As filed with the Securities and Exchange Commission on March 2, 1998
Registration No. 333-39977
=============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington , D.C. 20549
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------------------
ML ASSET BACKED CORPORATION
(Sponsor of the Trusts described herein)
(Exact name of Registrant as specified in its charter)
Delaware 13-3891329
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
ML Asset Backed Corporation
250 Vesey Street
World Financial Center
North Tower - 10th Floor
New York, New York 10281-1310
(212) 449-0336
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
Michael M. McGovern
ML Asset Backed Corporation
250 Vesey Street
World Financial Center
North Tower - 10th Floor
New York, New York 10281-1310
(212) 449-0336
(Name, Address, Including Zip Code,and Telephone Number,
Including Area Code, of Agent For Service)
Copies to:
Renwick D. Martin, Esq.
Brown & Wood LLP
One World Trade Center
New York, New York 10048
(212) 839-5319
-------------------------------------
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement as
determined by market conditions.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. / /
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. /x/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
----------------
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Securities Amount to Be Proposed Maximum Proposed Maximum Amount of
to Be Registered Registered(1) Offering Price Per Unit(2) Aggregate Offering Price(2) Registration Fee
- ----------------------- ----------------- -------------------------- --------------------------- ----------------
<S> <C> <C> <C> <C>
Asset Backed Notes;
Asset Backed Certificates $1,000,000,000 100% $1,000,000,000 $295,000(3)
</TABLE>
(1) The Registration Statement relates to the initial offering from time to
time of the Asset Backed Notes and Asset Backed Certificates and to
any resales thereof in market making transactions by an underwriter
to the extent required.
(2) Estimated pursuant to Rule 457 solely for the purpose of
calculating the registration fee.
(3) Of this amount, $304 was previously paid.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
=============================================================================
INTRODUCTORY NOTE
This Registration Statement contains a form of Prospectus Supplement
relating to the offering by various Trusts of series of Asset Backed Notes
and/or Asset Backed Certificates. The form of Prospectus Supplement relates
only to the securities described therein and is a form that may be used,
among others, by the registrant to offer Asset Backed Notes and/or Asset
Backed Certificates under this Registration Statement. A Prospectus
Supplement may contain any of the features referred to in the Prospectus.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement
becomes effective. This Prospectus Supplement shall not constitute an offer
to sell or the solicitation of an offer to buy nor shall there be any sale of
these securities in any jurisdiction in which such offer, solicitation or
sale would be unlawful prior to the registration or qualification under the
securities laws of any such jurisdiction.
Subject to completion dated March 2, 1998
PROSPECTUS SUPPLEMENT
(To Prospectus dated ______________ ___, 199__)
(____________________________ TRUST 199_-_)
($__________ ___% FIXED RATE ASSET BACKED INDEX AMORTIZING NOTES
$____________ FLOATING RATE ASSET BACKED INDEX AMORTIZING CERTIFICATES
ML ASSET BACKED CORPORATION
DEPOSITOR
____________________
_____________ Trust 199_-_ (the "Issuer" or the "Trust") will be
formed pursuant to a trust agreement between ML Asset Backed Corporation, as
depositor (the "Depositor"), and _______________________________________,
Trustee (the "Trust Agreement"). The Issuer will issue the $__________ ___%
Fixed Rate Asset Backed Index Amortizing Notes, Class A (the "Notes") and
$_______________ Floating Rate Asset Backed Index Amortizing Certificates,
Class B (the "Certificates" and, together with the Notes, the "Securities").
The Notes will be issued pursuant to an indenture, (the "Indenture"), among
the Issuer, ________________, as indenture trustee (the "Indenture Trustee")
(and _________________ as swap counterparty (the "Swap Counterparty")). The
Certificates will be issued pursuant to the Trust Agreement and will
represent undivided interests in the Issuer. The net proceeds of the
offering of the Notes and Certificates will be applied by the Issuer to the
purchase of $_____________ aggregate principal amount of
____________________________ Certificates, Series 199_-_ (the "Underlying
Securities") issued by ________________ Trust (the "Underlying Trust").
The Notes will bear interest at a rate equal to _____% per annum,
payable on the ___th day of each _______ or, if such day is not a Business
Day, the next succeeding Business Day (each a "Payment Date"), commencing on
______, 199_. Interest at a rate equal to (state formula) (calculated as
described herein) plus ____% will be distributed on the Certificates on each
Payment Date commencing on ______, 199_. The Notes will mature and principal
will be distributed on the Certificates on __________, ____ to the extent not
prepaid prior thereto. Distributions of principal and interest on the
Certificates will be subordinated in priority to payments due on the Notes,
as described herein.
The principal of the Notes and of the Certificates will be subject to
prepayment as described herein, in whole or in part, on each Payment Date,
commencing __________, ____, in the case of the Notes, and commencing
__________, ____ in the case of the Certificates, on the basis of (state
formula or index for determining principal prepayments). Variations in the
rate of payment of principal of the Securities may be significant. The
Securities are also subject to mandatory prepayment under other circumstances
as described herein. See "MANDATORY PREPAYMENT OF THE NOTES AND THE
CERTIFICATES" herein.
(The Issuer will enter into the Swap Agreement with the Swap
Counterparty pursuant to which the Issuer will agree to exchange the interest
payments received with respect to the Underlying Securities and certain
eligible investments for payments from the Swap Counterparty in an amount
equal to the interest due on the Securities.) (If the principal prepayments
are not based on principal distributions on Underlying Securities, state how
Swap Agreement or other Enhancement will provide funds for such prepayments.)
THE ISSUER IS NOT A SUBSIDIARY OR AFFILIATE OF OR OTHERWISE RELATED TO
THE UNDERLYING TRUST OR ANY OF ITS AFFILIATES. THE UNDERLYING TRUST AND ITS
AFFILIATES ARE NOT INVOLVED IN THE OFFERING OF THE SECURITIES OR IN THE
PREPARATION OF THIS PROSPECTUS SUPPLEMENT. THE UNDERLYING TRUST AND ITS
AFFILIATES WILL NOT RECEIVE ANY OF THE PROCEEDS OF THE OFFERING OF THE
SECURITIES, AND THE UNDERLYING TRUST AND ITS AFFILIATES ARE NOT RESPONSIBLE
FOR, NOR HAVE THEY PARTICIPATED IN THE DETERMINATION OF THE ISSUANCE OF, THE
SECURITIES.
There is currently no market for the Securities offered hereby and there
can be no assurance that such a market will develop or if it does develop
that it will continue. See "RISK FACTORS" herein.
FOR A DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE CONSIDERED BY PROSPECTIVE
PURCHASERS OF THE NOTES, SEE "RISK FACTORS" ON PAGE S-13 HEREIN.
____________________
THE NOTES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES REPRESENT BENEFICIAL
INTERESTS IN, THE TRUST ONLY AND DO NOT REPRESENT OBLIGATIONS OF OR
INTERESTS IN ML ASSET BACKED CORPORATION, THE UNDERWRITER, THE
UNDERLYING TRUST, THE UNDERLYING TRANSFEROR OR ANY OF THEIR
RESPECTIVE AFFILIATES. NONE OF THE NOTES, THE CERTIFI-
CATES OR THE UNDERLYING SECURITIES ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR BY ANY GOVERNMENTAL AGENCY
OR INSTRUMENTALITY OR ANY OTHER PERSON.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
____________________
The Securities offered hereby will be purchased by Merrill Lynch,
Pierce, Fenner & Smith Incorporated (the "Underwriter") from the Depositor
and will be offered by the Underwriter from time to time to the public in
negotiated transactions or otherwise at varying prices to be determined at
the time of sale. The aggregate proceeds to the Depositor from the sale of
the Securities are expected to be $ __________________ before deducting
expenses payable by the Depositor of $______________.
The Notes and the Certificates are offered subject to prior sale, when,
as, and if issued by the Trust and accepted by the Underwriter and subject to
the Underwriter's right to reject orders in whole or in part. It is expected
that the Notes and Certificates will be delivered in book-entry form through
the facilities of The Depository Trust Company and, in the case of the Notes,
Cedel Bank, societe anonyme, and the Euroclear System, in each case against
payment therefor in immediately available funds on or about ____________,
199_.
____________________
MERRILL LYNCH & CO.
____________________
The date of this Prospectus Supplement is _______ 199_
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT
THE OFFERING OF THE NOTES AND THE CERTIFICATES. ADDITIONAL INFORMATION IS
CONTAINED IN THE ACCOMPANYING PROSPECTUS (THE "PROSPECTUS"), AND PROSPECTIVE
INVESTORS ARE URGED TO READ BOTH THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS IN FULL. SALES OF THE NOTES OR THE CERTIFICATES MAY NOT BE
CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS. TO THE EXTENT ANY STATEMENTS IN THIS PROSPECTUS
SUPPLEMENT CONFLICT WITH STATEMENTS IN THE PROSPECTUS, THE STATEMENTS IN THIS
PROSPECTUS SUPPLEMENT SHALL CONTROL.
UNTIL 90 DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT, ALL DEALERS
EFFECTING TRANSACTIONS IN THE SECURITIES OFFERED BY THIS PROSPECTUS
SUPPLEMENT, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. THIS IS
IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO
THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE
NOTES OR THE CERTIFICATES. SUCH TRANSACTIONS MAY INCLUDE STABILIZING AND THE
PURCHASE OF NOTES OR CERTIFICATES TO COVER SYNDICATE SHORT POSITIONS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING" HEREIN.
REPORTS TO SECURITYHOLDERS
Unless and until Definitive Notes or Definitive Certificates are issued,
monthly and annual unaudited reports containing information concerning the
Securities will be prepared by the Administrator and sent on behalf of the
Trust only to Cede & Co. ("Cede"), as nominee of The Depository Trust Company
("DTC") and registered holder of the Notes and Certificates. See "CERTAIN
INFORMATION REGARDING THE SECURITIES - Book-Entry Registration" and "--
Reports to Securityholders" in the Prospectus. Such reports will not
constitute financial statements prepared in accordance with generally
accepted accounting principles. The Depositor, as originator of the Trust,
will file with the Securities and Exchange Commission (the "Commission") such
periodic reports as are required under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the rules and regulations of the
Commission thereunder.
SUMMARY
The following summary of certain pertinent information is qualified in
its entirety by reference to the detailed information appearing elsewhere in
this Prospectus Supplement and in the accompanying Prospectus and in the
prospectus and prospectus supplement for each Underlying Security. Certain
capitalized terms used herein are defined elsewhere in this Prospectus
Supplement on the pages indicated in the "Index of Defined Terms" or, to the
extent not defined herein, have the meanings assigned to such terms in the
Prospectus.
Securities Offered......... $_________ ___% Fixed Rate Asset Backed Index
Amortizing Notes, Class (the "Notes") and
$________ Floating Rate Asset Backed Index
Amortizing Certificates, (the "Certificates"
and, together with the Notes, the
"Securities"). Distributions of principal and
interest on the Certificates will be
subordinated in priority to payments due on the
Notes, as described herein.
The Issuer................. _________ Trust 199_-_ (the "Issuer" or the
"Trust"), a Delaware business trust to be
established pursuant to the Trust Agreement (as
defined herein). Initially, the assets of the
Issuer will consist of the Underlying
Securities (as defined herein). (In addition,
the Issuer will enter into the Swap Agreement
(as defined herein)). The Issuer will not have
any assets other than the Underlying
Securities, the Issuer's rights in the
Collection Account (as defined herein), (the
Issuer's rights under the Swap Agreement) and
all proceeds of the foregoing.
The Issuer is not an affiliate of or otherwise
related to _____ (the "Underlying Transferor")
or the Underlying Trust (as defined herein).
The Underlying Transferor and the Underlying
Trust are not involved in the offering of the
Securities or the preparation of this
Prospectus Supplement. The Underlying
Transferor and the Underlying Trust will not
receive any of the proceeds of the offering of
the Securities, and the Underlying Transferor
and the Underlying Trust are not responsible
for, nor have they participated in the
determination of the issuance of the
Securities.
Underlying Securities...... _________ Certificates, Series 199_-_ (the
"Underlying Securities") issued by ____________
Trust (the "Underlying Trust") as described
herein, with an aggregate principal balance
equal to $___________ as of _________ __, 199_
(the "Closing Date"). See "THE UNDERLYING
SECURITIES" herein.
Depositor.................. ML Asset Backed Corporation, an affiliate of
the Underwriter.
Description of the Notes... The Notes will be issued pursuant to an
indenture dated as of __________, 199_ among
the Issuer, _____________________ in its
capacity as indenture trustee (the "Indenture
Trustee") (and ____________ (the "Swap
Counterparty")) in a principal amount equal to
$______.
Security for the
Notes.................... The Assets (as defined herein) will be pledged
to the Indenture Trustee as security for the
Issuer's obligations under the Notes (and under
the Swap Agreement; provided that the pledge of
the Issuer's rights under the Swap Agreement
will secure the Notes only. Payment of any
amounts owed by the Issuer to the Swap
Counterparty under the Swap Agreement will be
senior in priority of payment to the payment of
interest and principal due on the Notes.)
Interest Payments
on the Notes............. Interest will accrue on the unpaid principal
amount of the Notes at a rate per annum equal
to ___% (or state floating rate formula),
calculated on the basis of a (360-day year
consisting of twelve 30-day months). Interest
will accrue with respect to each Payment Date
during the __________ period beginning on the
__th day of __________ (or on the Closing Date
in the case of the first Payment Date) and
ending on the __th day of __________ (each, a
"Note Interest Accrual Period").
Interest will be payable to Noteholders in
arrears on each Payment Date. "Payment Date"
means the __th day of each __________ or, if
such day is not a Business Day, the next
succeeding Business Day, commencing on ________
__, 199_. A failure to pay interest due on the
Notes on any Payment Date, which failure
continues for _______ Business Days,
constitutes an Event of Default (as defined
herein) under the Indenture.
Principal Payments
on the Notes............. The portion, if any, of the principal of the
Notes that has not been prepaid as described
under "Mandatory Prepayment of the Notes and
the Certificates" will be due on the __________
Payment Date (the "Scheduled Final Payment
Date"). However, if an Event of Default occurs
under the Indenture (other than an Event of
Default that constitutes a Swap Early
Termination (as defined herein)), the Indenture
Trustee may and, at the written request of the
holders of a majority of the principal of the
Notes, will declare the Notes immediately due
and payable, (subject to the prior written
consent of the Swap Counterparty under certain
circumstances. If a Swap Early Termination
occurs, the entire unpaid principal amount of
the Notes will become immediately due and
payable automatically.)
Mandatory Prepayment
of the Notes............. The principal of the Notes will be subject to
prepayment as described herein, in whole or in
part, on each ___________, commencing on
______________, on the basis of (state formula
or index for determining amount of principal
prepayments). Variations in the rate of
prepayment of the Notes may be significant.
See "MANDATORY PREPAYMENT OF THE NOTES AND THE
CERTIFICATES -- Prepayment" herein.
Record Date
for the Notes............ Payments on the Notes will be made to the
Noteholders in whose name the Notes were
registered at the close of business on the last
Business Day of the month prior to the month in
which such payment occurs, or, with respect to
the first Payment Date, the Closing Date (the
"Record Date").
Denominations
of the Notes............. The Notes will be issued in minimum
denominations of $1,000 and integral multiples
of $1,000 in excess thereof.
Form, Registration
and Transfer of
the Notes................ The Notes will be represented by one or more
permanent global Notes (the "Global Notes") in
fully registered form registered in the name of
a nominee of The Depository Trust Company
("DTC"). Noteholders may hold their Notes
through DTC (in the United States) or CEDEL or
Euroclear (in Europe) if they are participants
in such systems, or indirectly through
organizations which are the participants in
such systems. See "DESCRIPTION OF THE NOTES--
Form, Denomination and Registration" herein.
Except in the limited circumstances described
herein, Notes in certificated form will not be
issued in exchange for beneficial interests in
the Global Note. See "Definitive Notes and
Certificates."
Description of
the Certificates........... The Certificates will be issued pursuant to a
trust agreement dated as of _________ (_),
199_, as amended and restated as of __________
__, 199_ (the "Trust Agreement"), between the
Depositor and _____________ in its capacity as
owner trustee (the "Trustee") in a principal
amount equal to $________. The Certificates
will represent undivided interests in the
Issuer as described herein.
Interest Distributions
on the Certificates...... Interest will accrue on the unpaid principal
amount of the Certificates at a rate per annum
equal to (state formula), calculated on the
basis of (the actual number of days in each
Certificate Interest Accrual Period divided by
360). A "Certificate Interest Accrual Period"
with respect to any Payment Date is the period
from and including the preceding Payment Date
(in the case of the first Payment Date, from
and including _______ __, 199_) to but
excluding such current Payment Date. Except as
otherwise provided herein, interest will be
distributed on the Certificates in arrears on
each Payment Date. No interest will be paid on
overdue interest.
Principal Distributions
on the Certificates...... To the extent described herein, the portion, if
any, of the principal of the Certificates that
has not been prepaid as described under
"Mandatory Prepayment of the Notes and the
Certificates" will be distributed on the
Certificates on the Scheduled Final Payment
Date. If the principal of the Notes has become
immediately due and payable in accordance with
the Indenture upon the occurrence of an Event
of Default, the principal of the Certificates
will be distributed out of the net proceeds
realized from the liquidation of the Underlying
Securities and other Assets, if any, to the
extent available after the payment of all other
obligations of the Issuer in accordance with
the Priority of Payments (as defined herein)
(including (any termination payment, if any,
owed under the Swap Agreement,) all principal
and interest due on the Notes and all interest
due on the Certificates).
Mandatory
Prepayment of
the Certificates......... The principal of the Certificates will be
subject to prepayment as described herein, in
whole or in part, on each __________________,
commencing on _____________ (the "Initial
Certificate Prepayment Date"), on the basis of
(state formula or index for determining amount
of principal prepayments). Variations in the
rate of prepayment of the Certificates may be
significant. See "MANDATORY PREPAYMENT OF THE
NOTES AND THE CERTIFICATES" herein.
Subordination of
the Certificates......... Distribution of interest and principal on the
Certificates will be subordinated in priority
of payment to the payment of expenses of the
Issuer, (to amounts owed by the Issuer to the
Swap Counterparty) and to the payment of
interest and principal due on the Notes.
Record Date for
the Certificates......... Payments on the Certificates will be made to
the Certificateholders in whose name the
Certificates were registered at the close of
business on the Record Date.
Denominations of
the Certificates......... The Certificates will be issued in minimum
denominations of $1,000 and integral multiples
of $1,000 in excess thereof.
Form, Registration
and Transfer of
the Certificates......... The Certificates will be represented by one or
more permanent global Certificates (the "Global
Certificates") in fully registered form without
coupons registered in the name of a nominee of
DTC. See "DESCRIPTION OF THE CERTIFICATES --
Form, Denomination and Registration" herein.
Except in the limited circumstances described
herein, Certificates in certificated form will
not be issued in exchange for beneficial
interests in the Global Certificate. See
"Definitive Notes and Certificates."
Transfers of interests in the Global
Certificates are subject to certain
restrictions. See "Transfer Restrictions."
Limited Assets of
the Issuer................. The Notes are debt obligations of the Issuer
and the Certificates represent interests in the
Issuer only. The Notes and Certificates are
payable solely from proceeds of the Assets
owned by the Issuer. None of the Depositor,
(the Swap Counterparty,) the Trustee, the
Indenture Trustee, the Certificateholders or
any of their affiliates or any other person or
entity will be obligated to make payments on
the Notes or the Certificates. Consequently,
the holders of the Notes and Certificates must
rely solely on collections in respect of the
Assets for payments on the Notes and
distributions on the Certificates. If
collections in respect of the Assets net of any
amounts owed by the Issuer (to the Swap
Counterparty under the Swap Agreement and) to
the Indenture Trustee and the Trustee are
insufficient to make all payments and
distributions due in respect of the Notes and
the Certificates, there will be no other assets
of the Issuer available for payment of any
shortfall and, following realization of the
Assets, any obligation of the Issuer to pay
such shortfall will be extinguished. Any such
shortfall will be borne first by the
Certificateholders and then by the Noteholders.
Calculation Agent.......... _____________ will serve as calculation agent
(the "Calculation Agent") for the Issuer under
the Indenture and the Trust Agreement (and in
connection with the Swap Agreement.) See "THE
CALCULATION AGENT" herein.
(Swap Agreement............ Under the Swap Agreement, the Issuer will pay
to the Swap Counterparty amounts equal to the
payments of interest scheduled to be received
on the Underlying Securities in accordance with
the terms thereof (net of certain expenses) and
the Swap Counterparty will pay to the Issuer
amounts equal to the interest payable on the
Notes and the Certificates.
(If principal prepayments are not based on
principal distributions on Underlying
Securities, state how Swap Agreement or other
Enhancement will provide funds for such
principal prepayments.)
If a Swap Early Termination (as defined herein)
occurs, the principal of the Notes will be
declared or become immediately due and payable
and the Indenture Trustee will be obligated to
liquidate the Underlying Securities as
described under "THE INDENTURE -- Liquidation
of Underlying Securities and Eligible
Investments" herein. In such event, the
principal of the Certificates will be
distributed out of the net proceeds realized
from the liquidation of the Underlying
Securities, Eligible Investments and other
Assets, if any, only to the extent available
after the payment of all other obligations of
the Issuer. In the event that the net proceeds
of the liquidation of the Assets are not
sufficient to make all payments due in respect
of the Notes and Certificates and to pay the
Issuer's other obligations, if any, in respect
of the termination of the Swap Agreement, then
such amounts will be applied in accordance with
the Priority of Payments (as defined herein)
and the claims of the Swap Counterparty in
respect of such net proceeds will rank higher
in priority than the claims of the Noteholders
and the Certificateholders. See "THE SWAP
AGREEMENT" herein.)
Certain Income Tax
Consequences............... In the opinion of Brown & Wood LLP ("Federal
Tax Counsel"), for U.S. federal income tax
purposes, the Issuer will not be an association
or publicly traded partnership taxable as a
corporation, the Notes will be treated as debt
and the Certificates will be treated as
interests in a partnership to the extent they
are held by more than one person. To the
extent that the Certificates are held by one
person, the Issuer will be disregarded and the
holder of the Certificates will be treated as
directly owning the Issuer's assets for U.S.
federal income tax purposes. An opinion of
counsel is not binding on the Internal Revenue
Service (the "IRS") and it is possible the IRS
could disagree. Each Noteholder and
Certificateholder, by the acceptance of a Note
or Certificate, will agree to treat the Notes
as indebtedness for federal, state and local
income and franchise tax purposes. Each
Certificateholder for federal, state and local
tax purposes by acceptance of a Certificate
will agree to treat the Certificates as
interests in a partnership, or if all the
Certificates are held by one person, the
Certificateholder will agree to treat itself as
owning the Issuer's assets. See "Certain
Federal Income Tax Considerations" herein and
in the Prospectus.
ERISA...................... Generally, employee benefit plans that are
subject to the requirements of the Employee
Retirement Income Security Act of 1974, as
amended ("ERISA"), and Section 4975 of the
Internal Revenue Code of 1986, as amended (the
"Code"), are permitted to purchase instruments
like the Notes that are debt under applicable
state law and have no "substantial equity
features" without reference to the prohibited
transaction requirements of ERISA and the Code
if the obligor is not a party in interest with
respect to such plan. The Issuer expects that
the Notes will be classified as indebtedness
without substantial equity features for ERISA
purposes. Any plan fiduciary considering
whether to purchase the Notes on behalf of a
plan should consult with its counsel regarding
the applicability of the provisions of ERISA
and the Code and the availability of any
exemptions with respect to the purchase and
holding of the Notes.
Under current law the purchase and holding of
the Certificates by or on behalf of any
employee benefit plan subject to the fiduciary
responsibility provisions of ERISA or Section
4975 of the Code may result in a "prohibited
transaction" within the meaning of ERISA and/or
the Code. Consequently, Certificates may not
be transferred to a proposed transferee that is
a plan subject to ERISA or that is described in
Section 4975(e)(1) of the Code, or a person
acting on behalf of any such plan or using the
assets of such plan. See "ERISA
CONSIDERATIONS" herein.
Rating..................... It is a condition to the issuance of the Notes
that they be rated "___" by ____________ and
"___" by _______ (each, a Rating Agency). It
is a condition to the issuance of the
Certificates that they be rated "____" by
______ and "____" by ___. The ratings of the
Notes and the Certificates by the Rating
Agencies address the likelihood of the full and
timely payment of principal and interest on the
Notes and Certificates, respectively. There is
no assurance that any such rating will continue
for any period of time or that it will not be
revised or withdrawn entirely by such Rating
Agency if, in its judgment, circumstances
((including, without limitation, the rating of
the Swap Counterparty)) so warrant. A revision
or withdrawal of such rating may have an
adverse effect on the market price of the Notes
and Certificates. A security rating is not a
recommendation to buy, sell or hold securities.
RISK FACTORS
An investment in the Securities involves certain risks. Prospective
investors should carefully consider the following factors, in addition to the
factors set forth under "Risk Factors" in the Prospectus and the matters set
forth elsewhere in this Prospectus Supplement and the Prospectus, prior to
investing in the Securities.
Limited Liquidity. There is currently no secondary market for the
Securities. While the Underwriter intends to make a market in the Notes and
the Certificates upon their issuance, it is under no obligation to do so.
There can be no assurance that any secondary market for any of the Securities
will develop, or, if a secondary market does develop, that it will provide
the holders of such Securities with liquidity of investment or that it will
continue for the life of such Securities.
Limited Assets of the Issuer. The Notes are obligations of the Issuer
only and the Certificates represent interests in the Issuer only and the
Notes and Certificates are payable solely from proceeds of the Assets owned
by the Issuer. None of the Depositor, (the Swap Counterparty,) the
Certificateholders, the Underwriter or any of their affiliates or any other
person or entity will be obligated to make payments on the Notes, the
Certificates or the Underlying Securities. Consequently, the holders of the
Notes and Certificates must rely solely on collections in respect of the
Assets for payments on the Notes and distributions on the Certificates. If
collections in respect of the Assets net of any amounts owed by the Issuer to
(the Swap Counterparty,) the Indenture Trustee and the Owner Trustee are
insufficient to make all payments and distributions due in respect of the
Notes and the Certificates, there will be no other assets of the Issuer
available for payment of any shortfall and, following realization of the
Assets, any obligation of the Issuer to pay such shortfall will be
extinguished. Any such shortfall will be borne first by the
Certificateholders and secondly by the Noteholders.
No Investigation of Underlying Securities, Underlying Transferor,
Underlying Trust and Underlying Servicer. None of the Depositor, the
Underwriter, the Owner Trustee, the Indenture Trustee or any of their
affiliates (i) has made or will make any investigation of the business
condition, financial or otherwise, of the Underlying Trust, the Underlying
Transferor or the Underlying Servicer, or (ii) has verified or will verify
any reports or information filed by the Underlying Trust with the Commission.
Investors are encouraged to consider publicly available financial and other
information regarding the Underlying Trust. The issuance of the Securities
should not be considered an endorsement by the Depositor, the Underwriter,
the Owner Trustee, the Indenture Trustee or any of their affiliates of the
condition of the Underlying Trust or the merits of the Underlying Securities.
(The Swap Agreement. The purchase of Securities involves risks
associated with the Swap Agreement and the Swap Counterparty. If the Swap
Counterparty fails to make payments due to the Issuer under the Swap
Agreement, (or if the Swap Counterparty reduces its payments as described
under "THE SWAP AGREEMENT -- Taxation" herein,) the Issuer will be unable to
meet its obligations in respect of the Notes and Certificates. The Swap
Agreement may be terminated in accordance with its terms upon the occurrence
of a Swap Default or Termination Event (each as defined herein).
Upon any such early termination of the Swap Agreement, the Issuer or the
Swap Counterparty may be liable to make a termination payment to the other
(regardless, if applicable, of which of such parties may have caused such
termination). The amount of any such termination payment will be based on
the market value of the Swap Agreement computed on the basis of market
quotations of the cost of entering into swap transactions with the same terms
and conditions that would have the effect of preserving the respective full
payment obligations of the parties, in accordance with the procedures set
forth in the Swap Agreement; (state whether there are circumstances where no
termination payment will be payable). Any such termination payment could, if
interest rates have changed significantly, be substantial.
If a Swap Early Termination occurs, the principal of the Notes will be
declared or become immediately due and payable and the Indenture Trustee will
be obligated to liquidate the Underlying Securities and Eligible Investments,
if any, as described under "The Indenture -- Liquidation of Underlying
Securities." In any such event, the ability of the Issuer to pay principal
and interest on the Notes and Certificates will depend (a) on the price at
which the Underlying Securities and Eligible Investments, if any, are
liquidated, (b) on the amount of the termination payment (if any) which may
be due to the Swap Counterparty from the Issuer under the Swap Agreement and
(c) on the amount of the termination payment, if any, which may be due to the
Issuer from the Swap Counterparty under the Swap Agreement. In the event
that the net proceeds of the liquidation of the Assets are not sufficient to
make all payments due in respect of the Notes and Certificates and for the
Issuer to meet its obligations, if any, in respect of the termination of the
Swap Agreement, then such amounts will be applied in accordance with the
Priority of Payments and the claims of the Swap Counterparty in respect of
such net proceeds will rank higher in priority than the claims of the
Noteholders and the Certificateholders. See "PRIORITY OF PAYMENTS" herein.)
Underlying Securities. The Underlying Securities represent interests in
the Underlying Trust only and do not represent interests in or obligations of
the Underlying Transferor or any affiliate of the Underlying Transferor. (If
the Underlying Trust fails to make payments due to the Issuer under the
Underlying Securities on the due date therefor, the Swap Agreement may be
terminated. In such event, the principal of the Notes will become due and
payable immediately and the Assets of the Issuer available for payment of the
Notes and Certificates will be limited as described above under " -- Limited
Assets of the Issuer.") See "THE UNDERLYING SECURITIES" herein.
Maturity Assumptions and Early Prepayment Risk. The principal of the
Notes will be prepaid as described herein, in whole or in part, on
____________ and the principal of the Certificates will be distributed on
_____________ on the basis of (state formula or index and discuss related
maturity assumptions, yield considerations and prepayment risk factors).
Reinvestment Risk. As described herein, the rate of prepayment of the
Securities depends on a number of factors. Accordingly, it is not possible
to predict the rate at which the Securities will be redeemed. Moreover,
since prevailing interest rates are subject to fluctuation, there can be no
assurance that investors in the Securities will be able to reinvest the
payments thereon at yields equalling or exceeding the yield on such
Securities. It is possible that yields on such reinvestments will be lower,
and may be significantly lower, than the yield on the Securities. Investors
in the Securities should consider the related reinvestment risk in light of
other investments that may be available to such investors.
Subordination of the Certificates. Distributions of principal and
interest on the Certificates will be subordinated in priority of payment to
the payment of expenses of the Issuer(, to amounts owed by the Issuer to the
Swap Counterparty) and to the payment of principal and interest due on the
Notes. Consequently, the Certificateholders will not receive any
distributions of principal or interest with respect to a Payment Date until
amounts owed by the Issuer (to the Swap Counterparty on such Payment Date
and) the full amount of principal and interest due on the Notes on such
Payment Date are paid in full. See "PRIORITY OF PAYMENTS" herein.
(Potential Conflicts of Interest. Because the Calculation Agent is (the
Swap Counterparty), potential conflicts of interest may exist between the
Calculation Agent and the holders of Notes and Certificates. The Calculation
Agent is obligated to carry out its duties and functions as Calculation Agent
in good faith and using its reasonable judgment.)
Rating of the Securities. The Notes will be rated "___" by ______ and
"___" by ___ and the Certificates will be rated "___" by ( ) and "___" by
( ) (each of ___ and ______ being hereinafter referred to as a "Rating
Agency"). A rating is not a recommendation to purchase, hold or sell
securities, inasmuch as such rating does not comment as to market price or
suitability for a particular investor. The ratings of the Securities by the
Rating Agencies address the likelihood of the full and timely payment of
principal and interest on the Securities. However, a Rating Agency does not
evaluate, and the ratings of the Securities do not address, the possibility
that investors may receive a lower yield than anticipated. There can be no
assurance that a rating will remain for any given period of time or that a
rating will not be lowered or withdrawn entirely by a Rating Agency if, in
its judgment, circumstances ((including, without limitation, the rating of
the Swap Counterparty)) in the future so warrant.
THE ISSUER
The Issuer will be a business trust formed under the laws of the State
of Delaware pursuant to the Trust Agreement for the transactions described in
this Prospectus Supplement. After its formation, the Issuer will not engage
in any activity other than (i) acquiring and holding the Underlying
Securities and the other assets of the Issuer and proceeds therefrom, (ii)
issuing the Notes and the Certificates, (iii) making payments on the Notes
and distributions on the Certificates, (iv) (entering into the Swap
Agreement) and (v) engaging in other activities that are necessary, suitable
or convenient to accomplish the foregoing or are incidental thereto or
connected therewith.
The Issuer's principal offices are in Wilmington, Delaware in care of
___________ as Trustee, at the address listed below under "The Owner
Trustee."
The Issuer is not a subsidiary or affiliate of or otherwise related to
the Underlying Trust or any of its affiliates. The Underlying Trust and its
affiliates are not involved in the offering of the Securities or the
preparation of this Prospectus Supplement. The Underlying Trust and its
affiliates will not receive any of the proceeds of the offering of the
Securities, and the Underlying Trust and its affiliates are not responsible
for, nor have they participated in the determination of, the issuance of the
Securities.
DESCRIPTION OF THE NOTES
The Notes will be issued pursuant to the Indenture. The following
summaries describe certain terms of the Notes and the Indenture. The
summaries do not purport to be complete and are subject to, and qualified in
their entirety by reference to, the provisions of the Indenture. See
"MANDATORY PREPAYMENT OF THE NOTES AND THE CERTIFICATES" and "PRIORITY OF
PAYMENTS" herein and "DESCRIPTION OF THE NOTES - The Indenture" in the
Prospectus for a summary of additional terms of the Indenture.
STATUS AND SECURITY
The Notes will be debt obligations of the Issuer, secured as described
below. The Notes will be senior in right of payment on each Payment Date to
the Certificates.
Under the terms of the Indenture, the Issuer will grant to the Indenture
Trustee, for the benefit of the Noteholders and the Swap Counterparty, a
security interest in certain assets of the Issuer to secure the Issuer's
obligations under the Indenture and the Notes. The assets subject to the
security interest of the Indenture will consist of (i) the Underlying
Securities, (ii) the Collection Account, (iii) (the Issuer's rights under the
Swap Agreement (for the benefit of the Noteholders only)) and (iv) all
proceeds of the foregoing (collectively, the "Assets").
Payments of interest and principal on the Notes will be made solely from
the proceeds of the Assets, in accordance with the priorities described under
"PRIORITY OF PAYMENTS" herein.
INTEREST
Interest on the principal balances of the Notes will accrue at a rate
per annum equal to ___% (or state formula), (calculated on the basis of a
360-day year consisting of twelve 30-day months) (the "Note Accrual Rate").
Interest will accrue with respect to each Payment Date during the _________
period beginning on the __th day of __________ (or on the Closing Date in the
case of the first Payment Date) and ending on the __th day of ___________
(each, a "Note Interest Accrual Period").
Interest will be payable to Noteholders in arrears on each Payment Date.
"Payment Date" means the __th day of each __________ or, if such day is not a
Business Day, the next succeeding Business Day, commencing on ______ __,
199_. A failure to pay interest due on the Notes on any Payment Date, which
failure continues for five Business Days, constitutes an Event of Default (as
defined herein) under the Indenture. A "Business Day" is any day other than
a Saturday or Sunday or another day on which banking institutions in New
York, New York or the city in which the corporate trust office of the Owner
Trustee or the Indenture Trustee is located are authorized or obligated by
law, regulations or executive order to be closed.
PRINCIPAL
The portion, if any, of the principal of the Notes that has not been
prepaid as described under "Mandatory Prepayment of the Notes and the
Certificates" will mature on the Scheduled Final Payment Date. However, if
an Event of Default occurs under the Indenture (other than an Event of
Default that constitutes a Swap Early Termination) the Indenture Trustee may
and, at the written request of the holders of a majority of the principal of
the Notes, will declare the Notes immediately due and payable, (subject to
the prior written consent of the Swap Counterparty under certain
circumstances. If a Swap Early Termination occurs, the entire unpaid
principal amount of the Notes will become immediately due and payable
automatically.)
MANDATORY PREPAYMENT
Beginning on _______________ and on each ____________ thereafter until
the principal amount of the Notes is paid in full, the Issuer will prepay a
pro rata portion of the then outstanding principal amount of each Note (which
prepayment may range from (_____)% to (_____)% of such outstanding principal
amount) on the basis of calculations described herein under "MANDATORY
PREPAYMENT OF THE NOTES AND THE CERTIFICATES -- Prepayment."
PAYMENTS
Payments on the Notes will be made by the Indenture Trustee on each
Payment Date to persons in whose names the Notes are registered on the Record
Date. The final payment in retirement of a Note will be made only upon
surrender of the Note to the Indenture Trustee at the office thereof
specified in the notice to Noteholders of such final payment. Notice will be
mailed prior to the Payment Date on which the final payment of principal and
interest on a Note is expected to be made to the holder thereof.
FORM, DENOMINATION AND REGISTRATION
The Notes will be represented by one or more Global Notes. Investors
may hold their interests in the Global Note directly through DTC (in the
United States) or CEDEL or Euroclear (in Europe) if they are participants in
such systems, or indirectly through organizations which are participants in
such systems. The Global Note will be registered in the name of a nominee of
DTC.
Except in the limited circumstances described under "CERTAIN INFORMATION
REGARDING THE SECURITIES - Definitive Securities" in the Prospectus, owners
of beneficial interests in Global Notes will not be entitled to receive
physical delivery of certificated Notes. The Notes are not issuable in
bearer form.
The Notes will be issued in minimum denominations of $1,000 and integral
multiples of $1,000 in excess thereof.
DESCRIPTION OF THE CERTIFICATES
The Certificates will be issued pursuant to the Trust Agreement. The
following summaries describe certain terms of the Certificates and the Trust
Agreement. The summaries do not purport to be complete and are subject to,
and qualified in their entirety by reference to, the provisions of the Trust
Agreement. See "MANDATORY PREPAYMENT OF THE NOTES AND THE CERTIFICATES" and
"PRIORITY OF PAYMENTS" herein and "THE TRUST AGREEMENT" in the Prospectus for
a summary of additional terms of the Trust Agreement.
INTEREST
Interest will accrue on the unpaid principal amount of the Certificates
from the Closing Date at a rate per annum equal to (state rate or formula
therefor), calculated on the basis of (the actual number of days in each
Certificate Interest Accrual Period divided by 360) (the "Certificate Accrual
Rate"). The Certificate Accrual Rate for the first Certificate Interest
Accrual Period will be (_____)% per annum. A "Certificate Interest Accrual
Period", with respect to any Payment Date, is the period from and including
the preceding Payment Date (in the case of the first Payment Date, from and
including ________ __, 199_) to but excluding such current Payment Date. No
interest will be paid on overdue interest.
Interest on the principal balance of the Certificates will be
distributed __________ in arrears on each Payment Date to the extent funds
are available for such distribution in accordance with the priority described
under "Priority of Payments."
PRINCIPAL
To the extent funds are available for such distribution in accordance
with the priority described under "Priority of Payments," the portion, if
any, of the principal of the Certificates that has not been prepaid as
described under "Mandatory Prepayment of the Notes and the Certificates" will
be distributed on the Certificates on the Scheduled Final Payment Date. If
the Notes have been declared immediately due and payable in accordance with
the Indenture upon the occurrence of an Event of Default, the principal of
the Certificates will be distributed out of the net proceeds realized from
the liquidation of the Underlying Securities and other Assets, if any, to the
extent available after the payment of all other obligations of the Issuer in
accordance with the Priority of Payments (including (any termination payment,
if any, owed under the Swap Agreement), all principal and interest due on the
Notes and all interest due on the Certificates).
MANDATORY PREPAYMENT
Beginning on each _____________ thereafter until the principal amount of
the Certificates is paid in full, the Issuer will distribute a pro rata
portion of the then outstanding principal amount of each Certificate (which
prepayment may range from (____)% to (_____)% of such outstanding principal
amount) on the basis of calculations described herein under "MANDATORY
PREPAYMENT OF THE NOTES AND THE CERTIFICATES" to the extent funds are
available for such distribution in accordance with the priority described
under "Priority of Payments."
SUBORDINATION
Distributions of principal and interest on the Certificates will be
subordinated in priority of payment to the payment of expenses of the Issuer,
to amounts owed by the Issuer to the Swap Counterparty and to the payment of
principal and interest due on the Notes. Consequently, the Certificateholders
will not receive any distributions of principal or interest with respect to a
Payment Date until (amounts owed by the Issuer to the Swap Counterparty on
such Payment Date and) the full amount of principal and interest due on the
Notes on such Payment Date are paid in full. See "PRIORITY OF PAYMENTS"
herein.
DISTRIBUTIONS
Distributions of principal and interest will be paid to the
Certificateholders pro rata in accordance with the percentage interest of the
aggregate principal amount of the Certificates represented by their
respective Certificates.
Pursuant to an administration agreement entered into between the Trust,
the Indenture Trustee, ________________________ as administrator (the
"Administrator") and the Owner Trustee (the "Administration Agreement"),
interest and principal distributions (including prepayments of principal as
described under "Mandatory Prepayment of the Notes and the Certificates") on
the Certificates will be made on behalf of the Owner Trustee by the
Administrator on the Payment Date to persons in whose names the Certificates
are registered on the Record Date. The final distribution in retirement of a
Certificate will be made only upon surrender of the Certificate to the Owner
Trustee at the office thereof specified in the notice to Certificateholders
of such final payment. Notice will be mailed prior to the Payment Date on
which the final distribution of principal and interest on a Certificate is
expected to be made to the holder thereof.
FORM, DENOMINATION AND REGISTRATION
The Certificates will be represented by one or more Global Certificates.
Investors may hold their interests in the Global Certificate directly through
DTC if they are DTC participants, or indirectly through organizations (other
than CEDEL, Euroclear or their respective nominees) which are DTC
participants. The Global Certificate will be registered in the name of a
nominee of DTC.
Except in the limited circumstances described under "Certain Information
Regarding the Securities--Definitive Securities," owners of beneficial
interests in Global Certificates will not be entitled to receive physical
delivery of certificated Certificates. The Certificates are not issuable in
bearer form.
The Certificates will be issued in minimum denominations of $1,000 and
integral multiples of $1,000 in excess thereof.
TERMINATION
All obligations of the Issuer and the Owner Trustee created by the Trust
Agreement will terminate upon the distribution to Certificateholders of all
amounts required to be distributed to them, if any, pursuant to the Trust
Agreement (and distribution to the Swap Counterparty of all amounts required
to be distributed to it pursuant to the Swap Agreement).
MANDATORY PREPAYMENT OF THE NOTES AND THE CERTIFICATES
PREPAYMENT
Beginning on ______________ and on each _____________ thereafter until
the principal amount of the Notes is paid in full, the Issuer will prepay a
pro rata portion of the then outstanding principal amount of each Note (which
prepayment may range from (______)% to (______)% of such outstanding
principal amount) on the basis of (state formula or index for determining
principal prepayments). When the principal amount of the Notes is paid in
full, the Issuer will commence prepaying the principal of the Certificates
(which prepayment may range from ( )% to ( )% of such outstanding
principal amount) on the basis of (state formula or index for determining
principal prepayments).
Calculation of Prepayment Amounts. (Describe how principal prepayments
are calculated.)
PRIORITY OF PAYMENTS
The Indenture Trustee will apply all monies received by it under the
Indenture, including proceeds of the Underlying Securities, proceeds of
Eligible Investments, (payments made by the Swap Counterparty to the Issuer
under the Swap Agreement), amounts realized by the Indenture Trustee upon the
sale or other liquidation of Underlying Securities or Eligible Investments
and proceeds of any other property included in the Trust Estate in the
following order of priority (the "Priority of Payments"):
((i) in payment or satisfaction of any (certain;) expenses;
(ii) (to the Swap Counterparty in payment of amounts due under the Swap
Agreement);
(iii) to Noteholders in payment of amounts due and unpaid on the
Notes for interest, ratably, without preference or priority of any kind;
(iv) to Noteholders in payment of amounts due and unpaid on the Notes
for principal, by reason of mandatory prepayment or otherwise, ratably,
without preference or priority of any kind;
(v) to the Holders of the Certificates as a distribution of interest
then payable on the Certificates, ratably, without preference or priority of
any kind; and
(vi) to the Holders of the Certificates as a distribution of principal
then payable on the Certificates by reason of mandatory prepayment or
otherwise, ratably, without preference or priority of any kind.
The following capitalized words and phrases will have the following
meanings in connection with the Priority of Payments:
"Eligible Investments": An investment shall be an Eligible Investment
if: (1) (A) it is an U.S. dollar denominated bond, debenture, note or other
investment or security evidencing debt which: (i) has an original maturity of
less than 364 days; and (ii) has ratings of "A-1+" from Standard & Poor's and
"P-1" from Moody's at the time of investment; or (B) it is any bond,
debenture, note or other investment or security evidencing debt not referred
to in (A) if the Indenture Trustee has been provided with a letter from
Moody's and Standard & Poor's to the effect that investment in such bond,
debenture, note or other investment or security will not adversely affect the
ratings on the Notes and the Certificates and (2) it is purchased at a price
no greater than par plus accrued interest, if any. Eligible Investments may
include, without limitation, those investments for which the Indenture
Trustee, the Owner Trustee or an affiliate thereof provides services.
"Trust Estate": The Assets of the Issuer pledged by the Issuer to the
Indenture Trustee to secure the Notes (and the Swap Agreement).
THE INDENTURE
The following summary describes certain terms of the Indenture. The
summary does not purport to be complete and is subject to, and qualified in
its entirety by reference to, the provisions of the Indenture. See
"DESCRIPTION OF THE NOTES" herein for a summary of certain additional terms
of the Indenture.
COLLECTION ACCOUNT; INVESTMENT
All distributions on the Underlying Securities and Eligible Investments,
if any, (and each payment received by the Indenture Trustee under the Swap
Agreement) will be deposited in the Collection Account upon receipt. The
Indenture Trustee will hold such moneys for the benefit of holders of the
Notes and the Swap Counterparty. In the event that distributions of
principal or interest are received on the Underlying Securities prior to the
date such principal or interest distributions are needed to make interest
payments or mandatory prepayments of principal on the Notes and Certificates,
such amounts will be held by the Indenture Trustee on deposit in the
Collection Account and will be invested by the Indenture Trustee in Eligible
Investments (at the direction of the Swap Counterparty. See "THE SWAP
AGREEMENT -- Early Amortization of the Underlying Securities" herein).
COLLECTION OF DISTRIBUTIONS ON UNDERLYING SECURITIES
All distributions on the Underlying Securities and Eligible Investments,
if any, will be made directly to the Indenture Trustee. The obligation of
the Issuer to make payments on the Notes is limited to distributions on the
Underlying Securities and Eligible Investments, if any, (and payments
received pursuant to the Swap Agreement) which were actually received by it.
However, if the Indenture Trustee has not received a distribution with
respect to the Underlying Securities by the fifth Business Day after the date
on which such distribution was due and payable pursuant to the terms of such
Underlying Securities, the Indenture will require the Indenture Trustee,
subject to the following sentence, to take such actions as may be directed by
(the Swap Counterparty including taking such legal action as the Swap
Counterparty deems appropriate under the circumstances), and prosecuting any
claims in connection therewith. In the event that the Indenture Trustee
reasonably believes that there may not be sufficient funds available to
reimburse it for its projected legal fees and expenses in accordance with the
Priority of Payments, the Indenture Trustee will notify the Noteholders (and
the Swap Counterparty) that it is not obligated to pursue any such available
remedies unless adequate indemnity for its legal fees and expenses is
provided by the Noteholders (or the Swap Counterparty.)
LIEN OF INDENTURE TRUSTEE
The Indenture Trustee will have a lien ranking senior to that of the
Noteholders upon all funds held or collected as part of the Assets to secure
payment of amounts payable to the Indenture Trustee pursuant to the
Indenture.
EVENTS OF DEFAULT
With respect to the Notes, an "Event of Default" under the Indenture
will consist of: (i) a default for (_____) Business Days or more in the
payment of any interest on any Note when the same becomes due and payable;
(ii) a default in the payment of the principal of or any installment of the
principal of any Note when the same becomes due and payable by reason of
mandatory prepayment or otherwise; (iii) a default in the observance or
performance of any covenant or agreement of the Issuer made in the Indenture
and the continuation of any such default for a period of 30 days after notice
thereof is given to the Issuer by the Indenture Trustee (or the Swap
Counterparty) or to the Issuer, (the Swap Counterparty) and the Indenture
Trustee by the holders of at least 25% of the outstanding principal of the
Notes; (iv) any representation or warranty made by the Issuer in the
Indenture or in any certificate delivered pursuant thereto or in connection
therewith having been incorrect in a material respect as of the time made,
and the circumstance in respect of which such representation or warranty was
incorrect not having been cured within 30 days after notice thereof is given
to the Issuer by the Indenture Trustee (or the Swap Counterparty) or to the
Issuer, (the Swap Counterparty) and the Indenture Trustee by the holders of
at least 25% of the outstanding principal of the Notes then outstanding; (v)
certain events of bankruptcy, insolvency, receivership or liquidation of the
Issuer, or (vi) (the occurrence of a Swap Early Termination).
RIGHTS UPON EVENT OF DEFAULT
If there is an Event of Default with respect to the Notes due to late
payment or nonpayment of interest due on the Notes, additional interest will
accrue on such unpaid interest at the interest rate on the Notes (to the
extent lawful) until such interest is paid. Such additional interest on
unpaid interest will be due at the time such interest is paid. If there is
an Event of Default due to late payment or nonpayment of principal on the
Notes, interest will continue to accrue on such principal at the interest
rate on the Notes until such principal is paid.
If an Event of Default ((other than an Event of Default that constitutes
a Swap Early Termination)) should occur and be continuing with respect to the
Notes, the Indenture Trustee may, and, at the written request of the holders
of a majority of the principal of the Notes then outstanding will, declare
the principal of the Notes to be immediately due and payable, (subject to the
prior written consent of the Swap Counterparty under certain circumstances.)
Such declaration may, under certain circumstances, be rescinded by the
holders of a majority of the outstanding principal of the Notes then
outstanding, (subject to the prior written consent of the Swap Counterparty).
(If a Swap Early Termination occurs, the entire unpaid principal amount of
the Notes will become immediately due and payable automatically.)
If an Event of Default has occurred and is continuing (other than a Swap
Early Termination), the Indenture Trustee may institute proceedings to
collect amounts due or foreclose on property of the Issuer, exercise remedies
as a secured party, sell the Underlying Securities or elect to have the Trust
maintain possession of the Underlying Securities and continue to apply
collections on the Underlying Securities; (provided, however, that if the
Swap Counterparty has given instructions to the Indenture Trustee with
respect to such proceedings, remedies or actions, and no Swap Default as to
which the Swap Counterparty is the defaulting party or Termination Event as
to which the Swap Counterparty is the sole Affected Party (as defined in the
Swap Agreement) shall have occurred, the Indenture Trustee will follow such
instructions). (If an Event of Default due to (a Swap Early Termination
occurs, the Indenture Trustee is required to liquidate the Underlying
Securities in compliance with the Indenture.)
The Indenture Trustee will be under no obligation to exercise any of the
rights or powers under the Indenture at the request or direction of any of
the holders of the Notes (or the Swap Counterparty), if the Indenture Trustee
reasonably believes it will not be adequately indemnified against the costs,
expenses and liabilities which might be incurred by it in complying with such
request. Subject to certain limitations contained in the Indenture, (if a
Swap Default as to which the Swap Counterparty is the defaulting party or a
Termination Event as to which the Swap Counterparty is the sole Affected
Party shall have occurred), the holders of a majority of the outstanding
principal of the Notes will have the right to direct the time, method and
place of conducting any proceeding or any remedy available to the Indenture
Trustee. (With the prior written consent of the Swap Counterparty,) the
holders of a majority of the principal of the Notes then outstanding may, in
certain cases, waive any default with respect thereto, except (i) a default
in the payment of principal or interest, (ii) a default in respect of a
covenant or provision of the Indenture that cannot be modified without the
waiver or consent of all of the holders of the outstanding principal of the
Notes (or (iii) the occurrence of a Swap Early Termination.)
No holder of a Note will have the right to institute any proceeding with
respect to the Indenture, unless (i) such holder previously has given the
Indenture Trustee written notice of a continuing Event of Default, (ii) the
holders of not less than 25% of the outstanding principal of the Notes have
made written request to the Indenture Trustee to institute such proceeding in
its own name as Indenture Trustee, (iii) such holder or holders have offered
the Indenture Trustee reasonable indemnity satisfactory to the Indenture
Trustee, (iv) the Indenture Trustee has for 60 days failed to institute such
proceeding and (v) no direction inconsistent with such written request has
been given to the Indenture Trustee during the 60-day period by the holders
of a majority of the outstanding principal of the Notes.
In addition, the Indenture Trustee and the Noteholders, by accepting the
Notes, will covenant that they will not at any time institute against the
Issuer or the Depositor any bankruptcy, reorganization or other proceeding
under any federal or state bankruptcy or similar law in connection with the
Notes, (the Swap Agreement), the Indenture, the Trust Agreement or any
related agreement.
With respect to the Issuer neither the Indenture Trustee nor the Owner
Trustee in their capacities as trustees, nor any holder of a Certificate
representing an ownership interest in the Issuer nor any of their respective
owners, beneficiaries, agents, officers, directors, employees, affiliates,
successors or assigns will, in the absence of an express agreement to the
contrary, be personally liable for the payment of the principal of or
interest on the Notes or for the agreements of the Issuer contained in the
Indenture.
SATISFACTION AND DISCHARGE OF INDENTURE
The Indenture will be discharged with respect to the collateral securing
the Notes upon the delivery to the Indenture Trustee for cancellation of all
the Notes or, with certain limitations, upon deposit with the Indenture
Trustee of funds sufficient for the payment in full of the Notes, (and any
amounts due to the Swap Counterparty).
VOTING RIGHTS
At all times, the voting rights of Noteholders under the Indenture will
be allocated among the Notes pro rata in accordance with their outstanding
principal balances.
CERTAIN MATTERS REGARDING THE INDENTURE TRUSTEE AND THE DEPOSITOR
Neither the Depositor, the Indenture Trustee nor any director, officer
or employee of the Depositor or the Indenture Trustee will be under any
liability to the Trust or the Noteholders for any action taken or for
refraining from the taking of any action in good faith pursuant to the
Indenture or for errors in judgment; provided, however, that none of the
Indenture Trustee, the Depositor and any director, officer or employee
thereof will be protected against any liability which would otherwise be
imposed by reason of willful misconduct, bad faith or negligence in the
performance of duties or by reason of reckless disregard of obligations and
duties under the Indenture. The Indenture Trustee and/or its affiliates may
receive compensation in connection with the Indenture Trustee's investment of
Assets in certain Eligible Investments as provided in the Indenture.
Each person into which the Indenture Trustee may be merged or with which
it may be consolidated and each person resulting from such merger or
consolidation will be the successor of the Indenture Trustee under the
Indenture.
THE TRUST AGREEMENT
The following summary describes certain terms of the Trust Agreement.
The summary does not purport to be complete and is subject to, and qualified
in its entirety by reference to, the provisions of the Trust Agreement. See
"DESCRIPTION OF THE CERTIFICATES" herein and "THE TRUST AGREEMENT" in the
Prospectus for a summary of certain additional terms of the Trust Agreement.
COLLECTION OF DISTRIBUTIONS ON UNDERLYING SECURITIES
The Underlying Securities will be assets of the Trust. All distributions
thereon will be made directly to the Indenture Trustee. Pursuant to the
Administration Agreement, distributions on the Certificates will be made to
Certificateholders by the Administrator acting on behalf of the Owner
Trustee.
EXERCISE OF REMEDIES
The Trust Agreement provides that until all the Notes have been paid in
full, the Indenture Trustee will take all actions to collect any
distributions due on the Underlying Securities or to exercise remedies
pursuant to the Indenture, subject to certain conditions set forth in the
Indenture.
The Owner Trustee and the Certificateholders, by accepting the
Certificates, will covenant that they will not at any time institute against
the Issuer or the Depositor any bankruptcy, reorganization or other
proceeding under any federal or state bankruptcy or similar law in connection
with the Certificates, (the Swap Agreement), the Indenture, the Trust
Agreement or any related agreement.
VOTING INTERESTS
As of any date, the aggregate outstanding principal balance of all
Certificates will constitute the voting interest of the Issuer (the "Voting
Interests"), except that, for purposes of determining Voting Interests,
Certificates owned by the Issuer or its affiliates and the Depositor will be
disregarded and deemed not to be outstanding, and except that, in determining
whether the Owner Trustee is protected in relying upon any request, demand,
authorization, direction, notice, consent or waiver, only Certificates that
the Owner Trustee knows to be so owned will be so disregarded. Certificates
so owned that have been pledged in good faith may be regarded as outstanding
if the pledgee establishes to the satisfaction of the Owner Trustee the
pledgor's right so to act with respect to such Certificates and that the
pledgee is not the Issuer or one of its affiliates.
CERTAIN MATTERS REGARDING THE OWNER TRUSTEE AND THE DEPOSITOR
None of the Depositor, the Owner Trustee or any director, officer or
employee of the Depositor or the Owner Trustee will be under any liability to
the Trust or the Certificateholders for any action taken or for refraining
from the taking of any action in good faith pursuant to the Trust Agreement
or for errors in judgment; provided, however, that none of the Owner Trustee,
the Depositor and any director, officer or employee thereof will be protected
against any liability which would otherwise be imposed by reason of willful
misconduct, bad faith or negligence in the performance of duties or by reason
of reckless disregard of obligations and duties under the Trust Agreement.
Each person into which the Owner Trustee may be merged or with which it
may be consolidated or and each person resulting from such merger or
consolidation will be the successor of the Owner Trustee under the Trust
Agreement.
With respect to the Issuer, neither the Indenture Trustee nor the Owner
Trustee in their capacities as trustees nor any of their respective owners,
beneficiaries, agents, officers, directors, employees, affiliates, successors
or assigns will, in the absence of an express agreement to the contrary, be
personally liable for the payment of the principal of or interest on the
Certificates or for the agreements of the Issuer contained in the Trust
Agreement.
(THE SWAP AGREEMENT
The following summary describes certain terms of the Swap Agreement.
The summary does not purport to be complete and is subject to, and qualified
in its entirety by reference to, the provisions of the Swap Agreement.
PAYMENTS UNDER THE SWAP AGREEMENT
On the Closing Date the Issuer will enter into a 1992 International
Swaps and Derivatives Association, Inc. ("ISDA") Master Agreement (Multi
Currency-Cross Border) (such agreement, the "1992 Master Agreement") with the
Swap Counterparty, as modified to reflect the transactions described below
and certain terms of the Notes and the Certificates (the 1992 Master
Agreement, as so modified, the "Swap Agreement"). The Swap Agreement will
incorporate certain relevant standard definitions published by ISDA.
Under the Swap Agreement, the Issuer will pay to the Swap Counterparty
amounts equal to the payments of interest scheduled to be received on the
Underlying Securities and Eligible Investments in accordance with the terms
thereof (net of certain expenses) and the Swap Counterparty will pay to the
Issuer amounts equal to the interest payable on the Notes and the
Certificates.
(If principal prepayments are not based on principal distributions on
Underlying Securities, state how Swap Agreement or other Enhancement will
provide funds for such principal distributions.)
Unless the Swap Agreement is terminated early as described under "--
Early Termination of Swap Agreement," the Swap Agreement will terminate on
the earlier of (i) the Scheduled Final Payment Date and (ii) the date on
which the principal of all of the Notes and the Certificates is prepaid as
described under "Mandatory Prepayment of the Notes and the Certificates --
Monthly Prepayment."
PRINCIPAL PAYMENTS ON THE UNDERLYING SECURITIES
(In the event that principal of the Underlying Securities is received by
the Issuer prior to the Scheduled Final Payment Date, whether during any
applicable rapid amortization period or otherwise, such payments in respect
of principal of the Underlying Securities will be deposited by the Indenture
Trustee (such amounts, the "Reinvested Collateral") in the Collection Account
and invested in Eligible Investments (as directed by the Swap Counterparty).
In such event, (i) all interest amounts received by the Issuer in respect of
(a) the Underlying Securities and (b) the Reinvested Collateral (including
interest on Eligible Investments) will be paid by the Issuer to the Swap
Counterparty under the Swap Agreement and (ii) the Swap Counterparty's
payment obligations under the Swap Agreement (which correspond to the
Issuer's interest payment obligations in respect of the Notes and
Certificates) will continue without amendment (subject to adjustment in the
event of the imposition of withholding tax (as referred to below)).
MODIFICATION AND AMENDMENT OF SWAP AGREEMENT; ASSIGNMENT OF SWAP AGREEMENT
The Trust Agreement and the Indenture will contain provisions permitting
the Owner Trustee to enter into any amendment of the Swap Agreement requested
by the Swap Counterparty to cure any ambiguity in, or to correct or
supplement any provision of, such Swap Agreement, subject to certain
limitations described in the Trust Agreement.
(At the direction of the Administrator, exercised in its sole
discretion, the Trustee may cause the Swap Counterparty to assign its
interest in the Swap Agreement to an entity designated by the Administrator.
Upon such assignment, the assignee would become the Swap Counterparty and the
assignor would have no further liability under the Swap Agreement.)
CONDITIONS PRECEDENT
The respective obligations of the Swap Counterparty and the Issuer to
pay certain amounts due under the Swap Agreement will be subject to the
following conditions precedent: (i) no Swap Default (as defined below under
"-- Defaults Under Swap Agreement") or event that with the giving of notice
or lapse of time or both would become a Swap Default shall have occurred and
be continuing and (ii) no Early Termination Date (as defined below under "--
Early Termination of Swap Agreement") has occurred or been effectively
designated.
DEFAULTS UNDER SWAP AGREEMENT
"Events of Default" under the Swap Agreement (each, a "Swap Default")
are limited to: (i) the failure of the Issuer (or the Swap Counterparty), to
pay any amount when due under the Swap Agreement after giving effect to the
applicable grace period, if any; (ii) the occurrence of certain events of
insolvency or bankruptcy of the Issuer or the Swap Counterparty, and (iii)
certain other standard events of default under the 1992 Master Agreement
including "Breach of Agreement" (not applicable to the Issuer), "Credit
Support Default" (not applicable to the Issuer), "Misrepresentation" (not
applicable to the Issuer) and "Merger without Assumption", as described in
Sections 5(a)(ii), 5(a)(iii), 5(a)(iv) and 5(a)(viii) of the 1992 Master
Agreement.
TERMINATION EVENTS
"Termination Events" under the Swap Agreement consist of the following:
(i) the acceleration of the principal of the Notes under the Indenture; and
(ii) certain standard termination events under the 1992 Master Agreement
including "Illegality" and "Tax Event Upon Merger", as described in Sections
5(b)(i) and 5(b)(iii) of the 1992 Master Agreement.
EARLY TERMINATION OF SWAP AGREEMENT
Upon the occurrence of any Swap Default under the Swap Agreement, the
non-defaulting party will have the right to designate an Early Termination
Date (as defined in the Swap Agreement) upon the occurrence and continuance
of such Swap Default. With respect to Termination Events, an Early
Termination Date may be designated by one of the parties (as specified in
each case in the Swap Agreement) and will occur only upon notice and, in
certain cases, after any Affected Party has used reasonable efforts to
transfer its rights and obligations under such Swap Agreement to a related
entity within a limited period after notice has been given of the Termination
Event, all as set forth in the Swap Agreement. Upon the occurrence of (i)
any Swap Default arising from any action taken, or failure to act, by the
Swap Counterparty, or (ii) a Termination Event with respect to which the Swap
Counterparty is the sole Affected Party, the Indenture Trustee may by notice
to the Swap Counterparty designate an Early Termination Date with respect to
the Swap Agreement. If a Termination Event occurs as a result of the
acceleration of the principal of the Notes under the Indenture, the Swap
Agreement will be terminated. The occurrence of an Early Termination Date
under the Swap Agreement will constitute a "Swap Early Termination."
Upon any Swap Early Termination of the Swap Agreement, the Issuer or the
Swap Counterparty may be liable to make a termination payment to the other
(regardless, if applicable, of which of such parties may have caused such
termination). Such termination payment will be calculated on the basis that
the Issuer is the Affected Party (as defined in the Swap Agreement), subject
to certain exceptions. The amount of any such termination payment will be
based on the market value of the Swap Agreement computed on the basis of
market quotations of the cost of entering into swap transactions with the
same terms and conditions that would have the effect of preserving the
respective full payment obligations of the parties, in accordance with the
procedures set forth in the Swap Agreement; (state whether there are
circumstances where no termination payment will be payable). Any such
termination payment could, if interest rates have changed significantly, be
substantial.
(In addition, in certain events of insolvency or bankruptcy pertaining
to the Swap Counterparty, which would result in the early termination of the
Swap Agreement, the Swap Counterparty shall not be entitled to a termination
payment.)
If a Swap Early Termination occurs, the principal of the Notes will be
declared or become immediately due and payable and the Indenture Trustee will
be obligated to liquidate the Underlying Securities and Eligible Investments.
In any such event, the ability of the Issuer to pay principal and interest on
the Notes and Certificates will depend on (a) the price at which the
Underlying Securities and Eligible Investments, if any, are liquidated, (b)
the amount of the termination payment, if any, which may be due to the Swap
Counterparty from the Issuer under the Swap Agreement and (c) the amount of
the termination payment, if any, which may be due to the Issuer from the Swap
Counterparty under the Swap Agreement. In the event that the net proceeds of
the liquidation of the Assets are not sufficient to make all payments due in
respect of the Notes and Certificates and for the Issuer to meet its
obligations, if any, in respect of the termination of the Swap Agreement,
then such amounts will be applied in accordance with the Priority of Payments
and the claims of the Swap Counterparty in respect of such net proceeds will
rank higher in priority than the claims of the Noteholders and the
Certificateholders. See "PRIORITY OF PAYMENTS" herein.
TAXATION
Neither the Issuer nor the Swap Counterparty is obligated under the Swap
Agreement to gross up if withholding taxes are imposed on payments made under
the Swap Agreement.
In the event that any withholding tax is imposed on payments due to the
Issuer on the Underlying Securities or payments by the Issuer under the Swap
Agreement, the Swap Counterparty will be entitled to deduct amounts in the
same proportion (as calculated in accordance with the Swap Agreement) from
subsequent payments due from it. In the event that the Swap Counterparty is
required to withhold amounts from payments by the Swap Counterparty under the
Swap Agreement, the payment obligations of the Swap Counterparty will be
reduced by such amounts and the payment obligations of the Issuer under the
Swap Agreement will remain the same. In either event, the Issuer will be
unable to meet its obligations in respect of the Notes and Certificates.
ASSIGNMENT
Except as provided below, neither the Issuer nor the Swap Counterparty
is permitted to assign, novate or transfer as a whole or in part any of its
rights, obligations or interests under the Swap Agreement. (Describe swap
assignment provisions.)
THE SWAP COUNTERPARTY
(Describe Swap Counterparty)
The description of the Swap Counterparty set out above has been provided
by the Swap Counterparty; the Swap Counterparty has not, however, been
involved in the preparation of and does not accept responsibility for, this
Prospectus Supplement or the Prospectus as a whole. There can be no
assurance that the Swap Counterparty will be able to perform its obligations
under the Swap Agreement. Failure by the Swap Counterparty to make required
payments may result in a delay or reduction in payments on the Securities.)
THE CALCULATION AGENT
___________________ will serve as Calculation Agent for the Issuer under
the Indenture and the Trust Agreement (and in connection with the Swap
Agreement).
THE ADMINISTRATION AGREEMENT
The Indenture Trustee, in its capacity as Administrator, will enter into
the Administration Agreement with the Trust and the Owner Trustee pursuant to
which the Administrator will agree, to the extent provided in such
Administration Agreement, to (enforce the Swap Agreement at the direction of
the Owner Trustee,) provide notices and perform other administrative
obligations required by the Indenture and the Trust Agreement.
THE INDENTURE TRUSTEE
___________________ is the Indenture Trustee under the Indenture. The
mailing address of the Indenture Trustee is ______________________,
Attention: ________________________ _____________________.
THE OWNER TRUSTEE
_________________________ is the Owner Trustee under the Trust
Agreement. The mailing address of the Owner Trustee is
_______________________, Attention: _______________________
_____________________.
THE DEPOSITOR
The principal executive offices of ML Asset Backed Corporation (the
"Depositor") are located at 250 Vesey Street, World Financial Center, New
York, New York 10281-1310 (Telephone: (212) 449-0336). Neither the
Depositor, nor any affiliate thereof, has guaranteed or is otherwise
obligated with respect to the Securities.
WEIGHTED AVERAGE LIFE OF THE NOTES AND CERTIFICATES
AND MATURITY CONSIDERATIONS
Weighted average life refers to the average length of time, weighted by
principal, that will elapse from the date of delivery of a security to the
date each dollar of principal is repaid to the investor.
(Discuss prepayment factors applicable to relevant index or formula).
The effect of the foregoing factors on the Notes and Certificates may vary at
different times during the lives of the Notes and Certificates. Accordingly,
no assurance can be given as to the weighted average lives of the Notes or
Certificates.
The Scheduled Final Payment Date for the Notes and Certificates is the
date not later than which the principal amount of the Notes and Certificates
is required to be fully paid. (As described above, the actual final payment
of the Notes and Certificates may occur earlier, and could occur
significantly earlier, than the Scheduled Final Payment Date. However, there
can be no assurance that the final payment of principal of the Notes and
Certificates will occur prior to the Scheduled Final Payment Date.)
THE UNDERLYING SECURITIES
The Depositor will acquire the Underlying Securities for deposit into
the Trust from ___________________________. At the time of issuance of the
Securities, the Depositor will cause the beneficial interest in the
Underlying Securities, which will be held in book-entry form through the
facilities of DTC, to be delivered to the Indenture Trustee's participant
account at DTC.
Information in this Prospectus Supplement with respect to the Underlying
Securities, the Underlying Trust, the Underlying Transferor and the
Underlying Servicer is derived solely from publicly available documents, the
contents of which none of the Depositor, the Underwriter or any of their
affiliates have verified or will verify. A potential purchaser of a Security
should obtain and review the same information concerning the Underlying
Securities and the Underlying Trust as one would obtain and review if
investing directly in the Underlying Securities.
The table below sets forth certain of the characteristics of the
Underlying Securities. The table does not purport to be complete and is
subject to, and qualified in its entirety by reference to, the prospectuses
pursuant to which the Underlying Securities were offered and sold.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
-------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
(Issuer:)
(Principal Amount Purchased by
Depositor) . . . . . . . . . . .
(Percentage of Total
Underlying Securities Purchased
by the Depositor) . . . . . . . .
(Underlying Transferor and
Underlying Servicer) . . . . . . .
(Underlying Trustee)
(Designation). . . . . . . . . . .
(Initial Certificate Amount) . . . .
(Series Termination Date). . . . . .
(Certificate Rate) . . . . . . . . .
. . . . . . . . . . . . . . . . . .
(Principal Payment Period) . . . .
(Subordinated Amount). . . . . . . .
(Optional Repurchase Percentage) . .
(Ratings). . . . . . . . . . . . . .
</TABLE>
__________________________________
Publicly Available Information. Certain information relating to the
Underlying Securities filed by or on behalf of _____________________ with the
Commission can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W. Washington, D.C.
20549, and at the following regional offices of the Commission: New York
Regional Office, Suite 1300, 7 World Trade Center, New York, New York 10048;
and Chicago Regional Office, Suite 1400, 500 West Madison Street, Chicago,
Illinois 60661. Copies of such material can be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington D.C.
20549, at prescribed rates. In addition, the Commission maintains a Website
that contains certain information regarding the Underlying Securities. The
address of the Commission's Website is http://www.sec.gov.
Although the Depositor has no reason to believe the information
concerning the Underlying Securities, the Underlying Trust or the Underlying
Servicer contained in the prospectus related to the Underlying Securities is
not reliable, neither the Depositor nor the Underwriter has participated in
the preparation of such documents or made any due diligence inquiry with
respect to the information therein. There can be no assurance that events
affecting the Underlying Securities or the Underlying Trust have not occurred
or have not yet been publicly disclosed which would affect the accuracy or
completeness of the publicly available documents described above.
THE TRUST WILL HAVE NO ASSETS OTHER THAN UNDERLYING SECURITIES (AND THE
SWAP AGREEMENT) FROM WHICH TO MAKE DISTRIBUTIONS OF AMOUNTS DUE IN RESPECT OF
THE SECURITIES. CONSEQUENTLY, THE ABILITY OF SECURITYHOLDERS TO RECEIVE
DISTRIBUTIONS IN RESPECT OF THE SECURITIES WILL DEPEND ENTIRELY ON THE
TRUST'S RECEIPT OF PAYMENTS IN THE UNDERLYING SECURITIES. PROSPECTIVE
PURCHASERS OF THE SECURITIES SHOULD CONSIDER CAREFULLY THE CONDITION OF THE
UNDERLYING TRUST AND ITS ABILITY TO MAKE PAYMENTS IN RESPECT OF THE
UNDERLYING SECURITIES. THIS PROSPECTUS SUPPLEMENT RELATES ONLY TO THE
SECURITIES OFFERED HEREBY AND DOES NOT RELATE TO THE UNDERLYING SECURITIES OR
THE UNDERLYING TRUST. ALL INFORMATION CONTAINED IN THIS PROSPECTUS
SUPPLEMENT REGARDING THE UNDERLYING SECURITIES AND THE UNDERLYING TRUST IS
DERIVED FROM PUBLICLY AVAILABLE DOCUMENTS. NEITHER THE DEPOSITOR, THE
UNDERWRITER, THE OWNER TRUSTEE, THE INDENTURE TRUSTEE NOR ANY OF THEIR
AFFILIATES PARTICIPATED IN THE PREPARATION OF SUCH DOCUMENTS OR TAKES ANY
RESPONSIBILITY FOR THE ACCURACY OR COMPLETENESS OF THE INFORMATION THEREIN.
UNDERLYING SECURITIES EARLY AMORTIZATION EVENT
An "Underlying Securities Early Amortization Event" will occur if, at
any time, an (Early Amortization Period) (as defined in the applicable
Underlying Agreements) commences with respect to any of the Underlying
Securities. An (Early Amortization Period) will commence if one or more of
the following (pay-out events) occurs with respect to the Underlying
Securities ((and, in certain cases, with the election of the trustee under
the Underlying Securities, or of holders of Underlying Securities
representing 50% or more of the investor interest in the affected series)):
(Describe Events)
USE OF PROCEEDS
The net proceeds from the sale of the Securities will be applied by the
Depositor on the Closing Date towards the purchase price of the Underlying
Securities, the payment of expenses related to such sale and other corporate
purposes.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Brown & Wood LLP, counsel for the Trust, for U.S.
federal income tax purposes, the Notes will be characterized as debt, and the
Trust will not be characterized as an association (or a publicly traded
partnership) taxable as a corporation. Each Noteholder, by the acceptance of
a Note, will agree to treat the Notes as indebtedness and each
Certificateholder, by the acceptance of a Certificate, will agree to treat
the Trust as a partnership in which the Certificateholders are partners for
federal tax purposes. Alternative characterizations of the Trust and the
Certificates are possible, but would not generally result in materially
adverse tax consequences to the Certificateholders. The taxable income
allocated to a Certificateholder that is a tax-exempt entity will constitute
"unrelated business taxable income" generally to such a holder under the
code. The Notes may be issued with original issue discount ("OID"). The
prepayment assumption to be used for calculating the accrual of OID and
market discount and amortization of bond premium will be ( ). For
additional information regarding U.S. federal income tax consequences, see
"CERTAIN FEDERAL INCOME TAX CONSEQUENCES" in the Prospectus.
ERISA CONSIDERATIONS
GENERAL
The Employee Retirement Income Security Act of 1974, as amended
("ERISA"), imposes certain restrictions on employee benefit plans subject to
ERISA ("Plans") and on persons who are parties in interest or disqualified
persons ("parties in interest") with respect to such Plans. Certain employee
benefit plans, such as governmental plans and church plans (if no election
has been made under section 410(d) of the Code), are not subject to the
restrictions of ERISA, and assets of such plans may be invested in the
Securities without regard to the ERISA considerations described below,
subject to other applicable federal and state law. However, any such
governmental or church plan which is qualified under section 401(a) of the
Code and exempt from taxation under section 501(a) of the Code is subject to
the prohibited transaction rules set forth in section 503 of the Code. Any
Plan fiduciary which proposes to cause a Plan to acquire any of the
Securities should consult with its counsel with respect to the potential
consequences under ERISA, and the Code, of the Plan's acquisition and
ownership of the Securities.
Investments by Plans are also subject to ERISA's general fiduciary
requirements, including the requirement of investment prudence and
diversification and the requirement that a Plan's investments be made in
accordance with the documents governing the Plan.
As discussed under "CERTAIN FEDERAL INCOME TAX CONSEQUENCES" in the
Prospectus, a Plan would likely realize unrelated business taxable income if
it purchases Certificates since the underlying assets of the Trust are debt
financed assets. Thus, the Certificates are not being offered to Plans. In
view of this restriction, the discussion below is limited to the ERISA
considerations resulting from the purchase and ownership of Notes.
PROHIBITED TRANSACTIONS
GENERAL
Section 406 of ERISA prohibits parties in interest with respect to a
Plan from engaging in certain transactions (including loans) involving a Plan
and its assets unless a statutory or administrative exemption applies to the
transaction. Section 4975 of the Code imposes certain excise taxes (or, in
some cases, a civil penalty may be assessed pursuant to section 502(i) of
ERISA) on parties in interest which engage in non-exempt prohibited
transactions.
PLAN ASSETS REGULATION
The United States Department of Labor ("DOL") has issued final
regulations concerning the definition of what constitutes the assets of a
Plan for purposes of ERISA and the prohibited transaction provisions of the
Code (the "Plan Assets Regulation"). The Plan Assets Regulation describes the
circumstances under which the assets of an entity in which a Plan invests
will be considered to be "plan assets" such that any person who exercises
control over such assets would be subject to ERISA's fiduciary standards.
Under the Plan Assets Regulation, generally when a Plan invests in another
entity, the Plan's assets do not include, solely by reason of such
investment, any of the underlying assets of the entity. However, the Plan
Assets Regulation provides that, if a Plan acquires an "equity interest" in
an entity that is neither a "publicly-offered security" (as defined therein)
nor a security issued by an investment company registered under the
Investment Company Act of 1940, the assets of the entity will be treated as
assets of the Plan investor unless certain exceptions apply. If the Notes
were deemed to be equity interests and no statutory, regulatory or
administrative exemption applies, the Trust could be considered to hold plan
assets by reason of a Plan's investment in the Notes. Such plan assets would
include an undivided interest in any assets held by the Trust. In such an
event, the Indenture Trustee and other persons, in providing services with
respect to the Trust's assets, may be parties in interest with respect to
such Plans, subject to the fiduciary responsibility provisions of Title I of
ERISA, including the prohibited transaction provisions of Section 406 of
ERISA, and Section 4975 of the Code with respect to transactions involving
the Trust's assets.
Under the Plan Assets Regulation, the term "equity interest" is defined
as any interest in an entity other than an instrument that is treated as
indebtedness under "applicable local law" and which has no "substantial
equity features." Although the Plan Assets Regulation is silent with respect
to the question of which law constitutes "applicable local law" for this
purpose, DOL has stated that these determinations should be made under the
state law governing interpretation of the instrument in question. In the
preamble to the Plan Assets Regulation, DOL declined to provide a precise
definition of what features are equity features or the circumstances under
which such features would be considered "substantial," noting that the
question of whether a plan's interest has substantial equity features is an
inherently factual one, but that in making a determination it would be
appropriate to take into account whether the equity features are such that a
Plan's investment would be a practical vehicle for the indirect provision of
investment management services.
The Issuer believes that the Notes will be classified as indebtedness
without substantial equity features for ERISA purposes. This belief is based
upon the terms of the Notes, the opinion of Federal Tax Counsel that the
Notes will be classified as debt instruments for federal income tax purposes
and the ratings which are expected to be assigned to the Notes. However, if
the Notes are deemed to be equity interests in the Trust and no statutory,
regulatory or administrative exemption applies, the Trust could be considered
to hold plan assets by reason of a Plan's investment in the Notes.
REVIEW BY PLAN FIDUCIARIES
Any Plan fiduciary considering whether to purchase any Notes on behalf
of a Plan should consult with its counsel regarding the applicability of the
fiduciary responsibility and prohibited transaction provisions of ERISA and
the Code to such investment. Among other things, before purchasing any
Notes, a fiduciary of a Plan should make its own determination as to whether
the Trust, as obligor on the Notes, is, or may become, a party in interest
with respect to the Plan, the availability of the exemptive relief provided
in the Plan Assets Regulations and the availability of any other prohibited
transaction exemptions. In addition, prior to purchasing any Notes, a
fiduciary of a Plan should make its own determination as to whether the Swap
Counterparty, by virtue of being characterized as the issuer of the Notes for
federal income tax purposes, is, or may become, a party in interest with
respect to the Plan. Such other exemptions may include DOL Prohibited
Transaction Exemption 84-14 (Class Exemption for Plan Asset Transactions
Determined by Independent Qualified Professional Asset Managers), 80-51 and
91-38 (Class Exemption for Certain Transactions Involving Underlying
Transferor Collective Investment Funds) and 90-1 (Class Exemption for Certain
Transactions Involving Insurance Company Pooled Separate Accounts). There is
no assurance that these or other exemptions, even if all of the conditions
specified therein are satisfied, will apply to all of the transactions
involving the Trust's assets.
Any purchaser that is an insurance company should consider the effects
of the 1993 United States Supreme Court decision in John Hancock Mutual Life
Insurance Co. v. Harris Trust and Savings Underlying Transferor, 114 S. Ct.
