PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED NOVEMBER 6, 1997)
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$147,882,628
GUARANTEED TRADE TRUST 1997-A
6.104% GUARANTEED TRADE CERTIFICATES, SERIES 1997-A
EVIDENCING INTERESTS IN A PROMISSORY NOTE GUARANTEED BY
EXPORT-IMPORT BANK OF THE UNITED STATES
Each of the Certificates offered hereby evidences an undivided fractional
interest in Guaranteed Trade Trust 1997-A (the "Trust") to be formed
pursuant to a Declaration of Trust between Citibank, N.A., as trustee
(the "Trustee") and Citicorp North America, Inc., as depositor (the
"Depositor"). The assets of the Trust will consist primarily of a
promissory note (the "Promissory Note") (less certain retained amounts
described herein) of Empresa Colombiana de Petroleos (the "Borrower"),
the Liquidity Facility (as defined below) and the Eximbank Guarantee
(as defined below) or, in lieu thereof following the occurrence of an
Eximbank Payment Event, an Eximbank Payment Certificate (as such terms
are hereinafter defined).
Payments on the Promissory Note will be guaranteed (the "Eximbank
Guarantee") by the Export-Import Bank of the United States ("Eximbank")
as to the payment of 100% of all amounts of principal due thereon and
interest thereon at the Guaranteed Interest Rate (as defined herein). The
Eximbank Guarantee will be entitled to the full faith and credit of the
United States of America. Each Certificate will represent the right to
receive a portion of the payments due on the Promissory Note or under the
Eximbank Guarantee, but will not be directly guaranteed by Eximbank or
the United States of America. The Certificates will not be subject to
prepayment or acceleration under any circumstances.
The Trust will benefit from an irrevocable liquidity facility (the
"Liquidity Facility") provided by Citibank, N.A., acting through its
Nassau branch (the "Liquidity Provider"). The Liquidity Facility is
intended to provide for the distribution of principal and interest due on
the Promissory Note in a timely fashion to the holders of the
Certificates on any Certificate Payment Date with respect to which the
Borrower defaults in payment of amounts due on the Promissory Note.
Interest on the Promissory Note will accrue from the date of delivery
thereof. Principal and interest are distributable to the
Certificateholders on each January 15 and July 15, commencing January 15,
1998. The final maturity of the Promissory Note, and therefore the final
distribution on the Certificates, will be July 15, 2003.
The Underwriter intends, but is not obligated, to make a market in the
Certificates. There can be no assurance that a secondary market will
develop or, if a secondary market does develop, that it will continue.
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THE ATTORNEY GENERAL OF THE UNITED STATES HAS STATED IN AN OPINION DATED
SEPTEMBER 30, 1966 THAT EXIMBANK'S CONTRACTUAL LIABILITIES CONSTITUTE
GENERAL OBLIGATIONS OF THE UNITED STATES BACKED BY ITS FULL FAITH AND
CREDIT AND THAT PERSONS IN WHOSE FAVOR EXIMBANK HAS INCURRED CONTRACTUAL
LIABILITIES IN ACCORDANCE WITH LAW "HAVE ACQUIRED VALID GENERAL OBLIGATIONS
OF THE UNITED STATES, AND ARE THEREFORE IN A POSITION TO REACH BEYOND
EXIMBANK AND ITS ASSETS TO THE UNITED STATES FOR A SOURCE OF PAYMENT, IF
NECESSARY." THE EXIMBANK GUARANTEE OF THE PROMISSORY NOTE WILL CONSTITUTE A
CONTRACTUAL LIABILITY OF EXIMBANK AND, AS STATED IN SUCH OPINION, A GENERAL
OBLIGATION OF THE UNITED STATES. THE CERTIFICATES WILL NOT BE DIRECTLY
GUARANTEED BY EXIMBANK AND THERE WILL BE NO DIRECT CONTRACTUAL LIABILITY OF
EXIMBANK TO ANY HOLDER OF A CERTIFICATE.
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THE CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE ASSETS OF THE TRUST
ONLY. THE CERTIFICATES ARE NOT OBLIGATIONS OF OR GUARANTEED BY THE UNITED
STATES OF AMERICA, EXIMBANK OR ANY OTHER GOVERNMENTAL AGENCY NOR ARE THEY
OBLIGATIONS OF OR GUARANTEED BY THE DEPOSITOR, THE BORROWER OR THE TRUSTEE
OR ANY AFFILIATE OF ANY THEREOF.
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 OR THE
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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Underwriting
Initial Public Discounts and Proceeds to the
Offering Price(1) Commissions (2) Trust (1)(2)
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Per Certificate..... 100.00% 0.30% 100.00%
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Total............... $147,882,628 $443,648 $147,882,628
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(1) Plus accrued interest, if any, from November 26, 1997.
(2) The underwriting commissions and certain other expenses of the
offering (estimated to be $237,116) will be paid by the Borrower and not
out of the proceeds of the sale of the Certificates. The proceeds of the
sale of the Certificates will be used to acquire the Promissory Note from
the Depositor. The Certificates are offered subject to receipt and
acceptance by the Underwriter, to prior sale and to the Underwriter's right
to reject any order in whole or in part and to withdraw, cancel or modify
the offer without notice. It is expected that delivery of the Certificates
will be made in book-entry form through the facilities of The Depository
Trust Company on or about November 26, 1997.
CITICORP SECURITIES, INC.
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The date of this Prospectus Supplement is November 21, 1997
This Prospectus Supplement does not contain complete information
about the offering of the Certificates. Additional information is
contained in the Prospectus and purchasers are urged to read both the
Prospectus Supplement and the Prospectus itself. Sales of the
Certificates may not be consummated unless the purchaser has received
both this Prospectus Supplement and the Prospectus.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF
THE CERTIFICATES, INCLUDING OVER- ALLOTMENT, STABILIZING AND
SHORT-COVERING TRANSACTIONS IN SUCH CERTIFICATES, AND THE IMPOSITION OF A
PENALTY BID, DURING AND AFTER THE OFFERING. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING".
The Certificates will initially be issued entirely as a global
Certificate registered in the name of a nominee of The Depository Trust
Company ("DTC"), but may, under certain limited circumstances, be
exchangeable for Certificates issued in definitive form. Beneficial
interests in the global Certificates will trade in DTC's Same-Day Funds
Settlement System, and secondary market trading activity in such
interests will therefor settle in same-day funds. Beneficial interests in
global Certificates will be shown on, and transfers thereof will be
effected only through, records maintained by DTC (with respect to DTC
Participants' interests) and DTC Participants. See "DESCRIPTION OF THE
CERTIFICATES--Book-Entry Registration" in the Prospectus.
SUMMARY
The following summary is qualified in its entirety by reference
to the more detailed information appearing elsewhere in this Prospectus
Supplement and in the accompanying Prospectus. Certain capitalized terms
used in the summary are defined elsewhere in this Prospectus Supplement
and in the accompanying Prospectus.
Title of Securities ......... 6.104% Guaranteed Trade Certificates, Series
1997-A (the "Certificates").
Issuer....................... Guaranteed Trade Trust 1997-A (the "Trust").
Depositor.................... Citicorp North America, Inc., a corporation
organized under the laws of Delaware (the
"Depositor").
Trustee...................... Citibank, N.A., a national banking
association (in such capacity, the
"Trustee"). The Trustee is an affiliate of
the Underwriter and depositor and will
also act, through its Nassau branch, as
Liquidity Provider.
Liquidity Provider........... Citibank, N.A., acting through its Nassau
branch (in such capacity, the "Liquidity
Provider").
The Certificates............. The Certificates evidence fractional
undivided interests in the Trust. The
Trust will be created by the Trustee
pursuant to a Declaration of Trust (the
"Declaration of Trust") between the
Trustee and the Depositor for the
purpose of holding the Promissory Note,
the Eximbank Guarantee and the
Liquidity Facility and issuing the
Certificates, all as described herein
and in the Prospectus. The Trust will
issue the Certificates in the aggregate
principal amount of $147,882,628. The
Certificates will have a final
Certificate Payment Date on July 15,
2003.
Interest will be distributable on the
Certificates at a rate of 6.104% per annum
(calculated on the basis of a 360-day
year consisting of twelve 30-day
months). Interest on the Certificates
will be distrib uted on January 15 and
July 15 of each year (or, if not a
Business Day, on the next following
Business Day), commencing January 15,
1998 (each, a "Certificate Payment
Date").
Distributions of principal on the
Certificates will be made in 12 equal
semiannual installments on each
Certificate Payment Date, begin ning
January 15, 1998 and ending July 15,
2003.
Each Certificate will represent the right
to receive a portion of each semiannual
payment received on the Promissory Note
or under the Eximbank Guarantee. The
Certificates will be issuable in
minimum denominations of $1,000
original principal amount and integral
multiples of $1 in excess thereof, and
will be available only in book- entry
form. See "DESCRIPTION OF THE
CERTIFICATES-- Book-Entry Registration"
in the Prospectus.
The Certificates represent beneficial
interests in the Trust only and do not
represent interests in or obligations
of the Depositor, the Borrower or the
Trustee nor are they obligations of or
guaranteed by the United States of
America, Eximbank, the Liquidity
Provider or any other governmental
agency.
No Prepayment or Acceleration. The Certificates will not be subject to
prepayment or acceleration under any
circumstances.
The Trust Assets............. The property of the Trust will initially
consist of the Promissory Note (less a
certain retained interest described
herein), backed by a guarantee (the
"Eximbank Guarantee") issued by the
Export-Import Bank of the United States
("Eximbank"), of the payment of 100% of
all amounts of principal and interest
due thereon at the Guaran teed Interest
Rate. The guarantee of Eximbank is
backed by the full faith and credit of
the United States. The "Guaranteed
Interest Rate" will be equal to the
then applicable rate of interest borne
by the Promissory Note, but will not
include the penalty portion of interest
on any overdue principal and interest
thereon. See "THE EXIMBANK GUARANTEES"
in the Prospectus.
In addition, the Trust will benefit from an
irrevocable liquidity facility (the
"Liquidity Facility") provided by the
Liquidity Provider intended to provide
for the distribution of principal and
interest due on the Promissory Note in
a timely fashion to the
Certificateholders on any Certificate
Payment Date with respect to which the
Borrower defaults in the payment of
amounts due under the Promissory Note.
See "THE LIQUIDITY FACILITY" herein and
"THE LIQUIDITY FACILITIES" in the
Prospectus.
Trustee's Fees and Expenses.. The basic fees and expenses of the Trustee
(the "Basic Fee") will be paid directly
by the Borrower to the Trustee on the
closing date. The Trustee will also be
entitled to reimbursement by the
Borrower for certain out-of-pocket
costs and expenses incurred by the
Trustee in administering and enforcing
the Declaration of Trust and the
agreements executed in connection with
the transactions contemplated thereby.
No fees of the Trustee will be payable
by the Trust or from the assets of the
Trust.
The Promissory Note.......... The Promissory Note will be in the principal
amount of $147,882,628. The Promissory
Note will evidence the Borrower's
obligation to pay to the Trust interest
at a rate of 6.104% per annum,
semiannually on each January 15 and
July 15 (or, if such date is not a
Business Day, on the next succeeding
Business Day) of each year, commencing
January 15, 1998 (each, a "Note Payment
Date"). Principal on the Promissory
Note will be payable in 12 equal
consecutive semiannual installments on
each Note Payment Date, commencing on
January 15, 1998 and ending on July 15,
2003. Each payment made by the Borrower
to the Trustee on each such Note
Payment Date to which the
Certificateholders are entitled will be
distributed to the Certifi cateholders
on such Note Payment Date.
The principal and interest payments due on
the Promissory Note will be sufficient
to provide for the scheduled amounts to
be distributed to the Certificateholders
on the corresponding Certificate
Payment Date. See "DESCRIPTION OF THE
CERTIFICATES--Trust Account and
Investment of Funds" in the Prospectus.
Upon the occurrence of a default by the
Borrower on the Promissory Note,
Eximbank may accelerate the Promissory
Note. Such acceleration will not
result in an acceleration of the
Certificates. See "THE EXIMBANK
GUARANTEES--General" in the Prospectus.
The Eximbank Guarantee....... The Promissory Note will be guaranteed by
Eximbank as to the payment of 100% of
all principal due thereon and interest
thereon at the Guaranteed Interest
Rate. The Eximbank Guarantee will
represent an obligation of Eximbank
backed by the full faith and credit of
the United States. Eximbank will be
required to make payments under the
Eximbank Guarantee even if the
Borrower's obligations under the
Promissory Note are not enforceable.
See "THE EXIMBANK GUARANTEES" in the
Prospectus.
Notwithstanding the acceleration of the
Promissory Note, Eximbank will be
required to make payments on the
Eximbank Guarantee in accor dance with
the original amortization schedule of
the Promissory Note and, accordingly,
the Certificates will not be subject to
prepay ment or acceleration under any
circumstances.
Certain Restrictions on
the Eximbank Guarantee..... Pursuant to the terms of the Eximbank
Guarantee, Eximbank will not be
required to make a payment under the
Eximbank Guarantee of amounts due but
not paid on a Note Payment Date under
the Promissory Note unless the Trustee
has made a timely written demand for
payment upon each of the Borrower and
Eximbank. Accordingly, the Declaration
of Trust requires the Trustee to make
such a timely demand upon both the
Borrower and Eximbank in accordance
with the terms of the Eximbank
Guarantee. In the event that the
Trustee fails to make a written demand
on Eximbank within 150 days of a Note
Payment Date on which a payment is not
made or if a written demand for payment
is not made on the Borrower at least 15
days prior to such demand upon
Eximbank, the Trustee in its individual
capacity will be irrevocably obligated
to pay such unpaid amounts to the
Trust.
