AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 29, 1995
REGISTRATION NO. 33-60017
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------
AMENDMENT NO. 1
TO
FORM S-6
For Registration Under the Securities Act
of 1933 of Securities of Unit Investment
Trusts Registered on Form N-8B-2
----------------------------
A. EXACT NAME OF TRUST:
Quest for Value's Unit Investment Laddered Trust Series ("QUILTS"),
QUILTS Income -- U.S. Treasury Series 12, QUILTS Income -- U.S.
Treasury Series 13 and QUILTS Asset Builder -- U.S. Treasury Series
14
B. NAME OF DEPOSITOR:
Quest for Value Distributors
C. COMPLETE ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES:
Quest for Value Distributors
Two World Financial Center
225 Liberty Street
New York, New York 10080-6116
D. NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE:
COPY OF COMMENTS TO:
SUSAN A. MURPHY MICHAEL R. ROSELLA, Esq.
President Battle Fowler LLP
Quest Cash Management Services Park Avenue Tower
Oppenheimer Capital 75 East 55th Street
Two World Financial Center New York, New York 10022
225 Liberty Street (212) 856-6858
New York, New York 10080-6116
E. TITLE AND AMOUNT OF SECURITIES BEING REGISTERED:
An indefinite number of Units of Quest for Value's Unit Investment
Laddered Trust Series ("QUILTS"), QUILTS Income -- U.S. Treasury
Series 12, QUILTS Income -- U.S. Treasury Series 13 and QUILTS Asset
Builder -- U.S. Treasury Series 14 is being registered under the
Securities Act of 1933 pursuant to Section 24(f) of the Investment
Company Act of 1940, as amended, and Rule 24f-2 thereunder.
F. PROPOSED MAXIMUM AGGREGATE OFFERING PRICE TO THE PUBLIC OF THE
SECURITIES BEING REGISTERED:
Indefinite
G. AMOUNT OF FILING FEE:
$500 *(as required by Rule 24f-2)
H. APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after the effective date of the Registration
Statement.
_____ Check if it is proposed that this filing will become effective
immediately upon filing pursuant to Rule 487.
- -----------------
* Previously paid.
C/M: 11205.0009 284765.1
<PAGE>
Quest for Value's Unit Investment Laddered Trust Series
QUILTS Income -- U.S. Treasury Series 12
QUILTS Income -- U.S. Treasury Series 13
QUILTS Asset Builder -- U.S. Treasury Series 14
CROSS-REFERENCE SHEET
Pursuant to Rule 404 of Regulation C
Under the Securities Act of 1933
(Form N-8B-2 Items Required by Instruction as
to the Prospectus in Form S-6)
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
<S> <C> <C>
I. ORGANIZATION AND GENERAL INFORMATION
1. (a) Name of trust.......................................... Front cover of Prospectus
(b) Title of securities issued............................. Front cover of Prospectus
2. Name and address of each depositor.......................... The Sponsor
3. Name and address of trustee................................. The Trustee
4. Name and address of principal underwriters.................. Distribution of Units
5. State of organization of trust.............................. Organization
6. Execution and termination of trust agreement Trust Agreement, Amendment and
Termination
7. Changes of name............................................. Not Applicable
8. Fiscal year................................................. Not Applicable
9. Litigation ................................................. None
II. GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST
10. (a) Registered or bearer securities........................ Book Entry Units
(b) Cumulative or distributive securities Interest and Principal Distributions
(c) Redemption ............................................ Trustee Redemption
(d) Conversion, transfer, etc Book Entry Units, Sponsor Repurchase,
Trustee Redemption
(e) Periodic payment plan.................................. Not Applicable
(f) Voting rights ......................................... Trust Agreement, Amendment and
Termination
(g) Notice to certificateholders .......................... Records, Portfolio, Substitution of Securities,
Trust Agreement, Amendment and
Termination, The Sponsor, the Trustee
(h) Consents required...................................... Trust Agreement, Amendment and Termination
(i) Other provisions....................................... Tax Status
11. Type of securities comprising units Objectives, Portfolio, Portfolio Summary
12. Certain information regarding periodic payment
certificates................................................ Not Applicable
</TABLE>
i
C/M: 11205.0009 284765.1
<PAGE>
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
<S> <C> <C>
13. (a) Load, fees, expenses, etc ............................. Summary of Essential Information, Public
Offering Price, Market for Units, Volume and
Other Discounts, Sponsor's Profits, Trust
Expenses and Charges
(b) Certain information regarding periodic
payment certificates .................................. Not Applicable
(c) Certain percentages ................................... Summary of Essential Information, Public
Offering Price, Market for Units, Volume
and Other Discounts
(d) Price differences ..................................... Volume and Other Discounts, Distribution of
Units
(e) Other loads, fees, expenses ........................... Book Entry Units
(f) Certain profits receivable by depositors,
principal underwriters, trustee or
affiliated persons .................................... Sponsor's Profits, Portfolio Summary
(g) Ratio of annual charges to income ..................... Not Applicable
14. Issuance of trust's securities ............................. Organization, Certificates
15. Receipt and handling of payments from purchasers ........... Organization
16. Acquisition and disposition of underlying
securities ................................................. Organization, Objectives, Portfolio, Portfolio
Supervision
17. Withdrawal or redemption ................................... Comparison of Public Offering Price,
Sponsor's Repurchase Price and Redemption
Price, Sponsor Repurchase, Trustee
Redemption
18. (a) Receipt, custody and disposition of income ............ Monthly Distributions, Interest and Principal
Distributions, Portfolio Supervision
(b) Reinvestment of distributions ......................... Not Applicable
(c) Reserves or special funds ............................. Interest and Principal Distributions
(d) Schedule of distributions ............................. Not Applicable
19. Records, accounts and reports .............................. Records
20. Certain miscellaneous provisions of trust
agreement
(a) Amendment.............................................. Trust Agreement, Amendment and Termination
(b) Termination............................................ Trust Agreement, Amendment and Termination
(c) and (d) Trustee, removal and successor ................. The Trustee
(e) and (f) Depositor, removal and successor ............... The Sponsor
21. Loans to security holders .................................. Not Applicable
22. Limitations on liability ................................... The Sponsor, The Trustee, The Evaluator
23. Bonding arrangements ....................................... Part II - Item A
24. Other material provisions of trust agreement ............... Not Applicable
III. Organization, Personnel and Affiliated Persons of Depositor
25. Organization of depositor .................................. The Sponsor
26. Fees received by depositor ................................. Not Applicable
</TABLE>
ii
C/M: 11205.0009 284765.1
<PAGE>
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
<S> <C> <C>
27. Business of depositor ...................................... The Sponsor
28. Certain information as to officials and affiliated
persons of depositor ....................................... Not Applicable
29. Voting securities of depositor ............................. Not Applicable
30. Persons controlling depositor .............................. Not Applicable
31. Payments by depositor for certain services
rendered to trust .......................................... Not Applicable
32. Payments by depositor for certain other services
rendered to trust .......................................... Not Applicable
33. Remuneration of employees of depositor for
certain services rendered to trust ......................... Not Applicable
34. Remuneration of other person for certain services
rendered to trust .......................................... Not Applicable
IV. Distribution and Redemption of Securities
35. Distribution of trust's securities by states ............... Distribution of Units
36. Suspension of sales of trust's securities .................. Not Applicable
37. Revocation of authority to distribute ...................... None
38. (a) Method of distribution ................................ Distribution of Units
(b) Underwriting agreements ............................... Distribution of Units
(c) Selling agreements .................................... Distribution of Units
39. (a) Organization of principal underwriters ................ The Sponsor
(b) N.A.S.D. membership of principal
underwriters .......................................... The Sponsor
40. Certain fees received by principal underwriters ............ The Sponsor
41. (a) Business of principal underwriters The Sponsor
(b) Branch offices of principal underwriters .............. The Sponsor
(c) Salesmen of principal underwriters .................... The Sponsor
42. Ownership of trust's securities by certain persons Not Applicable
43. Certain brokerage commissions received by
principal underwriters ..................................... Not Applicable
44. (a) Method of valuation ................................... Summary of Essential Information, Market for
Units, Offering Price, Accrued Interest,
Volume and Other Discounts, Distribution of
Units, Comparison of Public Offering Price,
Sponsor's Repurchase Price and Redemption
Price, Sponsor Repurchase, Trustee
Redemption
(b) Schedule as to offering price ......................... Summary of Essential Information
(c) Variation in offering price to certain
persons ............................................... Distribution of Units, Volume and Other
Discounts
45. Suspension of redemption rights ............................ Not Applicable
</TABLE>
iii
C/M: 11205.0009 284765.1
<PAGE>
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
<S> <C> <C>
46. (a) Redemption valuation .................................. Comparison of Public Offering Price,
Sponsor's Repurchase Price and Redemption
Price, and Redemption Price, and Trustee
Redemption
(b) Schedule as to redemption price ....................... Summary of Essential Information
47. Maintenance of position in underlying securities ........... Comparison of Public Offering Price,
Sponsor's Repurchase Price and Redemption
Price, Sponsor Repurchase, Trustee
Redemption
V. Information Concerning the Trustee or Custodian
48. Organization and regulation of trustee ..................... The Trustee
49. Fees and expenses of trustee ............................... Trust Expenses and Charges
50. Trustee's lien ............................................. Trust Expenses and Charges
VI. Policy of Registrant
51. (a) Provisions of trust agreement with respect
to selection or elimination of underlying
securities ............................................ Objectives, Portfolio, Portfolio Supervision,
Substitution of Securities
(b) Transactions involving elimination of
underlying securities.................................. Not Applicable
(c) Policy regarding substitution or elimination
of underlying securities............................... Substitution of Securities
(d) Fundamental policy not otherwise covered............... Not Applicable
52. Tax status of trust......................................... Tax Status
VII. FINANCIAL AND STATISTICAL INFORMATION
53. Trust's securities during last ten years ................... Not Applicable
54. Hypothetical account for issuers of periodic
payment plans .............................................. Not Applicable
55. Certain information regarding periodic payment
certificates ............................................... Not Applicable
56. Certain information regarding periodic payment
plans ...................................................... Not Applicable
57. Certain other information regarding periodic
payment plans .............................................. Not Applicable
58. Financial statements (Instruction 1(c) to Form
S-6) ....................................................... Statement of Financial Condition
</TABLE>
iv
C/M: 11205.0009 284765.1
<PAGE>
("QUILTS")
QUEST FOR VALUE'S
UNIT INVESTMENT LADDERED TRUST SERIES
A Unit Investment Trust
QUILTS Income-U.S. Treasury Series 12
QUILTS Income-U.S. Treasury Series 13
QUILTS Asset Builder-U.S. Treasury Series 14
QUILTS consists of three separate unit investment trusts designated
QUILTS Income-U.S. Treasury Series 12, QUILTS Income-U.S. Treasury Series 13
and QUILTS Asset Builder-U.S. Treasury Series 14 (collectively, the "Trusts").
The Sponsor of the Trusts is Quest for Value Distributors (the "Sponsor"). The
objectives of the Trusts are to provide safety of principal and, with respect
to QUILTS-Income U.S. Treasury Series 12 current quarterly distributions of
interest and, with respect to QUILTS Income-U.S. Treasury Series 13 current
monthly distributions of interest. With respect to QUILTS Asset Builder-U.S.
Treasury Series 14, the Trusts seek to accumulate principal value in the Units
over the life of the Trust. Units of the Trusts may be suited for purchase by
IRAs, self-employed retirement plans (formerly Keogh Plans), pension,
profit-sharing and other qualified retirement plans. Investors considering
participation in any such plan should review specific tax laws and pending
legislation related thereto and should consult their attorneys or tax advisers
with respect to the establishment and maintenance of any such plan. (See
"Retirement Plans" and "Tax Status" in Part B of this Prospectus.) The Trusts
also seek to provide investment flexibility by allowing investors to choose
among three portfolios, each with a differing weighted average maturity and
quality. Each Trust seeks to achieve these objectives by investment in a
portfolio of U.S. Treasury Obligations (the "Treasury Securities") that are
backed by the full faith and credit of the United States Government. (The
Treasury Securities are sometimes collectively referred to as the
"Securities".) Each Trust is designed to have regularly scheduled payments of
principal during its life from a portfolio of Securities with laddered
maturities. The value of the Units of the Trusts will fluctuate with
fluctuations in the value of the underlying Securities in the portfolios of
each Trust. Therefore, Unit Holders who sell their Units prior to termination
of the Trusts may receive more or less than their original purchase price upon
sale.
These Trusts may be particularly appropriate for foreign investors as
the income from the Trusts, provided certain conditions are met, will be
exempt from withholding for U.S. Federal income tax purposes. A foreign
investor must provide a completed W-8 Form to his financial representative or
the Trustee to avoid withholding on his account.
The Trusts may also be appropriate for investors who desire to
participate in a portfolio of taxable fixed income securities offering the
safety of principal provided by an investment backed by the full faith and
credit of the United States. In addition, many investors may benefit from the
exemption from state and local personal income taxes that will pass through
the Trusts to Unit Holders.
This Prospectus consists of two parts. Part A contains a Summary of
Essential Information for each Trust including descriptive material relating
to each Trust, the Statement of Condition of the Trusts and the Portfolios of
each Trust. Part B contains general information about the Trusts. Part A may
not be distributed unless accompanied by Part B.
QUILTS are not a deposit or other obligation of, or guaranteed by, a
depository institution. QUILTS are not insured by the FDIC and are subject to
investment risks, including possible loss of the principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS PART A DATED JUNE 29, 1995
Please read and retain both parts of this Prospectus for
future reference.
C/M 11205.0009 284637.1
<PAGE>
<TABLE>
QUILTS Income
U.S. Treasury Series 12
<CAPTION>
SUMMARY OF ESSENTIAL INFORMATION AS OF JUNE 28, 1995 (The initial Date of
Deposit which is the date on which the Trust Agreement was signed and the
deposit of Securities with the Trustee was made.)
<S> <C>
CUSIP#: 74834K227 Evaluation Time: 12:00 Noon New York Time on the initial
Sponsor: Quest for Value Distributors Date of Deposit and 4:00 P.M. thereafter.
Date of Deposit: June 28, 1995 Minimum Purchase: 1,000 Units
Aggregate Principal Amount Minimum Principal Distribution: $1.00 per 1,000 Units.
of Securities:..........$500,000 Weighted Average Maturity of Securities in the Portfolio:
Number of Units: (The number of Units will 1.06 years
be increased as the Sponsor deposits Minimum Value of Trust: The Trust may be terminated if
additional Securities into the Trust.)500,000 the value of the Securities in the Trust is less than
Fractional Undivided Interest in Trust 40% of the original aggregate principal amount of
per 1,000 Units:....................1/500 Securities in the Trust.
Public Offering Price: Mandatory Termination Date: The earlier of December 31,
Aggregate Offering Price of Securities 1997 or the disposition of the last Security in the Trust.
in Trust................$501,625 Trustee and Evaluator: United States Trust
Divided By 500,000 Units multiplied Company of
by 1,000...............$1,003.25 New York.
Plus Sales Charge of 1.70% of Public Trustee's Annual Fee and Estimated Expenses: $1.00 per
Offering Price............$17.35 1,000 Units.
Public Offering Price per Annual Supervisory Fee (Payable to an affiliate of the
1,000 Units(1).........$1,020.60 Sponsor): Maximum of $.10 per $1,000 principal
Redemption Price per 1,000 amount of Securities (see "Trust Expenses and
Units..................$1,002.63 Charges" in Part B).
Sponsor's Initial Repurchase Price
per 1,000 Units:.......$1,003.25
Excess of Public Offering Price Over
Redemption Price per 1,000 Units:...$17.97
Excess of Sponsor's Initial Repurchase Price
Over Redemption Price per 1,000 Units:.$.62
</TABLE>
INFORMATION PER 1,000 UNITS
BASED UPON QUARTERLY DISTRIBUTIONS
Gross annual interest income (cash)................................... $57.25
Less organizational expenses (4)....................................... .20
Less estimated annual fees and expenses(5)............................. 1.10
Estimated net annual interest income (cash)(2)........................ 55.95
Estimated daily interest accrual (Does not include income
accrual from original issue discount bonds.)............................ .155
Estimated current return based on Public Offering Price
(Does not include income accrual from original issue
discount bonds. The estimated current return is
increased for transactions entitled to a discount.)(5)................. 5.48%
Estimated long term return (Does not include income accrual
from original issue discount bonds. The estimated long term return
is increased for transactions entitled to a discount.)(3)(5)..............5.43%
First record date.............................................January 15, 1996
First interest payment date...................................January 31, 1996
Subsequent record dates..................15th day of last month of each quarter
Subsequent interest payment dates.....................Last day of each quarter
- --------------------------
(1) No accrued interest will be added for any person contracting to purchase
Units on the date of this Prospectus. Anyone ordering Units after such
Date will pay accrued interest from July 5, 1995 to the date of
settlement (three business days after order) (the "First Settlement
Date"), less distributions from the Interest Account subsequent to July
5, 1995.
A-2
<PAGE>
(2) The first interest distribution of $29.53 per 1,000 Units for Treasury
Income Series 12 will be made on January 31, 1996 (the "First Payment
Date") to all Unit Holders of record on January 15, 1996 (the "First
Record Date"). The next quarterly payment per 1,000 Units of Treasury
Income Series 12, will be $12.35 on April 30, 1996 and thereafter (the
"Quarterly Payment Date").
(3) Estimated long term return is calculated by each Trust by computing the
average of the yields to maturity (or earlier call date) of the
Securities in the portfolio of the Trust in accordance with accepted
practices (taking into account the amortization of premiums, accretion of
discounts, market value, and estimated retirement of each Security) and
subtracting from the average yield so calculated the fees, expenses and
sales charge of each Trust. Estimated current return is calculated by
dividing the estimated net annual interest income by the Public Offering
Price per Unit. In contrast to the estimated long term return, the
estimated current return does not take into account the amortization of
premium or accretion of discount on the underlying Securities, if any.
These returns do not include the effects of any delay in payments to Unit
Holders and a calculation which includes those effects would be lower.
See "Estimated Long Term Return and Estimated Current Return" in Part B.
(4) Although historically the sponsors of unit investment trusts ("UITs")
have paid all of the costs of establishing UITs, this Trust (and
therefore the Unit Holders) will bear all or a portion of its
organizational costs up to a maximum of $.20 per $1,000 Units per annum
for Treasury Income Series 12. Such organizational costs include: the
cost of preparing and printing the registration statement, the trust
indenture and other closing documents; registering units with the
Securities and Exchange Commission and the states; and the initial audit
of the Trust. See "Trust Expenses and Changes" in Part B.
(5) Assumes the Trust will reach a size of 10,000,000 Units as estimated by
the Sponsor; expenses per Unit will vary with the actual size of the
Trust. If the Trust does not reach this Unit level, the Estimated Annual
Fees and Expenses per Unit, the Estimated Current Return and the
Estimated Long Term Return will be adversely affected.
A-3
<PAGE>
<TABLE>
QUILTS Income
U.S. Treasury Series 13
<CAPTION>
SUMMARY OF ESSENTIAL INFORMATION AS OF JUNE 28, 1995 (The initial Date of
Deposit which is the date on which the Trust Agreement was signed and the
deposit of Securities with the Trustee was made.)
<S> <C>
CUSIP#: 74834K235 Evaluation Time: 12:00 Noon New York Time on the initial
Sponsor: Quest for Value Distributors Date of Deposit and 4:00 P.M. thereafter.
Date of Deposit: June 28, 1995 Minimum Purchase: 1,000 Units
Aggregate Principal Amount Minimum Principal Distribution: $1.00 per 1,000 Units.
of Securities:..........$500,000 Weighted Average Maturity of Securities in the Portfolio:
Number of Units: (The number of Units will 1.89 years
be increased as the Sponsor deposits Minimum Value of Trust: The Trust may be terminated if
additional Securities into the Trust.)500,000 the value of the Securities in the Trust is less than
Fractional Undivided Interest in Trust 40% of the original aggregate principal amount of
per 1,000 Units:....................1/500 Securities in the Trust.
Public Offering Price: Mandatory Termination Date: The earlier of May 15, 1999
Aggregate Offering Price of Securities or the disposition of the last Security in the Trust.
in Trust................$502,172 Trustee and Evaluator: United States Trust Company of
Divided By 500,000 Units multiplied New York.
by 1,000...............$1,004.34 Trustee's Annual Fee and Estimated Expenses: $1.37 per
Plus Sales Charge of 1.70% of Public 1,000 Units.
Offering Price............$19.97 Annual Supervisory Fee (Payable to an affiliate of the
Public Offering Price per Sponsor): Maximum of $.10 per $1,000 principal
1,000 Units(1).........$1,024.31 amount of Securities (see "Trust Expenses and
Redemption Price per 1,000 Charges" in Part B).
Units..................$1,003.78
Sponsor's Initial Repurchase Price
per 1,000 Units:.......$1,004.34
Excess of Public Offering Price Over
Redemption Price per 1,000 Units:...$20.53
Excess of Sponsor's Initial Repurchase Price
Over Redemption Price per 1,000 Units:.$0.56
</TABLE>
INFORMATION PER 1,000 UNITS
BASED UPON MONTHLY DISTRIBUTIONS
Gross annual interest income (cash)................................... $58.00
Less organizational expenses(4)....................................... .20
Less estimated annual fees and expenses(5)............................. 1.47
Estimated net annual interest income (cash)(2)........................ 56.33
Estimated daily interest accrual (Does not include income
accrual from original issue discount bonds.).......................... .156
Estimated current return based on Public Offering Price
(Does not include income accrual from original issue discount
bonds. The estimated current return is increased for transactions
entitled to a discount.)(5)...................................... 5.50%
Estimated long term return (Does not include income accrual from original
issue discount bonds. The estimated long term return is increased for
transactions entitled to a discount.)(3)(5).........................5.45%
First record date................................................July 15, 1995
First interest payment date......................................July 31, 1995
Subsequent record dates.................................15th day of each month
Subsequent interest payment dates.......................Last day of each month
- --------------------------
(1) No accrued interest will be added for any person contracting to purchase
Units on the date of this Prospectus. Anyone ordering Units after such
Date will pay accrued interest from July 5, 1995 to the date of
settlement (three business days after order) (the "First Settlement
Date"), less distributions from the Interest Account subsequent to July
5, 1995.
(2) The first interest distribution of $1.56 per 1,000 Units for Treasury
Income Series 13 will be made on July 31, 1995 (the "First Payment Date")
to all Unit Holders of record on July 15, 1995 (the "First Record Date").
The next monthly payment
A-4
<PAGE>
per 1,000 Units of Treasury Income Series 13, will be $4.69 on August 31,
1995 and thereafter (the "Monthly Payment Date").
(3) Estimated long term return is calculated by each Trust by computing the
average of the yields to maturity (or earlier call date) of the
Securities in the portfolio of the Trust in accordance with accepted
practices (taking into account the amortization of premiums, accretion of
discounts, market value, and estimated retirement of each Security) and
subtracting from the average yield so calculated the fees, expenses and
sales charge of each Trust. Estimated current return is calculated by
dividing the estimated net annual interest income by the Public Offering
Price per Unit. In contrast to the estimated long term return, the
estimated current return does not take into account the amortization of
premium or accretion of discount on the underlying Securities, if any.
These returns do not include the effects of any delay in payments to Unit
Holders and a calculation which includes those effects would be lower.
See "Estimated Long Term Return and Estimated Current Return" in Part B.
(4) Although historically the sponsors of unit investment trusts ("UITs")
have paid all of the costs of establishing UITs, this Trust (and
therefore the Unit Holders) will bear all or a portion of its
organizational costs up to a maximum of $.20 per $1,000 Units per annum
for Treasury Income Series 13. Such organizational costs include: the
cost of preparing and printing the registration statement, the trust
indenture and other closing documents; registering units with the
Securities and Exchange Commission and the states; and the initial audit
of the Trust. See "Trust Expenses and Changes" in Part B.
(5) Assumes the Trust will reach a size of 10,000,000 Units as estimated by
the Sponsor; expenses per Unit will vary with the actual size of the
Trust. If the Trust does not reach this Unit level, the Estimated Annual
Fees and Expenses per Unit, the Estimated Current Return and the
Estimated Long Term Return will be adversely affected.
A-5
<PAGE>
<TABLE>
QUILTS Asset Builder
U.S. Treasury Series 14
<CAPTION>
SUMMARY OF ESSENTIAL INFORMATION AS OF JUNE 28, 1995 (The initial Date of
Deposit which is the date on which the Trust Agreement was signed and the
deposit of Securities with the Trustee was made.)
<S> <C>
CUSIP#: 74834K243 Excess of Sponsor's Initial Repurchase
Sponsor: Quest for Value Distributors Price Over Redemption Price per 1,000
Date of Deposit: June 28, 1995 Units:...........................$.40
Aggregate Principal Amount of Evaluation Time: 12:00 Noon New York Time on the initial
Securities:..........................$500,000 Date of Deposit and 4:00 P.M. thereafter.
Number of Units: (The number of Units will be Minimum Purchase: 1,000 Units
increased as the Sponsor deposits Minimum Principal Distribution: $1.00 per 1,000 Units.
additional Securities into the Trust.)500,000 Weighted Average Maturity of Securities in the Portfolio:
Fractional Undivided Interest in Trust per 2.37 years
1,000 Units:............................1/500 Minimum Value of Trust: The Trust may be terminated if
Public Offering Price: the value of the Securities in the Trust is less than
Aggregate Offering Price of Securities 40% of the original aggregate principal amount of
in Trust ...................$438,739 Securities in the Trust.
Divided By 500,000 Units multiplied Mandatory Termination Date: The earlier of November 30,
by 1,000 ....................$877.48 1999 or the disposition of the last Security in the Trust.
Plus Sales Charge of 1.95% of Public Trustee and Evaluator: United States Trust Company of New
Offering Price ..............$17.45 York.
Public Offering Price per 1,000 Units(1)$894.93 Trustee's Annual Fee and Estimated Expenses: $.55 per
Redemption Price per 1,000 Units..........$877.08 1,000 Units.
Sponsor's Initial Repurchase Price per Annual Supervisory Fee (Payable to an affiliate of the
1,000 Units:..................$877.48 Sponsor): Maximum of $.10 per $1,000 principal
Excess of Public Offering Price Over amount of Securities (see "Trust Expenses and
Redemption Price per 1,000 Units:......$17.85 Charges" in Part B).
</TABLE>
INFORMATION PER 1,000 UNITS
Gross annual interest income (cash) (Does not include income
accrued from original issue discount bonds.).................. $1.03
Less organizational expenses (3)................................ .20
Less estimated annual fees and expenses (The Trustee will
retain excess interest income in
the Trust to pay future expenses.)(4).......................... .65
Estimated net annual interest income (cash) (Does not include income
accrual from original issue discount bonds.).................... .18
Estimated long term return (Does not include income accrual
from original issue discount bonds.
The estimated long term return is increased for transactions
entitled to a discount.)(2)(4).................................. 5.57%
- --------------------------
(1) No accrued interest will be added for any person contracting to purchase
Units on the date of this Prospectus. Anyone ordering Units after such
Date will pay accrued interest from July 5, 1995 to the date of
settlement (three business days after order) (the "First Settlement
Date"), less distributions from the Interest Account subsequent to July
5, 1995.
(2) Estimated long term return is calculated by each Trust by computing the
average of the yields to maturity (or earlier call date) of the
Securities in the portfolio of the Trust in accordance with accepted
practices (taking into account the amortization of premiums, accretion of
discounts, market value, and estimated retirement of each Security) and
subtracting from the average yield so calculated the fees, expenses and
sales charge of each Trust. This return does not include the effects of
any delay in payments to Unit Holders and a calculation which includes
those effects would be lower. See "Estimated Long Term Return and
Estimated Current Return" in Part B.
(3) Although historically the sponsors of unit investment trusts ("UITs")
have paid all of the costs of establishing UITs, this Trust (and
therefore the Unit Holders) will bear all or a portion of its
organizational costs up to a maximum of $.20 per 1,000 Units per annum
for Asset Builder Series 14. Such organizational costs include: the cost
of preparing and printing the registration statement, the trust indenture
and other closing documents; registering units with the Securities and
Exchange Commission and the states; and the initial audit of the Trust.
See "Trust Expenses and Changes" in Part B.
(4) Assumes the Trust will reach a size of 10,000,000 Units as estimated by
the Sponsor; expenses per Unit will vary with the actual size of the
Trust. If the Trust does not reach this Unit level, the Estimated Annual
Fees and Expenses per Unit, and the Estimated Long Term Return will be
adversely affected.
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<PAGE>
QUEST FOR VALUE'S
UNIT INVESTMENT LADDERED TRUST SERIES
("QUILTS")
The Trusts. QUILTS consists of three separate unit investment trusts
designated QUILTS Income-U.S. Treasury Series 12 ("Treasury Income Series
12"), QUILTS Income-U.S. Treasury Series 13 ("Treasury Income Series 13") and
QUILTS Asset Builder-U.S. Treasury Series 14 ("Asset Builder Series 14")
(collectively, the "Trusts"). The Trusts were created under the laws of the
State of New York by a Trust Indenture and Agreement (the "Trust Agreement"),
dated the initial Date of Deposit, between Quest for Value Distributors, as
sponsor (the "Sponsor") and United States Trust Company of New York, as
trustee (the "Trustee"). The Trustee will also act as the Evaluator for the
Trusts. On the initial Date of Deposit, the Sponsor deposited with the Trustee
United States Treasury Obligations that are backed by the full faith and
credit of the United States Government including delivery statements relating
to contracts for the purchase of certain such Securities (the "Securities") in
the aggregate amount set forth in the "Summary of Essential Information" for
each Trust and cash or an irrevocable letter of credit issued by a major
commercial bank in the amount required for such purchases. Thereafter, the
Trustee, in exchange for the Securities so deposited, delivered to the Sponsor
a certificate evidencing the ownership of all of the Units of the Trusts,
which Units are being offered by this Prospectus. On the initial Date of
Deposit, each Unit in the Trusts represents an undivided interest in the
principal and net income of that Trust in the ratio of one Unit for each $1.00
principal amount of Securities initially deposited in that Trust. (See "The
Trust Organization" in Part B.)
Objectives. The objectives of the Trusts are to obtain safety of
principal and, with respect to Treasury Income Series 12 and Treasury Income
Series 13 current distributions of interest. With respect to Asset Builder
Series 14, the Trusts seek to accumulate principal value in the Units over the
life of the Trust. The Trusts also seek to provide investment flexibility by
allowing investors to choose among three portfolios of Securities, each with a
differing weighted average maturity and quality. The Trusts seek to achieve
these objectives through investment in a fixed, laddered portfolio of United
States Treasury Securities. The Trusts are also structured to provide
protection against changes in interest rates and to pass through to Unit
Holders the exemption from state personal income taxes afforded to direct
owners of United States obligations.
99% of the aggregate principal amount of the Securities in Asset
Builder Series 14 are Zero Coupon Bonds. 1% of the aggregate principal amount
of the Securities in Asset Builder Series 14 are interest-bearing securities
which are used to pay the expenses of this Trust. Any excess amounts remaining
after expenses are paid will be paid to Unit Holders of this Trust in cash.
Zero Coupon Bonds provide for payment at maturity at par value, but do not
provide for the payment of current interest. (For the amount of Zero Coupon
Bonds in Asset Builder Series 14, and the cost of such Securities to that
Trust, see "Portfolio" for Asset Builder Series 14 in this Part A). Investors
generally will be required to recognize interest currently, even though they
will not receive a corresponding amount of cash until later years. Long-term
capital gains based upon the difference, if any, between the value of the
Securities at maturity, redemption or sale and their original purchase price
at discount (plus the earned portion of acquisition discount) are generally
taxed, in the case of individuals, at a rate less than the rate applicable to
ordinary income. (See "Tax Status" in Part B.) Investment in Asset Builder
Series 14 should be made with the understanding that the value of Zero Coupon
Bonds may be subject to greater fluctuation in response to changes in interest
rates than interest-bearing Securities. In addition, for certain investors,
the accrual of the market discount from the Zero Coupon Bonds is not taxable
until the Securities in Asset Builder Series 14 are disposed of or mature.
(See "Tax Status" in Part B.) Any gain realized on the disposition or
maturities of these securities is treated as ordinary interest income to the
extent it represents accrued market discount. Any excess over that amount
would generally be treated as long-term capital gain if held for more than 1
year.
The Treasury Securities are direct obligations of the United States
and are backed by its full faith and credit. The value of the Units, the
estimated current return (not applicable to Asset Builder Series 14) and
estimated long-term return to new purchasers will fluctuate with
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<PAGE>
the value of the Securities included in the portfolio of each Trust which will
generally decrease or increase inversely with changes in prevailing interest
rates. See "Tax Status" in Part B of this Prospectus.