517 (1993), on its purchase of Notes or Certificates for its general account.
In John Hancock, the Supreme Court ruled that assets held in an insurance
company's general account may be deemed to be "plan assets" for ERISA
purposes under certain circumstances. In response to that decision, the DOL
has issued Prohibited Transaction Exemption 95-60 (Class Exemption for
Certain Transactions Involving Insurance Company Pooled General Accounts)
which, subject to certain conditions, provides relief from the prohibited
transaction rules that under John Hancock might otherwise be applicable to
assets held in an insurance company's general account. Any such prospective
purchaser should consult with its counsel as to the applicability of this
decision and exemption to its purchase of the Notes.
LEGAL INVESTMENT CONSIDERATIONS
The appropriate characterization of the Securities under various legal
investment restrictions, and thus the ability of investors subject to these
restrictions to purchase Securities, may be subject to significant
interpretive uncertainties. All investors whose investment authority is
subject to legal restrictions should consult their own legal advisors to
determine whether, and to what extent, the Securities will constitute legal
investments for them.
The Depositor makes no representation as to the proper characterization
of the Securities for legal investment or financial institution regulatory
purposes, or as to the ability of particular investors to purchase Securities
under applicable legal investment restrictions. The uncertainties described
above (and any unfavorable future determinations concerning legal investment
or financial institution regulatory characteristics of the Securities) may
adversely affect the liquidity of the Securities.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Depositor has agreed to sell to Merrill Lynch, Pierce, Fenner
& Smith Incorporated (the "Underwriter"), and the Underwriter has agreed to
purchase from the Depositor, the Securities. The Underwriter is obligated to
purchase all the Securities offered hereby if any are purchased.
Distribution of the Securities will be made by the Underwriter from time
to time in negotiated transactions or otherwise at varying prices to be
determined at the time of sale. Proceeds to the Depositor are expected to be
$ _____________________ from the sale of the Securities, before deducting
expenses payable by the Depositor of $_________________. In connection with
the purchase and sale of the Securities, the Underwriter may be deemed to
have received compensation from the Depositor in the form of underwriting
discounts, concessions or commissions.
Until the distribution of the Securities is completed, rules of the
Commission may limit the ability of the Underwriter to bid for and purchase
the Securities. As an exception to these rules, the Underwriter is permitted
to engage in certain transactions that stabilize the price of the Securities.
Such transactions consist of bids or purchases for the purpose of pegging,
fixing or maintaining the price of the Securities.
If the Underwriter creates a short position in the Securities in
connection with the offering, i.e., if it sells more Securities than are set
forth on the cover page of this Prospectus Supplement, the Underwriter may
reduce that short position by purchasing Securities in the open market.
In general, purchases of a security for the purpose of stabilization or
to reduce a short position could cause the price of the security to be higher
than it might be in the absence of such purchases.
Neither the Depositor nor the Underwriter makes any representation or
prediction as to the direction or magnitude of any effect that the
transactions described above may have on the prices of the Securities. In
addition, neither the Depositor nor any Underwriter makes any representation
that the Underwriter will engage in such transactions or that such
transactions, once commenced, will not be discontinued without notice.
The Underwriting Agreement provides that the Depositor will indemnify
the Underwriter against certain liabilities, including liabilities under the
Securities Act or contribute payments the Underwriter may be required to make
in respect thereof.
LEGAL MATTERS
Certain legal matters with respect to the Notes and the Certificates
will be passed upon for the Depositor by Brown & Wood LLP, New York, New York
and for the Underwriter by Brown & Wood LLP.
RATING
It is a condition to issuance of the Securities that the Notes be rated
"___" by (__________________ and "___" by _______________ and that the
Certificates be rated "___" by (________________ and "___" by
(_____________).
A securities rating addresses the likelihood of the receipt by
Securityholders of distributions on the Underlying Securities. The rating
takes into consideration the characteristics of the Underlying Securities and
the structural, legal and tax aspects associated with the Securities
(including, without limitation, the rating of the Swap Counterparty). The
ratings on the Securities do not, however, constitute statements regarding
the possibility that Securityholders might realize a lower than anticipated
yield.
A securities rating is not a recommendation to buy, sell or hold
securities and may be subject to revision or withdrawal at any time by the
assigning rating organization. Each securities rating should be evaluated
independently of similar ratings on different securities.
INDEX OF DEFINED TERMS
1992 Master Agreement . . . . . . . . . . . . . . . . . . . . . . . . . S-21
Administration Agreement . . . . . . . . . . . . . . . . . . . . . . . S-15
Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-15
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-13
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-13
CABS Early Amortization Event . . . . . . . . . . . . . . . . . . . . . S-27
Calculation Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-7
Cede . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Certificate Accrual Rate . . . . . . . . . . . . . . . . . . . . . . . S-14
Certificate Interest Accrual Period . . . . . . . . . . . . . . . . S-5, S-14
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-3
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-8
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2, S-27
Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-25
DOL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-29
DTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2, S-5
Eligible Investments . . . . . . . . . . . . . . . . . . . . . . . . . S-17
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-8, S-28
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . S-18
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Federal Tax Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . S-8
Global Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Global Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-3
Initial Certificate Prepayment Date . . . . . . . . . . . . . . . . . . . S-6
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-8
ISDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-21
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-3
Note Accrual Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . S-13
Note Interest Accrual Period . . . . . . . . . . . . . . . . . . . S-4, S-13
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-3
OID . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-28
parties in interest . . . . . . . . . . . . . . . . . . . . . . . . . . S-28
Payment Date . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-4, S-13
Plan Assets Regulation . . . . . . . . . . . . . . . . . . . . . . . . S-29
Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-28
Priority of Payments . . . . . . . . . . . . . . . . . . . . . . . . . S-16
Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Rating Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-12
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Reinvested Collateral . . . . . . . . . . . . . . . . . . . . . . . . . S-22
Scheduled Final Payment Date . . . . . . . . . . . . . . . . . . . . . . S-4
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-3
Swap Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-21
Swap Counterparty . . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-3
Swap Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-23
Swap Early Termination. . . . . . . . . . . . . . . . . . . . . . . . . S-23
Termination Events . . . . . . . . . . . . . . . . . . . . . . . . . . S-23
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-3
Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-5
Trust Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-17
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Underlying Securities . . . . . . . . . . . . . . . . . . . . . . . S-1, S-3
Underlying Securities Early Amortization Event . . . . . . . . . . . . S-27
Underlying Transferor . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Underlying Trust . . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-3
Underwriter . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-30
Voting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . S-21
_________________________
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE DEPOSITOR OR BY THE UNDERWRITER. THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, THE SECURITIES OFFERED HEREBY TO ANYONE IN
ANY JURISDICTION IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE ANY SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
AN IMPLICATION THAT INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE OF THIS PROSPECTUS SUPPLEMENT OR PROSPECTUS.
_________________________
TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUPPLEMENT
Reports to Securityholders . . . . . . . . . . . . . . . . . . . . . . . S-2
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-10
The Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-12
Description of The Notes . . . . . . . . . . . . . . . . . . . . . . . S-12
Description of The Certificates . . . . . . . . . . . . . . . . . . . . S-14
Mandatory Prepayment of The Notes and The Certificates . . . . . . . . S-16
Priority of Payments . . . . . . . . . . . . . . . . . . . . . . . . . S-16
The Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-17
The Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . S-20
(The Swap Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . S-21)
The Calculation Agent . . . . . . . . . . . . . . . . . . . . . . . . . S-25
The Administration Agreement . . . . . . . . . . . . . . . . . . . . . S-25
The Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . S-25
The Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . S-25
The Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-25
Weighted Average Life of The Notes and Certificates
and Maturity Considerations . . . . . . . . . . . . . . . . . . . . S-25
The Underlying Securities . . . . . . . . . . . . . . . . . . . . . . . S-26
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-28
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . S-28
ERISA Considerations . . . . . . . . . . . . . . . . . . . . . . . . . S-28
Legal Investment Considerations . . . . . . . . . . . . . . . . . . . . S-30
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-30
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-31
Rating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-31
Index of Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . S-33
PROSPECTUS
PAGE
----
Prospectus Supplement . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Documents by Reference . . . . . . . . . . . . . . 2
Reports to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Summary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Description of The Notes . . . . . . . . . . . . . . . . . . . . . . . . . 9
Description of The Certificates . . . . . . . . . . . . . . . . . . . . . 14
Certain Information Regarding The Securities . . . . . . . . . . . . . . 15
Trust Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
The Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
The Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Certain Federal Income Tax Considerations . . . . . . . . . . . . . . . . 28
State Tax Considerations . . . . . . . . . . . . . . . . . . . . . . . . 42
ERISA Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Index of Principal Terms . . . . . . . . . . . . . . . . . . . . . . . . 44
Global Clearance, Settlement and Tax Documentation Procedures . . . . . . I-1
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement
becomes effective. This Prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there by any sale of these
securities in any jurisdiction in which such offer, solicitation or sale
would be unlawful prior to the registration or qualification under the
securities laws of any such jurisdiction.
Subject to Completion dated March 2, 1998
PROSPECTUS
- ----------
ML ASSET BACKED CORPORATION
Depositor
Asset Backed Notes
Asset Backed Certificates
(Issuable in Series)
__________________
ML Asset Backed Corporation (the "Depositor") may offer from time to
time under this Prospectus and related Prospectus Supplements the Asset
Backed Notes (the "Notes") and the Asset Backed Certificates (the
"Certificates" and, together with the Notes, the "Securities") described
herein, which may be sold from time to time in one or more series (each, a
"Series"), in amounts, at prices and on terms to be determined at the time of
sale and to be set forth in a supplement to this Prospectus (a "Prospectus
Supplement").
As specified in the related Prospectus Supplement, the Certificates of a
series will evidence an interest in a trust (a "Trust") formed pursuant to a
Trust Agreement, as described herein. The Notes of a Series will be issued
and secured pursuant to an Indenture between the Trust and the Indenture
Trustee specified in the related Prospectus Supplement (the "Indenture
Trustee") and will represent indebtedness of the related Trust. The property
of each Trust will include assets composed of (a) credit card securities
("Underlying Securities"), (b) all monies due thereunder net, if and as
provided in the related Prospectus Supplement, of certain expenses, and (c)
certain funds, Enhancements (as defined herein) and other assets as described
herein and in the related Prospectus Supplement.
Each Series of Securities will be issued in one or more classes (each, a
"Class"), which may include subclasses. Interest on and principal of the
Securities of a Series will be payable on each Payment Date specified in the
related Prospectus Supplement, at the times, at the rates, in the amounts and
in the order of priority set forth in the related Prospectus Supplement.
Securities may be sold for U.S. dollars or for one or more foreign or
composite currencies and the principal of and any interest on Securities may
be payable in U.S. dollars or one or more foreign or composite currencies.
If a Series includes multiple Classes, such Classes may vary with
respect to the amount, percentage and timing of distributions of principal,
interest or both and one or more Classes may be subordinated to other Classes
with respect to distributions of principal, interest or both as described
herein and in the related Prospectus Supplement. A Series may include one or
more classes of Notes and/or one or more Classes of Certificates. A Series
may include one or more Classes entitled to distributions of principal with
disproportionate, nominal or no interest distributions, or to interest
distributions with disproportionate, nominal or no distributions in respect
of principal. Each Series of Securities may be subject to termination under
the circumstances described herein and in the related Prospectus Supplement.
The related Prospectus Supplement will specify which Class or Classes of
Notes, if any, and which Class or Classes of Certificates, if any, of a
Series are being offered thereby.
__________________
FOR A DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE CONSIDERED BY
PROSPECTIVE PURCHASERS OF THE SECURITIES, SEE "RISK FACTORS" ON PAGE 8 HEREIN
AND IN THE PROSPECTUS SUPPLEMENT.
__________________
NOTES OF A SERIES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES OF A SERIES
EVIDENCE BENEFICIAL INTERESTS IN, THE RELATED TRUST ONLY AND ARE NOT
GUARANTEED BY ANY GOVERNMENTAL AGENCY OR BY THE DEPOSITOR, ANY ISSUER
OF UNDERLYING SECURITIES, THE INDENTURE TRUSTEE, THE OWNER TRUSTEE,
THE ADMINISTRATOR OR BY ANY OF THEIR RESPECTIVE AFFILIATES OR,
UNLESS OTHERWISE SPECIFIED IN THE RELATED PROSPECTUS SUPPLEMENT,
BY ANY OTHER PERSON OR ENTITY. THE DEPOSITOR'S ONLY
OBLIGATIONS WITH RESPECT TO ANY SERIES OF SECURITIES
WILL BE PURSUANT TO CERTAIN REPRESENTATIONS AND
WARRANTIES SET FORTH IN THE RELATED TRUST
AGREEMENT, AS DESCRIBED HEREIN OR IN THE
RELATED PROSPECTUS SUPPLEMENT.
__________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Retain this Prospectus for future reference. This Prospectus may not be
used to consummate sales of Securities unless accompanied by the related
Prospectus Supplement.
__________________
MERRILL LYNCH & CO.
__________________
The date of this Prospectus is __________________
PROSPECTUS SUPPLEMENT
The Prospectus Supplement relating to a Series of Securities to be
offered hereunder will, among other things, set forth with respect to such
Series of Securities: (i) the aggregate principal amount, if any, interest
rate, if any, and authorized denominations of each Class of such Securities;
(ii) certain information concerning the Underlying Securities; (iii) the
terms of any Enhancement (as defined herein); (iv) information concerning any
other assets in the related Trust, including any Enhancement; (v) the
expected date or dates on which the principal amount, if any, of each Class
of Securities will be paid to the Securityholders; (vi) the extent to which
any Class within a Series is subordinated to any other Class of such Series;
and (vii) additional information with respect to the plan of distribution of
such Securities. To the extent that the terms of this Prospectus conflict or
are otherwise inconsistent with the terms of any related Prospectus
Supplement, the terms of such related Prospectus Supplement shall govern.
AVAILABLE INFORMATION
The Depositor, as originator of each Trust, has filed with the
Securities and Exchange Commission (the "Commission") a Registration
Statement (together with all amendments and exhibits thereto, referred to
herein as the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Notes and Certificates
offered pursuant to this Prospectus. For further information, reference is
made to the Registration Statement which may be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and its Regional Offices located as follows:
Chicago Regional Office, Citicorp Center, 500 West Madison Street,Suite 1400,
Chicago, Illinois 60661; and New York Regional Office, 7 World Trade Center,
Suite 1300, New York, New York 10048. Copies of such material can also be
obtained from the Public Reference Section of the Commission, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
In addition, the Commission maintains a Web site at http://www.sec.gov
containing reports, proxy statements and other information regarding
registrants, including the Depositor, that file electronically with the
Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed with respect to each Trust pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as
amended, subsequent to the date of the related Prospectus Supplement and
prior to the termination of any offering of Securities of such Trust shall be
deemed to be incorporated by reference into such Prospectus Supplement and
this Prospectus. Any statement contained in a document incorporated or
deemed to be incorporated by reference in any Prospectus Supplement or in
this Prospectus shall be deemed to be modified or superseded for purposes of
such Prospectus Supplement and this Prospectus to the extent that a statement
contained in any Prospectus Supplement or in this Prospectus modifies or
supersedes such statement. Any statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute part of any
Prospectus Supplement.
The Depositor will provide without charge to each person to whom a copy
of this Prospectus is delivered, on the written or oral request of any such
person, a copy of any or all of the documents incorporated herein by
reference, except the exhibits to such documents (unless such exhibits are
specifically incorporated by reference in such documents). Written requests
for such copies should be directed to ML Asset Backed Corporation, 250 Vesey
Street, World Financial Center, New York, New York 10281-1310, Attention:
Michael M. McGovern. Telephone requests for such copies should be directed
to ML Asset Backed Corporation at (212) 449-0336.
REPORTS TO HOLDERS
Periodic and annual reports concerning the Trust for a Series of
Securities are required under the Trust Agreement or Indenture to be
forwarded to the holders of record of such Securities. The holder of record
of each Class of Securities is expected to be Cede & Co. ("Cede"), as nominee
of The Depository Trust Company. See "THE TRUST AGREEMENT--Reports to
Holders" herein.
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus and by reference
to the information with respect to each Series contained in the related
Prospectus Supplement to be prepared and delivered in connection with the
offering of the Securities of such Series. Certain capitalized terms used in
this summary are defined elsewhere in this Prospectus on the pages indicated
in the "Index of Principal Terms".
ISSUER . . . . . . . . . . . With respect to each Series of Securities, the
trust (the "Trust" or the "Issuer") to be
formed pursuant to a trust agreement
(each, as amended and supplemented from
time to time, a "Trust Agreement") between
the Depositor and the Trustee.
OWNER TRUSTEE . . . . . . . . With respect to each Series of Securities, the
Owner Trustee specified in the related
Prospectus Supplement.
INDENTURE TRUSTEE . . . . . . With respect to any applicable Series of Notes,
the Indenture Trustee specified in the
related Prospectus Supplement.
THE CERTIFICATES . . . . . . A Series may include one or more classes of
Certificates and may or may not include
any Notes. The related Prospectus
Supplement will specify which Class or
Classes, if any, of the Certificates are
being offered thereby.
Unless otherwise specified in the related
Prospectus Supplement, each Class of
Certificates will have a stated
Certificate Balance specified in the
related Prospectus Supplement (the
"Certificate Balance") and will accrue
interest on such Certificate Balance at a
specified rate (with respect to each Class
of Certificates, the "Pass-Through Rate").
Each Class of Certificates may have a
different Pass-Through Rate, which may be
a fixed, variable or adjustable Pass-
Through Rate, or any combination of the
foregoing. The related Prospectus
Supplement will specify the Pass-Through
Rate for each Class of Certificates or the
method for determining the Pass-Through Rate.
With respect to a Series that includes two or
more Classes of Certificates, each Class
may differ as to timing and priority of
distributions, seniority, allocations of
losses, Enhancements, if any, Pass-Through
Rate or amount of distributions in respect
of principal or interest, or distributions
in respect of principal or interest in
respect of any such Class or Classes may
or may not be made upon the occurrence of
specified events or on the basis of
collections from designated portions of
the Underlying Securities. In addition, a
Series may include one or more Classes of
Certificates entitled to (i) distributions
in respect of principal with
disproportionate, nominal or no interest
distributions or (ii) interest
distributions with disproportionate,
nominal or no distributions in respect of
principal.
If a Series of Securities includes Classes of
Notes, distributions in respect of the
Certificates may be subordinated in
priority of payment to payments on the
Notes to the extent specified in the
related Prospectus Supplement.
THE NOTES . . . . . . . . . . Each Series of Securities may include one or
more Classes of Notes, which will be
issued pursuant to an Indenture between
the Trust and the Indenture Trustee (each,
as amended and supplemented from time to
time, an "Indenture"). The terms of any
Notes will be set forth in the Prospectus
Supplement relating to such Notes.
Unless otherwise specified in the related
Prospectus Supplement, each Class of Notes
will have a stated principal amount and
will bear interest at a specified rate or
rates (with respect to each Class of
Notes, the "Interest Rate"). Each Class
of Notes may have a different Interest
Rate, which may be a fixed, variable or
adjustable Interest Rate, or any
combination of the foregoing. The related
Prospectus Supplement will specify the
Interest Rate, if any, for each Class of
Notes, and the method for determining the
Interest Rate.
With respect to a Series that includes two or
more Classes of Notes, each Class may
differ as to the timing and priority of
payments, seniority, allocations of
losses, Enhancements, if any, Interest
Rate or amount of payments of principal or
interest, or payments of principal or
interest in respect of any such Class or
Classes may or may not be made upon the
occurrence of specified events or on the
basis of collections from designated
portions of the Underlying Securities. In
addition, a Series may include one or more
Classes of Notes entitled to (i) principal
payments with disproportionate, nominal or
no interest payments or (ii) interest
payments with disproportionate, nominal or
no principal payments.
DEPOSITOR . . . . . . . . . . ML Asset Backed Corporation. None of the
Depositor, the administrator named in the
Prospectus Supplement (the
"Administrator"), the Owner Trustee, the
Indenture Trustee or any underwriter, nor
any affiliate of the foregoing, will
guarantee, or will otherwise be obligated
with respect to, the Securities of any
Series. See "THE DEPOSITOR."
PRINCIPAL PAYMENTS . . . . . All payments of principal of a Series of
Securities will be made in an aggregate
amount determined as set forth in the
related Prospectus Supplement and will be
paid at the times and will be allocated
among the Classes of such Series in the
order and amounts as specified in the
related Prospectus Supplement.
OPTIONAL TERMINATION . . . . One or more Classes of Securities of any Series
may be repurchased or repaid in whole, but
not in part, at the Depositor's option or
at the option of such other entity named
in the related Prospectus Supplement, at
such time and under the circumstances
specified in such Prospectus Supplement,
at the redemption price set forth therein.
If so specified in the related Prospectus
Supplement for a Series of Securities, the
Depositor or such other entity that is
specified in the related Prospectus
Supplement may, at its option, cause an
early termination of the related Trust by
repurchasing or liquidating all of the
Assets remaining in the Trust on or after
a specified date, or on or after such time
as the aggregate principal balance of the
Securities of the Series or the Underlying
Securities of such Series, as specified in
the related Prospectus Supplement, is less
than the amount or percentage specified in
the related Prospectus Supplement. See
"CERTAIN INFORMATION REGARDING THE
SECURITIES -- Optional Purchase or
Termination."
In addition, the Prospectus Supplement may
provide other circumstances under which
Securityholders of a Series could be fully
paid significantly earlier than would
otherwise be the case if payments or
distributions were solely based on the
distributions on the related Underlying
Securities.
TRUST ASSETS
A. Underlying Securities . The assets (the "Assets") of a Trust will
include credit card securities
("Underlying Securities") that evidence an
interest in a trust or other entity that
contains a pool of receivables (the
"Credit Card Receivables") generated from
time to time in consumer revolving credit
card accounts (the "Accounts") and
collections thereon allocated to such
Underlying Securities.
The related Prospectus Supplement for a Series
will specify (in certain cases, on an
approximate basis and, in certain cases,
by reference to the Underlying Securities
Prospectus (as defined herein)), to the
extent relevant and to the extent such
information is reasonably available to the
Depositor and the Depositor reasonably
believes such information to be reliable,
(i) the aggregate approximate principal
amount and type of any Underlying
Securities to be included in the Trust for
such Series; (ii) the expected maturity
and the final maturity of the Underlying
Securities; (iii) the interest rate for
the Underlying Securities; (iv) the issuer
or issuers of the Underlying Securities
(each, an "Underlying Issuer" or
"Underlying Trust"), the servicer or
servicers of the Underlying Securities
(the "Underlying Servicer") and the
trustee or trustees of the Underlying
Securities (the "Underlying Securities
Trustee"); and (v) any early amortization
events applicable to the Underlying
Securities. See "THE TRUST ASSETS"
herein.
B. COLLECTION,
PRE-FUNDING AND OTHER
TRUST ACCOUNTS . . . . Unless otherwise provided in the related
Prospectus Supplement, all payments on or
with respect to the Assets for a Series
will be remitted directly to an account
(the "Collection Account") to be
established for such Series in the name of
the Owner Trustee, the Indenture Trustee,
the Administrator or other person
specified in the Prospectus Supplement.
Unless otherwise provided in the related
Prospectus Supplement, the Indenture
Trustee shall be required to apply a
portion of the amount in the Collection
Account to the payment, if and as provided
in the related Prospectus Supplement, of
certain amounts payable to the
Administrator and any other person
specified in the related Prospectus
Supplement, and then to apply remaining
amounts in the Collection Account to (i)
the payment of principal of and interest
on the Securities of such Series on the
next Payment Date and (ii) any other
purpose specified in such Prospectus
Supplement, in each case to the extent
specified in such Prospectus Supplement.
After applying the funds in the Collection
Account as described above, any funds
remaining in the Collection Account may be
paid over to the Administrator, the
Depositor, any provider of Enhancement
with respect to such Series (an
"Enhancer") or any other person entitled
thereto in the manner and at the times
established in the related Prospectus
Supplement. Various other accounts may be
created under the terms of the documents
related to a specific Series.
In addition, a Prospectus Supplement may
provide that the assets of a Trust will
include a Pre-Funding Account (the "Pre-
Funding Account"). To the extent provided
in the related Prospectus Supplement, the
Depositor will be obligated (subject only
to the availability thereof) to deposit,
and the related Trust will be obligated to
purchase (subject to the satisfaction of
certain conditions described in the
applicable Trust Agreement), additional
Underlying Securities (the "Subsequent
Underlying Securities") from time to time
(as frequently as daily) during the
funding period specified in the related
Prospectus Supplement (the "Funding
Period") having an aggregate principal
balance approximately equal to the amount
on deposit in the Pre-Funding Account on
the related Closing Date (the "Pre-Funded
Amount").
C. CREDIT, CASH FLOW
OR OTHER ENHANCEMENT
OR DERIVATIVE
ARRANGEMENTS . . . . . If and to the extent specified in the related
Prospectus Supplement, credit, cash flow
or other enhancement or derivative
arrangements with respect to a Trust or
any Class or Classes of Securities may
include any one or more of the following:
subordination of one or more other Classes
of Securities, a Reserve Account, over-
collateralization, letters of credit,
credit or liquidity facilities, surety
bonds, guaranteed investment contracts,
swaps (including without limitation
interest rate and currency swaps),
exchange agreements, interest rate
protection agreements, repurchase
obligations, put and/or call options,
yield supplement agreements or accounts,
other agreements with respect to third
party payments or other support, cash
deposits or such other derivative or other
arrangements as may be described in the
related Prospectus Supplement or any
combination of the foregoing. Unless
otherwise specified in the related
Prospectus Supplement, any form of credit
enhancement, cash flow enhancement or
other arrangements will have certain
limitations and exclusions from coverage
thereunder, which will be described in the
related Prospectus Supplement. Any of
such arrangements or devices are referred
to herein as "Enhancements."
TAX STATUS . . . . . . . . . Unless the Prospectus Supplement specifies that
the related Trust will be treated as a
grantor trust and, except as otherwise
provided in such Prospectus Supplement,
upon the issuance of the related Series of
Securities, Brown & Wood LLP ("Federal Tax
Counsel") will deliver an opinion to the
effect that for U.S. federal income tax
purposes (i) any Notes of such Series will
be characterized as debt and (ii) such
Trust will not be characterized as an
association (or a publicly traded
partnership) taxable as a corporation. In
respect of any such Series, each
Noteholder, by the acceptance of a Note of
such Series, will agree to treat such Note
as indebtedness, and each
Certificateholder, by the acceptance of a
Certificate of such Series, will agree to
treat such Trust as (i) to the extent
there is more than one Certificateholder,
a partnership in which such
Certificateholder is a partner for federal
income tax purposes or (ii) to the extent
there is a single Certificateholder as an
entity disregarded for U.S. federal income
tax purposes such that the
Certificateholder is treated as owning the
Trust's assets directly. Alternative
characterizations of such a Trust and such
Certificates are possible, but would not
result in materially adverse tax
consequences to Certificateholders.
If the Prospectus Supplement specifies that the
related Trust will be treated as a grantor
trust and except as otherwise provided in
such Prospectus Supplement, upon the
issuance of the related Series of
Certificates, Federal Tax Counsel will
deliver an opinion to the effect that such
Trust will be treated as a grantor trust
for federal income tax purposes and will
not be subject to federal income tax.
See "CERTAIN FEDERAL INCOME TAX CONSEQUENCES"
and "STATE TAX CONSIDERATIONS" for
additional information concerning the
application of federal and state tax laws.
ERISA CONSIDERATIONS . . . . Subject to the considerations discussed under
"ERISA CONSIDERATIONS" herein and in the
related Prospectus Supplement, and unless
otherwise specified therein, any Notes of
a Series will be eligible for purchase by
employee benefit plans subject to the
Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and plans
described in Code section 4975(e),
including individual retirement accounts.
Unless otherwise specified in the related
Prospectus Supplement, the Certificates
may not be acquired by any employee
benefit plan or by any individual
retirement account. See "ERISA
CONSIDERATIONS" herein and in the related
Prospectus Supplement.
RISK FACTORS
RISK FACTORS RELATING TO THE SECURITIES
Limited Liquidity. There can be no assurance that a secondary market
for the Securities of any Series will develop or, if it does develop, that
such market will provide Securityholders with liquidity of investment or that
it will continue for the life of the Securities of such Series. The
underwriters presently expect to make a secondary market in the Securities,
but have no obligation to do so.
Limited Nature of Rating. Any rating assigned to a Class of Securities
by a Rating Agency will reflect such Rating Agency's assessment solely of the
likelihood that the holders of such Class of Securities will receive the
payments of interest and/or principal required to be made under the Trust
Agreement or Indenture and will be based primarily on the value of the Assets
in the Trust and the availability of any Enhancement with respect to such
Class of Securities. The rating will not be a recommendation to purchase,
hold or sell such Class of Securities, and such rating will not comment as to
the marketability of such Securities, any market price or suitability for a
particular investor. There is no assurance that any rating will remain for
any given period of time or that any rating will not be lowered or withdrawn
entirely by a Rating Agency if in such Rating Agency's judgment circumstances
so warrant.
Book-Entry Certificates. Issuance of the Securities in book-entry form
may reduce the liquidity of such Securities in the secondary trading market
since investors may be unwilling to purchase Securities for which they cannot
obtain physical certificates. See "CERTAIN INFORMATION REGARDING THE
SECURITIES -- Book-Entry Registration" herein.
Because transactions in the Securities can be effected only through The
Depository Trust Company ("DTC"), Cedel Bank, soci t anonyme ("CEDEL"), the
Euroclear System ("Euroclear"), and participating organizations and indirect
participants, the ability of a beneficial owner of a Security (a "Security
Owner") to pledge a security to persons or entities that do not participate
in the DTC, CEDEL or Euroclear system, or otherwise to take actions in
respect of such Securities, may be limited due to lack of a physical
certificate representing the Certificates. See "CERTAIN INFORMATION
REGARDING THE SECURITIES -- Book-Entry Registration" herein.
Security Owners may experience some delay in their receipt of
distributions of interest on and principal of the Securities because such
distributions will be forwarded by the Trustee, the Indenture Trustee or the
Administrator to DTC and DTC will credit such distributions to the accounts
of its Participants (as defined herein), which will thereafter credit them to
the accounts of Security Owners either directly or indirectly through
indirect participants. See "CERTAIN INFORMATION REGARDING THE SECURITIES --
Book-Entry Registration" herein.
RISK FACTORS RELATING TO UNDERLYING SECURITIES
Each Prospectus Supplement will specify the Underlying Securities that
will be or are expected to be included in the Assets of the related Trust.
Each issue of Underlying Securities will have been registered under the
Securities Act. Such Prospectus Supplement will refer to the prospectus or
prospectus supplement (together, the "Underlying Securities Prospectus") for
each issue of such Underlying Securities for a description of the terms of
such Underlying Securities, the related Credit Card Receivables and the
originator and Underlying Servicer of the Credit Card Receivables. Such
Underlying Securities Prospectus will describe, among other things,
(i) the risk of the interruption or reduction of distributions on
the related Underlying Securities in the event of the insolvency or
receivership of the originator or transferor of the Credit Card
Receivables to the Underlying Trustee,
(ii) the risk that the failure to comply with state or Federal
consumer protection laws to which the Credit Card Receivables are
subject could adversely affect the Servicer's ability to collect
payments on the Credit Card Receivables, which would adversely affect
the funds available to make payments on such Underlying Securities, and
therefore adversely affect the ability of the Trust to make payments on
the related Securities,
(iii) legal actions and proposed legislation that could have
the effect of reducing the annual percentage rate payable on Credit Card
Receivables or other fees payable in respect of Credit Card Receivables,
(iv) the risk that a decline in the amount of Credit Card
Receivables originated in respect of the Underlying Securities may cause
such Underlying Securities to begin to amortize prior to their stated
maturity date, and thus, depending upon the structure of the related
Securities, affect the maturity of such Securities,
(v) (a) the basis risk that the finance charge rates borne by the
related Credit Card Receivables may not be based on the same index upon
which the Underlying Securities are based or (b) the basis risk that the
Underlying Securities are fixed rate securities and the finance charge
rates on the Credit Card Receivables move to rates that are lower than
the sum of such fixed rates and the servicing fee rate in respect of
such Underlying Securities, with the result in each case that there are
insufficient finance charges from the Credit Card Receivables to pay the
amount of interest due on such Underlying Securities, and
(vi) the ability of the Underlying Servicer to change the terms of
the Credit Card Receivables and the risk that such change could result
in the early amortization of the Underlying Securities, which could
adversely affect the Securities.
No Investigation of Underlying Securities, Underlying Transferor,
Underlying Trust and Underlying Servicer. None of the Depositor, the
Underwriter, the Owner Trustee, the Indenture Trustee or any of their
affiliates (i) has made or will make any investigation of the business
condition, financial or otherwise, of the Underlying Trust, the Underlying
Transferor or the Underlying Servicer, or (ii) has verified or will verify
any reports or information filed by the Underlying Trust with the Commission.
Investors are encouraged to consider publicly available financial and other
information regarding the Underlying Trust. The issuance of the Securities
should not be considered an endorsement by the Depositor, the Underwriter,
the Owner Trustee, the Indenture Trustee or any of their affiliates of the
condition of the Underlying Trust or the merits of the Underlying Securities.
DESCRIPTION OF THE NOTES
GENERAL
With respect to each Trust that issues Notes, if any, one or more Classes
of Notes of the related Series will be issued pursuant to the terms of an
Indenture, a form of which has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. The following summary does
not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all the provisions of the Notes and the Indenture.
Unless otherwise specified in the related Prospectus Supplement, each
Class of Notes will initially be represented by one or more Notes, in each
case registered in the name of the nominee of DTC (together with any
successor depository selected by the Trust, the "Depository") except as set
forth below. Unless otherwise specified in the related Prospectus
Supplement, the Notes will be available for purchase in denominations of
$1,000 and integral multiples thereof in book-entry form only. The Depositor
has been informed by DTC that DTC's nominee will be Cede, unless another
nominee is specified in the related Prospectus Supplement. Accordingly, such
nominee is expected to be the holder of record of the Notes of each Class.
Unless and until Definitive Notes are issued under the limited circumstances
described herein or in the related Prospectus Supplement, no Noteholder will
be entitled to receive a physical certificate representing a Note. All
references herein and in the related Prospectus Supplement to actions by
Noteholders refer to actions taken by DTC upon instructions from its
participating organizations (the "Participants") and all references herein
and in the related Prospectus Supplement to payments, notices, reports and
statements to Noteholders refer to payments, notices, reports and statements
to DTC or its nominee, as the registered holder of record of the Notes, for
payments, notices, reports and statements to be made to the Noteholders in
accordance with DTC's procedures with respect thereto. See "CERTAIN
INFORMATION REGARDING THE SECURITIES -- Book-Entry Registration" and "--
Definitive Securities."
PRINCIPAL OF AND INTEREST ON THE NOTES
The timing and priority of payment, seniority, allocations of losses,
Interest Rate, if any, and amount of or method of determining payments of
principal of and interest on each Class of Notes of a given Series will be
described in the related Prospectus Supplement. The right of holders of any
Class of Notes to receive payments of principal and interest may be senior or
subordinate to the rights of holders of any other Class or Classes of Notes
of such Series, as described in the related Prospectus Supplement. Unless
otherwise provided in the related Prospectus Supplement, payments of interest
on the Notes of such Series will be made prior to payments of principal
thereon. To the extent provided in the related Prospectus Supplement, a
Series may include one or more Classes of Notes entitled to (i) principal
payments with disproportionate, nominal or no interest payments or
(ii) interest payments with disproportionate, nominal or no principal
payments. Each Class of Notes may have a different Interest Rate, which may
be a fixed, variable or adjustable Interest Rate (and which may be zero for
certain Classes of Notes), or any combination of the foregoing. A Class of
Notes may accrue interest and such interest may be added to the principal
balance thereof, rather than paid to the related Noteholders, until a
specified event occurs or until such Class of Notes is retired. The related
Prospectus Supplement will specify the Interest Rate, if any, for each Class
of Notes of a given Series or the method for determining such Interest Rate.
One or more Classes of Notes of a Series may be redeemable in whole or in
part under the circumstances specified in the related Prospectus Supplement,
including at the end of the funding period (if any) or as a result of the
Underlying Servicer's exercising its option to purchase the related Credit
Card Receivables.
To the extent specified in any Prospectus Supplement, one or more
Classes of Notes of a Series may have fixed principal payment schedules or
formulas or other methodologies for determining the amount of principal and,
as set forth in such Prospectus Supplement, holders of such Notes would be
entitled to receive as payments of principal on any Payment Date the
applicable amounts set forth on such schedule or determined by such formula
or methodogoly with respect to such Notes, in the manner and to the extent set
forth in the related Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement,
payments to Noteholders of all Classes within a Series in respect of interest
will have the same priority. Under certain circumstances, the amount
available for such payments could be less than the amount of interest payable
on the Notes on any of the dates specified for payments in the related
Prospectus Supplement (each, a "Payment Date"), in which case each Class of
Noteholders will receive its ratable share (based upon the aggregate amount
of interest due to such Class of Noteholders) of the aggregate amount
available to be distributed in respect of interest on the Notes of such
Series.
In the case of a Series of Notes which includes two or more Classes of
Notes, the sequential order and priority of payment in respect of principal
and interest, and any schedule or formula or other provisions applicable to
the determination thereof, of each such Class will be set forth in the
related Prospectus Supplement. Payments in respect of principal of and
interest on any Class of Notes will be made on a pro rata basis among all the
Noteholders of such Class. A Series with Notes may provide for a period
during which collections of principal in respect of the Underlying Securities
are not applied to payments of principal of such Notes, or may provide for a
liquidity facility or other arrangement that permits one or more classes of
Notes to be paid in planned amounts or formula amounts on scheduled Payment
Dates.
THE INDENTURE
Modification of Indenture. With respect to each Trust that has issued
Notes pursuant to an Indenture, the Trust and the Indenture Trustee may, with
the consent of the holders of a majority of the outstanding Notes of the
related Series, execute a supplemental indenture to add provisions to, change
in any manner or eliminate any provisions of, the related Indenture, or
modify (except as provided below) in any manner the rights of the related
Noteholders.
Unless otherwise specified in the related Prospectus Supplement with
respect to a Series of Notes and the related Indenture, in the absence of the
consent of the holder of each such outstanding Note affected thereby, no
supplemental indenture will: (i) change the due date of any installment of
principal of or interest on any Note of such Series or reduce the principal
amount thereof, the interest rate thereon or the redemption price with
respect thereto, change the provisions of such Indenture relating to the
application of collections on, or proceeds of the sale of, the related trust
estate to the payment of principal of or interest on the Notes of such
Series, or change any place of payment where or the coin or currency in
which, any Note of such Series or the interest thereon is payable;
(ii) impair the right to institute suit for the enforcement of certain
provisions of such Indenture regarding payment; (iii) reduce the percentage
of the aggregate amount of the outstanding Notes of such Series, the consent
of the holders of which is required for any such supplemental indenture or
the consent of the holders of which is required for any waiver of compliance
with certain provisions of such Indenture or of certain defaults thereunder
and their consequences as provided for in such Indenture; (iv) modify or
alter the provisions of such Indenture regarding certain provisions relating
to which Notes of such Series will be considered outstanding for purposes of
voting under such Indenture; (v) reduce the percentage of the aggregate
outstanding amount of Notes of such Series required to direct the related
Indenture Trustee to sell or liquidate the related trust estate pursuant to
certain provisions of such Indenture; (vi) decrease the percentage of the
aggregate outstanding principal amount of the Notes of such Series required
to amend the sections of such Indenture which specify the applicable
percentage of aggregate principal amount of the Notes of such Series
necessary to amend such Indenture, or to provide that certain additional
provisions of such Indenture or related documents cannot be modified or
waived without the consent of each holder of an outstanding Note of such
Series affected thereby; or (vii) permit the creation of any lien ranking
prior to or on a parity with the lien of the related Indenture with respect
to any of the collateral for the Notes of such Series or, except as otherwise
permitted or contemplated in such Indenture, terminate the lien of such
Indenture on any such collateral or deprive the holder of any such Note of
the security provided by the lien of such Indenture.
Unless otherwise specified in the Prospectus Supplement, without the
consent of the holders of any Notes, the Trust and the Indenture Trustee for
any Series may enter into one or more supplemental indentures for any of the
following purposes: (i) to cure any ambiguity or mistake, (ii) to correct
any defective provisions or to correct or supplement any provision therein
which may be inconsistent with any other provision therein, (iii) to add to
the duties of the Depositor or Administrator, (iv) to add any other
provisions with respect to matters or questions arising under such Indenture
or related Enhancement, (v) to comply with any requirements of the Code, (vi)
to provide for the appointment of a successor Indenture Trustee under the
Indenture and to add or change any provisions of the Indenture as necessary
to facilitate the administration of the trusts thereunder by more than one
trustee or (vii) to modify, eliminate or add to the provisions of the
Indenture to the extent necessary to effect qualification of the Indenture
under the Trust Indenture Act of 1939, as amended, or under any similar
federal statute and to add to the Indenture such other provisions as may be
expressly required by the Trust Indenture Act of 1939, as amended, or such
other similar federal statute; provided that any such supplemental indenture
pursuant to clause (iv) above will not adversely affect in any material
respect the interests of any Securityholders of such Series, as evidenced by
an opinion of counsel or a written confirmation from each rating agency
requested by the Depositor rate the related Securities (each, a "Rating
Agency") that such amendment will not cause such Rating Agency to reduce
the then current rating thereof.
Events of Default; Rights upon Event of Default. With respect to the
Notes of a given Series, unless otherwise specified in the related Prospectus
Supplement, "Events of Default" under the related Indenture will include:
(i) a default for five days or more (or such longer period specified in the
related Prospectus Supplement) in the payment of any interest due on any such
Note (provided that, unless otherwise specified in the related Prospectus
Supplement, if any amount of interest which would otherwise be payable on the
Underlying Securities for such Series is deferred under the terms and
conditions of the related Underlying Agreement, an equivalent amount of
interest in respect of the Notes will be deferred and not considered "due and
payable" within the meaning of this clause (i) until the Payment Date
following the date when the related deferred interest on the Underlying
Securities is received by the related Issuer); (ii) a default in the payment
of the principal of or any installment of the principal of any such Note when
the same becomes due and payable by reason of mandatory prepayment or
otherwise; (iii) a default in the observance or performance of any covenant
or agreement of the applicable Trust made in the related Indenture or any
representation or warranty of such Trust made in such Indenture or in any
certificate or other writing delivered pursuant thereto or in connection
therewith proving to have been incorrect in any material respect as of the
time when made, and such default shall continue or not be cured, or the
circumstance or condition in respect of which such representation and
warranty was incorrect shall not have been eliminated or otherwise cured, for
a period of 30 days after notice thereof is given pursuant to the related
Indenture to such Trust by the applicable Indenture Trustee or to such Trust
and such Indenture Trustee by the holders of at least 25% in principal amount
of such Notes then outstanding; or (iv) certain events of bankruptcy,
insolvency, receivership or liquidation of the applicable Trust.
Unless otherwise specified in the related Prospectus Supplement, if an
Event of Default should occur and be continuing with respect to the Notes of
any Series, the related Indenture Trustee or holders of a majority in
principal amount of such Notes then outstanding (except in the case of (x) an
Event of Default described in clause (iii) of the preceding paragraph which
requires all holders of Notes, or (y) an Event of Default described in clause
(iv) of the preceding paragraph which causes automatic acceleration without
further action on the part of the Noteholders) may declare the principal of
such Notes to be immediately due and payable. Unless otherwise specified in
the related Prospectus Supplement, such declaration may, under certain
circumstances, be rescinded by the holders of a majority in principal amount
of such Notes then outstanding (except in the case of an Event of Default
described in clause (i) or (ii) of the preceding paragraph, which requires
the agreement of all Noteholders in order to be rescinded).
If the Notes of any Series are due and payable following an Event of
Default with respect thereto, the related Indenture Trustee may institute
proceedings to collect amounts due or foreclose on Trust property, exercise
remedies as a secured party, sell the related Underlying Securities or elect
to have the applicable Trust maintain possession of such Underlying
Securities and continue to apply collections on such Underlying Securities as
if there had been no declaration of acceleration, subject to the rights of an
Enhancement provider, if any, to direct remedies, as specified in the related
Prospectus Supplement. Unless otherwise specified in the related Prospectus
Supplement, however, such Indenture Trustee is prohibited from selling the
related Underlying Securities following an Event of Default, unless the
principal of all Notes of such Series then outstanding has become due and
payable immediately.
Subject to the provisions of the applicable Indenture relating to the
duties of the related Indenture Trustee, if an Event of Default occurs and is
continuing with respect to a Series of Notes, such Indenture Trustee will be
under no obligation to exercise any of the rights or powers under such
Indenture at the request or direction of any of the holders of such Notes, if
such Indenture Trustee reasonably believes it will not be adequately
indemnified against the costs, expenses and liabilities which might be
incurred by it in complying with such request. Subject to the provisions for
indemnification and certain limitations contained in the related Indenture,
the holders of a majority in principal amount of the outstanding Notes of a
given Series will have the right to direct the time, method and place of
conducting any proceeding or any remedy available to the applicable Indenture
Trustee, and the holders of a majority in principal amount of such Notes then
outstanding may, in certain cases, waive any default with respect thereto,
except a default in the payment of principal or interest or a default in
respect of a covenant or provision of such Indenture that cannot be modified
without the waiver or consent of all the holders of such outstanding Notes;
provided that, if and to the extent specified in the Prospectus Supplement,
some or all of these rights may be given to an Enhancement provider.
Unless otherwise specified in the related Prospectus Supplement, no
holder of a Note of any Series will have the right to institute any
proceeding with respect to the related Indenture, unless (i) such holder
previously has given to the Indenture Trustee written notice of a continuing
Event of Default, (ii) the holders of not less than 25% in principal amount
of the outstanding Notes of such Series have made written request to such
Indenture Trustee to institute such proceeding in its own name as Indenture
Trustee, (iii) such holder or holders have offered such Indenture Trustee
reasonable indemnity, (iv) such Indenture Trustee has for 60 days failed to
institute such proceeding and (v) no direction inconsistent with such written
request has been given to such Indenture Trustee during such 60-day period by
the holders of a majority in principal amount of such outstanding Notes (or,
if specified in the related Prospectus Supplement, by an Enhancement provider
for such Series).
In addition, each Indenture Trustee and the related Noteholders, by
accepting the related Notes, will covenant that they will not at any time
institute against the applicable Trust any bankruptcy, reorganization or
other proceeding under any federal or state bankruptcy or similar law.
With respect to any Trust, neither the related Indenture Trustee nor the
related Owner Trustee in its individual capacity, nor any holder of a
Certificate representing an ownership interest in such Trust nor any of their
respective owners, beneficiaries, agents, officers, directors, employees,
affiliates, successors or assigns will, in the absence of an express
agreement to the contrary, be personally liable for the payment of the
principal of or interest on the related Notes or for the agreements of such
Trust contained in the applicable Indenture.
Certain Covenants. Each Indenture will provide that the related Trust
may not consolidate with or merge into any other entity, unless (i) the
entity formed by or surviving such consolidation or merger is organized under
the laws of the United States, any state or the District of Columbia,
(ii) such entity expressly assumes such Trust's obligation to make due and
punctual payments upon the Notes of the related Series and the performance or
observance of every agreement and covenant of such Trust under the Indenture,
(iii) no Event of Default shall have occurred and be continuing immediately
after such merger or consolidation, (iv) such Trust has been advised that the
rating of the Notes or the Certificates of such Series then in effect would
not be reduced or withdrawn by the Rating Agencies as a result of such merger
or consolidation and (v) such Trust has received an opinion of counsel to the
effect that such consolidation or merger would have no material adverse tax
consequence to the Trust or to any related holder of a Note (a "Noteholder")
or a holder of a Certificate (a "Certificateholder"). The Noteholders and
Certificateholders are referred to herein individually as a "Securityholder"
and collectively as the "Securityholders".
Each Trust will not, among other things, (i) except as expressly
permitted by the applicable Indenture, the applicable Trust Agreement or
certain related documents with respect to such Trust (collectively, the
"Related Documents"), sell, transfer, exchange or otherwise dispose of any of
the assets of such Trust, (ii) claim any credit on or make any deduction from
the principal and interest payable in respect of the Notes of the related
Series (other than amounts withheld under the Code or applicable state law)
or assert any claim against any present or former holder of such Notes
because of the payment of taxes levied or assessed upon such Trust,
(iii) dissolve or liquidate in whole or in part, (iv) permit the validity or
effectiveness of the related Indenture to be impaired or permit any person to
be released from any covenants or obligations with respect to such Notes
under such Indenture except as may be expressly permitted thereby or
(v) permit any lien, charge, excise, claim, security interest, mortgage or
other encumbrance to be created on or extend to or otherwise arise upon or
burden the assets of such Trust or any part thereof, or any interest therein
or the proceeds thereof.
No Trust may engage in any activity other than as specified under the
section of the related Prospectus Supplement entitled "The Trust." No Trust
will incur, assume or guarantee any indebtedness other than indebtedness
incurred pursuant to the related Notes and the related Indenture or otherwise
in accordance with the Related Documents.
Annual Compliance Statement. Each Trust will be required to file
annually with the related Indenture Trustee a written statement as to the
fulfillment of its obligations under the Indenture.
Indenture Trustee's Annual Report. The Indenture Trustee for each Trust
will be required to mail each year to all related Noteholders a brief report
relating to its eligibility and qualification to continue as Indenture
Trustee under the related Indenture, any amounts advanced by it under the
Indenture, the amount, interest rate and maturity date of certain
indebtedness owing by such Trust to the applicable Indenture Trustee in its
individual capacity, the property and funds physically held by such Indenture
Trustee as such and any action taken by it that materially affects the
related Notes and that has not been previously reported.
Satisfaction and Discharge of Indenture. An Indenture will be
discharged with respect to the collateral securing the related Notes upon the
delivery to the related Indenture Trustee for cancellation of all such Notes
or, with certain limitations, upon deposit with such Indenture Trustee of
funds sufficient for the payment in full of all such Notes.
THE INDENTURE TRUSTEE
The Indenture Trustee for a Series of Notes will be specified in the
related Prospectus Supplement. The Indenture Trustee for any Series may
resign at any time, in which event the Issuer will be obligated to appoint a
successor trustee for such Series. The Issuer may also remove any such
Indenture Trustee if such Indenture Trustee ceases to be eligible to continue
as such under the related Indenture or if such Indenture Trustee becomes
insolvent. In such circumstances, the Issuer will be obligated to appoint a
successor trustee for the applicable Series of Notes. Neither resignation or
removal of the Indenture Trustee nor the appointment of a successor trustee
for any Series of Notes will become effective until acceptance of the
appointment by the successor trustee for such Series.
DESCRIPTION OF THE CERTIFICATES
GENERAL
With respect to each Trust, one or more Classes of Certificates of the
related Series will be issued pursuant to the terms of a Trust Agreement, a
form of which has been filed as an exhibit to the Registration Statement of
which this Prospectus forms a part. The following summary does not purport
to be complete and is subject to, and is qualified in its entirety by
reference to, all the provisions of the Certificates and the Trust Agreement.
Unless otherwise specified in the related Prospectus Supplement and
except for the Certificates, if any, of a given Series purchased by the
Depositor, each Class of Certificates will initially be represented by one or
more Certificates registered in the name of the Depositary, except as set
forth below. Unless otherwise specified in the related Prospectus Supplement
and except for the Certificates, if any, of a given Series purchased by the
Depositor, the Certificates will be available for purchase in minimum
denominations of $1,000 and integral multiples of $1,000 in excess thereof in
book-entry form only. The Depositor has been informed by DTC that DTC's
nominee will be Cede, unless another nominee is specified in the related
Prospectus Supplement. Accordingly, such nominee is expected to be the
holder of record of the Certificates of any Series that are not purchased by
the Depositor. Unless and until Definitive Securities are issued under the
limited circumstances described herein or in the related Prospectus
Supplement, no Certificateholder (other than the Depositor) will be entitled
to receive a physical certificate representing a Certificate. All references
herein and in the related Prospectus Supplement to actions by
Certificateholders refer to actions taken by DTC upon instructions from the
Participants and all references herein and in the related Prospectus
Supplement to distributions, notices, reports and statements to
Certificateholders refer to distributions, notices, reports and statements to
DTC or its nominee, as the case may be, as the holder of record of the
Certificates, for distributions, notices, reports and statements to be made
to the Certificateholders in accordance with DTC's procedures with respect
thereto. See "CERTAIN INFORMATION REGARDING THE SECURITIES -- Book-Entry
Registration" and "-- Definitive Securities." Any Certificates of a given
Series owned by the Depositor or its affiliates will be entitled to equal and
proportionate benefits under the applicable Trust Agreement, except that such
Certificates will be deemed not to be outstanding for the purpose of
determining whether the requisite percentage of Certificateholders have given
any request, demand, authorization, direction, notice, consent or other
action under the Related Documents.
DISTRIBUTIONS OF PRINCIPAL AND INTEREST
The timing and priority of distributions, seniority, allocations of
losses, Pass-Through Rate and amount of or method of determining
distributions with respect to principal of and interest on each Class of
Certificates will be described in the related Prospectus Supplement.
Distributions of interest on such Certificates will be made on the dates
specified in the related Prospectus Supplement (each, a "Payment Date") and
will be made prior to distributions with respect to principal of such
Certificates. To the extent provided in the related Prospectus Supplement, a
Series may include one or more Classes of Certificates entitled to
(i) distributions in respect of principal with disproportionate, nominal or
no interest distributions or (ii) interest distributions with
disproportionate, nominal or no distributions in respect of principal. Each
Class of Certificates may have a different Pass-Through Rate, which may be a
fixed, variable or adjustable Pass-Through Rate (and which may be zero for
certain Classes of Certificates) or any combination of the foregoing. A
Class of Certificates may accrue interest and such interest may be added to
the principal balance thereof, rather than paid to the related
Certificateholders, until a specific event occurs or until such Class of
Certificates is retired. The related Prospectus Supplement will specify the
Pass-Through Rate for each Class of Certificates of a Series or the method
for determining such Pass-Through Rate. Unless otherwise provided in the
related Prospectus Supplement, distributions in respect of the Certificates
of a given Series that includes Notes will generally be subordinate to
payments in respect of the Notes of such Series as more fully described in
the related Prospectus Supplement. Distributions in respect of interest on
and principal of any Class of Certificates will be made on a pro rata basis
among all the Certificateholders of such Class.
In the case of a Series of Certificates which includes two or more
Classes of Certificates, the timing, sequential order, priority of payment or
amount of distributions in respect of interest and principal, and any
schedule or formula or other provisions applicable to the determination
thereof, of each such Class shall be as set forth in the related Prospectus
Supplement. A Series of Certificates may provide for a period during which
collections of principal in respect of the Underlying Securities are not
applied to payments of principal of such Certificates, or may provide for a
liquidity facility or other arrangement that permits one or more classes of
Certificates to be paid in planned amounts or formula amounts on scheduled
Payment Dates.
CERTAIN INFORMATION REGARDING THE SECURITIES
OPTIONAL PURCHASE OR TERMINATION
The Depositor or any other entity named in the Prospectus Supplement
may, at its option, purchase or repay a Class of Securities of any Series, on
any date under the circumstances, if any, specified in the Prospectus
Supplement relating to such Series. Alternatively, if so specified in the
related Prospectus Supplement for a Series of Securities, the Depositor, the
Administrator, or another entity designated in the related Prospectus
Supplement may, at its option, cause an early termination of a Trust by
repurchasing or liquidating all of the Assets from such Trust on or after a
date specified in the related Prospectus Supplement, or on or after such time
as the aggregate outstanding principal amount of the Securities or Underlying
Securities or other Assets, as specified in the related Prospectus
Supplement, is less than the amount or percentage specified in the related
Prospectus Supplement. Notice of such purchase or termination must be given
by the Depositor, the Administrator, the Owner Trustee or the Indenture
Trustee, as applicable, prior to the related date. The purchase, redemption
or repurchase price will be set forth in the related Prospectus Supplement.
In addition, the related Prospectus Supplement may provide other
circumstances under which holders of Securities of a Series could be fully
paid significantly earlier than would otherwise be the case if payments or
distributions were solely based on the distributions on the related
Underlying Securities.
OPTIONAL EXCHANGE
If specified in the applicable Prospectus Supplement, a holder may
exchange Securities of a given Series for a pro rata portion of the Assets.
The terms upon which a holder may exchange its Securities for a pro rata
portion of the Assets will be specified in the related Prospectus Supplement.
BOOK-ENTRY REGISTRATION
If so specified in the related Prospectus Supplement, Securityholders
may hold their Securities through (i) DTC (in the United States), (ii) solely
in the case of (a) Certificates issued by a Trust that is a grantor trust and
(b) Notes, CEDEL or Euroclear (in Europe) if they are participants in such
systems, or (iii) indirectly through organizations which are participants in
such systems.
Cede, as nominee for DTC, will hold one or more global Securities (each,
a "Global Security"). Unless and until Definitive Securities are issued
under the limited circumstances described in the related Prospectus
Supplement, all references herein or in such Prospectus Supplement to actions
by Securityholders shall refer to actions taken by DTC upon instructions from
its participating organizations (the "Participants") acting on behalf of
beneficial owners of Securities and all references herein to distributions,
notices, reports and statements to Securityholders shall refer to
distributions, notices, reports and statements to DTC or Cede, as the
registered holder of the Securities, as the case may be, for distribution in
accordance with DTC procedures to Participants acting on behalf of the
beneficial owners of Securities.
CEDEL and Euroclear will hold omnibus positions on behalf of their
participants through customers' securities accounts in CEDEL's and
Euroclear's names on the books of their respective depositaries, which in
turn will hold such positions in customers' securities accounts in the
depositaries' names on the books of DTC. Citibank, N.A. will act as
depositary for CEDEL and Morgan Guaranty Trust Company of New York will act
as depositary for Euroclear (in such capacities, the "Depositaries").
Transfers between DTC participants will occur in the ordinary way in
accordance with DTC rules. Transfers between CEDEL Participants and Euroclear
Participants will occur in the ordinary way in accordance with their
applicable rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through CEDEL or
Euroclear participants, on the other, will be effected in DTC in accordance
with DTC rules on behalf of the relevant European international clearing
system by its Depositary; however, such cross-market transactions will
require delivery of instructions to the relevant European international
clearing system by the counterparty in such system in accordance with its
rules and procedures and within its established deadlines (European time).
The relevant European international clearing system will, if the transaction
meets its settlement requirements, deliver instructions to its Depositary to
take action to effect final settlement on its behalf by delivering or
receiving securities in DTC, and making or receiving payment in accordance
with normal procedures for same-day funds settlement applicable to DTC.
CEDEL Participants and Euroclear Participants may not deliver instructions
directly to the Depositaries.
Because of time-zone differences, credits of securities received in
CEDEL or Euroclear as a result of a transaction with a DTC participant will
be made during subsequent securities settlement processing and dated the
business day following the DTC settlement date. Such credits or any
transactions in such securities settled during such processing will be
reported to the relevant Euroclear or CEDEL participant on such business day.
Cash received in CEDEL or Euroclear as a result of sales of securities by or
through a CEDEL Participant or a Euroclear Participant to a DTC participant
will be received with value on the DTC settlement date but will be available
in the relevant CEDEL or Euroclear cash account only as of the business day
following settlement in DTC. For additional information regarding clearance
and settlement procedures for the Securities, see Annex I hereto and for
information with respect to tax documentation procedures relating to the
Securities, see Annex I hereto and "CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
- -- Taxation of Debt Securities -- Foreign Investors" and " -- Tax Status as a
Grantor Trust -- Foreign Investors."
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code (the
"UCC"), and a "clearing agency" registered pursuant to the provisions of
Section 17A of the Securities Exchange Act of 1934, as amended. DTC was
created to hold securities for its Participants and facilitate the clearance
and settlement of securities transactions between Participants through
electronic book-entry changes in accounts of its Participants, thereby
eliminating the need for physical movement of certificates. Participants
include securities brokers and dealers, banks, trust companies and clearing
corporations and may include certain other organizations (including the
underwriters). Indirect access to the DTC system also is available to others
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodian relationship with a Participant, either directly or
indirectly (the "Indirect Participants").
Securityholders that are not Participants or Indirect Participants but
desire to purchase, sell or otherwise transfer ownership of, or other
interests in, Securities may do so only through Participants and Indirect
Participants. In addition, Securityholders will receive all distributions of
principal of and interest on the Securities from the Owner Trustee, the
Administrator or the Indenture Trustee, as paying agent, or its successor in
such capacity (the "Paying Agent"), through the Participants who in turn will
receive them from DTC. Under a book-entry format, Securityholders may
experience some delay in their receipt of payments, since such payments will
be forwarded by the Paying Agent to Cede, as nominee for DTC. DTC will
forward such payments to its Participants which thereafter will forward them
to Indirect Participants or Securityholders. It is anticipated that the only
holder of record for all Notes and Certificates of a Series may be Cede, as
nominee of DTC. Securityholders would not then be recognized by the Owner
Trustee or Indenture Trustee as Securityholders, as such term is used herein
and in the Trust Agreement or the Indenture, and Securityholders would only
be permitted to exercise the rights of Securityholders indirectly through the
Participants who in turn will exercise the rights of Securityholders through
DTC.
Under the rules, regulations and procedures creating and affecting DTC
and its operations, DTC is required to make book-entry transfers among
Participants on whose behalf it acts with respect to the Securities and is
required to receive and transmit distributions of principal of and interest
on the Securities. Participants and Indirect Participants with which
Securityholders have accounts with respect to the Securities similarly are
required to make book-entry transfers and receive and transmit such payments
on behalf of their respective Securityholders. Accordingly, although
Securityholders will not possess the Securities, Securityholders will receive
payments and will be able to transfer their interests.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a
Securityholder to pledge Securities to persons or entities that do not
participate in the DTC system, or otherwise take actions in respect of such
Securities, may be limited due to the lack of a physical certificate for such
Securities.
DTC will take any action permitted to be taken by a Securityholder under
the Trust Agreement or the Indenture only at the direction of one or more
Participants to whose account or accounts with DTC the Securities are
credited. Additionally, DTC will take such actions with respect to specified
percentages of the Securityholders' interests only at the direction of and on
behalf of Participants whose holdings include undivided interests that
satisfy such specified percentages. DTC may take conflicting actions with
respect to other undivided interests to the extent that such actions are
taken on behalf of Participants whose holdings include such undivided
interests.
Cedel Bank, soci t anonyme ("CEDEL"), is incorporated under the laws of
Luxembourg as a professional depositary. CEDEL holds securities for its
participating organizations ("CEDEL Participants") and facilitates the
clearance and settlement of securities transactions between CEDEL
Participants through electronic book-entry changes in accounts of CEDEL
Participants, thereby eliminating the need for physical movement of
certificates. Transactions may be settled in CEDEL in any of 28 currencies,
including United States dollars. CEDEL provides to its Participants, among
other things, services for safekeeping, administration, clearance and
settlement of internationally traded securities and securities lending and
borrowing. CEDEL interfaces with domestic markets in several countries. As
a professional depositary, CEDEL is subject to regulation by the Luxembourg
Monetary Institute. Cedel Participants are recognized financial institutions
around the world, including underwriters, securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations
and may include the underwriters. Indirect access to CEDEL is also available
to others, such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a CEDEL Participant, either
directly or indirectly.
The Euroclear System was created in 1968 to hold securities for its
participants ("Euroclear Participants") and to clear and settle transactions
between Euroclear Participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating both the need for physical
movement of certificates and the risk resulting from transfers of securities
and cash that are not simultaneous.
The Euroclear System has subsequently been extended to clear and settle
transactions between Euroclear Participants and counterparties both in CEDEL
and in many domestic securities markets. Transactions may be settled in any
of 32 settlement currencies, including United States dollars. In addition to
safekeeping (custody) and securities clearance and settlement, the Euroclear
System includes securities lending and borrowing and money transfer services.
The Euroclear System is operated by the Brussels, Belgium, office of Morgan
Guaranty Trust Company of New York (the "Euroclear Operator"), under contract
with Euroclear Clearance System S.C., a Belgian cooperative corporation that
establishes policy on behalf of Euroclear Participants. The Euroclear
Operator is the Belgian branch of a New York banking corporation which is a
member bank of the Federal Reserve System. As such, it is regulated and
examined by the Board of Governors of the Federal Reserve System and the New
York State Banking Department, as well as the Belgian Banking Commission.
All operations are conducted by the Euroclear Operator and all Euroclear
securities clearance accounts and cash accounts are accounts with the
Euroclear Operator. They are governed by the Terms and Conditions Governing
Use of Euroclear and the related Operating Procedures of the Euroclear
System, and applicable Belgian law (collectively, the "Terms and
Conditions"). The Terms and Conditions govern all transfers of securities
and cash, both within the Euroclear System and receipts and withdrawals of
securities and cash. All securities in the Euroclear System are held on a
fungible basis without attribution of specific certificates to specific
securities clearance accounts.
Euroclear Participants include banks (including central banks),
securities brokers and dealers and other professional financial
intermediaries and may include the underwriters. Indirect access to the
Euroclear System is also available to other firms that clear through or
maintain a custodial relationship with a Euroclear Participant, either
directly or indirectly. The Euroclear Operator acts under the Terms and
Conditions only on behalf of Euroclear Participants, and has no record of or
relationship with persons holding through Euroclear Participants.
Distributions with respect to Securities held through CEDEL or Euroclear
will be credited to the cash accounts of CEDEL Participants or Euroclear
Participants in accordance with the relevant system's rules and procedures,
to the extent received by its Depositary. Such distributions will be subject
to tax reporting in accordance with relevant United States tax laws and
regulations. See "CERTAIN FEDERAL INCOME TAX CONSIDERATIONS." The CEDEL or
the Euroclear Operator, as the case may be, will take any other action
permitted to be taken by a Securityholder under the Trust Agreement or the
Indenture on behalf of a CEDEL Participant or Euroclear Participant only in
accordance with its relevant rules and procedures and subject to its
Depositary's ability to effect such actions on its behalf through DTC.
Although DTC, CEDEL and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Securities among participants
of DTC, CEDEL and Euroclear, they are under no obligation to perform or
continue to perform such procedures and such procedures may be discontinued
at any time.
DEFINITIVE SECURITIES
If so specified in the related Prospectus Supplement, the Securities of
any Series will be issued in fully registered, certificated form ("Definitive
Securities") to Securityholders or their respective nominees, rather than to
DTC or its nominee. Unless otherwise provided in the related Prospectus
Supplement, if the Securities of any Series are originally issued in book-
entry form instead of as Definitive Securities, Definitive Securities will be
issued in exchange for beneficial interests in a Global Security only if (i)
the Administrator advises the Owner Trustee and the Indenture Trustee (as
applicable) in writing that DTC is no longer willing or able to discharge
properly its responsibilities as depositary with respect to the Securities,
and the Administrator is not able to locate a qualified successor or (ii) the
Administrator, at its option, elects to terminate the book-entry system
through DTC.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, DTC is expected to notify all Participants of the
availability through DTC of Definitive Securities. Upon surrender by DTC of
the definitive certificates representing the Securities, and instructions for
re-registration, the Owner Trustee or the Indenture Trustee, as applicable,
will issue such Securities in the form of Definitive Securities, and
thereafter the Owner Trustee or the Indenture Trustee, as applicable, will
recognize the holders of such Definitive Securities as Securityholders, under
the Trust Agreement and the Indenture, as applicable.
If Definitive Securities are issued, payments or distributions of
principal and interest on the Definitive Securities will be made by the
Paying Agent, the Owner Trustee, the Administrator or the Indenture Trustee,
as applicable, directly to the holders of record in whose names the
Definitive Securities were registered on the related Record Date in
accordance with the procedures in the Trust Agreement or the Indenture, as
applicable. Unless otherwise specified in the related Prospectus Supplement,
payments or distributions will be made by wire transfer to an account
specified in writing by a holder of record and reasonably satisfactory to the
Administrator or the Indenture Trustee, as applicable, or by check mailed to
the address of each holder of record as it appears on the register maintained
by the Administrator, the Owner Trustee or the Indenture Trustee, as
applicable, except that the final payment or distribution on any Definitive
Security will be made only upon presentation and surrender of such Definitive
Security on the date for such final payment at such office or agency as is
specified in the notice of final distribution to holders of record. The
Administrator or the Indenture Trustee, as applicable, will provide such
notice to holders of record not later than the fifth day of the month of the
final distribution. The holder of record of such registered Definitive
Security may transfer such Security by surrendering it at the office or
agency maintained by the Indenture Trustee, in the case of the Notes, or by
the Administrator or the Owner Trustee, in the case of the Certificates, for
this purpose.
In case any Definitive Security becomes mutilated, destroyed, lost or
stolen, the Owner Trustee will execute and the Owner Trustee or the Indenture
Trustee, as applicable, will authenticate and deliver a new certificated
Security of like tenor (including the same date of issuance) and equal
principal amount, in exchange and substitution for the mutilated, destroyed,
lost or stolen Security (upon surrender and cancellation thereof or in lieu
of and substitution for such Security and upon satisfaction of certain
requirements set forth in the Trust Agreement or the Indenture, as
applicable, including, if the Security is destroyed, lost or stolen, that the
applicant for a substituted Security shall furnish to the Trust and the Owner
Trustee or the Indenture Trustee, as applicable, security or indemnity as may
be required by them to save each of them harmless and, in every case of
destruction, loss or theft of a Security, the applicant shall also furnish to
the Trust satisfactory evidence of the destruction, loss or theft of such
Security and of the ownership thereof). Upon the issuance of any substituted
Security, the Administrator, the Owner Trustee or the Indenture Trustee may
require payment by the holder thereof of a sum sufficient to cover fees and
expenses in connection therewith.
REPORTS TO HOLDERS
Unless otherwise specified in the related Prospectus Supplement, the
Administrator, the Owner Trustee or the Indenture Trustee will prepare and
forward to each Securityholder on each Payment Date, or as soon thereafter as
is practicable, a statement setting forth, to the extent applicable to any
Series, among other things:
(1) with respect to a Series, the amount of any distribution
allocable to interest;
(2) with respect to a Series the amount of any distribution
allocable to principal;
(3) the amount of compensation paid to the Administrator with
respect to such Payment Date;
(4) the aggregate outstanding principal balance of the Underlying
Securities, after giving effect to distributions allocated to principal
and reported under (2) above (and after giving effect to any sale, put
or call of all or part of the Underlying Securities on or prior to such
Payment Date);
(5) the aggregate outstanding principal amount of each Class of
Securities of such Series after giving effect to distributions allocated
to principal reported under (2) above;
(6) in the case of Securities that have a variable interest rate,
the rate applicable to the distribution being made;
(7) if applicable, the amount of any shortfall (i.e., the
difference between the aggregate amounts of principal and interest which
Securityholders would have received if there were sufficient eligible
funds in the Collection Account and the amounts actually distributed);
(8) the amount of any withdrawal from any applicable Reserve
Account included in amounts actually distributed to Securityholders and
the remaining balance of such Reserve Account, if any, on such Payment
Date, after giving effect to distributions made on such date;
(9) for each such date during the funding period (if any), the
remaining Pre-Funded Amount;
(10) for the first such date that is on or immediately following
the end of the Funding Period (if any), the amount of any remaining Pre-
Funded Amount that has not been used to fund the purchase of Subsequent
Underlying Securities and that is being passed through as payments on
the Securities of the related Series; and
(11) such other information as is specified in the related
Indenture or the Trust Agreement, as applicable.
Unless otherwise specified in the related Prospectus Supplement, within
a reasonable period of time after the end of each calendar year the
Administrator or Indenture Trustee will furnish to each holder of record at
any time during such calendar year: (a) the aggregate of amounts reported
pursuant to (i) and (ii) above for such calendar year and (b) such
information specified in the Indenture or the Trust Agreement, as applicable,
to enable holders to prepare their tax returns including, without limitation,
the amount of original issue discount accrued on the Securities, if
applicable.
Information in the Payment Date statements and the annual reports
provided to the holders will not have been examined and reported upon by an
independent public accountant.
TRUST ASSETS
GENERAL
The Trust for each Series of Securities will be composed of certain
assets delivered, assigned and transferred to the Owner Trustee by the
Depositor, in each case consisting, unless otherwise specified in the related
Prospectus Supplement, of (i) the Underlying Securities, (ii) any
Enhancement, and (iii) the amount, if any, initially deposited in the
Collection Account or the Pre-Funding Account, if any, for a Series as
specified in the related Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement. The
Underlying Securities for a Series will be purchased by the Depositor in
secondary market transactions and not from the issuer of such Underlying
Securities.
The following is a brief description of the Underlying Securities
expected to be included in the Trusts and the Credit Card Receivables
expected to support the Underlying Securities. Specific information
regarding the Underlying Securities will be provided in the related
Prospectus Supplement and, to the extent not contained in the related
Prospectus Supplement, in a report on Form 8-K to be filed with the
Commission after the initial issuance of such Securities. In certain cases,
such information will be provided by reference to the related Underlying
Securities Prospectus. A copy of the Trust Agreement with respect to each
Series, or the Indenture with respect to each Series of Notes, will be
attached to the Form 8-K and will be available for inspection at the
corporate trust office of the Owner Trustee or the Indenture Trustee, as
applicable, specified in the related Prospectus Supplement.
UNDERLYING SECURITIES
General. The Underlying Securities for a Series will consist of
certificates evidencing an undivided interest in a trust or other entity that
contains a pool of, or notes or loans secured
by, Credit Card Receivables generated in Accounts. Such certificates, notes
or loans will have previously been offered and distributed to the public
pursuant to an effective registration statement under the Securities Act or
are being registered under the Securities Act in connection with the offering
of a Series of Securities. Underlying Securities will have been issued
pursuant to a pooling and servicing agreement, a master pooling and servicing
agreement, a sale and servicing agreement, a trust agreement, an indenture or
a similar agreement (the "Underlying Agreement"). The seller/servicer of the
underlying Credit Card Receivables (the "Underlying Servicer") will have
entered into the Underlying Agreement with the trustee under such Underlying
Agreement (the "Underlying Trustee"). Credit Card Receivables underlying an
Underlying Security will be serviced by the Underlying Servicer directly or
by one or more sub-servicers who may be subject to the supervision of the
Underlying Servicer.
Unless otherwise specified in the related Prospectus Supplement, all
purchases of Underlying Securities for a Series by the Depositor will be made
in secondary market transactions and not from the issuer of such Underlying
Securities or any affiliate thereof. The transferor of Credit Card
Receivables to an Underlying Trust (the "Underlying Transferor") will be a
financial institution, corporation, or other entity engaged generally in the
business of issuing credit or charge cards; any store or merchandiser that
issues credit or charge cards; or a limited purpose or other entity organized
for the purpose of, among other things, establishing trusts and acquiring and
selling receivables to such trusts, and selling beneficial interests in such
trusts; or any other entity specified in the related Prospectus Supplement or
Underlying Securities Prospectus. If so specified in the related Prospectus
Supplement, the Underlying Transferor may be an affiliate of the Depositor.
The obligations of the Underlying Transferor with respect to the Underlying
Securities will generally be limited to certain representations and
warranties with respect to the assets conveyed by it to the related
Underlying Trust. Unless otherwise specified in the related Prospectus
Supplement, the Underlying Transferor will not have guaranteed any of the
assets conveyed to the related Underlying Trust or any of the Underlying
Securities.
Distributions of principal and interest will be made on the Underlying
Securities on the dates specified in the related Underlying Securities
Prospectus. The Underlying Securities may be entitled to receive nominal or
no principal distributions or nominal or no interest distributions.
Principal and interest distributions will be made on the Underlying
Securities by the related Underlying Trustee or the entity specified for such
purpose in the Underlying Securities Prospectus. The Underlying Transferor
or the Underlying Servicer may have the right to repurchase assets underlying
the Underlying Securities after a certain date or under other circumstances
specified in the related Underlying Securities Prospectus.
Enhancement Relating to Underlying Securities. Enhancement in the form
of reserve funds, subordination of other securities issued under the
Underlying Agreement, guarantees, letters of credit, cash collateral
accounts, insurance policies, swap agreements or other types of credit, cash
flow or other enhancement or derivative arrangements may be provided with
respect to the Credit Card Receivables underlying the Underlying Securities
or with respect to the Underlying Securities themselves.
Additional Publicly Available Information. The Prospectus Supplement
for a Series will refer to the publicly available information in respect of
the related Underlying Securities and the method by which such information
may be obtained. In general, information relating to the Underlying
Securities filed by or on behalf of the Underlying Trust with the Commission
can be inspected and copied at the public reference facilities maintained by
the Commission at 450 Fifth Street, N.W. Washington, D.C. 20549, and at the
following regional offices of the Commission: New York Regional Office,
Suite 1300, 7 World Trade Center, New York, New York 10048; and Chicago
Regional Office, Citicorp Center, Suite 1400, 500 West Madison Street,
Chicago, Illinois 60661. Copies of such material can be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W. Washington
D.C. 20549, at prescribed rates. In addition, the Commission maintains a
Website that contains certain information regarding the Underlying
Securities. The address of the Commission's Website is http://www.sec.gov.
None of the Depositor, any Administrator, any Owner Trustee, any
Indenture Trustee, any underwriter, or any of their respective affiliates,
assumes any responsibility for the accuracy or completeness of any publicly
available information in respect of any Underlying Securities or any
Underlying Securities Issuer filed with the Commission or otherwise made
publicly available. None of the Depositor, any Administrator, any Owner
Trustee, any Indenture Trustee, or any underwriter will (i) make any
independent investigation of the business condition, financial or otherwise,
of any Underlying Securities Issuer, Underlying Transferor, Underlying
Servicer or credit enhancers (including, without limitation, no investigation
as to their financial condition or creditworthiness), (ii) make any
independent investigation of any Underlying Securities (including, without
limitation, any independent investigation as to its rating) or (iii) verify
any reports or information filed by any Underlying Securities Issuer with the
Commission. The issuance of the Securities should not be construed as an
endorsement by the Depositor, any Administrator, any Owner Trustee, any
Indenture Trustee or any underwriter of any Underlying Securities or the
financial condition or business prospects of any Underlying Trust or the
Underlying Transferor. A potential Securityholder of any Series is encouraged
to obtain and evaluate the same information concerning the Underlying
Securities Issuer for such Series as one would obtain and evaluate if
investing directly in the Underlying Securities of such Series.
The related Prospectus Supplement for a Series will specify (in certain
cases, by reference to the Underlying Securities Prospectus), to the extent
relevant and to the extent such information is reasonably available to the
Depositor and the Depositor reasonably believes such information to be
reliable, (i) the aggregate approximate principal amount and type of the
Underlying Securities to be included in the related Trust; (ii) the expected
and final maturity of the Underlying Securities; (iii) the interest rate of
the Underlying Securities; (iv) the Underlying Transferor, the Underlying
Servicer and the Underlying Trustee for such Underlying Securities; and (v)
any early amortization events applicable to the Underlying Securities.
If information of the nature described above representing the Underlying
Securities is not known to the Depositor at the time the Securities are
initially offered, approximate or more general information of the nature
described above will be provided in the related Prospectus Supplement and the
additional information, if available, will be set forth in a Current Report
on Form 8-K to be available to investors on the date of issuance of the
related Series and to be filed with the Commission within 15 days of the
initial issuance of such Securities.
THE CREDIT CARD RECEIVABLES UNDERLYING THE UNDERLYING SECURITIES
General. The primary assets underlying the Underlying Securities for a
Series will consist, in whole or in part, of consumer, corporate, revolving
credit card, charge card or debit card receivables (collectively, the "Credit
Card Receivables") generated from time to time in the ordinary course of
business in a portfolio of consumer, corporate, revolving credit card, charge
card or debit card accounts (collectively, the "Accounts"). The Accounts may
consist of the initial Accounts sold to the Underlying Trust, as well as any
additional Accounts added from time to time, but will not include any Removed
Accounts (as defined herein).
The transferor to the Underlying Trust may have the right (subject to
certain limitations and conditions), but will not have any obligation (unless
otherwise specified in the related Prospectus Supplement or Underlying
Securities Prospectus), to remove the Credit Card Receivables in certain
Accounts from the Underlying Trust ("Removed Accounts"). The Underlying
Transferor may be able to include in the related Underlying Trust,
participations representing undivided interests in a pool of assets primarily
consisting of revolving credit card accounts or other revolving credit
accounts owned by the Underlying Transferor or any affiliate thereof and
collections thereon ("Participations").
Credit Card Accounts and Credit Card Receivables. The Credit Card
Receivables will generally consist of periodic finance charges, annual
membership fees, cash advance fees and late charges on amounts charged for
merchandise and services and certain other fees designated by the Underlying
Transferor ("Finance Charge Receivables") and all amounts charged by
cardholders for merchandise and services, amounts advanced to cardholders as
cash advances and all other fees billed to cardholders on the Accounts
("Principal Receivables"). In addition, certain Interchange (as defined
herein) attributed to cardholder charges for merchandise and services in the
Accounts may be treated as Finance Charge Receivables. Recoveries of
charged-off Finance Charge Receivables will generally be treated as
collections of Finance Charge Receivables and recoveries of charged-off
Principal Receivables will be applied against charge-offs of Principal
Receivables. From time to time, subject to certain conditions, certain of
the amounts described above which are included in Principal Receivables may
be treated as Finance Charge Receivables. The amount of Credit Card
Receivables in an Underlying Trust will fluctuate from day to day as new
Credit Card Receivables are generated or new Accounts are added to the
Underlying Trust and as existing Credit Card Receivables are collected,
charged-off as uncollectible or otherwise adjusted. "Interchange" consists
of certain fees received by a credit card-issuing bank from the VISA and
MasterCard International associations as partial compensation for taking
credit risk, absorbing fraud losses and funding receivables for a limited
period prior to initial billing. Under the VISA and MasterCard International
systems, a portion of the Interchange in connection with cardholder charges
for merchandise and services is passed from banks which clear the
transactions for merchants to credit card-issuing banks. VISA and MasterCard
International may from time to time change the amount of Interchange
reimbursed to banks issuing their credit cards.
