<PAGE>
Pursuant to Rule 424(b)(5)
Registration No. 33-55860
Prospectus Supplement
(To Prospectus Dated June 13, 1997)
TIERS(SM) Corporate Bond-Backed Certificates, Series MOT 1998-5
issued by
TIERS(SM) Corporate Bond-Backed Certificates Trust MOT 1998-5
relating to MOTOROLA, INC. 5.22% Debentures
Due October 1, 2097 (the "Term Assets")
ZTF(R) Class: $60,000,000 Certificate Principal Balance, 0%
Pass-Through Rate from May 19, 1998 to April 1,
2018; Mandatorily Exchangeable for Term Assets on
April 1, 2018
Amortizing Class: $34,778,000 initial Certificate Principal Balance,
semiannual Fixed Payments of principal and interest
until April 1, 2018
Evidencing fractional interests in $60,000,000 5.22% Debentures due
October 1, 2097 issued by Motorola, Inc.
Structured Products Corp.
Depositor
The TIERS(SM) Corporate Bond-Backed Certificates, Series MOT 1998-5 (the
"Certificates") offered hereby will represent two classes of fractional
undivided beneficial interests in TIERS Corporate Bond-Backed Certificates
Trust MOT 1998-5 (the "Trust") to be formed pursuant to the Trust Agreement,
dated as of May 19, 1998, between Structured Products Corp., as depositor (the
"Company" or the "Depositor"), and U.S. Bank Trust National Association, as
trustee (the "Trustee"), as supplemented by the Series MOT 1998-5 Supplement,
dated as of May 19, 1998 (collectively, the "Trust Agreement"). The property
of the Trust will consist principally of initially $60,000,000 aggregate
principal amount of 5.22% Debentures due October 1, 2097 (the "Term Assets")
issued by Motorola, Inc. (the "Term Assets Issuer"), having the
characteristics described in a prospectus and a supplement thereto, each dated
October 7, 1997 (together, the "Term Assets Prospectus"). The Term Assets were
issued and sold as part of an underwritten public offering of $300,000,000
aggregate principal amount of such securities.
The Depositor may from time to time deposit additional Term Assets into the
Trust. Upon any such deposit, additional ZTF Class Certificates will be issued
in a Certificate Principal Balance equal to the principal amount of the
additional Term Assets being deposited and additional Amortizing Class
Certificates will be issued in a Certificate Principal Balance calculated in
the same manner as was used in the initial offering of the Certificates. All
Certificates issued in connection with a deposit of additional Term Assets to
the Trust will rank pari passu with the Certificates of the same class issued
on the date hereof.
The Term Assets will be acquired by the Trustee on behalf of the Trust in
exchange for the Certificates. Terms used but not otherwise defined herein are
defined in the Prospectus dated June 13, 1997 attached hereto (the
"Prospectus").
(cover continued on next page)
The Amortizing Class Certificates (the "Amortizing Class Certificates") have
been authorized for listing, upon official notice of issuance, with the New
York Stock Exchange ("NYSE"). The Zero-To-Full(R) Class Certificates (the
"ZTF(R) Class Certificates") will not be so listed.
It is a condition to the establishment of the Trust and the issuance of the
Certificates that the Certificates be rated identically to the Term Assets by
both Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's Ratings
Services, a division of The McGraw-Hill Companies, Inc. ("Standard & Poor's,"
and with Moody's, the "Rating Agencies"). Moody's and Standard & Poor's have
rated the Term Assets "Aa3" and "AA," respectively.
---------------
THE CERTIFICATES REPRESENT INTERESTS IN THE TRUST ONLY AND DO NOT REPRESENT AN
OBLIGATION OF OR INTEREST IN THE COMPANY OR ANY OF ITS AFFILIATES. THE
CERTIFICATES DO NOT REPRESENT A DIRECT OBLIGATION OF THE TERM ASSETS ISSUER OR
ANY OF ITS AFFILIATES.
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.
---------------
Salomon Brothers Inc ("Salomon" or the "Underwriter") proposes to offer the
Certificates from time to time for sale in negotiated transactions or
otherwise at prices determined at the time of sale. The price at which
Certificates will be sold by the Underwriter may vary with each transaction.
The Underwriter has agreed to purchase the ZTF Class Certificates from the
Company at 18.782% of the Certificate Principal Balance thereof. The
Underwriter has agreed to purchase the Amortizing Class Certificates from the
Company at 99.25% of the initial Certificate Principal Balance thereof plus
accrued interest, if any, calculated at an annual rate of 6.5% compounded
semiannually (the "Yield to Amortizing Class Final Distribution Date") from
April 1, 1998 to the Closing Date (as defined below). Proceeds to the Company
from any sale of the Certificates will be equal to the purchase price paid
therefor by the Underwriter, net of any expenses payable by the Company and
any compensation payable to the Underwriter. For further information with
respect to the plan of distribution and any discounts, commissions or profits
that may be deemed underwriting discounts or commissions, see "Method of
Distribution" herein.
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
May 19, 1998 (the "Closing Date") against payment therefor in same-day funds.
"Zero-To-Full"(R), "ZTF"(R) and "TIERS"(R) are registered service marks of
Salomon Brothers Inc.
Salomon Smith Barney
The date of this Prospectus Supplement is May 19, 1998.
<PAGE>
(cover page continued)
The Certificates will be issued in two classes. Except in the case of a
Special Event Redemption (as defined below), the ZTF Class Certificates
evidence fractional undivided beneficial interests in all principal payments
on the Term Assets, and in interest accrued on the $60,000,000 aggregate
principal amount of the Term Assets on and after April 1, 2018 at a rate of
5.22% per annum (the "Pass-Through Rate"), compounded semiannually. Except in
the case of a Special Event Redemption, the Amortizing Class Certificates
evidence fractional undivided beneficial interests in all payments of interest
accrued and paid on the Term Assets on or before April 1, 2018.
Distributions on the Amortizing Class Certificates will be made semiannually
on the 1st day of each April and October (each, a "Distribution Date"), or if
any such day is not a Business Day then on the immediately following Business
Day, commencing October 1, 1998.
Except in the case of a Special Event Redemption, no cash distributions will
be made on the ZTF Class Certificates. Instead, the ZTF Class Certificates
outstanding on April 1, 2018 will be terminated and deemed involuntarily
surrendered by the holders thereof in exchange for a principal amount of the
Term Assets underlying such ZTF Class Certificates equal to the aggregate
Certificate Principal Balance of such ZTF Class Certificates. No action by
such holders will be required to effect such termination and exchange, which
will be carried out by the Trustee notifying such holders of such termination
and exchange and distributing to each such holder in kind its pro rata portion
of the Term Assets under the terms of the Trust Agreement.
Distributions on the Amortizing Class Certificates will consist of equal
semiannual installments of principal and interest through April 1, 2018 (each,
a "Fixed Payment"). Each Fixed Payment will be allocated between interest
accrued at a rate equal to the Yield to Amortizing Class Final Distribution
Date on the then-outstanding Certificate Principal Balance of the Amortizing
Class Certificates, and the repayment of principal. The Amortizing Class
Certificates will be paid in full on April 1, 2018.
Losses realized on the Term Assets will be borne by the holders of the
Certificates (the "Certificateholders") in the manner described herein. See
"Special Considerations--Events of Default".
The maturity of the Term Assets may be shortened by the Term Assets Issuer
upon the occurrence and during the continuation of a Tax Event (as defined
herein). The Term Assets may be redeemed by the Term Assets Issuer (i) in
whole within 90 days following the occurrence and continuation of a Tax Event
and the receipt of an additional tax opinion (as described herein) or (ii) at
the option of the Term Assets Issuer as a whole at anytime or in part from
time to time, on not less than 30 nor more than 60 days' notice to the holders
of the Term Assets (a "Term Assets Optional Redemption"), in each case at a
price which will at least equal the accreted value of the Term Assets plus
accrued and unpaid interest thereon at the Pass-Through Rate. If the Term
Assets or a portion thereof are redeemed, or the maturity of the Term Assets
is shortened to a date, prior to April 1, 2018, the Certificates or a portion
thereof, as the case may be, will be redeemed (a "Special Event Redemption").
(Any date of such redemption is referred to hereinafter as a "Special Event
Redemption Date.") The Trustee will distribute the payment received on the
Term Assets on the Special Event Redemption Date to the holders of the ZTF
Class Certificates and the Amortizing Class Certificates subject to such
redemption in the same ratio as (i) the accreted value of the ZTF Class
Certificates as of such Special Event Redemption Date bears to (ii) the
Certificate Principal Balance of the Amortizing Class Certificates as of such
Special Event Redemption Date. Such ratio will be calculated by Salomon
Brothers Inc, as calculation agent (the "Calculation Agent").
In the event of a redemption of a portion of the Term Assets on deposit in the
Trust pursuant to a Term Assets Optional Redemption, the Trustee shall select
by lot a portion of each of the ZTF Class Certificates and the Amortizing
Class Certificates for redemption based on their respective Certificate
Principal Balances in the same proportion (or as near as practicable) that the
amount of the Term Assets on deposit in the Trust being redeemed bears to the
aggregate amount of the Term Assets then on deposit in the Trust.
The Term Assets Issuer is not participating in, and will not receive any
proceeds in connection with, the sale of the Certificates.
There is currently no secondary market for the Certificates, and there can be
no assurance that a secondary market for the Certificates will develop or, if
it does develop, that it will continue. See "Special Considerations" in the
Prospectus.
The Certificates are being offered in registered form. The Certificates
initially will be represented by certificates registered in the name of Cede &
Co., as nominee of The Depository Trust Company ("DTC"). The interests of
beneficial owners of such Certificates will be represented by book entries on
the records of participating members of DTC ("Participants"). Definitive
certificates will be available for such Certificates only under the limited
circumstances described herein. See "Description of the
Certificates--Definitive Certificates."