With the deposit of the Securities in the Trusts on the initial Date
of Deposit, the Sponsor established a proportionate relationship among the
face amounts of each Security in the portfolio of each Trust. During the
90-day period following the initial Date of Deposit, the Sponsor may deposit
additional Securities ("Additional Securities"), contracts to purchase
Additional Securities or cash (or a bank letter of credit in lieu of cash)
with instructions to purchase Additional Securities, in order to create new
Units, maintaining to the extent practicable the original proportionate
relationship among the face amounts of each Security in the portfolio of each
Trust. It may not be possible to maintain the exact original proportionate
relationship among the Securities deposited on the initial Date of Deposit
because of, among other reasons, purchase requirements, changes in prices, or
unavailability of Securities. Replacement Securities may be acquired under
specified conditions (see "The Trust" and "Trust Administration" in Part B of
this Prospectus). Units may be continuously offered to the public by means of
this Prospectus (see "Public Offering" in Part B) resulting in a potential
increase in the number of Units outstanding. Deposits of Additional Securities
in the portfolio of each Trust subsequent to the 90-day period following the
initial Date of Deposit must replicate exactly the proportionate relationship
among the face amounts of Securities comprising the portfolio of each Trust at
the end of the initial 90- day period. No assurance can be given that the
Trusts' objectives will be achieved. In addition, an investment in a Trust can
be affected by fluctuations in interest rates.
Portfolio Summaries. General. The Trusts are comprised of those
Securities listed in each "Portfolio" in this Part A. The portfolio of each
Trust initially consists of contracts to purchase U.S. Treasury Obligations
fully secured by the full faith and credit of the United States, certain of
which have been purchased at a market discount or premium. Certain Securities
may have been purchased on a "when, as, and if" issued basis. Interest on
these Securities begins accruing to the benefit of holders on their respective
dates of delivery. Unit Holders will be "at risk" with respect to these
Securities (i.e. may derive either gain or loss from fluctuations in the
offering side evaluation of the securities) from the date they commit for
Units. The Trusts consist of the Securities (or contracts to purchase the
Securities) listed in each Portfolio as may continue to be held from time to
time in each Trust and any Additional Securities deposited in the Trusts in
connection with the sale of additional Units to the public as described above,
together with the accrued and undistributed interest thereon and undistributed
cash realized from the sale or redemption of Securities (see "Trust
Administration" in Part B of this Prospectus). Neither the Sponsor nor the
Trustee shall be liable in any way for any default, failure or defect in any
of the Securities. However, should any deposited contract fail, the Sponsor
shall, within 90 days from the initial Date of Deposit, acquire replacement
Securities and substitute them in the portfolios of the Trust. If the failed
Securities are not substituted or if the purchase price of the substituted
Securities does not exceed the cost of the original contracts, the Sponsor
shall make a pro rata distribution of the amount, if any, by which the cost of
the failed contract exceeded the cost of the substituted security on the next
scheduled distribution date.
On the Date of Deposit each Unit represented the fractional undivided
interest in each Trust set forth under "Essential Information" for each Trust.
Thereafter, if any Units are redeemed by the Trustee the face amount of
Securities in each Trust will be reduced by amounts allocable to redeemed
Units, and the fractional undivided interest represented by each Unit in the
balance will be increased. However, if additional Units are issued by each
Trust (through deposit of Securities by the Sponsor in connection with the
sale of additional Units), the aggregate value of Securities in each Trust
will be increased by amounts allocable to additional Units and the fractional
undivided interest represented by each Unit in the balance will be decreased.
Units will remain outstanding until redeemed upon tender to the Trustee by any
Unit Holder (which may include the Sponsor) or until the termination of the
Indenture.
The Sponsor has a limited right to substitute other Securities in the
Trust portfolio in the event of a failed contract. (See "The Trusts -
Substitution of Securities" in Part B.) Each Unit in each Trust represents an
undivided interest in the principal and net income of that Trust in the ratio
of one Unit for each $1.00 principal amount of Securities initially deposited
in that Trust. (See "The Trusts - Organization" in Part B.) (For the specific
number of Units in each Trust, see the "Summary of
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<PAGE>
Essential Information" for each Trust in this Part A). The Sponsor has not
participated as a sole underwriter or manager, co-manager or member of
underwriting syndicates from which any of the Securities were acquired for the
Trusts.
Treasury Income Series 12. Treasury Income Series 12 consists of a
fixed portfolio of interest-bearing U.S. Treasury Obligations with consecutive
maturities from January 31, 1996 to December 31, 1996 (referred to as
"laddered maturities"). As Securities mature, Treasury Income Series 12 will
return to Unit Holders every 3 months beginning in January, 1996,
approximately 20% of the face amount of the amount invested.
On the initial Date of Deposit 40% of the Securities in Treasury
Income Series 12 were purchased at a "market" discount from par value at
maturity. Based on the offering side evaluation on the initial Date of Deposit
40% of the aggregate principal amount of Securities in the portfolio were
acquired at a discount from par, 60% were at a premium over par and none were
at par. A Unit Holder may receive more or less than his original purchase
price upon disposition of his Units because the value of Units fluctuates with
the value of the underlying Securities, which vary inversely with interest
rates. On the initial Date of Deposit, the bid side evaluation was lower than
the offering side evaluation by .06% of the aggregate offering price of the
Treasury Income Series 12. (See "Public Offering" in Part B.)
All of the issues of Treasury Income Series 12 are represented by the
Sponsor's contracts to purchase, which are expected to be settled on or about
July 5, 1995 and none of the issues has been deposited in the Trust.
Treasury Income Series 13. Treasury Income Series 13 consists of a
fixed portfolio of interest-bearing U.S. Treasury Obligations with consecutive
maturities from May 15, 1996 to May 15, 1998 (referred to as "laddered
maturities"). As Securities mature, Treasury Income Series 13 will return to
Unit Holders every 6 months beginning in May, 1996, approximately 20% of the
face amount of the amount invested.
On the initial Date of Deposit 20% of the Securities in Treasury
Income Series 13 were purchased at a "market" discount from par value at
maturity. Based on the offering side evaluation on the initial Date of Deposit
20% of the aggregate principal amount of Securities in the portfolio were
acquired at a discount from par, 80% were at a premium over par and none were
at par. A Unit Holder may receive more or less than his original purchase
price upon disposition of his Units because the value of Units fluctuates with
the value of the underlying Securities, which vary inversely with interest
rates. On the initial Date of Deposit, the bid side evaluation was lower than
the offering side evaluation by .06% of the aggregate offering price of the
Treasury Income Series 13. (See "Public Offering" in Part B.)
All of the issues of Treasury Income Series 13 are represented by the
Sponsor's contracts to purchase, which are expected to be settled on or about
July 5, 1995 and none of the issues has been deposited in the Trust.
Asset Builder Series 14 . Asset Builder Series 14 consists principally
of a fixed portfolio of stripped U.S. Treasury notes or bonds with maturities
longer than 1 year, which are referred to as Zero Coupon Bonds. Zero Coupon
Bonds provide for payment at maturity at par value, unless sooner sold or
redeemed, but do not provide for the payment of current interest. The market
value of Zero Coupon Bonds may be subject to greater fluctuations than coupon
bonds in response to changes in interest rates. See "The Trusts--Discount and
Zero Coupon Bonds" in Part B. The Securities in Asset Builder Series 14 have
consecutive maturities from November 15, 1996 to November 30, 1998 (referred
to as "laddered maturities"). As Securities mature, Asset Builder Series 14
will return to Unit Holders every 6 months beginning in November, 1996,
approximately 20% of the face amount of the amount invested.
On the initial Date of Deposit 100% of the Securities in Asset Builder
Series 14 were purchased at a "market" discount from par value at maturity.
Based on the offering side evaluation on the initial Date of Deposit 100% of
the aggregate principal amount of Securities in the portfolio were acquired at
a discount from par, none were at a premium over par and none were at par. A
Unit Holder may receive more or less than his original purchase price upon
disposition of his Units because the value of Units fluctuates with the value
of the underlying Securities, which vary inversely with interest rates.
A-9
<PAGE>
On the initial Date of Deposit, the bid side evaluation was lower than the
offering side evaluation by .04% of the aggregate offering price of the Asset
Builder Series 14. (See "Public Offering" in Part B.)
All of the issues of Asset Builder Series 14 are represented by the
Sponsor's contracts to purchase, which are expected to be settled on or about
July 5, 1995 and none of the issues has been deposited in the Trust.
RISK FACTORS
An investment in Units of the Trusts should be made with an
understanding of the risks which an investment in fixed rate debt obligations
may entail, including the risk that the value of the portfolio of each Trust
and hence of the Units of each Trust will decline with increases in interest
rates. The value of the underlying Securities will fluctuate inversely with
changes in interest rates. The high inflation of prior years, together with
the fiscal measures adopted to attempt to deal with it, have resulted in wide
fluctuations in interest rates and, thus, in the value of fixed rate long term
debt obligations generally. The Sponsor cannot predict whether such
fluctuations will continue in the future.
In selecting Securities for deposit in the Trusts, the following
factors, among others, were considered by the Sponsor: (i) the prices of the
Securities relative to other comparable Securities; (ii) the maturities of
these Securities; and (iii) whether the Securities were issued after July 18,
1984.
Investment in Asset Builder Series 14 should be made with the
understanding that the value of Zero Coupon Bonds is subject to greater
fluctuation in response to changes in interest rates. In addition, the accrued
market discount of such Securities is not taxable to certain categories of
Unit Holders of such Trust until the Securities in such Trust are disposed of
or mature.
PUBLIC OFFERING PRICE
The Public Offering Price of each Unit of the Trusts is equal to the
aggregate offering price of the Securities in each Trust divided by the number
of Units of each Trust outstanding, plus a sales charge of (a) 1.70% of the
Public Offering Price or 1.729% of the net amount invested in Securities per
Unit of Treasury Income Series 12, (b) 1.95% of the Public Offering Price or
1.989% of the net amount invested in Securities per Unit of Treasury Income
Series 13, and (c) 1.95% of the Public Offering Price or 1.989% of the net
amount invested in Securities per Unit of Asset Builder Series 14. In
addition, for Units ordered after the date hereof, accrued interest will be
payable from the First Settlement Date for Units of the Trust (three business
days from the date hereof) to the expected date of settlement (three business
days after order). For additional information regarding the Public Offering
Price, the descriptions of interest and principal distributions, repurchase
and redemption of Units and other essential information regarding the Trusts,
see the "Summary of Essential Information" for each Trust in this Part A.
During the initial offering period orders involving the lesser of at least
500,000 Units or $500,000 for Treasury Income Series 12, 500,000 Units or
$500,000 for Treasury Income Series 13 and 500,000 Units or $500,000 for Asset
Builder Series 14 will be entitled to a volume discount from the Public
Offering Price. In addition, to the extent Units of each QUILTS Trust are
currently available from the Sponsor, Unit Holders may elect to rollover
principal distributions paid to them as Securities in their respective Trust
mature into additional units of such available QUILTS Trusts (upon receipt by
the Trusts of an appropriate exemptive order from the Securities and Exchange
Commission) at a reduced sales charge. (See "Public Offering-Volume and Other
Discounts" in Part B.) The Public Offering Price per Unit may vary on a daily
basis in accordance with fluctuations in the aggregate offering price of the
Securities. (See "Public Offering-Offering Price" in Part B.)
DISTRIBUTIONS
Distributions of interest income, less expenses, will be made by
Treasury Income Series 12 on a quarterly basis and Treasury Income Series 13
on a monthly basis. The first interest distributions will be made on the First
Payment Date to all Unit Holders of record on the First Record Date of the
Trust and thereafter distributions will be made on a quarterly basis for
Treasury Income Series 12 and on a monthly basis for Treasury Income Series
13. Distributions of principal, if any, will be made quarterly for Treasury
Income Series 12, semi-annually for Treasury Income Series 13 and
semi-annually for
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Asset Builder Series 14 beginning in 1996. (See "Rights of Unit
Holders-interest and Principal Distributions" in Part B. For estimated
quarterly and monthly interest distributions, the amount of the first interest
distributions and the specific dates representing the First Payment Date and
the First Record Date see "Summary of Essential Information" for each Trust in
Part A.)
ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN
Units of the Trusts are offered to investors on a "dollar price" basis
(using the computation method previously described under "Public Offering
Price") as distinguished from a "yield price" basis often used in offerings of
tax exempt bonds (involving the lesser of the yield as computed to maturity of
bonds or to an earlier redemption date). Since they are offered on a dollar
price basis, the rate of return on an investment in Units of Treasury Income
Series 12 and Treasury Income Series 13 is measured in terms of "Estimated
Current Return" and "Estimated Long Term Return". The rate of return for Asset
Builder Series 14 is only measured in terms of "Estimated Long Term Return."
This calculation of performance is mandated by the rules of the Securities and
Exchange Commission.
Estimated Long Term Return is calculated by: (1) computing the yield
to maturity or to an earlier call date (whichever results in a lower yield)
for each Security in each Trust portfolio in accordance with accepted
practices, which practices take into account not only the interest payable on
the Securities but also the amortization of premiums or accretion of
discounts, if any; (2) calculating the average of the yields for the
Securities in each Trust portfolio by weighing each Security's yield by the
market value of the Security and by the amount of time remaining to the date
to which the Security is priced (thus creating an average yield for the
portfolio of each Trust); and (3) reducing the average yield for the portfolio
of each Trust in order to reflect estimated fees and expenses of each Trust
and the maximum sales charge paid by Unit Holders. The resulting Estimated
Long Term Return represents a measure of the return to Unit Holders earned
over the estimated life of each Trust. The Estimated Long Term Return as of
the initial Date of Deposit is stated for the Trusts under "Summary of
Essential Information" for each Trust in Part A.
Estimated Current Return is computed by dividing the Estimated Net
Annual Interest Income per Unit by the Public Offering Price per Unit. In
contrast to the Estimated Long Term Return, the Estimated Current Return does
not take into account the amortization of premium or accretion of discount, if
any, on the Securities in the portfolio of each Trust. Moreover, because
interest rates on Securities purchased at a premium are generally higher than
current interest rates on newly issued bonds of a similar type with comparable
rating, the Estimated Current Return per Unit may be affected adversely if
such Securities are redeemed prior to their maturity. On the initial Date of
Deposit, the Estimated Net Annual Interest Income per Unit divided by the
Public Offering Price resulted in the Estimated Current Return stated for each
applicable Trust under "Summary of Essential Information" for each Trust in
Part A.
The Estimated Net Annual Interest Income per Unit of each Trust will
vary with changes in the fees and expenses of the Trustee and the Evaluator
applicable to the Trust and with the redemption, maturity, sale or other
disposition of the Securities in the Trusts. The Public Offering Price will
vary with changes in the offering prices (bid prices in the case of the
secondary market) of the Securities. Therefore, there is no assurance that the
present Estimate Current Return or Estimated Long Term Return will be realized
in the future.
MARKET FOR UNITS
The Sponsor, although not obligated to do so, currently intends to
maintain a secondary market for the Units of the Trusts after the initial
public offering has been completed. The secondary market repurchase price will
be based on the aggregate bid price of the Securities in a Trust portfolio;
and the reoffer price will be based on the aggregate offering price of the
Securities plus a sales charge of (a) 1.70% (1.729% of the net amount
invested) plus net accrued interest for Treasury Income Series 12, (b) 1.95%
(1.989% of the net amount invested) plus net accrued interest for Treasury
Income Series 13, and (c) 1.95% (1.989% of the net amount invested) plus net
accrued interest for Asset Builder Series 14. If a market is not maintained a
Unit Holder will be able to redeem his Units with the Trustee at a price based
on the aggregate bid price of the Unit. (See "Liquidity-Sponsor "Repurchase"
in Part B.)
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INDEPENDENT AUDITORS' REPORT
The Sponsor, Trustee, and Unit Holders of
Quest for Value's Unit Investment Laddered Trust Series ("QUILTS")
QUILTS Income-U.S. Treasury Series 12
QUILTS Income-U.S. Treasury Series 13
QUILTS Asset Builder-U.S. Treasury Series 14
We have audited the accompanying Statements of Condition and Portfolios of
Quest for Value's Unit Investment Laddered Trust Series ("QUILTS"), QUILTS
Income-U.S. Treasury Series 12 ("Treasury Income Series 12"), QUILTS
Income-U.S. Treasury Series 13 ("Treasury Income Series 13") and QUILTS Asset
Builder-U.S. Treasury Series 14 ("Asset Builder Series 14") as of June 28,
1995. These statements are the responsibility of the Sponsor. Our
responsibility is to express an opinion on the Statements of Condition and
Portfolios based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the Statements of Condition and
Portfolios are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
Statements of Condition and Portfolios. An audit also includes assessing the
accounting principles used and significant estimates made by the Sponsor, as
well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion. The irrevocable
letter of credit deposited in connection with the securities owned as of June
28, 1995, pursuant to contracts to purchase, as shown in the Statements of
Condition and Portfolios, was confirmed to us by United States Trust Company
of New York, the Trustee.
In our opinion, the accompanying Statements of Condition and Portfolios
present fairly, in all material respects, the financial position of Treasury
Income Series 12, Treasury Income Series 13 and Asset Builder Series 14 as of
June 28, 1995 in conformity with generally accepted accounting principles.
BDO SEIDMAN
New York, New York
June 28, 1995
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<TABLE>
QUILTS
STATEMENTS OF CONDITION
AS OF DATE OF DEPOSIT, JUNE 28, 1995
TRUST PROPERTY
<CAPTION>
Treasury Treasury Asset
Income Income Builder
Series 12 Series 13 Series 14
<S> <C> <C> <C>
Investment in Securities:
Sponsor's Contracts to Purchase Underlying
Securities Backed by Irrevocable Letters of Credit(1) $501,625 $502,172 $438,739
Accrued Interest to Date of Deposit on Securities(1) 6,638 3,219 49
Organizational Costs (2)........................... 20,000 20,000 20,000
Total.............................................. $528,263 $525,391 $458,788
LIABILITY AND INTEREST OF UNIT HOLDERS
Liability for Accrued Interest on Securities(1)(5). $6,638 $3,219 $ 49
Accrued Liability(2)............................... 20,000 20,000 $20,000
26,638 23,219 20,049
Interest of Unit Holders
Units of Fractional Undivided Interest Outstanding:
Cost to Unit Holders(3)........................ 510,300 512,157 447,464
Less-Gross Underwriting Commissions(4)......... 8,675 9,985 8,725
Net Amount Applicable to Unit Holders.............. 501,625 502,172 438,739
Total.............................................. $528,263 $525,391 $458,788
</TABLE>
(1) Aggregate cost to the Trusts of the Securities listed in the portfolio
of each Trust is based on offering prices determined by the Evaluator
on the basis set forth under "Public Offering-Offering Price" as of
12:00 Noon on June 28, 1995. An irrevocable letter of credit issued by
Credit Lyonnais in an amount of $3,000,000 has been deposited with the
Trustee to cover the purchase of $1,500,000 principal amount of
Securities pursuant to contracts to purchase such Securities and
$9,906 accrued interest on such Securities to the expected dates of
settlement.
(2) Organizational costs incurred by the Trusts have been deferred and
will be amortized over the life of each of the Trusts. The Trust will
reimburse the Sponsor for actual organizational costs incurred up to a
maximum of $.20 per 1,000 Units per annum. To the extent the Trust is
larger or smaller, the actual dollar amount reimbursed may vary.
(3) Aggregate public offering price (exclusive of interest) is computed on
500,000, 500,000 and 500,000 Units for Treasury Income Series 12,
Treasury Income Series 13, and Asset Builder Series 14, respectively,
on the basis set forth under "Public Offering-Offering Price" in Part
B.
(4) Sales charge of 1.70% computed on 500,000 Units of Treasury Income
Series 12, 1.95% computed on 500,000 Units of Treasury Income Series
13, and 1.95% computed on 500,000 Units of Asset Builder Series 14 on
the basis set forth under "Public Offering Price" in Part B.
(5) On the basis set forth under "Public Offering-Accrued Interest" in
Part B, the Trustee will advance the amount of accrued interest as of
July 5, 1995 (the "First Settlement Date"), and all accrued interest
to the First Settlement Date will be distributed to the Sponsor as the
Unit Holder of record as of the First Settlement Date. Consequently,
the amount of accrued interest to be added to the public offering
price of Units will include only accrued interest from the First
Settlement Date to date of settlement, less any distributions from the
Interest Account subsequent to the First Settlement Date.
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QUILTS
Treasury Income Series 12
AS OF DATE OF DEPOSIT, JUNE 28, 1995
Aggregate Coupon/ Cost of
Portfolio Principal Title of Securities Maturity Securities
No. Amount Contracted for (1) Date(s) to Trust (2)
1 $100,000 U.S. Treasury Note 4.000% $99,062
1/31/96
2 100,000 U.S. Treasury Note 5.500% 99,859
4/30/96
3 100,000 U.S. Treasury Note 6.125% 100,469
7/31/96
4 100,000 U.S. Treasury Note 6.875% 101,516
10/31/96
5 100,000 U.S. Treasury Note 6.125% 100,719
12/31/96
--------- ---------
$500,000 $501,625
ESTIMATED CASH FLOWS TO UNIT HOLDERS
The Table below sets forth the per 1,000 Units estimated distributions
of interest and principal to Unit Holders. The table assumes no changes in
Trust expenses, no redemptions or sales of the underlying U.S. Treasury
Obligations prior to maturity and the receipt of all principal due upon
maturity. To the extent the foregoing assumptions change actual distributions
will vary.
Quilts Treasury Estimated Interest Estimated Principal Estimated Total
Income Series 12 Distribution Distribution Distribution
January 1996 29.53 200.00 229.53
April 1996 12.35 200.00 212.35
July 1996 9.77 200.00 209.77
October 1996 6.80 200.00 206.80
December 1996 2.98 200.00 202.98
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QUILTS
Treasury Income Series 13
AS OF DATE OF DEPOSIT, JUNE 28, 1995
Aggregate Coupon/ Cost of
Portfolio Principal Title of Securities Maturity Securities
No. Amount Contracted for (1) Date(s) to Trust (2)
1 $100,000 U.S. Treasury Note 4.250% $ 98,781
5/15/96
2 100,000 U.S. Treasury Note 6.500% 101,156
11/30/96
3 100,000 U.S. Treasury Note 6.125% 100,766
5/31/97
4 100,000 U.S. Treasury Note 6.000% 100,531
11/30/97
5 100,000 U.S. Treasury Note 6.125% 100,938
5/15/98
--------- ---------
$500,000 $502,172
ESTIMATED CASH FLOWS TO UNIT HOLDERS
The Table below sets forth the per 1,000 Units estimated distributions
of interest and principal to Unit Holders. The table assumes no changes in
Trust expenses, no redemptions or sales of the underlying U.S. Treasury
Obligations prior to maturity and the receipt of all principal due upon
maturity. To the extent the foregoing assumptions change actual distributions
will vary.
Quilts Treasury Estimated Interest Estimated Principal Estimated Total
Income Series 13 Distribution Distribution Distribution
July 1995 1.56 1.56
August 1995-April 1996 4.69 4.69
May 1996 4.69 200.00 204.69
June 1996-October 1996 4.01 4.01
November 1996 4.01 200.00 204.01
December 1996 3.47 3.47
January 1997-April 1997 2.94 2.94
May 1997 2.94 200.00 202.94
June 1997 2.44 2.44
July 1997-October 1997 1.94 1.94
November 1997 1.94 200.00 201.94
December 1997 1.45 1.45
January 1998-April 1998 0.96 0.96
May 1998 0.96 200.00 200.96
A-15
<PAGE>
QUILTS
Asset Builder Series 14
AS OF DATE OF DEPOSIT, JUNE 28, 1995
Aggregate Coupon/ Cost of
Portfolio Principal Title of Securities Maturity Securities
No. Amount Contracted for (1) Date(s) to Trust (2)
1 $100,000 U.S. Treasury Strip 0.000% $92,593
11/15/96
2 100,000 U.S. Treasury Strip 0.000% 89,999
5/15/97
3 100,000 U.S. Treasury Strip 0.000% 87,381
11/15/97
4 100,000 U.S. Treasury Strip 0.000% 84,884
5/15/98
5 90,000 U.S. Treasury Strip 0.000% 74,101
11/15/98
6 10,000 U.S. Treasury Note 5.125% 9,781
11/30/98
--------- ---------
$500,000 $438,739
A-16
<PAGE>
FOOTNOTES TO PORTFOLIOS
(1) Contracts to purchase the Securities were entered into on June 28, 1995,
for Treasury Income Series 12, Treasury Income Series 13, and Asset
Builder Series 14. All contracts are expected to be settled on or about
the First Settlement Date of each Trust which is expected to be July 5,
1995 for Treasury Income Series 12, Treasury Income Series 13, and Asset
Builder Series 14.
(2) Evaluation of Securities by the Evaluator was made on the basis of current
offering prices for the Securities. The offering prices are greater than
the current bid prices of the Securities which are the basis on which Unit
Value is determined for purposes of redemption of Units.(See "Public
Offering-Comparison of Public Offering Price, Sponsor's Repurchase Price
and Redemption Price" in Part B.)
<TABLE>
<CAPTION>
The aggregate value of Securities in the Additional information
Trust, based on the bid prices on the Date regarding the Trust
of Deposit, are as follows: is as follows:
Value of Securities Based Upon
Bid Side Evaluation Sponsor's Purchase Price
<S> <C> <C>
Treasury Income Series 12 $501,313 $501,594
Treasury Income Series 13 $501,891 $502,094
Asset Builder Series 14 $438,539 $438,901
Cost of Securities Based Upon Sponsor's Profit
Offering Side Evaluation (Date of Deposit)
Treasury Income Series 12 $501,625 $31
Treasury Income Series 13 $502,172 $78
Asset Builder Series 14 $438,739 $(162)
Difference in Dollars Annual Interest Income
Treasury Income Series 12 $312 $28,625
Treasury Income Series 13 $281 $29,000
Asset Builder Series 14 $200 $ 513
% Difference Between Bid Side Evaluation
and Offering Side Evaluation
Treasury Income Series 12 .06%
Treasury Income Series 13 .06%
Asset Builder Series 14 .04%
</TABLE>
A-17
<PAGE>
UNDERWRITING SYNDICATES
The names and addresses of the Underwriters of the Units and their
participation in the offering of QUILTS are as follows:
Units of Units of Units of
Treasury Income Treasury Income Asset Builder
Name and Address Series 12 Series 13 Series 14
Sponsor
Quest For Value 100,000 100,000 200,000
World Financial Center
200 Liberty Street
New York, NY 10281
Underwriters
Oppenheimer & Co., Inc. 100,000 100,000 100,000
World Financial Center
200 Liberty Street
New York, NY 10281
Pershing Division of 100,000 100,000 100,000
Donaldson, Lufkin &
Jenrette Securities Corp.
One Pershing Plaza
Jersey City, NJ 07399
Fidelity Capital Markets 100,000 100,000 100,000
Division of National
Financial Services
World Trade Center
164 Northern Ave. ZT3
Boston, MA 02210
Stephens Inc. 100,000 100,000 -----
111 Center Street
Stephens Building
Little Rock, AR 72203
-------- -------- --------
500,000 500,000 500,000
A-18
<PAGE>
PROSPECTUS PART B
Part B of this Prospectus may not be Distributed unless Accompanied by Part A
QUEST FOR VALUE'S UNIT INVESTMENT LADDERED TRUST SERIES ("QUILTS")
QUILTS Income-U.S. Treasury Series 12 ("Treasury Income Series 12")
QUILTS Income-U.S. Treasury Series 13 ("Treasury Income Series 13")
QUILTS Asset Builder-U.S. Treasury Series 14 ("Asset Builder Series 14")
THE TRUST
Organization. "QUILTS" is comprised of three separate "unit investment
trusts" designated as set forth above and in Part A. The Trusts were created
under the laws of the State of New York pursuant to a Trust Indenture and
Agreement (the "Trust Agreement"), dated the Date of Deposit, between Quest
for Value Distributors, as Sponsor and United States Trust Company of New
York, as Trustee.
The Trustee also acts as the Evaluator for the Trusts.
On the Date of Deposit the Sponsor deposited with the Trustee the
underlying securities and contracts and funds (represented by the irrevocable
letter(s) of credit issued by major commercial bank(s)) for the purchase of
such securities (the "Securities"). (See "Portfolio" for each Trust in Part A
of this Prospectus.) The Trusts are created simultaneously with the execution
of the Trust Agreement and the deposit of the Securities with the Trustee. The
Trustee then immediately delivered to the Sponsor certificates of beneficial
interest (the "Certificates") representing the units (the "Units") comprising
the entire ownership of the Trusts. Through this Prospectus, the Sponsor is
offering the Units, including Additional Units, as defined below, for sale to
the public. The holders of Units (the "Unit Holders") will have the right to
have their Units redeemed at a price based on the aggregate bid side
evaluation of the Securities (the "Redemption Price") if they cannot be sold
in the secondary market which the Sponsor, although not obligated to, proposes
to maintain. In addition, the Sponsor may offer for sale through this
Prospectus Units which the Sponsor may have repurchased in the secondary
market or upon the tender of such Units for redemption.
With the deposit of the Securities in the Trusts on the initial Date of
Deposit, the Sponsor established a proportionate relationship among the
principal amounts of interest bearing and non-interest bearing U.S. Treasury
Obligations of specified ranges of maturities in the portfolios of each Trust.
During the 90-day period following the Date of Deposit, the Sponsor is
permitted under the Trust Agreement to deposit additional Securities (the
"Additional Securities") and any cash in the Trusts not held for distribution
to Unit Holders prior to the deposit, resulting in a corresponding increase in
the number of Units outstanding (the "Additional Units"). Such Additional
Units may be continuously offered for sale to the public by means of this
Prospectus. The Sponsor anticipates that any Additional Securities deposited
in the Trusts during the 90-day period subsequent to the Date of Deposit will
maintain, as far as practicable, the original proportionate relationship among
the principal amounts of U.S. Treasury Obligations in the portfolios
established on the Date of Deposit. Precise duplication of this original
proportionate relationship may not be possible because fractions of U.S.
Treasury Obligations may not be purchased or for other reasons, but
duplication will continue to be the goal in connection with any such deposit
of Additional Securities. (These original proportionate relationships on the
Date of Deposit are set forth in "Summary of Essential Information," for each
Trust in Part A.) Deposits of Additional Securities in the portfolios of each
Trust subsequent to the 90-day period following the Date of Deposit must
replicate exactly the proportionate relationship among the principal amounts
of Securities comprising the portfolios of each Trust at the time of
replication.
A "Unit" represents an undivided interest or pro rata share in the
principal and interest of each Trust in the ratio of one Unit for each $1.00
principal amount of Securities initially deposited in each Trust. Because
regular payments of principal are to be received and certain of the Securities
will mature in accordance with their terms or may be sold under certain
circumstances described herein and because Additional Securities may be
deposited into the Trusts from time to time, the Trusts are not expected to
retain their present size and composition. To the extent that any Units are
redeemed by
1
<PAGE>
the Trustee, the fractional undivided interest or pro rata share in such Trust
represented by each unredeemed Unit will increase, although the actual
interest in such Trust represented by such fraction will remain unchanged.
Units will remain outstanding until redeemed upon tender to the Trustee by
Unit Holders, which may include the Sponsor, or until the termination of the
Trust Agreement.
Objectives. The Trusts offer investors the opportunity to participate in
a portfolio of U.S. Treasury Obligations with a greater diversification than
they might be able to acquire themselves. The objectives of the Trusts are to
provide safety of principal and, with respect to Treasury Income Series 12,
quarterly distributions of interest and, with respect to Treasury Income
Series 13, monthly distributions of interest. With respect to Asset Builder
Series 14 the Trusts seek to accumulate principal value in the Units over the
life of the Trust. The Trusts seek to provide investment flexibility by
allowing investors to choose among three portfolios of Securities that have
differing maturities and a choice of frequent income distribution or to
accumulate principal value. Investors should be aware that there is no
assurance the Trusts' objectives will be achieved. Even though the portfolios
of Treasury Income Series 12 and Treasury Income Series 13 consist primarily
of U.S. Treasury Obligations which pay interest no more often than
semi-annually, Treasury Income Series 12 will pay interest quarterly and
Treasury Income Series 13 will pay interest monthly, through advances made by
the Trustee, which will then be reimbursed when interest is received. (See
"Interest and Principal Distributions" in this Part B.)
Since disposition of Units prior to final liquidation of the Trusts may
result in an investor receiving less than the amount paid for such Units (see
"Public Offering-Comparison of Public Offering Price, Sponsor's Repurchase
Price and Redemption Price" in this Part B), the purchase of a Unit should be
looked upon as a long-term investment. The Trusts are not designed to be a
complete investment program.