Charge Card Receivables and Credit Card Receivables. Charge card
receivables consist of amounts charged on designated charge card Accounts for
merchandise and services, and all annual membership fees and certain other
administrative fees billed to the designated Accounts. Charge card
receivables originated under charge card Accounts are not subject to a
monthly finance charge.
There are distinctions between the credit card Accounts and the charge
card Accounts. The credit card Accounts offer revolving credit plans to
their customers. Charge card Accounts generally have no pre-set spending
limit and are designed for use as a convenient method of payment for the
purchase of merchandise and services. Charge card Accounts generally cannot
be used as a means of financing such purchases. Accordingly, the full
balance of a month's purchases is billed to cardmembers and is due upon
receipt of the billing statement. By contrast, revolving credit plans allow
customers to make a minimum monthly payment and to borrow the remaining
outstanding balance from the credit issuer up to a predetermined limit. As a
result of these payment requirement differences, the charge card Accounts
have a high monthly payment rate and balances which turn over rapidly
relative to their charge volume when compared to credit card Accounts.
Another distinction between charge card Accounts and credit card
Accounts is that charge card Account balances are generally not subject to
monthly finance charges. As described above, the full Account balance is
billed monthly and is due upon receipt of the billing statement. Cardmembers
do not have the option of using their charge card Accounts to extend payment
and to pay a finance charge on the remaining outstanding balance. Credit
card Accounts, by contrast, do allow customers to pay a specified minimum
portion of an outstanding amount and to finance the balance at a finance
charge rate determined by the credit card issuer. Because charge card
Account balances are not assessed finance charges, for the purpose of
providing yield to the related Underlying Trust a portion of collections on
charge card receivables in Accounts received in any due period equal to the
product of collections and a discount factor will generally be treated as
finance charge collections. Each related Underlying Securities Prospectus,
where applicable, will describe the discount for a specific portfolio of
charge card Accounts.
ADDITIONAL INFORMATION RELATING TO CREDIT CARD RECEIVABLES
The Underlying Securities Prospectus for the Underlying Securities in a
Trust will provide information with respect to the Credit Card Receivables in
the related Underlying Trust as of the date specified in such Underlying
Securities Prospectus, including, among other things, (i) the aggregate
principal balance of such Credit Card Receivables; (ii) underwriting
criteria; (iii) the loss and delinquency experience for the portfolio of
Credit Card Receivables; (iv) the composition of the portfolio by account
balance; and (v) the geographic distribution of Accounts and Credit Card
Receivables.
COLLECTION ACCOUNTS
A separate Collection Account will be established by the Owner Trustee,
the Indenture Trustee or the Administrator, in the name of the Owner Trustee
or the Indenture Trustee, for each Series of Securities for receipt of all
amounts received on or with respect to the Underlying Securities and, unless
otherwise specified in the related Prospectus Supplement, net investment
income earned thereon. The Owner Trustee, the Administrator or the Indenture
Trustee will invest the funds in the Collection Account in Eligible
Investments. Unless otherwise specified in the related Prospectus
Supplement, Eligible Investments include, among other investments,
obligations of the United States and certain agencies thereof, federal funds,
certificates of deposit, commercial paper, demand and time deposits and
banker's acceptances, certain repurchase agreements of United States
government securities and certain guaranteed investment contracts, in each
case, acceptable to the Rating Agency.
From time to time, various accounts, including Pre-Funding Accounts, may
be created under the terms of the documents related to a specific Series.
CREDIT, CASH FLOW OR OTHER ENHANCEMENT OR DERIVATIVE ARRANGEMENTS
The amounts and types of credit, cash flow or other enhancement or
derivative arrangements and the provider thereof, if applicable, with respect
to each Class of Securities of a Series, if any, will be set forth in the
related Prospectus Supplement. If and to the extent provided in the related
Prospectus Supplement, credit, cash flow or other enhancement, derivative or
exchange arrangements may be in the form of the subordination of one or more
classes of Securities of a Series, reserve accounts, overcollateralization,
letters of credit, credit or liquidity facilities, surety bonds, guaranteed
investment contracts, swaps (including without limitation interest rate,
currency, securities, commodity and credit swaps), caps, floors, collars,
options, structured securities having embedded derivatives, exchange
agreements, interest rate protection agreements, repurchase obligations, put
and/or call options, yield supplement agreements or accounts, other
agreements with respect to third party payments or other support, cash
deposits or such other derivative or other arrangements as may be described
in the related Prospectus Supplement or any combination of the foregoing. If
specified in the applicable Prospectus Supplement, credit or cash flow
enhancement or any such other arrangement for a class of Securities may cover
one or more other Classes of Securities of the same Series, and credit or
cash flow enhancement or any such other arrangement for a Series of
Securities may cover one or more other Series of Securities.
THE TRUST AGREEMENT
The following summaries describe certain provisions of the Trust
Agreements. The summaries do not purport to be complete and are subject to,
and qualified in their entirety by reference to, the provisions of the Trust
Agreements. Where particular provisions or terms used in the Trust Agreement
are referred to, such provisions or terms are as specified in the Trust
Agreement. A form of the Trust Agreement has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part.
ASSIGNMENT OF UNDERLYING SECURITIES
The Depositor will either cause Underlying Securities to be registered in
the name of the Issuer, the Owner Trustee or the Indenture Trustee (or their
nominees or correspondents), as applicable or cause the Issuer, the Owner
Trustee or the Indenture Trustee to be an indirect entitlement holder with
respect to the Underlying Securities. See "TRUST ASSETS -- Underlying
Securities" herein. Each Underlying Security will be identified
in a schedule appearing as an exhibit to the related Trust Agreement (the
"Collateral Schedule"), which will specify the outstanding principal balance
as of the Cut-off Date and the annual pass-through rate or interest rate and
maturity date for each Underlying Security conveyed to the related Trust. In
the Trust Agreement, the Depositor will represent and warrant to the Owner
Trustee regarding the Underlying Securities: (i) that the information
contained in the Collateral Schedule is true and correct in all material
respects; (ii) that, immediately prior to the conveyance of the Underlying
Securities, the Depositor had good title thereto, and was the sole owner
thereof; and (iii) that there is no existing lien, charge, security interest
or other encumbrance on such Underlying Securities. To the extent specified
in the related Prospectus Supplement, a portion of the proceeds from the sale
of a Series of Securities may be applied to the deposit of the Pre-Funded
Amount into the Pre-Funding Account. The related Prospectus Supplement for a
given Trust will specify whether, and the terms, conditions and manner under
which, Subsequent Underlying Securities will be sold by the Depositor to the
applicable Trust from time to time during the funding period on each date
specified as a transfer date in the related Prospectus Supplement (each, a
"Subsequent Transfer Date").
THE OWNER TRUSTEE
The identity of the commercial bank, savings and loan association or
trust company named as owner trustee (the "Owner Trustee") for each Series of
Certificates will be set forth in the related Prospectus Supplement. The
entity serving as Owner Trustee may have normal banking relationships with
the Depositor and the Administrator. The Owner Trustee may act directly or
through its agents or attorneys pursuant to agreements entered into with any
of them, and the Owner Trustee shall not be liable for the conduct or
misconduct of such agents or attorneys if such agents or attorneys shall have
been selected by the Owner Trustee with reasonable care. If specified in the
related Prospectus Supplement, for the purpose of meeting the legal
requirements of certain local jurisdictions, the Owner Trustee will have the
power to appoint co-Owner Trustees or separate Owner Trustees for all or any
part of the Trust relating to a Series of Certificates.
Unless otherwise specified in the related Prospectus Supplement, the
Owner Trustee shall be deemed to have discharged its duties and
responsibilities under the Trust Agreement to the extent the Administrator
has agreed in the Administration Agreement to perform any act or to discharge
any duty of the Owner Trustee under the Trust Agreement and related
documents, and the Owner Trustee will not be held liable for the default or
failure of the Administrator to carry out its obligations under the
Administration Agreement.
Unless otherwise specified in the related Prospectus Supplement, all
persons into which the Owner Trustee under any Trust Agreement may be merged
or with which it may be consolidated or any person resulting from such merger
or consolidation will be the successor of the Owner Trustee under such Trust
Agreement.
RESIGNATION OR REMOVAL OF OWNER TRUSTEE
Unless otherwise specified in the related Prospectus Supplement,
the Owner Trustee for any Series may, upon written notice to the
Administrator and the Depositor, resign at any time, in which event the
Administrator will be obligated to use its best efforts to appoint a
successor Owner Trustee. If no successor Owner Trustee has been appointed
and has accepted the appointment within 30 days after giving such notice of
resignation, the resigning Owner Trustee may petition any court of competent
jurisdiction for appointment of a successor Owner Trustee. Unless otherwise
specified in the related Prospectus Supplement, the Owner Trustee for any
Series may also be removed by the Administrator if the Owner Trustee ceases
to be eligible to continue as such under the Trust Agreement or shall be
legally unable to act, or if the Owner Trustee is adjudged bankrupt or
insolvent, or a receiver of the Owner Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Owner
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation thereof. Any resignation or removal of the Owner
Trustee and appointment of a successor Owner Trustee will not become
effective until acceptance of the appointment by the successor Owner Trustee.
CERTAIN MATTERS REGARDING THE OWNER TRUSTEE AND THE DEPOSITOR
Unless otherwise specified in the related Prospectus Supplement, none of
the Depositor, the Owner Trustee for any Series or any director, officer or
employee of the Depositor or such Owner Trustee will be under any liability
to the Trust, the Noteholders or the Certificateholders of such Series for
any action taken or for refraining from the taking of any action in good
faith pursuant to the related Trust Agreement or for errors in judgment;
provided, however, that none of such Owner Trustee, the Depositor and any
director, officer or employee thereof will be protected against any liability
which would otherwise be imposed by reason of willful misconduct, bad faith
or negligence in the performance of duties or by reason of reckless disregard
of obligations and duties under the related Trust Agreement.
Unless otherwise specified in the related Prospectus Supplement, none of
any Owner Trustee, the Depositor or any of their respective owners,
beneficiaries, agents, officers, directors or employees will be (in the
absence of an express agreement to the contrary) personally liable for the
payment of the principal of or interest on the Notes or the Certificates of
such Series or for the agreements of the Issuer contained in the related
Trust Agreement.
AMENDMENT OF THE TRUST AGREEMENT
Unless otherwise specified in the Prospectus Supplement, the Trust
Agreement for any Series may be amended by the Depositor and the Owner
Trustee with respect to such Series, without notice to or consent of the
Noteholders or the Certificateholders to (i) cure any ambiguity or mistake,
(ii) correct any defective provisions or to correct or supplement any
provision therein which may be inconsistent with any other provision therein,
(iii) add to the duties of the Depositor or the Administrator, (iv) add any
other provisions with respect to matters or questions arising under such
Trust Agreement or any Enhancement, (v) comply with any requirements of the
Code or (vi) evidence and provide for the acceptance of the appointment under
the Trust Agreement by a successor Owner Trustee and to add to or change any
of the provisions of the Trust Agreement as shall be necessary to facilitate
the administration of the trusts thereunder; provided that any such amendment
pursuant to clause (iv) above will not adversely affect in any material
respect the interests of any Securityholders of such Series, as evidenced by
an opinion of counsel or a written confirmation from each Rating Agency that
such amendment will not cause such Rating Agency to reduce the then current
rating thereof. Unless otherwise specified in the related Prospectus
Supplement, the Trust Agreement for any Series may also be amended by the
Depositor and the related Owner Trustee with the consent of the holders
of Notes for such Series evidencing at least a majority of the outstanding
principal of the Notes for such Series and Certificateholders for such Series
owning voting interests aggregating not less than a majority of the
aggregate voting interests for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of such Trust
Agreement or modifying in any manner the rights of the Noteholders or
Certificateholders for such Series; provided, however, that, without
notification by each Rating Agency that such amendment shall not cause the
ratings of the Notes and Certificates of such Series to be reduced or
revoked, no such amendment may (i) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments on
the Underlying Securities or distributions that are required to be made for
the benefit of such Noteholders or Certificateholders or (ii) reduce the
aforesaid percentage of the Notes or the voting interests of Certificates
which are required to consent to any such amendment, without the consent of
the holders of all the outstanding Notes or Certificates for such Series.
VOTING RIGHTS
The related Prospectus Supplement will set forth the method of
determining allocation of voting rights with respect to a Series, if other
than set forth herein.
LIST OF CERTIFICATEHOLDERS
Upon written request of three or more Certificateholders of record of a
Series evidencing not less than 25% of the outstanding principal amount of
the Certificates of such Series for purposes of communicating with other
Certificateholders with respect to their rights under the Trust Agreement or
under the Certificates for such Series, which request is accompanied by a
copy of the communication which such Certificateholders propose to transmit,
the Trustee will afford such Certificateholders access during business hours
to the current list of Certificateholders of that Series held by the Owner
Trustee.
No Trust Agreement will provide for the holding of any annual or other
meeting of Certificateholders.
TERMINATION
The obligations created by the Trust Agreement for a Series will
terminate upon final distribution by the Owner Trustee of all moneys or other
property or proceeds of the trustee estate (including the Underlying
Securities) in accordance with the terms of the Indenture and the Trust
Agreement. If specified in the related Prospectus Supplement, the Trust
Agreement for each Series will permit, but does not require, the Depositor or
any other entity named in the Prospectus Supplement to repurchase from the
Trust for such Series all remaining Underlying Securities on or after a
specified date, or on or after such time as the aggregate principal balance
of the Securities of the Series or the Underlying Securities of such Series,
as specified in the related Prospectus Supplement, is less than the amount or
percentage specified in the related Prospectus Supplement. In no event,
however, will the trust created by the Trust Agreement continue beyond the
expiration of 21 years from the death of the last survivor of certain persons
identified therein. For each Series, the Administrator or the Owner Trustee,
as applicable, will give written notice of termination of the Trust Agreement
to each Certificateholder, and the final distribution will be made only upon
surrender and cancellation of the Certificates at an office or agency
specified in the notice of termination. If so provided in the related
Prospectus Supplement for a Series, the Depositor or another entity may
effect an optional termination of the Trust under the circumstances described
in such related Prospectus Supplement. See "CERTAIN INFORMATION REGARDING
THE SECURITIES -- Optional Purchase or Termination" herein.
THE DEPOSITOR
ML Asset Backed Corporation (the "Depositor") was incorporated in the
State of Delaware on September 22, 1987, is a wholly-owned subsidiary of
Merrill Lynch & Co., Inc. and is an affiliate of Merrill Lynch, Pierce,
Fenner & Smith Incorporated. The Depositor maintains its principal
office at 250 Vesey Street, World Financial Center, New York, New York
10281. Its telephone number is (212) 449-0336.
The Depositor will have no servicing obligations or responsibilities with
respect to any Credit Card Receivables or Underlying Securities. The Depositor
does not have and does not expect to have any significant assets.
As specified in the related Prospectus Supplement, the Administrator
with respect to any Series of Certificates and/or Notes may be an affiliate
of the Depositor. The Depositor anticipates that it will acquire Underlying
Securities in the open market or in privately negotiated transactions. Such
acquisition may be made through or from one or more affiliates of the
Depositor.
Neither the Depositor, the underwriters nor any of their respective
affiliates will insure or guarantee the Underlying Securities or the
Certificates and/or Notes of any Series.
USE OF PROCEEDS
The Depositor will apply all or substantially all of the net proceeds
from the sale of each Series of Securities offered hereby and by the related
Prospectus Supplement for one or more of the following purposes: (i) to
purchase the related Assets, (ii) to repay indebtedness which has been
incurred to obtain funds to acquire such Assets, (iii) to establish a Pre-
Funding Account for such Series, (iv) to establish any Reserve Account
described in the related Prospectus Supplement, and (v) to pay costs of
structuring and issuing such Securities, including the costs of obtaining any
Enhancement.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
Set forth below is a discussion of certain material U.S. federal income
tax consequences of the purchase, ownership and disposition of the
Securities. This discussion does not purport to deal with all aspects of
U.S. federal income taxation that may be relevant to holders of the
Securities in light of their personal investment circumstances, nor to
certain holders subject to special treatment under the U.S. federal income
tax laws (for example, banks, life insurance companies, tax-exempt
organizations, dealers in Securities, or holders of Securities that are part
of a "straddle" or "conversion transaction"). As specified in each
Prospectus Supplement, the Trust will be provided with an opinion of Brown &
Wood LLP ("Federal Tax Counsel") regarding certain federal income tax matters
discussed below. An opinion of Federal Tax Counsel, however, is not binding
on the Internal Revenue Service (the "IRS") or the courts. No ruling on any
of the issues discussed below will be sought from the IRS. Taxpayers and
preparers of tax returns (including those filed by any partnership or other
issuer) should be aware that under applicable Treasury Regulations a provider
of advice on specific issues of law is not considered an income tax return
preparer unless the advice is (i) given with respect to events that have
occurred at the time the advice is rendered and is not given with respect to
the consequences of contemplated actions, and (ii) is directly relevant to
the determination of an entry on a tax return. Prospective investors are
advised to consult their own tax advisors with regard to the U.S. federal
income tax consequences of holding and disposing of the Securities, as well
as the tax consequences arising under the laws of any state, foreign country
or other jurisdiction. This discussion is based upon present provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), the regulations
promulgated thereunder, and judicial or ruling authority, all of which are
subject to change, which change may be retroactive.
The Securities of a Series may be classified for U.S. federal income tax
purposes as (i) indebtedness, (ii) an ownership interest in some or all of
the assets included in the Trust for a Series or (iii) otherwise specified in
the Prospectus Supplement for such Series.
As used herein, the term "United States person" means a beneficial owner
of a Security that is for U.S. federal income tax purposes (i) a citizen or
resident of the United States, (ii) a corporation, partnership (including an
entity treated as a partnership or corporation for federal income tax
purposes) created or organized in or under the laws of the United States or
any state thereof or the District of Columbia (unless, in the case of a
partnership, applicable Treasury Regulations provide otherwise), (iii) an
estate whose income is subject to United States federal income tax regardless
of its source, or (iv) a trust if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more United States persons have the authority to control all substantial
decisions of the trust. Notwithstanding the preceding clause (iv), to the
extent provided in Treasury Regulations, certain trusts in existence on
August 20, 1996, and treated as United States persons under the Code and
applicable Treasury Regulations prior to such date, that elect to continue to
be treated as United States persons also will be United States persons. As
used herein, the term "non-United States person" means a beneficial owner of
a Security that is not a United States person.
TREATMENT OF THE NOTES AS INDEBTEDNESS
The Depositor will agree, and the Noteholders will agree by their
purchase of Notes, to treat the Notes as debt for U.S. federal income tax
purposes. If so specified in the Prospectus Supplement for a Series, Federal
Tax Counsel will advise the Trust that the Notes of a Series will be
classified as debt for federal income tax purposes. The discussion below
assumes this characterization of the Notes is correct. If, contrary to the
opinion of Federal Tax Counsel, the IRS successfully asserted that one or
more of the Notes did not represent debt for U.S. federal income tax
purposes, the Notes might be treated as equity interests in the Trust. If
the Notes were so treated, the Trust might be taxable as a corporation or,
alternatively, as a publicly traded partnership.
Interest Income to Noteholders. Assuming the Notes are debt obligations
for U.S. federal income tax purposes, interest thereon will be taxable as
ordinary income for U.S. federal income tax purposes when received by
Noteholders utilizing the cash basis method of accounting and when accrued by
Noteholders utilizing the accrual method of accounting. Interest received on
the Notes may also constitute "investment income" for purposes of certain
limitations of the Code concerning the deductibility of investment interest
expense. In addition, a Noteholder who buys a Security for less than its
principal amount (assuming the Note is issued without OID) will be subject to
the "market discount" rules of the Code, and a Noteholder who buys a Note for
more than its principal amount will be subject to the premium amortization
rules of the Code. See "-- Original Issue Discount" below for a description
of the U.S. federal income tax consequences if the Notes are issued with OID.
The Indenture Trustee will be required to report annually to the IRS,
and to each Noteholder of record, the amount of interest paid (and OID
accrued, if any) on the Notes (and the amount of interest withheld for U.S.
federal income taxes, if any) for each calendar year, except as to exempt
holders. See "-- Backup Withholding" herein.
Original Issue Discount. The following summary is a general discussion
of the U.S. federal income tax consequences to Noteholders who are United
States persons owning Notes issued with original issue discount ("OID Notes"
and "OID", respectively). It is based upon income tax regulations (the "OID
Regulations") under Code Sections 1271 through 1273 and 1275.
In general, the OID with respect to any OID Note will equal the
difference between the principal amount of the Note and its issue price
(defined as the initial offering price to the public at which price a
substantial amount of the OID Notes have been sold, ignoring sales to bond
houses, brokers, or similar persons or organizations acting in the capacity
of underwriters, placement agents or wholesalers), if such excess is 0.25% or
more of the OID Note's principal amount multiplied by the number of complete
years to its maturity (the "de minimis amount"). Even if such excess is less
than the de minimis amount, if a failure to pay interest currently on the
Notes is not a default it is possible that all stated interest could be
treated as principal for this purpose (and for purposes of the computations
described below) with the result that the Notes could be viewed as OID Notes.
Holders of OID Notes must include OID in income for U.S. federal income tax
purposes as it accrues under a constant yield method regardless of the
Noteholder's regular method of accounting.
In general, each Noteholder of an OID Note, whether such Noteholder uses
the cash or accrual method of accounting for tax purposes, will be required
to include in ordinary gross income the sum of the "daily portions" of OID on
the Note for each day during the taxable year that the Noteholder owns the
Note. The daily portion of OID on an OID Note is determined by allocating to
each day in any "accrual period" a ratable portion of the original issue
discount allocable to that accrual period. In the case of an initial
Noteholder, the amount of original issue discount on an OID Note allocable to
each accrual period is determined by (i) multiplying the "adjusted issue
price" (as defined below) of the Note by a fraction, the numerator of which
is the annual yield to maturity of such Note and the denominator of which is
the number of accrual periods in a year, and (ii) subtracting from the
product the amount of interest paid during that accrual period. The
"adjusted issue price" of an OID Note at the beginning of any accrual period
will be the sum of its issue price and the amount of OID allocable to all
prior accrual periods, minus the amount of all payments (other than payments
of qualified stated interest) previously made with respect to the OID Note.
As a result of such "constant yield" method of including OID income, the
amounts so includible in income are lower in the early years and greater in
the later years than the amounts that would be includible on a straightline
basis. Under the Code, OID is calculated and accrued using prepayment
assumptions where payments on a debt instrument may be accelerated by reason
of prepayments (or to the extent provided in regulations, by reason of other
events). Moreover, the legislative history to the provisions provides that
the same prepayment assumptions used to price a debt instrument are to be
used to calculate OID, as well as to accrue market discount and amortize
premium. If a prepayment assumption is or may be required, the prepayment
assumption the Trust intends to use for tax reporting purposes will be
specified in the relevant Prospectus Supplement.
In the event that a Noteholder purchases an OID Note at an "acquisition
premium," i.e., at a price in excess of the adjusted issue price and less
than or equal to the sum of all amounts payable on the instrument after the
purchase date other than qualified stated interest, the amount includible in
income in each taxable year as OID will be reduced by that portion of the
premium properly allocable to such year. Moreover, a Noteholder who
purchases an OID Note at a price less than the price described in the
preceding sentence will be subject to the market discount rules of the Code.
If an early amortization event occurs with respect to the Underlying
Securities, any early payments of principal as a result of such event could
result in acceleration of income corresponding to a portion of the unaccrued
OID.
Contingent Payment Securities. Where the Notes have been issued with
contingent interest and, as a result, would be subject to the contingent
payment rules under the OID provisions of the Code, a Prospectus Supplement
will so provide. Under the contingent payment debt rules, the timing of the
recognition of income (including original issue discount, market discount and
premium) depends on the issue price of the Notes and the terms of the
contingencies.
Effects of Defaults and Delinquencies. Holders of Notes that are
treated as debt for U.S. federal income tax purposes will be required to
report income with respect to such Notes under an accrual method without
giving effect to delays and reductions in distributions attributable to a
default or delinquency on the Underlying Securities or the Credit Card
Receivables, except possibly to the extent that it can be established that
such amounts are uncollectible. As a result, the amount of income (including
OID) reported by a holder of such a Note in any period could significantly
exceed the amount of cash distributed to such holder in that period. The
holder will eventually be allowed a loss (or will be allowed to report a
lesser amount of income) to the extent that the aggregate amount of
distributions on the Note is reduced as a result of Underlying Securities or
the Credit Card Receivables default. However, the timing and character of
such losses or reductions in income are uncertain and, accordingly, holders
of Notes should consult their own tax advisors on this point.
Sale or Exchange. A Noteholder's tax basis in its Note is the price
such holder pays for a Note, plus amounts of original issue or market
discount included in income and reduced by any payments received (other than
qualified stated interest payments) and any amortized premium. Gain or loss
recognized on a sale, exchange, or redemption of a Note, measured by the
difference between the amount realized and the Note's basis as so adjusted,
will generally be long-term capital gain or loss, assuming that the Note is
held as a capital asset and is held for more than one year, except to the
extent such gain represents accrued interest or market discount not
previously included in the Noteholder's income.
The Taxpayer Relief Act of 1997 reduces the maximum rates on long-term
capital gains recognized on capital assets held by individual taxpayers for
more than eighteen months as of the date of disposition to 20% (and would
further reduce the maximum rates on such gains in the year 2001 and
thereafter for certain individual taxpayers who meet specified conditions).
Gain recognized by individual taxpayers on assets held more than twelve but
not more than eighteen months continue to be taxed at a 28% rate.
Prospective investors should consult their own tax advisors regarding these
tax law changes.
Foreign Investors. If so specified in the Prospectus Supplement for a
Series, Federal Tax Counsel will give its opinion that the Notes of a Series
of Securities will properly be classified as debt for U.S. federal income tax
purposes. If the Notes are treated as debt:
(a) interest paid to a non-United States person would be exempt
from U.S. withholding taxes (including backup withholding taxes),
provided the holder complies with applicable identification requirements
(and does not actually or constructively own 10% or more of the voting
stock of the Depositor and is not a controlled foreign corporation with
respect to the Depositor). Applicable identification requirements will
be satisfied if there is delivered to a securities clearing organization
(or bank or other financial institution that holds the Notes on behalf
of the customer in the ordinary course of its trade or business) (i) IRS
Form W-8 signed under penalties of perjury by the beneficial owner of
such Notes stating that the beneficial owner is not a United States
person and providing such beneficial owner's name and address, (ii) IRS
Form 1001 signed by the beneficial owner of such Notes or such owner's
agent claiming exemption from withholding under an applicable tax
treaty, or (iii) IRS Form 4224 signed by the beneficial owner of such
Notes or such owner's agent claiming exemption from withholding of tax
on income connected with the conduct of a trade or business in the
United States; provided in any such case (x) the applicable form is
delivered pursuant to applicable procedures and is properly transmitted
to the United States entity otherwise required to withhold tax and (y)
none of the entities receiving the form has actual knowledge that the
holder is a United States person or that any certification on the form
is false.
(b) a holder of a Note who is a non-United States person will not
be subject to U.S. federal income tax on gain realized on the sale,
exchange or redemption of such Note, provided that (i) such gain is not
attributable to the conduct of a trade or business in the United States,
(ii) in the case of a holder that is an individual, such holder is not
present in the United States for 183 days or more during the taxable
year in which such sale, exchange or redemption occurs and (iii) in the
case of gain representing accrued interest, the conditions described in
clause (a) are satisfied; and
(c) a Note held by an individual who at the time of death is a
nonresident alien will not be subject to United States federal estate
tax as a result of such individual's death if, immediately before his
death, (i) the individual did not actually or constructively own 10% or
more of the voting stock of the Depositor and (ii) the holding of such
Note was not effectively connected with the conduct by the decedent of a
trade or business in the United States.
If the IRS were to contend successfully that a Series of Securities are
interests in a partnership (not taxable as a corporation), a Noteholder that
is a non-United States person might be required to file a U.S. individual or
corporate income tax return and pay tax on its share of partnership income at
regular U.S. rates, including, in the case of a corporation, the branch
profits tax (and would be subject to withholding tax on its share of
partnership income). If the Notes are recharacterized as interests in an
association taxable as a corporation or a "publicly traded partnership"
taxable as a corporation, to the extent distributions on the Notes were
treated as dividends, Noteholders that are non-United States persons would
generally be taxed on the gross amount of such dividends (and subject to
withholding) at a rate of 30% unless such rate were reduced by an applicable
treaty.
Backup Withholding. A Noteholder may, under certain circumstances, be
subject to "backup withholding" at a rate of 31% with respect to
distributions or the proceeds of a sale of Notes to or through brokers that
represent interest or OID on the Notes. This withholding generally applies
if the holder of a Note (i) fails to furnish the Indenture Trustee with its
taxpayer identification number ("TIN"); (ii) furnishes the Indenture Trustee
an incorrect TIN; (iii) fails to report properly interest, dividends or other
"reportable payments" as defined in the Code; or (iv) under certain
circumstances, fails to provide the Indenture Trustee or such holder's
securities broker with a certified statement, signed under penalty of
perjury, that the TIN provided is its correct number and that the holder is
not subject to backup withholding. Backup withholding will not apply,
however, with respect to certain payments made to Noteholders, including
payments to certain exempt recipients (generally, holders that are
corporations, tax-exempt organizations, qualified pension and profit-sharing
trusts, individual retirement accounts, or non-United States persons who
provide certification as to their status as non-United States persons) and to
certain non-United States persons. Each nonexempt Noteholder will be
required to provide, under penalties of perjury, a certificate on IRS Form
W-9 containing such holder's name, address, federal taxpayer identification
number and a statement that such holder is not subject to backup withholding.
Should a nonexempt Noteholder fail to provide the required certification, the
Trustee will be required to withhold (or cause to be withheld) 31% of the
interest (and principal) otherwise payable to the holder and remit the
withheld amounts to the IRS as credit against the Noteholder's federal income
tax liability. Noteholders should consult their tax advisers as to their
qualification for exemption from backup withholding and the procedure for
obtaining the exemption.
NEW WITHHOLDING REGULATIONS
On October 6, 1997, the Treasury Department issued new regulations (the
"New Regulations") which make certain modifications to the withholding,
backup withholding and information reporting rules described above. The New
Regulations attempt to unify certification requirements and modify reliance
standards. The New Regulations will generally be effective for payments made
after December 31, 1998, subject to certain transition rules. Prospective
investors are urged to consult their own tax advisors regarding the New
Regulations.
The Indenture Trustee will report to the Noteholders and to the
Administrator for each calendar year the amount of any "reportable payments"
during such year and the amount of tax withheld, if any, with respect to
payments on the Notes. The Indenture Trustee will furnish or make available,
within a reasonable time after the end of each calendar year, to each
Noteholder or each person holding a Note on behalf of a Noteholder at any
time during such year, such information as the Indenture Trustee deems
necessary or desirable to assist Noteholders in preparing their federal
income tax returns.
TAX TREATMENT OF SWAP AGREEMENTS
If so specified in a Prospectus Supplement, the Trust will enter into
one or more Swap Agreements. The Internal Revenue Service (the "IRS") has
issued regulations that address the timing of income and deductions with
respect to certain notional principal contracts (the "Swap Regulations"). In
general, the Swap Agreements should constitute notional principal contracts
within the meaning of the Swap Regulations. The Swap Regulations generally
require that a ratable portion of net payments accruing under a notional
principal contract within a taxable year be deducted from or included in
income for that year, despite actual payment or receipt in the following
taxable year. Accordingly, in general, each Certificateholder will be
required to include in income their pro rata share of the Trust's income or
deduction attributable to a Swap Agreement recognized in a given year even if
the Certificateholder is a cash method taxpayer. Under the terms of a Swap
Agreement, a Certificateholder could be treated as making or receiving an
upfront "nonperiodic payment" as that term is defined in the Swap
Regulations. Such a characterization could result in the Certificateholders
recognizing income less than or in excess of amounts actually received under
the Swap Agreement throughout the life of the Swap Agreement. In addition,
under the Swap Regulations, if a Swap Agreement is assigned by any Swap
Counterparty, the Certificateholders may be required to recognize gain or
loss on such assignment as though the Swap Agreement had been terminated and
a new Swap Agreement had been entered into. The Certificateholders will be
required to account for any Swap breakage fees paid or received pursuant to
the Swap Agreement as ordinary income or deduction unless the Swap breakage
fees constitute a termination payment within the meaning of Code Section
1234A, in which case any Swap breakage fees paid or received pursuant to the
Swap Agreement prior to the end of the term of the Swap Agreement would
constitute capital gain or loss. It is possible that one or more of the Swap
Agreements entered into by the Trust, although documented as such, will not
constitute notional principal contracts under the Swap Regulations. In such
a case, the substance of the Swap Agreement will govern how it is treated for
U.S. federal income tax purposes. As discussed below, the taxation of
Certificateholders in respect of the Swap Agreements may depend on the
classification of the Trust as a partnership, grantor trust or FASIT.
TAX STATUS AS A PARTNERSHIP
General. If specified in the related Prospectus Supplement, to the
extent there is more than one Certificateholder the Trust relating to the
Series of Certificates will receive an opinion from Federal Tax Counsel that
the Trust will be classified as a partnership for U.S. federal income tax
purposes and not as an association or publicly traded partnership taxable as
a corporation (assuming compliance with the Certificateholders'
representations or deemed representations, as the case may be). In such
case, the Certificateholders will agree by their purchase of Certificates to
treat the Trust as a partnership for purposes of U.S. federal and state
income tax, franchise tax and any other tax measured in whole or in part by
income. The assets of such tax partnership would consist of the assets held
by the Trust, the partners of the partnership would be the Certificateholders
and the Notes would be considered debt of the partnership. See "--Treatment
of Trust as a Disregarded Entity" for discussion of U.S. federal income tax
consequences of all Certificates being held by one person. It should be
noted that to the extent the Trust is classified as a partnership for U.S.
federal income tax purposes Certificates should not be held by tax-exempt
entities (including pension funds). To such an entity, all or a portion of
the income from partnership interests would be "unrelated business taxable
income." In addition, because of certain potentially adverse consequences,
to the extent the Trust is classified as a partnership for U.S. federal
income tax purposes, Certificates cannot be held by non-U.S. persons.
Accordingly, if the Trust is so classified, transfers of Certificates to non-
U.S. persons will be null and void ab initio and the intended transferee
shall be deemed never to have had an interest therein.
For U.S. federal income tax purposes, a partnership is not considered a
separate taxable entity. Instead, partnership income is taxed directly to
the partners and each partner generally is viewed as owning a direct
undivided interest in each partnership asset. The partnership is generally
treated as an entity, however, for computing partnership income, determining
the tax consequences of transactions between a partner and the partnership,
and characterizing the gain on the sale or exchange of a partnership
interest. The following discussion is a summary of some of the material U.S.
federal income tax consequences of classifying the Trust as a partnership.
Prospective owners of Certificates should consult their own tax advisors
regarding the U.S. federal income tax consequences discussed below, as well
as any other material U.S. federal income tax consequences that may result
from applying partnership tax rules to the ownership and transfer of a
Certificate.
Partnership Taxation. As a partnership, the Trust will not be subject
to U.S. federal income tax. Rather, each Certificateholder will be required
to separately take into account such holder's allocated share of income,
gains, losses, deductions and credits of the Trust. The Trust's income will
consist primarily of income from the Underlying Securities (including
appropriate adjustments for market discount, OID and bond premium), income
of Eligible Investments, payments made by the Swap Counterparty to the Trust
under the Swap Agreement (if so specified in the Prospectus Supplement), and
amounts realized by the Indenture Trustee upon the sale or other disposition
of Underlying Securities or Eligible Investments. The Trust's deductions
will consist primarily of interest accruing with respect to the Notes,
payments made to the Swap Counterparty under the Swap Agreement, other fees,
and losses or deductions upon collection or disposition of the Underlying
Securities or Eligible Investments.
It is important to note that cash basis holders may in effect be
required to report income from the Certificates on an accrual basis and
Certificateholders may become liable for taxes on the Trust's income even if
they have not received cash from the Trust to pay such taxes. In addition,
because tax allocations and tax reporting will be done on a uniform basis for
all Certificateholders, Certificateholders purchasing Certificates at
different times and at different prices may be required to report on their
tax returns taxable income that is greater or less than the amount reported
to them by the Trust.
An individual taxpayer's share of expenses of the Trust (not including
interest expenses) will generally be miscellaneous itemized deductions which
are deductible to the extent they exceed two percent of the individual's
adjusted gross income. Accordingly, such deductions might be disallowed to
the individual in whole or in part and might result in such holder being
taxed on an amount of income that exceeds the amount of cash actually
distributed to such holder over the life of the Issuer.
Computation of Income. Taxable income of the Trust will be computed at
the Trust level and then allocated pro rata to the Certificateholders.
Consequently, the method of accounting for taxable income, along with any
elections (such as those described above with respect to the market discount
rules), will be made by the Trust rather than the Certificateholders. The
Trust intends, to the extent possible, to have the taxable income of the
Trust computed under the accrual method of accounting. To the extent that
OID, if any, on the Underlying Securities exceeds a de minimis amount, the
Trust would have OID income. Moreover, if the purchase price paid by the
Trust for the Underlying Securities is greater or less than the remaining
principal balance of the Underlying Securities at the time of purchase, the
Underlying Securities will have been acquired at a premium or discount, as
the case may be. If the Trust acquires the Underlying Securities at more
than a de minimis market discount or at a premium, the Trust will elect to
include any such discount in income currently as it accrues over the life of
the Underlying Securities or to offset any such premium against interest
income on the Underlying Securities. In addition, the Trust intends to adopt
a calendar-year taxable year for computing the taxable income of the Trust
(if permitted under the Code). The time at which Certificateholders
recognize income of the Trust, however, is generally determined by reference
to the tax years of the Certificateholders. As a result, a Certificateholder
would be required to include its pro rata share of Trust income for a taxable
year, as determined by the Trust, in such Certificateholder's gross income
for its taxable year in which the taxable year of the Trust ends.
Determining the Bases of Trust Assets. The Trust will become a
partnership on the first date when the Trust Certificates are held by more
than one person. On that date, each of the Certificateholders should be
treated as having purchased a pro rata share of the assets of the Trust
(subject to the liability for the Notes) followed immediately by a deemed
contribution of such assets to the newly formed partnership. The
partnership's basis in the Trust's assets would therefore equal the sum of
the Certificateholders' bases in their respective interests in the Trust's
assets immediately prior to the deemed contribution to the partnership. To
the extent that the fair market value of the assets deemed contributed to the
partnership varied from the bases of such assets to the partnership, the
allocation of taxable income to the Certificateholders would be adjusted in
accordance with Code Section 704(c) to account for such variations.
Pursuant to final regulations issued on May 9, 1997 under Code Section
708, a sale or exchange of 50% or more of the capital and profits interests
in a partnership within a 12 month period would cause a deemed contribution
of assets of the partnership (the "old partnership") to a new partnership
(the "new partnership") in exchange for interests in the new partnership.
Such interests would be deemed distributed to the partners of the old
partnership in liquidation thereof, which would not constitute a sale or
exchange. Accordingly, under these new regulations, if the Trust were
characterized as a partnership and a sale of Certificates terminated the
partnership under Code Section 708, the purchaser's basis in its ownership
interest would not change.
Disposition of Certificates. Generally, capital gain or loss will be
recognized on a sale of Certificates in an amount equal to the difference
between the amount realized and the seller's tax basis in the Certificates
sold. To the extent the Trust is characterized as a partnership, a
Certificateholder's tax basis in a Certificate will generally equal the
holders' cost, increased by the holder's share of the Trust's income
(includible in gross income), and decreased by any distributions received
with respect to such Certificate. In addition, both the tax basis in the
Certificate and the amount realized on a sale of a Certificate would include
the holder's share of the Notes and others liabilities of the Trust. A
holder acquiring Certificates at different prices may be required to maintain
a single aggregate adjusted tax basis in such Certificates, and, upon sale or
other disposition of some of the Certificates, allocate a pro rata portion of
such aggregate tax basis to the Certificates sold (rather than maintaining a
separate tax basis in each Certificate for purposes of computing gain or loss
on a sale of that Certificate).
Any gain on the sale of a Certificate attributable to the holder's share
of unrecognized accrued market discount on the Underlying Securities would
generally be treated as ordinary income to the holder and could give rise to
special tax reporting requirements.
If a Certificateholder is required to recognize an aggregate amount of
income (not including income attributable to disallowed itemized deductions
described above) over the life of the Certificates that exceeds the aggregate
cash distributions with respect thereto, such excess will generally give rise
to a capital loss upon the retirement of the Certificates.
Allocations Between Transferors and Transferees. In general, the
Trust's taxable income and losses will be determined monthly and the tax
items for a particular calendar month will be apportioned among the
Certificateholders in proportion to the principal amount of Certificates
owned by them as of the close of the last day of such month. As a result, a
holder purchasing Certificates may be allocated tax items (which will affect
the tax liability and tax basis of the holder) attributable to periods before
the actual transaction.
The use of such a monthly convention may not be permitted by existing
laws and regulations. If a monthly convention is not allowed (or only
applies to transfers of less than all of the partner's interest), taxable
income or losses of the Trust might be reallocated among the
Certificateholders. The Administrator is authorized to revise the Trust's
method of allocation between transferors and transferees to conform to a
method permitted by future laws, regulations or other IRS guidance.
Code Section 754 Election. In the event that a Certificateholder sells
a Certificate at a profit (or loss), the purchasing Certificateholder will
have a higher (or lower) basis in the Certificate than the selling
Certificateholder had. The tax basis of the Trust's assets will not be
adjusted to reflect that higher (or lower) basis unless the Trust were to
file an election under Code Section 754. In order to avoid the
administrative complexities that would be involved in keeping accurate
accounting records, as well as potentially onerous information reporting
requirements, the Trust will not make such election. As a result,
Certificateholders might be allocated a greater or lesser amount of Trust
income than would be appropriate based on their own purchase price for
Certificates.
Administrative Matters. The Administrator will be required to prepare
and file a partnership information return (IRS Form 1065) signed by the "Tax
Matters Partner" (as defined in the applicable Trust Agreement) with the IRS
for each taxable year of the Issuer and will report each Certificateholder's
allocable share of items of the Trust's income and expense to
Certificateholders and the IRS on Schedule K-1. The Tax Matters Partner will
be the Certificateholder specified in the Trust Agreement, and in the absence
of such specification will be the Certificateholder with the largest profits
interest in the partnership at the close of the relevant taxable year (or, if
there is more than one such partner, the partner whose name would appear
first in an alphabetical listing.) The Administrator will provide the
Schedule K-1 information to nominees that fail to provide the Administrator
with the information statement described in Code Section 6031, and such
nominees will be required to forward such information to the beneficial
owners of the Certificates. Generally, Certificateholders must file returns
that are consistent with the information returns filed by the Trust or be
subject to penalties unless the Certificateholder notifies the IRS of all
such inconsistencies. In addition to signing the partnership return the Tax
Matters Partner will have certain administrative responsibilities in the
event the partnership is audited by the IRS.
Treatment of Trust as a Disregarded Entity. If specified in the related
Prospectus Supplement, to the extent there is only one Certificateholder, the
Trust will be disregarded as an entity separate from the Certificateholder
for U.S. federal income tax purposes. The Certificateholder will be treated
as owning the assets of the Trust directly and all income, losses, deductions
and credits of the Trust will be treated as those of the Certificateholder.
A cash basis Certificateholder may in effect be required to report income
from the Certificates on an accrual basis and may become liable for taxes on
Trust income even if it has not received cash from the Trust to pay such
taxes. In addition, to the extent the Certificateholder is an individual,
expenses (not including interest expenses) are miscellaneous itemized
deductions, which are only deductible to the extent they exceed two percent
of the individual's gross income. Accordingly, such deductions might be
disallowed to the individual in whole or in part and might result in such
holder's being taxed on an amount of income that exceeds the amount of cash
actually distributed to such holder over the life of the Trust. See "--
Computation of Income" and "--Payments under the Swap Agreement" herein for a
description of other U.S. federal income tax consequences of owning the
assets of Trust.
TAX STATUS AS A GRANTOR TRUST
General. If specified in the related Prospectus Supplement, in the
opinion of Federal Tax Counsel, the Trust relating to a Series of
Certificates will be classified for U.S. federal income tax purposes as a
grantor trust under Subpart E, Part 1 of Subchapter J of Chapter 1 of
subtitle A of the Code and not as an association taxable as a corporation
(the Certificates of such Series, "Pass-Through Securities"). In some Series
there will be no separation of the principal and interest payments on the
Securities. In such circumstances, a Certificateholder will be considered to
have purchased a pro rata undivided interest in the Securities. In other
cases ("Stripped Securities"), sale of the Certificates will produce a
separation in the ownership of all or a portion of the principal payments
from all or a portion of the interest payments on the Securities.
Each Certificateholder must report on its U.S. federal income tax return
its share of the gross income derived from the Securities (not reduced by the
amount payable as fees to the Indenture Trustee, the Owner Trustee or the
Administrator and similar fees (collectively, the "Servicing Fee")), at the
same time and in the same manner as such items would have been reported under
the Certificateholder's tax accounting method had it held its interest in the
Securities directly, received directly its share of the amounts received with
respect to the Securities, and paid directly its share of the servicing fees.
In the case of Pass-Through Securities, other than Stripped Securities (as
defined below), such income will consist of a pro rata share of all of the
income derived from all of the Securities and, in the case of Stripped
Securities, such income will consist of a pro rata share of the income
derived from each stripped bond or stripped coupon in which the
Certificateholder owns an interest. The Certificateholder will generally be
entitled to deduct servicing fees under Code Section 162 or Code Section 212
to the extent that such servicing fees represent "reasonable" compensation
for the services rendered by the Indenture Trustee, the Owner Trustee or the
Administrator (or third parties that are compensated for the performance of
services). In the case of a noncorporate holder, however, servicing fees (to
the extent not otherwise disallowed, e.g., because they exceed reasonable
compensation) will be deductible in computing such holder's regular tax
liability only to the extent that such fees, when added to other
miscellaneous itemized deductions, exceed 2% of the adjusted gross income of
the Certificateholder and may not be deductible to any extent in computing
such holder's alternative minimum tax liability.
Discount or Premium on Pass-Through Securities. Discount on a Pass-
Through Security represents OID or market discount. In the case of a
Underlying Security with OID in excess of a prescribed de minimis amount or a
Stripped Security, a holder of a Certificate will be required to report as
interest income in each taxable year its share of the amount of OID that
accrues during the year.
Stripped Securities. A Stripped Security may represent a right to
receive only a portion of the interest payments on a Underlying Security (a
"Stripped Coupon"), a right to receive only principal payments on a
Underlying Security or a right to receive certain payments of both interest
and principal (a "Stripped Bond"). Pursuant to Code Section 1286, the
separation of ownership of the right to receive some or all of the interest
payments on an obligation from ownership of the right to receive some or all
of the principal payments results in the creation of "stripped bonds" with
respect to principal payments and "stripped coupons" with respect to interest
payments. Code Section 1286 applies the OID rules to stripped bonds and
stripped coupons. For purposes of computing OID, a Stripped Bond or a
Stripped Coupon is treated as a debt instrument issued on the date that such
stripped interest is purchased, with an issue price equal to its purchase
price or, if more than one stripped interest is purchased, the ratable share
of the purchase price allocable to such stripped interest.
Generally, under Treasury regulations (the "Section 1286 Treasury
Regulations"), if the discount on a Stripped Bond Certificate is larger than
a de minimis amount (as calculated for purposes of the OID rules of the Code)
such Stripped Bond Certificate will be considered to have been issued with
OID. Based on the preamble to the Section 1286 Treasury Regulations, it
appears that stated interest on a Stripped Bond Certificate will be treated
as "qualified stated interest" within the meaning of the Section 1286
Treasury Regulations and such income will be so treated in the Owner
Trustee's or the Indenture Trustee's, as applicable tax information
reporting.
Under the foregoing rules, if it is anticipated that Stripped Bond
Certificates will be considered to be issued with de minimis OID, then the
OID will therefore be considered to be zero. Stripped Coupon Certificates
will be issued with OID. If Stripped Bond Certificates are issued with OID,
the rules described in this paragraph would apply. Generally, the owner of a
Stripped Security issued or acquired with OID must include in gross income
the sum of the "daily portions," as defined below, of the OID on such
Stripped Security for each day on which it owns a Stripped Security,
including the date of purchase but excluding the date of disposition. In the
case of an original Stripped Security holder, the daily portions of OID with
respect to a Stripped Security generally would be determined as follows. A
calculation will be made of the portion of OID that accrues on the Stripped
Security during each successive monthly accrual period (or shorter period in
respect of the date of original issue or the final Distribution Date) that
ends on the earlier to occur of the day in the calendar year corresponding to
each Distribution Date or the last day of the related accrual period. This
will be done, in the case of each full monthly accrual period, by adding (i)
the present value of all remaining payments to be received on the Stripped
Security and (ii) any payments received during such accrual period, and
subtracting from that total the "adjusted issued price" of the Stripped
Security at the beginning of such accrual period. The "adjusted issue price"
of a Stripped Security at the beginning of the first accrual period is its
issue price (as determined for purposes of the original issue discount rules
of the Code) and the "adjusted issue price" of a Stripped Security at the
beginning of a subsequent accrual period is the "adjusted issued price" at
the beginning of the immediately preceding accrual period plus the amount of
OID allocable to that accrual period and reduced by the amount of any payment
made at the end of or during that accrual period. The OID accruing during
such accrual period will then be divided by the number of days in the period
to determine the daily portion of OID for each day in the period.
Sale or Exchange. A Certificateholder's tax basis in its Certificate is
the price such holder pays for a Certificate, plus amounts of original issue
or market discount included in income and reduced by any payments received
(other than qualified stated interest payments) and any amortized premium.
Gain or loss recognized on a sale, exchange, or redemption of a
Certificate, measured by the difference between the amount realized and the
Certificate's basis as so adjusted, will generally be capital gain or loss,
assuming that the Certificate is held as a capital asset. See "Certain
Federal Income Tax Consequences-Treatment of Notes as Indebtedness-Sale or
Exchange."
Foreign Investors. Under the Code, unless interest (including OID) paid
on a Certificate is considered to be "effectively connected" with a trade or
business conducted in the United States by a non-United States person, such
interest will normally qualify as portfolio interest (except where (i) the
recipient is a holder, directly or by attribution, of 10% or more of the
capital or profits interest in the issuer of the Securities, or (ii) the
recipient is a controlled foreign corporation to which the Depositor is a
related person) and will be exempt from U.S. federal income tax. Upon
receipt of appropriate ownership statements, the issuer normally will be
relieved of obligations to withhold tax from such interest payments. These
provisions supersede the generally applicable provisions of United States law
that would otherwise require the issuer to withhold at a 30% rate (unless
such rate were reduced or eliminated by an applicable tax treaty) on, among
other things, interest and other fixed or determinable, annual or periodic
income paid to nonresidents of the United States. See "Certain Federal
Income Tax Consequences -- Treatment of Notes as Indebtedness -- Foreign
Investors" above. Holders of Pass-Through Securities and Stripped
Securities, however, may be subject to withholding to the extent that the
Securities were originated on or before July 18, 1984. See "Certain Federal
Income Tax Consequences New Withholding Regulations".
FASIT SECURITIES
General
The FASIT provisions of the Code were enacted by the Small Business Job
Protection Act of 1996 and create a new elective statutory vehicle for the
issuance of debt securities, including mortgage-backed and asset-backed
securities. Although the FASIT provisions of the Code became effective on
September 1, 1997, no Treasury regulations or other administrative guidance
have been issued with respect to those provisions. Accordingly, definitive
guidance cannot be provided with respect to many aspects of the tax treatment
of FASIT Securityholders. Investors also should note that the FASIT
discussion contained herein constitutes only a summary of the U.S. federal
income tax consequences to holders of FASIT Securities. With respect to each
Series of FASIT Securities, the related Prospectus Supplement will provide a
detailed discussion regarding the U.S. federal income tax consequences
associated with the particular transaction.
FASIT Securities will be classified as either FASIT Regular Securities,
which generally will be treated as debt for U.S. federal income tax purposes,
or FASIT Ownership Securities, which generally are not treated as debt for
such purposes, but rather as representing rights and responsibilities with
respect to the taxable income or loss of the related Series FASIT. The
Prospectus Supplement for each Series of Securities will indicate whether one
or more FASIT elections will be made for that Series and which Securities of
such Series will be designated as Regular Securities, and which, if any, will
be designated as Ownership Securities.
Qualification as a FASIT
The Trust underlying a Series (or one or more designated pools of assets
held in the Trust) will qualify under the Code as a FASIT in which the FASIT
Regular Securities and the FASIT Ownership Securities will constitute the
"regular interests" and the "ownership interests," respectively, if (i) a
FASIT election is in effect, (ii) certain tests concerning (A) the
composition of the FASIT's assets and (B) the nature of the Securityholders'
interests in the FASIT are met on a continuing basis, and (iii) the Trust is
not a regulated investment company as defined in Code Section 851(a).
Asset Composition
In order for a Trust (or one or more designated pools of assets held by
a Trust) to be eligible for FASIT status, substantially all of the assets of
the Trust (or the designated pool) must consist of "permitted assets" as of
the close of the third month beginning after the closing date and at all
times thereafter (the "FASIT Qualification Test"). Permitted assets include
(i) cash or cash equivalents, (ii) debt instruments with fixed terms that
would qualify as regular interests if issued by a Real Estate Mortgage
Investment Conduct as defined in Code Section 860D ("REMIC") (generally,
instruments that provide for interest at a fixed rate, a qualifying variable
rate, or a qualifying interest-only ("IO") type rate), (iii) foreclosure
property, (iv) certain hedging instruments (generally, interest and currency
rate swaps and credit enhancement contracts) that are reasonably required to
guarantee or hedge against the FASIT's risks associated with being the
obligor on FASIT interests, (v) contract rights to acquire qualifying debt
instruments or qualifying hedging instruments, (vi) FASIT regular interests,
and (vii) REMIC regular interests. Permitted assets do not include any debt
instruments issued by the holder of the FASIT's ownership interest or by any
person related to such holder.
Interests in a FASIT
In addition to the foregoing asset qualification requirements, the
interests in a FASIT also must meet certain requirements. All of the
interests in a FASIT must qualify as either of the following: (i) one or
more classes of regular interests or (ii) a single class of ownership
interest that is held by a fully taxable domestic C corporation. In the case
of Series that include FASIT Ownership Securities, the ownership interest
will be represented by the FASIT Ownership Securities.
A FASIT interest generally qualifies as a regular interest if (i) it is
designated as a regular interest, (ii) it has a stated maturity no greater
than thirty years, (iii) it entitles its holder to a specified principal
amount, (iv) the issue price of the interest does not exceed 125% of its
stated principal amount, (v) the yield to maturity of the interest is less
than the applicable Treasury rate published by the Service plus 5%, and (vi)
if it pays interest, such interest is payable at either (a) a fixed rate with
respect to the principal amount of the regular interest or (b) a permissible
variable rate with respect to such principal amount.
If a FASIT Security fails to meet one or more of the requirements set
out in clauses (iii), (iv), or (v) as set forth in the first sentence of the
preceding paragraph, but otherwise meets the above requirements, it may still
qualify as a type of regular interest known as a "High-Yield Interest." In
addition, if a FASIT Security fails to meet the requirement of clause (vi),
but the interest payable on the Security consists of a specified portion of
the interest payments on permitted assets and that portion does not vary over
the life of the Security, the Security also will qualify as a High-Yield
Interest. A High-Yield Interest may be held only by domestic C corporations
that are fully subject to corporate income tax ("Eligible Corporations"),
other FASITs, and dealers in securities who acquire such interests as
inventory, rather than for investment. In addition, holders of High-Yield
Interests are subject to limitations on offset of income derived from such
interest. See "Certain Federal Income Tax Consequences -- FASIT Securities
- -- Tax Treatment of FASIT Regular Securities -- Treatment of High-Yield
Interests."
Consequences of Disqualification
If a Series FASIT fails to comply with one or more of the Code's ongoing
requirements for FASIT status during any taxable year, the Code provides that
its FASIT status may be lost for that year and thereafter. If FASIT status
is lost, the treatment of the former FASIT and the interests therein for U.S.
federal income tax purposes is uncertain. The former FASIT might be treated
as a grantor trust, as a separate association taxation as a corporation, or
as a partnership. The FASIT Regular Securities could be treated as debt
instruments for federal income tax purposes or as equity interests. Although
the Code authorizes the Treasury to issue regulations that address situations
where a failure to meet the requirements for FASIT status occurs
inadvertently and in good faith, such regulations have not yet been issued.
It is possible that disqualification relief might be accompanied by
sanctions, such as the imposition of a corporate tax on all or a portion of
the FASIT's income for the period of time in which the requirements for FASIT
status are not satisfied.
Tax Treatment of FASIT Regular Securities
General. Payments received by holders of FASIT Regular Securities
generally should be accorded the same tax treatment under the Code as
payments received on other taxable debt instruments. Holders of FASIT
Regular Securities must report income from such Securities under an accrual
method of accounting, even if they otherwise would have used the cash
receipts and disbursements method. Except in the case of FASIT Regular
Securities issued with original issue discount or acquired with market
discount or premium, interest paid or accrued on a FASIT Regular Security
generally will be treated as ordinary income to the Securityholder and a
principal payment on such Security will be treated as a return of capital to
the extent that the Securityholder's basis is allocable to that payment.
Holders of FASIT Regular Securities issued with original issue discount or
acquired with market discount or premium generally will treat interest and
principal payments on such Securities in the same manner described for Notes.
See "Certain Federal Income Tax Consequences -- Taxation of Debt Securities -
- - Original Issue Discount," above. For purposes of accruing original issue
discount and market discount and amortizing premium, a prepayment assumption
is required to be used. The prepayment assumption the Issuer intends to use
will be set forth in the related Prospectus Supplement.
FASIT Regular Securities held by a Thrift Institution taxed as a
"domestic building and loan association" will represent qualifying assets for
purposes of the qualification requirements set forth in Code Section
7701(a)(19) to the same extent the REMIC Securities would be so considered.
In addition, FASIT Regular Securities held by a financial institution to
which Code Section 585 applies will be treated as evidences of indebtedness
for purposes of Code Section 582(c)(1). FASIT Securities will not qualify as
"Government securities" for either REIT or RIC qualification purposes.
Sale, Exchange or Redemption. If a FASIT Regular Security is sold,
exchanged, redeemed or retired, the seller will recognize gain or loss equal
to the difference between the amount realized on the sale, exchange,
redemption, or retirement and the seller's adjusted basis in the FASIT
Regular Security. Such adjusted basis generally will equal the cost of the
FASIT Regular Security to the seller, increased by any OID and market
discount included in the seller's gross income with respect to the FASIT
Regular Security, and reduced (but not below zero) by payments included in
the stated redemption price at maturity previously received by the seller and
by any amortized premium. Similarly, a holder who receives a payment that is
part of the stated redemption price at maturity of a FASIT Regular Security
will recognize gain equal to the excess, if any, of the amount of the payment
over the holder's adjusted basis in the FASIT Regular Security. A FASIT
Regular Securityholder who receives a final payment that is less than the
holder's adjusted basis in the FASIT Regular Security will generally
recognize a loss. Except as provided in the following paragraph and as
provided under "--Market discount" above, any such gain or loss will
constitute capital gain or loss, provided that the FASIT Regular Security is
held as a "capital asset". See "Certain Federal Income Tax Consequences --
Treatment of Notes as Indebtedness -- Sale or Exchange".
The Certificates will constitute "evidences of indebtedness" within the
meaning of Code Section 582(c)(1), so that gain or loss recognized from the
sale of a FASIT Regular Security by a bank or a thrift institution to which
such Section applies will be ordinary income or loss.
The FASIT Regular Security information reports will include a statement
of the adjusted issue price of the FASIT Regular Security at the beginning of
each accrual period. In addition, the reports will include information
necessary to compute the accrual of any market discount that may arise upon
secondary trading of FASIT Regular Securities. Because exact computation of
the accrual of market discount on a constant yield method would require
information relating to the holder's purchase price which the FASIT may not
have, it appears that the information reports will only require information
pertaining the appropriate proportionate method of accruing market discount.
Treatment of High-Yield Interests
High-Yield Interests are subject to special rules regarding the
eligibility of holders of such interests and the ability of such holders to
offset income derived from their FASIT Security with losses. High-Yield
Interests may be held only by Eligible Corporations, other FASITs, and
dealers in securities who acquire such interests as inventory. If a
securities dealer (other than an Eligible Corporation) initially acquires a
High-Yield Interest as inventory, but later begins to hold it for investment,
the dealer will be subject to an excise tax equal to the income from the
High-Yield Interest multiplied by the highest corporate income tax rate. In
addition, a transfer of a High-Yield Interest to a disqualified holder will
be disregarded for federal income tax purposes, and the transferor will
continue to be treated as the holder of the High-Yield Interest.
The holder of a High-Yield Interest may not use non-FASIT current losses
or net operating loss carryforwards or carrybacks to offset any income
derived from the High-Yield Interest, for either regular federal income tax
purposes or for alternative minimum tax purposes. In addition, the FASIT
provisions contain an anti-abuse rule that imposes corporate income tax on
income derived from a FASIT Regular Security that is held by a pass-through
entity (other than another FASIT) that issues debt or equity securities
backed by the FASIT Regular Security and having the same features as High-
Yield Interests.
Tax Treatment of FASIT Ownership Securities
A FASIT Ownership Security represents the residual equity interest in a
FASIT. Accordingly the holder of a FASIT Ownership Security determines its
taxable income by taking into account all assets, liabilities, and items of
income, gain, deduction, loss, and credit of a FASIT. In general, the
character of the income to the holder of a FASIT Ownership Interest will be
the same as the character of such income to the FASIT, except that any tax-
exempt interest income taken into account by the holder of a FASIT Ownership
Interest is treated as ordinary income. In determining taxable income, the
holder of a FASIT Ownership Security must determine the amount of interest,
original issue discount, market discount, and premium recognized with respect
to the FASIT's assets and the FASIT Regular Securities issued by the FASIT
according to a constant yield methodology and under an accrual method of
accounting. In addition, holders of FASIT Ownership Securities are subject
to the same limitations on their ability to use losses to offset income from
their FASIT Securities as are holders of High-Yield Interests. See "Certain
Federal Income Tax Consequences -- FASIT Securities -- Tax Treatment of FASIT
Regular Securities -- Treatment of High-Yield Interest."
Rules similar to the wash sale rules applicable to REMIC Residual
Securities also will apply to FASIT Ownership Securities. Accordingly,
losses on dispositions of a FASIT Ownership Security generally will be
disallowed where, within six months before or after the disposition, the
seller of such Security acquires any other FASIT Ownership Security that is
economically comparable to a FASIT Ownership Security. In addition, if any
security that is sold or contributed to a FASIT by the holder of the related
FASIT Ownership Security was required to be marked-to-market under Code
Section 475 by such holder, then Code Section 475 will continue to apply to
such securities, except that the amount realized under the mark-to-market
rules will be the greater of the securities' value under the marked-to-market
rules or the securities' value after applying special valuation rules
contained in the FASIT provision. Those special valuation rules generally
require that the value of debt instruments that are not traded on an
established securities market be determined by calculating the present value
of the reasonably expected payments under the instrument using a discount
rate of 120% of the applicable Federal rate, compounded semiannually.
The holder of a FASIT Ownership Security will be subject to a tax equal
to 100% of the net income derived by the FASIT from any "prohibited
transactions." Prohibited transactions include (i) the receipt of income
derived from assets that are not permitted assets, (ii) certain dispositions
of permitted assets, (iii) the receipt of any income derived from any loan
originated by a FASIT, and (iv) in certain cases, the receipt of income
representing a servicing fee or other compensation. Any Series for which a
FASIT election is made generally will be structured in order to avoid
application of the prohibited transaction tax.
Backup Withholding
Holders of FASIT Securities will be subject to backup withholding to the
same extent holders of Notes would be so subject. See "Certain Federal
Income Tax Consequences -- Treatment of Notes as Indebtedness -- Backup
Withholding."
STATE TAX CONSIDERATIONS
In addition to the U.S. federal income tax consequences described in
"Certain Federal Income Tax Considerations," potential investors should
consider the state income tax consequences of the acquisition, ownership and
disposition of the Securities. State income tax law may differ substantially
from the corresponding federal law, and this discussion does not purport to
describe any aspect of the income tax laws of any state. Therefore,
potential investors should consult their own tax advisors with respect to the
various state tax consequences of an investment in the Securities.
ERISA CONSIDERATIONS
Section 406 of ERISA and Code Section 4975 prohibit a pension,
profit-sharing or other employee benefit plan, as well as individual
retirement accounts and certain types of Keogh Plans (each a "Benefit Plan"),
from engaging in certain transactions with persons that are "parties in
interest" under ERISA or "disqualified persons" under the Code with respect
to such Benefit Plan. A violation of these "prohibited transaction" rules
may result in an excise tax or other penalties and liabilities under ERISA
and the Code for such persons.
Certain transactions involving a Trust might be deemed to constitute
prohibited transactions under ERISA and the Code with respect to a Benefit
Plan that purchased Notes or Certificates if assets of the Trust were deemed
to be assets of the Benefit Plan. Under a regulation issued by the United
States Department of Labor (the "Plan Assets Regulation"), the assets of a
Trust would be treated as plan assets of a Benefit Plan for the purposes of
ERISA and the Code only if the Benefit Plan acquired an "equity interest" in
the Trust and none of the exceptions contained in the Plan Assets Regulation
was applicable. An equity interest is defined under the Plan Assets
Regulation as an interest other than an instrument which is treated as
indebtedness under applicable local law and which has no substantial equity
features. The likely treatment in this context of Notes and Certificates of
a given series will be discussed in the related Prospectus Supplement.
Employee benefit plans that are governmental plans (as defined in
Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33)
of ERISA) are not subject to the requirements of ERISA or Section 4975 of the
Code, but may be subject to other restrictions imposed by applicable local
law or other Code provisions.
A plan fiduciary considering the purchase of Securities of a given
series should consult its tax and/or legal advisors regarding whether the
assets of the related Trust would be considered plan assets, the possibility
of exemptive relief from the prohibited transaction rules and other issues
and their potential consequences.
PLAN OF DISTRIBUTION
On the terms and conditions set forth in an underwriting agreement or
underwriting agreements with respect to the Notes, if any, and the
Certificates, if any, of a Series (collectively, the "Underwriting
Agreement"), the Depositor will agree to cause the related Trust to sell to
the underwriters named therein and in the related Prospectus Supplement, and
each of such underwriters will, severally and not jointly, agree to purchase,
the principal amount of each class of Notes and Certificates, as the case may
be, of such Series set forth therein and in the related Prospectus
Supplement.
In the Underwriting Agreement with respect to any Series of Securities,
the several underwriters will agree, subject to the terms and conditions set
forth therein, to purchase all the Notes and Certificates, as the case may
be, described therein which are offered hereby and by the related Prospectus
Supplement if any of such Notes and Certificates, as the case may be, are
purchased.
Each Prospectus Supplement will either (i) set forth the price at which
each Class of Notes and Certificates, as the case may be, being offered
thereby will be offered to the public and any concessions that may be offered
to certain dealers participating in the offering of such Notes and
Certificates or (ii) specify that the related Notes and Certificates, as the
case may be, are to be resold by the underwriters in negotiated transactions
at varying prices to be determined at the time of such sale. After the
initial public offering of any such Notes and Certificates, such public
offering prices and such concessions may be changed.
Each Underwriting Agreement will provide that the Depositor will
indemnify the underwriters against certain civil liabilities, including
liabilities under the Securities Act, or contribute to payments the several
underwriters may be required to make in respect thereof.
Each Trust may, from time to time, invest the funds in its Trust
Accounts in Eligible Investments acquired from such underwriters, the
Depositor or an affiliate of any of them.
Pursuant to each Underwriting Agreement with respect to a Series of
Securities, the closing of the sale of any Class of Securities subject to
such Underwriting Agreement will be conditioned on the closing of the sale of
all other such Classes of Securities of that Series.
LEGAL MATTERS
Unless otherwise specified in the related Prospectus Supplement, certain
legal matters in connection with the Certificates and the Notes will be
passed upon for the Depositor and for the underwriters by Brown & Wood LLP,
New York, New York.
INDEX OF PRINCIPAL TERMS
Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 23
Acquisition premium . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
adjusted issue price . . . . . . . . . . . . . . . . . . . . . . . . 30, 38
Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Cede . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
CEDEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8, 18
CEDEL Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Certificate Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Certificateholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Collateral Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Collection Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Credit Card Receivables . . . . . . . . . . . . . . . . . . . . . . . . 5, 23
daily portions . . . . . . . . . . . . . . . . . . . . . . . . . . . 30, 37
de minimis amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Definitive Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Depositaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 28
Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
DTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Eligible Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Enhancements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Enhancer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Euroclear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Euroclear Operator . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Euroclear Participants . . . . . . . . . . . . . . . . . . . . . . . . . 18
FASIT Qualification Test . . . . . . . . . . . . . . . . . . . . . . . . 39
Federal Tax Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . 7, 28
Finance Charge Receivables . . . . . . . . . . . . . . . . . . . . . . . 23
Funding Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Global Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
High-Yield Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Indirect Participants . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Interchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
IO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29, 33
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
new partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
New Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Non-United States person . . . . . . . . . . . . . . . . . . . . . . . . 29
nonperiodic payment . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Nonresidents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Noteholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
OID . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30, 31
OID Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
OID Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
old partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25, 26
Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10, 16
Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Pass-Through Securities . . . . . . . . . . . . . . . . . . . . . . . . . 36
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10, 15
Plan Assets Regulation . . . . . . . . . . . . . . . . . . . . . . . . . 42
Pre-Funded Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Pre-Funding Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Principal Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . 23
prohibited transactions . . . . . . . . . . . . . . . . . . . . . . . . . 42
Prospectus Supplement . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Rating Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Related Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Removed Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 1286 Treasury Regulations . . . . . . . . . . . . . . . . . . . . 37
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Security Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Stripped Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Stripped Coupon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Stripped Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Subsequent Transfer Date . . . . . . . . . . . . . . . . . . . . . . . . 25
Subsequent Underlying Securities . . . . . . . . . . . . . . . . . . . . . 6
Swap Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Terms and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . 18
TIN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 4
Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
UCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Underlying Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Underlying Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Underlying Securities . . . . . . . . . . . . . . . . . . . . . . . . . 1, 5
Underlying Securities Prospectus . . . . . . . . . . . . . . . . . . . . . 8
Underlying Securities Trustee . . . . . . . . . . . . . . . . . . . . . . . 6
Underlying Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . 6, 21
Underlying Transferor . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Underlying Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Underlying Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 43
United States person . . . . . . . . . . . . . . . . . . . . . . . . . . 29
TABLE OF CONTENTS
Page
----
PROSPECTUS SUPPLEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 2
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE . . . . . . . . . . . . . 2
REPORTS TO HOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SUMMARY OF TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
DESCRIPTION OF THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . 9
DESCRIPTION OF THE CERTIFICATES . . . . . . . . . . . . . . . . . . . . . 14
CERTAIN INFORMATION REGARDING THE SECURITIES . . . . . . . . . . . . . . 15
TRUST ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
THE TRUST AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
THE DEPOSITOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS . . . . . . . . . . . . . . . . 28
STATE TAX CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . 42
ERISA CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 42
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . 43
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
INDEX OF PRINCIPAL TERMS . . . . . . . . . . . . . . . . . . . . . . . . 44
GLOBAL CLEARANCE, SETTLEMENT
AND TAX DOCUMENTATION PROCEDURES . . . . . . . . . . . . . . . . . . . . I-1
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT
AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Securities
(the "Global Securities") will be available only in book-entry form. If so
specified in the related Prospectus Supplement, investors in the Global
Securities may hold such Global Securities through The Depository Trust
Company ("DTC") (in the United States) or, solely in the case of (i)
Certificates issued by a Trust that is a grantor trust and (ii) Notes, CEDEL
or Euroclear (in Europe) if they are participants of such systems, or
indirectly through organizations which are participants in such systems. The
Global Securities will be tradeable as home market instruments in both the
European and U.S. domestic markets. Initial settlement and all secondary
trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities
through CEDEL and Euroclear will be conducted in the ordinary way in
accordance with their normal rules and operating procedures and in accordance
with conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures
applicable to U.S. corporate debt obligations.
Secondary cross-market trading between CEDEL or Euroclear and DTC
participants holding Global Securities will be effected on a delivery-
against-payment basis through Citibank, N.A. ("Citibank") and Morgan Guaranty
Trust Company of New York ("Morgan") as the respective depositaries of CEDEL
and Euroclear and as participants in DTC.
Non-U.S. holders of Global Securities will be exempt from U.S.
withholding taxes, provided that such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing
organizations or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name
of Cede & Co. as nominee of DTC. Investors' interests in the Global
Securities will be represented through financial institutions acting on their
behalf as direct and indirect participants in DTC. As a result, CEDEL and
Euroclear will hold positions on behalf of their participants through their
respective depositaries, Citibank and Morgan, which in turn will hold such
positions in accounts as participants of DTC.
Investors electing to hold their Global Securities through DTC will
follow the settlement practices applicable to securities previously issued by
the Depositor. Investor securities custody accounts will be credited with
their holdings against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through CEDEL or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global
security and no "lock-up" or restricted period. Global Securities will be
credited to the securities custody accounts on the settlement date against
payment in same-day funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired
value date.
Trading between DTC participants. Secondary market trading between DTC
participants will be settled using the procedures applicable to securities
previously issued by the Depositor in same-day funds.
Trading between CEDEL and/or Euroclear participants. Secondary market
trading between CEDEL participants and/or Euroclear participants will be
settled using the procedures applicable to conventional eurobonds in same-day
funds.
Trading between DTC seller and CEDEL or Euroclear purchaser. When
Global Securities are to be transferred from the account of a DTC participant
to the account of a CEDEL participant or a Euroclear participant the
purchaser will send instructions to CEDEL or Euroclear through a participant
at least one business day prior to settlement. CEDEL or Euroclear will
instruct Citibank or Morgan, respectively as the case may be, to receive the
Global Securities against payment. Payment will include interest accrued on
the Global Securities from and including the last coupon payment date to and
excluding the settlement date. For transactions settling on the 31st day of
the month, payment will include interest accrued to and excluding the first
day of the following month. Payment will then be made by Citibank or Morgan
to the DTC participant's account against delivery of the Global Securities.
After settlement has been completed, the Global Securities will be credited
to the respective clearing system and by the clearing system, in accordance
with its usual procedures, to the CEDEL participant's or Euroclear
participant's account. The Global Securities credit will appear the next day
(European time) and the cash debit will be back-valued to, and the interest
on the Global Securities will accrue from, the value date (which would be the
preceding day when settlement occurred in New York). If settlement is not
completed on the intended value date (i.e., the trade fails), the CEDEL or
Euroclear cash debit will be valued instead as of the actual settlement date.
CEDEL participants and Euroclear participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to
preposition funds for settlement, either from cash on hand or existing lines
of credit, as they would for any settlement occurring within CEDEL or
Euroclear. Under this approach, they may take on credit exposure to CEDEL or
Euroclear until the Global Securities are credited to their accounts one day
later.
As an alternative, if CEDEL or Euroclear has extended a line of credit
to them, participants can elect not to preposition funds and allow that
credit line to be drawn upon to finance settlement. Under this procedure,
CEDEL participants or Euroclear participants purchasing Global Securities
would incur overdraft charges for one day, assuming they cleared the
overdraft when the Global Securities were credited to their accounts.
However, interest on the Global Securities would accrue from the value date.
Therefore, in many cases the investment income on the Global Securities
earned during that one-day period may substantially reduce or offset the
amount of such overdraft charges, although this result will depend on each
participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
participants can employ their usual procedures for sending Global Securities
to Citibank or Morgan for the benefit of CEDEL participants or Euroclear
participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC participant a cross-market transaction
will settle no differently than a trade between two DTC participants.
Trading between CEDEL or Euroclear seller and DTC purchaser. Due to
time zone differences in their favor, CEDEL and Euroclear participants may
employ their customary procedures for transactions in which Global Securities
are to be transferred by the respective clearing system, through Citibank or
Morgan, to a DTC participant. The seller will send instructions to CEDEL or
Euroclear through a participant at least one business day prior to
settlement. In these cases, CEDEL or Euroclear will instruct Citibank or
Morgan, as appropriate, to deliver the bonds to the participant's account
against payment. Payment will include interest accrued on the Global
Securities from and including the last coupon payment date to and excluding
the settlement date. For transactions selling on the 31st day of the month,
payment will include interest accrued to and excluding the first day of the
following month. The payment will then be reflected in the account of the
CEDEL participant or Euroclear participant the following day, and receipt of
the cash proceeds in the CEDEL or Euroclear participant's account would be
back-valued to the value date which would be the preceding day, when
settlement occurred in New York. Should the CEDEL or Euroclear participant
have a line of credit with its respective clearing system and elect to be in
debit in anticipation of receipt of the sale proceeds in its account, back-
valuation will extinguish any overdraft charges incurred over that one-day
period. If settlement is not completed on the intended value date (i.e., the
trade fails), receipt of the cash proceeds in the CEDEL or Euroclear
participant's account would instead be valued as of the actual settlement
date.
Finally, day traders that use CEDEL or Euroclear and that purchase
Global Securities from DTC participants for delivery to CEDEL participants or
Euroclear participants should note that these trades would automatically fail
on the sale side unless affirmative action were taken. At least three
techniques should be readily available to eliminate this potential problem.
(1) borrowing through CEDEL or Euroclear for one day (until the purchase
side of the day trade is reflected in their CEDEL or Euroclear accounts) in
accordance with the clearing system's customary procedures;
(2) borrowing the Global Securities in the U.S. from a DTC participant
no later than one day prior to settlement, which would give the Global
Securities sufficient time to be reflected in their CEDEL or Euroclear
account in order to settle the sale side of the trade; or
(3) staggering the value dates for the buy and sell sides of the trade
so that the value date for the purchase from the DTC participant is at least
one day prior to the value date for the sale to the CEDEL participant or
Euroclear participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A holder of Global Securities holding securities through CEDEL or
Euroclear (or through DTC if the holder has an address outside the U.S.) will
be subject to the 30% U.S. withholding tax that generally applies to payments
of interest (including original issue discount) on registered debt issued by
U.S. persons, unless such holder takes one of the following steps to obtain
an exemption or reduced tax rate:
Exemption for non-U.S. persons (Form W-8). Non U.S. persons that
are beneficial owners can obtain a complete exemption from the
withholding tax by filing a signed Form W-8 (Certificate of Foreign
Status).
Exemption for non-U.S. persons with effectively connected income
(Form 4224). A non-U.S. person, including a non-U.S. corporation or
bank with a U.S. branch, for which the interest income is effectively
connected with its conduct of a trade or business in the United States,
can obtain an exemption from the withholding tax by filing Form 4224
(exemption from withholding of Tax on Income Effectively Connected with
the Conduct of a Trade or Business in the United States).
Exemption or reduced rate for non-U.S.persons resident in treaty
countries (Form 1001). Non-U.S. persons that are beneficial owners
residing in a country that has a tax treaty with the United States can
obtain an exemption or reduced tax rate (depending on the treaty terms)
by filing Form 1001 (Ownership, Exemption or Reduced Rate Certificate).
If the treaty provides only for a reduced rate, withholding tax will be
imposed at that rate unless the filer alternately files Form W-8, Form
1001 may be filed by the beneficial owner or his agent.
Exemption for U.S. persons (Form W-9). U.S. persons can obtain a
complete exemption from the withholding tax by filing Form W-9 (Request
for Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Global Security
holder, or in the case of a Form 1001 or a Form 4224 filer, his agent,
files by submitting the appropriate form to the person through whom he
holds (the clearing agency, in the case of persons holding directly on
the books for the clearing agency). Form W-8 and Form 1001 are
effective for three calendar years and Form 4224 is effective for one
calendar year.
This summary does not deal with all aspects of federal income tax
withholding that may be relevant to foreign holders of these Global
Securities. Investors are advised to consult their own tax advisors for
specific tax advice concerning their holding and disposing of these Global
Securities.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
Expenses in connection with the offering of the Securities being
registered herein are estimated as follows:
SEC registration fee . . . . . . . . . . . . . . . . . . . . . $295,000
Legal fees and expenses . . . . . . . . . . . . . . . . . . . . $200,000
Accounting fees and expenses . . . . . . . . . . . . . . . . . $ 30,000
Blue sky fees and expenses . . . . . . . . . . . . . . . . . . $ 10,000
Rating agency fees . . . . . . . . . . . . . . . . . . . . . . $200,000
Trustee's fees and expenses . . . . . . . . . . . . . . . . . . $ 50,000
Printing . . . . . . . . . . . . . . . . . . . . . . . . . . . $100,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . -------
Total . . . . . . . . . . . . . . . . . . . . . . . . $885,000
____________________
* All amounts except the SEC Registration Fee are estimates of expenses
incurred or to be incurred.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
ML Asset Backed Corporation (the "Registrant") has undertaken in its
articles of incorporation and bylaws to indemnify, to the maximum extent
permitted by the Delaware General Corporation Law as from time to time
amended, any currently acting or former director, officer, employee and agent
of the Registrant against any and all liabilities incurred in connection with
their services in such capacities.
ITEM 16. EXHIBITS.
1.1 Form of Underwriting Agreement
3.1 Articles of Incorporation of the Registrant
3.2 Bylaws of the Registrant
4.1 Form of Trust Agreement (including form of Certificates)
4.2 Form of Indenture (including form of Notes)
5.1 Opinion of Brown & Wood LLP with respect to legality
5.2 Opinion of Richards, Layton & Finger with respect to legality
8.1 Opinion of Brown & Wood LLP with respect to certain federal income
tax matters
10.1 Form of Administration Agreement
23.1 Consent of Brown & Wood LLP (included in Exhibits 5.1 and 8.1)
23.2 Consent of Richards, Layton & Finger (included in Exhibit 5.2)
24.1 Power of Attorney (included on page II-3)
ITEM 17. UNDERTAKINGS.