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CERTIFICATES
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE CERTIFICATES OFFERED BY THIS PROSPECTUS SUPPLEMENT WILL CONSTITUTE A
SEPARATE SERIES OF CERTIFICATES BEING OFFERED BY THE COMPANY PURSUANT TO ITS
PROSPECTUS DATED JUNE 13, 1997, OF WHICH THIS PROSPECTUS SUPPLEMENT IS A PART
AND WHICH ACCOMPANIES THIS PROSPECTUS SUPPLEMENT. THE PROSPECTUS CONTAINS
IMPORTANT INFORMATION REGARDING THIS OFFERING WHICH IS NOT CONTAINED HEREIN,
AND PROSPECTIVE INVESTORS ARE URGED TO READ THE PROSPECTUS AND THIS PROSPECTUS
SUPPLEMENT IN FULL. IN PARTICULAR, INVESTORS SHOULD
ii
<PAGE>
CONSIDER CAREFULLY THE FACTORS SET FORTH UNDER "SPECIAL CONSIDERATIONS" IN THE
PROSPECTUS AND IN THIS PROSPECTUS SUPPLEMENT.
iii
<PAGE>
TABLE OF CONTENTS
Page
SUMMARY OF TERMS...........................................................S-1
SPECIAL CONSIDERATIONS.....................................................S-6
FORMATION OF THE TRUST.....................................................S-7
USE OF PROCEEDS............................................................S-7
THE TERM ASSETS ISSUER.....................................................S-7
DESCRIPTION OF THE TERM ASSETS.............................................S-8
DESCRIPTION OF THE CERTIFICATES............................................S-8
DESCRIPTION OF THE TRUST AGREEMENT........................................S-12
FEDERAL INCOME TAX CONSEQUENCES...........................................S-14
ERISA CONSIDERATIONS......................................................S-17
METHOD OF DISTRIBUTION....................................................S-18
RATINGS .................................................................S-18
LEGAL OPINIONS............................................................S-19
INDEX OF TERMS............................................................S-20
APPENDIX A - Identification of the Term Assets
APPENDIX B - Amortizing Class Certificates--Schedule of Amortizing Payments
APPENDIX C - Amounts Distributable Upon Special Event Redemption/Accreted
Value/Ratios
iv
<PAGE>
SUMMARY OF TERMS
The following summary of terms does not purport to be
complete and is qualified in its entirety by reference to the detailed
information appearing elsewhere herein and in the Prospectus. Certain
capitalized terms used herein are defined elsewhere in this Prospectus
Supplement or, to the extent not defined herein, have the meanings assigned to
such terms in the Prospectus.
<TABLE>
<S> <C>
The Trust.......................................... TIERS Corporate Bond-Backed Certificates Trust MOT
1998-5. The Trust will be formed pursuant to the Trust
Agreement dated as of May 19, 1998 (the "Closing Date"),
between Structured Products Corp., as depositor, and U.S.
Bank Trust National Association, as trustee, as supplemented
by the Series MOT 1998-5 Supplement dated as of May 19,
1998. The Trust Agreement will be qualified as an indenture
under the Trust Indenture Act of 1939, as amended. The
Company is an indirect wholly-owned subsidiary of Salomon
Smith Barney Holdings Inc, a wholly owned subsidiary of
Travelers Group Inc., and is an affiliate of Salomon Brothers
Inc. See "The Company" in the Prospectus.
Securities Offered................................. TIERS Corporate Bond-Backed Certificates, Series MOT
1998-5. The Certificates, each of which represents a fractional
undivided beneficial interest in the Trust, will be issued
pursuant to the Trust Agreement and will consist of two
classes: the ZTF Class Certificates and the Amortizing Class
Certificates. The Term Assets will be the sole assets of the
Trust from which Certificateholders will receive any
distributions.
ZTF Class Certificates............................. $60,000,000 aggregate Certificate Principal Balance. Except
in the case of a Special Event Redemption, no cash
distributions will be made on the ZTF Class Certificates.
Instead, the ZTF Class Certificates outstanding on April 1,
2018 will be terminated and deemed involuntarily surrendered
by the holders thereof in exchange for a principal amount of
the Term Assets underlying such ZTF Class Certificates equal
to the aggregate Certificate Principal Balance of such ZTF
Class Certificates. No action by such holders will be required
to effect such termination and exchange, which will be carried
out by the Trustee notifying such holders of such termination
and exchange and distributing to each such holder in kind its
pro rata portion of the Term Assets under the terms of the
Trust Agreement.
Cash Distributions
on the ZTF Class Certificates...................... Except in the case of a Special Event Redemption, there will
be no cash distributions on the ZTF Class Certificates.
Amortizing Class Certificates...................... $34,778,000 aggregate initial Certificate Principal Balance.
Distributions on the Amortizing Class Certificates will consist
of semiannual Fixed Payments payable on each Distribution
Date up to and including April 1, 2018. Each Fixed Payment
</TABLE>
<PAGE>
<TABLE>
<S> <C>
will be in an amount equal to the product of (i) 5.22%, (ii) 180
divided by 360, and (iii) $60,000,000 (or such other amount equal
to the amount of Term Assets in the Trust as of the related
Distribution Date. Each Fixed Payment payable on the Amortizing
Class Certificates will be allocated between interest accrued at
the Yield to Amortizing Class Final Distribution Date on the
then-outstanding aggregate Certificate Principal Balance of the
Amortizing Class Certificates, and return of principal to
Certificateholders, according to the schedule attached as Appendix
B hereto. Although payments on the Amortizing Class Certificates
are denominated as principal and interest, the Amortizing Class
Certificates generally represent indirect beneficial ownership of
solely the interest payments on the Term Assets and will be paid
solely from interest payments on the Term Assets; absent a Special
Event Redemption on or prior to April 1, 2018, the Amortizing
Class Certificateholders have no right to any portion of the
principal payments on the Term Assets.
The aggregate Certificate Principal Balance of the Amortizing
Class Certificates will initially be $34,778,000. On any
Distribution Date, the aggregate Certificate Principal Balance
will be reduced by the positive difference between (i) the
semiannual Fixed Payment made on such Distribution Date and
(ii) interest accrued on the aggregate Certificate Principal
Balance at the Yield to Amortizing Class Final Distribution
Date from the prior Distribution Date (or, in the case of the
initial Distribution Date, such interest accrued from April 1,
1998). The Certificate Principal Balance of the Amortizing
Class Certificates for each Distribution Date is set forth on
Appendix B.
Amortizing Class Final Distribution ............... The Amortizing Class Certificates will be paid in full on April
1, 2018.
Distribution Dates................................. Distributions on the Amortizing Class Certificates will be made
semiannually on the 1st day of each April and October, or if any
such day is not a Business Day then on the immediately following
Business Day, commencing October 1, 1998;
</TABLE>
S-2
<PAGE>
<TABLE>
<S> <C>
provided, however, that payment on each Distribution Date shall be
subject to prior payment of interest on the Term Assets.
Interest Accrual Period............................ For each Distribution Date, interest shall accrue on the
Amortizing Class Certificates during the period commencing
on and including the prior Distribution Date to, but excluding,
such Distribution Date, except that the initial Interest Accrual
Period will commence on April 1, 1998.
Term Assets........................................ The Term Assets consist of $60,000,000 aggregate principal
amount of Motorola, Inc. 5.22% Debentures due October 1,
2097, having the characteristics described in a prospectus and
a supplement thereto, each dated October 7, 1997. The Term
Assets were issued and sold as part of an underwritten public
offering of $300,000,000 aggregate principal amount of such
securities. Distributions are required to be made on the Term
Assets semiannually on the 1st day of each April and October,
or if such day is not a Business Day, on the next succeeding
Business Day. See "Description of the Term Assets" herein.
Deposit of Additional Term Assets;
Issuance of Additional Certificates................ The Depositor may from time to time deposit additional Term
Assets into the Trust. Upon any such deposit, additional ZTF
Class Certificates will be issued in a Certificate Principal
Balance equal to the principal amount of the additional Term
Assets being deposited and additional Amortizing Class
Certificates will be issued in a Certificate Principal Balance
calculated in the same manner as was used in the initial
offering of the Certificates. All Certificates issued in
connection with a deposit of additional Term Assets to the
Trust will rank pari passu with the Certificates of the same
class issued on the date hereof.
Trustee and Trust Agreement........................ U.S. Bank Trust National Association, acts as the Trustee
pursuant to a series trust agreement (the "Trust Agreement"), a
copy of which may be inspected at the designated office of the
Trustee, 100 Wall Street, Suite 1600, New York, New York 10005.
Tax Event; Term Assets Optional Redemption;
Special Event Redemption........................... The maturity of the Term Assets may be shortened by the
Term Assets Issuer upon the occurrence and continuance of a
Tax Event (as defined herein). In addition, the Term Assets
may be redeemed by the Term Assets Issuer (i) in whole
within 90 days following the occurrence of a Tax Event and
the receipt of an additional tax opinion (as described herein) or
(ii) at the option of the Term Assets Issuer as a whole at
anytime or in part from time to time, on not less than 30 nor
more than 60 days' notice to the holders at the Term Assets (a
"Term Assets Optional Redemption"), in each case at a price
which will at least equal the accreted value of the Term Assets
plus accrued and unpaid interest thereon at the Pass-Through
Rate. If the Term Assets or a portion thereof are redeemed, or
the maturity of the Term Assets is shortened to a date, prior to
April 1, 2018, the Certificates or a portion thereof, as the case
may be, will be redeemed. Any redemption of Certificates is
referred to as a "Special Event Redemption" and any date of
such redemption is referred to as a "Special Event Redemption
Date." The Trustee will distribute the payment received on the
Term Assets on the Special Event Redemption Date to the
holders of the ZTF Class Certificates and the Amortizing Class
Certificates subject to such redemption in the same ratio as (i)
the accreted value of the ZTF Class Certificates as of such
Special Event Redemption
</TABLE>
S-3
<PAGE>
<TABLE>
<S> <C>
Date bears to (ii) the Certificate Principal Balance of the
Amortizing Class Certificates as of such Special Event Redemption
Date. Such ratio will be calculated by the Calculation Agent. Such
ratio, and the amounts distributable as of any Distribution Date,
are shown on Appendix C hereto. In the event of a redemption of a
portion of the Term Assets on deposit in the Trust pursuant to a
Term Assets Optional Redemption, the Trustee shall select by lot a
portion of each of the ZTF Class Certificates and the Amortizing
Class Certificates for redemption based on their respective
Certificate Principal Balances in the same proportion (or as near
as practicable) that the Term Assets on deposit in the Trust being
redeemed bears to the aggregate amount of the Term Assets then on
deposit in the Trust, and such Certificates will be redeemed. See
"Description of the Certificates--Special Event Redemption Following
a Tax Event or a Term Assets Optional Redemption" herein.
Distribution of Term Assets
on Default......................................... Upon a Payment Default or an Acceleration of the Term
Assets (as such terms are defined herein), the Trustee will
make an in-kind distribution of the Term Assets to the holders
of the ZTF Class Certificates and the Amortizing Class
Certificates. The distribution will be made in the same ratio
as (i) the accreted value of the ZTF Class Certificates as of the
date of such Payment Default or Acceleration bears to (ii) the
Certificate Principal Balance of the Amortizing Class
Certificates as of the date of such Payment Default or
Acceleration. Such ratio will be calculated by the Calculation
Agent. Such ratio, and the amounts distributable as of any
Distribution Date, are shown on Appendix C hereto.