In addition, the Eximbank Guarantee provides
that it will cease to be effective if
the Depositor or the Trustee agrees to
any material amendment, supplement or
modification of the Promissory Note or
the Credit Agreement pursuant to which
the Promissory Note was issued (the
"Credit Agreement") without Eximbank's
prior written consent. The Declaration
of Trust will therefore forbid the
Deposi tor and the Trustee from
agreeing to any amendment, supplement
or modification of the Promissory Note
or the Credit Agreement with out
Eximbank's prior written consent. See
"THE EXIMBANK GUARANTEES--Certain
Restrictions Applicable to Eximbank
Guarantees" in the Prospectus.
Under the Eximbank Guarantee, there are no
restrictions on the eligibility of
holders of the Certificates based upon
residency or citizenship.
Liquidity Facility........... The Trust will benefit from an irrevocable
liquidity facility, the proceeds of
which will be available for
distribution to Certificateholders on
any Certificate Payment Date with
respect to which the Borrower defaults
in the payment of amounts due under the
Promissory Note. Citibank, N.A., acting
through its Nassau branch, will act as
Liquidity Provider under the Liquidity
Facility. See "THE LIQUIDITY FACILITY"
herein and "THE LIQUIDITY FACILITIES" in
the Prospectus.
ERISA Considerations......... As described in the Prospectus, the Certi-
ficates may be purchased by employee
benefit plans that are subject to the
Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), and
plans and individual retirement
accounts that are subject to certain of
the prohibited transaction provisions
of the Internal Revenue Code of 1986,
as amended (the "Code") (collectively,
"Plans"). The assets of the Trust may
be regarded as "plan assets" for
purposes of the fiduciary
responsibility provisions of ERISA and
the prohibited transaction provisions
of ERISA and the Code. The Trust,
however, will be operated in an
essentially passive manner with the
Trustee having essentially custodial
and ministerial responsibilities and
functions. The Trust will not reinvest
any of the proceeds of the assets of
the Trust. Any Plan fiduciary who
proposes to cause a Plan to acquire any
of the Certificates should consult with
its own counsel with respect to the
applicability of ERISA and the Code to
such investment, including whether the
acquisition or holding of such
Certificate may constitute a
"prohibited transaction," and the
availability of any administrative or
statutory exemption from the
prohibitions on such transactions. See
"ERISA CONSIDERATIONS" in the Prospectus.
Tax Status................... In the opinion of Skadden, Arps, Slate,
Meagher & Flom LLP, special tax counsel
to the Trust, the Trust will be
classified as a grantor trust for
federal income tax purposes, and the
Certificateholders will be treated as
beneficial owners of fractional
undivided interests in the assets held
by the Trust. Accordingly, each such
Certificate holder must include in
income its pro rata share of the income
from the Promissory Note included in
the Trust and may, subject to the
limitations on the deduction of
miscellaneous itemized deductions by
individuals, estates and trusts, deduct
its share of the reasonable fees and
other deductible expenses paid by the
Trust, at the same time and to the same
extent as such items would be included
or deducted by the Certificateholder if
the Certificateholder held directly a
pro rata interest in the assets of the
Trust and received and paid directly a
pro rata portion of the amounts
received and paid by the Trust. It is
anticipated that the Certificates will
be issued with de minimis original
issue discount. See "CERTAIN UNITED
STATES FEDERAL TAX CONSEQUENCES" in the
Prospectus.
Ratings...................... A condition to the issuance of the
Certificates will be a rating of "Aaa"
by Moody's Investors Service, Inc. and
"AAA" by Standard & Poor's Ratings
Services (the "Rating Agencies"). A
security rating is not a recommendation
to buy, sell or hold securities, and
may be subject to revision or
withdrawal at any time. See "RATINGS"
herein and in the Prospectus.
OVERVIEW OF THE TRANSACTION
The Trust will be formed for the purpose of holding the
Promissory Note, the Eximbank Guarantee, the Liquidity Facility, and
issuing the Certificates. Each Certificate offered hereby will represent
a fractional undivided interest in payments on the Promissory Note. The
Promissory Note will be backed by the Eximbank Guarantee, which is a
guarantee by Eximbank of the payment of 100% of the principal of and
interest at the Guaranteed Interest Rate (as defined below) on the
Promissory Note. The Eximbank Guarantee is backed by the full faith and
credit of the United States of America. The Certificates are not directly
guaranteed by Eximbank or the United States of America.
Each scheduled payment on the Promissory Note is in an amount
sufficient to satisfy corresponding scheduled distributions on the
Certificates. On each Certificate Payment Date, the Trustee will, from
the payments on the Promissory Note, distribute to Certificateholders
payments of the amounts due on the Certificates. The Borrower will be
required to make payments on the Promissory Note on the day on which
distributions are to be made to the Certificateholders. If a scheduled
payment on the Promissory Note is not received in full from the Borrower
at or prior to 10:30 a.m., New York City time, on a Note Payment Date,
the Trustee will immediately make a demand for payment under the
Liquidity Facility in the amount of such scheduled payment of principal
and interest not paid by the Borrower. The amount available under the
Liquidity Facility will be equal to the largest remaining scheduled
payment of principal and interest on the Promissory Note. The Liquidity
Provider will be obligated to pay to the Trustee the amount demanded by
12:00 noon, New York City time, on such Certificate Payment Date and such
funds will be distributed to the Certificateholders on such Certificate
Payment Date. In addition, if the Borrower fails to make a scheduled
payment on the Promissory Note on a Note Payment Date, and such failure
continues for 30 calendar days, Eximbank, upon written demand by the
Trustee, accompanied by an assignment of the Promissory Note and the
Credit Agreement, on any Business Day following such 30-day period and,
provided that the Trustee shall also have made a written demand for
payment upon the Borrower at least 15 calendar days prior thereto, will
be obligated to pay to the Trust within 15 Business Days of such demand
100% of the current installment of principal of and interest at the
Guaranteed Interest Rate on the Promissory Note (an "Eximbank Payment
Event"). Eximbank will also be obligated to deliver to the Trustee an
Eximbank Payment Certificate. To the extent that the Liquidity Provider
has previously satisfied a demand under the Liquidity Facility and has
not been reimbursed therefor, the Trustee will reimburse the Liquidity
Provider from amounts received from Eximbank. With respect to each
subsequent Note Payment Date (and corresponding Certificate Payment
Date), without the requirement of a demand upon the Borrower or Eximbank,
Eximbank will be obligated, pursuant to the terms of the Eximbank Payment
Certificate delivered to the Trust, to directly and timely pay to the
Trust such scheduled amounts of principal and interest.
The transaction has been structured to provide the Trust with
sufficient funds so that, even in the event of a default in payment by
the Borrower, full and timely payment on the Certificates can be made by
the Trustee from payments made by the Liquidity Provider under the
Liquidity Facility. See "THE EXIMBANK GUARANTEES", "THE PROMISSORY NOTES"
and "THE CREDIT AGREEMENTS" in the Prospectus and "DESCRIPTION OF THE
CERTIFICATES--Distributions on Certificates" herein and in the
Prospectus.
USE OF PROCEEDS
The proceeds of the sale by the Trust of the Certificates offered
hereby will be used by the Trust to acquire the Promissory Note from the
Depositor at a price equal to the aggregate principal amount thereof,
plus accrued and unpaid interest, if any, from the closing date (the
"Purchase Price"). The Promissory Note will be purchased by the Depositor
from Citibank, N.A., acting through its Nassau Branch (in such capacity,
"Citibank Nassau"), on the closing date at the Purchase Price.
The Promissory Note evidences a loan to the Borrower in an
outstanding principal amount of $147,882,668. The Promissory Note will be
issued by the Borrower on the closing date in substitution for a
promissory note in like outstanding principal amount and bearing a
floating rate of interest. The proceeds of the initial loan were applied
by the Borrower to repay borrowings incurred in connection with the purchase
of petroleum production equipment and related services of U.S. origin and
manufacture from a U.S. exporter and certain other costs of this
offering, including the exposure fee payable to Eximbank for the Eximbank
Guarantee. Underwriting commissions and certain other expenses related to
the offering will be paid by the Borrower and not out of the proceeds of
the sale of the Certificates.
THE PROMISSORY NOTE
The Promissory Note will be issued to Citibank Nassau, which will
sell the Promissory Note (less the right to receive any penalty interest
described below) to Citibank North America, Inc. (the "Depositor"), which
will in turn deposit the Promissory Note (less the right to receive
penalty interest retained by the Citibank Nassau) in the Trust
simultaneously with the receipt by the Trust of the proceeds from the
sale of the Certificates. The Promissory Note will be issued pursuant to
a Credit Agreement dated April 1, 1996 (as amended, the "Credit
Agreement"), among the Borrower, Eximbank and Citibank Nassau.
The Promissory Note will be in the principal amount of
$147,882,628 and will mature on July 15, 2003.
The Promissory Note will accrue interest at the rate of 6.104% per
annum. Interest payments on the Promissory Note will be payable
semiannually on January 15 and July 15 of each year, commencing January 15,
1998; provided that if any such date is not a Business Day, payment will be
made on the immediately succeeding Business Day (each, a "Note Payment
Date"). A Business Day is any day (other than a day on which the Federal
Reserve Bank of New York is closed) and which is a day on which banks are
open for business in New York City. Interest on the Promissory Note will be
computed on the basis of a year of 360 days consisting of twelve 30-day
months.
The principal amount of the Promissory Note is payable in 12
equal semi-annual installments due on each Note Payment Date commencing
on January 15, 1998 and ending on July 15, 2003.
The amounts of principal and interest payable on the Promissory
Note will be sufficient to provide for the scheduled payments on the
Certificates.
The Promissory Note will provide that any overdue principal or
interest thereon will bear interest at a rate per annum 1.25% in excess
of the Interest Rate otherwise borne by the Promissory Note. The right to
receive any such penalty interest will be retained by Citibank Nassau and
will not be deposited in the Trust. Such penalty rate of 1.25% per annum
will not be subject to the Eximbank Guarantee. To the extent funds are
sufficient to pay the Certificateholders in full, any penalty interest
received by the Trustee will be remitted to Citibank Nassau. See "THE
EXIMBANK GUARANTEES" in the Prospectus.
THE LIQUIDITY FACILITY
The Trust will benefit from an irrevocable Liquidity Facility. The
Liquidity Facility will be in an amount initially equal to approximately
$16,460,815.39, which amount is equal to the largest remaining scheduled
payment of principal and interest due on the Promissory Note. Citibank,
N.A., acting through its Nassau branch, will be the Liquidity Provider
under the Liquidity Facility. The Liquidity Provider's current short term
debt rating from Moody's Investors Service, Inc. is "P-1" and from Standard
& Poor's Rating Services is "A-1+" and its current long term debt ratings
from such rating agencies is "Aa2" and "AA-", respectively. There is no
assurance that any such ratings will not change in the future. The
Liquidity Facility is designed to provide liquidity and not credit support
for the related Certificates. The Liquidity Facility will be available to
be drawn on by the Trustee in the event that the Borrower defaults in its
obligation to make any required payment of principal and interest in full
on the Promissory Note on a Note Payment Date. The Liquidity Facility will
only cover the principal and interest due on the Promissory Note on one
Note Payment Date because after the first payment default on a Note Payment
Date by the Borrower, Eximbank will issue Eximbank Payment Certificates to
the Trust in exchange for the Promissory Note and will thereafter pay the
Trust directly under the Eximbank Guarantee on each scheduled Note Payment
Date. The Declaration of Trust will require the Trustee to make a demand
for a drawing under the related Liquidity Facility to the Liquidity
Provider immediately after 10:30 a.m., New York City time, on the related
Note Payment Date if the Trustee has not received payment in full from the
Borrower. Pursuant to the Liquidity Facility, the Liquidity Provider will
be obligated to pay to the Trustee the amount demanded at or prior to 12:00
noon, New York City time, on such Note Payment Date (and corresponding
Certificate Payment Date). The Liquidity Provider will be entitled to
receive reimbursement for any payment made under the Liquidity Facility,
and interest accrued thereon at a rate not in excess of the Guaranteed
Interest Rate, from amounts paid by Eximbank to the Trust under the
Eximbank Guarantee (if the Liquidity Provider has not theretofore been
reimbursed). On the closing date, the Borrower will have paid the Liquidity
Provider a one-time commitment fee and facility fee. No other fees will be
payable by the Borrower to the Liquidity Provider. The Borrower may become
obligated to pay interest on advances made by the Liquidity Provider in
excess of amounts otherwise payable under the Promissory Note or the
Eximbank Guarantee. However, the failure of the Borrower to pay such
interest to the Liquidity Provider will not affect the Liquidity Provider's
obligations under the Liquidity Facility.
The Liquidity Facility for the Trust will be provided under a
Liquidity Reimbursement Agreement (the "Liquidity Reimbursement
Agreement"), between the Liquidity Provider and the Trustee on behalf of
the Trust.
THE TRUST
Guaranteed Trade Trust 1997-A (the "Trust") will be created for the
purpose of holding the Promissory Note (less the retained amounts described
above) and the Eximbank Guarantee or, in lieu thereof following the
occurrence of an Eximbank Payment Event, an Eximbank Payment Certificate,
and issuing the Certificates. The Trust will be formed pursuant to a
Declaration of Trust (the "Declaration of Trust") between Citibank, N.A.,
as Trustee on behalf of the Certificateholders (the "Trustee"), and the
Depositor.
THE BORROWER
The borrower under the Promissory Note and the Credit Agreement
will be Empresa Colombiana de Petroleos, a wholly owned industrial and
commercial enterprise of the State of the National Order created under the
laws of the Republic of Colombia and organized and validly existing in good
standing under the laws of the Republic of Colombia (the "Borrower").