(a) As to Rule 415:
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(b) As to documents subsequently filed that are incorporated by
reference:
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) As to indemnification:
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
(d) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, as amended, the information omitted from the form of prospectus
filed as part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, as amended, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new Registration Statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(e) As to qualification of trust indentures:
The undersigned Registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with
the rules and regulations prescribed by the Commission under Section
305(b)(2) of the Act.
(f) The undersigned Registrant hereby undertakes to file in a current
report a Form 8-K or in a post-effective amendment an opinion with respect to
any Federal tax consequences material to an investor with regard to a
specific Series to be issued pursuant to this Registration Statement where
such tax consequences have not been addressed in the prospectus or the
prospectus supplement related to such Series.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and 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, the
State of New York, on March 2, 1998.
ML ASSET BACKED CORPORATION
By: /s/ Michael M. McGovern
-------------------------------------
Name: Michael M. McGovern
Title: Secretary
Pursuant to the requirements of the Securities Act of 1933, as amended,
this amendment to the Registration Statement has been signed below by the
following persons in the capacities indicated on March 2, 1998.
Signature Title
--------- -----
* President, Chairman of the Board and Director
- ---------------------------- (Principal Executive Officer)
(Michael J. Normile)
* Chief Financial Officer (Principal
- ---------------------------- Financial Officer and Principal Accounting
(Thomas Layton) Officer)
* Vice President and Director
- ----------------------------
(Jack Ross)
* Director
- ----------------------------
(Donald Puglisi)
*By /s/ Michael M. McGovern
(Michael M. McGovern,
Attorney-in-fact)
EXHIBIT INDEX
Exhibit Description Page
- ------- ----------- ----
1.1 Form of Underwriting Agreement
3.1 Articles of Incorporation of the Registrant
3.2 Bylaws of the Registrant
4.1 Form of Trust Agreement (including form of Certificates)
4.2 Form of Indenture (including form of Notes)
5.1 Opinion of Brown & Wood LLP with respect to legality
5.2 Opinion of Richards, Layton & Finger with respect to legality
8.1 Opinion of Brown & Wood LLP with respect to certain federal income tax
matters
10.1 Form of Administration Agreement
23.1 Consent of Brown & Wood LLP (included in Exhibits 5.1 and 8.1)
23.2 Consent of Richards, Layton & Finger (included in Exhibit 5.2)
24.1 Power of Attorney (included on Page II-4)
Exhibit 1.1
ML ASSET BACKED CORPORATION, DEPOSITOR
Asset Backed Securities,
(Issuable in Series)
FORM OF UNDERWRITING AGREEMENT
------------------------------
_________________, 199_
MERRILL LYNCH & CO.,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
World Financial Center
North Tower
New York, New York 10281
Ladies and Gentlemen:
ML Asset Backed Corporation (the "Company"), a Delaware corporation,
with its principal place of business in New York, New York, is a wholly-owned
subsidiary of Merrill Lynch & Co., Inc., a Delaware corporation, and an
affiliate of Merrill Lynch, Pierce, Fenner & Smith Incorporated. The Company
has authorized the issuance and sale of Asset Backed Notes (the "Notes") and
Asset Backed Certificates (the "Certificates" and, together with the Notes,
the "Securities") in the classes, and in the respective original principal
amounts as follows: (____________). (The Notes will be issued pursuant to an
Indenture, dated as of _____________, 199_ (the "Indenture") between the
Trust and _____________, as Indenture Trustee.) (The Certificates will be
issued pursuant to a Trust Agreement dated as of _______________, 199_ (the
"Trust Agreement") between the Company, as Depositor and __________________,
as Owner Trustee.) The Securities will represent undivided beneficial
ownership interests in a trust (the "Trust") the assets of which shall
consist of (DESCRIBE TRUST ASSETS). The Securities are described in the
Prospectus Supplement (as hereinafter defined). The Securities of each
Series will evidence undivided interests in a trust fund (the "Trust Fund")
consisting primarily of ( ) (the "Assets").
Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture or the Trust Agreement.
The Company has determined to make an offering of the Securities and
entered into a Terms Agreement, dated as of __________________, 199_ (the
"Terms Agreement") providing for the sale of the Securities to, and the
purchase and offering thereof by, you (the "Underwriter"). The Terms
Agreement specifies, among other things, the principal amount or amounts of
Securities to be issued, the price or prices at which the Securities are to
be purchased by the Underwriter from the Company and the initial public
offering price or prices or the method by which the price or prices at which
such Securities are to be sold will be determined. The Terms Agreement shall
be substantially in the form of Exhibit A hereto. The offering of the
Securities will be governed by this Agreement, as supplemented by the Terms
Agreement, and this Agreement and such Terms Agreement shall inure to the
benefit of and be binding upon the Underwriter.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (File No. 333-____)
relating to its asset backed securities, and the offering thereof from time
to time in accordance with Rule 415 under the Securities Act of 1933, as
amended (the "1933 Act"), and has filed, and proposes to file, such
amendments thereto as may have been required through the date hereof and
prior to the effective date thereof pursuant to the 1933 Act and the rules of
the Commission thereunder (the "Regulations"). Such registration statement,
as amended at the time when it becomes effective under the 1933 Act is
referred to herein as the "Registration Statement". The base prospectus
relating to the sale of the asset backed securities by the Company is
referred to herein as the "Basic Prospectus," and the supplement to the
Prospectus relating to the Securities and contemplated by Section 3(a) hereof
is referred to herein as a "Prospectus Supplement". The Basic Prospectus and
the Prospectus Supplement are collectively referred to as the "Prospectus".
SECTION 1. Representations and Warranties. (a) The Company
-------------------------------
represents and warrants to you as of the date hereof, as of the
date of the Terms Agreement (the "Representation Date"), as follows:
(1) The Registration Statement, at the time the Registration
Statement became effective did, and the Registration Statement,
Prospectus and Prospectus Supplement as of the Representation Date will,
comply in all material respects with the requirements of the 1933 Act
and the Regulations. The Registration Statement, at the time it became
effective did not, and as of the Representation Date will not, contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading. The Prospectus, as amended or supplemented as of the
Representation Date, does not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the Company makes no
representations or warranties as to any statements in, or omissions
from, the Registration Statement or the Prospectus made in reliance upon
and in conformity with information furnished to the Company in writing
by the Underwriter expressly for use in the Registration Statement or
the Prospectus. The conditions to the use by the Company of a
registration statement on Form S-3 under the 1933 Act, as set forth in
the General Instructions to Form S-3, have been satisfied with respect
to the Registration Statement and the Prospectus. There are no
contracts or documents of the Company which are required to be filed as
exhibits to the Registration Statement pursuant to the 1933 Act or the
Regulations which have not been so filed.
(2) The Company has been duly organized and is validly existing as
a corporation in good standing under the laws of the State of Delaware
with corporate power and authority to own, lease and operate its
properties and conduct its business as described in the Prospectus and
to enter into and perform its obligations under this Agreement, the
Trust Agreement, the Securities and the Terms Agreement; and the Company
is duly qualified as a foreign corporation to transact business and is
in good standing in the State of New York.
(3) The Company is not in violation of its certificate of
incorporation or by-laws or in default in the performance or observance
of any material obligation, agreement, covenant or condition contained
in any contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which it is a party or by which it or its properties
may be bound, which default might result in any material adverse change
in the financial condition, earnings, affairs or business of the Company
or which might materially and adversely affect the properties or assets
thereof.
(4) The execution and delivery by the Company of this Agreement,
the Terms Agreement and the Trust Agreement are within the corporate
power of the Company and have been duly authorized by all necessary
corporate action on the part of the Company; and with respect to the
Securities, neither the issuance and sale of the Securities to the
Underwriter, nor the execution and delivery by the Company of this
Agreement and the Trust Agreement, nor the consummation by the Company
of the transactions therein contemplated, nor compliance by the Company
with the provisions hereof or thereof, will materially conflict with or
result in a material breach of, or constitute a material default under,
any of the provisions of any law, governmental rule, regulation,
judgment, decree or order binding on the Company or its properties or
the restated certificate of incorporation or by-laws of the Company, or
any of the provisions of any indenture, mortgage, contract or other
instrument of which the Company is a party or by which it is bound or
result in the creation or imposition of any lien, charge or encumbrance
upon any of its property pursuant to the terms of any such indenture,
mortgage, contract or other instrument.
(5) This Agreement has been, and the Terms Agreement when executed
and delivered as contemplated hereby and thereby, will have been, duly
authorized, executed and delivered by the Company, and each constitutes,
or will constitute when so executed and delivered, a legal, valid and
binding instrument enforceable against the Company in accordance with
its terms, subject (a) to applicable bankruptcy, insolvency,
reorganization, moratorium, or other similar laws affecting creditors'
rights generally, (b) as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding in
equity or at law) and (c) as to enforceability with respect to rights of
indemnity thereunder, to limitations of public policy under applicable
securities laws.
(6) The Trust Agreement when executed and delivered as
contemplated hereby and thereby will have been duly authorized, executed
and delivered by the Company, and will constitute when so executed and
delivered, a legal, valid and binding instrument enforceable against the
Company in accordance with its terms, subject (a) to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and (b) as to enforceability, to
general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law).
(7) As of the Closing Time (as defined in Section 2 below), the
Securities will have been duly and validly authorized by the Company,
and, when executed and authenticated as specified in the Indenture and
the Trust Agreement, will be validly issued and outstanding and will be
entitled to the benefits of the Indenture and the Trust Agreement.
(8) There are no actions, proceedings or investigations now
pending against the Company or, to the knowledge of the Company,
threatened against the Company, before any court, administrative agency
or other tribunal (i) asserting the invalidity of this Agreement, the
Indenture, the Trust Agreement or the Securities, (ii) seeking to
prevent the issuance of such Securities or the consummation of any of
the transactions contemplated by this Agreement, the Indenture or the
Trust Agreement, (iii) which might materially and adversely affect the
performance by the Company of its obligations under, or the validity or
enforceability of, this Agreement or the Securities or (iv) seeking to
adversely affect the federal income tax attributes of the Securities
described in the Prospectus and the Prospectus Supplement.
(9) Any taxes, fees and other governmental charges that are
assessed and due in connection with the execution, delivery and issuance
of this Agreement, the Indenture, the Trust Agreement or the Securities
shall have been paid at or prior to the Closing Time.
(10) No filing or registration with, notice to or consent,
approval, authorization or order of any court or governmental authority
or agency is required for the consummation by the Company of the
transactions contemplated by this Agreement, the Trust Agreement or the
Terms Agreement, except such as may be required under the 1933 Act, the
Regulations, or state securities or Blue Sky laws.
(11) The Company possesses all material licenses, certificates,
authorities or permits issued by the appropriate state, federal or
foreign regulatory agencies or bodies necessary to conduct the business
now operated by it and as described in the Prospectus and the Company
has received no notice of proceedings relating to the revocation or
modification of any such license, certificate, authority or permit
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would materially and adversely affect the
conduct of the business, operations, financial condition or income of
the Company.
(12) As of the Closing Time, each of the Assets will have the
characteristics described in the Prospectus Supplement.
(13) Neither the Company nor the Trust Fund will be subject to
registration as an "investment company" under the Investment Company Act
of 1940, as amended (the "1940 Act").
(14) At the Closing Time, the Securities, the Indenture, the Trust
Agreement and the Terms Agreement will conform in all material respects
to the descriptions thereof contained in the Prospectus.
(15) At the Closing Time, the Securities shall have received the
certificate ratings specified in the Terms Agreement.
Any certificate signed by an officer of the Company and delivered to you
or counsel for the Underwriter in connection with an offering of Securities
shall be deemed, a representation and warranty as to the matters covered
thereby to each person to whom the representations and warranties in this
Section 1 are made.
SECTION 2. Purchase and Sale. The commitment of the Underwriter
-----------------
to purchase Securities pursuant to the Terms Agreement shall be deemed to
have been made on the basis of the representations and warranties herein
contained and shall be subject to the terms and conditions herein set forth.
Payment of the purchase price for, and delivery of, any Securities to be
purchased by the Underwriter shall be made at the office of Merrill Lynch,
Pierce, Fenner & Smith Incorporated, World Financial Center, North Tower, New
York, New York 10281, or at such other place as shall be agreed upon by you
and the Company, at such time or date as shall be agreed upon by you and the
Company in the Terms Agreement (the "Closing Time"). Payment shall be made
to the Company in immediately available Federal funds wired to such bank as
may be designated by the Company. Such Securities shall be in such
denominations and registered in such names as you may request in writing at
least two business days prior to the Closing Time. Such Securities, which
may be in temporary form, will be made available for examination and
packaging by you no later than 12:00 noon on the first business day prior to
the Closing Time.
SECTION 3. Covenants of the Company. The Company covenants with
------------------------
you as follows with respect to the Securities:
(a) Contemporaneously with the execution of the Terms Agreement,
the Company will prepare a Prospectus Supplement setting forth the
principal amount of Securities covered thereby, the price or prices at
which the Securities are to be purchased by the Underwriter, the initial
public offering price or prices or the method by which the price or
prices by which the Securities are to be sold will be determined, the
selling concession(s) and reallowance(s), if any, any delayed delivery
arrangements, and such other information as you and the Company deem
appropriate in connection with the offering of the Securities. The
Company will promptly transmit copies of the Prospectus Supplement to
the Commission for filing pursuant to Rule 424 under the 1933 Act and
will furnish to the Underwriter as many copies of the Prospectus and
such Prospectus Supplement as you shall reasonably request.
(b) If at any time when the Prospectus is required by the 1933 Act
to be delivered in connection with sales of the Securities by you, any
event shall occur or condition exists as a result of which it is neces-
sary, in the opinion of your counsel, counsel for the Company, or
otherwise, to further amend or supplement the Prospectus in order that
the Prospectus will not include an untrue statement of a material fact
or omit to state any material fact necessary to make the statements
therein, in light of circumstances existing at the time it is delivered
to a purchaser, not misleading or if it shall be necessary, in the
opinion of any such counsel or otherwise, at any such time to amend or
supplement the Registration Statement or the Prospectus in order to
comply with the requirements of the 1933 Act or the Regulations
thereunder, the Company will promptly prepare and file with the
Commission such amendment or supplement as may be necessary to correct
such untrue statement or omission or to make the Registration Statement
comply with such requirements, and within two business days will furnish
to the Underwriter as many copies of the Prospectus, as so amended or
supplemented, as you shall reasonably request.
(c) The Company will give you reasonable notice of its intention
to file any amendment to the Registration Statement or any amendment or
supplement to the Prospectus, whether pursuant to the 1933 Act or
otherwise, will furnish you with copies of any such amendment or
supplement or other documents proposed to be filed a reasonable time in
advance of filing, and will not file any such amendment or supplement or
other documents in a form to which you or your counsel shall object.
(d) The Company will notify you immediately, and confirm the
notice in writing, (i) of the effectiveness of any amendment to the
Registration Statement, (ii) of the mailing or the delivery to the
Commission for filing of any supplement to the Prospectus or any
document, other than quarterly and annual reports to be filed pursuant
to the Securities Exchange Act of 1934, as amended (the "1934 Act"),
(iii) of the receipt of any comments from the Commission with respect to
the Registration Statement, the Prospectus or any Prospectus Supplement,
(iv) of any request by the Commission for any amendment to the
Registration Statement of any amendment or supplement to the Prospectus
or for additional information, and (v) of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose. The
Company will make every reasonable effort to prevent the issuance of any
stop order and, if any stop order is issued, to obtain the lifting
thereof at the earliest possible moment.
(e) The Company will deliver to you as many signed and as many
conformed copies of the Registration Statement (as originally filed) and
of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein and documents incorporated by
reference in the Prospectus) as you may reasonably request.
(f) The Company will endeavor, in cooperation with you, to qualify
the Securities for offering and sale under the applicable securities
laws of such states and other jurisdictions of the United States as you
may designate, and will maintain or cause to be maintained such
qualifications in effect for as long as may be required for the
distribution of the Securities. The Company will file or cause the
filing of such statements and reports as may be required by the laws of
each jurisdiction in which the Securities have been qualified as above
provided.
SECTION 4. Conditions of Underwriter's Obligations. The
---------------------------------------
obligations of the Underwriter to purchase Securities pursuant to the Terms
Agreement are subject to the accuracy of the representations and warranties
on the part of the Company herein contained, to the accuracy of the
statements of the Company's officers made pursuant hereto, to the performance
by the Company of all of its obligations hereunder and to the following
further conditions:
(a) At the Closing Time (i) no stop order suspending the
effectiveness of the Registration Statement shall have been issued or
proceedings therefor initiated or threatened by the Commission, (ii) the
Securities shall have received the rating or ratings specified in the
Terms Agreement, and (iii) there shall not have come to your attention
any facts that would cause you to believe that the Prospectus at the
time it was required to be delivered to a purchaser of the Securities,
contained an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in
light of the circumstances existing at such time, not misleading.
(b) At the Closing Time, you shall have received:
(1) The favorable opinion, dated as of the Closing Time, of
Brown & Wood LLP, special counsel to the Company, in form and
substance satisfactory to you, to the effect that:
(i) The Company is validly existing as a corporation in
good standing under the laws of the State of Delaware.
(ii) The Company has the corporate power and corporate
authority to carry on its business as described in the
Prospectus and to own and operate its properties in connection
therewith.
(iii) This Agreement has been duly authorized, executed
and delivered by the Company.
(iv) The Trust Agreement has been duly authorized,
executed and delivered by the Company and is a valid and
binding obligation of the Company, enforceable against the
Company in accordance with its terms, except that (A) such
enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally
and (B) such enforcement may be limited by general principles
of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(v) The execution and delivery by the Company of this
Agreement and Trust Agreement and the signing of the
Registration Statement by the Company are within the corporate
power of the Company and have been duly authorized by all
necessary corporate action on the part of the Company; and
neither the issue and sale of the Securities, nor the consum-
mation of the transactions contemplated in this Agreement nor
the fulfillment of the terms of this Agreement will result in
any violation of the provisions of the certificate of
incorporation or by-laws of the Company or, to the best of
such counsel's knowledge, any New York or federal law,
administrative regulation or administrative or court decree
applicable to the Company.
(vi) The Securities have been duly authorized by the
Company and, when executed and countersigned as specified in
the Indenture and/or the Trust Agreement and delivered and
paid for pursuant to this Agreement and the Sale Agreement,
will be duly issued and entitled to the benefits of the
Indenture and/or the Trust Agreement.
(vii) To the best of such counsel's knowledge, no filing
or registration with or notice to or consent, approval,
authorization or order of any New York or federal court or
governmental authority or agency is required for the
consummation by the Company of the transactions contemplated
by this Agreement, except such as may be required under the
1933 Act, the Regulations, state securities or Blue Sky laws.
(viii) The Registration Statement is effective under the
1933 Act and, to the best of such counsel's knowledge and
information, no stop order suspending the effectiveness of the
Registration Statement has been issued under the 1933 Act or
proceedings therefor initiated or threatened by the
Commission.
(ix) Neither the Indenture nor the Trust Agreement are
required to be qualified under the Trust Indenture Act of
1939, as amended.
(x) To the best of such counsel's knowledge, there are
no contracts or documents of the Company which are required to
be filed as exhibits to the Registration Statement pursuant to
the 1933 Act or the Regulations thereunder which have not been
so filed.
(xi) The statements in the Prospectus under the heading
"Certain Federal Income Tax Considerations," to the extent
that they constitute matters of law or legal conclusions with
respect thereto, have been prepared or reviewed by such
counsel and are correct in all material respects.
(xii) The Trust Fund is not required to register as an
"investment company" under the Investment Company Act of 1940,
as amended.
(xiii) The statements in the Prospectus under the captions
"Description of the Notes" and "Description of the
Certificates," insofar as such statements purport to summarize
certain provisions of the Securities, the Indenture and the
Trust Agreement, constitute a fair summary of such provisions
in all material respects.
(xiv) The Registration Statement, as of the date it became
effective, and the Prospectus, as of the date thereof (other
than, in each case, the financial statements and other
financial, statistical and numerical information included
therein, as to which no opinion is rendered), complied as to
form in all material respects with the requirements of the
1933 Act and the Regulations thereunder.
Such counsel shall deliver to you such additional opinions addressing
the transfer by the Company to the Trustee of its right, title and interest
in and to the Assets and other property included in the Trust Fund on the
Closing Time as may be required by each Rating Agency rating the Securities.
Such counsel shall state that it has participated in conferences with
officers and other representatives of the Company, your counsel,
representatives of the independent accountants for the Company and you at
which the contents of the Registration Statement and the Prospectus were
discussed and, although such counsel is not passing upon and does not assume
responsibility for, the factual accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus (except
as stated in paragraphs (xi) and (xiii) above) and has made no independent
check or verification thereof for the purpose of rendering this opinion, on
the basis of the foregoing (relying as to materiality to a large extent upon
the certificates of officers and other representatives of the Company),
nothing has come to their attention that leads such counsel to believe that
either the Registration Statement, at the time it became effective, or the
Prospectus at the time the Prospectus was delivered to you contained or at
the Closing Time, contains an untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that such counsel need express no view with respect to the financial
statements, schedules and other financial and statistical data included in or
incorporated by reference into or omitted from the Registration Statement or
the Prospectus.
Said counsel may state that they are admitted to practice only in the
State of New York, that they are not admitted to the Bar in any other State
and are not experts in the law of any other State and to the extent that the
foregoing opinions concern the laws of any other State such counsel may rely
upon the opinion of counsel satisfactory to the Underwriter and admitted to
practice in such jurisdiction. Any opinions relied upon by such counsel as
aforesaid shall be addressed to the Underwriter and shall be delivered
together with the opinion of such counsel, which shall state that such
counsel believes that their reliance thereon is justified.
(2) The favorable opinion of counsel to the Indenture
Trustee, dated as of the applicable Closing Time, addressed to you
and in form and scope satisfactory to your counsel, to the effect
that:
(i) The Indenture Trustee is a New York banking
corporation with trust powers, duly organized and validly
existing in good standing under the laws of New York, and has
all requisite power and authority to enter into the Agreement
and perform the obligations of Indenture Trustee.
(ii) The Indenture has been duly authorized, executed,
and delivered by the Indenture Trustee and constitutes the
legal, valid, and binding obligation of the Indenture Trustee,
enforceable against the Indenture Trustee in accordance with
its terms, except as enforceability may be limited by
applicable bankruptcy and insolvency laws and other similar
laws affecting the enforcement of creditors' rights generally
and by general equity principles.
In rendering such opinion, such counsel may rely, as to matters of fact,
to the extent deemed proper and stated therein, on certificates of
responsible officers of the Indenture Trustee or public officials.
(3) The favorable opinion of counsel to the Owner Trustee,
dated as of the applicable Closing Time, addressed to you and in
form and scope satisfactory to your counsel, to the effect that:
(i) The Owner Trustee is a Delaware corporation with
trust powers, duly organized and validly existing in good
standing under the laws of Delaware, and has all requisite
power and authority to enter into the Agreement and perform
the obligations of Owner Trustee.
(ii) The Trust Agreement has been duly authorized,
executed, and delivered by the Owner Trustee and constitutes
the legal, valid, and binding obligation of the Owner Trustee,
enforceable against the Owner Trustee in accordance with its
terms, except as enforceability may be limited by applicable
bankruptcy and insolvency laws and other similar laws
affecting the enforcement of creditors' rights generally and
by general equity principles.
In rendering such opinion, such counsel may rely, as to matters of fact,
to the extent deemed proper and stated therein, on certificates of
responsible officers of the Owner Trustee or public officials.
(c) At the Closing Time you shall have received a certificate of
an Assistant Vice President (or more senior officer) of the Company,
dated as of such Closing Time, to the effect that the representations
and warranties of the Company contained in Section 1 are true and
correct with the same force and effect as though such Closing Time were
a Representation Date.
(d) You shall have received from independent certified public
accountants acceptable to you, a letter, dated as of the date of the
Terms Agreement, in the form heretofore agreed to.
(e) At the Closing Time, the Securities shall have received the
certificate rating or ratings specified in the Terms Agreement.
(f) At the Closing Time, counsel for the Underwriter shall have
been furnished with such documents as they may reasonably require for
the purpose of enabling them to pass upon the issuance and sale of the
Securities as herein contemplated and related proceedings or in order to
evidence the accuracy and completeness of any of the representations and
warranties, or the fulfillment of any of the conditions, herein
contained; and all proceedings taken by the Company in connection with
the issuance and sale of the Securities as herein contemplated shall be
satisfactory in form and substance to you and counsel for the
Underwriter.
If any condition specified in this Section shall not have been fulfilled
when and as required to be fulfilled, the Terms Agreement may be terminated
by you by notice to the Company at any time at or prior to the Closing Time,
and such termination shall be without liability of any party to any other
party except as provided in Section 5.
SECTION 5. Payment of Expenses. The Company will pay all expenses
-------------------
incident to the performance of its obligations under this Agreement and the
Terms Agreement, including without limitation those related to (i) the filing
of the Registration Statement and all amendments thereto, (ii) the printing
and delivery to the Underwriter, in such quantities as you may reasonably
request, of copies of this Agreement, the Terms Agreement, the Memorandum and
any selling agreements and Underwriter's questionnaires and powers of
attorney, (iii) the preparation, issuance and delivery of the Securities to
the Underwriter, (iv) the fees and disbursements of the Company's counsel and
accountants, (v) the qualification of the Securities under securities and
Blue Sky laws and the determination of the eligibility of the Securities for
investment in accordance with the provisions of Section 3(f), including
filing fees, and the fees and disbursements of counsel for the Underwriter in
connection therewith and in connection with the preparation of any Blue Sky
Survey and Legal Investment Survey, (vi) the printing and delivery to the
Underwriter, in such quantities as you may reasonably request, hereinabove
stated, of copies of the Registration Statement, and Prospectus and all
amendments and Supplements thereto, and of any Blue Sky Survey and Legal
Investment Survey, (vii) the printing and delivery to the Underwriter, in
such quantities as you may reasonably request, of copies of the Pooling and
Servicing Agreement, (viii) the fees charged by investment rating agencies
for rating the Securities, (ix) the fee and expenses, if any, incurred in
connection with the listing of the Securities on any national securities
exchange, and (x) the fees and expenses of the Trustee and its counsel. The
cost of the accountant's comfort letter referred to in Section 3(g) will not
be an expense of the Company.
If a Terms Agreement is terminated by you in accordance with the
provisions of Section 4 or Section 9(i), the Company shall reimburse you for
all reasonable out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Underwriter.
SECTION 6. Indemnification.
---------------
(a) The Company agrees to indemnify and hold harmless the
Underwriter and each person, if any, who controls the Underwriter within the
meaning of Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage
and expense whatsoever arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out
of any untrue statement or alleged untrue statement of a material fact
contained in any Prospectus (or any amendment or supplement thereto) or
the omission or alleged omission therefrom of a material fact necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, unless such untrue statement
or omission or alleged untrue statement or omission was made in reliance
upon and in conformity with written information furnished to the Company
by the Underwriter expressly for use in the Registration Statement (or
any amendment thereto) or any Prospectus (or any amendment or supplement
thereto);
(ii) against any and all loss, liability, claim, damage
and expense whatsoever to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency, or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, if such
settlement is effected with the written consent of the Company; and
(iii) against any and all expense whatsoever (including
the fees and disbursements of counsel chosen by you) reasonably incurred
in investigating, preparing or defending against any litigation, or
investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above.
This indemnity agreement will be in addition to any liability which the
Company may otherwise have. Insofar as this indemnity may permit
indemnification for liabilities under the 1933 Act of any person who is a
partner of the Underwriter entitled to indemnity hereby or who controls the
Underwriter within the meaning of Section 15 of the 1933 Act and who, at the
date of this Agreement, is a director, officer or controlling person of the
Company, such indemnity agreement is subject to the undertaking of the
Company in the Registration Statement.
(b) The Underwriter agrees to indemnify and hold harmless the
Company, each of the Company's directors, each of the Company's officers who
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act against any and all
loss, liability, claim, damage and expense described in the indemnity
contained in subsection (a) of this Section, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in
the Registration Statement (or any amendment thereto) or any Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by the Underwriter expressly for
use in the Registration Statement (or any amendment thereto) or any
Prospectus (or any amendment or supplement thereto). This indemnity
agreement will be in addition to any liability which the Underwriter may
otherwise have.
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it with respect to which
indemnity may be sought hereunder but failure to so notify an indemnifying
party shall not relieve it from any liability which it may have otherwise
than on account of this indemnity agreement. An indemnifying party may
participate at its own expense in the defense of such action. In no event
shall the indemnifying parties be liable for the fees and expenses of more
than one counsel for all indemnified parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances.
SECTION 7. Contribution. In order to provide for just and
------------
equitable contribution in circumstances in which the indemnity agreement
provided for in Section 6 is for any reason held to be unenforceable by the
indemnified parties although applicable in accordance with its terms, the
Company on the one hand, and the Underwriter, on the other, shall contribute
to the aggregate losses, liabilities, claims, damages and expenses of the
nature contemplated by said indemnity agreement incurred by the Company and
the Underwriter in such proportions that the Underwriter is responsible for
that portion represented by the underwriting compensation earned by it bears
to the initial public offering price or prices and the Company shall be
responsible for the balance; provided, however, that no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section, each
person, if any, who controls the Underwriter within the meaning of Section 15
of the 1933 Act shall have the same rights to contribution as the Underwriter
and each director of the Company, such officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act shall have the same rights
to contribution as the Company.
SECTION 8. Representations, Warranties, and Agreements to Survive
------------------------------------------------------
Delivery. All representations, warranties and agreements contained in this
- --------
Agreement, or contained in certificates of officers of the Company submitted
pursuant hereto, shall remain operative and in full force and effect,
regardless of any termination of this Agreement, or any investigation made by
or on behalf of the Underwriter or controlling person thereof, or by or on
behalf of the Company and shall survive delivery of any Securities to the
Underwriter.
SECTION 9. Termination of Agreement. You may terminate the Terms
------------------------
Agreement, immediately upon notice to the Company, at any time at or prior to
the Closing Time (i) if there has been, since the date of the Terms Agreement
or since the respective dates as of which information is given in the Regis-
tration Statement or Prospectus any change, or any development involving a
prospective change, in or affecting the condition, financial or otherwise,
earnings, affairs or business of the Company, whether or not arising in the
ordinary course of business, which in your judgment would materially impair
the market for, or the investment quality of, the Securities to be purchased
pursuant to the Terms Agreement, or (ii) if there has occurred any outbreak
of hostilities or other calamity or crisis the effect of which on the
financial markets of the United States is such as to make it, in your
judgment, impracticable to market such Securities or enforce contracts for
the sale of such Securities, or (iii) if trading generally on either the New
York Stock Exchange or the American Stock Exchange has been suspended, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices for securities have been required, by either of said exchanges or by
order of the Commission or any other governmental authority, or if a banking
moratorium has been declared by either Federal or New York authorities. In
the event of any such termination, (A) the covenants set forth in Section 3
with respect to any offering of such Securities shall remain in effect so
long as the Underwriter owns any such Securities purchased from the Company
pursuant to the Terms Agreement and (B) the covenant set forth in Section
3(c), the provisions of Section 5, the indemnity agreement set forth in
Section 6, the contribution provisions set forth in Section 7, and the
provisions of Section 8 and 13 shall remain in effect.
SECTION 10. Notices. All notices and other communications
-------
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication. Notices to
the Underwriter shall be directed to you at the address set forth on the
first page hereof, attention Syndicate Department. Notices to the Company
shall be directed to ML Asset Backed Corporation 250 Vesey Street, World
Financial Center - North Tower, 10th Floor, New York, New York 10281-1310,
attention of the Secretary, with a copy to the Treasurer.
SECTION 11. Parties. This Agreement shall inure to the benefit
-------
of and be binding upon you and the Company and the Terms Agreement shall
inure to the benefit of and be binding upon the Company and the Underwriter
and their respective successors. Nothing expressed or mentioned in this
Agreement or the Terms Agreement is intended or shall be construed to give
any person, firm or corporation, other than the parties hereto or thereto and
their respective successors and the controlling person and officers and
directors referred to in Sections 6 and 7 and their heirs and legal repre-
sentatives any legal or equitable right, remedy or claim under or with
respect to this Agreement or the Terms Agreement or any provision herein or
therein contained. This Agreement and the Terms Agreement and all conditions
and provisions hereof or thereof are intended to be for the sole and
exclusive benefit of the parties and their respective successors and their
heirs and legal representative (to the extent of their rights as specified
herein and therein) and for the benefit of no other person, firm or
corporation. No purchaser of Securities from the Underwriter shall be deemed
to be a successor by reason merely of such purchase.
SECTION 12. Governing Law and Time. This Agreement and the Terms
----------------------
Agreement shall be governed by the laws of the State of New York. Specified
times of day refer to New York City time.
SECTION 13. Counterparts. This Agreement and the Terms Agreement
------------
may be executed in counterparts, each of which shall constitute an original
of any party whose signature appears on it, and all of which shall together
constitute a single instrument.
* * *
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement
between you and the Company in accordance with its terms.
Very truly yours,
ML ASSET BACKED CORPORATION
By
-----------------------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED, as of
the date first above written:
MERRILL LYNCH & CO.,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By____________________________
Name:
Title:
ML ASSET BACKED CORPORATION
ASSET
BACKED SECURITIES
TERMS AGREEMENT
---------------
Dated: ______________, 199_
To: ML Asset Backed Corporation, as depositor under the Trust Agreement
to be dated as of _____________, 199_ (the "Agreement").
Re: Underwriting Agreement dated _____________, 199_.
Series Designation: ML Asset Backed Corporation,
- ------------------
Asset Backed Securities, Series 199_-_.
Terms of the Notes and Underwriting Compensation:
- ------------------------------------------------
<TABLE>
<CAPTION>
Class Original Pass-Through Price to
- ----- Principal Rate Public
Amount ------------ --------
---------
<S> <C> <C> <C>
__ $ __________ ___%** ***
__ $ __________ ___% ***
__ $ __________ ___% ***
</TABLE>
Terms of the Certificates and Underwriting Compensation:
- -------------------------------------------------------
<TABLE>
<CAPTION>
Class Original Pass-Through Price to
- ----- Principal Rate Public
Amount ------------ --------
---------
<S> <C> <C> <C>
__ $ __________ ___%** ***
__ $ __________ ___% ***
__ $ __________ ___% ***
</TABLE>
Note [Rating [Rating [Rating
Rating Agency] Agency] Agency]
______ _______ _______ -------
Class __ __ __ __
Class __ __ __ __
Class __ __ __ __
Certificate (Rating (Rating (Rating
Rating Agency) Agency) Agency)
- ----------- ------- ------- -------
Class __ __ __ __
Class __ __ __ __
Class __ __ __ __
Assets
- ------
As described in the Prospectus.
Credit Enhancement:
- ------------------
[ ]
Cut-off Date:
- ------------
_____________, 199_.
Distribution Date:
- -----------------
[ ]
Purchase Price:
- --------------
The purchase price payable by the Underwriter for the Offered Notes and
the Offered Certificates is a percentage of the principal amount of such
Class, as follows:
<TABLE>
<CAPTION>
Aggregate Original Percentage
Principal of
Class of Notes Amount Principal
- -------------- ------------------ ----------
<S> <C> <C>
__ $ _________ _______% *
__ $ _________ %
__ $ _________ %
</TABLE>
<TABLE>
<CAPTION>
Aggregate Original Percentage
Class of Principal of
Certificates Amount Principal
------------ ------------------ ----------
<S> <C> <C>
__ $ _________ _______% *
__ $ _________ %
__ $ _________ %
</TABLE>
* The Offered Notes and the Offered Certificates are being offered by
the Underwriter from time to time in negotiated transactions or
otherwise at varying prices to be determined, in each case, at the time
of sale.
The undersigned represents and agrees that (i) it has not offered or
sold and, prior to the expiration of the period of six months from the
Closing Date referred to below, will not offer or sell any Offered Notes or
Offered Certificates to persons in the United Kingdom, except to persons
whose ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of their
businesses or otherwise in circumstances that have not resulted and will not
result in an offer to the public in the United Kingdom within the meaning of
the Public Offers of Securities Regulation 1995; (ii) it has complied and
will comply with all applicable provisions of the Financial Services Act 1986
with respect to anything done by it in relation to the Offered Certificates
in, from or otherwise involving the United Kingdom; and (iii) it has only
issued or passed on and will only issue or pass on in the United Kingdom any
documents received by it in connection with the issue of the Offered Notes or
Offered Certificates to a person who is of a kind described in Article 11(3)
of the Financial Services Act 1986 (Investment Advertisements)(Exemptions)
Order 1995, or is a person to whom such document may otherwise lawfully be
issued or passed on.
* * *
Closing Date and Location:
- -------------------------
______________, 199_ at the offices of Brown & Wood LLP, One World
Trade Center, New York, New York 10048.
MERRILL LYNCH & CO.,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:_____________________________
Name:
Title:
ACCEPTED:
ML ASSET BACKED CORPORATION
By:__________________________
Name:
Title:
Exhibit 3.1
THE CORPORATION TRUST COMPANY (LOGO)
Associated with CT Corporation System
CORPORATION TRUST CENTER
1209 ORANGE STREET MAILING ADDRESS:
WILMINGTON, DEL. 19801 P.0. BOX 631
(302) 658-7581 WILMINGTON, DEL. 19899
RE: ML ASSET BACKED CORPORATION
CORPORATE LAW DEPARTMENT
MERRILL LYNCH & CO., INC.
WORLD HEADQUARTERS-NORTH TOWER
WORLD FINANCIAL CENTER
NEW YORK, NEW YORK 10281-1222
ATT: GARY C. DOLAN, VICE PRESIDENT & ATTORNEY
Attached for the permanent records of this corporation, is the certified
recorded copy of your document, which has just been released by the Recorder
of Deeds.
THE CORPORATION TRUST COMPANY
/s/ George J. Coyle
George J. Coyle
Assistant Vice President
Enclosure
STATE OF DELAWARE
(LOGO)
Office of Secretary of State
-----------------
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE
CERTIFICATE OF AMENDMENT BEFORE PAYMENT FOR STOCK OF ML ASSET BACKED
CORPORATION FILED IN THIS OFFICE ON THE TWENTY-FOURTH DAY OF SEPTEMBER,
A.D. 1987, AT 10 O'CLOCK A.M.
| | | | | | | |
(LOGO) /s/ Michael Harkins
-----------------------------------
Michael Harkins, Secretary of State
877267058 AUTHENTICATION: 1413501
DATE: 09/25/1987
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
ML ASSET BACKED CORPORATION
ML ASSET BACKED CORPORATION, a corporation organized and existing under
the laws of the State of Delaware, DOES HEREBY CERTIFY:
First: That the sole incorporator of the Corporation, on September 23,
1987, adopted a resolution proposing and declaring advisable an amendment to
the Certificate of Incorporation of the Corporation. Article VI of the
Certificate of Incorporation, as proposed to be amended by such resolution,
is as follows:
The Corporation will conduct its affairs in the following manner: (1)
the Corporation's assets will not be commingled with those of any direct or
ultimate parent of the Corporation; (2) the Corporation will maintain
separate corporate records and books of account from those of any direct or
ultimate parent of the Corporation; (3) prior to issuing and selling any
bonds, notes, or other evidences of indebtedness, or acting as settler or
depositor of trusts, at least one director and executive officer (or one
individual serving in both capacities) of the Corporation will not be a
director, officer or employee of any person owning beneficially, directly or
indirectly, more than 10% of the outstanding stock of the Corporation, or a
director, officer or employee of any of such owner's parent, subsidiaries or
affiliates other than the Corporation.
Second: That the Corporation has not received any payment for any of its
stock.
Third: That the foregoing amendment has been duly adopted in accordance
with the provisions of Section 241 of the General Corporation Law of the
State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed by its sole incorporator this 23rd day of September, 1987.
ML ASSET BACKED CORPORATION
By: /s/ Gary C. Dolan
-----------------------------
Gary C. Dolan
Sole Incorporator
0301C
STATE OF DELAWARE
(LOGO)
OFFICE OF SECRETARY OF STATE
----------------
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE
CERTIFICATE OF INCORPORATION OF ML ASSET BACKED CORPORATION FILED IN
THIS OFFICE ON THE TWENTY-SECOND DAY OF SEPTEMBER, A.D. 1987, AT 10
O'CLOCK A.M.
| | | | | | | |
(LOGO)
/s/ Michael Harkins
-----------------------------------
Michael Harkins, Secretary of State
AUTHENTICATION: 1410478
DATE: 09/24/1987
727265014
CERTIFICATE OF INCORPORATION
OF
ML ASSET BACKED CORPORATION
_______
ARTICLE I
Name
The name of the Corporation is ML Asset Backed Corporation
ARTICLE II
Registered Office and Registered Agent
The registered office of the Corporation in the State of Delaware is
located at Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of the Corporation's registered
agent is The Corporation Trust Company.
ARTICLE III
Corporate Purposes
The purpose of the Corporation is to engage solely in the following
activities: (a) issuing, selling, authorizing, and delivering bonds, notes,
and other evidences of indebtedness, (b) acting as settlor or depositor of
trusts formed to issue notes or to issue participation certificates that are
secured or collateralized by (1) receivables (the "Receivables") including
without limitation, automobile installment sale contracts, automobile leases,
equipment leases, revolving credit card accounts, truck receivables,
recreational vehicle loans, manufactured housing loans, student loans, and
other receivables, (2) pass-through certificates (the "Pass-Through
Certificates") evidencing a fractional undivided ownership interest in one or
more trusts or in one or more pools of Receivables, (3) bonds, notes and
other evidences of indebtedness (the "Notes") secured or collateralized by
one or more pools of Receivables, or (4) any combination of Receivables,
Notes and Pass-Through Certificates, (c) acquiring, owning, holding, selling,
assigning, pledging and otherwise dealing with the Receivables and related
insurance policies and agreements, including agreements with automobile
dealers and other originators or servicers of Receivables; (d) authorizing,
issuing, selling and delivering indebtedness that is completely subordinated
to the Notes and Pass-Through Certificates; and (e) engaging in any activity
and exercising any powers permitted to corporations under the laws of the
State of Delaware that are incident to the foregoing and necessary or
convenient to accomplish the foregoing.
ARTICLE IV
Authorized Shares
Section 1. Shares Authorized. The total number of shares of all
-----------------
classes of capital stock that the Corporation is authorized to issue is one
thousand (1,000) shares of Common Stock, par value ten dollars ($10.00) per
share ("Common Stock").
Section 2. Increase or Decrease in Amount of Authorized Shares.
---------------------------------------------------
The number of authorized shares of any class or classes of capital stock of
the Corporation may be increased or decreased by an amendment to this
Certificate of Incorporation authorized by the affirmative vote of the
holders of a majority of the shares of the Common Stock outstanding and
entitled to vote thereon.
Section 3. Shares Entitled to more or Less than One Vote. If, on
---------------------------------------------
any matter, any class or series of the Corporation's capital stock shall be
entitled to more or less than one vote for any share, every reference in this
Certificate of Incorporation and in any relevant provision of law to a
majority or other proportion of stock shall refer to such majority or other
proportion of the votes of such stock.
ARTICLE V
Corporate Existence
The Corporation is to have perpetual existence.
ARTICLE VI
THE CORPORATION GENERALLY
The Corporation will conduct its affairs in the following manner: (1)
the Corporation's assets will not be commingled with those of any direct or
ultimate parent of the Corporation; (2) the Corporation will maintain
separate corporate records and books of account from those of any direct or
ultimate parent of the Corporation; (3) at least one director and executive
officer (or one individual serving in both capacities) of the Corporation
will not be a director, officer or employee of any person owning
beneficially, directly or indirectly, more than 10% of the outstanding stock
of the Corporation or a director, officer or employee of any of such owner's
parent, subsidiaries of affiliates other than the Corporation.
ARTICLE VII
Powers of Board of Directors
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors of the Corporation is expressly authorized:
(a) To make, alter, amend or repeal the By-Laws, except as
otherwise expressly provided in any By-Law made by the holders of the capital
stock of the Corporation entitled to vote thereon. Any By-Law may be
altered, amended or repealed by the holders of the capital stock of the
Corporation entitled to vote thereon at any annual meeting or at any special
meeting called for that purpose.
(b) To authorize and cause to be executed mortgages and liens upon
the real and personal property of the Corporation.
(c) To determine the use and disposition of any surplus and net
profits of the Corporation, including the determination of the amount of
working capital required, to set apart out of any of the funds of the
Corporation, whether or not available for dividends, a reserve or reserves
for any proper purpose and to abolish any such reserve in the manner in which
it was created.
(d) To designate, by resolution passed by a majority of the whole
Board of Directors, one or more committees, each committee to consist of two
or more directors of the Corporation, which, to the extent provided in the
resolution designating the committee or in the By-Laws of the Corporation,
shall, subject to the limitations prescribed by law, have and may exercise
all the powers and authority of the Board of Directors in the management of
the business and affairs of the Corporation and may authorize the seal of the
Corporation to be affixed to all papers that may require it. Such committee
or committees shall have such name or names as may be provided in the By-Laws
of the Corporation or as may be determined from time to time by resolution
adopted by the Board of Directors.
(e) To adopt such pension, retirement, deferred compensation or
other employee benefit plans or provisions as may, from time to time, be
approved by it, providing for pensions, retirement income, deferred
compensation or other benefits for officers or employees of the Corporation
and of any corporation that is a subsidiary of the Corporation, or any of
them, in consideration for or in recognition of the services rendered by such
officers or employees or as an inducement to future efforts. No such plan or
provision, which is not at the time of adoption unreasonable or unfair, shall
be invalidated or in any way affected because any director shall be a
beneficiary thereunder or shall vote for any plan or provision under which he
may benefit.
(f) To exercise, in addition to the powers and authorities
hereinbefore or by law conferred upon it, any such powers and authorities and
do all such acts and things as may be exercised or done by the Corporation,
subject, nevertheless, to the provisions of the laws of the State of Delaware
and of the Certificate of Incorporation and of the By-Laws of the
Corporation.
ARTICLE VIII
LIMITATION OF DIRECTORS' LIABILITY; INDEMNIFICATION
BY CORPORATION
SECTION 1. Limitation of Directors' Liability. (a) No director of
----------------------------------
the Corporation shall be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except, to the extent provided by applicable law, for liability (i) for
breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) pursuant to
Section 174 of the Delaware General Corporation Law or (iv) for any
transaction from which the director derived an improper personal benefit. If
the Delaware General Corporation Law is hereafter amended to authorize
corporate action further limiting or eliminating the personal liability of
directors, then the liability of each director of the Corporation shall be
limited or eliminated to the full extent permitted by the Delaware General
Corporation Law as so amended from time to time.
(b) Neither the amendment nor repeal of this Section 1, nor the
adoption of any provision of the Certificate of Incorporation inconsistent
with this Section 1, shall eliminate or reduce the effect of this Section 1,
in respect of any matter occurring, or any cause of action, suit or claim
that, but for this Section 1, would accrue or arise, prior to such amendment,
repeal or adoption of an inconsistent provision.
SECTION 2. Indemnification by Corporation. (a) The Corporation
------------------------------
shall indemnify any person who is or was a director or officer of the
Corporation, with respect to actions taken or omitted by such person in any
capacity in which such person serves the Corporation, to the full extent
authorized or permitted by law, as now or hereafter in effect, and such right
to indemnification shall continue as to a person who has ceased to be a
director or officer, as the case may be, and shall inure to the benefit of
such person's heirs, executors and personal and legal representatives;
provided, however, that, except for proceedings to enforce rights to
- -------- -------
indemnification, the Corporation shall not be obligated to indemnify any
person in connection with a proceeding (or part thereof) initiated by such,
person unless such proceeding (or part thereof) was authorized in advance, or
unanimously consented to, by the Board of Directors of the Corporation.
(b) Directors and officers of the Corporation shall have the right to
be paid by the Corporation expenses incurred in defending or otherwise
participating in any proceeding in advance of its final disposition.
(c) The Corporation may, to the extent authorized from time to time by
the Board of Directors, provide rights to indemnification and to the
advancement of expenses to employees and agents of the Corporation.
(d) The rights to indemnification and to the advancement of expenses
conferred in this Section 2 shall not be exclusive of any other right that
any person may have or hereafter acquire under this Certificate of
Incorporation, the by-laws, any statute, agreement, vote of stockholders or
disinterested directors, or otherwise.
(e) Any repeal or modification of this Section 2 by the stockholders of
the Corporation shall not adversely affect any rights to indemnification and
to advancement of expenses that any person may have at the time of such
repeal or modification with respect to any acts or omissions occurring prior
to such repeal or modification.
ARTICLE IX
Reservation of Right to Amend Certificate of Incorporation
The Corporation reserves the right to amend, alter, change or repeal any
provisions contained in this Certificate of Incorporation in the manner now
or hereafter prescribed by law, and all the provisions of this Certificate of
Incorporation and all rights and powers conferred in this Certificate of
Incorporation on stockholders, directors and officers are subject to this
reserved power.
ARTICLE X
The name and mailing address of the incorporator is Gary C. Dolan, 250
Vesey Street, World Financial Center, New York, New York 10281-1218.
For the purpose of forming a corporation pursuant to the General
Corporation Law of the State of Delaware, the undersigned hereby declares and
certifies that the facts herein stated are true; and accordingly has hereunto
set his hand this 17th day of September, 1987.
_____________________________
Gary C. Dolan
Incorporator
Exhibit 3.2
BY-LAWS
OF
ML ASSET BACKED CORPORATION
ARTICLE I.
OFFICES
ML Asset Backed Corporation (hereinafter called the "Corporation") may
establish or discontinue, from time to time, such offices and places of
business within or without the State of Delaware as the Board of Directors
may deem proper for the conduct of the Corporation's business.
ARTICLE II.
MEETINGS OF STOCKHOLDERS
Section 1. Annual Meeting. The annual meeting of the holders of
--------------
shares of such class or series of stock as are entitled to notice thereof and
to vote thereat pursuant to the provisions of the Certificate of
Incorporation (hereinafter called "Annual Meeting of Stockholders") for the
purpose of electing directors and transacting such other business as may come
before it shall be held in each year at such time, on such day and at such
place, within or without the State of Delaware, as shall be designated by the
Board of Directors.
Section 2. Special Meetings. In addition to such special meetings
----------------
as are provided for by law or by the Certificate of Incorporation, special
meetings of the holders of any class or series or of all classes or series of
the Corporation's stock may be called at any time by the Board of Directors
and may be held at such time, on such day and at such place, within or
without the State of Delaware, as shall be designated by the Board of
Directors.
Section 3. Notice of Meetings. Except as otherwise provided by law,
------------------
notice of each meeting of stockholders shall be given either by delivering a
notice personally or mailing a notice to each stockholder of record entitled
to vote thereat. If mailed, the notice shall be directed to the stockholder
in a postage-prepaid envelope at his address as it appears on the stock books
of the Corporation unless, prior to the time of mailing, he shall have filed
with the Secretary a written request that notices intended for him be mailed
to some other address, in which case it shall be mailed to the address
designated in such request. Notice of each meeting of stockholders shall be
in such form as is approved by the Board of Directors or the Secretary, as
the case may be, and shall state the purpose or purposes for which the
meeting is called, the time when and the place where it is to be held, and
shall be delivered personally or mailed not more than fifty (50) days and not
fewer than ten (10) days before the day of the meeting. Except as otherwise
provided by law, the business that may be transacted at any such meeting of
stockholders shall consist of and be limited to the purpose or purposes so
stated in such notice.
Section 4. Waiver of Notice. Anything herein contained to the
----------------
contrary notwithstanding, notice of any meeting of stockholders shall not be
required as to any stockholder who shall attend and participate in the
business transacted at such meeting in person or by proxy, or who shall, or
whose proxy or attorney duly authorized shall, sign a written waiver thereof,
whether before or after the time stated therein. Attendance of a person at a
meeting of stockholders shall constitute a waiver of notice of such meeting,
except when the person attends such meeting for the purpose of objecting, at
the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened.
Section 5. Organization. The Chairman of the Board shall act as
------------
chairman at all meetings of stockholders at which he is present, and as such
chairman shall call such meetings of stockholders to order and preside
thereat. If the Chairman of the Board shall be absent from any meeting of
stockholders, the duties otherwise provided in this Section 5 of Article II
to be performed by him at such meeting shall be performed at such meeting by
the officer prescribed by Section 6 of Article V. The Secretary of the
Corporation shall act as secretary at all meetings of the stockholders, but
in his absence the chairman of the meeting may appoint any person present to
act as secretary of the meeting.
Section 6. Judges. All votes by ballot at any meeting of
------
stockholders shall be conducted by two judges who shall, except as otherwise
provided by law, be appointed for the purpose by the chairman of the
meeting. The judges shall decide upon the qualifications of voters, count
the votes and declare the result.
Section 7. Stockholders Entitled to Vote. The Board of Directors
-----------------------------
may fix a date not more than fifty (50) days nor less than ten (10) days
prior to the date of any meeting of stockholders, or prior to the last day on
which the consent or dissent of stockholders may be effectively expressed for
any purpose without a meeting, as a record date for the determination of the
stockholders entitled to notice of, and to vote at, such meeting and any
adjournment thereof, or to give such consent or express such dissent, and in
such case such stockholders and only such stockholders as shall be
stockholders of record on the date so fixed shall be entitled to notice of,
and to vote at, such meeting and any adjournment thereof, or to give such
consent or express such dissent, as the case may be, notwithstanding any
transfer of any stock on the books of the Corporation after any such record
date fixed as aforesaid. The Secretary shall prepare and make or cause to be
prepared and made, at least ten (10) days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at such
meeting, arranged in alphabetical order and showing the address of each such
stockholder and the number of shares registered in the name of each such
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten (10) days prior to the meeting, either at a place,
specified in the notice of the meeting, within the city where the meeting is
to be held, or, if not so specified, at the place where the meeting is to be
held. Such list shall be produced and kept at the time and place of the
meeting during the whole time thereof, and subject to the inspection of any
stockholder who may be present.
Section 8. Quorum and Adjournment of Meetings. Except as otherwise
----------------------------------
provided by law or by the Certificate of Incorporation, the holders of a
majority of the shares of stock entitled to vote at the meeting present in
person or by proxy without regard to class or series shall constitute a
quorum at all meetings of the stockholders. In the absence of a quorum, the
holders of a majority of such shares of stock present in person or by proxy
may adjourn any meeting, from time to time, until a quorum shall be present.
At any such adjourned meeting at which a quorum may be present, any business
may be transacted that might have been transacted at the meeting as
originally called. No notice of any adjourned meeting need be given other
than by announcement at the meeting that is being adjourned, provided that if
the adjournment is for more than thirty (30) days, or if after the
adjournment a new record date is fixed for the adjourned meeting, then a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
Section 9. Order of Business. The order of business at all meetings
-----------------
of stockholders shall be as determined by the chairman of the meeting or as
is otherwise determined by the vote of the holders of a majority of the
shares of stock present in person or by proxy and entitled to vote without
regard to class or series at the meeting.
Section 10. Vote of Stockholders. Except as otherwise permitted by
--------------------
law or by the Certificate of Incorporation or the By-Laws, all action by
stockholders shall be taken at a stockholders' meeting. Every stockholder of
record, as determined pursuant to Section 7 of this Article II, and who is
entitled to vote, shall be entitled at every meeting of the stockholders to
one vote for every share of stock standing in his name on the books of the
Corporation, except as otherwise expressly provided in the Certificate of
Incorporation with respect to any class or series of the Corporation's
capital stock. Every stockholder entitled to vote shall have the right to
vote in person or by proxy duly appointed by an instrument in writing,
subscribed by such stockholder and executed not more than three (3) years
prior to the meeting, unless the instrument provides for a longer period.
The attendance at any meeting of stockholders of a stockholder who may
theretofore have given a proxy shall not have the effect of rescinding such
proxy unless such stockholder shall in writing so notify the secretary of the
meeting prior to the voting of the proxy. Election of directors shall be by
ballot but, unless otherwise provided by law, no vote on any question upon
which a vote of the stockholders may be taken need be by ballot unless the
chairman of the meeting shall determine that it shall be by ballot or the
holders of a majority of the shares of stock present in person or by proxy
and entitled to participate in such vote shall so demand. In a vote by
ballot each ballot shall state the number of shares voted and the name of the
stockholder or proxy voting. Except as otherwise provided by law, by the
Certificate of Incorporation or by Section 14 of Article III, all elections
of directors and all questions shall be decided by the vote of the holders of
a majority of the shares of stock present in person or by proxy at the
meeting and entitled to vote in the election or on the question.
Section 11. Action Without a meeting. Except as otherwise provided
------------------------
by law or by the Certificate of Incorporation, any action required to be
taken, or which may be taken, at any meeting of stockholders may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by the holders of
shares of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at
which all shares of stock entitled to vote thereon were present and voted;
provided, that prompt notice of the taking of corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
Section 12. Attendance at Stockholders' Meetings. Except as
------------------------------------
otherwise provided by the Certificate of Incorporation or the By-Laws, any
stockholder of the Corporation shall be entitled to attend any meeting of
stockholders of the Corporation regardless of whether such stockholder shall
be entitled to vote any shares thereat or to have received notice thereof.
ARTICLE III.
BOARD OF DIRECTORS
Section 1. Election and Term. Except as otherwise provided by law
-----------------
or by the Certificate of Incorporation, and subject to the provisions of
Sections 2, 13, 14 and 15 of this Article III, directors shall be elected at
the Annual Meeting of Stockholders to serve until the next annual meeting of
stockholders and until their successors are elected and qualify or until
their earlier resignation or removal.
Section 2. Qualification. Acceptance of the office of director may
-------------
be expressed orally or in writing. The Board of Directors or the
stockholders may fix, from time to time, such qualifications, if any, for
election as a director or the continued holding of such office as they may
deem appropriate in view of the Corporation's business. Whenever any
director of the Corporation ceases to be an employee of the Corporation and
of all corporations that control or are under common control with the
Corporation, he shall thereupon also cease to be a director of the
Corporation without any further action on his part or on the part of the
Board of Directors or the Chairman of the Board.
Section 3. Number. The number of directors may be fixed from time
------
to time by resolution of the Board of Directors or by action of the
stockholders but shall not be less than one nor more than twenty.
Section 4. General Powers. The business, properties and affairs of the
--------------
Corporation shall be managed by or under the direction of the Board of
Directors, which, without limiting the generality of the foregoing, shall
have power to elect and appoint officers of the Corporation, to appoint and
direct agents, to grant general or limited authority to officers, employees
and agents of the Corporation to make, execute and deliver contracts and
other instruments and documents in the name and on behalf of the Corporation
and over its seal, without specific authority in each case, and to appoint
committees of the Board of Directors in addition to those provided for in
Article IV hereof, the membership of which may consist of either one or more
directors and one or more persons who are not directors or two or more
persons who are not directors, and which may advise the Board of Directors
with respect to any matters relating to the conduct of the Corporation's
business. The Board of Directors may designate one or more directors as
alternate members of any committee, including those provided for in Article
IV hereof, who may replace any absent or disqualified member at any meeting
of the committee. In addition, the Board of Directors may exercise all the
powers of the Corporation and do all lawful acts and things that are not
reserved to the stockholders by law or by the Certificate of Incorporation.
Section 5. Place of Meetings. Meetings of the Board of Directors
-----------------
may be held at any place, within or without the State of Delaware, from time
to time designated by the Board of Directors.
Section 6. Organization Meeting. A newly elected Board of Directors
--------------------
shall meet and organize, and also may transact any other business that might
be transacted at a regular meeting thereof, as soon as practicable after each
Annual Meeting of Stockholders, at the place at which such meeting of
stockholders took place, without notice of such meeting, provided a majority
of the whole Board of Directors is present. If such a majority is not
present, such organization meeting may be held at any other time or place
that may be specified in a notice given in the manner provided in Section 8
of this Article III for special meetings of the Board of Directors, or in a
waiver of notice thereof.
Section 7. Regular Meetings. Regular meetings of the Board of
----------------
Directors shall be held at such times as may be determined by resolution of
the Board of Directors and no notice shall be required for any regular
meeting. Except as otherwise provided by law, any business may be transacted
at any regular meeting of the Board of Directors.
Section 8. Special Meetings; Notice and Waiver of Notice. Special
---------------------------------------------
meetings of the Board of Directors shall be called by the Secretary on the
request of the Chairman of the Board, or the President, or on the request of
any director stating the purpose or purposes of such meeting. Notice of a
special meeting shall be in form approved by the director pursuant to whose
request the meeting was called, subject to reasonable control of the
Secretary. Notices of special meetings shall be mailed to each director,
addressed to him at his residence or usual place of business, not later than
two (2) days before the day on which the meeting is to be held, or shall be
sent to him at such place by telegraph, cable or other form of recorded
communication, or be delivered personally or by telephone, not later than the
day before such day of meeting. Notice of any meeting of the Board of
Directors or of any committee thereof need not be given to any director if he
shall sign a written waiver thereof either before or after the time stated
therein, or if he shall be present at the meeting and participate in the
business transacted thereat except if a director attends for the purpose of
objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Any meeting
of the Board of Directors or of any committee thereof shall be a legal
meeting without any notice thereof having been given, if all members shall be
present thereat. Unless limited by law, by the Certificate of Incorporation,
by the By-Laws, or by the terms of the notice thereof, any and all business
may be transacted at any special meeting.
Section 9. Organization of Meetings. The Chairman of Board shall
------------------------
preside at all meetings of the Board of Directors at which he is present. If
the Chairman of the Board shall be a absent from any meeting of the Board of
Directors, the duties otherwise provided in this Section 9 of Article III to
be performed by him at such meeting shall be performed at such meeting by the
officer prescribed by Section 6 of Article V. If no such officer is present
at such meeting, one of the directors present shall be chosen by the members
of the Board of Directors present to preside at such meeting. The Secretary
of the Corporation shall act as the secretary at all meetings of the Board of
Directors and in his absence a temporary secretary shall be appointed by the
chairman of the meeting.
Section 10. Quorum and Manner of Acting. Except as otherwise
---------------------------
provided by Section 6 of this Article III, at every meeting of the Board of
Directors one-third (1/3) of the total number of directors constituting the
whole Board of Directors shall constitute a quorum but in no event shall a
quorum be constituted by less than two (2) directors. Except as otherwise
provided by law, or by the Certificate of Incorporation, or by Section 15(a)
of this Article III, or by Section 1 of Article IV, or by Section 3 of
Article V, or by Article IX, the act of a majority of the directors present
at any such meeting, at which a quorum is present, shall be the act of the
Board of Directors. In the absence of a quorum, a majority of the directors
present may adjourn any meeting, from time to time, until a quorum is
present. No notice of any adjourned meeting need be given other than by
announcement at the meeting that is being adjourned. Members of the Board of
Directors or any committee thereof may participate in a meeting of the Board
of Directors or of such committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation by a member of the Board of
Directors in a meeting pursuant to this Section 10 of this Article III shall
constitute his presence in person at such meeting.
Section 11. Voting. On any question on which the Board of Directors
------
shall vote, the names of those voting and their votes shall be entered in the
minutes of the meeting when any member of the Board of Directors so requests
at the time.
Section 12. Action without a Meeting. Except as otherwise provided
------------------------
by law or by the Certificate of Incorporation, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if prior to such action all
members of the Board of Directors or of such committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board of Directors or the committee.
Section 13. Resignations. Any director may resign at any time upon
------------
written notice of resignation to the Corporation. Any resignation shall be
effective immediately unless a date certain is specified for it to take
effect, in which event it shall be effective upon such date, and acceptance
of any resignation shall not be necessary to make it effective, irrespective
of whether the resignation is tendered subject to such acceptance.
Section 14. Removal of Directors. Any director may be removed,
--------------------
either for or without cause, at any time, by action of the holders of record
of a majority of the outstanding shares of stock entitled to vote at an
election of directors, either at a meeting of the holders of such shares or,
whenever permitted by law and the Certificate of Incorporation, without a
meeting by their written consents thereto.
Section 15. Filling of Vacancies. Except as otherwise provided by law
--------------------
or the Certificate of Incorporation, in case of any increase in the number
of directors, or of any vacancy in the Board of Directors, including any
prospective vacancy to result from the effectiveness at a future date of a
resignation therefrom, the additional director or directors may be elected,
or, as the case may be, the vacancy or vacancies may be filled, either (a) by
the Board of Directors at any meeting by affirmative vote of a majority of
the remaining directors though the remaining directors be less than the
quorum provided in Section 10 of this Article III, or by a sole remaining
director, or (b) by the holders of capital stock of the Corporation entitled
to vote thereon, either at an Annual Meeting of Stockholders or at a special
meeting of such holders called for that purpose. The directors so chosen
shall hold office until the next Annual Meeting of Stockholders and until
their successors are elected and qualify or until their earlier removal or
resignation.
ARTICLE IV.
COMMITTEES
Section 1. Constitution and Power. The Board of Directors may, by
----------------------
resolution adopted by affirmative vote of a majority of the whole Board of
Directors, appoint one or more committees of the Board of Directors, which
shall have such powers and duties as the Board of Directors shall properly
determine. No such committee of the Board of Directors shall be composed of
fewer than two (2) directors.
Section 2. Place of Meetings. Meetings of any committee of the
-----------------
Board of Directors may be held at any place, within or without the State of
Delaware, from time to time designated by the Board of Directors or such
committee.
Section 3. Meetings; Notice and Waiver of Notice. Regular meetings
-------------------------------------
of any committee of the Board of Directors shall be held at such times as may
be determined by resolution either of the Board of Directors or of such
committee and no notice shall be required for any regular meeting. Special
meetings of any committee shall be called by the secretary thereof upon
request of any member. Notice of any special meeting of any committee shall
be in form approved by the Chairman of the Board. Notices of special
meetings shall be mailed to each member, addressed to him at his residence or
usual place of business, not later than two (2) days before the day on which
the meeting is to be held, or shall be sent to him at such place by
telegraph, cable or any other form of recorded communication, or be delivered
personally or by telephone, not later than the day before such day of
meeting. Neither the business to be transacted at, nor the purpose of, any
special meeting of any committee, need be specified in any notice or written
waiver of notice unless so required by the Certificate of Incorporation or
the By-Laws. Notices of any such meeting need not be given to any member of
any committee, however, if waived by him as provided in Section 8 of Article
III, and the provisions of such Section 8 with respect to waiver of notice of
meetings of the Board of Directors shall apply to meetings of any committee
as well.
Section 4. Organization of Meetings. The most senior officer of the
------------------------
corporation present, if any be members of the committee, and, if not, the
director present who has served the longest as a director, except as
otherwise expressly provided in the By-Laws or by the Board of Directors or
the committee, shall preside at all meetings of any committee. The Secretary
of the Corporation, except as otherwise expressly provided by the Board of
Directors, shall act as secretary at all meetings of any committee and in his
absence a temporary secretary shall be appointed by the chairman of the
meeting.
Section 5. Quorum and Manner of Acting. One third (1/3) of the
---------------------------
members of any committee then in office, but not less than two (2), shall
constitute a quorum for the transaction of business, and the act of a
majority of those present at any meeting at which a quorum is present, shall
be the act of such committee. In the absence of a quorum, a majority of the
members of any committee present, or, if two or fewer members shall be
present, any member of the committee present or the Secretary, may adjourn
any meeting, from time to time, until a quorum is present. No notice of any
adjourned meeting need be given other than by announcement at the meeting
that is being adjourned. The provisions of Section 10 of Article III with
respect to participation in a meeting of a committee of the Board of
Directors and the provisions of Section 12 of Article III with respect to
action taken by a committee of the Board of Directors without a meeting shall
apply to participation in meetings of and action taken by any committee.
ARTICLE V.
THE OFFICERS
Section 1. Officers--Qualifications. The elected officers of the
------------------------
Corporation shall be a Chairman of the Board and a Secretary and also may
include a President, one or more Executive Vice Presidents, Senior Vice
Presidents, and Vice Presidents, and a Treasurer. The elected officers shall
be elected by the Board of Directors. One or more Assistant Vice Presidents,
Assistant Secretaries, Assistant Treasurers, and other officers and agents
may be appointed by the Board of Directors or may be appointed pursuant to
Sections 6 or 7 of this Article V. Whenever any officer of the Corporation
ceases to be an employee of the Corporation and of all corporations that
control or are under common control with the Corporation, he shall thereupon
also cease to be an officer of the Corporation without any further action on
his part or on the part of the Board of Directors or the Chairman of the
Board.
Section 2. Term of Office; Vacancies. So far as is practicable, all
-------------------------
elected officers shall be elected at the organization meeting of the Board of
Directors in each year, and except as otherwise provided in Sections 1, 3 and
4, and subject to the provisions of Section 6 of this Article V, shall hold
office until the organization meeting of the Board of Directors in the next
subsequent year and until their respective successors are elected and
qualify, or until their earlier removal or resignation. All appointed
officers shall hold office during the pleasure of the Board of Directors and
the President. If any vacancy shall occur in any office, the Board of
Directors may elect or appoint a successor to fill such vacancy for the
remainder of the term.
Section 3. Removal of Elected Officers. Any elected officer may be
---------------------------
removed at any time, either for or without cause, by affirmative vote of a
majority of the whole Board of Directors, or by the stockholders, at any
regular meeting or at any special meeting called for the purpose.
Section 4. Resignations. Any officer may resign at any time, upon
------------
written notice of resignation to the Corporation. Any resignation shall be
effective immediately unless a date certain is specified for it to take
effect, in which event it shall be effective upon such date, and acceptance
of any resignation shall not be necessary to make it effective, irrespective
of whether the resignation is tendered subject to such acceptance.
Section 5. Officers Holding More Than One Office. Any officer may
-------------------------------------
hold two or more offices the duties of which can be performed concurrently by
the same person.
Section 6. The Chairman of the Board. The Chairman of the Board shall
-------------------------
direct, coordinate and control the Corporation's business and activities and
its operating expenses and capital expenditures, and shall have general
authority to exercise all the powers necessary for the chairman of the board
of the Corporation, all in accordance with basis policies established by and
subject to the control of the Board of Directors. He shall be responsible
for the employment or appointment of employees, agents and officers (except
officers to be elected by the Board of Directors pursuant to Section 1 of
this Article V) as may be required for the conduct of the business and the
attainment of the objectives of the Corporation. He shall have authority to
suspend or to remove any employee, agent or appointed officer of the
Corporation and to suspend for cause any elected officer of the Corporation
and, in the case of the suspension for cause of any such elected officer, to
recommend to the Board of Directors what further action should be taken. He
shall have general authority to execute bonds, deeds and contracts in the
name and on behalf of the Corporation. As provided in Section 5 of Article
II, he shall act as Chairman at all meetings of the stockholders at which he
is present, and, as provided in Section 9 of Article III, he shall preside at
all meetings of the Board of Directors at which he is present. In the
absence of the Chairman of the Board, his duties shall be performed and his
authority may be exercised by the President, and, in the absence of the
President and the Chairman of the Board, such duties shall be performed and
his authority may be exercised by such officer as may have been designated by
the most senior officer of the Corporation who has made any such designation,
with the right reserved to the Board of Directors to make the designation or
supersede any designation so made.
Section 7. The President. The President shall be the chief executive
-------------
officer and the chief operating officer of the Corporation. He shall implement
the general directives, plans and policies formulated by the Chairman of the
Board pursuant to the By-Laws, in general shall have authority to exercise all
powers delegated to him by the Chairman of the Board and shall establish
operating and administrative plans and policies and direct and coordinate the
Corporation's organizational components, within the scope of the authority
delegated to him by the Board of Directors or the Chairman of the Board. He
shall have general authority to execute bonds, deeds and contracts in the name
and on behalf of the Corporation and responsibility for the employment or
appointment of such employees, agents and officers (except officers to be
elected by the Board of Directors pursuant to Section 1 of this Article V) as
may be required to carry on the operations of the business. He shall have
authority to suspend or to remove any employee or agent of the Corporation
(other than officers). As provided in Section 6 of this Article V, in the
absence of the Chairman of the Board, his duties shall be performed and his
authority may be exercised by the President. In the absence of the President,
his duties shall be performed and his authority may be exercised by the
Chairman of the Board. In the absence of the Chairman of the Board and the
President, such duties shall be performed and such authority may be exercised
by such officer as may have been designated by the most senior officer of the
Corporation who has made any such designation, with the right reserved to the
Board of Directors to make the designation or supersede any designation so
made.
Section 8. The Executive Vice Presidents. The several Executive
-----------------------------
Vice Presidents, if any, shall perform such duties and may exercise such
authority as may from time to time be conferred upon them by the Board of
Directors, the Chairman of the Board or the President.
Section 9. The Senior Vice Presidents. The several Senior Vice
--------------------------
Presidents, if any, shall perform such duties and may exercise such authority
as may from time to time be conferred upon them by the Board of Directors,
the Chairman of the Board, the President, or any Executive Vice President.
Section 10. The Vice Presidents. The several Vice Presidents, if
-------------------
any, shall perform such duties and may exercise such authority as may from to
time be conferred upon them by the Board of Directors, the Chairman of the
Board, the President, any Senior Vice President, or any Executive Vice
President.
Section 11. The Secretary. The Secretary shall attend to the giving
-------------
of notice of all meetings of stockholders and of the Board of Directors and
committees thereof, and, as provided in Section 5 of Article II, Section 8 of
Article III, and Section 4 of Article IV, shall keep minutes of all
proceedings at meetings of the stockholders, and of the Board of Directors
and committees thereof at which he is present, and where some other person
has served as secretary thereto, the Secretary shall maintain custody of the
minutes of such proceedings. As provided in Section 2 of Article VII, he
shall have charge of the corporate seal and shall have authority to attest
any and all instruments or writings to which the same may be affixed. He
shall keep and account for all books, documents, papers and records of the
Corporation, except those for which some other officer or agent is properly
accountable. He shall generally perform all the duties usually appertaining
to the office of secretary of a corporation. In the absence of the
Secretary, such person as shall be designated by the Chairman of the Board
shall perform his duties.
Section 12. The Treasurer. The Treasurer shall have the care and
-------------
custody of all the funds of the Corporation and shall deposit the same in
such banks or other depositories as the Board of Directors, or any officer or
officers, or any officer and agent jointly, thereunto duly authorized by the
By-Laws or by the Board of Directors, shall, from time to time, direct or
approve. He shall keep a full and accurate account of all moneys received
and paid on account of the Corporation, and shall render a statement of his
accounts whenever the Board of Directors or any other appropriate elected
officer of the Corporation shall require. He shall perform all other
necessary acts and duties in connection with the administration of the
financial affairs of the Corporation and shall generally perform all the
duties usually appertaining to the office of the treasurer of a corporation.
When required by the Board of Directors, or any other appropriate elected
officer of the Corporation, he shall give bonds for the faithful discharge of
his duties in such sums and with such sureties as the Board of Directors, or
any other appropriate elected officer of the Corporation, shall approve. In
the absence of the Treasurer, such person as shall be designated by the
Chairman of the Board shall perform his duties.
Section 13. Additional Duties and Authority. In addition to the
-------------------------------
foregoing specifically enumerated duties and authority, the several officers
of the Corporation shall perform such other duties and may exercise such
further authority as the Board of Directors may, from time to time, determine,
or as may be as signed to them by any superior officer.
ARTICLE VI.
STOCK AND TRANSFERS OF STOCK
Section 1. Stock Certificates. The capital stock of the Corporation
------------------
shall be represented by certificates signed by, or in the name of the
Corporation by the Chairman of the Board, the President, any Senior Vice
President, any Executive Vice President or any Vice President and the
Secretary or an Assistant Secretary, and sealed with the seal of the
Corporation. In case any such officer who has signed any such certificate
shall have ceased to be such officer before such certificate is delivered by
the Corporation, it may nevertheless be issued and delivered by the
Corporation with the same effect as if such officer had not ceased to be such
at the date of its delivery. The certificates representing the capital stock
of the Corporation shall be in such form as shall be approved by the Board of
Directors.
Section 2. Transfers of Stock. Transfers of stock shall be made on
------------------
the books of the Corporation by the Secretary or an Assistant Secretary of
the Corporation, or by an attorney lawfully constituted in writing, and upon
surrender and cancellation of a certificate or certificates for a like number
of shares of the same class or series of stock, with duly executed assignment
and power of transfer endorsed thereon or attached thereto, and with such
proof of the authenticity of the signatures as the Corporation or its agents
may reasonably require and with all required stock transfer tax stamps
affixed thereto and cancelled or accompanied by sufficient funds to pay such
taxes.
Section 3. Lost Certificates. In case any certificate of stock
-----------------
shall be lost, stolen or destroyed, the Board of Directors, in its
discretion, or any officer or officers thereunto duly authorized by the Board
of Directors, may authorize the issue of a substitute certificate in place of
the certificate so lost, stolen or destroyed; provided, however, that, in
each such case, the applicant for a substitute certificate shall furnish
evidence to the Corporation, which it determines in its discretion is
satisfactory, of the loss, theft or destruction of such certificate and of
the ownership thereof, and also such security or indemnity as may be required
by it.
Section 4. Determination of Stockholders of Record for Certain
---------------------------------------------------
Purposes. The Board of Directors may fix, in advance, a date, not more
- --------
than sixty (60) days prior to the date of payment of any dividend or other
distribution, or the date for the allotment of rights, or the date when any
change, conversion or exchange of capital stock shall go into effect, as a
record date for the determination of the stockholders entitled to receive
payment of any such dividend or other distribution, or any such allotment of
rights, or to exercise the rights in respect of any such change, conversion
or exchange of its capital stock, and in such case only stockholders of
record on the date so fixed shall be entitled to receive payment of such
dividend, or to receive such allotment of rights, or to exercise such rights,
notwithstanding any transfer of any stock on the books of the Corporation
after any such record date fixed as aforesaid.
ARTICLE VII.
CORPORATE SEAL
Section 1. Seal. The seal of the Corporation shall be in the form
----
of a circle and shall bear the name of the Corporation and, in the center of
the circle, the words "Corporate Seal, Connecticut" and the year of
incorporation.
Section 2. Affixing and Attesting. The seal of the Corporation
----------------------
shall be in the custody of the Secretary, who shall have power to affix it to
the proper corporate instruments and documents, and who shall attest it. In
his absence, it may be affixed and attested by an Assistant Secretary, or by
the Treasurer or an Assistant Treasurer or by any other person or persons as
may be designated by the Board of Directors.
ARTICLE VIII.
MISCELLANEOUS
Section 1. Fiscal Year. The fiscal year of the Corporation shall
-----------
end on the final Friday of December in each year and the succeeding fiscal
year shall begin on the day next succeeding the last day of the preceding
fiscal year.
Section 2. Signatures on Negotiable Instruments. All bills, notes,
------------------------------------
checks or other instruments for the payment of money shall be signed or
countersigned by such officers or agents and in such manner as, from time to
time, may be prescribed by resolution (whether general or special) of the
Board of Directors, or may be prescribed by any officer or officers, or any
officer and agent jointly, thereunto duly authorized by the Board of
Directors.
Section 3. References to Article and Section Numbers and to the
----------------------------------------------------
By-Laws an the Certificate of Incorporation. Whenever in the By-Laws
- -------------------------------------------
reference is made to an Article or Section number, such reference is to the
number of an Article or Section of the By-Laws. Whenever in the By-Laws
reference is made to the By-Laws, such reference is to these By-Laws of the
Corporation, as amended, and whenever reference is made to the Certificate of
Incorporation, such reference is to the Certificate of Incorporation of the
Corporation, as amended, including all documents deemed by the General
Corporation Law of the State of Delaware to constitute a part thereof.
ARTICLE IX.
AMENDMENTS
The By-Laws may be altered, amended or repealed at any Annual Meeting of
Stockholders, or at any special meeting of holders of shares of stock
entitled to vote thereon, provided that in the case of a special meeting,
notice of such proposed alteration, amendment or repeal be included in the
notice of meeting, by a vote of the holders of a majority of the shares of
stock present in person or by proxy at the meeting and entitled to vote
thereon, or (except as otherwise expressly provided in any By-Law adopted by
the stockholders) by the Board of Directors at any valid meeting by
affirmative vote of a majority of the whole Board of Directors.