Portfolios. The Trusts consist of the Securities (or contracts to
purchase such Securities together with an irrevocable letter or letters of
credit for the purchase of such contracts) listed under "Portfolio" for each
Trust in Part A of this Prospectus, as long as such Securities may continue to
be held from time to time in the Trusts (including certain securities
deposited in the Trusts in exchange or substitution for any Securities
pursuant to the Trust Agreement) together with accrued and undistributed
interest thereon and undistributed and uninvested cash realized from the
disposition of Securities. Because certain of the Securities from time to time
may be redeemed or will mature in accordance with their terms or may be sold
under certain circumstances described herein, a Trust is not expected to
retain for any length of time its present size and composition.
The Sponsor although not obligated to do so, intends to maintain a
secondary market for the Units on the bid side of the market for the Units.
(See "Liquidity-Sponsor Repurchase", herein.) Unit Holders of the Trusts, in
the absence of a secondary market for Units will have the right to have one or
more of their Units redeemed with the Trustee at a price equal to the
Redemption Price thereof (see "Liquidity-Sponsor Repurchase" in this Part B)
based on the then aggregate bid price for the Securities in the portfolios of
each Trust. Due to fluctuations in the market price of the Securities in the
portfolios and the fact that the Initial Public Offering Price is based on the
offering side of the market and includes a sales charge among other factors,
the amount realized by a Unit Holder upon the redemption or sale of Units may
be less than the price paid for such units by the Unit Holder.
The portfolio of each Trust consists of Securities issued by the United
States of America ("U.S. Treasury Obligations"), which are direct obligations
of the United States and therefore are backed by the full faith and credit of
the United States Government. The U.S. Treasury Obligations are different
issues of bonds, bills, notes, debentures and other debt obligations with
fixed final maturity dates. None of the U.S. Treasury Obligations have any
equity or conversion features. All of the U.S. Treasury Obligations in
Treasury Income Series 12 and Treasury Income Series 13 are current
interest-bearing obligations of the United States of America, or in the case
of U.S. Treasury Obligations not delivered on the initial Date of Deposit,
contracts to purchase such obligations assigned to the Trustee. Most of the
U.S. Treasury Obligations in Asset Builder Series 14 consist of stripped U.S.
Treasury notes and
2
<PAGE>
bonds with maturities of 1 year or more (hereinafter referred to as "Zero
Coupon Bonds"). The balance of the portfolio of this Trust consists of
interest-bearing obligations used to pay expenses of the Trust. Any excess
amounts after expenses are paid will be paid to Unit Holders in cash. A Zero
Coupon Bond makes no present interest payments. Rather, it makes one payment
of its face amount at maturity.
U.S. Treasury Obligations represent 100% of the aggregate market value of
the portfolios of each Trust. These U.S. Treasury Obligations are sold by the
United States Department of Treasury (the "Treasury") to finance shortfalls
between the Treasury's income and expenditures. Such gaps may have been
planned and accounted for in the budget, or they may arise from unexpected
changes in economic, political, fiscal and other circumstances. U.S. Treasury
Obligations constitute public debt of the United States and are, therefore,
direct obligations of the United States.
When selecting U.S. Treasury Obligations for the Trusts, the
following factors, among others, were considered by the Sponsor: (i) the
prices and yields of such U.S. Treasury Obligations relative to other
comparable securities; (ii) the maturities of such U.S. Treasury Obligations;
and (iii) whether the U.S. Treasury Obligations were issued after July 18,
1984.
The yields on U.S. Treasury Obligations of the type deposited in the
Trusts are dependent on a variety of factors, including general money market
conditions, fluctuations in prevailing interest rates, general conditions of
the government securities markets, size of a particular offering and the
maturity of the obligations.
RISK FACTORS
Risk Factors. An investment in Units of the Trusts should be made with an
understanding of the risks which an investment in fixed rate debt obligations
may entail, including the risk that the value of the portfolios of each Trust,
and hence of the Units, will decline with increases in prevailing interest
rates. The value of the underlying Securities will fluctuate inversely with
changes in prevailing interest rates. In recent years, the national economy
has experienced significant variations in rates of inflation and economic
growth, substantial increases in the national debt, substantial increase in
reliance upon foreign investors to finance the national debt, and material
reformulation of federal tax, monetary and regulatory policies. These
conditions have been associated with wide fluctuations in prevailing interest
rates and thus in the value of fixed rate debt obligations. The Sponsor cannot
predict whether such fluctuations will continue in the future.
The Securities in the portfolios of each Trust were chosen in part on the
basis of their respective stated maturity dates. The ranges of maturity dates
of each of the Securities contained in the portfolios of each Trust are shown
on the "Portfolio" for each Trust in Part A of this Prospectus.
The Trusts may be appropriate for investors who desire to invest in a
portfolio of taxable fixed income federal securities offering the safety of
principal provided by an investment in U.S. Treasury Obligations backed by the
full faith and credit of the United States Government. The Trusts generally
pass through to Unit Holders the exemptions from state and local personal
income taxes afforded to direct owners of U.S. Obligations. The Trusts are
appropriate for qualified retirement plans. (See "Retirement Plans" in this
Part B.) These Trusts may also be particularly appropriate for foreign
investors as the income from the Trusts, provided certain conditions are met,
will be exempt from withholding for U.S. Federal income tax purposes. (See
"Tax Status".)
Certain of the Securities in the Trusts may have been acquired at a
market premium. Securities trade at a premium because the prevailing interest
rates on the Securities are higher than interest on comparable debt securities
being issued at currently prevailing interest rates. The current returns of
securities trading at a market premium are higher than the current returns of
comparably rated debt securities of a similar type issued at currently
prevailing interest rates because premium securities tend to decrease in
market value as they approach maturity, when the face amount becomes payable.
Because part of the purchase price is thus returned not at maturity but
through current income
3
<PAGE>
payments, an early redemption at par of a security purchased at a premium or a
maturity at par of a security purchased at a premium will result in a
reduction in yield and a loss of principal to the Unit Holders. If currently
prevailing interest rates for newly issued and otherwise comparable securities
increase, the market premium of previously issued securities will decline and
if currently prevailing interest rates for newly issued comparable securities
decline, the market premium of previously issued securities will increase, all
other things being equal. Furthermore, the value of the Units will fluctuate
with fluctuations in the value of the underlying Securities in the portfolios
of each Trust. Therefore, Unit Holders who sell their Units prior to
termination may receive more or less than their original purchase price upon
sale. Market premium attributable to interest rate changes does not indicate
market confidence in the issue.
Substitution of Securities. Neither the Sponsor nor the Trustee shall be
liable in any way for any default, failure or defect in any of the Securities.
In the event of a failure to deliver any Security that has been purchased for
the Trusts under a contract, including those Securities purchased on a "when,
as, and if" issued basis ("Failed Securities"), the Sponsor is authorized
under the Trust Agreement to direct the Trustee to acquire other securities
("Replacement Securities") and to substitute them in the portfolios of the
Trusts within 90 days of the initial Date of Deposit.
Replacement Securities must be deposited with the Trustee within 20 days
after delivery of notice of a Failed Security (but in no event later than the
90th day following the initial Date of Deposit) and the purchase price thereof
(exclusive of accrued interest) may not exceed the amount of funds reserved by
the Trustee pursuant to a letter of credit supplied by the Sponsor for the
purchase of the Failed Security. The Replacement Securities must (i) be U.S.
Treasury Obligations, (ii) have a fixed maturity approximately the same as the
fixed maturity of the Security replaced, and (iii) be purchased at a price
that results in a yield to maturity and in a current return, in each case as
of the date on which such Replacement are deposited with the Trustee, which is
equivalent (taking into consideration then current market conditions and the
relative creditworthiness of the underlying obligation) to the yield to
maturity and current return of the related Failed Security. Whenever a
Replacement Security has been acquired for a Trust, the Trustee shall, within
five days thereafter, notify all Unit Holders of the acquisition of the
Replacement Security and shall, no later than the next Quarterly or Monthly
Payment Date, make a pro rata distribution of the amount, if any, by which the
cost to the Trust of the Failed Security exceeded the cost of the Replacement
Security.
If the right of limited substitution described in the preceding paragraph
shall not be utilized to acquire Replacement Securities in the event of a
failed contract, the Sponsor will refund to each Unit Holder the portion of
the sales charge and the pro rata portion of the cost of such Failed
Securities, and distribute the principal and accrued interest attributable to
such Failed Securities on the next Quarterly or Monthly Payment Date. In all
cases, accrued interest attributable to Failed Securities will be paid to Unit
Holders until such time as Replacement Securities are acquired. All such
interest paid to a Unit Holder which accrued after the expected date of
settlement for purchase of his Units will be paid by the Sponsor.
Because certain of the Securities from time to time may be redeemed or
will mature in accordance with their terms or may be sold under certain
circumstances, no assurance can be given that the Trusts will retain their
present size and composition for any length of time. The proceeds from the
sale of a Security or the exercise of any redemption or call provision will be
distributed to Unit Holders except to the extent such proceeds are applied to
meet redemptions of Units. (See "Liquidity-Trustee Redemption" in this Part
B.)
Discount and Zero Coupon Bonds. Most of the aggregate principal amount of
the Securities in Asset Builder Series 14 are stripped U.S. Treasury notes or
bonds with maturities of 1 year or more, which are referred to as Zero Coupon
Bonds. The balance of the portfolio of this Trust consists of interest-bearing
obligations used to pay expenses of the Trust. Any excess amounts remaining
after expenses are paid will be paid to Unit Holders in cash. Zero Coupon
Bonds do not provide for the payment of any current interest and provide for
payment at maturity at face value unless sooner sold
4
<PAGE>
or redeemed. The market value of Zero Coupon Bonds is subject to greater
fluctuation in response to changes in prevailing interest rates. Zero Coupon
Bonds generally are subject to redemption at compound accreted value based on
par value at maturity. Because the issuer is not obligated to make current
interest payments, Zero Coupon Bonds may be less likely to be redeemed than
coupon bonds issued at a similar prevailing interest rates. In the case of
certain categories of Unit Holders, the accrued market discount from Zero
Coupon Bonds is not taxable until such Securities are disposed of or have
matured. The accrued portion of such discount will generally be treated as
taxable interest income for regular federal income tax purposes. Upon sale or
redemption, any gain realized that is in excess of the earned portion of
acquisition discount will be taxable as long-term capital gain if the Zero
Coupon Bonds have been held for more than one year. (See "Tax Status" in this
Part B.) The current value of a Zero Coupon Bond reflects the present value of
its face amount at maturity. (See "Portfolio Summary" in Part A.)
Some of the aggregate principal amount of Securities in the Trusts may
have been purchased at a "market" discount from par value at maturity. The
coupon interest rates on the discount bonds at the time they were purchased
and deposited in the Trusts were lower than the current market interest rates
for newly issued bonds of comparable rating and type. At the time of issuance
the discount bonds were for the most part issued at then current coupon
interest rates. The current yields (coupon interest income as a percentage of
market price) of discount bonds will be lower than the current yields of
comparably rated bonds of similar type newly issued at current interest rates
because discount bonds tend to increase in market value as they approach
maturity and the full principal amount becomes payable. A market discount bond
held to maturity will have a larger portion of its total return in the form of
capital gain and less in the form of interest income than a comparable bond
newly issued at current yield and a lower current market value than otherwise
comparable bonds with a shorter term of maturity. If prevailing interest rates
rise, the value of discount bonds will decrease; and if prevailing interest
rates decline, the value of discount bonds will increase. The discount does
not necessarily indicate a lack of market confidence in the issuer.
PUBLIC OFFERING
Offering Price. The Public Offering Price per Unit of each Trust is
computed by adding to the aggregate offering price of the Securities in each
Trust divided by the number of Units outstanding for that Trust, an amount
equal to (a) 1.70% of the aggregate offering price of the Securities per Unit
which is equal to 1.729% of the Public Offering Price for Treasury Income
Series 12, (b) 1.95% of the aggregate offering price of the Securities per
Unit which is equal to 1.989% of the Public Offering Price for Treasury Income
Series 13, and (c) 1.95% of the aggregate offering price of the Securities per
Unit which is equal to 1.989% of the Public Offering Price for Asset Builder
Series 14. A proportionate share of accrued interest on the Securities from
the First Settlement Date to the expected date of settlement for the Units is
added to the Public Offering Price. Accrued interest is the accumulated and
unpaid interest on a Security from the last day on which interest was paid and
is accounted for daily by the applicable Trusts at the initial daily rate set
forth under "Summary of Essential Information" for each Trust in Part A. The
Public Offering Price for each Trust can vary on a daily basis from the amount
stated in this Prospectus in accordance with fluctuations in the prices of the
Securities and the price to be paid by each investor will be computed as of
the date the Units are purchased.
The aggregate offering side evaluation of the Securities is determined by
the Evaluator (a) on the basis of current offering prices of the Securities,
(b) if an offering price is not available for any particular Security, on the
basis of current offering prices for comparable securities, (c) by determining
the value of the Securities on the offer side of the market by appraisal, or
(d) by any combination of the above. This evaluation is made on the initial
Date of Deposit as of 12:00 Noon New York Time and as of 4:00 P.M. each
business day thereafter during the initial public offering, effective for all
orders received during the preceding 24-hour period. With respect to the
initial evaluation of the offering prices of certain Securities which at the
initial Date of Deposit were subject to syndicate offering period pricing
restrictions, it is the practice of the Evaluator to determine such evaluation
on the basis of the syndicate
5
<PAGE>
offering price, unless other factors cause the Evaluator to conclude that such
syndicate offering price does not then accurately reflect the free market
value of such Securities, in which case the Evaluator will also take into
account the other criteria described above for the purpose of making its
determination.
The Evaluator may obtain current bid or offering prices for the
Securities from investment dealers or brokers (including the Sponsor) that
customarily deal in U.S. Treasury Obligations, or from any other reporting
service or source of information which the Evaluator deems appropriate.
Accrued Interest. Accrued interest is the accumulation of unpaid interest
on a bond from the last day on which interest thereon was paid. Interest on
Securities in the Trusts is actually paid semi-annually to the Trusts.
However, interest on the Securities in the applicable Trusts is accounted for
daily on an accrual basis. Because of this, the Trusts always have an amount
of interest earned but not yet collected by the Trustee because of
non-collected coupons. For this reason, the Public Offering Price of Units of
the Trusts will have added to it the proportionate share of accrued and
undistributed interest to date of settlement.
In an effort to reduce the amount of accrued interest which would
otherwise have to be paid in addition to the Public Offering Price on the sale
of Units to the public, the Trustee will advance the amount of accrued
interest as of the First Settlement Date as set forth in the "Summary of
Essential Information" for each Trust in Part A and the same will be
distributed to the Sponsor as the Unit Holder of record as of the First
Settlement Date. Consequently, the amount of accrued interest to be added to
the Public Offering Price of Units will include only accrued interest from the
First Settlement Date to date of settlement, less any distributions from the
Interest Account subsequent to the First Settlement Date. Thus, since the
First Settlement Date is the date of settlement for anyone ordering Units on
the date of this Prospectus, no accrued interest will be added to the Public
Offering Price of Units ordered on the initial Date of Deposit. Except through
an advancement of its own funds, the Trustee will have no cash for
distribution to Unit Holders until it receives interest payments on the
Securities in the Trust. The Trustee has agreed to make advancements of its
own funds in order to reduce the amount of time before monthly or quarterly
distributions of interest in Unit Holders commence (see "Interest and
Principal Distributions"). The Trustee will recover its advancements without
interest or other costs to such Trust from interest received on the Securities
in the Trust. When these advancements have been recovered, regular
distributions of interest to Unit Holders will be commenced. The Interest
Account during the initial months of the Trusts will include some cash
representing interest which has been collected but will predominantly consist
of uncollected accrued interest which is not available for distribution. Since
the Trusts normally receive the interest on Securities twice a year and the
interest on the Securities in the Trusts is accrued on a daily basis, the
Trusts usually will have an amount of interest accrued but not actually
received and distributed to Unit Holders. A Unit Holder will not recover his
proportionate share of accrued interest until the Units are sold or redeemed,
or such Trust is terminated. At that time, the Unit Holder will receive his
proportionate share of the accrued interest computed to the settlement date in
the case of sale or termination and to the date of tender in the case of
redemption.
Volume and Other Discounts. Units of the Trusts are available to Unit
Holders at a volume discount ("Volume Discount") from the Public Offering
Price during the initial public offering. Volume Discount will result in a
reduction of the sales charge applicable to such purchases. Furthermore,
Volume Discount applies to the cumulative Units purchased by a Unit Holder
during a period of 60 days from the initial date of sale of the Units to such
Unit Holder. Units purchased by the same purchasers in separate transactions
during this 60-day period will be aggregated for purposes of determining if
such purchaser is entitled to a Volume Discount provided that such purchaser
must own at least the lesser of either (i) the required number of Units or
(ii) the required dollar amount at the Public Offering Price, at the time such
determination is made. Units held in the name of the spouse of the purchaser
or in the name of a child of the purchaser under 21 years of age are deemed
for the purposes hereof to be registered in the name of the purchaser. Volume
Discount is also applicable to a trustee or other
6
<PAGE>
fiduciary purchasing securities for a single trust estate or single fiduciary
account. As a result of such discounts, Units are sold to dealers/agents at
prices which represent a concession as reflected below. The Sponsor reserves
the right to change these discounts from time to time. The amount of Volume
Discount, the approximate sales charge and the dealer concession applicable to
such purchases are as follows:
<TABLE>
<CAPTION>
Volume Discount Approximate Approximate
Lesser of Number of from Public Reduced Dealer/Agent
Units or Dollar Amount Sales Charge Offering per Unit Sales Charge Concession
Treasury Income Series 12
<S> <C> <C> <C> <C>
Less than 500,000 1.70% 0% 1.70% 1.05%
500,000 to 999,999 1.70% .20% 1.50% .95%
1,000,000 and above* 1.70% .45% 1.25% .75%
Treasury Income Series 13
Less than 500,000 1.95% 0% 1.95% 1.20%
500,000 to 999,999 1.95% .25% 1.70% 1.10%
1,000,000 and above* 1.95% .55% 1.40% .85%
Asset Builder Series 14
Less than 500,000 1.95% 0% 1.95% 1.20%
500,000 to 999,999 1.95% .25% 1.70% 1.10%
1,000,000 and above* 1.95% .55% 1.40% .85%
</TABLE>
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* For any transactions of 1,000,000 Units or more or over $1,000,000, the
Sponsor intends to negotiate the applicable sales charge and such charge
will be disclosed to any such purchaser.
Rollover Privilege. In addition, to the extent Units of each QUILTS trust
are currently available from the Sponsor, Unit Holders of the Trusts may elect
to rollover principal distributions paid to them as Securities in their
respective Trusts mature into additional units of such available QUILTS trusts
at a reduced sales charge equal to the first breakpoint of the Trust
purchased, as described above on the day the rollover is executed. Reduced
sales charges are available only on proceeds received from principal
distributions from maturing Securities of the Trust. Furthermore, for rollover
transactions of any amount, dealers/agents will receive concessions equal to
the first breakpoint of the Trust purchased described above on the day the
rollover is executed. For more complete information concerning the rollover
privilege, including charges and expenses, the Unit Holders should contact
their broker.
Net Asset Value Purchases. No sales charge will be applied to the
following transactions: purchases by persons who for at least 90 days have
been directors, trustees, officers or full-time employees of any of (i) the
funds distributed by Quest for Value Distributors, (ii) Quest for Value
Advisors and (iii) Quest for Value Distributors, or their affiliates, their
immediate relatives or any trust, pension, profit sharing or other benefit
plan for any of them; purchases by any account advised by Oppenheimer Capital,
the parent of Quest for Value Advisors; and purchases by an employee of a
broker-dealer having a dealer or servicing agreement with Quest for Value
Distributors and/or a participating member of the Oppenheimer Capital brokered
CD selling group or of a bank or financial intermediary currently offering
QUILTS to its customers.
Distribution of Units. During the initial offering period (i) Units
issued on the initial Date of Deposit and (ii) Additional Units issued after
such date in respect of additional deposits of Securities, will be distributed
by the Sponsor and dealers at the Public Offering Price plus accrued interest.
The initial offering period in each case is thirty days unless extended by the
Sponsor for Units specified in (i) and (ii) in the preceding sentence. In
addition, Units may be distributed through dealers who are members of the
National Association of Securities Dealers, Inc. or other financial
intermediaries as permitted by law. Certain banks and thrifts will make Units
of each Trust available to their customers on an agency basis. A portion of
the sale charge paid by their customers is retained by or remitted
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to the banks. Under the Glass-Steagall Act, banks are prohibited from
underwriting Units; however, the Glass-Steagall Act does permit certain agency
transactions and the banking regulators have indicated that these particular
agency transactions are permitted under such Act. In addition, state
securities laws on this issue may differ from the interpretations of federal
law expressed herein and banks and financial institutions may be required to
register as dealers pursuant to state law.
The Sponsor intends to qualify the Units of the Trusts for sale in
Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia,
Illinois, Indiana, Iowa, Kansas, Maryland, Michigan, Minnesota, Missouri,
Nebraska, Nevada, New Jersey, New York, Ohio, Oklahoma, Oregon, Texas,
Virginia, Washington and the District of Columbia. Additional states may be
added from time to time.
The Sponsor may provide additional concessions to its affiliates in
connection with the distribution of the Units. The Sponsor reserves the right
to change the dealers concession at any time. Such Units may then be
distributed to the public by the dealers at the Public Offering Price then in
effect. The Sponsor reserves the right to reject, in whole or in part, any
order for the purchase of Units. Also, the Sponsor in its discretion may from
time to time pursuant to objective criteria established by the Sponsor pay
fees to qualifying Underwriters, brokers, dealers, banks and/or others for
certain services or activities which are primarily intended to result in sales
of Units of the Trusts. Such payments are made by the Sponsor out of its own
assets and out of the assets of the Trusts. These programs will not change the
price Unit Holders pay for their Units or the amount that each Trust will
receive from the Units sold.
Sponsor's Profits. The Sponsor will receive a gross underwriting
commission (although the net commission retained will be lower because of the
concession paid to dealers) equal to 1.70% of the Public Offering Price per
Unit (equivalent to 1.729% of the net amount invested in the Securities) for
Treasury Income Series 12, 1.95% of the Public Offering Price per Unit
(equivalent to 1.989% of the net amount invested in the Securities) for
Treasury Income Series 13, and 1.95% of the Public Offering Price per Unit
(equivalent to 1.989% of the net amount invested in the Securities) for Asset
Builder Series 14. Additionally, the Sponsor may realize a profit on the
deposit of the Securities in the Trust representing the difference between the
cost of the Securities to the Sponsor and the cost of the Securities to the
Trusts (see "Portfolios" in Part A). The Sponsor may realize profits or
sustain losses with respect to Securities deposited in the Trust which were
acquired from underwriting syndicates of which it was a member.
The Sponsor may have participated as a sole underwriter or manager,
co-manager or member of underwriting syndicates from which some of the
aggregate principal amount of the Securities were acquired for the Trusts in
the amounts set forth in Part A.
During the initial offering period and thereafter to the extent
Additional Units continue to be issued and offered for sale to the public the
Sponsor may also realize profits or sustain losses as a result of fluctuations
after the initial Date of Deposit in the offering prices of the Securities and
hence in the Public Offering Price received by the Sponsor for the Units.
Cash, if any, made available to the Sponsor prior to settlement date for the
purchase of Units may be used in the Sponsor's business subject to the
limitations of 17 CFR 240.15c3-3 under the Securities Exchange Act of 1934,
and may be of benefit to the Sponsor.
In maintaining a market for the Units (see "Liquidity-Sponsor
Repurchase") the Sponsor will realize profits or sustain losses in the amount
of any difference between the price at which they buy Units and the price at
which they resell such Units.
Comparison of Public Offering Price, Sponsor's Repurchase Price and
Redemption Price. Although the Public Offering Price of Units of the Trusts
will be determined on the basis of the current offering prices of the
Securities in the Trusts, the value at which Units may be redeemed or sold in
the secondary market will be determined on the basis of the current bid prices
of such Securities. On the initial Date of Deposit, the Public Offering Price
and the Sponsor's Initial Repurchase Price per Unit
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of each Trust (each based on the offering side evaluation of the Securities in
the Trusts) each exceeded the Redemption Price and the Sponsor's secondary
market Repurchase Price per Unit (based upon the current bid side evaluation
of the Securities in the Trusts) by the amounts shown under "Summary of
Essential Information" for each Trust in Part A of this Prospectus. On the
initial Date of Deposit, the bid side evaluation for each Trust was lower than
the offering side evaluation for such Trust by the amount set forth in Part A.
For this reason, among others (including fluctuations in the market prices of
such Securities and the fact that the Public Offering Price includes the
applicable sales charge), the amount realized by a Unit Holder upon any
redemption or Sponsor repurchase of Units may be less than the price paid for
such Units. See "Liquidity-Sponsor Repurchase."
ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN
Units of the Trusts are offered to investors on a "dollar price" basis
(using the computation method previously described under "Public Offering
Price") as distinguished from a "yield price" basis (involving the lesser of
the yield as computed to maturity of bonds or to an earlier redemption date).
Since they are offered on a dollar price basis, the rate of return on an
investment in Units of Treasury Income Series 12 and Treasury Income Series 13
is measured in terms of "Estimated Current Return" and "Estimated Long Term
Return." The rate of return for Asset Builder Series 14 is only measured in
terms of "Estimated Long Term Return." This calculation of performance is
mandated by the rules of the Securities and Exchange Commission.
Estimated Long Term Return is calculated by: (1) computing the yield to
maturity or to an earlier call date (whichever results in a lower yield) for
each Security in each Trust's portfolio in accordance with accepted practices,
which practices take into account not only the interest payable on the
Security but also the amortization of premiums or accretion of discounts, if
any; (2) calculating the average of the yields for the Securities in each
Trust's portfolio by weighing each Security's yield by the market value of the
Security and by the amount of time remaining to the date to which the Security
is priced (thus creating an average yield for the portfolio of each Trust);
and (3) reducing the average yield for the portfolio of each Trust in order to
reflect estimated fees and expenses of such Trust and the maximum sales charge
paid by Unit Holders. The resulting Estimated Long Term Return represents a
measure of the return to Unit Holders earned over the estimated life of the
Trusts. The Estimated Long Term Return as of the initial Date of Deposit is
stated for each Trust under "Summary of Essential Information" in Part A.
Estimated Current Return is computed by dividing the Estimated Net Annual
Interest Income per Unit by the Public Offering Price per Unit. In contrast to
the Estimated Long Term Return, the Estimated Current Return does not take
into account the amortization of premium or accretion of discount, if any, on
the Securities in the portfolio of each Trust. Moreover, because prevailing
interest rates on Securities purchased at a premium are generally higher than
current interest rates on newly issued bonds of a similar type with comparable
rating, the Estimated Current Return per Unit may be affected adversely if
such Securities are redeemed prior to their maturity. On the initial Date of
Deposit, the Estimated Net Annual Interest Income per Unit divided by the
Public Offering Price resulted in the Estimated Current Return stated for the
applicable Trust under "Summary of Essential Information" in Part A.
The Estimated Net Annual Interest Income per Unit of each Trust will vary
with changes in the fees and expenses of the Trustee and the Evaluator
applicable to the Trust and with the redemption, maturity, sale or other
disposition of the Securities in such Trust. The Public Offering Price will
vary with changes in the offering prices (bid prices in the case of the
secondary market) of the Securities. Therefore, there is no assurance that the
present Estimated Current Return or Estimated Long Term Return will be
realized in the future.
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RIGHTS OF UNIT HOLDERS
Book-Entry Units. Ownership of Units of the Trusts will not be evidenced
by certificates. All evidence of ownership of the Units will be recorded in
book-entry form either at Depository Trust Company ("DTC") through an
investor's broker's account or through registration of the Units on the books
of the Trustee. Units held through DTC will be deposited by the Sponsor with
DTC in the Sponsor's DTC account and registered in the nominee name CEDE & CO.
Individual purchases of beneficial ownership interest in the Trust will be
made in book-entry form through DTC or the Trustee. Ownership and transfer of
Units will be evidenced and accomplished directly and indirectly by
book-entries made by DTC and its participants if the Units are evidenced at
DTC, or otherwise will be evidenced and accomplished by book-entries made by
the Trustee. DTC will record ownership and transfer of the Units among DTC
participants and forward all notices and credit all payments received in
respect of the Units held by the DTC participants. Beneficial owners of Units
will receive written confirmation of their purchase and sale from the
broker-dealer or bank from whom their purchase was made. Units are
transferable by making a written request properly accompanied by a written
instrument or instruments of transfer which should be sent registered or
certified mail for the protection of the Unit Holder. Unit Holders must sign
such written request exactly as their names appear on the records of the
Trusts. Such signatures must be guaranteed by a commercial bank or trust
company, savings and loan association or by a member firm of a national
securities exchange.
Interest and Principal Distributions. Interest received by the Trusts is
credited by the Trustee to an Interest Account for the Trusts and a deduction
is made to reimburse the Trustee without interest for any amounts previously
advanced. Proceeds representing principal received from the maturity,
redemption, sale or other disposition of the Securities are credited to a
Principal Account of the Trust. Cash credited to the Interest Account and
Principal Account will not be reinvested by the Trusts prior to distribution.
Such cash balances are maintained by the Trustee and any income generated
thereon inures to the benefit of the Trustee and not the Trusts.
Distributions to each Unit Holder from the Interest Account are computed
as of the close of business on each Record Date for the following Payment Date
and consist of an amount substantially equal to one-twelfth of such Unit
Holder's pro rata share of the Estimated Net Annual Interest Income in the
Interest Account. Distributions from the Principal Account of the Trusts
(other than amounts representing failed contracts, as previously discussed)
will be computed as of each quarterly Record Date for Treasury Income Series
12 and as of each monthly Record Date for Treasury Income Series 13, and will
be made to the Unit Holders of the Trusts on or shortly after the next
Quarterly or Monthly Payment Date. Proceeds representing principal received
from the disposition of any of the Securities between a Record Date and a
Payment Date which are not used for redemptions of Units will be held in the
Principal Account and not distributed until the second succeeding Payment
Date. Persons who purchase Units between a Record Date and a Payment Date will
receive their first distribution on the second Payment Date after such
purchase.
Normally, interest payments on the Securities in the portfolios of the
Trusts which pay interest are made on a semi-annual basis. Therefore, it
usually takes several months after the Date of Deposit for the Trustee to
receive sufficient interest payments on the Securities to begin quarterly or
monthly distributions of interest to Unit Holders. However, the Trustee has
agreed to advance sufficient funds to the Trusts in order to reduce the amount
of time before quarterly or monthly distributions of interest to Unit Holders
commence. Further, because interest payments are not received by the Trusts at
a constant rate throughout the year, interest distributions may be more or
less than the amount credited to the Interest Account as of a given Record
Date. For the purpose of minimizing fluctuations in the distributions from the
Interest Account, the Trustee will advance sufficient funds, without interest,
as may be necessary to provide interest distributions of approximately equal
amounts. All funds in respect of the Securities received and held by the
Trustee prior to distribution to Unit Holders may be of benefit to the Trustee
and do not bear interest to Unit Holders.
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In order to acquire the "when, as, and if issued" Securities contracted
for by the Trusts, if any, it may be necessary to pay on the settlement dates
for delivery of such Securities amounts covering accrued interest on such
Securities which exceed (1) the amounts paid by Unit Holders and (2) the
amount which will be made available under the letter of credit furnished by
the Sponsor on the initial Date of Deposit for the purchase of such
Securities. The Trustee has agreed to pay for any amounts necessary to cover
any such excess and will be reimbursed therefor, without interest, when funds
become available from interest payments on the particular Securities with
respect to which such payments may have been made. Also, since interest on the
Securities in the portfolios of the Trusts does not accrue to the benefit of
Unit Holders until their respective dates of delivery, the Trustee will, in
order to provide income to the Unit Holders for this period of non-accrual,
reduce its fee applicable to the Trust in an amount equal to the amount of
interest that would have so accrued on such Securities in the Trust between
the date of settlement for the Units and such dates of delivery. To the extent
such non-accrual is in excess of the reduction in the Trustee's fee, the
amount of such excess will be distributed to Unit Holders as a return of
capital.
As of the first day of each month, the Trustee will deduct from the
Interest Account of the Trusts, and, to the extent funds are not sufficient
therein, from the Principal Account of the Trusts, amounts necessary to pay
the expenses of the Trusts (see "Trust Expenses and Charges" in this Part B).
