAGE>
(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
Amendment No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, on March 15,
2000.
Merrill Lynch, Pierce, Fenner &
Smith
Incorporated
*
By: _________________________________
Name:Ahmass L. Fakahany
Title:Senior Vice President,
Chief Financial Officer and
Controller
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed by the following
persons in the capacities indicated on March 15, 2000.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
* Chief Executive Officer,
___________________________________________ Chairman of the Board and Director
John L. Steffens
* Director
___________________________________________
E. Stanley O'Neal
* Director
___________________________________________
George A. Schieren
* Senior Vice President,
___________________________________________ Chief Financial Officer and
Ahmass L. Fakahany Controller
/s/ Stephen G. Bodurtha Attorney-in-Fact
By: _______________________________________
Stephen G. Bodurtha
</TABLE>
II-3
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibits
- --------
<S> <C>
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 Broadband 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)
</TABLE>
- ----------------
*Previously filed.
<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>
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<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>
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<TABLE>
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Page
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<S> <C>
EXHIBIT A
FORM OF DEPOSITARY TRUST AGREEMENT.....................................................................A-1
EXHIBIT B
FORM OF CERTIFICATE EVIDENCING RECEIPTS................................................................B-1
</TABLE>
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<PAGE>
STANDARD TERMS FOR DEPOSITARY TRUST AGREEMENTS agreed to as of
_______________, 1999 (these "Standard Terms"), between MERRILL LYNCH, PIERCE,
FENNER & SMITH INCORPORATED, a Delaware corporation (the "Initial Depositor")
and THE BANK OF NEW YORK, a New York banking corporation, as trustee (the
"Trustee").
W I T N E S S E T H :
WHEREAS, from time to time, the Initial Depositor and the Trustee may
enter into one or more depositary trust agreements providing for the deposit
with the Trustee of specified Securities (as hereinafter defined), the creation
of Depositary Trust Receipts representing the Securities so deposited and the
execution and delivery of certificates evidencing the Depositary Trust Receipts;
and
WHEREAS, the Initial Depositor and the Trustee wish to establish the
general terms and conditions of such depositary trust agreements and the form of
the certificates evidencing Depositary Trust Receipts;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in these Standard Terms, the parties hereby agree as
follows:
ARTICLE 1
DEFINITIONS AND ASSUMPTIONS
Section 1.1. Definitions. Except as otherwise specified in these
-----------
Standard Terms or in the applicable Depositary Trust Agreement or as the context
may otherwise require, the following terms have the respective meanings set
forth below for all purposes of these Standard Terms and the applicable
Depositary Trust Agreement.
<PAGE>
"Beneficial Owner" means any Person owning a beneficial interest in
any Receipt.
"Closing Date" means the day on which the initial deposit of
Securities is to be made, which date may be specified in the applicable
Depositary Trust Agreement.
"Commission" means the Securities and Exchange Commission of the
United States or any successor governmental agency in the United States.
"Corporate Trust Office" means the office of the Trustee at which its
depositary receipt business is administered which, at the date of these Standard
Terms, is 101 Barclay Street, New York, New York 10286.
"Deliver" means (a) when used with respect to Securities, either (i)
one or more book-entry transfers of such Securities to an account at DTC
designated by the Person entitled to such delivery for further credit as
specified by such Person or (ii) in the case of Securities for which DTC book-
entry settlement is not available, the delivery of certificates evidencing such
Securities to the Person entitled to such delivery, duly endorsed for transfer
or accompanied by proper instruments of transfer and (b) when used with respect
to Receipts, either (i) one or more book-entry transfers of Receipts to an
account at DTC designated by the Person entitled to such delivery for further
credit as specified by such Person or (ii) in the event DTC ceases to make its
book-entry settlement system available for the Receipts, execution and delivery
at the Corporate Trust Office of the Trustee of one or more certificates
evidencing such Receipts.
-2-
<PAGE>
"Depositary Trust Agreement" means a depositary trust agreement
entered into by the Initial Depositor and the Trustee pursuant to these Standard
Terms which incorporates by reference these Standard Terms.
"Depositor" means any Person who deposits Securities into the Trust,
either for its own account or on behalf of another Person who is the owner
or beneficial owner of such Securities.
"Depositor Order" means a written order or request signed in the name
of the Initial Depositor or any other Depositor, as applicable.
"DTC" means The Depository Trust Company, its nominees and their
respective successors.
"Initial Depositor" means Merrill Lynch, Pierce, Fenner & Smith
Incorporated, a Delaware corporation, or its successor.
"Issuance Denomination" is defined in Section 2.4, subject to increase
as provided in Sections 4.3 and 4.8.
"Owner" means the Person in whose name a Receipt is registered in the
books of the Trustee maintained for that purpose.
"Person" means any individual, limited liability company, corporation,
partnership, joint venture, association, joint stock company, trust (including
any trust beneficiary), unincorporated organization or government or any agency
or political subdivision thereof.
-3-
<PAGE>
"Receipt" means a depositary trust receipt which is issued under the
Depositary Trust Agreement and which represents the Owner's right to receive
the Underlying Securities which must be deposited into the Trust for issuance of
a Receipt plus any other Underlying Securities received by the Trustee with
respect to such Underlying Securities and held by the Trustee under the
Depositary Trust Agreement at such time. The Trustee shall only accept for
deposit whole Securities and shall not issue Receipts except to the extent
such Receipts represent, in the aggregate, whole Underlying Securities.
"Registrar" means any bank or trust company having an office in the
Borough of Manhattan, The City of New York, which shall be appointed to register
Receipts and transfers of Receipts as herein provided.
"Restricted Securities" means Securities, or Receipts representing
such Securities, which are acquired directly or indirectly from the issuer or
its affiliates (as defined in Rule 144 under the Securities Act of 1933) in a
transaction or chain of transactions not involving any public offering, or which
are held by an officer or director (or person performing similar functions) or
other affiliate of the issuer, or which would require registration under the
Securities Act of 1933 in connection with the public offer and sale thereof in
the United States, or which are subject to other restrictions on sale or deposit
under the federal securities laws of the United States, a shareholder agreement
or the corporate documents of the issuer.
"Round Lot" means 100.
-4-
<PAGE>
"Securities" means any shares of a class of securities which must be
deposited for issuance of Receipts.
"Securities Issuer" means, as of any time, the issuer of a class of
Securities.
"Securities Registrar" means the entity that presently carries out the
duties of registrar for any Securities or any successor as registrar for any
Securities and any other appointed agent of a Securities Issuer for the transfer
and registration of Securities.
"Surrender" means, when used with respect to Receipts, (a) one or more
book-entry transfers of Receipts to the DTC account of the Trustee or (b)
surrender to the Trustee at its Corporate Trust Office of one or more
certificates evidencing such Receipts, in each case in a Round Lot or an
integral multiple thereof.
"Trust" means the trust entity created by the Depositary Trust
Agreement.
"Trustee" means The Bank of New York, a New York banking corporation,
in its capacity as Trustee under the Depositary Trust Agreement, or any
successor as Trustee thereunder.
"Underlying Securities" means, as of any time, Securities of each of
the classes and in the quantities required by the Depositary Trust Agreement to
be deposited in the Trust for the issuance of Receipts and which are at such
time deposited under the applicable Depositary Trust Agreement and any other
securities, property or cash received by the Trustee in respect thereof and at
such time held hereunder.