______________________
Exhibit 4.1
_____________________________________________________________________________
ML ASSET BACKED CORPORATION,
as Depositor
and
(_____________________________)
as Owner Trustee
__________________________________________
FORM OF TRUST AGREEMENT
Dated as of (_____________)
__________________________________________
Asset Backed Certificates, Class (B-1) (and Class B-2)
_____________________________________________________________________________
Table of Contents
-----------------
Section Page
- ------- ----
ARTICLE I
Definitions
1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
Organization
2.01. Name . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.02. Office . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.03. Purposes and Powers . . . . . . . . . . . . . . . . . . . 12
2.04. Appointment of Owner Trustee . . . . . . . . . . . . . . . 12
2.05. Initial Capital Contribution of Trust Assets . . . . . . . 13
2.06. Declaration of Trust . . . . . . . . . . . . . . . . . . . 13
2.07. Limitation of Liability . . . . . . . . . . . . . . . . . 13
2.08. Title to Trust Property . . . . . . . . . . . . . . . . . 13
2.09. Situs of Trust . . . . . . . . . . . . . . . . . . . . . . 13
2.10. Representations and Warranties and Covenants of the
Depositor . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE III
Conveyance of the Underlying Securities;
Certificates; Appointment of Administrator
3.01. Conveyance of the Underlying Securities . . . . . . . . . 15
3.02. Initial Ownership . . . . . . . . . . . . . . . . . . . . 16
3.03. The Certificates . . . . . . . . . . . . . . . . . . . . . 16
3.04. The Global Certificates . . . . . . . . . . . . . . . . . 19
3.05. Book-Entry Certificates . . . . . . . . . . . . . . . . . 20
3.06. Notices to Depository . . . . . . . . . . . . . . . . . . 21
3.07. Definitive Certificates . . . . . . . . . . . . . . . . . 21
3.08. Authentication of Certificates . . . . . . . . . . . . . . 22
3.09. Registration of Transfer and Exchange of Certificates . . 22
3.10. Reporting . . . . . . . . . . . . . . . . . . . . . . . . 26
3.11. Mutilated, Destroyed, Lost or Stolen Certificates . . . . 26
3.12. Persons Deemed Certificateholders . . . . . . . . . . . . 26
3.13. Access to List of Certificateholders' Names and
Addresses . . . . . . . . . . . . . . . . . . . . . . . . 26
3.14. Maintenance of Office or Agency . . . . . . . . . . . . . 27
3.15. Appointment of Administrator . . . . . . . . . . . . . . . 27
ARTICLE IV
Actions by Owner Trustee
4.01. Prior Notice to Certificateholders with Respect to
Certain Matters . . . . . . . . . . . . . . . . . . . . . 27
4.02. Action by Certificateholders with Respect to Certain
Matters . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.03. Action by Certificateholders and the Owner Trustee with
Respect to Bankruptcy . . . . . . . . . . . . . . . . . . 28
4.04. Restrictions on Certificateholders' Power . . . . . . . . 29
4.05. Majority Control . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE V
Administration of the Underlying Securities;
Application of Trust Funds
5.01. Collection of Payments on Underlying Securities;
Collection Account . . . . . . . . . . . . . . . . . . . . 29
5.02. Distributions . . . . . . . . . . . . . . . . . . . . . . 29
5.03. Method of Payment . . . . . . . . . . . . . . . . . . . . 31
5.04. Accounting and Reports to the Noteholders,
Certificateholders, the Internal Revenue Service and
Others . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.05. Signature on Returns . . . . . . . . . . . . . . . . . . . 31
5.06. Statements to Certificateholders; Certain Tax
Information . . . . . . . . . . . . . . . . . . . . . . . 32
5.07. Notices to Owner Trustee . . . . . . . . . . . . . . . . . 33
ARTICLE VI
Authority and Duties of Owner Trustee
6.01. General Authority . . . . . . . . . . . . . . . . . . . . 33
6.02. General Duties . . . . . . . . . . . . . . . . . . . . . . 33
6.03. Action upon Instruction . . . . . . . . . . . . . . . . . 33
6.04. No Duties Except as Specified in this Trust Agreement or
in Instructions . . . . . . . . . . . . . . . . . . . . . 35
6.05. No Action Except Under Specified Documents or
Instructions . . . . . . . . . . . . . . . . . . . . . . . 35
6.06. Restrictions . . . . . . . . . . . . . . . . . . . . . . . 35
6.07. Limitation on Trust Activities . . . . . . . . . . . . . . 35
ARTICLE VII
Concerning the Owner Trustee
7.01. Acceptance of Trusts and Duties . . . . . . . . . . . . . 36
7.02. Furnishing of Documents . . . . . . . . . . . . . . . . . 37
7.03. Representations and Warranties . . . . . . . . . . . . . . 37
7.04. Reliance; Advice of Counsel . . . . . . . . . . . . . . . 38
7.05. Not Acting in Individual Capacity . . . . . . . . . . . . 39
7.06. Owner Trustee Not Liable for Certificates or Underlying
Securities . . . . . . . . . . . . . . . . . . . . . . . . 39
7.07. Owner Trustee May Own Certificates and Notes . . . . . . . 39
ARTICLE VIII
Compensation of Owner Trustee
8.01. Owner Trustee's Fees, Expenses and Indemnity . . . . . . . 39
ARTICLE IX
Termination of Trust Agreement
9.01. Termination of Trust Agreement . . . . . . . . . . . . . . 40
ARTICLE X
Successor Owner Trustees and Additional Owner Trustees
10.01. Eligibility Requirements for Owner Trustee . . . . . . . . 41
10.02. Resignation or Removal of Owner Trustee . . . . . . . . . 42
10.03. Successor Owner Trustee . . . . . . . . . . . . . . . . . 43
10.04. Merger or Consolidation of Owner Trustee . . . . . . . . . 43
ARTICLE XI
Miscellaneous
11.01. Supplements and Amendments . . . . . . . . . . . . . . . . 44
11.02. Supplemental Amendments with Consent of Noteholders. . . . 44
11.03. Voting Interests . . . . . . . . . . . . . . . . . . . . . 45
11.04. Modification and Amendment of Swap Agreement . . . . . . . 46
11.05. Modification and Amendment of Swap Agreement . . . . . . . 46
11.06. No Legal Title to Trust Estate in Certificateholders . . . 46
11.07. Limitations on Rights of Others . . . . . . . . . . . . . 46
11.08. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.09. Severability . . . . . . . . . . . . . . . . . . . . . . . 47
11.10. Separate Counterparts . . . . . . . . . . . . . . . . . . 47
11.11. Successors and Assigns . . . . . . . . . . . . . . . . . . 47
11.12. Covenants of the Depositor . . . . . . . . . . . . . . . . 47
11.13. No Petition . . . . . . . . . . . . . . . . . . . . . . . 48
11.14. No Recourse . . . . . . . . . . . . . . . . . . . . . . . 48
11.15. Headings . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.16. Governing Law . . . . . . . . . . . . . . . . . . . . . . 48
11.17. Integration . . . . . . . . . . . . . . . . . . . . . . . 48
11.18. Appointment of Agent . . . . . . . . . . . . . . . . . . . 48
11.19. Benefits of Trust Agreement . . . . . . . . . . . . . . . 49
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
EXHIBITS
Exhibit A - Form of Certificate
Exhibit B - Certificate of Trust of (___________) Trust (______)
Exhibit C - Underlying Securities Schedule
This Trust Agreement of (_________) TRUST (______), dated as of
(_____________), (amending and restating the Trust Agreement, dated as of
______________) (as amended from time to time, this "Trust Agreement"),
between ML ASSET BACKED CORPORATION, a Delaware corporation, as Depositor
(the "Depositor") and (_______________________) a Delaware banking
corporation, as Owner Trustee (the "Owner Trustee").
WITNESSETH THAT:
In consideration of the mutual agreements herein contained, the
Depositor and the Owner Trustee agree as follows:
ARTICLE I
Definitions
-----------
Section 1.01. Definitions. Whenever used in this Trust Agreement, the
-----------
capitalized words and phrases, unless the context otherwise requires, shall
have the following meanings:
"Administration Agreement": The Administration Agreement dated as of
------------------------
(_____________) among the Trust, (_____________________) as Indenture Trustee
and (_____________________) as Administrator, as it may be amended from time
to time.
"Administrator": Initially (_____________________), and thereafter, any
-------------
successor appointed under the Administration Agreement.
"Assets": The meaning specified in the Indenture.
------
"Affiliate": With respect to any specified Person, any other Person
---------
controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with
respect to any Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Authorized Officer": With respect to the Issuer, any officer of the
------------------
Owner Trustee who is authorized to act for the Owner Trustee in matters
relating to the Issuer and who is identified on the list of Authorized
Officers delivered by the Owner Trustee to the Indenture Trustee (and the
Swap Counterparty) on the Closing Date (as such list may be modified or
supplemented from time to time thereafter) and, so long as the Administration
Agreement is in effect, any Responsible Officer of the Administrator who is
authorized to act for the Administrator in matters relating to the Issuer and
to be acted upon by the Administrator pursuant to the Administration Agree-
ment and who is identified on the list of Authorized Officers delivered by
the Administrator to the Indenture Trustee (and the Swap Counterparty) on the
Closing Date (as such list may be modified or supplemented from time to time
thereafter).
"Basic Documents": The Certificate of Trust, the Trust Agreement, the
---------------
Indenture, the Administration Agreement, the Depository Agreement, (the Swap
Agreement, the Swap Guarantee) and other documents and certificates delivered
in connection therewith.
("Beneficial Owner": With respect to any Certificate, the Person who
----------------
is the beneficial owner of such Certificate as reflected on the books of the
Depository or on the books of a Person maintaining an account with such
Depository (directly as a Depository Participant or indirectly through a
Depository Participant, in accordance with the rules of such Depository).)
("Book-Entry Certificates": A beneficial interest in the Certificates,
-----------------------
ownership and transfers of which shall be made through book entries by the
Depository as described in Section 3.05 of this Trust Agreement.)
"Business Day": Any day other than a Saturday or a Sunday, or another
------------
day on which banking institutions in the City of New York, New York or the
city in which the Corporate Trust Office of the Owner Trustee or the
Indenture Trustee is located are authorized or obligated by law, regulations
or executive order to be closed.
"Business Trust Statute": Chapter 38 of Title 12 of the Delaware Code,
----------------------
12 Del. Code SectionSection3801 et seq., as the same may be amended from time
--- ---- -- ----
to time.
("Calculation Agent": Initially, (_____________), and thereafter, any
-----------------
successor appointed under the Calculation Agent Agreement.)
("Calculation Agent Agreement": The Calculation Agent Agreement dated
---------------------------
as of (_____________) among the Trust, the Indenture Trustee and the
Calculation Agent, as amended from time to time.)
"Certificate": Any one of the Class (B-1) (or the Class B-2)
-----------
Certificates, each evidencing fractional undivided beneficial interests in
amounts to be distributed hereunder and executed by the Owner Trustee in
substantially the form set forth in Exhibit A-1 and Exhibit A-2,
respectively, hereto.
"Certificate Early Prepayment Price": In respect of each Certificate,
----------------------------------
the lesser of:
(i) its Pro Rata Share of (A) the proceeds of the liquidation of
the Assets minus (B) (the sum of (1) any termination payment owed by the
Issuer to the Swap Counterparty under the Swap Agreement and (2)) any
other unpaid expenses incurred by the Issuer (including Trustee
Expenses) and (3) the outstanding principal amount of the Notes plus
accrued interest thereon; and
(ii) 100% of the outstanding principal amount of such Certificate
plus accrued interest thereon.
"Certificate Interest Accrual Period": As to any Payment Date, the
-----------------------------------
period from and including the preceding Payment Date (in the case of the
first Payment Date, from and including (_____________)) to but excluding such
current Payment Date.
"Certificate of Trust": The Certificate of Trust filed for the Trust
--------------------
pursuant to Section 3810 (a) of the Business Trust Statute.
"Certificate Owner": The Beneficial Owner of a Certificate.
-----------------
"Certificate Register": The meaning provided in Section 3.09 of the
--------------------
Trust Agreement.
"Certificate Registrar": Initially the Administrator, in its capacity
---------------------
as Certificate Registrar, or any successor to the Administrator in such
capacity as provided in Section 3.09 of the Trust Agreement.
"Certificateholder or Holder": The Person in whose name a Certificate
---------------------------
is registered in the Certificate Register, except that, solely for the
purpose of giving any consent pursuant to this Trust Agreement, any
Certificate registered in the name of the Depositor, the Owner Trustee or any
affiliate of either shall be deemed not to be Outstanding.
"Class": As to the Notes, the Class (A-1) Notes (and the Class A-2
-----
Notes) and as to the Certificates, the Class (B-1) Certificates (and the
Class B-2 Certificates).
"Class A Notes": The (___________) Trust (______) (________________)
-------------
Notes, Class (A-1) (and Class A-2).
"Class (B-1) Certificate Accrual Rate": For each Certificate Interest
------------------------------------
Accrual Period, a rate per annum equal to (_____) for such Certificate
Interest Accrual Period calculated on the basis of (the actual number of days
in such Certificate Interest Accrual Period divided by 360). The Class (B-1)
Certificate Accrual Rate for the first Certificate Interest Accrual Period
shall be (_______)%.
"Class (B-2) Certificate Accrual Rate": For each Certificate Interest
------------------------------------
Accrual Period, a rate per annum equal to (_____) for such Certificate
Interest Accrual Period calculated on the basis of (the actual number of days
in such Certificate Interest Accrual Period divided by 360). The Class (B-2)
Certificate Accrual Rate for the first Certificate Interest Accrual Period
shall be (_______)%.
"Class (B-1) Certificates": The (___________) Trust (______)
------------------------
(__________________) Certificates, Class (B-1).
"Class (B-2) Certificates": The (___________) Trust (______)
------------------------
(__________________) Certificates, Class (B-2).
"Closing Date": The date of the initial issuance of the Notes and the
------------
Certificates.
"Code": The Internal Revenue Code of 1986, as amended, and the rules
----
and regulations promulgated thereunder.
"Collateral": The meaning specified in the Granting Clause of the
----------
Indenture.
"Collection Account": The trust account created and maintained with the
------------------
Indenture Trustee pursuant to Section 3.01 of the Indenture and referred to
therein as the Collection Account. Funds deposited in the Collection Account
shall be held in trust for the Noteholders (and the Swap Counterparty) for
the uses and purposes set forth in Article III of the Indenture.
"Corporate Trust Office": Either (i) The principal corporate trust
----------------------
office of the Owner Trustee at which at any particular time its corporate
trust business shall be administered, which office at the date of the
execution of this Trust Agreement is located at (_______), Attention:
Corporate Trust Department or (ii) the principal corporate trust office of
the Indenture Trustee and Note Registrar at which at any particular time its
corporate trust business shall be administered, which office at the date of
the execution of this instrument is located at (________), Attention:
(_________________).
"Definitive Notes": The meaning provided in Section 4.06 of the
----------------
Indenture.
"Denomination": For each Note or Certificate, as applicable, the amount
------------
designated as such on the face thereof, the aggregate of the Denominations of
all Notes and Certificates on the Closing Date being equal to the aggregate
of the principal balance of the Underlying Securities.
"Depositor": ML Asset Backed Corporation, a Delaware corporation, or
---------
its successor in interest.
"Depository": The Depository Trust Company or a successor appointed by
----------
the Administrator. Any successor to the Depository shall be an organization
registered as a "clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended, and the regulations of the Securities and
Exchange Commission thereunder.
"Depository Agreement": A letter of representations dated
--------------------
(_____________) (as amended and supplemented from time to time) among the
Issuer, the Indenture Trustee, the Administrator and the Depository.
"Depository Participant": A Person for whom the Depository maintains
----------------------
one or more securities accounts on its books and records.
"Eligible Investments": The meaning specified in the Indenture.
--------------------
"ERISA": Employee Retirement Income Security Act of 1974, as amended,
-----
and the rules and regulations promulgated thereunder.
"Event of Default": The meaning specified in the Indenture.
----------------
"Exchange Act": The Securities Exchange Act of 1934, as amended, and
------------
the rules and regulations promulgated thereunder.
"Extraordinary Expenses": (a) All costs, charges and expenses incurred
----------------------
by the Issuer in connection with the issue of the Notes or Certificates or
otherwise relating to the Notes or Certificates that do not constitute
Ordinary Expenses and (b) all Trustee Expenses.
"FHLMC": The Federal Home Loan Mortgage Corporation.
-----
"Final Liquidation Proceeds": The proceeds of the sale or other
--------------------------
liquidation of the Underlying Securities and the Eligible Investments after
the occurrence of an Event of Default.
("Global Certificate": The meaning provided in Section 3.04 of this
------------------
Trust Agreement.)
"Global Note": The meaning provided in Section 4.01 of the Indenture.
-----------
"Grant": Means mortgage, pledge, bargain, sell, warrant, alienate,
-----
remise, release, convey, assign, transfer, create, and grant a lien upon and
a security interest in and right of set-off against, deposit, set over and
confirm pursuant to this Indenture. A Grant of the Collateral or of any
other agreement or instrument shall include all rights, powers and options
(but none of the obligations) of the granting party thereunder, including the
immediate and continuing right to claim for, collect, receive and give
receipt for principal and interest payments in respect of the Underlying
Securities or the Eligible Investments and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
proceedings in the name of the granting party or otherwise, and generally to
do and receive anything that the granting party is or may be entitled to do
or receive thereunder or with respect thereto.
"Indenture": The Trust Indenture dated as of (_____________) among the
---------
Trust, (_____________________) as Indenture Trustee (and the Swap
Counterparty), as it may be amended from time to time.
"Indenture Trustee": (_____________________), in its capacity as
-----------------
indenture trustee or its successor in interest, or any successor trustee
appointed as herein provided.
"Initial Certificate Balance": $(____).
---------------------------
("Initial Certificate Prepayment Date": ______________.)
-----------------------------------
"Initial Owner Trustee Fee": The fees as have been separately agreed
-------------------------
upon before the date hereof between the Depositor and the Owner Trustee.
("Interest Determination Date": ______________.)
---------------------------
"Issuer": (___________) Trust (______), a Delaware business trust.
------
"Lien": Any mortgage, deed of trust, pledge, conveyance, hypothecation,
----
assignment, participation, deposit arrangement, encumbrance, lien (statutory
or other), preference, priority right or interest or other security agreement
or preferential arrangement of any kind or nature whatsoever, including,
without limitation, any conditional sale or other title retention agreement,
any financing lease having substantially the same economic effect as any of
the foregoing and the filing of any financing statement under the UCC (other
than any such financing statement filed for informational purposes only) or
comparable law of any jurisdiction to evidence any of the foregoing.
"Money": The meaning specified in Section 1-201(24) of the UCC.
-----
"Note": Any one of the Class A Notes, each secured by the specified
----
assets of the Trust pursuant to the Indenture and authenticated by the
Indenture Trustee in substantially the form set forth in Exhibit A to the
Indenture.
"Noteholder": The Person in whose name a Note is registered in the Note
----------
Register, except that, solely for the purpose of giving any consent pursuant
to the Indenture, any Note registered in the name of the Depositor or the
Indenture Trustee or any affiliate of either shall be deemed not to be
Outstanding (as defined in the Indenture).
"Note Registrar": The Indenture Trustee, in its capacity as Note
--------------
Registrar.
"Officer's Certificate": A certificate signed by any Authorized Officer
---------------------
of the Issuer and delivered to the Indenture Trustee. Unless otherwise
specified, any reference in this Trust Agreement to an Officer's Certificate
shall be to an Officer's Certificate of any Authorized Officer of the Issuer.
"Opinion of Counsel": A written opinion of counsel, who may be counsel
------------------
for the Issuer, the Depositor, the Owner Trustee or the Indenture Trustee.
"Ordinary Expenses": (i) All costs, charges and expenses incurred by
-----------------
the Issuer in connection with the issue of the Notes and Certificates that
were incurred or were reasonably quantifiable or could reasonably be
anticipated on or before (_____________) and (ii) all customary ongoing
expenses of the Issuer, and shall exclude, without limitation, (a) any
expenses incurred by the Issuer resulting from legal actions against the
Issuer, the Indenture Trustee, the Administrator or the Owner Trustee and (b)
any costs, charges or expenses incurred by the Owner Trustee, the Indenture
Trustee or the Administrator.
"Outstanding": With respect to the Certificates, as of the date of
-----------
determination, all Certificates theretofore executed, authenticated and
delivered under this Trust Agreement except:
(i) Certificates theretofore cancelled by the Certificate Registrar or
delivered to the Owner Trustee for cancellation;
(ii) Certificates in exchange for or in lieu of which other Certificates
have been executed, authenticated and delivered pursuant to this Trust
Agreement unless proof satisfactory to the Owner Trustee is presented that
any such Certificates are held by a holder in due course; and
(iii) solely for the purpose of giving any request, demand,
authorization, direction, notice, consent or other action under the Basic
Documents, any Certificate registered in the name of the Depositor, the Owner
Trustee or any affiliate thereof.
"Outstanding Amount": On any day, the aggregate unpaid principal amount
------------------
of all Notes or Certificates Outstanding on such day, as applicable.
"Owner Trustee": (_______________________) not in its individual
-------------
capacity but solely in its capacity as owner trustee or its successor in
interest, or any successor owner trustee appointed as herein provided.
"Payment Amount": As to any Payment Date with respect to the Notes, the
--------------
amount due and payable pursuant to Section 3.05 of the Indenture.
"Payment Date": The (_____) day of each (_____), (or if any such date
------------
is not a Business Day, the next succeeding Business Day), commencing
(___________) .
"Percentage Interest": As to any Note, the percentage interest in the
-------------------
applicable Payment Amount represented thereby, such percentage interest being
equal to the percentage obtained by dividing the outstanding principal amount
of such Note by the Outstanding Amount of all Notes or as to any Certificate,
the percentage interest represented thereby, such percentage interest being
equal to the percentage obtained through dividing the outstanding principal
amount of such Certificate by the aggregate Outstanding Amount of all
Certificates.
"Person": Any individual, corporation, partnership, limited liability
------
company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Predecessor Certificate": With respect to any particular Certificate,
-----------------------
every previous Certificate evidencing all or a portion of the same debt as
that evidenced by such particular Certificate; and, for the purpose of this
definition, any Certificate authenticated and delivered under Section 3.11 of
the Trust Agreement in lieu of a mutilated, lost, destroyed or stolen
Certificate shall be deemed to evidence the same debt as the mutilated, lost,
destroyed or stolen Certificate.
"Prepayment Determination Date": With respect to any Payment Date on
-----------------------------
which a payment or prepayment of principal on the Certificates is due, the
first Business Day of the month in which such Payment Date occurs.
"Pro Rata Share": With respect to any Certificate, the percentage
--------------
obtained by dividing the outstanding principal amount of such Certificate by
the Outstanding Amount of all of the Certificates.
"Principal Balance": As to any Payment Date and for each Note, the
-----------------
aggregate Denomination of such Notes, reduced by any distributions of
principal thereof.
"Priority of Payments": The meaning specified in the Indenture.
--------------------
"Proceeding": Any suit in equity, action at law or other judicial or
----------
administrative proceeding.
("Purchase Agreement": The Purchase Agreement dated (________) between
------------------
Merrill Lynch, Pierce, Fenner & Smith Incorporated as initial purchaser (the
"Initial Purchaser") and the Issuer.)
"Rating Agency": (_____) and (_____). If no such organization or
-------------
successor is any longer in existence, "Rating Agency" shall be a nationally
recognized statistical rating organization or other comparable Person
designated by the Owner Trustee, notice of which designation shall be given
to the Indenture Trustee, the Owner Trustee, (the Swap Counterparty) and the
Depositor.
"Record Date": With respect to any Payment Date other than the first
-----------
Payment Date, the last Business Day of the month preceding the month of the
related Payment Date and with respect to the first Payment Date, the Closing
Date.
"Registered Holder": The Person in whose name a Certificate is
-----------------
registered in the Certificate Register on the applicable Record Date.
"Responsible Officer": With respect to the Indenture Trustee, the Owner
-------------------
Trustee or the Administrator, the Chairman or Vice Chairman of the Board of
Directors, the Chairman or Vice Chairman of the Executive or Standing Com-
mittee of the Committee on Trust Matters, any Vice President (Executive,
Senior, Regular, Assistant or other), any Assistant Secretary, any Assistant
Treasurer, any Trust Officer or any Banking Officer of such entity.
("Rule 144A Information": Such information as is specified pursuant to
---------------------
Rule 144A(d)(4) under the Securities Act (or any successor provision
thereto).)
"Sale Procedures": The meaning specified in Section 5.16 of the
---------------
Indenture.
"Scheduled Final Payment Date": (_______).
----------------------------
"Securities": The Notes and the Certificates.
----------
"Securities Act": The Securities Act of 1933, as amended, and the rules
--------------
and regulations promulgated thereunder.
"Securityholder": Any Holder of the Notes and Certificates.
--------------
"Single Certificate": A Certificate in the Denomination of $1,000.
------------------
"Single Note": A Note in the Denomination of $1,000.
-----------
("Swap Agreement": The master agreement dated as of (_____), including
--------------
any schedules attached thereto and confirmation letters executed in
connection therewith, between the Swap Counterparty and the Trust).
("Swap Counterparty": _______________)
-----------------
("Swap Default": An Event of Default under and as defined in the Swap
------------
Agreement.)
("Swap Early Termination": The designation of an "Early Termination
----------------------
Date" (as defined in the Swap Agreement).)
("Swap Guarantee": The Swap Guarantee dated as of (_____) delivered by
--------------
the Swap Guarantor).
("Swap Guarantor": _____________________).
--------------
("Swap Termination Event": A Termination Event under and as defined in
----------------------
the Swap Agreement.)
"Trust": (___________) Trust (______); the trust created by this Trust
-----
Agreement and by the filing with the Secretary of State of the State of
Delaware a Certificate of Trust of the Trust.
"Trust Agreement": The agreement entered into between the Owner Trustee
---------------
and the Depositor, dated as of (______________) (as amended and restated on
(_____________) by this amended and restated trust agreement).
"Trust Estate": The meaning specified in the Granting Clause of the
------------
Indenture.
"Trustee Expenses": The meaning specified in the Indenture.
----------------
"UCC": The Uniform Commercial Code as in effect in the State of New
---
York as of the date hereof.
"Underlying Agreement": (______________) pursuant to which the
--------------------
Underlying Securities were originally issued.
"Underlying Securities": The credit-card asset-backed certificates or
---------------------
notes transferred to the Trust by the Depositor, each of which is identified
on the Underlying Securities Schedule.
"Underlying Securities Distribution Date Statement": The statement
-------------------------------------------------
provided by the paying agent for the Underlying Securities on each
distribution date for the Underlying Securities pursuant to the Underlying
Agreement reporting certain information with respect to the Underlying
Securities, which report may be obtained by the Indenture Trustee, as holder
of the Underlying Securities, upon request.
"Underlying Securities Schedule": The schedule attached as Exhibit C
------------------------------
hereto, such schedule setting forth certain information as to each of the
Underlying Securities, including (i) the principal balance at the Closing
Date, (ii) the pass-through or interest rate payable in respect of the
Underlying Securities and (iii) the maturity date of the Underlying
Securities.
"Voting Interests": The meaning provided in Section 11.03 of this Trust
----------------
Agreement.
ARTICLE II
Organization
------------
Section 2.01. Name. The Trust created hereby shall be known as
----
"(___________) Trust (______)," in which name the Owner Trustee may conduct
the business of the Trust, make and execute contracts and other instruments
on behalf of the Trust and sue and be sued.
Section 2.02. Office. The office of the Trust shall be in care of the
------
Owner Trustee at the Corporate Trust Office or at such other address in
Delaware as the Owner Trustee may designate by written notice to the
Certificateholders, (the Swap Counterparty) and the Depositor.
Section 2.03. Purposes and Powers. The purpose of the Trust is to
-------------------
engage in the following activities:
(i) to issue the Notes pursuant to the Indenture and the
Certificates pursuant to this Trust Agreement, to sell the Notes and the
Certificates and to make payments on the Notes and distributions on the
Certificates;
(ii) with the proceeds of the sale of the Notes and the
Certificates, to purchase the Underlying Securities; (to enter into the
Swap Agreement), and to pay the organizational, start-up and
transactional expenses of the Trust;
(iii) to assign, grant, transfer, pledge, mortgage and convey the
Trust Estate pursuant to the Indenture and to hold, manage and
distribute to the Certificateholders any portion of the Trust Estate
released from the Lien of, and remitted to the Trust pursuant to, the
Indenture;
(iv) to enter into and perform its obligations under the Basic
Documents to which it is to be a party;
(v) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith; and
(vi) subject to compliance with the Basic Documents, to engage in
such other activities as may be required in connection with conservation
of the Trust Estate, (the making of payments to the Swap Counterparty)
and the making of distributions to the Certificateholders and the
Noteholders.
The Trust is hereby authorized to engage in the foregoing activities. The
Trust shall not engage in any activity other than in connection with the
foregoing or other than as required or authorized by the terms of this Trust
Agreement or the other Basic Documents.
Section 2.04. Appointment of Owner Trustee. The Depositor hereby
----------------------------
appoints the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and duties set forth herein.
Section 2.05. Initial Capital Contribution of Trust Assets. The
--------------------------------------------
Depositor has sold, assigned, transferred, conveyed and set over to the
Trust, as of (___________), the sum of $1. The Owner Trustee hereby
acknowledges on behalf of the Trust, receipt in trust from the Depositor, as
of the date hereof, of the foregoing contribution, which shall constitute the
initial assets of the Trust and shall be deposited in the Collection Account.
Section 2.06. Declaration of Trust. The Owner Trustee hereby declares
--------------------
that it will hold the Trust Estate on behalf of the Trust in trust upon and
subject to the conditions set forth herein for the use and benefit of the
Certificateholders, subject to the obligations of the Trust under the Basic
Documents. It is the intention of the parties hereto that the Trust
constitute a business trust under the Business Trust Statute and that this
Trust Agreement constitute the governing instrument of such business trust.
(It is the intention of the parties hereto that, solely for income and
franchise tax purposes, the Trust shall be treated as a security arrangement
for the issuance of debt.) The parties agree that, unless otherwise required
by appropriate tax authorities, the Trust will file or cause to be filed
annual or other necessary returns, reports and other forms consistent with
the characterization of the Trust as a security arrangement for the issuance
of debt for such tax purposes. Effective as of the date hereof, the Owner
Trustee shall have all rights, powers and duties set forth herein and in the
Business Trust Statute with respect to accomplishing the purposes of the
Trust. The Owner Trustee is hereby authorized to file with the Secretary of
State of the State of Delaware a Certificate of Trust of the Trust.
Section 2.07. Limitation of Liability. The Certificateholders shall
-----------------------
be entitled to the same limitation of personal liability extended to stock-
holders of private corporations for profit organized under the General
Corporation Law of the State of Delaware.
Section 2.08. Title to Trust Property. Legal title to the Trust Estate
-----------------------
shall be vested at all times in the Trust as a separate legal entity except
where applicable law in any jurisdiction requires title to any part of the
Trust Estate to be vested in a trustee or trustees, in which case title shall
be deemed to be vested in the Owner Trustee, a co-trustee and/or a separate
trustee, as the case may be.
Section 2.09. Situs of Trust. The Trust will be located and
--------------
administered in the State of Delaware. All bank accounts maintained by the
Owner Trustee on behalf of the Trust shall be located in the State of
Delaware or the State of New York. The Trust shall not have any employees in
any state other than Delaware; provided, however, that nothing herein shall
restrict or prohibit the Owner Trustee from having employees within or
without the State of Delaware. Payments will be received by the Trust only
in Delaware or New York, and payments will be made by the Trust only from
Delaware or New York. The only office of the Trust will be at the Corporate
Trust Office in Delaware.
Section 2.10. Representations and Warranties and Covenants of the
---------------------------------------------------
Depositor. (a) The Depositor hereby represents and warrants to the Owner
- ----------
Trustee that:
(i) the Depositor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware;
(ii) the execution and delivery of the Trust Agreement by the
Depositor and its performance of and compliance with the terms thereof
will not violate the Depositor's articles of incorporation or by-laws or
constitute a default (or an event which, with notice or lapse of time,
or both, would constitute a default) under, or result in the breach or
acceleration of, any material contract, agreement or other instrument to
which the Depositor is a party or by which the Depositor or any of its
assets is bound;
(iii) to the Depositor's knowledge after due inquiry, the
Depositor has the full power and authority to enter into and consummate
all transactions contemplated by the Trust Agreement, has duly
authorized the execution, delivery and performance of the Trust
Agreement and has duly executed and delivered the Trust Agreement; and
the Trust Agreement, upon its execution and delivery by the Depositor
and assuming due authorization, execution and delivery by the Trustee,
will constitute a valid, legal and binding obligation of the Depositor,
enforceable against it in accordance with the terms thereof, except as
such enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other laws relating to or
affecting the rights of creditors generally, and by general equity
principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law);
(iv) to the Depositor's knowledge after due inquiry, the Depositor
is not in violation, and the execution and delivery of the Trust
Agreement by the Depositor and its performance and compliance with the
terms of the Trust Agreement will not constitute a violation, of any
order or decree of any court or any order or regulation of any federal,
state, municipal or governmental agency having jurisdiction over the
Depositor or its properties, which violation would reasonably be
expected to have a material and adverse effect on the duties and
obligations of the Depositor under the Trust Agreement; and
(v) there are not any existing liens, charges, security interests
or other encumbrances on the Underlying Securities immediately prior to
the time of transfer except those created by this Trust Agreement;
(vi) immediately prior to the conveyance of the Underlying
Securities pursuant to Section 3.01, the Depositor had good title
thereto and was the sole owner thereof;
(vii) the information contained in the Underlying Securities
Schedule is true and correct in all material respects.
(b) The Depositor hereby covenants that:
(i) Except for the transfer hereunder, the Depositor will not
sell, pledge, assign or transfer to any other Person, or grant, create,
incur, assume or suffer to exist any Lien on any of the Underlying
Securities or any interest therein; the Depositor will notify the Owner
Trustee (and the Swap Counterparty) of the existence of any Lien on any
of the Underlying Securities immediately upon discovery thereof; and the
Depositor will defend the right, title and interest of the Owner Trustee
in, to and under the Underlying Securities against all claims of third
parties claiming through or under the Depositor.
(ii) The Depositor will not engage in any activity that would
result in a reduction or withdrawal of the rating of the Certificates or
Notes by the Rating Agencies.
ARTICLE III
Conveyance of the Underlying Securities;
----------------------------------------
Certificates; Appointment of Administrator
------------------------------------------
Section 3.01. Conveyance of the Underlying Securities. The Depositor,
---------------------------------------
upon the execution and delivery of this Trust Agreement, does hereby
transfer, convey, sell and assign to the Trust, without recourse, all the
right, title and interest of the Depositor in and to the Underlying
Securities including all distributions thereon, payable on and after the
Closing Date and all other assets included or to be included in the Trust for
the benefit of Certificateholders.
The parties hereto intend that the transaction set forth herein be a
sale by the Depositor to the Trust of all of the Depositor's right, title and
interest in and to the Underlying Securities and the other property described
above. In the event that the transaction set forth herein is not deemed to
be a sale, the Depositor hereby grants to the Trust a security interest in
all of the Depositor's right, title and interest in, to and under the
Underlying Securities, all distributions thereon and all proceeds thereof;
and this Trust Agreement shall constitute a security agreement under
applicable law.
Section 3.02. Initial Ownership. Upon the formation of the Trust by
-----------------
the contribution by the Depositor pursuant to Section 2.05 and until the
transfer of the Certificates to the purchaser thereof, the Depositor shall be
the sole beneficiary of the Trust.
Section 3.03. The Certificates. (a) The Class (B-1) Certificates (and
----------------
the Class B-2 Certificates) shall be issued substantially in the form set
forth in Exhibit (A-1 and A-2, respectively) in minimum denominations of
$(_______) and in integral multiples of $(_____) in excess thereof. The
Certificates shall be executed on behalf of the Trust by manual or facsimile
signature of an authorized officer of the Owner Trustee. Certificates
bearing the manual or facsimile signatures of individuals who were, at the
time when such signatures shall have been affixed, authorized to sign on
behalf of the Trust, shall be validly issued and entitled to the benefit of
this Trust Agreement, notwithstanding that such individuals or any of them
shall have ceased to be so authorized prior to the authentication and
delivery of such Certificates or did not hold such offices at the date of
authentication and delivery of such Certificates. A Person shall become a
Certificateholder and shall be entitled to the rights and subject to the
obligations of a Certificateholder hereunder upon such Person's acceptance of
a Certificate duly registered in such Person's name, pursuant to Section
3.05.
A transferee of a Certificate shall become a Certificateholder and shall
be entitled to the rights and subject to the obligations of a
Certificateholder hereunder upon such transferee's acceptance of a
Certificate duly registered in such transferee's name pursuant to Section
3.05.
(b) The Class (B-1) Certificates (and the Class B-2 Certificates) shall
accrue interest at the Class (B-1) Certificate Accrual Rate (and the Class B-
2 Certificate Accrual Rate, respectively). Such amounts shall be due and
payable on each Payment Date. Interest will accrue with respect to each
Payment Date during the Certificate Interest Accrual Period ending on the day
next preceding such Payment Date. Interest on the Certificates shall be
payable solely from amounts in the Collection Account, (including amounts
received pursuant to the Swap Agreement), and shall be subject to the
Priority of Payments. No interest will be paid on overdue interest.
Beginning on (_______________), the principal payable on the Certificates as
described in Section 3.03(c) on a Payment Date will be calculated by the
Administrator (based on information provided by the Calculation Agent), and
will be paid to the Certificateholders in accordance with the Percentage
Interest represented by each such Certificate. Any installment of interest
or principal, if any, payable on any Certificate that is punctually paid or
duly provided for by the Issuer on the applicable Payment Date shall be paid
to each Certificateholder of record on the preceding Record Date, by wire
transfer to an account specified in writing by such Certificateholder
reasonably satisfactory to the Administrator as of the preceding Record Date
or by check to such Certificateholder mailed to such Holder's address as it
appears in the Certificate Register if no such instructions have been
delivered to the Administrator.
(If any amount of interest which would otherwise be payable on the
Underlying Securities on any payment date for such Underlying Securities is
deferred under the terms and conditions thereof, interest otherwise due in
respect of the Certificates on the following Payment Date will be deferred in
the same proportion as the proportion that the deferred interest on such
Underlying Securities represents of the aggregate interest otherwise due on
the Underlying Securities on the most recent payment date for the Underlying
Securities preceding such Payment Date (as determined by the Calculation
Agent (in accordance with the Swap Agreement)). Any such deferred interest
on the Certificates will become payable on the Payment Date following the
date when the related deferred interest on the Underlying Securities is
received by the Issuer. Certificateholders will not be entitled to any
additional payment in respect of any such delay.)
(c) Principal due on the Certificates shall be payable solely from
amounts in the Collection Account, including amounts, if any, received
pursuant to (the Swap Agreement), and shall be subject to the Priority of
Payments. Beginning on (_____) and on each Payment Date thereafter,
principal payable on the Class (B-1) Certificates (and the Class B-2
Certificates) on any Payment Date will be equal to (___________________), as
determined by the Administrator (based on information provided by the
Calculation Agent.)
(d) (Reserved)
(e) (Reserved)
(f) (At such time as the Issuer has incurred Extraordinary Expenses in
an aggregate amount at least equal to $(______), the Indenture Trustee will
give notice to the Noteholders and the Administrator will give notice to the
Certificateholders that such expenses have been incurred.)
(g) The prepayment price for any payment of principal on the
Certificates will be (___)% of the principal amount prepaid. No notice of
prepayment will be given to Holders of the Certificates.
(h) (The Issuer has no optional prepayment rights with respect to the
Certificates.)
(i) The principal, if any, of each Certificate shall be due and payable
in full on the Scheduled Final Payment Date for such Certificate as provided
in the form of Certificate set forth in Exhibit A, to the extent funds are
available, in accordance with the Priority of Payments. Notwithstanding the
foregoing, if the outstanding principal amount of the Notes has become
immediately due and payable in the manner provided in the Indenture, upon the
occurrence of an Event of Default, the principal of the Certificates will be
distributed out of the net proceeds realized from the sale of the Underlying
Securities and Eligible Investments, if any, to the extent available after
the payment of all other obligations of the Issuer in accordance with the
Priority of Payments. All principal payments on Certificates shall be made
to the Certificateholders entitled thereto in accordance with the Percentage
Interests represented by such Certificates. The Administrator shall notify
the Person in whose name a Certificate is registered at the close of business
on the Record Date preceding the Scheduled Final Payment Date or other
earlier final Payment Date. Such notice shall be mailed no later than five
Business Days prior to such Scheduled Final Payment Date or other final
Payment Date and shall specify that payment of the principal amount and any
interest due with respect to such Certificate at the Scheduled Final Payment
Date or other final Payment Date, but in no case later than
(________________) will be payable only upon presentation and surrender of
such Certificate and shall specify the place where such Certificate may be
presented and surrendered for such final payment.
(Section 3.04. The Global Certificates. (This section to be revised
-----------------------
depending on tax status of trust.) The aggregate Denominations of all
Certificates issued as of the Closing Date shall be $(_________). Beneficial
Owners will hold interests in the Global Certificates through the book-entry
facilities of the Depository in minimum Denominations of $(_________) and
integral multiples of $(_________) in excess thereof.
The Certificates shall be issued initially in the form of one or more
permanent Global Certificates in definitive, fully registered form without
interest coupons with the applicable legend set forth in Exhibit A hereto,
respectively, added to the form of such Certificates (each, a "Global
Certificate"), which shall be deposited on behalf of the subscribers for such
Certificates represented thereby with the Owner Trustee as custodian for the
Depository and registered in the name of a nominee of the Depository, duly
executed by the Owner Trustee and authenticated by the Owner Trustee as
hereinafter provided. The aggregate principal amount of the Global
Certificates may from time to time be increased or decreased by adjustments
made on the records of the Owner Trustee or the Depository or its nominee, as
the case may be, as hereinafter provided.
The Owner Trustee may for all purposes (including the making of payments
due on the Global Certificates) deal with the Depository as the authorized
representative of the Beneficial Owners with respect to the Global
Certificates for the purposes of exercising the rights of Certificateholders
hereunder. Except as provided in the next succeeding paragraph of this
Section 3.04, the rights of Beneficial Owners with respect to the Global
Certificates shall be limited to those established by law and agreements
between such Beneficial Owners and the Depository and Depository
Participants. Except as provided in Section 3.07, Beneficial Owners shall
not be entitled to definitive notes for the Global Certificates as to which
they are the Beneficial Owners. Requests and directions from, and votes of,
the Depository as Certificateholder shall not be deemed inconsistent if they
are made with respect to different Beneficial Owners. The Owner Trustee may
establish a reasonable record date in connection with solicitations of
consents from or voting by Certificateholders and give notice to the
Depository of such record date. Without the consent of the Issuer and the
Owner Trustee, no Global Certificate may be transferred by the Depository
except to a successor Depository that agrees to hold such Global Certificate
for the account of the Beneficial Owners.
In the event the Depository Trust Company resigns or is removed as
Depository, the Administrator may appoint a successor Depository. If no
successor Depository has been appointed within 30 days of the effective date
of the Depository's resignation or removal, each Beneficial Owner shall be
entitled to certificates representing the Global Certificate it beneficially
owns in the manner prescribed in Section 3.07.)
(Section 3.05. Book-Entry Certificates. This section shall apply only
-----------------------
to Global Certificates deposited with or on behalf of the Depository.
The Owner Trustee shall execute, on behalf of the Issuer, and the Owner
Trustee shall authenticate and deliver initially one or more Global
Certificates that (i) shall be registered in the name of the nominee of the
Depository for such Global Certificates and (ii) shall be delivered by the
Owner Trustee to such Depository or pursuant to such Depository's
instructions or held by the Owner Trustee's agent as custodian for the
Depository. Such Global Certificates shall initially be registered on the
Certificate Register in the name of Cede & Co., the nominee of the initial
Depository, and no Beneficial Owner will receive a Definitive Certificate
representing such Beneficial Owner's interest in such Certificate, except as
provided in Section 3.07. Unless and until definitive, fully registered
Certificates (the "Definitive Certificates") have been issued to Beneficial
Owners pursuant to Section 3.07:
(i) the provisions of this Section 3.05 shall be in full force and
effect;
(ii) the Certificate Registrar and the Owner Trustee shall be
entitled to deal with the Depository for all purposes of this Trust
Agreement (including the payment of principal of and interest on the
Certificates and the giving of instructions or directions hereunder) as
the sole holder of the Global Certificates, and shall have no obligation
to the applicable Certificate Owners;
(iii) to the extent that the provisions of this Section 3.05
conflict with any other provisions of this Trust Agreement, the
provisions of this Section 3.05 shall control;
(iv) the rights of Beneficial Owners shall be exercised only
through the Depository and shall be limited to those established by law
and agreements between such Certificate Owners and the Depository and/or
the Depository Participants pursuant to the Depository Agreement.
Unless and until Definitive Certificates are issued pursuant to
Section 3.07 the initial Depository will make book-entry transfers among
the Depository Participants and receive and transmit payments of
principal of and interest on the Global Certificates to such Depository
Participants; and
(v) whenever this Trust Agreement requires or permits actions to
be taken based upon instructions or directions of Holders of Global
Certificates evidencing a specified percentage of the Outstanding Amount
of the Certificates, the Depository shall be deemed to represent such
percentage only to the extent that it has received instructions to such
effect from Beneficial Owners and/or Depository Participants owning or
representing, respectively, such required percentage of the beneficial
interest in the Global Certificates and has delivered such instructions
to the Owner Trustee.)
Section 3.06. (Notices to Depository. Whenever a notice or other
---------------------
communication to the Certificateholders is required under this Trust
Agreement, unless and until Definitive Certificates shall have been issued to
Beneficial Owners pursuant to Section 3.07, the Owner Trustee shall give all
such notices and communications specified herein to be given to Holders of
the Global Certificates to the Depository, and shall have no obligation to
the Beneficial Owners.)
Section 3.07. (Definitive Certificates. If (i) the Administrator
-----------------------
advises the Indenture Trustee and the Owner Trustee in writing that the
Depository is no longer willing or able to properly discharge its
responsibilities with respect to the Securities, and the Administrator is
unable to locate a qualified successor or (ii) the Administrator, at its
option, elects to terminate the book-entry system of registration through the
Depository then the Depository will be expected to notify all Beneficial
Owners and the Owner Trustee of the occurrence of any such event and of the
availability of Definitive Notes and Definitive Certificates to Beneficial
Owners requesting the same. Upon surrender to the Owner Trustee of the
typewritten Certificates representing the Book-Entry Certificates by the
Depository, accompanied by re-registration instructions, the Owner Trustee,
on behalf of the Issuer, shall execute and shall authenticate the Definitive
Notes and Definitive Certificates in accordance with the instructions of the
Depository, and thereafter the Indenture Trustee will recognize the holders
of such Definitive Notes as Noteholders under the Indenture and the Owner
Trustee will recognize the holders of such Definitive Certificates as
Certificateholders under the Trust Agreement. None of the Issuer, the
Certificate Registrar or the Owner Trustee shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates, the Owner Trustee shall recognize the Holders of the Definitive
Certificates as Certificateholders.)
Section 3.08. Authentication of Certificates. Concurrently with the
------------------------------
initial sale of the Underlying Securities to the Trust, the Owner Trustee
shall cause the Certificates in an aggregate principal amount equal to the
Initial Certificate Balance to be executed on behalf of the Trust,
authenticated and delivered to or upon the written order of the Depositor,
signed by its chairman of the board, its president, any vice president,
secretary or any assistant treasurer, without further corporate action by the
Depositor, in authorized denominations. No Certificate shall entitle its
holder to any benefit under this Trust Agreement or be valid for any purpose
unless there shall appear on such Certificate a certificate of authentication
substantially in the form set forth in Exhibit A, executed by the Owner
Trustee or the Administrator, as the Trust's authenticating agent, by manual
signature; such authentication shall constitute conclusive evidence that such
Certificate shall have been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication.
Section 3.09. Registration of Transfer and Exchange of Certificates.
-----------------------------------------------------
The Certificate Registrar shall keep or cause to be kept, at the office or
agency maintained pursuant to Section 3.14, a Certificate Register (the
"Certificate Register") in which, subject to such reasonable regulations as
it may prescribe, the Trust shall provide for the registration of
Certificates and of transfers and exchanges of Certificates as herein
provided. The Administrator shall be the initial Certificate Registrar.
Upon surrender for registration of transfer of any Certificate at the
office or agency maintained pursuant to Section 3.14, the Owner Trustee on
behalf of the Trust shall execute, authenticate and deliver in the name of
the designated transferee or transferees, one or more new Certificates in
authorized denominations of a like aggregate amount dated the date of
authentication by the Owner Trustee or any authenticating agent. At the
option of a Holder, Certificates may be exchanged for other Certificates of
authorized denominations of a like aggregate amount upon surrender of the
Certificates to be exchanged at the office or agency maintained pursuant to
Section 3.14.
Every Certificate presented or surrendered for registration of transfer
or exchange shall be accompanied by a written instrument of transfer in form
satisfactory to the Owner Trustee and the Certificate Registrar duly executed
by the Holder or such Holder's attorney duly authorized in writing. Each
Certificate surrendered for registration of transfer or exchange shall be
cancelled and subsequently disposed of by the Owner Trustee in accordance
with its customary practice.
No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Owner Trustee or the Certificate Registrar
may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer or exchange of
Certificates.
The preceding provisions of this Section notwithstanding, the Owner
Trustee shall not make, and the Certificate Registrar shall not register,
transfers or exchanges of, Certificates for a period of 15 days preceding the
due date for any payment with respect to the Certificates.
(Each purchaser of the Certificates or a beneficial interest in a Global
Certificate will be deemed to have represented and agreed as follows (terms
used in this paragraph that are defined in Rule 144A under the Securities Act
are used herein as defined therein):
(a) The purchaser (1) is a qualified institutional buyer, (2) is
aware that the sale of the Certificates to it is being made in reliance
on the exemption from registration provided by Rule 144A under the
Securities Act and (3) is acquiring the Certificates for its own account
or for one or more accounts, each of which is a qualified institutional
buyer, and as to each of which the purchaser exercises sole investment
discretion. The purchaser has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits
and risks of its investment in the Certificates, and the purchaser, and
any accounts for which it is acting, are each able to bear the economic
risk of the purchaser's or its investment.
(b) The purchaser understands that the Certificates are being
offered only in a transaction not involving any public offering in the
United States within the meaning of the Securities Act, the Certificates
have not been and will not be registered under the Securities Act, and,
if in the future the purchaser decides to offer, resell, pledge or
otherwise transfer the Certificates, such Certificates may be offered,
resold, pledged or otherwise transferred only in accordance with the
applicable legend on such Certificates. The purchaser acknowledges that
no representation is made by the Indenture Trustee, the Owner Trustee,
the Administrator, (the Swap Counterparty, the Swap Guarantor), the
Initial Purchaser or the Depositor, as the case may be, as to the
availability of any exemption under the Securities Act or any state
securities laws for resale of the Certificates.
(c) The purchaser is not purchasing the Certificates with a view
to the resale, distribution or other disposition thereof in violation of
the Securities Act. The purchaser understands that an investment in the
Certificates involves certain risks, including the risk of loss of all
or a substantial part of its investment under certain circumstances.
The purchaser has had access to such financial and other information
concerning the Trust and the Certificates as it deemed necessary or
appropriate in order to make an informed investment decision with
respect to its purchase of the Certificates.
(d) In connection with the purchase of the Certificates: (A) none
of the Owner Trustee, the Indenture Trustee, the Administrator, (the
Swap Counterparty, the Swap Guarantor), the Initial Purchaser, or the
Depositor is acting as a fiduciary or financial or investment adviser
for the purchaser; (B) the purchaser is not relying (for purposes of
making any investment decision or otherwise) upon any advice, counsel or
representations (whether written or oral) of the Owner Trustee, the
Indenture Trustee, the Administrator, (the Swap Counterparty, the Swap
Guarantor), or the Depositor other than in a current offering memorandum
for such Certificates and any representations expressly set forth in a
written agreement with such party; (C) none of the Owner Trustee, the
Indenture Trustee, the Administrator, (the Swap Counterparty, the Swap
Guarantor), the Initial Purchaser or the Depositor have given to the
purchaser (directly or indirectly through any other person) any
assurance, guarantee, or representation whatsoever as to the expected or
projected success, profitability, return, performance, result, effect,
consequence, or benefit (including legal, regulatory, tax, financial,
accounting, or otherwise) of the Trust Agreement, the Indenture, (the
Swap Agreement) or documentation for the Certificates; and (D) the
purchaser has consulted with its own legal, regulatory, tax, business,
investment, financial, and accounting advisers to the extent it has
deemed necessary, and it has made its own investment decisions
(including decisions regarding the suitability of any transaction
pursuant to the Trust Agreement, (the Swap Agreement) and Indenture)
based upon its own judgment and upon any advice from such advisers as it
has deemed necessary and not upon any view expressed by the Owner
Trustee, the Administrator, (the Swap Counterparty, the Swap Guarantor),
the Indenture Trustee, the Initial Purchaser or the Depositor.
(e) The purchaser understands that the Certificates will bear the
applicable legend set forth in exhibits to the Trust Agreement. Before
any interest in a Certificate may be offered, resold, pledged or
otherwise transferred, the transferee will be required to provide the
Owner Trustee with a written certification as to compliance with the
transfer restrictions.
(f) The purchaser will not, at any time, offer to buy or offer to
sell the Certificates by any form of general solicitation or
advertising, including, but not limited to, any advertisement, article,
notice or other communication published in any newspaper, magazine or
similar medium or broadcast over television or radio or seminar or
meeting whose attendees have been invited by general solicitation or
advertising.
(g) The purchaser is a United States person within the meaning of
Section 7701 (a) (30) of the Internal Revenue Code of 1986, as amended.
The purchaser understands and agrees that any purported transfer of the
certificates to a Holder that does not comply with the requirements of
this clause (h) shall be null and void ab initio.
(h) The purchaser is not (A) an "employee benefit plan" (as
defined in Section 3(3) of ERISA) that is subject to the fiduciary
responsibility provisions of ERISA, (B) a "plan" that is subject to
Section 4975 of the Code, (C) a "governmental plan" (as defined in
Section 3(32) of ERISA) that is subject to any federal, State or local
law which is substantially similar to the provisions of Section 406 of
ERISA or Section 4975 of the Code (the persons or entities described in
clauses (A), (B), and (C) being referred to herein as "Benefit Plans")
or (D) any person or entity that is using, for purposes of the fiduciary
responsibility provisions of ERISA or Section 4975 of the Code, the
assets of any Benefit Plan to purchase or hold its interest in any
Securities (the person and entities described in this clause (D),
together with Benefit Plans, being referred to as "Benefit Plan
Investors"). The purchaser, and any fiduciary of the purchaser causing
the purchaser to acquire the Securities, agrees to indemnify and hold
harmless the Trust, the Owner Trustee, the Indenture Trustee, the
Administrator, the Depositor, (the Swap Counterparty, the Swap
Guarantor), the Initial Purchaser and the Depositor and their respective
affiliates from any cost, damage or loss incurred by them as a result of
the purchaser being or being deemed to be a Benefit Plan Investor.
(i) If the Certificates purchased by any Person that is a
partnership, grantor trust or S Corporation for federal income tax
purposes comprise more than one-half of the assets of such Person
(including beneficial owners owning such Person through a partnership,
grantor trust or S Corporation), that the number of beneficial owners of
such Person does not and will not exceed the principal amount of the
Certificates owned by such Person divided by $100,000 and income from
such Certificates will be allocated pro rata to beneficial owners of
such Person.)
Section 3.10. (Reporting. At any time when the Trust is not subject
----------
to Section 13 or 15(d) of the Exchange Act and is not exempt from reporting
pursuant to Rule 12g3-2(b) under the Exchange Act, upon the request of a
holder or beneficial owner of a Note or a Certificate, the Depositor shall
promptly furnish or cause to be furnished Rule 144A Information to such
holder or beneficial owner and to any prospective purchaser of such Note or
Certificate designated by such holder or beneficial owner, as the case may
be, in order to permit compliance by such holder or beneficial owner with
Rule 144A under the Securities Act in connection with the resale of such Note
or Certificate by such holder or beneficial owner.)
Section 3.11. Mutilated, Destroyed, Lost or Stolen Certificates. If
-------------------------------------------------
(a) any mutilated Certificate shall be surrendered to the Certificate
Registrar, or if the Certificate Registrar shall receive evidence to its
satisfaction of the destruction, loss or theft of any Certificate and
(b) there shall be delivered to the Certificate Registrar and the Owner
Trustee such security or indemnity as may be required by them to save each of
them harmless, then in the absence of notice that such Certificate has been
acquired by a bona fide purchaser, the Owner Trustee on behalf of the Trust
shall execute and the Owner Trustee or the Administrator, as the Owner
Trustee's authenticating agent, shall authenticate and deliver, in exchange
for or in lieu of any such mutilated, destroyed, lost or stolen Certificate,
a new Certificate of like tenor and denomination. In connection with the
issuance of any new Certificate under this Section 3.11, the Owner Trustee or
the Certificate Registrar may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
therewith. Any duplicate Certificate issued pursuant to this Section 3.11
shall constitute conclusive evidence of ownership in the Trust, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
Section 3.12. Persons Deemed Certificateholders. Prior to due
---------------------------------
presentation of a Certificate for registration of transfer, the Owner
Trustee, the Certificate Registrar or any Administrator shall treat the
Person in whose name any Certificate is registered in the Certificate
Register as the owner of such Certificate for the purpose of receiving
distributions pursuant to Section 5.02 and for all other purposes whatsoever,
and none of the Owner Trustee, the Certificate Registrar or any Administrator
shall be bound by any notice to the contrary.
Section 3.13. Access to List of Certificateholders' Names and
-----------------------------------------------
Addresses. The Owner Trustee shall furnish or cause to be furnished to the
- ---------
Depositor, within 15 days after receipt by the Owner Trustee of a written
request therefor from the Depositor, a list, in such form as the Depositor
may reasonably require, of the names and addresses of the Certificateholders
as of the most recent Record Date. If three or more Certificateholders or
one or more Holders of Certificates evidencing not less than 25% of the
outstanding principal of the Certificates apply in writing to the Owner
Trustee, and such application states that the applicants desire to
communicate with other Certificateholders with respect to their rights under
this Trust Agreement or under the Certificates and such application is
accompanied by a copy of the communication that such applicants propose to
transmit, then the Owner Trustee shall, within five Business Days after the
receipt of such application, afford such applicants access during normal
business hours to the current list of Certificateholders. Each Holder, by
receiving and holding a Certificate, shall be deemed to have agreed not to
hold any of the Depositor, the Certificate Registrar or the Owner Trustee
accountable by reason of the disclosure of its name and address, regardless
of the source from which such information was derived.
Section 3.14. Maintenance of Office or Agency. The Issuer shall
-------------------------------
maintain in the City of New York, an office or offices or agency or agencies
where Certificates may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Owner Trustee in
respect of the Certificates and the Basic Documents may be served. The Trust
initially designates the office of (__________________) its office for such
purposes. The Owner Trustee shall give prompt written notice to the
Depositor and to the Certificateholders of any change in the location of the
Certificate Register or any such office or agency.
Section 3.15. Appointment of Administrator. The Administrator shall
----------------------------
undertake the obligations of the Trust, pursuant to the Administration
Agreement and shall make distributions to Certificateholders from the amounts
received by the Administrator from the Indenture Trustee in accordance with
the Priority of Payments pursuant to Section 5.02 and shall report the
amounts of such distributions to the Owner Trustee. The Administrator
initially shall be (_____________________) and shall be designated pursuant
to the Administration Agreement and will perform such duties as are set forth
therein. Any reference in this Trust Agreement to the Administrator shall
include any co-paying agent unless the context requires otherwise.
ARTICLE IV
Actions by Owner Trustee
------------------------
Section 4.01. Prior Notice to Certificateholders with Respect to
--------------------------------------------------
Certain Matters. With respect to the following matters and subject to
- ---------------
Section 4.05, the Owner Trustee shall not take action unless at least 30 days
before the taking of such action, the Owner Trustee shall have notified the
Certificateholders in writing of the proposed action and the Certificate-
holders shall not have notified the Owner Trustee in writing prior to the
30th day after such notice is given that such Certificateholders have
withheld consent or provided alternative direction:
(a) the initiation of any claim or lawsuit by the Trust and the
compromise of any action, claim or lawsuit brought by or against the Trust;
(b) the election by the Trust to file an amendment to the Certificate
of Trust (unless such amendment is required to be filed under the Business
Trust Statute);
(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;
(d) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is not required and such
amendment materially adversely affects the interest of the
Certificateholders; or
(e) the appointment pursuant to the Indenture of a successor Note
Registrar, Administrator or Indenture Trustee or pursuant to this Trust
Agreement of a successor Certificate Registrar, or the consent to the
assignment by the Note Registrar, Administrator or Indenture Trustee or
Certificate Registrar of its obligations under the Indenture or this Trust
Agreement, as applicable.
Section 4.02. Action by Certificateholders with Respect to Certain
----------------------------------------------------
Matters. The Owner Trustee shall not have the power, except upon the
- -------
direction of the Certificateholders, to (a) remove the Administrator under
the Administration Agreement pursuant to Section 7(c) and 7(d) thereof,
(b) appoint a successor Administrator pursuant to Section 7(e) of the
Administration Agreement, or (c) except as expressly provided in the Basic
Documents, sell the Underlying Securities or Eligible Investments after the
termination of the Indenture. The Owner Trustee shall take the actions
referred to in the preceding sentence only upon written instructions signed
by the Certificateholders.
Section 4.03. Action by Certificateholders and the Owner Trustee with
-------------------------------------------------------
Respect to Bankruptcy. The Owner Trustee and the Certificateholders, by
- ---------------------
accepting the Certificates, will covenant that they will not at any time
institute against the Issuer or the Depositor any bankruptcy, reorganization
or other proceeding under any federal or state bankruptcy or similar law in
connection with the Certificates, (the Swap Agreement), the Indenture, the
Trust Agreement or any related agreement.
Section 4.04. Restrictions on Certificateholders' Power. The
-----------------------------------------
Certificateholders shall not direct the Owner Trustee to take or to refrain
from taking any action if such action or inaction would be contrary to any
obligation of the Trust or the Owner Trustee under this Trust Agreement or
any of the Basic Documents or would be contrary to Section 2.03, nor shall
the Owner Trustee be obligated to follow any such direction, if given.
Section 4.05. Majority Control. Except as expressly provided herein,
----------------
any action that may be taken by the Certificateholders under this Trust
Agreement shall be taken by the Holders of Certificates evidencing not less
than a majority of the Voting Interests of all Certificates. Except as
expressly provided herein, any written notice of the Certificateholders
delivered pursuant to this Trust Agreement shall be effective if signed by
Holders of Certificates evidencing not less than a majority of the Voting
Interests of the Certificates at the time of the delivery of such notice.
ARTICLE V
Administration of the Underlying Securities;
--------------------------------------------
Application of Trust Funds
--------------------------
Section 5.01. Collection of Payments on Underlying Securities;
------------------------------------------------
Collection Account. (a) The Trust shall cause the Indenture Trustee
- ------------------
pursuant to Section 3.01 of the Indenture to establish and maintain with the
Indenture Trustee a segregated trust account (the "Collection Account") in
which the Indenture Trustee shall, subject to the terms of this paragraph,
deposit on the same day that it receives each distribution received by the
Indenture Trustee with respect to the Underlying Securities (and amounts, if
any, received pursuant to the Swap Agreement). Until the Notes have been
paid in full (and all amounts due from the Trust to the Swap Counterparty
under the Swap Agreement have been paid), the Indenture Trustee will take all
reasonable actions to collect any distributions due on the Underlying
Securities (and any amounts due under the Swap Agreement) or to exercise
remedies pursuant to Section 3.01 of the Indenture.
(b) The amounts on deposit in the Collection Account shall be invested
by the Indenture Trustee in Eligible Investments (as directed by the Swap
Counterparty).
Section 5.02. Distributions. Subject to the Priority of Payments, (a)
-------------
on each Payment Date, the Administrator, on behalf of the Trust shall
distribute to each Certificateholder of record on the preceding Record Date
(or, with respect to the first Payment Date, on the Closing Date), pro rata
in accordance with the Percentage Interest evidenced by such Holder's
Certificate, an amount equal to (A)(x) the Certificate Accrual Rate multi-
plied by (y) the Outstanding Amount of the Certificates and multiplied by (z)
the actual number of days in the Certificate Interest Accrual Period divided
by 360, plus (B) any amounts previously due and payable pursuant to this
clause (a) to the extent such amounts were not paid on a prior Payment Date.
(b) On any Payment Date, no distributions pursuant to clause (a) herein
shall be made to any Certificateholder until (the Swap Counterparty has
received all amounts owed by the Trust under the Swap Agreement and) the
Holders of Notes have received all payments of interest and principal due and
owing to them on such Payment Date.
(c) Subject to the Priority of Payments, on any Payment Date on which
principal is distributed the Administrator, on behalf of the Trust, shall
distribute to each Certificateholder, pro rata in accordance with the
Percentage Interest evidenced by such Holder's Certificate, the (principal
payable on the Certificates) after payment of amounts due in respect of
principal on the Notes on such Payment Date.
(d) On any Payment Date no distributions pursuant to clause (c) herein
shall be made to any Certificateholder until (the Swap Counterparty has
received all amounts owed by the Trust under the Swap Agreement) and the
Holders of Notes have received all payments of interest and principal due and
owing to them on such Payment Date.
(e) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to a Certificateholder, such tax shall
reduce the amount otherwise distributable to the Certificateholder in
accordance with this Section 5.02. The Trust is hereby authorized and
directed to retain from amounts otherwise distributable to the
Certificateholders sufficient funds for the payment of any withholding tax
that is legally owed by the Trust (but such authorization shall not prevent
the Trust from contesting any such tax in appropriate proceedings, and
withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings). The amount of any withholding tax imposed with respect to
a Certificateholder shall be treated as cash distributed to such
Certificateholder at the time it is withheld by the Trust and remitted to the
appropriate taxing authority. If the Owner Trustee is notified of any
withholding tax (by a source other than the Administrator), it shall inform
the Administrator of such notice. If there is a possibility that withholding
tax is payable with respect to a distribution, the Owner Trustee shall
withhold such amounts in accordance with this paragraph (e). The Owner
Trustee shall first notify the Depositor with respect to any applicable
withholding taxes imposed on the Certificates and no earlier than 5 Business
Days thereafter, shall withhold, at the applicable withholding rate (or
backup withholding rate, as applicable), a portion of interest payments
otherwise distributable to any beneficial holder of a Certificate unless the
Certificateholder provides the appropriate certifications in a form
acceptable to the Owner Trustee.
Section 5.03. Method of Payment. Subject to Section 9.01(c),
-----------------
distributions required to be made to Certificateholders on any Payment Date
shall be made to each Certificateholder of record on the preceding Record
Date either by wire transfer, in immediately available funds, to the account
of such Holder at a bank or other entity having appropriate facilities
therefor, if such Certificateholder shall have provided to the Administrator
appropriate written instructions reasonably satisfactory to the Administrator
at least five Business Days prior to such Payment Date or, if not, by check
mailed to such Certificateholder at the address of such Holder appearing in
the Certificate Register.
Section 5.04. Accounting and Reports to the Noteholders,
------------------------------------------
Certificateholders, the Internal Revenue Service and Others. The
- -----------------------------------------------------------
Administrator shall (a) maintain (or cause to be maintained) the books of the
Trust on a calendar year basis, (b) deliver to each Certificateholder such
information as may be required by the Code and applicable Treasury
Regulations, ((c) file such tax returns and reports relating to the Trust and
make such elections as from time to time may be required or appropriate under
any applicable state or federal statute or any rule or regulation thereunder
so as to maintain the Trust's characterization as a security arrangement for
the issuance of debt for federal income tax purposes,) (d) cause such tax
returns and reports to be signed in the manner required by law, (e) notify
Certificateholders, the Depositor and the Indenture Trustee of any
withholding tax as described in Section 5.02(e) with respect to income or
distributions to Certificateholders and the amount of such withholding tax
and (f) collect or cause to be collected any withholding tax as described in
and in accordance with Section 5.02(e) with respect to income or
distributions to Certificateholders. The Administrator may appoint a firm of
Independent (as defined in the Indenture) certified public accountants for
purposes of preparing and filing tax returns and reports required by this
Section 5.04. The fees of such certified public accountants shall be paid by
the Administrator without reimbursement from the Trust.
Section 5.05. Signature on Returns. The Owner Trustee shall sign on
--------------------
behalf of the Trust the tax returns of the Trust, unless applicable law
requires a Certificateholder to sign such documents, in which case such
documents shall be signed by the Depositor.
Section 5.06. Statements to Certificateholders; Certain Tax
---------------------------------------------
Information. On each Payment Date, or as soon as practicable thereafter, the
- -----------
Administrator shall prepare and forward by mail a statement to each
Certificateholder (with a copy to each Rating Agency) stating:
(a) the aggregate amount of any distribution on such Payment Date
allocable to interest on the Certificates;
(b) the aggregate amount of any distribution on such Payment Date
allocable to principal on the Certificates;
(c) the aggregate amount of compensation paid to the Administrator
on such Payment Date;
(d) the aggregate principal balance of the Underlying Securities
as of such Payment Date after giving effect to distributions of
principal pursuant to clause (b) above (and after giving effect to any
sale, put or call of all or part of the Underlying Securities prior to
or on such Payment Date);
(e) the aggregate outstanding principal amount of (each Class of)
Certificates on such Payment Date, after giving to the distribution of
principal referred to in clause (b) above;
((f) (if a floating rate) Class B-1 Certificate Accrual Rate (and
the Class B-2 Certificate Accrual Rate) applicable in respect of
distributions of interest made on such Payment Date;)
((g) as applicable, information regarding any of the following ((as
described in the base prospectus)): the amount of any shortfall; the
amount of any withdrawal from any (Reserve Account); for each date
during the (Funding Period), the remaining (Pre-Funded Amount); for the
first such date that is on or immediately following the end of the
(Funding Period) (if any), the amount of any remaining (Pre-Funding
Amount) that has not been used to fund the purchase of the (Subsequent
Underlying Securities) and that is being passed through as payments on
the Notes and Certificates); and
((h) the aggregate outstanding principal balance of any Eligible
Investments purchased with proceeds of the Underlying Securities.)
((b) Within a reasonable period of time ((not to exceed
(________________))) after the end of each calendar year (commencing with
(___________________)), the Administrator shall (i) furnish to each Holder of
a Certificate during the preceding calendar year: (A) the aggregate amounts
reported pursuant to each of clause (i) and clause (ii) of Section 5.06(a)
for such preceding calendar year (and (B) such other information as the
Administrator reasonably determines necessary to enable the
Certificateholders to prepare their tax returns) and (ii) file or cause to be
filed such tax returns and reports with respect to such statements as are
required by the Code to be filed by the Trust.)
(c) The Administrator shall forward by mail to each Certificateholder
with each statement described in Section 5.06(a) a copy of the most current
Underlying Securities Distribution Date Statement received from the Indenture
Trustee (unless such Underlying Securities Distribution Date Statement was
previously distributed to Certificateholders).
Section 5.07. Notices to Owner Trustee. Upon receipt of any notice
------------------------
with respect to the Underlying Securities, the Administrator shall promptly
transmit such notice to the Certificateholders. In the event such notice
requests or requires any action by the Owner Trustee and the
Certificateholders, the Owner Trustee shall not take any action except in
accordance with written instructions from the Certificateholders pursuant to
Section 6.03(c).
ARTICLE VI
Authority and Duties of Owner Trustee
-------------------------------------
Section 6.01. General Authority. The Owner Trustee is authorized and
-----------------
directed to execute and deliver the Basic Documents to which the Trust is to
be a party and each certificate or other document attached as an exhibit to
or contemplated by the Basic Documents to which the Trust is to be a party
and any amendment or other agreement or instrument described herein, in each
case, in such form as the Depositor shall approve, as evidenced conclusively
by the Owner Trustee's execution thereof. In addition to the foregoing, the
Owner Trustee is authorized, but shall not be obligated, to take all actions
required of the Trust pursuant to the Basic Documents. Subject to compliance
with the Basic Documents, the Owner Trustee is further authorized from time
to time to take such action as the Administrator recommends with respect to
the Basic Documents.
Section 6.02. General Duties. It shall be the duty of the Owner
--------------
Trustee to discharge (or cause to be discharged) all of its responsibilities
pursuant to the terms of this Trust Agreement and the other Basic Documents
to which the Trust is a party and to administer the Trust in the interest of
the Certificate- holders, subject to the Basic Documents and in accordance
with the provisions of this Trust Agreement. Notwithstanding the foregoing,
the Owner Trustee shall be deemed to have discharged its duties and
responsibilities hereunder and under the Basic Documents to the extent the
Administrator has agreed in the Administration Agreement to perform any act
or to discharge any duty of the Owner Trustee hereunder or under any other
Basic Document, and the Owner Trustee shall not be held liable for the
default or failure of the Administrator to carry out its obligations under
the Administration Agreement.
Section 6.03. Action upon Instruction. (a) Subject to Article IV and
-----------------------
in accordance with the terms of the Basic Documents, the Certificateholders
may by written instruction direct the Owner Trustee in the management of the
Trust. Such direction may be exercised at any time by written instruction of
the Certificateholders pursuant to Article IV.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any Basic Document if the Owner Trustee shall have
reasonably determined, or shall have been advised by counsel selected in good
faith, that such action is likely to result in liability on the part of the
Owner Trustee or is contrary to the terms hereof or of any other Basic
Document or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Trust Agreement
or under any other Basic Document, the Owner Trustee shall promptly give
notice (in such form as shall be appropriate under the circumstances) to the
Certificateholders requesting instruction as to the course of action to be
adopted, and to the extent the Owner Trustee acts in good faith in accordance
with any written instruction of the Certificateholders received, the Owner
Trustee shall not be liable on account of such action to any Person. If the
Owner Trustee shall not have received appropriate instruction within 10 days
of such notice (or within such shorter period of time as reasonably may be
specified in such notice or may be necessary under the circumstances) it may,
but shall be under no duty to, take or refrain from taking such action not
inconsistent with this Trust Agreement or the other Basic Documents, as it
shall deem to be in the best interests of the Certificateholders, and shall
have no liability to any Person for such action or inaction.
(d) In the event that the Owner Trustee is unsure as to the application
of any provision of this Trust Agreement or any other Basic Document or any
such provision is ambiguous as to its application, or is, or appears to be,
in conflict with any other applicable provision, or in the event that this
Trust Agreement permits any determination by the Owner Trustee or is silent
or is incomplete as to the course of action that the Owner Trustee is
required to take with respect to a particular set of facts, the Owner Trustee
may give notice (in such form as shall be appropriate under the
circumstances) to the Certificateholders requesting instruction and, to the
extent that the Owner Trustee acts or refrains from acting in good faith in
accordance with any such instruction received, the Owner Trustee shall not be
liable, on account of such action or inaction, to any Person. If the Owner
Trustee shall not have received appropriate instruction within 10 days of
such notice (or within such shorter period of time as reasonably may be
specified in such notice or may be necessary under the circumstances) it may,
but shall be under no duty to, take or refrain from taking such action not
inconsistent with this Trust Agreement or the other Basic Documents, as it
shall deem to be in the best interests of the Certificateholders, and shall
have no liability to any Person for such action or inaction.
Section 6.04. No Duties Except as Specified in this Trust Agreement or
--------------------------------------------------------
in Instructions. The Owner Trustee shall not have any duty or obligation to
- ---------------
manage, make any payment with respect to, register, record, sell, dispose of,
or otherwise deal with the Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated
hereby to which the Owner Trustee is a party, except as expressly provided by
the terms of this Trust Agreement or in any document or written instruction
received by the Owner Trustee pursuant to Section 6.03; and no implied duties
or obligations shall be read into this Trust Agreement or any other Basic
Document against the Owner Trustee. The Owner Trustee shall have no
responsibility for filing any financing or continuation statement in any
public office at any time or to otherwise perfect or maintain the perfection
of any security interest or lien granted to it hereunder, prepare or file any
tax form or to prepare or file any Securities and Exchange Commission filing
for the Trust or to record this Trust Agreement or any Basic Document. The
Owner Trustee nevertheless agrees that it will, at its own cost and expense,
promptly take all action as may be necessary to discharge any liens on any
part of the Trust Estate that result from actions by, or claims against, the
Owner Trustee solely in its individual capacity that are not related to the
ownership or the administration of the Trust Estate.
Section 6.05. No Action Except Under Specified Documents or
---------------------------------------------
Instructions. The Owner Trustee shall not manage, control, use, sell,
- ------------
dispose of or otherwise deal with any part of the Trust Estate except (i) in
accordance with the powers granted to and the authority conferred upon the
Owner Trustee pursuant to this Trust Agreement, (ii) in accordance with the
Basic Documents and (iii) in accordance with any document or instruction
delivered to the Owner Trustee pursuant to Section 6.03.
Section 6.06. Restrictions. The Owner Trustee shall not take any
------------
action (a) that is inconsistent with the purposes of the Trust set forth in
Section 2.03 or (b) that, to the actual knowledge of the Owner Trustee, would
result in the Trust's becoming taxable as a corporation for federal income
tax purposes. The Certificateholders shall not direct the Owner Trustee to
take action that would violate the provisions of this Section 6.06.
(Section 6.07. Limitation on Trust Activities. Notwithstanding any
------------------------------
other provision in this Trust Agreement to the contrary, the Owner Trustee
shall have no power to exercise discretion to vary the investment of the
Certificateholders within the meaning of Treasury Department Regulations
Section 301.7701-4(c), or to engage in any business activity unless the Owner
Trustee shall have received an Opinion of Counsel that such activity shall
not adversely affect the status of the Trust as a security arrangement for
the issuance of debt.)
ARTICLE VII
Concerning the Owner Trustee
----------------------------
Section 7.01. Acceptance of Trusts and Duties. The Owner Trustee
-------------------------------
accepts the trusts hereby created and agrees to perform its duties hereunder
with respect to such trusts but only upon the terms of this Trust Agreement.
The Owner Trustee also agrees to disburse all moneys actually received by it
constituting part of the Trust Estate upon the terms of the Basic Documents
and this Trust Agreement. The Owner Trustee shall not be answerable or
accountable hereunder or under any other Basic Document under any
circumstances, except (i) for its own willful misconduct or negligence or
(ii) in the case of the inaccuracy of any representation or warranty
contained in Section 7.03 expressly made by the Owner Trustee in its
individual capacity. In particular, but not by way of limitation (and
subject to the exceptions set forth in the preceding sentence):
(a) The Owner Trustee shall not be liable for any error of judgment
made by a Responsible Officer of the Owner Trustee unless it is proved that
the Owner Trustee was negligent in ascertaining the pertinent facts;
(b) The Owner Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in accordance with the instructions of the
Administrator, the Depositor or the Certificateholders;
(c) No provision of this Trust Agreement or any Basic Document shall
require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights, duties or powers
hereunder or under any Basic Document if the Owner Trustee shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured or
provided to it;
(d) Under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents,
including the principal of and interest on the Notes;
(e) The Owner Trustee shall not be responsible for or in respect of the
validity or sufficiency of this Trust Agreement or for the due execution
hereof by the Depositor or for the form, character, genuineness, sufficiency,
value or validity of any of the Trust Estate, or for or in respect of the
validity or sufficiency of the Basic Documents, other than the certificate of
authentication on the Certificates, if executed by the Owner Trustee and the
Owner Trustee shall in no event assume or incur any liability, duty, or
obligation to any Noteholder or to any Certificateholder, other than as
expressly provided for herein or expressly agreed to in the Basic Documents;
(f) The Owner Trustee shall not be liable for the default or misconduct
of the Administrator, the Depositor, the Certificate Registrar, a paying
agent, or an authenticating agent (if not the Owner Trustee) or the Indenture
Trustee under any of the Basic Documents or otherwise and the Owner Trustee
shall have no obligation or liability to perform the obligations of the Trust
under this Trust Agreement or the Basic Documents that are required to be
performed by the Administrator under the Administration Agreement, the
Indenture Trustee under the Indenture, the Certificate Registrar, a paying
agent, or an authenticating agent (if not the Owner Trustee); and
(g) The Owner Trustee shall be under no obligation to exercise any of
the rights or powers vested in it or duties imposed by this Trust Agreement,
or to institute, conduct or defend any litigation under this Trust Agreement
or otherwise or in relation to this Trust Agreement or any Basic Document, at
the request, order or direction of any of the Certificateholders, unless such
Certificateholders have offered to the Owner Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities that may be
incurred by the Owner Trustee therein or thereby. The right of the Owner
Trustee to perform any discretionary act enumerated in this Trust Agreement
or in any other Basic Document shall not be construed as a duty, and the
Owner Trustee shall not be answerable for other than its negligence or
willful misconduct in the performance of any such act.
Section 7.02. Furnishing of Documents. The Owner Trustee shall furnish
-----------------------
to the Certificateholders promptly upon receipt of a written request
therefor, duplicates or copies of all reports, notices, requests, demands,
certificates, financial statements and any other instruments furnished to the
Owner Trustee under the Basic Documents.
Section 7.03. Representations and Warranties. The Owner Trustee hereby
------------------------------
represents and warrants to the Depositor, for the benefit of the
Certificateholders, that:
(a) It is a banking corporation duly organized and validly existing in
good standing under the laws of the State of Delaware. It has all requisite
corporate power and authority to execute, deliver and perform its obligations
under this Trust Agreement.
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Trust Agreement, and this Trust
Agreement will be executed and delivered by one of its officers who is duly
authorized to execute and deliver this Trust Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this Trust
Agreement, nor the consummation by it of the transactions contemplated hereby
nor compliance by it with any of the terms or provisions hereof will
contravene any federal or Delaware law, governmental rule or regulation
governing the banking or trust powers of the Owner Trustee or any judgment or
order binding on it, or constitute any default under its charter documents or
bylaws or any indenture, mortgage, contract, agreement or instrument to which
it is a party or by which any of its properties may be bound.
Section 7.04. Reliance; Advice of Counsel. (a) The Owner Trustee
---------------------------
shall incur no liability to anyone in acting upon any signature, instrument,
notice, resolution, request, consent, order, certificate, report, opinion,
bond, or other document or paper believed by it to be genuine and believed by
it to be signed by the proper party or parties. The Owner Trustee may accept
a certified copy of a resolution of the board of directors or other governing
body of any corporate party as conclusive evidence that such resolution has
been duly adopted by such body and that the same is in full force and effect.
As to any fact or matter the method of determination of which is not
specifically prescribed herein, the Owner Trustee may for all purposes hereof
rely on a certificate, signed by the president or any vice president or by
the treasurer or other authorized officers of the relevant party, as to such
fact or matter and such certificate shall constitute full protection to the
Owner Trustee for any action taken or omitted to be taken by it in good faith
in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Trust Agreement or
the other Basic Documents, the Owner Trustee (i) may act directly or through
its agents or attorneys pursuant to agreements entered into with any of them,
and the Owner Trustee shall not be liable for the conduct or misconduct of
such agents or attorneys if such agents or attorneys shall have been selected
by the Owner Trustee with reasonable care, and (ii) may consult with counsel,
accountants and other skilled persons to be selected with reasonable care and
employed by it. The Owner Trustee shall not be liable for anything done,
suffered or omitted in good faith by it in accordance with the written
opinion or advice of any such counsel, accountants or other such Persons and
not contrary to this Trust Agreement or any other Basic Document.
Section 7.05. Not Acting in Individual Capacity. Except as provided
---------------------------------
in this Article VII, in accepting the trusts hereby created,
(_______________________) acts solely as Owner Trustee hereunder and not in
its individual capacity.