DESCRIPTION OF THE CERTIFICATES
GENERAL
Each Certificate will be issued pursuant to the Declaration of
Trust. Reference is made to the accompanying Prospectus for important
additional information regarding the terms and conditions of the
Certificates and the Declaration of Trust. The following summaries of the
Certificates do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all the provisions of the
Promissory Note, the Credit Agreement, the Eximbank Guarantee and the
Declaration of Trust. Capitalized terms used herein and not otherwise
defined are used with the meanings given in the Declaration of Trust.
The Certificates will be issued in minimum denominations of $1,000
initial principal amount and integral multiples of $1 in excess thereof,
and will be available only in book-entry form through the facilities of The
Depository Trust Company ("DTC"). See "DESCRIPTION OF THE
CERTIFICATES--Book-Entry Registration" in the Prospectus.
DISTRIBUTIONS ON THE CERTIFICATES
Interest will be distributable on the Certificates at a rate of
6.104% per annum. Interest on the Promissory Note will accrue from the
closing date and will be distributed semiannually on each January 15 and
July 15 (or the next succeeding Business Day if such date is not a Business
Day) (each such date, a "Certificate Payment Date") in each year,
commencing January 15, 1998, to the persons in whose names the Certificates
are registered on the preceding January 1 or July 1, as the case may be
(each, a "Record Date").
Payments of principal on the Certificates are due in 12 equal
semiannual installments distributable on each Certificate Payment Date,
commencing January 15, 1998 and ending on July 15, 2003, to the persons
in whose names the Certificates are registered on the preceding Record
Date, each installment being in the aggregate amount of $12,323,552.40.
The Certificates will not be subject to prepayment or
acceleration under any circumstances.
THE TRUSTEE
Citibank, N.A., the Trustee under the Declaration of Trust,
currently has its principal Corporate Trust Office at 111 Wall Street,
New York, New York, 10043, Attention: Corporate Trust Department. The
Trustee is an affiliate of the Depositor and the Underwriter and, through
its Nassau branch, will also act as Liquidity Provider.
In taking actions with respect to the Eximbank Guarantee
(including the making of demands thereunder), the Trustee will act
through Citibank Nassau.
CERTAIN FOREIGN TAXES
Under the present tax laws of the Republic of Colombia, or any
political subdivision or taxing authority thereof, there is no tax, levy,
deduction, charge or withholding on or in connection with the execution
or delivery of the Credit Agreement, the Promissory Note or any payment
to be made by the Borrower to the Trust under the Credit Agreement or the
Promissory Note. Gain or loss on the sale or other disposition of
Certificates by holders who are nonresident non citizens of the Republic
of Colombia will not be subject to estate, gift, stamp, transfer or
similar taxes in Colombia in respect of those holdings. Holders of the
Certificates who are citizens (whether residents or nonresidents of the
Republic of Colombia may be subject to estate, gift, stamp, transfer or
similar taxes in Colombia in respect of those holdings.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement (the "Underwriting Agreement"), among the Depositor, the Borrower
and Citicorp Securities, Inc., (the "Underwriter"), the Depositor has
agreed to sell to the Underwriter, and the Underwriter has agreed to
purchase from the Depositor, subject to the terms and conditions set forth
therein, all of the Certificates if any Certificates are purchased. The
Depositor has been advised by the Underwriter that it proposes initially to
offer the Certificates to the public at the offering price set forth on the
cover page of this Prospectus Supplement, and to certain dealers at such
price less a concession not in excess of 0.180% of the principal amount of
the Certificates. The Underwriter may allow and such dealers may re-allow
to other dealers a concession not in excess of 0.125% of such principal
amount. After the initial public offering, the public offering price may be
changed.
The Certificates are a new issue of securities with no established
trading market. The Depositor has been advised by the Underwriter that it
intends to make a market in the Certificates but is not obligated to do so
and may discontinue making a market at any time without notice. No
assurance can be given as to the liquidity of any trading market for the
Certificates.
During and after the offering, the Underwriter may purchase and
sell the Certificates in the open market in transactions in the United
States. These transactions may include overallotment and stabilizing
transactions and purchases to cover short positions created in connection
with the offering. The Underwriter also may impose a penalty bid, whereby
selling concessions allowed to broker-dealers in respect of the
Certificates sold in the offering for their account may be reclaimed by the
Underwriter if such Certificates are repurchased by the Underwriter in
stabilizing or covering transactions. These activities may stabilize,
maintain or otherwise affect the market price of the Certificates, which
may be higher than the price that might otherwise prevail in the open
market. These transactions may be effected in the over-the-counter market
or otherwise, and these activities, if commenced, may be discontinued at
any time.
The Underwriting Agreement provides that the Borrower will
indemnify the Underwriter against certain liabilities, including
liabilities under applicable securities laws, or contribute to payments
the Underwriter may be required to make in respect thereof and will pay
certain expenses of the Underwriter, including the fees of counsel to the
Underwriters.
The provisions of Section 44(c)(8) of the Corporate Financing Rule
of the National Association of Securities Dealers, Inc. apply to this
offering.
The Underwriter is an affiliate of the Depositor, the Trustee, and
the Liquidity Provider. The Underwriter and its affiliates may engage in
transactions with, or perform services for, the Borrower in the ordinary
course of business.
LEGAL MATTERS
Certain legal matters will be passed upon for the Depositor by
Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York, special
United States counsel to the Depositor, for the Borrower by Cleary,
Gottlieb, Steen & Hamilton, New York, New York, special United States
counsel to the Borrower, and for the Underwriter by Skadden, Arps, Slate,
Meagher & Flom LLP, New York, New York. Skadden, Arps, Slate, Meagher &
Flom LLP, New York, New York, as special United States tax counsel to the
Trust, will also render an opinion regarding certain federal income tax
consequences.
RATINGS
A condition to the issuance of the Certificates will be a rating
of "Aaa" by Moody's Investors Service, Inc. and "AAA" by Standard &
Poor's Ratings Services. A securities rating is not a recommendation to
buy, sell or hold securities, and may be subject to revision or
withdrawal at any time.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED NOVEMBER , 1997
PROSPECTUS
===========================================================================
GUARANTEED TRADE TRUSTS
GUARANTEED TRADE CERTIFICATES
(ISSUABLE IN SERIES)
EVIDENCING INTERESTS IN PROMISSORY NOTES GUARANTEED BY
EXPORT-IMPORT BANK OF THE UNITED STATES
This Prospectus relates to Guaranteed Trade Certificates (the
"Certificates") that may be sold from time to time under this Prospectus
and the related Prospectus Supplement in one or more series (each, a
"Series") by Citicorp North America, Inc. (the "Depositor").
Unless otherwise specified in the related Prospectus Supplement, each
Series of Certificates will consist of a single Class. If, as specified
in the related Prospectus Supplement, a Series includes more than one
Class, one Class may be subordinated to another Class with respect to
distributions of principal and interest as described herein and in the
related Prospectus Supplement. Any such subordinated Class will not be
offered hereby or by any Prospectus Supplement.
Each Certificate of a Series will evidence an undivided fractional
interest in a Guaranteed Trade Trust (each, a "Trust") to be formed
pursuant to a Declaration of Trust among Citicorp North America, Inc., as
depositor (the "Depositor"), the trustee (the "Trustee") and the other
parties, if any, thereto identified in the related Prospectus Supplement.
The assets of each Trust will consist of one or more promissory notes
(the "Promissory Notes") of one or more borrowers (each, a "Borrower")
identified in the related Prospectus Supplement and the related Eximbank
Guarantee or Guarantees (as defined below) or, in lieu thereof following
the occurrence of an Eximbank Payment Event, an Eximbank Payment
Certificate (as such terms are defined herein). If so specified in the
related Prospectus Supplement, the assets of a Trust may include a
Liquidity Facility or Defeasance Agreement (as such terms are defined
herein).
Payments on each Promissory Note will be guaranteed (each, an "Eximbank
Guarantee") by the Export-Import Bank of the United States ("Eximbank"),
as to the payment of 100% of all amounts of principal due thereon and
interest thereon at the Guaranteed Interest Rate specified in the related
Prospectus Supplement. Each Eximbank Guarantee will be entitled to the
full faith and credit of the United States of America. Each Certificate
will represent the right to receive a portion of the payments due on the
related Promissory Note or Notes or under the related Eximbank Guarantee
or Guarantees, Liquidity Facility, if any, or Defeasance Agreement, if
any (as such terms are defined herein) but will not be directly
guaranteed by Eximbank or the United States of America.
- ----------------------------------------------------------------------------
THE ATTORNEY GENERAL OF THE UNITED STATES HAS STATED IN AN OPINION DATED
SEPTEMBER 30, 1966 THAT EXIMBANK'S CONTRACTUAL LIABILITIES CONSTITUTE
GENERAL OBLIGATIONS OF THE UNITED STATES BACKED BY ITS FULL FAITH AND
CREDIT AND THAT PERSONS IN WHOSE FAVOR EXIMBANK HAS INCURRED CONTRACTUAL
LIABILITIES IN ACCORDANCE WITH LAW "HAVE ACQUIRED VALID GENERAL OBLIGATIONS
OF THE UNITED STATES, AND ARE THEREFORE IN A POSITION TO REACH BEYOND
EXIMBANK AND ITS ASSETS TO THE UNITED STATES FOR A SOURCE OF PAYMENT, IF
NECESSARY." THE EXIMBANK GUARANTEE OF A PROMISSORY NOTE WILL CONSTITUTE A
CONTRACTUAL LIABILITY OF EXIMBANK AND, AS STATED IN SUCH OPINION, A GENERAL
OBLIGATION OF THE UNITED STATES. THE CERTIFICATES WILL NOT BE DIRECTLY
GUARANTEED BY EXIMBANK AND THERE WILL BE NO DIRECT CONTRACTUAL LIABILITY OF
EXIMBANK TO ANY HOLDER OF A CERTIFICATE.
- ----------------------------------------------------------------------------
THE CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE ASSETS OF THE
RELATED TRUST ONLY. THE CERTIFICATES ARE NOT OBLIGATIONS OF OR GUARANTEED
BY THE UNITED STATES OF AMERICA, EXIMBANK OR ANY OTHER GOVERNMENTAL AGENCY
NOR ARE THEY OBLIGATIONS OF OR GUARANTEED BY THE DEPOSITOR, THE BORROWER OR
THE TRUSTEE OR ANY AFFILIATE OF ANY THEREOF.
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. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus may not be used to consummate the sale of Certificates of a
Series unless accompanied by a Prospectus Supplement relating to such
Series of Certificates. CITICORP SECURITIES, INC.
============================================================================
The date of this Prospectus is November , 1997.
PROSPECTUS SUPPLEMENT
The Prospectus Supplement relating to each Series of Certificates
to be offered hereunder will, among other things, set forth with respect to
such Series of Certificates: the aggregate principal balances, interest
rates (or method of determining such rates) and authorized denominations of
the Certificates of such Series; the Guaranteed Interest Rate (or method of
determining such Rate) for the Promissory Note or Notes relating to such
Series of Certificates; the identity of the Borrower or Borrowers related
to such Series of Certificates; the final distribution date for such Series
of Certificates; if a Liquidity Facility is to be delivered in respect of
such Series of Certificates, the identity of the Liquidity Provider and
additional information with respect to such Liquidity Facility; if no
Liquidity Facility is to be delivered in respect of such Series of
Certificates, information with respect to any yield considerations that may
be applicable to such Certificates; if a Series of Certificates includes
more than one Class of Certificates, information with respect to the
characteristics of each such Class, including any provisions for
subordination of any Class or differences among Classes in their respective
interests in payments on the Promissory Note or Notes; if a portion of the
principal of or interest borne by a Promissory Note is to be defeased by
the delivery of Defeasance Securities, information with respect to such
Defeasance Securities and the related Defeasance Agreement; if any entity
other than the Trustee is to undertake the obligation to pay amounts to the
related Trust in the event that Eximbank is not obligated to make payment
under the Eximbank Guarantee of amounts due and unpaid under a Promissory
Note because demands for payment were not timely made, information with
respect to such entity; if a Servicer is to be appointed in respect of a
Series of Certificates, the identity of such Servicer and the duties to be
undertaken thereby, a description of certain foreign tax consequences
relating to a Series of Certificates; a description of any Total Loss Event
or other circumstance in which a Promissory Note may be required to be
exchanged for an Eximbank Payment Certificate; a description of any
circumstances under which the Certificates may be prepaid or accelerated
and additional information with respect to the plan of distribution for
such Series of Certificates.
---------------------
AVAILABLE INFORMATION
The Depositor has filed a Registration Statement under the
Securities Act of 1933, as amended, with the Securities and Exchange
Commission (the "Commission") with respect to the Certificates. This
Prospectus, which forms part of the Registration Statement, does not
contain all of the information contained in such Registration Statement and
exhibits thereto. For further information, reference is made to the
Registration Statement and amendments thereof and to the exhibits thereto,
which are available for inspection without charge at the office of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the Commission at 7 World Trade Center, New York, New
York 10048 and at the Northwestern Atrium Building, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511, and copies of which may
be obtained form the Commission at prescribed rates. The Commission also
maintains a web site that contains reports and other information regarding
registrants that file electronically with the Commission, including the
Trust, and the address is http://www.sec.gov. The Trustee, on behalf of the
Trust, will also file or cause to be filed with 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, and after each Certificate Payment Date, and an
Annual Report on Form 10-K. Such reports will contain certain financial
information regarding the Trust, including the reports regarding the Trust
which will be furnished following each Certificate Payment Date to
Certificateholders and certain beneficial owners of the Certificates as
described under "REPORTS TO CERTIFICATEHOLDERS" below. It is anticipated
that reports on Form 8-K and Form 10-K will not be filed for any period
which ends after December 31, 1997, the Certificateholders will continue to
receive the reports described under "REPORTS TO CERTIFICATEHOLDERS"
following each Certificate Payment Date, as described below.