-5-
<PAGE>
Section 1.2. Rules of Construction. Unless the context otherwise
---------------------
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning assigned
to it in accordance with generally accepted accounting principles as in effect
in the United States from time to time;
(iii) "or" is not exclusive;
(iv) the words "herein", "hereof", "hereunder" and other words of
similar import refer to these Standard Terms or the Depositary Trust Agreement
as a whole and not to any particular Article, Section or other subdivision;
(v) "including" means including without limitation; and
(vi) words in the singular include the plural and words in the plural
include the singular.
ARTICLE 2
FORM OF RECEIPTS, DEPOSIT OF SECURITIES, DELIVERY,
REGISTRATION OF TRANSFER AND SURRENDER OF RECEIPTS
Section 2.1. Depositary Trust Agreements. Each Depositary Trust
---------------------------
Agreement entered into between the Initial Depositor and the Trustee for the
purposes set
-6-
<PAGE>
forth herein shall be in substantially the form of Exhibit A to these Standard
Terms and shall provide that these Standard Terms shall be incorporated by
reference into, and form a part of, such Depositary Trust Agreement.
Section 2.2. Creation and Declaration of Trusts; Deposit of
----------------------------------------------
Securities. (a) The Initial Depositor, concurrently with the execution and
- ----------
delivery of the Depositary Trust Agreement, does hereby agree to deposit with
the Trustee under the Depositary Trust Agreement all the right, title and
interest of the Initial Depositor in, to and under Securities, of each of
the classes and in the quantities necessary to create Receipts in accordance
with Section 2 of the Depositary Trust Agreement in effect at the time of
deposit. Unless otherwise specified in the Depositary Trust Agreement, such
deposit shall include all cash dividends and distributions in respect of such
Securities. The Initial Depositor shall make such deposit on or prior to the
Closing Date.
(b) From time to time after the date of the Depositary Trust
Agreement, a Depositor may deposit with the Trustee, in the manner specified in
subsection (a), Securities, of each of the classes and in the quantities
necessary to create Receipts in accordance with Section 2 of the Depositary
Trust Agreement in effect at the time of deposit by Delivery of such Securities
to the Trustee.
(c) The Trustee shall only accept for deposit whole Securities and
shall not issue Receipts except to the extent such Receipts represent, in the
aggregate, whole Underlying Securities.
(d) The Trust shall not engage in any business or activities
other than those required or authorized by these Standard Terms or incidental
and necessary to carry out the duties and responsibilities set forth in the
Depositary Trust
-7-
<PAGE>
Agreement. Other than issuance of the Receipts, the Trust shall not issue or
sell any certificates or other obligations or otherwise incur, assume or
guarantee any indebtedness for money borrowed.
(e) Anything herein to the contrary notwithstanding, the Trustee
does not assume any of the duties, responsibilities, obligations or liabilities
of the Initial Depositor or any other Depositor in respect of the Underlying
Securities.
(f) Underlying Securities shall be held by the Trustee at such
place and in such manner as the Trustee shall determine.
Section 2.3. Acceptance by Trustee. The Trustee will hold the
---------------------
Underlying Securities for the benefit of the Owners for the purposes, and
subject to and limited by the terms and conditions, set forth in these Standard
Terms and the applicable Depositary Trust Agreement.
Section 2.4. Form and Transferability of Receipts. (a) The
------------------------------------
certificates evidencing Receipts shall be substantially in the form set forth in
Exhibit B annexed to these Standard Terms, with appropriate insertions,
modifications and omissions, as hereinafter provided or as may be provided in
the Depositary Trust Agreement. The Issuance Denominations of a certificate
shall be any integral multiple of a Round Lot of Receipts, subject to increase
or decrease as provided in Sections 4.3 and 4.8. No Receipt shall be entitled
to any benefits under the Depositary Trust Agreement or be valid or obligatory
for any purpose unless a certificate evidencing such Receipt shall have been
executed by the Trustee by the manual or facsimile signature
-8-
<PAGE>
of a duly authorized signatory of the Trustee and, if a Registrar (other than
the Trustee) for the Receipts shall have been appointed, countersigned by the
manual or facsimile signature of a duly authorized officer of the Registrar. The
Trustee shall maintain books on which the registered ownership of each Receipt
and transfers, if any, of such registered ownership shall be recorded.
Certificates evidencing Receipts bearing the manual or facsimile signature of a
duly authorized signatory of the Trustee and Registrar, if applicable, who was
at the time such certificates were executed a proper signatory of the Trustee or
Registrar, if applicable, shall bind the Trustee, notwithstanding that such
signatory has ceased to hold such office prior to the delivery of such
certificates.
(b) The certificates evidencing Receipts may be endorsed with or have
incorporated in the text thereof such legends or recitals or modifications not
inconsistent with the provisions of the Depositary Trust Agreement as may be
required by the Trustee or required to comply with any applicable law or
regulations thereunder or with the rules and regulations of any securities
exchange upon which Receipts may be listed or to conform with any usage with
respect thereto, or to indicate any special limitations or restrictions to which
any particular Receipts are subject by reason of the date of issuance of the
Underlying Securities or otherwise.
(c) The Initial Depositor and the Trustee will apply to DTC for
acceptance of the Receipts in its book-entry settlement system. Receipts
deposited with DTC shall be represented by one or more global certificates which
shall be registered in the name of Cede & Co., as nominee for DTC, and shall
bear the following legend:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
THE AGENT AUTHORIZED BY THE ISSUER FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF
-9-
<PAGE>
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
(d) So long as the Receipts are eligible for book-entry settlement
with DTC and such settlement is available, unless otherwise required by law,
notwithstanding anything to the contrary in the Depositary Trust Agreement, all
Receipts shall be evidenced by one or more global certificates registered in the
name of a nominee of DTC and no person acquiring beneficial ownership of such
Receipts shall receive or be entitled to receive physical delivery of Receipts.
Ownership of beneficial interests in Receipts evidenced by such global
certificate or certificates shall be shown on, and the transfer of such
ownership shall be effected only through, records maintained by (i) DTC or (ii)
institutions that have accounts with DTC.
(e) If, at any time when Receipts are evidenced by a global
certificate, DTC ceases to make its book-entry settlement system available for
such Receipts, the Trustee shall issue separate certificates evidencing Receipts
to the DTC book-entry settlement system participants entitled thereto, with such
additions, deletions and modifications to the Depositary Trust Agreement and to
the form of certificate evidencing Receipts as the Initial Depositor and the
Trustee may, from time to time, agree.
(f) Title to a certificate evidencing Receipts (and to the Receipts
evidenced thereby), when properly endorsed or accompanied by proper
instruments of transfer, shall be transferable by delivery with the same effect
as in the case of a negotiable instrument under the laws of New York; provided,
--------
however, that the Trustee, notwithstanding any notice to the contrary, may treat
- -------
the Owner of Receipts as the
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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
-11-
<PAGE>
of a Round Lot requested, and deliver the same to or upon the order of the
Person entitled thereto.
(c) The Trustee, subject to the terms and conditions of these Standard
Terms and the applicable Depositary Trust Agreement, shall, upon Surrender of a
certificate evidencing Receipts for the purposes of effecting a split-up or
combination of such certificate or certificates, execute and deliver one or more
new certificate or certificates evidencing such Receipts in any integral
multiple of a Round Lot requested.
(d) The Trustee may appoint one or more co-transfer agents for the
purpose of effecting transfers, combinations and split-ups of Receipts at
designated transfer offices on behalf of the Trustee. In carrying out its
functions, a co-transfer agent may require evidence of authority and compliance
with applicable laws and other requirements by Owners or Persons entitled to
Receipts and will be entitled to protection and indemnity to the same extent as
the Trustee.