Section 7.06. Owner Trustee Not Liable for Certificates or Underlying
-------------------------------------------------------
Securities. The recitals contained herein and in the Certificates (other
- ----------
than the signature and countersignature of the Owner Trustee on the
Certificates) shall be taken as the statements of the Depositor, and the
Owner Trustee assumes no responsibility for the correctness thereof. The
Owner Trustee makes no representations as to the validity or sufficiency of
this Trust Agreement, of any Basic Document or of the Certificates (other
than the signature and countersignature of the Owner Trustee on the
Certificates) or the Notes, or of any Underlying Securities or related docu-
ments. The Owner Trustee shall at no time have any responsibility or
liability for or with respect to the sufficiency of the Trust Estate or its
ability to generate the payments to be distributed to Certificateholders
under this Trust Agreement or the Noteholders under the Indenture, including,
the compliance by the Depositor with any warranty or representation made
under any Basic Document or in any related document or the accuracy of any
such warranty or representation, or any action of the Administrator or the
Indenture Trustee taken in the name of the Owner Trustee.
Section 7.07. Owner Trustee May Own Certificates and Notes. The Owner
--------------------------------------------
Trustee in its individual or any other capacity may become the owner or
pledgee of Certificates or Notes and may deal with the Depositor, the
Administrator and the Indenture Trustee in banking transactions with the same
rights as it would have if it were not Owner Trustee.
ARTICLE VIII
Compensation of Owner Trustee
-----------------------------
Section 8.01. Owner Trustee's Fees, Expenses and Indemnity. (a) The
--------------------------------------------
Owner Trustee, Indenture Trustee and Administrator shall receive from the
Depositor as compensation for their respective services hereunder such fees
as have been separately agreed upon before the date hereof among the
Depositor and each of the Owner Trustee, Indenture Trustee, and
Administrator. The Owner Trustee hereby acknowledges receipt of its Initial
Owner Trustee Fee as its entire remuneration for its services as owner
trustee under this Trust Agreement and receipt of all of its ordinary
expenses to be incurred in acting as Owner Trustee under this Trust
Agreement. After the execution of this Trust Agreement and subject to
Section 8.01(d) herein, the Issuer shall only be obligated to indemnify the
Owner Trustee for those expenses of the Owner Trustee that constitute
Extraordinary Expenses and only in accordance with the Priority of Payments
in Section 3.05(d) of the Indenture.
(b) If the Owner Trustee shall serve, by reason of its resigning its
appointment or removal therefrom under this Trust Agreement, for less than
the period in respect of which its Initial Owner Trustee Fee has been paid,
its Initial Owner Trustee Fee shall be pro-rated as agreed in a letter of
even date.
(c) Nothing contained in this Trust Agreement shall require the Owner
Trustee or the Administrator to expend or risk its own funds or otherwise
incur any financial liability in the performance of its duties or the
exercise of any right, power, authority or discretion hereunder if it has
reasonable grounds for believing the repayment of such funds or adequate
indemnity against, or security for, such risk or liability is not reasonably
assured to it.
(d) Neither the Issuer nor the Administrator need reimburse any expense
or indemnify against any loss, liability or expense incurred by the Owner
Trustee through the Owner Trustee's own willful misconduct, negligence or bad
faith.
ARTICLE IX
Termination of Trust Agreement
------------------------------
Section 9.01. Termination of Trust Agreement. (a) This Trust
------------------------------
Agreement (other than Article VIII) and the Trust shall terminate and be of
no further force or effect upon the final distribution by the Owner Trustee
of all moneys or other property or proceeds of the Trust Estate (including
the Underlying Securities) in accordance with the terms of the Indenture and
Article V. The bankruptcy, liquidation, dissolution, death or incapacity of
any Certificateholder shall not (x) operate to terminate this Trust Agreement
or the Trust or (y) entitle such Certificateholder's 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 all or any part of the Trust or Trust Estate
or (z) otherwise affect the rights, obligations and liabilities of the
parties hereto.
(b) None of the Depositor, or any Certificateholder shall be entitled
to revoke or terminate the Trust.
(c) Notice of any termination of the Trust, specifying the Payment Date
upon which Certificateholders shall surrender their Certificates to the
Administrator for payment of the final distribution and cancellation, shall
be given by the Owner Trustee by letter to Certificateholders mailed within
five Business Days prior to the final Payment Date, stating (i) the Payment
Date upon or with respect to which final payment of the Certificates shall be
made upon presentation and surrender of the Certificates at the office of the
Administrator therein designated, (ii) the amount of any such final payment
and (iii) that the Record Date otherwise applicable to such Payment Date is
not applicable, payments being made only upon presentation and surrender of
the Certificates at the office of the Administrator therein specified. The
Owner Trustee shall give such notice to the Certificate Registrar (if other
than the Owner Trustee) and the Administrator at the time such notice is
given to Certificateholders. Upon presentation and surrender of the
Certificates, the Administrator shall cause to be distributed to
Certificateholders amounts distributable on such Payment Date pursuant to
Section 5.02.
In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the date
specified in the above mentioned written notice, the Owner Trustee shall give
a second written notice to the remaining Certificateholders to surrender
their Certificates for cancellation and receive the final distribution with
respect thereto. If within one year after the second notice all the
Certificates shall not have been surrendered for cancellation, the Owner
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 funds and other assets that shall remain subject to this Trust Agreement.
Any funds remaining in the Trust after exhaustion of such remedies shall be
distributed by the Owner Trustee to the Depositor.
(d) Upon the winding up of the Trust and its termination, the Owner
Trustee shall cause the Certificate of Trust to be cancelled by filing a
certificate of cancellation with the Secretary of State in accordance with
the provisions of Section 3810 of the Business Trust Statute.
ARTICLE X
Successor Owner Trustees and Additional Owner Trustees
------------------------------------------------------
Section 10.01. Eligibility Requirements for Owner Trustee. The Owner
------------------------------------------
Trustee shall at all times be a corporation satisfying the provisions of
Section 3807(a) of the Business Trust Statute; authorized to exercise
corporate trust powers; having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal or state
authorities; and having (or having a parent that has) a rating of at least
(____) by (_____) (or a rating otherwise acceptable to Moody's) and at least
(____) by (____). If such corporation shall publish reports of condition at
least annually pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purpose of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time the Owner Trustee shall cease to
be eligible in accordance with the provisions of this Section 10.01, the
Owner Trustee shall resign immediately in the manner and with the effect
specified in Section 10.02.
Section 10.02. Resignation or Removal of Owner Trustee. The Owner
---------------------------------------
Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Administrator, (the Swap
Counterparty) and the Depositor. Upon receiving such notice of resignation,
the Administrator shall, (with the prior consent of the Swap Counterparty)
promptly appoint a successor Owner Trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to the resigning
Owner Trustee and one copy to the successor Owner Trustee. If no successor
Owner Trustee shall have been so appointed and have accepted appointment
within 30 days after the giving of such notice of resignation, the resigning
Owner Trustee may petition any court of competent jurisdiction for the
appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.01 and shall fail to resign
after written request therefor by the Administrator, or if at any time the
Owner Trustee shall be legally unable to act, or shall be adjudged bankrupt
or insolvent, or a receiver of the Owner Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Owner
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Administrator (or the Swap
Counterparty) may remove the Owner Trustee. If the Administrator (or the
Swap Counterparty) shall remove the Owner Trustee under the authority of the
immediately preceding sentence, the Administrator (or the Swap Counterparty)
shall promptly appoint a successor Owner Trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to the outgoing
Owner Trustee so removed and one copy to the successor Owner Trustee. All
amounts, if any, owed to the outgoing Owner Trustee shall be paid on the next
Payment Date, to the extent funds are available for such payment in
accordance with the Priority of Payments.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section
shall not become effective until acceptance of appointment by the successor
Owner Trustee pursuant to Section 10.03 and payment of all fees and expenses
owed to the outgoing Owner Trustee. The Administrator shall provide notice
of such resignation or removal of the Owner Trustee to each of the Rating
Agencies.
Section 10.03. Successor Owner Trustee. Any successor Owner Trustee
-----------------------
appointed pursuant to Section 10.02 shall execute, acknowledge and deliver to
the Administrator, (the Swap Counterparty) and to its predecessor Owner
Trustee an instrument accepting such appointment under this Trust Agreement,
and thereupon the resignation or removal of the predecessor Owner Trustee
shall become effective, and such successor Owner Trustee, without any further
act, deed or conveyance, shall become fully vested with all the rights,
powers, duties and obligations of its predecessor under this Trust Agreement,
with like effect as if originally named as Owner Trustee. The predecessor
Owner Trustee shall deliver to the successor Owner Trustee all documents and
statements and monies held by it under this Trust Agreement; and the
Administrator and the predecessor Owner Trustee shall execute and deliver
such instruments and do such other things as may reasonably be required for
fully and certainly vesting and confirming in the successor Owner Trustee all
such rights, powers, duties and obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section 10.03 unless at the time of such acceptance such successor Owner
Trustee shall be eligible pursuant to Section 10.01.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section 10.03, the Administrator shall mail notice thereof to all
Certificateholders, the Indenture Trustee, the Noteholders and the Rating
Agencies. If the Administrator shall fail to mail such notice within 10 days
after acceptance of such appointment by the successor Owner Trustee, the
successor Owner Trustee shall cause such notice to be mailed at the expense
of the Administrator.
Section 10.04. Merger or Consolidation of Owner Trustee. Any Person
----------------------------------------
into which the Owner Trustee may be merged or converted or with which it may
be consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any Person
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, without
the execution or filing of any instrument or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding;
provided, that such Person shall be eligible pursuant to Section 10.01 and,
provided, further, that the Owner Trustee shall mail notice of such merger or
consolidation to the Rating Agencies (and the Swap Counterparty).
ARTICLE XI
Miscellaneous
-------------
Section 11.01. Amendments Without Consent of Certificateholders or
---------------------------------------------------
Noteholders. Without the consent of Holders of any Certificates or the
- -----------
consent of the Holders of any Notes, but with prior notice to the Rating
Agencies (and the Swap Counterparty), this Trust Agreement may be amended by
the Depositor and the Owner Trustee, for any of the following:
(i) to cure any ambiguity or mistake;
(ii) to correct any defective provisions or to correct or supplement any
provision herein that may be defective or inconsistent with any other
provision herein;
(iii) to add to the covenants or duties of the Depositor or the
Administrator herein;
(iv) to add any other provisions with respect to matters or questions
arising under this Trust Agreement or any Enhancement; provided, however,
that any such amendment pursuant to this clause (iv) shall not adversely
affect in any material respect the interests of any Noteholders or
Certificateholders, as evidenced by an Opinion of Counsel;
(v) to comply with any provisions of the Code; or
(vi) to evidence and provide for the acceptance of the appointment
hereunder by a successor Owner Trustee and to add to or change any of the
provisions of this Trust Agreement as shall be necessary to facilitate the
administration of the trusts hereunder.
Any amendment pursuant to clause (iv) above of this Section 11.01, shall
be deemed not to adversely affect in any material respect the interests of
any Noteholder or Certificateholder if the Administrator or Owner Trustee
receives written confirmation from each Rating Agency that such amendment
shall not cause the reduction or withdrawal of the ratings assigned to the
Notes or the Certificates.
The Owner Trustee is hereby authorized to join in the execution of any
such amendment and to make any further appropriate agreements and
stipulations that may be therein contained.
Section 11.02. Amendments with Consent of Certificateholders and
-------------------------------------------------
Noteholders. This Trust Agreement may also be amended from time to time by
- -----------
the Depositor and the Owner Trustee, with prior written notice to the Rating
Agencies, with the consent of the Holders (as defined in the Indenture) of
Notes evidencing not less than a majority of the of Outstanding Amount of the
Notes and Certificateholders owning Voting Interests aggregating not less
than a majority of the aggregate Voting Interests (and with the consent of
the Swap Counterparty) for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Trust
Agreement or of modifying in any manner the rights of the Noteholders or the
Certificateholders (or the Swap Counterparty); provided, however, that no
such amendment shall, without notification from each Rating Agency that such
amendment shall not cause the rating of the Notes or the Certificates to be
reduced, suspended or withdrawn (a) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments on
Underlying Securities or distributions that shall be required to be made for
the benefit of the Noteholders or the Certificateholders or (b) reduce the
aforesaid percentage of the Outstanding Amount of the Notes or the Voting
Interests of Certificates required to consent to any such amendment, without
the consent of the holders of all the outstanding Notes and Certificates.
Promptly after the execution of any such amendment or consent, the
Administrator shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, the Indenture Trustee, (the
Swap Counterparty) and each of the Rating Agencies.
It shall not be necessary for the consent of Certificateholders,
Noteholders, the Indenture Trustee (or the Swap Counterparty) pursuant to
this Section 11.02 to approve the particular form of any proposed amendment
or consent, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents (and any other
consents of Certificateholders provided for in this Trust Agreement or in any
other Basic Document) and of evidencing the authorization of the execution
thereof by Certificateholders shall be subject to such reasonable
requirements as the Owner Trustee may prescribe.
Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State of the State of Delaware.
Prior to the execution of any amendment to this Trust Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Trust Agreement. The Owner Trustee may, but
shall not be obligated to, enter into any such amendment that affects the
Owner Trustee's own rights, duties or immunities under this Trust Agreement
or otherwise.
Section 11.03. Voting Interests. As of any date, the aggregate
----------------
outstanding principal balance of all Certificates will constitute the voting
interest of the Issuer (the "Voting Interests"), except that, for purposes of
determining Voting Interests, Certificates owned by the Issuer or its
affiliates and the Depositor will be disregarded and deemed not to be
outstanding, and except that, in determining whether the Owner Trustee is
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Certificates that the Owner Trustee knows to
be so owned will be so disregarded. Certificates so owned that have been
pledged in good faith may be regarded as outstanding if the pledgee
establishes to the satisfaction of the Owner Trustee the pledgor's right so
to act with respect to such Certificates and that the pledgee is not the
Issuer or its affiliates.
Section 11.04. (Modification and Amendment of Swap Agreement. (a) The
--------------------------------------------
Swap Agreement may be amended by the Owner Trustee and the Swap Counterparty
without notice to or consent of the Certificateholders (i) to cure any
ambiguity or mistake, (ii) to correct any defective provisions or to correct
or supplement any provisions therein which may be inconsistent with any other
provisions therein or (iii) to add any other provisions with respect to
matters or questions arising under such Swap Agreement; provided that any
such amendment pursuant to this clause (iii) shall not adversely affect in
any material respect the interests of any Certificateholders, as evidenced by
an Opinion of Counsel. Any amendment pursuant to clause (iii) of the
preceding sentence shall be deemed not to adversely affect in any material
respect the interests of any Certificateholder if the Owner Trustee receives
written confirmation from each Rating Agency rating the Certificates that
such amendment will not cause such Rating Agency to reduce the then current
rating thereof.
(b) The Swap Agreement may also be amended by the Owner Trustee and the
Swap Counterparty with the consent of (i) the holders processing not less
than a majority of the aggregate outstanding principal amount of the Notes
and (ii) the holders possessing not less than a majority of the aggregate
outstanding principal amount of the Certificates for the purpose of adding
any provisions to or changing in any manner or eliminating any of the
provisions of such Swap Agreement.)
Section 11.05. No Legal Title to Trust Estate in Certificateholders.
----------------------------------------------------
The Certificateholders shall not have legal title to any part of the Trust
Estate. The Certificateholders shall be entitled to receive distributions
with respect to their undivided beneficial interest therein only in
accordance with Articles V and IX. No transfer, by operation of law or
otherwise, of any right, title or interest of the Certificateholders to and
in their ownership interest in the Trust Estate shall operate to terminate
this Trust Agreement or the trusts hereunder or entitle any transferee to an
accounting or to the transfer to it of legal title to any part of the Trust
Estate.
Section 11.06. Limitations on Rights of Others. Except for
-------------------------------
Section 2.07, the provisions of this Trust Agreement are solely for the
benefit of the Owner Trustee, the Depositor, the Certificateholders, the
Administrator and, to the extent expressly provided herein, the Indenture
Trustee, the Noteholders (and the Swap Counterparty), and nothing in this
Trust Agreement (other than Section 2.07), whether express or implied, shall
be construed to give to any other Person any legal or equitable right, remedy
or claim in the Trust Estate or under or in respect of this Trust Agreement
or any covenants, conditions or provisions contained herein.
Section 11.07. Notices. (a) Unless otherwise expressly specified or
-------
permitted by the terms hereof, all notices shall be in writing and shall be
deemed given upon receipt by the intended recipient or three Business Days
after mailing if mailed by certified mail, postage prepaid (except that
notice to the Owner Trustee shall be deemed given only upon actual receipt by
the Owner Trustee), if to the Owner Trustee, addressed to the Corporate Trust
Office; if to the Depositor, addressed to ML Asset Backed Corporation, 250
Vesey Street, World Financial Center, North Tower - 10th Floor, New York, New
York 10281-1310, Attention: Michael M. McGovern; or, as to each party, at
such other address as shall be designated by such party in a written notice
to each other party.
(b) Any notice required or permitted to be given to a Certificateholder
shall be given by first-class mail, postage prepaid, at the address of such
Holder as shown in the Certificate Register. Any notice so mailed within the
time prescribed in this Trust Agreement shall be conclusively presumed to
have been duly given, whether or not the Certificateholder receives such
notice.
Section 11.08. Severability. Any provision of this Trust Agreement that
------------
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
Section 11.9. Separate Counterparts. This Trust Agreement may be
---------------------
executed by the parties hereto in separate counterparts, each of which when
so executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 11.10. Successors and Assigns. All covenants and agreements
----------------------
contained herein shall be binding upon, and inure to the benefit of, each of
the Depositor, the Owner Trustee and its successors and each
Certificateholder and its successors and permitted assigns, all as herein
provided. Any request, notice, direction, consent, waiver or other instrument
or action by a Certificateholder shall bind the successors and assigns of
such Certificateholder.
Section 11.11. Covenants of the Depositor. (a) The Depositor will not
--------------------------
at any time institute against the Trust any bankruptcy proceedings under any
United States federal or state bankruptcy or similar law in connection with
any obligations relating to the Certificates, the Notes, the Trust Agreement
or any of the other Basic Documents.
((b) The Depositor will not register or aid in the registration of the
Certificates under the Securities Act and will not list or aid in the listing
of the Certificates on any exchange or trade or aid in the trading of the
Certificates on an "established securities market" as defined in Treas. Reg.
Section 1.7704-1(e) (including an interdealer quotation system that regularly
disseminates firm buy or sell quotations by identified brokers or dealers by
electronic means or otherwise).)
Section 11.12. No Petition. The Owner Trustee, by entering into this
-----------
Trust Agreement, each Certificateholder, by accepting a Certificate, and the
Indenture Trustee and each Noteholder, by accepting the benefits of this
Trust Agreement, hereby covenant and agree that they will not at any time
institute against the Depositor or the Trust, or join in any institution
against the Depositor or the Trust of, any bankruptcy proceedings under any
United States federal or state bankruptcy or similar law in connection with
any obligations relating to the Certificates, the Notes, this Trust Agreement
or any of the Basic Documents.
Section 11.13. No Recourse. Each Certificateholder by accepting a
-----------
Certificate acknowledges that such Certificateholder's Certificates represent
beneficial interests in the Trust only and do not represent interests in or
obligations of the Depositor, the Administrator, the Owner Trustee, the
Indenture Trustee, (the Swap Counterparty) or any affiliate thereof and no
recourse may be had against such parties or their assets, except as may be
expressly set forth or contemplated in this Trust Agreement, the Certificates
or the other Basic Documents.
Section 11.14. Headings. The headings of the various Articles and
--------
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
Section 11.15. GOVERNING LAW. THIS TRUST AGREEMENT SHALL BE CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE AND THE OBLIGATIONS,
RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
Section 11.16. Integration. This Trust Agreement constitutes the entire
-----------
agreement among the parties hereto pertaining to the subject matter hereof
and supersedes all prior agreements and understanding pertaining thereto.
Section 11.17. Appointment of Agent. The Trust irrevocably consents to
--------------------
the service of any and all process in any action or proceeding by the mailing
or delivery of copies of such process to it at the office of
(_______________________):
(_____)
(_____)
(_____)
(_____)
Attn: (_______).
Section 11.18. Benefits of Trust Agreement. Nothing in the Trust
---------------------------
Agreement or in the Certificates, express or implied, shall give to any
Person, other than the parties hereto and their successors hereunder, and the
Certificateholders and other parties entitled to the benefits of this Trust
Agreement as herein stated, any benefit or any legal or equitable right,
remedy or claim under the Trust Agreement; (provided, however, that
-------- -------
the Swap Counterparty is a third party beneficiary of all provisions of this
Trust Agreement and as such is entitled to enforce all provisions of this
Trust Agreement directly).
Section 11.19. Assignment. (The parties hereby expressly agree that
----------
the Swap Counterparty may assign its rights hereunder and under the Indenture
(exclusive of any such rights in Section 3.21 of the Indenture) but not any
of its obligations and the assignee of such rights may take action hereunder
consistent with the assignment of rights and the parties agree to be bound by
such assignment.)
IN WITNESS WHEREOF, the Depositor and the Owner Trustee have caused
their names to be signed hereto by their respective officers thereunto duly
authorized, all as of the day and year first above written.
ML Asset Backed Corporation,
as Depositor
By:________________________________
Name:
Title:
(__________________________________),
as Owner Trustee
By:_________________________________
Name:
Title:
EXHIBIT A
(Form of Certificate)
(Face)
(THIS SECURITY HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND NEITHER
THE TRUST NOR THE POOL OF ASSETS HAS BEEN REGISTERED UNDER THE UNITED STATES
INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE "1940 ACT"). THIS SECURITY
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT TO A
PERSON WHO (1) IS A QUALIFIED INSTITUTIONAL BUYER, (2) IS AWARE THAT THE SALE
OF THE CERTIFICATES TO IT IS BEING MADE IN RELIANCE ON THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144A UNDER THE SECURITIES ACT (THE "SECURITIES
ACT") AND (3) IS ACQUIRING THE CERTIFICATES FOR ITS OWN ACCOUNT OR FOR ONE OR
MORE ACCOUNTS, EACH OF WHICH IS A QUALIFIED INSTITUTIONAL BUYER, AND AS TO
EACH OF WHICH THE PURCHASER EXERCISES SOLE INVESTMENT DISCRETION. THE
PURCHASER HAS SUCH KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS
AS TO BE CAPABLE OF EVALUATING THE MERITS AND RISKS OF ITS INVESTMENT IN THE
CERTIFICATES, AND THE PURCHASER, AND ANY ACCOUNTS FOR WHICH IT IS ACTING, ARE
EACH ABLE TO BEAR THE ECONOMIC RISK OF THE PURCHASER'S OR ITS INVESTMENT.
THE PURCHASER UNDERSTANDS THAT THE CERTIFICATES ARE BEING OFFERED ONLY IN A
TRANSACTION NOT INVOLVING ANY PUBLIC OFFERING WITHIN THE MEANING OF THE
SECURITIES ACT, THE CERTIFICATES HAVE NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT, AND, IF IN THE FUTURE THE PURCHASER DECIDES TO
OFFER, RESELL, PLEDGE OR OTHERWISE TRANSFER THE CERTIFICATES, SUCH
CERTIFICATES MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN
ACCORDANCE WITH THE APPLICABLE LEGEND ON SUCH CERTIFICATES. THE PURCHASER
ACKNOWLEDGES THAT NO REPRESENTATION IS MADE BY THE INDENTURE TRUSTEE, THE
OWNER TRUSTEE, THE ADMINISTRATOR, (THE SWAP COUNTERPARTY, THE SWAP
GUARANTOR,) THE INITIAL PURCHASER OR THE DEPOSITOR, AS THE CASE MAY BE, AS TO
THE AVAILABILITY OF ANY EXEMPTION UNDER THE SECURITIES ACT OR ANY STATE
SECURITIES LAWS FOR RESALE OF THE CERTIFICATES.
THE PURCHASER IS NOT PURCHASING THE CERTIFICATES WITH A VIEW TO THE RESALE,
DISTRIBUTION OR OTHER DISPOSITION THEREOF IN VIOLATION OF THE SECURITIES ACT.
THE PURCHASER UNDERSTANDS THAT AN INVESTMENT IN THE CERTIFICATES INVOLVES
CERTAIN RISKS, INCLUDING THE RISK OF LOSS OF ALL OR A SUBSTANTIAL PART OF ITS
INVESTMENT UNDER CERTAIN CIRCUMSTANCES. THE PURCHASER HAS HAD ACCESS TO SUCH
FINANCIAL AND OTHER INFORMATION CONCERNING THE ISSUER AND THE CERTIFICATES AS
IT DEEMED NECESSARY OR APPROPRIATE IN ORDER TO MAKE AN INFORMED INVESTMENT
DECISION WITH RESPECT TO ITS PURCHASE OF THE CERTIFICATES.
IN CONNECTION WITH THE PURCHASE OF THE CERTIFICATES: (A) NONE OF THE OWNER
TRUSTEE, THE INDENTURE TRUSTEE, THE ADMINISTRATOR, (THE SWAP COUNTERPARTY,
THE SWAP GUARANTOR,) THE INITIAL PURCHASER OR THE DEPOSITOR IS ACTING AS A
FIDUCIARY OR FINANCIAL OR INVESTMENT ADVISER FOR THE PURCHASER; (B) THE
PURCHASER IS NOT RELYING (FOR PURPOSES OF MAKING ANY INVESTMENT DECISION OR
OTHERWISE) UPON ANY ADVICE, COUNSEL OR REPRESENTATIONS (WHETHER WRITTEN OR
ORAL) OF THE OWNER TRUSTEE, THE INDENTURE TRUSTEE, THE ADMINISTRATOR, (THE
SWAP COUNTERPARTY, THE SWAP GUARANTOR,) THE INITIAL PURCHASER OR THE
DEPOSITOR OTHER THAN IN A CURRENT OFFERING MEMORANDUM FOR SUCH SECURITIES AND
ANY REPRESENTATIONS EXPRESSLY SET FORTH IN A WRITTEN AGREEMENT WITH SUCH
PARTY; (C) NONE OF THE OWNER TRUSTEE, THE INDENTURE TRUSTEE, THE
ADMINISTRATOR, (THE SWAP COUNTERPARTY, THE SWAP GUARANTOR,) THE INITIAL
PURCHASER OR THE DEPOSITOR HAVE GIVEN TO THE PURCHASER (DIRECTLY OR
INDIRECTLY THROUGH ANY OTHER PERSON) ANY ASSURANCE, GUARANTEE, OR
REPRESENTATION WHATSOEVER AS TO THE EXPECTED OR PROJECTED SUCCESS,
PROFITABILITY, RETURN, PERFORMANCE, RESULT, EFFECT, CONSEQUENCE, OR BENEFIT
(INCLUDING LEGAL, REGULATORY, TAX, FINANCIAL, ACCOUNTING, OR OTHERWISE) OF
THE TRUST AGREEMENT, THE INDENTURE(, THE SWAP AGREEMENT) OR DOCUMENTATION FOR
THE CERTIFICATES; AND (D) THE PURCHASER HAS CONSULTED WITH ITS OWN LEGAL,
REGULATORY, TAX, BUSINESS, INVESTMENT, FINANCIAL, AND ACCOUNTING ADVISERS TO
THE EXTENT IT HAS DEEMED NECESSARY, AND IT HAS MADE ITS OWN INVESTMENT
DECISIONS (INCLUDING DECISIONS REGARDING THE SUITABILITY OF ANY TRANSACTION
PURSUANT TO THE TRUST AGREEMENT(, THE SWAP AGREEMENT) AND THE INDENTURE)
BASED UPON ITS OWN JUDGEMENT AND UPON ANY ADVICE FROM SUCH ADVISERS AS IT HAS
DEEMED NECESSARY AND NOT UPON ANY VIEW EXPRESSED BY THE OWNER TRUSTEE, (THE
SWAP COUNTERPARTY, THE SWAP GUARANTOR,) THE INDENTURE TRUSTEE, THE
ADMINISTRATOR, THE INITIAL PURCHASER OR THE DEPOSITOR.
THE PURCHASER WILL NOT, AT ANY TIME, OFFER TO BUY OR OFFER TO SELL THE
CERTIFICATES BY ANY FORM OF GENERAL SOLICITATION OR ADVERTISING, INCLUDING,
BUT NOT LIMITED TO, ANY ADVERTISEMENT, ARTICLE, NOTICE OR OTHER COMMUNICATION
PUBLISHED IN ANY NEWSPAPER, MAGAZINE OR SIMILAR MEDIUM OR BROADCAST OVER
TELEVISION OR RADIO OR SEMINAR OR MEETING WHOSE ATTENDEES HAVE BEEN INVITED
BY GENERAL SOLICITATION OR ADVERTISING.
THE PURCHASER IS NOT (A) AN "EMPLOYEE BENEFIT PLAN" (AS DEFINED IN SECTION
3(3) OF EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA")) THAT IS SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF
ERISA, (B) A "PLAN" THAT IS SUBJECT TO SECTION 4975 OF THE CODE, (C) A
"GOVERNMENTAL PLAN" (AS DEFINED IN SECTION 3(32) OF ERISA) THAT IS SUBJECT TO
ANY FEDERAL, STATE OR LOCAL LAW WHICH IS SUBSTANTIALLY SIMILAR TO THE
PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE (THE PERSONS
OR ENTITIES DESCRIBED IN CLAUSES (A), (B), AND (C) BEING REFERRED TO HEREIN
AS "BENEFIT PLANS") OR (D) ANY PERSON OR ENTITY THAT IS USING, FOR PURPOSES
OF THE FIDUCIARY RESPONSIBILITY PROVISIONS OF ERISA OR SECTION 4975 OF THE
CODE, THE ASSETS OF ANY BENEFIT PLAN TO PURCHASE OR HOLD ITS INTEREST IN ANY
SECURITIES (THE PERSON AND ENTITIES DESCRIBED IN THIS CLAUSE (D), TOGETHER
WITH BENEFIT PLANS, BEING REFERRED TO AS "BENEFIT PLAN INVESTORS"). THE
PURCHASER, AND ANY FIDUCIARY OF THE PURCHASER CAUSING THE PURCHASER TO
ACQUIRE THE SECURITIES, AGREES TO INDEMNIFY AND HOLD HARMLESS THE ISSUER, THE
OWNER TRUSTEE, THE INDENTURE TRUSTEE, THE DEPOSITOR, (THE SWAP COUNTERPARTY,
THE SWAP GUARANTOR,) THE INITIAL PURCHASER AND THEIR RESPECTIVE AFFILIATES
FROM ANY COST, DAMAGE OR LOSS INCURRED BY THEM AS A RESULT OF THE PURCHASER
BEING OR BEING DEEMED TO BE A BENEFIT PLAN INVESTOR.
THE PURCHASER IS A UNITED STATES PERSON WITHIN THE MEANING OF SECTION
7701(A)(30) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. THE PURCHASER
UNDERSTANDS AND AGREES THAT ANY PURPORTED TRANSFER OF THE CERTIFICATES TO A
HOLDER THAT DOES NOT COMPLY WITH THE REQUIREMENTS OF THIS CLAUSE WILL BE NULL
AND VOID AB INITIO.
IF THE CERTIFICATES PURCHASED BY ANY PERSON THAT IS A PARTNERSHIP, GRANTOR
TRUST OR S CORPORATION FOR FEDERAL INCOME TAX PURPOSES COMPRISE MORE THAN
ONE-HALF OF THE ASSETS OF SUCH PERSON (INCLUDING BENEFICIAL OWNERS OWNING
SUCH PERSON THROUGH A PARTNERSHIP, GRANTOR TRUST OR S CORPORATION), THE
NUMBER OF BENEFICIAL OWNERS OF SUCH PERSON DOES NOT AND WILL NOT EXCEED THE
PRINCIPAL AMOUNT OF THE CERTIFICATES OWNED BY SUCH PERSON DIVIDED BY $100,000
AND INCOME FROM SUCH CERTIFICATES WILL BE ALLOCATED PRO RATA TO BENEFICIAL
OWNERS OF SUCH PERSON.)
Unless this Class (B-1) (B-2) Certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation
("DTC"), to the Issuer or its agent for registration of transfer, exchange or
payment, and any Class (B-1) (B-2) Certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE PRINCIPAL OF THIS CLASS (B-1) (B-2) CERTIFICATE IS SUBJECT TO PREPAYMENT
FROM TIME TO TIME WITHOUT SURRENDER OF OR NOTATION ON THIS CLASS (B-1) (B-2)
CERTIFICATE. ACCORDINGLY, THE UNPAID PRINCIPAL AMOUNT OF THIS CLASS (B-1)
(B-2) CERTIFICATE MAY BE LESS THAN THAT SET FORTH BELOW. ANYONE ACQUIRING
THIS CLASS (B-1) (B-2) CERTIFICATE MAY ASCERTAIN ITS CURRENT PRINCIPAL
BALANCE BY INQUIRY OF THE OWNER TRUSTEE. THE RIGHTS OF A HOLDER OF THIS
CLASS (B-1) (B-2) CERTIFICATE ARE SUBJECT TO THE PROVISIONS OF THE WITHIN
REFERENCED TRUST AGREEMENT.
(INTEREST ON AND PRINCIPAL OF THE CLASS (B-1) CERTIFICATES AND THE CLASS (B-
2) CERTIFICATES ARE PAYABLE ON A PRO RATA BASIS.) (THIS CLASS B-2
CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS B-1 CERTIFICATES
AS PROVIDED IN THE WITHIN REFERENCED TRUST AGREEMENT).
The Owner Trustee shall withhold, at the applicable withholding rate (or
backup withholding rate, as applicable), a portion of interest payments
otherwise distributable to any beneficial holder of a Certificate that fails
to provide the Owner Trustee with a copy of a properly completed IRS Form W-
8, IRS Form W-9, IRS Form 1001, or IRS Form 4224.
(_________) TRUST (______)
(_________________) CERTIFICATE, CLASS (B-1) (B-2)
Evidencing a fractional undivided Percentage Interest in the Trust
consisting of assets acquired by the Trust.
Class (B-1) (B-2) Certificate No. __ CUSIP No.
Original principal amount ("Denomination") of this
Certificate: $_________
Aggregate Denominations of all Certificates: $(________)
Pass-Through Rate: (______________)
First Payment Date
(______________)
This certifies that (name of Holder) is the registered owner of the
fractional undivided Percentage Interest evidenced by this Class (B-1) (B-2)
Certificate in the amounts distributable from a trust (the "Trust") con-
sisting of $(___________) in aggregate principal amount outstanding as of the
Closing Date of (_______________________) (the "Underlying Securities"). The
Underlying Securities were transferred to the Trust by ML Asset Backed
Corporation (the "Depositor"). The Trust was created pursuant to a trust
agreement dated as of (________) (as amended and restated by an amended and
restated trust agreement dated as of (_____________)) (the "Trust Agreement")
between the Depositor and (_______________________), as owner trustee (the
"Owner Trustee", which term includes any successor entity under the Trust
Agreement), a summary of certain of the pertinent provisions of which is set
forth hereinafter. This Class (B-1) (B-2) Certificate is issued under and is
subject to the terms, provisions and conditions of the Trust Agreement, to
which Trust Agreement the Holder of this Class (B-1) (B-2) Certificate by
virtue of the acceptance hereof assents and by which such Holder is bound.
This Class (B-1) (B-2) Certificate is one of a duly authorized issue of
(___________________) (issued in two classes) Class (B-1) and Class (B-2)
(herein called the "Certificates") issued under the Trust Agreement to which
reference is hereby made for a statement of the respective rights thereunder
of the Depositor, the Owner Trustee and the Holders of the Certificates and
the terms upon which the Certificates are executed and delivered. All terms
used in this Class (B-1) (B-2) Certificate which are defined in the Trust
Agreement shall have the meanings assigned to them in the Trust Agreement.
To the extent funds are available in accordance with the Priority of
Payments (as defined in the Indenture), the Issuer will make distributions of
interest on this Class (B-1) (B-2) Certificate as described in the Trust
Agreement on each Payment Date until the principal of this Class (B-1) (B-2)
Certificate is paid or made available for payment, on the principal amount of
this Class (B-1) (B-2) Certificate outstanding on the preceding Payment Date
(after giving effect to all payments of principal made on the preceding
Payment Date), subject to certain limitations contained in the Trust
Agreement. Such principal of and interest on this Class (B-1) (B-2)
Certificate shall be paid in the manner specified on the reverse hereof.
Interest on this Class (B-1) (B-2) Certificate will accrue from the Closing
Date at a rate (per annum) equal to (_______________) (the "Class (B-1) (B-2)
Accrual Rate"). Interest will accrue with respect to each Payment Date
during the period beginning on (______________) (or on the Closing Date in
the case of the first Payment Date) and ending on (______________) (each "a
Certificate Interest Accrual Period") and will be payable to
Certificateholders (______) in arrears on each Payment Date. Interest will
be calculated on the basis of (the actual number of days in a Certificate
Interest Accrual Period divided by 360). "Payment Date" means
(____________). Under certain circumstances described in the Trust
Agreement, interest on the Certificates may be deferred.
(Interest on and principal of the Class (B-1) Certificates and the Class
(B-2) Certificates are payable on a pro rata basis.) (This Class (B-2)
Certificate is subordinated in right of payment of interest and principal to
the Class (B-1) Certificates as provided in the Trust Agreement.)
Subject to the Priority of Payments, on each Payment Date, interest will
be distributed to the Person in whose name this Class (B-1) (B-2) Certificate
is registered at the close of business on the last Business Day of the month
preceding the month of such distribution (the "Record Date").
The Holder of this Class (B-1) (B-2) Certificate, by its acceptance of
this Class (B-1) (B-2) Certificate, agrees that it will look solely to the
funds on deposit in the Collection Account maintained by the Indenture
Trustee for payment hereunder and that neither the Owner Trustee in its
individual capacity nor the Depositor is personally liable to the Certifi-
cateholders for any amount payable under this Class (B-1) (B-2) Certificate
or the Trust Agreement or, except as expressly provided in the Trust
Agreement, subject to any liability under the Trust Agreement.
The Holder of this Class (B-1) (B-2) Certificate acknowledges and agrees
that its rights to receive distributions in respect of this Class (B-1) (B-2)
Certificate are subordinated to the rights of (the Swap Counterparty to
receive payments under the Swap Agreement and) of the Noteholders to receive
payments on the Notes as described in the Indenture dated as of
(_____________) among the Trust, (_____________________) (and the Swap
Counterparty) (the "Indenture") (and the Holders of the Class (B-1)
Certificates, as described in the Trust Agreement).
(It is the intent of the Depositor and the Certificateholders that, for
purposes of federal income, state and local income and single business tax
and any other income taxes, the Trust will be treated as a security
arrangement for the issuance of debt. The Depositor and the other Certifi-
cateholders, by acceptance of a Certificate, agree to treat, and to take no
action inconsistent with the treatment of, the Certificates for such tax
purposes as a security arrangement for the issuance of debt.)
Each Certificateholder or Certificate Owner, by its acceptance of a
Certificate or, in the case of a Certificate Owner, a beneficial interest in
a Certificate, covenants and agrees that such Certificateholder or
Certificate Owner, as the case may be, will not at any time institute against
the Depositor, or join in any institution against the Depositor of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any United States federal or state
bankruptcy or similar law in connection with any obligations relating to the
Certificates, the Notes, the Trust Agreement or any of the Basic Documents.
Distributions on this Class (B-1) (B-2) Certificate will be made as
provided in the Trust Agreement by the Administrator by wire transfer or
check mailed to the Certificateholder of record in the Certificate Register
without the presentation or surrender of this Class (B-1) (B-2) Certificate
or the making of any notation hereon. Except as otherwise provided in the
Trust Agreement and notwithstanding the above, the final distribution on this
Class (B-1) (B-2) Certificate will be made after due notice by the Owner
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Class (B-1) (B-2) Certificate at the office or agency
maintained for that purpose by the Trust in the Borough of Manhattan, The
City of New York.
Reference is hereby made to the further provisions of this Class (B-1)
(B-2) Certificate set forth on the reverse hereof, which further provisions
shall for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been executed
by an authorized officer of the Owner Trustee, or an authenticating agent by
manual signature, this Class (B-1) (B-2) Certificate shall not entitle the
Holder hereof to any benefit under the Trust Agreement or be valid for any
purpose.
THIS CLASS (B-1) (B-2) CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO THIS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and
not in its individual capacity, has caused this Class (B-1) (B-2) Certificate
to be duly executed.
(_________) TRUST (______)
By: (_______________________), not in its
individual capacity but solely as Owner
Trustee
Dated: __________ By: __________________________________
Authorized Signatory
(REVERSE OF CERTIFICATE)
The Certificates do not represent an obligation of, or an interest in,
the Depositor, the Seller, the Owner Trustee(, the Swap Counterparty) or any
affiliates of any of them (except the Trust) and no recourse may be had
against such parties or their assets, except as expressly set forth or
contemplated herein or in the Trust Agreement or the other Basic Documents.
In addition, this Class (B-1) (B-2) Certificate is not guaranteed by any
governmental agency or instrumentality and is limited in right of payment to
certain collections and recoveries with respect to the Underlying Securities
(and certain other amounts), all as more specifically set forth herein. A
copy of the Trust Agreement may be examined by any Certificateholder upon
written request during normal business hours at the principal office of the
Depositor and at such other places, if any, designated by the Depositor.
Subject to the Priority of Payments, principal will be distributed on
the Certificates on (________) unless prepaid prior thereto. (The
Certificates are subject to prepayment as described in the Trust Agreement.)
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of
the Depositor and the rights of the Certificateholders under the Trust
Agreement at any time by the Depositor and the Owner Trustee (with the
consent of the Swap Counterparty) and of the Holders of the Certificates and
the Noteholders, each voting as a class, evidencing not less than a majority
of the Voting Interests of the Certificates and the outstanding principal
balance of the Notes of each such class. Any such consent by the Holder of
this Class (B-1) (B-2) Certificate shall be conclusive and binding on such
Holder and on all future Holders of this Class (B-1) (B-2) Certificate and of
any Class (B-1) (B-2) Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof, whether or not notation of such consent
is made upon this Class (B-1) (B-2) Certificate. The Trust Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Class (B-1) (B-2) Certificate is
registerable in the Certificate Register upon surrender of this Class (B-1)
(B-2) Certificate for registration of transfer at the offices or agencies of
the Certificate Registrar maintained by the Trust in the Borough of
Manhattan, The City of New York, accompanied by a written instrument of
transfer in form satisfactory to the Owner Trustee and the Certificate
Registrar duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Class (B-1) (B-2)
Certificates of authorized denominations evidencing the same aggregate
interest in the Trust will be issued to the designated transferee. The
initial Certificate Registrar appointed under the Trust Agreement is
(_____________________), as Administrator.
Except as provided in the Trust Agreement, the Certificates are issuable
only in minimum denominations of $(___________) and in integral multiples of
$(___________) in excess thereof. As provided in the Trust Agreement and
subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates (of the same Class) of authorized
denominations evidencing the same aggregate denomination, as requested by the
Holder surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Owner Trustee or the
Certificate Registrar may require payment of a sum sufficient to cover any
tax or governmental charge payable in connection therewith.
The Owner Trustee, the Certificate Registrar and any agent of the Owner
Trustee or the Certificate Registrar may treat the Person in whose name this
Class (B-1) (B-2) Certificate is registered as the owner hereof for all
purposes, and none of the Owner Trustee, the Certificate Registrar or any
such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Trust Agreement and
the Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them pursuant to the
Trust Agreement and the Indenture and the disposition of all property held as
part of the Trust Estate.
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
__________________________________________________________________________
(Please print or type name and address, including postal zip code, of
assignee)
the within Class (B-1) (B-2) Certificate, and all rights thereunder, hereby
irrevocably constituting and appointing
- --------------------------------------------------------------------------
to transfer said Class (B-1) (B-2) Certificate on the books of the
Certificate Registrar, with full power of substitution in the premises.
Dated:
*/
- --------------------------------------------
Signature Guaranteed:
*/
-----------------------------
_________________
*/ NOTICE: The signature to this assignment must correspond with the name
- - of the registered owner as it appears on the face of the within Class
(B-1) (B-2) Certificate in every particular, without alteration,
enlargement or any change whatever. Such signature must be guaranteed
by an "eligible guarantor institution" meeting the requirements of the
Certificate Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as
may be determined by the Certificate Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange
Act of 1934, as amended.
Certificate of Authentication
This is one of the Class (B-1) (B-2) Certificates referred to in the within
mentioned Trust Agreement.
(_____________________________),
as Owner Trustee
By:______________________________
Authorized Signatory
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of the
Owner Trustee:
Distribution shall be made by wire transfer in immediately available
funds to ____________________________________________________________________
__________________________________________________________________________for
the account of _____________________________________________________________,
account number ______________, or, if mailed by check, to ______________.
Applicable statements should be mailed to__________________.
______________________________
Signature of assignee or agent
(for authorization of wire
transfer only)
EXHIBIT B
TO THE TRUST AGREEMENT
CERTIFICATE OF TRUST OF
(___________) Trust (______)
THIS Certificate of Trust of (___________) Trust (______) (the
"Trust"), dated (__________), is being duly executed and filed by
(___________________), a Delaware banking corporation, as trustee, to form a
business trust under the Delaware Business Trust Act (12 Del. Code,
---------
Section 3801 et seq.).
1. Name. The name of the business trust formed hereby is
----
(___________) Trust (______).
2. (_______________________) The name and business address of
-------------------------
the trustee of the Trust in the State of Delaware is (____________________
_____________________), Attention: Corporate Trust Administration.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.
(__________________________________),
not in its individual capacity but solely as
owner trustee under a Trust Agreement dated as
of (__________)
By:_________________________________________
Name:
Title:
Exhibit 4.2
(_______________) TRUST (_______________),
ISSUER
AND
(______________________________)
INDENTURE TRUSTEE
AND
(______________________________)
(SWAP COUNTERPARTY)
_________________________________________
FORM OF INDENTURE
Dated as of (____________________)
__________________________________________
ASSET BACKED NOTES, CLASS (A-1) (and CLASS A-2)
TABLE OF CONTENTS
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Section Page
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ARTICLE I
Definitions
1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . 2
1.02. Other Definitional Provisions. . . . . . . . . . . . . . 16
1.03. Rules of Construction . . . . . . . . . . . . . . . . . . 16
1.04. Incorporation by Reference of Trust Indenture Act . . . . 16
ARTICLE II
Original Issuance of Notes
2.01. Form . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.02. Execution, Authentication and Delivery . . . . . . . . . . 17
ARTICLE III
Administration of the Underlying Securities;
Application of Trust Funds
3.01. Collection of Payments on Underlying Securities;
Collection Account . . . . . . . . . . . . . . . . . . . . 18
3.02. Maintenance of Office or Agency . . . . . . . . . . . . . 19
3.03. Money for Payments To Be Held in Trust . . . . . . . . . . 20
3.04. Existence . . . . . . . . . . . . . . . . . . . . . . . . 21
3.05. Application of Trust Funds . . . . . . . . . . . . . . . . 21
3.06. Protection of Trust Estate . . . . . . . . . . . . . . . . 26
3.07. Opinions as to Trust Estate . . . . . . . . . . . . . . . 27
3.08. Performance of Obligations . . . . . . . . . . . . . . . . 27
3.09. Annual Statement as to Compliance . . . . . . . . . . . . 28
3.10. Negative Covenants . . . . . . . . . . . . . . . . . . . . 28
3.11. Transfer of Assets . . . . . . . . . . . . . . . . . . . . 29
3.12. Transferee . . . . . . . . . . . . . . . . . . . . . . . . 30
3.13. Issuer May Consolidate, etc., Only on Certain Terms . . . 30
3.14. No Other Business . . . . . . . . . . . . . . . . . . . . 31
3.15. No Borrowing . . . . . . . . . . . . . . . . . . . . . . . 31
3.16. Guarantees, Loans, Advances and Other Liabilities . . . . 31
3.17. Capital Expenditures . . . . . . . . . . . . . . . . . . . 32
3.18. Removal of Administrator . . . . . . . . . . . . . . . . . 32
3.19. Restricted Payments . . . . . . . . . . . . . . . . . . . 32
3.20. Notice of Events of Default . . . . . . . . . . . . . . . 32
3.21. Further Instruments and Acts . . . . . . . . . . . . . . . 32
3.22. Statements to Noteholders . . . . . . . . . . . . . . . . 32
3.23. Notices to Indenture Trustee . . . . . . . . . . . . . . . 34
3.24. Custodianship, Transfer of Underlying Securities and
Eligible Investments . . . . . . . . . . . . . . . . . . . 34
ARTICLE IV
The Notes; Satisfaction and Discharge of Indenture
4.01. The Notes . . . . . . . . . . . . . . . . . . . . . . . . 36
4.02. Registration of and Limitations on Transfer and Exchange
of Notes . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.03. Mutilated, Destroyed, Lost or Stolen Notes . . . . . . . . 38
4.04. Persons Deemed Owners . . . . . . . . . . . . . . . . . . 40
4.05. Cancellation . . . . . . . . . . . . . . . . . . . . . . . 40
4.06. Book-Entry Notes . . . . . . . . . . . . . . . . . . . . . 40
4.07. Notices to Depository . . . . . . . . . . . . . . . . . . 41
4.08. Definitive Notes . . . . . . . . . . . . . . . . . . . . . 41
4.09. Tax Treatment . . . . . . . . . . . . . . . . . . . . . . 42
4.10. Satisfaction and Discharge of Indenture . . . . . . . . . 42
4.11. Application of Trust Money . . . . . . . . . . . . . . . . 43
4.12. Repayment of Moneys Held by Administrator . . . . . . . . 44
ARTICLE V
Remedies
5.01. Events of Default . . . . . . . . . . . . . . . . . . . . 44
5.02. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee . . . . . . . . . . . . . . . . . . . . 44
5.03. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.04. Enforcement of Swap Agreement . . . . . . . . . . . . . . 48
5.05. Modification and Amendment of Swap Agreement . . . . . . . 48
5.06. Limitation of Suits and Liability . . . . . . . . . . . . 49
5.07. Unconditional Rights of Noteholders To Receive Principal
and Interest . . . . . . . . . . . . . . . . . . . . . . . 50
5.08. Restoration of Rights and Remedies . . . . . . . . . . . . 50
5.09. Rights and Remedies Cumulative . . . . . . . . . . . . . . 50
5.10. Delay or Omission Not a Waiver . . . . . . . . . . . . . . 51
5.11. Control by Noteholders . . . . . . . . . . . . . . . . . . 51
5.12. Waiver of Past Defaults . . . . . . . . . . . . . . . . . 51
5.13. Undertaking for Costs . . . . . . . . . . . . . . . . . . 52
5.14. Waiver of Stay or Extension Laws . . . . . . . . . . . . . 52
5.15. Action on Notes . . . . . . . . . . . . . . . . . . . . . 52
5.16. Sale of Underlying Securities . . . . . . . . . . . . . . 53
ARTICLE VI
The Indenture Trustee
6.01. Duties of Indenture Trustee . . . . . . . . . . . . . . . 53
6.02. Rights of Indenture Trustee . . . . . . . . . . . . . . . 54
6.03. Individual Rights of Indenture Trustee . . . . . . . . . . 55
6.04. Indenture Trustee's Disclaimer . . . . . . . . . . . . . . 55
6.05. Notice of Event of Default . . . . . . . . . . . . . . . . 56
6.06. Reports by Indenture Trustee to Holders . . . . . . . . . 56
6.07. Compensation and Indemnity . . . . . . . . . . . . . . . . 56
6.08. Replacement of Indenture Trustee . . . . . . . . . . . . . 57
6.09. Successor Indenture Trustee by Merger . . . . . . . . . . 58
6.10. Appointment of Co-Indenture Trustee or Separate Indenture
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 58
6.11. Eligibility; Disqualification . . . . . . . . . . . . . . 60
6.12. Preferential Collection of Claims Against Issuer . . . . . 60
6.13. Representation and Warranty . . . . . . . . . . . . . . . 60
6.14. Directions to Indenture Trustee . . . . . . . . . . . . . 60
ARTICLE VII
Noteholders' Lists and Reports
7.01. Issuer To Furnish Indenture Trustee Names and Addresses
of Noteholders . . . . . . . . . . . . . . . . . . . . . . 61
7.02. Preservation of Information; Communications to
Noteholders . . . . . . . . . . . . . . . . . . . . . . . 61
7.03. Reports by Issuer . . . . . . . . . . . . . . . . . . . . 61
7.04. Reports by Indenture Trustee . . . . . . . . . . . . . . . 62
ARTICLE VIII
Accounts, Disbursements and Releases
8.01. Collection of Money . . . . . . . . . . . . . . . . . . . 62
8.02. Trust Accounts . . . . . . . . . . . . . . . . . . . . . . 63
8.03. Opinion of Counsel . . . . . . . . . . . . . . . . . . . . 63
8.04. Termination Upon Distribution to Noteholders(, Swap
Counterparty) and Indenture Trustee . . . . . . . . . . . 64
8.05. Release of Trust Estate . . . . . . . . . . . . . . . . . 64
8.06. Surrender of Notes Upon Final Payment . . . . . . . . . . 64
ARTICLE IX
Supplemental Indentures
9.01. Supplemental Indentures Without Consent of Noteholders . . 64
9.02. Supplemental Indentures with Consent of Noteholders . . . 66
9.03. Execution of Supplemental Indentures . . . . . . . . . . . 67
9.04. Effect of Supplemental Indenture . . . . . . . . . . . . . 67
9.05. Conformity with Trust Indenture Act . . . . . . . . . . . 67
9.06. Reference in Notes to Supplemental Indentures . . . . . . 68
ARTICLE X
Miscellaneous
10.01. Compliance Certificates, etc . . . . . . . . . . . . . . . 68
10.02. Form of Documents Delivered to Indenture Trustee . . . . . 70
10.03. Acts of Noteholders . . . . . . . . . . . . . . . . . . . 71
10.04. Notices, etc., to Indenture Trustee, Issuer, (Swap
Counterparty) and Rating Agencies . . . . . . . . . . . . 71
10.05. Notices to Noteholders; Waiver . . . . . . . . . . . . . . 72
10.06. Alternate Payment and Notice Provisions . . . . . . . . . 73
10.07. Conflict with Trust Indenture Act . . . . . . . . . . . . 73
10.08. Effect of Headings . . . . . . . . . . . . . . . . . . . . 73
10.09. Successors and Assigns . . . . . . . . . . . . . . . . . . 73
10.10. Separability . . . . . . . . . . . . . . . . . . . . . . . 74
10.11. Benefits of Indenture . . . . . . . . . . . . . . . . . . 74
10.12. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . 74
10.13. Governing Law . . . . . . . . . . . . . . . . . . . . . . 74
10.14. Counterparts . . . . . . . . . . . . . . . . . . . . . . . 74
10.15. Recording of Indenture . . . . . . . . . . . . . . . . . . 74
10.16. Trust Obligation . . . . . . . . . . . . . . . . . . . . . 75
10.17. (Section 316(a)(1) of the TIA . . . . . . . . . . . . . . 75
10.18. No Petition . . . . . . . . . . . . . . . . . . . . . . . 75
ARTICLE XI
Redemption
11.01. Redemption . . . . . . . . . . . . . . . . . . . . . . . . 76
11.02. Form of Redemption Notice . . . . . . . . . . . . . . . . 76
11.03. Notes Payable on Redemption Date . . . . . . . . . . . . . 77
Signatures and Seals . . . . . . . . . . . . . . . . . . . . . . . . . __
Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . __
EXHIBITS
Exhibit A - Form of Notes
This is an Indenture, dated as of (________), among (________)
TRUST (________), a Delaware business trust, as Issuer (the "Issuer"),
(________________________________________), a national banking association,
as Indenture Trustee (the "Indenture Trustee") (and (____________________),
as Swap Counterparty).
WITNESSETH THAT:
Each party hereto agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Issuer's
Asset Backed Notes, Class (A-1), (and Asset Backed Notes, Class (A-2)
(collectively, the "Notes").
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the Closing
Date, as Indenture Trustee for the benefit of the Holders of the Notes, (and
the Swap Counterparty), as their interests appear herein, all of the Issuer's
right, title and interest in and to (a) the Underlying Securities and all
monies and proceeds due thereon after the Closing Date; (b) all funds on
deposit from time to time in the Collection Account and in all proceeds
thereof; (c) any Eligible Investments purchased with funds on deposit in the
Collection Account; (d) (the Swap Agreement, the Swap Guarantee and any
amounts received pursuant thereto or any proceeds thereof (provided that the
Grant of the Swap Agreement and the Swap Guarantee shall be for the benefit
of the Noteholders only)); and (e) all present and future claims, demands,
causes and choses in action in respect of any or all of the foregoing and all
payments on or under, and all proceeds of every kind and nature whatsoever in
respect of, any or all of the foregoing and all payments on or under, and all
proceeds of every kind and nature whatsoever in the conversion thereof,
voluntary or involuntary, into cash or other liquid property, all cash
proceeds, accounts, accounts receivable, notes, drafts, acceptances, checks,
deposit accounts, rights to payment of any and every kind, and other forms of
obligations and receivables, instruments and other property which at any time
constitute all or part of or are included in the proceeds of any of the fore-
going (collectively, the "Trust Estate", the "Collateral" or the "Assets").
The foregoing Grant is made in trust to secure the payment of
principal of and interest on, and any other amounts owing in respect of, (the
Swap Agreement and) the Notes, and to secure compliance with the provisions
of this Indenture, all as provided in this Indenture.
The Indenture Trustee, as Indenture Trustee on behalf of the
Holders of the Notes (and the Swap Counterparty), as their interests appear
herein and in the Trust Agreement, acknowledges such Grant, accepts the trust
under this Indenture in accordance with the provisions hereof and agrees to
perform its duties as Indenture Trustee as required herein to the best of its
ability to the end that the interests of the Holders of the Notes and
Certificates (and the Swap Counterparty) may be adequately and effectively
protected.
ARTICLE I
Definitions
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Section 1.01. Definitions. Whenever used in this Indenture, the
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capitalized words and phrases, unless the context otherwise requires, shall
have the following meanings:
"Administration Agreement": The Administration Agreement dated as of
------------------------
(_______________) among the Trust, (____________________), as Owner Trustee
and (____________________), as Administrator, as it may be amended from time
to time.
"Administrator": Initially, (_________________), and, thereafter, any
-------------
successor appointed under the Administration Agreement.
("Affected Party": The meaning specified in the Swap Agreement.)
--------------
"Affiliate": With respect to any specified Person, any other Person
---------
controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with
respect to any Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Assets": The meaning specified in the Granting Clause of this
------
Indenture.
"Authorized Officer": With respect to the Issuer, any officer of the
------------------
Owner Trustee who is authorized to act for the Owner Trustee in matters
relating to the Issuer and who is identified on the list of Authorized
Officers delivered by the Owner Trustee to the Indenture Trustee (and the
Swap Counterparty) on the Closing Date (as such list may be modified or
supplemented from time to time thereafter) and, so long as the Administration
Agreement is in effect, any Responsible Officer of the Administrator who is
authorized to act for the Administrator in matters relating to the Issuer and
to be acted upon by the Administrator pursuant to the Administration Agree-
ment and who is identified on the list of Authorized Officers delivered by
the Administrator to the Indenture Trustee (and the Swap Counterparty) on the
Closing Date (as such list may be modified or supplemented from time to time
thereafter).
"Bank": ______________________________, in its individual capacity and
----
not as Indenture Trustee.
"Basic Documents": The Certificate of Trust, the Trust Agreement, the
---------------
Indenture, the Administration Agreement, the Depository Agreement, (the Swap
Agreement, the Swap Guarantee) and other documents and certificates delivered
in connection therewith.
"Beneficial Owner": With respect to any Note, the Person who is the
----------------
beneficial owner of such Note, as reflected on the books of the Depository or
on the books of a Person maintaining an account with such Depository
(directly as a Depository Participant or indirectly through a Depository
Participant, in accordance with the rules of such Depository).
"Book-Entry Notes": A beneficial interest in the Notes, ownership and
----------------
transfers of which shall be made through book entries by the Depository as
described in Section 4.06.
"Book-entry Regulations": With respect to any Government Security, the
----------------------
applicable regulations of the appropriate governmental authority, governing
the creation of interests in such Government Security, including, without
limitation, for U.S. Treasury bills, bonds and notes, 31 C.F.R. Part 357,
and, with respect to other Government Securities, substantially similar
regulations thereto. Terms defined in the Book-entry Regulations and used
herein have the meanings provided therein. Terms used in "Revised Article 8"
of the Uniform Commercial Code as defined and incorporated by reference
therein have the meaning provided in such Revised Article 8; provided,
however, that such terms used herein although not capitalized therein are
capitalized herein for conformity with the analogous defined terms of the
Book-entry Regulations.
"Business Day": Any day other than a Saturday or a Sunday, or another
------------
day on which banking institutions in the City of New York, New York or the
city in which the Corporate Trust Office of the Owner Trustee or the
Indenture Trustee is located are authorized or obligated by law, regulations
or executive order to be closed.
"Business Trust Statute": Chapter 38 of Title 12 of the Delaware Code,
----------------------
12 Del. Code Sections 3801 et seq., as the same may be amended from time
--- ---- -- ----
to time.
"Calculation Agent": Initially, (____________________________), and
-----------------
thereafter, any successor appointed under the Calculation Agent Agreement.
"Calculation Agent Agreement": The Calculation Agent Agreement dated
---------------------------
as of (____________________) among the Trust, the Indenture Trustee and the
Calculation Agent, as amended from time to time.
"Cash": Such coin or currency of the United States of America as at the
----
time shall be legal tender for payment of all public and private debts.
"Certificate": Any one of the Asset Backed Certificates, Class (B-1)
-----------
(or any one of the Asset Backed Certificates, Class (B-2)), each evidencing
fractional undivided beneficial interests in amounts to be distributed
pursuant to the Trust Agreement and executed by the Owner Trustee in
substantially the form set forth in Exhibit A to the Trust Agreement.
"Certificate of Trust": The Certificate of Trust filed for the Trust
--------------------
pursuant to Section 3810 (a) of the Business Trust Statute.
"Certificate Register": The meaning provided in Section 3.11 of the
--------------------
Trust Agreement.
"Certificated Security": The meaning specified in Section 8-102(1)(a)
---------------------
of the UCC.
"Certificateholder" or "Holder": The Person in whose name a Certificate
----------------- ------
is registered in the Certificate Register.
"Class": As to the Notes, the Class (A-1) Notes (and the Class (A-2)
-----
Notes) and, as to the Certificates, the Class (B-1) Certificates (and the
Class (B-2) Certificates).
"Class (A-1) Note Accrual Rate": A rate (per annum) equal to (______),
-----------------------------
calculated on the basis of a (360-day year consisting of twelve 30-day
months).
"Class (A-1) Notes": The (________) Trust (________) $(________) Asset
-----------------
Backed Notes, Class A-1.
"Class (A-1) Payment Amount": As to any Payment Date with respect to the
--------------------------
Class A-1 Notes, the amount due and payable thereon pursuant to Section 3.05
of this Indenture.
"Class (A-1) Scheduled Final Payment Date": (____________________).
----------------------------------------
("Class (A-2) Note Accrual Rate": A rate (per annum) equal to (____),
-----------------------------
calculated on the basis of a (360-day year consisting of twelve 30-day
months).)
("Class (A-2) Notes": The (____________) Trust (________) $(______
-----------------
______) Asset Backed Notes, Class (A-2)))
("Class (A-2) Payment Amount": As to any Payment Date with respect to
--------------------------
the Class (A-2) Notes, the amount due and payable thereon pursuant to Section
3.05 of this Indenture.)
("Class (A-2) Scheduled Final Payment Date": (____________________).)
----------------------------------------
"Clearing Corporation": The meaning specified in Section 8-102 of the
--------------------
UCC.
"Clearing Corporation Custodian": A custodian acting on behalf of a
------------------------------
Clearing Corporation.
"Clearing Corporation Security": Any Underlying Securities or Eligible
-----------------------------
Investment that is either (a) an Uncertificated Security that is (i) issued
by an issuer organized under the laws of the State of New York and (ii)
registered in the name of a Clearing Corporation or its Clearing Corporation
Custodian or a nominee of either subject to the exclusive control of the
Clearing Corporation or (b) a Certificated Security that is (i) held in the
State of New York in the custody of a Clearing Corporation or its Clearing
Corporation Custodian or a nominee of either subject to the exclusive control
of the Clearing Corporation, (ii) in bearer form or endorsed in blank by an
appropriate Person or registered in the name of the Clearing Corporation or
its Clearing Corporation Custodian or the nominee of either subject to the
exclusive control of such Clearing Corporation; and (c) in each case,
credited to the securities account of a participant of or member in such
Clearing Corporation on the books of the Clearing Corporation.
"Closing Date": The date of the initial issuance of the Notes and the
------------
Certificates.
"Code": The Internal Revenue Code of 1986, as amended, and the rules
----
and regulations promulgated thereunder.
"Collateral": The meaning specified in the Granting Clause of this
----------
Indenture.
"Collection Account": The trust account created and maintained with the
------------------
Indenture Trustee pursuant to Section 3.01 and referred to as the Collection
Account. Funds deposited in the Collection Account shall be held in trust
for the Noteholders (and the Swap Counterparty) for the uses and purposes set
forth in Article III of this Indenture.
"Corporate Trust Office": Either (i) The principal corporate trust
----------------------
office of the Owner Trustee at which at any particular time its corporate
trust business shall be administered, which office at the date of the
execution of this Trust Agreement is located at (____________________),
Attention: Corporate Trust Department or (ii) the principal corporate trust
office of the Indenture Trustee and Note Registrar at which at any particular
time its corporate trust business shall be administered, which office at the
date of the execution of this instrument is located at (________), Attention:
(________).
"Custodial Account": A custodial account at the Custodian, established
-----------------
in the name of the Issuer and the Indenture Trustee.
"Custodial Account Securities Intermediary": The meaning specified in
-----------------------------------------
Section 3.24(b)(iii).
"Custodian": (____________________), a New York trust company.
---------
("Defaulted Security": Any Underlying Security or any other security
------------------
included in the Assets which is known to the Issuer or the (Portfolio
Manager) (provided, however, that the (Portfolio Manager) will be responsible,
-------- -------
under the (Management Agreement), for obtaining, to the extent practicable
from sources of information normally available to it, such knowledge) to be
in default under the related (Collateral Instrument), which default entitles
the holders thereof, with notice or passage of time or both, to accelerate
the maturity of all or a portion of the principal amount of such obligation,
but only until such default or event of default has been cured or waived and
such security satisfies the criteria for inclusion of securities in the
Assets described in the definition of "Underlying Security" or "Eligible
Investments" as applicable to such security.)
"Definitive Notes": The meaning provided in Section 4.06.
----------------
"Denomination": For each Note or Certificate, as applicable, the amount
------------
designated as such on the face thereof, the aggregate of the Denominations of
all Notes and Certificates on the Closing Date being equal to the aggregate
of the principal balance of the Underlying Securities.
"Depositor": ML Asset Backed Corporation, a Delaware corporation, or
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its successor in interest.
"Depository": The Depository Trust Company or a successor appointed by
----------
the Administrator. Any successor to the Depository shall be an organization
registered as a "clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended, and the regulations of the Securities and
Exchange Commission thereunder.
"Depository Agreement": The Letter of Representations dated (_______
--------------------
____________) (as amended and supplemented from time to time) among the
Issuer, the Indenture Trustee, and the Depository.
"Depository Participant": A Person for whom the Depository maintains
----------------------
one or more securities accounts on its books and records.
"Eligible Investments": An investment purchased by the Issuer shall be
--------------------
an Eligible Investment if: (1)(A) it is a U.S. dollar denominated bond,
debenture, note or other investment or security evidencing debt which: (i)
has an original maturity of less than 364 days; and (ii) has ratings of "A-
1+" from (____________________) and "P-1" from (____________________) at the
time of investment; or (b) it is any bond, debenture, note or other
investment or security evidencing debt not referred to in (a) if the
Indenture Trustee has been provided with a letter from (____) and
(_________________) to the effect that investment in such bond, debenture,
note or other investment or security will not adversely affect the ratings on
the Notes and the Certificates and (2) it is purchased at a price no greater
than par plus accrued interest, if any. Eligible Investments may include,
without limitation, those investments for which the Indenture Trustee, the
Owner Trustee or an affiliate thereof provides services.
("Enhancement": The (Swap Agreement or ____________________.))
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("Equity Security": Any security that does not entitle the holder
---------------
thereof to receive periodic payments of interest and one or more installments
of principal or any other security which is not eligible for purchase by the
Issuer as an Underlying Security and any security purchased as part of a
"unit" with a Underlying Security and which itself is not eligible for
purchase by the Issuer.)
"ERISA": Employee Retirement Income Security Act of 1974, as amended,
-----
and the rules and regulations promulgated thereunder.
"Event of Default": Any one of the following events (whatever the
----------------
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) a default in the payment of any interest on any Note when the
same becomes due and payable, and such default shall continue for a
period of ( ) Business Days, provided that if any amount of interest
which would otherwise be payable on the Underlying Securities is
deferred under the terms and conditions thereof, an equivalent amount
((determined in accordance with the methodology set forth in the Swap
Agreement)) of interest in respect of the Notes will be deferred and not
considered "due and payable" within the meaning of this clause (i) until
the Payment Date following the date when the related deferred interest
on the Underlying Securities is received by the Issuer; or
(ii) a default in the payment of the principal of or any
installment of the principal of any Note when the same becomes due and
payable by reason of mandatory prepayment or otherwise; or
(iii) a default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture, or any representation or
warranty of the Issuer made in this Indenture or in any certificate or
other writing delivered pursuant hereto or in connection herewith
proving to have been incorrect in any material respect as of the time
when the same shall have been made, and such default shall continue or
not be cured, or the circumstance or condition in respect of which such
representation or warranty was incorrect shall not have been eliminated
or otherwise cured, for a period of (30) days after there shall have
been given, by registered or certified mail, to the Issuer by the
Indenture Trustee (or by the Swap Counterparty), or to the Issuer, (the
Swap Counterparty) and the Indenture Trustee by the Holders of at least
25% of the Outstanding Amount of (each Class of) the Notes, a written
notice specifying such default or incorrect representation or warranty
and requiring it to be remedied and stating that such notice is a notice
of default hereunder; or
(iv) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any substantial
part of the Trust Estate in an involuntary case under any applicable
federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Issuer or
for any substantial part of the Trust Estate, or ordering the winding-up
or liquidation of the Issuer's affairs, and such decree or order shall
remain unstayed and in effect for a period of 60 consecutive days; or
(v) the commencement by the Issuer of a voluntary case under any
applicable federal or state bankruptcy, insolvency or other similar law
now or hereafter in effect, or the consent by the Issuer to the entry of
an order for relief in an involuntary case under any such law, or the
consent by the Issuer to the appointment or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Issuer or for any substantial part of the assets
of the Trust Estate, or the making by the Issuer of any general
assignment for the benefit of creditors, or the failure by the Issuer
generally to pay its debts as such debts become due, or the taking of
any action by the Issuer in furtherance of any of the foregoing; or
(vi) (the occurrence of a Swap Early Termination).
"Exchange Act": The Securities Exchange Act of 1934, as amended, and
------------
the rules and regulations promulgated thereunder.
"Extraordinary Expenses": (a) All costs, charges and expenses incurred
----------------------
by the Issuer in connection with the issue of the Notes or Certificates or
otherwise relating to the Notes or Certificates that do not constitute
Ordinary Expenses and (b) all Trustee Expenses.
"FRBNY": The Federal Reserve Bank of New York.
-----
"Global Note": The meaning provided in Section 4.01.
-----------
"Government Security": A security (other than a security issued by the
-------------------
Government National Mortgage Association) issued or guaranteed by the United
States of America or an agency or instrumentality thereof representing a full
faith and credit obligation of the United States of America and, with respect
to each of the foregoing, that is maintained in book-entry form on the
records of FRBNY pursuant to the applicable Book-entry Regulations.
"Grant": Means mortgage, pledge, bargain, sell, warrant, alienate,
-----
remise, release, convey, assign, transfer, create, and grant a lien upon and
a security interest in and right of set-off against, deposit, set over and
confirm pursuant to this Indenture. A Grant of the Collateral or of any
other agreement or instrument shall include all rights, powers and options
(but none of the obligations) of the granting party thereunder, including the
immediate and continuing right to claim for, collect, receive and give
receipt for principal and interest payments in respect of the Underlying
Securities or the Eligible Investments and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
proceedings in the name of the granting party or otherwise, and generally to
do and receive anything that the granting party is or may be entitled to do
or receive thereunder or with respect thereto.
"Indenture": This Trust Indenture dated as of (________) among the
---------
Trust, (_______________), as Indenture Trustee, (and the Swap Counterparty),
as it may be amended from time to time.
"Indenture Trustee": (____________________) in its capacity as
-----------------
indenture trustee or its successor in interest, or any successor trustee
appointed as herein provided.
"Independent": When used with respect to any specified Person, means
-----------
that the Person (i) is in fact independent of the Issuer and any Affiliate of
the Issuer, (ii) does not have any direct financial interest or any material
indirect financial interest in the Issuer or any Affiliate of any of the
foregoing Persons and (iii) is not connected with the Issuer or any Affiliate
of the Issuer as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.
Independent Certificate: means a certificate or opinion to be delivered
-----------------------
to the Indenture Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 10.01, made by an
Independent appraiser or other expert appointed by a written request or order
signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Indenture Trustee, and approved by the Indenture Trustee in
the exercise of reasonable care, and such opinion or certificate shall state
that the signer has read the definition of "Independent" in this Indenture
and that the signer is Independent within the meaning thereof.
"Initial Indenture Trustee Fee": The meaning provided in Section
-----------------------------
6.07(a).
"Instrument": The meaning ascribed thereto in Section 9-104(i) of the
----------
UCC.
"Issuer": (___________) Trust (________), a Delaware business trust or
------
its successor in interest and, for purposes of any provision contained herein
and required by the TIA, each other obligor on the Notes.
"Lien": Any mortgage, deed of trust, pledge, conveyance, hypothecation,
----
assignment, participation, deposit arrangement, encumbrance, lien (statutory
or other), preference, priority right or interest or other security agreement
or preferential arrangement of any kind or nature whatsoever, including,
without limitation, any conditional sale or other title retention agreement,
any financing lease having substantially the same economic effect as any of
the foregoing and the filing of any financing statement under the UCC (other
than any such financing statement filed for informational purposes only) or
comparable law of any jurisdiction to evidence any of the foregoing.
"Money": The meaning specified in Section 1-201(24) of the UCC.
-----
"Note": Any one of the Class (A-1) Notes (or the Class (A-2) Notes),
----
each secured by the specified assets of the Trust pursuant to this Indenture
and authenticated by the Indenture Trustee in substantially the form set
forth in Exhibit A to this Indenture.
("Note Early Prepayment Price": In respect of each Note, the lesser of:
---------------------------
(i) its Pro Rata Share of (A) the proceeds of the liquidation of
the Assets minus (B) the sum of ((1) any termination payment owed by the
Issuer to the Swap Counterparty under the Swap Agreement and) (2) any
other unpaid expenses incurred by the Issuer (including Trustee
Expenses); and
(ii) 100% of the outstanding principal amount of such Note plus
accrued interest thereon.)
"Note Interest Accrual Period": The meaning specified in Section
----------------------------
3.05(a).
"Note Owner": The Beneficial Owner of a Note.
----------
"Note Register": The meaning provided in Section 4.02.
-------------
"Note Registrar": The Indenture Trustee, in its capacity as Note
--------------
Registrar.
"Noteholder" or Holder": The Person in whose name a Note is registered
---------- ------
in the Note Register, except that, solely for the purpose of giving any
consent pursuant to this Indenture, any Note registered in the name of the
Depositor or the Indenture Trustee or any affiliate of either shall be deemed
not to be Outstanding.
"Officer's Certificate": A certificate signed by any Authorized Officer
---------------------
of the Issuer and delivered to the Indenture Trustee. Unless otherwise
specified, any reference in this Indenture to an Officer's Certificate shall
be to an Officer's Certificate of any Authorized Officer of the Issuer.
"Opinion of Counsel": A written opinion of counsel, who may be counsel
------------------
for the Issuer, the Depositor, the Owner Trustee or the Indenture Trustee.
"Ordinary Expenses": (i) All costs, charges and expenses incurred by
-----------------
the Issuer in connection with the issue of the Notes and Certificates that
were incurred or were reasonably quantifiable or could reasonably be
anticipated on or before (________________________________________) and
(ii) all customary ongoing expenses of the Issuer, and shall exclude, without
limitation, (a) any expenses incurred by the Issuer resulting from legal
actions against the Issuer, the Indenture Trustee, the Administrator or the
Owner Trustee, and (b) any costs, charges or expenses incurred by the Owner
Trustee, the Indenture Trustee, the Note Registrar, the Certificate Registrar
or the Administrator.
"Original Outstanding Amount": On the Closing Date, the aggregate
---------------------------
principal amount of all Notes, a class of Notes or Certificates, as
applicable.
"Outstanding": With respect to the Notes, as of the date of
-----------
determination, all Notes theretofore executed, authenticated and delivered
under this Indenture except:
(i) Notes theretofore cancelled by the Note Registrar or delivered to
the Indenture Trustee for cancellation;
(ii) Notes in exchange for or in lieu of which other Notes have been
executed, authenticated and delivered pursuant to this Indenture unless proof
satisfactory to the Indenture Trustee is presented that any such Notes are
held by a holder in due course; and
(iii) solely for the purpose of giving any consent pursuant to this
Indenture, any Note registered in the name of the Issuer, the Depositor, the
Owner Trustee or any affiliate thereof.
"Outstanding Amount": On any day, the aggregate unpaid principal amount
------------------
of all Notes, a Class of Notes or Certificates Outstanding on such day, as
applicable.
"Owner Trustee": (____________________) not in its individual capacity
-------------
but solely as owner trustee or its successor in interest, or any successor
owner trustee appointed as provided in the Trust Agreement.
"Payment Amount": For any Payment Date, (the sum of) the Class (A-1)
--------------
Payment Amount for such Payment Date (and the Class (A-2) Payment Amount for
such Payment Date.)
"Payment Date": The (_______) day of each (_______), (or, if any such
------------
date is not a Business Day, the next succeeding Business Day), commencing
(____________).
"Percentage Interest": (As to any Class (A-1) Note, the percentage
-------------------
interest in the applicable Class (A-1) Payment Amount represented thereby,
such percentage interest being equal to the percentage obtained by dividing
the outstanding principal amount of such Note by the Outstanding Amount of
all Class (A-1) Notes. (As to any Class (A-2) Note, the percentage interest
in the applicable Class (A-2) Payment Amount represented thereby, such
percentage interest being equal to the percentage obtained by dividing the
outstanding principal amount of such Note by the Outstanding Amount of all
Class (A-2) Notes).
"Person": Any individual, corporation, partnership, limited liability
------
company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Predecessor Note": With respect to any particular Note, every previous
----------------
Note evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 4.03 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Prepayment Determination Date": With respect to any Payment Date on
-----------------------------
which a payment or prepayment of principal on the Notes is due, the first
Business Day of the month in which such Payment Date occurs.
"Pro Rata Share": With respect to any Note of a Class, the percentage
--------------
obtained by dividing the outstanding principal amount of such Note by the
Outstanding Amount of all of the Notes or all the Notes of such Class.
"Principal Balance": As to any Payment Date and for each Note, the
-----------------
aggregate Denomination of such Notes, reduced by any distributions of
principal thereof.
"Priority of Payments": The meaning provided in Section 3.05(d).
--------------------
"Proceeding": Any suit in equity, action at law or other judicial or
----------
administrative proceeding.
"Rating Agency": (____________________). If no such organization or
-------------
successor is any longer in existence, "Rating Agency" shall be a nationally
recognized statistical rating organization or other comparable Person
designated by the Owner Trustee, notice of which designation shall be given
to the Indenture Trustee, (the Owner Trustee, the Swap Counterparty) and the
Depositor.
"Record Date": With respect to any Payment Date other than the first
-----------
Payment Date, (the last Business Day of the month preceding the month of the
related Payment Date) and with respect to the first Payment Date, the Closing
Date.
"Redemption Date" means, in the case of a redemption of the Notes
---------------
pursuant to Section 11.01, the Payment Date specified by the (Administrator
or the Issuer) pursuant to Section 11.01.
"Redemption Price": means in connection with a redemption of the Notes
----------------
pursuant to Section 11.01, an amount equal to the unpaid principal amount of
the Notes redeemed plus accrued and unpaid interest thereon excluding the
Redemption Date.
"Registered Holder": The Person in whose name a Note is registered in
-----------------
the Note Register on the applicable Record Date.
"Reinvested Collateral": Payments in respect of principal of the
---------------------
Underlying Securities received by the Indenture Trustee prior to the
Scheduled Final Payment Date.
"Responsible Officer": With respect to the Indenture Trustee, the Owner
-------------------
Trustee or the Administrator, the Chairman or Vice Chairman of the Board of
Directors, the Chairman or Vice Chairman of the Executive or Standing Com-
mittee of the Committee on Trust Matters, any Vice President (Executive,
Senior, Regular, Assistant or other), any Assistant Secretary, any Assistant
Treasurer, any Trust Officer or any Banking Officer of such entity.
"(Revised Article 8": The meaning provided in the Book-entry
-----------------
Regulations.)
"Sale Procedures": The meaning specified in Section 5.16.
---------------
"Scheduled Final Payment Date": The later of the Class (A-1) Scheduled
----------------------------
Final Payment Date (and the Class A-2 Final Scheduled Payment Date).
"Securities": The Notes and the Certificates.
----------
"Securities Act": The Securities Act of 1933, as amended, and the rules
--------------
and regulations promulgated thereunder.
"Securities Intermediary": The meaning specified in Section 8
-----------------------
102(a)(14) of the UCC.
"Security Entitlement": The meaning specified in Section 8-102(a)(17)
--------------------
of the UCC.
"Single Note": A Note in the Denomination of $1,000.
-----------
"State" means any one of the 50 states of the United States of America
-----
or the District of Columbia.
"Stated Maturity": With respect to any security, the date specified in
---------------
such security or applicable Collateral Instrument, and with respect to any
Class A Note, Class B Note and Class C Note, __________, or, if such date is
not a Business Day, the next following Business Day.