The Trustee also may withdraw from said accounts such amounts, if any, as it
deems necessary to establish a reserve for any applicable taxes or other
governmental charges that may be payable out of the Trusts. Amounts so
withdrawn shall not be considered a part of the Trusts' assets until such time
as the Trustee shall return all or any part of such amounts to the appropriate
accounts. In addition, the Trustee may withdraw from the Interest and
Principal Accounts such amounts as may be necessary to cover purchases of
Replacement Securities and redemptions of Units by the Trustee.
The estimated quarterly interest distribution per Unit for Treasury
Income Series 12 and the estimated monthly interest distribution per unit for
Treasury Income Series 13 will initially be in the amount shown under "Summary
of Essential Information" for each Trust in Part A and will change and may be
reduced as Securities mature or are redeemed, exchanged or sold, or as
expenses of the Trusts fluctuate. No distribution need be made from the
Principal Account until the balance therein is an amount sufficient to
distribute $1.00 per 1,000 Units.
Records. For each of the Trusts, the Trustee shall furnish Unit Holders
in connection with each distribution a statement of the amount of interest, if
any, and the amount of other receipts, if any, which are being distributed,
expressed in each case as a dollar amount per Unit. Within a reasonable time
after the end of each calendar year the Trustee will furnish to each person
who at any time during the calendar year was a Unit Holder of record, a
statement showing (a) as to the Interest Account: interest received (including
any earned original issue discount and amounts representing interest received
upon any disposition of Securities), amounts paid for purchases of Replacement
Securities and redemptions of Units, if any, deductions for applicable taxes
and fees and expenses of the Trusts, and the balance remaining after such
distributions and deductions, expressed both as a total dollar amount and as a
dollar amount representing the pro rata share of each Unit outstanding on the
last business day of such calendar year; (b) as to the Principal Account: the
dates of disposition of any Securities and the net proceeds received therefrom
(including any unearned original issue discount but excluding any portion
representing accrued interest), deductions for payments of applicable taxes
and fees and expenses of the Trusts, amounts paid for purchases of Replacement
Securities and redemptions of Units, if any, and the balance remaining after
such distributions and deductions, expressed both as a total dollar amount and
as a dollar amount representing the pro rata share of each Unit outstanding on
the last business day of such calendar year; (c) a list of the Securities held
and the number of Units outstanding on the last business day of such calendar
year; (d) the Redemption Price per Unit based upon the last computation
thereof made during such calendar year; and (e) amounts actually distributed
to Unit Holders during such calendar year from the Interest and Principal
Accounts, separately stated, of each Trust, expressed both as total dollar
amounts and as dollar amounts representing the pro rata share of each Unit
outstanding on the last business day of such calendar year.
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The Trustee shall keep available for inspection by Unit Holders at all
reasonable times during usual business hours, books of record and account of
its transactions as Trustee, including records of the names and addresses of
Unit Holders, certificates issued or held, a current list of Securities in the
portfolio of each Trust and a copy of the Trust Agreement.
TAX STATUS
In the opinion of Battle Fowler LLP, counsel for the Sponsor, under
existing law:
Each Trust is not an association taxable as a corporation for United
States federal income tax purposes and income of the Trusts will be
treated as income of the Unit Holders in the manner set forth below. Each
Unit Holder will be considered the owner of a pro rata portion of each
asset of a Trust under the grantor trust rules of Sections 671-678 of the
Internal Revenue Code of 1986, as amended (the "Code").
Each Unit Holder will be considered to have received his pro rata
share of interest derived from each Trust asset when such interest is
received by the Trust. Each Unit Holder will be required to include in
his gross income, as determined for Federal income tax purposes, original
issue discount with respect to his interest in a Security held by the
Trust at the same time and in the same manner as though the Unit Holder
were the direct owner of such interest. Each Unit Holder's pro rata share
of each expense paid by the Trust is deductible by the Unit Holder to the
same extent as though the expense had been paid directly by him.
Each Unit Holder will have a taxable event when a Security is
disposed of (whether by sale, exchange, redemption, or payment at
maturity) or when the Unit Holder redeems or sells his Units. The total
tax cost of each Unit to a Unit Holder must be allocated among the cash
and Securities held in the Trust in accordance with their relative fair
market value on the date the Unit Holder purchases his Units in order to
determine his per Unit tax basis for the Securities represented thereby.
If a Unit Holder's tax cost of his pro rata interest in a Security
exceeds the amount payable in respect of such pro rata interest upon the
maturity of the Security, such excess is a "bond premium" which may be
amortized by the Unit Holder at the Unit Holder's election as provided in
Section 171 of the Code.
The tax basis of a Unit Holder with respect to his interest in a Security
will be increased by the amount of original issue discount thereon properly
included in the Unit Holder's gross income as determined for Federal income
tax purposes.
The amount of gain recognized by a Unit Holder on a disposition of a
Security by a Trust will be equal to the difference between such Unit Holder's
pro rata portion of the gross proceeds realized by the Trust on the
disposition and the Unit Holder's tax cost basis in his pro rata portion of
the Security disposed of. Any gain recognized on a sale or exchange of a Unit
Holder's pro rata interest in a Security, and not constituting a realization
of accrued "market discount" in the case of a Security issued after July 18,
1984, and any loss will be a capital gain or loss, except in the case of a
dealer or financial institution. Gain realized on the disposition of the
interest of a Unit Holder in a market discount Security is treated as ordinary
income to the extent the gain does not exceed the accrued market discount. A
Unit Holder has an interest in a market discount Security in a case in which
the Unit Holder's tax cost for his pro rata interest in the Security is less
than the stated redemption price thereof at maturity (or the issue price plus
original issue discount accrued up to the acquisition date, in the case of an
original issue discount Security). If a Unit Holder has an interest in a
market discount Security and has incurred debt to acquire Units, the
deductibility of a portion of the interest incurred on such debt may be
deferred. Any capital gain or loss arising from the disposition of a Unit
Holder's pro rata interest in a Security will be a long-term capital gain or
loss if the Unit Holder has held his Units and the Trust has held the Security
for more than one year. Net capital gains (i.e., the excess of net long-term
capital gain over net short-term capital loss) of individuals, estates and
trusts are subject to a maximum nominal tax rate of 28%. Such net capital
gains may, however, result in a
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disallowance of itemized deductions and/or affect a personal exemption
phase-out. For taxable year beginning after December 31, 1992, net capital
gain from the disposition of property held for investment is excluded from
investment income for purposes of computing the limitation on the deduction
for investment interest applicable to individuals. A taxpayer may, however,
elect to include such net capital gain in investment income if the taxpayer
reduces the amount of net capital gain that is otherwise eligible for the
maximum 28% rate by such amount.
If the Unit Holder sells or redeems a Unit for cash, he is deemed thereby
to have disposed of his entire pro rata interest in all Trust assets
represented by the Unit and will have a taxable income or loss measured by the
difference between his per Unit tax basis for such assets, as described above,
and the amount realized.
Under the personal income tax laws of the State and City of New York, the
income of Trust will be treated as the income of the Unit Holders.
Each Trust may contain one or more Securities which were originally
issued at a discount ("original issue discount"). In general, original issue
discount can be defined as the difference between the price at which a
Security was issued and its stated redemption price at maturity. In the case
of a Security issued before July 2, 1982, original issue discount is deemed to
accrue (be "earned") ratably over the period from the date of issuance of the
Security to the date of maturity and is apportioned among the original holder
of the obligation and subsequent purchasers in accordance with a ratio, the
numerator of which is the number of calendar days the obligation was owned by
the holder and the denominator of which is the total number of calendar days
from the date of issuance of the obligation to its date of maturity. Gain or
loss upon the disposition of an original issue discount Security is measured
by the difference between the amount realized upon disposition and the amount
paid for such obligation. A holder may, however, exclude from gross income
that portion of such gain attributable to accrued interest and the "earned"
portion of original issue discount.
In the case of a Security issued after July 1, 1982, original issue
discount is deemed to accrue on a constant interest method, which corresponds
in general to the economic accrual of interest (adjusted to eliminate
proportionately on an elapsed-time basis any excess of the amount paid for the
Security over the sum of the issue price and the accrued original issue
discount on the acquisition date). Unit Holders generally will be required to
recognize the accrual of original issue discount as interest income currently
even though they will not receive a corresponding amount of cash until later
years. The tax basis in the Security is increased by the amount of original
issue discount that is deemed to accrue while the Security is held. The
difference between the amount realized on a disposition of the Security
(excluding accrued interest) and the adjusted tax basis of the Security will
give rise to taxable gain or loss upon a disposition of the Security by the
Trust (or a sale or redemption of Units by a Unit Holder).
The general rule that requires the holder of a debt instrument issued at
a discount to include in gross income on a current basis the sum of the daily
portions of original issue discount does not apply to a debt instrument that
has a fixed maturity not more than one year from the date of issue. For
short-term Government obligations held by a cash method taxpayer, if no
special election is made by the holder, income is not realized until the sale,
maturity, or other disposition of the obligation, and is ordinary income to
the extent the gain realized does not exceed an amount equal to the ratable
share of acquisition discount. Gain, if any, in excess of such amount should
be a short-term capital gain. Acquisition discount is the excess of the stated
redemption price at maturity of the obligation over the basis of the taxpayer
in the obligation. For accrual basis taxpayers and taxpayers treated for this
purpose as if they use the accrual method (dealers, banks, regulated
investment companies, common trust funds, and taxpayers engaged in hedging
transactions), acquisition discount on short-term Governmental obligations is
includible in income as it accrues, on a straight line basis, unless a special
election is made. Limitations apply to the deductibility of interest on loans
incurred to acquire short-term obligations and special rules apply to
short-term obligations that are a stripped bond or stripped coupon.
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A Unit Holder who is neither a citizen nor a resident of the United
States and is not a United States domestic corporation (a "foreign Unit
Holder") will not generally be subject to United States Federal income tax on
his, her or its pro rata share of interest and original issue discount on a
Security held in the Trust or any gain from the sale or other disposition of
his, her or its pro rata interest in a Security held in the Trust, which
interest or original issue discount is not effectively connected with the
conduct by the foreign Unit Holder of a trade or business within the United
States and which gain is either (i) not from sources within the United States
or (ii) not so effectively connected, provided that:
(a) with respect to interest and original issue discount the Security
was issued after July 18, 1984;
(b) with respect to any U.S. source capital gain, the foreign Unit
Holder (if an individual) is not present in the United States
for 183 days or more during his or her taxable year in which
the gain was realized and so certifies; and
(c) the foreign Unit Holder provides the required certifications
regarding (i) his, her or its status and, (ii) in the case of U.S.
source income, the fact that the interest, original issue discount or
gain is not effectively connected with the conduct by the foreign
Unit Holder of a trade or business within the United States.
The interest and/or dividend income received by a foreign Unit Holder
from an entity of which it owns 10% or more of the voting stock in the case of
a corporation or 10% or more of the profits or capital interest in the case of
a partnership, will, however, be subject to federal income taxation. Foreign
Unit Holders should consult their own tax counsel with respect to United
States tax consequences of ownership of Units.
Each Unit Holder (other than a foreign Unit Holder who has properly
provided the certifications described above) will be requested to provide the
Unit Holder's taxpayer identification number to the Trustee and to certify
that the Unit Holder has not been notified that payments to the Unit Holder
are subject to back-up withholding. If the taxpayer identification number and
an appropriate certification are not provided when requested, 31% back-up
withholding will apply.
The foregoing discussion relates only to United States Federal and, to
the extent stated, New York State and City income taxes.
Investors should consult their tax counsel for advice with respect to
their own particular tax situations.
After the end of each calendar year, the Trustee will furnish to each
Unit Holder an annual statement containing information relating to the
interest received by the Trust on the Securities, the gross proceeds received
by the Trust from the disposition of any Security (resulting from redemption
or payment at maturity of any Security or the sale by the Trust of any
Security), and the fees and expenses paid by the Trust. The Trustee will also
furnish required annual information returns to each Unit Holder and to the
Internal Revenue Service.
The Sponsor believes that Unit Holders who are individuals should not
generally be subject to state personal income taxes on the interest (including
original issue discount) received through each Trust. However, Unit Holders
(including individuals) may be subject to state and local taxes on any capital
gains (or market discount treated as ordinary income) derived from each Trust
and to other state and local taxes with respect to the interest derived from
each Trust. Moreover, Unit Holders will probably not be entitled to a
deduction for state tax purposes for their share of the fees and expenses paid
by the Trusts or for any interest on indebtedness incurred to purchase or
carry their Units. Even though the Sponsor believes that interest income
(including original issue discount) received through each Trust is exempt from
state personal income taxes on individuals in most states, Unit Holders should
consult their own tax advisers with respect to state and local taxation
matters.
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LIQUIDITY
Sponsor Repurchase. The Sponsor, although not obligated to do so,
currently intends to maintain a secondary market for the Units and
continuously to offer to repurchase the Units. The Sponsor's secondary market
repurchase price after the initial public offering is completed, will be based
on the aggregate bid price of the Securities in each Trust portfolio and will
be the same as the redemption price. The aggregate bid price will be
determined by the Evaluator on a daily basis after the initial public offering
is completed and computed on the basis set forth under "Liquidity-Trustee
Redemption." During the initial offering period, the Sponsor's repurchase
price will be based on the aggregate offering price of the Securities in the
Trusts. Unit Holders who wish to dispose of their Units should inquire of the
Sponsor as to current market prices prior to making a tender for redemption.
The Sponsor may discontinue repurchase of Units if the supply of Units exceeds
demand, or for other business reasons. The date of repurchase is deemed to be
the date on which Units are received in proper form by Quest of Value
Distributors, Two World Financial Center, 225 Liberty Street, New York, NY
10080-6116. Units received after 4 P.M., New York Time, will be deemed to have
been repurchased on the next business day. In the event a market is not
maintained for the Units, a Unit Holder may be able to dispose of Units only
by tendering them to the Trustee for redemption.
Units purchased by the Sponsor in the secondary market may be reoffered
for sale by the Sponsor at a price based on the aggregate offering price of
the Securities in the Trusts plus (a) a 1.70% sales charge (1.729% of the net
amount invested) plus net accrued interest for Treasury Income Series 12, (b)
a 1.95% sales charge (1.989% of the net amount invested) plus net accrued
interest for Treasury Income Series 13 and (c) a 1.95% sales charge (1.989% of
the net amount invested) plus net accrued interest for Asset Builder Series
14. Any Units that are purchased by the Sponsor in the secondary market also
may be redeemed by the Sponsor if it determines such redemption to be in its
best interest.
The Sponsor may, under certain circumstances, as a service to Unit
Holders, elect to purchase any Units tendered to the Trustee for redemption
(see "Liquidity-Trustee Redemption" in this Part B). Factors which the Sponsor
will consider in making a determination will include the number of Units of
all Trusts which it has in inventory, its estimate of the salability and the
time required to sell such Units and general market conditions. For example,
if in order to meet redemptions of Units the Trustee must dispose of
Securities, and if such disposition cannot be made by the redemption date
(seven calendar days after tender), the Sponsor may elect to purchase such
Units. Such purchase shall be made by payment to the Unit Holder not later
than the close of business on the redemption date of an amount equal to the
Redemption Price on the date of tender.
Trustee Redemption. Units may also be tendered to the Trustee for
redemption at its corporate trust office at 770 Broadway, New York, New York
10003, upon proper delivery of such Units and payment of any relevant tax. At
the present time there are no specific taxes related to the redemption of
Units. No redemption fee will be charged by the Sponsor or the Trustee. Units
redeemed by the Trustee will be canceled.
Within seven calendar days following a tender for redemption, or, if such
seventh day is not a business day, on the first business day prior thereto,
the Unit Holder will be entitled to receive in cash an amount for each Unit
tendered equal to the Redemption Price per Unit computed as of the Evaluation
Time set forth under "Summary of Essential Information" for each Trust in Part
A on the date of tender. The "date of tender" is deemed to be the date on
which Units are received by the Trustee, except that with respect to Units
received after the close of trading on the New York Stock Exchange, the date
of tender is the next day on which such Exchange is open for trading, and such
Units will be deemed to have been tendered to the Trustee on such day for
redemption at the Redemption Price computed on that day.
Accrued interest paid on redemption shall be withdrawn from the Interest
Account, or, if the balance therein is insufficient, from the Principal
Account. All other amounts paid on redemption shall be withdrawn from the
Principal Account. The Trustee is empowered to sell Securities in order to
make funds available for redemptions. Such sales, if required, could result in
a sale of Securities by
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the Trustee at a loss. To the extent Securities are sold, the size and
diversity of such Trust will be reduced.
The Redemption Price per Unit is the pro rata share of each Unit in each
Trust determined by the Trustee on the basis of (i) the cash on hand in the
Trust or moneys in the process of being collected, (ii) the value of the
Securities in the Trust based on the bid prices of such Securities and (iii)
interest accrued thereon, less (a) amounts representing taxes or other
governmental charges payable out of each Trust, (b) the accrued expenses of
such Trust and (c) cash allocated for the distribution to Unit Holders of
record as of the business day prior to the evaluation being made. The
Evaluator may determine the value of the Securities in each Trust (1) on the
basis of current bid prices of the Securities obtained from dealers or brokers
who customarily deal in bonds comparable to those held by the Trusts, (2) on
the basis of bid prices for bonds comparable to any Securities for which bid
prices are not available, (3) by determining the value of the Securities by
appraisal, or (4) by any combination of the above. The Evaluator will
determine the aggregate current bid price evaluation of the Securities in each
Trust, taking into account the market value of the Securities in the manner
described as set forth under "Public Offering-Offering Price."
The Trustee is irrevocably authorized in its discretion, if the Sponsor
does not elect to purchase a Unit tendered for redemption or if the Sponsor
tenders a Unit or Units for redemption, in lieu of redeeming such Unit, to
sell such Unit in the over-the-counter market for the account of the tendering
Unit Holder at prices which will return to the Unit Holder an amount in cash,
net after deducting brokerage commissions, transfer taxes and other charges,
equal to or in excess of the Redemption Price for such Unit. The Trustee will
pay the net proceeds of any such sale to the Unit Holder on the day he would
otherwise be entitled to receive payment of the Redemption Price.
The Trustee reserves the right to suspend the right of redemption and to
postpone the date of payment of the Redemption Price per Unit for any period
during which the New York Stock Exchange is closed, other than customary
weekend and holiday closings, or trading on that Exchange is restricted or
during which (as determined by the Securities and Exchange Commission) an
emergency exists as a result of which disposal or evaluation of the Securities
is not reasonably practicable, or for such other periods as the Securities and
Exchange Commission may by order permit. The Trustee and the Sponsor are not
liable to any person or in any way for any loss or damage which may result
from any such suspension or postponement.
A Unit Holder who wishes to dispose of his Units should inquire of his
bank or broker in order to determine if there is a current secondary market
price in excess of the Redemption Price.
RETIREMENT PLANS
The Trusts may be an appropriate investment for retirement plans such as
IRAs, self-employed retirement plans (formerly Keogh Plans), pension,
profit-sharing plans and other qualified retirement plans.
Generally, capital gains and income received under each of the foregoing
plans are deferred from Federal taxation. All distributions from such plans
are generally treated as ordinary income but may, in some cases, be eligible
for special income averaging or tax-deferred rollover treatment. Investors
considering participation in any such plan should review specific tax laws
related thereto and should consult their attorneys or tax advisers with
respect to the establishment and maintenance of any such plan. Such plans are
offered by brokerage firms and other financial institutions. Fees and charges
with respect to such plans may vary.
Individual Retirement Account-IRA. Any individual under age 701/2 may
contribute the lesser of $2,000 or 100% of compensation to any IRA annually.
Such contributions are fully deductible if the individual (and spouse if
filing jointly) is not covered by a retirement plan at work.
A participant's interest in an IRA must be, or commence to be,
distributed to the participant not later than April 1 of the calendar year
following the year during which the participant attains age 701/2.
Distributions made before attainment of age 591/2, except in the case of the
participant's death or disability, or where the amount distributed is to be
rolled over to another IRA, or where the distributions are taken as a series
of substantially equal periodic payments over the participant's life or life
expectancy (or the joint lives or life expectancies of the participant and the
designated
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beneficiary) are generally subject to a surtax in an amount equal to 10% of
the distribution. The amount of such periodic payments may not be modified
before the later of five years or attainment of age 591/2. Excess
contributions are subject to an annual 6% excise tax.
IRA applications, disclosure statements and trust agreements are
available from the Sponsor upon request.
Qualified Retirement Plans. Units of each Trust may be purchased by
qualified pension or profit sharing plans maintained by corporations,
partnerships or sole proprietors. The maximum annual contribution for a
participant in a money purchase pension plan or to paired profit sharing and
pension plans is the lesser of 25% of compensation or $30,000. Prototype plan
documents for establishing qualified retirement plans are available from the
Sponsor upon request. The latest date by which a participant must commence
receiving benefits from a plan is generally the same as for an IRA. The 10%
early distribution surtax also applies, except that distributions received
after age 55 or as a result of a separation of service, and distributions
received to pay deductible medical expenses or pursuant to qualified domestic
relations order are not subject to the tax.
Excess Distributions Tax. In addition to the other taxes due by reason of
a plan distribution, a tax of 15% may apply to certain aggregate distributions
from IRAs, Keogh Plans, and corporate retirement plans to the extent such
aggregate taxable distributions exceed specified amounts (generally $150,000,
as adjusted during a tax year). This 15% tax will not apply to distributions
on account of death, qualified domestic relations order or to eligible
distributions that are rolled over to an IRA or other qualified plan. In
general, for lump sum distributions the excess distribution over $750,000 (as
adjusted) will be subject to the 15% tax.
TRUST ADMINISTRATION
Portfolio Supervision. Except for the purchase of Replacement Securities,
Additional Securities or as discussed herein, the acquisition of any
Securities for the Trust other than Securities initially deposited by the
Sponsor is prohibited. The Sponsor may direct the Trustee to dispose of
Securities upon (i) default in payment of principal or interest on such
Securities, (ii) default under other documents adversely affecting debt
service on such Securities, or (iii) decline in price or the occurrence of
other market or credit factors that in the opinion of the Sponsor would make
the retention of such Securities in the Trusts detrimental to the interests of
the Unit Holders. If a default in the payment of principal or interest on any
of the Securities occurs and if the Sponsor fails to instruct the Trustee to
sell or hold such Securities, the Trust Agreement provides that the Trustee
may sell such Securities. The Trustee shall not be liable for any depreciation
or loss by reason of any sale of Securities or by reason of the failure of the
Sponsor to give directions to the Trustee. An affiliate of the Sponsor, Quest
For Value Advisors, will perform the portfolio supervisory functions noted
herein on behalf of the Sponsor and receive the Annual Supervisory Fee noted
in Part A.
The Sponsor is authorized by the Trust Agreement to direct the Trustee to
accept or reject certain plans for the refunding or refinancing of any of the
Securities. Any bonds received in exchange or substitution will be held by the
Trustee subject to the terms and conditions of the Agreement to the same
extent as the Securities originally deposited. Within five days after such
deposit, notice of such exchange and deposit shall be given by the Trustee to
each Unit Holder registered on the books of the Trustee, including an
identification of the Securities eliminated and the Securities substituted
therefor.
Trust Agreement, Amendment and Termination. The Trust Agreement may be
amended by the Trustee, the Sponsor and the Evaluator without the consent of
any of the Unit Holders: (1) to cure any ambiguity or to correct or supplement
any provision which may be defective or inconsistent; (2) to change any
provision thereof as may be required by the Securities and Exchange Commission
or any successor governmental agency; or (3) to make such other provisions in
regard to matters arising thereunder as shall not adversely affect the
interests of the Unit Holders.
The Trust Agreement may also be amended in any respect, or performance of
any of the provisions thereof may be waived, with the consent of the Unit
Holders owning 662/3% of the Units then outstanding for the purpose of
modifying the rights of Unit Holders; provided that no such
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amendment or waiver shall reduce any Unit Holder's interest in a Trust without
his consent or reduce the percentage of Units required to consent to any such
amendment or waiver without the consent of Unit Holders. The Trust Agreement
may not be amended, without the consent of all Unit Holders then outstanding,
to increase the number of Units issuable or to permit the acquisition of any
securities in addition to or in substitution for those initially deposited in
the Trusts, or to provide the Trustee with the power to engage in business or
investment activities not specifically authorized in the indenture as
originally adopted or so as to adversely affect the characterization of a
Trust as a grantor trust for federal income tax purposes, except in accordance
with the provisions of the Trust Agreement. The Trustee shall promptly notify
Unit Holders, in writing, of the substance of any such amendment.
The Trust Agreement provides that the Trust shall terminate upon the
maturity, redemption or other disposition, as the case may be, of the last of
the Securities held in the Trust but in no event is it to continue beyond the
end of the calendar year preceding the fiftieth anniversary of the execution
of the Trust Agreement. If the value of a Trust shall be less than the minimum
amount set forth under "Summary of Essential Information" in Part A, the
Trustee may, in its discretion, and shall when so directed by the Sponsor,
terminate the Trusts. The Trust may also be terminated at any time with the
consent of the Unit Holders representing 100% of the Units then outstanding.
In the event of termination, written notice thereof will be sent by the
Trustee to all Unit Holders. Within a reasonable period after termination, the
Trustee must sell any Securities remaining in the terminated Trust, and, after
paying all expenses and charges incurred by the Trust, distribute to each Unit
Holder, upon surrender for cancellation of his Units, his pro rata share of
the Interest and Principal Accounts.
Alternatively, upon the termination of the Trust and further upon receipt
by the Trust, and subject to the conditions of an appropriate exemptive order
from the Securities and Exchange Commission, each Unit Holder's pro rata share
of the net asset value of the Trust will automatically be invested on behalf
of each Unit Holder in a mutual fund which invests in U.S. government
securities (the "Reinvestment Fund"). A copy of the current Prospectus of the
Reinvestment Fund will be delivered to Unit Holders at least 30 days prior to
the time reinvestment is made. At any time prior to the time of reinvestment,
Unit Holders may elect not to invest in the Reinvestment Fund, in which case,
their pro rata share of liquidation proceeds will be sent to them. This
investment in the Reinvestment Fund will not prevent Unit Holders from
recognizing taxable gain or loss as a result of the liquidation of the Trust,
even though no cash will be distributed to Unit Holders to pay any taxes.
However, Unit Holders may redeem any shares in the Reinvestment Fund in order
to generate cash to pay these taxes. Unit Holders should consult their own tax
advisers regarding this matter.
The Sponsor. Quest for Value Distributors is the Sponsor of Quest for
Value's Unit Investment Laddered Trust Series and all subsequent series. The
Sponsor is a majority-owned subsidiary of Oppenheimer Capital. Since 1969,
Oppenheimer Capital has managed assets for many of the nation's largest
pension plan clients. Today, the firm has over $28 billion under management,
including $5 billion in the Quest for Value funds. The Quest for Value
organization was created in 1988 to introduce mutual funds designed to help
individual investors achieve their financial goals. Quest for Value is
committed to retirement planning and services geared to the long term
investment goals of the individual investor. The Sponsor, a Delaware general
partnership, is engaged in the mutual fund distribution business. It is a
member of the National Association of Securities Dealers, Inc.
The information included herein is only for the purpose of informing
investors as to the financial responsibility of the Sponsor and its ability to
carry out its contractual obligations.
The Sponsor is liable for the performance of its obligations arising from
its responsibilities under the Trust Agreement, but will be under no liability
to Unit Holders for taking any action, or refraining from taking any action,
in good faith pursuant to the Trust Agreement, or for errors in judgment
except in cases of its own willful misfeasance, bad faith, negligence or
reckless disregard of its obligations and duties.
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The Sponsor may resign at any time by delivering to the Trustee an
instrument of resignation executed by the Sponsor. If at any time the Sponsor
shall resign or fail to perform any of its duties under the Trust Agreement or
becomes incapable of acting or becomes bankrupt or its affairs are taken over
by public authorities, then the Trustee may either (a) appoint a successor
Sponsor; (b) terminate the Trust Agreement and liquidate the Trusts; or (c)
continue to act as Trustee without terminating the Trust Agreement. Any
successor sponsor appointed by the Trustee shall be satisfactory to the
Trustee and, at the time of appointment, shall have a net worth of at least
$1,000,000.
The Trustee. The Trustee is United States Trust Company of New York,
with its offices at 770 Broadway, New York, New York 10003 (800) 428-8890.
The Trustee shall not be liable or responsible in any way for taking any
action, or for refraining from taking any action, in good faith pursuant to
the Trust Agreement, or for errors in judgment; or for any disposition of any
moneys, Securities or Certificates in accordance with the Trust Agreement,
except in cases of its own willful misfeasance, bad faith, negligence or
reckless disregard of its obligations and duties. In addition, the Trustee
shall not be liable for any taxes or other governmental charges imposed upon
or in respect of the Securities or the Trusts which it may be required to pay
under current or future law of the United States or any other taxing authority
having jurisdiction. The Trustee shall not be liable for depreciation or loss
incurred by reason of the sale by the Trustee of any of the Securities
pursuant to the Trust Agreement.
For further information relating to the responsibilities of the Trustee
under the Trust Agreement, reference is made to the material set forth under
"Rights of Unit Holders."
The Trustee may resign by executing an instrument in writing and filing
the same with the Sponsor, and mailing a copy of a notice of resignation to
all Unit Holders. In such an event the Sponsor is obligated to appoint a
successor Trustee as soon as possible. In addition, if the Trustee becomes
incapable of acting or becomes bankrupt or its affairs are taken over by
public authorities, the Sponsor may remove the Trustee and appoint a successor
as provided in the Trust Agreement. Notice of such removal and appointment
shall be mailed to each Unit Holder by the Sponsor. If upon resignation of the
Trustee no successor has been appointed and has accepted the appointment
within thirty days after notification, the retiring Trustee may apply to a
court of competent jurisdiction for the appointment of a successor. The
resignation or removal of the Trustee becomes effective only when the
successor Trustee accepts its appointment as such or when a court of competent
jurisdiction appoints a successor Trustee. Upon execution of a written
acceptance of such appointment by such successor Trustee, all the rights,
powers, duties and obligations of the original Trustee shall vest in the
successor.
Any corporation into which the Trustee may be merged or with which it may
be consolidated, or any corporation resulting from any merger or consolidation
to which the Trustee shall be a party, shall be the successor Trustee. The
Trustee must always be a banking corporation organized under the laws of the
United States or any State and have at all times an aggregate capital, surplus
and undivided profits of not less than $2,500,000.
The Evaluator. The Evaluator is United States Trust Company of New York,
with its offices at 770 Broadway, New York, New York 10003 (800) 428-8890.
The Trustee, the Sponsor and the Unit Holders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the accuracy
thereof. Determinations by the Evaluator under the Trust Agreement shall be
made in good faith upon the basis of the best information available to it,
provided, however, that the Evaluator shall be under no liability to the
Sponsor or Unit Holders for errors in judgment, except in cases of its own
willful misfeasance, bad faith, negligence or reckless disregard of its
obligations and duties. The Evaluator shall not be liable or responsible for
depreciation or losses incurred by reason of the purchase, sale or retention
of any Securities.
The Evaluator may resign or may be removed by the Sponsor and Trustee,
and the Sponsor and the Trustee are to use their best efforts to appoint a
satisfactory successor. Such resignation or removal shall become effective
upon the acceptance of appointment by the successor Evaluator. If
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upon resignation of the Evaluator no successor has accepted appointment within
thirty days after notice of resignation, the Evaluator may apply to a court of
competent jurisdiction for the appointment of a successor.
TRUST EXPENSES AND CHARGES
All or a portion of the expenses incurred in creating and establishing
the Trusts, including the cost of the initial preparation and execution of the
Trust Agreement, registration of the Trusts and the Units under the Investment
Company Act of 1940 and the Securities Act of 1933, blue sky registration
fees, the initial fees and expenses of the Trustee, legal expenses and other
actual out-of-pocket expenses, will be paid by the Trusts and amortized over
the life of the Trusts. All advertising and selling expenses, as well as any
organizational expenses not paid by the Trusts, will be borne by the Sponsor
at no cost to the Trusts.
The Sponsor will not charge the Trusts a fee for its services as such.
The Sponsor's affiliate will receive for portfolio supervisory services
to the Trusts an annual fee in the amount set forth under "Summary of
Essential Information" for each Trust in Part A. The Sponsor's fee may exceed
the actual cost of providing portfolio supervisory services for the Trusts,
but at no time will the total amount received for portfolio supervisory
services rendered to all series of the Quest for Value's Unit Investment
Laddered Trust Series in any calendar year exceed the aggregate cost to the
Sponsor of supplying such services in such year. (See "Trust Administration-
Portfolio Supervision.")
The Trustee's annual fee and estimated expenses are set forth under
"Summary of Essential Information" for each Trust in Part A. For a discussion
of the services performed by the Trustee pursuant to its obligations under the
Trust Agreement, see "Trust Administration" and "Rights of Unit Holders."
The Trustee's fees applicable to the Trusts are calculated based upon the
principal amount of Securities in the Trusts on the Record Date of such month,
payable monthly as of the Record Date from the Interest Account of the Trusts
to the extent funds are available and then from the Principal Account. Both
the supervisory fee and the Trustee's fee may be increased without approval of
the Unit Holders by amounts not exceeding proportionate increases in consumer
prices for services as measured by the United States Department of Labor's
Consumer Price Index entitled "All Services Less Rent."
The following additional charges are or may be incurred by the Trusts:
all expenses (including counsel fees) of the Trustee incurred and advances
made in connection with its activities under the Trust Agreement, including
the expenses and costs of any action undertaken by the Trustee to protect the
Trusts and the rights and interests of the Unit Holders; fees of the Trustee
for any extraordinary services performed under the Trust Agreement;
indemnification of the Trustee for any loss or liability accruing to it
without negligence, bad faith or willful misconduct on its part, arising out
of or in connection with its acceptance or administration of the Trusts;
indemnification of the Sponsor for any losses, liabilities and expenses
incurred in acting as sponsors of the Trusts without negligence, bad faith or
willful misconduct on its part; and all taxes and other governmental charges
imposed upon the Securities or any part of the Trusts (no such taxes or
charges are being levied, made or, to the knowledge of the Sponsor,
contemplated). The above expenses, including the Trustee's fees, when paid by
or owing to the Trustee are secured by a first lien on the Trusts to which
such expenses are charged. In addition, the Trustee is empowered to sell
Securities in order to make funds available to pay all expenses.
The accounts of the Trusts shall be audited not less than annually by
independent public accountants selected by the Sponsor. The expenses of the
audit shall be an expense of the Trust. So long as the Sponsor maintains a
secondary market, the Sponsor will bear any audit expense which exceeds 50
Cents per 1,000 Units. Unit Holders covered by the audit during the year may
receive a copy of the audited financial statements upon request.
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OTHER MATTERS
Legal Opinions. The legality of the Units offered hereby and certain
matters relating to federal tax law have been passed upon by Messrs.
Battle Fowler LLP, 75 East 55th Street, New York, New York 10022 as counsel
for the Sponsor. Messrs. Carter, Ledyard & Milburn, Two Wall Street, New
York, New York 10005 have acted as counsel for the Trustee.
Independent Auditors. The Statements of Condition and Portfolios are
included herein in reliance upon the report of BDO Seidman, independent
auditors, and upon the authority of said firm as experts in accounting and
auditing.
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Quest for Value's Unit Investment Laddered Trust Series ("QUILTS")
(A Unit Investment Trust)
QUILTS Income-U.S. Treasury Series 12
QUILTS Income-U.S. Treasury Series 13
QUILTS Asset Builder-U.S. Treasury Series 14
Prospectus Dated: June 29, 1995
Sponsor: Trustee and Evaluator:
Quest for Value Distributors United States Trust Company
Two World Financial Center of New York
225 Liberty Street 770 Broadway
New York, New York 10080-6116 New York, New York 10003
(800) 628-6664 (800) 428-8890
---------------------------
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Table of Contents
Title Page
PART A
Summary of Essential Information...........................................A-2
Independent Auditors' Report..............................................A-12
Statements of Condition...................................................A-13
Portfolio and Cash Flow Information.......................................A-14
Underwriting Syndicates...................................................A-18
PART B
The Trust....................................................................1
Risk Factors.................................................................3
Public Offering..............................................................5
Estimated Long Term Return and
Estimated Current Return....................................................9
Rights of Unit Holders......................................................10
Tax Status..................................................................12
Liquidity...................................................................15
Retirement Plans............................................................16
Trust Administration........................................................17
Trust Expenses and Charges..................................................20
Other Matters...............................................................21
No person is authorized to give any information or to make any
representations not contained in Parts A and B of this Prospectus; and any
information or representation not contained herein must not be relied upon as
having been authorized by the Trust, the Trustee, the Evaluator, or the
Sponsor. The Trust is a registered as unit investment trust under the
Investment Company Act of 1940. Such registration does not imply that the
Trust or any of its Units have been guaranteed, sponsored, recommended or
approved by the United States or any state or any agency or officer thereof.
This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, securities in any state to any person to whom
it is not lawful to make such offer in such state.
Parts A and B of this Prospectus do not contain all of the information
set forth in the registration statement and exhibits relating thereto, filed
with the Securities and Exchange Commission, Washington, D.C., under the
Securities Act of 1933, and the Investment Company Act of 1940, and to which
reference is made.
<PAGE>
PART II--ADDITIONAL INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM A--BONDING ARRANGEMENTS
The employees of Quest for Value Distributors are covered under
Brokers' Blanket Policy, Standard Form 14, in the amount of $1,000,000.
ITEM B--CONTENTS OF REGISTRATION STATEMENT
This Registration Statement on Form S-6 comprises the following
papers and documents: The facing sheet on Form S-6. The Cross-Reference Sheet.
The Prospectus consisting of pages. Undertakings. Signatures.
Written consents of the following persons:
Battle Fowler LLP (included in Exhibit 3.1)
BDO Seidman
United States Trust Company of New York (included in Exhibit 5.1)
The following exhibits:
*1.1 -- Reference Trust Agreements including certain Amendments to
the Trust Indenture and Agreement referred to under Exhibit
1.1.1 below.
*1.1.1 -- Trust Indenture and Agreement.
1.3.4 -- Agreement of General Partnership of Quest for Value
Distributors dated July 9, 1987 (filed as Exhibit 1.3.4 to Form
S-6 Registration Statement No. 33-57284 of Quest for Value's
Unit Investment Laddered Treasury Securities ("QUILTS") on
January 21, 1993 and incorporated herein by reference).
1.4 -- Form of Master Agreement Among Underwriters (filed as
Exhibit 1.4 to Amendment No. 2 to Form S-6 Registration
Statement No. 33-57284 of Quest for Value's Unit Investment
Laddered Trust Series ("QUILTS"), QUILTS Monthly Income --
U.S. Treasury Series 1; QUILTS Monthly Income -- U.S.
Treasury Series 2 and QUILTS Asset Builder -- U.S. Treasury
Series 3 on March 19, 1993 and incorporated herein by
reference).
2.1 -- Form of Certificate (filed as Exhibit 2.1 to Amendment No.
2 to Form S-6 Registration Statement No. 33-57284 of Quest
for Value's Unit Investment Laddered Trust Series ("QUILTS"),
QUILTS Monthly Income -- U.S. Treasury Series 1; QUILTS
Monthly Income -- U.S. Treasury Series 2 and QUILTS Asset
Builder -- U.S. Treasury Series 3 on March 19, 1993 and
incorporated herein by reference).
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* Filed herewith.
II-i
C/M: 11205.0009 284765.1
<PAGE>
*3.1 -- Opinion of Battle Fowler LLP as to the legality of the
securities being registered, including their consent to the
filing thereof and to the use of their name under the headings
"Tax Status" and "Legal Opinions" in the Prospectus, and to the
filing of their opinion regarding tax status of the Trust.
*5.1 -- Consents of the Evaluator.
6.0 -- Powers of Attorney of Quest for Value Distributors, by the
majority of the Board of Directors and certain officers of
Oppenheimer Financial Corp., its Managing General Partner
(filed as Exhibit 6.0 to Amendment No. 2 to Form S-6
Registration Statement No. 33-57284 of Quest for Value's Unit
Investment Laddered Trust Series ("QUILTS"), QUILTS Monthly
Income -- U.S. Treasury Series 1; QUILTS Monthly Income --
U.S. Treasury Series 2 and QUILTS Asset Builder -- U.S.
Treasury Series 3 on March 19, 1993 and as Exhibit 6.0 to
Pre-Effective amendment No. 1 to Form S-6 Registration
Statement No. 33-57284 of Quest for Value's Investment Unit
Investment Laddered Trust Series ("QUILTS") on March 5, 1993
and incorporated herein by reference).
*27 -- Financial Data Schedules (for EDGAR filing only).
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* Filed herewith.
II-ii
C/M: 11205.0009 284765.1
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the
Securities Exchange Act of 1934, the undersigned registrant hereby undertakes
to file with the Securities and Exchange Commission such supplementary and
periodic information, documents, and reports as may be prescribed by any rule
or regulation of the Commission heretofore or hereafter duly adopted pursuant
to authority conferred in that section.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Quest for Value's Unit Investment Laddered Trust Series
("QUILTS"), QUILTS Income -- U.S. Treasury Series 12, QUILTS Income -- U.S.
Treasury Series 13 and QUILTS Asset Builder -- U.S. Treasury Series 14 has
duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, hereunto duly authorized, in the City of New York
and State of New York on the 29th day of June, 1995.
QUEST FOR VALUE'S UNIT INVESTMENT
LADDERED TRUST SERIES ("QUILTS"),
QUILTS INCOME -- U.S. TREASURY SERIES 12,
QUILTS INCOME -- U.S. TREASURY SERIES 13 AND
QUILTS ASSET BUILDER -- U.S. TREASURY SERIES 14
(Registrant)
QUEST FOR VALUE DISTRIBUTORS
(Depositor)
By: OPPENHEIMER FINANCIAL CORP.,
as Managing General Partner of the Depositor
By: /s/ SUSAN A. MURPHY
(Susan A. Murphy, Attorney-in-Fact)
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the following
persons, who constitute the principal officers and a majority of the directors
of Oppenheimer Financial Corp., the Managing General Partner of the Depositor,
in the capacities and on the date indicated.
NAME TITLE DATE
STEPHEN ROBERT* Chief Executive Officer and Director
Stephen Robert
NATHAN GANTCHER* Chief Operating Officer and Director
Nathan Gantcher
ROGER EINIGER* Chief Administrative Officer and Director
Roger Einiger
JOSEPH LAMOTTA* Director
Joseph LaMotta
ANTONIO FERNANDEZ* Chief Financial Officer and Treasurer
Antonio Fernandez
*By: /s/ SUSAN A. MURPHY June 29, 1995
(Susan A. Murphy, Attorney-in-Fact)
- --------
* Executed copy of Power of Attorney filed as Exhibit 6.0 to Amendment No.
2 to Registration Statement No. 33-57284 on March 19, 1993, and as
Exhibit 6.0 to the Pre-Effective Amendment No. 1 to Registration
Statement No. 33-57284 on March 5, 1993.
II-iii
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<PAGE>
CONSENT OF INDEPENDENT AUDITORS
The Sponsor, Trustee, and Unit Holders of
Quest for Value's Unit Investment Laddered Trust Series ("QUILTS")
QUILTS Income -- U.S. Treasury Series 12
QUILTS Income -- U.S. Treasury Series 13
QUILTS Asset Builder -- U.S. Treasury Series 14
We have issued our report dated June 28, 1995 on the Statements of
Condition and Portfolios of Quest for Value's Unit Investment Laddered Trust
Series ("QUILTS"), QUILTS Income -- U.S. Treasury Series 12 ("Income Series
12"), QUILTS Income -- U.S. Treasury Series 13 ("Income Series 13") and QUILTS
Asset Builder -- U.S. Treasury Series 14 ("Asset Builder Series 14") as of
June 28, 1995 contained in the Registration Statement on Form S-6 and the
Prospectus. We consent to the use of our report in the Registration Statement
and Prospectus and to the use of our name as it appears under the caption
"Independent Auditors."
BDO SEIDMAN
New York, New York
June 28, 1995
II-iv
C/M: 11205.0009 284765.1
<PAGE>
REGISTRATION NO. 33-60017
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
EXHIBITS
FILED WITH
AMENDMENT NO. 1
TO
FORM S-6
For Registration Under the Securities Act
of 1933 of Securities of Unit Investment
Trusts Registered on Form N-8B-2
------------------------
QUEST FOR VALUE'S UNIT INVESTMENT LADDERED TRUST SERIES ("QUILTS")
QUILTS Income -- U.S. Treasury Series 12
QUILTS Income -- U.S. Treasury Series 13
QUILTS Asset Builder -- U.S. Treasury Series 14
C/M: 11205.0009 284765.1
<PAGE>
EXHIBIT INDEX
Exhibit Number DESCRIPTION PAGE
*1.1 -- Reference Trust Agreements including certain
Amendments to the Trust Indenture and Agreement
referred to under Exhibit 1.1.1 below. ____
*1.1.1 -- Trust Indenture and Agreement. ____
1.3.4 -- Agreement of General Partnership of Quest for
Value Distributors dated July 9, 1987 (filed as
Exhibit 1.3.4 to Form S-6 Registration Statement
No. 33-57284 of Quest for Value's Unit Investment
Laddered Treasury Securities ("QUILTS") on January
21, 1993 and incorporated herein by reference). ____
1.4 -- Form of Master Agreement Among Underwriters (filed
as Exhibit 1.4 to Amendment No. 2 to Form S-6
Registration Statement No. 33-57284 of Quest for
Value's Unit Investment Laddered Trust Series
("QUILTS"), QUILTS Monthly Income -- U.S. Treasury
Series 1; QUILTS Monthly Income -- U.S. Treasury
Series 2 and QUILTS Asset Builder -- U.S. Treasury
Series 3 on March 19, 1993 and incorporated herein
by reference). ____
2.1 -- Form of Certificate (filed as Exhibit 2.1 to
Amendment No. 2 to Form S-6 Registration Statement
No. 33-57284 of Quest for Value's Unit Investment
Laddered Trust Series ("QUILTS"), QUILTS Monthly
Income -- U.S. Treasury Series 1; QUILTS Monthly
Income -- U.S. Treasury Series 2 and QUILTS Asset
Builder -- U.S. Treasury Series 3 on March 19,
1993 and incorporated herein by reference). ____
*3.1 -- Opinion of Battle Fowler LLP as to the legality of
the securities being registered, including their
consent to the filing thereof and to the use of
their name under the headings "Tax Status" and
"Legal Opinions" in the Prospectus, and to the
filing of their opinion regarding tax status of
the Trust. ____
*5.1 -- Consents of the Evaluator. ____
6.0 -- Powers of Attorney of Quest for Value
Distributors, by the majority of the Board of
Directors and certain officers of Oppenheimer
Financial Corp., its Managing General Partner
(filed as Exhibit 6.0 to Amendment No. 2 to Form
S-6 Registration Statement No. 33-57284 of Quest
for Value's Unit Investment Laddered Trust Series
("QUILTS"), QUILTS Monthly Income -- U.S. Treasury
Series 1; QUILTS Monthly Income -- U.S. Treasury
Series 2 and QUILTS Asset Builder -- U.S. Treasury
Series 3 on March 19, 1993 and as Exhibit 6.0 to
Pre-Effective amendment No. 1 to Form S-6
Registration Statement No. 33-57284 of Quest for
Value's Investment Unit Investment Laddered Trust
Series ("QUILTS") on March 5, 1993 and
incorporated herein by reference). ____
*27 -- Financial Data Schedules (for EDGAR filing only).
- --------
* Filed herewith.
C/M: 11205.0009 284765.1
QUEST FOR VALUE'S UNIT INVESTMENT
LADDERED TRUST SERIES ("QUILTS")
QUILTS INCOME - U.S. TREASURY SERIES 12
REFERENCE TRUST AGREEMENT
This Reference Trust Agreement (the "Agreement") dated June 28,
1995 among Quest for Value Distributors, as Depositor, and United States Trust
Company of New York, as Trustee and Evaluator, sets forth certain provisions
in full and incorporates other provisions by reference to the document
entitled "Quest For Value's Unit Investment Laddered Trust Series ("QUILTS")
And Subsequent Series And Any Other Future Trusts For Which Quest For Value
Distributors Acts As Sponsor" dated June 28, 1995 (the "Indenture") as amended
in part by this Agreement (collectively, such documents hereinafter called the
"Indenture and Agreement"). This Agreement and the Indenture, as incorporated
by reference herein, will constitute a single instrument.
WITNESSETH THAT:
WHEREAS, this Agreement is a Reference Trust Agreement as defined
in Section 1.1 of the Indenture, and shall be amended and modified from time
to time by an Addendum as defined in Section 1.1 (1) of the Indenture, such
Addendum setting forth any Additional Securities as defined in Section 1.1 (2)
of the Indenture;
WHEREAS, the Depositor wishes to deposit Securities, and any
Additional Securities as listed on any Addendums hereto, into the Trust and
issue Units, and Additional Units as the case maybe, in respect thereof
pursuant to Sections 2.1 and 2.6 of the Indenture; and
NOW THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the Depositor, the Trustee and the Evaluator
agree as follows:
Part I
STANDARD TERMS AND CONDITIONS OF TRUST
Section 1. Subject to the provisions of Part II hereof, all the
provisions contained in the Indenture are herein incorporated by reference in
their entirety and shall be deemed to be a part of this instrument as fully
and to the same extent
C/M: 11205.0009 284575.1
<PAGE>
as though said provisions had been set forth in full in this
instrument.
Section 2. This Reference Trust Agreement may be amended and
modified by Addendums, attached hereto, evidencing the purchase of Additional
Securities which have been deposited to effect an increase over the number of
Units initially specified in Part II of this Reference Trust Agreement
("Additional Closings"). The Depositor, Trustee and Evaluator hereby agree
that their respective representations, agreements and certifications contained
in the Closing Memorandum dated June 28, 1995, relating to the initial deposit
of Securities continue as if such representations, agreements and
certifications were made on the date of such Additional Closings and with
respect to the deposits made therewith, except as such representations,
agreements and certifications relate to their respective By-Laws and as to
which they each represent that their has been no amendment affecting their
respective abilities to perform their respective obligations under the
Indenture.
Part II
SPECIAL TERMS AND CONDITIONS OF TRUST
Section 1. The following special terms and conditions are hereby
agreed to:
(a) The Securities (including Contract Securities) listed in
Schedule A hereto have been deposited in the Trust under this Agreement.
(b) The number of Units delivered by the Trustee in exchange for
the Securities referred to in Section 2.3 is 500,000.
(c) For the purposes of the definition of Unit in item (19) of
Section 1.1, the fractional undivided interest in and ownership of the Trust
per 1,000 Units initially is 1/500 as of the date hereof.
(d) The term Record Date shall mean the fifteenth day of the last
month of each quarter (or the last business day prior thereto) commencing on
January 15, 1996.
(e) The term Payment Date shall mean the last day of each quarter
(or the last business day prior thereto) commencing on January 31, 1996.
(f) The First Settlement Date shall mean July 5, 1995.
-2-
C/M: 11205.0009 284575.1
<PAGE>
(g) For purposes of Section 6.1(g), the liquidation amount is
hereby specified to be 40% of the aggregate value of the Securities at the
completion of the Deposit Period.
(h) For purposes of Section 6.4, the Trustee shall be paid per
annum $.80 per 1,000 Units.
(i) For purposes of Section 7.4, the Depositor's maximum
supervisory annual fee is hereby specified to be $.10 per $1,000 principal
amount of Securities.
(j) The fiscal year for the Trust shall end on March
31st of each year.
(k) For purposes of these Series of Quest For Value's Unit
Investment Laddered Trust Series ("QUILTS"), the form of Certificate set forth
in the Indenture shall be appropriately modified to reflect the titles of
these Series and represent as set forth above.
IN WITNESS WHEREOF, the parties hereto have caused this Reference
Trust Agreement to be duly executed on the date first above written.
[Signatures on separate pages]
-3-
C/M: 11205.0009 284575.1
<PAGE>
QUEST FOR VALUE DISTRIBUTORS
as Depositor
By: OPPENHEIMER FINANCIAL CORP.
as Managing Partner of the
Depositor
By: Susan Murphy
Authorized Person
STATE OF NEW YORK )
: ss:
COUNTY OF NEW YORK )
I, Carla Vogel, a Notary Public in and for
the said County in the State aforesaid, do hereby certify that
Susan Murphy personally known to me to be the same
person whose name is subscribed to the foregoing instrument and personally
known to me to be an Authorized Person of Oppenheimer Financial Corp., a
Delaware corporation, appeared before me this day in person, and acknowledged
that he/she signed and delivered the said instrument as his/her free and
voluntary act as such Authorized Person and as the free and voluntary act of
said Oppenheimer Financial Corp., for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this day of June, 1995.
Carla Vogel
Notary Public
(SEAL) Carla Vogel
Notary Public, State of New York
No. 02V05019906
My Commission expires: Qualified in Bronx County
Commission Expires November 1, 1995
C/M: 11205.0009 284575.1
<PAGE>
UNITED STATES TRUST COMPANY
OF NEW YORK
as Trustee and Evaluator
By: Thomas Porrazzo
(SEAL)
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
I, ADA IRIS VEGA, a Notary Public in and for
the said County in the State aforesaid, do hereby certify that
Thomas Porrazzo personally known to me to be the same
person whose name is subscribed to the foregoing instrument and personally
known to me to be a of United States Trust Company of New York, appeared
before me this day in person, and acknowledged that he sealed with the
corporate seal of the United States Trust Company of New York and signed and
delivered the said instrument as free and voluntary act as such and as the
free and voluntary act of said United States Trust Company of New York, for
the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this 28th day of June, 1995.
Ada Iris Vega
Notary Public
(SEAL) ADA IRIS VEGA
Notary Public, State of New York
My Commission expires: No. 4864106
Qualified in New York County
Commission Expires 6-30-96
C/M: 11205.0009 284575.1
<PAGE>
Schedule A
QUILTS
Treasury Income Series 12
AS OF DATE OF DEPOSIT, JUNE 28, 1995
Aggregate Coupon/ Cost of
Portfolio Principal Title of Securities Maturity Securities
No. Amount Contracted for (1) Date(s) to Trust (2)
1 $100,000 U.S. Treasury Note 4.000% $99,062
1/31/96
2 100,000 U.S. Treasury Note 5.500% 99,859
4/30/96
3 100,000 U.S. Treasury Note 6.125% 100,469
7/31/96
4 100,000 U.S. Treasury Note 6.875% 101,516
10/31/96
5 100,000 U.S. Treasury Note 6.125% 100,719
12/31/96
--------- ---------
$500,000 $501,625
ESTIMATED CASH FLOWS TO UNIT HOLDERS
The Table below sets forth the per 1,000 Units estimated distributions
of interest and principal to Unit Holders. The table assumes no changes in
Trust expenses, no redemptions or sales of the underlying U.S. Treasury
Obligations prior to maturity and the receipt of all principal due upon
maturity. To the extent the foregoing assumptions change actual distributions
will vary.
Quilts Treasury Estimated Interest Estimated Principal Estimated Total
Income Series 12 Distribution Distribution Distribution
January 1996 29.53 200.00 229.53
April 1996 12.35 200.00 212.35
July 1996 9.77 200.00 209.77
October 1996 6.80 200.00 206.80
December 1996 2.98 200.00 202.98
<PAGE>
QUEST FOR VALUE'S UNIT INVESTMENT
LADDERED TRUST SERIES ("QUILTS")
QUILTS INCOME - U.S. TREASURY SERIES 13
REFERENCE TRUST AGREEMENT
This Reference Trust Agreement (the "Agreement") dated June 28,
1995 among Quest for Value Distributors, as Depositor, and United States Trust
Company of New York, as Trustee and Evaluator, sets forth certain provisions
in full and incorporates other provisions by reference to the document
entitled "Quest For Value's Unit Investment Laddered Trust Series ("QUILTS")
And Subsequent Series And Any Other Future Trusts For Which Quest For Value
Distributors Acts As Sponsor" dated June 28, 1995 (the "Indenture") as amended
in part by this Agreement (collectively, such documents hereinafter called the
"Indenture and Agreement"). This Agreement and the Indenture, as incorporated
by reference herein, will constitute a single instrument.
WITNESSETH THAT:
WHEREAS, this Agreement is a Reference Trust Agreement as defined
in Section 1.1 of the Indenture, and shall be amended and modified from time
to time by an Addendum as defined in Section 1.1 (1) of the Indenture, such
Addendum setting forth any Additional Securities as defined in Section 1.1 (2)
of the Indenture;
WHEREAS, the Depositor wishes to deposit Securities, and any
Additional Securities as listed on any Addendums hereto, into the Trust and
issue Units, and Additional Units as the case maybe, in respect thereof
pursuant to Sections 2.1 and 2.6 of the Indenture; and
NOW THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the Depositor, the Trustee and the Evaluator
agree as follows:
Part I
STANDARD TERMS AND CONDITIONS OF TRUST
Section 1. Subject to the provisions of Part II hereof, all the
provisions contained in the Indenture are herein incorporated by reference in
their entirety and shall be deemed to be a part of this instrument as fully
and to the same extent
C/M: 11205.0009 284763.1
<PAGE>
as though said provisions had been set forth in full in this
instrument.
Section 2. This Reference Trust Agreement may be amended and
modified by Addendums, attached hereto, evidencing the purchase of Additional
Securities which have been deposited to effect an increase over the number of
Units initially specified in Part II of this Reference Trust Agreement
("Additional Closings"). The Depositor, Trustee and Evaluator hereby agree
that their respective representations, agreements and certifications contained
in the Closing Memorandum dated June 28, 1995, relating to the initial deposit
of Securities continue as if such representations, agreements and
certifications were made on the date of such Additional Closings and with
respect to the deposits made therewith, except as such representations,
agreements and certifications relate to their respective By-Laws and as to
which they each represent that their has been no amendment affecting their
respective abilities to perform their respective obligations under the
Indenture.
Part II
SPECIAL TERMS AND CONDITIONS OF TRUST
Section 1. The following special terms and conditions are hereby
agreed to:
(a) The Securities (including Contract Securities) listed in
Schedule A hereto have been deposited in the Trust under this Agreement.
(b) The number of Units delivered by the Trustee in exchange for
the Securities referred to in Section 2.3 is 500,000.
(c) For the purposes of the definition of Unit in item (19) of
Section 1.1, the fractional undivided interest in and ownership of the Trust
per 1,000 Units initially is 1/500 as of the date hereof.
(d) The term Record Date shall mean the fifteenth day of each
month (or the last business day prior thereto) commencing on July 15, 1995.
(e) The term Payment Date shall mean the last day of each month
(or the last business day prior thereto) commencing on July 31, 1995.
(f) The First Settlement Date shall mean July 5, 1995.
-2-
C/M: 11205.0009 284763.1
<PAGE>
(g) For purposes of Section 6.1(g), the liquidation amount is
hereby specified to be 40% of the aggregate value of the Securities at the
completion of the Deposit Period.
(h) For purposes of Section 6.4, the Trustee shall be paid per
annum $1.17 per 1,000 Units.
(i) For purposes of Section 7.4, the Depositor's maximum
supervisory annual fee is hereby specified to be $.10 per $1,000 principal
amount of Securities.
(j) The fiscal year for the Trust shall end on March
31st of each year.
(k) For purposes of these Series of Quest For Value's Unit
Investment Laddered Trust Series ("QUILTS"), the form of Certificate set forth
in the Indenture shall be appropriately modified to reflect the titles of
these Series and represent as set forth above.
IN WITNESS WHEREOF, the parties hereto have caused this Reference
Trust Agreement to be duly executed on the date first above written.
[Signatures on separate pages]
CM: 11205.0009 284763.1
<PAGE>
QUEST FOR VALUE DISTRIBUTORS
as Depositor
By: OPPENHEIMER FINANCIAL CORP.
as Managing Partner of the
Depositor
By: Susan Murphy
Authorized Person
STATE OF NEW YORK )
: ss:
COUNTY OF NEW YORK )
I, Carla Vogel, a Notary Public in and for the said County in
the State aforesaid, do hereby certify that Susan A. Murphy personally
known to me to be the same person whose name is subscribed to the
foregoing instrument and personally known to me to be an Authorized
Person of Oppenheimer Financial Corp., a Delaware corporation, appeared before
me this day in person, and acknowledged that she signed and delivered the said
instrument as her free and voluntary act as such Authorized Person and as the
free and voluntary act of said Oppenheimer Financial Corp., for the uses and
purposes therein set forth.
GIVEN under my hand and notarial seal this day of June 28, 1995.
Carla Vogel
Notary Public
(SEAL) Carla Vogel
Notary Public, State of New York
No. 02V05019906
My Commission expires: Qualified in Bronx County
Commission Expires November 1,1995
C/M: 11205.0009 284763.1
<PAGE>
UNITED STATES TRUST COMPANY OF NEW YORK
as Trustee and Evaluator
By: Thomas Porrazzo
(SEAL)
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
I, ADA IRIS VEGA, a Notary Public in and for
the said County in the State aforesaid, do hereby certify that
Thomas Porrazzo personally known to me to be the same
person whose name is subscribed to the foregoing instrument and personally
known to me to be a of United States Trust Company of New York, appeared
before me this day in person, and acknowledged that he sealed with the
corporate seal of the Bank of New York and signed and delivered the said
instrument as free and voluntary act as such and as the free and voluntary act
of said Bank of New York, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this 28th day of June, 1995.
Ada Iris Vega
Notary Public
(SEAL}
ADA IRIS VEGA
My Commission expires: Notary Public, State of New York
No. 4864106
Qualified in New York County
Commission Expires 6-30-96
<PAGE>
QUILTS
Treasury Income Series 12
AS OF DATE OF DEPOSIT, JUNE 28, 1995
Aggregate Coupon/ Cost of
Portfolio Principal Title of Securities Maturity Securities
No. Amount Contracted for (1) Date(s) to Trust (2)
1 $100,000 U.S. Treasury Note 4.000% $99,062
1/31/96
2 100,000 U.S. Treasury Note 5.500% 99,859
4/30/96
3 100,000 U.S. Treasury Note 6.125% 100,469
7/31/96
4 100,000 U.S. Treasury Note 6.875% 101,516
10/31/96
5 100,000 U.S. Treasury Note 6.125% 100,719
12/31/96
--------- ---------
$500,000 $501,625
ESTIMATED CASH FLOWS TO UNIT HOLDERS
The Table below sets forth the per 1,000 Units estimated distributions
of interest and principal to Unit Holders. The table assumes no changes in
Trust expenses, no redemptions or sales of the underlying U.S. Treasury
Obligations prior to maturity and the receipt of all principal due upon
maturity. To the extent the foregoing assumptions change actual distributions
will vary.
Quilts Treasury Estimated Interest Estimated Principal Estimated Total
Income Series 12 Distribution Distribution Distribution
January 1996 29.53 200.00 229.53
April 1996 12.35 200.00 212.35
July 1996 9.77 200.00 209.77
October 1996 6.80 200.00 206.80
December 1996 2.98 200.00 202.98
C/M: 11205.0009 284763.1
<PAGE>
QUEST FOR VALUE'S UNIT INVESTMENT
LADDERED TRUST SERIES ("QUILTS")
QUILTS ASSET BUILDER - U.S. TREASURY SERIES 14
REFERENCE TRUST AGREEMENT
This Reference Trust Agreement (the "Agreement") dated June 28,
1995 among Quest for Value Distributors, as Depositor, and United States Trust
Company of New York, as Trustee and Evaluator, sets forth certain provisions
in full and incorporates other provisions by reference to the document
entitled "Quest For Value's Unit Investment Laddered Trust Series ("QUILTS")
And Subsequent Series And Any Other Future Trusts For Which Quest For Value
Distributors Acts As Sponsor" dated June 28, 1995 (the "Indenture") as amended
in part by this Agreement (collectively, such documents hereinafter called the
"Indenture and Agreement"). This Agreement and the Indenture, as incorporated
by reference herein, will constitute a single instrument.
WITNESSETH THAT:
WHEREAS, this Agreement is a Reference Trust Agreement as defined
in Section 1.1 of the Indenture, and shall be amended and modified from time
to time by an Addendum as defined in Section 1.1 (1) of the Indenture, such
Addendum setting forth any Additional Securities as defined in Section 1.1 (2)
of the Indenture;
WHEREAS, the Depositor wishes to deposit Securities, and any
Additional Securities as listed on any Addendums hereto, into the Trust and
issue Units, and Additional Units as the case maybe, in respect thereof
pursuant to Sections 2.1 and 2.6 of the Indenture; and
NOW THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the Depositor, the Trustee and the Evaluator
agree as follows:
Part I
STANDARD TERMS AND CONDITIONS OF TRUST
Section 1. Subject to the provisions of Part II hereof, all the
provisions contained in the Indenture are herein incorporated by reference in
their entirety and shall be deemed
C/M: 11205.0009 284764.1
<PAGE>
to be a part of this instrument as fully and to the same extent as though said
provisions had been set forth in full in this instrument.
Section 2. This Reference Trust Agreement may be amended and
modified by Addendums, attached hereto, evidencing the purchase of Additional
Securities which have been deposited to effect an increase over the number of
Units initially specified in Part II of this Reference Trust Agreement
("Additional Closings"). The Depositor, Trustee and Evaluator hereby agree
that their respective representations, agreements and certifications contained
in the Closing Memorandum dated June 28, 1995, relating to the initial deposit
of Securities continue as if such representations, agreements and
certifications were made on the date of such Additional Closings and with
respect to the deposits made therewith, except as such representations,
agreements and certifications relate to their respective By-Laws and as to
which they each represent that their has been no amendment affecting their
respective abilities to perform their respective obligations under the
Indenture.
Part II
SPECIAL TERMS AND CONDITIONS OF TRUST
Section 1. The following special terms and conditions are hereby
agreed to:
(a) The Securities (including Contract Securities) listed in
Schedule A hereto have been deposited in the Trust under this Agreement.
(b) The number of Units delivered by the Trustee in exchange for
the Securities referred to in Section 2.3 is 500,000.
(c) For the purposes of the definition of Unit in item (19) of
Section 1.1, the fractional undivided interest in and ownership of the Trust
per 1,000 Units initially is 1/500 as of the date hereof.
(d) The First Settlement Date shall mean July 5, 1995.
(e) For purposes of Section 6.1(g), the liquidation amount is
hereby specified to be 40% of the aggregate value of the Securities at the
completion of the Deposit Period.
(f) For purposes of Section 6.4, the Trustee shall be paid per
annum $.35 per 1,000 Units.
-2-
C/M: 11205.0009 284764.1
<PAGE>
(g) For purposes of Section 7.4, the Depositor's maximum
supervisory annual fee is hereby specified to be $.10 per $1,000 principal
amount of Securities.
(h) The fiscal year for the Trust shall end on March
31st of each year.
(i) For purposes of these Series of Quest For Value's Unit
Investment Laddered Trust Series ("QUILTS"), the form of Certificate set forth
in the Indenture shall be appropriately modified to reflect the titles of
these Series and represent as set forth above.
IN WITNESS WHEREOF, the parties hereto have caused this Reference
Trust Agreement to be duly executed on the date first above written.
[Signatures on separate pages]
-3-
C/M: 11205.0009 284764.1
<PAGE>
QUEST FOR VALUE DISTRIBUTORS
as Depositor
By: OPPENHEIMER FINANCIAL CORP.
as Managing Partner of the
Depositor
By: Susan Murphy
Authorized Person
STATE OF NEW YORK )
: ss:
COUNTY OF NEW YORK )
I, Carla Vogel , a Notary Public in and for the said County in the State
aforesaid, do hereby certify that Susan A. Murphy personally known to me to be
the same person whose name is subscribed to the foregoing instrument and
personally known to me to be an Authorized Person of Oppenheimer Financial
Corp., a Delaware corporation, appeared before me this day in person, and
acknowledged that she signed and delivered the said instrument as her free and
voluntary act as such Authorized Person and as the free and voluntary act of
said Oppenheimer Financial Corp., for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this day of June, 1995.
Carla Vogel
Notary Public
(SEAL)
My Commission expires: CARLA VOGEL
Notary Public, State of New York
No. 02V05019906
Qualified in Bronx County
Commission Expires November 1, 1995
C/M: 11205.0009 284764.1
<PAGE>
UNITED STATES TRUST COMPANY OF NEW YORK
as Trustee and Evaluator
By: Thomas Porrazzo
(SEAL)
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
I, ADA IRIS VEGA, a Notary Public in and for
the said County in the State aforesaid, do hereby certify that
THOMAS PARAZZO personally known to me to be the same
person whose name is subscribed to the foregoing instrument and personally
known to me to be a of United States Trust Company of New York, appeared
before me this day in person, and acknowledged that he sealed with the
corporate seal of United States Trust Company of New York and signed and
delivered the said instrument as free and voluntary act as such and as the
free and voluntary act of said Bank of New York, for the uses and purposes
therein set forth.
GIVEN under my hand and notarial seal this day of June, 1995.
Ada Idris Vega
Notary Public
(SEAL) ADA IDRIS VEGA
Notary Public, State of New York
My Commission expires: No. 4864106
Qualified in New York County
Commission Expires 6-30-96
C/M: 11205.0009 284764.1
<PAGE>
Schedule A
QUILTS
Treasury Income Series 12
AS OF DATE OF DEPOSIT, JUNE 28, 1995
Aggregate Coupon/ Cost of
Portfolio Principal Title of Securities Maturity Securities
No. Amount Contracted for (1) Date(s) to Trust (2)
1 $100,000 U.S. Treasury Note 4.000% $99,062
1/31/96
2 100,000 U.S. Treasury Note 5.500% 99,859
4/30/96
3 100,000 U.S. Treasury Note 6.125% 100,469
7/31/96
4 100,000 U.S. Treasury Note 6.875% 101,516
10/31/96
5 100,000 U.S. Treasury Note 6.125% 100,719
12/31/96
--------- ---------
$500,000 $501,625
ESTIMATED CASH FLOWS TO UNIT HOLDERS
The Table below sets forth the per 1,000 Units estimated distributions
of interest and principal to Unit Holders. The table assumes no changes in
Trust expenses, no redemptions or sales of the underlying U.S. Treasury
Obligations prior to maturity and the receipt of all principal due upon
maturity. To the extent the foregoing assumptions change actual distributions
will vary.
Quilts Treasury Estimated Interest Estimated Principal Estimated Total
Income Series 12 Distribution Distribution Distribution
January 1996 29.53 200.00 229.53
April 1996 12.35 200.00 212.35
July 1996 9.77 200.00 209.77
October 1996 6.80 200.00 206.80
December 1996 2.98 200.00 202.98
<PAGE>
QUEST FOR VALUE'S UNIT INVESTMENT
LADDERED TRUST SERIES ("QUILTS")
AND
SUBSEQUENT SERIES AND ANY OTHER
FUTURE TRUSTS FOR WHICH QUEST FOR VALUE
DISTRIBUTIORS ACTS AS SPONSOR
_______________________
TRUST INDENTURE AND AGREEMENT
Among
QUEST FOR VALUE DISTRIBUTORS
As Depositor
UNITED STATES TRUST COMPANY OF NEW YORK
As Trustee and Evaluator
________________________
Dated: June 28, 1995
<PAGE>
HERE
TRUST INDENTURE AND AGREEMENT
QUEST FOR VALUE'S UNIT INVESTMENT
LADDERED TRUST SERIES ("QUILTS")
and Subsequent Series and any other future
trusts for which Quest for Value Distributors
acts as sponsor
CONTENTS
Page
ARTICLE I DEFINITIONS; CERTIFICATES............................ 2
Section 1.1. Definitions.......................................... 2
Section 1.2. Form of Certificate.................................. 4
ARTICLE II DEPOSIT OF SECURITIES; DECLARATION OF TRUST;
FORM AND ISSUANCE OF CERTIFICATES................ 6
Section 2.1. Deposit of Securities................................ 6
Section 2.2. Declaration of Trust................................. 6
Section 2.3. Issue of Certificates................................ 7
Section 2.4. Form of Certificates................................. 7
Section 2.5. Certain Contracts Satisfactory....................... 7
Section 2.6. Deposit of Additional Securities..................... 7
ARTICLE III ADMINISTRATION OF TRUST.............................. 8
Section 3.1. Cost................................................. 8
Section 3.2. Interest Account..................................... 9
Section 3.3. Principal Account.................................... 9
Section 3.4. Reserve Account...................................... 10
Section 3.5. Distributions........................................ 10
Section 3.6. Distribution Statements.............................. 14
Section 3.7. Sale of Securities................................... 15
Section 3.8. Securities........................................... 16
Section 3.10. Notice and Sale by Trustee........................... 17
Section 3.11. Trustee Not to Amortize.............................. 17
Section 3.12. Action by Trustee Regarding Securities............... 17
Section 3.13. Notice of Change in Principal Account: ............. 18
Section 3.14. Limited Replacement of Special Securities............ 18
ARTICLE IV EVALUATION OF SECURITIES; EVALUATOR.................. 20
Section 4.1. Evaluation of Securities............................. 20
Section 4.2. Liability of Evaluator............................... 21
ARTICLE V TRUST EVALUATION; REDEMPTION OR PURCHASE OF
UNITS............................................ 22
Section 5.1. Trust Evaluation..................................... 22
Section 5.2. Redemptions by Trustee; Purchases by
Depositor........................................ 23
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Page
ARTICLE VI TRUSTEE; REMOVAL OF DEPOSITOR........................ 26
Section 6.1. General Definition of Trustee's Liabilities,
Rights and Duties; Removal of Depositor.......... 26
Section 6.2. Books, Records and Reports........................... 29
Section 6.3. Indenture and List of Securities on File............. 29
Section 6.4. Compensation......................................... 30
Section 6.5. Removal and Resignation of the Trustee;
Successor........................................ 31
Section 6.6. Qualifications of Trustee............................ 32
ARTICLE VII DEPOSITOR............................................ 32
Section 7.1. Succession........................................... 32
Section 7.2. Resignation of a Depositor........................... 33
Section 7.3. Liability of Depositor and Indemnification........... 33
Section 7.4. Compensation......................................... 34
ARTICLE VIII RIGHTS OF UNIT HOLDERS............................... 35
Section 8.1. Beneficiaries of Trust............................... 35
Section 8.2. Rights, Terms and Conditions......................... 35
ARTICLE IX ADDITIONAL COVENANTS; MISCELLANEOUS
PROVISIONS....................................... 36
Section 9.1. Amendments........................................... 36
Section 9.2. Termination.......................................... 37
Section 9.3. Construction......................................... 38
Section 9.4. Registration of Units................................ 39
Section 9.5. Written Notice....................................... 39
Section 9.6. Severability......................................... 39
Section 9.7. Dissolution of Depositor Not to Terminate............ 39
This Table of Contents does not constitute part of the Indenture.
**
<PAGE>
QUEST FOR VALUE'S UNIT INVESTMENT LADDERED
TRUST SERIES
("QUILTS")
(A UNIT INVESTMENT TRUST)
AND
SUBSEQUENT SERIES AND ANY OTHER FUTURE TRUSTS
FOR WHICH QUEST FOR VALUE DISTRIBUTORS ACTS
AS SPONSOR
TRUST INDENTURE AND AGREEMENT
DATED JUNE 28, 1995
This Trust Indenture and Agreement ("Indenture") dated
June 28, 1995, among Quest for Value Distributors
("Distributors"), as Depositor, and United States Trust Company
of New York, as Trustee and Evaluator.
WITNESSETH THAT
In consideration of the premises and of the mutual
agreements herein contained, the Depositor, the Trustee and the Evaluator
agree as follows:
INTRODUCTION
The Depositor, concurrently with the execution and delivery
hereof, is establishing Quest for Value's Unit Investment Laddered Trust
Series ("QUILTS"), wherein certain interest bearing and non-interest bearing
obligations will be deposited by the Depositor, to be held by the Trustee in
trust for the use and benefit of the registered holders of units of beneficial
interest as recorded in book-entry form. The parties hereto are entering into
this Indenture for the purpose of establishing certain of the terms, covenants
and conditions of Quest for Value's Unit Investment Laddered Trust Series and
of each additional series of such Trust, and any other future trusts for which
the Depositor acts as sponsor, which may be established from time to time
hereafter. For Quest for Value's Unit Investment Laddered Trust Series and
each subsequent series, and any other future trusts for which the Depositor
acts as sponsor (as to which this Indenture is to be applicable) the parties
hereto shall execute a separate Reference Trust Agreement incorporating by
reference this Indenture and effecting any amendment, supplement or variation
from or to this Indenture with respect to the related series and specifying
for that series (i) the Securities deposited in trust and the number of Units
delivered by the Trustee in exchange for the Securities pursuant
97085.4
<PAGE>
to Section 2.3; (ii) the initial fractional undivided interest represented by
each Unit; (iii) the first and subsequent Record Dates; (iv) the first and
subsequent Payment Dates; (v) the First Settlement Date; (vi) the Evaluator's
fee; (vii) the liquidation amount for purposes of Section 6.01(g); (viii) the
Trustee's fee and (ix) any other change or addition contemplated or permitted
by this Indenture.
ARTICLE I
DEFINITIONS; CERTIFICATES
Section 1.1. Definitions: Whenever used in this
Indenture the following words and phrases, unless the context
clearly indicates otherwise, shall have the following meanings:
(1) "Addendum to the Reference Trust Agreement" shall mean
the addendum which evidences the Additional Securities deposited into
the Trust and the number of Additional Units created.
(2) "Additional Securities" shall mean such Securities as
are listed in Supplementary Schedules to Addendums to the Reference
Trust Agreement and which have been deposited to effect an increase
over the number of Units initially specified in the Reference Trust
Agreement.
(3) "Additional Units" shall mean such Units as are issued
in respect of Additional Securities.
(4) "Business Day" shall mean any day other than Saturday,
Sunday, or, in the City of New York, a legal holiday or a day on
which banking institutions or the New York Stock Exchange are
authorized by law to close.
(5) "Certificate" shall mean any certificate substantially
in the form hereinafter recited executed by the Trustee and the
Depositor evidencing ownership of an undivided fractional interest in
each Trust.
(6) "Contract Securities" shall mean Securities which are to
be acquired by the Trust pursuant to contracts, including (i)
Securities listed in Schedule A to the Reference Trust Agreement,
contracts for the purchase thereof which have been assigned to the
Trustee and cash or an irrevocable letter of credit issued by a
commercial bank in the amount required for such purchase which has
been delivered to the Trustee and (ii) Securities which the Depositor
has contracted to purchase for the Trust pursuant to Section 3.14.
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<PAGE>
(7) "Depositor" shall mean Quest for Value Distributors, its
successors or any successor Depositor appointed as herein provided.
(8) "DTC" shall mean Depository Trust Company, or its
successors.
(9) "Evaluator" shall mean United States Trust Company of
New York, or its successors or any successor evaluator appointed as
herein provided.
(10) "First Settlement Date" shall mean the date specified
in Part II of the Reference Trust Agreement.
(11) The words "herein", "hereby", "herewith", "hereof",
"hereinafter", "hereunder", "hereinabove", "hereafter", "heretofore"
and similar words or phrases of reference and association shall refer
to this Indenture in its entirety.
(12) "Indenture" shall mean this Trust Indenture and
Agreement as originally executed or, if amended as herein provided,
as so amended.
(13) "Payment Date" shall have the meaning assigned to it in
Part II of the Reference Trust Agreement.
(14) "Record Date" shall have the meaning assigned to it in
Part II of the Reference Trust Agreement.
(15) "Reference Trust Agreement" shall mean the Inden- ture
for the particular series of Quest for Value Trust into which the
terms of this Indenture are incorporated.
(16) "Securities" shall mean the securities, including
Contract Securities, (i) which are listed in Schedule A to the
Reference Trust Agreement or (ii) which have been received by the
Trust in exchange, substitution or replacement pursuant to Sections
3.8 and 3.14 hereof, as may from time to time continue to be held as
part of the Trust.
(17) "Trust" shall mean the trust created by this Indenture,
which shall consist of the Securities held pursuant and subject to
this Indenture together with all undistributed interest received or
accrued thereon, and any undistributed cash realized from the sale,
redemption, liquidation, or maturity thereof. Such amounts as may be
on deposit in the Reserve Account hereinafter established shall be
excluded from the definition of the Trust.
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<PAGE>
(18) "Trustee" shall mean The Bank of New York, or its
successors or any successor Trustee appointed as herein provided.
(19) "Unit" shall mean the fractional undivided interest in
and ownership of the Trust initially specified in Part II of the
Reference Trust Agreement, the denominator of which shall be
decreased by the number of any such Units redeemed as provided in
Section 5.2.
(20) "Unit Holder" shall mean the registered holder of units
of beneficial interest as recorded in book-entry form at DTC, his
legal representatives and heirs and the successors of any
corporation, partnership or legal entity which is a registered holder
of any Unit, and as such shall be deemed a beneficiary of the trust
created by the Indenture to the extent of his pro rata share thereof.
(21) Words importing singular number shall include the
plural number in each case and vice versa, and words importing person
shall include corporations and associations, as well as natural
persons.
Section 1.2. Form of Certificate: The form of Certi-
ficate evidencing ownership of fractional undivided interests in
each Trust shall be substantially as follows:
No.
CERTIFICATE OF OWNERSHIP
--evidencing--
A Fractional Undivided Interest
--in--
QUEST FOR VALUE'S UNIT INVESTMENT
LADDERED TRUST SERIES
("QUILTS")
__________ SERIES _________
- --------------------
CUSIP
This is to certify that ______________________________ is the owner and
registered holder of this Certificate evidencing the ownership of unit(s) of
fractional undivided interest in the above named Trust created under the laws
of the State of New
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97085.4
<PAGE>
York pursuant to the Trust Indenture and Agreement among Quest for Value
Distributors as Depositor and United States Trust Company of New York as
Trustee and Evaluator (the "Indenture"), a copy of which is available at the
office of the Trustee. This Certificate is issued under and is subject to the
terms, provisions and conditions of the Indenture to which the holder of this
Certificate by virtue of the acceptance hereof asserts and is bound, a summary
of which Indenture is contained in the Prospectus relating to the Trust. This
Certificate is transferable and interchangeable by the registered holder in
person or by his duly authorized attorney at the Trustees' office upon
surrender of this Certificate properly endorsed or accom- panied by a written
instrument of transfer or other documents that the Trustee may require for
transfer in form satisfactory to the Trustee and payment of the fees and
expenses as provided in the Indenture.
Witness the facsimile signature of a duly authorized officer
of the Depositor and the manual signature of an authorized signature of the
Trustee.
Date: QUEST FOR VALUE DISTRIBUTORS,
Depositor
Authorized Signatory
UNITED STATES TRUST COMPANY OF NEW
YORK, Trustee
By:
Authorized Officer
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97085.4
<PAGE>
ASSIGNMENT
For Value Received _________________________________________
hereby sells, assigns and transfers unto _____________________________________
the within Certificate and does hereby irrevocably constitute and
appoint ______________________________________________________________________
attorney, to transfer the within Certificate on the books of the Trustee, with
full power of substitution in the premises.
Date: _______________________________________________________________
Notice: The signature(s) to this assignment must correspond with the
name(s) as written above upon the face of this Certificate in every
particular, without alteration or enlargement or any change whatever.
___________________________
Signature Guaranteed
[end of certificate]
ARTICLE II
DEPOSIT OF SECURITIES; DECLARATION OF TRUST;
FORM AND ISSUANCE OF CERTIFICATES
Section 2.1. Deposit of Securities: The Depositor, concurrently with the
execution and delivery of the Reference Trust Agreement, has deposited with
the Trustee in trust the Securities listed in Schedule A to the Reference
Trust Agreement in bearer form or registered in the name of the Trustee, or
its nominee, or duly endorsed in blank or accompanied by all necessary
instruments of assignment and transfer in proper form to be held, managed and
applied by the Trustee as herein provided. The Depositor shall deliver the
Securities listed on said Schedule A to the Trustee which were not actually
delivered concurrently with the execution and delivery of the Reference Trust
Agreement within 90 days after said execution and delivery, or if the contract
to buy such Security between the Depositor and seller is terminated by the
seller thereof for any reason beyond the control of the Depositor, the
Depositor shall forthwith take the remedial action specified in Section 3.14.
Section 2.2. Declaration of Trust: The Trustee declares that
it holds and will hold the Securities as Trustee in trust upon the trusts
herein set forth for the use and benefit of all present and future Unit
Holders.
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97085.4
<PAGE>
Section 2.3. Issue of Certificates: The Trustee hereby
acknowledges receipt of the deposit referred to in Section 2.1, and
simultaneously with the receipt of said deposit, has executed Certificates
substantially in the form above recited representing the ownership of the
number of Units specified in Part II of the Reference Trust Agreement.
Section 2.4. Form of Certificates: Each Certificate referred
to in Section 2.3 is, and each Certificate hereafter issued shall be, in
substantially the form hereinabove recited, numbered serially for
identification, in fully registered form, transferable only on the books of
the Trustee as herein provided, executed manually or in facsimile by an
authorized officer of the Trustee and in facsimile by an Officer of the
Depositor.
Section 2.5. Certain Contracts Satisfactory: The Depositor
approves as satisfactory in form and substance the contracts to be assumed by
the Trustee with regard to any Securities listed in Schedule A to the
Reference Trust Agreement and authorizes the Trustee on behalf of the Trust to
assume such contracts and otherwise to carry out the terms and provisions
thereof or to take other appropriate action in order to complete the deposit
of the Securities covered thereby into the Trust.
Section 2.6. Deposit of Additional Securities. During
the 90-day period subsequent to the Date of Deposit, the
Depositor may make deposits of Additional Securities duly
endorsed in blank or accompanied by all necessary instruments of
assignment and transfer in proper form (or contracts to purchase
Additional Securities and cash or an irrevocable letter of credit
in an amount necessary to consummate the purchase of any
Additional Securities pursuant to such contracts ("Additional
Contract Securities")) and Cash (as defined below), provided that
each deposit of Additional Securities and Cash, if any, shall
replicate, to the extent practicable, the Securities (including
Contract Securities) held in the Trust immediately prior to each
such deposit and shall exactly replicate Cash. For purposes of
this paragraph, "Cash" means, as to the Principal Account, cash
or other property (other than Securities) on hand in the
Principal Account or receivable and to be credited to the
Principal Account as of the date of the supplemental deposit
(other than amounts to be distributed solely to persons other
than persons receiving the distribution from the Principal
Account as holders of Additional Units created by the deposit),
and, as to the Income Account, cash or other property (other than
Securities) received by the Trust as of the date of the
supplemental deposit or receivable by the Trust in respect of
dividends or other distributions declared but not received as of
the date of the supplemental deposit, reduced by the amount of
any cash or other property received or receivable on any Security
allocable (in accordance with the Trustee's calculation of the
monthly distribution from the Income Account pursuant to
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<PAGE>
Section 3.5) to a distribution made or to be made in respect of Record Date
occurring prior to the supplemental deposit. The Depositor may make deposits
of Additional Securities and Cash subsequent to the 90-day period following
the Date of Deposit provided, however, that any deposits of Additional
Securities and Cash subsequent to the 90-day period following the Date of
Deposit must replicate exactly the Securities and Cash held in the Trust at
the end of the initial 90-day period. Each deposit of Additional Securities
shall be listed in a Supplementary Schedule to an Addendum to the Reference
Trust Agreement stating the date of such deposit and the number of Additional
Units being issued therefor. The Trustee shall acknowledge in such Addendum
receipt of the deposit, and simultaneously with the receipt of said deposit,
reflect the aggregate number of Additional Units specified in such Addendum by
recording such Units on its books. Such Additional Securities shall be held,
administered and applied by the Trustee in the same manner as herein provided
for the Securities. The execution by the Depositor in connection with the
deposit of Additional Securities of an Addendum to the Reference Trust
Agreement shall constitute the approval by the Depositor as satisfactory in
form and substance of the contracts to be entered into or assumed on such
Addendum and authorization to the Trustee on behalf of the Trust to enter into
or assume such contracts and otherwise to carry out the terms and provisions
thereof or to take other appropriate action in order to complete the deposit
of the Additional Securities covered thereby into the Trust.
ARTICLE III
ADMINISTRATION OF TRUST
Section 3.1. Cost: The cost of the initial preparation,
printing and execution of the Certificates and this Indenture, Registration
Statement and other documents relating to the Trust, Federal and State
registration fees and costs, the initial fees and expenses of the Trustee and
Evaluator, legal and auditing expenses and other out-of-pocket expenses
(excluding expenses incurred in the preparation and printing of preliminary
prospectuses and prospectuses, expenses incurred in the preparation and
printing of brochures and other advertising materials and any other selling
expenses), to the extent not borne by the Depositor, shall be paid by the
Trust; provided, however, the Trust shall not bear such expenses in excess of
the amount shown in the Statement of Condition included in the Prospectus, and
any such excess shall be borne by the Depositor. To the extent the funds in
the Interest and Principal Accounts of the Trust shall be insufficient to pay
the expenses borne by the Trust specified in this Section 3.1, the Trustee
shall advance out of its own funds and cause to be deposited and credited to
the Interest Account such amount as may be required to permit
-8-
97085.4
<PAGE>
payment of such expenses. The Trustee shall be reimbursed for such advance in
the manner provided in Section 3.5, and the provisions of Section 6.4 with
respect to the reimbursement of disbursements for Trust expenses, including,
without limitation, the lien in favor of the Trustee therefor, shall apply to
the payment of expenses made pursuant to this Section. For purposes of
calculation of distributions under Section 3.5 and the addition provided in
clause (4) of Section 5.1, the expenses borne by the Trust pursuant to this
Section shall be deemed to accrue at a daily rate over the time period
specified for their amortization provided in the Prospectus; provided,
however, that nothing herein shall be deemed to prevent, and the Trustee shall
be entitled to, full reimbursement for any advances made pursuant to this
Section no later than the termination of the Trust.
Section 3.2. Interest Account: The Trustee shall collect the
interest on the Securities as it becomes payable (including all interest
accrued but unpaid prior to the date of deposit of the Securities in trust and
including that part of the proceeds of the sale, liquidation, redemption or
maturity of any Securities which represents accrued interest thereon and
including all moneys representing penalties for the failure to make timely
payments on the Securities, or as liquidated damages for default or breach of
any condition or term of the Securities or of any instrument underlying such
Securities) and credit such interest to a separate account to be known as the
"Interest Account".
Section 3.3. Principal Account: (a) The Securities and all
moneys (except moneys held by the Trustee pursuant to subsection (b) hereof),
other than amounts credited to the Interest Account, received by the Trustee
in respect of the Securities shall be credited to a separate account to be
known as the "Principal Account".
(b) Moneys and/or irrevocable letters of credit re- quired
to purchase Contract Securities or deposited to secure such purchases are
hereby declared to be held specially by the Trustee for such purchases and
shall not be deemed to be part of the Principal Account until (i) the
Depositor fails to purchase timely a Contract Security and has not given the
Failed Contract Notice (as defined in Section 3.14) at which time the moneys
and/or letters of credit attributable to the Contract Security not purchased
by the Depositor shall be credited to the Principal Account; or (ii) the
Depositor has given the Trustee the Failed Contract Notice at which time the
moneys and/or letters of credit attributable to failed contracts referred to
in such Notice shall be credited to the Principal Account; provided, however,
that if the Depositor also notifies the Trustee in the Failed Contract Notice
that they have purchased or entered into a contract to purchase a New Security
(as defined in Section 3.14), the Trustee shall not credit such moneys and/or
letters of credit to the
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<PAGE>
Principal Account unless the New Security shall also have failed or is not
delivered by the Depositor within two business days after the settlement date
of such New Security, in which event the Trustee shall forthwith credit such
moneys and/or letters of credit to the Principal Account. The Trustee shall in
any case forthwith credit to the Principal Account, and/or cause the Depositor
to deposit in the Principal Account, the difference, if any, between the
purchase price of the failed Contract Security and the purchase price of the
New Security, together with any sales charge and accrued interest applicable
to such difference and distribute such moneys to Unit Holders pursuant to Sec-
tion 3.5.
Section 3.4. Reserve Account: From time to time the Trustee
shall withdraw from the cash on deposit in the Interest Account or the
Principal Account such amounts as it, in its sole discretion, shall deem
requisite to establish a reserve for any applicable taxes or other
governmental charges that may be payable out of or by the Trust. Such amounts
so withdrawn shall be credited to a separate account which shall be known as
the "Reserve Account". The Trustee shall not be required to distribute to the
Unit Holders any of the amounts in the Reserve Account; provided, however,
that if it shall, in its sole discretion, determine that such amounts are no
longer necessary for payment of any applicable taxes or other governmental
charges, then it shall promptly deposit such amounts in the appropriate
account from which withdrawn or, if the Trust has been terminated or is in the
process of termination, the Trustee shall distribute to each Unit Holder such
holder's interest in the Reserve Account in accordance with Section 9.2.
Section 3.5. Distributions: On the First Settlement Date,
the Trustee shall advance out of its own funds and cause to be deposited in
and credited to the Interest Account an amount equal to all interest accrued
on the Securities but unpaid as of the First Settlement Date. Immediately
after such advance, the Trustee shall distribute out of the Interest Account
to the Depositor, as Unit Holder of record on the First Settlement Date, an
amount equal to the amount then credited to the Interest Account. The Trustee
shall be entitled to be reimbursed, without interest, out of the cash balance
in the Interest Account from time to time, for amounts advanced pursuant to
this Section 3.5 before it is required to make any additional distributions to
Unit Holders. Repayment of any advance made by the Trustee to the Interest
Account pursuant to this Section 3.5 shall be secured by a lien upon the Trust
prior to the interests of the Unit Holders. In the event the advance by the
Trustee is not reimbursed prior to the first distribution referred to in Part
II(e) of the Reference Trust Agreement, the Trustee shall have the power to
sell Securities in the manner provided in Section 5.2 hereof. The Trustee
shall not be liable or responsible in any way for depreciation or loss
incurred by reason of any
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97085.4
<PAGE>
sale of Securities made pursuant to this Section 3.5. The Trustee shall
promptly notify the Depositor of such action in writing and shall set forth in
such notice the Securities sold and the proceeds received therefrom.
As of each Record Date, the Trustee shall:
(a) Deduct from the Interest Account or, to the extent funds
are not available in such Account, from the Principal Account, and pay to
itself individually the amounts that it is at the time entitled to receive
pursuant to Section 6.4 or pursuant to this Section 3.5.
(b) Deduct from the Interest Account, or, to the extent
funds are not available in such Account, from the Princi- pal Account, and pay
an amount equal to the unpaid fees and ex- penses, if any, of counsel pursuant
to Section 3.9 as certified to it by the Depositor.
(c) Deduct from the Interest Account, or to the extent funds
are not available in such Account, from the Principal Account, one-twelfth of
the estimated annual amount that the Depositor or its affiliate is entitled to
receive pursuant to Section 7.4 and hold such amount without interest until
such time as it is payable to the Depositor or its affiliate as set forth
below; provided that the Trustee shall deduct from the Interest Account when
making the first monthly distribution, or to the extent funds are not
available in such Account, from the Principal Account an amount equal to a
fraction of the estimated annual amount that the Depositor is entitled to
receive pursuant to Section 7.4 in which the numerator is the number of months
or fraction thereof that Units in the Trust have been owned by a Unit Holder
other than the Depositor and the denominator is twelve.
On or before the first Payment Date after the con- clusion
of each calendar year, the Trustee shall, upon certi- fication in satisfactory
form to the Trustee, upon which the Trustee may rely, distribute to the
Depositor from the amount so held pursuant to the immediately preceding
paragraph the amounts that the Depositor is at the time entitled to receive
pursuant to Section 7.4 on account of their services theretofore performed and
expenses theretofore incurred.
For those Trusts making monthly interest payments, on each
Payment Date or within a reasonable period of time thereafter, the Trustee
shall distribute by mail to each Unit Holder of record at the close of
business on the preceding Record Date, at the post office address appearing on
the registration books of the Trustee, such holder's pro rata share of the
balance in the Interest Account computed as of the Record Date on the basis of
one-twelfth of the estimated interest income to the
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<PAGE>
Trust for the ensuing twelve months, after deduction of the estimated costs
and expenses to be incurred during such period except that the first
distribution will be in the amount specified in the prospectus for any trust
created under this Indenture; provided, however, that with respect to the
Asset Builder Series, the Trustee shall retain in the Interest Account a
sufficient balance to provide for payment of all the expenses of the Asset
Builder Series until its termination based upon the Trustee's estimation of
such Series' estimated cash flow until its date of termination.
For those Trusts making quarterly interest payments, on each
Payment Date or within a reasonable period of time thereafter, the Trustee
shall distribute by mail to each Unit Holder of record at the close of
business on the preceding Record Date, at the post office address appearing on
the registration books of the Trustee, such holder's pro rata share of the
balance in the Interest Account computed as of the Record Date on the basis of
one-fourth of the estimated interest income to the Trust for the ensuing
twelve months, after deduction of the estimated costs and expenses to be
incurred during such period except that the first distribution will be in the
amount specified in the prospectus for any trust created under this Indenture;
provided, however, that with respect to the Asset Builder Series, the Trustee
shall retain in the Interest Account a sufficient balance to provide for
payment of all the expenses of the Asset Builder Series until its termination
based upon the Trustee's estimation of such Series' estimated cash flow until
its date of termination.
In the event the amount on deposit in the Interest Account
for a monthly or quarterly distribution is not sufficient for the payment of
the amount of interest to be distributed to Unit Holders participating in such
distribution on the basis of the aforesaid computation, the Trustee shall
advance out of its own funds and cause to be deposited in and credited to the
Interest Account such amounts as may be required to permit payment of the
monthly or quarterly interest distribution to be made as aforesaid and shall
be entitled to be reimbursed, without interest, out of interest received by
the Trust subsequent to the date of such advance and subject to the condition
that the funds in or available for the Interest Account will not be reduced in
an amount less than required for the next ensuing distribution of interest,
except where advances were made by the Trustee on Securities that have
defaulted, in which case the Trustee may reimburse itself for such advances
and reduce, if necessary, the next ensuing monthly or quarterly interest
distribution, as the case may be.
On each Payment Date or within a reasonable period of time
thereafter, the Trustee shall distribute by mail to each Unit Holder of record
at the close of business on the preceding
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Record Date, at the post office address appearing on the registration books of
the Trustee, such holder's pro rata share of the cash balance of the Principal
Account computed as of the Record Date. The Trustee shall not be required to
make a distribution from the Principal Account unless the cash balance on
deposit therein available for distribution shall be sufficient to permit
distribution of at least $1.00 per 1,000 Units.
If the Depositor (i) fails to replace any failed Special
Security or (ii) is unable or fails to enter into any contract for the
purchase of any New Security in accordance with Section 3.14, the Trustee
shall distribute to all Unit Holders the principal, accrued interest and sales
charge attributable to such Special Securities at the next Monthly Payment
Date which is more than thirty days after the expiration of the Purchase
Period (as defined in Section 3.14) or at such earlier time or in such manner
as the Trustee in its sole discretion deems to be in the best interest of the
Unit Holders.
If any contract for a New Security in replacement of a
Special Security shall fail, the Trustee shall distribute the principal,
accrued interest and sales charge attributable to the Special Security to the
Unit Holders at the next Monthly Payment Date which is more than thirty days
after the date on which the contract in respect of such New Security failed or
at such earlier time or in such earlier manner as the Trustee in its sole
discretion determines to be in the best interest of the Unit Holders.
If, at the end of the Purchase Period, less than all moneys
attributable to a failed Special Security have been applied or allocated by
the Trustee pursuant to a contract to purchase New Securities, the Trustee
shall distribute the remaining moneys to Unit Holders at the next Payment Date
which is more than thirty days after the end of the Purchase Period or at such
earlier time thereafter as the Trustee in its sole discretion deems to be in
the best interest of the Unit Holders.
The amounts to be distributed to each Unit Holder shall be
that pro rata share of the cash balance of the Interest and Principal
Accounts, computed as set forth above, as shall be represented by the Units
issued in book-entry form.
In the computation of each such share, fractions of less
than one cent shall be omitted. After any such distribution provided for
above, any cash balance remaining in the Interest Account or the Principal
Account shall be held in the same manner as other amounts subsequently
deposited in each such accounts, respectively.
For the purpose of distribution, as herein provided,
the holders of record on the registration books of the Trustee at
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the close of business on each Record Date shall be conclusively entitled to
such distribution, and no liability shall attach to the Trustee by reason of
payment to any such registered Unit Holder of record. Nothing herein shall be
construed to prevent the payment of amounts from the Interest Account and the
Principal Account to individual Unit Holders by means of one check, draft or
other proper instrument, provided that the appropriate statement of such
distribution shall be furnished therewith as provided in Section 3.6 hereof.
Section 3.6. Distribution Statements: With each distribution
from the Interest or Principal Accounts the Trustee shall set forth, either in
the instrument by means of which payment of such distribution is made or in an
accompanying statement the amount being distributed from each such account
expressed as a dollar amount per Unit.
In the event that the issuer of any of the Securities shall
fail to make payment when due of any interest or principal and such failure
results in a change in the amount which would otherwise be paid as a
distribution of interest the Trustee shall, with the first such distribution
to each Unit Holder following such failure, set forth in an accompanying
statement (a) the name of the issuer and the Security, (b) the amount of the
reduction in the distribution per Unit resulting from such failure, (c) the
percentage of the aggregate principal amount of Securities which such Security
represents, and (d) to the extent then determined, information regarding any
disposition or legal action with respect to such Securities.
Within a reasonable period of time after the last business
day of each calendar year, the Trustee shall furnish to each person who at any
time during such calendar year was a Unit Holder a statement setting forth,
with respect to such calendar year:
(A) as to the Interest Account:
(1) the amount of interest received on the
Securities,
(2) the amounts paid for purchases of New
Securities pursuant to Section 3.14, and for redemptions of
Units pursuant to Section 5.2,
(3) the deductions for applicable taxes and fees
and expenses of the Trustee, the Evaluator and counsel pursuant to
Section 3.9, the annual audit fees referred to in Section 6.2 and the
annual fee of the Depositor for portfolio supervisory services
pursuant to Section 7.4, and
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(4) the balance remaining after such distribu-
tions and deductions, expressed both as a total dollar amount and as
a dollar amount per Unit outstanding on the last business day of such
calendar year;
(B) as to the Principal Account:
(1) the date and the net proceeds received from the
sale, maturity, liquidation or redemption of any of the Securities,
excluding any portion thereof credited to the Interest Account,
(2) the amounts paid for purchases of New
Securities pursuant to Section 3.14, and for redemptions of
Units pursuant to Section 5.2,
(3) the deductions for payment of applicable taxes
and fees and expenses of the Trustee, the Evaluator and counsel
pursuant to Section 3.9, the annual audit fees referred to in Section
6.2 and the annual fee of the Depositor for portfolio supervisory
services pursuant to Section 7.4, and
(4) the balance remaining after such distribu-
tions and deductions, expressed both as a total dollar amount and as
a dollar amount per Unit outstanding on the last business day of such
calendar year; and
(C) the following information:
(1) a list of Securities disposed of or acquired
during such calendar year and a list of Securities as of the last
business day of such calendar year,
(2) the number of Units outstanding on the last
business day of such calendar year,
(3) the Net Asset Value per Unit based on the last
Trust Evaluation made during such calendar year, and
(4) the amounts actually distributed to Unit
Holders during such calendar year from the Interest and Principal
Accounts, separately stated, expressed both as total dollar amounts
and as dollar amounts per Unit outstanding on the Record Dates for
such distributions.
Section 3.7. Sale of Securities: In order to maintain the
sound investment character of the Trust, the Depositor may direct the Trustee
to sell or liquidate Securities at such prices and times and in such manner as
shall be determined by the Depositor, provided that the Depositor has
determined that any one or more of the following conditions exist:
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(a) that there has been a default on such Securities
in the payment of principal or interest when due and payable;
(b) that any action or proceeding has been instituted at law
or in equity seeking to restrain or enjoin the payment of principal or
interest on any such Security or that there exists any other legal question or
impediment affecting such Securities or the payment of principal or interest
thereon;
(c) that there has occurred any breach of covenant or
warranty in any trust indenture or other document relating to the issuer or
guarantor of the Securities which would adversely affect either immediately or
contingently the payment of debt service on such Securities, or their general
credit standing, or otherwise impair the sound investment character of such
Securities;
(d) that there has been a default in the payment of
principal of or interest on any other outstanding obligations of an issuer or
guarantor of such Securities; or
(e) determination of the Depositor that the tax
treatment of the Trust as a "grantor trust" would be
jeopardized.
(f) that the price of any such Securities has declined to
such an extent, or such other market or credit factor exists, that in the
opinion of the Depositor the retention of such Securities would be detrimental
to the interests of the Unit Holders.
Upon receipt of such direction from the Depositor, upon
which the Trustee shall rely, the Trustee shall proceed to sell the specified
Securities in accordance with such direction. The Trustee shall not be liable
or responsible in any way for depre- ciation or loss incurred by reason of any
sale made pursuant to any such direction, or by reason of the failure of the
Depositor to give any such direction, and in the absence of such direction the
Trustee shall have no duty to sell any Securities under this Section 3.7
except to the extent otherwise required by Section 3.10 of this Indenture.
All proceeds from the disposition of Securities pursuant to this Section 3.7
which represent accrued interest thereon shall be deposited in the Interest
Account and the balance thereof in the Principal Account and shall thereafter
be distributed in accordance with Section 3.5.
Section 3.8. Securities: In the event that an offer shall be
made to issue new securities in exchange or substitution for any issue of
Securities pursuant to a plan for the refunding or refinancing of such
Securities, or an exchange offer therefor; or tenders of Securities for
sinking fund or other cash redemptions shall be solicited, the Depositor shall
instruct the
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Trustee in writing to reject such offer and either to hold or sell such
Securities, except that if (1) the issuer is in default with respect to such
Securities or (2) in the opinion of the Depositor, given in writing to the
Trustee, the issuer will probably default with respect to such Securities in
the reasonably foreseeable future, the Depositor shall instruct the Trustee in
writing to accept or reject such offer to take any other action with respect
thereto as the Depositor may deem proper. Any security so received in exchange
shall be deposited hereunder and shall be subject to the terms and conditions
of this Indenture to the same extent as the Securities originally deposited
hereunder. Within five days after such deposit, notice of such exchange and
deposit shall be given by the Trustee to each Unit Holder, including an
identification of the Securities eliminated and the Securities substituted
therefor.
Section 3.9. Counsel: The Depositor from time to time as it
may deem necessary employ a firm of attorneys for any legal services that may
be required in connection with the disposition of Securities pursuant to
Section 3.7 or the substitution of any securities for Securities as the result
of any refunding permitted under Section 3.8. The fees and expenses of such
counsel shall be paid by the Trustee from the Interest and Principal Accounts
as provided for in Section 3.5(c) hereof.
Section 3.10. Notice and Sale by Trustee: If at any time the
principal of or interest on any of the Securities shall be in default and not
paid or provision for payment thereof shall not have been duly made, the
Trustee shall notify the Depositor thereof. If within thirty days after such
notification the Depositor has not given any instruction in writing to sell or
to hold or has not taken any other action in connection with such Securities,
the Trustee shall sell such Securities forthwith, and the Trustee shall not be
liable or responsible in any way for depreciation or loss incurred by reason
of such sale.
Section 3.11. Trustee Not to Amortize: Nothing in this
Indenture, or otherwise, shall be construed to require the Trustee to make any
adjustments between the Interest and Principal Accounts by reason of any
premium or discount in respect of any of the Securities.
Section 3.12. Action by Trustee Regarding Securities: In the
event that the Trustee shall have been notified at any time of any action to
be taken or proposed to be taken by holders of the Securities (including but
not limited to the making of any demand, direction, request, giving of any
notice, consent or waiver or the voting with respect to any amendment or
supplement to any indenture or other instrument under or pursuant to which the
Securities have been issued) the Trustee shall promptly notify the Depositor
and shall thereupon take such action or refrain from taking such action as the
Depositor shall in writing
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direct; provided, however, that if the Depositor shall not within five
business days of the giving of such notice to the Depositor direct the Trustee
to take or refrain from taking any action, the Trustee shall take such action
as it, in its sole discretion, shall deem advisable. Neither the Depositor nor
the Trustee shall be liable to any person for any action or failure to take
action with respect to this Section 3.12.
Section 3.13. Notice of Change in Principal Account: The
Trustee shall give prompt written notice to the Depositor and the Evaluator of
all amounts credited to or withdrawn from the Principal Account pursuant to
any provisions of this Article III, and the balance of such account after
giving effect to such credit of withdrawal.
Section 3.14. Limited Replacement of Special Securities: If
any contract in respect of Contract Securities other than a contract to
purchase a New Security (as defined below), including those purchased on a
when, as and if issued basis, shall have failed due to any occurrence, act or
event beyond the control of the Depositor or the Trustee (such failed Contract
Securities being herein called the "Special Securities"), the Depositor shall
notify the Trustee, (such notice being herein called the "Failed Contract
Notice") of its inability to deliver the failed Special Security to the
Trustee after it is notified in writing that the Special Security will not be
delivered by the seller thereof to the Depositor. Prior to, or simultaneously
with, giving the Trustee the Failed Contract Notice, or within a maximum of
twenty days after giving such Notice (such twenty day period being herein
called the "Purchase Period"), the Depositor shall, if possible, purchase or
enter into the contract, if any, to purchase an obligation to be held as a
Security hereunder (herein called the "New Security") as part of the Trust in
replacement of the failed Special Security, subject to the satisfaction of all
of the following conditions in the case of each purchase or contract to
purchase:
(a) The New Securities (i) shall be United States Treasury
obligations backed by the full faith and credit of the United States
government, (ii) shall have a fixed maturity date (whether or not
entitled to the benefits of any sinking, redemption, purchase or
similar fund) not exceeding the date of maturity of the Special
Security it replaces, (iii) if the Security is an interest bearing
security, shall bear fixed interest at a rate not less than that of
the Special Security which it replaces, and shall be purchased at a
price that results in a yield to maturity at least equal to that of
the Special Security it replaces on the date the Special Security was
deposited in the Trust, (iv) shall be payable as to principal and
interest in United States currency, and (v) shall not be a when, as
and if issued Security.
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(b) Each New Security shall not cause Units of the Trust to
cease to be rated AAA by Standard & Poor's Corporation.
(c) The purchase price of the New Securities (exclusive of
accrued interest) shall not exceed the principal attributable to the
Special Securities.
(d) The Depositor shall furnish a notice to the Trustee
(which may be part of the Failed Contract Notice) in respect of the
New Security purchased or to be purchased that shall (i) identify the
New Securities, (ii) state that the contract to purchase, if any,
entered into by the Depositor is satisfactory in form and substance,
and (iii) state that the foregoing conditions of clauses (a) through
(c) have been satisfied with respect to the New Securities.
Upon satisfaction of the foregoing conditions with respect
to any New Security, the Depositor shall pay the purchase price for the New
Security from their own resources or, if the Trustee has credited any moneys
and/or letters of credit attributable to the failed Special Security to the
Principal Account, the Trustee shall pay the purchase price of the New
Security upon directions from the Depositor from the moneys and/or letters of
credit so credited to the Principal Account. If the Depositor has paid the
purchase price, and, in addition, the Trustee has credited moneys of the
Depositor to the Principal Account, the Trustee shall forthwith return to the
Depositor the portion of such moneys that is not properly distributable to
Unit Holders pursuant to Section 3.5.
Whenever a New Security is acquired by the Depositor
pursuant to the provisions of this Section 3.14, the Trustee shall, within
five days thereafter, mail to all Unit Holders notices of such acquisition,
including an identification of the failed Special Securities and the New
Securities acquired. The purchase price of the New Securities shall be paid
out of the principal attributable to the failed Special Securities. The
Trustee shall not be liable or responsible in any way for depreciation or loss
incurred by reason of any purchase made pursuant to any such directions and in
the absence of such directions the Trustee shall have no duty to purchase any
Securities under this Indenture. The Depositor shall not be liable for any
failure to instruct the Trustee to purchase any New Securities or for errors
of judgment in respect of this Section 3.14; provided, however, that this
provision shall not protect the Depositor against any liability to which it
would otherwise be subject by reason of willful misfeasance, bad faith or
gross negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties hereunder.
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ARTICLE IV
EVALUATION OF SECURITIES; EVALUATOR
Section 4.1. Evaluation of Securities: The Evaluator shall
determine separately and promptly furnish to the Trustee and the Depositor
upon request the value of each issue of Securities (treating separate
maturities of Securities as separate issues) as of the close of trading on the
New York Stock Exchange on the bid side of the market on the days on which the
Trust Evaluation is required by Section 5.1, and, in addition, as of the close
of trading on the New York Stock Exchange on the offering side of the market
until such time as the Evaluator and Trustee have been informed by the
Depositor that the initial public offering has been completed and thereafter
if the secondary market for the Units is maintained based on offering side
values, such additional evaluation being made as of the last business day of
each calendar week effective for transactions during the following week
commencing with the week after the initial public offering has been completed.
If the Securities are listed on a national securities exchange, the current
bid or offering side evaluation shall be determined on the basis of the
closing sale price on such exchange (unless the Evaluator deems such price
inappropriate as a basis for valuation). If the Securities are not so listed
or, if so listed and the principal market therefor is other than on such
exchange or there is no such closing sale price available, the current bid or
offering price evaluation shall be based on the closing sale prices of such
Securities on the over-the-counter market (unless the Evaluator deems such
prices inappropriate as a basis for valuation), or, if no such closing sale
prices are available (i) on the basis of current bid or offering prices for
the Securities, (ii) if bid or offering prices are not available for any
Securities, on the basis of current bid or offering prices for comparable
obligations, (iii) by determining the value of the Securities on the bid or
offering side of the market by appraisal or (iv) by any combination of the
above.
For each evaluation, the Evaluator shall also determine and
furnish to the Trustee and the Depositor the aggregate of (a) the value of all
Securities on the basis of such evaluation and (b) on the basis of the
information furnished to the Evaluator by the Trustee pursuant to Section
3.13, cash on hand in the Trust.
For the purpose of this Section 4.1, the Evaluator may
obtain current bid or offering prices for the obligations from investment
dealers or brokers (including the Depositor) that customarily deal in U.S.
Treasury obligations or from any other reporting service or source of
information which the Evaluator deems appropriate.
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Section 4.2. Liability of Evaluator: The Trustee, the
Depositor and the Unit Holders may rely on any evaluation furnished by the
Evaluator and shall have no responsibility for the accuracy thereof. The
determinations made by the Evaluator hereunder shall be made in good faith
upon the basis of the best information available to it. The Evaluator shall be
under no liability to the Trustee, the Depositor or the Unit Holders for
errors in judgment, provided, however, that this provision shall not protect
the Evaluator against any liability to which it would otherwise be subject by
reason of willful misfeasance, bad faith or negligence in the performance of
its duties or by reason of its reckless disregard of its obligations and
duties hereunder. The Evaluator will not receive a fee for its services. The
Evaluator shall not be liable or responsible for depreciation or losses
incurred by reason of the purchase, sale or retention of any Securities.
Section 4.3. Resignation, Removal and Other Matters: (a) The
Evaluator may resign and be discharged hereunder, by executing an instrument
in writing resigning as the Evaluator and filing the same with the Depositor
and the Trustee not less than sixty days before the date specified in such
instrument when, subject to Section 4.4(c), such resignation is to take
effect. Upon receiving such notice of resignation, the Depositor and the
Trustee shall use their best efforts to appoint a successor Evaluator having
qualifications and at a rate of compensation satisfactory to the Depositor and
the Trustee. Such appointment shall be made by written instrument executed by
the Depositor and the Trustee, in duplicate, one copy of which shall be
delivered to the resigning Evaluator and one copy to the successor Evaluator.
The Depositor or the Trustee may remove the Evaluator at any time upon thirty
days' written notice and appoint a successor Evaluator having qualifications
and at a rate of compensation satisfactory to the Depositor and the Trustee.
Such appointment shall be made by written instrument executed by the Depositor
and the Trustee, in duplicate, one copy of which shall be delivered to the
Evaluator so removed and one copy to the successor Evaluator. Notice of such
resignation or removal and appointment of a successor Evaluator shall be
mailed by the Trustee to each Unit Holder.
(b) If the Evaluator resigns and no successor Evaluator
shall have been appointed and have accepted appointment within thirty days
after receipt of the notice of resignation by the Depositor and the Trustee,
the Evaluator may forthwith apply to a court of competent jurisdiction for the
appointment of a successor Evaluator. Such court may thereupon, after such
notice, if any, as it may deem proper, appoint a successor Evaluator.
(c) Any successor Evaluator appointed hereunder shall
execute, acknowledge and deliver to the Depositor and the Trustee
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an instrument accepting such appointment hereunder, and such successor
Evaluator without any further act, deed or conveyance shall become vested with
all the rights, powers, duties and obligations of its predecessor hereunder
with like effect as if originally named the Evaluator herein and shall be
bound by all the terms and conditions of this Indenture. Any resignation or
removal of the Evaluator and appointment of a successor Evaluator pursuant to
this Section 4.4 shall become effective upon such acceptance of appointment.
(d) Any corporation into which the Evaluator hereunder may
be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Evaluator hereunder shall be a
party, shall be the successor Evaluator under this Indenture without the
execution or filing of any paper, instrument or further act to be done on the
part of the parties hereto, anything herein, or in any agreement relating to
such merger or consolidation, by which the Evaluator may seek to retain
certain powers, rights and privileges theretofore obtaining for any period of
time following such merger or consolidation, to the contrary notwithstanding.
ARTICLE V
TRUST EVALUATION; REDEMPTION
OR PURCHASE OF UNITS
Section 5.1. Trust Evaluation: The Evaluator shall make an
evaluation of the Trust (herein called a "Trust Evaluation") as of the closing
of trading on the New York Stock Exchange (i) on the last business day of each
of the months of December and June, (ii) on the day on which any Unit is
tendered for redemption to the Depositor for repurchase unless such tender
shall occur subsequent to the close of trading on the New York Stock Exchange,
in which event on the business day next following such day, and on each
business day after the initial public offering has been completed, and (iii)
on any other day desired by the Trustee or requested by the Depositor. Each
Trust Evaluation shall take into account and itemize separately:
(1) the cash on hand in the Trust (other than cash declared
held specially for purchase of Contract Securities) or moneys in the
process of being collected from matured interest coupons or
Securities matured or called for redemption prior to maturity,
(2) the value of each issue of the Securities (including
Contract Securities) on the bid side of the market as determined by
the Evaluator pursuant to Section 4.1,
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(3) accrued but unpaid interest on the Securities, and
(4) amounts representing organizational expenses paid less
amounts representing secured organizational expenses of a Trust.
For each such Trust Evaluation there shall be deducted from the sum of the
above:
(1) amounts representing any applicable taxes or
governmental charges payable out of the Trust and for which no
deductions shall have previously been made for the purpose of
addition to the Reserve Account,
(2) amounts representing accrued expenses of the Trust
including but not limited to unpaid fees and expenses (including
legal and auditing expenses) of the Trustee, the Evaluator and
counsel pursuant to Section 3.9 on or prior to the date of
evaluation, and
(3) cash held for distribution to Unit Holders of record as
of a date prior to the evaluation then being made.
The value of the pro rata share of each Unit determined on the basis of any
such Trust Evaluation is referred to herein as the "Net Asset Value" per Unit.
Section 5.2. Redemptions by Trustee; Purchases by Depositor:
Any Unit tendered for redemption by a Unit Holder or his duly authorized
attorney to the Trustee at its corporate trust office shall be redeemed by the
Trustee on the seventh calendar day following the day on which tender for
redemption is made, provided that if such day of redemption is not a business
day, then such Unit shall be redeemed on the first business day prior thereto
(such seventh calendar day or first business day prior thereto being herein
called the "Redemption Date"). Subject to payment by such Unit Holder of any
tax or other governmental charges which may be imposed thereon, such
redemption is to be made by payment on the Redemption Date of cash equivalent
to the Net Asset Value per Unit determined by the Trustee as of the closing of
trading on the New York Stock Exchange, on the date of tender, multiplied by
the number of Units being tendered for redemption (herein called the
"Redemption Price"). Unit received for redemption by the Trustee on any day
after the close of trading on the New York Stock Exchange will be held by the
Trustee until the next day on which the New York Stock Exchange is open for
trading and will be deemed to have been tendered on such day for redemption at
the Redemption Price computed on that day.
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The Trustee may in its discretion, and shall when so
directed by the Depositor in writing, suspend the right of redemption or
postpone the date of payment of the Redemption Price for more than seven
calendar days following the day on which tender for redemption is made:
(1) for any period during which the New York Stock Exchange
is closed other than customary weekend and holiday closings or during
which trading on the New York Stock Exchange is suspended;
(2) for any period during which an emergency exists as a
result of which disposal by the Trust of the Securities is not
reasonably practicable or it is not reasonably practicable fairly to
determine in accordance herewith the value of the Securities; or
(3) for such other periods as the Securities and
Exchange Commission may by order permit,
and the Trustee shall not be liable to any person or in any way for any loss
or damage which may result from any such suspension or postponement.
Not later than the close of business on the day of tender of
a Unit for redemption by a Unit Holder other than the Depositor, the Trustee
shall notify the Depositor of such tender. The Depositor shall have the right
to purchase such Unit by notifying the Trustee of its election to make such
purchase as soon as practicable thereafter, but in no event subsequent to the
close of business on the second business day after the day on which such Unit
was tendered for redemption. Such purchase shall be made by payment for such
Unit by the Depositor to the Unit Holder not later than the close of
business on the Redemption Date of an amount equal to the Redemption Price
which would otherwise be payable by the Trustee to such Unit Holder.
Any Unit so purchased by the Depositor may, at the option of
the Depositor, be tendered to the Trustee for redemption at the corporate
trust office of the Trustee in the manner provided in the first paragraph of
this Section 5.2.
If the Depositor does not elect to purchase any Unit
tendered to the Trustee for redemption, or if a Unit is being tendered by the
Depositor for redemption, that portion of the Redemption Price which
represents interest shall be withdrawn from the Interest Account to the extent
funds are available. The balance paid on any redemption, including accrued
interest, if any, shall be withdrawn from the Principal Account to the extent
that funds are available for such purpose. If such available balance shall be
insufficient, the Trustee shall sell such Securities from among those
designated on the current list for
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such purpose as provided below and in the manner, in its discretion, as it
shall deem advisable or necessary in order to fund the Principal Account for
purposes of such redemption. Sales of Securities by the Trustee shall be made
in such manner as the Trustee shall determine, subject to any minimum face
amount limitations on sale which shall have been specified by the Depositor
and agreed to by the Trustee. In the event that funds are withdrawn from the
Principal Account or Securities are sold for payment of any portion of the
Redemption Price representing accrued interest, the Principal Account shall be
reimbursed when sufficient funds are next available in the Interest Account
for such funds so applied.
The Depositor shall maintain with the Trustee a current list
of Securities designated to be sold, and/or the proportionate amount of the
Securities designated to be sold, for the purpose of redemption of Units
tendered for redemption and not purchased by the Depositor, and for payment of
expenses hereunder, provided that if the Depositor shall for any reason fail
to maintain such a list, the Trustee, in its sole discretion, may designate a
current list of Securities for such purposes. The net proceeds of any sales of
Securities from such list representing principal shall be credited to the
Principal Account and the proceeds of such sales representing accrued interest
shall be credited to the Interest Account.
Neither the Trustee nor the Depositor shall be liable or
responsible in any way for depreciation or loss incurred by reason of any sale
of Securities made pursuant to this Section 5.2.
Units redeemed pursuant to this Section 5.2 shall be
cancelled by the Trustee and the Units shall be terminated by such
redemptions.
Notwithstanding the foregoing provisions of this Sec-
tion 5.2, the Trustee is hereby irrevocably authorized in its discretion, in
the event that the Depositor does not elect to purchase any Unit tendered to
the Trustee for redemption, or in the event that a Unit is being tendered by
the Depositor for redemption, in lieu of redeeming Units tendered for
redemption, to sell such Units in the over-the-counter market or by private
sale for the account of tendering Unit Holders at prices which will return to
the Unit Holders amounts in cash, net after deducting brokerage commissions,
transfer taxes and other charges, equal to or in excess of the Redemption
Prices which such Unit Holders would otherwise be entitled to receive on
redemption pursuant to this Section 5.2. The Trustee shall pay to the Unit
Holders the net proceeds of any such sale on the day they would otherwise be
entitled to receive payment of the Redemption Price hereunder.
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ARTICLE VI
TRUSTEE; REMOVAL OF DEPOSITOR
Section 6.1. General Definition of Trustee's
Liabilities, Rights and Duties; Removal of Depositor: In
addition to and notwithstanding the other duties, rights,
privileges and liabilities of the Trustee otherwise set forth
herein, the liabilities of the Trustee are further defined as
follows:
(a) all moneys deposited with or received by the Trustee
hereunder shall be held by the Trustee without interest in trust as
part of the Trust or the Reserve Account until required to be
disbursed in accordance with the provisions of this Indenture and
such moneys will be segregated by separate recordation on the trust
ledgers of the Trustee so long as such practice preserves a valid
preference under applicable law, or if such preference is not so
preserved the Trustee shall handle such moneys in such other manner
as shall constitute the segregation and holding thereof in trust
within the meaning of the Investment Company Act of 1940;
(b) the Trustee shall be under no liability for any action
taken in good faith and with reasonable care on any appraisal, paper,
order, list, demand, request, consent, affidavit, notice, opinion,
direction, evaluation, endorsement, assignment, resolution, draft or
other document, whether or not of the same kind prima facie properly
executed, or for the disposition of moneys, Securities or
Certificates pursuant to this Indenture, or in respect of any
evaluation which the Trustee is required to make or is required or
permitted to have made by others under this Indenture or otherwise
except by reason of its negligence, lack of good faith and reasonable
care or willful misconduct, provided that the Trustee shall not in
any event be liable or responsible for any evaluation made by the
Evaluator. The Trustee may construe any of the provisions of this
Indenture, insofar as the same may appear to be ambiguous or
inconsistent with any other provisions hereof, and any construction
of any such provisions hereof by the Trustee in good faith shall be
binding upon the parties hereto. The Trustee shall in no event be
deemed to have assumed or incurred any liability, duty or obligation
to any Unit Holder, the Evaluator or the Depositor, other than as
expressly provided for herein;
(c) the Trustee in its role as Trustee shall not be
responsible for or in respect of the recitals herein, the validity or
sufficiency of this Indenture or for the due execution hereof by the
Depositor or the Evaluator, or for
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the form, character, genuineness, sufficiency, value or validity of
any Securities (except that the Trustee shall be responsible for the
exercise of due care in determining the genuineness and negotiability
of Securities delivered to it pursuant to contracts for the purchase
of such Securities) or for or in respect of the validity or
sufficiency of the Certificates or of the due execution thereof by
the Depositor, and the Trustee shall in no event assume or incur any
liability, duty or obligation to any Unit Holder or the Depositor
other than as expressly provided for herein. The Trustee shall not be
responsible for or in respect of the validity of any signature by or
on behalf of the Depositor or the Evaluator;
(d) the Trustee shall not be under any obligation to appear
in, prosecute or defend any action, which in its opinion may involve
it in expense or liability, unless as often as required, it shall be
furnished with reasonable security and indemnity against such expense
or liability as it may require, and any pecuniary cost of the Trustee
from such actions shall be deductible from and a charge against the
Interest and Principal Accounts. The Trustee shall in its discretion
undertake such action as it may deem necessary at any and all times
to protect the Trust and the rights and interests of the Unit Holders
pursuant to the terms of this Indenture, provided, however, that the
expenses and costs of such actions, undertakings or proceedings shall
be reimbursable to the Trustee from the Interest and Principal
Accounts, and the payment of such costs and expenses shall be secured
by a lien on the Trust prior to the interests of the Unit Holders;
(e) the Trustee may employ agents, attorneys, accountants
and auditors and shall not be answerable for the default or
misconduct of any such agents, attorneys, accountants or auditors if
such agents, attorneys, accountants or auditors shall have been
selected or their activities overseen with reasonable care. The
Trustee shall be fully protected in respect of any action under this
Indenture taken, or suffered, in good faith by it in accordance with
the opinion of counsel. The fees and expenses charged by such agents,
attorneys, accountants or auditors shall constitute an expense of the
Trustee reimbursable from the Interest and Principal Accounts as set
forth in Section 3.5 hereof;
(f) other than as provided in Article VII hereunder, if at
any time the Depositor shall resign or fail to undertake or perform
or become incapable of undertaking or performing any of the duties
which by the terms of this Indenture are required by it to be
undertaken or performed and no express provision is made for action
to be taken by
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the Trustee in such event, or said Depositor shall be adjudged a
bankrupt or insolvent, or a receiver of such Depositor or of its
property shall be appointed, or any public officer shall take charge
or control of such Depositor or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then in any
such case, the Trustee may do any one or more of the following: (1)
appoint a successor Depositor having a net worth, determined in
accordance with generally accepted accounting principles, of at least
$1,000,000, who shall act hereunder in all respects in place of the
Depositor, who shall be compensated, at rates deemed by the Trustee
to be reasonable under the circumstances, by deduction from the
Interest Account or from the Principal Account, but no such deduction
shall be made exceeding such reasonable amount as the Securities and
Exchange Commission may prescribe in accordance with Section
26(a)(2)(C) of the Investment Company Act of 1940 or any successor
provision; (2) continue to act in the capacity of Trustee hereunder
in its own absolute discretion without appointing any successor
Depositor; or (3) if no depositor or successor depositor has been
appointed, terminate this Indenture and the Trust created hereby and
liquidate the Trust, all in the manner provided in Section 9.2;
(g) if the value of the Trust as shown by any evaluation by
the Trustee pursuant to Section 5.1 hereof shall be less than the
liquidation amount specified in Part II of the Reference Trust
Agreement, the Trustee shall notify all Unit Holders and may in its
discretion, and shall, when so directed by the Depositor, terminate
this Indenture and the Trust created hereby and liquidate the Trust,
all in the manner provided in Section 9.2;
(h) in no event shall the Trustee be liable for any taxes or
other governmental charges imposed upon or in respect of the
Securities or upon the interest thereon or upon it as Trustee
hereunder or upon or in respect of the Trust which it may be required
to pay under any present or future law of the United States of
America or any other taxing authority having jurisdiction in the
premises. For all such taxes and charges and for any expenses,
including counsel fees, which the Trustee may sustain or incur with
respect to such taxes or charges, the Trustee shall be reimbursed and
indemnified out of the Interest and Principal Accounts of the Trust,
and the payment of such amounts so paid by the Trustee shall be
secured by a prior lien on the Trust;
(i) the Trustee, except by reason of its negligence, lack of
good faith, reckless disregard of its obligations hereunder or
willful misconduct, shall not be liable for any
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action taken or suffered to be taken by it in good faith and believed
by it to be authorized or within the discretion or rights or powers
conferred upon it by this Indenture;
(j) notwithstanding anything in this Indenture to the
contrary, the Trustee is authorized and empowered to enter into any
safekeeping arrangement or arrangements it deems necessary or
appropriate for holding the Securities then owned by the Trust and
the Trustee is authorized and empowered in its sole right to amend,
supplement or terminate any safekeeping arrangement or arrangements
made under this provision.