Record Dates....................................... The day immediately preceding each Distribution Date.
Denominations;
Specified Currency................................. The Certificates will be denominated and payable in U.S.
dollars and will be available for purchase in minimum
denominations of $5,000 and integral multiples thereof.
Form of Security................................... The Certificates are being offered in registered form.
The Certificates initially will be registered in the name of Cede
& Co., as nominee of The Depository Trust Company.
Definitive certificates will be available for such Certificates
only under the limited circumstances described herein.
See "Description of the Certificates--Definitive Certificates."
Distributions on the Certificates will be settled in immediately
available (same-day) funds.
Trustee .......................................... U.S. Bank Trust National Association.
Federal Income
Tax Consequences................................... See "Federal Income Tax Consequences" herein.
</TABLE>
S-4
<PAGE>
<TABLE>
<S> <C>
ERISA Considerations............................... Subject to the matters discussed under "ERISA Considerations"
herein, any employee benefit or other plan subject to the
Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or Section 4975 of the Internal Revenue
Code of 1986, as amended (the "Code"), including an
individual retirement account or Keogh plan, may purchase
Certificates of a class if such plan or the fiduciary who causes
"plan assets" of any such plan to purchase the Certificates is
able to make a deemed representation that its purchase and
holding of the Certificates, as well as subsequent transactions
involving the Trust, would not be prohibited under ERISA or
Section 4975 of the Code.
Ratings .......................................... It is a condition to the issuance of the Certificates that they
receive ratings of "Aa3" from Moody's Investors Service, Inc.
("Moody's") and "AA" from Standard & Poor's Ratings
Services, a division of The McGraw-Hill Companies, Inc.
("Standard & Poor's"). The Depositor has not requested a
rating of the Certificates from any other rating agency. The
rating given to the Certificates will be based primarily upon
the credit rating of the Term Assets and the legal structure of
the transaction, including the limitation that payments in
respect of the Certificates are subject to receipt by the Trustee
of payments on the Term Assets. The rating reflects the
likelihood that Certificateholders will receive the payments or
property due or distributable on their Certificates, as
applicable. A security rating is not a recommendation to buy,
sell or hold securities, and may be subject to revision or
withdrawal at any time by the assigning rating agency. See
"Ratings."
</TABLE>
S-5
<PAGE>
SPECIAL CONSIDERATIONS
A prospective purchaser of the Certificates should be aware of the
following factors in evaluating the merits and risks of an investment therein.
No Detailed Information About Term Assets or Term Assets Issuer
This Prospectus Supplement does not provide detailed information with
respect to the Term Assets or Motorola, Inc. (the "Term Assets Issuer"), any
risk factors relating thereto, or any rights or obligations, legal, financial
or otherwise, arising under or related to the Term Assets. See "The Term
Assets Issuer" and "Appendix A--Identification of Term Assets" herein.
Term Assets Issuer is the Only Payment Source
The Certificates are payable solely from amounts received by the
Trustee from payments made by the Term Assets Issuer on the Term Assets. The
Term Assets Issuer is subject to laws permitting bankruptcy, moratorium,
reorganization or other actions which, in the event of financial difficulties
of the Term Assets Issuer, could result in delays in payment, partial payment
or non-payment of the Certificates relating to a Term Asset. In the event of
nonpayment of the Term Assets, the risk of such nonpayment will be borne by
the holders of the Certificates. See "Description of the
Certificates--Distribution of Term Assets on Payment Default or Acceleration"
herein.
Bankruptcy Risks
If Salomon Brothers Holding Company Inc ("SBHCI"), the parent of the
Depositor, were to become a debtor in a bankruptcy case and a creditor or
trustee-in-bankruptcy or SBHCI itself were to request a bankruptcy court to
order that the Depositor be substantively consolidated with SBHCI, delays in
and reductions in the amount of distributions on the Certificates could occur.
SBHCI and the Depositor have taken certain steps that are intended to minimize
the risk that the assets of the Depositor would be substantively consolidated
with the assets and liabilities of SBHCI. These steps include the creation of
the Depositor as a separate, limited purpose subsidiary, restrictions on the
operations of the Depositor, and limitations in the certificate of
incorporation of the Depositor on the nature of the Depositor's business and
its ability to commence voluntary insolvency cases or proceedings without the
prior unanimous vote of all its directors. Further, the Depositor does not
intend to file, and SBHCI has agreed that it will not file, a voluntary
petition for relief under the Bankruptcy Code or any similar applicable state
laws with respect to the Depositor. Thus, (i) the voluntary or involuntary
application with respect to the Depositor for relief under Title 11 of the
United States Code or similar applicable state laws and (ii) the substantive
consolidation of the Depositor and SBHCI is unlikely to occur.
The transfer of the Term Assets from Salomon to the Depositor is
intended and has been structured to constitute an absolute sale of the Term
Assets rather than a borrowing by Salomon secured by the Term Assets. If
Salomon were to become a debtor in a bankruptcy case or a case under the
Securities Investor Protection Act of 1970, as amended ("SIPA") and a
bankruptcy trustee, a court which had issued a protective decree under SIPA or
a creditor of Salomon were to take the position that the transfer of the Term
Assets from Salomon to the Depositor should be characterized as the pledge of
the Term Assets to secure a borrowing by Salomon, then delays in distributions
on the Certificates or (should the bankruptcy court or the court in a case
under SIPA rule in favor of any such trustee or creditor) reductions in such
distributions could result. If the transfer of the Term Assets to the
Depositor is treated as a sale, however, the Term Assets would not be part of
Salomon's bankruptcy estate and would not be available to Salomon's creditors.
No Assurance of Liquidity
There is no assurance that any secondary market will develop or be
maintained for any class of Certificates. While the Underwriter intends to
maintain a secondary market for Certificates, it is not obligated to do so.
There can be no assurance that a secondary market in the Certificates will
develop or, if it does develop, that it will remain in existence for any
period of time. The absence of a secondary market would adversely affect the
liquidity of the Certificates.
S-6
<PAGE>
Events of Default
If an event of default on the Term Assets occurs, the risk of loss
with respect to the Term Assets lies entirely with the Certificateholders. If
a Payment Default or Acceleration (as such terms are defined herein) occurs,
the Trustee will distribute the Term Assets to the Certificateholders. See
"Description of the Certificates--Distribution of Term Assets on Payment
Default or Acceleration" herein.
The Underwriter and the Company
The Underwriter is an affiliate of the Company.
FORMATION OF THE TRUST
TIERS Corporate Bond-Backed Certificates Trust MOT 1998-5 will be
formed under New York law pursuant to the Trust Agreement dated as of May 19,
1998, as supplemented by the Series MOT 1998-5 Supplement dated as of May 19,
1998. The Trust Agreement will be qualified as an indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). Concurrently
with the execution and delivery of the Trust Agreement, the Company will
deposit with the Trustee the proceeds from the sale of the Certificates to the
Underwriter, with instructions to use such funds for the specific purpose of
purchasing the Term Assets. The Trustee, on behalf of the Trust, will accept
such funds, purchase the Term Assets and deliver the Certificates to or upon
the order of the Company. The Trustee will hold the Term Assets for the
benefit of the Certificateholders.
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the
Certificates will be used to purchase the Term Assets, which, after the
purchase thereof, will be sold by the Company to the Trust and will be the
sole Deposited Assets (as defined in the Prospectus) of the Trust.
THE TERM ASSETS ISSUER
This Prospectus Supplement does not provide information with respect
to the Term Assets Issuer. No investigation has been made of the financial
condition or creditworthiness of the Term Assets Issuer or any of its
subsidiaries in connection with the issuance of the Certificates. The Company
is not an affiliate of the Term Assets Issuer.
The Term Assets Issuer is subject to the informational requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
in accordance therewith files reports and other information (including
financial information) with the Commission. Copies of such reports and other
information may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549; Seven World Trade Center, New York, New York 10048; and Northwestern
Atrium Center, 500 West Madison Street, Chicago, Illinois 60661, and may be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission
maintains a Web site at http://www.sec.gov containing reports, proxy
statements and other information regarding registrants that file
electronically with the Commission. In addition, such reports and other
information can be obtained from the Term Assets Issuer at its address
specified in its most recent publicly available reports and at the offices of
the New York Stock Exchange, 20 Broad Street, New York, New York 10005 and the
Chicago Stock Exchange, 440 South LaSalle Street, Chicago, Illinois 60605.
The Trust will have no assets other than the Term Assets from which
to make distributions of amounts due in respect of the Certificates.
Consequently, the ability of Certificateholders to receive distributions in
respect of the Certificates will depend principally on the Trust's receipt of
payments on the Term Assets from the Term Assets Issuer.
Prospective purchasers of the Certificates should consider carefully
the Term Assets Issuer's financial condition and its ability to make payments
in respect of such Term Assets. This Prospectus Supplement
S-7
<PAGE>
relates only to the Certificates being offered hereby and does not relate to
the Term Assets or the Term Assets Issuer. All information contained in this
Prospectus Supplement regarding the Term Assets Issuer is derived from the
Term Assets Prospectus. Neither the Company nor the Underwriter has
participated in the preparation of such documents, or takes any responsibility
for the accuracy or completeness of the information provided therein.
DESCRIPTION OF THE TERM ASSETS
The Term Assets of the Trust will consist solely of initially
$60,000,000 aggregate principal amount of 5.22% Debentures due October 1, 2097
issued by the Term Assets Issuer, having the characteristics described in the
Term Assets Prospectus. The Term Assets were originally issued by the Term
Assets Issuer as part of an underwritten public offering of $300,000,000
aggregate principal amount of such securities, pursuant to a registration
statement on Form S-3 (together with all amendments and exhibits thereto, the
"Term Assets Registration Statement"), filed by the Term Assets Issuer with
the Securities and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended (the "Securities Act"). Distributions are required to
be made on the Term Assets semiannually on the 1st day of each April and
October (each, a "Term Assets Payment Date"), or if such day is not a Business
Day, on the next succeeding Business Day.
The Term Assets deposited in the Trust represent the sole assets of
the Trust that are available to make distributions in respect of the
Certificates. Consequently, the ability of Certificateholders to receive
distributions in respect of the Certificates will depend on the Trust's
receipt of payments on, or in respect of, the Term Assets. This Prospectus
Supplement relates only to the Certificates being offered hereby and does not
relate to the Term Assets.
The disclosure under this caption in the Prospectus Supplement is
intended primarily to identify the Term Assets and does not purport to
summarize the Term Assets or to provide information with respect to the Term
Assets Issuer. Appendix A to this Prospectus Supplement, which contains the
pricing terms of the Term Assets, is derived solely from the description
thereof in the Term Assets Prospectus. Such information does not purport to be
complete and is qualified in its entirety by, and should be read in
conjunction with, (i) the Term Assets Prospectus, and (ii) the Term Assets
Registration Statement, of which the Term Assets Prospectus is a part. This
Prospectus Supplement relates only to the Certificates offered hereby and does
not relate to an offering of the Term Assets. No representation is made by the
Trust, the Trustee or the Company as to the accuracy or completeness of the
information contained in the Term Assets Prospectus or the Term Assets
Registration Statement.
Ratings
The Term Assets have been rated "Aa3" and "AA" by Moody's and
Standard & Poor's, respectively. Any rating of the Term Assets is not a
recommendation to purchase, hold or sell such Term Assets or the Certificates,
and there can be no assurance that a rating will remain for any given period
of time or that a rating will not be revised or withdrawn entirely by a rating
agency if in its judgment circumstances in the future so warrant.
Salomon Brothers Inc and the Term Assets Issuer
From time to time, Salomon Brothers Inc may be engaged by the Term
Assets Issuer as an underwriter or placement agent, in an advisory capacity or
in other business arrangements. In addition, Salomon Brothers Inc or another
affiliate of the Company may make a market in other outstanding securities of
the Term Assets Issuer.
DESCRIPTION OF THE CERTIFICATES
General
The Certificates will be denominated and distributions with respect
thereto will be payable in United States Dollars, which will be the "Specified
Currency" as such term is defined in the Prospectus. The Certificates
represent in the aggregate the entire beneficial ownership interest in the
Trust. The property of the Trust will
S-8
<PAGE>
consist of (i) the Term Assets, (ii) all payments on or collections in respect
of the Term Assets accrued on or after the Closing Date, together with any
proceeds thereof, and (iii) all funds from time to time deposited with the
Trustee in accounts related to the Trust. The property of the Trust will be
held for the benefit of the Certificateholders by the Trustee.
Certificateholders will receive payments on each Distribution Date as
described herein. See "-- Collections and Distributions."
The Certificates represent two classes of undivided fractional
beneficial interests in specific assets of the Trust, and all distributions to
Certificateholders shall be made only from the property of the Trust as
described herein. The Certificates do not represent an interest in or
obligation of the Company, the Term Assets Issuer, the Trustee or Salomon
Brothers Inc or any affiliate thereof.
The aggregate "Certificate Principal Balance" of the ZTF Class
Certificates on any determination date will equal the aggregate principal
amount of the Term Assets in the Trust as of such date. The Certificate
Principal Balance of any ZTF Class Certificate will represent a pro rata
portion of the then-current aggregate Certificate Principal Balance of all
outstanding ZTF Class Certificates and will equal the principal amount of Term
Assets that the holder of such ZTF Class Certificate is entitled to receive as
an in-kind distribution on April 1, 2018. Except in the case of a Special
Event Redemption, holders of ZTF Class Certificates will not be entitled to
receive any cash distributions.
The aggregate "Certificate Principal Balance" of the Amortizing Class
Certificates will initially be $34,778,000. On any Distribution Date, the
aggregate Certificate Principal Balance will be reduced by the positive
difference between (i) the semiannual Fixed Payment made on such Distribution
Date and (ii) interest accrued on the aggregate Certificate Principal Balance
at the Yield to Amortizing Class Final Distribution Date from the prior
Distribution Date (or, in the case of the initial Distribution Date, such
interest accrued from the Closing Date). The Certificate Principal Balance of
any Amortizing Class Certificate will represent a pro rata portion of the
then-current aggregate Certificate Principal Balance of all outstanding
Amortizing Class Certificates. The Amortizing Class Certificates are not
subject to redemption except in connection with a Special Event Redemption.
The semiannual Fixed Payment payable on the Amortizing Class
Certificates will be allocated between interest and return of principal
according to the table attached as Appendix B hereto. Although payments on the
Amortizing Class Certificates are denominated as principal and interest, the
Amortizing Class Certificates generally represent indirect beneficial
ownership of solely the interest payments on the Term Assets and will be paid
solely from interest payments on the Term Assets; absent a Special Event
Redemption prior to April 1, 2018, the Amortizing Class Certificateholders
have no right to any portion of the principal payments on the Term Assets.
Form of the Certificates
The Certificates will be delivered in registered form. The
Certificates will be issued, maintained and transferred on the book-entry
records of DTC and its Participants in minimum denominations of $5,000 and
integral multiples thereof.
The Certificates will each initially be represented by one or more
global certificates registered in the name of the nominee of DTC (together
with any successor clearing agency selected by the Company, the "Clearing
Agency"), except as provided below; the Company has been informed by DTC that
DTC's nominee will be Cede & Co. No Certificateholder will be entitled to
receive a certificate representing such Certificateholder's interest, except
as set forth below under "Definitive Certificates." Unless and until
Definitive Certificates (as defined below) are issued under the limited
circumstances described herein, all references to actions by
Certificateholders with respect to any such Certificates shall refer to
actions taken by DTC upon instructions from its Participants. See "Definitive
Certificates" below and "Description of the Certificates--Global Securities"
in the Prospectus.
Under the rules, regulations and procedures creating and affecting
DTC and its operations, DTC will take action permitted to be taken by a
Certificateholder under the Trust Agreement only at the direction of one or
more Participants to whose DTC account such Certificates are credited.
Additionally, DTC will take such actions with respect to specified Voting
Rights (as defined herein) only at the direction and on behalf of Participants
whose holdings of such Certificates evidence such specified Voting Rights. DTC
may take conflicting actions with respect
S-9
<PAGE>
to Voting Rights, to the extent that Participants whose holdings of
Certificates evidence such Voting Rights authorize divergent action.
Definitive Certificates
"Definitive Certificates" will be issued to owners of Certificates or
their nominees, respectively, rather than to DTC or its nominee, only if (i)
the Company advises the Trustee in writing that DTC is no longer willing or
able to discharge properly its responsibilities as Clearing Agency with
respect to the Certificates and the Company is unable to locate a qualified
successor or (ii) the Company, at its option, elects to terminate the
book-entry system through DTC.
Upon the occurrence of any event described in the immediately
preceding paragraph, the Trustee is required to notify all Participants of the
availability through DTC of Definitive Certificates. Upon surrender by DTC of
the definitive certificates representing the Certificates and receipt of
instructions for re-registration, the Trustee will reissue such Certificates
as Definitive Certificates issued in the respective principal amounts owned by
the individual owners of such Certificates, and thereafter the Trustee will
recognize the holders of such Definitive Certificates as Certificateholders
under the Trust Agreement.
Listing on the New York Stock Exchange
The Amortizing Class Certificates have been authorized for listing,
upon official notice of issuance, with the NYSE. There can be no assurance
that the Amortizing Class Certificates, once listed, will continue to be
eligible for trading on the NYSE.
Interest Accrual
For each Distribution Date, interest shall accrue on the Amortizing
Class Certificates during the period (the "Interest Accrual Period")
commencing on and including the prior Distribution Date to, but excluding,
such Distribution Date, except that the initial Interest Accrual Period shall
commence on April 1, 1998.
Interest will not accrue on the Certificate Principal Balance of the
ZTF Class Certificates. Instead, the ZTF Class Certificates will be terminated
and deemed involuntarily surrendered by the holders thereof in exchange for a
principal amount of the Term Assets underlying such ZTF Class Certificates
equal to the aggregate Certificate Principal Balance of such ZTF Class
Certificates on April 1, 2018, unless a Special Event Redemption has occurred
prior to such date. No action by such holders will be required to effect such
termination and exchange, which will be carried out by the Trustee notifying
such holders of such termination and exchange and distributing to each such
holder in kind its pro rata portion of the Term Assets under the terms of the
Trust Agreement.
Interest will accrue on each Amortizing Class Certificate for each
Interest Accrual Period ending on or prior to April 1, 2018 at the Yield to
Amortizing Class Final Distribution Date (such accrued interest, the
"Amortizing Class Periodic Interest"). Except in the case of any Special Event
Redemption, the Amortizing Class Periodic Interest shall be payable (together
with principal on the Amortizing Class Certificates) on the Distribution Dates
related to each applicable Interest Accrual Period.
See "Description of the Certificates--Interest on the Certificates" in
the Prospectus.
Collections and Distributions
Distributions by the Trustee pursuant to the terms of the
Certificates and the Trust Agreement shall be made, subject to timely receipt
of payments on the Term Assets and, in the case of cash distributions, solely
to the extent of funds held under the Trust Agreement:
(i) for the ZTF Class Certificates, by a distribution in kind of the
Term Assets on April 1, 2018, and
(ii) for the Amortizing Class Certificates, on each Distribution Date
through April 1, 2018;
S-10
<PAGE>
subject, in each case, to the provisions discussed under "Description of the
Certificates -- Special Event Redemption Following a Tax Event or a Term
Assets Optional Redemption" and "-- Distribution of Term Assets on Payment
Default or Acceleration."
If a payment with respect to the Term Assets is made to the Trustee
after the Term Assets Payment Date on which such payment was due, the Trustee
will distribute any such amounts received on the Business Day following such
receipt. No additional amounts will accrue on the Certificates or be owed to
Certificateholders in respect of such distribution.
All amounts received on or with respect to the Term Assets shall be
held uninvested by the Trustee.
On April 1, 2018, the Trustee will distribute the Term Assets in kind
to the ZTF Class Certificateholders, unless a Special Event Redemption has
occurred on or prior to such date.
On each Distribution Date, the Trustee will distribute Interest
Collections (as defined below) for such Distribution Date in the Collection
Account to the Amortizing Class Certificateholders for the payment of Fixed
Payments, but only to the extent that such Interest Collections were accrued
prior to April 1, 2018.
"Interest Collections" means, with respect to any Distribution Date,
all payments received by the Trustee, during the Collection Period ending on
such Distribution Date, in respect of (i) interest on the Term Assets and (ii)
penalties or other amounts required to be paid because of late payments on the
Term Assets. "Collection Period" means each period from (but excluding) the
preceding Distribution Date (or, in the case of the first Distribution Date,
from and including the Closing Date) up to and including the current
Distribution Date.
Distribution In Kind of Term Assets on April 1, 2018
The ZTF Class Certificates outstanding on April 1, 2018 will be
terminated and deemed involuntarily surrendered by the holders thereof in
exchange for a principal amount of the Term Assets underlying such ZTF Class
Certificates equal to the aggregate Certificate Principal Balance of such ZTF
Class Certificates. No action by such holders will be required to effect such
termination and exchange, which will be carried out by the Trustee notifying
such holders of such termination and exchange and distributing to each such
holder in kind its pro rata portion of the Term Assets under the terms of the
Trust Agreement.
Special Event Redemption Following a Tax Event or a Term Assets Optional
Redemption
The maturity of the Term Assets may be shortened by the Term Assets
Issuer upon the occurrence and during the continuation of a Tax Event (as
defined herein). The Term Assets may be redeemed by the Term Assets Issuer in
whole but not in part within 90 days following the occurrence and continuation
of a Tax Event and the receipt by the Term Assets Issuer of an opinion of a
nationally recognized independent tax counsel, to the effect that there would,
notwithstanding any shortening of the maturity of the Term Assets, be more
than an insubstantial risk that the interest paid by the Term Assets Issuer,
or original issue discount accrued, on the Term Assets is not, or will not be,
deductible, in whole or in part, by the Term Assets Issuer for United States
federal income tax purposes. In addition, the Term Assets may be redeemed as a
whole at any time or in part from time to time at the option of the Term
Assets Issuer on not less than 30 nor more than 60 days' notice to the holders
of the Term Assets (a "Term Assets Optional Redemption"). The Term Assets will
be redeemed at a price which will at least equal the accreted value of the
Term Assets plus accrued and unpaid interest thereon at the Pass-Through Rate
to the date of redemption. If the Term Assets or a portion thereof are
redeemed, or the maturity of the Term Assets is shortened to a date, prior to
April 1, 2018, the Certificates or a portion thereof, as the case may be, will
be redeemed. Any redemption of Certificates is referred to as a "Special Event
Redemption" and any date of such redemption is referred to as a "Special Event
Redemption Date." The Trustee will distribute the payment received on the Term
Assets on the Special Event Redemption Date to the holders of the ZTF Class
Certificates and the Amortizing Class Certificates subject to such redemption
in the same ratio as (i) the accreted value of the ZTF Class Certificates as
of such Special Event Redemption Date bears to (ii) the Certificate Principal
Balance of the Amortizing Class Certificates as of such Special Event
Redemption Date. Such ratio will be calculated by the Calculation Agent. Such
ratio, and the amounts distributable as of any Distribution Date, are shown on
Appendix C hereto.
S-11
<PAGE>
In the event of a redemption of a portion of the Term Assets on
deposit in the Trust pursuant to a Term Assets Optional Redemption, the
Trustee shall select by lot a portion of each of the ZTF Class Certificates
and the Amortizing Class Certificates for redemption based on their respective
Certificate Principal Balances in the same proportion (or as near as
practicable) that the Term Assets on deposit in the Trust being redeemed bears
to the aggregate amount of Term Assets then on deposit in the Trust, and such
Certificates will be redeemed.
A "Tax Event" means the receipt by the Term Assets Issuer of an
opinion of nationally recognized independent tax counsel to the effect that,
as a result of (a) any amendment to, clarification of or change (including any
announced prospective amendment, clarification or change) in any law, or any
regulation thereunder, of the United States, (b) any judicial decision,
official administrative pronouncement, ruling (including the public release of
any technical advice memorandum or other private letter ruling), regulatory
procedure, notice or announcement, including any notice or announcement of
intent to adopt or promulgate any ruling, regulatory procedure or regulation
(any of the foregoing, an "Administrative or Judicial Action"), or (c) any
amendment to, clarification of or change in any official position with respect
to, or any interpretation of (including any position taken in any Internal
Revenue Service audit or similar proceeding, in each event, involving the Term
Assets Issuer), an Administrative or Judicial Action or a law or regulation of
the United States that differs from the theretofore generally accepted
position or interpretation, in each case, occurring or first publicly released
on or after October 7, 1997, there is more than an insubstantial increase in
the risk that interest paid by the Term Assets Issuer, or original issue
discount accrued, on the Term Assets is not, or will not be, deductible, in
whole or in part, by the Term Assets Issuer for United States federal income
tax purposes.
Distribution of Term Assets on Payment Default or Acceleration
If a Payment Default or an Acceleration occurs, the Trustee will make
an in-kind distribution of the Term Assets to the holders of the ZTF Class
Certificates and the Amortizing Class Certificates. A "Payment Default" means
a default in the payment of any amount due on the Term Assets from the Term
Assets Issuer after the same becomes due and payable (and the expiration of
any applicable grace period on the Term Assets). An "Acceleration" means the
acceleration of the maturity of the Term Assets following the occurrence of
any default on the Term Assets other than a Payment Default. The distribution
will be made to the holders of the ZTF Class Certificates and the Amortizing
Class Certificates in the same ratio as (i) the accreted value of the ZTF
Class Certificates as of the date of such Payment Default or Acceleration
bears to (ii) the Certificate Principal Balance of the Amortizing Class
Certificates as of the date of such Payment Default or Acceleration. Such
ratio will be calculated by the Calculation Agent. Such ratio, and the amounts
distributable as of any Distribution Date, are shown on Appendix C hereto.
Term Assets will be liquidated by the Trustee, and the proceeds thereof
distributed in cash, only to the extent necessary to avoid distribution of
fractional securities to Certificateholders.
Additional Term Assets and Certificates
The Depositor may from time to time deposit additional Term Assets
into the Trust. Upon any such deposit, additional ZTF Class Certificates will
be issued in a Certificate Principal Balance equal to the principal amount of
the additional Term Assets being deposited and additional Amortizing Class
Certificates will be issued in a Certificate Principal Balance calculated in
the same manner as was used in the initial offering of the Certificates. All
Certificates issued in connection with a deposit of additional Term Assets to
the Trust will rank pari passu with the Certificates of the same class issued
on the date hereof.
DESCRIPTION OF THE TRUST AGREEMENT
General
The Certificates will be issued pursuant to the Trust Agreement, a
form of which is filed as an exhibit to the Registration Statement of which
this Prospectus Supplement and the Prospectus form a part. A Current Report on
Form 8-K relating to the Certificates containing a copy of the Trust Agreement
as executed will be filed by the Company with the Commission following the
issuance and sale of the Certificates. The assets of the Trust created under
the Trust Agreement will consist of (i) the Term Assets, (ii) all payments on
or collections in respect of the Term Assets accrued on or after April 1,
1998, together with any proceeds thereof, and (iii) all funds from time
S-12
<PAGE>
to time deposited with the Trustee in accounts related to the Trust. Reference
is made to the Prospectus for important information in addition to that set
forth herein regarding the Trust, the terms and conditions of the Trust
Agreement and the Certificates. The following summaries of certain provisions
of the Trust Agreement do not purport to be complete and are subject to the
detailed provisions contained in the form of Trust Agreement, to which
reference is hereby made for a full description of such provisions, including
the definition of certain terms used herein.
Affiliate Exchange Right
Each affiliate of the Depositor, but not the Depositor itself, will
have the right, subject to the limitations contained in the Trust Agreement,
on any date to tender to the Trustee ZTF Class Certificates comprising a
specified percentage of the aggregate Certificate Principal Balance of the ZTF
Class Certificates, together with Amortizing Class Certificates comprising the
same percentage of the aggregate Certificate Principal Balance of the
Amortizing Class Certificates, and to receive in exchange a principal amount
of Term Assets comprising the same percentage of the Term Assets deposited in
the Trust.
The Trustee
U.S. Bank Trust National Association, a national banking association,
will act as trustee for the Certificates and the Trust pursuant to the Trust
Agreement. The Trustee's offices are located at 100 Wall Street, Suite 1600,
New York, New York 10005 and its telephone number is (212) 361-2500.
The Trust Agreement will provide that the Trustee and any director,
officer, employee or agent thereof will be indemnified by the Trust and held
harmless against any loss, liability or expense incurred in connection with
any legal action relating to the Trust Agreement or the Certificates or the
performance of the Trustee's duties under the Trust Agreement, other than any
loss, liability or expense (i) that constitutes a specific liability of the
Trustee under the Trust Agreement or (ii) incurred by reason of willful
misfeasance, bad faith or negligence in the performance of the Trustee's
duties under the Trust Agreement or as a result of a breach, or by reason of
reckless disregard, of the Trustee's obligations and duties under the Trust
Agreement.
Pursuant to the Trust Agreement, as compensation for the performance
of its duties under such agreement, the Trustee shall be entitled to payment
of trustee fees and reimbursement of expenses by the Company pursuant to a
separate agreement with the Company, but shall not have any claim against the
Trust with respect thereto.
Event of Default
There are no events of default with respect to the Certificates. If a
Payment Default or an Acceleration occurs, the Trustee will distribute the
Term Assets to the Certificateholders. See "Description of the
Certificates--Distribution of Term Assets on Payment Default or Acceleration"
herein.
Voting Rights
The ZTF Class Certificateholders will have 50% of the total Voting
Rights, and the Amortizing Class Certificateholders will have 50% of the total
Voting Rights. Subject to the foregoing, "Voting Rights" shall mean (a) with
respect to the ZTF Class Certificates, the Voting Rights allotted to such
Class allocated among all ZTF Class Certificateholders in proportion to the
respective Certificate Principal Balances of the then-outstanding ZTF Class
Certificates held by such Certificateholders on any date of determination and
(b) with respect to the Amortizing Class Certificates, the Voting Rights
allotted to such Class allocated among all Amortizing Class Certificateholders
in proportion to the respective Certificate Principal Balances of the
then-outstanding Amortizing Class Certificates held by such Certificateholders
on any date of determination.
The required percentage of Voting Rights of those Certificates that
are materially adversely affected by any modification or amendment of the
Trust Agreement necessary to consent to such modification or amendment shall
be 66-2/3%.
S-13
<PAGE>
Voting of Term Assets
The Trustee, as holder of the Term Assets, has the right to vote and
give consents and waivers in respect of such Term Assets as permitted by the
depositary with respect thereto and except as otherwise limited by the Trust
Agreement. In the event that the Trustee receives a request from the Term
Assets Issuer for its consent to any amendment, modification or waiver of the
Term Assets or any document relating thereto, or receives any other
solicitation for any action with respect to the Term Assets, the Trustee shall
mail a notice of such proposed amendment, modification, waiver or solicitation
to each Certificateholder of record as of such date. The Trustee shall request
instructions from the Certificateholders as to whether or not to consent to or
vote to accept such amendment, modification, waiver or solicitation. The
Trustee shall consent or vote, or refrain from consenting or voting, in the
same proportion (based on the relative Certificate Principal Balances of the
Certificates) as the Certificates of the Trust were actually voted or not
voted by the Certificateholders thereof as of a date determined by the Trustee
prior to the date on which such consent or vote is required; provided,
however, that, notwithstanding anything to the contrary stated herein, the
Trustee shall at no time vote in favor of or consent to any matter (i) which
would alter the timing or amount of any payment on the Term Assets, including,
without limitation, any demand to accelerate the Term Assets or (ii) which
would result in the exchange or substitution of any Term Asset pursuant to a
plan for the refunding or refinancing of such Term Asset, except in each case
with the unanimous consent of the Certificateholders and subject to the
requirement that such vote or consent would not, based on an opinion of
counsel, materially increase the risk that the Trust would fail to qualify as
a grantor trust for federal income tax purposes. The Trustee shall have no
liability for any failure to act resulting from Certificateholders' late
return of, or failure to return, directions requested by the Trustee from the
Certificateholders.
Evidence as to Compliance
Annual independent audits of the Trust will not be required; however,
the Trust Agreement will provide that within four months following the end of
an Accounting Period during which a distribution was scheduled to be made on
the Term Assets, a firm of independent public accountants will furnish a
report to the Depositor, the Rating Agencies and the Trustee to the effect
that such firm has examined certain documents and records relating to the
administration of the Term Assets during the related Accounting Period and
performed accounting and auditing procedures set forth in the Trust Agreement
which should enable the recipients of such reports to determine whether such
administration was conducted in compliance with the terms of the Trust
Agreement. Such report will identify any exceptions found during the
examination. "Accounting Period" will mean each twelve-month period ending on
the 30th day of June. The Company reserves the right to change the timing of
Accounting Periods, but no Accounting Period may exceed 12 months.
Termination of the Trust
The Trust shall terminate upon (i) the distribution in kind of the
Term Assets on April 1, 2018, (ii) the payment in full of amounts due and
owing on the Certificates following a Special Event Redemption, (iii) the
distribution in kind of the Term Assets to the ZTF Class Certificateholders
and Amortizing Class Certificateholders after a Payment Default or an
Acceleration or (iv) the distribution in kind of the Term Assets upon the
tender by an affiliate of the Depositor of 100% of each of the
then-outstanding ZTF Class Certificates and Amortizing Class Certificates in
exchange for 100% of the Term Assets. See "Description of the Trust
Agreement--Termination" in the Prospectus.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain of the United States federal
income tax consequences of an investment in the Certificates by Holders that
acquire their Certificates in their initial offering. The discussion and the
opinions referenced below are based upon laws, regulations, rulings and
decisions currently in effect, all of which are subject to change. Prospective
investors should note that no rulings have been or are expected to be sought
from the Internal Revenue Service (the "IRS") with respect to any of the
United States federal income tax consequences discussed below, and no
assurance can be given that the IRS will not take contrary positions. Further,
the following summary does not deal with all United States federal income tax
consequences applicable to all categories of investors, some of which may be
subject to special rules, such as Non-United States Holders
S-14
<PAGE>
(as defined below), banks, insurance companies, tax-exempt organizations,
dealers in securities or currencies, S corporations, estates and trusts,
investors that hold the Certificates (or have held the Term Assets) as part of
a hedge, straddle, integrated transaction or conversion transaction, or
holders whose "functional currency" is not the United States dollar.
Furthermore, it does not address alternative minimum tax consequences or the
indirect effects on the holders of equity interests in a Certificateholder. In
addition, this summary generally is limited to investors that will hold the
Certificates as "capital assets" within the meaning of Section 1221 of the
Internal Revenue Code of 1986 (the "Code"). Investors should consult their own
tax advisers to determine the United States federal, state, local and other
tax consequences of the purchase, ownership and disposition of the
Certificates.
As used herein under "Federal Income Tax Consequences," "United
States Holder" or "Holder" means a beneficial holder of a Certificate that is
an individual citizen or resident of the United States, a corporation or,
except as may be provided in regulations, other entity created or organized in
or under the laws of the United States or an estate or trust which is a United
States Person within the meaning of section 7701(a)(30) of the Code.
"Non-United States Holder" means any holder that is not a United States
Holder.
Tax Status of the Trust
The characterization of the Trust for federal income tax purposes is
not certain. It is structured as a "grantor trust" and will likely be so
treated. Nonetheless, certain terms of the Trust may be viewed by the Internal
Revenue Service as inconsistent with the rules for qualification as a grantor
trust. In light of this uncertainty, upon the issuance of the Certificates,
Orrick, Herrington & Sutcliffe LLP, special counsel to the Depositor, will
deliver its opinion generally to the effect that, assuming compliance with the
Trust Agreement (and certain other documents) and based on certain
representations of the Depositor, for federal income tax purposes, if the
Trust is determined not to be a grantor trust, it will be characterized as a
partnership and not as an association taxable as a corporation (or publicly
traded partnership treated as an association).
Prospective investors should be aware that no rulings have been
sought from the IRS, and that legal opinions are not binding on the IRS or the
courts. Accordingly, there can be no absolute assurance that the IRS will
agree that the Trust is a grantor trust. If, contrary to special counsel's
opinion, the Trust is determined to be an association taxable as a corporation
or a publicly traded partnership treated as a corporation, among other
consequences, the Trust would be subject to federal income tax (and similar
state income or franchise taxes) on its income and distributions to
Certificateholders would be impaired. In light of special counsel's opinion,
however, (i) the Trust intends for tax reporting purposes to characterize the
Trust as a grantor trust and (ii) except as specifically discussed otherwise
under "Possible Recharacterization of the Trust as a Partnership and the
Amortizing Class Certificates as Debt" or otherwise indicated herein, the
balance of this discussion assumes that the Trust will be classified as a
grantor trust.
Certificateholders will be treated, for federal income tax purposes,
as if they had purchased their pro rata interest of the Trust's underlying
assets.
The prospectus supplement relating to the original offering of the
Term Assets indicates that counsel to the Term Assets Issuer advised the Term
Assets Issuer that the Term Assets will constitute indebtedness for United
States federal income tax purposes. Special tax counsel to the Company has
made no investigation of the Term Assets or the circumstances surrounding
their issuance but has assumed that they will be classified for United States
federal income tax purposes as indebtedness of the Term Assets Issuer. The
balance of this discussion assumes that the Term Assets will be so classified.
Income of Certificateholders
Each Certificateholder will be subject to the original issue discount
("OID") rules of the Code and Treasury Regulations with respect to such
Certificate. Under those rules, the Certificateholder (whether on the cash or
accrual method of accounting) will be required to include in income the OID on
the Certificate as it accrues on a daily basis, regardless of when cash
payments are received, using a method reflecting a constant yield as described
below.
S-15
<PAGE>
The amount of OID on the Certificate will be equal to the excess of
all amounts payable on the Certificate over the amount paid to acquire the
Certificate. In general, the amount of OID includible in income in any taxable
year by a Certificateholder is the sum of the "daily portions" of OID on the
Certificate for all days during the taxable year that the Certificateholder
owns the Certificate. The daily portions of OID on a Certificate are
determined by allocating to each day in any "accrual period" a ratable portion
of the OID allocable to that accrual period. The amount of OID allocable to
each accrual period is determined by multiplying the "adjusted issue price"
(as defined below) of the Certificate at the beginning of the period by a
fraction, the numerator of which is the annual yield to maturity of the
Certificate and the denominator of which is the number of accrual periods in a
year. An "accrual period" would generally be each period ending on an interest
payment date on the Certificates, although Treasury regulations allow a
Certificateholder to elect other accrual periods of no more than a year in
length, as long as each scheduled payment on the Certificates occurs at the
end of an accrual period. The yield to maturity of a Certificate is determined
by each holder based on that holder's purchase price.
The "adjusted issue price" of the Certificate at the beginning of any
accrual period is the purchase price for a Certificate (i) increased by the
amount of OID allocable to all prior accrual periods and (ii) reduced by the
amount of all payments on the Certificates allocable to the holder in all
prior accrual periods.
The Trustee currently intends for information reporting purposes to
account for OID reportable by Certificateholders by reference to the price
paid for a Certificate by an initial purchaser at the original offering price
to the public, although the amount of OID will differ for other purchasers.
Such purchasers should consult their tax advisers regarding the proper
calculation of OID.
Because a ZTF Class Certificateholder will not be receiving current
distributions of interest, OID will be reported as income prior to the receipt
of cash attributable to such income and (prior to the ZTF Class Accrual
Commencement Date) the amount of OID includible in income will increase each
year.
Purchase and Sale of a Certificate or Term Assets
A Certificateholder's tax basis in a Certificate generally will equal
the cost of the Certificate increased by any amounts includible in income as
OID, and reduced by any payments made on the Certificate. If a Certificate is
sold or redeemed for cash (for example, upon the redemption of Term Assets upon
a Special Event Redemption), capital gain or loss will be recognized equal to
the difference between the proceeds of sale and the Certificateholder's adjusted
basis in the Certificate. Assuming that all holders receive solely Term Assets,
no gain or loss will be recognized by a holder upon the exchange of Term Assets
for ZTF Class Certificates of equal principal amount on April 1, 2018. It is not
clear whether gain or loss will be recognized upon the redemption of the
Certificates in exchange for Term Assets following a Payment Default or an
Acceleration on the Term Assets.
Possible Recharacterization of the Trust as a Partnership and the Amortizing
Class Certificates as Debt
As indicated above under "Tax Status of the Trust," it is possible
that the IRS will seek to recharacterize the Trust as a partnership. If the
IRS were to successfully recharacterize the Trust as a partnership, the Trust
would not be subject to federal income tax. Further, under Treasury Regulation
1.761-2, certain partnerships may "elect out" of subchapter K of the Code
(partnership tax accounting). Although its eligibility is subject to
uncertainty, the Trust intends to make this election. Assuming that it is so
eligible, each Certificateholder will be required to report its respective
share of the items of income, deductions, and credits of the organization on
their respective returns (making such elections as to individual items as may
be appropriate) in a manner consistent with the exclusion of the Trust from
partnership tax accounting. Such reporting should be substantially similar to
the income tax reporting that would be required under the grantor trust rules.
In mutual consideration for each Holder's purchase of a Certificate, each such
Holder is deemed to consent to the Trust's making of a protective election out
of subchapter K of the Code.
If the election to be excluded from the partnership tax accounting
provisions of the Code is not effective, among other consequences, (i) the
Trust would be required to account for its income and deductions at the Trust
level and to utilize a taxable year for reporting purposes, (ii) the
information reporting rules applicable to
S-16
<PAGE>
partnerships would apply and (iii) each Holder would be required to separately
take into account such Holder's distributive share of income and deductions of
the Trust. A Holder would take into account its distributive share of Trust
income and deductions for each taxable year of the Trust in the Holder's
taxable year which ends with or within the Trust's taxable year. A Holder's
share of the income of the Trust computed at the Trust level would not
necessarily be the same if computed under the OID rule described above under
"Income of Certificateholders" and, in particular, may not take account of any
difference in the yield on the Certificate to the Holder based on the
Certificateholder's purchase price and the yield on the Term Assets determined
at the Trust level.
Although unlikely, it is also possible that the Amortizing Class
Certificates may be treated as newly issued debt instruments of the Trust. In
such a case they would generally be treated as not having been issued with
original issue discount. However, as debt instruments, the Amortizing Class
Certificates would be debt instruments described in section 1272(a)(6) of the
Code. Special rules apply to such debt instruments acquired with market
discount or premium and, in general, such instruments may not be integrated
with hedging instruments under Treasury Regulation section 1.1275-6.
In the unlikely event that the Amortizing Class Certificates are
treated as debt instruments issued by the Trust, ZTF Class Certificateholders
would be treated as owning indirect interests in the (whole) Term Assets and
the Amortizing Class Certificates would be treated as acquisition
indebtedness. Among other consequences, income on the ZTF Class Certificates
would be included in unrelated business taxable income, and thus subject to
tax, in the hands of tax-exempt investors.
State and Other Tax Consequences
In addition to the federal income tax consequences described above,
potential investors should consider the state, local and foreign tax
consequences of the acquisition, ownership and disposition of the
Certificates. State, local and foreign tax law may differ substantially from
federal tax law, and this discussion does not purport to describe any aspect
of the tax law of a state or other jurisdiction (including whether the Trust,
if treated as a partnership for federal income tax purposes, would be treated
as a partnership under any state or local jurisdiction). Therefore,
prospective purchasers should consult their own tax advisers with respect to
such matters.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and Section 4975 of the Code impose certain requirements on (a) an
employee benefit plan (as defined in Section 3(3) of ERISA), (b) a plan
described in Section 4975(e)(1) of the Code, including an individual
retirement account ("IRA") or Keogh plan ("Keogh") or (c) any entity whose
underlying assets include plan assets by reason of a plan's investment in the
entity (each, a "Plan").
In accordance with ERISA's general fiduciary standards, before
investing in a Certificate, a Plan fiduciary should determine whether such an
investment is permitted under the governing Plan instruments and is
appropriate for the Plan in view of its overall investment policy and the
composition and diversification of its portfolio. Other provisions of ERISA
and Section 4975 of the Code prohibit certain transactions involving the
assets of a Plan and persons who have specified relationships to the Plan,
i.e., "parties in interest" within the meaning of ERISA or "disqualified
persons" within the meaning of the Code (collectively, "Parties in Interest").
Thus, a Plan fiduciary considering an investment in Certificates should also
consider whether such an investment might constitute or give rise to a
prohibited transaction under ERISA or Section 4975 of the Code. The Term
Assets Issuer, the Underwriter, the Trustee and their respective affiliates
may be Parties in Interest with respect to many Plans.
An investment in Certificates by a Plan might result in the assets of
the Trust being deemed to constitute plan assets, which in turn might mean
that certain aspects of such investment, including the deemed extension of
credit between the Term Assets Issuer and the holder of a Certificate (as a
result of the Term Assets being deemed to be plan assets) might be prohibited
transactions under ERISA and Section 4975 of the Code unless exemptive relief
were available under an applicable exemption issued by the United States
Department of Labor (the "DOL"). Neither ERISA nor the Code defines the term
"plan assets." Under Section 2510.3-101 of the DOL regulations (the
S-17
<PAGE>
"Regulation"), a Plan's assets may include the assets of an entity if the Plan
acquires an "equity interest" in such entity. Thus, if a Plan acquired a
Certificate, for certain purposes (including the prohibited transaction
provisions of ERISA and Section 4975 of the Code), the Plan would be
considered to own an undivided interest in the underlying assets of the Trust
unless an exception applied under the Regulation.
Each purchaser of a ZTF Class Certificate or Amortizing Class
Certificate, as applicable, and each fiduciary who causes any entity to
purchase a Certificate will be deemed to have represented and warranted that
either (i) it is neither a Plan nor an entity the assets of which are deemed
to be "plan assets" or (ii) its purchase and holding of such Certificate will
not constitute or result in a non-exempt prohibited transaction. In this
regard, prospective Plan investors as to which the Term Assets Issuer, the
Underwriter or any of their affiliates may be a Party in Interest may wish to
consider the exemptive relief available under the following prohibited
transaction class exemptions ("PTCEs"): (A) the qualified in-house asset
manager ("INHAM") exemption (PTCE 96-23), (B) the insurance company general
account exemption (PTCE 95-60), (C) the bank collective investment fund
exemption (PTCE 91-38), (D) the insurance company pooled separate account
exemption (PTCE 90-1), (E) the qualified professional asset manager ("QPAM")
exemption (PTCE 84-14), and (F) the broker-dealer exemption (PTCE 75-1).
Nothing herein shall be construed as a representation that an
investment in the Certificates would meet any or all of the relevant legal
requirements with respect to investments by, or is appropriate for, Plans
generally or any particular Plan. Any Plan or any other entity the assets of
which are deemed to be "plan assets," such as an insurance company investing
assets of its general account, proposing to acquire Certificates should
consult with its counsel.
METHOD OF DISTRIBUTION
Subject to the terms and conditions set forth in the Underwriting
Agreement, dated May 19, 1998 (the "Underwriting Agreement"), the Company has
agreed to sell and Salomon Brothers Inc (an affiliate of the Company) has
agreed to purchase, all the ZTF Class Certificates and Amortizing Class
Certificates.
The Underwriter has agreed, subject to the terms and conditions set
forth in the Underwriting Agreement, to purchase all Certificates offered
hereby, if any such Certificates are purchased, at a price of $46,087,774.33
which will constitute the aggregate proceeds to the Company, before deducting
expenses estimated at $127,500.00.
The Company has been advised by the Underwriter that it proposes to
offer the Certificates from time to time in negotiated transactions or
otherwise at varying prices to be determined at the time of sale. Any profit
on the resale of Certificates by the Underwriter will constitute underwriting
compensation under the Securities Act.
The Underwriting Agreement provides that the Company will indemnify
the Underwriter against certain civil liabilities, including liabilities under
the Securities Act, or will contribute to payments the Underwriter may be
required to make in respect thereof.
Salomon Brothers Inc is an affiliate of the Company, and the
participation by Salomon Brothers Inc in the offering of the Certificates
complies with Conduct Rule 2720 of the National Association of Securities
Dealers, Inc. regarding underwriting securities of an affiliate.
RATINGS
It is a condition to the establishment of the Trust and the issuance
of the Certificates that the Certificates be rated identically to the Term
Assets by both Moody's and Standard & Poor's. Moody's and Standard & Poor's
have rated the Term Assets "Aa3" and "AA," respectively.
The ratings address the likelihood of the receipt by
Certificateholders of payments required under the Trust Agreement, and are
based primarily on the credit quality of the Term Assets.
S-18
<PAGE>
A security rating is not a recommendation to buy, sell or hold
securities and may be subject to revision or withdrawal at any time by the
assigning Rating Agencies. Each security rating should be evaluated
independently of any other security rating.
The Company has not requested a rating on the Certificates by any
rating agency other than the Rating Agencies. However, there can be no
assurance as to whether any other rating agency will rate the Certificates,
or, if it does, what rating would be assigned by any such other rating agency.
A rating on the Certificates by another rating agency, if assigned at all, may
be lower than the ratings assigned to the Certificates by the Rating Agencies.
LEGAL OPINIONS
Certain legal matters relating to the Certificates will be passed
upon for the Company and for the Underwriter by Orrick, Herrington & Sutcliffe
LLP, New York, New York.
S-19
<PAGE>
INDEX OF TERMS
Acceleration..............................................................S-12
Accounting Period.........................................................S-14
Amortizing Class Certificates................................................i
Amortizing Class Periodic Interest........................................S-10
Calculation Agent...........................................................ii
Certificate Principal Balance..............................................S-9
Certificateholders..........................................................ii
Certificates.................................................................i
Clearing Agency............................................................S-9
Closing Date............................................................i, S-1
Code.................................................................S-5, S-15
Collection Period.........................................................S-11
Commission.................................................................S-8
Company......................................................................i
Definitive Certificates...................................................S-10
Depositor....................................................................i
Distribution Date...........................................................ii
DOL.......................................................................S-17
DTC.........................................................................ii
ERISA................................................................S-5, S-17
Exchange Act...............................................................S-7
Fixed Payment...............................................................ii
Holder....................................................................S-15
INHAM.....................................................................S-18
Interest Accrual Period...................................................S-10
Interest Collections......................................................S-11
IRA.......................................................................S-17
IRS.......................................................................S-14
Keogh.....................................................................S-17
Moody's.................................................................1, S-5
Non-United States Holder..................................................S-15
NYSE.........................................................................i
OID.......................................................................S-15
Participants................................................................ii
Pass-Through Rate...........................................................ii
Payment Default...........................................................S-12
Plan......................................................................S-17
Plan assets................................................................S-5
Prospectus...................................................................i
PTCEs.....................................................................S-18
QPAM......................................................................S-18
Rating Agencies..............................................................i
Regulation................................................................S-18
Salomon......................................................................i
Securities Act.............................................................S-8
Special Considerations......................................................ii
Special Event Redemption....................................................ii
Special Event Redemption Date...............................................ii
Specified Currency.........................................................S-8
Standard & Poor's.......................................................i, S-5
Tax Event.................................................................S-12
Term Assets..................................................................i
Term Assets Issuer......................................................i, S-6
S-20
<PAGE>
Term Assets Optional Redemption.............................................ii
Term Assets Payment Date...................................................S-8
Term Assets Prospectus.......................................................i
Term Assets Registration Statement.........................................S-8
Trust........................................................................i
Trust Agreement.........................................................i, S-3
Trust Indenture Act........................................................S-7
Trustee......................................................................i
Underwriter..................................................................i
Underwriting Agreement....................................................S-18
Voting Rights.............................................................S-13
United States Holder......................................................S-15
Yield to Amortizing Class Final Distribution Date............................i
ZTF(SM) Class Certificates...................................................i
S-21
<PAGE>
APPENDIX A
IDENTIFICATION OF TERM ASSETS
Terms of Term Assets
Term Assets Issuer: Motorola, Inc.
Term Assets: 5.22% Debentures due
October 1, 2097
Dated: October 10, 1997
Original Principal Maturity Date: October 1, 2097
Original Par Value Amount Issued: $300,000,000
CUSIP Number: 620076 AM1
Stated Interest Rate: 5.22%
Interest Payment Dates: April 1 and October 1
Mode of Payment of Term Assets: By credit to the account of
the holder at DTC
Principal Amount of Initial Amount of Term
Assets Deposited Under Trust Agreement: $60,000,000
The Term Assets will be held by the Trustee for the Owners of
Certificates as book-entry credits to an account of the Trustee at DTC.
Available Information
The Term Assets Issuer is subject to the information requirements of
the Securities Exchange Act of 1934 and in accordance therewith files reports
and other information with the Commission. Such reports, proxy and information
statements and other information filed by the Term Assets Issuer with the
Commission can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the Commission's regional offices at 500 West Madison Street,
14th Floor, Chicago, Illinois 60661 and 75 Park Place, New York, New York
10007. Copies of such material can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates. The Commission maintains a Web site at http://www.sec.gov
containing reports, proxy statements and other information regarding
registrants that file electronically with the Commission. In addition, certain
material described above and other information will also be available for
inspection at the offices of the New York Stock Exchange at 20 Broad Street,
New York, New York and the Midwest Stock Exchange, 120 South LaSalle Street,
Chicago, Illinois.
S-22
<PAGE>
APPENDIX B
Amortizing Class Certificates
Schedule of Amortizing Payments
<TABLE>
<CAPTION>
Total Amortizing
Distribution Date Interest Principal Payment Balance
----------------- -------- --------- ------- -------
<S> <C> <C> <C> <C>
May 19, 1998 $34,778,000.00
October 1, 1998 $1,130,285.00 435,715.00 $1,566,000.00 34,342,285.00
April 1, 1999 1,116,124.26 449,875.74 1,566,000.00 33,892,409.26
October 1, 1999 1,101,503.30 464,496.70 1,566,000.00 33,427,912.56
April 1, 2000 1,086,407.16 479,592.84 1,566,000.00 32,948,319.72
October 1, 2000 1,070,820.39 495,179.61 1,566,000.00 32,453,140.11
April 1, 2001 1,054,727.05 511,272.95 1,566,000.00 31,941,867.17
October 1, 2001 1,038,110.68 527,889.32 1,566,000.00 31,413,977.85
April 1, 2002 1,020,954.28 545,045.72 1,566,000.00 30,868,932.13
October 1, 2002 1,003,240.29 562,759.71 1,566,000.00 30,306,172.42
April 1, 2003 984,950.60 581,049.40 1,566,000.00 29,725,123.03
October 1, 2003 966,066.50 599,933.50 1,566,000.00 29,125,189.53
April 1, 2004 946,568.66 619,431.34 1,566,000.00 28,505,758.19
October 1, 2004 926,437.14 639,562.86 1,566,000.00 27,866,195.33
April 1, 2005 905,651.35 660,348.65 1,566,000.00 27,205,846.67
October 1, 2005 884,190.02 681,809.98 1,566,000.00 26,524,036.69
April 1, 2006 862,031.19 703,968.81 1,566,000.00 25,820,067.88
October 1, 2006 839,152.21 726,847.79 1,566,000.00 25,093,220.09
April 1, 2007 815,529.65 750,470.35 1,566,000.00 24,342,749.74
October 1, 2007 791,139.37 774,860.63 1,566,000.00 23,567,889.11
April 1, 2008 765,956.40 800,043.60 1,566,000.00 22,767,845.51
October 1, 2008 739,954.98 826,045.02 1,566,000.00 21,941,800.48
April 1, 2009 713,108.52 852,891.48 1,566,000.00 21,088,909.00
October 1, 2009 685,389.54 880,610.46 1,566,000.00 20,208,298.54
April 1, 2010 656,769.70 909,230.30 1,566,000.00 19,299,068.25
October 1, 2010 627,219.72 938,780.28 1,566,000.00 18,360,287.96
April 1, 2011 596,709.36 969,290.64 1,566,000.00 17,390,997.32
October 1, 2011 565,207.41 1,000,792.59 1,566,000.00 16,390,204.74
April 1, 2012 532,681.65 1,033,318.35 1,566,000.00 15,356,886.39
October 1, 2012 499,098.81 1,066,901.19 1,566,000.00 14,289,985.20
April 1, 2013 464,424.52 1,101,575.48 1,566,000.00 13,188,409.72
October 1, 2013 428,623.32 1,137,376.68 1,566,000.00 12,051,033.03
April 1, 2014 391,658.57 1,174,341.43 1,566,000.00 10,876,691.61
October 1, 2014 353,492.48 1,212,507.52 1,566,000.00 9,664,184.08
April 1, 2015 314,085.98 1,251,914.02 1,566,000.00 8,412,270.07
October 1, 2015 273,398.78 1,292,601.22 1,566,000.00 7,119,668.84
April 1, 2016 231,389.24 1,334,610.76 1,566,000.00 5,785,058.08
October 1, 2016 188,014.39 1,377,985.61 1,566,000.00 4,407,072.47
April 1, 2017 143,229.86 1,422,770.14 1,566,000.00 2,984,302.32
October 1, 2017 96,989.83 1,469,010.17 1,566,000.00 1,515,292.15
April 1, 2018 49,246.99 1,515,292.15 1,564,539.14 0.00
</TABLE>
S-23
<PAGE>
APPENDIX C
Amounts Distributable Upon Special Event
Redemption/Accreted Value/Ratios
<TABLE>
<CAPTION>
Amortizing Accreted Value Amortizing Class ZTF
Distribution Date Class % ZTF Class % of Term Assets Certificates Certificates
----------------- ------- ----------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
October 1, 1998 75.76% 24.24% $45,331,140.00 $34,342,285.00 $10,988,855.00
April 1, 1999 74.77 25.23 45,331,740.00 33,892,409.26 11,439,330.74
October 1, 1999 73.74 26.26 45,332,340.00 33,427,912.56 11,904,427.44
April 1, 2000 72.68 27.32 45,333,000.00 32,948,319.72 12,384,680.28
October 1, 2000 71.59 28.41 45,333,660.00 32,453,140.11 12,880,519.89
April 1, 2001 70.46 29.54 45,334,380.00 31,941,867.17 13,392,512.83
October 1, 2001 69.29 30.71 45,335,100.00 31,413,977.85 13,921,122.15
April 1, 2002 68.09 31.91 45,335,820.00 30,868,932.13 14,466,887.87
October 1, 2002 66.85 33.15 45,336,600.00 30,306,172.42 15,030,427.58
April 1, 2003 65.56 34.44 45,337,380.00 29,725,123.03 15,612,256.97
October 1, 2003 64.24 35.76 45,338,220.00 29,125,189.53 16,213,030.47
April 1, 2004 62.87 37.13 45,339,060.00 28,505,758.19 16,833,301.81
October 1, 2004 61.46 38.54 45,339,960.00 27,866,195.33 17,473,764.67
April 1, 2005 60.00 40.00 45,340,860.00 27,205,846.67 18,135,013.33
October 1, 2005 58.50 41.50 45,341,820.00 26,524,036.69 18,817,783.31
April 1, 2006 56.94 43.06 45,342,840.00 25,820,067.88 19,522,772.12
October 1, 2006 55.34 44.66 45,343,800.00 25,093,220.09 20,250,579.91
April 1, 2007 53.68 46.32 45,344,880.00 24,342,749.74 21,002,130.26
October 1, 2007 51.97 48.03 45,345,960.00 23,567,889.11 21,778,070.89
April 1, 2008 50.21 49.79 45,347,100.00 22,767,845.51 22,579,254.49
October 1, 2008 48.39 51.61 45,348,240.00 21,941,800.48 23,406,439.52
April 1, 2009 46.50 53.50 45,349,440.00 21,088,909.00 24,260,531.00
October 1, 2009 44.56 55.44 45,350,700.00 20,208,298.54 25,142,401.46
April 1, 2010 42.55 57.45 45,351,960.00 19,299,068.25 26,052,891.75
October 1, 2010 40.48 59.52 45,353,280.00 18,360,287.96 26,992,992.04
April 1, 2011 38.34 61.66 45,354,660.00 17,390,997.32 27,963,662.68
October 1, 2011 36.14 63.86 45,356,100.00 16,390,204.74 28,965,895.26
April 1, 2012 38.86 66.14 45,357,540.00 15,356,886.39 30,000,653.61
October 1, 2012 31.50 68.50 45,359,100.00 14,289,985.20 31,069,114.80
April 1, 2013 29.07 70.93 45,360,660.00 13,188,409.72 32,172,250.28
October 1, 2013 26.57 73.43 45,362,280.00 12,051,033.03 33,311,246.97
April 1, 2014 23.98 76.02 45,363,960.00 10,876,691.61 34,487,268.39
October 1, 2014 21.30 78.70 45,365,700.00 9,664,184.08 35,701,515.92
April 1, 2015 18.54 81.46 45,367,500.00 8,412,270.07 36,955,229.93
October 1, 2015 15.69 84.31 45,369,360.00 7,119,668.84 38,249,691.16
April 1, 2016 12.75 87.25 45,371,280.00 5,785,058.08 39,586,221.92
October 1, 2016 9.71 90.29 45,373,320.00 4,407,072.47 40,966,247.53
April 1, 2017 6.58 93.42 45,375,360.00 2,984,302.32 42,391,057.68
October 1, 2017 3.34 96.66 45,377,520.00 1,515,292.15 43,862,227.85
April 1, 2018 0.00 100.00 45,379,740.00 0.00 45,379,740.00
</TABLE>
S-24
<PAGE>
No dealer, salesman or any other person has been authorized to give
any information or to make any representations other than those contained in
this Prospectus Supplement or the Prospectus 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 upon as having been
authorized by the Underwriter. This Prospectus Supplement and the Prospectus
do not constitute an offer or solicitation by anyone in any jurisdiction in
which such offer or solicitation is not authorized or in which the person
making such offer or solicitation is not authorized or in which the person
making such offer or solicitation is not qualified to do so or to anyone to
whom it is unlawful to make such offer or solicitation. Neither the delivery
of this Prospectus Supplement or the accompanying Prospectus, nor any sale
made hereunder and thereunder, shall, under any circumstances, create any
implication that the information contained herein and in the accompanying
Prospectus is correct as of any time subsequent to the date hereof; however,
if any material change occurs while this Prospectus Supplement or the
accompanying Prospectus is required by law to be delivered, this Prospectus
Supplement or the accompanying Prospectus will be amended or supplemented
accordingly.
S-25