("Swap Agreement": The master agreement dated as of (____________),
--------------
including any schedules attached thereto and confirmation letters executed in
connection therewith, between the Swap Counterparty and the Trust.
("Swap Counterparty": (____________________).)
-----------------
("Swap Default": An Event of Default under and as defined in the Swap
------------
Agreement.)
("Swap Early Termination": The designation of an "Early Termination
----------------------
Date" (as defined in the Swap Agreement).)
("Swap Guarantee": The Swap Guarantee dated as of (____) delivered by
--------------
the Swap Guarantor.)
("Swap Guarantor": (____________________).)
--------------
("Swap Termination Event": A Termination Event under and as defined in
-----------------------
the Swap Agreement.)
"Trust": (_______) Trust (_______); the trust created by the Trust
-----
Agreement and by the filing with the Secretary of State of the State of
Delaware a Certificate of Trust of the Trust.
"Trust Agreement": The agreement entered into between the Owner Trustee
---------------
and the Depositor, dated as of (_______________) as amended and restated as
of (____________________).
"Trust Estate": The meaning specified in the Granting Clause.
------------
"Trustee Expenses": Any fees, expenses or amounts properly incurred by
----------------
the Indenture Trustee or the Note Registrar in connection with their actions
under the terms of this Indenture, by (____________________) or any successor
when acting as Owner Trustee or the Certificate Registrar in connection with
their actions under the terms of the Trust Agreement and by the Administrator
in connection with its actions under the terms of the Administration
Agreement, but excluding any fees, expenses or amounts incurred by the
Indenture Trustee, the Note Registrar, the Owner Trustee, the Certificate
Registrar or the Administrator that were incurred or were reasonably
quantifiable or could reasonably be anticipated on or before the Closing
Date.
"Trust Indenture Act" or "TIA": The Trust Indenture Act of 1939 as in
------------------- ---
force on the date hereof, unless otherwise specifically provided.
"UCC": The Uniform Commercial Code as in effect in the State of New
---
York as of the date hereof.
"Uncertificated Security": The meaning specified in Section 8-102(1)(b)
-----------------------
of the UCC.
"Underlying Agreement": The (Pooling and Servicing Agreement) dated as
--------------------
of (____________________) as supplemented by a series supplement thereto by
and between (____________________) as Transferor and Servicer and
(____________________) as Trustee pursuant to which the Underlying Securities
were originally issued.
"Underlying Securities": The $(____________), issued by (___________
----------------------
____________________).
"Underlying Securities Distribution Date Statement": The statement
-------------------------------------------------
provided by the paying agent for the Underlying Securities on each
distribution date for the Underlying Securities pursuant to the related
Underlying Agreement reporting certain information with respect to such
Underlying Securities, which report may be obtained by the Indenture Trustee,
as holder of the Underlying Securities, upon request.
Section 1.02. Other Definitional Provisions. (a) (The words
-----------------------------
"certificated security", "clearing corporation", "custodian",
--------------------- -------------------- ---------
"financial intermediary", "general intangibles", "instrument",
---------------------- ------------------- ----------
"proceeds", "purchase", "security", "uncertificated security",
-------- -------- -------- -----------------------
"entitlement holder", "entitlement order", "Investment Property",
------------------ ----------------- -------------------
"securities account", "securities intermediary", "security entitlement"
------------------ ----------------------- --------------------
and "transfer" each have the meaning ascribed thereto in the UCC.
--------
(b) The words "Entitlement Holder", "Entitlement Order", "Participant",
------------------ ----------------- -----------
"Securities Intermediary", "Revised Article 8", "Securities Account" and
----------------------- ----------------- ------------------
"Security Entitlement" each have the meaning ascribed thereto in the Book
--------------------
Entry Regulations.
Section 1.03. Rules of Construction. Unless the context otherwise
---------------------
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) references to Sections mean Sections of this Indenture;
(vi) words in the singular include the plural and words in the
plural include the singular; and
(vii) any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection
herewith means such agreement, instrument or statute as from time to
time amended, modified or supplemented and includes (in the case of
agreements or instruments) references to all attachments thereto and
instruments incorporated therein; references to a Person are also to its
permitted successors and assigns.
Section 1.04. Incorporation by Reference of Trust Indenture Act.
-------------------------------------------------
Unless otherwise expressly provided, whenever this Indenture refers to a
provision of the TIA, the provision is incorporated by reference in and made
a part of this Indenture. The following TIA terms used in this Indenture
have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Indenture
Trustee.
"obligor" on the indenture securities means the Issuer and any
other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule
have the meaning assigned to them by such definitions.
ARTICLE II
Original Issuance of Notes
--------------------------
Section 2.01. Form. The Notes, together with the Indenture Trustee's
----
certificate of authentication, shall be in substantially the form set forth
in Exhibit A, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by
the officers executing such Notes, as evidenced by their execution of the
Notes. Any portion of the text of any Note may be set forth on the reverse
thereof, with an appropriate reference thereto on the face of the Note.
The Notes shall be typewritten, printed, lithographed or engraved or
produced by any combination of these methods (with or without steel engraved
borders), all as determined by the Authorized Officers executing such Notes,
as evidenced by their execution of such Notes.
The terms of the Notes set forth in Exhibit A are part of the terms of
this Indenture.
Section 2.02. Execution, Authentication and Delivery. The Notes shall
--------------------------------------
be executed on behalf of the Issuer by any of its Authorized Officers and
delivered to the Indenture Trustee for authentication as provided in this
Indenture. The signature of any such Authorized Officer on the Notes may be
manual or facsimile.
Notes bearing the manual or facsimile signature of individuals who were
at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not
hold such offices at the date of such Notes.
The Indenture Trustee shall authenticate and deliver Class (A-1) Notes
for original issue in an aggregate principal amount of $(________) (and
(ii) Class (A-2) Notes for original issue in an aggregate principal amount of
$(____________)). The aggregate principal amount of (each Class of) Notes
outstanding at any time may not exceed such amounts.
Each Note shall be dated the date of its authentication. The Notes
shall be issuable as registered Notes in the minimum denomination of $100,000
and in integral multiples of $1,000 in excess thereof.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Indenture Trustee by the manual signature of one of its
authorized signatories, and such certificate upon any Note shall be
conclusive evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder.
ARTICLE III
Administration of the Underlying Securities;
Application of Trust Funds
--------------------------------------------
Section 3.01. Collection of Payments on Underlying Securities;
------------------------------------------------
Collection Account. (a) The Indenture Trustee shall establish and maintain
- ------------------
a segregated trust account (the "Collection Account") which shall be held in
trust in the name of the Indenture Trustee for the benefit of the Noteholders
(and the Swap Counterparty), into which the Indenture Trustee shall, subject
to the terms of this paragraph, deposit, on the same day as it is received,
each distribution received by the Indenture Trustee with respect to the
Underlying Securities, the Reinvested Collateral or any Eligible Investments
(and each payment received by the Indenture Trustee pursuant to the Swap
Agreement). The Indenture Trustee shall make all payments of principal of,
and interest on, the Notes, as provided in Section 3.05 herein, (and all
payments to the Swap Counterparty pursuant to the Swap Agreement), and all
payments to the Administrator of principal of and interest on the Certifi-
cates as provided in Section 5.02 of the Trust Agreement, from moneys on
deposit in the Collection Account in accordance with the Priority of
Payments.
If the Indenture Trustee shall not have received a distribution with
respect to the Underlying Securities by the fifth Business Day after the date
on which such distribution was due and payable pursuant to the terms of such
Underlying Securities, the Indenture Trustee shall, notwithstanding Section
316(a)(1) of the TIA (which provisions of the TIA are hereby expressly
excluded) and subject to the penultimate sentence of this paragraph, take
such action (as it deems appropriate) as may be directed by (the Swap
Counterparty) (Noteholders) including taking such legal action as (it) (the
Swap Counterparty) shall deem appropriate under the circumstances, and
prosecuting any claims in connection therewith. In the event that the
Indenture Trustee reasonably believes that there may not be sufficient funds
available to reimburse it for its projected legal fees and expenses in
accordance with the Priority of Payments, the Indenture Trustee shall notify
the Noteholders (and the Swap Counterparty) that it is not obligated to
pursue any such available remedies unless indemnity satisfactory to the
Indenture Trustee for its legal fees and expenses is provided or procured by
Noteholders (or the Swap Counterparty). In the event any such indemnity is
provided to the Indenture Trustee, the Indenture Trustee shall take such
action as shall be appropriate, (or, notwithstanding Section 316(a)(1) of the
TIA (which provisions of the TIA are hereby expressly excluded), as the Swap
Counterparty shall direct in writing,) under the circumstances.
(b) The amounts on deposit in the Collection Account shall be invested
by the Indenture Trustee in Eligible Investments (at the direction of the
Swap Counterparty).
(c) The Indenture Trustee will have a lien ranking senior to that of
the Noteholders upon all funds held or collected as part of the Assets to
secure payment of amounts payable to the Indenture Trustee for Extraordinary
Expenses.
Section 3.02. Maintenance of Office or Agency. The Issuer will
-------------------------------
maintain in the Borough of Manhattan, the City of New York, an office or
agency where Notes may be surrendered for registration of transfer or
exchange, and where notices and demands to or upon the Issuer in respect of
the Notes and this Indenture may be served. The Issuer hereby initially
appoints the Indenture Trustee to serve as its agent for the foregoing
purposes. If at any time the Issuer shall fail to maintain any such office
or agency or shall fail to furnish the Indenture Trustee with the address
thereof, such surrenders, notices and demands may be made or served at the
Corporate Trust Office, and the Issuer hereby appoints the Indenture Trustee
as its agent to receive all such surrenders, notices and demands.
Section 3.03. Money for Payments To Be Held in Trust. As provided in
--------------------------------------
Section 3.01, all payments of amounts due and payable with respect to any
Notes that are to be made from amounts withdrawn from the Collection Account
pursuant to Section 3.01 shall be made on behalf of the Issuer by the
Indenture Trustee, and no amounts so withdrawn from the Collection Account
for payments of Notes shall be paid over to the Issuer except as provided in
this Section 3.03.
The Issuer will cause any Administrator other than the Indenture Trustee
to execute and deliver to the Indenture Trustee (and the Swap Counterparty)
an instrument in which such Administrator shall agree with the Indenture
Trustee (and if the Indenture Trustee acts as Administrator, it hereby so
agrees), subject to the provisions of this Section 3.03, that such
Administrator will:
(i) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and pay such sums to such Persons as
herein provided;
(ii) give the Indenture Trustee (and the Swap Counterparty) notice
of any default by the Issuer of which it has actual knowledge in the
making of any payment required to be made with respect to the Notes;
(iii) at any time during the continuance of any such default, upon
the request of the Indenture Trustee (or, notwithstanding Section
316(a)(1) of the TIA (which provisions are hereby expressly excluded),
the Swap Counterparty), forthwith pay to the Indenture Trustee all sums
so held in trust by such Administrator;
(iv) immediately resign as Administrator and forthwith pay to the
Indenture Trustee all sums held by it in trust for the payment of Notes
if at any time it ceases to meet the standards required to be met by an
Administrator at the time of its appointment; and
(v) notify the Issuer with respect to any applicable withholding
taxes imposed on the Notes and no earlier than 5 Business Days
thereafter comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any applicable
withholding taxes (including backup withholding) imposed thereon and
with respect to any applicable reporting requirements in connection
therewith and, in the event the Administrator does not receive a copy of
a properly completed (i) IRS Form W-8, (ii) IRS Form 1001, (iii) IRS
Form 4224, or (iv) IRS Form W-9 with respect to any Noteholder, shall
treat payments to such Noteholder as being subject to withholding and
backup withholding taxes and shall retain from amounts otherwise
distributable to such Noteholder an amount sufficient for the payment of
such withholding or backup withholding tax (as applicable).
The Indenture Trustee may at any time, in connection with obtaining the
satisfaction and discharge of this Indenture or for any other purpose, direct
any Administrator to pay to the Indenture Trustee all sums held in trust by
such Administrator, such sums to be held by the Indenture Trustee upon the
same trusts as those upon which the sums were held by such Administrator; and
upon such payment by any Administrator to the Indenture Trustee, such
Administrator shall be released from all further liability with respect to
such money.
Section 3.04. Existence. The Issuer will keep in full effect its
---------
existence, rights and franchises as a business trust under the laws of the
State of Delaware (unless it becomes, or any successor Issuer hereunder is or
becomes(, with the prior consent of the Swap Counterparty), organized under
the laws of any other state or of the United States of America, in which case
the Issuer will keep in full effect its existence, rights and franchises
under the laws of such other jurisdiction) and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification
is or shall be necessary to protect the validity and enforceability of this
Indenture, the Notes, the Underlying Securities, (the Swap Agreement) and
each other instrument or agreement included in the Trust Estate.
Section 3.05. Application of Trust Funds. (a) The Class (A-1) Notes
--------------------------
(and the Class (A-2) Notes) shall accrue interest at the Class (A-1) Note
Accrual Rate (and the Class (A-2) Accrual Rate, respectively), calculated on
the basis of a 360 day year consisting of twelve 30-day months). Such
amounts shall be due and payable on each Payment Date. Interest will accrue
with respect to each Payment Date during the (____) month period beginning on
the (____) day of (____________________) (or on the Closing Date in the case
of the first Payment Date) and ending on the (____) day of (________) (each,
a "Note Interest Accrual Period"). Interest on the Notes shall be payable
solely from amounts in the Collection Account, (including amounts received
pursuant to the Swap Agreement), and shall be subject to the Priority of
Payments. Unless the entire unpaid principal amount of the Notes shall
become due and payable upon the occurrence of an Event of Default in
accordance with the provisions of Section 3.05(c) hereof prior to
(____________________), no principal will be payable on the Class (A-1) Notes
until (____________________) (and on the Class (A-2) Notes until
(____________________)). Beginning on (____________________) (in the case of
Class (A-1) Notes) (and on (____________________) (in the case of Class (A-2)
Notes)), and on each Payment Date thereafter, principal payable on Class of
Notes as described in Section 3.05(b) on any Payment Date will be calculated
by the Indenture Trustee, and will be paid to the Noteholders of each Class
in accordance with the Percentage Interest represented by each such Note.
Any principal of the Class (A-1) Notes that remains outstanding on the Class
(A-1) Scheduled Final Payment Date shall be due in full on the Class (A-1)
Scheduled Final Payment Date. (Any principal of the Class (A-2) Notes that
remains outstanding on the Class (A-2) Scheduled Final Payment Date shall be
due in full on the Class (A-2) Scheduled Final Payment Date.) Any
installment of interest or principal, if any, payable on any Note that is
punctually paid or duly provided for by the Issuer on the applicable Payment
Date shall be paid to each Noteholder of record on the preceding Record Date,
by wire transfer to an account specified in writing by such Noteholder
reasonably satisfactory to the Indenture Trustee as of the preceding Record
Date or by check to such Noteholder mailed to such Holder's address as it
appears in the Note Register if no such instructions have been delivered to
the Indenture Trustee.
(If any amount of interest which would otherwise be payable on the
Underlying Securities on any payment date for such Underlying Securities is
deferred under the terms and conditions thereof, interest otherwise due in
respect of the Notes on the following Payment Date will be deferred in the
same proportion as the proportion that the deferred interest on such
Underlying Securities represents of the aggregate interest otherwise due on
the Underlying Securities on the most recent payment date for the Underlying
Securities preceding such Payment Date (as determined by the Calculation
Agent in accordance with (the Swap Agreement)). (If any such deferral of
interest on the Notes is with respect to less than the entire amount of
interest due and payable on the Notes, such deferral shall be made (on a pro
rata basis between the Class (A-1) Notes and the Class (A-2) Notes) (in
(________) order)). Any deferred interest on the Notes will become payable
on the Payment Date following the date when the related deferred interest on
the Underlying Securities is received by the Issuer. Noteholders will not be
entitled to any additional payment in respect of any such delay.)
(b) Principal due on the Notes shall be payable solely from amounts in
the Collection Account(, including amounts, if any, received pursuant to the
Swap Agreement), and shall be subject to the Priority of Payments.
(Beginning on (____________________) and on each Payment Date thereafter,
principal payable on the Class (A-1) Notes on any Payment Date will be equal
to the (______________________________), as determined by the Indenture
Trustee. (Beginning on (____________________) and on each Payment Date
thereafter, principal payable on the Class (A-2) Notes on any Payment Date
will be equal to (______________________________), as determined by the
Indenture Trustee.)
The prepayment price for any payment of principal on the Notes will be
(________)% of the principal amount prepaid. No notice of prepayment will be
given to Holders of the Notes.
(The Issuer has no optional prepayment rights with respect to the
Notes.)
(c) Upon the occurrence and continuance of any Event of Default ((other
than one specified in subsection (vi) of the definition of Event of
Default)), the Indenture Trustee (may and), upon the written request of the
Holders of not less than a majority of (each Class of) the Outstanding Amount
of the Notes, shall, by notice in writing to the Holders (and the Swap
Counterparty), declare the principal of all Notes then Outstanding (if not
then due and payable) to be due and payable immediately, and upon such
declaration the same shall become and be immediately due and payable,
anything contained in the Notes or in this Indenture to the contrary
notwithstanding; (provided, however, that, notwithstanding Section 3.16(a) of
the TIA (which provisions of the TIA are hereby expressly excluded), in the
case of an Event of Default specified in subsection (iii) of the definition
of Event of Default, such declaration will not be effective without the prior
written consent of (the Swap Counterparty and) the Holders of 100% of the
Outstanding Amount of the Notes).
At any time after such declaration of acceleration of maturity has been
made and before a judgment or decree for payment of the money due has been
obtained by the Indenture Trustee, the Noteholders representing a majority of
(each Class of) the Outstanding Amount of the Notes (or, in the case of an
Event of Default specified in subsection (iii) of the definition of Event of
Default, all Noteholders), (with the consent of the Swap Counterparty
(notwithstanding Section 316(a)(1) of the TIA (which provisions of the TIA
are hereby expressly excluded),) by written notice to the Indenture Trustee,
may rescind and annul such declaration and its consequences if:
(i) the Issuer has paid or deposited with the Indenture Trustee a
sum sufficient to pay:
(A) all payments of principal of and interest on the Notes
and all other amounts that would then be due hereunder if the Event
of Default giving rise to such acceleration had not occurred;
(B) (all amounts due to the Swap Counterparty under the Swap
Agreement); and
(C) all sums paid or advanced by the Indenture Trustee
hereunder and the reasonable compensation, expenses, disbursements
and advances of the Indenture Trustee and its agents and counsel
and any other Extraordinary Expenses then due and payable; and
(ii) all Events of Default, other than the nonpayment of the
principal of the Notes that has become due solely by such acceleration,
have been cured or waived as provided in Section 5.11.
No such rescission shall affect any subsequent default or impair any
right consequent thereto.
(The entire unpaid principal amount of the Notes shall become
immediately due and payable automatically upon the occurrence of an Event of
Default specified in subsection (vi) of the definition thereof. Immediately
after the occurrence of an Event of Default described in clause (vi) of the
definition of "Event of Default", the Indenture Trustee shall liquidate the
Underlying Securities and Eligible Investments, if any, in accordance with
the Sales Procedures.)
(d) The Indenture Trustee shall apply all monies received by it under
this Trust Indenture, including proceeds of the Underlying Securities,
proceeds of Eligible Investments, (payments made by the Swap Counterparty to
the Issuer under the Swap Agreement,) amounts realized by the Indenture
Trustee upon the sale or other liquidation of Underlying Securities or
Eligible Investments and proceeds of any other property included in the Trust
Estate in accordance with the following priorities (the "Priority of
Payments"):
FIRST: in payment or satisfaction of any Ordinary Expenses and
Extraordinary Expenses;
SECOND: (to the Swap Counterparty for amounts due under the Swap
Agreement);
/*/THIRD: to the Noteholders for amounts due and unpaid on the
Notes for interest, ratably, without preference or priority of any
kind;
/*/FOURTH: to the Noteholders in payment of amounts due and
unpaid on the Notes for principal, by reason of mandatory
prepayment or otherwise, ratably, without preference or priority of
any kind;
/*/FIFTH: to the Administrator or the Owner Trustee to be
distributed to the Holders of the Certificates as a distribution of
interest then payable on the Certificates, ratably, without
preference or priority of any kind;
/*/SIXTH: to the Administrator or the Owner Trustee to be
distributed to the Holders of the Certificates as a distribution of
principal then payable on the Certificates by reason of mandatory
prepayment or otherwise, ratably, without preference or priority of
any kind.
/*/SEVENTH: to the Administrator or the Owner Trustee to be
distributed to the Certificateholders, if there shall be any excess
remaining.
(e) All principal payments on the Notes of any Class shall be made to
the Noteholders of such Class entitled thereto in accordance with the
Percentage Interests represented by such Notes. The Indenture Trustee shall
send a notice to each Person in whose name a Note is registered at the close
of business on the Record Date preceding the Class (A-1) Scheduled Final
Payment Date (in the case of the Class (A-1) Notes) (and the Class (A-2)
Scheduled Final Payment Date (in the case of the Class (A-2) Notes)), or(, in
either case,) any other earlier final Payment Date. Such notice shall be
mailed no later than five Business Days prior to the Class (A-1) Scheduled
Final Payment Date (in the case of the Class (A-1) Notes) (and the Class (A-2
Scheduled Final Payment Date (in the case of the Class (A-2) Notes)), or(, in
_______________
/F/ (To be Revised in the case of multiple Classes of Notes or Certificates
to provide for pro rata payments, sequential payments or other payment order,
as applicable.)
either case,) any other earlier final Payment Date and shall specify that
payment of the principal amount and any interest due with respect to such
Note at the Class (A-1) Scheduled Final Payment Date (in the case of the
Class (A-1) Notes) (and the Class (A-2 Scheduled Final Payment Date (in the
case of the Class (A-2) Notes)), or(, in either case), any other earlier
final Payment Date, will be payable only upon presentation and surrender of
such Note to the Indenture Trustee and shall specify the place where such
Note may be presented and surrendered for such final payment.
(f) If the Issuer defaults in a payment of interest on the Notes, the
Issuer shall pay defaulted interest (plus interest on such defaulted interest
at the related Note Accrual Rate to the extent lawful) in any lawful manner.
The Issuer may pay such defaulted interest to the Persons who are Noteholders
on a subsequent special record date, which date shall be at least five
Business Days prior to the payment date. The Indenture Trustee shall fix or
cause to be fixed any such special record date and payment date and, at least
10 days before any such special record date, the Issuer shall mail to each
Noteholder a notice that states the special record date, the payment date and
the amount of defaulted interest to be paid. Such additional interest on
unpaid interest will be due at the time such unpaid interest is paid. The
Indenture Trustee shall mail to each Noteholder a notice that states the
record date, the payment date and the amount of defaulted interest to be
paid.
(g) (Reserved)
(h) (At such time as the Issuer has incurred Extraordinary Expenses in
an aggregate amount at least equal to $(____________, the Indenture Trustee
will give notice to the Noteholders and the Administrator will give notice to
the Certificateholders that such expenses have been incurred.)
Section 3.06. Protection of Trust Estate.
--------------------------
(a) The Issuer shall from time to time execute and deliver all such
supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance and other
instruments, and shall take such other action as may be necessary or
advisable or desirable to secure the rights and remedies of the Noteholders
(and the Swap Counterparty) hereunder and to:
(i) Grant more effectively all or any portion of the Collateral;
(ii) maintain or preserve the lien and security interest (and the
priority thereof) of this Indenture or to carry out more effectively the
purposes hereof;
(iii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture (including, without
limitation, any and all actions necessary or desirable as a result of
changes in law or regulations);
(iv) enforce any of the Underlying Securities or Eligible
Investments or other instruments or property included in the Collateral;
(v) preserve and defend title to the Collateral and the rights
therein of the Indenture Trustee, the Noteholders (and the Swap
Counterparty) against the claims of all persons and parties; or
(vi) pay or cause to be paid any and all taxes levied or assessed
upon all or any part of the Collateral.
The Issuer hereby designates the Indenture Trustee, its agent and
attorney-in-fact to execute any financing statement, continuation statement
or other instrument required pursuant to this Section 3.06.
(b) The Indenture Trustee shall not (i) remove any portion of the
Collateral that consists of Cash or is evidenced by an instrument,
certificate or other writing from the jurisdiction of the State of New York
or (ii) cause or permit ownership or the pledge of any portion of the
Collateral that consists of Government Securities to be recorded in a
securities account on the books of a Person located in a jurisdiction other
than the State of New York, unless the Indenture Trustee shall have first
received an Opinion of Counsel to the effect that the lien and security
interest created by this Indenture with respect to such property will
continue to be maintained after giving effect to such action or actions.
Section 3.07. Opinions as to Trust Estate. (a) On the Closing Date,
---------------------------
the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel
either stating that, in the opinion of such counsel, such action has been
taken with respect to the recording and filing of this Indenture, any
indentures supplemental hereto, and any other requisite documents, and with
respect to the execution and filing of any financing statements and
continuation statements, as are necessary to perfect and make effective the
lien and security interest of this Indenture and reciting the details of such
action, or stating that, in the opinion of such counsel, no such action is
necessary to make such lien and security interest effective.
(b) On or before (__________________ _________), in each calendar year,
beginning in 19(___), the Issuer shall furnish to the Indenture Trustee an
Opinion of Counsel either stating that, in the opinion of such counsel, such
action has been taken with respect to the recording, filing, re-recording and
refiling of this Indenture, any indentures supplemental hereto and any other
requisite documents and with respect to the execution and filing of any
financing statements and continuation statements as is necessary to maintain
the lien and security interest created by this Indenture and reciting the
details of such action, or stating that in the opinion of such counsel no
such action is necessary to maintain such lien and security interest. Such
Opinion of Counsel shall also describe the recording, filing, re-recording
and refiling of this Indenture, any indentures supplemental hereto and any
other requisite documents and the execution and filing of any financing
statements and continuation statements that will, in the opinion of such
counsel, be required to maintain the lien and security interest of this
Indenture until (_________ ___) in the following calendar year.
Section 3.08. Performance of Obligations. (a) The Issuer and the
--------------------------
Indenture Trustee will not take any action and will use their best efforts to
not permit any action to be taken by others that would release any Person
from any of such Person's material covenants or obligations under any
instrument or agreement included in the Trust Estate or that would result in
the amendment, hypothecation, subordination, termination or discharge of, or
impair the validity or effectiveness of, any such instrument or agreement,
except as expressly provided in this Indenture or such other instrument or
agreement.
(b) The Issuer has contracted with the Administrator to assist the
Issuer in performing its duties under this Indenture. The Administrator, on
behalf of the Issuer, may contract with other Persons to assist it or the
Issuer in performing its duties under this Indenture, and any performance of
such duties by a Person identified to the Indenture Trustee (and the Swap
Counterparty) in an Officer's Certificate of the Issuer shall be deemed to be
action taken by the Issuer.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the applicable Basic
Documents and in the instruments and agreements included in the Trust Estate.
Except as otherwise expressly provided therein, the Issuer shall not waive,
amend, modify, supplement or terminate any Basic Document or any provision
thereof without the consent of the Indenture Trustee or the Holders of at
least a majority of the Outstanding Amount of the Notes (and the Swap
Counterparty) and receiving notification from a Rating Agency that such
waiver, amendment, modification, supplement or termination shall not cause
the rating of the Notes or the Certificates to be reduced, suspended or
withdrawn.
Section 3.09. Annual Statement as to Compliance. The Issuer will
---------------------------------
deliver to the Indenture Trustee, within 120 days after the end of each
fiscal year of the Issuer (commencing with the fiscal year 199_), an
Officer's Certificate stating, as to the Authorized Officer signing such
Officer's Certificate, that:
(i) a review of the activities of the Issuer during such year and
of its performance under this Indenture has been made under such
Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based on
such review, the Issuer has complied with all conditions and covenants
under this Indenture throughout such year or, if there has been a
default in its compliance with any such condition or covenant,
specifying each such default known to such Authorized Officer and the
nature and status thereof.
Section 3.10. Negative Covenants. So long as any Notes are Outstanding
------------------
(or any amounts are owed to the Swap Counterparty), the Issuer shall not:
(i) except as expressly permitted by this Indenture, sell,
transfer, exchange or otherwise dispose of the Trust Estate or any
interest therein, unless directed to do so by the Indenture Trustee;
(ii) claim any credit on, or make any deduction from the principal
or interest payable in respect of, the Notes (or in respect of amounts
payable under the Swap Agreement) (other than amounts properly withheld
from such payments under the Code or under applicable state law) or
assert any claim against any present or former Noteholder (or the Swap
Counterparty) by reason of the payment of the taxes levied or assessed
upon any part of the Issuer or the Trust Estate;
(iii) (A) permit the validity or effectiveness of this Indenture to
be impaired, or permit the lien of this Indenture to be amended,
hypothecated, subordinated, terminated or discharged, or permit any
Person to be released from any covenants or obligations with respect to
the Notes under this Indenture except as may be expressly permitted
hereby, (B) permit any lien, charge, excise, claim, security interest,
mortgage or other encumbrance (other than the lien of this Indenture) to
be created on or extend to or otherwise arise upon or burden the Trust
Estate or any part thereof or any interest therein or the proceeds
thereof or (C) permit the lien of this Indenture not to constitute a
valid first priority security interest in the Trust Estate except as
permitted herein or in the Trust Agreement;
(iv) except as contemplated herein, dissolve or liquidate in whole
or in part; or
(v) incur, assume or guarantee any indebtedness other than
indebtedness incurred pursuant hereto or under the Basic Documents.
Section 3.11. Transfer of Assets. The Issuer shall not convey or
------------------
transfer any of its properties or assets, including those included in the
Trust Estate, to any Person, unless:
(a) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer the conveyance or transfer of which
is hereby restricted shall (i) be a United States citizen or a Person
organized and existing under the laws of the United States of America or
any state, (ii) expressly assume, by an indenture supplemental hereto,
executed and delivered to the Indenture Trustee (and the Swap
Counterparty), in form satisfactory to the Indenture Trustee (and the
Swap Counterparty), the due and punctual payment of the principal of and
interest on all Notes and the performance or observance of every
agreement and covenant of this Indenture (and the Swap Agreement) on the
part of the Issuer to be performed or observed, all as provided herein,
(iii) expressly agree by means of such supplemental indenture that all
right, title and interest so conveyed or transferred shall be subject
and subordinate to the rights of Holders of the Notes and the
Certificateholders (and the Swap Counterparty), as their interests
appear herein and (iv) unless otherwise provided in such supplemental
indenture, expressly agree to indemnify, defend and hold harmless the
Issuer (and the Swap Counterparty) against and from any loss, liability
or expense arising under or related to this Indenture, (the Swap
Agreement) and the Notes;
(b) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(c) the Rating Agencies shall have notified the Issuer that such
transaction shall not cause the rating of the Notes to be reduced,
suspended or withdrawn;
(d) the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Indenture Trustee (and the
Swap Counterparty)) to the effect that such transaction will not have
any material adverse tax consequence to the Issuer, any Noteholder, any
Certificateholder (or the Swap Counterparty);
(e) any action that is necessary to maintain the lien and security
interest created by this Indenture shall have been taken; and
(f) the Issuer shall have delivered to the Indenture Trustee (and
the Swap Counterparty) an Opinion of Counsel stating that such
conveyance or transfer and such supplemental indenture comply with this
Article III and that all conditions precedent herein provided for
relating to such transaction have been complied with.
Section 3.12. Transferee. Upon a conveyance or transfer of all the
----------
assets and properties of the Issuer pursuant to Section 3.11, (__________)
Trust (________) will be released from every covenant and agreement of this
Indenture to be observed or performed on the part of the Issuer with respect
to the Notes immediately upon the delivery of written notice to the
(________) Trust (________) that it is to be so released.
Section 3.13. Issuer May Consolidate, etc., Only on Certain Terms.
---------------------------------------------------
(a) The Issuer shall not consolidate or merge with or into any other Person,
unless:
(i) the Person (if other than the Issuer) formed by or surviving
such consolidation or merger shall be a Person organized and existing
under the laws of the United States of America or any State and shall
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Indenture Trustee, in form satisfactory to the
Indenture Trustee, the due and punctual payment of the principal of and
interest on all Notes and the performance or observance of every
agreement and covenant of this Indenture on the part of the Issuer to be
performed or observed, all as provided herein;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agencies shall have notified the Issuer that such
transaction shall not cause the rating of the Notes to be reduced,
suspended or withdrawn;
(iv) the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Indenture Trustee) to the
effect that such transaction will not have any material adverse tax
consequence to the Issuer, any Noteholder or any Certificateholder;
(v) any action that is necessary to maintain the lien and security
interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation or merger and such supplemental indenture comply with this
Article III and that all conditions precedent herein provided for
relating to such transaction have been complied with (including any
filing required by the Exchange Act).
Section 3.14. No Other Business. The Issuer shall not engage in any
-----------------
business other than financing, purchasing, owning and selling the Underlying
Securities in the manner contemplated by this Indenture and the other Basic
Documents; issuing the Notes and Certificates; (entering into and performing
under the Swap Agreement); and all activities incidental thereto.
Section 3.15. No Borrowing. The Issuer shall not issue, incur, assume,
------------
guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Notes or as permitted under the Basic Documents.
Section 3.16. Guarantees, Loans, Advances and Other Liabilities.
-------------------------------------------------
Except as contemplated by this Indenture or under the Basic Documents, the
Issuer shall not make any loan or advance or credit to, or guarantee
(directly or indirectly or by an instrument having the effect of assuring
another's payment or performance on any obligation or capability of so doing
or otherwise), endorse or otherwise become contingently liable, directly or
indirectly, in connection with the obligations, stocks or dividends of, or
own, purchase, repurchase or acquire (or agree contingently to do so) any
stock, obligations, assets or securities of, or any other interest in, or
make any capital contribution to, any other Person.
Section 3.17. Capital Expenditures. The Issuer shall not make any
--------------------
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
Section 3.18. Removal of Administrator. So long as any Notes are
------------------------
Outstanding, the Issuer shall not remove the Administrator without cause
unless the Rating Agencies shall have notified the Indenture Trustee that
such removal will not result in the reduction.
Section 3.19. Restricted Payments. The Issuer shall not, directly or
-------------------
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or
security in or of the Issuer, (ii) redeem, purchase, retire or otherwise
acquire for value any such ownership or equity interest or security or
(iii) set aside or otherwise segregate any amounts for any such purpose;
provided, however, that the Issuer may make, or cause to be
made, distributions to the Owner Trustee and the Certificateholders as
contemplated by, and to the extent funds are available for, such purpose
under this Indenture and the Trust Agreement. The Issuer will not, directly
or indirectly, make payments to or distributions from the Collection Account
except in accordance with this Indenture and the other Basic Documents.
Section 3.20. Notice of Events of Default. The Indenture Trustee shall
---------------------------
give (the Swap Counterparty and) the Rating Agencies prompt written notice of
each Event of Default hereunder of which it has knowledge.
Section 3.21. Further Instruments and Acts. Upon request of the
----------------------------
Indenture Trustee, the Issuer will execute and deliver such further
instruments and do such further acts as may be reasonably necessary or proper
to carry out more effectively the purpose of this Indenture.
Section 3.22. Statements to Noteholders. (a) On each Payment Date,
-------------------------
or as soon as practicable thereafter, the Indenture Trustee shall prepare and
forward by mail a statement to each Noteholder (with a copy to each Rating
Agency) stating:
(i) the aggregate amount of any distribution on such Payment Date
allocable to interest on the Notes;
(ii) the aggregate amount of any distribution on such Payment Date
allocable to principal on the Notes;
(iii) the aggregate amount of compensation paid to the
Administrator on such Payment Date;
(iv) the aggregate principal balance of the Underlying Securities
as of such Payment Date after giving effect distributions of principal
pursuant to clause (ii) above (and after giving effect to any sale, put
or call of all or part of the Underlying Securities on prior to or on
such Payment Date);
(v) the aggregate outstanding principal amount of (each Class of)
Notes on such Payment Date, after giving to the distribution of
principal referred to in clause (ii) above;
((vi) (if a floating rate) Class A-1 Note Accrual Rate (and the
Class A-2 Note Accrual Rate) applicable in respect of distributions of
interest made on such Payment Date;)
((vii) as applicable, information regarding any of the following
((as described in the base prospectus)): the amount of any shortfall;
the amount of any withdrawal from any (Reserve Account); for each date
during the (Funding Period), the remaining (Pre-Funded Amount); for the
first such date that is on or immediately following the end of the
(Funding Period) (if any), the amount of any remaining (Pre-Funding
Amount) that has not been used to fund the purchase of the (Subsequent
Underlying Securities) and that is being passed through as payments on
the Notes and Certificates); and
(viii) the aggregate outstanding principal balance of any Eligible
Investments purchased with proceeds of the Underlying Securities.)
((b) Within a reasonable period of time ((not to exceed
(_______________))) after the end of each calendar year (commencing with
(___________________)), the Indenture Trustee shall (i) furnish to each
Holder of a Note during the preceding calendar year: (A) the aggregate
amounts reported pursuant to each of clause (i) and clause (ii) of Section
3.22(a) for such preceding calendar year (and (B) such other information as
the Administrator reasonably determines necessary to enable the Noteholders
to prepare their tax returns) and (ii) file or cause to be filed such tax
returns and reports with respect to such statements as are required by the
Code to be filed by the Trust.)
(c) The Indenture Trustee shall forward by mail to (i) the
Administrator and (ii) (the Swap Counterparty) and each Noteholder with each
statement described in this Section 3.22(a) a copy of the most current
Underlying Securities Distribution Date Statement delivered to the Indenture
Trustee.
Section 3.23. Notices to Indenture Trustee. Upon receipt of any notice
----------------------------
with respect to the Underlying Securities, the Indenture Trustee shall
promptly transmit such notice to the Administrator (and the Swap
Counterparty). In the event such notice requests or requires any action by
the Indenture Trustee or the Noteholders, the Indenture Trustee shall not
take any action except in accordance with written instructions from (the Swap
Counterparty or) the Noteholders pursuant to Section 5.10.
Section 3.24. Custodianship, Transfer of Underlying Securities and
----------------------------------------------------
Eligible Investments.
- --------------------
(a) The Indenture Trustee shall hold all Certificated Securities and
Instruments in physical form at the office of a custodian appointed by it in
the Borough of Manhattan, City of New York. Initially, such Custodian shall
be (____________________) with its address at (____________________). Any
successor custodian shall be a State or national bank or trust company which
is not an Affiliate of the Issuer and has capital surplus of at least
$10,000,000.
(b) On the Closing Date, the Issuer shall cause the transfer of the
Underlying Securities to the Custodian to be held in the Custodial Account
for the benefit of the Indenture Trustee in accordance with the terms of this
Indenture. Each time that (the Swap Counterparty) shall direct the
acquisition of any Eligible Investment, the Administrator shall, if such
Eligible Investment has not already been transferred to the Custodial
Account, cause the transfer of such Eligible Investment to the Custodian to
be held in the Custodial Account for the benefit of the Indenture Trustee in
accordance with the terms of this Indenture. The security interest of the
Indenture Trustee in the funds or other property utilized in connection with
such acquisition shall, immediately and without further action on the part of
the Indenture Trustee, be released. The security interest of the Indenture
Trustee shall nevertheless come into existence and continue in the Eligible
Investment so acquired, including all rights of the Issuer in and to any
contracts related to and proceeds of such Eligible Investment. Underlying
Securities and Eligible Investments acquired by or on behalf of the Issuer
shall be transferred to the Custodian for the benefit of the Indenture
Trustee as follows:
(i) in the case of each Certificated Security or Instrument, by
(A) causing the delivery of such Certificated Security or Instrument to
the Custodian registered in the name of the Custodian or its affiliated
nominee or endorsed to the Custodian or in blank, (B) causing the
Custodian to continuously identify on its books and records that such
Certificated Security or Instrument is credited to the securities
account of the Indenture Trustee, (C) causing the Custodian to send a
confirmation to the Indenture Trustee that such Certificated Security is
credited to the securities account of the Indenture Trustee and, in the
case of an Instrument, acknowledge that it is holding such Instrument,
for the account of the Indenture Trustee, and (D) causing the Custodian
to maintain continuous possession of such Certificated Security or
Instrument in the State of New York;
(ii) in the case of each Uncertificated Security, by (A) causing
such Uncertificated Security to be continuously registered on the books
of the issuer thereof to the Custodian or its affiliated nominee, (B)
causing the Custodian to continuously identify on its books and records
that such Uncertificated Security is credited to the securities account
of the Indenture Trustee, and (C) causing the Custodian to send a
confirmation to the Indenture Trustee that such Uncertificated Security
is credited to the securities account of the Indenture Trustee;
(iii) in the case of each Clearing Corporation Security, by
causing (A) the relevant Clearing Corporation to make appropriate
entries on its books reducing the appropriate securities account of the
transferor and increasing the appropriate securities account of the Bank
at such Clearing Corporation by the amount of such Clearing Corporation
Security, (B) the Bank to continuously identify on its books and records
that such Clearing Corporation Security is credited to the securities
account of the Custodian and send a confirmation to the Custodian that
such Clearing Corporation Security is credited to the securities account
of the Custodian, (C) the Custodian to continuously identify on its
books and records that such Clearing Corporation Security is being
credited to the securities account of the Indenture Trustee, (D) the
Custodian to send a confirmation to the Indenture Trustee that such
Clearing Corporation Security is credited to the securities account of
the Indenture Trustee and (E) such Clearing Corporation Security to be
(1) for an Uncertificated Security or a Certificated Security in
registered form, continuously registered to the Clearing Corporation or
its Clearing Corporation Custodian or the nominee of either subject to
the exclusive control of such Clearing Corporation or, in the case of an
Uncertificated Security, in bearer form or endorsed in blank by an
appropriate person and, in the case of a Certificated Security,
continuously maintained in the State of New York in the possession of
such Clearing Corporation or its Clearing Corporation Custodian or the
nominee of either subject to the exclusive control of such Clearing
Corporation and (2) in any case, continuously identified on the books
and records of such Clearing Corporation as being credited to the sole
and exclusive securities account of the Bank;
(iv) in the case of each Government Security, by causing (A) the
creation of a Security Entitlement to such Government Security in
favor of the Indenture Trustee when the Custodian indicates by book
entry that such Government Security has been credited to the Securities
Account maintained by the Custodian as Securities Intermediary for the
Indenture Trustee and (B) such Securities Intermediary to continuously
identify such Government Security credited to the securities account of
the Indenture Trustee as Entitlement Holder (as defined in Revised
Article 8);
(v) in the case of any Custodial Account which constitutes a
"deposit account" under the UCC, by causing the Custodian to
continuously identify in its books that in the Custodian Account is
being held in the name of the Issuer and the Indenture Trustee and that
the Custodian Account has been pledged to the Indenture Trustee pursuant
to the granting clause herein and, except as may be expressly provided
herein to the contrary, relinquishing dominion and control over such
account to the Indenture Trustee.
(c) (The Indenture Trustee shall hold the Swap Agreement in the State
of New York.)
(d) Without limiting the foregoing, the Issuer and the Indenture
Trustee agree, and the Indenture Trustee will cause the Custodian and the
Bank, to take such different or additional action as the Indenture Trustee
may reasonably request in order to maintain the perfection and priority of
the security interest of the Indenture Trustee in the event of any change in
applicable law or regulation, including without limitation Articles 8 and 9
of the UCC and the Book-Entry Regulations.
ARTICLE IV
The Notes; Satisfaction and Discharge of Indenture
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Section 4.01. The Notes. The aggregate Denominations of all Notes
---------
issued as of the Closing Date shall be $(________). Beneficial Owners will
hold interests in the Global Notes through the book-entry facilities of the
Depository in minimum Denominations of ($100,000) and integral multiples of
$1,000 in excess thereof.
The Notes shall be issued initially in the form of one or more permanent
Global Notes in definitive, fully registered form without interest coupons
with the applicable legend set forth in Exhibit A hereto, respectively, added
to the form of such Notes (each, a "Global Note"), which shall be deposited
on behalf of the subscribers for such Notes represented thereby with the
Indenture Trustee as custodian for the Depository and registered in the name
of a nominee of the Depository, duly executed by the Owner Trustee and
authenticated by the Indenture Trustee as hereinafter provided. The
aggregate principal amount of the Global Notes may from time to time be
increased or decreased by adjustments made on the records of the Indenture
Trustee or the Depository or its nominee, as the case may be, as hereinafter
provided.
The Indenture Trustee may for all purposes (including the making of
payments due on the Global Notes) deal with the Depository as the authorized
representative of the Beneficial Owners with respect to the Global Notes for
the purposes of exercising the rights of Noteholders hereunder. Except as
provided in the next succeeding paragraph of this Section 4.01, the rights of
Beneficial Owners with respect to the Global Notes shall be limited to those
established by law and agreements between such Beneficial Owners and the
Depository and Depository Participants. Except as provided in Section 4.08,
Beneficial Owners shall not be entitled to definitive notes for the Global
Notes as to which they are the Beneficial Owners. Requests and directions
from, and votes of, the Depository as Noteholder shall not be deemed
inconsistent if they are made with respect to different Beneficial Owners.
Notwithstanding Section 316(c) of the TIA, the Indenture Trustee may
establish a reasonable record date in connection with solicitations of
consents from or voting by Noteholders and give notice to the Depository of
such record date. Without the consent of the Issuer and the Indenture
Trustee, no Global Note may be transferred by the Depository except to a
successor Depository that agrees to hold such Global Note for the account of
the Beneficial Owners.
In the event the Depository Trust Company resigns or is removed as
Depository, the Administrator may appoint a successor Depository. If no
successor Depository has been appointed within 30 days of the effective date
of the Depository's resignation or removal, each Beneficial Owner shall be
entitled to certificates representing the Global Note it beneficially owns in
the manner prescribed in Section 4.08.
The Notes shall, on original issue, be executed on behalf of the Trust
by the Owner Trustee, not in its individual capacity but solely as Owner
Trustee, authenticated by the Indenture Trustee and delivered by the
Indenture Trustee to or upon the order of the Issuer upon receipt by the
Indenture Trustee of the Underlying Securities.
Section 4.02. Registration of and Limitations on Transfer and Exchange
--------------------------------------------------------
of Notes. The Note Registrar shall cause to be kept at its Corporate Trust
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Office a note register in which, subject to such reasonable regulations as it
may prescribe, the Note Registrar shall provide for the registration of Notes
and of transfers and exchanges of Notes as herein provided (the "Note
Register").
Subject to the restrictions and limitations set forth below, upon
surrender for registration of transfer of any Note of any Class at the
Corporate Trust Office, the Indenture Trustee shall execute and the Note
Registrar shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Notes of such Class in authorized
Denominations evidencing the same aggregate Percentage Interests.
At the option of the Noteholders, Notes of any Class may be exchanged
for other Notes of such Class in authorized Denominations evidencing the same
aggregate Percentage Interests upon surrender of the Notes of such Class to
be exchanged at the Corporate Trust Office of the Note Registrar. Whenever
any Notes of any Class are so surrendered for exchange, the Owner Trustee on
behalf of the Issuer shall execute and the Indenture Trustee shall
authenticate and deliver the Notes of such Class which the Noteholder making
the exchange is entitled to receive. Each Note presented or surrendered for
registration of transfer or exchange shall (if so required by the Note
Registrar) be duly endorsed by, or be accompanied by a written instrument of
transfer in form reasonably satisfactory to the Note Registrar duly executed
by, the Holder thereof or his attorney duly authorized in writing. Notes
delivered upon any such transfer or exchange will evidence the same Class and
the same obligations, and will be entitled to the same rights and privileges,
as the Notes surrendered.
No service charge shall be made for any registration of transfer or
exchange of Notes, but the Note Registrar shall require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes.
All Notes surrendered for registration of transfer and exchange shall be
cancelled by the Note Registrar and delivered to the Indenture Trustee for
subsequent destruction without liability on the part of either.
Section 4.03. Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
------------------------------------------
mutilated Note is surrendered to the Note Registrar, or the Note Registrar
receives evidence to its satisfaction of the destruction, loss or theft of
any Note, and (ii) there is delivered to the Indenture Trustee such security
or indemnity as may be required by it to hold the Issuer, the Note Registrar
and the Indenture Trustee harmless, then, in the absence of notice to the
Issuer, the Note Registrar or the Indenture Trustee that such Note has been
acquired by a bona fide purchaser, and provided that the requirements of
Section 8-405 of the UCC are met, the Owner Trustee, on behalf of the Issuer,
shall execute, and the Indenture Trustee shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Note, a replacement Note of the same Class and like tenor (including the same
date of issuance) and equal principal amount, provided, however, that if any
such destroyed, lost or stolen Note, but not a mutilated Note, shall have
become or within seven days shall be due and payable, or shall have been
called for redemption, instead of issuing a replacement Note, the Issuer may
pay such destroyed, lost or stolen Note when so due or payable or upon the
Redemption Date without surrender thereof. If, after the delivery of such
replacement Note or payment of a destroyed, lost or stolen Note pursuant to
the proviso to the preceding sentence, a bona fide purchaser of the original
Note in lieu of which such replacement Note was issued presents for payment
such original Note, the Issuer, the Note Registrar and the Indenture Trustee
shall be entitled to recover such replacement Note (or such payment) from the
Person to whom it was delivered or any Person taking such replacement Note
from such Person to whom such replacement Note was delivered or any assignee
of such Person, except a bona fide purchaser, and shall be entitled to
recover upon the security or indemnity provided therefor to the extent of any
loss, damage, cost or expense incurred by the Issuer, the Note Registrar or
the Indenture Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section 4.03, the
Indenture Trustee may require the payment by the Holder of such Note of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other reasonable expenses (including the fees and
expenses of the Indenture Trustee or the Note Registrar) connected therewith.
Every replacement Note issued pursuant to this Section 4.03 in
replacement of any mutilated, destroyed, lost or stolen Note shall constitute
an original additional contractual obligation of the Issuer, whether or not
the mutilated, destroyed, lost or stolen Note shall be at any time
enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Notes duly
issued hereunder.
The provisions of this Section 4.03 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Notes.
Section 4.04. Persons Deemed Owners. Prior to due presentment for
---------------------
registration of transfer of any Note, the Issuer, the Indenture Trustee, the
Note Registrar and any agent of the Issuer, the Note Registrar or the Inden-
ture Trustee shall treat the Person in whose name any Note is registered (as
of the day of determination) as the owner of such Note for the purpose of
receiving payments of principal of and interest, if any, on such Note and for
all other purposes whatsoever, whether or not such Note be overdue, and
neither the Issuer, the Indenture Trustee, the Note Registrar nor any agent
of the Issuer, the Note Registrar or the Indenture Trustee shall be affected
by notice to the contrary.
Section 4.05. Cancellation. All Notes surrendered for payment,
------------
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Indenture Trustee, be delivered to the Indenture
Trustee and shall be promptly cancelled by the Indenture Trustee. The Issuer
may at any time deliver to the Indenture Trustee for cancellation any Notes
previously authenticated and delivered hereunder which the Issuer may have
acquired in any manner whatsoever, and all Notes so delivered shall be
promptly cancelled by the Indenture Trustee. No Notes shall be authenticated
in lieu of or in exchange for any Notes cancelled as provided in this Section
4.05, except as expressly permitted by this Indenture. All cancelled Notes
may be held or disposed of by the Indenture Trustee in accordance with its
standard retention or disposal policy as in effect at the time.
Section 4.06. Book-Entry Notes. This section shall apply only to
----------------
Global Notes deposited with or on behalf of the Depository.
The Owner Trustee shall execute, on behalf of the Issuer, and the
Indenture Trustee shall authenticate and deliver initially one or more Global
Notes that (i) shall be registered in the name of the nominee of the
Depository for such Global Notes and (ii) shall be delivered by the Indenture
Trustee to such Depository or pursuant to such Depository's instructions or
held by the Indenture Trustee's agent as custodian for the Depository. Such
Global Notes shall initially be registered on the Note Register in the name
of Cede & Co., the nominee of the initial Depository, and no Beneficial Owner
will receive a Definitive Note representing such Beneficial Owner's interest
in such Note, except as provided in Section 4.08. Unless and until
definitive, fully registered Notes (the "Definitive Notes") have been issued
to Beneficial Owners pursuant to Section 4.08:
(i) the provisions of this Section 4.06 shall be in full force and
effect;
(ii) the Note Registrar and the Indenture Trustee shall be entitled
to deal with the Depository for all purposes of this Indenture
(including the payment of principal of and interest on the Notes and the
giving of instructions or directions hereunder) as the sole holder of
the Global Notes, and shall have no obligation to the applicable Note
Owners;
(iii) to the extent that the provisions of this Section 4.06
conflict with any other provisions of this Indenture, the provisions of
this Section 4.06 shall control;
(iv) the rights of Beneficial Owners shall be exercised only
through the Depository and shall be limited to those established by law
and agreements between such Note Owners and the Depository and/or the
Depository Participants pursuant to the Depository Agreement. Unless
and until Definitive Notes are issued pursuant to Section 4.08, the
initial Depository will make book-entry transfers among the Depository
Participants and receive and transmit payments of principal of and
interest on the Global Notes to such Depository Participants; and
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of Global Notes
evidencing a specified percentage of the Outstanding Amount of the
Notes, the Depository shall be deemed to represent such percentage only
to the extent that it has received instructions to such effect from
Beneficial Owners and/or Depository Participants owning or representing,
respectively, such required percentage of the beneficial interest in the
Global Notes and has delivered such instructions to the Indenture
Trustee.
Section 4.07. Notices to Depository. Whenever a notice or other
---------------------
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Beneficial Owners pursuant
to Section 4.08, the Indenture Trustee shall give all such notices and
communications specified herein to be given to Holders of the Global Notes to
the Depository, and shall have no obligation to the Beneficial Owners.
Section 4.08. Definitive Notes. If (i) the Administrator advises the
----------------
Indenture Trustee in writing that the Depository is no longer willing or able
to properly discharge its responsibilities with respect to the Global Notes
and the Administrator is unable to locate a qualified successor or (ii) the
Administrator at its option advises the Indenture Trustee in writing that it
elects to terminate the book-entry system of registration through the
Depository, then the Depository will be expected to notify all Beneficial
Owners of the availability of Definitive Notes to Beneficial Owners
requesting the same. Upon surrender to the Indenture Trustee of the
typewritten Notes representing the Book-Entry Notes by the Depository,
accompanied by re-registration instructions, the Owner Trustee, on behalf of
the Issuer, shall execute and the Indenture Trustee shall authenticate the
Definitive Notes in accordance with the instructions of the Depository. None
of the Issuer, the Note Registrar or the Indenture Trustee shall be liable
for any delay in delivery of such instructions and may conclusively rely on,
and shall be protected in relying on, such instructions. Upon the issuance
of Definitive Notes, the Indenture Trustee shall recognize the Holders of the
Definitive Notes as Noteholders.
Section 4.09. Tax Treatment. The Issuer has entered into this
-------------
Indenture, and the Notes will be issued, with the intention that, for
federal, state and local income, single business and franchise tax purposes,
the Notes will qualify as indebtedness. The Issuer, by entering into this
Indenture, and each Noteholder, by its acceptance of its Note (and each
Beneficial Owner by its acceptance of an interest in the applicable Book-
Entry Note), agree to treat the Notes for federal, state and local income,
single business and franchise tax purposes as indebtedness.
Section 4.10. Satisfaction and Discharge of Indenture. This Indenture
---------------------------------------
shall cease to be of further effect, as set forth in Section 8.04, with
respect to the Notes except as to (i) rights of registration of transfer and
exchange, (ii) substitution of mutilated, destroyed, lost or stolen Notes,
(iii) rights of Noteholders to receive payments of principal thereof and
interest thereon, (iv) Sections 3.03, 3.04, 3.06, 3.10, 3.11, 3.12, 3.13 and
3.15, (v) the rights, obligations and immunities of the Indenture Trustee
hereunder (including the rights of the Indenture Trustee under Section 6.07
and the obligations of the Indenture Trustee under Section 4.11) and (vi) the
rights of Noteholders (and the Swap Counterparty) as beneficiaries hereof
with respect to the property so deposited with the Indenture Trustee payable
to all or any of them, and the Indenture Trustee, at the expense of the
Issuer, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture with respect to the Notes, when
(A) either
(1) all Notes theretofore authenticated and delivered (other than
Notes that have been destroyed, lost or stolen and that have been
replaced or paid as provided in Section 4.03) have been delivered to the
Indenture Trustee for cancellation; or
(2) all Notes not theretofore delivered to the Indenture Trustee
for cancellation
(a) have become due and payable, or
(b) will become due and payable at the Class (A-1) Scheduled
Final Payment Date (in the case of the Class (A-1) Notes) (or the
Class (A-2) Scheduled Final Payment Date (in the case of the Class
(A-2) Notes), in either case within one year,
and the Issuer, in the case of (a) or (b) above, has irrevocably
deposited or caused to be irrevocably deposited with the Indenture
Trustee cash or direct obligations of or obligations guaranteed by the
United States of America (which will mature prior to the date such
amounts are payable), in trust for such purpose, in an amount sufficient
to pay and discharge the entire indebtedness on such Notes not
theretofore delivered to the Indenture Trustee for cancellation when due
on the Class (A-1) Scheduled Final Payment Date (in the case of the
Class (A-1) Notes) (or the Class (A-2) Scheduled Final Payment Date (in
the case of the Class (A-2) Notes));
(B) (the Issuer has paid or caused to be paid all amounts due or
which may become due by the Issuer to the Swap Counterparty under the
Swap Agreement);
(C) the Issuer has paid or caused to be paid all other sums
payable hereunder by the Issuer; and
(D) in the case of a deposit made in connection with Section
4.10(A)(2)(b) above, the Indenture Trustee shall have received an
Opinion of Counsel and (if required by the TIA, the Indenture Trustee
(or the Swap Counterparty)) a certificate from a firm of Independent
certified public accountants, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with and such Opinion of Counsel shall
further be to the effect that such deposit will not have any material
adverse tax consequences to the Issuer, any Noteholders, any
Certificateholders (or the Swap Counterparty).
Section 4.11. Application of Trust Money. All moneys deposited with
--------------------------
the Indenture Trustee pursuant to Section 4.10 hereof shall be held in trust
and applied by it, in accordance with the provisions of the Notes(, the Swap
Agreement) and this Indenture, to the payment, either directly or through any
Administrator, as the Indenture Trustee may determine, to (the Swap
Counterparty and) the Holders of the particular Notes for the payment or
redemption of which such moneys have been deposited with the Indenture
Trustee, of all sums due and to become due thereon for principal and
interest.
Section 4.12. Repayment of Moneys Held by Administrator. In
-----------------------------------------
connection with the satisfaction and discharge of this Indenture with respect
to the Notes (and the Swap Agreement), all moneys then held by any
Administrator other than the Indenture Trustee under the provisions of this
Indenture with respect to such Notes (and the Swap Agreement) shall be paid
to the Indenture Trustee to be held and applied according to Section 3.05 and
thereupon such Administrator shall be released from all further liability
with respect to such moneys.
ARTICLE V
Remedies
--------
Section 5.01. Events of Default. "Event of Default" shall have the
-----------------
meaning given to such term in Article I.
Section 5.02. Collection of Indebtedness and Suits for Enforcement by
-------------------------------------------------------
Indenture Trustee. (a) The Issuer covenants that if (i) default is made in
- -----------------
the payment of any interest on any Note when the same becomes due and
payable, and such default continues for a period of five days, (ii) default
is made in the payment of the principal of or any installment of the
principal of any Note when the same becomes due and payable or (iii) (default
is made in the payment of amounts due by the Issuer under the Swap
Agreement), the Issuer will, upon demand of the Indenture Trustee, pay to it,
for the benefit of the Holders of the Notes (and the Swap Counterparty), the
whole amount then due and payable on such Notes for principal and interest,
with interest upon the overdue principal, and, to the extent payment at such
rate of interest shall be legally enforceable, upon overdue installments of
interest, at the rate borne by such Notes (and the whole amount then due and
payable under the Swap Agreement).
(b) In case the Issuer shall fail forthwith to pay such amounts upon
such demand, the Indenture Trustee, in its own name and as trustee of an
express trust, may institute a Proceeding for the collection of the sums so
due and unpaid, and may prosecute such Proceeding to judgment or final
decree, and may enforce the same against the Issuer upon such Notes (or in
respect of the Swap Agreement) and collect in the manner provided by law out
of the property of the Issuer upon such Notes (or in respect of the Swap
Agreement), wherever situated, the moneys adjudged or decreed to be payable;
(provided, however, that, notwithstanding Section 316(a)(1) of the TIA (which
provisions of the TIA are hereby expressly excluded), if the Swap
Counterparty has given instructions to the Indenture Trustee with respect to
such proceedings, remedies or actions and no Swap Default as to which the
Swap Counterparty is the defaulting party or Swap Termination Event as to
which the Swap Counterparty is the sole Affected Party shall have occurred,
the Indenture Trustee shall follow such instructions).
(c) If the Notes are due and payable following an Event of Default with
respect thereto, the Indenture Trustee, as more particularly provided in
Section 5.03, in its discretion, may proceed to protect and enforce its
rights and the rights of the Noteholders (and the Swap Counterparty), by such
appropriate Proceedings as the Indenture Trustee shall deem most effective to
protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy or legal or
equitable right vested in the Indenture Trustee by this Indenture or by law,
including any remedy provided in any Underlying Agreement to a holder of the
Underlying Securities; (provided, however, that, notwithstanding Section
316(a)(1) of the TIA (which provisions of the TIA are hereby expressly
excluded), if the Swap Counterparty has given instructions to the Indenture
Trustee with respect to such proceedings, remedies or actions and no Swap
Default as to which the Swap Counterparty is the defaulting party or Swap
Termination Event as to which the Swap Counterparty is the sole Affected
Party shall have occurred, the Indenture Trustee shall follow such
instructions).
(d) In case there shall be pending, relative to the Issuer or any other
obligor upon the Notes (or in respect of the Swap Agreement) or any Person
having or claiming an ownership interest in the Trust Estate, Proceedings
under Title 11 of the United States Code or any other applicable federal or
state bankruptcy, insolvency or other similar law, or in case a receiver,
assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator
or similar official shall have been appointed for or taken possession of the
Issuer or its property or such other obligor or Person, or in case of any
other comparable judicial Proceedings relative to the Issuer or other obligor
upon the Notes (or in respect of the Swap Agreement), or to the creditors or
property of the Issuer, the Indenture Trustee, irrespective of whether the
principal of any Notes shall then be due and payable as therein expressed or
by declaration or otherwise and irrespective of whether the Indenture Trustee
shall have made any demand pursuant to the provisions of this Section, shall
be entitled and empowered, by intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Notes (or in
respect of the Swap Agreement) and to file such other papers or
documents as may be necessary or advisable in order to have the claims
of the Indenture Trustee (including any claim for reasonable
compensation to the Indenture Trustee and each predecessor Indenture
Trustee, and their respective agents, attorneys and counsel, and for
reimbursement of all expenses and liabilities incurred, and all advances
made, by the Indenture Trustee and each predecessor Indenture Trustee,
except as a result of negligence or bad faith) (of the Swap
Counterparty) and of the Noteholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote
on behalf of the Holders of Notes (and the Swap Counterparty) in any
election of a trustee, a standby trustee or Person performing similar
functions in any such Proceedings;
(iii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute all amounts received
with respect to the claims of the Noteholders (and the Swap
Counterparty) and of the Indenture Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the
Indenture Trustee, (the Swap Counterparty) or the Holders of Notes
allowed in any judicial proceedings relative to the Issuer, its
creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders (and by
the Swap Counterparty) to make payments to the Indenture Trustee, and, in the
event that the Indenture Trustee shall consent to the making of payments
directly to such Noteholders (or the Swap Counterparty), as applicable, to
pay to the Indenture Trustee such amounts as shall be sufficient to cover
reasonable compensation to the Indenture Trustee, each predecessor Indenture
Trustee and their respective agents, attorneys and counsel, and all other
expenses and liabilities incurred, and all advances made, by the Indenture
Trustee and each predecessor Indenture Trustee except as a result of
negligence or bad faith.
(e) Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf
of any Noteholder (or on behalf of the Swap Counterparty) any plan of
reorganization, arrangement, adjustment or composition affecting the Notes,
the rights of any Holder thereof (or the Swap Counterparty) or to authorize
the Indenture Trustee to vote in respect of the claim of any Noteholder (or
the Swap Counterparty) in any such proceeding except, as aforesaid, to vote
for the election of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this Indenture,
under any of the Notes (or under the Swap Agreement), may be enforced by the
Indenture Trustee without the possession of any of the Notes or the
production thereof in any trial or other Proceedings relative thereto, and
any such action or proceedings instituted by the Indenture Trustee shall be
brought in its own name as trustee of an express trust, and any recovery of
judgment, subject to the payment of the expenses, disbursements and
compensation of the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents and attorneys, shall be for the ratable benefit of
the Holders of the Notes (and the Swap Counterparty).
(g) In any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture
to which the Indenture Trustee shall be a party), the Indenture Trustee shall
be held to represent all the Holders of the Notes (and the Swap
Counterparty), and it shall not be necessary to make any Noteholder (or the
Swap Counterparty) a party to any such Proceedings.
Section 5.03. Remedies. If an Event of Default shall have occurred and
--------
be continuing, the Indenture Trustee may do one or more of the following:
(i) liquidate the Underlying Securities and Eligible Investments,
if any, as provided in Section 5.16 hereof;
(ii) institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the
Notes or under this Indenture with respect thereto, whether by
declaration or otherwise, enforce any judgment obtained, and collect
from the Issuer upon such Notes (or in respect of the Swap Agreement)
moneys adjudged due;
(iii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Trust Estate;
(iv) exercise any remedies of a secured party under the UCC and
take any other appropriate action to protect and enforce the rights and
remedies of the Indenture Trustee, (the Swap Counterparty and) the
Holders of the Notes;
(v) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law;
(vi) institute Proceedings in its own name and as trustee of an
express trust and take any other appropriate action to protect and
enforce the rights and remedies of the Issuer (under the Swap
Agreement); and
(vii) maintain possession of the Underlying Securities and continue
to apply collections on the Underlying Securities in accordance with the
provisions of this Indenture;
provided, however that the Indenture Trustee shall not take the actions
described in Subsections (i) or (v) above unless the principal of all Notes
then Outstanding has become due and payable immediately under Section 3.05(c)
of this Indenture. (Immediately after the occurrence of an Event of Default
described in clause (vi) of the definition of "Event of Default", the
Indenture Trustee shall liquidate the Underlying Securities and Eligible
Investments, if any.)
(Section 5.04. Enforcement of Swap Agreement. Notwithstanding any other
-----------------------------
provision of this Indenture requiring the consent of the Swap Counterparty or
directing the Trustee to follow the instructions of the Swap Counterparty, if
a Swap Default or a Swap Termination Event shall occur, the Indenture Trustee
may, in its discretion, and shall, if directed by the Holders of at least a
majority of the Outstanding Amount of the Notes, proceed to protect and
enforce the rights of the Issuer under the Swap Agreement by such appropriate
Proceedings as the Indenture Trustee shall deem most effective or as the
Holders of at least a majority of the Outstanding Amount of the Notes shall
direct, without regard to any instructions of the Swap Counterparty.)
(Section 5.05. Modification and Amendment of Swap Agreement. (a) The
--------------------------------------------
Swap Agreement may be amended by the Owner Trustee and the Swap Counterparty
without notice to or consent of the Noteholders (i) to cure any ambiguity or
mistake, (ii) to correct any defective provisions or to correct or supplement
any provisions therein which may be inconsistent with any other provisions
therein or (iii) to add any other provisions with respect to matters or
questions arising under such Swap Agreement, provided that any such amendment
pursuant to clause (iii) above shall not adversely affect in any material
respect the interests of any Noteholders, as evidenced by an Opinion of
Counsel. Any such amendment pursuant to clause (iii) of the preceding
sentence shall be deemed not to adversely affect in any material respect the
interests of any Noteholder if the Owner Trustee receives written
confirmation from each Rating Agency rating the Notes that such amendment
will not cause such Rating Agency to reduce the then current rating thereof.
(b) The Swap Agreement may also be amended by the Owner Trustee and the
Swap Counterparty with the consent of (i) the holders possessing not less
than a majority of the aggregate outstanding principal amount of the Notes
and (ii) the holders possessing not less than a majority of the aggregate
outstanding principal amount of the Notes for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of such Swap Agreement.)
Section 5.06. Limitation of Suits and Liability. (a) No Holder of any
---------------------------------
Note shall have any right to institute any Proceeding, judicial or otherwise,
with respect to this Indenture, or for the appointment of a receiver or
trustee, or for any other remedy hereunder, unless:
(i) such Holder has previously given written notice to the
Indenture Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Outstanding Amount of
the Notes have made written request to the Indenture Trustee to
institute such Proceeding in respect of such Event of Default in its own
name as Indenture Trustee hereunder;
(iii) such Holder or Holders have offered to the Indenture Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in complying with such request satisfactory to the Indenture
Trustee;
(iv) the Indenture Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute such
Proceedings; and
(v) no direction inconsistent with such written request has been
given to the Indenture Trustee during such 60-day period by the Holders
of a majority of the Outstanding Amount of the Notes.
It is understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Notes (or the Swap Counterparty) or to obtain or to seek to
obtain priority or preference over any other Holders (or the Swap
Counterparty) or to enforce any right under this Indenture, except in the
manner herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of
Notes, each representing less than a majority of the Outstanding Amount of
the Notes, the Indenture Trustee in its sole discretion may determine what
action, if any, shall be taken, notwithstanding any other provisions of this
Indenture; (provided, however, that, notwithstanding Section 316(a)(1) of the
TIA (which provisions of the TIA are hereby expressly excluded), if the Swap
Counterparty has given instructions to the Indenture Trustee with respect to
any such determination and no Swap Default as to which the Swap Counterparty
is the defaulting party or Swap Termination Event as to which the Swap
Counterparty is the sole Affected Party shall have occurred, the Indenture
Trustee shall follow such instructions).
(b) With respect to the Issuer, neither the Indenture Trustee nor the
Owner Trustee in their capacities as trustees, nor any holder of a
Certificate representing an ownership interest in the Issuer, nor the
Administrator nor any of their respective owners, beneficiaries, agents,
officers, directors, employees, affiliates, successors or assigns will, in
the absence of an express agreement to the contrary, be personally liable for
the payment of the principal of or interest on the Notes or for the
agreements of the Issuer contained in this Indenture.
Section 5.07. Unconditional Rights of Noteholders To Receive Principal
--------------------------------------------------------
and Interest. Notwithstanding any other provisions in this Indenture, the
- ------------
Holder of any Note shall have the right, which is absolute and unconditional,
to receive payment of the principal of and interest, if any, on such Note on
or after the respective due dates thereof expressed in such Note or in this
Indenture and to institute suit for the enforcement of any such payment, and
such right shall not be impaired without the consent of such Holder.
Section 5.08. Restoration of Rights and Remedies. If the Indenture
----------------------------------
Trustee, (the Swap Counterparty) or any Noteholder has instituted any
Proceeding to enforce any right or remedy under this Indenture and such
Proceeding has been discontinued or abandoned for any reason or has been
determined adversely to the Indenture Trustee, (to the Swap Counterparty), or
to such Noteholder, then and in every such case the Issuer, the Indenture
Trustee, (the Swap Counterparty) and the Noteholders shall, subject to any
determination in such Proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of
the Indenture Trustee, (the Swap Counterparty) and the Noteholders shall
continue as though no such Proceeding had been instituted.
Section 5.09. Rights and Remedies Cumulative. No right or remedy
------------------------------
herein conferred upon or reserved to the Indenture Trustee(, the Swap
Counterparty) or to the Noteholders is intended to be exclusive of any other
right or remedy, and every right and remedy shall, to the extent permitted by
law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
Section 5.10. Delay or Omission Not a Waiver. No delay or omission of
------------------------------
the Indenture Trustee(, the Swap Counterparty) or any Holder of any Note to
exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default
or an acquiescence therein. Every right and remedy given by this Article V
or by law to the Indenture Trustee(, the Swap Counterparty) or to the
Noteholders may be exercised from time to time, and as often as may be deemed
expedient, by the Indenture Trustee(, the Swap Counterparty) or by the
Noteholders, as the case may be.
Section 5.11. Control by Noteholders. (Notwithstanding Section 316(a)
----------------------
of the TIA (which provisions of the TIA are hereby expressly excluded), if a
Swap Default as to which the Swap Counterparty is the defaulting party or a
Swap Termination Event as to which the Swap Counterparty is the sole Affected
Party shall have occurred,) the Holders of a majority of the Outstanding
Amount of each Class of the Notes shall have the right to direct the time,
method and place of conducting any Proceeding for any remedy available to the
Indenture Trustee with respect to such Notes or exercising any trust or power
conferred on the Indenture Trustee; provided that:
(i) such direction shall not be in conflict with any rule of law
or with this Indenture (or the Swap Agreement); and
(ii) the Indenture Trustee may take any other action deemed proper
by the Indenture Trustee that is not inconsistent with such direction.
Notwithstanding the rights of Noteholders set forth in this Section, subject
to Section 6.01, the Indenture Trustee need not take any action that it
determines might involve it in liability or might materially adversely affect
the rights of any Noteholders not consenting to such action.
Section 5.12. Waiver of Past Defaults. Prior to the declaration of
-----------------------
the acceleration of the maturity of the Notes, the Holders of Notes of not
less than a majority of the Outstanding Amount of the Notes may, (with the
prior written consent of the Swap Counterparty (notwithstanding Section
316(a)(1) of the TIA (which provisions of the TIA are hereby expressly
excluded))), waive any past Event of Default and its consequences except an
Event of Default (a) with respect to payment of principal of or interest on
any of the Notes, (b) in respect of a covenant or provision hereof which
cannot be modified or amended without the consent of the Holder of each Note
or (c) specified in paragraph (vi) of the definition thereof. In the case of
any such waiver, the Issuer, the Indenture Trustee, (the Swap Counterparty)
and the Holders of the Notes shall be restored to their former positions and
rights hereunder, respectively; but no such waiver shall extend to any
subsequent or other Event of Default or impair any right consequent thereto.
Upon any such waiver, any Event of Default arising therefrom shall be
deemed to have been cured and not to have occurred, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Event
of Default or impair any right consequent thereto.
Section 5.13. Undertaking for Costs. All parties to this Indenture
---------------------
agree, and each Holder of any Note by such Holder's acceptance thereof shall
be deemed to have agreed, that any court may in its discretion require, in
any suit for the enforcement of any right or remedy under this Indenture, or
in any suit against the Indenture Trustee for any action taken, suffered or
omitted by it as Indenture Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may
in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section 5.13 shall not apply to (a) any suit
instituted by the Indenture Trustee, (b) (any suit instituted by the Swap
Counterparty), (c) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate more than 10% of the
Outstanding Amount of the Notes or (d) any suit instituted by any Noteholder
for the enforcement of the payment of principal of or interest on any Note on
or after the respective due dates expressed in such Note and in this
Indenture.
Section 5.14. Waiver of Stay or Extension Laws. The Issuer covenants
--------------------------------
(to the extent that it may lawfully do so) that it will not at any time
insist upon, or plead or in any manner whatsoever, claim or take the benefit
or advantage of, any stay or extension law wherever enacted, now or at any
time hereafter in force, that may affect the covenants or the performance of
this Indenture; and the Issuer (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the execution of any power
herein granted to the Indenture Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
Section 5.15. Action on Notes. The Indenture Trustee's right to seek
---------------
and recover judgment on the Notes, (in respect of the Swap Agreement) or
under this Indenture shall not be affected by the seeking, obtaining or
application of any other relief under or with respect to this Indenture.
Neither the lien of this Indenture nor any rights or remedies of the
Indenture Trustee, (the Swap Counterparty) or the Noteholders shall be
impaired by the recovery of any judgment by the Indenture Trustee against the
Issuer or by the levy of any execution under such judgment upon any portion
of the Trust Estate or upon any of the assets of the Issuer. Any money or
property collected by the Indenture Trustee shall be applied in accordance
with Section 3.05(d).
Section 5.16. Sale of Underlying Securities. Any liquidation of the
-----------------------------
Underlying Securities and Eligible Investments, if any, by the Indenture
Trustee shall be conducted by the Indenture Trustee in accordance with the
Sale Procedures and shall occur as soon as practicable in the case of any
acceleration of the principal of the Notes. (Specify any restrictions on
sales) The settlement of the liquidation will occur no earlier than the
second and no later than the first Business Day prior to the date set for
prepayment (or the Early Termination Date of the Swap Agreement, as
applicable). "Sale Procedures" means that the Indenture Trustee on behalf of
the Issuer will (i) sell the Underlying Securities and Eligible Investments
(other than Eligible Investments described in clause (ii) below) to the
highest bidder of not less than three solicited bidders for such Underlying
Securities or Eligible Investments and (ii) redeem all Eligible Investments
that are redeemable at the holder's option by exercising such option for
settlement no earlier than the second and no later than the first Business
Day prior to the date set for prepayment (or the Early Termination Date of
the Swap Agreement, as applicable). The bidders may include the Depositor
(or the Swap Counterparty) or affiliates thereof; provided, however, that
neither the Depositor (nor the Swap Counterparty), nor any of (their)
affiliates, is obligated to bid, and bidders need not be limited to
recognized broker dealers.
ARTICLE VI
The Indenture Trustee
---------------------
Section 6.01. Duties of Indenture Trustee. (a) If an Event of Default
---------------------------
has occurred and is continuing, the Indenture Trustee shall exercise the
rights and powers vested in it by this Indenture and use the same degree of
care and skill in their exercise as a prudent person would exercise or use
under the circumstances in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Indenture Trustee and conforming to the
requirements of this Indenture; however, the Indenture Trustee shall
examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section 6.01;
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is proved
that the Indenture Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Indenture Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.10.
(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to paragraphs (a), (b) and (c) of this Section
6.01.
(e) The Indenture Trustee shall not be liable for interest on any money
received by it except as the Indenture Trustee may agree in writing with the
Issuer.
(f) No provision of this Indenture shall require the Indenture Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that
repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.
(g) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this Section and to the provisions of
the TIA.
Section 6.02. Rights of Indenture Trustee. (a) The Indenture Trustee
---------------------------
may rely on any document believed by it to be genuine and to have been signed
or presented by the proper person. The Indenture Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Opinion of Counsel. The Indenture Trustee shall not be liable for
any action it takes or omits to take in good faith in reliance on Opinion of
Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee, and the Indenture Trustee
shall not be responsible for any misconduct or negligence on the part of, or
for the supervision of, any such agent, attorney, custodian or nominee
appointed with due care by it hereunder.
(d) The Indenture Trustee shall not be liable for any action it takes
or omits to take in good faith which it believes to be authorized or within
its rights or powers; provided, however, that the Indenture Trustee's conduct
does not constitute willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture
and the Notes shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder
in good faith and in accordance with the advice or opinion of such counsel.
Section 6.03. Individual Rights of Indenture Trustee. The Indenture
--------------------------------------
Trustee in its individual or any other capacity may become the owner or
pledgee of Notes and, subject to Sections 310(b) and 311 of the TIA, may
otherwise deal with the Issuer or its Affiliates with the same rights it
would have if it were not Indenture Trustee. Any Administrator, Note
Registrar, co-registrar or co-paying agent may do the same with like rights.
However, the Indenture Trustee must comply with Section 6.11.
Section 6.04. Indenture Trustee's Disclaimer. The Indenture Trustee
------------------------------
shall not be responsible for and makes no representation as to the validity
or adequacy of this Indenture or the Notes, it shall not be accountable for
the Issuer's use of the proceeds from the Notes, and it shall not be
responsible for any statement of the Issuer in the Indenture or in any
document issued in connection with the sale of the Notes or in the Notes
other than the Indenture Trustee's certificate of authentication.
Unless the Bank is the Administrator, the Indenture Trustee shall not be
deemed to have notice or knowledge of any Event of Default (other than as
described in clauses (i) and (ii) of the definition thereof) unless a
Responsible Officer assigned to and working in the Corporate Trust Department
has actual knowledge or has received written notice thereof.
The Indenture Trustee shall not be responsible for any errors or
omissions contained in the Underlying Securities Distribution Date Statements
or for any errors or omissions in the statements furnished to any Noteholder
pursuant to Section 3.22 to the extent such error or omission results from
information contained in or omitted from the Underlying Securities
Distribution Date Statement.
Section 6.05. Notice of Event of Default. If an Event of Default
--------------------------
occurs and is continuing and if it is known to a Responsible Officer of the
Indenture Trustee, the Indenture Trustee shall mail to each Noteholder (and
the Swap Counterparty) notice of the Event of Default within five days after
it obtains written notice thereof. Except in the case of an Event of Default
in payment of principal of or interest on any Note (including payments
pursuant to the mandatory redemption provisions of such Note), the Indenture
Trustee may withhold the notice from the Noteholders if and so long as a
committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of Noteholders.
Section 6.06. Reports by Indenture Trustee to Holders. The Indenture
---------------------------------------
Trustee shall deliver to each Noteholder such information as may be required
to enable such holder to prepare its federal and state income tax returns
consistent with the tax characterization set forth in Section 4.09 hereof.
Section 6.07. Compensation and Indemnity. (a) The Indenture Trustee
--------------------------
shall receive from the Depositor or the Issuer as compensation for its
services hereunder such fees as have been separately agreed upon before the
date hereof between the Depositor and the Indenture Trustee (the "Initial
Indenture Trustee Fee"). The Indenture Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The
Indenture Trustee hereby acknowledges receipt of its Initial Indenture
Trustee Fee as its entire remuneration for its services as trustee under this
Trust Indenture and receipt of all of its ordinary expenses to be incurred in
acting as trustee under this Trust Indenture. (After the execution of this
Trust Indenture, the Issuer shall only be obligated to indemnify the
Indenture Trustee for those expenses of the Indenture Trustee that constitute
Extraordinary Expenses and only in accordance with the Priority of Payments
in Section 3.05(d)).
(b) If the Indenture Trustee shall serve, by reason of its resigning
its appointment under this Trust Indenture, for less than the period in
respect of which its Initial Indenture Trustee Fee has been paid, its Initial
Indenture Trustee Fee shall be pro-rated as agreed in a letter of even date.