Section 6.2. Books, Records and Reports: The Trustee shall
keep proper books of record and account of all the transactions under this
Indenture at its corporate trust office including a record of the name and
address of every Unit Holder, and such books and records shall be open to
inspection by any Unit Holder at all reasonable times during the usual
business hours, and such books and records shall be made available to the
Depositor upon the request of the Depositor including, but not limited to, a
record of the name and address of every Unit Holder.
The Trustee shall cause audited statements as to the assets
and income of the Trust to be prepared on an annual basis by independent
public accountants selected by the Depositor, provided, however, that if the
Depositor is then making a market for units of the Trust, the Depositor shall
bear the cost of such audit to the extent that it exceeds $.50 per 1,000 Units
on an annual basis (or such proportionate amount in the case of units of
greater or lesser initial value). In the event that the Depositor is not
making a market for the Units of a Trust, then the Depositor may instruct the
Trustee not to prepare such statements.
To the extent permitted under the Investment Company Act of
1940 as evidenced by an opinion of counsel to the Depositor, the Trustee shall
pay, or reimburse to the Depositor or others, the costs of the preparation of
documents and information with respect to each Trust required by law or
regulation in connection with the maintenance of a secondary market in units
of each Trust. Such costs may include but are not limited to accounting and
legal fees, blue sky registration and filing fees, printing expenses and other
reasonable expenses related to documents required under Federal and state
securities laws.
The Trustee shall make such annual or other reports as may
from time to time be required under any applicable state or federal statute or
rule or regulation thereunder.
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Section 6.3. Indenture and List of Securities on File: The
Trustee shall keep a certified copy or duplicate original of this Indenture on
file at its corporate trust office available for inspection at all reasonable
times during the usual business hours by any Unit Holder and the Trustee shall
keep and so make available for inspection a current list of the Securities.
Section 6.4. Compensation: For services performed under this
Indenture the Trustee shall be paid at the rate per annum set forth in Part II
of the Reference Trust Agreement which shall be computed on the basis of the
number of Units in the Trust on the Record Date of such month. The Trustee may
from time to time adjust its compensation as set forth above provided that the
total adjustment upward does not, at the time of such adjustment, exceed the
percentage of the total increase, after the date hereof, in consumer prices
for services as measured by the United States Department of Labor Consumer
Price Index entitled "All Services Less Rent," or, if such index shall cease
to be published, then as measured by the available index most nearly
comparable to such index. The consent or concurrence of any Unit Holder
hereunder shall not be required for any such adjustment or increase. Such
compensation shall be charged by the Trustee against the Interest and
Principal Accounts on or before the Payment Date on which such period
terminates; provided, however, that such compensation shall be deemed to
provide only for the usual normal and recurring functions undertaken as
Trustee pursuant to this Indenture.
The Trustee shall charge the Interest and Principal Accounts
as provided for in Section 3.5(a) for any and all expenses, including the fees
of counsel which may be retained by the Trustee in connection with its
activities hereunder, and disbursements incurred hereunder and any
extraordinary services performed by the Trustee hereunder. The Trustee shall
be indemnified and held harmless against any loss or liability accruing to it
without negligence, bad faith or willful misconduct on its part, arising out
of or in connection with the acceptance or administration of this trust,
including the costs and expenses (including counsel fees) of defending itself
against any claim of liability in the premises. If the cash balances in the
Interest and Principal Accounts shall be insufficient to provide for amounts
payable pursuant to this Section 6.4, the Trustee shall have the power to sell
(i) Securities from the current list of Securities designated to be sold
pursuant to Section 5.2 hereof, or (ii) if no such Securities have been so
designated, such Securities as the Trustee may see fit to sell in its own
discretion, and to apply the proceeds of any such sale in payment of the
amounts payable pursuant to this Section 6.4. The Trustee shall not be liable
or responsible in any way for depreciation or loss incurred by reason of any
sale of Securities made pursuant to this Section 6.4. Any moneys payable to
the
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<PAGE>
Trustee pursuant to this section shall be secured by a prior lien on the
Trust.
Section 6.5. Removal and Resignation of the
Trustee; Successor: The following provisions shall provide for
the removal and resignation of the Trustee and the appointment of
any successor Trustee.
(a) Any resignation or removal of the Trustee and
appointment of a successor pursuant to this section shall not become
effective until acceptance of appointment by the successor Trustee as
provided in subsection (b) hereof.
(b) The Trustee or any trustee hereafter appointed may
resign and be discharged of the trust created by this Indenture by
executing an instrument in writing resigning as such Trustee, filing
the same with the Depositor and mailing a copy of a notice of
resignation to all Unit Holders then on record not less than sixty
days before the date specified in such instrument when, subject to
Section 6.5(d), such resignation is to take effect. Upon receiving
such notice of resignation, the Depositor shall use their best
efforts to promptly appoint a successor Trustee as hereinafter
provided, by written instrument, in duplicate, one copy of which
shall be delivered to the resigning Trustee and one copy to the
successor Trustee. In case at any time the Trustee shall become
incapable of acting or shall be deemed incapable of acting by the
written consent of Unit Holders evidencing 66-2/3% of the outstanding
Units of the Trust, or shall be adjudged a bankrupt or insolvent, or
a receiver of the Trustee or of its property shall be appointed, or
any public officer shall take charge or control of the Trustee or of
its property or affairs for the purposes of re- habilitation,
conservation, or liquidation, or the Depositor shall deem it to be in
the best interests of the Unit Holders, then in any such case the
Depositor may remove the Trustee and appoint a successor Trustee by
written instrument, in duplicate, one copy of which shall be
delivered to the Trustee so removed and one copy to the successor
Trustee; provided that notice of such removal and appointment of a
successor shall be mailed by the Depositor to each Unit Holder then
of record.
(c) Any successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Depositor and the retiring Trustee an
instrument accepting such appointment hereunder, and such successor
Trustee without any further act, deed or conveyance shall become
vested with all the rights, powers, duties and obligations of its
predecessor hereunder with like effect as if originally named Trustee
herein and shall be bound by all the terms and conditions of this
Indenture. Upon the request of such successor Trustee,
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the Depositor and the retiring Trustee shall, upon payment of any
amounts due the retiring Trustee or provision therefor to the
satisfaction of such retiring Trustee, execute and deliver an
instrument acknowledged by it transferring to such successor Trustee
all the rights and powers of the retiring Trustee; and the retiring
Trustee shall transfer, deliver and pay over to the successor Trustee
all bonds and moneys at the time held by it hereunder, together with
all necessary instruments of transfer and assignment or other
documents properly executed necessary to effect such transfer and
such of the records or copies thereof maintained by the retiring
Trustee in the administration hereof as may be requested by the
successor Trustee, and shall thereupon be discharged from all duties
and responsibilities under this Indenture. The retiring Trustee
shall, nevertheless, retain a lien upon all Securities and moneys at
the time held by it hereunder to secure any amounts then due the
retiring Trustee hereunder.
(d) In case at any time the Trustee shall resign and no
successor Trustee shall have been appointed and have accepted
appointment within thirty days after notice of resignation has been
received by the Depositor, the retiring Trustee may forthwith apply
to a court of competent jurisdiction for the appointment of a
successor Trustee. Such court may thereupon, after such notice, if
any, as it may deem proper and prescribe, appoint a successor
Trustee.
(e) Any corporation into which any Trustee hereunder may be
merged or with which it may consolidate, or any corporation resulting
from any merger or consolidation to which any Trustee hereunder shall
be a party, shall be the successor Trustee under this Indenture
without the execution or filing of any paper, instrument or further
act to be done on the part of the parties hereto, anything herein, or
in any agreement relating to such merger or consolidation, by which
any such Trustee may seek to retain certain powers, rights and
privileges theretofore obtaining for any period of time following
such merger or consolidation, to the contrary notwithstanding.
Section 6.6. Qualifications of Trustee: The Trustee, or any
successor thereof, shall be a corporation organized and doing business under
the laws of the United States or any state thereof, which is authorized under
such laws to exercise corporate trust powers and having at all times an
aggregate capital, surplus, and undivided profits of not less than $2,500,000.
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ARTICLE VII
DEPOSITOR
Section 7.1. Succession: The covenants, provisions and
agreements herein contained shall in every case be binding upon any successor
to the business of the Depositor. In the event of the death, resignation or
withdrawal of any partner of either of the Depositor or of any successor
Depositor which may be a partnership, the deceased, resigning or withdrawing
partner shall be relieved of all further liability hereunder if at the time of
such death, resignation or withdrawal such Depositor maintains a net worth
(determined in accordance with generally accepted accounting principles) of at
least $1,000,000. In the event of an assignment by the Depositor to a
successor corporation or partnership as permitted by the next following
sentence, such Depositor and, if such Depositor is a partnership, its partners
shall be relieved of all further liability under this Indenture. The Depositor
may transfer all or substantially all of their assets to a corporation or
partnership which carries on the business of that Depositor, if at the time of
such transfer such successor duly assumes all the obligations of said
Depositor under this Indenture and if at such time such successor maintains a
net worth of at least $1,000,000 (determined in accordance with generally
accepted accounting principles).
Section 7.2. Resignation of a Depositor: If at any time, any
Depositor desires to resign its position as Depositor hereunder, it may resign
by delivering to the Trustee an instrument of resignation executed by such
Depositor. Such resignation shall become effective upon the expiration of
thirty days from the date on which such instrument is delivered to the
Trustee. Upon effective resignation hereunder, the resigning Depositor shall
be discharged and shall no longer be liable in any manner hereunder except as
to acts or omissions occurring prior to such resignation and any successor
Depositor appointed by the Trustee pursuant to Section 6.1(f) shall thereupon
perform all duties and be entitled to all rights under this Indenture. The
successor Depositor shall not be under any liability hereunder for occurrences
or omissions prior to the execution of such instrument.
Section 7.3. Liability of Depositor and
Indemnification:
(a) No Depositor shall be under any liability to any other
Depositor, the Trust or the Unit Holders for any action or for
refraining from the taking of any action in good faith pursuant to
this Indenture, or for errors in judgment or for depreciation or loss
incurred by reason of the purchase or sale of any Securities,
provided, however, that this provision shall not protect the
Depositor against
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any liability to which they would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance
of their duties or by reason of their reckless disregard of their
obligations and duties hereunder. The Depositor may rely in good
faith on any paper, order, notice, list, affidavit, receipt,
evaluation, opinion, endorsement, assignment, draft or any other
document of any kind prima facie properly executed and submitted to
them by the Trustee, the Trustee's counsel, the Evaluator or any
other person for any matters arising hereunder. The Depositor shall
in no event be deemed to have assumed or incurred any liability,
duty, or obligation to any Unit Holder, the Evaluator or the Trustee
other than as expressly provided for herein.
(b) The Trust shall pay and hold the Depositor harmless from
and against any loss, liability or expense incurred in acting as
Depositor of the Trust other than by reason of wilful misfeasance,
bad faith or gross negligence in the performance of their duties or
by reason of the reckless disregard of their obligations and duties
hereunder, including the costs and expenses of the defense against
any claim or liability in the premises. The Depositor shall not be
under any obligation to appear in, prosecute or defend any legal
action which in their opinion may involve them in any expense or
liability, provided, however, that the Depositor may, in their
discretion, undertake any such action which they may deem necessary
or desirable in respect of this Indenture and the rights and duties
of the parties hereto and the interests of the Unit Holders hereunder
and, in such event, the legal expenses and costs of any such action
and any liability resulting therefrom shall be expenses, costs and
liabilities of the Trust and shall be paid directly by the Trustee
out of the Interest and Principal Accounts as provided by Section
3.5.
(c) None of the provisions of this Indenture shall be deemed
to protect or purport to protect the Depositor against any liability
to the Trust or to the Unit Holders to which the Depositor would
otherwise be subject by reason of willful misfeasance, bad faith or
negligence in the performance of their duties, or by reason of the
Depositor's reckless disregard of their obligations and duties under
this Indenture.
(d) Notwithstanding the discharge of a Depositor of the
Trust in accordance with Section 6.1(f) or Section 7.1(b), such
Depositor shall continue to be fully liable in accordance with the
provisions hereof in respect of action taken or refrained from under
this Agreement by the Depositor before the date of such discharge or
by the undischarged Depositor before or after the date of such
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<PAGE>
discharge, as fully and to the same extent as if no
discharge has occurred.
Section 7.4. Compensation: The Depositor or its affiliate
shall receive at the times set forth in Section 3.5 as compensation for
performing portfolio supervisory services, such amount and for such periods as
specified in Part II of the Reference Trust Agreement. The computation of such
compensation shall be made on the basis of the principal amount of Securities
in the Trust at the beginning of each calendar year period. At no time,
however, will the total amount received by the Depositor for services rendered
to all series of the Quest for Value's Unit Investment Laddered Trust Series
in any calendar year exceed the aggregate cost to them of supplying such
services in such year. Such rate may be increased by the Trustee from time to
time, without the consent or approval of any Unit Holder or the Depositor, by
amounts not exceeding the proportionate increase during the period from the
date of such Reference Trust Agreement to the date of any such increase, in
consumer prices as published either under the classification "All Services
Less Rent" in the Consumer Price Index published by the United States
Department of Labor, or, if such Index is no longer published, a similar
index.
In the event that any amount of the compensation paid to the
Depositor pursuant to Section 3.5 is found to be an improper charge against
the Trust, the Depositor shall reimburse the Trust in such amount. An improper
charge shall be established if a final judgment or order for reimbursement of
the Trust shall be rendered against the Depositor and such judgment or order
shall not be effectively stayed or a final settlement is established in which
the Depositor agrees to reimburse the Trust for amounts paid to the Depositor
pursuant to this Section 7.4.
ARTICLE VIII
RIGHTS OF UNIT HOLDERS
Section 8.1. Beneficiaries of Trust: By the purchase and
acceptance or other lawful delivery and acceptance of any Unit the Unit Holder
shall be deemed to be a beneficiary of the trust created by this Indenture and
vested with all right, title and interest in the Trust to the extent of his or
her Unit or Units subject to the terms and conditions of this Indenture.
Section 8.2. Rights, Terms and Conditions: In addition to
the other rights and powers set forth in the other provisions and conditions
of this Indenture the Unit Holders shall have the following rights and powers
and shall be subject to the following terms and conditions:
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<PAGE>
(a) A Unit Holder may at any time tender his Unit or Units
to the Trustee for redemption in accordance with Section 5.2.
(b) The death or incapacity of any Unit Holder shall not
operate to terminate this Indenture or the Trust, nor entitle his
legal representatives or heirs to claim an accounting or to take any
action or proceeding in any court of competent jurisdiction for a
partition or winding up of the Trust, nor otherwise affect the
rights, obligations and liabilities of the parties hereto or any of
them. Each Unit Holder expressly waives any right he may have under
any rule of law, or the provisions of any statute, or otherwise, to
require the Trustee at any time to account, in any manner other than
as expressly provided in this Indenture, in respect of the Securities
or moneys from time to time received, held and applied by the Trustee
hereunder.
(c) No Unit Holder shall have any right to vote or in any
manner otherwise control the operation and management of the Trust,
or the obligations of the parties hereto, nor shall anything herein
set forth, be construed so as to constitute the Unit Holders from
time to time as partners; nor shall any Unit Holder ever be under any
liability to any third persons by reason of any action taken by the
parties to this Indenture for any other cause whatsoever.
ARTICLE IX
ADDITIONAL COVENANTS; MISCELLANEOUS PROVISIONS
Section 9.1. Amendments: This Indenture may be amended from
time to time by the parties hereto or their respective successors, without the
consent of any of the Unit Holders (a) to cure any ambiguity or to correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provision contained herein; (b) to change any
provision required by the Securities and Exchange Commission or any successor
governmental agency to be changed; or (c) to make such other provision in
regard to matters or questions arising hereunder as shall not adversely affect
the interests of the Unit Holders; provided, however, that the parties hereto
may not amend this Indenture so as to (1) increase the number of Units above
the number set forth in Part II of the Reference Trust Agreement or such
lesser amount as may be outstanding at any time during the term of this
Indenture or (2) except as specified in Sections 3.8 and 3.14 permit the
deposit or acquisition hereunder of securities either in addition to or in
replacement of any of the Securities or (3) adversely affect the
characterization of the Trust as a grantor trust for federal income tax
purposes.
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This Indenture may also be amended from time to time by the
Depositor and the Trustee (or the performance of any of the provisions of this
Agreement may be waived) with the expressed written consent of Unit Holders
representing 66-2/3% of the Units at the time outstanding under the Indenture
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of modifying in any
manner the rights of the Unit Holders, save for the termination of the Trust
as set forth in Section 9.2 below; provided, however, that no such amendment
or waiver shall (i) reduce the interest in the Trust represented by such Units
without the consent of the Unit Holder, (ii) reduce the aforesaid percentage
of Units, the holders of which are required to consent to any such amendment,
without the consent of the holders of all Units then outstanding or (iii)
affect the duties, obligations and responsibilities of the Trustee without its
consent.
Promptly after the execution of any such amendment the
Trustee shall furnish written notification to all then outstanding Unit
Holders of the substance of such amendment.
Section 9.2. Termination: This Indenture and the Trust
created hereby shall terminate upon the maturity, redemption, sale or other
disposition as the case may be of the last Securities held hereunder unless
sooner terminated as hereinbefore specified and may be terminated at any time
by written consent of all Unit Holders; provided that in no event shall the
Trust continue beyond the end of the calendar year preceding the fiftieth
anniversary of the execution of this Indenture.
Written notice of any termination, specifying the time or
times at which the Unit Holders may surrender their Units for cancellation
shall be given by the Trustee to each Unit Holder at his address appearing on
the registration books of the Trustee. Within a reasonable period of time
after such termination the Trustee shall fully liquidate the Securities then
held, if any, and shall:
(a) deduct from the Interest Account or, to the extent that
funds are not available in such account, from the Principal Account
and pay to itself individually an amount equal to the sum of
(1) its accrued compensation for its ordinary
recurring services,
(2) any compensation due it for its extraordinary
services, and
(3) any other costs, expenses, advances or indemnities
as provided herein;
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<PAGE>
(b) deduct from the Interest Account or, to the extent that
funds are not available in such account, from the Principal Account
and pay accrued and unpaid fees of the Evaluator and counsel pursuant
to Section 3.9;
(c) deduct from the Interest Account or the Principal
Account any amounts which may be required to be deposited in the
Reserve Account to provide for payment of any applicable taxes or
other governmental charges and any other amounts which may be
required to meet expenses incurred under this Indenture;
(d) distribute to each Unit Holder, upon surrender for
cancellation of his Unit or Units, such holder's pro rata share of
the balance of the Interest Account;
(e) distribute to each Unit Holder, upon surrender for
cancellation of his Unit or Units, such holder's pro rata share of
the balance of the Principal Account; and
(f) together with such distribution to each Unit Holder as
provided for in (d) and (e), furnish to each such Unit Holder a final
distribution statement as of the date of the computation of the
amount distributable to Unit Holders, setting forth the data and
information in substantially the form and manner provided for in
Section 3.6 hereof.
The amounts to be so distributed to each Unit Holder shall
be that pro rata share of the balance of the total Interest and Principal
Accounts as shall be represented by the Units held of record by such Unit
Holder.
The Trustee shall be under no liability with respect to
moneys held by it in the Interest, Reserve and Principal Accounts upon
termination except to hold the same in trust without interest until disposed
of in accordance with the terms of this Indenture.
In the event that all of the Unit Holders shall not
surrender their Units for cancellation within six months after the time
specified in the above-mentioned written notice, the Trustee shall give a
second written notice to the remaining Unit Holders to surrender their Units
for cancellation and receive the liquidation distribution with respect
thereto. If within one year after the second notice all the Units shall not
have been surrendered for cancellation, the Trustee may take steps to contact
the remaining Unit Holders concerning surrender of their Units and the cost
thereof shall be paid out of the moneys and other assets which remain in trust
hereunder.
Section 9.3. Construction: This Indenture is executed
and delivered in the State of New York, and all local laws or
-38-
97085.4
<PAGE>
rules of construction of such State shall govern the rights of the parties
hereto and the Unit Holders and the interpretation of the provisions hereof.
Section 9.4. Registration of Units. The Depositor agrees and
undertakes to register the Units with the Securities and Exchange Commission
or other applicable governmental agency pursuant to applicable Federal or
State statutes, if such registration shall be required, and to do all things
that may be necessary or required to comply with this provision during the
term of the Trust created hereunder, and the Trustee shall incur no liability
or be under any obligation or expense in connection therewith.
Section 9.5. Written Notice: Any notice, demand, direction
or instruction to be given to the Depositor hereunder shall be in writing and
shall be duly given if mailed or delivered to: Quest for Value Distributors,
World Financial Center, 200 Liberty Street New York, New York 10281 Attn:
Susan Murphy, and with a copy to Quest For Value Distributors' Secretary, or
at such other address as shall be specified by the Depositor to the Trustee in
writing. Any notice, demand, direction or instruction to be given to the
Trustee or Evaluator shall be in writing and shall be duly given if mailed or
delivered to the Trustee, 770 Broadway, New York, New York 10003. Any notice
to be given to the Unit Holders shall be duly given if mailed or delivered to
each Unit Holder at the address of such holder appearing on the registration
books of the Trust.
Section 9.6. Severability: If any one or more of the
covenants, agreements, provisions or terms of this Indenture shall be held
contrary to any express provision of law or contrary to policy or express law,
though not expressly prohibited, or against public policy, or shall for any
reason whatsoever be held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Indenture and shall in no way affect the validity
or enforceability of the other provisions of this Indenture or of the Units or
the rights of the Unit Holders.
Section 9.7. Dissolution of Depositor Not to
Terminate: The dissolution of the Depositor from or for any
cause whatsoever shall not operate to terminate this Indenture or
the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the date first above written.
[Signatures and acknowledgments on separate pages.]
-39-
97085.4
<PAGE>
QUEST FOR VALUE DISTRIBUTORS
as Depositor
By: OPPENHEIMER FINANCIAL CORP.
as Managing Partner of the
Depositor
By: Susan Murphy
Authorized Person
ATTEST:
Thomas Egan
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
I, Carla Vogel, a Notary Public in and for
the said County in the State aforesaid, do hereby certify that
Susan Murphy personally known to me to be the same person
whose name is subscribed to the foregoing instrument and personally known to
me to be an Authorized Person of Oppenheimer Financial Corp., a Delaware
corporation, appeared before me this day in person, and acknowledged that she
signed and delivered the said instrument as her free and voluntary act as such
Authorized Person and as the free and voluntary act of said Oppenheimer
Financial Corp., for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this 28th day of June,
1995.
Carla Vogel
Notary Public
(SEAL)
Carla Vogel
Notary Public, State of New York
No. 02V05019906
My Commission expires: Qualified in Bronx County
Commission Expires November 1, 1995
-40-
97085.4
<PAGE>
UNITED STATES TRUST COMPANY OF NEW
YORK, as Trustee and Evaluator
By: Thomas Porrazzo
Vice President
(SEAL)
ATTEST:
Celeste Summerville
Assistant Secretary
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 28th day of June, 1995, before me personally
came Thomas Porrazzo to me known, who being by me duly sworn, said that
he is an Assistant Vice President of United States Trust Company of York, one
of the corporations described in and which executed the foregoing instrument;
that he knows the seal of said corporation; that the seal affixed to the said
instrument is such corporate seal; that it was so affixed by authority of the
Board of Directors of said corporation; and that he signed his name thereto by
like authority.
ADA IRIS VEGA
Notary Public
(SEAL) ADA IRIS VEGA
Notary Public, State of New York
My Commission expires: No. 4864106
Qualified in New York County
Commission Expires 6-30-96
-41-
97085.4
<PAGE>
BATTLE FOWLER LLP
PARK AVENUE TOWER
75 EAST 55TH STREET
NEW YORK, NEW YORK 10022
June 28, 1995
Quest For Value Distributors
Two World Financial Center
225 Liberty Street
New York, New York 10080-6116
Re: Quest For Value's Unit Investment Laddered -
Trust Series ("QUILTS")
QUILTS Income - U.S. Treasury Series 12
QUILTS Income - U.S. Treasury Series 13
QUILTS Asset Builder - U.S. Treasury Series 14
Dear Sirs:
We have acted as special counsel for Quest For Value Distributors,
as Depositor, Sponsor and Principal Underwriter (the "Depositor") of Quest For
Value's Unit Investment Laddered Trust Series ("QUILTS"): QUILTS Income - U.S.
Treasury Series 12, QUILTS Income - U.S. Treasury Series 13 and QUILTS Asset
Builder - U.S. Treasury Series 14 (the "Trusts") in connection with the
issuance by the Trusts, respectively, of 500,000, 500,000 and 500,000 units of
fractional undivided interest (the "Units") in the Trusts. Pursuant to the
Trust Agreements referred to below, the Depositor has transferred to the
Trusts certain securities and contracts to purchase certain securities
together with an irrevocable letter of credit to be held by the Trustee upon
the terms and conditions set forth in the Trust Agreements. (All securities to
be acquired by the Trusts are collectively referred to as the "Securities").
In connection with our representation, we have examined copies of
the following documents relating to the creation of the Trusts and the
issuance and sale of the Units: (a) the Trust Indenture and Agreement and
related Reference Trust Agreements, each of even date herewith, relating to
the Trusts (collectively the "Trust Agreements") among the Depositor and
United States
C/M: 11205.0009 284745.1
<PAGE>
Quest For Value 2
Distributors
June 28, 1995
Trust Company of New York, as Trustee and Evaluator; (b) the Notification of
Registration on Form N-8A and the Registration Statement on Form N-8B-2, as
amended, relating to the Trusts, as filed with the Securities and Exchange
Commission (the "Commission") pursuant to the Investment Company Act of 1940
(the "1940 Act"); (c) the Registration Statement on Form S-6 (Registration No.
33-60017) filed with the Commission pursuant to the Securities Act of 1933
(the "1933 Act"), and all Amendments thereto (said Registration Statement, as
amended by said Amendment(s) being herein called the "Registration
Statement"); (d) the proposed form of final Prospectus (the "Prospectus")
relating to the Units, which is expected to be filed with the Commission on
June 29, 1995; (e) certified resolutions of the Board of Directors of
Oppenheimer Financial Corp., the Managing General Partner of the Depositor
(the "Managing General Partner"), authorizing the execution and delivery by
the Depositor of the Trust Agreements and the consummation of the transactions
contemplated thereby; (f) the Partnership Agreement of the Depositor; and (g)
a certificate of an authorized officer of the Managing General Partner with
respect to certain factual matters contained therein.
We have not reviewed the financial statements, compilation of the
Securities held by the Trusts, or other financial or statistical data
contained in the Registration Statement and the Prospectus, as to which you
have been furnished with the reports of the accountants appearing in the
Registration Statement and the Prospectus.
In addition, we have assumed the genuineness of all agreements,
instruments and documents submitted to us as originals and the conformity to
originals of all copies thereof submitted to us. We have also assumed the
genuineness of all signatures and the legal capacity of all persons executing
agreements, instruments and documents examined or relied upon by us.
Statements in this opinion as to the validity, binding effect and
enforceability of agreements, instruments and documents are subject: (i) to
limitations as to enforceability imposed by bankruptcy, reorganization,
moratorium, insolvency and other laws of general application relating to or
affecting the enforceability of creditors' rights, and (ii) to limitations
under equitable principles governing the availability of equitable remedies.
We are not admitted to the practice of law in any jurisdiction but
the State of New York and we do not hold ourselves out as experts in or
express any opinion as to the laws
C/M: 11205.0009 284745.1
<PAGE>
Quest For Value 3
Distributors
June 28, 1995
of other states or jurisdictions except as to matters of Federal
and Delaware corporate law.
Based exclusively on the foregoing, we are of the opinion that
under existing law:
(1) The Trust Agreements have been duly authorized and entered
into by an authorized officer of the Depositor and are valid and binding
obligations of the Depositor in accordance with their respective terms.
(2) The execution and delivery of each of the Certificates
evidencing the Units of each of the Trusts has been duly authorized by the
Depositor and each such Certificate, when executed by the Depositor and the
Trustee in accordance with the provisions of such Certificate and the
respective Trust Agreements and issued for the consideration contemplated
therein, will constitute fractional undivided interest in the respective
Trusts, will be entitled to the benefits of the respective Trust Agreements,
will conform in all material respects to the description thereof for the Units
as provided in the Trust Agreements and the Registration Statement, and the
Units will be fully paid and non-assessable by the Trusts.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement and to the use of our name in the Registration
Statement and in the Prospectus under the headings "Tax Status" and "Legal
Opinions". We authorize you to deliver copies of this opinion to the Trustee
and the Underwriters named in Schedule A to the Master Agreement Among
Underwriters, as amended, relating to the Trusts and the Trustee may rely on
this opinion as fully and to the same extent as if it had been addressed to
it.
This opinion is intended solely for the benefit of the addressees
and the Trustee in connection with the issuance of the Units of the Trusts and
may not be relied upon in any other manner or by any other person without our
express written consent.
Very truly yours,
Battle Fowler LLP
C/M: 11205.0009 284745.1
<PAGE>
June 28, 1995
Quest For Value Distributors
Two World Financial Center
225 Liberty Street
New York, NY 10080-6116
Re: QUILTS Asset Builder - Series 12
Gentlemen:
We have examined Registration Statement File No. 33-60017 for the above
referenced trust. We hereby acknowledge that United States Trust Company of
New York is currently acting as the evaluator for the trust. We hereby consent
to the use in the Registration Statement of the reference to United States
Trust Company of New York as evaluator.
You are hereby authorized to file a copy of this letter with the Securities
and Exchange Commission.
Sincerely,
Thomas Porrazzo
Vice President
C/M 11205.0009 285060.1
<PAGE>
June 28, 1995
Quest For Value Distributors
Two World Financial Center
225 Liberty Street
New York, NY 10080-6116
Re: QUILTS Asset Builder - Series 13
Gentlemen:
We have examined Registration Statement File No. 33-60017 for the above
referenced trust. We hereby acknowledge that United States Trust Company of
New York is currently acting as the evaluator for the trust. We hereby consent
to the use in the Registration Statement of the reference to United States
Trust Company of New York as evaluator.
You are hereby authorized to file a copy of this letter with the Securities
and Exchange Commission.
Sincerely,
Thomas Porrazzo
Vice President
<PAGE>
June 28, 1995
Quest For Value Distributors
Two World Financial Center
225 Liberty Street
New York, NY 10080-6116
Re: QUILTS Asset Builder - Series 14
Gentlemen:
We have examined Registration Statement File No. 33-60017 for the above
referenced trust. We hereby acknowledge that United States Trust Company of
New York is currently acting as the evaluator for the trust. We hereby consent
to the use in the Registration Statement of the reference to United States
Trust Company of New York as evaluator.
You are hereby authorized to file a copy of this letter with the Securities
and Exchange Commission.
Sincerely,
Thomas Porrazzo
Vice President
<TABLE> <S> <C>
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The schedule contains summary financial information extracted from the
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</LEGEND>
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<NAME> QUILTS 12
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<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 528,263
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
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<PER-SHARE-NAV-END> 1
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
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The schedule contains summary financial information extracted from the
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</LEGEND>
<CIK> 0000946085
<NAME> QUILTS 13
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</TABLE>
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The schedule contains summary financial information extracted from the
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</LEGEND>
<CIK> 0000946085
<NAME> QUILTS 14
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</TABLE>