Section 2.7. Surrender of Receipts and Withdrawal of Underlying
--------------------------------------------------
Securities. (a) Upon Surrender at the Corporate Trust Office of the Trustee
- ----------
of a Round Lot of Receipts or integral multiple thereof for the purpose of
withdrawal of the Underlying Securities represented thereby, and upon payment of
the fee of the Trustee in connection with the Surrender of Receipts as provided
in Section 5.6 and payment of all taxes and charges payable in connection with
such Surrender and withdrawal of the Underlying Securities, and subject to the
terms and conditions of the applicable Depositary Trust Agreement, including,
without limitation, Section 4.10, the Owner of such Receipts shall be entitled
to Delivery of the amount of Underlying Securities at the time represented by
such Receipts. Delivery of such Underlying Securities may be made by (i)
Delivery of Securities to such Owner or as ordered by such Owner and (ii) any
-12-
<PAGE>
available form of delivery of any other securities, property and cash to which
such Owner is then entitled to such Owner or as ordered by such Owner. The
Trustee shall make such delivery as promptly as practicable.
(b) A certificate evidencing Receipts Surrendered for such purposes
may be required by the Trustee to be properly endorsed in blank or accompanied
by proper instruments of transfer in blank, and if the Trustee so requires, the
Owner thereof shall execute and deliver to the Trustee a written order directing
the Trustee to cause the Underlying Securities being withdrawn to be delivered
to or upon the written order of a Person or Persons designated in such order.
Thereupon the Trustee shall Deliver through the facilities of DTC or, if
applicable, at its Corporate Trust office, subject to Sections 2.8, 3.1, 3.2 and
4.10 and to the other terms and conditions of the Depositary Trust Agreement, to
or upon the written order of the Person or Persons designated in the order
delivered to the Trustee as above provided, the amount of Underlying Securities
represented by such Receipts.
Section 2.8. Limitations on Delivery, Registration of Transfer and
-----------------------------------------------------
Surrender of Receipts. (a) As a condition precedent to the Delivery,
- ---------------------
registration of transfer, split-up, combination or Surrender (including, for the
avoidance of doubt, any Surrender in connection with an exchange) of any Receipt
or withdrawal of any Underlying Securities, the Trustee or Registrar may require
payment from the Depositor of Securities or the presentor of the Receipts of a
sum sufficient to reimburse it for any tax or other charge and any stock
transfer or registration fee with respect thereto (including any such tax or
charge and fee with respect to Securities being deposited or withdrawn) and
payment of any applicable fees as herein provided, may require the production of
proof satisfactory to it as to the identity and genuineness of any signature and
may also require compliance with any regulations the Trustee may establish
-13-
<PAGE>
consistent with the provisions of the Depositary Trust Agreement, including,
without limitation, this Section 2.8.
(b) The Delivery of Receipts against deposits of Securities, the
registration of transfer of Receipts or the Surrender of Receipts for the
purpose of withdrawal of Underlying Securities may be suspended, generally or in
particular instances, during any period when the transfer books of the Trustee
are closed or the transfer books of a Securities Issuer are closed or if any
such action is deemed necessary or advisable by the Trustee at any time or from
time to time, subject to the provisions of the following sentence.
Notwithstanding any other provision of any applicable Depositary Trust Agreement
or the Receipts, the Surrender of Receipts and withdrawal of Underlying
Securities may not be suspended except for (i) temporary delays caused by
closing the transfer books of the Trustee or a Securities Issuer, (ii) the
payment of fees, taxes and applicable charges, and (iii) compliance with any
U.S. laws or governmental regulations relating to the Receipts or to the
withdrawal of the Underlying Securities. Without limitation of the foregoing,
the Trustee shall not knowingly accept for deposit under the Depositary Trust
Agreement any Securities required to be registered under the provisions of the
Securities Act of 1933, as amended, for the public offer and sale thereof in the
United States unless a registration statement is in effect as to such Securities
for such offer and sale.
Section 2.9. Lost Certificates, Etc. In case any certificate
----------------------
evidencing Receipts shall be mutilated, destroyed, lost or stolen, the Trustee
shall execute and deliver a new certificate of like tenor in exchange and
substitution for such mutilated certificate upon cancellation thereof, or in
lieu of and in substitution for such destroyed, lost or stolen certificate.
Before the Trustee shall execute and deliver a new certificate in substitution
for a destroyed, lost or stolen certificate, the Owner thereof shall have (a)
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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
-18-
<PAGE>
which would otherwise be distributed hereunder except that the Trustee deems
such distribution not to be lawful and feasible, the Trustee shall, subject to
Section 4.10, cause the securities or property received by it to be distributed
to the Owners entitled thereto, in proportion to the number of Receipts held by
them respectively, in any manner that the Trustee may deem equitable and
practicable for accomplishing such distribution;
provided, however, that if in the opinion of the Trustee such distribution
- -------- -------
cannot be made proportionately among the Owners entitled thereto, or if for any
other reason (including, but not limited to, any requirement that a Securities
Issuer or the Trustee withhold an amount on account of taxes or other
governmental charges or that such securities must be registered under the
Securities Act of 1933 in order to be distributed to Owners) the Trustee deems
such distribution not to be feasible, the Trustee shall adopt such method as it
deems equitable and practicable for the purpose of effecting such distribution,
including, but not limited to, the public or private sale of the securities or
property thus received, or any part thereof, and the net proceeds of any such
sale (net of the fees of the Trustee as provided in Section 5.6) shall be
distributed by the Trustee to the Owners entitled thereto as in the case of a
distribution received in cash.
Section 4.3. Distributions in Securities. If any distribution upon
---------------------------
any Underlying Securities consists of a dividend in, or free distribution of,
Securities, the Trustee shall, to the extent lawful and feasible, retain
such Securities under the Depositary Trust Agreement, and, in such case, the
(i) the amount of such Securities so retained in respect of each Receipt shall
be added to the classes and quantities of securities which must be deposited for
issuance of Receipts and (ii) the number of Receipts in an Issuance
Denomination may be increased or decreased by the Trustee to the lowest multiple
of 100 Receipts such that no fractional shares are thereby represented in such
Issuance Denomination.
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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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<PAGE>
in Section 7.5, and such removal shall take effect upon the appointment of the
successor Trustee and its acceptance of such appointment as hereinafter
provided.
(c) In case at any time the Trustee acting hereunder shall resign or
be removed, the Initial Depositor, acting on behalf of the Owners, shall use its
reasonable efforts to appoint a successor Trustee, which shall be a bank or
trust company having an office in the Borough of Manhattan, The City of New
York. Every successor Trustee shall execute and deliver to its predecessor and
to the Initial Depositor, acting on behalf of the Owners, an instrument in
writing accepting its appointment hereunder, and thereupon such successor
Trustee, without any further act or deed, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor; but such predecessor,
nevertheless, upon payment of all sums due it and on the written request of the
Initial Depositor, acting on behalf of the Owners, shall execute and deliver an
instrument transferring to such successor all rights and powers of such
predecessor hereunder, shall duly assign, transfer and deliver all right, title
and interest in the Underlying Securities to such successor, and shall deliver
to such successor a list of the Owners of all outstanding Receipts. The Initial
Depositor or any such successor Trustee shall promptly mail notice of the
appointment of such successor Trustee to the Owners.
(d) Any corporation into or with which the Trustee may be merged,
consolidated or converted shall be the successor of such Trustee without the
execution or filing of any document or any further act.
Section 5.5. Indemnification. (a) The Initial Depositor shall indemnify
---------------
the Trustee, its directors, employees, agents and affiliates against, and hold
each of them harmless from, any loss, liability, cost, expense or judgment
(including, but not limited to, the fees and expenses of counsel) (collectively
"Indemnified Amounts") which is
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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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[(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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<PAGE>
Section 5.6. Charges of Trustee. The following charges shall be
------------------
incurred by any party depositing or withdrawing Securities or by any party
Surrendering Receipts or to whom Receipts are Delivered or any Owner, as
applicable: (1) taxes and charges and other fees payable in respect of the
Underlying Securities assessed by third-party custodians, depositories, transfer
agents, and other service providers in the ordinary course of their
respective businesses (whether in connection with the deposit of Securities or
withdrawal of Underlying Securities or otherwise), (2) a fee of $10 or less per
100 Receipts for the execution and Delivery of Receipts pursuant to Section 2.5,
and the Surrender of Receipts pursuant to Section 2.7, and (3) a fee which
shall accrue on the first day of each calendar quarter at a rate of $.02 or less
per Receipt per quarter for the Trustee's services as such under the Depositary
Trust Agreement (which fee shall be assessed against Owners of record as of the
date or dates set by the Trustee in accordance with Section 4.5 and shall be
collected at the Trustee's discretion by deducting such fee from one or more
cash dividends or other cash distributions); provided, however, that with
-------- -------
respect to the aggregate fee accrued in any calendar year under this clause
(3) with respect to each Receipt, the Trustee will waive that portion which
exceeds the total cash dividends and other cash distributions the record
date for which falls in such calendar year and payable with respect to such
Receipt.
Section 5.7. Retention of Trust Documents. The Trustee is authorized
----------------------------
to destroy those documents, records, bills and other data compiled during the
term of the Depositary Trust Agreement at the times permitted by the laws or
regulations governing the Trustee.
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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.
-37-
<PAGE>
IN WITNESS WHEREOF, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
and THE BANK OF NEW YORK have duly executed these Standard Terms as of the day
and year first set forth above.
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
By:
--------------------------------
Steven G. Budurtha
First Vice President
THE BANK OF NEW YORK,
as Trustee
By:
--------------------------------
Name:
Title:
-38-
<PAGE>
EXHIBIT A
[NAME OF TRUST]
[FORM OF] DEPOSITARY TRUST AGREEMENT
DEPOSITARY TRUST AGREEMENT dated as of __________ (this "Depositary
Trust Agreement"), between MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, a
Delaware corporation (the "Initial Depositor"), THE BANK OF NEW YORK, a New York
banking corporation, as trustee (the "Trustee"), and all Holders and Beneficial
Owners (each as hereinafter defined) from time to time of Depositary Trust
Receipts issued hereunder and all Depositors (as hereinafter defined) from time
to time.
Section 1. Incorporation of Standard Terms. The Standard Terms for
-------------------------------
Depositary Trust Agreements agreed to as of ____________, 1999 (the "Standard
Terms"), between the Initial Depositor and the Trustee are hereby incorporated
by reference into and made a part of this Depositary Trust Agreement. If there
is any conflict between the provisions of this Depositary Trust Agreement and
the Standard Terms, the provisions of this Depositary Trust Agreement shall
control.
Section 2. Securities to be Deposited. Initially, the securities
--------------------------
which must be deposited for issuance of one Receipt and which shall be
represented thereby shall be as follows:
Quantity which
must be deposited
Issuer and Title of Security per Receipt
---------------------------- ---------------------
[Issuer and title of security] [Quantity]
[Issuer and title of security] [Quantity]
; provided, however, that if an event to which Section 2.11 of the Standard
-------- -------
Terms applies or an event described in Sections 4.3 or 4.8 of the Standard Terms
occurs, the definition of the securities that must be deposited for issuance of
one Receipt shall be changed as provided in such Sections, if applicable.
Section 3. Creation and Declaration of Trust; Termination Date. The
---------------------------------------------------
trust created hereby shall be known as [Name of Trust], for which the Trustee,
-------------
or the Initial Depositor to the extent provided herein, may conduct the business
of the Trust, make and
A-1
<PAGE>
execute contracts, and sue and be sued. [The termination date of the Trust will
be December 31, 2039].
Section 4. Closing. The "Closing Date" shall be [specify date].
------- ------------
IN WITNESS WHEREOF, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
and THE BANK OF NEW YORK have duly executed this agreement as of the day and
year first set forth above. All Owners and Beneficial Owners shall become
parties hereto upon acceptance by them of Receipts issued in accordance with the
terms hereof or any interest therein, and all Depositors shall become parties
hereto upon depositing any Securities hereunder.
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
By:
---------------------------------
Name:
Title:
THE BANK OF NEW YORK,
as Trustee
By:
---------------------------------
Name:
Title:
A-2
<PAGE>
EXHIBIT B
[Form of Receipt]
THE RECEIPTS EVIDENCED HEREBY REPRESENT RIGHTS WITH RESPECT TO UNDERLYING
SECURITIES (AS DEFINED IN THE DEPOSITARY TRUST AGREEMENT REFERRED TO HEREIN)
HELD BY THE TRUST AND DO NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, AND
ARE NOT GUARANTEED BY THE INITIAL DEPOSITOR OR THE TRUSTEE OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THE RECEIPTS NOR THE UNDERLYING SECURITIES ARE
INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR ANY OTHER PERSON.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE AGENT
AUTHORIZED BY THE ISSUER FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
B-1
<PAGE>
DEPOSITARY TRUST RECEIPTS
ISSUED BY
[NAME OF TRUST]
REPRESENTING [COMMON STOCK] OF
[LIST COMPANIES HERE]
THE BANK OF NEW YORK, as Trustee
No. CUSIP NO.
THE BANK OF NEW YORK, as Trustee (hereinafter called the "Trustee"),
hereby certifies that CEDE & CO., as nominee of the Depositary Trust Company, or
registered assigns, IS THE OWNER OF * Depositary Trust Receipts issued by
[Name of Trust], each representing the securities described in the within-
- --------------
mentioned Depositary Trust Agreement. At the date hereof, each Receipt
represents the right to receive the following securities:
Quantity Initially
Issuer and Title Represented by
of Security Each Receipt
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
which are deposited under the Depositary Trust Agreement referred to herein at
the Corporate Trust Office of the Trustee. The specification of the securities
represented by each Receipt is subject to change as provided in the Depositary
Trust Agreement. The Trustee's Corporate Trust Office is located at a different
address than its principal executive office. Its Corporate Trust Office is
located at 101 Barclay Street, New York, New York 10286, and its principal
executive office is located at One Wall Street, New York, New York 10286.
THE TRUSTEE'S CORPORATE TRUST OFFICE ADDRESS IS
101 BARCLAY STREET, NEW YORK, NEW YORK 10286
- ------------------
* That number of Receipts held at The Depository Trust Company at any given
point in time.
B-2
<PAGE>
(1) THE DEPOSITARY TRUST AGREEMENT.
------------------------------
This Receipt is issued upon the terms and conditions set forth in the
Depositary Trust Agreement, dated as of _________, 1999 (the "Depositary Trust
Agreement"), agreed to by and among the Initial Depositor, the Trustee, all
Owners and Beneficial Owners from time to time of Receipts issued thereunder and
all Depositors. By becoming an Owner or Beneficial Owner, or by depositing
Securities, such Person agrees to become a party to the Depositary Trust
Agreement and become bound by all the terms and conditions thereof. The
Depositary Trust Agreement sets forth the rights of Owners and the rights and
duties of the Trustee in respect of the Securities deposited thereunder and any
and all other securities, property and cash from time to time received in
respect of such Securities and held thereunder (such Securities, other
securities, property, and cash are herein called "Underlying Securities").
Copies of the Depositary Trust Agreement are on file at the Trustee's Corporate
Trust Office in New York City.
The statements made on the face and reverse of this Receipt are summaries
of certain provisions of the Depositary Trust Agreement and are qualified by and
subject to the detailed provisions of the Depositary Trust Agreement, to which
reference is hereby made. Capitalized terms not defined herein shall have the
meanings set forth in the Depositary Trust Agreement.
(2) SURRENDER OF RECEIPTS AND WITHDRAWAL OF SECURITIES.
--------------------------------------------------
Upon Surrender at the Corporate Trust Office of the Trustee of a Round Lot
of Receipts or integral multiples thereof for the purpose of withdrawal of the
Underlying Securities represented thereby, and upon payment of the fee of the
Trustee in connection with the Surrender of Receipts as provided in Section 5.6
of the Standard Terms and payment of all taxes and charges payable in connection
with such Surrender and withdrawal of the Underlying Securities, and subject to
the terms and conditions of the applicable Depositary Trust Agreement,
including, without limitation, Section 4.10 thereof, the Owner of such Receipts
shall be entitled to Delivery of the amount of Underlying Securities at the time
represented by such Receipts. Delivery of such Underlying Securities may be
made by (i) Delivery of Securities to such Owner or as ordered by such Owner and
(ii) any available form of delivery of any other securities, property and cash
to which such Owner is then entitled to such Owner or as ordered by such Owner.
The Trustee shall only deliver whole Underlying Securities upon Surrender of
Receipts representing such Underlying Securities.
(3) REGISTRATION OF TRANSFERS, SPLIT-UPS AND COMBINATIONS OF CERTIFICATES;
----------------------------------------------------------------------
LIMITATIONS.
-----------
The transfer of ownership of Receipts evidenced by this certificate is
registrable on the books of the Trustee at its Corporate Trust Office by the
Owner hereof in person or by a duly authorized attorney, upon Surrender of this
certificate evidencing Receipts,
B-3
<PAGE>
properly endorsed or accompanied by proper instruments of transfer, and duly
stamped as may be required by the laws of the State of New York and of the
United States of America. This certificate evidencing Receipts may be split up
into other such certificates, each evidencing any integral multiple of a Round
Lot of Receipts, or may be combined with other certificates evidencing Receipts
into one such certificate, in each case evidencing the same aggregate number of
Receipts as the certificate or certificates Surrendered.
As a condition precedent to the Delivery, registration of transfer, split-
up, combination or Surrender (including, for the avoidance of doubt, any
Surrender in connection with an exchange) of any Receipt or withdrawal of any
Underlying Securities, the Trustee or Registrar may require payment from the
Depositor of Securities or the presentor of the Receipts of a sum sufficient to
reimburse it for any tax or other charge and any stock transfer or registration
fee with respect thereto (including any such tax or charge and fee with respect
to Securities being deposited or withdrawn) and payment of any applicable fees
as herein provided, may require the production of proof satisfactory to it as to
the identity and genuineness of any signature and may also require compliance
with any regulations the Trustee may establish consistent with the provisions of
the Depositary Trust Agreement, including, without limitation, Section 2.8 of
the Standard Terms.
The Delivery of Receipts against deposits of Securities, the registration
of transfer of Receipts or the Surrender of Receipts for the purpose of
withdrawal of Underlying Securities may be suspended, generally or in particular
instances, during any period when the transfer books of the Trustee are closed
or the transfer books of a Securities Issuer are closed or if any such action is
deemed necessary or advisable by the Trustee at any time or from time to time
for any reason, subject to the provisions of the following sentence.
Notwithstanding any other provision of any applicable Depositary Trust Agreement
or the Receipts, the Surrender of Receipts and withdrawal of Underlying
Securities may not be suspended subject to only (i) temporary delays caused by
closing the transfer books of the Trustee or a Securities Issuer, (ii) the
payment of fees, taxes and similar charges, and (iii) compliance with any U.S.
laws or governmental regulations relating to the Receipts or to the withdrawal
of the Underlying Securities. Without limitation of the foregoing, the Trustee
shall not knowingly accept for deposit under the Depositary Trust Agreement any
Securities required to be registered under the provisions of the Securities Act
of 1933, as amended, for the public offer and sale thereof in the United States
unless a registration statement is in effect as to such Securities for such
offer and sale.
(4) RECONSTITUTION EVENTS
---------------------
B-4
<PAGE>
If any class of Securities ceases to be outstanding as a result of
a merger, consolidation or other corporate combination of the Securities Issuer
and Section 4.8 of the Standard Terms does not apply, the Trustee shall, if
it has actual knowledge of such event, to the extent lawful and feasible and
subject to Section 4.10 of the Standard Terms, distribute any securities
which shall be received by the Trustee in exchange for or in conversion of or in
respect of Underlying Securities which are not Securities issued by a Securities
Issuer to the Owners in proportion to their ownership of Receipts. Effective on
the date that such Securities cease to be outstanding, such class of Securities
shall cease to be part of the securities which must be deposited for
issuance of Receipts.
(b) If any class of Securities is delisted from trading on its
primary exchange or market and is not listed for trading on another national
securities exchange or through NASDAQ within five business days from the date of
such delisting, the Trustee shall, if it has actual knowledge of such event, to
the extent lawful and feasible and subject to Section 4.10 of the Standard
Terms, distribute the Underlying Securities of such class to the Owners in
proportion to their ownership of Receipts. Effective on the date of such
distribution, such class of Securities shall cease to be a part of the
securities which must be deposited for issuance of Receipts.
(c) In the event that any Securities Issuer no longer has a class of
common stock registered under section 12 of the Securities Exchange Act of 1934,
as amended, the Trustee shall, if it has actual knowledge of such event, to the
extent lawful and feasible and subject to Section 4.10 of the Standard Terms,
distribute the Underlying Securities of such Securities Issuer to the Owners in
proportion to their ownership of Receipts. Effective on the date of such
distribution, such class of Securities shall cease to be part of the
securities which must be deposited for issuance of Receipts.
(d) If the Commission determines that a Securities Issuer is an
investment company under the Investment Company Act of 1940, and the Trustee has
actual knowledge of such Commission determination, then the Trustee shall, to
the extent lawful and feasible and subject to Section 4.10 of the Standard
Terms, distribute the Underlying Securities of such Securities Issuer to the
Owners in proportion to their ownership of Receipts. Effective on the date of
such distribution, such class of Securities shall cease to be part of the
securities which must be deposited for issuance of Receipts.
(5) LIABILITY OF OWNER FOR TAXES.
----------------------------
If any tax or other governmental charge shall become payable with respect
to any Receipts or any Underlying Securities represented thereby, such tax or
other governmental charge shall be payable by the Owner hereof to the Trustee.
The Trustee
B-5
<PAGE>
shall refuse to effect any registration of transfer of such Receipts
or any withdrawal of Underlying Securities represented by such Receipt until
such payment is made, and may withhold any dividends or other distributions, or
may sell for the account of the Owner hereof Underlying Securities constituting
any multiples of the securities which must be deposited for issuance of
Receipts, and may apply such dividends or other distributions of the proceeds of
any such sale in payment of such tax or other charge and the Owner hereof shall
remain liable for any deficiency.
(6) WARRANTIES ON DEPOSIT OF SECURITIES.
-----------------------------------
Every Person depositing Securities under the Depositary Trust Agreement
shall be deemed thereby to represent and warrant that such Receipts and each
certificate therefor are validly issued and fully paid, that the person making
such deposit is duly authorized to do so and that at the time of delivery, such
Securities are free and clear of any lien, pledge, encumbrance, right, charge or
claim (other than the rights created by the Depositary Trust Agreement). Every
such person shall also be deemed to represent that such Securities are not, and
Receipts representing such Securities would not be, Restricted Securities. Such
representations and warranties shall survive the deposit of Securities, issuance
of Receipts or termination of the Depositary Trust Agreement.
(7) FILING PROOFS, CERTIFICATES AND OTHER INFORMATION.
-------------------------------------------------
Any person presenting Securities for deposit or any Owner of a Receipt may
be required from time to time to file with the Trustee such proof of citizenship
or residence, exchange control approval, or such information relating to the
registration on the books of any Securities Issuer or Securities Registrar, if
applicable, to execute such certificates and to make such representations and
warranties, as the Trustee may require. The Trustee may withhold the Delivery
or registration of transfer of any Receipts or the delivery of any Underlying
Securities until such proof or other information is filed or such certificates
are executed or such representations and warranties made.
(8) CHARGES OF TRUSTEE. The following charges shall be incurred by any party
------------------
depositing or withdrawing Securities or by any party Surrendering Receipts or to
whom Receipts are Delivered or any Owner, as applicable: (1) taxes and charges
and other fees payable in respect of the Underlying Securities assessed by
third-party custodians, depositories, transfer agents, and other service
providers in the ordinary course of their respective businesses (whether in
connection with the deposit of Securities or withdrawal of Underlying Securities
or otherwise), (2) a fee of $10 or less per 100 Receipts for the execution and
Delivery of Receipts pursuant to Section 2.5 of the Standard Terms, and the
Surrender of Receipts pursuant to Section 2.7 Standard Terms, and (3) a fee
which shall accrue on the first day of each calendar quarter at a rate of $.02
or less per Receipt per quarter for the Trustee's services as such under the
Depositary Trust Agreement (which fee shall be assessed against Owners of
B-6
<PAGE>
record as of the date or dates set by the Trustee in accordance with
Section 4.5 of the Standard Terms and shall be collected at the Trustee's
discretion by deducting such fee from one or more cash dividends or other
cash distributions); provided, however, that with respect to the aggregate
-------- -------
fee accrued in any calendar year under this clause (3) with respect to each
Receipt, the Trustee will waive that portion which exceeds the total cash
dividends and other cash distributions the record date for which falls in
such calendar year and payable with respect to such Receipt.
(9) TITLE TO RECEIPTS.
-----------------
It is a condition of the Receipts and every successive Owner of the
Receipts by accepting or holding a certificate for Receipts consents and agrees,
that title to such certificate (and the Receipts evidenced thereby) , when
properly endorsed or accompanied by proper instruments of transfer, is
transferable by delivery with the same effect as in the case of a negotiable
instrument under the laws of New York; provided, however, that the Trustee,
-------- -------
notwithstanding any notice to the contrary, may treat the person in whose name
Receipts are registered on the books of the Trustee as the absolute owner
thereof for the purpose of determining the person entitled to distribution or
dividends or other distributions or to any notice provided for in the Depositary
Trust Agreement and for all other purposes.
(10) VALIDITY OF RECEIPTS.
--------------------
Receipts shall not be entitled to any benefits under the Depositary Trust
Agreement or be valid or obligatory for any purpose, unless a certificate
evidencing such Receipts shall have been executed by the Trustee by the manual
or facsimile signature of a duly authorized signatory of the Trustee and, if a
Registrar for the Receipts shall have been appointed, countersigned by the
manual or facsimile signature of a duly authorized officer of the Registrar.
(11) REPORTS; INSPECTION OF TRANSFER BOOKS.
-------------------------------------
The issuer of each class of Securities is subject to the periodic reporting
requirements of the Securities Exchange Act of 1934 and, accordingly, files
certain reports with the Securities and Exchange Commission (herein called the
"Commission"). Such reports will be available for inspection and copying at the
public reference facilities maintained by the Commission located at 450 Fifth
Street, NW, Washington, DC 20549.
The Trustee shall, to the extent lawful, forward to Owners, any reports
and communications, including any proxy statement or other soliciting material,
received from a Securities Issuer which are received by the Trustee as the
holder of the Underlying Securities, unless such reports and communications have
been forwarded directly to Owners by such Securities Issuer.
B-7
<PAGE>
The Trustee shall keep books for the registration of Receipts and transfers
of Receipts which at all reasonable times shall be open for inspection by the
Owners.
(12) DIVIDENDS AND DISTRIBUTIONS.
---------------------------
Whenever the Trustee shall receive any cash dividend or other cash
distribution on any Underlying Securities, the Trustee shall, subject to the
Depositary Trust Agreement, distribute the amount thus received (net of the fees
of the Trustee as provided in the Depositary Trust Agreement, if applicable) to
the Owners of Receipts entitled thereto; provided, however, that in the event
-------- -------
that the respective Securities Issuer or the Trustee shall be required to
withhold and does withhold from such cash dividend or such other cash
distribution in respect of any Underlying Securities an amount on account of
taxes, the amount distributed to the Owners of the Receipts representing such
Underlying Securities shall be reduced accordingly.
Subject to the provisions of Sections 4.8 and 5.6 of the Standard Terms,
whenever the Trustee shall receive any distribution other than a distribution
described in Sections 4.1, 4.3 or 4.4 of the Standard Terms or a
distribution which would otherwise be distributed under the Depositary Trust
Agreement except that the Trustee deems such distribution not to be lawful and
feasiable, the Trustee shall, subject to Section 4.10 of the Standard Terms,
cause the securities or property received by it to be distributed to the Owners
of Receipts entitled thereto, in any manner that the Trustee may deem equitable
and practicable for accomplishing such distribution; provided, however, that if
-------- -------
in the opinion of the Trustee such distribution cannot be made proportionately
among the Owners of Receipts entitled thereto, or if for any other reason
(including, but not limited to, any requirement that a Securities Issuer or the
Trustee withhold an amount on account of taxes or other governmental charges or
that such securities must be registered under the Securities Act of 1933 in
order to be distributed to Owners) the Trustee deems such distribution not to be
feasible, the Trustee shall adopt such method as it deems equitable and
practicable for the purpose of effecting such distribution, including, but not
limited to, the public or private sale of the securities or property thus
received, or any part thereof, and the net proceeds of such sale (net of the
fees of the Trustee as provided in Section 5.6 of the Standard Terms) shall be
distributed by the Trustee to the Owners entitled thereto as in the case of a
distribution received in cash.
If any distribution upon any Underlying Securities consists of a dividend
in, or free distribution of, Securities, the Trustee shall, to the extent
lawful and feasible, retain such Securities under the Depositary Trust
Agreement, and, in such case, the (i) the amount of such Securities so retained
in respect of each Receipt shall be added to the classes and quantities of
securities which must be deposited for issuance of Receipts and (ii) the
number of Receipts in an Issuance Denomination may be increased
B-8
<PAGE>
or decreased by the Trustee to the lowest multiple of 100 Receipts such that no
fractional shares are thereby represented in such Issuance Denomination.
In the event that the Trustee determines that any distribution in property
(including Securities and rights to subscribe therefor) is subject to any tax or
other charge which the Trustee is obligated to withhold, notwithstanding
anything to the contrary in the Standard Terms or the applicable Depositary
Trust Agreement, the Trustee may by public or private sale dispose of all or a
portion of such property (including Securities and rights to subscribe therefor)
in such amounts and in such manner as the Trustee deems necessary and
practicable to pay any such taxes or charges and the Trustee shall distribute
the net proceeds or any such sale after deduction of such taxes or charges to
the Owners entitled thereto.
(13) RIGHTS OFFERINGS.
----------------
(a) If a Securities Issuer offers or cause to be offered to the holders of
any Underlying Securities any rights to subscribe for additional Securities or
other securities, the Trustee shall have discretion in accordance with Section
4.4 of the Standard Terms as to the procedure to be followed in making such
rights available to any Owners or in disposing of such rights on behalf of
Owners and making the net proceeds available to Owners or, if by the terms of
such rights offering or for any other reason (including the absence of an
effective registration statement covering the distribution of securities
underlying the rights), the Depositary may not make such rights available to any
Owners or dispose of such rights and make the net proceeds available to Owners,
then the Trustee shall allow the rights to lapse.
(b) The Trustee will not offer rights to Owners unless both the rights and
the securities to which such rights relate are either exempt from registration
under the Securities Act of 1933 with respect to a distribution to all Owners or
are registered under the provisions of such Act.
(c) The Trustee shall not be responsible for any failure to determine that
it may be lawful or feasible to make such rights available to Owners in general
or any Owner in particular.
(14) RECORD DATES.
------------
Whenever any cash dividend or other cash distribution shall become payable
or any distribution other than cash shall be made, or whenever the Trustee
receives notice of a meeting of or solicitation of proxies from holders of any
Underlying Securities, or whenever a fee shall be changed by the Trustee under
Section 5.6 of the Standard Terms, or whenever for any reason there is a
reconstitution or other event under the Depositary Trust Agreement that causes a
change in the composition of the Securities which must be
B-9
<PAGE>
deposited for issuance of Receipts, or whenever the Trustee shall find it
necessary or convenient in respect of any matter, the Trustee shall fix a record
date (a) for the determination of the Owners who shall be (i) entitled to
receive such dividend, distribution or rights or the net proceeds of the sale
thereof or (ii) entitled to give instructions for the exercise of voting rights
at any such meeting or solicitation, or (iii) required to pay such fee, or (b)
on or after which each Receipt will represent such changed group of Securities,
subject to the provisions of the Depositary Trust Agreement. In the case of
subsections (a)(i) and (a)(ii) of this Article (13), the Trustee shall use its
reasonable efforts to ensure that, to the extent practicable, the record date
set under the Depositary Trust Agreement will be the same as the record date set
by the Securities Issuer.
(15) VOTING OF UNDERLYING SECURITIES.
-------------------------------
Upon receipt by the Trustee or its appointed agent of notice of any meeting
of, or solicitation of proxies from, holders of Underlying Securities, the
Trustee shall, to the extent lawful, mail to the Owners a notice which shall
contain (a) such information as is contained in such notice of meeting or
solicitation, (b) a statement that the Owners of Receipts as of the close of
business on a specified record date will be entitled, subject to applicable law
and the provisions of the corporate documents of the Securities Issuer, to
instruct the Trustee as to the exercise of the voting rights, if any, or giving
of proxies, as applicable, in respect of the amount of Underlying Securities
represented by their respective Receipts and (c) a statement as to the manner in
which such instructions may be given. Upon the written request of an Owner of a
Receipt on such record date, received on or before the date established by the
Trustee, the Trustee shall endeavor, insofar as practicable, to vote or cause to
be voted, or to give a proxy, as applicable, in respect of the amount of
Underlying Securities represented by such Receipt in accordance with the
instructions set forth in such request. The Trustee shall not vote or attempt
to exercise the right to vote that attaches to, or give a proxy with respect to,
Underlying Securities other than in accordance with such instructions.
(16) CHANGES AFFECTING UNDERLYING SECURITIES.
---------------------------------------
(a) In circumstances where the provisions of Sections 2.11 and 4.3 of the
Standard Terms do not apply, upon any change in nominal value, change in par
value, split-up, consolidation or any other reclassification of any Underlying
Securities, or upon any recapitalization, reorganization, merger or
consolidation or sale of assets affecting the issuer of any Underlying Security,
if the relevant Securities Issuer survives such event, the Trustee shall, to the
extent lawful and feasible, retain such Securities under the Depositary Trust
Agreement, and, in such case, the (A) the amount of such Securities so retained
in respect of each Receipt shall be added to the classes and quantities of
Securities which must be deposited for issuance of Receipts and (B) the number
of Receipts in an Issuance Denomination may be increased or decreased
B-10
<PAGE>
by the Trustee to the lowest multiple of 100 Receipts such that no fractional
shares are thereby represented in such Issuance Denomination.
(b) Securities of any class which are surrendered by the Trustee in
connection with any such conversion or exchange shall, effective on the date of
such surrender, no longer be part of the securities which must be deposited for
issuance of Receipts. In any such case, or in the case of an event to which
Section 2.11 of the Standard Terms applies, the Trustee may call for the
Surrender of outstanding certificates evidencing Receipts to be exchanged for
new certificates specifically describing any applicable change in the classes
and quantities of securities which must be deposited for issuance of
Receipts.
(17) LIABILITY OF THE INITIAL DEPOSITOR AND THE TRUSTEE.
--------------------------------------------------
Neither the Initial Depositor nor the Trustee nor any of their respective
directors, employees, agents or affiliates shall incur any liability to any
Owner or Beneficial Owner of any Receipt, if by reason of any provision of any
present or future law or regulation of the United States or any other country,
or of any governmental or regulatory authority or stock exchange, or by reason
of any act of God or war or other circumstances beyond its control, the Initial
Depositor or the Trustee shall be prevented or forbidden from, or be subject to
any civil or criminal penalty on account of, doing or performing any act or
thing which by the terms of the Standard Terms or the applicable Depositary
Trust Agreement it is provided shall be done or performed; nor shall the Initial
Depositor or the Trustee incur any liability to any Owner or Beneficial Owner of
any Receipt by reason of any non-performance or delay, caused as aforesaid, in
the performance of any act or thing which by the terms of the Standard Terms or
the applicable Depositary Trust Agreement it is provided shall or may be done or
performed, or by reason of any exercise of, or failure to exercise, any
discretion provided for in the Standard Terms or the applicable Depositary Trust
Agreement. Where, by the terms of an offering or distribution to which
Sections 2.11, 4.2 or 4.4 of the Standard Terms applies, or for any
other reason, it is not lawful and feasible to make such distribution or
offering available to Owners, and the Trustee may not dispose of such
distribution or offering on behalf of such Owners and make the net proceeds
available to such Owners, then the Trustee shall not make such distribution or
offering available to Owners and shall allow any rights, if applicable, to
lapse. The Trustee shall not be subject to any liability with respect to the
validity or worth of the Underlying Securities. Neither the Initial Depositor
nor the Trustee shall be under any obligation to prosecute any action, suit or
other proceeding in respect of any Underlying Securities or in respect of the
Receipts. Neither the Initial Depositor nor the Trustee shall be liable for any
action or non-action by it in reliance upon the advice of or information
from legal counsel, accountants, any person presenting Securities for deposit,
any Owner or Beneficial Owner, or any other person believed by it in good faith
to be competent to give such advice or information.
B-11
<PAGE>
The Trustee shall not be liable for any acts or omissions made by a successor
depositary whether in connection with a previous act or omission of the Trustee
or in connection with any matter arising wholly after the resignation of the
Trustee, provided that in connection with the issue out of which such potential
liability arises the Trustee performed its obligations without negligence or bad
faith while it acted as Trustee. The Trustee shall not be responsible for any
failure to carry out any instructions to vote any of the Underlying Securities,
or for the manner in which any such vote is cast or the effect of any such vote,
provided that any such action or non-action is without negligence or bad faith.
Except as specifically provided in Section 4.6 of the Standard Terms, the
Trustee shall have no obligation to monitor or to obtain any information
concerning the business or affairs of any Securities Issuer or to advise Owners
or Beneficial Owners of any event or condition affecting any Securities Issuer.
The Trustee shall have no obligation to comply with any direction or instruction
from any Owner or Beneficial Owner regarding Receipts except to the extent
specifically provided in the Standard Terms or any applicable Depositary Trust
Agreement. The Trustee shall be a fiduciary under the Standard Terms and the
applicable Depositary Trust Agreement; provided, however, that the fiduciary
duties and responsibilities and liabilities of the Trustee shall be limited by,
and shall be only those specifically set forth in, the Standard Terms and the
applicable Depositary Trust Agreement. No disclaimer of liability under the
Securities Act of 1933 is intended by any provision of the Depositary Trust
Agreement.
(18) RESIGNATION OR REMOVAL OF THE TRUSTEE.
-------------------------------------
(a) The Trustee may at any time resign as Trustee under the Depositary
Trust Agreement by written notice of its election so to do, delivered to the
Initial Depositor, and such resignation shall take effect upon the appointment
of a successor Trustee and its acceptance of such appointment.
(b) If at any time the Trustee is in material breach of its obligations
under the Depositary Trust Agreement and the Trustee fails to cure such breach
within 30 days after receipt by the Trustee of written notice from the Initial
Depositor or the Owners of 25% or more of the outstanding Receipts
specifying such default and requiring the Trustee to cure such default, the
Initial Depositor, acting on behalf of the Owners, may remove the Trustee by
written notice delivered to the Trustee, and such removal shall take effect upon
the appointment of the successor Trustee and its acceptance of such appointment.
(c) In case at any time the Trustee acting hereunder shall resign or be
removed, the Initial Depositor, acting on behalf of the Owners, shall use its
reasonable efforts to appoint a successor Trustee, which shall be a bank or
trust company having an office in the Borough of Manhattan, The City of New
York.
B-12
<PAGE>
(19) AMENDMENT.
---------
The Trustee and the Initial Depositor may amend any provisions of the
Depositary Trust Agreement without the consent of any Owner. Any amendment that
imposes or increases any fees or charges (other than taxes and other
charges, registration fees or other such expenses), or that otherwise
prejudices any substantial existing right of the Owners will not become
effective until 30 days after notice of such amendment is given to the Owners.
Every Owner and Beneficial Owner, at the time any amendment so becomes
effective, shall be deemed, by continuing to hold any Receipt or an interest
therein, to consent and agree to such amendment and to be bound by the
Depositary Trust Agreement as amended thereby. In no event shall any amendment
impair the right of the Owner of any Receipt to Surrender such Receipt and
receive therefor the Underlying Securities represented thereby, except in order
to comply with mandatory provisions of applicable law.
B-13
<PAGE>
(20) EARLY TERMINATION OF DEPOSITARY TRUST AGREEMENT.
-----------------------------------------------
(a) The Trust shall terminate by the Trustee mailing notice of such
termination to the Owners of all Receipts then outstanding at least 30 days
prior to the date set for termination if any of the following occurs:
(i) The Trustee is notified that the Receipts are delisted from a
national securities exchange and are not approved for listing on another
national securities exchange within 5 business days of their
delisting;
(ii) Owners of at least 75% of the outstanding Receipts notify the
Trustee that they elect to terminate the Trust; or
(iii) 60 days shall have expired after the Trustee shall have
delivered to the Initial Depositor and the Owners a written notice of its
election to resign and a successor trustee shall not have been appointed
and accepted its appointment.
(b) On and after the date of termination, the Owner of a Receipt will, upon
(a) Surrender of such Receipt at the Corporate Trust Office of the Trustee, (b)
payment of the fee of the Trustee for the Surrender of Receipts referred to in
Section 2.7 of the Standard Terms, and (c) payment of any applicable taxes or
charges, be entitled to Delivery, to him or upon his order, of the amount of
Underlying Securities evidenced by such Receipt. If any Receipts shall remain
outstanding after the date of termination, the Trustee thereafter shall
discontinue the registration of transfers of Receipts, shall suspend the
distribution of dividends or other distribution to the Owners thereof, and shall
not give any further notices or perform any further acts under these Standard
Terms or the applicable Depositary Trust Agreement, except that the Trustee
shall continue to collect dividends and other distributions pertaining to
Underlying Securities and hold the same uninvested and without liability for
interest, shall sell rights as provided in these Standard Terms or the
applicable Depositary Trust Agreement, and shall continue to deliver Underlying
Securities, together with any dividends or other distributions received with
respect thereto and the net proceeds of the sale of any rights or other
property, in exchange for Receipts Surrendered to the Trustee (after deducting
or upon payment of, in each case, the fee of the Trustee set forth in 5.6 of the
Standard Terms for the Surrender of Receipts, any expenses for the account of
the Owner of such Receipts in accordance with the terms and conditions of the
Depositary Trust Agreement, and any applicable taxes or charges). At any time
after the expiration of one year following the date of termination, the Trustee
may sell the Underlying Securities then held hereunder and may thereafter hold
uninvested the net proceeds of any such sale, together with any other cash then
held by it hereunder, unsegregated and without liability for interest, for the
pro rata benefit of the Owners of Receipts which have not theretofore been
- --- ----
Surrendered, such Owners thereupon becoming general creditors of the Trustee
with respect to such net proceeds.
B-14
<PAGE>
After making such sale, the Trustee shall be discharged from all obligations
under these Standard Terms with respect to the Receipts and the applicable
Depositary Trust Agreement, except to account for such net proceeds and other
cash (after deducting, in each case, the fee of the Trustee for the Surrender of
Receipts, any fees of the Trustee due and owing from the Owner of such Receipts
pursuant to Section 5.6 of the Standard Terms, any expenses for the account of
the Owner of such Receipts in accordance with the terms and conditions of the
Depositary Trust Agreement, and any applicable taxes or charges). Upon the
termination of the applicable Depositary Trust Agreement, the Initial Depositor
shall be discharged from all obligations under such Depositary Trust Agreement
except for its obligations to the Trustee under Section 5.5 of the Standard
Terms.
B-15
<PAGE>
EXHIBIT 5.1
March 15, 2000
Merrill Lynch, Pierce, Fenner & Smith Incorporated
250 Vesey Street
New York, New York 10281
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Broadband HOLDRSSM Trust
Registration Statement on Form S-1
Registration No. 333-31226
-------------------------------------
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 Broadband 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 Broadband 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 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
March 15, 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
Broadband HOLDRSSM Trust
Registration Statement on Form S-1
Registration No. 333-31226
-------------------------------------
Ladies and Gentlemen:
We have acted as special Tax Counsel to Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch"), as Initial Depositor, and the Broadband
HOLDRSSM Trust in connection with the preparation and filing of a Prospectus
and Registration Statement on Form S-1, No. 333-92163, 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 Broadband 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