(c) Nothing contained in this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of its duties or the exercise of any right,
power, authority or discretion hereunder if it has reasonable grounds for
believing the repayment of such funds or adequate indemnity against, or
security for, such risk or liability is not reasonably assured to it.
(d) Neither the Issuer nor the Administrator need reimburse any expense
or indemnify against any loss, liability or expense incurred by the Indenture
Trustee through the Indenture Trustee's own willful misconduct, negligence or
bad faith.
Section 6.08. Replacement of Indenture Trustee. No resignation or
--------------------------------
removal of the Indenture Trustee and no appointment of a successor Indenture
Trustee shall become effective until the acceptance of appointment by the
successor Indenture Trustee pursuant to this Section 6.08. The Indenture
Trustee may resign at any time by so notifying the Issuer. The Holders of a
majority in Outstanding Amount of the Notes (or the Swap Counterparty) may
remove the Indenture Trustee by so notifying the Indenture Trustee (and, in
the case of such a removal by the Holders, the Swap Counterparty, and the
Swap Counterparty or the Holders of a majority in Outstanding Amount of the
Notes with the prior consent of the Swap Counterparty) may appoint a
successor Indenture Trustee. The Administrator shall remove the Indenture
Trustee if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) the Indenture Trustee is adjudged a bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of the
Indenture Trustee or its property; or
(iv) the Indenture Trustee otherwise becomes incapable of acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists in
the office of Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein as the retiring Indenture Trustee), (the Swap
Counterparty or) the Administrator ((with the prior consent of the Swap
Counterparty),) may appoint a successor Indenture Trustee.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee (and the Swap Counterparty).
Thereupon the resignation or removal of the retiring Indenture Trustee shall
become effective, and the successor Indenture Trustee shall have all the
rights, powers and duties of the Indenture Trustee under this Indenture. The
successor Indenture Trustee shall mail a notice of its succession to
Noteholders and the Rating Agencies. The retiring Indenture Trustee shall
promptly transfer all property held by it as Indenture Trustee to the
successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 60 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer, (the Swap Counterparty) or the Holders of a
majority in Outstanding Amount of the Notes may petition any court of
competent jurisdiction for the appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any
Noteholder (or the Swap Counterparty) may petition any court of competent
jurisdiction for the removal of the Indenture Trustee and the appointment of
a successor Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to
this Section, the Issuer's obligations under Section 6.07 shall continue for
the benefit of the retiring Indenture Trustee.
Section 6.09. Successor Indenture Trustee by Merger. If the Indenture
-------------------------------------
Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation without any further act shall be the successor Indenture Trustee;
provided, that such corporation or banking association shall be otherwise
qualified and eligible under Section 6.11. The Indenture Trustee shall
provide the Rating Agencies (and the Swap Counterparty) prior written notice
of any such transaction.
In case at the time such successor or successors by merger, conversion
or consolidation to the Indenture Trustee shall succeed to the trusts created
by this Indenture any of the Notes shall have been authenticated but not
delivered, any such successor to the Indenture Trustee may adopt the
certificate of authentication of any predecessor trustee, and deliver such
Notes so authenticated; and in case at that time any of the Notes shall not
have been authenticated, any successor to the Indenture Trustee may
authenticate such Notes either in the name of any predecessor hereunder or in
the name of the successor to the Indenture Trustee; and in all such cases
such certificates shall have the full force which it is anywhere in the Notes
or in this Indenture provided that the certificate of the Indenture Trustee
shall have.
Section 6.10. Appointment of Co-Indenture Trustee or Separate Indenture
---------------------------------------------------------
Trustee. (a) Notwithstanding any other provisions of this Indenture, at any
- -------
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the Trust Estate may at the time be located, the Indenture
Trustee shall have the power and may, (with the prior consent of the Swap
Counterparty) execute and deliver all instruments to appoint one or more
Persons to act as a co-trustee or co-trustees, or separate trustee or
separate trustees, of all or any part of the Trust, and to vest in such
Person or Persons, in such capacity and for the benefit of the Noteholders
(and the Swap Counterparty), such title to the Trust Estate, or any part
hereof, and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trusts as the Indenture Trustee may consider
necessary or desirable. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under
Section 6.11 and no notice to Noteholders of the appointment of any co-
trustee or separate trustee shall be required under Section 6.08 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions
and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed upon
and exercised or performed by the Indenture Trustee and such separate
trustee or co-trustee jointly (it being understood that such separate
trustee or co-trustee is not authorized to act separately without the
Indenture Trustee joining in such act), except to the extent that under
any law of any jurisdiction in which any particular act or acts are to
be performed the Indenture Trustee shall be incompetent or unqualified
to perform such act or acts, in which event such rights, powers, duties
and obligations (including the holding of title to the Trust Estate or
any portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at
the direction of the Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) the Indenture Trustee may at any time accept the resignation
of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement
and the conditions of this Article VI. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with
the Indenture Trustee or separately, as may be provided therein, subject to
all the provisions of this Indenture, specifically including every provision
of this Indenture relating to the conduct of, affecting the liability of, or
affording protection to, the Indenture Trustee. Every such instrument shall
be filed with the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Indenture Trustee, its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or
in respect of this Agreement on its behalf and in its name. If any separate
trustee or co-trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Indenture Trustee, to the extent permitted by
law, without the appointment of a new or successor trustee.
Section 6.11. Eligibility; Disqualification. The Indenture Trustee
-----------------------------
shall at all times satisfy the requirements of TIA Section 310(a). The
Indenture Trustee shall have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition and it or its parent shall have a long-term debt rating of (____)
or better by (_____) and (___) or better by (_____). The Indenture Trustee
shall comply with TIA Section 310(b), including the optional provision
permitted by the second sentence of TIA Section 310(b)(9); provided,
however, that there shall be excluded from the operation of TIA
Section 310(b)(1) any indenture or indentures under which other securities of
the Issuer are outstanding if the requirements for such exclusion set forth
in TIA Section 310(b)(1) are met.
Section 6.12. Preferential Collection of Claims Against Issuer. The
------------------------------------------------
Indenture Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). An Indenture Trustee who
has resigned or been removed shall be subject to TIA Section 311(a) to the
extent indicated.
Section 6.13. Representation and Warranty. The Indenture Trustee
---------------------------
represents and warrants to the Issuer (and the Swap Counterparty), for the
benefit of the Noteholders, that this Indenture has been executed and
delivered by one of its Responsible Officers who is duly authorized to
execute and deliver such document in such capacity on its behalf.
Section 6.14. Directions to Indenture Trustee. The Issuer hereby
-------------------------------
directs the Indenture Trustee:
(a) to accept assignment of the Underlying Securities and hold the
assets of the Issuer in trust for the Noteholders, the Certificateholders
(and the Swap Counterparty), as their interests appear herein;
(b) to issue, authenticate and deliver the Notes substantially in the
form prescribed by Exhibit A in accordance with the terms of this Indenture;
and
(c) to take all other actions as shall be required to be taken by the
terms of this Indenture.
ARTICLE VII
Noteholders' Lists and Reports
------------------------------
Section 7.01. Issuer To Furnish Indenture Trustee Names and Addresses
-------------------------------------------------------
of Noteholders. The Note Registrar will furnish or cause to be furnished
- --------------
to the Indenture Trustee (a) not more than five days after the earlier of
(i) each Record Date and (ii) three months after the last Record Date, a
list, in such form as the Indenture Trustee may reasonably require, of the
names and addresses of the Holders of Notes as of such Record Date, (b) at
such other times as the Indenture Trustee may request in writing, within
30 days after receipt by the Note Registrar of any such request, a list of
similar form and content as of a date not more than 10 days prior to the time
such list is furnished; provided, however, that so long as the Indenture
Trustee is the Note Registrar, no such list shall be required to be furnished
to the Indenture Trustee.
Section 7.02. Preservation of Information; Communications to
----------------------------------------------
Noteholders. (a) The Indenture Trustee shall preserve, in as current
- -----------
a form as is reasonably practicable, the names and addresses of the Holders
of Notes contained in the most recent list furnished to the Indenture Trustee
as provided in Section 7.01 and the names and addresses of Holders of Notes
received by the Indenture Trustee in its capacity as Note Registrar. The
Indenture Trustee may destroy any list furnished to it as provided in such
Section 7.01 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b) with
other Noteholders with respect to their rights under this Indenture or under
the Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall have
the protection of TIA Section 312(c).
Section 7.03. Reports by Issuer. (a) The Issuer shall:
-----------------
(i) file with the Indenture Trustee, within 15 days after the
Issuer is required to file the same with the Commission, copies of the
annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may
from time to time by rules and regulations prescribe) that the Issuer
may be required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act;
(ii) file with the Indenture Trustee and the Commission in
accordance with rules and regulations prescribed from time to time by
the Commission such additional information, documents and reports with
respect to compliance by the Issuer with the conditions and covenants of
this Indenture as may be required from time to time by such rules and
regulations; and
(iii) supply to the Indenture Trustee (and the Indenture Trustee
shall transmit by mail to all Noteholders described in TIA
Section 313(c)) such summaries of any information, documents and reports
required to be filed by the Issuer pursuant to clauses (i) and (ii) of
this Section 7.03(a) and by rules and regulations prescribed from time
to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
Section 7.04. Reports by Indenture Trustee. If required by TIA
----------------------------
Section 313(a), within 60 days after each (____________) beginning with
(____________), the Indenture Trustee shall mail to each Noteholder as
required by TIA Section 313(c) a brief report dated as of such date that
complies with TIA Section 313(a). The Indenture Trustee also shall comply
with TIA Section 313(b).
A copy of each report at the time of its mailing to Noteholders shall be
filed by the Indenture Trustee with the Commission and each stock exchange,
if any, on which the Notes are listed. The Issuer shall notify the Indenture
Trustee if and when the Notes are listed on any stock exchange.
ARTICLE VIII
Accounts, Disbursements and Releases
------------------------------------
Section 8.01. Collection of Money. Except as otherwise expressly
-------------------
provided herein, the Indenture Trustee may demand payment or delivery of, and
shall receive and collect, directly and without intervention or assistance of
any fiscal agent or other intermediary, all money and other property payable
to or receivable by the Indenture Trustee pursuant to this Indenture. The
Indenture Trustee shall apply all such money received by it as provided in
this Indenture. Except as otherwise expressly provided in this Indenture, if
any default occurs in the making of any payment or performance under any
agreement or instrument that is part of the Trust Estate, the Indenture
Trustee may take such action as may be appropriate to enforce such payment or
performance, including the institution and prosecution of appropriate
Proceedings. Any such action shall be without prejudice to any right to
claim a Default or Event of Default under this Indenture and any right to
proceed thereafter as provided in Article V.
Section 8.02. Trust Accounts. (a) On or prior to the Closing Date,
--------------
the Indenture Trustee shall establish and maintain, in the name of the
Issuer, for the benefit of the Noteholders, the Certificateholders (and the
Swap Counterparty), as their interests appear herein, the Collection Account
as provided in Section 3.01 of this Indenture.
(b) The Indenture Trustee shall deposit all distributions of interest
and principal that it receives on the Underlying Securities, (and any amounts
received under the Swap Agreement), into the Collection Account. On each
Payment Date prior to the Scheduled Final Payment Date, the Indenture Trustee
shall distribute all amounts received in respect of interest on the
Underlying Securities and on the Reinvested Collateral (but excluding accrued
interest received on any Eligible Investment to the extent such accrued
interest represents interest paid by the Issuer as a portion of the purchase
price of such Eligible Investment) (to the Swap Counterparty in accordance
with the Swap Agreement).
Section 8.03. Opinion of Counsel. The Indenture Trustee shall receive
------------------
at least seven days written notice when requested by the Issuer to take any
action pursuant to Section 8.05(a) and (b), accompanied by copies of any
instruments involved, and the Indenture Trustee shall also require, as a
condition to such action, an Opinion of Counsel, in form and substance
satisfactory to the Indenture Trustee, stating the legal effect of any such
action, outlining the steps required to complete the same, and concluding
that all conditions precedent to the taking of such action have been complied
with and such action will not materially and adversely impair the security
for the Notes (or Swap Counterparty) or the rights of the Noteholders or
Certificateholders (or Swap Counterparty) in contravention of the provisions
of this Indenture; provided, however, that such Opinion of Counsel shall not
be required to express an opinion as to the fair value of the Trust Estate.
Counsel rendering any such opinion may rely, without independent
investigation, on the accuracy and validity of any certificate or other
instrument delivered to the Indenture Trustee in connection with any such
action.
Section 8.04. Termination Upon Distribution to Noteholders(, Swap
---------------------------------------------------
Counterparty) and Indenture Trustee. This Indenture and the respective
- -----------------------------------
obligations and responsibilities of the Issuer and the Indenture Trustee
created hereby shall terminate upon the distribution to Noteholders,
Certificateholders, (Swap Counterparty) and the Indenture Trustee of all
amounts required to be distributed pursuant to Article III.
Section 8.05. Release of Trust Estate. (a) Subject to the payment of
-----------------------
its fees and expenses, the Indenture Trustee may, and when required by the
provisions of this Indenture shall, execute instruments to release property
from the lien of this Indenture, or convey the Indenture Trustee's interest
in the same, in a manner and under circumstances that are not inconsistent
with the provisions of this Indenture. No party relying upon an instrument
executed by the Indenture Trustee as provided in Article IV hereunder shall
be bound to ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent, or see to the application of any
moneys.
(b) The Indenture Trustee shall, at such time as there are no Notes or
Certificates Outstanding, all sums due the Indenture Trustee pursuant to this
Indenture have been paid, (and all sums due the Swap Counterparty have been
paid), release any remaining portion of the Trust Estate that secured the
Notes from the lien of this Indenture. The Indenture Trustee shall release
property from the lien of this Indenture pursuant to this Section 8.05 only
upon receipt of a request from the Issuer accompanied by an Officers'
Certificate, an Opinion of Counsel and (if required by the TIA) Independent
Certificates in accordance with TIA Sections 314(c) and 314(d) meeting the
applicable requirements of Section 10.01 (and a letter from the President or
any Vice President or any Secretary of the Swap Counterparty, if any, stating
that the Swap Counterparty has no objection to such request from the Issuer).
Section 8.06. Surrender of Notes Upon Final Payment. By acceptance of
-------------------------------------
any Note, the Holder thereof agrees to surrender such Note to the Indenture
Trustee promptly, prior to such Noteholder's receipt of the final payment
thereon.
ARTICLE IX
Supplemental Indentures
-----------------------
Section 9.01. Supplemental Indentures Without Consent of Noteholders.
------------------------------------------------------
Without the consent of the Holders of any Notes but with prior notice to the
Rating Agencies, the Issuer(, the Swap Counterparty) and the Indenture
Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act as in force at the date of the execution thereof as
provided in Section 9.05), in form satisfactory to the Indenture Trustee, for
any of the following purposes:
(i) to cure any ambiguity or mistake;
(ii) to correct any defective provisions or to correct or
supplement any provision herein or in any supplemental indenture that
may be defective or inconsistent with any other provision herein or in
any supplemental indenture;
(iii) to add to the covenants or duties of the Depositor and/or
the Administrator herein;
(iv) to add any other provisions with respect to matters or
questions arising under this Indenture, any supplemental indenture or
any Enhancement; provided, however, that any such supplemental indenture
pursuant to this clause (iv) shall not adversely affect in any material
respect the interests of any Noteholders or Certificateholders, as
evidenced by an Opinion of Counsel;
(v) to comply with any provisions of the Code;
(vi) to evidence and provide for the acceptance of the appointment
hereunder by a successor trustee with respect to the Notes and to add to
or change any provisions of this Indenture as shall be necessary to
facilitate the administration of the trusts hereunder by more than one
trustee, pursuant to the requirements of Article VI; or
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Indenture such
other provisions as may be expressly required by the TIA or such other
similar federal statute.
Any supplemental indenture pursuant to clause (iv) above of this Section
9.01, shall be deemed not to adversely affect in any material respect the
interests of any Noteholder or Certificateholder if the Indenture Trustee
receives an Opinion of Counsel to that effect or a written confirmation from
each Rating Agency that such supplemental indenture shall not cause the
reduction or withdrawal of the ratings assigned to the Notes or the
Certificates, as applicable.
The Indenture Trustee is hereby authorized to join in the execution of
any such supplemental indenture and to make any further appropriate
agreements and stipulations that may be therein contained.
SECTION 9.02. Supplemental Indentures with Consent of Noteholders. The
---------------------------------------------------
Issuer(, the Swap Counterparty) and the Indenture Trustee, also may, with
prior notice to the Rating Agencies and with the consent of the Holders of
not less than a majority of the Outstanding Amount of the Notes, enter into
an indenture or indentures supplemental hereto for the purpose of adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, this Indenture or of modifying in any manner the rights of the Holders of
the Notes (or the Swap Counterparty) under this Indenture; provided, however,
that no such supplemental indenture shall, without the consent of the Holder
of each Outstanding Note affected thereby:
(i) change the date of payment of any installment of principal of
or interest on any Note, or reduce the principal amount thereof, the
interest rate thereon, or the redemption price with respect thereto,
change the provisions of this Indenture relating to the application of
collections on, or the proceeds of the sale of, the Trust Estate to
payment of principal of or interest on the Notes, or change any place of
payment where, or the coin or currency in which, any Note or the
interest thereon is payable;
(ii) impair the right to institute suit for the enforcement of the
provisions of this Indenture requiring the application of funds
available therefor, as provided in Article V, to the payment of any such
amount due on the Notes on or after the respective due dates thereof;
(iii) reduce the percentage of the Outstanding Amount of the
Notes, the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is
required for any waiver of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences provided
for in this Indenture;
(iv) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(v) reduce the percentage of the Outstanding Amount of the Notes
required to direct the Indenture Trustee to sell or liquidate the Trust
Estate pursuant to Section 5.03;
(vi) modify any provision of this Section 9.02 except to increase
any percentage specified herein or to provide that certain additional
provisions of this Indenture or the Basic Documents cannot be modified
or waived without the consent of the Holder of each Outstanding Note
affected thereby; or
(vii) permit the creation of any lien ranking prior to or on a
parity with the lien of this Indenture with respect to any part of the
Trust Estate or, except as otherwise permitted or contemplated herein,
terminate the lien of this Indenture on any property at any time subject
hereto or deprive the Holder of any Note of the security provided by the
lien of this Indenture.
It shall not be necessary for Noteholders under this Section 9.02 to
approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer(, the Swap Counterparty) and
the Indenture Trustee of any supplemental indenture pursuant to this Section
9.02, the Indenture Trustee shall mail to the Holders of the Notes to which
such amendment or supplemental indenture relates a notice setting forth in
general terms the substance of such supplemental indenture. Any failure of
the Indenture Trustee to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such supplemental
indenture.
SECTION 9.03. Execution of Supplemental Indentures. In executing, or
------------------------------------
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modification thereby of the trusts
created by this Indenture, the Indenture Trustee shall be entitled to
receive, and subject to Sections 6.01 and 6.02, shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The
Indenture Trustee may, but shall not be obligated to, enter into any such
supplemental indenture that affects the Indenture Trustee's own rights,
duties, liabilities or immunities under this Indenture or otherwise.
SECTION 9.04. Effect of Supplemental Indenture. Upon the execution of
--------------------------------
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and shall be deemed to be modified and amended in accordance
therewith with respect to the Notes affected thereby, and the respective
rights, limitations of rights, obligations, duties, liabilities and
immunities under this Indenture of the Indenture Trustee, the Issuer(, the
Swap Counterparty) and the Holders of the Notes shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
SECTION 9.05. Conformity with Trust Indenture Act. Every amendment of
-----------------------------------
this Indenture and every supplemental indenture executed pursuant to this
Article IX shall conform to the requirements of the Trust Indenture Act as
then in effect so long as this Indenture shall then be qualified under the
Trust Indenture Act.
SECTION 9.06. Reference in Notes to Supplemental Indentures. Notes
---------------------------------------------
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee
shall, bear a notation in form approved by the Indenture Trustee as to any
matter provided for in such supplemental indenture. If the Issuer or the
Indenture Trustee shall so determine, new Notes so modified as to conform, in
the opinion of the Indenture Trustee and the Issuer, to any such supplemental
indenture may be prepared and executed by the Issuer and authenticated and
delivered by the Indenture Trustee in exchange for Outstanding Notes.
ARTICLE X
Miscellaneous
-------------
Section 10.01. Compliance Certificates, etc. (a) Upon any application
-----------------------------
or request by the Issuer to the Indenture Trustee to take any action under
any provision of this Indenture, the Issuer shall furnish to the Indenture
Trustee (i) an Officer's Certificate stating that all conditions precedent,
if any, provided for in this Indenture relating to the proposed action have
been complied with, (ii) an Opinion of Counsel stating that in the opinion of
such counsel all such conditions precedent, if any, have been complied with
and (iii) (if required by the TIA) an Independent Certificate from a firm of
certified public accountants meeting the applicable requirements of this
Section 10.01, except that, in the case of any such application or request as
to which the furnishing of such documents is specifically required by any
provision of this Indenture, no additional certificate need be furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(1) a statement that each signatory of such certificate has read
or has caused to be read such covenant or condition and the definitions
herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Collateral or other property or
securities with the Indenture Trustee that is to be made the basis for the
release of any property or securities subject to the lien of this Indenture,
the Issuer shall, in addition to any obligation imposed in Section 10.01(a)
or elsewhere in this Indenture, furnish to the Indenture Trustee an Officer's
Certificate certifying or stating the opinion of each person signing such
certificate as to the fair value (within 90 days of such deposit) to the
Issuer of the Collateral or other property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of any
signer thereof as to the matters described in clause (i) above, the Issuer
shall also deliver to the Indenture Trustee an Independent Certificate as to
the same matters, if the fair value to the Issuer of the securities to be so
deposited and of all other such securities made the basis of any such
withdrawal or release since the commencement of the then-current fiscal year
of the Issuer, as set forth in the certificates delivered pursuant to clause
(i) above and this clause (ii), is 10% or more of the Outstanding Amount of
the Notes, but such a certificate need not be furnished with respect to any
securities so deposited, if the fair value thereof to the Issuer as set forth
in the related Officer's Certificate is less than $25,000 or less than one
percent of the Outstanding Amount of the Notes.
(iii) Whenever any property or securities are to be released from
the lien of this Indenture, the Issuer shall also furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of each
person signing such certificate as to the fair value (within 90 days of such
release) of the property or securities proposed to be released and stating
that in the opinion of such person the proposed release will not impair the
security under this Indenture in contravention of the provisions hereof.
(iv) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of any
signer thereof as to the matters described in clause (iii) above, the Issuer
shall also furnish to the Indenture Trustee an Independent Certificate as to
the same matters if the fair value of the property or securities and of all
other property, other than property as contemplated by clause (v) below or
securities released from the lien of this Indenture since the commencement of
the then-current calendar year, as set forth in the certificates required by
clause (iii) above and this clause (iv), equals 10% or more of the
Outstanding Amount of the Notes, but such certificate need not be furnished
in the case of any release of property or securities if the fair value
thereof as set forth in the related Officer's Certificate is less than
$25,000 or less than one percent of the then Outstanding Amount of the Notes.
(v) Notwithstanding any provision of this Indenture, the Issuer
may, without compliance with the requirements of the other provisions of this
Section 10.01, (A) collect, sell or otherwise dispose of the Trust Estate as
and to the extent permitted or required by the Basic Documents or (B) make
cash payments out of the Collection Account as and to the extent permitted or
required by the Basic Documents.
Section 10.02. Form of Documents Delivered to Indenture Trustee. In
------------------------------------------------
any case where several matters are required to be certified by, or covered by
an opinion of, any specified Person, it is not necessary that all such
matters be certified by, or covered by the opinion of, only one such Person,
or that they be so certified or covered by only one document, but one such
Person may certify or give an opinion with respect to some matters and one or
more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate of an Authorized
Officer or Opinion of Counsel may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by, an officer
or officers of the Issuer or the Administrator, stating that the information
with respect to such factual matters is in the possession of the Issuer or
the Administrator, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the
Issuer shall deliver any document as a condition of the granting of such
application, or as evidence of the Issuer's compliance with any term hereof,
it is intended that the truth and accuracy, at the time of the granting of
such application or at the effective date of such certificate or report (as
the case may be), of the facts and opinions stated in such document shall in
such case be conditions precedent to the right of the Issuer to have such
application granted or to the sufficiency of such certificate or report. The
foregoing shall not, however, be construed to affect the Indenture Trustee's
right to rely upon the truth and accuracy of any statement or opinion
contained in any such document as provided in Article VI.
Section 10.03. Acts of Noteholders. (a) Any request, demand,
-------------------
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by agents duly appointed in writing; and except
as herein otherwise expressly provided such action shall become effective
when such instrument or instruments are delivered to the Indenture Trustee,
and, where it is hereby expressly required, to the Issuer. Proof of
execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to
Section 6.01) conclusive in favor of the Indenture Trustee and the Issuer, if
made in the manner provided in this Section 10.03.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of
every Note issued upon the registration thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to be done by
the Indenture Trustee or the Issuer in reliance thereon, whether or not
notation of such action is made upon such Note.
Section 10.04. Notices, etc., to Indenture Trustee, Issuer, (Swap
--------------------------------------------------
Counterparty) and Rating Agencies. Any request, demand, authorization,
- ---------------------------------
direction, notice, consent or waiver of Noteholders or other documents
provided or permitted by this Indenture shall be in writing and if such
request, demand, authorization, direction, notice, consent, waiver or act of
Noteholders is to be made upon, given or furnished to or filed with:
(i) the Indenture Trustee by any Noteholder, (by the Swap
Counterparty), by a Rating Agency or by the Issuer shall be sufficient
for every purpose hereunder if made, given, furnished or filed in
writing to or with the Indenture Trustee at (____________________),
Attention: (____________________), or
(ii) the Issuer by the Indenture Trustee (or by the Swap
Counterparty), or by any Noteholder shall be sufficient for every
purpose hereunder if in writing and mailed first-class, postage prepaid
to the Issuer addressed to: (____________________), Attention:
Corporate Trust Department, or at any other address previously furnished
in writing to the Indenture Trustee (and the Swap Counterparty) by the
Issuer or the Administrator. The Issuer shall promptly transmit any
notice received by it from the Noteholders to the Indenture Trustee, or
((iii) the Swap Counterparty by the Indenture Trustee, the
Issuer or any Noteholder shall be sufficient for every purpose hereunder
if made, given, furnished or filed in writing to or with the Swap
Counterparty at (____________________)).
Notices required to be given to the Rating Agencies by the Issuer, the
Indenture Trustee or the Owner Trustee shall be in writing, personally
delivered or mailed by certified mail, return receipt requested, to (i) in
the case of (____________) at the following address: (____________________)
and (ii) in the case of (________), at the following address: (_____________
_________); or as to each of the foregoing, at such other address as shall be
designated by written notice to the other parties.
Section 10.05. Notices to Noteholders; Waiver. Where this Indenture
------------------------------
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Noteholders is given by
mail, neither the failure to mail such notice nor any defect in any notice so
mailed to any particular Noteholder shall affect the sufficiency of such
notice with respect to other Noteholders, and any notice that is mailed in
the manner herein provided shall conclusively be presumed to have been duly
given.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to
mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed
to be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies, failure
to give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute an Event of
Default.
Section 10.06. Alternate Payment and Notice Provisions.
---------------------------------------
Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, the Issuer may enter into any agreement with any Holder of a Note
providing for a method of payment, or notice by the Indenture Trustee or any
Administrator to such Holder, that is different from the methods provided for
in this Indenture for such payments or notices. The Issuer will furnish to
the Indenture Trustee a copy of each such agreement and the Indenture Trustee
will cause payments to be made and notices to be given in accordance with
such agreements.
Section 10.07. Conflict with Trust Indenture Act. If any provision
---------------------------------
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this Indenture by any of the provisions of the
Trust Indenture Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties
on any person (including the provisions automatically deemed included herein
unless expressly excluded by this Indenture) are a part of and govern this
Indenture, whether or not physically contained herein.
Section 10.08. Effect of Headings. The Article and Section headings
------------------
herein are for convenience only and shall not affect the construction hereof.
Section 10.09. Successors and Assigns. All agreements of the Indenture
----------------------
Trustee in this Indenture shall bind its successors, co-trustees and agents.
(The parties hereby expressly agree that the Swap Counterparty may assign its
rights hereunder (exclusive of any such rights in Section 3.24 hereof) but
not any of its obligations and the assignee of such rights may take action
hereunder consistently with the assignment of such rights and the parties
agree to be bound by such assignment.)
Section 10.10. Separability. In case any provision in this Indenture
------------
or in the Notes shall be invalid, illegal or unenforceable, the validity,
legality, and enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.
Section 10.11. Benefits of Indenture. Nothing in this Indenture or in
---------------------
the Notes, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, and the Noteholders, and any
other party secured hereunder, and any other Person with an ownership
interest in any part of the Trust Estate, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
Section 10.12. Legal Holidays. In any case where the date on which any
--------------
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the date on which nominally due, and no interest
shall accrue for the period from and after any such nominal date.
Section 10.13. GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
Section 10.14. Counterparts. This Indenture may be executed in any
------------
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 10.15. Recording of Indenture. If this Indenture is subject
----------------------
to recording in any appropriate public recording offices, such recording is
to be effected by the Issuer and at its expense accompanied by an Opinion of
Counsel (which may be counsel to the Indenture Trustee (or the Swap
Counterparty) or any other counsel reasonably acceptable to the Indenture
Trustee) to the effect that such recording is necessary either for the
protection of the Noteholders(, the Swap Counterparty) or any other Person
secured hereunder or for the enforcement of any right or remedy granted to
the Indenture Trustee under this Indenture.
Section 10.16. Trust Obligation. No recourse may be taken, directly
----------------
or indirectly, with respect to the obligations of the Issuer, the Owner
Trustee, the Indenture Trustee (or the Swap Counterparty) on the Notes or
under this Indenture or any certificate or other writing delivered in
connection herewith or therewith, against (i) the Indenture Trustee or the
Owner Trustee in its individual capacity, (ii) any owner of a beneficial
interest in the Issuer or (iii) any partner, owner, beneficiary, agent,
officer, director, employee or agent of the Indenture Trustee, the Owner
Trustee in its individual capacity (or the Swap Counterparty), any holder of
a beneficial interest in the Issuer, the Owner Trustee, the Indenture Trustee
(or the Swap Counterparty) or of any successor or assign of the Indenture
Trustee, the Owner Trustee in its individual capacity (or the Swap
Counterparty), except as any such Person may have expressly agreed (it being
understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their individual capacity) and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.
For all purposes of this Indenture, in the performance of any duties or
obligations of the Issuer hereunder, the Owner Trustee shall be subject to,
and entitled to the benefits of, the terms and provisions of Article VI, VII
and VIII of the Trust Agreement.
(Section 10.17. Section 316(a)(1) of the TIA. The provisions of
----------------------------
Section 316(a)(1) of the TIA are expressly excluded.)
Section 10.18. No Petition. The Indenture Trustee (and the Swap
-----------
Counterparty), by entering into this Indenture, and each Noteholder, by
accepting a Note, hereby covenant and agree that they will not at any time
institute against the Depositor or the Issuer, or join in any institution
against the Depositor or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings
under any United States federal or state bankruptcy or similar law in
connection with any obligations relating to the Notes, this Indenture or any
of the other Basic Documents.
ARTICLE XI
Redemption
----------
SECTION 11.01. Redemption. The outstanding Class A-2 Notes are subject
----------
to redemption by the Indenture Trustee [in whole, but not in part] if (specify
events which permit a redemption); provided that the Issuer has available
funds sufficient to pay the Redemption Price. The Issuer shall furnish the
Rating Agencies notice of such redemption. If the outstanding Class A-2
Notes are to be redeemed pursuant to this Section, the Issuer shall furnish
notice of such election to the Indenture Trustee not later than 20 days prior
to the Redemption Date and the Issuer shall deposit by 10:00 A.M. New York
City time on the Redemption Date with the Indenture Trustee in the Collection
Account the Redemption Price of the Class A-2 Notes to be redeemed, whereupon
all such Class A-2 Notes shall be due and payable on the Redemption Date upon
the furnishing of a notice complying with Section 11.02 to each holder of the
Notes.
SECTION 11.02. Form of Redemption Notice. Notice of redemption under
-------------------------
Section 11.01 shall be given by the Indenture Trustee by first-class mail,
postage prepaid, or by facsimile mailed or transmitted not later than 10 days
prior to the applicable Redemption Date to each holder of a Note, as of the
close of business on the Record Date preceding the applicable Redemption
Date, at such holder's address or facsimile number appearing in the Note
Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price; and
(iii) the place where such Notes are to be surrendered for
payment of the Redemption Price (which shall be the office or agency of
the Issuer to be maintained as provided in Section 3.02).
Notice of redemption of the Notes shall be given by the Indenture Trustee in
the name and at the expense of the Issuer. Failure to give notice of
redemption, or any defect therein, to any holder of any Note shall not impair
or affect the validity of the redemption of any other Note.
SECTION 11.03. Notes Payable on Redemption Date. The Notes or portions
--------------------------------
thereof to be redeemed shall, following notice of redemption as required by
Section 11.02, on the Redemption Date become due and payable at the
Redemption Price and (unless the Issuer shall default in the payment of the
Redemption Price) no interest shall accrue on the Redemption Price for any
period after the date to which accrued interest is calculated for purposes of
calculating the Redemption Price.)
IN WITNESS WHEREOF, the Issuer, the Indenture Trustee (and the Swap
Counterparty) have caused their names to be signed hereto by their respective
officers thereunto duly authorized, all as of the day and year first above
written.
(__________) TRUST (__________),
as Issuer
By: (____________________________), not in its
individual capacity, but solely as Owner
Trustee
By:___________________________________
Name:
Title:
(______________________________________),
as Indenture Trustee
By:____________________________________
Name:
Title:
(______________________________,
as Swap Counterparty
By:____________________________________
Name:
Title:)
Exhibit A to the Indenture
--------------------------
(Form of Note)
CLASS (A-1)(A-2) NOTE
Unless this Class (A-1) (A-2) Note is presented by an authorized
representative of The Depository Trust Company, a New York corporation
("DTC"), to the Issuer or its agent for registration of transfer, exchange or
payment, and any Class (A-1) (A-2) Note issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE PRINCIPAL OF THIS CLASS (A-1) (A-2) NOTE IS SUBJECT TO PREPAYMENT
FROM TIME TO TIME WITHOUT SURRENDER OF OR NOTATION ON THIS CLASS (A-1) (A-2)
NOTE. ACCORDINGLY, THE UNPAID PRINCIPAL AMOUNT OF THIS CLASS (A-1) (A-2)
NOTE MAY BE LESS THAN THAT SET FORTH BELOW. ANYONE ACQUIRING THIS CLASS (A-
1) (A-2) NOTE MAY ASCERTAIN ITS CURRENT PRINCIPAL BALANCE BY INQUIRY OF THE
INDENTURE TRUSTEE.
(INTEREST ON AND PRINCIPAL OF THE CLASS (A-1) NOTES AND THE CLASS (A-2)
NOTES ARE PAYABLE ON A PRO RATA BASIS.) (THIS CLASS A-2 NOTE IS SUBORDINATED
IN RIGHT OF PAYMENT TO THE CLASS A-1 NOTES AS PROVIDED IN THE INDENTURE)
THE RIGHTS OF A HOLDER OF THIS CLASS (A-1) (A-2) NOTE ARE SUBJECT TO THE
PROVISIONS OF THE WITHIN REFERENCED INDENTURE.
(________) TRUST (________)
Asset Backed Note, Class (A-1) (A-2)
Registered Principal Amount: $__________
Class (A-1) (A-2) Note No. __
CUSIP No.
(____________) Trust (____________), a business trust duly organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to (__________) or
registered assigns, in accordance with the terms of an Indenture, dated as of
(____________) as supplemented or amended, among the Issuer, (the Swap
Counterparty) and (____________________), as indenture trustee (the
"Indenture Trustee," which term includes any successor Indenture Trustee
under the Indenture), the principal sum of _______________ Dollars
($__________) as herein described, and interest on the unpaid amount hereof
in the manner hereinafter described until this Class (A-1) (A-2) Note has
been paid in full.
The Issuer will pay interest on this Class (A-1) (A-2) Note as described
in the Indenture on each Payment Date until the principal of this Class (A-1)
(A-2) Note is paid or made available for payment, on the principal amount of
this Class (A-1) (A-2) Note outstanding on the preceding Payment Date (after
giving effect to all payments of principal made on the preceding Payment
Date), subject to certain limitations contained in the Indenture. Such
principal of and interest on this Class (A-1) (A-2) Note shall be paid in the
manner specified on the reverse hereof. Interest on this Class (A-1) (A-2)
Note will accrue from the Closing Date at a rate (per annum) equal to
(________)%, calculated on the basis of a (360-day year consisting of twelve
30 days months) (the "Note Accrual Rate"). Interest will accrue with respect
to each Payment Date during the (____________) period beginning on
(____________) (or on the Closing Date in the case of the first Payment Date)
and ending on (____________) (each a "Note Interest Accrual Period") and will
be payable to (Class (A-1) (A-2)) Noteholders (____________) in arrears on
each Payment Date. "Payment Date" means (____________________).
Under certain circumstances described in the Indenture, interest on the
Notes (as defined below) may be deferred. A failure to pay interest due on
the Notes on any Payment Date, which failure continues for five Business
Days, constitutes an Event of Default (as defined herein) under the Indenture
provided that if interest on the Notes is deferred, such deferred interest
will not be considered to be "due" for such purposes.
The principal of and interest on this Class (A-1) (A-2) Note are payable
in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts. All
payments made by the Issuer with respect to this Class (A-1) (A-2) Note shall
be applied first to interest due and payable on this Class (A-1) (A-2) Note
as provided above and then to the unpaid principal of this Class (A-1) (A-2)
Note.
(Interest on and principal of the Class (A-1) Notes and the Class (A-2)
Notes are payable on a pro rata basis.) (This Class A-2 Note is subordinated
in right of payment of interest and principal to the Class A-1 Notes as
provided in the Indenture.)
Reference is made to the further provisions of this Class (A-1) (A-2)
Note set forth on the reverse hereof, which shall have the same effect as
though fully set forth on the face of this Class (A-1) (A-2) Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Class
(A-1)(A-2) Note shall not be entitled to any benefit under the Indenture
referred to on the reverse hereof, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed, as of the date set forth below.
Date: _____________ (____________________) TRUST (________),
by (______________________________),
not in its individual capacity but solely as Owner
Trustee under the Trust Agreement,
by ____________________________________
Authorized Signatory
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class (A-1) (A-2) Notes designated above and referred
to in the within-mentioned Indenture.
Date: _____________ (______________________________), not in its
individual capacity but solely as Indenture
Trustee,
by ________________________________
Authorized Signatory
(Reverse of Note)
This Class (A-1) (A-2) Note is one of a duly authorized issue of Notes
of the Issuer, designated as its (______________________________) Notes,
(issued in two Classes (as defined in the Indenture)) Class (A-1) and Class
(A-2) (herein called the "Notes"), all issued under the Indenture, to which
Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights and obligations thereunder of the
Issuer, the Indenture Trustee(, the Swap Counterparty) and the Holders of the
Notes. The Notes are subject to all terms of the Indenture.
The Notes are and will be equally and ratably secured by the collateral
pledged as security therefor as provided in the Indenture. The Notes are
payable solely from proceeds of the Assets (as defined in the Indenture)
owned by the Issuer in accordance with the Priority of Payments (as defined
in the Indenture).
(The Notes are subject to prepayment as described in the Indenture).
The entire unpaid principal amount of this Class (A-1) (A-2) Note shall
be due and payable on the Class (A-1) (A-2) Scheduled Final Payment Date
pursuant to the Indenture. Notwithstanding the foregoing, the entire unpaid
principal amount of the Notes shall be due and payable on the date on which
an Event of Default shall have occurred and be continuing and the Indenture
Trustee shall have declared the Notes to be immediately due and payable in
the manner provided in the Indenture(, subject to the prior written consent
of the Swap Counterparty under certain circumstances). (If a Swap Early
Termination occurs, the entire unpaid principal amount of the Notes shall
become immediately due and payable automatically.) All principal payments on
the (Notes) Class (A-1) (A-2) Notes shall be made (pro rata) to the
Noteholders entitled thereto.
Payments of interest on this Class (A-1) (A-2) Note due and payable on
each Payment Date, together with the installment of principal, if any, to the
extent not in full payment of this Class (A-1) (A-2) Note, shall be made by
wire transfer to an account specified in writing by the Holder and reasonably
satisfactory to the Indenture Trustee or by check mailed to the Person whose
name appears as the Registered Holder of this Class (A-1) (A-2) Note (or one
or more Predecessor Class (A-1) (A-2) Notes) on the Note Register as of the
close of business on each Record Date, except that with respect to Notes
registered on the Record Date in the name of the nominee of the Depository
(initially, such nominee to be Cede & Co.), payments will be made by wire
transfer in immediately available funds to the account designated by such
nominee. Such checks shall be mailed to the Person entitled thereto at the
address of such Person as it appears on the Note Register as of the
applicable Record Date without requiring that this Class (A-1) (A-2) Note be
submitted for notation of payment. Any reduction in the principal amount of
this Class (A-1) (A-2) Note (or any one or more Predecessor Class (A-1) (A-2)
Notes) effected by any payments made on any Payment Date shall be binding
upon all future Holders of this Class (A-1) (A-2) Note and of any Class (A-1)
(A-2) Note issued upon the registration of transfer hereof or in exchange
hereof or in lieu hereof, whether or not noted hereon. The Indenture
Trustee, in the name of and on behalf of the Issuer, will notify the Person
who was the Registered Holder hereof as of the Record Date preceding the
Final Payment Date by notice mailed or transmitted by facsimile prior to such
Payment Date, and the amount then due and payable shall be payable only upon
presentation and surrender of this Class (A-1) (A-2) Note at the Indenture
Trustee's principal Corporate Trust Office or at the office of the Indenture
Trustee's agent appointed for such purposes located in The City of New York.
The Issuer shall pay interest on overdue installments of interest at the
Note Accrual Rate to the extent lawful.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Class (A-1) (A-2) Note may be registered
on the Note Register upon surrender of this Class (A-1) (A-2) Note for
registration of transfer at the office or agency designated by the Issuer
pursuant to the Indenture, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Indenture Trustee duly
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, with such signature guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities Transfer
Agent's Medallion Program ("STAMP") or such other "signature guarantee
program" as may be determined by the Note Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange Act
of 1934, as amended, and thereupon one or more new Class (A-1) (A-2) Notes of
authorized denominations and in the same aggregate principal amount will be
issued to the designated transferee or transferees. No service charge will
be charged for any registration of transfer or exchange of this Class (A-1)
(A-2) Note, but the transferor may be required to pay a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any such registration of transfer or exchange.
(As provided in the Indenture, the Class A-2 Notes may be redeemed by
the Issuer in (specify events permitting redemption) upon payment of the
Redemption Price on the Redemption Date.)
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that
no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee, the Administrator or the
Indenture Trustee on the Notes or under the Indenture or any certificate or
other writing delivered in connection therewith, against (i) the Indenture
Trustee, the Owner Trustee (or the Swap Counterparty) in its individual
capacity, (ii) any owner of a beneficial interest in the Issuer or (iii) any
partner, owner, beneficiary, agent, officer, director or employee of the
Indenture Trustee, the Owner Trustee (or the Swap Counterparty) in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Owner Trustee, the Indenture Trustee (or the Swap Counterparty) or of any
successor or assign of the Indenture Trustee, the Owner Trustee (or the Swap
Counterparty) in its individual capacity, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary shall
be fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees by
accepting the benefits of the Indenture that such Noteholder or Note Owner
will not at any time institute against the Depositor or the Issuer, or join
in any institution against the Depositor or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States federal or state bankruptcy or similar law in connection with
any obligations relating to the Notes, the Indenture or the other Basic
Documents.
The Issuer has entered into the Indenture and this Class (A-1) (A-2)
Note is issued with the intention that, for federal, state and local income,
single business and franchise tax purposes, the Notes will qualify as
indebtedness secured by the Trust Estate. Each Noteholder, by acceptance of
a Note (and each Note Owner by acceptance of a beneficial interest in a
Note), agrees to treat the Notes for federal, state and local income, single
business and franchise tax purposes as indebtedness.
Prior to the due presentment for registration of transfer of this Class
(A-1) (A-2) Note, the Issuer, the Indenture Trustee and any agent of the
Issuer or the Indenture Trustee may treat the Person in whose name this Class
(A-1) (A-2) Note (as of the day of determination or as of such other date as
may be specified in the Indenture) is registered as the owner hereof for all
purposes, whether or not this Class (A-1) (A-2) Note be overdue, and none of
the Issuer, the Indenture Trustee or any such agent shall be affected by
notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of all Notes at the time Outstanding. The
Indenture also contains provisions permitting the Holders of Notes
representing specified percentages of the Outstanding Amount of the Notes, on
behalf of the Holders of all the Notes, (with the prior consent of the Swap
Counterparty), to waive compliance by the Issuer with certain provisions of
the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Class (A-1)
(A-2) Note (or any one of more Predecessor Class (A-1) (A-2) Notes) shall be
conclusive and binding upon such Holder and upon all future Holders of this
Class (A-1) (A-2) Note and of any Class (A-1) (A-2) Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made upon this Class (A-
1) (A-2) Note. The Indenture also permits the Indenture Trustee to amend or
waive certain terms and conditions set forth in the Indenture without the
consent of Holders of the Notes issued thereunder.
The term "Issuer" as used in this Class (A-1) (A-2) Note includes any
successor to the Issuer under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
The Notes and the Indenture shall be construed in accordance with the
laws of the State of New York and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws.
No reference herein to the Indenture and no provision of this Class (A-
1) (A-2) Note or of the Indenture shall alter or impair the obligation of the
Issuer, which is absolute and unconditional, to pay the principal of and
interest on this Class (A-1)(A-2) Note at the times, place and rate, and in
the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of (________) in its individual
capacity, (____________), in its individual capacity, any owner of a
beneficial interest in the Issuer, or any of their respective partners,
beneficiaries, agents, officers, directors, employees or successors or
assigns shall be personally liable for, nor shall recourse be had to any of
them for, the payment of principal of or interest on the Notes or performance
of, or omission to perform, any of the covenants, obligations or
indemnifications contained in the Indenture. The Holder of this Class (A-1)
(A-2) Note by its acceptance hereof agrees that, except as expressly provided
in the Basic Documents, in the case of an Event of Default under the
Indenture, the Holder shall have no claim against any of the foregoing for
any deficiency, loss or claim therefrom; provided, however, that nothing
contained herein shall be taken to prevent recourse to, and enforcement
against, the assets of the Issuer for any and all liabilities, obligations
and undertakings contained in the Indenture or in this Class (A-1) (A-2)
Note.
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
- -----------------------------------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ______________________________________________________________
_____________________________________________________________________________
___________
(name and address of assignee)
the within Class (A-1) (A-2) Note and all rights thereunder, and hereby
irrevocably constitutes and appoints ________________________________________
____________________________________, attorney, to transfer said Class (A-1)
(A-2) Note on the books kept for registration thereof, with full power of
substitution in the premises.
Dated: ______________________________ _______________________________
*/
- --------------------------------
Signature Guaranteed:
_____________________________
*/
- -----------------------------
________________________
*/ NOTICE: The signature to this assignment must correspond with
-
the name of the registered owner as it appears on the face of the
within Class (A-1) (A-2) Note in every particular, without
alteration, enlargement or any change whatever. Such signature
must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the Note Registrar, which requirements include
membership or participation in STAMP or such other "signature
guarantee program" as may be determined by the Note Registrar in
addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
Exhibit 5.1
March 2, 1998
ML Asset Backed Corporation
250 Vesey Street
World Financial Center
North Tower - 10th Floor
New York, New York 10281
Re: ML Asset Backed Corporation
Registration Statement on Form S-3 (File No. 333-39977)
-------------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel for you in connection with the Registration
Statement on Form S-3 (File No. 333-39977) (the "Registration Statement"),
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended (the "Act"), for the registration under the Act of
$1,000,000,000 aggregate principal amount of Asset Backed Securities (the
"Securities"). Each series of such Securities will be issued pursuant to
(i) a trust agreement (the "Trust Agreement") among a trustee named in the
related prospectus supplement, ML Asset Backed Corporation (the "Registrant")
and another entity named in such prospectus supplement and/or (ii) an
indenture (the "Indenture") between the trust formed pursuant to the Trust
Agreement and the indenture trustee named in the related prospectus
supplement.
We have made such investigation of law as we deemed appropriate and have
examined the proceedings heretofore taken and are familiar with the
procedures proposed to be taken by the Registrant in connection with the
authorization, issuance and sale of the Securities.
Based on the foregoing, we are of the opinion that:
(i) When each Indenture in respect of which notes are issued (the
"Notes") and we have participated as your counsel has been duly authorized
by all necessary corporate action and has been duly executed and delivered,
it will constitute a valid and binding obligation of the Registrant
enforceable in accordance with its terms, subject to applicable bankruptcy,
reorganization, insolvency and similar laws affecting creditors' rights
generally and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding in
equity or at law); and
(ii) When the issuance, execution and delivery of the Notes
issued pursuant to an Indenture in respect of which we have participated
as your counsel have been duly authorized by all necessary corporate
action, and when such Notes have been duly executed and delivered
and sold and paid for as described in the Registration Statement, such Notes
will be legally and validly issued and the holders of such Notes will be
entitled to the benefits provided by the Indenture pursuant to which such
Notes were issued.
In rendering the foregoing opinions, we have assumed the accuracy and
truthfulness of all public records regarding the Registrant and of all
certifications, documents and other proceedings examined by us that have been
executed or certified by officials of the Registrant acting within the scope
of their official capacities and have not verified the accuracy or
truthfulness thereof. We have also assumed the genuineness of the signatures
appearing upon such public records, certifications, documents and
proceedings. In addition, we have assumed that each such Indenture and the
related Notes will be executed and delivered in substantially the form
filed as exhibits to the Registration Statement with such changes acceptable
to us, and that such Notes will be sold as described in the Registration
Statement. We express no opinion as to the laws of any jurisdiction other
than the laws of the State of New York and the federal laws of the United
States of America.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the heading
"Legal Matters" in the Prospectus forming a part of the Registration
Statement, without implying or admitting that we are "experts" within the
meaning of the Act or the rules and regulations of the Securities and
Exchange Commission issued thereunder, with respect to any part of the
Registration Statement, including this exhibit.
Very truly yours,
/s/ Brown & Wood LLP
Exhibit 5.2
(Richards, Layton & Finger letterhead)
March 2, 1998
ML Asset Backed Corporation
250 Vesey Street
World Financial Center
North Tower - 10th Floor
New York, New York 10281
Re: ML Asset Backed Corporation
Registration Statement on Form S-3 (File No. 333-39977)
-------------------------------------------------------
Ladies and Gentlemen:
We have acted as special Delaware counsel for ML Asset Backed
Corporation (the "Registrant") in connection with the Registration Statement
on Form S-3 (File No. 333-39977) (the "Registration Statement"), filed with
the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Act"), for the registration under the Act of up to
$1,000,000,000 aggregate principal amount of Asset Backed Certificates (the
"Securities"). Each series of such Securities may be issued pursuant to a
trust agreement (the "Trust Agreement") among a trustee named in the related
prospectus supplement and the Registrant. This opinion is being delivered to
you at your request.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The form of Trust Agreement (including the form of Certificate of
Trust (the "Certificate") attached as Exhibit 4.1 thereto); and
(b) The Registration Statement.
Initially capitalized terms used herein and not otherwise defined are
used as defined in the Trust Agreement.
For purposes of this opinion, we have not reviewed any documents other
than the documents listed above, and we have assumed that there exists no
provision in any document that we have not reviewed that bears upon or is
inconsistent with the opinions stated herein. We have conducted no
independent factual investigation of our own but rather have relied solely
upon the foregoing documents, the statements and information set forth
therein and the additional matters recited or assumed herein, all of which we
have assumed to be true, complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii)
the conformity with the originals of all documents submitted to us as copies
or forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Trust
Agreement will constitute the entire agreement among the parties thereto with
respect to the subject matter thereof, including with respect to the
creation, operation and termination of the Trust, (ii) the due creation or
due organization or due formation, as the case may be, and valid existence in
good standing of each party to the documents examined by us under the laws of
the jurisdiction governing its creation, organization or formation, (iii) the
legal capacity of natural persons who are parties to the documents examined
by us, and (iv) that each of the parties to the documents examined by us has
the power and authority to execute and deliver, and to perform its
obligations under, such documents. We have not participated in the
preparation of the Registration Statement and assume no responsibility for
its contents.
This opinion is limited to the laws of the State of Delaware (excluding
the securities laws of the State of Delaware), and we have not considered and
express no opinion on the laws of any other jurisdiction, including federal
laws and rules and regulations relating thereto. Our opinions are rendered
only with respect to Delaware laws and rules, regulations and orders
thereunder which are currently in effect.
Based upon the foregoing, and upon our examination of such questions of
law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. When each Trust Agreement in respect of which we have participated
as your counsel has been duly authorized by all necessary corporate action
and has been duly executed and delivered, it will constitute a valid and
binding obligation of the Registrant enforceable in accordance with its
terms; and
2. When the issuance, execution and delivery of the Securities in
respect of which we have participated as your counsel have been duly
authorized by all necessary corporate action, and when such Securities have
been duly executed and delivered and sold as described in the Registration
Statement, such Securities will be legally and validly issued and the holders
of such Securities will be entitled to the benefits provided by the Trust
Agreement pursuant to which such Securities were issued.
The foregoing opinions regarding enforceability are subject to (i)
applicable bankruptcy, insolvency, moratorium, reorganization, receivership,
fraudulent conveyance and similar laws relating to or affecting the rights
and remedies of creditors generally, (ii) principles of equity (regardless of
whether considered and applied in a proceeding in equity or at law) and (iii)
the effect of applicable public policy on the enforceability of provisions
relating to indemnification or contribution.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the heading
"Legal Matters" in the Prospectus forming a part of the Registration
Statement. In giving the foregoing consents, we do not thereby admit that we
come within the category of Persons whose consent is required under Section 7
of the Act, or the rules and regulations of the Securities and Exchange
Commission thereunder with respect to any part of the Registration Statement,
including this exhibit. Except as stated above, this opinion may not be
furnished or quoted to, or relied upon by, any other Person for any purpose.
Very truly yours,
/s/ Richards, Layton & Finger
Exhibit 8.1
March 2, 1998
ML Asset Backed Corporation
250 Vesey Street
World Financial Center
North Tower - 10th Floor
New York, New York 10281
Re: ML Asset Backed Corporation
Registration Statement on Form S-3
(File No. 333-39977)
----------------------------------
Ladies and Gentlemen:
We have acted as counsel to ML Asset Backed Corporation, a Delaware
corporation (the "Registrant"), in connection with the issuance and sale of
its Asset Backed Securities (the "Securities") that evidence interests in, or
securities backed by, certain pools of receivables. Each series of
Securities will be issued pursuant to (i) a trust agreement (the "Trust
Agreement") among a trustee named in the related prospectus supplement, the
Registrant and another entity named in such prospectus supplement and/or
(ii) an indenture (the "Indenture") between the trust formed pursuant to the
Trust Agreement and the indenture trustee named in the related prospectus
supplement. We have advised the Registrant with respect to certain federal
income tax consequences of the proposed issuance of the Securities. This
advice is summarized under the heading "Certain Federal Income Tax
Considerations" in the Prospectus, all as part of the Registration
Statement on Form S-3 (File No. 333-39977) (the "Registration
Statement"), filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Act"), as amended on the date
hereof for the registration of such Securities under the Act. Such
description does not purport to discuss all possible federal income tax
ramifications of the proposed issuance, but with respect to those tax
consequences which are discussed, in our opinion, the description is accurate
in all material respects.
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and to a reference to this firm (as counsel to the
Registrant) under the heading "Certain Federal Income Tax Considerations" in
the Prospectus forming a part of the Registration Statement, without implying
or admitting that we are "experts" within the meaning of the Act or the rules
and regulations of the Commission issued thereunder, with respect to any part
of the Registration Statement, including this exhibit.
Very truly yours,
/s/ Brown & Wood LLP
Exhibit 10.1
This ADMINISTRATION AGREEMENT dated as of [___________] (as amended
from time to time, this "Agreement"), among [_______] TRUST [_____], a
Delaware business trust (the "Issuer"), [_________________________________],
a Delaware banking corporation, not in its individual capacity but solely as
Owner Trustee (the "Owner Trustee") and [____________________________], a
[____________________________], as Administrator (the "Administrator"),
W I T N E S S E T H :
WHEREAS, the Issuer is issuing the Fixed Rate Asset Backed
Amortizing Notes, Class (A-1) (the "Notes") pursuant to the Indenture dated
as of [_______________] (as amended and supplemented from time to time, the
"Indenture"), among the Issuer, the Indenture Trustee and
[__________________________] and the Floating Rate Asset Backed Amortizing
Certificates, Class (B-1) (the "Certificates" and together with the Notes,
the "Securities") pursuant to the Trust Agreement dated as of [_________] (,
as amended and restated as of [_____________]) (the "Trust Agreement")
between ML Asset Backed Corporation (the "Depositor") and the Owner Trustee
(capitalized terms used and not otherwise defined herein shall have the
meanings assigned such terms in the Related Agreements (as hereinafter
defined));
WHEREAS, the Issuer has entered into certain agreements in
connection with the issuance of the Securities, including (i) the Indenture,
(ii) the Swap Agreement dated as of [_______] (as amended and supplemented
from time to time, the "Swap Agreement") between the Issuer and
[___________________________], (iii) the Underwriting Agreement, dated
[__________] between the Issuer and Merrill Lynch, Pierce Fenner & Smith
Incorporated (the "Underwriter") and (iv) two Letters of Representations
dated [__________] (as amended and supplemented from time to time, the
"Depository Agreement"), one among the Issuer, the Indenture Trustee and The
Depository Trust Company ("DTC") relating to the Notes, and another among the
Issuer, the Administrator, and DTC relating to the Certificates (the Trust
Agreement, the Indenture, the Swap Agreement, the Underwriting Agreement and
the Depository Agreement being referred to hereinafter collectively as the
"Related Agreements");
WHEREAS, pursuant to the Related Agreements, the Issuer, the Owner
Trustee and the Administrator are required to perform certain duties in
connection with the Notes, the Certificates and the collateral therefor
pledged pursuant to the Indenture (the "Collateral");
WHEREAS, the Issuer and the Owner Trustee desire to appoint an
Administrator (i) to perform the duties of the Administrator in this
Agreement and in the Related Documents and (ii) to perform certain of the
duties of the Issuer and the Owner Trustee referred to in the preceding
clause and to provide such additional services consistent with the terms of
this Agreement and the Related Agreements as the Issuer and the Owner Trustee
may from time to time request; and
WHEREAS, the Administrator has the capacity to provide the services
required hereby and is willing to perform such services for the Issuer and
the Owner Trustee on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties agree as follows:
1. Duties of the Administrator.
---------------------------
(a) Duties with Respect to the Indenture
------------------------------------
(i) The Administrator agrees to perform all of the duties of the
Administrator in this Agreement and in the Related Agreements and to perform
the duties of the Issuer and the Owner Trustee under the Related Agreements.
In addition, the Administrator shall consult with the Owner Trustee regarding
the duties of the Issuer or the Owner Trustee under the Indenture and the
other Related Agreements. The Administrator shall monitor the performance of
the Issuer and the Owner Trustee and shall advise the Owner Trustee when the
Administrator believes action is necessary to comply with the Issuer's or the
Owner Trustee's duties under the Indenture and the other Related Agreements.
The Administrator shall prepare for execution by the Issuer, or shall cause
the preparation by other appropriate persons or entities of, all such
documents, reports, filings, instruments, certificates and opinions that it
shall be the duty of the Issuer or the Owner Trustee to prepare, file or
deliver pursuant to the Indenture and the Related Agreements. In furtherance
of the foregoing, the Administrator shall take all appropriate action that is
the duty of the Issuer or the Owner Trustee to take pursuant to the Indenture
including, without limitation, such of the foregoing as are required with
respect to the following matters under the Indenture (references are to sec-
tions of the Indenture):
(A) the preparation, obtaining or filing of the instruments,
opinions and certificates and other documents required for the release
of collateral (Section 8.05);
(B) the maintenance of an office in the Borough of Manhattan, City
of New York, for registration of transfer or exchange of Notes
(Section 3.02);
(C) the duty to cause newly appointed Administrators, if any, to
deliver to the Indenture Trustee and the Swap Counterparty the instru-
ment specified in the Indenture regarding funds held in trust
(Section 3.03);
(D) the identification to the Indenture Trustee and the Swap
Counterparty in an Officer's Certificate of a person or entity with whom
the Administrator, on behalf of the Issuer, has contracted to assist it
or the Issuer in performing its duties under the Indenture
(Section 3.07(b));
(E) the taking of any action as the Indenture Trustee may request
in order to maintain the perfection and priority of the security
interest of the Indenture Trustee in accordance with Section 3.21(c) of
the Indenture (Section 3.21);
(F) the execution of Notes and delivery of Definitive Notes in
accordance with Section 4.08 of the Indenture (Section 4.08);
(G) the monitoring of the Issuer's obligations as to the
satisfaction and discharge of the Indenture and the preparation of an
Officer's Certificate and the obtaining of the Opinion of Counsel and
the certificate, if necessary, relating thereto (Section 4.10);
(H) the compliance with any written directive of the Indenture
Trustee with respect to the sale of the Trust Estate in a commercially
reasonable manner if an Event of Default shall have occurred and be
continuing (Section 5.03);
(I) the preparation and delivery of notice to Noteholders and the
Swap Counterparty of the removal of the Indenture Trustee and the
appointment of a successor Indenture Trustee (Section 6.08);
(J) the preparation of any written instruments required to confirm
more fully the authority of any co-trustee or separate trustee and any
written instruments necessary in connection with the resignation or
removal of any co-trustee or separate trustee (Section 6.10);
(K) the preparation of an Officer's Certificate and the obtaining
of an Opinion of Counsel and certificates, if necessary, for the release
of the Trust Estate (Sections 8.05 and 8.03);
(L) the obtaining of Opinions of Counsel with respect to the
execution of supplemental indentures and the mailing to the Noteholders
of notices with respect to such supplemental indentures (Sections 9.01,
9.02 and 9.03);
(M) the execution and delivery of new Notes conforming to any
supplemental indenture (Section 9.05);
(N) the notification of the Rating Agencies, upon the failure of
the Indenture Trustee to give such notification, of the information
required pursuant to Section 10.03 of the Indenture (Section 10.03); and
(b) Additional Duties. (i) In addition to the duties of the
-----------------
Administrator set forth above, the Administrator shall perform, or cause to
be performed, all duties and obligations of the Owner Trustee or Issuer under
the Trust Agreement or Swap Agreement, as applicable, shall perform such
calculations and shall prepare or shall cause the preparation by other
appropriate persons or entities of, and shall execute on behalf of the Issuer
or the Owner Trustee, all such documents, reports, filings, instruments,
certificates and opinions that it shall be the duty of the Issuer or the
Owner Trustee to prepare, file or deliver pursuant to the Related Agreements,
and at the request of the Owner Trustee shall take all appropriate action
that it is the duty of the Issuer or the Owner Trustee to take pursuant to
the Related Agreements. In furtherance thereof, the Issuer shall execute and
deliver to the Administrator and to each successor Administrator appointed
pursuant to the terms hereof, one or more powers of attorney substantially in
the form of Exhibit A hereto, appointing the Administrator the
attorney-in-fact of the Issuer for the purpose of executing on behalf of the
Issuer all such documents, reports, filings, instruments, certificates and
opinions. Subject to Section 5 of this Agreement, and in accordance with the
directions of the Issuer, the Administrator shall administer, perform or
supervise the performance of such other activities in connection with the
Collateral (including the Related Agreements) as are not covered by any of
the foregoing provisions and as are expressly requested by the Owner Trustee
and are reasonably within the capability of the Administrator.
Notwithstanding any provision in this agreement or other Related Agreements
to the contrary, the Administrator shall not be responsible for any filings
required under the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, the Investment Company of 1940, as amended,
or under any state securities or "Blue Sky" statute.
(ii) Notwithstanding anything in this Agreement or the Related
Agreements to the contrary, the Administrator shall be responsible for
promptly notifying the Owner Trustee in the event that the Administrator
becomes aware of any withholding tax imposed on the Trust's payments (or
allocations of income) to a Certificateholder as contemplated in Section
5.02(e) of the Trust Agreement. Any such notice shall specify the amount of
any withholding tax required to be withheld by the Owner Trustee pursuant to
such provision. Furthermore, the Administrator shall comply with all
requirements of the Code with respect to the withholding from any payments
made by it on any Notes or Certificates of any applicable withholding taxes
(including backup withholding) imposed thereon and with respect to any
applicable reporting requirements in connection therewith and, in the event
the Administrator does not receive a copy of a properly completed (i) IRS
Form W-8, (ii) IRS Form 1001, (iii) IRS Form 4224, or (iv) IRS Form W-9 with
respect to any Securityholder, shall treat payments to such Securityholder as
being subject to withholding taxes (including backup withholding, as
applicable) and shall retain from amounts otherwise distributable to such
Securityholder an amount sufficient for the payment of such withholding taxes
(including backup withholding, as applicable).
(iii) Notwithstanding anything in this Agreement or the Related
Agreements to the contrary, the Administrator shall be responsible for
performance of the duties of the Trust set forth in Section 5.04 of the Trust
Agreement with respect to, among other things, accounting and reports to
Certificateholders; provided, however, that the Owner Trustee shall retain
responsibility for the distribution of the information returns or reports
required by the Code.
(iv) The Administrator shall perform the duties of the
Administrator specified in the Trust Agreement required to be performed in
connection with the resignation or removal of the Owner Trustee, and any
other duties expressly required to be performed by the Administrator under
the Trust Agreement.
(v) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Administrator may enter into
transactions or otherwise deal with any of its affiliates; provided, however,
that the terms of any such transactions or dealings shall be in accordance
with any directions received from the Issuer and shall be, in the
Administrator's opinion, no less favorable to the Issuer than would be
available from unaffiliated parties. If reasonably necessary to carry out
duties or other obligations contemplated hereby, the Administrator is hereby
authorized to select and hire agents or attorneys-in-fact, and so long as
such selection was done with reasonable care, the Administrator shall be not
responsible for the act or omissions of such agents or attorneys-in-fact.
(vi) In carrying out any of its obligations under this Agreement,
the Administrator may act either directly or through agents, attorneys,
accountants, independent contractors and auditors and enter into agreements
with any of them and shall not be liable for the default or misconduct of any
such agents, attorneys, accountants, independent contractors or auditors if
such agents, attorneys, accountants, independent contractors or auditors
shall have been selected with reasonable care.
(c) Non-Ministerial Matters.
-----------------------
(i) With respect to matters that in the reasonable judgment of
the Administrator are non-ministerial, the Administrator shall not take any
action unless within a reasonable time before the taking of such action, the
Administrator shall have notified the Owner Trustee of the proposed action
and the Owner Trustee shall not have withheld consent or provided an
alternative direction. For the purpose of the preceding sentence,
"non-ministerial matters" shall include, without limitation:
(A) the amendment of or any supplement to the Indenture;
(B) the initiation of any claim or lawsuit by the Issuer and the
compromise of any action, claim or lawsuit brought by or against the
Issuer (other than in connection with the collection of distributions on
the Underlying Securities):
(C) the amendment, change or modification of the Related
Agreements;
(D) the appointment of successor Note Registrars, successor
Administrators and successor Indenture Trustees pursuant to the
Indenture, or the consent to the assignment by the Note Registrar,
Administrator or Indenture Trustee of its obligations under the
Indenture; and
(E) the removal of the Indenture Trustee.
(ii) Notwithstanding anything to the contrary in this Agreement,
the Administrator shall not be obligated to, and shall not (x) make any
payments to the Noteholders under the Related Agreements, (y) sell the Trust
Estate pursuant to Section 5.03 of the Indenture or (z) take any action that
the Issuer directs the Administrator not to take on its behalf.
(d) Tax Matters. The Administrator will be required to prepare and
-----------
file a partnership information return (IRS Form 1065) signed by the Tax
Matters Partner with the IRS for each taxable year of the Issuer and will
report each Certificateholder's allocable share of items of Issuer income and
expense to holders and the IRS on Schedule K-1. The Tax Matters partner
shall be as designated in the Trust Agreement. The Administrator will
provide the Schedule K-1 information to nominees that fail to provide the
Administrator with the information statement described in Section 6031 of the
Internal Revenue Code of 1986, as amended, and such nominees will be required
to forward such information to the beneficial owners of the Certificates.
2. Records. The Administrator shall maintain appropriate books
-------
of account and records relating to services performed hereunder, which books
of account and records shall be accessible for inspection by the Issuer and
the Depositor at any time during normal business hours.
3. Additional Information To Be Furnished to the Issuer. The
----------------------------------------------------
Administrator shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably request.
4. Independence of the Administrator. For all purposes of this
---------------------------------
Agreement, the Administrator shall be an independent contractor and shall not
be subject to the supervision of the Issuer or the Owner Trustee with respect
to the manner in which it accomplishes the performance of its obligations
hereunder. Unless expressly authorized by the Issuer, the Administrator
shall have no authority to act for or represent the Issuer or the Owner
Trustee in any way and shall not otherwise be deemed an agent of the Issuer
or the Owner Trustee.
5. No Joint Venture. Nothing contained in this Agreement (i)
----------------
shall constitute the Administrator and either of the Issuer or the Owner
Trustee or the Depositor as members of any partnership, joint venture,
association, syndicate, unincorporated business or other separate entity,
(ii) shall be construed to impose any liability as such on any of them or
(iii) shall be deemed to confer on any of them any express, implied or
apparent authority to incur any obligation or liability on behalf of the
others.
6. Other Activities of Administrator. Nothing herein shall
---------------------------------
prevent the Administrator or its Affiliates from engaging in other businesses
or, in its sole discretion, from acting in a similar capacity as an
administrator for any other person or entity even though such person or
entity may engage in business activities similar to those of the Issuer, the
Owner Trustee or the Indenture Trustee.
7. Term of Agreement; Resignation and Removal of Administrator.
-----------------------------------------------------------
(a) This Agreement shall continue in force until the dissolution of the
Issuer, upon which event this Agreement shall automatically terminate.
(b) Subject to Section 7(e), the Administrator may resign its
duties hereunder by providing the Issuer and the Swap Counterparty with at
least 60 days' prior written notice.
(c) Subject to Section 7(e), the Issuer may remove the
Administrator without cause by providing the Administrator with at least 60
days' prior written notice. The Issuer shall provide written notice of any
such removal of the Administrator to the Swap Counterparty.
(d) Subject to Section 7(e), at the sole option of the Issuer, the
Administrator may be removed immediately upon written notice of termination
from the Issuer to the Administrator if any of the following events shall
occur:
(i) the Administrator shall default in the performance of any of
its duties under this Agreement and, after notice of such default, shall
not cure such default within ten days (or, if such default cannot be
cured in such time, shall not give within ten days such assurance of
cure as shall be reasonably satisfactory to the Issuer);
(ii) a court having jurisdiction in the premises shall enter a
decree or order for relief, and such decree or order shall not have been
vacated within 60 days, in respect of the Administrator in any
involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect or appoint a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar
official for the Administrator or any substantial part of its property
or order the winding-up or liquidation of its affairs; or
(iii) the Administrator shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, shall consent to the entry of an order for relief in an
involuntary case under any such law, or shall consent to the appointment
of a receiver, liquidator, assignee, trustee, custodian, sequestrator or
similar official for the Administrator or any substantial part of its
property, shall consent to the taking of possession by any such official
of any substantial part of its property, shall make any general
assignment for the benefit of creditors or shall fail generally to pay
its debts as they become due.
The Administrator agrees that if any of the events specified in
clauses (ii) or (iii) of this Section shall occur, it shall give written
notice thereof to the Issuer and the Indenture Trustee within seven days
after the happening of such event. The Issuer shall provide prompt written
notice of any such removal of the Administrator to the Swap Counterparty.
(e) No resignation or removal of the Administrator pursuant to
this Section shall be effective until (i) a successor Administrator shall
have been appointed by the Issuer and (ii) such successor Administrator shall
have agreed in writing to be bound by the terms of this Agreement in the same
manner as the Administrator is bound hereunder.
(f) The appointment of any successor Administrator shall be
effective only after a Rating Agency, after having been given 10 days prior
notice of such proposed appointment, shall have declared in writing that such
appointment will not result in a reduction or withdrawal of the then current
rating of the Notes or Certificates. The Issuer shall give prompt written
notice to the Swap Counterparty of the appointment of a successor
administrator.
8. Action upon Termination, Resignation or Removal. Upon the
-----------------------------------------------
Payment Date next following the effective date of termination of this
Agreement pursuant to Section 7(a) or the resignation or removal of the
Administrator pursuant to Section 7(b) or (c), respectively, the
Administrator shall be entitled to be paid all fees and reimbursable expenses
constituting Extraordinary Expenses accruing to it to the date of such
termination, resignation or removal to the extent funds are available for
such payment in accordance with the Priority of Payments. The Administrator
shall forthwith upon such termination pursuant to Section 7(a) deliver to the
Issuer all property and documents of or relating to the Collateral then in
the custody of the Administrator. In the event of the resignation or removal
of the Administrator pursuant to Section 7(b) or (c), respectively, the
Administrator shall cooperate with the Issuer and take all reasonable steps
requested to assist the Issuer in making an orderly transfer of the duties of
the Administrator.
9. Notices. Any notice, report or other communication given
-------
hereunder shall be in writing and addressed as follows:
(a) if to the Issuer, to:
[___________________________] Trust 1997-1
c/o _______________________
___________________________
___________________________
Attention: _______________
(b) If to the Administrator, to:
___________________________
___________________________
___________________________
Attention: _______________
(c) If to the Indenture Trustee, to:
___________________________
___________________________
___________________________
Attention: _______________
(d) If to the Owner Trustee, to:
___________________________
___________________________
___________________________
Attention: _______________
(e) If to the Swap Counterparty, to:
___________________________
___________________________
___________________________
Attention: _______________
or to such other address as any party shall have provided to the other
parties in writing. Any notice required to be in writing hereunder shall be
deemed given if such notice is mailed by certified mail, postage prepaid, or
hand-delivered to the address of such party as provided above.
10. Amendments. This Agreement may be amended from time to time
----------
by a written amendment duly executed and delivered by the Issuer and the
Administrator and with the written consent of the Indenture Trustee, the
Owner Trustee and the Swap Counterparty, without the consent of the
Noteholders and the Certificateholders, and after receiving notification from
a Rating Agency that such amendment shall not cause the rating of the Notes
or the Certificates to be reduced, suspended or withdrawn, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Noteholders or Certificateholders; provided that such amendment will not, in
the Opinion of Counsel satisfactory to the Indenture Trustee, materially and
adversely affect the interest of any Noteholder or Certificateholder. This
Agreement may also be amended by the Issuer, the Administrator and with the
written consent of the Indenture Trustee, the Owner Trustee and the Swap
Counterparty and the holders of Notes evidencing at least a majority in the
Outstanding Amount of the Notes and the holders of Certificates evidencing at
least a majority of the Certificate Balance for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of this Agreement or of modifying in any manner the rights of the Noteholders
or the Certificateholders; provided, however, that no such amendment may (i)
increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of distributions on the Underlying Certificates or
distributions that are required to be made for the benefit of the Noteholders
or Certificateholders or (ii) reduce the aforesaid percentage of the holders
of Notes and Certificates which are required to consent to any such
amendment, without the consent of the holders of all the outstanding Notes
and Certificates. Notwithstanding the foregoing, the Administrator may not
amend this Agreement without the permission of the Depositor, which
permission shall not be unreasonably withheld.
11. Successors and Assigns. This Agreement may not be assigned
----------------------
by the Administrator unless such assignment is previously consented to in
writing by the Issuer, the Swap Counterparty and the Owner Trustee and unless
a Rating Agency, after having been given 10 days prior notice of such
assignment, shall have declared in writing that such assignment will not
result in a reduction or withdrawal of the then current rating of the Notes
or Certificates. An assignment with such consent and satisfaction, if
accepted by the assignee, shall bind the assignee hereunder in the same
manner as the Administrator is bound hereunder. Notwithstanding the fore-
going, this Agreement may be assigned by the Administrator without the
consent of the Issuer or the Owner Trustee to a corporation or other
organization that is a successor (by merger, consolidation or purchase of
assets) to the Administrator; provided that such successor organization
executes and delivers to the Issuer, the Owner Trustee and the Indenture
Trustee an agreement in which such corporation or other organization agrees
to be bound hereunder by the terms of said assignment in the same manner as
the Administrator is bound hereunder. Subject to the foregoing, this
Agreement shall bind any successors or assigns of the parties hereto.
12. Compensation and Indemnity. The Administrator shall receive
--------------------------
from the Depositor or the Issuer as compensation for its services hereunder
such fees as have been separately agreed upon before the date hereof between
the Depositor and the Administrator (the "Initial Administrator Fee"). The
Administrator hereby acknowledges receipt of its Initial Administrator Fee as
its entire remuneration for its services as Administrator under this
Administration Agreement and under the Related Documents and receipt of all
of its ordinary expenses to be incurred in acting as Administrator under this
Administration Agreement and under the Related Documents. After the
execution of this Administration Agreement the Issuer shall only be obligated
to indemnify the Administrator for those expenses of the Administrator that
constitute Extraordinary Expenses and only in accordance with Priority of
Payments in Clause 3.05(d) of the Indenture.
13. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
14. Headings. The section headings hereof have been inserted for
--------
convenience of reference only and shall not be construed to affect the
meaning, construction or effect of this Agreement.
15. Counterparts. This Agreement may be executed in counterparts,
------------
each of which when so executed shall together constitute but one and the same
agreement.
16. Severability. Any provision of this Agreement that is
------------
prohibited or unenforceable in any jurisdiction shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction.
17. Not Applicable to the Administrator in Other Capacities.
-------------------------------------------------------
Nothing in this Agreement shall affect any obligation that the Administrator
may have in any other capacity.
18. Limitation of Liability of Owner Trustee, Indenture Trustee
-----------------------------------------------------------
and Administrator and Standard of Care. (a) Notwithstanding anything
- --------------------------------------
contained herein to the contrary, this instrument has been countersigned by [
] not in its individual capacity but solely in its capacity as Owner
Trustee of the Issuer and in no event shall [ ] in its individual
capacity or any beneficial owner of the Issuer have any liability for the
representations, warranties, covenants, agreements or other obligations of
the Issuer hereunder. For all purposes of this Agreement, in the performance
of any duties or obligations of the Issuer hereunder, the Owner Trustee shall
be subject to, and entitled to the benefits of, the terms and provisions of
Articles VI, VII and VIII of the Trust Agreement. The Owner Trustee hereby
acknowledges that the Owner Trustee shall have no recourse to the Issuer for
amounts hereunder.
(b) Notwithstanding anything contained herein to the contrary,
this Agreement has been countersigned by the Indenture Trustee not in its
individual capacity but solely as Indenture Trustee, not in its individual
capacity but solely as Administrator and in no event shall the Indenture
Trustee have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto; nor shall the
Indenture Trustee be liable for any action or omission to act;
notwithstanding negligence, nor for any indirect, special or consequential
damages. The Administrator hereby acknowledges receipt of its fees as
compensation for services performed hereunder and that the Administrator
shall have no recourse to the Issuer for amounts hereunder.
19. Third-Party Beneficiary. The Owner Trustee and the Swap
-----------------------
Counterparty are each a third-party beneficiary to this Agreement and are
each entitled to the rights and benefits hereunder and may enforce the
provisions hereof as if they were a party hereto.
20. No Petition. The Administrator, by entering into this
-----------
Agreement, hereby covenants and agrees that they will not at any time
institute against the Depositor or the Issuer, or join in any institution
against the Depositor or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings
under any United States federal or state bankruptcy or similar law in
connection with any obligations relating to the Notes, the Indenture or any
of the Related Agreements.
* * * * * * * *
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
[______] TRUST 199_-_
By: _________________________________, not in its
individual capacity but solely as Owner
Trustee,
By: _________________________
Name:
Title:
[_____________________________________],
not in its individual capacity but solely as Owner
Trustee
By: _________________________
Name:
Title:
[____________________________________], not in its
individual capacity, but solely as Administrator
By: _________________________
Name:
Title:
Exhibit A
POWER OF ATTORNEY
STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
KNOW ALL MEN BY THESE PRESENTS, that [_______] Trust 199_-_ (the
"Trust"), does hereby make, constitute and appoint
[_____________________________________________], as administrator under the
Administration Agreement dated [_____________], 1997 (the "Administration
Agreement"), among the Trust, [_____________________________________], as
Owner Trustee and [_____________________________________], as Administrator,
as the same may be amended from time to time, and its agents and attorneys,
as Attorneys-in-Fact to execute on behalf of the Trust all such documents,
reports, filings, instruments, certificates and opinions as it shall be the
duty of the Trust to prepare, file or deliver pursuant to the Related
Agreements, including, without limitation, to appear for and represent the
Trust in connection with the preparation, filing and audit of federal, state
and local tax returns pertaining to the Trust, and with full power to perform
any and all acts associated with such returns and audits that the Trust could
perform, including without limitation, the right to distribute and receive
confidential information, defend and assert positions in response to audits,
initiate and defend litigation, and to execute waivers of restrictions on
assessments of deficiencies, consents to the extension of any statutory or
regulatory time limit, and settlements.
All powers of attorney for this purpose heretofore filed or executed by
the Trust are hereby revoked.
Capitalized terms that are used and not otherwise defined herein shall
have the meanings ascribed thereto in the Administration Agreement.
EXECUTED this ____ day of ____________, 1997.
[______] TRUST 199_-_
By: [____________________________________],
not in its individual capacity but solely as Owner
Trustee
By: ________________________________
Name:
Title:
