<PAGE>
File No. 333-22641
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-6
For Registration Under the Securities Act of 1933 of
Securities of Unit Investment Trusts Registered on Form N 8B-2
A. Exact name of Trust:
THE PAINEWEBBER PATHFINDERS TRUST,
TREASURY AND GROWTH STOCK SERIES 21
B. Name of Depositor:
PAINEWEBBER INCORPORATED
C. Complete address of Depositor's principal executive
office:
PAINEWEBBER INCORPORATED
1285 Avenue of the Americas
New York, New York 10019
D. Name and complete address of agents for service:
PAINEWEBBER INCORPORATED
Attention: Mr. Robert E. Holley
1200 Harbor Blvd.
Weehawken, New Jersey 07087
Copy to:
CARTER, LEDYARD & MILBURN
Attention: Kathleen H. Moriarty, Esq.
2 Wall Street
New York, New York 10005
E. Total and amount of securities being registered:
An indefinite number of Units pursuant to Rule
24f-2 of the Investment Company Act of 1940
F. Proposed maximum offering price to the public of the
securities being registered:
Indefinite
<PAGE>
G. Amount of filing fee, computed at one-thirty-third of 1
percent of the proposed maximum aggregate offering price
to the public:
None required pursuant to Rule 24f-2.
H. Approximate date of proposed sale to public:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE
OF THE REGISTRATION STATEMENT
/X/ Check box if it is proposed that this filing will become effective
at 3:00 p.m. on July 30, 1997 pursuant to Rule 487.
<PAGE>
THE PAINEWEBBER PATHFINDERS TRUST,
TREASURY AND GROWTH STOCK SERIES 21
Cross Reference Sheet
Pursuant to Rule 404(c) of Regulation C
under the Securities Act of 1933
(Form N-8B-2 Items required by Instruction 1
as to Prospectus on Form S-6)
Form N-8B-2 Form S-6 Item Number
Heading in Prospectus
I. Organization and General Information
1. (a)Name of Trust ) Front Cover
(b)Title of securities issued )
2. Name and address of Depositor ) Back Cover
3. Name and address of Trustee ) Back Cover
4. Name and address of principal ) Back Cover
Underwriter )
5. Organization of Trust ) The Trust
6. Execution and termination of ) The Trust
Trust Agreement ) Termination of the Trust
7. Charges of name ) *
8. Fiscal Year ) *
9. Litigation ) *
II. General Description of the Trust
and Securities of the Trust
10. General Information regarding Trust's ) The Trust
Securities and Rights of Holders ) Rights of Unitholders
(a) Type of Securities ) The Trust
(Registered or Bearer )
* Not applicable, answer negative or not required.
(b) Type of Securities ) The Trust
(Cumulative or Distributive) )
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(c) Rights of Holders as to ) Rights of Unitholders
Withdrawal or Redemption ) Redemption Public
) Offering of Units-
) Secondary Market for
) Units
(d) Rights of Holders as to ) Public Offering of
conversion, transfer, etc. ) Units-Secondary Market
) for Units
) Exchange Option
(e) Rights of Trust issues periodic ) *
payment plan certificates )
(f) Voting rights as to Securities ) Rights of Unitholders
under the Indenture )
(g) Notice to Holders as to )
change in
(1) Assets of Trust ) Amendment of the Indenture
(2) Terms and Conditions ) Supervision of Trust
of Trust's Securities ) Investments
(3) Provisions of Trust ) Amendment of the Indenture
(4) Identity of Depositor ) Administration of the
and Trustee ) Trust
(h) Consent of Security Holders )
required to change )
(1) Composition of assets ) Amendment of the Indenture
of Trust
(2) Terms and conditions ) Amendment of the Indenture
of Trust's Securities )
(3) Provisions of Indenture )
(4) Identity of Depositor ) Amendment of the Indenture
and Trustee )
11. Type of securities comprising ) The Trust
security holder's interest ) Rights of Unitholders
) Administration of the
) Trust
) Portfolio Supervision
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* Not applicable, answer negative or not required.
<PAGE>
12. Information concerning periodic ) *
payment certificates )
13. (a) Load, fees, expenses, etc. ) Public Offering Price of
) Units, Expenses of the
) Trust
(b) Certain information regarding ) *
periodic payment certificates- )
(c) Certain percentages ) *
(d) Certain other fees, etc. ) Expenses of the Trust
payable by holders ) Rights of Unitholders
(e) Certain profits receivable by ) Public Offering of Units-
depositor, principal under- ) Public Offering Price;
writers, trustee or affiliated ) -Sponsor's Profit
persons ) -Secondary Market for
-Units
(f) Ratio of annual charges to ) *
income )
14. Issuance of trust's securities ) The Trust
) Public Offering of Units
15. Receipt and handling of payments ) *
from purchasers )
16. Acquisition and disposition of ) The Trust, Administration
Underlying Securities ) of the Trust-Portfolio
) Supervision Rights of
) Unitholders
17. Withdrawal or redemption ) Redemption
) Public Offering of Units
) -Secondary Market for
) Units-Exchange Option
) Rights of Unitholders
18. (a) Receipt and disposition of ) Distributions, Termination
income ) of the Trust,
) Administration of the
) Trust-Reports and Records
(b) Reinvestment of distributions ) *
* Not applicable, answer negative or not required.
(c) Reserves or special fund ) Distributions, Expenses of
) the Trust, Administration
) of the Trust-Reports and
<PAGE>
) Records
(d) Schedule of distribution ) *
19. Records, accounts and report ) Distributions, Adminstra-
) tion of the Trust
20. Certain miscellaneous provisions ) Administration of the
of trust agreement ) Trust
21. Loans to security holders ) *
22. Limitations on liability ) Sponsor, Trustee
23. Bonding arrangements ) Included in Form N-8B-2
24. Other material provisions of ) *
trust agreement )
III. Organization Personnel and
Affiliated Persons of Depositor
25. Organization of Depositor ) Sponsor
26. Fees received by Depositor ) Public Offering Price of
) Units, Expenses of the
) Trust
27. Business of Depositor ) Sponsor
28. Certain information as to ) Sponsor
officials and affiliated )
persons of Depositor )
29. Voting securities of Depositor ) *
30. Persons controlling Depositor ) Sponsor
31. Payments by Depositor for certain ) *
other services trust )
32. Payments by Depositor for certain ) *
other services rendered to trust )
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* Not applicable, answer negative or not required.
<PAGE>
33. Remuneration of employees of ) *
Depositor for certain services )
rendered to trust )
34. Remuneration of other persons ) *
for certain services rendered )
to trust )
IV. Distribution and Redemption of Securities
35. Distribution of trust's ) Public Offering of Units
securities by states ) Distribution of Units
36. Suspension of sales of trust's ) *
securities )
37. Revocation of authority to ) *
distribute )
38. (a) Method of distribution ) Public Offering of Units
(b) Underwriting agreements ) Distribution of Units
(c) Selling agreements )
39. (a) Organization of principal ) Sponsor
underwriter )
(b) N.A.S.D. membership of ) Sponsor
principal underwriter )
40. Certain fees received by ) Public Offering of Units
principal underwriter ) -public Offering Price
41. (a) Business of principal ) Sponsor
underwriter )
(b) Branch officers of principal )
underwriter )
(c) Salesman of principal ) *
underwriter )
42. Ownership of trust's securities ) *
by certain persons )
43. Certain brokerage commissions ) *
received by principal underwriter )
* Not applicable, answer negative or not required.
44. (a) Method of valuation ) Public Offering of Units
) -Public Offering Price
<PAGE>
(b) Schedule as to offering price ) *
(c) Variation in offering price ) Public Offering of Units
to certain persons ) -Public Offering Price
45. Suspension of redemption rights ) *
46. (a) Redemption valuation ) Public Offering of Units
) -Public Offering Price
) -Secondary Market for
) Units Valuation Redemption
(b) Schedule as to redemption price ) *
V. Information concerning the Trustee or Custodian
47. Maintenance of position in ) Redemption, Public
underlying securities ) Offering of Units Public
) Offering Price
48. Organization and regulation of ) Trustee
Trustee ) )
49. Fees and expenses of Trustee ) Expenses of the Trust
50. Trustee's lien ) Expenses of the Trust
VI. Information concerning Insurance of Holders of Securities
51. (a) Name and address of Insurance ) *
Company )
(b) Type of policies ) *
(c) Type of risks insured and ) *
excluded )
(d) Coverage of policies ) *
(e) Beneficiaries of policies ) *
(f) Terms and manner of ) *
cancellation )
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* Not applicable, answer negative or not required.
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(g) Method of determining premiums ) *
(h) Amount of aggregate premiums ) *
paid )
(i) Who receives any part of ) *
premiums )
(j) Other material provisions of ) *
the Trust relating to insurance )
VII. Policy of Registrant
52. (a) Method of selecting and ) The Trust, Administration
eliminating securities from ) of the Trust-Portfolio
the Trust ) Supervision
(b) Elimination of securities ) *
from the Trust )
(c) Policy of Trust regarding ) The Trust, Administration
substitution and elimination ) of the Trust-Portfolio
of securities ) Supervision
(d) Description of any fundamental ) The Trust, Administration
policy of the Trust ) of the Trust-Portfolio
) Supervision
53. (a) Taxable status of the Trust ) Federal Income Taxes
(b) Qualification of the Trust as ) Federal Income Taxes
a mutual investment company
VIII. Financial and Statistical Information
54. Information regarding the Trust's ) *
past ten fiscal years )
55. Certain information regarding ) *
periodic payment plan certificates )
56. Certain information regarding ) *
periodic payment plan certificates )
57. Certain information regarding ) *
periodic payment plan certificates )
* Not applicable, answer negative or not required.
<PAGE>
58. Certain information regarding ) *
periodic payment plan certificates )
59. Financial statements ) Statement of Financial
(Instruction 1(c) to Form S-6) ) Condition
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* Not applicable, answer negative or not required.
<PAGE>
PAINEWEBBER PATHFINDERS TRUST
Treasury and Growth Stock Series 21
[PaineWebber Pathfinders Trust LOGO]
THE UPSIDE POTENTIAL OF EQUITIES
WITH THE SECURITY OF U.S. TREASURIES
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The investment objective of this Trust is to preserve capital while
providing for capital appreciation through an investment in "zero-coupon"
United States Treasury obligations (the "Treasury Obligations") and equity
stocks (the "Stocks") having, in the Sponsor's opinion on the Initial Date of
Deposit, potential for appreciation. The value of the Units will fluctuate
with the value of the portfolio of underlying securities.
The minimum purchase is $250. Only whole Units may be purchased.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
- -----------------------------------------------------------------------------
SPONSOR:
PAINEWEBBER INCORPORATED
Read and retain this prospectus for future reference.
PROSPECTUS DATED JULY 30, 1997
<PAGE>
ESSENTIAL INFORMATION REGARDING THE TRUST
AS OF JULY 29, 1997+
<TABLE>
<CAPTION>
<S> <C>
Initial Date of Deposit: July 30, 1997
Aggregate Value of Securities in Trust:......................$952,500
Number of Units:.............................................1,000,000
Fractional Undivided Interest in the Trust Represented by
Each Unit:..................................................1/1,000,000th
Calculation of Public Offering Price Per Unit*
Aggregate Value of Underlying Securities in Trust .........$952,500
Divided by 1,000,000 Units.................................$.9525
Plus Sales Charge of 4.75% of Public Offering Price
(4.99% of net amount invested per Unit)...................$.0475
Public Offering Price per Unit.............................$1.00
Redemption Value: .............................................$.9511
Evaluation Time:...............................................4:00 P.M. New York time.
Distribution Dates**: .........................................Quarterly, commencing
October 20, 1997.
Record Date: ..................................................September 30, 1997, and quarterly
thereafter.
Mandatory Termination Date:....................................November 30, 2008 (15 days after
maturity of the Treasury
Obligations).
20% of the value of the Securities
upon completion of the deposit
Discretionary Liquidation Amount:.............................. of the Securities.
Estimated Annual Organizational Expenses of the Trust*** ......$.00080 per Unit.
Estimated Other Expenses of the Trust..........................$.00255 per Unit.
Total Estimated Expenses of the Trust****:.....................$.00335 per Unit.
</TABLE>
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* On the date of this Prospectus (the "Initial Date of Deposit") the
Public Offering Price is based on the value of the Securities as of
the close of business on July 29, 1997 (the business day preceding
the Initial Date of Deposit). However, if the public offering price
determined with reference to values of the Securities as of the close
of business on the Initial Date of Deposit is less than $.975, the
purchase orders received on the Initial Date of Deposit will be
filled on the basis of such lower price. Beginning July 31, 1997 the
Public Offering Price will be based on value of the Securities next
computed following receipt of the purchase order plus the applicable
sales charge. (See "Valuation").
** No distributions of less than $.0050 per Unit need be made from the
Capital account on any Distribution Date. See "Distributions".
*** This Trust (and therefore the investors) will bear all or a portion
of its organizational costs--including costs of preparing the initial
registration statement, the trust indenture and other closing
documents, registering Units with the SEC and the states and the
initial audit of the portfolio--as is common for mutual funds.
Historically, the sponsors of unit investment trusts have paid all
the costs of establishing those trusts.
**** See "Expenses of the Trust". Estimated dividends from the Stocks,
based upon last dividends actually paid, are expected by the Sponsor
to be sufficient to pay Estimated Expenses of the Trust.
+ The date prior to the Initial Date of Deposit.
2
<PAGE>
ESSENTIAL INFORMATION REGARDING THE TRUST (CONTINUED)
The Trust. The objective of the PaineWebber Pathfinders Trust, Treasury
and Growth Stock Series
21 (the "Trust") is preservation of capital and capital appreciation through
an investment in the principal or interest portions of stripped "zero-coupon"
United States Treasury notes or bonds as the case may be (the "Treasury
Obligations"), and equity stocks (the "Stock" or "Stocks") which, in
Sponsor's opinion on the Initial Date of Deposit, have potential for capital
appreciation (collectively, the "Securities"). The stripped Treasury
Obligations in the Trust portfolio are interest-only portions of United
States Treasury Obligations (as further discussed under "Risk Factors and
Special Considerations"), maturing November 15, 2008 and which represent
approximately 52% of the aggregate market value of the Trust portfolio. The
Stocks represent approximately 48% of the aggregate market value of the Trust
portfolio. The stripped Treasury Obligations, as discussed below, make no
payment of current interest, but rather make a single payment upon their
stated maturity. Because the maturity value of the Treasury Obligations is
backed by the full faith and credit of the United States, the Sponsor
believes that the Trust provides an attractive combination of safety and
appreciation for purchasers who hold Units until the Trust's termination. The
Trust has been formulated so that the portion of the Trust invested in
stripped Treasury Obligations is designed to provide an approximate return of
principal invested on the Mandatory Termination Date for purchasers on the
Initial Date of Deposit. (See "Essential Information--Distributions".)
Therefore, even if the Stocks are valueless upon termination of the Trust,
and if the Treasury Obligations are held until their maturity in proportion
to the Units outstanding, purchasers will receive, at the termination of the
Trust, $1,000 per 1,000 Units purchased. This feature of the Trust provides
that Unitholders who purchased their units at or below $1,000 per 1,000 Units
and who hold their units to the Mandatory Termination Date of the Trust on
November 30, 2008 will receive the same amount as they originally invested,
although they would have foregone earning any interest on the amounts
involved and will not protect their principal on a present value basis,
assuming the Stocks are valueless. Therefore, the Trust may be an attractive
investment to those persons who buy their Units during the initial offering
period and hold such Units throughout the life of the Trust until the Trust
matures.
Summary of Risk Factors. The stripped Treasury Obligations may appreciate
or depreciate in value depending upon economic and market conditions. (For a
further discussion of stripped Treasury Obligations, see "Risk Factors and
Special Considerations.") The Stock may appreciate or depreciate in value (or
pay dividends) depending on the full range of economic and market influences
affecting corporate profitability, the financial condition of issuers, the
prices of equity securities in general and the Stock in particular and the
risk inherent in an investment made in common stocks in general. Also, the
Trust may contain American Depositary Receipts ("ADRs") which are susceptible
to additional risks, such as foreign currency exchange rate fluctuations, as
well as potential future political and economic developments, which might
adversely affect the payment or receipt of payments on dividends. (See
"Schedule of Investments" to determine if this Trust contains ADRs and "Risk
Factors and Special Considerations" for a further discussion of ADRs.) In
addition, the stripped Treasury Obligations may fluctuate substantially in
value and may be subject to greater fluctuations in value during the life of
the Trust than might be experienced by current interest-bearing Treasury
Obligations which distribute income regularly. There is no assurance that the
Trust's objective will be achieved at the Trust's intended maturity or if the
Trust is terminated or Units redeemed prior to the Trust's intended maturity.
The value of the Securities and, therefore, the value of Units may be
expected to fluctuate. Purchasers who purchase Units subsequent to the
Initial Date of Deposit will receive, if the pro rata portion of the Treasury
Obligations are held until maturity, $1,000 per 1,000 Units as a return of
such purchaser's principal investment, regardless of the purchase price paid
by such purchaser. (See "Risk Factors and Special Considerations.")
3
<PAGE>
The Composition of the Portfolio. PaineWebber understands the importance of
long-term financial goals such as planning for retirement, funding a child's
education, or trying to build wealth toward some other objective.
In PaineWebber's view, one of the most important investment decisions an
investor faces may be determining how to best allocate his investments to
capture growth opportunities without exposing his portfolio to undue risk.
For long-term capital growth, many investment experts recommend stocks. As
with all investments, the higher return potential of equities is typically
associated with higher risk. With this in mind, PaineWebber designed a
portfolio to meet the needs of investors interested in building wealth
prudently over a long-term time horizon by pairing the security of U.S.
Treasury bonds with the growth potential of Stocks. The Trust is a balanced
portfolio with approximately equal portions in U.S. Treasury bonds and
Stocks. Therefore, should interest rates decline significantly prior to
maturity, there is a potential for achieving greater returns by liquidating
the portfolio before the final maturity date. Unitholders can sell units at
any time at the then current net asset value with no additional sales charge.
(See Public Offering of Units--Secondary Market for Units and Redemption.)
The main objective of PaineWebber in constructing the portfolio of stocks
to be included in the Trust was to select a group of stocks which, in
PaineWebber's view, would be capable of, over the long term, closely tracking
the performance of the market as measured by the S&P 500. The S&P 500 is an
unmanaged index of 500 stocks calculated under the auspices of Standard &
Poor's, which, in PaineWebber's view, is a broadly diversified,
representative segment of the market of all publicly traded stocks in the
United States.
In constructing the Trust's portfolio, a computer program was generated
against the 500 S&P stocks to identify a combination of 40 S&P 500 stocks
(excluding General Electric and those stocks rated "Unattractive" or "Sell"
by PaineWebber Equity Research) which, when equally weighted, have the
highest correlation with the S&P 500 Index with the smallest tracking error.
The Trust portfolio, in PaineWebber's opinion, is comprised of a
diversified group of large, well-known companies representing various
industries. These are common stocks issued by companies who may receive
income and derive revenues from multiple industry sources but whose primary
source is listed in the table below. For a list of the individual common
stocks comprising each industry group listed below, investors should consult
the "Schedule of Investments" herein.
<TABLE>
<CAPTION>
APPROXIMATE PERCENTAGE OF
PRIMARY INDUSTRY SOURCE AGGREGATE NET ASSET VALUE OF THE TRUST
- --------------------------------------- --------------------------------------
<S> <C>
Automobile.............................. 1.18%
Beverage ............................... 2.35%
Chemical ............................... 1.27%
Computer Processing & Data Preparation 1.18%
Computer Software....................... 2.26%
Electronics/Semi-Conductor.............. 2.38%
Entertainment .......................... 1.18%
Financial Institutions/Banks............ 7.49%
Foods................................... 1.17%
Household Products...................... 2.51%
Insurance............................... 1.19%
Manufacturing........................... 1.22%
Metals.................................. 1.23%
Oil/Gas................................. 4.76%
Pharmaceuticals......................... 7.18%
Restaurants ............................ 1.19%
4
<PAGE>
APPROXIMATE PERCENTAGE OF
PRIMARY INDUSTRY SOURCE AGGREGATE NET ASSET VALUE OF THE TRUST
- --------------------------------------- --------------------------------------
Retail-Building Products................ 1.22%
Retail-Department Stores................ 1.11%
Telecommunications...................... 3.61%
Tobacco................................. 1.19%
Utilities............................... 1.20%
</TABLE>
The Sponsor anticipates that, based upon last dividends actually paid,
dividends from the Stock will be sufficient (i) to pay expenses of the Trust
(see "Expenses of the Trust" herein), and (ii) after such payment, to make
distributions of such to Unitholders as described below under
"Distributions".
Additional Deposits. After the first deposit on the Initial Date of
Deposit the Sponsor may, from time to time, cause the deposit of additional
Securities in the Trust where additional Units are to be offered to the
public, replicating the original percentage relationship between the maturity
values of the Treasury Obligations and the number of shares of the Stocks
deposited on the Initial Date of Deposit, subject to certain adjustments.
Costs incurred in acquiring such additional Stocks which are either not
listed on any national securities exchange or are ADRs, including brokerage
fees, stamp taxes and certain other costs associated with purchasing such
additional Stocks, will be borne by the Trust. Investors purchasing Units
during the initial public offering period will experience a dilution of their
investment as a result of such brokerage fees and other expenses paid by the
Trust during additional deposits of Securities purchased by the Trustee with
cash or cash equivalents pursuant to instructions to purchase such
Securities. (See "The Trust" and "Risk Factors and Special Considerations".)
Termination. As directed by the Sponsor, approximately 30 days prior to
the maturity of the Treasury Obligations the Trustee will begin to sell the
Stocks held in the Trust. Stocks having the greatest amount of capital
appreciation will be sold first. In certain circumstances, monies held upon
the sale of Securities may, at the direction of the Sponsor, be invested for
the benefit of Unitholders in United States Treasury obligations which mature
on or prior to the next distribution date (see "Administration of the
Trust--Reinvestment"), otherwise monies held upon the sale or maturity of
Securities will be held in non-interest bearing accounts created by the
Indenture until distributed and will be of benefit to the Trustee. During the
life of the Trust, Securities will not be sold to take advantage of market
fluctuations. The Trust will terminate within 15 days after the Treasury
Obligations mature. (See "Termination of the Trust" and "Federal Income
Taxes".)
Public Offering Price. The Public Offering Price per Unit is computed by
dividing the Trust Fund Evaluation by the number of Units outstanding and
then adding a sales charge of 4.75% of the Public Offering Price (4.99% of
the net amount invested). The sales charge is reduced after the second year
and is also reduced on a graduated scale for sales involving at least $50,000
or 50,000 Units and will be applied on whichever basis is more favorable to
the purchaser. (See "Public Offering of Units--Sales Charge and Volume
Discount".)
The public offering price on the Initial Date of Deposit is determined on
the basis of the value of the Securities as of the close of business on the
preceding business day (i.e., by "backward pricing") pursuant to an exemptive
order of the Securities and Exchange Commission, which applies only to
purchase orders received on the Initial Date of Deposit. As a condition of
that order, however, if the public offering price based on the value of the
Securities as of the close of business on the Initial Date of Deposit (i.e.,
by "forward pricing") would be less than $.975, then purchase orders received
on that day will be filled on the basis of the lower public offering price.
Distributions. The Trustee will distribute any net income and principal in
excess of $.00500 per Unit received quarterly on the Distribution Dates. (See
"Distributions.") Income with respect to the original issue discount on the
Treasury Obligations will not be distributed although Unitholders will be
subject to income tax at ordinary income rates as if a distribution had
occurred. (See "Federal Income Taxes".)
5
<PAGE>
Upon termination of the Trust, the Trustee will distribute to each Unitholder
his pro rata share of the Trust's assets, less expenses. The sale of Stocks
in the Trust in the period prior to termination and upon termination may
result in a lower amount than might otherwise be realized if such sale were
not required at such time due to impending or actual termination of the
Trust. For this reason, among others, the amount realized by a Unitholder
upon termination may be less than the amount paid by such Unitholder. Unless
a Unitholder purchases Units on the Initial Date of Deposit and unless the
Treasury Obligations in proportion to the Units outstanding remain in the
Trust, total distributions, including distributions made upon termination of
the Trust, may be less than the amount paid for a Unit.
Market for Units. The Sponsor, though not obligated to do so, presently
intends to maintain a secondary market for Units based upon the value of the
Stocks and the Treasury Obligations as determined by the Trustee as set forth
in "Valuation". The public offering price in the secondary market will be
based upon the value of the Securities next determined after receipt of a
purchase order plus the applicable sales charge. (See "Public Offering of
Units--Public Offering Price" and "Valuation".) If a secondary market is not
maintained, a Unitholder may dispose of his Units only through redemption.
With respect to redemption requests in excess of $100,000, the Sponsor may
determine in its sole discretion to direct the Trustee to redeem units "in
kind" by distributing Securities to the redeeming Unitholder as directed by
the Sponsor. (See "Redemption".)
TRUST
The Trust is one of a series of similar but separate unit investment
trusts created by the Sponsor pursuant to a Trust Indenture and Agreement*
(the "Indenture") dated as of the Initial Date of Deposit, among PaineWebber
Incorporated, as Sponsor and the Investors Bank & Trust Company and The First
National Bank of Chicago, as Co-Trustees (the "Co-Trustees" or "Trustee").
The objective of the Trust is preservation of capital and capital
appreciation through an investment in Treasury Obligations and Stocks. These
are equity stocks, which, in the Sponsor's opinion on the Initial Date of
Deposit, are capable of, over the long term, closely tracking the performance
of the market as measured by the S&P 500. The Stocks contained in the Trust
are representative of a number of different industries. Dividends, if any,
received will be held by the Trustee in non-interest bearing accounts until
used to pay expenses or distributed to Unitholders on the next Distribution
Date and to the extent that funds are held therein will benefit the Trustee.
On the Initial Date of Deposit, the Sponsor deposited with the Trustee the
confirmations of contracts for the purchase of Securities together with an
irrevocable letter or letters of credit of a commercial bank or banks in an
amount at least equal to the purchase price. The value of the Securities was
determined on the basis described under "Valuation". In exchange for the
deposit of the contracts to purchase Securities, the Trustee delivered to the
Sponsor a registered certificate for Units representing the entire ownership
of the Trust. On the Initial Date of Deposit the fractional undivided
interest in the Trust represented by a Unit was as set forth in "Essential
Information Regarding the Trust".
With the deposit on the Initial Date of Deposit, the Sponsor established a
proportionate relationship between the maturity value of the Treasury
Obligations and the number of shares of each Stock in the Trust. The Sponsor
may, from time to time, cause the deposit of additional Securities in the
Trust when additional Units are to be offered to the public, replicating the
original percentage relationship between the maturity value of the Treasury
Obligations and the number of shares of Stock deposited on the Initial Date
of Deposit and replicating any cash or cash equivalents held by the Trust
(net of expenses). The
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* Reference is hereby made to said Trust Indenture and Agreement and any
statements contained herein are qualified in their entirety by the
provisions of said Trust Indenture and Agreement.
6
<PAGE>
original proportionate relationship is subject to adjustment to reflect the
occurrence of a stock split or other corporate action which affects the
capital structure of the issuer of a Stock but which does not affect the
Trust's percentage ownership of the common stock equity of such issuer at the
time of such event. Taxable stock dividends received by the Trust, if any,
will be sold by the Trustee and the proceeds therefrom shall be treated as
income to the Trust.
The Treasury Obligations consist of U.S. Treasury obligations which have
been stripped of their unmatured interest coupons or interest coupons
stripped from the U.S. Treasury Obligations. The obligor with respect to the
Treasury Obligations is the United States Government. U.S. Government backed
obligations are considered the safest investment.
On the Initial Date of Deposit each Unit represented the fractional
undivided interest in the Securities and net income of the Trust set forth
under "Essential Information Regarding the Trust". However, if additional
Units are issued by the Trust (through either the deposit of (i) additional
Securities or (ii) cash for the purchase of additional Securities for
purposes of the sale of additional Units), the aggregate value of Securities
in the Trust will be increased and the fractional undivided interest
represented by each Unit in the balance will be decreased. If any Units are
redeemed, the aggregate value of Securities in the Trust will be reduced, and
the fractional undivided interest represented by each remaining Unit in the
balance will be increased. Units will remain outstanding until redeemed upon
tender to the Trustee by any Unitholder (which may include the Sponsor) or
until the termination of the Trust. (See "Termination of the Trust".)
RISK FACTORS AND SPECIAL CONSIDERATIONS
Risk Factors
An investment in the Trust should be made with the understanding of the
risks inherent in an investment in deep discount or "zero-coupon" debt
obligations and the risks associated with an investment in common stocks in
general.
The Trust contains stripped Treasury Securities described below (see
"Schedule of Investments"). Stripped Treasury Securities consist of
"interest-only" or "principal-only" portions of Treasury Obligations.
Interest-only portions of Treasury Obligations represent the rights only to
payment of interest on a date certain, and principal-only portions of
Treasury Obligations represent the rights only to payment of principal at a
stated maturity. Interest-only and principal-only portions of Treasury
Obligations are deep discount obligations that are economically identical to
zero-coupon obligations; that is, all such instruments are debt obligations
which make no periodic payment of interest prior to maturity. THE STRIPPED
TREASURY SECURITIES IN THE TRUST WERE PURCHASED AT A DEEP DISCOUNT AND DO NOT
MAKE ANY PERIODIC PAYMENTS OF INTEREST. Instead, the entire payment of
proceeds will be made upon maturity of such Treasury Obligations. The effect
of owning deep discount bonds which do not make current interest payments
(such as the stripped Treasury Obligations in the Trust Portfolio) is that a
fixed yield is earned not only on the original investment but also, in
effect, on all earned discount during the life of the discount obligation.
This implicit reinvestment of earnings at the same rate eliminates the risk
of being unable to reinvest the income on such obligations at a rate as high
as the implicit yield on the discount obligation, but at the same time
eliminates the holder's ability to reinvest at higher rates in the future.
For this reason, while the full faith and credit of the United States
government provides a high degree of protection against credit risks, sale of
Units prior to the termination date of the Trust will involve substantially
greater price fluctuations during periods of changing market interest rates
than would be experienced in connection with sale of Units of a Trust which
held Treasury Obligations which made scheduled interest payments on a current
basis.
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An investment in Units of the Trust should also be made with an
understanding of the risks inherent in an investment in common stocks in
general. The general risks are associated with the rights to receive payments
from the issuer which are generally inferior to creditors of, or holders of
debt obligations or preferred stocks issued by, the issuer. Holders of common
stocks have a right to receive dividends only when and if, and in the
amounts, declared by the issuer's board of directors and to participate in
amounts available for distribution by the issuer only after all other claims
against the issuer have been paid or provided for. By contrast, holders of
preferred stocks have the right to receive dividends at a fixed rate when and
as declared by the issuer's board of directors, normally on a cumulative
basis, but do not participate in other amounts available for distribution by
the issuing corporation. Dividends on cumulative preferred stock must be paid
before any dividends are paid on common stock. Preferred stocks are also
entitled to rights on liquidation which are senior to those of common stocks.
For these reasons, preferred stocks generally entail less risk than common
stocks.
Common stocks do not represent an obligation of the issuer. Therefore they
do not offer any assurance of income or provide the degree of protection of
debt securities. The issuance of debt securities or even preferred stock by
an issuer will create prior claims for payment of principal, interest and
dividends which could adversely affect the ability and inclination of the
issuer to declare or pay dividends on its common stock or the rights of
holders of common stock with respect to assets of the issuer upon liquidation
or bankruptcy. Unlike debt securities which typically have a stated principal
amount payable at maturity, common stocks do not have a fixed principal
amount or a maturity. Additionally, the value of the Stocks in the Trust,
like the Treasury Obligations, may be expected to fluctuate over the life of
the Trust to values higher or lower than those prevailing on the Date of
Deposit. The Stocks may appreciate or depreciate in value (or pay dividends)
depending on the full range of economic and market influences affecting
corporate profitability, the financial condition of issuers and the prices of
equity securities in general and the Stocks in particular.
Certain of the Stocks in the Trust may be ADRs which are subject to
additional risks. (See "Schedule of Investments" herein.) ADRs evidence
American Depositary Shares ("ADS"), which, in turn, represent common stock of
foreign issuers deposited with a custodian in a depositary. (For purposes of
this Prospectus, the term "ADR" generally includes "ADS".) ADRs involve
certain investment risks that are different from those experienced by Stocks
issued by domestic issuers. These investment risks include potential future
political and economic developments and the potential establishment of
exchange controls, new or higher levels of taxation, or other governmental
actions which might adversely affect the payment or receipt of payment of
dividends on the common stock of foreign issuers underlying such ADRs. ADRs
may also be subject to current foreign taxes, which could reduce the yield on
such securities. Also, certain foreign issuers are not subject to reporting
requirements under certain U.S. securities laws and therefore may make less
information publicly available than that afforded by their domestic
counterparts. Further, foreign issuers are not necessarily subject to uniform
financial reporting, auditing and accounting standards, requirements and
practices such as are applicable to domestic issuers.
In addition, the securities underlying the ADRs held in the Trust are
generally denominated, and pay dividends, in foreign currency. An investment
in securities denominated and principally traded in foreign currencies
involves investment risk substantially different than an investment in
securities that are denominated and principally traded in U.S. dollars. This
is due to currency exchange rate risk, because the U.S. dollar value of the
shares underlying the ADRs and of their dividends will vary with the
fluctuations in the U.S. dollar foreign exchange rates for the relevant
currency in which the shares underlying the ADRs are denominated. The Trust,
however, will compute its income in United States dollars, and to the extent
any of the Stocks in the Trust pay income or dividends in foreign currency,
the
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Trust's computation of income will be made on the date of its receipt by the
Trust at the foreign exchange rate in effect on such date. PaineWebber
observes that, in the recent past, most foreign currencies have fluctuated
widely in value against the U.S. dollar for many reasons, including the
soundness of the world economy, supply and demand of the relevant currency,
and the strength of the relevant regional economy as compared to the
economies of the United States and other countries. Exchange rate
fluctuations are also dependent, in part, on a number of economic factors
including economic conditions within the relevant country, interest rate
differentials between currencies, the balance of imports and exports of goods
and services, and transfer of income and capital from one country to another.
These economic factors in turn are influenced by a particular country's
monetary and fiscal policies, perceived political stability (particularly
with respect to transfer of capital) and investor psychology, especially that
of institutional investors predicting the future relative strength or
weakness of a particular currency. As a general rule, the currency of a
country with a low rate of inflation and a favorable balance of trade should
increase in value relative to the currency of a country with a high rate of
inflation and deficits in the balance of trade.
There is no assurance that the Trust's objective will be achieved. Under
ordinary circumstances, dividends and principal received upon the sale of
Stocks may not be reinvested, and such money will be held in a non-interest
bearing account until the next distribution made on the Distribution Date.
Under certain limited circumstances, such dividends and principal may be
reinvested in current interest bearing United States Treasury Obligations
maturing on or before the next Distribution Date. (See "Administration of the
Trust--Reinvestment".) (The Treasury Obligations, the current
interest-bearing United States Treasury Obligations if any, and the Stocks
may be collectively referred to as "Securities" herein.) The value of the
Securities and, therefore, the value of Units may be expected to fluctuate.
Investors should note that the creation of additional Units subsequent to
the Initial Date of Deposit may have an effect upon the value of previously
existing Units. To create additional Units the Sponsor may deposit cash (or
cash equivalents, e.g., a bank letter of credit in lieu of cash) with
instructions to purchase Securities in amounts sufficient to replicate the
original percentage relationship among the Securities based on the price of
the Securities at the Evaluation Time on the date the cash is deposited. To
the extent the price of a Security (or the relevant foreign currency exchange
rate, if applicable) increases or decreases between the time cash is
deposited with instructions to purchase the Security and the time the cash is
used to purchase the Security, Units will represent less or more of that
Security and more or less of the other Securities in the Trust. Unitholders
will be at risk because of price (and currency) fluctuations during this
period since if the price of shares of a Security increases, Unitholders will
have an interest in fewer shares of that Security, and if the price of a
Security decreases, Unitholders will have an interest in more shares of that
Security, than if the Security had been purchased on the date cash was
deposited with instructions to purchase the Security. In order to minimize
these effects, the Trust will attempt to purchase Securities as close as
possible to the Evaluation Time or at prices as close as possible to the
prices used to evaluate the Trust at the Evaluation Time. Thus price (and
currency) fluctuations during this period will affect the value of every
Unitholder's Units and the income per Unit received by the Trust. In
addition, costs incurred in connection with the acquisition of Securities not
listed on any national securities exchange (due to differentials between bid
and offer prices for the Securities) and brokerage fees, stamp taxes and
other costs incurred in purchasing stocks will be at the expense of the Trust
and will affect the value of every Unitholder's Units.
In the event a contract to purchase a Security fails, the Sponsor will
refund to each Unitholder the portion of the sales charge attributable to
such failed contract. Principal and income, if any, attributable to such
failed contract will be distributed to Unitholders of record on the last
business day of the month in which the fail occurs within 20 days of such
record date.
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<PAGE>
BECAUSE THE TRUST IS ORGANIZED AS A UNIT INVESTMENT TRUST, RATHER THAN AS
A MANAGEMENT INVESTMENT COMPANY, THE TRUSTEE AND THE SPONSOR DO NOT HAVE
AUTHORITY TO MANAGE THE TRUST'S ASSETS FULLY IN AN ATTEMPT TO TAKE ADVANTAGE
OF VARIOUS MARKET CONDITIONS TO IMPROVE THE TRUST'S NET ASSET VALUE, BUT MAY
DISPOSE OF SECURITIES ONLY UNDER LIMITED CIRCUMSTANCES. (SEE "ADMINISTRATION
OF THE TRUST--PORTFOLIO SUPERVISION".)
Certain of the Stocks may be attractive acquisition candidates pursuant to
mergers, acquisitions and tender offers. In general, tender offers involve a
bid by an issuer or other acquiror to acquire a stock pursuant to the terms
of its offer. Payment generally takes the form of cash, securities (typically
bonds or notes), or cash and securities. The Indenture contains provisions
requiring the Trustee to follow certain procedures with regard to mergers,
acquisitions, tender offers and other corporate actions. Under certain
circumstances, the Trustee, at the direction of the Sponsor, may hold or sell
such stock or securities received in connection with such corporate actions
(see "Administration of the Trust--Portfolio Supervision").
FEDERAL INCOME TAXES
In the opinion of Carter, Ledyard & Milburn, counsel for the Sponsor,
under existing law:
1. The Trust is not an association taxable as a corporation for federal
income tax purposes. Under the Internal Revenue Code of 1986, as amended
(the "Code"), each Unitholder will be treated as the owner of a pro rata
portion of the Trust, and income of the Trust will be treated as income of
the Unitholder.
2. Each Unitholder will have a taxable event when the Trust disposes of
a Security (whether by sale, exchange, redemption, or payment at maturity)
or when the Unitholder sells its Units or redeems its Units for cash. The
total tax cost of each Unit to a Unitholder is allocated among each of the
Securities in accordance with the proportion of the Trust comprised by
each Security to determine the per Unit tax cost for each Security.
3. The Trust is not an association taxable as a corporation for New York
State income tax purposes. Under New York State law, each Unitholder will
be treated as the owner of a pro rata portion of the Trust and the income
of the Trust will be treated as income of the Unitholders.
The following general discussion of the federal income tax treatment of an
investment in Units of the Trust is based on the Code and Treasury
Regulations promulgated thereunder as in effect on the date of this
Prospectus. The federal income tax treatment applicable to a Unitholder may
depend upon the Unitholder's particular tax circumstances. The tax-treatment
of non-U.S. investors is not addressed. Future legislative, judicial or
administrative changes could modify the statements below and could affect the
tax consequences to Unitholders. Accordingly, each Unitholder is advised to
consult its own tax advisor concerning the effect of an investment in Units.
General. Each Unitholder must report on its federal income tax return a
pro rata share of the entire income of the Trust, derived from dividends on
Stocks, original issue discount or interest on Treasury Obligations, gains or
losses upon dispositions of Securities by the Trust and a pro rata share of
the expenses of the Trust. Unitholders should note that their taxable income
from an investment in Units will exceed cash distributions because taxable
income will include accretions of original issue discount on the Treasury
Obligations, as well as amounts that are not distributed to Unitholders but
are used by the Trust to pay expenses.
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<PAGE>
Distributions with respect to Stock, to the extent they do not exceed
current or accumulated earnings and profits of the distributing corporation,
will be treated as dividends to the Unitholders and will be subject to income
tax at ordinary rates. Corporate Unitholders may be entitled to the
dividends-received deduction discussed below.
To the extent distributions with respect to a Stock were to exceed the
issuing corporation's current and accumulated earnings and profits, they
would not constitute dividends. Rather, they would be treated as a tax free
return of capital and would reduce a Unitholder's tax cost for such Stock.
This reduction in basis would increase any gain, or reduce any loss, realized
by the Unitholder on any subsequent sale or other disposition of Units. After
the tax cost has been reduced to zero, any additional distributions in excess
of current and accumulated earnings and profits would be taxable as gain from
the sale of Stock.
A Unitholder who is an individual, estate or trust may be disallowed
certain itemized deductions described in Code Section 67, including
compensation paid to the Trustee and administrative expenses of the Trust, to
the extent these itemized deductions, in the aggregate, do not exceed two
percent of the Unitholder's adjusted gross income. Thus, a Unitholder's
taxable income from an investment in Units may exceed amounts distributed to
the extent amounts are used by the Trust to pay expenses.
Corporate Dividends-Received Deduction. Corporate holders of Units may be
eligible for the dividends-received deduction with respect to distributions
treated as dividends, subject to the limitations provided in Sections 246 and
246A of the Code. The dividends-received deduction generally equals 70
percent of the amount of the dividend. As a result, the maximum effective tax
rate on dividends received generally will be reduced from 35 percent to 10.5
percent. A portion of the dividends-received deduction may, however, be
subject to the alternative minimum tax. Individuals, partnerships, trusts, S
corporations and certain other entities are not eligible for the
dividends-received deduction. The Clinton administration has proposed a
reduction in the dividends-received deduction from 70 percent to 50 percent
and to modify the holding period for such deduction. The Sponsor is unable to
predict whether the Clinton administration proposal or any other proposal
will be adopted during the life of the Trust.
Original Issue Discount. The Trust will contain principal or interest
portions of stripped "zero-coupon" United States Treasury Obligations which
are treated as bonds that were originally issued at a discount ("original
issue discount"). Original issue discount represents interest for federal
income tax purposes and can generally be defined as the difference between
the price at which a bond was issued and its stated redemption price at
maturity. For purposes of the preceding sentence, stripped obligations, such
as the Treasury Obligations, which variously consist either of the right to
receive payments of interest or the right to receive payments of principal,
are treated by each successive purchaser as originally issued on their
purchase dates at an issue price equal to their respective purchase prices
thereof. The market value of the Trust assets comprising the Trust will be
provided to a Unitholder upon request in order to enable the Unitholder to
calculate the original issue discount attributable to each of the Treasury
Obligations. Original issue discount on Treasury Obligations (which were
issued or treated as issued on or after July 2, 1982) is deemed earned based
on a compounded, constant yield to maturity over the life of such obligation,
taking into account the compounding of accrued interest at least annually,
resulting in an increasing amount of original issue discount includible in
income in each year. Each Unitholder is required to include in income each
year the amount of original issue discount which accrues on its pro rata
portion of each Treasury Obligation with original issue discount. The amount
of accrued original issue discount included in income with respect to a
Unitholder's pro rata interest in Treasury Obligations is thereupon added to
the tax cost for such obligations.
Gain or Loss on Sale. If a Unitholder sells or otherwise disposes of a
Unit, the Unitholder generally will recognize gain or loss in an amount equal
to the difference between the amount realized on the
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<PAGE>
disposition allocable to the Securities and the Unitholder's adjusted tax
bases in the Securities. In general, such adjusted tax bases will equal the
Unitholder's aggregate cost for the Unit increased by any accrued original
issue discount. Such gain or loss will be capital gain or loss if the Unit
and underlying Securities were held as capital assets, except that such gain
will be treated as ordinary income to the extent of any accrued original
issue discount not previously reported. Each Unitholder generally will also
recognize taxable gain or loss when all or part of its pro rata portion of a
Security is sold or otherwise disposed of for an amount greater or less than
its per Unit tax cost therefor.
Withholding For Citizen or Resident Investors. In the case of any
noncorporate Unitholder that is a citizen or resident of the United States a
31 percent "backup" withholding tax will apply to certain distributions of
the Trust unless the Unitholder properly completes and files, under penalties
of perjury, IRS Form W-9 (or its equivalent).
The foregoing discussion is a general summary and relates only to certain
aspects of the federal income tax consequences of an investment in the Trust.
Unitholders may also be subject to state and local taxation. Each Unitholder
should consult its own tax advisor regarding the federal, state and local tax
consequences to it of ownership of Units.
Investment in the Trust may be suited for purchase by funds and accounts
of individual investors that are exempt from federal income taxes such as
Individual Retirement Accounts, tax-qualified retirement plans including
Keogh Plans, and other tax-deferred retirement plans. Unitholders desiring to
purchase Units for tax-deferred plans and IRA's should consult their
PaineWebber Investment Executive for details on establishing such accounts.
Units may also be purchased by persons who already have self-directed
accounts established under tax-deferred retirement plans.
PUBLIC OFFERING OF UNITS
Public Offering Price. The public offering price per Unit on the Initial
Date of Deposit is equal to the aggregate market value of the Securities
determined on the day preceding the Initial Date of Deposit, divided by the
number of Units outstanding plus the sales charge of 4.75%, pursuant to an
exemptive order of the SEC. However, if the public offering price would be
less than $.975 then purchase orders received that day will be filled on the
basis of the lower public offering price. Thereafter, the public offering
price during the initial offering period will be computed by dividing the
Trust Fund Evaluation, next determined after receipt of a purchase order,
and, with respect to the Treasury Obligations, determined with reference to
the offering side evaluation, by the number of Units outstanding plus the
applicable sales charge. The initial public offering period will terminate
when the Sponsor chooses to discontinue offering Units in the initial market.
Thereafter, the Sponsor may offer Units in the secondary market. The public
offering price in the secondary market will be the Trust Fund Evaluation per
Unit next determined after receipt of a purchase order, determined with
respect to the Treasury Obligations on the bid side of the market, plus the
applicable sales charge. (See "Valuation".) The public offering price on any
date subsequent to the Initial Date of Deposit will vary from the public
offering price calculated on the business day prior to the Initial Date of
Deposit (as set forth on page 2 hereof) due to fluctuations in the value of
Stocks and the Treasury Obligations, and the foreign currency exchange rates
(if applicable), among other factors.
Sales Charge and Volume Discount. The Public Offering Price of Units of
the Trust includes a sales charge which varies based upon the number of Units
purchased by a single purchaser. (See the sales charge schedule set forth
below.) During the initial public offering period, the sales charge will be
based on the number of Trust Units purchased on the same or any preceding day
by a single purchaser. Such purchaser or his dealer must notify the Sponsor
at the time of purchase of any previous purchase of Trust
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<PAGE>
Units in order to aggregate all such purchases and must supply the Sponsor
with sufficient information to permit confirmation of such purchaser's
eligibility; acceptance of such purchase order is subject to confirmation.
Purchases of units of other trusts may not be aggregated with purchases of
Trust Units to qualify for this procedure. This procedure may be amended or
terminated at any time without notice. In the event of such termination, the
procedure will revert to that stated under the sales charge schedule referred
to below.
Sales charges during the initial public offering period and for secondary
market sales are set forth below. A discount in the sales charge is available
to volume purchasers of Units due to economies of scales in sales effort and
sales related expenses relating to volume purchases. The sales charge
applicable to volume purchasers of Units is reduced on a graduated scale for
sales to any person of at least $50,000 or 50,000 Units, applied on whichever
basis is more favorable to the purchaser.
INITIAL PUBLIC OFFERING PERIOD AND
SECONDARY MARKET THROUGH JULY 30, 1999
<TABLE>
<CAPTION>
PERCENT OF
PUBLIC PERCENT OF
OFFERING NET AMOUNT
AGGREGATE DOLLAR VALUE OF UNITS* PRICE INVESTED
- ------------------------------- ------------ ------------
<S> <C> <C>
Less than $50,000 .............. 4.75% 4.99%
$50,000 to $99,999 ............. 4.50 4.71
$100,000 to $199,999............ 4.00 4.17
$200,000 to $399,999 ........... 3.50 3.63
$400,000 to $499,999 ........... 3.00 3.09
$500,000 to $999,999 ........... 2.50 2.56
$1,000,000 or more ............. 2.00 2.04
</TABLE>
- ------------
* The sales charge applicable to volume purchasers according to the table
above will be applied on either a dollar or Unit basis, depending upon
which basis provides a more favorable purchase price to the purchaser.
SECONDARY MARKET FROM JULY 31, 1999 THROUGH JULY 30, 2001
<TABLE>
<CAPTION>
PERCENT OF
PUBLIC PERCENT OF
OFFERING NET AMOUNT
AGGREGATE DOLLAR VALUE OF UNITS* PRICE INVESTED
- -------------------------------- ------------ ------------
<S> <C> <C>
Less than $50,000 ............... 4.25% 4.44%
$50,000 to $99,999 .............. 4.00 4.17
$100,000 to $199,999 ............ 3.50 3.63
$200,000 to $399,999 ............ 3.00 3.09
$400,000 to $499,999 ............ 2.50 2.56
$500,000 to $999,999 ............ 2.00 2.04
$1,000,000 or more............... 1.75 1.78
</TABLE>
- ------------
* The sales charge applicable to volume purchasers according to the table
above will be applied on either a dollar or Unit basis, depending upon
which basis provides a more favorable purchase price to the purchaser.
<TABLE>
<CAPTION>
SECONDARY MARKET FROM SECONDARY MARKET ON AND
JULY 31, 2001 AFTER
THROUGH JULY 30, 2003 JULY 31, 2003
PERCENT OF PERCENT OF
PUBLIC PERCENT OF PUBLIC PERCENT OF
OFFERING NET AMOUNT OFFERING NET AMOUNT
PRICE INVESTED PRICE INVESTED
- ----------- ------------ ------------ ------------
<S> <C> <C> <C>
3.25% 3.36% 2.25% 2.30%
</TABLE>
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The volume discount sales charge shown above will apply to all purchases
of Units on any one day by the same person in the amounts stated above, and
for this purpose purchases of Units of this Trust will be aggregated with
concurrent purchases of any other trust which may be offered by the Sponsor.
Units held in the name of the purchaser's spouse or in the name of a
purchaser's child under the age of 21 are deemed for the purposes hereof to
be registered in the name of the purchaser. The reduced sales charges are
also applicable to a trustee or other fiduciary purchasing Units for a single
trust estate or single fiduciary account.
Employee Discount. Due to the realization of economies of scale in sales
effort and sales related expenses with respect to the purchase of Units by
employees of the Sponsor and its affiliates, the Sponsor intends to permit
employees of the Sponsor and its affiliates and certain of their relatives to
purchase units of the Trust at a reduced sales charge of $5.00 per 1,000
Units.
Exchange Option. Unitholders may elect to exchange any or all of their
Units of this series for units of one or more of any series of PaineWebber
Municipal Bond Fund (the "PaineWebber Series"); The Municipal Bond Trust (the
"National Series"); The Municipal Bond Trust, Multi-State Program (the
"Multi-State Series"); The Municipal Bond Trust, California Series (the
"California Series"); The Corporate Bond Trust (the "Corporate Series");
PaineWebber Pathfinder's Trust (the "Pathfinder's Trust"); the PaineWebber
Federal Government Trust (the "Government Series"); The Municipal Bond Trust,
Insured Series (the "Insured Series"); or the PaineWebber Equity Trust (the
"Equity Series") (collectively referred to as the "Exchange Trusts"), at a
Public Offering Price for the Units of the Exchange Trusts to be acquired
based on a reduced sales charge of $15 per Unit, per 100 Units in the case of
a trust whose Units cost approximately $10 or per 1,000 units in the case of
a trust whose Units cost approximately one dollar. Unitholders of this Trust
are not eligible for the Exchange Option into an Equity Trust, Growth Stock
Series designated as a rollover series for the 30 day period prior to
termination of the Trust. The purpose of such reduced sales charge is to
permit the Sponsor to pass on to the Unitholder who wishes to exchange Units
the cost savings resulting from such exchange of Units. The cost savings
result from reductions in time and expense related to advice, financial
planning and operational expenses required for the Exchange Option. Each
Exchange Trust has different investment objectives, therefore a Unitholder
should read the prospectus for the applicable exchange trust carefully prior
to exercising this option. Exchange Trusts having as their objective the
receipt of tax-exempt interest income would not be suitable for tax-deferred
investment plans such as Individual Retirement Accounts. A Unitholder who
purchased Units of a series and paid a per Unit, per 100 Unit or per 1,000
Unit sales charge that was less than the per Unit, per 100 Unit or per 1,000
Unit sales charge of the series of the Exchange Trusts for which such
Unitholder desires to exchange into, will be allowed to exercise the Exchange
Option at the Unit Offering Price plus the reduced sales charge, provided the
Unitholder has held the Units for at least five months. Any such Unitholder
who has not held the Units to be exchanged for the five-month period will be
required to exchange them at the Unit Offering Price plus a sales charge
based on the greater of the reduced sales charge, or an amount which,
together with the initial sales charge paid in connection with the
acquisition of the Units being exchanged, equals the sales charge of the
series of the Exchange Trust for which such Unitholder desires to exchange
into, determined as of the date of the exchange.
The Sponsor will permit exchanges at the reduced sales charge provided
there is either a primary market for Units or a secondary market maintained
by the Sponsor in both the Units of this series and units of the applicable
Exchange Trust and there are units of the applicable Exchange Trust available
for sale. While the Sponsor has indicated that it intends to maintain a
market for the Units of the respective Trusts, there is no obligation on its
part to maintain such a market. Therefore, there is no assurance that
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<PAGE>
a market for Units will in fact exist on any given date at which a Unitholder
wishes to sell his Units of this series and thus there is no assurance that
the Exchange Option will be available to a Unitholder. Exchanges will be
effected in whole Units only. Any excess proceeds from Unitholders' Units
being surrendered will be returned. Unitholders will be permitted to advance
new money in order to complete an exchange to round up to the next highest
number of Units. An exchange of Units pursuant to the Exchange Option will
normally constitute a "taxable event" under the Code and a Unitholder will
generally recognize a tax gain or loss at the time of exchange in the same
manner as upon a sale of Units. Unitholders are urged to consult their own
tax advisors as to the tax consequences to them of exchanging Units in
particular cases.
The Sponsor reserves the right to modify, suspend or terminate this
Exchange Option at any time without further notice to Unitholders. In the
event the Exchange Option is not available to a Unitholder at the time he
wishes to exercise it, the Unitholder will be immediately notified and no
action will be taken with respect to his Units without further instruction
from the Unitholder.
To exercise the Exchange Option, a Unitholder should notify the Sponsor of
his desire to exercise the Exchange Option and to use the proceeds from the
sale of his Units to the Sponsor of this series to purchase Units of one or
more of the Exchange Trusts from the Sponsor. If Units of the applicable
outstanding series of the Exchange Trust are at that time available for sale,
and if such Units may lawfully be sold in the state in which the Unitholder
is resident, the Unitholder may select the series or group of series for
which he desires his investment to be exchanged. The Unitholder will be
provided with a current prospectus or prospectuses relating to each series in
which he indicates interest.
The exchange transaction will operate in a manner essentially identical to
any secondary market transaction, i.e., Units will be repurchased at a price
based on the market value of the Securities in the portfolio of the Trust
next determined after receipt by the Sponsor of an exchange request and
properly endorsed Certificate. Units of the Exchange Trust will be sold to
the Unitholder at a price based upon the next determined market value of the
Securities in the Exchange Trust plus the reduced sales charge. Exchange
transactions will be effected only in whole units; thus, any proceeds not
used to acquire whole units will be paid to the selling Unitholder.
For example, assume that a Unitholder, who has three thousand units of a
trust with a current price of $1.30 per unit, desires to sell his units and
seeks to exchange the proceeds for units of a series of an Exchange Trust
with a current price of $890 per unit based on the bid prices of the
underlying securities. In this example, which does not contemplate any
rounding up to the next highest number of Units, the proceeds from the
Unitholder's units would aggregate $3,900. Since only whole units of an
Exchange Trust may be purchased under the Exchange Option, the Unitholder
would be able to acquire four units in the Exchange Trust for a total cost of
$3,620 ($3,560 for the units and $60 for the sales charge). If all 3,000
units were tendered, the remaining $280 would be returned to the Unitholder.
Conversion Option. Owners of units of any registered unit investment trust
sponsored by another sponsor which was initially offered at a maximum
applicable sales charge of at least 3.0% (a "Conversion Trust") may elect to
apply the cash proceeds of the sale or redemption of those units directly to
acquire available units of any Exchange Trust at a reduced sales charge of
$15 per Unit (or per 100 Units in the case of Exchange Trusts having a Unit
price of approximately $10, or per 1,000 Units in the case of Exchange Trusts
having a Unit price of approximately $1), subject to the terms and conditions
applicable to the Exchange Option (except that no secondary market is
required for Conversion Trust units). To exercise this option, the owner
should notify his retail broker. He will be given a prospectus for each
series in which he indicates interest and for which units are available. The
dealer must sell or redeem the units
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of the Conversion Trust. Any dealer other than PaineWebber must certify that
the purchase of units of the Exchange Trust is being made pursuant to and is
eligible for the Conversion Option. The dealer will be entitled to two thirds
of the applicable reduced sales charge. The Sponsor reserves the right to
modify, suspend or terminate the Conversion Option at any time without
further notice, including the right to increase the reduced sales charge
applicable to this option (but not in excess of $5 more per Unit (or per 100
Units or per 1,000 Units, as applicable) than the corresponding fee then
being charged for the Exchange Option). For a description of the tax
consequences of a conversion reference is made to the Exchange Option section
of the prospectus.
Distribution of Units. The minimum purchase during the initial public
offering is $250. Only whole Units may be purchased.
The Sponsor is the sole underwriter of the Units. Sales may, however, be
made to dealers who are members of the National Association of Securities
Dealers, Inc. ("NASD") at prices which include a concession of $.03 per Unit,
during the initial offering period and one-half of the highest applicable
sales charge during the secondary market, subject to change from time to
time. The difference between the sales charge and the dealer concession will
be retained by the Sponsor. In the event that the dealer concession is 90% or
more of the sales charge per Unit, dealers taking advantage of such
concession may be deemed to be underwriters under the Securities Act of 1933.
The Sponsor reserves the right to reject, in whole or in part, any order
for the purchase of Units. The Sponsor intends to qualify the Units in all
states of the United States, the District of Columbia and the Commonwealth of
Puerto Rico.
Secondary Market for Units. While not obligated to do so, the Sponsor
intends to maintain a secondary market for the Units and continuously offer
to purchase Units at the Trust Fund Evaluation per Unit next computed after
receipt by the Sponsor of an order from a Unitholder. The Sponsor may cease
to maintain such a market at any time, and from time to time, without notice.
In the event that a secondary market for the Units is not maintained by the
Sponsor, a Unitholder desiring to dispose of Units may tender such Units to
the Trustee for redemption at the price calculated in the manner set forth
under "Redemption". Redemption requests in excess of $100,000 may be redeemed
"in kind" as described under "Redemption." The Sponsor does not in any way
guarantee the enforceability, marketability, value or price of any stocks in
the Trust, nor that of the Units.
Investors should note the Trust Fund Evaluation per Unit at the time of
sale or tender for redemption may be less than the price at which the Unit
was purchased.
The Sponsor may redeem any Units it has purchased in the secondary market
if it determines for any reason that it is undesirable to continue to hold
these Units in its inventory. Factors which the Sponsor may consider in
making this determination will include the number of units of all series of
all trusts which it holds in its inventory, the saleability of the Units and
its estimate of the time required to sell the Units and general market
conditions.
Sponsor's Profits. In addition to the applicable sales charge, the Sponsor
realizes a profit (or sustains a loss) in the amount of any difference
between the cost of the Securities to the Sponsor and the price (including
foreign currency rates, if any) at which it deposits the Securities in the
Trust, which is the value of the Securities, determined by the Trustee as
described under "Valuation," at the close of business on the business day
prior to the Initial Date of Deposit. The cost of Securities to the Sponsor
includes the amount paid by the Sponsor for brokerage commissions. These
amounts are an expense of the Trust.
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Cash, if any, received from Unitholders prior to the settlement date for
the purchase of Units or prior to the payment for Securities upon their
delivery may be used in the Sponsor's business subject to the limitations of
Rule 15c3-3 under the Securities and Exchange Act of 1934 and may be of
benefit to the Sponsor.
In selling any Units in the initial public offering after the Initial Date
of Deposit, the Sponsor may realize profits or sustain losses resulting from
fluctuations in the net asset value of outstanding Units during that period.
In maintaining a secondary market for the Units, the Sponsor may realize
profits or sustain losses in the amount of any differences between the price
at which it buys Units and the price at which it resells or redeems such
Units.
REDEMPTION
Units may be tendered to Investors Bank & Trust Company for redemption at
its office in person, or by mail at Hancock Towers, P.O. Box 9130, Boston, MA
02117-9130 upon payment of any transfer or similar tax which must be paid to
effect the redemption. At the present time there are no such taxes. No
redemption fee will be charged by the Sponsor or the Trustee. If Units are
represented by a certificate, it must be properly endorsed accompanied by a
letter requesting redemption. If held in uncertificated form, a written
instrument of redemption must be signed by the Unitholder. Unitholders must
sign exactly as their names appear on the records of the Trustee with
signatures guaranteed by an eligible guarantor institution or in such other
manner as may be acceptable to the Trustee. In certain instances the Trustee
may require additional documents such as, but not limited to, trust
instruments, certificates of death, appointments as executor or
administrator, or certificates of corporate authority. Unitholders should
contact the Trustee to determine whether additional documents are necessary.
Units tendered to the Trustee for redemption will be cancelled, if not
repurchased by the Sponsor.
Units will be redeemed at the Redemption Value per Unit next determined
after receipt of the redemption request in good order by the Trustee. The
Redemption Value per Unit is determined by dividing the Trust Fund Evaluation
by the number of Units outstanding. (See "Valuation.")
A redemption request is deemed received on the business day (See
"Valuation" for a definition of business day) when such request is received
prior to 4:00 p.m. If it is received after 4:00 p.m., it is deemed received
on the next business day. During the period in which the Sponsor maintains a
secondary market for Units, the Sponsor may repurchase any Unit presented for
tender to Investors Bank & Trust Company for redemption no later than the
close of business on the second business day following such presentation and
Unitholders will receive the Redemption Value next determined after receipt
by the Trustee of the redemption request. Proceeds of a redemption will be
paid to the Unitholder on the seventh calendar day following the date of
tender (or if the seventh calendar day is not a business day on the first
business day prior thereto).
With respect to cash redemptions, amounts representing income received
shall be withdrawn from the Income Account, and, to the extent such balance
is insufficient, from the Capital Account. The Trustee is empowered, to the
extent necessary, to sell Securities in such manner as is directed by the
Sponsor, which direction shall be given so as to maximize the objectives of
the Trust. In the event that no such direction is given by the Sponsor, the
Trustee is empowered to sell Securities as follows: Treasury Obligations will
be sold so as to maintain in the Trust Treasury Obligations in an amount
which, upon maturity, will equal at least $1.00 per Unit outstanding after
giving effect to such redemption and Stocks having the greatest amount of
capital appreciation will be sold first. (See "Administration of the Trust".)
However, with respect to redemption requests in excess of $100,000, the
Sponsor may determine in its discretion to direct the Trustee to redeem Units
"in kind" by distributing Securities to the redeeming
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Unitholder. When Stock is distributed, a proportionate amount of Stock will
be distributed, rounded to avoid the distribution of fractional shares and
using cash or checks where rounding is not possible. The Sponsor may direct
the Trustee to redeem Units "in kind" even if it is then maintaining a
secondary market in Units of the Trust. Securities will be valued for this
purpose as set forth under "Valuation". A Unitholder receiving a redemption
"in kind" may incur brokerage or other transaction costs in converting the
Securities distributed into cash. The availability of redemption "in-kind" is
subject to compliance with all applicable laws and regulations, including the
Securities Act of 1933, as amended.
To the extent that Securities are redeemed in kind or sold, the size and
diversity of the Trust will be reduced. Sales will usually be required at a
time when Securities would not otherwise be sold and may result in lower
prices than might otherwise be realized. The price received upon redemption
may be more or less than the amount paid by the Unitholder depending on the
value of the Securities in the portfolio at the time of redemption. In
addition, because of the minimum amounts in which Securities are required to
be sold, the proceeds of sale may exceed the amount required at the time to
redeem Units; these excess proceeds will be distributed to Unitholders on the
Distribution Dates.
The Trustee may, in its discretion, and will, when so directed by the
Sponsor, suspend the right of redemption, or postpone the date of payment of
the Redemption Value, for more than seven calendar days following the day of
tender for any period during which the New York Stock Exchange, Inc. is
closed other than for weekend and holiday closings; or for any period during
which the Securities and Exchange Commission determined that trading on the
New York Stock Exchange, Inc. is restricted or for any period during which an
emergency exists as a result of which disposal or evaluation of the
Securities is not reasonably practicable; or for such other period as the
Securities and Exchange Commission may by order permit for the protection of
Unitholders. The Trustee is not liable to any person or in any way for any
loss or damages which may result from any such suspension or postponement, or
any failure to suspend or postpone when done in the Trustee's discretion.
VALUATION
The Trustee will calculate the Trust's value (the "Trust Fund Evaluation")
per Unit at the Evaluation Time set forth under "Essential Information
Regarding the Trust" (1) on each June 30 and December 31 (or the last
business day prior thereto), (2) on each business day as long as the Sponsor
is maintaining a bid in the secondary market, (3) on the business day on
which any Unit is tendered for redemption and (4) on any other day desired by
the Sponsor or the Trustee, by adding (a) the aggregate value of the
Securities and other assets determined by the Trustee as set forth below, (b)
cash on hand in the Trust, income accrued on the Treasury Obligations but not
distributed or held for distribution and dividends receivable on Stocks
trading ex-dividend (other than any cash held in any reserve account
established under the Indenture) and (c) accounts receivable for securities
sold and any other assets of the Trust Fund not included in (a) and (b) above
and deducting therefrom the sum of (v) taxes or other governmental charges
against the Trust not previously deducted, (w) accrued fees and expenses of
the Trustee and the Sponsor (including legal and auditing expenses) and other
Trust expenses, (x) cash allocated for distribution to Unitholders, and (y)
accounts payable for units tendered for redemption and any other liabilities
of the Trust Fund not included in (v), (w) , (x) and (y) above. The per Unit
Trust Fund Evaluation is calculated by dividing the result of such
computation by the number of Units outstanding as of the date thereof.
Business days do not include Saturdays, Sundays, New Year's Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day and other days that the New York Stock Exchange is closed.
The U.S. dollar value of Stock denominated in foreign currency, if any,
contained in the Trust, will be based on the applicable foreign currency
exchange rate calculated at the Evaluation Time.
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The value of Stocks shall be determined by the Trustee in good faith in
the following manner: (1) if the Securities are listed on one or more
national securities exchanges, such evaluation shall be based on the closing
sale price on that day (unless the Trustee deems such price inappropriate as
a basis for evaluation) on the exchange which is the principal market thereof
(deemed to be the New York Stock Exchange if the Securities are listed
thereon) (2) if there is no such appropriate closing sale price on such
exchange, at the mean between the closing bid and asked prices on such
exchange (unless the Trustee deems such price inappropriate as a basis for
evaluation), (3) if the Securities are not so listed or, if so listed and the
principal market therefor is other than on such exchange or there are no such
appropriate closing bid and asked prices available, such evaluation shall be
made by the Trustee in good faith based on the closing sale price on the
over-the-counter market (unless the Trustee deems such price inappropriate as
a basis for evaluation) or (4) if there is no such appropriate closing price,
then (a) on the basis of current bid prices, (b) if bid prices are not
available, on the basis of current bid prices for comparable securities, (c)
by the Trustee's appraising the value of the Securities in good faith on the
bid side of the market or (d) by any combination thereof.
During the initial offering period the Treasury Obligations are valued on
the basis of offering prices; thereafter and for purposes of determining
Redemption Value they are valued on the basis of bid prices. The aggregate
offering and bid prices of the Treasury Obligations, is the price obtained
from investment dealers or brokers (which may include the Sponsor) who
customarily deal in Treasury Obligations; or, if there is no market for the
Treasury Obligations, and bid or offering prices are not available, on the
basis of current bid or offering prices for comparable securities; or by
appraisal; or by any combination of the above, adjusted to reflect income
accrued.
COMPARISON OF PUBLIC OFFERING PRICE AND REDEMPTION VALUE
While the Public Offering Price of Units during the initial offering
period is determined on the basis of the current offering prices of the
Treasury Obligations, the Public Offering Price of Units in the secondary
market and the Redemption Value is determined on the basis of the current bid
prices of the Treasury Obligations. The Stocks are valued on the same basis
for the initial and secondary markets and for purposes of redemptions. On the
business day prior to the Date of Deposit, the Public Offering Price per Unit
(which figure includes the sales charge) exceeded the Redemption Value, (See
"Essential Information"). The bid and offering prices of the Treasury
Obligations is expected to vary. For this reason and others, including the
fact that the Public Offering Price includes the sales charge, the amount
realized by a Unitholder upon redemption of Units may be less than the price
paid by the Unitholder for such Units.
EXPENSES OF THE TRUST
The cost of the preparation of the Certificates, the Indenture and this
Prospectus, the initial fees of the Trustee and the Trustee's counsel, and
certain expenses incurred in establishing the Trust including legal and
auditing fees and initial SEC and state registration fees (the
"Organizational Expenses"), will be paid by the Trust, as is common for
mutual funds. Historically, the Sponsors of Unit Investment Trusts have paid
all organizational expenses. The Sponsor will receive no fee from the Trust
for its services in establishing the Trust.
The Sponsor will receive a fee, which is earned for portfolio supervisory
services, and which is based upon the largest number of Units outstanding
during the calendar year. The Sponsor's fee, which is initially $.00035 per
Unit, may exceed the actual costs of providing portfolio supervisory services
for the Trust, but at no time will the total amount it receives for portfolio
supervisory services rendered to all series of the PaineWebber Pathfinders
Trust in any calendar year exceed the aggregate cost to it of supplying such
services in such year.
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For its services as Trustee and Evaluator, the Trustee will be paid in
monthly installments, annually $.00145 per Unit computed monthly based upon
the largest number of Units outstanding in the Trust during the preceding
month. In addition, the regular and recurring expenses of the Trust are
estimated to be $.00155 per Unit annually which include, but are not limited
to Organizational Expenses of $.00080 per Unit and certain mailing, printing,
and audit expenses. Expenses in excess of this estimate will be borne by the
Trust. The Trustee could also benefit to the extent that it may hold funds in
non-interest bearing accounts created by the Indenture.
The Sponsor's fee and Trustee's fee may be increased without approval of
the Unitholders by an amount not exceeding a proportionate increase in the
category entitled "All Services Less Rent" in the Consumer Price Index
published by the United States Department of Labor or if the Price Index is
no longer published, a similar index as determined by the Trustee and
Sponsor.
In addition to the above, the following charges are or may be incurred by
each Trust and paid from the Income Account, or, to the extent funds are not
available in such Account, from the Capital Account (see "Administration of
the Trust-Accounts"): (1) fees for the Trustee for extraordinary services;
(2) expenses of the Trustee (including legal and auditing expenses) and of
counsel; (3) various governmental charges; (4) expenses and costs of any
action taken by the Trustee to protect the trusts and the rights and
interests of the Unitholders; (5) indemnification of the Trustee for any
loss, liabilities or expenses incurred by it in the administration of the
Trust without gross negligence, bad faith or wilful misconduct on its part;
(6) brokerage commissions and other expenses incurred in connection with the
purchase and sale of Securities; and (7) expenses incurred upon termination
of the Trust. In addition, to the extent then permitted by the Securities and
Exchange Commission, the Trust may incur expenses of maintaining registration
or qualification of the Trust or the Units under Federal or state securities
laws so long as the Sponsor is maintaining a secondary market (including, but
not limited to, legal, auditing and printing expenses).
The accounts of the Trust shall be audited not less than annually by
independent auditors selected by the Sponsor. The expenses of the audit shall
be an expense of the Trust. So long as the Sponsor maintains a secondary
market, the Sponsor will bear any audit expense which exceeds $.00050 per
Unit. Unitholders covered by the audit during the year may receive a copy of
the audited financial statements upon request.
The fees and expenses set forth above are payable out of the Trust and
when unpaid will be secured by a lien on the Trust. Based upon the last
dividend paid prior to the Initial Date of Deposit, dividends on the Stocks
are expected to be sufficient to pay the estimated expenses of the Trust. To
the extent that dividends paid with respect to the Stocks are not sufficient
to meet the expenses of the Trust, the Trustee is authorized to sell
Securities in the same manner as provided in "Redemption" herein.
RIGHTS OF UNITHOLDERS
Ownership of Units is evidenced by recordation on the books of the
Trustee. In order to avoid additional operating costs and for investor
convenience, certificates will not be issued unless a request, in writing
with signature guaranteed by an eligible guarantor institution or in such
other manner as may be acceptable to the Trustee, is delivered by the
Unitholder to the Sponsor. Issued Certificates are transferable by
presentation and surrender to the Trustee at its office in Boston,
Massachusetts properly endorsed or accompanied by a written instrument or
instruments of transfer. Uncertificated Units are transferable by
presentation to the Trustee at its office of a written instrument of
transfer.
Certificates may be issued in denominations of one Unit or any integral
multiple thereof as deemed appropriate by the Trustee. A Unitholder may be
required to pay $2.00 per certificate reissued or transferred, and shall be
required to pay any governmental charge that may be imposed in connection
with each such transfer or interchange. For new certificates issued to
replace destroyed, mutilated, stolen
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or lost certificates, the Unitholder must furnish indemnity satisfactory to
the Trustee and must pay such expenses as the Trustee may incur. Mutilated
certificates must be surrendered to Investors Bank & Trust Company for
replacement.
DISTRIBUTIONS
The Trustee will distribute any net income received, if any, from the
Income Account, quarterly on the Distribution Dates to Unitholders of record
on the preceding Record Date. Income with respect to the original issue
discount on the Treasury Obligations will not be distributed although
Unitholders will be subject to tax as if a distribution had occurred.
Distributions from the Capital Account will be made on quarterly Distribution
Dates to Unitholders of record on the preceding Record Date, provided
however, that distributions of less than $.00500 per Unit need not be made
from the Capital Account on any Distribution Date. See "Federal Income
Taxes".
Within a reasonable period after the Trust is terminated, each Unitholder
will, upon surrender of his Certificates for cancellation, receive his pro
rata share of the amounts realized upon disposition of the Securities plus
any other assets of the Trust, less expenses of the Trust. (See
"Termination.")
ADMINISTRATION OF THE TRUST
Accounts. All dividends received and interest, if any, accrued on
Securities, proceeds from the sale of Securities or other monies received by
the Trustee on behalf of the Trust shall be held in trust in non-interest
bearing accounts until required to be disbursed.
The Trustee will credit on its books to an Income Account any dividends
(including stock dividends which were sold) and interest, if any, accrued by
the Trust. All other receipts (i.e. return of principal, and gains) are
credited on its books to a Capital Account. Stock dividends received by the
Trust, if any, will be sold by the Trustee and the proceeds therefrom be
treated as income to the Trust. A record will be kept of qualifying dividends
within the Income Account. The pro rata share of the Income Account and the
pro rata share of the Capital Account represented by each Unit will be
computed by the Trustee as set forth under "Valuation".
The Trustee will deduct from the Income Account and, to the extent funds
are not sufficient therein, from the Capital Account, amounts necessary to
pay expenses incurred by the Trust. (See "Expenses and Charges.") In
addition, the Trustee may withdraw from the Income Account and the Capital
Account such amounts as may be necessary to cover redemption of Units by the
Trustee. (See "Redemption.")
The Trustee may establish reserves (the "Reserve Account") within the
Trust for state and local taxes, if any, and any other governmental charges
payable out of the Trust.
Reports and Records. With the distribution of income from the Trust,
Unitholders will be furnished with a statement setting forth the amount being
distributed from each account.
The Trustee keeps records and accounts of the Trust at its office in
Boston, including records of the names and addresses of Unitholders, a
current list of underlying Securities in the portfolio and a copy of the
Indenture. Records pertaining to a Unitholder or to the Trust (but not to
other Unitholders) are available to the Unitholder for inspection at
reasonable times during business hours.
Within a reasonable period of time after the end of each calendar year,
starting with calendar year 1997, the Trustee will furnish each person who
was a Unitholder at any time during the calendar year an annual report
containing the following information, expressed in reasonable detail both as
a dollar amount and as a dollar amount per Unit: (1) a summary of
transactions for such year in the Income and Capital Accounts and any
Reserves; (2) any Securities sold during the year and the Securities held at
the
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end of such year; (3) the Trust Fund Evaluation per Unit, based upon a
computation thereof on the 31st day of December of such year (or the last
business day prior thereto); and (4) amounts distributed to Unitholders
during such year.
Portfolio Supervision. The portfolio of the Trust is not "managed" by the
Sponsor or the Trustee; their activities described herein are governed solely
by the provisions of the Indenture. The Indenture provides that the Sponsor
may (but need not) direct the Trustee to dispose of a Security (or tender a
Security for cash in the case of paragraph (6) below):
(1) upon the failure of the issuer to declare or pay anticipated
dividends or interest;
(2) upon the institution of materially adverse action or proceeding at
law or in equity seeking to restrain or enjoin the declaration or payment
of dividends or interest on any such Securities or the existence of any
other materially adverse legal question or impediment affecting such
Securities or the declaration or payment of dividends or interest on the
same;
(3) upon the breach of covenant or warranty in any trust indenture or
other document relating to the issuer which might materially and
adversely affect either immediately or contingently the declaration or
payment of dividends or interest on such Securities;
(4) upon the default in the payment of principal or par or stated value
of, premium, if any, or income on any other outstanding securities of the
issuer or the guarantor of such securities which might materially and
adversely, either immediately or contingently, affect the declaration or
payment of dividends or interest on the Securities;
(5) upon the decline in price or the occurrence of any materially
adverse market or credit factors, that in the opinion of the Sponsor,
make the retention of such Securities not in the best interest of the
Unitholder;
(6) upon a public tender offer being made for a Security, or a merger or
acquisition being announced affecting a Security that in the opinion of
the Sponsor make the sale or tender of the Security in the best interests
of the Unitholders;
(7) upon a decrease in the Sponsor's internal rating of the Security; or
(8) upon the happening of events which, in the opinion of the Sponsor,
negatively affect the economic fundamentals of the issuer of the Security
or the industry of which it is a part.
The Indenture contains certain instructions to the Trustee regarding
corporate actions taken in respect of Securities held in the Trust Fund. In
most cases, the Trustee is required to use its best efforts to vote the
Securities as closely as practicable in the same manner and in the same
proportion as are all other securities held by owners other than the Trust.
In cases of offers to exchange Securities for other stock or securities
(including but not limited to a tender offer), the Trustee is required to
reject such offers. If, after complying with such procedures, the Trustee
nevertheless receives stock or securities, with or without cash, as a result
of such corporate action, the Trustee, at the direction of the Sponsor, may
retain or sell such stock or securities. Any stock or securities so retained
will be subject to the terms and conditions of the Indenture to the same
extent as the Securities originally deposited in the Trust Fund.
The Trustee may dispose of Securities where necessary to pay Trust
expenses or to satisfy redemption requests as directed by the Sponsor and in
a manner necessary to maximize the objectives of the Trust, or if not so
directed in its own discretion, provided however, that Treasury Obligations
will be sold so as to maintain in the Trust Treasury Obligations in an amount
which, upon maturity, will equal at least $1.00 per Unit outstanding after
giving effect to such redemption and Stocks having the greatest appreciation
shall be sold first.
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Reinvestment. Cash received upon the sale of Stock (except for sales to
meet redemption requests) and dividends received may, if and to the extent
there is no legal or regulatory impediment, be reinvested in United States
Treasury obligations which mature on or prior to the next scheduled
Distribution Date. The Sponsor anticipates that, where permitted, such
proceeds will be reinvested in current interest-bearing United States
Treasury obligations unless factors exist such that such reinvestment would
not be in the best interest of Unitholders or would be impractical. Such
factors may include, among others, (i) short reinvestment periods which would
make reinvestment in United States Treasury obligations undesirable or
infeasible and (ii) amounts not sufficiently large so as to make a
reinvestment economical or feasible. Any moneys held and not reinvested will
be held in a non-interest bearing account until distribution on the next
Distribution Date to Unitholders of record.
AMENDMENT OF THE INDENTURE
The Indenture may be amended by the Trustee and the Sponsor without the
consent of any of the Unitholders to cure any ambiguity or to correct or
supplement any provision thereof which may be defective or inconsistent or to
make such other provisions as will not materially adversely affect the
interest of the Unitholders.
The Indenture may be amended in any respect by the Sponsor and the Trustee
with the consent of the holders of 51% of the Units then outstanding;
provided that no such amendment shall (1) reduce the interest in the Trust
represented by a Unit or (2) reduce the percentage of Unitholders required to
consent to any such amendment, without the consent of all Unitholders.
The Trustee will promptly notify Unitholders of the substance of any
amendment affecting Unitholders rights or their interest in the Trust.
TERMINATION OF THE TRUST
The Indenture provides that the Trust will terminate within 15 days after
the maturity of the Treasury Obligations held in the Trust. If the value of
the Trust as shown by any evaluation is less than twenty percent (20%) of the
market value of the Securities on the Date of Deposit, the Trustee may in its
discretion, and will when so directed by the Sponsor, terminate the Trust.
The Trust may also be terminated at any time by the written consent of 51% of
the Unitholders or by the Trustee upon the resignation or removal of the
Sponsor if the Trustee determines termination to be in the best interest of
the Unitholders. In no event will the Trust continue beyond the Mandatory
Termination Date.
As directed by the Sponsor approximately 30 days prior to the maturity of
the Treasury Obligations the Trustee will begin to sell the Stocks held in
the Trust. Stocks having the greatest amount of capital appreciation will be
sold first. Upon termination of the Trust, the Trustee will sell any Stocks
then remaining in the Trust and will then, after deduction of any fees and
expenses of the Trust and payment into the Reserve Account of any amount
required for taxes or other governmental charges that may be payable by the
Trust, distribute to each Unitholder, upon surrender for cancellation of his
Certificate after due notice of such termination, such Unitholder's pro rata
share in the Income and Capital Accounts. Monies held upon the sale of
Securities will be held in non-interest bearing accounts created under the
Indenture until distributed and will be of benefit to the Trustee. The sale
of Stocks in the Trust in the period prior to termination and upon
termination may result in a lower amount than might otherwise be realized if
such sale were not required at such time due to impending or actual
termination of the Trust. For this reason, among others, the amount realized
by a Unitholder upon termination may be less than the amount paid by such
Unitholder.
23
<PAGE>
SPONSOR
The Sponsor, PaineWebber Incorporated, is a corporation organized under
the laws of the State of Delaware. The Sponsor is a member firm of the New
York Stock Exchange, Inc. as well as other major securities and commodities
exchanges and is a member of the National Association of Securities Dealers,
Inc. The Sponsor is engaged in a security and commodity brokerage business as
well as underwriting and distributing new issues. The Sponsor also acts as a
dealer in unlisted securities and municipal bonds and in addition to
participating as a member of various selling groups or as an agent of other
investment companies, executes orders on behalf of investment companies for
the purchase and sale of securities of such companies and sells securities to
such companies in its capacity as a broker or dealer in securities.
The Indenture provides that the Sponsor will not be liable to the Trustee,
any of the Trusts or to the Unitholders for taking any action or for
refraining from taking any action made in good faith or for errors in
judgment, but will be liable only for its own wilful misfeasance, bad faith,
gross negligence or wilful disregard of its duties. The Sponsor will not be
liable or responsible in any way for depreciation or loss incurred by reason
of the sale of any Securities in the Trust.
The Indenture is binding upon any successor to the business of the
Sponsor. The Sponsor may transfer all or substantially all of its assets to a
corporation or partnership which carries on the business of the Sponsor and
duly assumes all the obligations of the Sponsor under the Indenture. In such
event the Sponsor shall be relieved of all further liability under the
Indenture.
If the Sponsor fails to undertake any of its duties under the Indenture,
becomes incapable of acting, becomes bankrupt, or has its affairs taken over
by public authorities, the Trustee may either appoint a successor Sponsor or
Sponsors to serve at rates of compensation determined as provided in the
Indenture or terminate the Indenture and liquidate the Trust.
TRUSTEE
The Co-Trustees are The First National Bank of Chicago, a national banking
association with its corporate trust office at One First National Plaza,
Suite 0126, Chicago, Illinois 60670-0126 (which is subject to supervision by
the Comptroller of the Currency, the Federal Deposit Insurance Corporation
and the Board of Governors of the Federal Reserve System) and Investors Bank
& Trust Company, a Massachusetts trust company with its office at Hancock
Towers, 200 Clarendon Street, Boston, Massachusetts 02117, toll-free number
1-800-356-2754 (which is subject to supervision by the Massachusetts
Commissioner of Banks, the Federal Deposit Insurance Corporation and the
Board of Governors of the Federal Reserve System).
The Indenture provides that the Trustee will not be liable for any action
taken in good faith in reliance on properly executed documents or the
disposition of moneys, Securities or Certificates or in respect of any
valuation which it is required to make, except by reason of its own gross
negligence, bad faith or wilful misconduct, nor will the Trustee be liable or
responsible in any way for depreciation or loss incurred by reason of the
sale by the Trustee of any Securities in the Trust. In the event of the
failure of the Sponsor to act, the Trustee may act and will not be liable for
any such action taken by it in good faith. The Trustee will not be personally
liable for any taxes or other governmental charges imposed upon or in respect
of the Securities or upon the interest thereon or upon it as Trustee or upon
or in respect of the Trust which the Trustee may be required to pay under any
present or future law of the United States of America or of any other taxing
authority having jurisdiction. In addition, the Indenture contains other
customary provisions limiting the liability of the Trustee. The Trustee will
be indemnified and held harmless against any loss or liability accruing to it
without gross negligence, bad faith or wilful misconduct on its part, arising
out of or in connection with its acceptance or administration of the Trust,
including the costs and expenses (including counsel fees) of defending itself
against any claim of liability.
24
<PAGE>
INDEPENDENT AUDITORS
The Statement of Financial Condition and Schedule of Investments audited
by Ernst & Young LLP, independent auditors, have been included herein in
reliance upon their report given on their authority as experts in accounting
and auditing.
LEGAL OPINIONS
The legality of the Units offered hereby has been passed upon by Carter,
Ledyard & Milburn, 2 Wall Street, New York, New York, as counsel for the
Sponsor.
25
<PAGE>
REPORT OF INDEPENDENT AUDITORS
THE UNITHOLDERS, SPONSOR AND CO-TRUSTEES
THE PAINEWEBBER PATHFINDERS TRUST,
TREASURY AND GROWTH STOCK SERIES 21
We have audited the accompanying Statement of Financial Condition of The
PaineWebber Pathfinders Trust, Treasury and Growth Stock Series 21, including
the Schedule of Investments, as of July 30, 1997. This Statement of Financial
Condition is the responsibility of the Co-Trustees. Our responsibility is to
express an opinion on this Statement of Financial Condition based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the Statement of Financial
Condition is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the Statement
of Financial Condition. Our procedures included confirmation with Investors
Bank & Trust Company, a Co-Trustee, of an irrevocable letter of credit
deposited for the purchase of securities, as shown in the Statement of
Financial Condition as of July 30, 1997. An audit also includes assessing the
accounting principles used and significant estimates made by the Co-Trustees,
as well as evaluating the overall Statement of Financial Condition
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the Statement of Financial Condition referred to above
presents fairly, in all material respects, the financial position of The
PaineWebber Pathfinders Trust, Treasury and Growth Stock Series 21 at July
30, 1997, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
July 30, 1997
26
<PAGE>
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES 21
STATEMENT OF FINANCIAL CONDITION
AS OF INITIAL DATE OF DEPOSIT JULY 30, 1997
<TABLE>
<CAPTION>
TRUST PROPERTY
-------------------------------------
<S> <C>
Sponsor's Contracts to Purchase underlying Securities backed
by irrevocable letter of credit (a)........................... $ 952,500
Organizational Expenses (b).................................... 100,000
------------
Total..................................................... $1,052,500
============
INTEREST OF UNITHOLDERS
-------------------------------------
Accrued Liability (b).......................................... $ 100,000
------------
1,000,000 Units outstanding:
Cost to investors (c)......................................... 1,000,000
Less: Gross underwriting commissions (d)....................... (47,500)
------------
Total liabilities and net assets.......................... $1,052,500
============
</TABLE>
- ------------
(a) The aggregate cost to the Trust of the securities listed under
"Schedule of Investments" is determined by the Co-Trustees on the basis set
forth under "Public Offering of Units--Public Offering Price." See also the
column headed Cost of Securities to Trust under "Schedule of Investments."
Pursuant to contracts to purchase securities, an irrevocable letter of credit
drawn on Kredietbank N.V., New York Branch in the amount of $1,250,000 has
been deposited with the Co-Trustees, Investors Bank & Trust Company and The
First National Bank of Chicago, for the purchase of $952,500 aggregate value
of Securities in the initial deposit and for the purchase of Securities in
subsequent deposits.
(b) Organizational Expenses incurred by the Trust have been deferred and
will be amortized over five years. Organizational Expenses have been
estimated on projected total assets of $25 million. To the extent the Trust
is larger or smaller, the estimate may vary.
(c) The aggregate public offering price is computed on the basis set forth
under "Public Offering of Units--Public Offering Price."
(d) Sales charge of 4.75% of the Public Offering Price per Unit is
computed on the basis set forth under "Public Offering of Units--Sales Charge
and Volume Discount."
27
<PAGE>
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES 21
SCHEDULE OF INVESTMENTS
AS OF INITIAL DATE OF DEPOSIT, JULY 30, 1997
<TABLE>
<CAPTION>
COST OF
SECURITIES
NAME OF SECURITY COUPON MATURITY VALUE MATURITY DATE TO TRUST(2)
- ---------------------- -------- -------------- ----------------- ------------
<S> <C> <C> <C> <C>
U.S. Treasury Interest
Payments (3)
(51.93%).............. 0% $1,000,000 November 15, 2008$494,605.58
</TABLE>
COMMON STOCKS (48.07%) (1)
<TABLE>
<CAPTION>
COST OF
NUMBER OF SECURITIES
NAME OF ISSUER SHARES TO TRUST(2)
- --------------------------------------------- ----------- ------------
<S> <C> <C>
Automobile (1.18%)
General Motors Corporation................... 190 $11,293.13
Beverage (2.35%)
The Coca-Cola Company ....................... 160 11,150.00
PepsiCo, Inc. ............................... 300 11,325.00
Chemical (1.27%)
DuPont (E.I.) De Nemours & Company ......... 180 12,105.00
Computer Processing & Data Preparation
(1.18%)
First Data Corporation ...................... 260 11,277.50
Computer Software (2.26%)
Microsoft Corporation* ...................... 80 11,195.00
Cisco Systems, Inc.* ........................ 130 10,302.50
Electronics/Semi-Conductor (2.38%)
Hewlett-Packard Company ..................... 170 11,251.88
Intel Corporation ........................... 130 11,456.25
Entertainment (1.18%)
The Walt Disney Company ..................... 140 11,217.50
Financial Institutions/Banks (7.49%)
BankAmerica Corporation ..................... 160 11,630.00
Bankers Trust New York Corporation ......... 110 11,000.00
Chase Manhattan Corporation ................. 110 11,976.25
Citicorp .................................... 90 11,750.63
J.P. Morgan & Company Incorporated ......... 100 11,425.00
Wells Fargo & Company ....................... 50 13,550.00
Foods (1.17%)
General Mills, Inc. ......................... 160 11,130.00
Household Products (2.51%)
Gillette Company ............................ 120 11,895.00
Procter & Gamble Company .................... 80 12,030.00
Insurance (1.19%)
Aetna Inc. .................................. 100 11,337.50
Manufacturing (1.22%)
Minnesota Mining & Manufacturing Company ... 120 11,587.50
Metals (1.23%)
Phelps Dodge Corporation .................... 140 11,742.50
Oil/Gas (4.76%)
Mobil Corporation ........................... 150 11,343.75
Schlumberger Ltd. ........................... 150 11,118.75
Texaco Inc. ................................. 100 11,406.25
Unocal Corporation .......................... 290 11,436.88
</TABLE>
28
<PAGE>
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES 21
SCHEDULE OF INVESTMENTS (CONTINUED)
AS OF INITIAL DATE OF DEPOSIT, JULY 30, 1997
<TABLE>
<CAPTION>
COST OF
NUMBER OF SECURITIES
NAME OF ISSUER SHARES TO TRUST(2)
- ------------------------------- ----------- -------------
<S> <C> <C>
Pharmaceuticals (7.18%)
Abbott Laboratories ........... 180 $ 11,542.50
Bristol-Myers Squibb Company . 150 11,784.38
Johnson & Johnson ............. 190 11,601.88
Eli Lilly & Company ........... 100 11,231.25
Merck & Co., Inc. ............. 110 11,302.50
Warner-Lambert Company ........ 80 10,905.00
Restaurants (1.19%)
McDonald's Corporation ........ 210 11,326.88
Retail-Building Products
(1.22%)
Home Depot, Inc. .............. 240 11,610.00
Retail-Department Stores
(1.11%)
Sears, Roebuck & Co. .......... 170 10,593.13
Telecommunications (3.61%)
AT&T Corporation .............. 310 11,450.63
Lucent Technologies, Inc. .... 140 11,681.25
SBC Communications, Inc. ..... 190 11,233.75
Tobacco (1.19%)
Philip Morris Companies, Inc. 250 11,312.50
Utilities (1.20%)
Texas Utilities Company ...... 330 11,385.00
TOTAL COMMON STOCKS........... $457,894.42
-------------
TOTAL INVESTMENTS............. $952,500.00
=============
</TABLE>
- ------------
(1) All Securities are represented entirely by contracts to purchase
Securities.
(2) Valuation of Securities by the Trustee was made as described in
"Valuation" as of the close of business on the business day prior to
the Initial Date of Deposit. The bid side evaluation of the Treasury
Obligations on the business day prior to the Initial Date of Deposit
was $493,250.
(3) This security does not pay interest. On the maturity date thereof,
the entire maturity value becomes due and payable. Generally, a fixed
yield is earned on such security which takes into account the
semi-annual compounding of accrued interest. (See "The Trust" and
"Federal Income Taxes" herein.)
(4) The gain to the Sponsor on the Initial Date of Deposit is $280.58.
* Non-income producing.
29
<PAGE>
PAINEWEBBER PATHFINDERS TRUST
Treasury and Growth Stock Series 21
[PaineWebber Pathfinders Trust LOGO]
The Upside Potential of Equities
with the Security of U.S. Treasuries
CO-TRUSTEES:
INVESTORS BANK & TRUST COMPANY
Hancock Towers,
200 Clarendon Street
Boston, Mass. 02117
1 (800) 356-2754
THE FIRST NATIONAL BANK
OF CHICAGO
One First National Plaza,
Suite 0126
Chicago, Illinois 60670-0126
SPONSOR:
PAINEWEBBER INCORPORATED
1200 Harbor Boulevard,
Weehawken, N.J. 07087
(201) 902-3000
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Essential Information Regarding the Trust .... 2
Trust ......................................... 6
Risk Factors and Special Considerations ...... 7
Federal Income Taxes .......................... 10
Public Offering of Units ...................... 12
Public Offering Price ....................... 12
Sales Charge and Volume Discount ............ 12
Employee Discount ........................... 14
Exchange Option ............................. 14
Conversion Option ........................... 15
Distribution of Units ....................... 16
Secondary Market for Units .................. 16
Sponsor's Profits ........................... 16
Redemption .................................... 17
Valuation ..................................... 18
Comparison of Public Offering Price and
Redemption Value.............................. 19
Expenses of the Trust.......................... 19
Rights of Unitholders ......................... 20
Distributions ................................. 21
Administration of the Trust ................... 21
Accounts .................................... 21
Reports and Records ......................... 21
Portfolio Supervision ....................... 22
Reinvestment ................................ 23
Amendment of the Indenture .................... 23
Termination of the Trust ...................... 23
Sponsor ....................................... 24
Trustee ....................................... 24
Independent Auditors .......................... 25
Legal Opinions ................................ 25
Report of Independent Auditors ................ 26
Statement of Financial Condition .............. 27
Schedule of Investments ....................... 28
</TABLE>
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
NOT CONTAINED IN THIS PROSPECTUS; AND ANY INFORMATION OR REPRESENTATION NOT
CONTAINED HEREIN MUST NOT BE RELIED ON AS HAVING BEEN AUTHORIZED BY THE
TRUST, THE TRUSTEE OR THE SPONSOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SECURITIES IN ANY STATE TO
ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH STATE.
THIS PROSPECTUS CONTAINS INFORMATION CONCERNING THE TRUST AND THE SPONSOR,
BUT DOES NOT CONTAIN ALL THE INFORMATION SET FORTH IN THE TRUST'S
REGISTRATION STATEMENTS, AMENDMENTS AND EXHIBITS RELATING THERETO, WHICH HAVE
BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WASHINGTON, D.C.
UNDER THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF 1940, AND
TO WHICH REFERENCE IS HEREBY MADE.
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the
Securities Exchange Act of 1934, the undersigned registrant hereby undertakes
to file with the Securities and Exchange Commission such supplementary and
periodic information, documents, and reports as may be prescribed by any rule
or regulation of the Commission heretofore or hereafter duly adopted pursuant
to authority conferred in that section.
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following
documents:
The facing sheet.
The Prospectus.
The Undertaking to file reports.
The signatures.
Written consents of the following persons:
Ernst & Young LLP (included in Exhibit 99.C2)
Carter, Ledyard & Milburn (included in Exhibits
99.2 and 99.C1)
The following exhibits:
1. Ex.-27 - Financial Data Schedule
2. Ex. 99.A1 - Standard Terms and Conditions of Trust
dated as of July 1, 1997 between PaineWebber
Incorporated, Depositor and Investors Bank & Trust
Company and The First National Bank of Chicago,
Co-Trustees filed herewith.
3. Ex. 99.A2 - Copy of Trust Indenture and Agreement
between PaineWebber Incorporated, Depositor, and of
Investors Bank & Trust Company and The First National
Bank of Chicago, Co-Trustees, incorporating by
reference Standard Terms and Conditions of Trust dated
as of July 1, 1997 filed herewith as Exhibit No. 2.
4. Ex. 99.A5 - Form of Certificate of Ownership (included
in Standard Terms and Conditions of Trust).
5. Ex. 99.A6 - Certificate of Incorporation of
PaineWebber Incorporated, as amended (incorporated by
reference to Exhibit 8 in File No. 2-88344).
6. Ex. 99.A6 - By-Laws of PaineWebber Incorporated, as
amended (incorporated by reference to Exhibit A(6)(a)
in File No. 811-3722).
7. Ex. 99.2 - Opinion of Counsel as to legality of
securities being registered.
8. Ex. 99.C1 - Opinion of Counsel as to income tax status
of securities being registered.
9. Ex. 99.C2 - Consent of Ernst & Young LLP, Independent
Auditors.
FINANCIAL STATEMENTS
1. Statement of Condition of the Trust as shown in
the current Prospectus for this series.
<PAGE>
2. Financial Statements of the Depositor.
PaineWebber Incorporated-Financial Statements incorporated by reference to
Form 10-K and Form 10-Q (File No. 1-7367), respectively.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Amendment to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New York, and State of New York, on the 30th day of July, 1997.
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES 21
(Registrant)
By: PaineWebber Incorporated
(Depositor)
/s/ Robert E. Holley
-------------------------------
Robert E. Holley
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed on behalf of PaineWebber
Incorporated, the Depositor by the following persons who constitute the
Executive Committee of its Board of Directors, in the following capacities,
and by the Director of Finance and Control and in the City of New York, and
State of New York, on this 30th day of July, 1997.
PAINEWEBBER INCORPORATED
Name Office
---- ------
Donald B. Marron Chairman, Chief Executive
Officer, Director & Member of
the Executive Committee*
Joseph J. Grano, Jr. President, Retail Sales & Marketing, Director &
Member of the Executive Committee*
Regina Dolan Senior Vice President and Chief Financial Officer
& Director*
/s/ Robert E. Holley
------------------------------------------
Robert E. Holley
Attorney-in-fact*
- --------------------
*Executed copies of the powers of attorney have been filed with the Securities
and Exchange Commission in connection with Registration Statement No. 33-19786.
<PAGE>
EXHIBIT INDEX
1. Ex.-27 - Financial Data Schedule
2. Ex. 99.A1 - Form of Standard Terms and Conditions of Trust
dated as of July 1, 1997 between PaineWebber Incorporated,
Depositor and Investors Bank & Trust Company and The First
National Bank of Chicago, Co-Trustees filed herewith.
3. Ex. 99.A2 - Copy of Trust Indenture and Agreement between
PaineWebber Incorporated, Depositor, and of Investors Bank &
Trust Company and The First National Bank of Chicago,
Co-Trustees, incorporating by reference Standard Terms and
Conditions of Trust dated as of July 1, 1997 filed herewith as
Exhibit No. 2.
4. Ex. 99.A5 - Form of Certificate of Ownership (included in
Standard Terms and Conditions of Trust).
5. Ex. 99.A6 - Certificate of Incorporation of PaineWebber
Incorporated, as amended (incorporated by reference to Exhibit
8 in File No. 2-88344).
6. Ex. 99.A6 - By-Laws of PaineWebber Incorporated, as amended
(incorporated by reference to Exhibit A(6)(a) in File No.
811-3722).
7. Ex. 99.2 - Opinion of Counsel as to legality of securities
being registered.
8. Ex. 99.C1 - Opinion of Counsel as to income tax status of
securities being registered.
9. Ex. 99.C2 - Consent of Ernst & Young, LLP, Independent
Auditors.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 952,500
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 100,000
<TOTAL-ASSETS> 1,052,500
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 100,000
<TOTAL-LIABILITIES> 100,000
<SENIOR-EQUITY> 952,500
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,052,500
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
EXHIBIT 2
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES 21
AND
SUBSEQUENT SERIES OF PAINEWEBBER PATHFINDERS TRUST
STANDARD TERMS AND CONDITIONS OF TRUST
for all series formed on or subsequent to the
effective date specified below
Dated as of July 1, 1997
AMONG
PAINEWEBBER INCORPORATED,
as SPONSOR,
and
INVESTORS BANK & TRUST COMPANY
and
THE FIRST NATIONAL BANK OF CHICAGO,
as CO-TRUSTEES
EFFECTIVE DATE: JULY 30, 1997
<PAGE>
Table of Contents
INTRODUCTION..................................................................1
ARTICLE I
Definitions..........................................................2
ARTICLE II
Declaration of Trust; Original Issuance of Certificates.............11
Section 2.01. Declaration of Trust.................................11
Section 2.02. Deposit of Securities................................11
Section 2.03. Issuance of Certificates.............................12
Section 2.04. Certain Contracts Satisfactory.......................13
Section 2.05. Voting Rights........................................13
ARTICLE III
Administration of Trust.............................................13
Section 3.01. Certain Moneys to Be Credited to Income Account......13
Section 3.02. Certain Moneys to Be Credited to Capital Account.....13
Section 3.03. Establishment of Reserve Account.....................14
Section 3.04. Certain Deductions and Distributions.................14
Section 3.05. Statements and Reports...............................15
Section 3.06. Sale of Securities and of Certain Rights.............17
Section 3.07.
Refunding Securities.........................................18
Section 3.08.
Counsel......................................................18
Section 3.09. Notice and Sale by Trustee...........................18
Section 3.10.
Action by Trustee Regarding Securities and Voting............19
Section 3.11. Trustee Not to Adjust Accounts.......................19
Section 3.12.
Notice of Change in Capital Account..........................19
Section 3.13.
Election to Qualify as a Regulated Investment Company;
Diversification Tests........................................19
Section 3.14.
Investment Restrictions......................................20
Section 3.15. Special Provisions for Grantor Trusts................21
ARTICLE IV
<PAGE>
Evaluation of Securities............................................21
Section 4.01. Evaluation of Securities.............................21
Section 4.02. Liability of the Trustee.............................22
ARTICLE V
Trust Fund Evaluation and Redemption of Units.......................22
Section 5.01.
Trust Fund Evaluation........................................22
Section 5.02. Redemption of Units..................................23
ARTICLE VI
Transfer, Interchange or Replacement of Units.......................26
Section 6.01. Transfer and Interchange of Units....................26
Section 6.02. Replacement of Certificates..........................27
Section 6.03. Form of Certificate..................................27
ARTICLE VII
Sponsor.............................................................28
Section 7.01. Liability of Sponsor and Indemnification.............28
Section 7.02. Compensation of Sponsor..............................28
Section 7.03. Liability............................................29
Section 7.04. Discharge of Sponsor.................................29
Section 7.05. Certain Matters Regarding Succession.................30
Section 7.06. Resignation of Sponsor...............................30
Section 7.07. Notice to Unitholders................................31
ARTICLE VIII
Trustee.............................................................31
Section 8.01. General Matters Relating to Trustee..................31
Section 8.02. Books and Records....................................34
Section 8.03. Reports to Securities and Exchange Commission and
Others...........................................34
Section 8.04. Indenture and List of Securities on File.............34
Section 8.05. Compensation of Trustee..............................34
Section 8.06. Resignation, Discharge or Removal of Trustee;
Successor........................................35
Section 8.07.
Qualification of Trustee.....................................37
ARTICLE IX
Termination.........................................................37
Section 9.01.
Procedure Upon Termination...................................37
<PAGE>
Section 9.02.
Notice to Holders of Units Evidenced by Certificates.........38
Section 9.03.
Moneys to Be Held in Trust Without Interest..................39
Section 9.04.
Dissolution of Sponsor Not to Terminate......................39
ARTICLE X
Miscellaneous Provisions............................................39
Section 10.01. Amendment and Waiver................................39
Section 10.02. Initial Costs.......................................40
Section 10.03. Registration (Initial and Current) of Units and Trust
Fund.............................................41
Section 10.04. Certain Matters Relating to Unitholders.............41
Section 10.05. New York Law to Govern..............................41
Section 10.06. Notices.............................................42
Section 10.07. Severability........................................42
Section 10.08 Separate and Distinct Series........................42
Section 10.09. Counterparts........................................42
<PAGE>
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES 21
AND
SUBSEQUENT SERIES OF PAINWEBBER PATHFINDERS TRUST
STANDARD TERMS AND CONDITIONS OF TRUST
EFFECTIVE: JULY 30, 1997
These Standard Terms and Conditions of Trust effective as of July 30,
1997 are executed between PaineWebber Incorporated, as Sponsor, and Investors
Bank & Trust Company and The First National Bank of Chicago, as Co-Trustees.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Sponsor and the Trustee agree as follows:
INTRODUCTION
These Standard Terms and Conditions of Trust effective as of the day
and year first above written shall be applicable to The PaineWebber
Pathfinders Trust, Treasury and Growth Stock Series 21 (a Unit Investment
Trust) and to all subsequent Series of The PaineWebber Pathfinders Trust
formed on or subsequent to the date hereof for which their applicability and
their incorporation by reference is specified in the applicable Trust
Indenture relating to such series. For each Series of The PaineWebber
Pathfinders Trust to which these Standard Terms and Conditions of Trust are to
be applicable, the Sponsor and the Trustee shall execute a Trust Indenture (or
supplement or amendment to such Trust Indenture) incorporating by reference
these Standard Terms and Conditions of Trust and designating any exclusion
from or exception to such incorporation by reference for the purposes of that
series or variation of the terms hereof for the purposes of that series and
specifying for that series (i) the Securities deposited in trust at that time
and the number of Units delivered by the Trustee in exchange for the
Securities pursuant to Section 2.02, (ii) the initial fractional undivided
interest represented by each Unit, (iii) the Record Dates, (iv) the
Distribution Dates, (v) the Mandatory Termination Date, and the date on which
the Trustee shall begin to sell equity Securities pursuant to Section 9.01,
(vi) the Discretionary Liquidation Amount, (vii) the Sponsor's fee, (viii) the
Trustee's fees, (ix) the determination, if applicable, to qualify the Trust as
a regulated investment company under the Internal Revenue Code of 1986, as
amended, and (x) the balance in the Capital Account below which no
distribution need be made from the Capital Account.
ARTICLE I
Definitions
<PAGE>
Whenever used in this Indenture, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
Agreement
The Standard Terms and Conditions of Trust embodied in this
instrument and all amendments and supplements hereto.
Business Day
Any day that the Sponsor or the Trustee are open for business or when
there is sufficient trading in the Securities as to materially affect the
value of the Securities, excluding, when permitted by law, U.S. business
holidays.
Capital Account
The account created pursuant to Section 3.02.
Certificate
Any one of the Certificates manually executed by the Trustee, in each
case in substantially the following form with the blanks appropriately filled
in.
CERTIFICATE OF BENEFICIAL INTEREST
Units
-Evidencing-
A Fractional Undivided Interest
-in-
THE PAINEWEBBER PATHFINDERS TRUST, SERIES
This is to certify that is the owner and registered holder of this
Certificate evidencing the ownership of Unit(s) of fractional undivided
interest in the particular series of the PaineWebber Pathfinders Trust noted
on the face hereof (herein called the "Trust"), created under the laws of the
State of New York by the Trust Indenture and Agreement (hereinafter called the
"Indenture") dated as of the date of deposit (the "Date of Deposit") between
PAINEWEBBER INCORPORATED (hereinafter called the "Sponsor") and INVESTORS BANK
& TRUST COMPANY and THE FIRST NATIONAL BANK OF CHICAGO (hereinafter called the
"Co-Trustees" or the "Trustee").
The Trust Fund consists of (1) Securities, as defined in the
Indenture, as may from time to time be held in the Trust (including contracts,
if any for the purchase of certain of the Securities together with moneys
and/or letters of credit in an amount sufficient to pay for such Securities)
and (2) such amounts as from time to time may be held in the Income
<PAGE>
Account and the Capital Account maintained under the Indenture in the manner
described below.
At any given time this Certificate shall represent a fractional
undivided interest in the Trust, the numerator of which faction shall be the
number of Units set forth on the face hereof and the denominator of which
shall be the total number of Units of undivided interest which are outstanding
at such time. The Sponsor may, in its discretion and if permitted by the
Indenture, deposit additional Securities from time to time with the Trustee,
at which times the Trustee will deliver to the Sponsor certificates for Units
representing additional Securities deposited with the Trust.
The Sponsor hereby grants and conveys all of its right, title and
interest in and to the Trust to the extent of the fractional undivided
interest represented hereby to the registered holder of this Certificate
subject to and in pursuance of the Indenture, all the terms, conditions and
covenants of which are incorporated herein as if fully set forth at length.
The registered holder of this Certificate is entitled at any time
upon tender of this Certificate of the Trustee, endorsed in blank or
accompanied by all necessary instruments of assignment and transfer in proper
form, at its Office at Hancock Towers, P.O. Box 9130, Boston, MA, 02117-9130
and, upon payment of any tax or other governmental charges, to receive on or
before the seventh calendar day following the day on which such tender is made
or, if such calendar day is not a Business Day, on the first Business Day
prior to such calendar day, an amount in cash or cash equivalents equal to the
evaluation of the fractional undivided interest in the Trust Fund evidenced by
this Certificate, upon the basis provided for in the Indenture. The right of
redemption may be suspended and the date of payment may be postponed for any
period during which the New York Stock Exchange is closed other than customary
weekend or holiday closings; or for any period during which the Securities and
Exchange Commission has determined that trading on that Exchange is restricted
or an emergency exists as a result of which disposal or evaluation of any of
the Securities held in the Trust Fund is not reasonably practicable or for
such other periods as the Securities and Exchange Commission may by order
permit for the protection of Certificateholders.
The Sponsor has the right under certain circumstances set forth in
the Indenture to purchase any Certificate tendered to the Trustee for
redemption no later than the second Business Day following tender at a price
not less than the Redemption Value. The Trustee is irrevocably authorized in
its discretion, in lieu of redeeming this Certificate if tendered for
redemption, in the event the Sponsor does not purchase any Certificate
tendered for redemption, to sell this Certificate in the over-the-counter
market for the account of the Certificateholder at a price which will return
to the Certificateholder proceeds in an amount, net after deducting brokerage
commissions, transfer taxes and other charges, equal to or in excess of the
Redemption Value for this Certificate. In the event of any such sale, the
Trustee shall pay the net proceeds thereof to the Certificateholder on the day
he would otherwise be entitled to receive payment of the Redemption Value.
Income received by the Trustee as part of the Trust Fund (including
that part of the proceeds of any disposition of Securities which represents
accrued interest) shall be credited
<PAGE>
by the Trustee to the Income Account. With certain exceptions specified in the
Indenture, all other moneys received by the Trustee as a part of the Trust
Fund shall be credited to a separate Capital Account.
The Record Date and Distribution Date are as set forth in the
Indenture.
The fractional undivided interest represented by this certificate
with respect to the Income and Capital Accounts (after the deductions referred
to below) shall be distributed on, or shortly after, each Distribution Date in
the manner and subject to the limitations specified in the Indenture. All
distributions from the Income and Capital Accounts shall be made to the holder
of record of this Certificate at the close of business on the Record Date
prior to the Distribution Date on which such distributions are made.
No distributions need be made from the Capital Account if the balance
therein is less than an amount specified in the Indenture.
Distributions from the Income and Capital Accounts shall be made by
mail at the post office address of the holder hereof appearing on the
registration books of the Trustee or by such other means as shall be mutually
agreed upon between the holder and the Trustee.
From time to time deductions shall be made from the Income and
Capital Accounts, as more fully set forth in the Indenture, for redemption of
Units, compensation of the Sponsor, compensation of the Trustee, reimbursement
of certain expenses and advances incurred by or on behalf of the Trustee
(other than such expenses borne by the Trustee), certain legal and auditing
expenses and payment of, or the establishment of a reserve for, applicable
taxes or governmental charges, if any.
Shortly after the end of each calendar year the Trustee shall furnish
to the registered holder of this Certificate a statement setting forth, among
other things, the amounts received by the Trust and deductions therefrom and
the amounts distributed during the preceding year in respect of income on, and
sales of, Securities held in the Trust Fund.
This Certificate shall be transferable by the registered holder
hereof by presentation and surrender hereof at the Office of the Trustee
properly endorsed hereon or accompanied by a written instrument or instruments
of transfer in form satisfactory to the Trustee and executed by the registered
holder or his authorized attorney. Certificates of this Series are
interchangeable for one or more Certificates of such Series in an equal
aggregate number of Units of fractional undivided interest at the Office of
the Trustee in denominations of one Unit of fractional undivided interest or
any multiple thereof that may be deemed appropriate by the Trustee.
The holder hereof may be required to pay a charge of $2.00 per
Certificate issued in connection with the transfer or interchange of this
Certificate and any tax or other governmental charge that may be imposed in
connection with the transfer, interchange or other surrender of this
Certificate.
The holder of this Certificate, by virtue of the purchase and
acceptance hereof,
<PAGE>
assents to and shall be bound by the terms of the Indenture, copies of which
are on file and available for inspection at reasonable times during business
hours at the Office of the Trustee, to which reference is made for all the
terms, conditions and covenants thereof.
The Trustee may deem and treat the person in whose name this
Certificate is registered upon the books of the Trustee as the owner hereof
for all purposes and the Trustee shall not be affected by any notice to the
contrary.
Units may also be held in uncertificated form. Holders of Units
evidenced by Certificates may at any time elect to have their Units held in
uncertificated form by surrendering their Certificates to the Trustee for
cancellation. At such time, an appropriate notation will be made in the
registration books of the Trustee to indicate that the Units formerly
evidenced by such canceled Certificates are held in uncertificated form. The
Trustee shall, at the request of the holder of any Units held in
uncertificated form, issue a new Certificate or certificate in quantities and
denominations as requested by the holder and deemed appropriate by the
Trustee, subject to a $2.00 per Certificate charge, to evidence such Units and
at such time make an appropriate notation in the registration books of the
Trustee. Uncertificated Units are transferable and interchangeable by the
holder or his duly authorized attorney at the Office of the Trustee upon
delivery of an instrument of transfer and related documents in form
satisfactory to the Trustee and payment of any tax or other governmental
charges, fees and expenses applicable thereto.
The Indenture and the Trust created thereby shall terminate on the
Mandatory Termination Date as defined in the Indenture. The Indenture provides
that the Trust may be terminated prior to such date under certain
circumstances which include the sale or other disposition of the last Security
held thereunder, a decrease in the value of the Trust Fund to less than the
amount specified in the Indenture or upon the vote of the holders of 51% of
all units outstanding. Upon any termination the Trustee shall sell all of the
Securities then held, if any, and distribute pro- rata the funds then held in
the Trust Fund upon the surrender of the Certificates, all in the manner
provided in the Indenture. Upon the termination, the Trustee shall be under no
further obligation with respect to the Trust Fund, except to hold such funds
in trust, without interest, until distribution as aforesaid and shall have no
duty upon any such termination to communicate with the holder thereof other
than by mail at the address of such holder appearing on the registration books
of the Trustee.
This Certificate shall not become valid or binding for any purpose
until properly executed by either of the Co-Trustees under the Indenture.
IN WITNESS WHEREOF, , as Co-Trustee, has caused this Certificate
to be executed in its corporate name by an authorized officer and PaineWebber
Incorporated, as Sponsor, has caused this Certificate to be executed in its
name by the facsimile signature of one of its Vice Presidents.
Co-Trustee
<PAGE>
By
Authorized Signatory
PAINEWEBBER INCORPORATED,
Sponsor
By
Vice President
Date:
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as
tenants in common
UNIF GIFT MIN ACT...........Custodian........
(Cust) (Minor)
under Uniform Gifts to Minors
Act................................(State)
Additional abbreviations may also be used though not in the above list.
Form of Assignment
FOR VALUE RECEIVED, , hereby sell(s), assign(s) and
transfer(s) Units unto
Please insert Social Security or
Other Identifying Number of Assignee
and does hereby irrevocably constitute and appoint , attorney, to
transfer said Units on the books of the Trustee, with full power of
substitution in the premises.
Dated:
Notice: The signature to this assignment must correspond with
the name as written upon the face of the Certificate or as recorded on the
books of the Trustee, as the case may be, in every particular, without
alteration or enlargement or any change whatever.
The signature must be guaranteed by an eligible guarantor
institution in such other manner as may be acceptable to the Trustee.
<PAGE>
Certificateholder
The registered holder of any Certificate as recorded on the books of
the Trustee, his legal representative and heirs, and the successors of any
corporation, partnership or other legal entity which is a registered holder of
any Certificate.
Contract Securities
Securities which are to be acquired by the Trust Fund pursuant to
contract.
Depositor
The Sponsor of any series of The PaineWebber Pathfinders Trust.
Discretionary Liquidation Amount
The amount specified in the Trust Indenture.
Distribution Date
The date specified in the Trust Indenture.
Evaluation Time
4:00 p.m. New York time or any other time of day when trading on the
New York Stock Exchange may close, unless another meaning is assigned to it in
the Trust Indenture.
Income
Any interest payment, accrual of income on Securities issued at an
original issue discount or cash dividend distribution by an issuer of a
Security, whether or not such payment or distribution is taxable to the
recipient thereof.
Income Account
The account created pursuant to Section 3.01.
Income Distribution
Shall have the meaning assigned to it in Section 3.04.
Indenture
These Standard Terms and Conditions of Trust and the Trust Indenture
and all amendments and Supplemental Indentures hereto and thereto.
Initial Date of Deposit
Shall have the meaning assigned to it in Section 2.02(a).
<PAGE>
Mandatory Termination Date
The date specified in the Trust Indenture.
Percentage Ratios
Shall have the meaning assigned to it in Section 2.02.
Record Date
The date specified in the Trust Indenture.
Redemption Date
Shall have the meaning assigned to it in Section 5.02.
Redemption Value
Shall have the meaning assigned to it in Section 5.02.
Regulated Investment Company
A trust which, pursuant to Section (ix) of the Introduction, elects
to qualify as a "regulated investment company" under the Internal Revenue Code
of 1986, as amended.
Reserve Account
The account created pursuant to Section 3.03.
Restricted Securities
Securities which were acquired in private placements and which at the
time cannot, in the opinion of counsel designated by the Sponsor and
satisfactory to the Trustee, be sold publicly by the Trustee without
registration under the Securities Act of 1933, as amended (or similar
provisions of law subsequently enacted).
Securities
The debt and equity securities, including Contract Securities, (a)
which are listed or referred to as Securities hereunder in Schedule A to the
Trust Indenture, as the same may be supplemented from time to time pursuant to
a Supplemental Indenture, if any, provided in Section 2.02(c) hereof, (b)
which have been received by the Trust in exchange or substitution pursuant to
Section 3.07 hereof as may from time to time continue to be held as a part of
the Trust, and (c) which have been purchased for deposit in the Trust pursuant
to Section 3.02 hereof, unless another meaning is assigned to such term in the
Trust Indenture.
Sponsor
<PAGE>
PaineWebber Incorporated, or its successors or any successor Sponsor
(or successor Sponsors if there be more than one) appointed as herein
provided.
Supplemental Indenture
Shall mean a written direction from the Sponsor to the Trustee
instructing the Trustee to create additional Units pursuant to and in
accordance with Section 2.02(c) hereof.
Trust Fund
Shall mean the trust created by the Indenture which shall consist of
the Securities and all undistributed income or other amounts received or
receivable thereon and any undistributed cash held in the Capital and Income
Accounts or otherwise realized from the sale or liquidation of the Securities,
exclusive of any amounts which may be on deposit in the Reserve Account.
Trust Fund Evaluation
Shall have the meaning assigned to it in Section 5.01.
Trust Indenture
The Trust Indenture for the particular series of The PaineWebber
Pathfinders Trust into which these Standard Terms and Conditions of Trust are
incorporated and all amendments and supplements thereto.
Trustee or Co-Trustees
Shall mean Investors Bank & Trust Company and The First National Bank
of Chicago or their successors, or any successor trustee appointed as herein
provided.
Unit
Each Unit of fractional undivided interest in and ownership of the
Trust Fund, which shall be initially equal to the fraction specified in the
Trust Indenture, the denominator of which fraction shall be decreased by the
number of any Units redeemed as provided in Section 5.02 and shall be
increased by the number of any Units issued pursuant to a Supplemental
Indenture pursuant to and in accordance with Section 2.02(c) hereof. Whenever
reference is made herein to the "interest" of a Unitholder in the Trust Fund
or in the Income or Capital Accounts it shall mean such fractional undivided
interest represented by the number of Units held of record by such Unitholder.
Unitholder
The registered holder of any Unit, whether or not evidenced by a
Certificate, as recorded on the registration books of the Trustee, and his
legal representative and heirs, and the successors of any corporation,
partnership or other legal entity which is a registered
<PAGE>
holder of any Unit.
Unit Value
The value of the fractional undivided interest and ownership of the
Trust Fund represented by each Unit as determined by a Trust Fund Evaluation.
ARTICLE II
Declaration of Trust;
Original Issuance of Certificates
Section 2.01. Declaration of Trust. The Trustee declares it holds and
will hold the Trust Fund as Trustee in trust upon the trusts herein set forth
for the use and benefit of all present and future Unitholders.
Section 2.02. Deposit of Securities. (a) The Sponsor concurrently
with the execution and delivery hereof, hereby grants and conveys all of its
right, title and interest in and to and hereby conveys to and deposits with
the Trustee in an irrevocable Trust, the Securities (together with accrued and
unpaid income thereon) and Contract Securities, listed in Schedule A to the
Indenture, duly endorsed in blank or accompanied by all necessary instruments
of assignment and transfer in proper form, to be held, managed and applied by
the Trustee as herein provided for the benefit of each Unitholder to the
extent of such Unitholder's interest in the Trust Fund. The Sponsor hereby
also delivers to the Trustee a certified check or checks, cash or cash
equivalents or an irrevocable letter or letters of credit issued by a
commercial bank or banks in an amount necessary to consummate the purchase of
any Contract Securities. The Percentage Ratios for the Trust Fund shall be the
percentage ratios between the number of shares of each issue of stock in such
Trust and the maturity value of the Treasury obligations deposited in such
Trust Fund on the initial date of deposit thereof (the "Initial Date of
Deposit") and determined by reference to Schedule A to the Indenture for such
Trust Fund. Such Percentage Ratios are subject to adjustment to reflect the
occurrence of (i) a stock split or a similar event which affects the capital
structure of the issuer of a stock but which does not affect the Trust's
percentage ownership of the common stock equity of such issuer at the time of
such event, (ii) a merger or reorganization or (iii) sale of any Securities
from the Trust portfolio. Stock dividends received by the Trust, if any,
pursuant to Section 3.07(d) will be sold by the Trustee and the proceeds
therefrom shall be treated as income to the Trust.
(b) In the event that the purchase of Contract Securities pursuant to
any contract shall not be consummated in accordance with said contracts, the
Trustee shall credit to the Capital Account referred to in Section 3.02 the
moneys, or, if applicable, the moneys drawn on an irrevocable letter of
credit, deposited by the Sponsor for the purpose of such purchase. Such funds
shall be distributed pursuant to Section 3.04 to Unitholders of record as of
the Record Date next following the failure of consummation of such purchase.
The Sponsor shall cause to be refunded to each Unitholder his pro rata portion
of the sales charge levied on the sale of Units to such Unitholder
attributable to such Contract Security.
<PAGE>
(c) From time to time, following the Initial Date of Deposit, the
Sponsor is hereby authorized, in its discretion to cause the Trustee to issue
additional Units pursuant to a Supplemental Indenture directing such
additional Units to be created based upon the following:
(1) the deposit of additional Securities in respect of such
additional Units and/or contracts for the purchase of such
additional Securities; and/or
(2) the deposit of cash in an amount to purchase such additional
Securities based upon the price of such additional Securities
at the Valuation Time on such date of deposit.
To accomplish the issuance of additional Units by means of a deposit
of additional Securities, the Sponsor is authorized to assign, convey to and
deposit with the Trustee (i) additional Securities, duly endorsed in blank or
accompanied by all necessary instruments of assignment, and/or (ii) contracts
for the purchase of such additional Securities, and the Sponsor shall transfer
and deliver such necessary instruments of assignment and/or contracts for the
purchase of such additional Securities to the Trustee along with a certified
check or checks, cash, cash equivalents or an irrevocable letter or letters of
credit issued by a commercial bank in an amount necessary to consummate the
purchase of any such additional Securities represented by contracts for the
purchase of additional Securities.
To accomplish the issuance of additional Units by means of depositing
sufficient cash amounts with the Trustee to enable the Trustee to purchase and
deposit the additional Securities, the Sponsor is hereby authorized to, and
shall, instruct the Trustee to create a specified number of additional Units
whereupon the Trustee shall purchase and deposit the additional Securities in
respect thereof.
Brokerage commissions with respect to the Trustee's purchase of
additional Securities, if any, shall be an expense borne by the Trust. In all
cases of creating additional Units, the Sponsor shall also pay to the Trustee
for deposit into the Income Account an amount equal to the Cash Component per
Unit (as defined below), multiplied by the number of new Units created in
respect of the additional Securities deposited into the Trust Fund pursuant to
this Section 2.02(c). For purposes of this paragraph, Cash Component means
cash on hand in the Trust Fund (excluding cash held for the purchase of
Contract Securities) and/or cash receivable by the Trust as of the date of the
deposit of additional Securities, reduced by payables and accrued expenses and
amounts allocated for redemption of Units or for distribution to holders of
record as of a preceding Record Date. Such purchase and deposit of additional
Securities shall be made, in each case, pursuant to a Supplemental Indenture.
The Sponsor, if depositing additional Securities with the Trustee pursuant to
this Section 2.02(c), and the Trustee, if purchasing additional Securities
with amounts provided to it by the Sponsor pursuant to this Section 2.02(c),
in each case shall ensure that each deposit of additional Securities pursuant
to this Section shall be made so as to replicate the Percentage Ratios for
such Securities determined by reference to Schedule A of the Trust Indenture
for each Trust Fund and subject to adjustment as provided herein.
The Securities deposited pursuant to this Section 2.02 are comprised
of (1) the Securities set forth in Schedule A of the Trust Indenture, (2) any
Treasury Securities which may be deposited as temporary reinvestment for sale
proceeds pursuant to Section 3.02, and
<PAGE>
(3) additional deposits of Securities pursuant to this Section 2.02(c). Such
additional Securities shall be held, managed and applied by the Trustee as
herein provided and as provided in the applicable Trust Indenture.
(d) The Trustee is hereby irrevocably authorized to effect
registration or transfer of the Securities in fully registered form to the
name of the Trustee or to the name of its nominee or the nominee of its agent.
Section 2.03. Issuance of Certificates. The Trustee acknowledges that
the Securities and Contract Securities listed in Schedule A to the Trust
Indenture have been deposited with it by the Sponsor on the date of the Trust
Indenture and on the same date it has executed and delivered to or on the
order of the Sponsor in exchange therefor Certificates evidencing the
ownership of the aggregate number of Units specified in the Trust Indenture.
Units may also be held in uncertificated form. Holders of Units
evidenced by Certificates may at any time elect to have their Units held in
uncertificated form by surrendering their Certificates to the Trustee for
cancellation. At such time, an appropriate notation will be made in the
registration books of the Trustee to indicate that the Units formerly
evidenced by such canceled Certificates are held in uncertificated form. The
Trustee shall, at the request of the holder of any Units in uncertificated
form, issue a new Certificate or Certificates in quantities and denominations
as requested by the holder and deemed appropriate by the Trustee, subject to a
$2.00 per Certificate Fee, to evidence such Units and at such time make an
appropriate notation in the registration books of the Trustee. Uncertificated
Units are transferable and interchangeable by the holder or his duly
authorized attorney at the Office of the Trustee upon delivery of an
instrument of transfer and related documents in form satisfactory to the
Trustee and payment of any tax or other governmental charges, fees and
expenses applicable thereto.
Section 2.04. Certain Contracts Satisfactory. The Sponsor hereby
approves as satisfactory in form and substance the contracts to be entered
into or assumed by the Trustee with regard to any Securities listed on
Schedule A to the Trust Indenture and hereby authorizes the Trustee on behalf
of the Trust Fund to enter into or assume such contracts, to give any
investment representations required for the purchase of Restricted Securities
thereunder, and otherwise to carry out the terms and provisions thereof in
order to complete the purchase of the Securities covered thereby.
Section 2.05. Voting Rights. Voting rights with respect to the
Securities held by the Trust shall be exercised by the Trustee as directed by
the Sponsor in accordance with Section 3.10.
ARTICLE III
Administration of Trust
Section 3.01. Certain Moneys to Be Credited to Income Account. The
Trustee shall collect the Income on the Securities as it becomes payable and
credit all income to a separate non-interest bearing account to be known as
the "Income Account", on the date on
<PAGE>
which the Trust Fund receives such Income, or on the date it accrues with
respect to Securities issued at an original issue discount (including all
moneys realized by the Trustee from the sale of options, warrants or other
similar rights received in respect of the Securities and including any stock
dividends sold pursuant to Section 3.07).
Section 3.02. Certain Moneys to Be Credited to Capital Account. All
moneys other than amounts credited to the Income Account received by the
Trustee in respect of the Securities under this Indenture shall be credited to
a separate non-interest bearing account to be known as the "Capital Account"
except that if Securities in a Trust are to be sold pursuant to Section 3.06,
the proceeds of such sale, or moneys received as a distribution of capital as
the result of any corporate or other business action of the issuer of a
Security in the Trust, may be reinvested (to the extent not distributed), if
(1) at the time there is no legal or regulatory impediment and (2) in the
opinion of the Sponsor it is in the best interests of the Unitholders to do
so, in U.S. Treasury Obligations which mature on or prior to the next
scheduled Distribution Date (the "Short-Term Treasury Obligations"). Any
Short-Term Treasury Obligations purchased pursuant to this Section 3.02 shall
be deposited into the applicable Trust and shall be subject to the terms of
such Trust Indenture and Agreement to the same extent as any Security
deposited into such Trust on the Initial Date of Deposit and the terms "Trust
Fund" and "Securities" shall thereafter be defined as including such
Short-term Treasury Obligations, provided, however, that, with respect to any
Trust Fund other than a Trust Fund which has qualified, or is anticipated to
qualify, as a Regulated Investment Company, the Trustee shall not have the
power to sell, transfer or otherwise dispose of any such Short-term Treasury
Obligation prior to the maturity thereof. Brokerage commissions with respect
to the purchase of Short-Term Treasury obligations, if any, shall be an
expense borne by the Trust. Anything in this Section 3.02 to the contrary
notwithstanding, moneys which are required to cover the purchase of Contract
Securities shall be held specially by the Trustee for such purchase and shall
not be deemed to be part of the Capital Account until the Sponsor shall have
notified the Trustee that such contracts have failed, whereupon such moneys
shall be credited to the Capital Account and shall be held specially for
distribution in the manner provided in Section 2.02(b).
Section 3.03. Establishment of Reserve Account. From time to time the
Trustee may withdraw from the Income or Capital Accounts such amounts as it,
in its sole discretion, shall deem requisite to establish a reserve for any
applicable taxes or other governmental charges that may be payable out of the
Trust Fund. Such amounts so withdrawn shall be credited to a separate
non-interest bearing account which shall be known as the "Reserve Account".
The Trustee shall not be required to distribute to the Unitholders any of the
amounts in the Reserve Account; provided, however, that if it, in its sole
discretion, determines that such amounts are no longer necessary for payment
of any applicable taxes or other governmental charges, then it shall promptly
deposit such amounts in the account from which such amounts were withdrawn or
if the Trust Fund has been terminated or shall be in the process of
termination, the Trustee shall distribute to each Unitholder such holder's
interest in the Reserve Account in accordance with Section 9.01.
Section 3.04. Certain Deductions and Distributions. Each month the
Trustee shall satisfy itself as to the adequacy of the Reserve Account, making
any further credits thereto as may appear appropriate in accordance with
Section 3.03 and shall then:
<PAGE>
(a) deduct from the Income Account or, to the extent such funds are
not available in such Account, from the Capital Account, and pay to itself
individually the amounts that it is at the time entitled to receive pursuant
to Sections 8.01 and 8.05 on account of its services theretofore performed and
expenses, losses and liabilities theretofore incurred, if any;
(b) deduct from the Income Account or, to the extent funds are not
available in such Account, from the Capital Account, and pay to itself
individually an amount equal to the portion of the advance for Initial Costs
specified in 10.02(b) for which it is then entitled to reimbursement pursuant
to such section;
(c) deduct from the Income Account or, to the extent funds are not
available in such Account, from the Capital Account, and pay to the Sponsor or
successor Sponsor the amount that it is entitled to receive pursuant to
Sections 7.02 and 8.01(f); and
(d) to the extent that the Trustee has been advised that costs
incurred in keeping the registration of Units and the Trust on a current basis
are permitted to be deducted at that time by the Securities and Exchange
Commission, deduct from the Income Account, or to the extent funds are not
available in such Account, from the Capital Account, an amount equal to the
unpaid fees and expenses incurred in keeping the registration statement
current as provided in Section 10.03.
Any amounts that the Trustee has paid pursuant to (c) above in excess
of the amount to which the Sponsor is entitled pursuant to Section 7.02, shall
be returned to the Trust and distributed on the next Distribution Date to
Unitholders of record on the preceding Record Date.
On each Distribution Date, or within a reasonable period of time
thereafter, the Trustee shall distribute by mail to each Unitholder of record
at the close of business on the preceding Record Date at his address appearing
on such Record Date on the registration books of the Trustee or by such other
means as may be mutually agreed upon by the Trustee and the Unitholder, such
Unitholder's pro rata share of the balance of the Income and Capital Accounts,
computed as of such Record Date in the manner set forth below (the "Income
Distribution").
The Trustee shall on or before each Distribution Date compute the
amount of the distribution per Unit for such Distribution Date (i) by
deducting from the cash on hand in the Capital and Income Accounts as of the
Record Date immediately preceding such Distribution Date the total of (X) cash
required for the redemption of unredeemed tendered Units and (Y) the sum of
the amounts to be deducted from such Accounts on or before such Distribution
Date pursuant to the foregoing provisions of this Section 3.04 and (ii)
dividing the amount so obtained by the number of Units outstanding on the
Record Date immediately preceding such Distribution Date.
No distribution need be made from the Capital Account if the balance
therein is less than an amount set forth in the Indenture.
<PAGE>
The amount to be so distributed to each Unitholder shall be that pro
rata share of the cash balance of the Income and Capital Accounts, computed as
set forth herein, as shall be represented by the number of Units evidenced by
the number of Units held of record by such Unitholder. In making the
computation of such holder's pro rata share of the balance of the Income and
Capital Accounts, fractions of less than one cent shall be omitted.
In the event a Unitholder of a particular series of any Trust fund is
also a Unitholder of one or more other series of a trust for which the Trustee
is the trustee and for which the Sponsor is the sole depositor, then the
Trustee shall consolidate in one check the distribution required to be made to
a Unitholder hereunder with all other distributions required to be made on
such Distribution Date to such Unitholder pursuant to the indenture governing
such other series; provided that an appropriate statement of distribution be
furnished therewith as required by the applicable Trust Indenture.
Section 3.05. Statements and Reports. With each distribution from the
Income or Capital Accounts the Trustee shall set forth, either in the
instrument by means of which payment of such distribution is made or in a
separate statement to each Unitholder, the amount being distributed from each
such account expressed as a dollar amount per Unit or per 1,000 Units, as
appropriate, and, the number of such Units in the Unitholder's account
maintained by the Trustee.
Within a reasonable period of time after the last day of each
calendar year commencing with the calendar year stated in the applicable Trust
Indenture and prospectus, the Trustee shall furnish to each person who at any
time during such calendar year was a Unitholder a statement setting forth,
with respect to such calendar year:
(a) as to the Income Account:
(1) the amount of Income received on the Securities or on the sale
pursuant to Section 3.06 of any rights to purchase securities;
(2) the deductions for fees and expenses of the Trustee and the
Sponsor pursuant to Section 3.04, if any, and deductions, if any, for payments
to the Reserve Account;
(3) the amounts reserved for purchases of Contract Securities;
(4) the balance remaining after such distributions, deductions and
reservations, expressed both as a total dollar amount and as a dollar amount
per Unit or per 1,000 Units, as appropriate, outstanding on the last day of
such calendar year; and
(5) the amounts paid for redemptions pursuant to Section 5.02.
(b) as to the Capital Account:
(1) the net proceeds received (excluding any portion thereof credited
to the Income Account) from the sale or liquidation of any of the Securities
or the sale pursuant to Section 3.06 of any rights to purchase securities;
<PAGE>
(2) the deductions for payment of fees and expenses of the Trustee
and the Sponsor pursuant to Section 3.04, if any, and deductions, if any, for
payments to the Reserve Account;
(3) the amounts reserved for purchases of Contract Securities;
(4) the balance remaining after such distributions, deductions and
reservations, expressed both as a total dollar amount and as a dollar amount
per Unit or per 1,000 Units, as
appropriate, outstanding on the last day of such calendar year; and
(5) the amounts paid for redemptions pursuant to Section 5.02.
(c) the following information:
(1) a list of the Securities disposed of or acquired during such
calendar year, and a list of the Securities as of the last day of such
calendar year showing which Securities constitute Restricted Securities;
(2) the number of Units outstanding on the last day of such calendar
year;
(3) the Unit Value based on the last Trust Fund Evaluation made during
such calendar year; and
(4) the amounts actually distributed to Unitholders during such
calendar year from the Income and Capital Accounts, separately stated,
expressed both as total dollar amounts and as dollar amounts per Unit or per
1,000 Units, as appropriate, outstanding on the Record Dates for such
distributions and the status of such distributions for Federal income tax
purposes in the case of a trust which has elected to be treated as a Regulated
Investment Company under the Code.
Section 3.06. Sale of Securities and of Certain Rights. The Sponsor
by written notice may direct the Trustee to sell, or tender for cash, in the
event of an event under subparagraph (g) below, Securities at such price and
time and in such manner as shall be deemed appropriate by the Sponsor if the
Sponsor shall have determined that any one or more of the following conditions
exist:
(a) that there has been a failure to declare or pay anticipated
dividends or interest;
(b) that any materially adverse action or proceeding has been
instituted at law or in equity seeking to restrain or enjoin the declaration
or payment of dividends or interest on any such Securities or that there
exists any other materially adverse legal question or impediment affecting
such Securities or the declaration or payment of dividends or interest on the
same;
(c) that there has occurred any breach of covenant or warranty in any
trust indenture or other document relating to the issuer or obligor or
guarantor which might materially and adversely affect either immediately or
contingently the declaration or payment of dividends or interest on such
Securities;
<PAGE>
(d) that there has been a default in the payment of the principal or
par or stated value of, premium, if any, or income on any other outstanding
securities of the issuer or the guarantor of such securities which might
materially and adversely, either immediately or contingently, affect the
declaration or payment of dividends on the Securities;
(e) that a decline in price has occurred or such materially adverse
market or credit factors have occurred, that in the opinion of the Sponsor the
retention of such Securities would not be in the best interest of the
Unitholders;
(f) that the sale of such Securities is desirable in order to
maintain the qualification of the Trust Fund as a "Regulated Investment
Company" in the case of a trust which has elected to qualify as such;
(g) that a public tender offer has been made for a Security, or a
merger or acquisition has been announced affecting a Security, that in the
opinion of the Sponsor, the sale or tender of such Security is in the best
interests of the Unitholders;
(h) that there has been a decrease in the Sponsor's internal rating
of the Security; or
(i) that there has been a happening of events which, in the opinion
of the Sponsor, negatively affects the economic fundamentals of the issuer of
the Security or the industry of which it is a part.
Upon receipt of such direction from the Sponsor with respect to any
Securities, or in the case of options, warrants or other rights to purchase
securities distributed to the Trust in respect of Securities as soon as is
practicable after receipt of such options, warrants or other rights, the
Trustee shall proceed to sell the specified Securities or any such rights. The
Trustee shall not be liable or responsible in any way for depreciation or loss
incurred by reason of any sale made pursuant to any such direction or by
reason of the failure of the Sponsor to give any such direction, and in the
absence of such direction the Trustee shall have no duty to sell any
Securities under this Section 3.06 except to the extent otherwise required by
Section 3.10. The Sponsor shall not be liable for errors of judgment in
directing or failing to direct the Trustee pursuant to this Section 3.06. This
provision, however, shall not protect the Trustee or Sponsor against any
liability for which they would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of their
obligations and duties hereunder.
Section 3.07.
Refunding Securities, Reorganizations and Similar Events, Stock Dividends.
(a) In the event the Trustee is notified of any vote to be taken or
proposed to be taken by holders of the Securities held by the Trust Fund in
connection with any proposed merger, reorganization, spin-off, split-off or
split-up by the issuer of Securities held in the Trust Fund, the Trustee
shall:
(i) in the case of a Trust Fund which has elected to qualify as a
Regulated Investment Company, take such action with respect thereto as the
Sponsor shall direct; or
<PAGE>
(ii) in the case of a Trust Fund which is organized as a "grantor
trust" for purposes of federal income taxation, use its best efforts to vote
the Securities as closely as practicable in the same manner and in the same
general proportion as are the Securities held by owners other than the Trust
Fund.
(b) In the event that an offer shall be made by any person to
exchange stock or securities for any Securities (including but not limited to
a tender offer), the Trustee shall:
(i) in the case of a Trust Fund which has elected to qualify as a
Regulated Investment Company, take such action with respect thereto as the
Sponsor shall direct; or
(ii) in the case of a Trust Fund which is organized as a "grantor
trust" for purposes of federal income taxation, reject such offer.
(c) If, stock or securities are received by the Trustee, with or
without cash, as a result of any merger, reorganization, tender offer,
spin-off, split-off, or split-up by the issuer of Securities held in the Trust
Fund or in exchange for Securities (including any stock or securities received
notwithstanding the Trustee's rejection of an offer or received without an
initial offer), the Trustee at the direction of the Sponsor may retain or sell
such stock or securities in the Trust Fund. Any stock or securities so retained
shall be subject to the terms and conditions of the Indenture to the same
extent as the Securities originally deposited hereunder. The Trustee shall
give notice to the Unitholders of the retention of stock or securities
acquired in exchange for Securities within five days after such acquisition.
(d) Additional shares of Securities received as a distribution on
Securities (other than shares received in a non-taxable distribution which
shall be retained by the Trust Fund) shall be sold and the proceeds credited
to the Income Account.
Section 3.08.
Counsel. The Sponsor may employ from time to time counsel to act on behalf of
the Trust Fund and perform any legal services in connection with the
Securities, including advice as to whether any Securities constitute
Restricted Securities and any legal matters relating to the possible
disposition or acquisition of any Securities pursuant to any provision hereof.
The fees and expenses of such counsel shall be paid by the Trustee as provided
in Section 3.04(b) hereof.
Section 3.09. Notice and Sale by Trustee. If at any time the issuer
of any Security fails to pay or declare an anticipated dividend or interest,
and provision for such payment has not been duly made, the Trustee shall
notify the Sponsor thereof. If within thirty days after such notification the
Sponsor has not given any instruction in writing to sell or to hold or has not
taken any action in connection with such Securities, the Trustee shall sell
such Securities forthwith, and neither the Trustee nor the Sponsor shall be
liable or responsible in any way for depreciation or loss incurred by reason
of such sale.
Section 3.10.
Action by Trustee Regarding Securities and Voting. Except as otherwise
provided for in
<PAGE>
Section 3.07, in the event that the Trustee shall have been notified at any
time of any action to be taken or proposed to be taken by the holders of the
Securities, the Trustee shall promptly notify the Sponsor and shall thereupon
take such action or refrain from taking any action as the Sponsor shall in
writing direct; provided, however, that if the Sponsor shall not within five
business days of the giving of such notice to the Sponsor direct the Trustee
to take or refrain from taking any action, the Trustee shall take such action
as it, in its sole discretion, shall deem advisable. The Securities may, in
the discretion of the Trustee, be interchanged from time to time into either
bearer or registered form without any notification thereof to the Sponsor or
the Unitholders and may be registered in the name of the Trustee or the name
of any nominee designated by it or any nominees of its agent. Neither the
Sponsor nor the Trustee shall be liable to any person for any action or
failure to take action with respect to this Section 3.10.
Section 3.11. Trustee Not to Adjust Accounts. Nothing in the
Indenture and Agreement, or otherwise, shall be construed to require the
Trustee to make any adjustments between the Income Account and the Capital
Account by reason of any premium or discount in respect of any of the
Securities.
Section 3.12.
Notice of Change in Capital Account. The Trustee shall give prompt written
notice to the Sponsor of all amounts credited to or withdrawn from the Capital
Account pursuant to any of the provisions of this Article III, and the balance
in such Account after giving effect to the credit or withdrawal.
Section 3.13.
Election to Qualify as Regulated Investment Company; Diversification Tests.
(a) If the applicable Trust Indenture and prospectus for the Trust Fund
indicate that it intends to elect to be treated and to qualify as a Regulated
Investment Company as defined in the Internal Revenue Code, the Trustee is
directed to make such elections, including any appropriate election to be
taxed as a corporation, as shall be necessary to effect such qualification.
(b) In the case of a trust which has elected to qualify as a
Regulated Investment Company, the Trustee shall furnish to independent
certified public accountants designated by the Sponsor pursuant to Section
8.01(e) of this Indenture the value of the Securities in the Trust Fund as of
(1) the Friday (or the immediately preceding Business Day if such Friday is
not a Business Day) before the last Business Day of the first quarter of the
Trust Fund's first taxable year (2) the last Business Day of the first quarter
of the Trust Fund's first taxable year, and (3) the last Business Day of any
subsequent quarter during which any Securities are acquired by the Trust Fund.
For purposes of this Section 3.13 each said day shall, except as the context
may otherwise require, be hereinafter referred to as the "Diversification Test
Date".
On each Diversification Test Date upon written request from the
Trustee no later than five Business Days prior thereto, which date shall be
specified by the Trustee in such request, such accountants shall send a
written report, in form and substance satisfactory to the Trustee and its
counsel, to the Trustee and to the Sponsor stating whether or not the
aggregate value of all Securities (other than U.S. Government Securities) of
each issuer,
<PAGE>
Securities issued by which are valued at greater than 5% of the total assets
of the Trust Fund, exceeds 50% of the value of the total assets of the Trust
Fund on such Diversification Test Date. In making the necessary computations,
such accountants shall compute the value of the Securities by taking the value
of the Securities in the Trust Fund, as so furnished by the Trustee, including
the amount of any accrued interest thereon, by treating as Securities of the
same issuer only those Securities whose name so indicates; by treating
contracts to purchase Securities as if the Securities subject to such
contracts had been acquired by the Trust Fund; and by the settlement of
contracts to purchase Securities as the acquisition of Securities on their
respective settlement dates.
In the event the foregoing certification by such accountants states
that the aggregate value of Securities (other than U.S. Government Securities)
of each issuer, Securities issued by which are valued at more than 5% of the
total assets of the Trust Fund, on the Friday (or the immediately prior
Business Day if such Friday is not a Business Day) before the last Business
Day in the first quarter of the first taxable year of the Trust Fund exceeds
50% of the total assets of the Trust Fund on such date, as provided in Section
3.06, the Sponsor shall direct the Trustee to sell all or any portion of the
Securities whose value is greater than 5% of total assets of the Trust Fund or
take such other action as is necessary so that the aggregate value of
Securities (other than U.S. Government Securities) of each issuer, Securities
issued by which have values greater than 5% of the total assets of the Trust
Fund, does not exceed 50% of the value of the total assets of the Trust Fund
on the last Business Day of the first quarter of the first taxable year of the
Trust Fund. On the last day of the first quarter of the first taxable year of
the Trust Fund the Sponsor shall provide a certificate satisfactory in form
and substance to the Trustee and its counsel to the effect that the aggregate
value of all Securities (other than U.S. Government Securities) of each
issuer, Securities issued by which are valued at greater than 5% of the total
assets of the Trust Fund does not exceed 50% of the value of the Fund's total
assets on the last day of the quarter.
In order to ensure the continued qualification as a Regulated
Investment Company of a trust which has elected to so qualify, the Trustee
shall cause a review of the Trust to be performed by such accountants prior to
the end of the calendar year. The purpose of such review shall be to determine
whether the Trust is deriving at least 90% of its gross income from dividends,
interest and gains from the sale or other disposition of the Securities. The
Trustee shall submit the written results of such review to the Sponsor.
In the event that the foregoing audit states that less than 90% of
the gross income of the Trust is derived from dividends, interest and gains
from the sale or other disposition of the Securities, the Sponsor shall direct
the Trustee to sell certain of the Securities pursuant to Section 3.06 in an
amount deemed necessary by the Sponsor to maintain the status of the Trust
as a Regulated Investment Company.
Section 3.14.
Investment Restrictions. The Sponsor hereby agrees that it will not deposit
Securities in any series of the Trust, if such deposit would cause the Trust
(including any prior series of the Trust) to be the holder of 5% or more of
the outstanding voting securities of any one issuer of Securities of, or
otherwise cause the Trust to be deemed an "affiliate" of, a public utility
company, as defined in the Public Utility Holding Company Act of 1935 (the
"1935 Act")
<PAGE>
or in any way cause the Trust to be in violation of the 1935 Act.
Section 3.15. Special Provisions for Grantor Trusts. If the
prospectus for the Trust Fund indicates that it is organized as a "grantor
trust" for purposes of the Internal Revenue Code, nothing in these Standard
Terms and Conditions of Trust or the Trust Indenture under which the Trust
Fund is created, or otherwise, shall be construed to give the Trustee the
power to vary the investment of the Unitholders within the meaning of Treasury
Regulation Section 301.7701-4(c) or any similar or successor provisions of
Treasury Regulations, nor shall the Sponsor give the Trustee any direction
that would vary the investment of the Unitholders.
ARTICLE IV
Evaluation of Securities
Section 4.01. Evaluation of Securities. The Trustee shall determine
separately and promptly furnish to the Sponsor upon request the value of each
issue of Securities as of the Evaluation Time on the days on which the Trust
Fund Evaluation is required by Section 5.01. The evaluation with respect to
Securities which are equity securities or securities convertible into equity
securities shall be valued as follows: (1) if the Securities are listed on one
or more national securities exchanges, the evaluation shall be determined on
the basis of the closing sale price on such exchange on that day on the
exchange which is the principal market thereof (deemed to be the New York
Stock Exchange) if the Securities are listed thereon (unless the Trustee deems
such price inappropriate as a basis for valuation); (2) if there is no
appropriate closing sale price on such exchange at the mean between the
closing bid and asked prices on such exchange (unless the Trustee deems such
price inappropriate as a basis for evaluation); (3) Securities are not so
listed, or if so listed and the principal market therefor is other than on
such exchange, the evaluation shall be based on the closing sale price on the
over-the-counter market (unless the trustee deems such price appropriate as
the basis for such evaluation) or (4) if no such closing sale prices are
available (a) on the basis of current bid prices for the Securities, (b) if
bid prices are not available for any Securities, on the basis of current bid
prices for comparable Securities, (c) by determining the value of the
Securities, on the bid side of the market or (d) by any combination of the
above.
All other Securities shall be valued as follows: during the initial
offering period the Securities are valued on the basis of offering prices;
thereafter for purposes of determining the Trust Fund Evaluations required by
Section 5.01 they are valued on the basis of bid prices. The aggregate
offering and bid prices of the Securities is the price obtained from
investment dealers or brokers (which may include the Sponsor) who customarily
deal in such Securities; or, if there is no market for the Securities, and bid
or offering prices are not available, on the basis of current bid or offering
prices for comparable securities; or by appraisal; or by any combination of
the above.
In the case of Securities issued at an original issue discount the
value shall be reduced to reflect the accrual of income credited to the Income
Account.
<PAGE>
Among the factors the Trustee will consider in determining the value
of any Restricted Securities as identified by the Sponsor are (a) an estimate
of the existence and extent of any market therefor, (b) the extent of any
discount at which such Securities were acquired by the Trust Fund, (c) the
estimated period of time during which such Securities will not be freely
marketable, (d) the estimated expenses, if any, to the Trust Fund of
registering or otherwise qualifying such Securities for public sale, (e)
estimated underwriting commissions if underwriting would be required to effect
a sale, and (f) any credit or other factors affecting the issuer of such
Securities. In making valuations, opinions of counsel may be relied upon as to
whether or not any Securities are Restricted Securities.
For each evaluation, the Trustee shall also determine and furnish to
the Sponsor the aggregate of (a) the value of all Securities on the basis of
such evaluation and (b) cash on hand in the Trust Fund (other than cash
specifically for the purchase of Contract Securities).
Section 4.02. Liability of the Trustee. The Sponsor and the
Unitholders may rely on any evaluation furnished by the Trustee and shall have
no responsibility for the accuracy thereof. The determinations made by the
Trustee hereunder shall be made in good faith upon the basis of information
reasonably available to it. The Trustee shall be under no liability to the
Sponsor or the Unitholders for errors in judgment; provided, however, that
this provision shall not protect the Trustee against any liability to which it
would otherwise be subject by reason of willful misfeasance, bad faith or
gross negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties hereunder.
ARTICLE V
Trust Fund Evaluation
and
Redemption of Units
Section 5.01.
Trust Fund Evaluation. As of the Evaluation Time (1) on each June 30 and
December 31 (or the last Business Day prior thereto), (2) on each Business Day
so long as the Sponsor is maintaining a secondary market in Units, (3) on any
Business Day as of the Evaluation Time next following the tender of any Unit
for redemption, and (4) on any other Business Day desired by it, the Trustee
shall:
Add
(1) cash on hand in the Trust Fund, including dividends receivable on
securities trading ex-dividend and accrued but unpaid interest on the
Securities on the date of such computation, other than cash declared held
especially for the purchase of Contract Securities or cash held in the Reserve
Account; and
(2) the aggregate value of each issue of the Securities, including
Contract Securities; and
(3) accounts receivable for Securities sold and any other assets of
the Trust Fund
<PAGE>
not included in (1) and (2) above; and
Deduct
(1) amounts representing any applicable taxes or governmental charges
payable out of the Trust Fund and for which no deductions shall have
previously been made for the purpose of addition to the Reserve Account;
(2) amounts representing estimated accrued fees and expenses of the
Trust Fund including but not limited to unpaid fees and expenses of the
Trustee (including legal and auditing expenses), and the Sponsor pursuant to
Section 3.04;
(3) cash allocated as of a date prior to the evaluation then being
made for distribution; and
(4) accounts payable for Units tendered for redemption and any other
liabilities of the Trust Fund not included in (1), (2) and (3) above.
The resulting figure is herein called a "Trust Fund Evaluation".
For each day on which the Trustee shall make a Trust Fund Evaluation
it shall also determine "Unit Value" for such day. Such "Unit Value" shall be
determined by dividing said Trust Fund Evaluation by the number of Units
outstanding on such day, treating Units as no longer outstanding which have
been tendered for redemption and for which a liability has been established
pursuant to (4) above.
Section 5.02. Redemption of Units. Any Unit tendered by a Unitholder
(for purposes of this Section 5.02, a written instrument evidencing such
transfer, delivered to the Trustee and in form satisfactory to the Trustee,
will constitute tender with respect to Units owned by Unitholders and not
represented by a Certificate) or his duly authorized attorney for redemption
to the Trustee at its Office shall be redeemed and canceled by the Trustee on
or prior to the seventh calendar day following the day on which tender for
redemption is made, provided that if such seventh calendar day is not a
Business Day, then such Unit shall be redeemed on the first Business Day prior
thereto (such seventh calendar day or first Business Day prior thereto being
herein called the "Redemption Date"). Subject to payment by such Unitholder of
any tax or other governmental charges which may be imposed thereon, such
redemption is to be made by payment on the Redemption Date of cash or check
equal to the Unit Value (determined on the basis of the Trust Fund Evaluation
made in accordance with Section 5.01) multiplied by the number of Units being
redeemed (herein called the "Redemption Value"). The portion of the Redemption
Value which represents income shall be withdrawn from the Income Account to
the extent available. The balance paid on any redemption including accrued or
declared but unpaid income, if any, shall be withdrawn from the Capital
Account to the extent that funds are available for such purpose. If such
available balance shall be insufficient, the Trustee shall sell such
Securities from among those designated on the current list for such purpose as
provided below and in the manner, in its discretion, as it shall deem
advisable or necessary and as shall not result in Restricted Securities
constituting more than 50% in value of the Securities remaining in the
<PAGE>
Trust Fund upon the completion of such sale or result in the Trust Fund
ceasing to be qualified as a "Regulated Investment Company" under the Internal
Revenue Code (if it has so elected to be so treated), or result in the Trust
Fund holding less than $250,000 in value of any Restricted Security; provided,
however, that the Sponsor shall use its best efforts to insure that such sale
shall not result in Restricted Securities constituting more than 40% in value
of the Securities remaining in the Trust Fund upon completion of such sale, it
being understood that sales of unrestricted Securities may be made if the
Sponsor's best efforts with regard to the timely sale of Restricted Securities
at prices they deem reasonable are unsuccessful if as a result of such sales
more than 50% in value of the Trust Fund does not consist of Restricted
Securities. The Trustee shall use reasonable efforts to obtain the best price
available in connection with the sale of Securities, subject to any minimum
value limitations on sales which shall have been specified by the Sponsor and,
as to any Restricted Securities being sold, any price reductions necessitated
by the disposition of such Securities being by way of private sale for
investment. Securities transactions of the Trust Fund will be placed by the
Trustee with brokers or dealers, which may include the Sponsor and its
affiliates. In the event that funds are withdrawn from the Capital Account or
Securities are sold for payment of any portion of the Redemption Value
representing accrued or declared but unpaid income, the Capital Account shall
be reimbursed when sufficient funds are next available in the Income Account
for such funds so applied.
The Sponsor shall maintain with the Trustee a current list of
Securities designated to be sold for the purpose of funding the Capital
Account for redemption of Units tendered for redemption and not sold by the
Trustee, and also, to the extent necessary, for payment of expenses under this
Agreement; provided that if the Sponsor shall for any reason fail to maintain
such a list, the Trustee may designate a current list of Securities for such
purposes. The Sponsor in maintaining such a list shall use its best efforts to
maximize the investment objectives of the Trust Fund. In the event the Trustee
maintains such a list, such list shall provide that (1) Securities backed by
the United States Government will be sold so as to maintain in the Trust such
Securities in an amount which, upon maturity, will equal at least $1.00 per
Unit outstanding after giving effect to such redemption, and (2) other
Securities having the greatest amount of capital appreciation shall be sold,
as necessary. In the event the Trustee is unable to meet any minimum
denomination requirements for sale of Securities backed by the United States
Government, Securities not backed by the United States Government only may be
sold. The net proceeds of any sales of Securities from such lists representing
accrued interest shall be credited to the Income Account and the proceeds of
such sales representing principal or gains shall, to the extent necessary for
payment of expenses hereunder, first be credited to the Capital Account and
then disbursed therefrom in payment of such expenses, and any balance shall
remain credited to the Capital Account.
In the event any one Unitholder on any one day shall tender for
redemption Units with a Redemption Value in excess of $100,000, the Trustee
shall notify the Sponsor. If, and in the manner, directed by the Sponsor, when
a Unitholder tenders for redemption Units with a Redemption Value in excess of
$100,000, in lieu of the cash distribution mandated by the preceding paragraph
of this Section 5.02, the Trustee shall distribute Securities, or Securities
and cash, or checks, equal in value (determined in accordance with Section
4.01) to the Redemption Value as determined by the Sponsor. In the event that
the Sponsor
<PAGE>
directs the Trustee to distribute Securities in lieu of a cash redemption
pursuant to this Section 5.02, the Trustee shall distribute only stock and
stocks in a proportionate amount, rounding to avoid the delivery of fractional
shares and where such rounding is not possible by delivering stocks and an
amount equal to the difference between the Redemption Value and the value of
such stocks delivered, such value to be determined in accordance with Section
4.01 on the date of tender.
The Trustee may in its discretion, and shall when so directed by the
Sponsor in writing, suspend the right of redemption or postpone the date of
payment of the Redemption Price for more than seven calendar days following
the day on which tender for redemption is made (1) for any period during which
the New York Stock Exchange, Inc. is closed other than customary weekend and
holiday closings; (2) for any period during which (as determined by the
Securities and Exchange Commission by rule, regulation or order) (i) trading
on the New York Stock Exchange, Inc. is restricted or (ii) an emergency exists
as a result of which disposal by the Trust Fund of the Securities is not
reasonably practicable or it is not reasonably practicable fairly to determine
in accordance herewith the value of the Securities for the purposes of any
Trust Fund Evaluation; or (3) for such other periods as the Securities and
Exchange Commission may by order permit.
Not later than the close of business on the day of tender of a Unit
for redemption by a Unitholder other than the Sponsor, the Trustee shall
notify the Sponsor of such tender. The Sponsor shall have the right to
purchase such Unit by notifying the Trustee of its election to make such
purchase as soon as practicable thereafter but in no event subsequent to the
close of business on the second Business Day after the day on which such Unit
was tendered for redemption. Such purchase shall be made by payment for such
Unit by the Sponsor to the Unitholder not later than the close of business on
the Redemption Date of an amount not less than the Redemption Value which
would otherwise be payable by the Trustee to such Unitholder. So long as the
Sponsor is maintaining a bid in the secondary market for the Units, the
Sponsor will so repurchase any Unit tendered to the Trustee for redemption.
Neither the Sponsor nor the Trustee shall be liable or responsible in
any way for depreciation or loss incurred by reason of any sale of Securities
made pursuant to this Section 5.02.
Notwithstanding the foregoing provisions of this Section 5.02, the
Trustee is hereby irrevocably authorized in its discretion, in the event that
the Sponsor does not elect to purchase any Unit tendered to the Trustee for
redemption, or in the event that a Unit is being tendered by the Sponsor for
redemption, in lieu of redeeming Units tendered for redemption, to sell such
Units in the over-the-counter market for the account of tendering Unitholders
at prices which will return to the Unitholders proceeds in an amount, net
after deducting brokerage commissions, transfer taxes and other charges, equal
to or in excess of the Redemption Value which such Unitholders would otherwise
be entitled to receive on redemption pursuant to this Section 5.02. The
Trustee shall pay to the Unitholders the net proceeds of any such sale on or
before the Redemption Date.
ARTICLE VI
<PAGE>
Transfer, Interchange or Replacement of Units
Section 6.01. Transfer and Interchange of Units. A Unit may be
transferred by the registered holder thereof by presentation and surrender of
such Certificate or, in the case of uncertificated Units, transfer
instructions, at the Office of the Trustee properly endorsed or accompanied by
such documents as the Trustee deems necessary to evidence the authority of the
person making such transfer and executed by the registered Unitholder or his
authorized attorney, whereupon a new registered Certificate or Certificates or
Units registered in the name of the holder for the same number of Units shall
be issued in exchange and substituted therefor. The Certificates issued
pursuant to this Indenture are interchangeable for one or more other
Certificates in an equal aggregate number of Units and all Certificates issued
shall be issued in denominations of one Unit or any multiple thereof as may be
requested by the Unitholder and deemed appropriate by the Trustee. The Trustee
may deem and treat the person in whose name any Unit shall be registered upon
the books of the Trustee as the owner of such Unit for all purposes hereunder,
and the Trustee shall not be affected by any notice to the contrary, nor be
liable to any person or in any way for so deeming and treating the person in
whose name any Unit shall be so registered. The transfer books maintained by
the Trustee for the purposes of this Section 6.01 shall be closed in
connection with the termination of the Trust Fund pursuant to Article IX
hereof.
A sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any such transfer or interchange shall be
paid to the Trustee. A Certificateholder may be required to pay $2.00 (or such
other amount as may be specified by the Trustee and approved by the Sponsor)
for each new Certificate issued on any such transfer or interchange.
Holders who have elected to hold their Units in uncertificated form,
where such option is available, may at any time, and subject to a $2.00 per
Certificate charge, request the Trustee to issue Certificates for such Units.
The Trustee shall, upon receipt of such request in form satisfactory to it,
issue such Certificates in denominations of one Unit or any multiple thereof
as may be requested by such holder and deemed appropriate by the Trustee.
All Certificates canceled pursuant to this Indenture, other than
those endorsed for transfer may be destroyed by the Trustee.
Section 6.02. Replacement of Certificates. In case any Certificate
shall become mutilated or be destroyed, stolen or lost, the Trustee shall
execute and deliver a new Certificate in exchange and substitution therefor
upon the Certificateholder's furnishing the Trustee with proper identification
and satisfactory indemnity, complying with such other reasonable regulations
and conditions as the Trustee may prescribe and paying such expenses as the
Trustee may incur, provided, however, that if the Trust Fund has terminated or
is in the process of termination, the Trustee, in lieu of issuing such new
Certificate, may, upon the terms and conditions set forth herein, make the
distributions set forth in Section 9.01 hereof. Any mutilated Certificate
shall be duly surrendered and canceled before any replacement Certificate
shall be issued in exchange and substituted therefor. Upon issuance of any
duplicate Certificate pursuant to this Section 6.02, the Certificate claimed
to have been lost, stolen or destroyed shall become null and void and of no
effect, and any bona fide
<PAGE>
purchaser thereof shall have only such rights as are afforded under Article 8
of the Uniform Commercial Code to a holder presenting a Certificate for
transfer in the case of any overissue.
Section 6.03. Form of Certificate. Each Certificate shall be in fully
registered form, shall be numbered serially for identification, shall be
executed in facsimile by the Sponsor and manually by an authorized signatory
of the Trustee, shall be dated the date of execution and delivery by the
Trustee and shall represent a fractional undivided interest in the Trust Fund,
the numerator of which fraction shall be the number of Units set forth on the
face of such Certificate and the denominator of which shall be the total
number of Units of undivided interest outstanding at any such time.
ARTICLE VII
Sponsor
Section 7.01. Liability of Sponsor and Indemnification. (a) The
Sponsor shall be under no liability to the Trust or the Unitholders for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Indenture, or for errors in judgment or for depreciation or
loss incurred by reason of the purchase or sale of any Securities; provided,
however, that this provision shall not protect the Sponsor against any
liability to which it would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of its reckless disregard of their obligations and duties hereunder.
The Sponsor may rely in good faith on any paper, order, notice, list,
affidavit, receipt, evaluation, opinion, endorsement, assignment, draft or any
other document of any kind prima facie properly executed and submitted to it
by the Trustee, the Trustee's counsel or any other person for any matters
arising hereunder (including the determination as to whether any Security is a
Restricted Security). The Sponsor shall in no event be deemed to have assumed
or incurred any liability, duty or obligation to any Unitholder or the Trustee
other than as expressly provided for herein.
(b) The Trust fund shall pay and hold the Sponsor harmless from and
against any loss, liability or expense incurred in acting as Sponsor of the
Trust other than by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties hereunder, including the costs and
expenses of the defense against any claim or liability in the premises. The
Sponsor shall not be under any obligation to appear in, prosecute or defend
any legal action which in its opinion may involve it in any expense or
liability; provided, however, that the Sponsor may in its discretion undertake
any such action which it may deem necessary or desirable in respect of this
Indenture and the rights and duties of the parties hereto and the interests of
the Unitholders hereunder and, in such event, the legal expenses and costs of
any such action and any liability resulting therefrom shall be expenses, costs
and liabilities of the Trust Fund and shall be paid directly by the Trustee
out of the Income and Capital Accounts as provided by Section 3.04.
(c) None of the provisions of the Indenture and Agreement shall be
deemed to protect or purport to protect the Sponsor against any liability to
the Trust Fund or to the
<PAGE>
Unitholders to which the Sponsor would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of it
duties, or by reason of the Sponsor's reckless disregard of its obligations
and duties under the Indenture and Agreement.
Section 7.02. Compensation of Sponsor. The Sponsor may make additions
and deletions to the list referred to in Section 5.02 and shall conduct
regular quarterly reviews to determine whether or not to recommend the
disposition of Securities pursuant to the procedures under this Agreement. In
addition, the Sponsor shall perform such other reviews and procedures as it
may deem necessary for the Sponsor to give the consents and directions
required by these Standard Terms and Conditions of Trust. The Sponsor and
successor Sponsor or Sponsors may charge an annual fee for such portfolio
supervision equal to and no more than the Sponsor's cost for performing such
services. The initial fee for such portfolio supervision shall be set forth in
the Indenture. Such fee may be increased by the Trustee from time to time,
without the consent or approval of any Unitholder or the Sponsor, by amounts
not exceeding in total the proportionate increase, during the period from the
date of such Trust Agreement to the date of any such increase, in consumer
prices as published either under the classification "All Services Less Rent"
in the Consumer Price Index published by the United States Department of Labor
or, if such Index is no longer published, a similar index as determined by the
Trustee and the Sponsor.
The Sponsor shall also receive, at the times set forth in Section
3.04, reimbursement for any and all expenses and disbursements incurred
hereunder, including legal and auditing expenses, in connection with such
action as the Sponsor in its discretion may deem necessary at any and all
times to undertake in order to protect the Trust Fund and the rights and
interests of the Unitholders pursuant to the terms of this Indenture.
Section 7.03. Liability. The Sponsor, or the Sponsors jointly and
severally if there be more than one, shall be liable in accordance herewith
for the obligations imposed upon and undertaken by any Sponsor hereunder,
provided that, without in any way affecting or diminishing such liability,
each Sponsor shall indemnify the other Sponsors and hold the other Sponsors
harmless from and against any and all costs, expenses and liabilities
(including attorneys' fees) which such other Sponsors may suffer or incur as a
result of or by reason of any act or failure to act hereunder on the part of
the indemnifying Sponsor. At all times prior to the termination of the Trust
Fund, in the event here be more than one Sponsor and while such Sponsors shall
continue to act jointly hereunder, there shall be maintained on file with the
Trustee a power of attorney executed in favor of one Sponsor by the other
Sponsors constituting and appointing the non-executing Sponsor the true and
lawful agent and attorney-in-fact of the executing Sponsors to execute and
deliver for and on behalf of the executing Sponsors any and all notices,
opinions, certificates, lists, demands, directions, instruments or other
documents provided or permitted to be executed or delivered by any Sponsor
hereunder or to take any other action in respect hereof. Such power of
attorney shall continue in effect as to each executing Sponsor until written
notice of revocation thereof has been given by such executing Sponsor to the
Trustee. Prior to receipt of such notice of revocation the Trustee shall be
entitled to rely conclusively upon such power of attorney as authorizing the
non-executing Sponsor to give any notice, opinion, certificate, list, demand,
direction, instrument or any other document provided for or
<PAGE>
permitted hereunder or to take any other action in respect hereof on behalf of
the executing Sponsors as to which such power of attorney is in effect.
Section 7.04. Discharge of Sponsor: (a) If there be more than one
Sponsor, in the event that any Sponsor shall fail to undertake or perform any
of the duties which by the terms of this Agreement are required to be
undertaken or performed by it and such failure shall continue for 30 days
after notice to all Sponsors from the Trustee, or if any Sponsor shall become
incapable of acting or shall be adjudged a bankrupt or insolvent, or a
receiver of the property of any Sponsor shall be appointed or any public
officer shall take charge or control of any Sponsor or its property or affairs
for the purpose of rehabilitation, conservation or liquidation, then such
Sponsor shall forthwith be and be deemed to be discharged forever as a Sponsor
hereunder and thereupon the other Sponsor shall act hereunder without the
necessity of any other or further action on their part or on the part of the
Trustee.
(b) In the event that the power of attorney referred to in Section
7.03 above shall be revoked by written notice given by an executing Sponsor
and it shall not be replaced within one Business Day by another power of
attorney conforming with the requirements of Section 7.03, the Sponsors shall
be deemed to have been unable to reach agreement with respect to action to be
taken jointly by them hereunder and thereupon the non-executing Sponsor shall
execute within one Business Day an instrument discharging the executing
Sponsor and thereupon such Sponsor shall be and shall be deemed to be
discharged forever as Sponsor hereunder and thereupon the other Sponsors shall
act hereunder without the necessity of any other or further action on their
part or on the part of the Trustee.
(c) Notwithstanding the discharge of a Sponsor in accordance with
this Section 7.04, such Sponsor shall continue to be fully liable in
accordance with the provisions hereof in respect of action taken or refrained
from under this Agreement by such Sponsors before the date of such discharge,
or by the remaining Sponsor before or after the time of such discharge as
fully and to the same extent as if no discharge had occurred.
Section 7.05. Certain Matters Regarding Succession. The covenants,
provisions and agreements herein contained shall in every case be binding upon
any successor to the business of any Sponsor. In the event of the death,
resignation or withdrawal of any partner of any successor Sponsor which may be
a partnership, a partner so dying, resigning or withdrawing shall be relieved
of all further liability hereunder if at the time of such death, resignation
or withdrawal such Sponsor maintains a net worth (determined in accordance
with generally accepted accounting principles) of at least $2,000,000. In the
event of any assignment by any Sponsor to a successor corporation or
partnership as permitted by the next following sentence, such Sponsor and, if
such Sponsor is a partnership, its partners, shall be relieved of all further
liability under this Agreement. Any Sponsor may transfer all or substantially
all of its assets to a corporation or partnership which carries on the
business of such Sponsor, if at the time of such transfer such successor duly
assumes all the obligations of such Sponsor under this Agreement.
Section 7.06. Resignation of Sponsor. (a) If there be more than one
Sponsor and if at any time any Sponsor desires to resign its position as a
Sponsor hereunder and if at such
<PAGE>
time one of the other Sponsors maintains a net worth (determined in accordance
with generally accepted accounting principles) of at least $2,000,000 and the
other Sponsor or Sponsors are agreeable to such resignation, the Sponsor
desiring to resign may resign by delivering to the Trustee an instrument
executed by such resigning Sponsor and consented to by the remaining Sponsors
and upon such delivery, the resigning Sponsor shall be discharged and shall no
longer be liable in any manner hereunder except as to acts or omissions
occurring prior to such delivery and the remaining Sponsors shall thereupon
perform all duties and be entitled to all rights under the Indenture,
provided, however, that concurrently with or subsequent to such resignation
the remaining Sponsors and the Trustee may appoint a new Sponsor to act with
the remaining Sponsors and to assume the duties of the resigning Sponsor by an
instrument executed by the remaining Sponsors, the Trustee and the new
Sponsor. Such new Sponsor shall not be under any liability hereunder for acts
or omissions prior to the execution of such instrument.
(b) If at any time there is only one Sponsor acting hereunder and
such Sponsor desires to resign its position as Sponsor hereunder, it may
resign by delivering to the Trustee an instrument of resignation executed by
such Sponsor. Such resignation shall not be or become effective or valid for
any purpose whatsoever unless prior to or concurrently with the delivery
thereof (i) the Trustee shall have appointed a successor Sponsor or Sponsors
to assume, with such compensation from the Trust Fund as the Trustee may deem
reasonable under the circumstances, the duties and obligations of the
resigning Sponsor hereunder by an instrument of appointment and assumption
executed by the Trustee and the successor Sponsor or Sponsors or (ii) in
accordance with Section 8.01(f) hereof, the Trustee shall have determined to
terminate this Agreement and the Indenture and the Trust Fund created therein
and liquidate the Trust Fund. Any such successor Sponsor shall be satisfactory
to the Trustee and, at the time of appointment, shall have a net worth of at
least $2,000,000 (determined in accordance with generally accepted accounting
principles). Upon effective resignation hereunder, the resigning Sponsor shall
be discharged and shall no longer be liable in any manner hereunder except as
to acts or omissions prior to such delivery and the successor Sponsor or
Sponsors shall thereupon perform all duties and be entitled to all rights as a
Sponsor under this Agreement. The successor Sponsor or Sponsors shall not be
under any liability hereunder for occurrences or omissions prior to the
execution of such instrument.
Section 7.07. Notice to Unitholders. Notice of the discharge or
resignation of any Sponsor and of any appointment of a successor Sponsor or
Sponsors under Section 7.06 shall be mailed by the Trustee to each Unitholder
of record.
ARTICLE VIII
Trustee
Section 8.01. General Matters Relating to Trustee. All moneys
deposited with or received by the Trustee hereunder shall be held by it
without interest in trust as part of the Trust Fund until required to be
disbursed in accordance with the provisions of the Indenture and Agreement and
such moneys will be segregated by separate recordation on the trust ledger of
the Trustee so long as such practice preserves a valid preference under
applicable
<PAGE>
law, or if such preference is not so preserved the Trustee shall handle such
moneys in such other manner as shall constitute the segregation and holding
thereof in trust within the meaning of the Investment Company Act of 1940.
(b) The Trustee shall be under no liability for any action taken in
good faith on any appraisal, paper, order, list, demand, request, consent,
affidavit, notice, opinion, direction, endorsement, assignment, resolution,
draft or other document whether or not of the same kind, prima facie properly
executed, or for the disposition of moneys or Securities pursuant to the
Indenture and Agreement or in respect of any valuation which it is required to
make or is required or permitted to have made by others under this Indenture
and Agreement or otherwise; provided, however, that this provision shall not
protect the Trustee against any liability to which it would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties hereunder, and the Trustee may construe any of the
provisions of the Indenture and Agreement insofar as the same may appear to be
ambiguous or inconsistent with any other provisions hereof, and any
construction of any such provisions hereof by the Trustee in good faith shall
be binding upon the parties hereto and the Unitholders.
(c) The Trustee shall not be responsible for or in respect of the
recitals herein, the validity or sufficiency of the Indenture and Agreement or
for the due execution hereof by the Sponsor or for the form, character,
genuineness, sufficiency, value or validity of any Securities (except that the
Trustee shall be responsible for the exercise of due care in determining the
genuineness of Contract Securities delivered to it) or for or in respect of
the validity or sufficiency of the Certificate (except for the due execution
thereof by the Trustee), or for the due execution thereof by the Sponsor, and
the Trustee shall in no event assume or incur any liability, duty or
obligation to any Unitholder or to the Sponsor, other than as expressly
provided for herein. The Trustee shall not be responsible for or in respect of
the validity of any signature by or on behalf of the Sponsor.
(d) The Trustee shall not be under any obligation to appear in,
prosecute or defend any action, which in its opinion may involve it in expense
or liability unless it shall be furnished with such reasonable security and
indemnity against such expense or liability as it may require, and any
pecuniary cost of the Trustee from such actions shall be deductible from and a
charge against the Income and Capital Accounts. The Trustee shall in its
discretion undertake such action as it may deem necessary at any and all times
to protect the Trust Fund and the rights and interests of the Unitholders
pursuant to the terms of the Indenture and Agreement, provided, however, that
the expenses and costs of such actions, undertakings or proceedings shall be
reimbursable to the Trustee for the Income and Capital Accounts.
(e) The Trustee may employ agents, attorneys, accountants and
auditors and shall not be answerable for the default or misconduct of any such
agents, attorneys, accountants or auditors if such agents, attorneys,
accountants or auditors shall have been selected with reasonable care. The
accounts of the Trust Fund shall be examined not less frequently than annually
by independent certified public accountants designated from time to time by
the Sponsor, and the report of such accountants shall be furnished by the
Trustee to Unitholders
<PAGE>
upon request. So long as the Sponsor is maintaining a secondary market for
Units, the Sponsor shall bear any audit expense which exceeds $.00050 per
Unit, unless the Trustee has been advised that all of such expenses are
permitted by the Securities and Exchange Commission to be deducted from the
Trust Fund. The Trustee shall not be liable in respect of any action taken or
suffered under this Indenture in good faith, in accordance with an opinion of
counsel, including any action taken in reliance upon an opinion of counsel as
to whether any Securities are Restricted Securities. The fees and expenses
charged by such agents, attorneys, accountants or auditors shall constitute an
expense of the Trustee reimbursable from the Income and Capital Accounts as
set forth in Section 3.04 hereof.
(f) If at any time there is only one Sponsor acting hereunder and
such Sponsor shall fail to undertake or perform any of the duties which by the
terms of this Indenture are required by it to be undertaken or performed, or
such Sponsor shall become incapable of acting, or if a court having
jurisdiction in the premises shall enter a decree or order for relief in
respect of such Sponsor in an involuntary case, or such Sponsor shall commence
a voluntary case, under any applicable bankruptcy, insolvency, or other
similar law now or hereafter in effect, or any receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) for such Sponsor or for
any substantial part of its property shall be appointed or such Sponsor shall
make any general assignment for the benefit of creditors or shall generally
fail to pay its debts as they become due, then in any such case, the Trustee
may do any one or more of the following: (1) appoint a successor Sponsor or
Sponsors which shall act hereunder in all respects in place of such Sponsor
and which may be compensated, at rates deemed by the Trustee to be reasonable
under the circumstances, by deduction from the Income Account or, to the
extent funds are not available in such Account, from the Capital Account but
no such deduction shall be made exceeding such reasonable amount as the
Securities and Exchange Commission may prescribe in accordance with Section
26(a)(2)(C) of the Investment Company Act of 1940; (2) act hereunder in its
own absolute discretion without appointing any successor Sponsor and receive
additional compensation at rates determined as provided in clause (1); or (3)
terminate this Indenture and the Trust created hereby and liquidate the Trust
Fund in the manner provided in Section 9.01.
(g) If the value of the Trust Fund as shown by any Trust Fund
Evaluation shall be less than the Discretionary Liquidation Amount specified
in the Indenture, the Trustee may in its discretion, and shall if so directed
by the Sponsor, terminate this Indenture and Agreement and the Trust created
hereby and liquidate the Trust Fund all in the manner provided by Section
9.01.
(h) In no event shall the Trustee be personally liable for any taxes
or other governmental charges imposed upon or in respect of the Securities or
upon the interest thereon. The Trustee shall be reimbursed and indemnified out
of the Income and Capital Accounts for all such taxes and charges, for any tax
or charge imposed against the Trustee as trustee of the Trust Fund and for any
expenses, including counsel fees, interest, penalties and additions to tax,
which the Trustee may sustain or incur with respect to such taxes or charges.
(i) Notwithstanding any provision of the Indenture and Agreement to
the contrary,
<PAGE>
except as set forth in Section 3.04(c), 7.02 and 8.01(f), no payment to the
Sponsor or to any principal underwriter (as defined in the Investment Company
Act of 1940) for the Trust Fund or to any affiliated person (as so defined) or
agent of the Sponsor or such underwriter shall be allowed the Trustee as an
expense except for payment of such reasonable amounts as the Securities and
Exchange Commission may prescribe as compensation for performing bookkeeping
and other administrative services of a character normally performed by the
Trustee.
Section 8.02. Books and Records. The Trustee shall keep proper books
of record and account of all the transactions under this Indenture at its
Office including, as agent of the Sponsor, a record of the name and address
of, and the Units (indicating whether they are evidenced by Certificates or in
uncertificated form) issued by the Trust Fund and held or beneficially owned
by every Unitholder, and such books and records shall be open to inspection by
any Unitholder at reasonable times during business hours of the Trustee,
except as they may pertain to another holder's account.
Section 8.03. Reports to Securities and Exchange Commission and
Others. The Trustee shall make such annual or other reports, make such
elections and file such tax returns as the Sponsor directs or as may from time
to time be required under any applicable state or Federal statute or rule or
regulation thereunder, in particular, for the continuing qualification of the
Fund as a Regulated Investment Company under the Internal Revenue Code. In the
case of a Regulated Investment Company, the Trust's taxable year shall be set
forth in the Indenture. Nothing contained herein shall obligate the Trustee to
maintain the registration of the Units or Trust on a current basis.
Section 8.04. Indenture and List of Securities on File. The Trustee
shall keep a certified copy or duplicate original of the Indenture and
Agreement on file at its Office available for inspection at reasonable times
during its usual business hours by any Unitholder, and the Trustee shall keep
and so make available for inspection a current list of the Securities.
Section 8.05. Compensation of Trustee. The Trustee shall receive at
the times set forth in Section 3.04 as compensation for performing the usual,
ordinary, normal and recurring services under this Agreement during the
preceding month an amount equal to the amount per month specified in the
Indenture per Unit outstanding at any time during such month. The computation
of such compensation shall be made on the basis of the largest number of Units
outstanding at any time during such month such rate may be increased by the
Trustee from time to time, without the consent or approval of any Unitholder
or the Sponsor by amounts not exceeding the total of the proportionate
increase, during the period from the date of such Trust Indenture to the date
of any such increase, in consumer prices as published either under the
classification "All Services Less Rent" in the Consumer Price Index published
by the United States Department of Labor or, if such Index is no longer
published, a similar index as determined by the Trustee and the Sponsor.
The Trustee shall also receive, at the times set forth in Section
3.04, reimbursement for any and all expenses and disbursements incurred
hereunder, including legal, evaluating and auditing expenses and additional
compensation for any extraordinary services performed
<PAGE>
hereunder, which extraordinary services shall include but not be limited to
all costs and expenses incurred by the Trustee in making any annual or other
reports or filing tax returns pursuant to Section 8.03; provided, however,
that the amount of any such charge which has not been finally determined as of
any Distribution Date may be estimated and any necessary adjustments shall be
made on the succeeding Distribution Date.
The Trustee shall be indemnified from the Trust Fund and held
harmless against any loss, liability or expense incurred without gross
negligence, bad faith or willful misconduct on the part of such Trustee
arising out of or in connection with the acceptance or administration of this
Trust, including the costs and expenses of defending itself against any claim
or liability in the premises.
The Trustee's normal and extraordinary compensation and reimbursement
of the above-mentioned expenses and losses shall be charged by the Trustee
against the Income and Capital Accounts in accordance with Section 3.04. If
the balances in the Income and Capital Accounts shall be insufficient to
provide for amounts payable pursuant to this Section 8.05, the Trustee shall
have the power to sell Securities in the manner provided in Section 5.02
hereof. The Trustee shall not be liable or responsible in any way for
depreciation or loss incurred by reason of any sale of Securities made
pursuant to this Section 8.05. Any moneys payable to the Trustee shall be
secured by a prior lien on the Trust fund.
Section 8.06. Resignation, Discharge or Removal of Trustee;
Successor. (a) The Trustee may resign and be discharged of the Trust created
by the Indenture and Agreement by executing an instrument in writing resigning
as such Trustee, filing the same with the Sponsor and mailing a copy of a
notice of resignation to all Unitholders then of record, not less than sixty
days before the date specified in such instrument when, subject to Section
8.06(c), such resignation is to take effect. Upon receiving such notice of
resignation, the Sponsor, shall use its best efforts promptly to appoint a
successor Trustee (which may, in the cases of a resigning Co-Trustee, be one
or more of the remaining Co-Trustees) in the manner and meeting the
qualifications hereinafter provided, by written instrument or instruments
delivered to such resigning Trustee and the successor Trustee. Notice of such
appointment of a successor Trustee shall be mailed promptly after acceptance
of such appointment by the successor Trustee to each Unitholder then of
record. In case at any time the Trustee shall not meet requirements set forth
in Section 8.07 hereof, or shall become incapable of acting, or if a court
having jurisdiction in the premises shall enter a decree or order for relief
in respect of the Trustee in an involuntary case, or the Trustee shall
commence a voluntary case, under any applicable bankruptcy, insolvency, or
other similar law now or hereafter in effect, or any receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official) for the
Trustee or for any substantial part of its property shall be appointed or the
Trustee shall make any general assignment for the benefit of creditors or
shall generally fail to pay its debts as they become due, or if for any other
reason the Sponsor shall determine in good faith that the replacement of the
Trustee is in the best interests of the Unitholders, the Sponsor may remove
such Trustee and appoint a successor Trustee (which may, in the case of a
removed Co-Trustee, be one or more of the remaining CoTrustees) by written
instrument or instruments delivered to the Trustee so removed and the
successor Trustee, provided that a notice of such removal and appointment of a
successor Trustee shall be mailed by the successor Trustee promptly after
acceptance of
<PAGE>
such appointment to each Unitholder then of record. The holders of 51% of the
Units may remove the Trustee at any time by written instrument or instruments
delivered to the Trustee and Sponsor; the Sponsor shall thereupon use its best
efforts to appoint a successor Trustee (which may, in the case of a removed
Co-Trustee, be one or more of the remaining Co-Trustees) in the manner
hereinabove provided. If there shall be two or more Co-Trustees hereunder, and
any CoTrustee shall resign or be removed in accordance with this Section
8.06(a), the Sponsor may remove any or all of the remaining Co-Trustees and
appoint a successor Trustee or two or more successor Co-Trustees in the manner
hereinabove provided.
(b) In case at any time the Trustee shall resign and no successor
Trustee shall have been appointed within thirty days after notice of
resignation has been received by the Sponsor, the retiring Trustee may
forthwith apply to a court of competent jurisdiction for the appointment of a
successor Trustee. Such court may thereupon, after such notice, if any, as it
may deem proper and prescribe, appoint a successor Trustee.
(c) Any successor Trustee appointed hereunder shall execute and
acknowledge to the Sponsor and the retiring Trustee an instrument accepting
such appointment hereunder, and such successor Trustee without any further
act, deed or conveyance shall become vested with all the rights, powers,
duties and obligations of its predecessor hereunder with like effect as if it
were originally named a Trustee herein and shall be bound by all the terms and
conditions of the Indenture and Agreement. Upon the request of such successor
Trustee, the retiring Trustee shall, upon payment of all amounts due the
retiring Trustee, execute and deliver an instrument acknowledged by it
transferring to such successor Trustee all the rights and powers of the
retiring Trustee; and the retiring Trustee shall transfer, deliver and pay
over to the successor Trustee all Securities and moneys at the time held by it
hereunder, if any, together with all necessary instruments of transfer and
assignment of other documents properly executed as necessary to effect such
transfer and such of the records or copies thereof maintained by the retiring
Trustee in the administration hereof as may be requested by the successor
Trustee and shall thereupon be discharged from all duties and responsibilities
under this Indenture and Agreement. Any resignation or removal of a Trustee
and appointment of a successor Trustee pursuant to this Section 8.06 shall
become effective upon such acceptance of appointment by the successor Trustee.
(d) Any corporation into which a Trustee hereunder may be merged or
with which it may be consolidated, or any corporation resulting from any
merger or consolidation to which such Trustee hereunder shall be a party,
shall be the successor Trustee under the Indenture and Agreement without the
execution or filing of any paper, instrument or further act to be done on the
part of the parties hereto, anything herein, or in any agreement relating to
such merger or consolidation, by which any such Trustee may seek to retain
certain powers, rights and privileges theretofore obtaining for any period of
time following such merger or consolidation, to the contrary notwithstanding.
(e) In any circumstance in which the Sponsor may appoint a successor
Trustee pursuant to Section 8.06(a), the Sponsor may alternatively, at its
option, in the manner provided in Section 8.06(a) for the appointment of a
successor Trustee, appoint two or more successor Co-Trustees. Upon execution
and acknowledgment by each successor Co-Trustee
<PAGE>
of an instrument accepting such appointment in the manner set forth in Section
8.06(c), without any further act, deed or conveyance, such successor
Co-Trustee shall become vested with all the rights, powers, duties and
obligations of the predecessor Trustee hereunder with like effect as if
originally named a Trustee herein and shall be bound by all the terms and
conditions of this Indenture. The word "Trustee" as used in this Indenture
shall be deemed to include any and all Co-Trustees appointed pursuant hereto.
Notwithstanding any provision hereof (including without limitation Section
8.01(e)), the obligations of the Co-Trustees shall be jointly liable for the
acts of one another in connection with the performance of their duties
hereunder.
Section 8.07.
Qualification of Trustee. The Trustee and any successor Trustee shall be a
banking association or corporation organized and doing business under the laws
of the United States, or any state thereof, having at all times an aggregate
capital, surplus and undivided profits of not less than $5,000,000.00.
ARTICLE IX
Termination
Section 9.01.
Procedure Upon Termination. The Indenture and Agreement and the Trust created
hereby shall terminate upon the Mandatory Termination Date set forth in the
Trust Indenture or upon the maturity, sale or other disposition as the case
may be of the last Security held hereunder unless sooner terminated as
hereinbefore specified and may be terminated at any time by written instrument
executed by the Sponsor and consented to (as provided in Section 10.01) by
Unitholders owning 51% of the Units then outstanding under the Indenture and
Agreement, or if the value of the Trust Fund is less than the Discretionary
Liquidation Amount specified in the Indenture.
On the date set forth in the Trust Indenture prior to the Mandatory
Termination Date, the Trustee will begin to sell the equity Securities held in
the Trust. Equity Securities having the greatest amount of capital
appreciation will be sold first and in a manner to effectuate orderly sales
and minimal market impact as directed by the Sponsor.
Written notice of any termination, specifying the time or times at
which the Certificateholders may surrender their Certificates for cancellation
and the date determined by the Trustee, upon which the transfer books of the
Trustee, maintained pursuant to Section 6.01 shall be closed, shall be given
by the Trustee to each Unitholder. Within a reasonable period of time after
such termination the Trustee shall, subject to any applicable provisions of
law, sell all of the Securities not already sold then held, if any, and shall:
(a) deduct from the Income Account or, to the extent that funds are
not available in such Account, from the Capital Account and pay to itself
individually an amount equal to the sum of (1) its accrued compensation for
its ordinary services, (2) any compensation due to it for its extraordinary
services and (3) any other expenses and disbursements as provided herein;
<PAGE>
(b) deduct from the Income Account or, to the extent that funds are
not available in such Account, from the Capital Account, an amount equal to
the unpaid fees and expenses of the Sponsor, if any, including registration
charges, expenses of registering the Trust or Trust Units under various state
laws are required, printing costs, attorneys' fees, auditing costs and other
miscellaneous out-of-pocket expenses, as certified by the Sponsor, incurred in
keeping the registration of the Units and the Trust on a current basis
pursuant to Section 10.03; provided, however, that no portion of such amount
shall be deducted or paid unless the payment thereof from the Trust is at that
time lawful;
(c) deduct from the Income Account or, to the extent that funds are
not available from such Account, from the Capital Account any amounts which
it, in its sole discretion, shall deem requisite to be deposited in the
Reserve Account to provide for any applicable taxes or other governmental
charges that may be payable out of the Trust Fund;
(d) distribute to each holder of Units, in uncertificated form and to
each holder of Units evidenced by Certificates upon surrender for cancellation
of his Certificate or Certificates, if applicable, such holder's interest in
the balances of the Income and Capital Accounts, and, on the conditions set
forth in Section 3.03 hereof the Reserve Account; and
(e) together with such distribution to each Unitholder as provided
for in paragraph (d), furnish to each such Unitholder a final statement as of
the date of the computation of the amount distributable to Unitholders,
setting forth the data and information in substantially the form and manner
provided for in Section 3.05 hereof.
Section 9.02.
Notice to Holders of Units Evidenced by Certificates. In the event that all of
the Certificateholders shall not surrender their Certificates for cancellation
within six months after the time specified in the above-mentioned written
notice, the Trustee shall give a second written notice to the remaining
Certificateholders to surrender their Certificates for cancellation and
receive the liquidating distribution with respect thereto. If within one year
after the second notice all the Certificates shall not have been surrendered
for cancellation, the Trustee may take appropriate steps, or may appoint an
agent to take appropriate steps, to contact the remaining Certificateholders
concerning surrender of their Certificates and the cost thereof shall be paid
out of the moneys and other assets which remain in trust hereunder.
Section 9.03.
Moneys to Be Held in Trust Without Interest. The Trustee shall be under no
liability with respect to moneys in the Income, Capital and Reserves Accounts
upon termination, except to hold the same in trust without interest.
Section 9.04.
Dissolution of Sponsor Not to Terminate. The dissolution of the Sponsor, or
any Sponsors, if there are more than one, shall not operate to terminate this
Indenture and Agreement, insofar as the duties and obligations of the Trustee
are concerned.
<PAGE>
ARTICLE X
Miscellaneous Provisions
Section 10.01. Amendment and Waiver. The Indenture and Agreement may
be amended from time to time by the Sponsor and the Trustee without the
consent of any of the Unitholders (a) to cure any ambiguity or to correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provision contained herein; (b) to change any
provision hereof as may be required by the Securities and Exchange Commission
or any successor governmental agency exercising similar authority; (c) to add
or change any provision as may be necessary or advisable for the continuing
qualification of the Trust Fund as a grantor trust or as a regulated
investment company under the Internal Revenue Code where applicable; or (d) to
make such other provisions in regard to matters or questions arising hereunder
as shall not materially adversely affect the interests of the Unitholders.
The Indenture and Agreement may also be amended from time to time by
the Sponsor and the Trustee (or the performance of any of the provisions of
the Indenture and Agreement may be waived) with the consent of Unitholders
owning 51% of the Units at the time outstanding under the Indenture and
Agreement for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of the Indenture and Agreement or
of modifying in any manner the rights of the Unitholders; provided, however,
that no such amendment or waiver shall (i) reduce a Unitholder's interest in
the Trust Fund without the consent of such Unitholders or (ii) reduce the
aforesaid percentage of Units, the holders of which are required to consent to
any such amendment, without the consent of all the Unitholders then
outstanding.
Promptly after the execution of any such amendment the Trustee shall
furnish written notification of the substance of such amendment to each
Unitholder then of record.
It shall not be necessary for the consent of Unitholders under this
Section 10.01 or under Section 9.01 to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Unitholders shall be subject to
such reasonable regulations as the Trustee may prescribe.
Section 10.02. Initial Costs. (a) The initial costs incurred by the
Sponsor and the Trustee in connection with the organization and establishment
of the Trust (the "Initial Costs") shall be paid by the Trust, or if paid for
by the Trustee initially, shall be reimbursed by the Trust to the Trustee in
accordance with Sections 3.04(b) and 8.05.
(b) Initial Costs to be charged to the Trust include, but are not
limited to (1) the costs of the initial preparation, typesetting and execution
of the registration statement, prospectuses (including preliminary
prospectuses), the trust indenture and other legal documents relating to the
establishment of the Trust, and the costs of submitting such documents in
electronic format to the SEC, (2) SEC and state blue sky registration fees for
the initial registration of Trust Units, (3) the cost of the initial audit of
the Trust, (4) the
<PAGE>
legal costs incurred by the Sponsor and the Trustee related to any and all of
the foregoing, and (5) other out-of-pocket expenses related to any and all of
the foregoing.
(c) Costs and expenses incurred in the marketing and selling of Trust
Units, shall not be borne by the Trust but shall be paid for by the Sponsor.
Such costs and expenses include but are not limited to (1) any expenses
incurred in the printing of prospectuses (including preliminary prospectuses),
(2) the preparation and printing of brochures and other advertising or
marketing materials, including any legal costs incurred in the review thereof,
and (3) any other selling or promotional costs or expenses.
(d) Promptly after the Initial Date of Deposit, upon written
certification to the Trustee, the Sponsor shall receive reimbursement for any
of the Initial Costs set forth in subsection (b) above which are payable from
the Trust but which were paid for by the Sponsor, without profit. The Trustee
shall advance out of its own funds such reimbursement, provided, however, that
the Trustee shall be entitled to be reimbursed without interest out of the
Trust Fund for any and all amounts advanced by it pursuant to this Section
10.02(d), in the manner set forth in Section 3.04(a). Such advances shall be
considered a lien on the Trust Fund, and the Trustee shall have a priority
over Certificateholders on funds received in respect of the Securities in the
Trust, as such funds are received.
(e) The Trustee shall reimburse itself for the advances made pursuant
to subsection (b) above in 60 approximately equal installments over a five (5)
year period unless (i) the Trust is sooner terminated, in which case all
amounts still due and owing shall be payable to the Trustee from the assets of
the Trust or (ii) by law or regulation the Trust is required to amortize costs
set forth in subsection (b) over a period of time shorter than 60 months, in
which case the Trustee shall follow the requisite time period for such
reimbursement.
(f) The Sponsor shall bear the Initial Costs, if any, in excess of
$100,000 unless as otherwise specified in the applicable Trust Indenture..
Section 10.03. Registration (Current) of Units and Trust Fund. If the
Sponsor shall maintain a market in the Units, the Sponsor shall, if required
by applicable law, keep the registration of the Units and the Trust Fund with
the Securities and Exchange Commission and under the applicable securities
laws of such states as the Sponsor may select on a current basis. Registration
charges, Blue Sky fees, printing costs, attorney's fees, and other
miscellaneous out-of-pocket expenses incurred pursuant to this Section and
related to all Units shall be borne by the Trust only to the extent and in
manner provided for by Section 3.04(d). To the extent that such expenses
cannot be borne by the Trust, they shall be borne by the Sponsor. The Sponsor
shall be under no obligation to maintain a market in the Units and, if it
shall maintain such a market, it may cease to do so immediately at any time
and from time to time and without notice. The Sponsor shall do all things that
may be necessary or required to comply with this provision and the Trustee
shall not incur any liability or be under any obligation in connection
therewith.
Section 10.04. Certain Matters Relating to Unitholders. (A) The death
or incapacity of any Unitholder shall not operate to terminate the Indenture
and Agreement or
<PAGE>
the Trust Fund, nor entitle his legal representatives or heirs to claim an
accounting or to take any action or proceeding in any court for a partition or
winding up of the Trust Fund, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them. Each Unitholder expressly
waives any right he may have under any rule of law, or the provisions of any
statute, or otherwise, to require the Trustee at any time to account, in any
manner other than as expressly provided in the Indenture and Agreement, in
respect of the Securities or moneys from time to time received, held and
applied by the Trustee hereunder.
(b) No Unitholder shall have any right to vote except as provided in
Sections 9.01 and 10.01 or in any manner otherwise to control the operation
and management of the Trust Fund, or the obligations of the parties hereto,
nor shall anything herein set forth or contained in the terms of the
Certificates, be construed so as to constitute the Unitholders from time to
time as partners or members of an association; nor shall any Unitholder ever
be under any liability to any third persons by reason of any action taken by
the parties to this Indenture, or for any other cause whatsoever.
Section 10.05. New York Law to Govern. The Indenture and Agreement
are delivered in the State of New York, and all laws or rules of construction
of such State shall govern the rights of the parties hereto and the
Unitholders and the interpretation of the provisions hereof. The Indenture and
Agreement shall be deemed effective when it is executed by the Sponsor and
the Trustee.
Section 10.06. Notices. Any notice, demand, direction or instruction
to be given to the Sponsor hereunder shall be in writing and shall be duly
given if mailed or delivered to the Sponsor, to the attention of Robert E.
Holley -- Unit Trust Department, PaineWebber Incorporated, 1200 Harbor
Boulevard, Weehawken, New Jersey 07087 or at such other address as shall be
specified by the Sponsor to the other parties hereto in writing. Any notice,
demand, direction or instruction to be given to the Trustee shall be in
writing and shall be duly given if mailed or delivered to the attention of the
Office, Investors Bank & Trust Company, Hancock Towers, P.O. Box 9130, Boston,
Massachusetts 02117-9130, or such other address as shall be specified to the
other parties hereto by the Trustee in writing. Any notice to be given to a
Unitholder shall be duly given if mailed or delivered to each Unitholder at
the address of such holder appearing on the registration books of the Trustee.
Section 10.07. Severability. If any one or more of the covenants,
agreements, provisions or terms of this Indenture shall be for any reason
whatsoever held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
or terms of this Indenture and shall in no way affect the validity or
enforceability of the other provisions of this Indenture or of the
Certificates or the rights of the holders thereof or of Unitholders.
Section 10.08. Separate and Distinct Series. Each Series of the
PaineWebber Pathfinders Trust to which the Standard Terms and Conditions of
Trust shall be applicable shall, for all financial and administrative
purposes, be considered separate and distinct from every other Series, and the
assets of one Series shall not be commingled with the assets of another Series
nor shall the expenses of any one Series be charged against any other Series.
<PAGE>
Section 10.09. Counterparts. These Standard Terms may be executed in
counterparts, and by each party on separate counterparts, each of which as so
executed and delivered shall be deemed an original, but all of which together
shall constitute one and the same instrument, and it shall not be necessary in
making proof of these Standard Terms as to any party hereto to produce or
account for more than one such counterpart executed and delivered by such
party.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused these Standard
Terms and Conditions of Trust dated as of July 1, 1997 to be executed.
PaineWebber Incorporated
By
Robert E. Holley
Senior Vice President
SEAL
ATTEST:
- ---------------
By:
Investors Bank & Trust Company
By
Name:
Title:
SEAL
ATTEST:
- ------------
By:
<PAGE>
The First National Bank of Chicago
By
Name:
Title:
SEAL
ATTEST:
By:
STATE OF NEW YORK )
: SS.:
COUNTY OF NEW YORK )
On this __ day of July, 1997 before me personally appeared Robert E.
Holley, to me known, who being by me duly sworn, said that he is a Senior Vice
President of PaineWebber Incorporated, one of the corporations described in
and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
By
- -----------------------------------
Notary Public
<PAGE>
COMMONWEALTH OF MASSACHUSETTS )
: SS.:
COUNTY OF SUFFOLK
)
On this __ day of July, 1997, before me personally appeared
_______________ and ________________ to me known, who being by me duly sworn,
said that each is a ______________ of Investors Bank & Trust Company one of
the corporations described in and which executed the foregoing instrument;
that each knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by authority of the
Board of Directors of said corporation and that each signed his/her name
thereto by like authority.
------------------------------
Notary Public
[NOTARY]
[SEAL]
My Commission Expires: ______________
<PAGE>
STATE OF ILLINOIS )
) ss.:
COUNTY OF COOK )
On this __ day of July, 1997, before me personally appeared
_______________ and ___________________, to me known, who being by me duly
sworn, said that each is a __________________ and ___________________,
respectively, of The First National Bank of Chicago, one of the corporations
described in and which executed the foregoing instrument; that each knows the
seal of said corporation; that the seal Affixed to said instrument is such
corporate seal; that it was so affixed by authority of the Board of Directors
of said corporation, and that each signed his name thereto by like authority.
------------------------------
Notary Public
My Commission Expires _________
[NOTARY]
[SEAL]
<PAGE>
Exhibit 3
THE PAINEWEBBER PATHFINDERS TRUST,
TREASURY AND GROWTH STOCK SERIES 21
TRUST INDENTURE AND AGREEMENT
Dated as of July 30, 1997
Incorporating
Standard Terms and Conditions of Trust
Dated as of July 1,1997,
Between
PAINEWEBBER INCORPORATED,
as Sponsor
and
INVESTORS BANK & TRUST COMPANY
AND
THE FIRST NATIONAL BANK OF CHICAGO,
as Co-Trustees
<PAGE>
THIS TRUST INDENTURE AND AGREEMENT dated as of July 30, 1997
between PaineWebber Incorporated, as Sponsor and Investors Bank & Trust
Company and The First National Bank of Chicago, as Co-Trustees, which sets
forth certain of its provisions in full and incorporates other of its
provisions by reference to a document entitled "Standard Terms and Conditions
of Trust" dated as of July 1, 1997 among the parties hereto (hereinafter
called the "Standard Terms and Conditions of Trust" or the "Standard Terms"),
such provisions as are set forth in full and such provisions as are
incorporated by reference constituting a single instrument.
W I T N E S S E T H T H A T :
Whereas, the parties hereto have heretofore or concurrently
herewith entered into the Standard Terms and Conditions of Trust in order to
facilitate creation of series of securities issued under a unit investment
trust pursuant to the provisions of the Investment Company Act of 1940 and the
laws of the State of New York, each of which series will be composed of
redeemable securities representing undivided interests in a trust fund
composed of publicly traded common or preferred stocks, stripped United States
Treasury obligations, or evidence thereof, and in certain cases, United States
Treasury obligations and Restricted Securities as defined in the Standard
Terms and Conditions of Trust; and
WHEREAS, the parties now desire to create the Twenty-
First of the aforesaid series;
NOW THEREFORE, in consideration of the premises and of the
mutual agreements herein contained, the Sponsor and the Trustee agree as
follows:
Section 1. Incorporation of Standard Terms and Conditions of
Trust. Subject to the provisions of Section 2 of this Trust Indenture and
Agreement set forth below, all of the provisions of the Standard Terms and
Conditions of Trust are herein incorporated by reference in their entirety
and shall be deemed to be a part of this instrument as fully to all intents
and purposes as though said provisions had been set forth in full in this
instrument, except as provided below in this Section 1. Unless otherwise
stated, section references shall refer to sections in the Standard Terms and
Conditions of Trust.
Section 2. Specific Terms of this Series. The following
terms are hereby agreed to for this series of The PaineWebber Pathfinders
Trust, which series shall be known and designated as "The PaineWebber
Pathfinders Trust, Treasury and
Growth Stock Series 21".
A. The Securities deposited pursuant to Section 2.02
are set forth in Schedule A hereto.
<PAGE>
B. (1) The aggregate number of Units outstanding on
the Initial Date of Deposit for this Series is 1,000,000.
(2) The initial fractional undivided interest represented by
each Unit of this series shall initially be 1/1,000,000th of the Trust Fund. A
Certificate representing the total number of Units outstanding on the Initial
Date of Deposit is being delivered by the Trustee to the Sponsor pursuant to
Section 2.03.
C. The term "Record Date" shall mean September 30, 1997 and
quarterly thereafter, except that with respect to a distribution required by
Section 2.02 (b), the Record Date shall be the last business day of the month
during which the contract to purchase the Security fails and except that with
respect to cash representing long-term capital gains held in the Capital
Account the Record Date shall be each December 31.
Record Date shall also include such date or dates determined
by the Sponsor and the Trustee as necessary or desirable and in the best
interest of the Unitholders for federal or state purposes or for other
purposes (hereinafter a "Special Record Date") which date may replace a
regularly scheduled Record Date if such regularly scheduled Record Date is
within 30 days of a Special Record Date.
D. The term "Distribution Date" shall mean the 20th
day following the Record Date, commencing October 20, 1997.
In the event a Special Record Date is declared, the
Distribution Date shall also include such Date as is determined by the Sponsor
and the Trustee to be the Distribution Date in respect of such Special Record
Date.
E. The Discretionary Liquidation Amount shall be twenty per
centum (20%) of the aggregate value of (i) the Securities originally deposited
pursuant to Section 2.02 and (ii) any additional Securities deposited pursuant
to Section 2.02(c).
F. The Mandatory Termination Date shall be November 30,
2008. The date on which the Trustee shall begin to sell equity Securities
in accordance with Section 9.01 shall be October 15, 2008.
G. The Trustee's annual compensation as referred to in
Section 8.05 shall be $.00145 per Unit computed monthly based on the largest
number of Units outstanding at any time during the preceding month.
H. The Sponsor's annual compensation pursuant to Section
7.02 shall be computed as $.00035 per Unit, based on the largest number of
Units Outstanding at any time during the calendar year.
<PAGE>
I. The balance in the Capital Account below which no
distribution need be made, as referred to in Section 3.04, is
$.005 per Unit outstanding.
J. The calendar year to be specified pursuant to Section
3.05 shall be calendar year 1997, so that the Trustee's first annual report
will be furnished to Unitholders within a reasonable period of time following
calendar year 1997.
<PAGE>
IN WITNESS WHEREOF, PaineWebber Incorporated has caused this
Trust Indenture and Agreement to be executed by one of its Senior Vice
Presidents and its corporate seal to be hereto affixed and attested by one of
its Secretaries, and Investors Bank & Trust Company and The First National
Bank of Chicago have caused this Trust Indenture to be executed by one of
their Authorized Signatories and their corporate seals to be hereto affixed
and attested by one of their Authorized Signatories, all as of the date first
above written.
PAINEWEBBER INCORPORATED
as Depositor and Sponsor
SEAL
By
-----------------------
Senior Vice President
Attest:
- -----------------------------
Secretary
<PAGE>
STATE 0F NEW YORK )
:ss.:
COUNTY OF NEW YORK )
On this 30th day of July, 1997 before me personally appeared
Robert E. Holley, to me known, who being by me duly sworn, said that he is a
Senior Vice President of PaineWebber Incorporated, one of the corporations
described in and which executed the foregoing instrument; that he knows the
seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by authority of the Board of Directors
of said corporation, and that he signed his name thereto by like authority.
By
------------------------
Notary Public
<PAGE>
INVESTORS BANK & TRUST COMPANY
AND THE FIRST NATIONAL
BANK OF CHICAGO
SEAL
Attest:
By
-----------------------
Title:
- ---------------------------
Title:
<PAGE>
STATE OF NEW YORK )
:ss.:
COUNTY OF NEW YORK )
On this 30th day of July, 1997 before me personally appeared
Steven M. Wagner, to me known, who being by me duly sworn, said that he is a
of The First National Bank of Chicago, one of the corporations described in
and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Trustees of said
corporation, and that he signed his name thereto by like authority.
----------------------
Notary Public
<PAGE>
SCHEDULE A
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES 21
SCHEDULE OF INVESTMENTS
AS OF INITIAL DATE OF DEPOSIT, JULY 30, 1997
<TABLE>
<CAPTION>
COST OF
SECURITIES
NAME OF SECURITY COUPON MATURITY VALUE MATURITY DATE TO TRUST(2)
- ---------------------- -------- -------------- ----------------- ------------
<S> <C> <C> <C> <C>
U.S. Treasury Interest
Payments (3)
(51.93%).............. 0% $1,000,000 November 15, 2008 $494,605.58
</TABLE>
COMMON STOCKS (48.07%) (1)
<TABLE>
<CAPTION>
COST OF
NUMBER OF SECURITIES
NAME OF ISSUER SHARES TO TRUST(2)
- --------------------------------------------- ----------- ------------
<S> <C> <C>
Automobile (1.18%)
General Motors Corporation................... 190 $11,293.13
Beverage (2.35%)
The Coca-Cola Company ....................... 160 11,150.00
PepsiCo, Inc. ............................... 300 11,325.00
Chemical (1.27%)
DuPont (E.I.) De Nemours & Company ......... 180 12,105.00
Computer Processing & Data Preparation
(1.18%)
First Data Corporation ...................... 260 11,277.50
Computer Software (2.26%)
Microsoft Corporation* ...................... 80 11,195.00
Cisco Systems, Inc.* ........................ 130 10,302.50
Electronics/Semi-Conductor (2.38%)
Hewlett-Packard Company ..................... 170 11,251.88
Intel Corporation ........................... 130 11,456.25
Entertainment (1.18%)
The Walt Disney Company ..................... 140 11,217.50
Financial Institutions/Banks (7.49%)
BankAmerica Corporation ..................... 160 11,630.00
Bankers Trust New York Corporation ......... 110 11,000.00
Chase Manhattan Corporation ................. 110 11,976.25
Citicorp .................................... 90 11,750.63
J.P. Morgan & Company Incorporated ......... 100 11,425.00
Wells Fargo & Company ....................... 50 13,550.00
Foods (1.17%)
General Mills, Inc. ......................... 160 11,130.00
Household Products (2.51%)
Gillette Company ............................ 120 11,895.00
Procter & Gamble Company .................... 80 12,030.00
Insurance (1.19%)
Aetna Inc. .................................. 100 11,337.50
Manufacturing (1.22%)
Minnesota Mining & Manufacturing Company ... 120 11,587.50
Metals (1.23%)
Phelps Dodge Corporation .................... 140 11,742.50
Oil/Gas (4.76%)
Mobil Corporation ........................... 150 11,343.75
Schlumberger Ltd. ........................... 150 11,118.75
Texaco Inc. ................................. 100 11,406.25
Unocal Corporation .......................... 290 11,436.88
</TABLE>
<PAGE>
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES 21
SCHEDULE OF INVESTMENTS (CONTINUED)
AS OF INITIAL DATE OF DEPOSIT, JULY 30, 1997
<TABLE>
<CAPTION>
COST OF
NUMBER OF SECURITIES
NAME OF ISSUER SHARES TO TRUST(2)
- ------------------------------- ----------- -------------
<S> <C> <C>
Pharmaceuticals (7.18%)
Abbott Laboratories ........... 180 $ 11,542.50
Bristol-Myers Squibb Company . 150 11,784.38
Johnson & Johnson ............. 190 11,601.88
Eli Lilly & Company ........... 100 11,231.25
Merck & Co., Inc. ............. 110 11,302.50
Warner-Lambert Company ........ 80 10,905.00
Restaurants (1.19%)
McDonald's Corporation ........ 210 11,326.88
Retail-Building Products
(1.22%)
Home Depot, Inc. .............. 240 11,610.00
Retail-Department Stores
(1.11%)
Sears, Roebuck & Co. .......... 170 10,593.13
Telecommunications (3.61%)
AT&T Corporation .............. 310 11,450.63
Lucent Technologies, Inc. .... 140 11,681.25
SBC Communications, Inc. ..... 190 11,233.75
Tobacco (1.19%)
Philip Morris Companies, Inc. 250 11,312.50
Utilities (1.20%)
Texas Utilities Company ...... 330 11,385.00
TOTAL COMMON STOCKS........... $457,894.42
-------------
TOTAL INVESTMENTS............. $952,500.00
=============
</TABLE>
- ------------
(1) All Securities are represented entirely by contracts to purchase
Securities.
(2) Valuation of Securities by the Trustee was made as described in
"Valuation" as of the close of business on the business day prior to
the Initial Date of Deposit. The bid side evaluation of the Treasury
Obligations on the business day prior to the Initial Date of Deposit
was $493,250.
(3) This security does not pay interest. On the maturity date thereof,
the entire maturity value becomes due and payable. Generally, a fixed
yield is earned on such security which takes into account the
semi-annual compounding of accrued interest. (See "The Trust" and
"Federal Income Taxes" herein.)
(4) The gain to the Sponsor on the Initial Date of Deposit is $280.58.
* Non-income producing.
<PAGE>
Exhibit 7
July 30, 1997
PaineWebber Inc.
1200 Harbor Boulevard
Weehawken, New Jersey 07087
The First National Bank of Chicago
Corporate Trust Administration
One First National Plaza
Chicago, Illinois 06070-0126
Investors Bank & Trust Company
89 South Street
Boston, Massachusetts 02111
Re: PaineWebber Pathfinders Trust,
Treasury and Growth Stock, Series 21
Ladies and Gentlemen:
We have served as counsel for PaineWebber Incorporated as
sponsor and depositor (the "Sponsor") of PaineWebber Pathfinders Trust,
Treasury and Growth Stock, Series 21 (hereinafter referred to as the "Trust")
in connection with the issuance by the Trust of an initial 1,000,000 units of
fractional undivided interest in the Trust (hereinafter referred to as the
"Units").
In this regard, we have examined executed originals or
copies of the following:
(a) The Restated Certificate of Incorporation,
as amended, and the By-Laws of the Sponsor, as
amended, certified by the Secretary of the Sponsor on
the date hereof;
(b) Resolutions of the Board of Directors of the
Sponsor adopted on December 3, 1971 relating to the Trust
and the sale of the Units, certified by the Secretary of the
Sponsor on the date hereof;
(c) Resolutions of the Executive Committee of
the Sponsor adopted on September 24, 1984, certified
<PAGE>
by the Secretary of the Sponsor on the date hereof;
(d) Powers of Attorney as set forth in the
certificate of the Secretary of the Sponsor dated the
date hereof;
(e) The Registration Statement on Form S-6 (File
No. 333- 22641) filed with the Securities and Exchange
Commission (the "Commission") in accordance with the
Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder
(collectively, the "1933 Act") and amendments thereto
including Amendment No. 1 ("Amendment No. 1") proposed
to be filed on July 30, 1997 (the "Registration
Statement");
(f) The Notification of Registration of the Trust
filed with the Commission under the Investment Company Act
of 1940, as amended (collectively, the "1940 Act") on Form
N-8A, as amended, (the "1940 Act Notification");
(g) The registration of the Trust filed with the
Commission under the 1940 Act on Form N-8B-2 (File No.
811-4158), as amended (the "1940 Act Registration);
(h) The prospectus included in Amendment No. 1
(the "Prospectus");
(i) The Standard Terms and Conditions of the Trust
dated as of July 1, 1997, between the Sponsor and Investors
Bank & Trust Company and The First National Bank of Chicago
(the "Co-Trustees") (the
"Standard Terms");
(j) The Trust Indenture dated as of July 30, 1997
between the Sponsor and the Co-Trustees (the "Trust
Indenture" and, collectively with the Standard Terms, the
"Indenture and Agreement");
(k) The Closing Memorandum dated July 30, 1997,
between the Sponsor and the Co-Trustees (the "Closing
Memorandum");
(l) Officers Certificates required by the
Closing Memorandum;
(m) The form of certificate of ownership for
units (the "Certificate") to be issued under the
Indenture and Agreement; and
(n) Such other pertinent records and documents
as we have deemed necessary.
With your permission, in such examination, we have
<PAGE>
assumed the following: (a) the authenticity of original documents and the
genuineness of all signatures; (b) the conformity to the originals of all
documents submitted to us as copies; (c) the truth, accuracy, and completeness
of the information, representations, and warranties contained in the records,
documents, instruments and certificates we have reviewed; (d) except as
specifically covered in the opinions set forth below, the due authorization,
execution, and delivery on behalf of the respective parties thereto of
documents referred to herein and the legal, valid, and binding effect thereof
on such parties; and (e) the absence of any evidence extrinsic to the
provisions of the written agreement(s) between the parties that the parties
intended a meaning contrary to that expressed by those provisions. However, we
have not examined the securities deposited pursuant to the Indenture and
Agreement (the "Securities") nor the contracts for the Securities.
We express no opinion as to matters of law in jurisdictions
other than the laws of the State of New York (except for "Blue Sky" laws) and
the federal laws of the United States, except to the extent necessary to
render the opinion as to the Sponsor and the Indenture and Agreement in
paragraphs (i) and (iii) below with respect to Delaware law. As you know we
are not licensed to practice law in the State of Delaware, and our opinion in
paragraph (i) and (iii) as to Delaware law is based solely on review of the
official statutes of the State of Delaware.
Based upon such examination, and having regard for legal
considerations which we deem relevant, we are of the opinion that:
(i) The Sponsor is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware with
full corporate power to conduct its business as described in the Prospectus;
(ii) The Sponsor is duly qualified as a foreign corporation
and is in good standing as such within the State of New York;
(iii) The Indenture and Agreement has been duly authorized,
executed and delivered by the Sponsor and, assuming the due authorization,
execution and delivery by the Trustee, is a valid and binding agreement of the
Sponsor, enforceable against the Sponsor in accordance with its terms;
(iv) The Trust has been duly formed and is validly existing
as an investment trust under the laws of the State of New York and has been
duly registered under the Investment Company Act of 1940;
(v) The terms and provisions of the Units conform in
all material respects to the description thereof contained in
the Prospectus;
<PAGE>
(vi) The consummation of the transactions contemplated under
the Indenture and Agreement and the fulfillment of the terms thereof will not
be in violation of the Sponsor's Restated Certificate of Incorporation, as
amended, or By-Laws, as amended, and will not conflict with any applicable
laws or regulations applicable to the Sponsor in effect on the date hereof;
(vii) The Certificates to be issued by the Trust, when duly
executed by the Sponsor and the Co-Trustees in accordance with the Indenture
and Agreement, upon delivery against payment therefor as described in the
Registration Statement and Prospectus will constitute fractional undivided
interests in the Trust enforceable against the Trust in accordance with their
terms, will be entitled to the benefits of the Indenture and Agreement and
will be fully paid and non-assessable; and
(viii) While the Registration Statement has not yet become
effective we have no reason to believe that such Registration Statement will
not become effective on the date and at the time requested therein pursuant to
Rule 487 promulgated under the 1933 Act.
In addition, we have participated in conferences with
representatives of the Sponsor, the Trustee, the Trust's accountants and
others concerning the Registration Statement and the Prospectus and have
considered the matters required to be stated therein and the statements
contained therein, although we have not independently verified the accuracy,
completeness or fairness of such statements. Based upon and subject to the
foregoing, nothing has come to our attention to cause us to believe that the
Registration Statement, as of the date hereof, contained an untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or that the
Prospectus, as of the date hereof, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading (it being understood
that we have not been requested to and do not make any comment in this
paragraph with respect to the financial statements, schedules and other
financial and statistical information contained in the Registration Statement
or the Prospectus).
Our opinion that any document is valid, binding, or
enforceable in accordance with its terms is qualified as to:
(a) limitations imposed by bankruptcy, insolvency,
reorganization, arrangement, fraudulent conveyance, moratorium, or other laws
relating to or affecting the enforcement of creditors' rights generally;
<PAGE>
(b) rights to indemnification and contribution which
may be limited by applicable law or equitable principles; and
(c) general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement and to the use of our name wherever it
appears in the Registration Statement and the Prospectus.
Very truly yours,
CARTER, LEDYARD & MILBURN
KHM:def
<PAGE>
Exhibit 8
July 30, 1997
The First National Bank of Chicago
Corporate Trust Administration
One First National Plaza
Chicago, Illinois, 60670-0126
Investors Bank & Trust Company
89 South Street
Boston, Massachusetts 02111
Dear Sirs:
As counsel for PaineWebber Incorporated (the "Depositor"),
we have examined an executed copy of the Trust Indenture and Agreement dated
as of July 30, 1997 (the "Indenture") and Standard Terms and Conditions of
Trust, dated as of July 1, 1997 (the "Agreement"), both between the Depositor,
and Investors Bank & Trust Company and The First National Bank of Chicago as
Co-Trustees. The Indenture established a trust called PaineWebber Pathfinders
Trust, Treasury and Growth Stock Series 21 (the "Trust") into which the
Depositor deposited certain United States Treasury obligations, or evidences
thereof, and stocks (the "Securities"), and moneys to be held by the
Co-Trustees upon the terms and conditions set forth in the Indenture and
Agreement. Under the Indenture, certificates of ownership were issued on the
Initial Date of Deposit representing 1,000,000 units of fractional undivided
interest in the Trust (the "Units").
Based upon the foregoing and upon an examination of such
other documents and an investigation of such matters of law as we have deemed
necessary, we are of the opinion that, under existing statutes and decisions:
1. The Trust is not an association taxable as a corporation for
Federal income tax purposes. Under the Internal Revenue Code of 1986, as
amended (the "Code"), each Unitholder will be treated as the owner of a pro
rata portion of the Trust, and income of the Trust will be treated as income
of the Unitholder.
<PAGE>
2. Each Unitholder will have a taxable event when the Trust
disposes of a Security (whether by sale, exchange, redemption, or payment at
maturity) or when the Unitholder redeems or sells its Unit or redeems its
units for cash. For purposes of determining gain or loss, the total tax cost
of each Unit to a Unitholder is allocated among each of the Securities, in
accordance with the proportion of the Trust comprised by each Security, to
determine the Unitholder's per Unit tax cost for each Security.
3. The Trust is not an association taxable as a corporation
for New York State income tax purposes. Under New York State Law, each
Unitholder will be treated as the owner of a pro rata portion of the Trust,
and the income of the Trust will be treated as income of the Unitholders.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement (File No. 333-22641) relating to the
Units referred to above and to the use of our name and to the reference to our
firm in said Registration Statement and in the related Prospectus.
Very truly yours,
CARTER, LEDYARD & MILBURN
<PAGE>
Exhibit 9
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in this Registration Statement of our report dated July
30, 1997 relating to the Statement of Financial Condition of The PaineWebber
Pathfinders Trust, Treasury and Growth Stock, Series 21 including the Schedule
of Investments, included herein, and to the reference made to us under the
caption "Independent Auditors" in the Prospectus.
ERNST & YOUNG, LLP
July 30, 1997
New York, New York