---------------------
REPORTS TO CERTIFICATEHOLDERS
On behalf of each Trust, the related Trustee will prepare and send
reports following each Certificate Payment Date concerning the Trust to (i)
all registered Certificateholders and (ii) to any owner of a beneficial
interest in a Certificate that requests such reports from the Trustee in
writing and certifies to the Trustee as to such beneficial ownership. See
"DESCRIPTION OF THE CERTIFICATES--Reports to Certificateholders" herein.
The Trustee will deliver, without charge, to any registered
Certificateholder of the related Series copies of all documents and reports
furnished to the Commission pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, upon written request delivered
to the Trustee for such Series.
OVERVIEW F THE TRANSACTION
The Certificates of each Series will evidence interests in a
separate Trust formed for the purpose of holding one or more Promissory
Notes and the related Eximbank Guarantee or Guarantees, together with, if
so specified in the related Prospectus Supplement, the related Liquidity
Facility or Defeasance Agreement, and issuing the Certificates. Each
Promissory Note will be backed by an Eximbank Guarantee, which is a
guarantee by Eximbank of the payment of 100% of the principal of and
interest at the Guaranteed Interest Rate (as defined below) on such
Promissory Note. Each Eximbank Guarantee is backed by the full faith and
credit of the United States of America. The Certificates will not be
directly guaranteed by Eximbank or the United States of America.
The following summaries describe certain provisions expected to
be common to each Series of Certificates and to each Promissory Note,
Eximbank Guarantee, Declaration of Trust, Credit Agreement, Liquidity
Facility, if any, and Defeasance Agreement, if any, with respect to each
Series. The Prospectus Supplement for each Series will describe more
fully the Certificates and provisions of each Promissory Note, Eximbank
Guarantee, Declaration of Trust, Credit Agreement, Liquidity Facility, if
any, and Defeasance Agreement, if any, with respect to such Series which
may be different from the summaries set forth below.
As stated above, each Trust may hold one or more Promissory Notes
which may be issued by one or more Borrowers. If a Trust holds more than
one Promissory Note, all of such Promissory Notes may be issued pursuant
to a single Credit Agreement or some or all of such Promissory Notes may
be issued pursuant to separate Credit Agreements. If a Trust holds more
than one Promissory Note, all of such Promissory Notes may be guaranteed
by Eximbank pursuant to a single Eximbank Guarantee or some or all of
such Promissory Notes may be guaranteed pursuant to separate Eximbank
Guarantees. Except as otherwise specified in the related Prospectus
Supplement, the descriptions of the Promissory Notes, Eximbank Guarantees
and Credit Agreements below apply to each Promissory Note, Credit
Agreement and Eximbank Guarantee related to each Trust, whether or not
such Trust holds one or more Promissory Notes.
Each scheduled payment on a Promissory Note is in an amount
sufficient to satisfy the corresponding scheduled payments on the related
Certificates. On each Certificate Payment Date, after the Trust receives
payments on the related Promissory Note, the Trustee will, from the
payments on the Promissory Note, distribute to Certificateholders
payments of the amounts due on the Certificates.
Unless a Liquidity Facility is delivered in respect of a Series of
Certificates as described in the related Prospectus Supplement, in order to
provide for timely distributions to Certificateholders, the Borrower will
be required to make payments on the Promissory Note to the Trustee a
specified number of days before payments are due on the Certificates. Such
number of days will be specified in the related Prospectus Supplement. If
the Borrower fails to make a scheduled payment on the Promissory Note on a
Note Payment Date, and such failure continues for 30 calendar days,
Eximbank, upon written demand by the Trustee on any Business Day following
such 30-day period, and provided that the Trustee shall also have made a
written demand for payment upon the Borrower at least 15 calendar days
prior thereto, will be obligated to pay to the Trust within 15 Business
Days (or such other number of days as may be specified in the related
Prospectus Supplement) of such demand 100% of the current installment of
principal of and interest at the Guaranteed Interest Rate on the Promissory
Note.
If, as specified in the related Prospectus Supplement, a Liquidity
Facility is delivered in respect of a Series of Certificates, the Borrower
will be required to make payments on the Promissory Note to the Trustee on
or immediately prior to the Certificate Payment Date. If a scheduled
payment is not received on the Promissory Note on or prior to 10 a.m. (or
such other time as may be specified in the related Prospectus Supplement)
on the Certificate Payment Date, the Trustee will make demand for payment
under the Liquidity Facility in the amount of the scheduled payment not
made by the Borrower. The amount available under the Liquidity Facility on
each Certificate Payment Date will be in an amount sufficient to make the
scheduled distribution of principal and interest on such Certificate
Payment Date. The Liquidity Provider will be obligated to pay to the
Trustee the amount demanded by 11:45 a.m. (or such other time as may be
specified in the related Prospectus Supplement) on the Certificate Payment
Date and such funds will be distributed to the Certificateholders on such
Certificate Payment Date. In addition, if the Borrower fails to make a
payment on the Promissory Note and such failure continues for 30 calendar
days, Eximbank, upon written demand by the Trustee on any Business Day
following such 30-day period (provided that the Trustee shall have made
written demand upon the Borrower at least 15 calendar days prior thereto),
will be obligated to pay to the Trust within fifteen Business Days (or such
other number of days as may be specified in the related Prospectus
Supplement) of such demand the 100% of the principal amount and interest at
the Guaranteed Interest Rate due and unpaid on the Promissory Note. To the
extent that the Liquidity Provider had previously satisfied a demand under
the Liquidity Facility and had not been reimbursed therefor, the Trustee
will reimburse the Liquidity Provider from amounts received from Eximbank
in respect of the payment made by the Liquidity Provider.
Upon the making of a demand on Eximbank under the Eximbank
Guarantee in respect of any Note Payment Date on which both principal and
interest are payable, the Trustee will be required to assign to Eximbank
the rights of the Trust to the Promissory Note and the Credit Agreement
and, unless otherwise specified in the related Prospectus Supplement,
Eximbank will deliver to the Trustee an Eximbank Payment Certificate. With
respect to each subsequent Note Payment Date (and corresponding Certificate
Payment Date), without the requirement of a demand upon the Borrower or
Eximbank, Eximbank will be obligated under such Eximbank Payment
Certificate to directly and timely pay to the Trust all principal and
interest at the Guaranteed Interest Rate then due on the Promissory Note.
In addition, if so described in the related Prospectus Supplement,
upon the occurrence of certain events described therein (an "Exchange
Event"), the prepayment of the Promissory Note (or a portion thereof) will
be required. In such event, the Trustee will be required to assign to
Eximbank the rights of the Trust to the Promissory Note (or a portion
thereof) and Eximbank will deliver to the Trustee an Eximbank Payment
Certificate in exchange therefor. The Promissory Note (or portion thereof)
held by Eximbank will then be prepaid. Following the delivery of such
Eximbank Payment Certificate, on each subsequent Note Payment Date, without
the requirement of a demand upon the Borrower or Eximbank, Eximbank will be
obligated to directly and timely pay to the Trust the amounts that would
have been due on such Promissory Note (or portion thereof) in accordance
with its original amortization schedule. Accordingly, unless otherwise
specified in the related Prospectus Supplement, the Certificates will not
be subject to prepayment even though the Promissory Note (or a portion
thereof) is prepaid as a result of an Exchange Event.
In the case of any Series of Certificates evidencing an interest
in a Promissory Note the interest rate on which (exclusive of any penalty
rate required to be paid in respect of overdue principal and interest on
such Promissory Note) exceeds the Guaranteed Interest Rate covered by the
Eximbank Guarantee (such excess, the "Unguaranteed Portion"), either (i)
the Unguaranteed Portion will be defeased by the Borrower by the delivery
to the Trustee pursuant to a Defeasance Agreement of United States Treasury
obligations (the "Defeasance Collateral") in amounts and maturities
sufficient to pay the Unguaranteed Portion as it comes due or (ii) a Class
of Certificates of such Series (the "Subordinate Certificates") will be
issued which is subordinated to the rights of the senior Class of
Certificates of such Series (the "Senior Certificates") such that proceeds
of the Eximbank Guarantee or the Liquidity Facility, if any, will be
sufficient to distribute to the Senior Certificates their allocable share
of the scheduled payments on the Promissory Note. The Subordinate
Certificates will not be offered by the Prospectus or any Prospectus
Supplement.
THE EXIMBANK GUARANTEES
GENERAL
Eximbank, pursuant to the Eximbank Guarantees, will guarantee
payment of 100% of the principal of and interest at the Guaranteed Interest
Rate on the related Promissory Note. Each Eximbank Guarantee provides that
after Eximbank's endorsement of a guarantee legend on the Promissory Note
or the delivery by Eximbank of a certificate to the effect that the
disbursement evidenced by such Promissory Note is subject to the Eximbank
Guarantee, Eximbank's guarantee will be a binding obligation of Eximbank,
except as provided under "--Certain Restrictions Applicable to the Eximbank
Guarantees" below, even if the Borrower's obligations under such Promissory
Note are not enforceable.
The Attorney General of the United States of America has stated
in an opinion that Eximbank's contractual liabilities constitute general
obligations of the United States backed by its full faith and credit. The
Eximbank Guarantees of the Promissory Notes by Eximbank will constitute
contractual liabilities of Eximbank and, as stated in such opinion,
general obligations of the United States of America. The Certificates
will not be directly guaranteed by Eximbank and there will be no direct
contractual liability of Eximbank to any holder of a Certificate.
Unless otherwise specified in the related Prospectus Supplement,
in addition, the General Counsel of Eximbank will opine, or will have
opined, among other things, that Eximbank has the power and authority to
enter into each Eximbank Guarantee, that each Eximbank Guarantee has been
duly and validly authorized, executed and delivered by Eximbank and
constitutes a legal, valid and binding agreement of Eximbank in
accordance with its terms and that Eximbank's guarantee of payment on the
related Promissory Note will be backed by the full faith and credit of
the United States. See "--Eximbank" below.
Unless otherwise specified in the related Prospectus Supplement,
under the terms of each Eximbank Guarantee, if the Borrower fails to make
payment when due of any installment of principal or interest under the
Promissory Note and such failure has continued for 30 calendar days,
Eximbank, upon receipt of a written demand for payment on any Business
Day subsequent to such 30-day period by the Trustee (and provided that
the Trustee has made a payment demand upon the Borrower at least 15
calendar days prior thereto), is obligated to pay to the Trust within 15
Business Days (or such other number of days as may be specified in the
related Prospectus Supplement) of such demand 100% of the installment of
principal and interest due on the Promissory Note, together with interest
at the Guaranteed Interest Rate specified in the related Prospectus
Supplement on overdue principal and overdue interest from the original
due date to the actual date of payment by Eximbank (all such amounts of
principal and interest, the "Guaranteed Amounts").
Unless otherwise specified in the related Prospectus Supplement,
following an Eximbank Payment Event or, if so described in the related
Prospectus Supplement, an Exchange Event and the required assignment of
the Promissory Note and Credit Agreement to Eximbank, Eximbank will
execute and deliver a certificate (the "Eximbank Payment Certificate"),
providing for the timely payment to the Trust by Eximbank of the
Guaranteed Amounts due under the Promissory Note on each Note Payment
Date until the scheduled maturity of the Promissory Note (regardless of
any acceleration of the Promissory Note). On and after such time, the
property of the Trust will consist of the Eximbank Payment Certificate,
which will be a direct obligation of Eximbank, backed by the full faith
and credit of the United States of America.
CERTAIN RESTRICTIONS APPLICABLE TO EXIMBANK GUARANTEES
Pursuant to the terms of each Eximbank Guarantee, Eximbank will
not be required to make a payment under an Eximbank Guarantee of amounts
due under the related Promissory Note on a Note Payment Date if a written
demand for payment upon Eximbank is not made within 150 days of such Note
Payment Date and if a written demand for payment upon the Borrower is not
made at least 15 calendar days prior to such demand upon Eximbank.
Accordingly, each Declaration of Trust requires the Trustee (or, if so
specified in the related Prospectus Supplement, the Servicer) to make such
a demand upon the Borrower on or prior to the second Business Day following
the failure by the Borrower to make any payment on the Promissory Note and
upon Eximbank on the Business Day after the 30th day following the failure
of the Borrower to make a payment on the Promissory Note. In the event that
Eximbank is not obligated to make a payment under the Eximbank Guarantee of
any amounts due and unpaid under the Promissory Note because written
demands for payment were not timely made upon Eximbank and the Borrower by
the Trustee (or the Servicer), then the Trustee (or, if so specified in the
related Prospectus Supplement, the Servicer) will itself be irrevocably
obligated to pay such amounts to the Trust. Such payment, including
interest on overdue interest and overdue principal at the Guaranteed
Interest Rate, will be made by the Trustee, or the Servicer, as the case
may be, on the 151st day after the related Note Payment Date, without the
requirement of notice or demand. Notwithstanding the foregoing, any
Certificateholder may make a demand upon the Trustee or the Servicer, as
the case may be, if such amount is not paid when due, in which event the
Trustee or the Servicer, as the case may be, will be required to make such
payment promptly upon receipt of such written demand from any
Certificateholder (or the Servicer). In addition, the Eximbank Guarantee
provides that it will cease to be effective if the Depositor or the Trustee
agrees to any material amendment, supplement or modification of the
Promissory Note or the Credit Agreement without Eximbank's prior written
consent. The Declaration of Trust will therefore forbid the Depositor and
the Trustee from agreeing to any amendment, supplement or modification of
the Promissory Note or the Credit Agreement without Eximbank's prior
written consent. See "DESCRIPTION OF THE CERTIFICATES--Events of Default,
Enforcement of Promissory Note, Eximbank Guarantee, Liquidity Facility and
Defeasance Agreement" and "--Amendments" herein.
EXIMBANK
Eximbank is an independent agency of the United States government,
corporate in form, all of the capital stock of which is held by the
Secretary of the Treasury, was founded in 1934 and operates under authority
contained in the Export-Import Bank Act of 1945, as amended (12 U.S.C.
Section 635 et seq.) (the "EXIM Act"). Eximbank's purpose is to aid in
financing exports and imports of goods and services between the United
States and foreign countries and, in furtherance thereof, the EXIM Act
vests broad banking powers in Eximbank, including the power to borrow and
lend, to guarantee and insure loans, and to purchase or guarantee
negotiable instruments, evidences of indebtedness and other securities.
Eximbank's authority to exercise its functions has been limited to
specified periods, which have been extended by Congressional action from
time to time. The EXIM Act currently provides that the authority empowering
Eximbank to continue to exercise its functions expires on September 30,
1997. Although the current authority under the EXIM Act to provide loans
and guarantees in support of import and export activities expires on
September 30, 1997, Eximbank is permitted to assume prior thereto liability
as a guarantor of obligations maturing subsequent to that date.
The Attorney General of the United States, in an opinion dated
September 30, 1966, stated that Eximbank's contractual liabilities
constitute general obligations of the United States backed by its full
faith and credit and that persons in whose favor Eximbank has incurred
contractual liabilities in accordance with law "have acquired valid general
obligations of the United States, and are therefore in a position to reach
beyond Eximbank and its assets to the United States for a source of
payment, if necessary." The Eximbank Guarantee of each Promissory Note by
Eximbank will constitute a contractual liability of Eximbank and, as stated
in such opinion, a general obligation of the United States. The
Certificates will not be directly guaranteed by Eximbank and there will be
no direct contractual liability of Eximbank to any holder of a Certificate.
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued in Series pursuant to separate
Declarations of Trust. A form of Declaration of Trust is filed as an
exhibit to the Registration Statement of which this Prospectus is a part.
The Certificates will be issuable in the authorized denominations
specified in the related Prospectus Supplement. Unless otherwise specified
in the related Prospectus Supplement, the Certificates will be issued in
book-entry form only. See "--Book-Entry Registration" herein. If definitive
Certificates of any Series are issued as specified in the related
Prospectus Supplement, the transfer of definitive Certificates may be
registered and the Certificates exchanged at the office of the Trustee and
any other transfer agent designated by the Trustee without the payment of
any service charge other than any tax or governmental charge payable in
connection with such registration of transfer or exchange.
DISTRIBUTIONS ON THE CERTIFICATES
Interest will be distributable on the Certificates at the rate per
annum specified in, or determined in the manner specified in, the related
Prospectus Supplement. Unless otherwise specified in the related Prospectus
Supplement, interest on the Certificates will accrue from the Closing Date
and will be distributed on the dates specified in the related Prospectus
Supplement (each such date, a "Certificate Payment Date").
Payments of principal on the Certificates will be distributable in
the aggregate amount and on the Certificate Payment Dates specified in the
related Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement,
the Certificates will not be subject to prepayment or acceleration under
any circumstances.
The Trustee is obligated to apply all Available Funds (as defined
below), including any payments received from the Borrower or other person
in respect of the Promissory Note, any payments received from Eximbank
pursuant to the Eximbank Guarantee, any amounts received from the Liquidity
Provider, if any, under any Liquidity Facility and any amounts received
under the Defeasance Agreement, if any, to make the distributions to the
Certificateholders on such date. If the Available Funds for distribution to
the Certificateholders on any Certificate Payment Date are less than the
amounts required to be distributed to all Certificateholders in full on
such date, distributions will be made to the respective Certificateholders
(other than holders of Subordinate Certificates, if any) on a pro rata
basis. If a Class of Subordinate Certificates is issued, no distribution
will be made to the Holders of such Subordinate Certificates until all
amounts required to be distributed to the holders of the Senior
Certificates have been paid in full. If distributions on any Certificates
are not made when scheduled as a result of failure of timely payment on the
Promissory Note (or the Eximbank Guarantee, the Liquidity Facility, if any,
or the Defeasance Agreement, if any) after a default in payment on the
Promissory Note), Certificateholders will be entitled to distributions of
interest on overdue principal and overdue interest at the rate of interest
then distributable on the Certificates.
"Available Funds" means, unless otherwise specified in the
related Prospectus Supplement, in respect of any date on which payments
are due on the Certificates, any payments received by the Trustee from
the Borrower, Eximbank or the Liquidity Provider, if any, on or in
respect of the Promissory Note, the Eximbank Guarantee, the Eximbank
Payment Certificate or Liquidity Facility, if any, as well as amounts
received under the Defeasance Agreement, if any, in each case in respect
of the related Note Payment Date.
BOOK-ENTRY REGISTRATION
Unless otherwise specified in the related Prospectus Supplement,
the Certificates will be issued in the form of one or more global
Certificates that will be deposited with The Depository Trust Company
("DTC") and registered in the name of a nominee of DTC. The Certificates
will be available only in book-entry form. Certificateholders may hold
their Certificates through DTC, if they are participants of DTC, or
indirectly through organizations which are participants in such systems.
Cede & Co., as nominee for DTC, will be the registered holder of
the global Certificates. No Certificateholder will be entitled to receive
a certificate representing such person's interest in the Certificates.
The laws of some states require that certain purchasers of securities
take physical delivery of such securities in definitive form. Such laws
may impair the ability to purchase or transfer beneficial interests in
the global Certificates.
Owners of beneficial interests in the global Certificates will
not be considered the holders thereof for any purpose under the
Declaration of Trust or the Certificates. Unless DTC notifies the Trustee
that it is unwilling or unable to continue as depositary for the global
Certificates or ceases to be a "clearing agency" registered under the
Exchange Act, owners of beneficial interests in the global Certificates
will not be entitled to have any portions of the global Certificates
registered in their names, will not receive or be entitled to receive
physical delivery of Certificates in definitive form and will not be
considered the owners or holders of the global Certificates (or any
Certificates represented thereby) under the Declaration of Trust or the
Certificates.
All references herein to actions by Certificateholders shall refer
to actions taken by DTC upon instructions from its participants ("DTC
Participants"), and all references herein to distributions, notices,
reports and statements to Certificateholders shall refer to distributions,
notices, reports and statements to Cede & Co., as the registered holder of
the Certificates for distribution to Certificateholders in accordance with
DTC procedures. Accordingly, each Certificateholder must rely on the
procedures of DTC and, if such person is not a DTC Participant, on the
procedures of the DTC Participant through which such person owns its
interest, to exercise any rights of a holder under the Declaration of
Trust. Neither the Trust, the Trustee, nor any agent of the Trust or the
Trustee, nor the Borrower will have any responsibility or liability for any
aspect of DTC's records or any DTC Participant's records relating to or
payments made on account of beneficial interests in the global Certificates
or for maintaining, supervising or reviewing any of DTC's records or any
DTC Participant's records relating to such beneficial interest.
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 Uniform Commercial Code 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 DTC Participants and facilitate the clearance and settlement
of securities transactions between DTC Participants through electronic
book-entry changes in accounts of DTC Participants, thereby eliminating the
need for physical movement of certificates. DTC Participants include
certain of the Underwriters, securities brokers and dealers, banks, trust
companies and clearing corporations and may include certain other
organizations. 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 custodial relationship with a DTC Participant, either
directly or indirectly ("Indirect Participants").
Under the rules, regulations and procedures creating and affecting
DTC and its operations, DTC is required to make book-entry transfers among
DTC Participants on whose behalf it acts with respect to the Certificates
and is required to receive and transmit distributions of principal of and
interest on the Certificates. DTC Participants and Indirect Participants
with which Certificateholders have accounts with respect to the
Certificates similarly are required to make book-entry transfers and
receive and transmit such payments on behalf of their respective
Certificateholders.
Because DTC can only act on behalf of DTC Participants, which in
turn act on behalf of Indirect Participants and certain banks, the
ability of a Certificateholder to pledge Certificates to persons or
entities that do not participate in the DTC system, or otherwise take
actions in respect of such Certificates, may be limited due to the lack
of physical certificates for such Certificates.
Prior to the initial delivery date of the Certificates, it is
expected that DTC will have advised the Trust that it will take any
action permitted to be taken by a Certificateholder under the Declaration
of Trust only at the direction of one or more DTC Participants to whose
account with DTC the Certificates are credited. Additionally, prior to
the initial delivery date of the Certificates, it is expected that DTC
will have advised the Trust that it will take such actions with respect
to specified portions of the Percentage Interests (as defined below) in
the Certificates only at the direction of and on behalf of DTC
Participants whose holdings include Percentage Interests that satisfy
such specified percentages.
None of the Underwriters, the Depositor, the Trust, the Trustee
or any Borrower, or their affiliates can give any assurances that DTC
will perform or continue to perform the procedures discussed above, and
such procedures may be discontinued at any time.
EVENTS OF DEFAULT, ENFORCEMENT OF PROMISSORY NOTE, EXIMBANK GUARANTEE,
LIQUIDITY AGREEMENT AND DEFEASANCE AGREEMENT
If the Borrower fails to deposit with the Trustee all amounts due
on the Promissory Note on a Note Payment Date, the Declaration of Trust
provides that the Trustee will be required to send a payment demand to
the Borrower (with a copy thereof to Eximbank) on or prior to the second
Business Day following such Note Payment Date, setting forth the amounts
due on the Promissory Note on such date and the amounts due and unpaid by
the Borrower. If any amounts due on the Promissory Note remain unpaid on
the thirtieth calendar day after such Note Payment Date, the Trustee will
be required to file with and deliver to Eximbank on the first Business
Day following such thirtieth calendar day a payment demand setting forth
the amounts due on the Promissory Note on such date and the amounts due
and unpaid by the Borrower and demanding payment from Eximbank under the
Eximbank Guarantee. Under the Eximbank Guarantee, Eximbank, upon receipt
of a demand for payment and satisfaction of all other requirements
contained in the Eximbank Guarantee, will within fifteen Business Days
(or such other number of days as may be specified in the related
Prospectus Supplement) of such demand make payment of all principal and
interest at the Guaranteed Interest Rate owing in respect of such
defaulted payment. See "THE EXIMBANK GUARANTEES" and "THE PROMISSORY
NOTES" herein.
Simultaneously with the making of a demand on Eximbank under the
Eximbank Guarantee in respect of any Note Payment Date on which both
principal and interest are payable (an "Eximbank Payment Event") or in
respect of an Exchange Event, the Trustee will be required to assign to
Eximbank the rights of the Trust to the Promissory Note and the Credit
Agreement and, unless otherwise specified in the related Prospectus
Supplement, Eximbank will deliver to the Trustee an Eximbank Payment
Certificate providing for payment to the Trust by Eximbank of all amounts
of principal and interest at the Guaranteed Interest Rate due under the
Promissory Note on each Note Payment Date, until the scheduled maturity
of the Promissory Notes. Thereafter, Eximbank will directly and timely
pay all amounts of principal and interest due under the Promissory Note
to the Trust on each subsequent Note Payment Date, without a requirement
of demand on or notice to the Borrower or Eximbank for such payment. On
and after such Eximbank Payment Event, the property of the Trust will
consist of the Eximbank Payment Certificate, which is a direct obligation
of Eximbank, backed by the full faith and credit of the United States of
America, and the Defeasance Agreement, if any.
Unless otherwise specified in the related Prospectus Supplement,
under the Credit Agreement, Eximbank will have the sole right to accelerate
the Promissory Note upon an Event of Default. Unless otherwise specified in
the related Prospectus Supplement, such acceleration will relate only to
the rights of Eximbank vis-a-vis the Borrower and will not result in an
acceleration of the Certificates, as Eximbank will be required to make
payments under the Eximbank Guarantee in accordance with the original
amortization schedule of the Promissory Note.
The Trustee is required to take all necessary action, as permitted
or required by the Declaration of Trust, the Eximbank Guarantee, any
Liquidity Facility, any Defeasance Agreement and applicable law to (i)
enforce payments due from Eximbank under the Eximbank Guarantee and from
the Liquidity Provider, if any, under any Liquidity Facility and enforce
the Defeasance Agreement, if any, and (ii) apply amounts received in
accordance with the Declaration of Trust for the benefit of the
Certificateholders.
TRUST ACCOUNTS AND INVESTMENTS OF FUNDS
The Trustee will establish two separate, segregated, non-interest
bearing trust accounts (the "Trust Account" and the "Eximbank Payment
Account") for the benefit of the Certificateholders. All payments
received by the Trustee in respect of the Promissory Note (including
amounts received under the Liquidity Facility, if any) will be paid into
the Trust Account, except amounts received under the Eximbank Guarantee,
which will be paid into the Eximbank Payment Account. If so specified in
the related Prospectus Supplement, the Trust may establish additional
segregated non-interest bearing trust accounts, including, without
limitation, a defeasance account into which all payments received by the
Trustee under the Defeasance Agreement, if any, will be deposited.
Each of the Trust Account and the Eximbank Payment Account will
be maintained by the Trustee in its trust capacity. The Declaration of
Trust directs the Trustee to invest all funds deposited in the Trust
Account and the Eximbank Payment Account in respect of a Note Payment
Date in Eligible Investments (as defined below) that mature prior to the
immediately succeeding Certificate Payment Date; provided that, if a
Liquidity Facility is delivered with respect to a Series of Certificates
and the Note Payment Dates fall on the corresponding Certificate Payment
Dates, such funds will not be invested by the Trustee.
"Eligible Investments" are required to mature prior to the next
succeeding Certificate Payment Date and, unless otherwise specified in
the related Prospectus Supplement, consist of non-callable non-prepayable
bonds, notes, bills or other similar obligations (i) issued or guaranteed
by the United States of America or an agency or instrumentality thereof
or a corporation sponsored thereby (including, without limitation, the
Federal Home Loan Banks, the Federal National Mortgage Association and
the Federal Home Loan Mortgage Corporation); (ii) either (a) backed by
the full faith and credit of the United States and, if guaranteed by the
United States of America or an agency or instrumentality thereof or a
corporation sponsored thereby, providing for the full and timely payment
thereof or (b) rated in either the highest long-term debt rating category
or highest short-term debt rating category of each of the Rating Agencies
rating such Certificates and (iii) purchased from the issuer thereof as
principal.
Unless otherwise specified in the related Prospectus Supplement,
each Declaration of Trust provides that the Certificateholders have no
rights to the interest earned on Eligible Investments.
Unless otherwise specified in the related Prospectus Supplement,
interest earned on Eligible Investments relating to the Trust Account will
be distributed to the Borrower; provided, however, that no such amounts
will be distributed to the Borrower if at the time of such proposed
distribution any Certificateholder has not received distributions of all
amounts which it is entitled to receive or the Basic Fee has not been paid
to the Trustee. The Borrower will be obligated to reimburse the Trust for
losses on investments in such Eligible Investments.
Unless otherwise specified in the related Prospectus Supplement,
interest earned on Eligible Investments relating to the Eximbank Payment
Account will be distributed first to the Trustee in payment of any due and
unpaid Basic Fees and Expenses and any remaining portion of such interest
will be paid to Eximbank.
Any losses on Eligible Investments not reimbursed to the Trust
will not be covered by the Eximbank Guarantee and will reduce the amounts
available for distribution to the Certificateholders.
REPORTS TO CERTIFICATEHOLDERS
On each Certificate Payment Date, the Trustee is obligated to
supply the Certificateholders, and any beneficial owner of an interest in
a certificate that delivers to the Trustee a written request certifying
to its beneficial ownership, with a report which is to include the
following information as of the related Certificate Payment Date: (i) the
aggregate amounts of principal and interest distributed to the holders of
Certificates; (ii) the aggregate principal balance of the Certificates
outstanding after such distribution; and (iii) if the amounts referred to
in (i) above are less than the amounts of principal and interest paid on
the Promissory Note on the related Note Payment Date, the amount of any
such difference and the reason or reasons therefor. The report will also
state that neither a delinquency in payment under the Promissory Note,
the Eximbank Guarantee, the Eximbank Payment Certificate, the Liquidity
Facility, if any, or the Defeasance Agreement, if any, nor any Event of
Default that is a payment default or, to its knowledge, any other Event
of Default has occurred or, if any such event has occurred and is
continuing, will specify the event and its status.
The fiscal year of each Trust will be a calendar year. Within the
prescribed period of time for tax reporting purposes after the end of
each calendar year during the term of the Declaration of Trust, the
Trustee is to prepare and mail to each Certificateholder of record at any
time during such year a report setting forth such information as is
reasonably necessary for the preparation of that Certificateholder's
federal income tax returns for such calendar year or, in the event such
person was a Certificateholder for only a portion of such calendar year,
for the applicable portion of the year.
The Trustee will deliver, without charge, to any registered
Certificateholder copies of all documents and reports furnished to the
Commission pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934, as amended, upon written request to the Trustee.
AMENDMENTS
The Declaration of Trust may be amended from time to time by the
Trustee, and, if parties thereto, the Servicer, if any, and the Borrower,
without the consent of the Depositor or any of the Certificateholders, to
cure any ambiguity, to correct or supplement any inconsistent provisions
therein, to add any other provisions with respect to matters or questions
arising thereunder which shall not be inconsistent with the provisions
thereof; provided that such action will not, as evidenced by an opinion
of counsel delivered to the Trustee, adversely affect in any material
respect the interests of any Certificateholder.
The Declaration of Trust may also be amended from time to time by
the Trustee, and, if parties thereto, the Servicer, if any, and the
Borrower or the Lessee, if any, with the consent of holders of
Certificates representing at least 51% of the Percentage Interest in the
outstanding Certificates but without the consent of the Depositor, for
the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of the Declaration of Trust or of
modifying in any manner the rights of the Certificateholders, except
that, without the unanimous consent of the Certificateholders, no such
amendment may (i) reduce in any manner the amount of, or delay the timing
of, collections of payments on the Promissory Note, the Eximbank
Guarantee, the Eximbank Payment Certificate, the Liquidity Facility, if
any, or the Defeasance Agreement, if any, or distributions which are
required to be made on the Certificates or (ii) reduce the percentage
required to consent to any such amendment. "Percentage Interest" means,
with respect to any Certificate at any time, the percentage determined by
dividing the outstanding principal amount of such Certificate by the
aggregate outstanding principal amount of all of the Certificates.
No amendment, modification or supplement to or of the Declaration
of Trust may be made unless (i) the Trustee shall have received an opinion
of counsel to the effect that the proposed amendment, supplement or
modification will not cause the Trust to be treated other than as a grantor
trust for federal income tax purposes or render any part of the Eximbank
Guarantee, the Liquidity Facility, if any, or the Defeasance Agreement, if
any, ineffective or (ii) if no such opinion is obtained, such amendment,
modification or supplement has been unanimously approved by the
Certificateholders. In addition, no amendment, modification or supplement
requiring the consent of any of the Certificateholders may be made without
the unanimous approval of the Certificateholders unless the Trustee shall
have received a statement in writing from each of the Rating Agencies to
the effect that the proposed amendment, supplement or modification will not
in and of itself result in a downgrading or withdrawal of the ratings then
assigned to the Certificates. No amendment, modification or supplement may
be made (i) without the consent of the Depositor if the proposed amendment,
modification or supplement would adversely effect the obligations or
liabilities of the Depositor under the Declaration or (ii) without the
consent of the Liquidity Provider, if any, if the proposed amendment,
modification or supplement would have a material adverse effect on the
Liquidity Provider.
Promptly after the execution of any amendment or consent pursuant
to the Declaration of Trust, the Trustee is obligated to furnish or cause
to be furnished written notification of the substance of such amendment or
consent to each Certificateholder, the Depositor, the Borrower or the
Lessee, if any, Eximbank and the Rating Agencies.
TERMINATION
The Declaration of Trust will terminate after payment in full has
been made on the Certificates and any other amounts held by the Trustee
have been distributed in accordance with the provisions thereof, but in
no event later than 21 years after the death of the last survivor of the
descendants of the person named in the Declaration of Trust living as of
the date of the Declaration of Trust.
THE TRUSTEE
The Trustee under the Declaration of Trust will be named in the
related Prospectus Supplement. The Trustee is obligated to provide each
Certificateholder with prompt written notice of any change in the address
of the corporate trust office specified in the related Prospectus
Supplement.
Unless otherwise specified in the related Prospectus Supplement,
the Trustee may resign at any time, by giving written notice to the
Borrower, Eximbank and the certificate registrar, if other than the
Trustee. The Borrower (or, if there is a Lessee specified in the related
Prospectus Supplement, the Lessee), the holders of Certificates
representing 25% or more of the aggregate Percentage Interests of all of
the outstanding Certificates, or a court of competent jurisdiction upon the
petition of one or more Certificateholders, may also remove the Trustee if
such Trustee ceases to be eligible to continue as such under the
Declaration of Trust or if such Trustee becomes legally unable to act or
insolvent. In the event of resignation or removal of the Trustee, the
Borrower (or, if there is a Lessee specified in the related Prospectus
Supplement, the Lessee), with the consent of Eximbank, will appoint a
national bank or a state banking institution subject to state banking
supervision as successor Trustee. If no successor Trustee has been
appointed and has accepted appointment within 30 days after the giving of a
notice of resignation or a determination to remove the Trustee, the
resigning Trustee or the Trustee whose removal is sought, as the case may
be, or any Certificateholder, may petition any court of competent
jurisdiction for the appointment of a successor Trustee. Any resignation or
removal of a Trustee and appointment of a successor Trustee will not become
effective until any required approval by Eximbank is received, acceptance
of the appointment by the successor Trustee and transfer of the property of
the Trust to such successor Trustee. In addition, unless the Servicer is
designated in the related Prospectus Supplement as the person irrevocably
obligated to pay the amounts described under "THE EXIMBANK
GUARANTEE--Certain Restrictions Applicable to the Eximbank Guarantee" to
the Trust in the event of a failure to make a timely demand on Eximbank, no
resignation or removal of the Trustee or appointment of a successor Trustee
will become effective unless either (i) the Trustee remains irrevocably
obligated to pay such amounts to the Trust in the event of the failure of
the successor Trustee to make a timely demand on Eximbank or (ii) the
successor Trustee irrevocably assumes such obligation.
DUTIES AND IMMUNITIES OF THE TRUSTEE
The Trustee assumes no responsibility or liability for, and makes
no representations as to, the validity or sufficiency, or as to the
accuracy, of the recitals, if any, set forth in the Certificates (other
than the execution and authentication thereof), the Promissory Note, the
Eximbank Guarantee, the Liquidity Facility, if any, the Defeasance
Agreement, if any, or the Credit Agreement (or the accuracy of the recitals
in the Declaration of Trust), except for the Trustee's representation as to
the due execution of all documents signed by it.
The Trustee undertakes to perform such duties and only such duties
as are specifically set forth in the Declaration of Trust. Subject to the
foregoing sentence, the Trustee will be liable for its own negligence or
misconduct except for (i) good faith errors in judgment (provided the
Trustee was not negligent in ascertaining the pertinent facts) and (ii)
actions taken or omitted pursuant to the direction of Certificateholders as
described below. If an Event of Default has occurred (which has not been
cured), the Trustee is obligated to exercise such of the rights and powers
vested in it by the Declaration of Trust, 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. The Trustee
will not be charged with actual knowledge of an Event of Default or a
default under the Eximbank Guarantee, Eximbank Payment Certificate, the
Liquidity Facility, if any, or the Defeasance Agreement, if any, (other
than a failure by the Borrower, the Liquidity Provider, if any, or
Eximbank, as the case may be, to make a payment when due under the
Promissory Note, the Eximbank Guarantee, the Eximbank Payment Certificate,
the Liquidity Facility, if any, or the Defeasance Agreement, if any) unless
a responsible officer of the Trustee at its principal corporate trust
office obtains actual knowledge thereof or receives written notice thereof
from the Borrower, Eximbank, the Liquidity Provider, if any, the Servicer,
if any, or any Certificateholder.
Subject to the foregoing paragraph, the Trustee will have no
responsibility or liability for or with respect to the enforcement of the
Promissory Note or, if no Event of Default has occurred, the Eximbank
Guarantee, the Liquidity Facility, if any, or the Defeasance Agreement,
if any, and, if no default under the Eximbank Payment Certificate has
occurred, the Trustee will have no responsibility or liability for or
with respect to the enforcement of the Eximbank Payment Certificate.
Except for any liability that may arise under the Declaration of Trust as
the result of the failure of the Trustee to make a claim on Eximbank
within 150 days following a payment default by the Borrower or such other
liability as is finally determined to have resulted from the Trustee's
negligence or bad faith, no recourse shall be had for any claim based on
any provision of the Declaration of Trust, the Certificates, the
Promissory Note, the Guarantee, the Liquidity Facility, if any, the
Defeasance Agreement, if any, or the Credit Agreement against the Trustee
in its individual capacity, and any such claim may be asserted solely
against the Trust.
Subsequent to the occurrence of the Eximbank Payment Event, the
Trustee's only recourse with respect to the principal and interest due
under the Promissory Note will be against Eximbank for payments due under
the Eximbank Payment Certificate, which payments will correspond to the
payments of principal and interest due on the Promissory Note without
giving effect to any acceleration thereof.
The Declaration of Trust also provides that Certificateholders
representing at least 51% in Percentage Interest of the Certificates may,
with certain exceptions, direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any
trust power conferred on the Trustee, with respect to the Certificates,
except that the Trustee need not comply with such directions if it
determines in good faith that the action would involve it in personal
liability. A Certificateholder may not pursue any remedy under the
Declaration of Trust or give any demand for payment unless (1) the
Certificateholder gives to the Trustee written notice stating that an event
of default is continuing; (2) the holders of Certificates representing at
least 51% in Percentage Interest of the Certificates make a written request
to the Trustee to pursue the remedy or give a demand notice; (3) such
Certificateholder or Certificateholders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense; (4) the
Trustee does not comply with the request within sixty days after receipt of
the request and the offer of security or indemnity; and (5) the holders of
at least 51% in Percentage Interest of the Certificates do not give the
Trustee a direction inconsistent with the request during such sixty-day
period. The Trustee will be under no obligation to exercise any remedy or
power under the Declaration of Trust unless the Certificateholders shall
have offered it reasonable indemnity against costs, expenses and
liabilities incurred in connection therewith.
THE SERVICER
If so specified in the related Prospectus Supplement, a servicer
identified therein (the "Servicer") may be selected to perform certain
duties described in such Prospectus Supplement. Such duties may include,
as specified in such Prospectus Supplement, (i) the making of demands
upon the Borrower and Eximbank upon the occurrence of a payment default
under the related Promissory Note, (ii) the preparation and making of
reports to Certificateholders described under "DESCRIPTION OF THE
CERTIFICATES--Reports to Certificateholders" and (iii) the undertaking of
the obligation to pay amounts to the related Trust in the event that
Eximbank is not obligated to make payment under the Eximbank Guarantee of
amounts due and unpaid under a Promissory Note because demands for
payment were not timely made; provided that no Servicer will undertake
such obligation unless it is a national bank or a state banking
institution subject to state banking supervision. The Servicer, if any,
will undertake its duties pursuant to the related Declaration of Trust or
pursuant to a Servicing Agreement (the "Servicing Agreement") for the
applicable Trust or for multiple Trusts. A form of Servicing Agreement is
filed as an exhibit to the Registration Statement of which this
Prospectus is part.
TRUSTEE'S AND SERVICER'S FEES AND EXPENSES
Unless otherwise specified in the related Prospectus Supplement,
the basic fees and expenses of the Trustee (the "Basic Fees and
Expenses") will be paid directly by or on behalf of the Borrower to the
Trustee and will not be payable from the assets of the Trust. Certain
expenses of the Trustee will be payable from the assets of the related
Trust in certain extraordinary circumstances. In addition, unless
otherwise specified in the related Prospectus Supplement, if payments on
the Certificates are not made when due, the Trustee will be entitled to
receive a supplemental fee (the "Trustee Supplemental Fee") equal to the
amount, if any, of interest on overdue principal and interest on the
Promissory Note received from the Borrower.
The Trustee Supplemental Fee will be paid from payments made on
the Promissory Note. The Trustee Supplemental Fee will be paid only after
all amounts due and payable on the Certificates on the related
Certificate Payment Date have been paid in full and only if the Trustee
has made any payment demand required to be made on the Borrower and
Eximbank with respect to such Certificate Payment Date in a timely
manner.
Unless otherwise specified in the related Prospectus Supplement,
the fees and expenses (the "Servicer's Fees and Expenses") of the
Servicer, if any, will be paid directly by the Borrower to the Servicer.
In the event that the Borrower fails to pay the Basic Fees and
Expenses of the Trustee or the Servicer's Fees and Expenses to the
Servicer, if any, the Trustee and the Servicer, if any, will be entitled,
to the extent of the Basic Fees and Expenses or the Servicer's Fees and
Expenses, as the case may be, to receive the earnings on amounts, if any,
deposited in the Trust Account or the Eximbank Payment Account (as
defined below) and invested in Eligible Investments, as described under
"DESCRIPTION OF THE CERTIFICATES--Trust Accounts and Investments of
Funds." Such investment earnings will be payable to the Trustee or the
Servicer, if any, only after all amounts due and payable on the
Certificates on the related Certificate Payment Date have been paid in
full.
Except as otherwise described under "--Duties and Immunities of
the Trustee", the Basic Fees and Expenses payable to the Trustee will
cover (i) compensation for all services rendered by the Trustee or as
contemplated by the Declaration of Trust, (ii) all expenses,
disbursements and advances made by the Trustee under or as contemplated
by the Declaration of Trust (including the fees, expenses and
disbursements of the Trustee's accountants, counsel and other agents),
and (iii) any loss, liability or expense arising out of or in connection
with the acceptance or administration of the Trust and its duties as
Trustee.
The Servicer's Fees and Expenses payable to the Servicer, if any,
will cover (i) compensation for all services rendered by the Servicer or as
contemplated by the Declaration of Trust, (ii) all expenses, disbursements
and advances made by the Servicer or as contemplated by the Declaration of
Trust (including the fees, expenses and disbursements of the Servicer's
accountants, counsel and other agents) and (iii) any loss, liability or
expense arising out of or in connection with the servicing of the Trust and
its duties as Servicer.
THE PROMISSORY NOTES
Each Promissory Note will either, as specified in the related
Prospectus Supplement, be issued to, or otherwise be acquired by, the
Depositor, which will deposit the Promissory Note in the related Trust
simultaneously with the receipt by the Trust of the proceeds from the sale
of the Certificates. Each Promissory Note will be issued pursuant to a
Credit Agreement. A form of the Credit Agreement, with a form of Promissory
Note attached, is filed as an exhibit to the Registration Statement of
which this Prospectus is a part.
Each Promissory Note will be in the principal amount, mature on
the date and bear interest at the rate or rates per annum specified in the
related Prospectus Supplement. Interest and principal payments on each
Promissory Note will be payable on the dates specified in the related
Prospectus supplement (the "Note Payment Dates"). Unless otherwise
specified in the related Prospectus Supplement, interest on each Promissory
Note will be computed on the basis of a 360-day year consisting of twelve
30-day months.
Unless otherwise specified in the related Prospectus Supplement,
the Borrower will have no right to prepay to the Trust any amounts due
under the Promissory Note.
The amounts of principal and interest payable on the Promissory
Note or Notes underlying a Series of Certificates will be sufficient to
provide for the scheduled payments on such Certificates.
Each Promissory Note will be payable in lawful money of the
United States without deduction for or on account of any present or
future taxes, duties or other charges levied or imposed on the Promissory
Note or the proceeds or holder thereof by the country of the Borrower or
any political subdivision or taxing authority thereof or any other taxing
jurisdiction other than the United States or any political subdivision or
taxing authority thereof.
Each Promissory Note will provide that any overdue principal or
interest thereon will bear interest at the rate or rates per annum
specified in the related Prospectus Supplement. The portion of any such
rate in excess of the rate that would then have been applicable to the
Promissory Note had principal or interest not been overdue will not
constitute a portion of the Guaranteed Interest Rate pursuant to the
Eximbank Guarantee. Each transaction will be structured to provide the
Trust with sufficient funds so that, even if the Borrower fails to pay
such penalty rate, full and timely distributions on the Certificates can
be made from other payments made by the Borrower on the Promissory Note
or from payments made by Eximbank under the Eximbank Guarantee, from
payments made by the Liquidity Provider, if any, under the Liquidity
Facility, from amounts received under the Defeasance Agreement, if any,
or from amounts otherwise distributable to holders of Subordinate
Certificates, if any.
THE CREDIT AGREEMENTS
Each Promissory Note will be issued pursuant to a Credit Agreement
entered into by a Borrower with Eximbank and, unless otherwise specified in
the related Prospectus Supplement, the Depositor. Each Credit Agreement
contains terms and provisions relating to the rights and remedies of the
Trust and Eximbank with respect to the Promissory Note and the loan
evidenced thereby. Under each Credit Agreement, Events of Default include
the failure of the Borrower to make payments under the Promissory Note as
provided therein.
Unless otherwise specified in the related Prospectus Supplement,
the Borrower will have no right to prepay to the Trust any amounts due
under the Promissory Note. Accordingly unless otherwise specified in the
related Prospectus Supplement all payments of principal and interest owed
by the Borrower to the Trust under the Promissory Note will be required to
be made to the Trust on the Note Payment Date specified in the Promissory
Note.
Upon the occurrence of an Event of Default, Eximbank may
accelerate payment of the Promissory Note. Unless otherwise specified in
the related Prospectus Supplement, such acceleration will relate only to
the rights of Eximbank vis-a-vis the Borrower and will not result in any
prepayment of the Certificates, as Eximbank will be required to make
payments under the Eximbank Guarantee in accordance with the original
amortization schedule of the Promissory Note.
THE LIQUIDITY FACILITIES
If so specified in the related Prospectus Supplement, an
irrevocable revolving liquidity facility, letter of credit or surety bond
will be provided in an amount equal to, unless otherwise specified in the
such Prospectus Supplement, the largest remaining scheduled payment of
principal and interest due at any time on the Promissory Note or Notes
included in the related Trust (each, a "Liquidity Facility"). The
provider (the "Liquidity Provider") under any such Liquidity Facility
will be specified in the related Prospectus Supplement.
The Liquidity Facilities will provide for the distribution in a
timely manner of principal and interest to the Certificateholders on any
Certificate Payment Date with respect to which the Borrower defaults in
the payment of amounts due under a Promissory Note.
A form of irrevocable revolving liquidity facility is filed as an
exhibit to the Registration Statement of which this Prospectus is a part.
THE DEFEASANCE AGREEMENTS
If so specified in the related Prospectus Supplement, the
Borrower or other entity specified in such Prospectus Supplement will
provide for the payment of the Unguaranteed Portion of principal or
interest due on a Promissory Note by delivery to the Trustee on the
Closing Date of non-callable United States government securities (the
"Defeasance Collateral") pursuant to a Defeasance Agreement (each, a
'Defeasance Agreement') with the Trustee. The Defeasance Collateral will
be in amounts and have maturities sufficient to provide for payment of
the Unguaranteed Portion of each payment on interest on the Promissory
Note as it comes due on each Note Payment Date. Upon maturity of each
portion of the Defeasance Collateral, the Trustee will apply the proceeds
thereof to the payment of a portion of the amounts due on the Promissory
Note.
A form of Defeasance Agreement is filed as an exhibit to the
Registration Statement of which this Prospectus is a part.
SUBORDINATE CERTIFICATES
In order to provide for the payment of any Unguaranteed Portion of
interest due on a Promissory Note and if so specified in the related
Prospectus Supplement, a Class of Certificates of a Series (the
"Subordinate Certificates") may be issued which is subordinated to the
rights of the senior Class of Certificates of such Series (the "Senior
Certificates") such that proceeds of the Eximbank Guarantee or the
Liquidity Facility, if any, will be sufficient to distribute to the Senior
Certificates their allocable share of the scheduled payments on the
Promissory Note. The Subordinate Certificates will not be offered by the
Prospectus or any Prospectus Supplement.
THE TRUSTS
Each Guaranteed Trade Trust (each, a "Trust") will be specially
created for the purpose of holding the related Promissory Note and the
related Eximbank Guarantee, Liquidity Facility, if any, Defeasance
Agreement, if any, and Eximbank Payment Certificate, if any, and issuing
the Certificates. Each Trust will be formed pursuant to a Declaration of
Trust (the "Declaration of Trust") between the Trustee named in the related
Prospectus Supplement, the Depositor and, if so specified in the related
Prospectus Supplement, the Servicer, with, if so specified, the consent and
agreement of the related Borrower. No Trust will have any material assets
other than the related Promissory Note, backed by the related Eximbank
Guarantee and, if so specified in the related Prospectus Supplement, a
Liquidity Facility and Defeasance Agreement and, in the event the Eximbank
Payment Event occurs, the Eximbank Payment Certificate, a direct obligation
of Eximbank. No Declaration of Trust will permit the related Trust to
engage in any activity other than holding such assets, issuing the
Certificates and engaging in certain other necessary activities related
thereto.
THE DEPOSITOR
Citicorp North America, Inc. (the "Depositor") is a corporation
organized under the laws of Delaware. The Depositor is an affiliate of
Citicorp Securities, Inc., one of the Underwriters. The principal executive
offices of the Depositor are located at 399 Park Avenue, New York, New York
10043 and its telephone number is 212-559-1000.
CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
The following summarizes certain federal income tax consequences
arising from the purchase, ownership and disposition of Certificates. The
summary is based upon the Internal Revenue Code of 1986, as amended (the
"Code"), and the United States Treasury Regulations promulgated thereunder,
as interpreted by court decisions and Internal Revenue Service rulings and
procedures, all as in effect on the date hereof. The discussion does not
deal with all aspects of federal income taxation that may be relevant to
particular investors, some of whom may be subject to special rules. This
discussion is also generally limited to investors who will hold the
Certificates as "capital assets" (generally, property held for investment)
within the meaning of Section 1221 of the Code. Prospective investors are
advised to consult their own tax advisors to determine the federal, state,
local and any other tax consequences arising out of the purchase, ownership
and disposition of Certificates.
TAX STATUS OF THE TRUST
In the opinion of Skadden, Arps, Slate, Meagher & Flom LLP
("Special United States Tax Counsel"), the Trust will be classified as a
grantor trust for federal income tax purposes rather than as an association
taxable as a corporation or as a partnership, and accordingly, each
Certificateholder will be treated for federal income tax purposes as the
owner of an undivided interest in the assets of the Trust.
GENERAL TAX CONSEQUENCES TO CERTIFICATEHOLDERS
Each Certificateholder, in accordance with his method of
accounting, will be required to include in income his pro rata share of the
income of the Trust and will generally be entitled to deduct his pro rata
share of expenses incurred by the Trust. However, a noncorporate
Certificateholder's allocable share of expenses may be a "miscellaneous
itemized deduction" as defined in Section 67 of the Code, which will be
deductible by a noncorporate Certificateholder only to the extent that the
aggregate of such deductions (including those arising from transactions
unrelated to holding the Certificates) exceeds 2% of such
Certificateholder's adjusted gross income. In addition, in the case of
Certificateholders who are individuals, otherwise allowable itemized
deductions will be reduced, but not by more than 80%, by an amount equal to
3% of the Certificateholder's adjusted gross income over a statutorily
defined threshold. The threshold is $121,200 in the case of a married
couple filing jointly for taxable years beginning in 1997. The dollar
thresholds are subject to adjustment for inflation.
The portion of each payment to a Certificateholder that is
allocable to principal will represent a recovery of capital, which will
reduce the tax basis of such Certificateholder's interest in the assets
of the Trust.
Each Certificateholder's pro rata share of income with respect to
the Promissory Note (which will include any withholding taxes paid over to
foreign tax authorities) will be treated as income from sources without the
United States for federal income tax purposes. If, as a result of an
Eximbank Payment Event or an Exchange Event, an Eximbank Payment
Certificate is substituted for the Promissory Note, it is possible that
such substitution would be treated as an exchange for federal tax purposes,
with the result that each Certificateholder could be required to recognize
gain or loss as if such Certificateholder had actually exchanged his
interest in the Promissory Note for an interest in the Eximbank Payment
Certificate. If such substitution of obligations were treated as an
exchange, each Certificateholder's pro rata share of income with respect to
the Eximbank Payment Certificate would be treated thereafter as income from
sources within the United States for federal income tax purposes.
CREDIT FOR FOREIGN TAXES WITHHELD
Subject to the limitations set forth in Section 904 of the Code
(which generally restricts the availability of foreign tax credits to the
tax liability of a U.S. Person (as defined below) attributable to
foreign-source income of the same type as the income with respect to which
the tax was imposed, as determined under complex U.S. tax rules), any
foreign tax withheld or paid with respect to a U.S. Person's pro rata share
of interest on the Promissory Note generally may be taken as a foreign tax
credit against United States federal income taxes by such a U.S. Person who
makes an appropriate election for the taxable year. U.S. Persons who do not
elect to claim foreign tax credits for a taxable year may claim a United
States tax deduction for their pro rata share of such foreign tax in such
taxable year.
INTEREST, DISCOUNT AND PREMIUM
A purchaser of a Certificate will be treated as purchasing an
interest in the Promissory Note at a price equal to the purchase price
paid for the Certificate. To the extent that the purchase price of a
Certificate is less than or greater than the portion of the principal
balance of the Promissory Note which is allocable to the Certificate, the
interest in the Promissory Note will have been acquired at a discount or
premium.
The treatment of any discount on the Promissory Note will depend
on whether the discount represents original issue discount or market
discount. The original issue discount on the Promissory Note will be
considered to be zero if it is less than a statutorily defined de minimis
amount. In other cases, original issue discount will be required to be
included in income by the Certificateholder under an economic accrual
method regardless of whether payments are actually made to the
Certificateholder, although such accrued amounts will not have to be
included in income again when received thereby.
If the Promissory Note is acquired at a market discount,
Certificateholders will be required to include each principal payment on
the Promissory Note in gross income as ordinary income to the extent of the
accrued market discount on the Promissory Note not previously included in
income. The market discount on the Promissory Note will be considered to be
zero if it is less than a statutorily defined de minimis amount.
If the Promissory Note is acquired at a premium,
Certificateholders that hold their Certificates as capital assets and elect
to amortize bond premium will be allowed to amortize such premium as an
offset to interest income on the Promissory Note. An election to amortize
bond premium applies to all obligations held by a Certificateholder at the
beginning of the first taxable year to which the election applies and to
all such obligations thereafter acquired by such Certificateholder and will
generally be binding for all subsequent years with respect to all
obligations held by such Certificateholder.
The method of accruing market discount and premium on the
Promissory Note will be determined by rules to be provided in Treasury
Regulations which have not yet been issued. Until such regulations are
issued, market discount and premium will accrue, at the taxpayer's
election, either (1) on the basis of a constant interest method, or (2) in
proportion to the stated interest paid on the Promissory Note in the
accrual period relative to the stated interest remaining to be paid on the
Promissory Note as of the beginning of the accrual period.
The excess of interest paid or accrued to purchase or carry a
Promissory Note with market discount over interest received on such
Promissory Note is allowed as a current deduction only to the extent such
excess is greater than the untaxed market discount that accrued during the
taxable year in which such interest expense was incurred. The deferred
interest expense is, in general, allowed as a deduction not later than the
year in which the Promissory Note is disposed of. A Certificateholder may
elect to include market discount in income currently as it accrues on all
obligations acquired by such holder at a market discount during the taxable
year such election is made and thereafter, in which case the interest
deferral rule described above would not apply.
SALE OF A CERTIFICATE
If a Certificate is sold, gain or loss will be recognized in an
amount equal to the difference between the amount realized on the sale and
the Certificateholder's adjusted basis in the Certificate. In general, a
Certificateholder's adjusted basis will equal the Certificateholder's cost
for the Certificate, decreased by any offset previously allowed for accrued
premium and by the amount of the Certificateholder's pro rata share of
prior principal payments on the Promissory Note that are not of qualified
stated interest and increased by the amount of original issue discount and
market discount previously included in income with respect to the
Promissory Note. Any gain or loss will generally be capital gain or loss.
FOREIGN CERTIFICATEHOLDERS
Subject to the discussion with respect to backup withholding
below, a Certificateholder that is not a U.S. Person generally will not be
subject to U.S. federal income taxation, including withholding taxes, on
his pro rata share of income with respect to the Promissory Note because
such income will be treated as income from sources without the United
States. Gains realized upon the sale of a Certificate by a
Certificateholder that is not a U.S. Person generally should not be subject
to U.S. federal income tax. Notwithstanding the preceding two sentences,
however, a Certificateholder that is not a U.S. Person generally will be
subject to U.S. federal income taxation on amounts received or gains
realized with respect to a Certificate to the extent such amounts or gain
are effectively connected with a U.S. trade or business of the
Certificateholder. Furthermore, an individual Certificateholder who is not
a U.S. Person may be taxed on any gain from the sale or disposition of a
Certificate if the individual is present in the United States for 183 days
or more during the taxable year in which the sale or disposition occurs.
For purposes of this discussion, a "U.S. Person" is a citizen or
resident of the United States, a corporation or partnership created or
organized in or under the laws of the United States or any state or
political subdivision thereof, an estate the income of which is includible
in gross income for U.S. federal income tax purposes regardless of its
source or a trust if a court within the United States is able to exercise
primary supervision over the administration of such trust and one or more
United States fiduciaries have the authority to control all substantial
decisions of such trust.
BACKUP WITHHOLDING
Payment made on the Certificates and proceeds from the sale of the
Certificates will not be subject to a "backup" withholding tax of 31%
unless, in general, the Certificateholder fails to comply with certain
reporting procedures (generally, provision of an IRS Form W-8) and is not
an exempt recipient under applicable provisions of the Code.
ERISA CONSIDERATIONS
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.
ERISA also imposes certain duties on persons who are fiduciaries of Plans
subject to ERISA and prohibits certain transactions between a Plan and
Parties in Interest with respect to such Plans. Under ERISA, any person who
exercises any authority or control respecting the management or disposition
of the assets of a Plan is considered to be a fiduciary of such Plan
(subject to certain exceptions not here relevant). Certain employee benefit
plans, such as governmental plans and church plans (if no election has been
made under Code section 410(d)), are not subject to the restrictions of
ERISA, and assets of such plans may be invested in the Certificates 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 Code section 401(a) and exempt from taxation
under Code section 501(a) is subject to the prohibited transaction rules
set forth in Code section 503. Certain plans not subject to ERISA, such as
individual retirement accounts and certain Keogh plans, are subject to
prohibitions in the Internal Revenue Code against transactions with Parties
in Interest. Moreover, based on the reasoning of the United States Supreme
Court in John Hancock Life Ins. Co. v. Harris Trust and Sav. Bank, 114
S.Ct. 517 (1993), an insurance company's general account may be deemed to
include assets of the Plans investing in the general account (e.g., through
the purchase of an annuity contract), and the insurance company might be
treated as a Party-in-Interest with respect to the Plan by virtue of such
investment.
Investments by Plans are 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.
Plan fiduciaries must also determine whether the acquisition and
holding of the Certificates and the operations of the Trust would result
in direct or indirect Prohibited Transactions. Although the assets of the
Trust are essentially passive in nature and the responsibilities and
functions to be performed by the Trustee are generally custodial and
ministerial in nature, the operations of the Trust could result in
Prohibited Transactions if Plans that purchase the Certificates are
deemed to own an interest in the underlying assets of the Trust.
The Department of Labor ("DOL") has issued a final regulation (29
C.F.R. Section 2510.3-101) concerning the definition of what constitutes
the assets of a Plan (the "Plan Asset Regulation"). This regulation
provides that, as a general rule, the underlying assets and properties of
corporations, partnerships, trusts and certain other entities in which a
Plan (which is subject to ERISA) makes an "equity" investment will be
deemed for purposes of ERISA to be assets of the investing Plan unless
certain exceptions apply. There can be no assurance that any of the
exceptions will apply to the Trusts. Accordingly, if a Plan purchases the
Certificates, the Trust Fund could be deemed to hold plan assets unless one
of the exceptions under the Plan Asset Regulation is applicable to the
Trust. The Trustee, however, will have limited discretionary investment
authority and the Trust will be operated in an essentially passive manner
with the Trustee having essentially custodial and ministerial
responsibilities and functions (other than with respect to its limited
investment authority, if any).
Regardless of whether the Trust is deemed to hold plan assets of
Plans that are holders of Certificates, possible violations of the
prohibited transaction or fiduciary responsibility rules could occur if
Certificates are purchased during the offering with assets of any Plan if
the Underwriter, the Trustee or the Borrower, or any of their affiliates is
a party in interest or disqualified person with respect to such Plan,
unless such acquisition is subject to a statutory or administrative
exemption, such as ERISA Section 401(c)(1), regarding insurance company
general accounts; Prohibited Transaction Class Exemption ("PTCE") 91-38,
regarding certain investments by bank collective investment funds; PTCE
90-1, regarding certain insurance company pooled separate accounts; PTCE
95-60, regarding certain investments by insurance company general accounts;
PTCE 84-14, regarding certain transactions effected on behalf of a Plan by
a "qualified professional asset manager;" PTCE 96-23, regarding certain
transactions effected on behalf of a Plan by an "in-house asset manager";
or pursuant to any other available exemption.
Any Plan fiduciary which proposes to cause a Plan to purchase
Certificates should consult with its counsel with respect to the potential
applicability of ERISA and the Code to such investments and whether the
exemptions discussed above or another exemption would be applicable and
determine on its own whether all conditions have been satisfied.
Moreover, each Plan fiduciary should determine whether, under the
general fiduciary standards of investment prudence and diversification,
an investment in the Certificates is appropriate for the Plan, taking
into account the overall investment policy of the Plan and the
composition of the Plan's investment portfolio.
The information above is of general application and may be
modified by information with respect to ERISA considerations contained in
the Prospectus Supplement relating to a Series of Certificates.
Fiduciaries of Plans should review such information, if any, in
considering the purchase of Certificates of such a Series.
PLAN OF DISTRIBUTION
Each Series of Certificates offered hereby and by means of the
related Prospectus Supplements may be sold directly by the Depositor or may
be offered through an underwriter or an underwriting syndicate (the
"Underwriters"), which may include Citicorp Securities, Inc., an affiliate
of the Depositor. The Prospectus Supplement with respect to each Series of
Certificates will set forth the terms of the offering of such Series of
Certificates, including the name or names of the Underwriters, the proceeds
to the Depositor, and either the initial public offering price, the
discounts and commissions to the Underwriters and any discounts or
concessions allowed or reallowed to certain dealers, or the method by which
the price at which the Underwriters will sell the Certificates will be
determined.
Unless otherwise specified in such Prospectus Supplement, the
Underwriters will be obligated to purchase all of the Series of
Certificates described in the Prospectus Supplement with respect to such
Series if any such Certificates are purchased. The Certificates may be
acquired by the Underwriters for their own account and may be resold from
time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices
determined at the time of sale.
If the Certificates of a Series are offered other than through
Underwriters, the related Prospectus Supplement will contain information
regarding the nature of such offering and any agreements to be entered into
between the Depositor, the related Borrower and the purchasers of such
Certificates.
The place and time of delivery for each Series of Certificates in
respect of which this Prospectus is delivered will be set forth in the
Prospectus Supplement with respect to such Series.
LEGAL MATTERS
Certain legal matters will be passed upon for the Depositor and
the Underwriters by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New
York. Skadden, Arps, Slate, Meagher & Flom LLP, as special United States
tax counsel to the Trust, will also render an opinion regarding certain
federal income tax consequences.
RATINGS
Unless otherwise specified in the related Prospectus Supplement,
at the time of issuance, it is anticipated that the Certificates of each
Series will be rated in the highest rating category of the nationally
recognized statistical rating organization or organizations specified
therein. The Certificates of each Series offered hereby will be rated at
least "investment grade", typically one of the four highest generic rating
categories, by at least one such nationally recognized statistical rating
organization.
==================================== ======================================
NO DEALER, SALESMAN OR ANY OTHER
PERSON HAS BEEN AUTHO RIZED TO
GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS OTHER THAN
THOSE CONTAINED IN THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY
THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS AND, IF GIVEN OR MADE,
SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED $147,882,628
UPON. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS NOR ANY SALE MADE
HEREUN DER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE
TRUST, THE BORROWER OR EXIMBANK
SINCE THE DATE HEREOF. THIS PRO
SPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN
OFFER OR SOLICITATION BY ANYONE IN GUARANTEED TRADE TRUST
ANY STATE IN WHICH SUCH OFFER OR 1997-A
SOLICITATION IS NOT AUTHORIZED OR
IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON
MAKING THE SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO
WHOM IT IS UNLAWFUL TO MAKE SUCH 6.104%
OFFER OR SOLICITATION.
GUARANTEED TRADE CERTIFICATES
--------------- SERIES 1997-A
TABLE OF CONTENTS
PAGE
PROSPECTUS SUPPLEMENT
Summary.......................... S-3
Overview of the Transaction...... S-8
Use of Proceeds.................. S-8
The Promissory Note.............. S-9
The Trust........................ S-9
The Borrower..................... S-9
Description of the
Certificates................... S-10
Yield Considerations............. S-11
Certain Foreign Taxes............ S-11
Underwriting..................... S-12
Legal Matters.................... S-12
Ratings.......................... S-12
PROSPECTUS
- ----------
Prospectus Supplement............ 2
Available Information............ 2 PROSPECTUS
Reports to Certificateholders.... 2 SUPPLEMENT
Overview of the Transactions..... 2
The Eximbank Guarantees.......... 4
Description of the Certificates.. 6
The Promissory Notes............. 13
The Credit Agreements............ 14
The Liquidity Facilities......... 14
The Defeasance Agreements........ 14
Subordinate Certificates......... 15
The Trusts....................... 15
The Depositor.................... 15
Certain United States Federal
Tax Consequences............... 15
ERISA Considerations............. 17 CITICORP SECURITIES, INC.
Plan of Distribution............. 19
Legal Matters.................... 19
Ratings.......................... 19
-----------------------
Until February 19, 1998 (90 days after
the date of this Prospectus Supplement),
all dealers effecting transactions
in the Certificates, whether or
not participating in this
distribution, may be required to
deliver this Prospectus Supplement
and the Prospectus. This is in
addition to the obligations of
dealers to deliver a Prospectus
Supplement and the Prospectus when
acting as underwriters and with
respect to their unsold allot
ments or subscriptions.
======================================== =================================
