AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
ON SEPTEMBER 15, 1998
REGISTRATION NO. 333-
=================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM S-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
-------------------------
PRUDENTIAL SECURITIES STRUCTURED ASSETS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or
organization)
6799
(Primary Standard Industrial Classification Code
Number)
31-0944462
(I.R.S. Employer Identification No.)
One New York Plaza
14th Floor
New York, New York 10292
(212) 809-6631
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
RECEIPTS ON CORPORATE SECURITIES TRUST,
SERIES NSC 1998-1
(Exact name of registrant as specified in its
Trust Agreement)
New York
(State or other jurisdiction of incorporation
or organization)
6733
(Primary Standard Industrial Classification
Code Number)
N/A
(I.R.S. Employer Identification No.)
c/o The Bank of New York
101 Barclay Street, 12 East
New York, New York 10286
Attention: Corporate Trust
(212) 815-5098
(Address including zip code, and telephone
number, including area code, of registrant's
principal executive offices)
-------------------
Greg Weatherly, Esq.
Prudential Securities Incorporated
One Seaport Plaza
New York, New York 10292
(212) 214-6404
(Name, address, including zip code,
and telephone number, including area code,
of agent for service)
-------------------
COPIES TO:
David L. Sugerman, Esq.
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
(212) 225-2000
-------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this
Registration Statement.
If the securities being registered on this form are being offered
in connection with the formation of a holding company and there
is compliance with General Instruction G, check the following
box. [ ]
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check
the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
-------------------
CALCULATION OF REGISTRATION FEE
=================================================================
Title of
Each Proposed Proposed
Class of Maximum Maximum Amount of
Securities Amount Offering Aggregate Regis-
to be to be Reg- Price Offering tration
Registered istered(1) Per Share Price(2) Fee(3)
- -----------------------------------------------------------------
Receipts on
Corporate
Securities,
Series NSC
1998-1,
Residual
Class Not
Certificate $80,000,000 Applicable $23,992,000.00 $7,077.64
=================================================================
(1) Certificate Principal Balance.
(2) Estimated solely for purposes of calculating the
registration fee, which was computed pursuant to Rule 457(f)
under the Securities Act of 1933, as amended based on the
book value of the Securities being registered.
(3) $7,077.64 has previously been transmitted to the designated
lockbox at Mellon Bank.
-------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE
UNTIL THE REGISTRANTS SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND
EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.
<PAGE>
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR +
+ AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE +
+ SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE +
+ COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS +
+ TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION +
+ STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT +
+ CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER +
+ TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY +
+ STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+ UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE +
+ SECURITIES LAWS OF ANY SUCH STATE. +
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED SEPTEMBER 15, 1998
PROSPECTUS
Receipts on Corporate Securities Trust, Series NSC 1998-1
Offer to Exchange Receipts on Corporate Securities,
Series NSC 1998-1, Residual Class, which have been
registered under the Securities Act of 1933, as amended,
for any and all outstanding Receipts on Corporate Securities,
Series NSC 1998-1, Residual Class
The Exchange Offer will expire at 5:00 p.m., New York City
time, on , unless extended.
The Receipts on Corporate Securities, Series NSC 1998-1,
Residual Class (the "New Certificates") issued by the Receipts on
Corporate Securities Trust, Series NSC 1998-1 (the "Trust"),
which have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to a Registration
Statement of which this Prospectus is a part, are hereby offered,
upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying letter of transmittal (the
"Letter of Transmittal" and, together with this Prospectus, the
"Exchange Offer"), in exchange for an equal Certificate Principal
Balance of outstanding Receipts on Corporate Securities, Series
NSC 1998-1, Residual Class (the "Old Certificates"), of which
$80,000,000 aggregate Certificate Principal Balance is
outstanding as of the date hereof. The Trust was formed pursuant
to a trust agreement dated as of August 28, 1997 as amended by
Base Amendment No. 1 dated as of February 27, 1998, and as
supplemented by the Series NSC 1998-1 Supplement dated as of
April 13, 1998 (together, the "Trust Agreement") between
Prudential Securities Structured Assets, Inc., as depositor
("PSSA") and The Bank of New York, a New York banking
corporation, as trustee (the "Trustee"). The property of the
Trust will consist solely of $80,000,000 aggregate principal
amount of 7.90% Notes due May 15, 2097 (the "NSC Notes") issued
by Norfolk Southern Corporation ("NSC"), having the
characteristics described in its prospectus dated May 14, 1997
and a supplement thereto dated May 14, 1997 (together, the "NSC
Notes Prospectus"). The NSC Notes were issued and sold as part of
an underwritten public offering of $350,000,000 aggregate
principal amount of such securities.
Any and all Old Certificates that are validly tendered and
not withdrawn on or prior to 5:00 P.M., New York City time, on
the date the Exchange Offer expires, which will be , (30
calendar days following the commencement of the Exchange Offer)
unless the Exchange Offer is extended (such date, including as
extended, the "Expiration Date"), will be accepted for exchange.
Tenders of Old Certificates may be withdrawn at any time prior to
5:00 P.M., New York City time on the Expiration Date. The
Exchange Offer is not conditioned upon any minimum principal
amount of Old Certificates being tendered for exchange. However,
the Exchange Offer is subject to certain customary conditions,
which may be waived by the Trust, and to the terms of the
Registration Rights Agreement, dated as of April 13, 1998 (the
"Registration Rights Agreement"), between PSSA and Prudential
Securities Incorporated, as initial purchaser ("Prudential
Securities"). Old Certificates may be tendered only in minimum
denominations of $500,000 Certificate Principal Balance and
integral multiples of $1.00 in excess thereof. See "The Exchange
Offer".
The New Certificates will be entitled to the benefits of
the same Trust Agreement that governs the Old Certificates and
will govern the New Certificates. The form and terms of the New
Certificates are the same in all material respects as the form
and terms of the Old Certificates, except the New Certificates
have been registered under the Securities Act and therefore will
not bear certain legends restricting the transfer thereof. The
New Certificates will be issued in fully registered, certificated
form. See "The Exchange Offer" and "Description of the New
Certificates".
The Trust issued the Receipts on Corporate Securities
Series NSC 1998-1 (the "Trust Certificates") in two Series: the
Residual Class and the Amortizing Class, which collectively
represent the entire beneficial ownership of the Trust. Subject
to the occurrence of an Optional Redemption, a Shortened Maturity
Redemption, or an In-Kind Distribution (each as defined herein),
the Residual Class Certificates evidence fractional undivided
beneficial interests in all principal payments on the NSC Notes,
and in interest accrued and paid on the NSC Notes after May 15,
2017 at a rate of 7.90% per annum, compounded semiannually.
Subject to such occurrences, the Amortizing Class Certificates
evidence fractional undivided beneficial interests in all
payments of interest accrued and paid on the NSC Notes on or
before May 15, 2017. The Trust Certificates were purchased at an
original issue discount. Subject to the occurrence of an Optional
Redemption or a Shortened Maturity Redemption, no cash
distributions will be made on the Residual Class Certificates.
Instead, the Residual Class Certificates outstanding on May 15,
2017 will be terminated and deemed involuntarily surrendered by
the holders thereof in exchange for a principal amount of the NSC
Notes underlying such Residual Class Certificates equal to the
aggregate Certificate Principal Balance of such Residual Class
Certificates. No action by such holders will be required to
effect such termination and exchange, which will be carried out
by the Trustee's notifying such holders of such termination and
exchange and distributing to each such holder in kind its
pro-rata portion of the NSC Notes in accordance with the Trust
Agreement.
<PAGE>
The NSC Notes may be redeemed prior to maturity, as a whole
or in part, at the option of NSC (an "Optional Redemption"), upon
not less than 30 nor more than 60 days' prior written notice, at
any time, at a redemption price equal to the greater of (i) 100%
of the principal amount being redeemed and (ii) the sum of the
present values of the remaining scheduled payments of principal
and interest thereon discounted to the date of redemption (an
"Optional Redemption Date") on a semiannual basis at the Treasury
Yield (as defined herein) plus 20 basis points, together with
accrued interest to the date of redemption.
Upon the occurrence of a Tax Event (as defined herein) with
respect to the NSC Notes, NSC has the right to shorten the
maturity of the NSC Notes (i) to the minimum extent required, in
the opinion of nationally recognized independent tax counsel to
NSC, such that, after the shortening of the maturity, interest
paid on the NSC Notes will be deductible for U.S. federal income
tax purposes or, (ii) if such counsel is unable to opine
definitively as to such minimum period, the minimum extent so
required as determined in good faith by the Board of Directors of
NSC after receipt of an opinion of such counsel regarding the
applicable legal standards. (Any such new maturity date is
referred to herein as the "Shortened Maturity Date," and the
redemption of the NSC Notes effected on such date is referred to
as a "Shortened Maturity Redemption.")
In the event of an Optional Redemption or a Shortened
Maturity Redemption, the Certificates will be redeemed on the
Optional Redemption Date or the Shortened Maturity Date. In such
event, the Trustee will distribute the payment received on the
NSC Notes on the Optional Redemption Date or the Shortened
Maturity Date, as the case may be, to the holders of the
Amortizing Class Certificates and the Residual Class
Certificates, respectively, in the same ratio as (i) the present
value of all originally scheduled future payments on the
Amortizing Class Certificates bears to (ii) the present value of
all originally scheduled future payments on the NSC Notes after
May 15, 2017, discounted semiannually in each case at a rate of
7.90% per annum to the Optional Redemption Date or the Shortened
Maturity Date. Such ratio will be calculated by the Company, as
calculation agent. In the case of an Optional Redemption of less
than all of the NSC Notes, the Trustee will distribute the
payment received on the NSC Notes on the Optional Redemption Date
to the holders of the Amortizing Class Certificates and the
Residual Class Certificates on the basis of the foregoing ratio
as of the Optional Redemption Date on a pro rata basis; such a
distribution will result in a reduction (based on the percentage
of NSC Notes redeemed) of the Residual Class Certificates
Certificate Principal Balance and a recalculation of the
Certificate Principal Balance of, and Fixed Payments (as defined
in the Trust Agreement) with respect to, the Amortizing Class
Certificates based on the remaining NSC Notes after such
redemption.
Losses realized on the NSC Notes will be borne by the
holders of the Trust Certificates in the manner described herein.
See "Risk Factors--Events of Default" herein.
NSC did not participate in, and did not receive any
proceeds in connection with, the sale of the Trust Certificates.
Based on interpretations by the staff of the Securities and
Exchange Commission (the "Commission"), as set forth in no-action
letters issued to third parties, including Exxon Capital Holdings
Corporation, SEC No-Action Letter (available April 13, 1989),
Morgan Stanley & Co. Incorporated, SEC No-Action Letter
(available June 5, 1991) and Shearman & Sterling, SEC No-Action
Letter (available July 2, 1993) (collectively, the "Exchange
Offer No-Action Letters"), PSSA believes that the New
Certificates issued pursuant to the Exchange Offer may be offered
for resale, resold or otherwise transferred by holders thereof
(other than a broker-dealer who acquires such New Certificates
directly from the Trust or PSSA for resale pursuant to Rule 144A
under the Securities Act or any other available exemption under
the Securities Act or any holder that is an "affiliate" of PSSA
as defined in Rule 405 under the Securities Act), without
compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such New
Certificates are acquired in the ordinary course of such holders'
business and such holders are not engaged in, and do not intend
to engage in, a distribution of such New Certificates and have no
arrangement with any person to participate in a distribution of
such New Certificates. By tendering the Old Certificates in
exchange for New Certificates, each holder, other than a
broker-dealer, will represent to the Trust that: (i) it is not an
affiliate of PSSA (as defined in Rule 405 under the Securities
Act) or a broker-dealer tendering Old Certificates acquired
directly from PSSA for its own account; (ii) any New Certificates
to be received by it will be acquired in the ordinary course of
its business; and (iii) it is not engaged in, and does not intend
to engage in, a distribution of such New Certificates and has no
arrangement or understanding to participate in a distribution of
the New Certificates. If a holder of Old Certificates is engaged
in or intends to engage in a
<PAGE>
(continued from cover page)
distribution of the New Certificates or has any arrangement or
understanding with respect to the distribution of the New
Certificates to be acquired pursuant to the Exchange Offer, such
holder may not rely on the applicable interpretations of the
staff of the Commission and must comply with the registration and
prospectus delivery requirements of the Securities Act in
connection with any secondary resale transaction. Each
broker-dealer that receives New Certificates for its own account
pursuant to the Exchange Offer (a "Restricted Broker-Dealer")
must acknowledge that it will deliver a prospectus in connection
with any resale of such New Certificates. The Letter of
Transmittal states that by so acknowledging and by delivering a
prospectus, a Restricted Broker-Dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a Restricted
Broker-Dealer in connection with resales of New Certificates
received in exchange for Old Certificates where such Old
Certificates were acquired by such Restricted Broker-Dealer as a
result of market-making activities or other trading activities.
Pursuant to the Registration Rights Agreement, PSSA has agreed
that starting on the Expiration Date it will make this Prospectus
available to any Restricted Broker-Dealer for use in connection
with any such resale for one year. See "Plan of Distribution".
Neither the Trust nor PSSA will receive any proceeds from
this offering. PSSA has agreed to pay the expenses of the
Exchange Offer. No underwriter or dealer-manager is being
utilized in connection with the Exchange Offer.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE TRUST
ACCEPT SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD CERTIFICATES
IN ANY JURISDICTION IN WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE
THEREOF WOULD NOT BE IN COMPLIANCE WITH THE SECURITIES AND BLUE
SKY LAWS OF SUCH JURISDICTION.
Prior to this Exchange Offer, there has been no public
market for the New Certificates. Neither PSSA nor the Trust
intends to apply for listing of the New Certificates on any
securities exchange or for quotation of the New Certificates on
The Nasdaq Stock Market's National Market or otherwise.
Prudential Securities has previously made a market in the Old
Certificates, and the Trust has been advised that Prudential
Securities currently intends to make a market in the New
Certificates, as permitted by applicable laws and regulations,
after consummation of the Exchange Offer. Prudential Securities
is not obligated, however, to make a market in the Old
Certificates or the New Certificates and any such market-making
activity may be discontinued at any time without notice at the
sole discretion of Prudential Securities. There can be no
assurance as to the liquidity of the public market for the New
Certificates or that any active public market for the New
Certificates will develop or continue. If an active public market
does not develop or continue, the market price and liquidity of
the New Certificates may be adversely affected. See "Risk
Factors--Absence of a Public Market for the New Certificates".
-------------
FOR A DISCUSSION OF MATERIAL RISKS THAT SHOULD BE
CONSIDERED BY PARTICIPANTS IN THE EXCHANGE OFFER, SEE "RISK
FACTORS" BEGINNING ON PAGE 9 OF THIS PROSPECTUS.
-------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL
CONTAIN IMPORTANT INFORMATION. HOLDERS OF OLD CERTIFICATES ARE
URGED TO READ THIS PROSPECTUS AND THE RELATED LETTER OF
TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO TENDER THEIR OLD
CERTIFICATES PURSUANT TO THE EXCHANGE OFFER.
-------------
The date of this Prospectus is , 1998
<PAGE>
AVAILABLE INFORMATION REGARDING THE TRUST
PSSA on behalf of the Trust will be subject to the
informational requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and in accordance
therewith will file reports and other information with the
Commission relating to the Trust. Such reports, proxy statements
and other information may be inspected and copied at the
following public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549; Seven World Trade Center, 13th Floor, New
York, New York 10048; and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material may also be obtained from the Public Reference Section
of the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, upon payment of prescribed
rates. The Commission maintains a Web site at http://www.sec.gov
containing reports, proxy statements and other information
regarding registrants that file electronically with the
Commission, including PSSA on behalf of the Trust.
The reports to be filed by PSSA on behalf of the Trust will
consist primarily of distribution date statements relating to the
distributions made on the Trust Certificates and certain material
events regarding the Trust, but not other financial information
or statements. The reports will also refer to the periodic
reports filed by NSC so long as NSC is a reporting company under
the Exchange Act. If NSC ceases to be a reporting company under
the Exchange Act, information regarding NSC and the NSC Notes
will be limited to that received by the Trustee, as the holder of
the NSC Notes, from the NSC Notes Trustee as required by the NSC
Notes Indenture.
This Prospectus constitutes a part of a registration
statement on Form S-4 (together with all amendments and exhibits,
the "Registration Statement") filed by the Trust and PSSA on
behalf of the Trust with the Commission, through the Electronic
Data Gathering, Analysis and Retrieval System ("EDGAR"), under
the Securities Act, with respect to the New Certificates offered
hereby. This Prospectus omits certain of the information
contained in the Registration Statement, and reference is hereby
made to the Registration Statement for further information with
respect to the Trust and Holdings and the securities offered
hereby. Although statements concerning and summaries of certain
documents are included herein, reference is made to the copy of
such document filed as an exhibit to the Registration Statement
or otherwise filed with the Commission. These documents may be
inspected without charge at the office of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
and copies may be obtained at fees and charges prescribed by the
Commission.
No separate financial statements of the Trust have been
included or incorporated by reference herein. PSSA does not
believe such financial statements would be material to holders of
the New Certificates because the sole asset of the Trust consists
of debt obligations of an unaffiliated issuer that is a reporting
company under the Exchange Act. See "Description of the Trust
Assets--NSC."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission as
exhibits to the Registration Statement of which this Prospectus
is a part (File No. 333- ) are hereby incorporated by reference
in this Prospectus: the Trust Agreement dated as of August 28,
1997 between Prudential Securities Structured Assets, Inc., as
depositor, and The Bank of New York, as trustee, as amended by
Base Amendment No. 1 dated as of February 27, 1998; the Series
NSC 1998-1 Supplement dated as of April 13, 1998 between
Prudential Securities Structured Assets, Inc., as depositor, and
The Bank of New York, as trustee; and the Registration Rights
Agreement dated as of April 13, 1998 between Prudential
Securities Structured Assets, Inc. and Prudential Securities
Incorporated.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE THAT
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS
ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON TO WHOM A PROSPECTUS
IS DELIVERED, UPON WRITTEN OR ORAL REQUEST OF SUCH PERSON, FROM
PRUDENTIAL SECURITIES STRUCTURED ASSETS, INC., ONE NEW YORK
PLAZA, 14TH FLOOR, NEW YORK, N.Y. 10292-2014, ATTENTION: LINDA
MULLER. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY
REQUEST SHOULD BE MADE BY , 1998.
1
<PAGE>
PROSPECTUS SUMMARY
The following summary information is qualified in its
entirety by the detailed information appearing elsewhere or
incorporated by reference in this Prospectus. Prospective
investors are urged to read this Prospectus in its entirety.
Certain capitalized terms used herein are defined elsewhere in
this Prospectus. For an index of capitalized terms, please see
page 31.
The Issuer
Receipts on Corporate Securities Trust, Series NSC 1998-1
(the "Trust") formed pursuant to a Trust Agreement dated as of
August 28, 1997, between Prudential Securities Structured Assets,
Inc., as depositor ("PSSA"), and The Bank of New York, a New York
banking corporation, as trustee (the "Trustee"), as supplemented
by the Series NSC 1998-1 Supplement dated as of April 13, 1998
(together, and as amended, the "Trust Agreement"). PSSA is a
Delaware corporation and a wholly-owned subsidiary of Prudential
Securities Group Inc. ("PSGI"). On April 13, 1998, PSSA deposited
$80,000,000 aggregate principal amount of 7.90% Notes due May 15,
2097 (the "NSC Notes") issued by Norfolk Southern Corporation
("NSC") with the Trustee in exchange for two classes of Receipts
on Corporate Securities, Series NSC 1998-1: the Residual Class
Certificates and the Amortizing Class Certificates (together the
"Trust Certificates"). The Old Certificates currently constitute,
and the New Certificates along with any Old Certificates not
tendered in the Exchange Offer will constitute, the entire
Residual Class.
The Corporate Trust Office of the Trustee is located at 101
Barclay Street, 12 East, New York, New York 10286, Attention:
Corporate Trust--Administration and its number is (212) 815-5098.
Description of the Trust Assets
The assets of the Trust consist solely of $80,000,000
aggregate principal amount of 7.90% Notes due May 15, 2097 issued
by NSC and having the characteristics described in the NSC Notes
Prospectus. The NSC Notes were originally issued by NSC on or
about May 19, 1997 as part of an underwritten public offering of
$350,000,000 aggregate principal amount of such securities (CUSIP
No. 655844AK4) pursuant to a registration statement on Form S-3
(File No. 333-24051) (together with all amendments and exhibits
thereto, the "NSC Notes Registration Statement"), filed by NSC
with the Commission under the Securities Act. Payments of
interest are required to be made on the NSC Notes semiannually on
the fifteenth day of each May and November, commencing November
15, 1997, or if such day is not a business day, on the next
business day.
The NSC Notes deposited in the Trust represent the sole
assets of the Trust that are available to make distributions in
respect of the Trust Certificates. Consequently, the ability of
holders of New Certificates to receive cash distributions in
respect of the New Certificates in the event of an Optional
Redemption or a Shortened Maturity Redemption will depend on the
Trust's receipt of payments on, or in respect of, the NSC Notes.
The Exchange Offer
The Exchange Offer........... New Certificates are being offered
in exchange for an equal
Certificate Principal Balance of
Old Certificates. As of the date
hereof, Old Certificates with an
aggregate Certificate Principal
Balance of $80,000,000 are
outstanding. Old Certificates may
be tendered only in minimum
denominations of $500,000 and
integral multiples of $1.00 in
excess thereof.
Registration Rights
Agreement.................... The Old Certificates were sold on
April 13, 1998 to Prudential
Securities. Prudential Securities
placed the Old Certificates with
institutional investors in a
transaction exempt from
registration under the Securities
Act in reliance on Rule 144A
thereunder. In connection
therewith, PSSA and Prudential
Securities entered into the
Registration Rights Agreement,
providing, among other things, for
the Exchange Offer to occur. See
"The Exchange Offer--Terms of the
Exchange Offer".
Resale of New Certificates... Based on interpretations by the
staff of the Commission, as set
forth in no-action letters issued
to third parties, including the
Exchange
2
<PAGE>
Offer No-Action Letters, PSSA
believes that the New Certificates
issued pursuant to the Exchange
Offer may be offered for resale,
resold or otherwise transferred by
holders thereof (other than a
broker-dealer who acquires such New
Certificates directly from the
Trust for resale pursuant to Rule
144A under the Securities Act or
any other available exemption under
the Securities Act or any holder
that is an "affiliate" of PSSA as
defined under Rule 405 of the
Securities Act), without compliance
with the registration and
prospectus delivery provisions of
the Securities Act, provided that
such New Certificates are acquired
in the ordinary course of such
holders' business and such holders
are not engaged in, and do not
intend to engage in, a distribution
of such New Certificates and have
no arrangement with any person to
participate in a distribution of
such New Certificates. By tendering
the Old Certificates in exchange
for New Certificates, each holder,
other than a broker-dealer, will
represent to the Trust that: (i) it
is not an affiliate of PSSA (as
defined in Rule 405 under the
Securities Act) or a broker-dealer
tendering Old Certificates acquired
directly from PSSA for its own
account; (ii) any New Certificates
to be received by it were acquired
in the ordinary course of its
business; and (iii) it is not
engaged in, and does not intend to
engage in, a distribution of such
New Certificates and has no
arrangement or understanding to
participate in a distribution of
the New Certificates. If a holder
of Old Certificates is engaged in
or intends to engage in a
distribution of the New
Certificates or has any arrangement
or understanding with respect to
the distribution of the New
Certificates to be acquired
pursuant to the Exchange Offer,
such holder may not rely on the
applicable interpretations of the
staff of the Commission and must
comply with the registration and
prospectus delivery requirements of
the Securities Act in connection
with any secondary resale
transaction. Each Restricted
Broker-Dealer that receives New
Certificates for its own account
pursuant to the Exchange Offer must
acknowledge that it will deliver a
prospectus in connection with any
resale of such New Certificates.
The Letter of Transmittal states
that by so acknowledging and by
delivering a prospectus, a
Restricted Broker-Dealer will not
be deemed to admit that it is an
"underwriter" within the meaning of
the Securities Act. This
Prospectus, as it may be amended or
supplemented from time to time, may
be used by a Restricted
Broker-Dealer in connection with
resales of New Certificates
received in exchange for Old
Certificates where such Old
Certificates were acquired by such
Restricted Broker-Dealer as a
result of market-making activities
or other trading activities. PSSA
has agreed that it will make this
Prospectus available to any
Restricted Broker-Dealer for use in
connection with any such resale for
one year. See "Plan of
Distribution". To comply with the
securities laws of certain
jurisdictions, it may be necessary
to qualify for sale or register the
New Certificates prior to offering
or selling such New Certificates.
PSSA has agreed, pursuant to the
Registration Rights Agreement and
subject to certain specified
limitations therein, to cause the
registration or qualification of
the New Certificates for offer or
sale under the securities or "blue
sky" laws of such jurisdictions as
may be necessary to permit the
holders of New Certificates to
trade the New Certificates without
any restrictions or limitations
under the securities laws of the
several states of the United
States.
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<PAGE>
Consequences of Failure
to Exchange Old
Certificates................. Upon consummation of the Exchange
Offer, subject to certain
exceptions, holders of Old
Certificates who do not exchange
their Old Certificates for New
Certificates in the Exchange Offer
will no longer be entitled to
registration rights and will not be
able to offer or sell their Old
Certificates, unless such Old
Certificates are subsequently
registered under the Securities Act
(which, subject to certain limited
exceptions, neither PSSA nor the
Trust will have an obligation to
do), except pursuant to an
exemption from, or in a transaction
not subject to, the Securities Act
and applicable state securities
laws. See "Risk Factors--Risk
Factors Relating to the New
Certificates and the Exchange
Offer--Consequences of Failure to
Exchange" and "The Exchange
Offer--Terms of the Exchange
Offer".
Expiration Date.............. 5:00 p.m., New York City time, on
(30 calendar days
following the commencement of the
Exchange Offer), unless the
Exchange Offer is extended, in
which case the term "Expiration
Date" means the latest date and
time to which the Exchange Offer is
extended.
Conditions to the Exchange
Offer........................ The Exchange Offer is not
conditioned upon any minimum
principal amount of Old
Certificates being tendered for
exchange. However, the Exchange
Offer is subject to certain
customary conditions, which may be
waived by the Trust. See "The
Exchange Offer--Conditions". Except
for the requirements of applicable
federal and state securities laws,
there are no federal or state
regulatory requirements to be
complied with, or obtained by, the
Trust or PSSA in connection with
the Exchange Offer.
Procedures for Tendering
Old Certificates............. Each holder of Old Certificates
wishing to accept the Exchange
Offer must complete, sign and date
the Letter of Transmittal, or a
facsimile thereof, in accordance
with the instructions contained
herein and therein, and mail or
otherwise deliver such Letter of
Transmittal, or such facsimile,
together with the Old Certificates
to be exchanged and any other
required documentation to the
Exchange Agent at the address set
forth herein. See "The Exchange
Offer--Procedures for Tendering".
Guaranteed Delivery
Procedures................... Holders of Old Certificates who
wish to tender their Old
Certificates and whose Old
Certificates are not immediately
available or who cannot deliver
their Old Certificates and a
properly completed Letter of
Transmittal or any other documents
required by the Letter of
Transmittal to the Exchange Agent
prior to the Expiration Date may
tender their Old Certificates
according to the guaranteed
delivery procedures set forth in
"The Exchange Offer--Guaranteed
Delivery Procedures".
Withdrawal Rights............ Tenders of Old Certificates may be
withdrawn at any time prior to 5:00
p.m., New York City time, on the
Expiration Date. To withdraw a
tender of Old Certificates, a
written or facsimile transmission
notice of withdrawal must be
received by the Exchange Agent at
its address set forth herein under
"The Exchange Offer--Exchange
Agent" prior to 5:00 p.m., New York
City time, on the Expiration Date.
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<PAGE>
Acceptance of Old
Certificates and Delivery
of New Certificates.......... Subject to certain conditions, any
and all Old Certificates that are
properly tendered in the Exchange
Offer prior to 5:00 p.m., New York
City time, on the Expiration Date
will be accepted for exchange. The
New Certificates issued pursuant to
the Exchange Offer will be
delivered promptly following the
Expiration Date. See "The Exchange
Offer--Terms of the Exchange
Offer".
Federal Income Tax
Consequences................. The exchange of New Certificates
for Old Certificates will not be a
sale or exchange or otherwise a
taxable event for federal income
tax purposes. See "U.S. Federal
Income Tax Consequences--Exchange
of Old Certificates for New
Certificates".
Exchange Agent............... The Bank of New York is serving as
exchange agent (the "Exchange
Agent") in connection with the
Exchange Offer. The Bank of New
York is also the Trustee.
Fees and Expenses............ All expenses incident to the
Trust's consummation of the
Exchange Offer and compliance with
the Registration Rights Agreement
will be borne by PSSA. See "The
Exchange Offer--Fees and Expenses".
Use of Proceeds.............. There will be no cash proceeds
payable to the Trust or PSSA from
the issuance of the New
Certificates pursuant to the
Exchange Offer. The proceeds from
the sale of the Old Certificates
were applied to the purchase of the
NSC Notes and to pay issuance
costs. See "Use of Proceeds".
The New Certificates
The Exchange Offer relates to the exchange of up to
$80,000,000 aggregate Certificate Principal Balance of Old
Certificates for up to an equal aggregate Certificate Principal
Balance of New Certificates. The New Certificates will be
entitled to the benefits of the same Trust Agreement that governs
the Old Certificates and will govern the New Certificates. The
form and terms of the New Certificates are the same in all
material respects as the form and terms of the Old Certificates,
except that the New Certificates have been registered under the
Securities Act and therefore will not bear certain legends
restricting the transfer thereof. See "Description of the New
Certificates".
Trust Securities............. The New Certificates (along with
any Old Certificates that are not
tendered in the Exchange Offer)
will constitute the "Residual Class
Certificates," one of two classes
of Trust Certificates, which
collectively represent the entire
undivided beneficial ownership of
the Trust. The initial aggregate
Certificate Principal Balance on
the Residual Class Certificates
will be $80,000,000. The other
class of Trust Certificates, the
Amortizing Class Certificates, has
an $69,048,275.30 aggregate
Certificate Principal Balance.
Subject to the occurrence of an
Optional Redemption, a Shortened
Maturity Redemption, or an In-Kind
Distribution, scheduled
distributions on the Amortizing
Class Certificates will consist of
equal semiannual installments
allocable to principal and interest
through May 15, 2017 (each, a
"Fixed Payment") and will be made
on each Scheduled Distribution Date
up to and including May 15, 2017.
Scheduled Distributions
on New Certificates.......... Subject to the occurrence of an
Optional Redemption, a Shortened
Maturity Redemption or an In-Kind
Distribution, no cash distributions
will be made on the Residual Class
Certificates. Instead, except in
certain circumstances of
non-payment by NSC, the Residual
Class Certificates outstanding on
May 15, 2017 will be terminated and
deemed involuntarily surrendered by
the holders thereof in exchange for
a principal amount of the NSC Notes
underlying such Residual Class
Certificates equal to the aggregate
Certificate Principal Balance of
the
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<PAGE>
Residual Class Certificates. Such
exchange will be made on a pro rata
basis among holders of the Residual
Class Certificates. No action by
such holders will be required to
effect such termination and the
exchange will be carried out in
accordance with the Trust
Agreement. The NSC Notes to be
delivered to each holder of New
Certificates on May 15, 2017 or
earlier upon an In-Kind
Distribution will entitle holders
thereof to the same rights as
holders of all other NSC Notes.
Optional Redemption.......... The NSC Notes will be redeemable
prior to maturity, as a whole or in
part, at the option of NSC (an
"Optional Redemption"), upon not
less than 30 nor more than 60 days'
prior written notice, at any time,
at a redemption price equal to the
greater of (i) 100% of the
principal amount being redeemed and
(ii) the sum of the present values
of the remaining scheduled payments
of principal and interest thereon
discounted to the date of
redemption (an "Optional Redemption
Date") on a semiannual basis at the
Treasury Yield (as defined herein)
plus 20 basis points, together with
accrued interest to the date of
redemption. In the event of an
Optional Redemption, the Trustee
will distribute the payment
received on the NSC Notes on the
Optional Redemption Date to the
holders of the Amortizing Class
Certificates and the Residual Class
Certificates, respectively, in the
same ratio as (i) the present value
of all originally scheduled future
payments on the Amortizing Class
Certificates bears to (ii) the
present value of all originally
scheduled future payments on the
NSC Notes after May 15, 2017,
discounted semiannually in each
case at a rate of 7.90% per annum
(such ratio being the "Distribution
Ratio") to the Optional Redemption
Date. Such ratio will be calculated
by the Company, as calculation
agent (the "Calculation Agent"). In
the case of an Optional Redemption
of less than all of the NSC Notes,
the Trustee will distribute the
payment received on the NSC Notes
on the Optional Redemption Date to
the holders of the Amortizing Class
Certificates and the Residual Class
Certificates on the basis of the
Distribution Ratio as of the
Optional Redemption Date on a pro
rata basis; such a distribution
will result in a reduction (based
on the percentage of NSC Notes
redeemed) of the Residual Class
Certificates Certificate Principal
Balance and a recalculation of the
Certificate Principal Balance of,
and Fixed Payments with respect to,
the Amortizing Class Certificates
based on the remaining NSC Notes
after such redemption.
Shortened Maturity
Redemption Upon the occurrence of a Tax Event
(as defined below) with respect to
the NSC Notes, NSC has the right to
shorten the maturity of the NSC
Notes (i) to the minimum extent
required, in the opinion of
nationally recognized independent
tax counsel, such that, after the
shortening of the maturity,
interest paid on the NSC Notes will
be deductible for U.S. federal
income tax purposes or, (ii) if
such counsel is unable to opine
definitively as to such minimum
period, the minimum extent so
required as determined in good
faith by the Board of Directors of
NSC after receipt of an opinion of
such counsel regarding the
applicable legal standards. (Any
such new maturity date is referred
to herein as the "Shortened
Maturity Date.") If the Shortened
Maturity Date is on or prior to May
15, 2017, the Amortizing Class
Certificates and the Residual Class
Certificates will be redeemed on
the Shortened Maturity Date (a
"Shortened Maturity Redemption").
The Trustee will distribute the
payment received on the NSC Notes
on the Shortened Maturity Date to
the holders of each class of
Certificates on the basis of the
Distribution Ratio as of the
Shortened Maturity Date. Such ratio
will be calculated by the
Calculation Agent. After such a
distribution, holders of Amortizing
Class Certificates and Residual
Class Certificates will receive no
further distributions from the
Trust. A Shortened Maturity
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<PAGE>
Redemption as a result of a Tax
Event may increase the amount of
original issue discount required to
be included in a holder's ordinary
gross income. See "U.S. Federal
Income Tax Consequences--Purchase
and Holding of Trust Certificates."
A "Tax Event" means that NSC shall
have received an opinion of
nationally recognized independent
tax counsel to the effect that, as
a result of (a) any amendment to,
clarification of, or change
(including any announced
prospective amendment,
clarification or change) in any
law, or any regulation thereunder,
of the United States, (b) any
judicial decision, official
administrative pronouncement,
ruling, regulatory procedure or
regulation, including any notice or
announcement of intent to adopt or
promulgate any ruling, regulatory
procedure or regulation (any of the
foregoing, an "Administrative or
Judicial Action"), or (c) any
amendment to, clarification of, or
change in any official position
with respect to, or any
interpretation of, an
Administrative or Judicial Action
or a law or regulation of the
United States that differs from the
theretofore generally accepted
position or interpretation, in each
case, occurring on or after May 19,
1997, there is more than an
insubstantial increase in the risk
that interest paid by NSC on the
NSC Notes is not, or will not be,
deductible, in whole or in part, by
NSC for United States federal
income tax purposes. See
"Description of the New
Certificates--Shortened Maturity
Redemption".
In-Kind Distribution......... Upon a Payment Default or an
Acceleration of the NSC Notes under
the terms of the trust indenture
relating to the NSC Notes (the "NSC
Notes Indenture") on or before May
15, 2017, the Trustee will make an
In- Kind Distribution of the NSC
Notes to the holders of the Trust
Certificates. Such distribution
will be made to the holders of the
Residual Class Certificates and the
Amortizing Class Certificates,
respectively, in the same ratio as
(i) the present value of all
originally scheduled future
payments on the NSC Notes after May
15, 2017 bears to (ii) the present
value of all originally scheduled
future payments on the Amortizing
Class Certificates, discounted
semiannually in each case at a rate
of 7.90% per annum to the date of
such Payment Default or
Acceleration. Such ratio will be
calculated by the Calculation
Agent. See "Description of New
Certificates--In-Kind
Distribution". After such a
distribution, Holders of Amortizing
Class Certificates will receive no
further distributions from the
Trust. An In-Kind Distribution may
be treated in whole or in part as
equivalent to a taxable sale or
exchange. See "U.S. Federal Income
Tax Consequences-- Distributions".
Restriction on Ownership..... Each registered holder of a New
Certificate will be required to
deliver to the Trustee a
certification upon purchase of the
New Certificate (which will be
included in the Letter of
Transmittal) to the effect that the
beneficial owner thereof (whether
such registered holder or the
ultimate beneficiary for whom it
holds such Certificate) is (a) a
qualified institutional buyer (as
defined in Rule 144A under the
Securities Act) and (b) either (i)
a United States person or (ii) a
non-United States person who is
exempt from withholding under U.S.
federal income tax laws and has
completed, accurately and in a
manner reasonably satisfactory to
the Trustee or its agent, an
appropriate statement (generally on
IRS Form W-8) signed under
penalties of perjury, identifying
the holder and stating, among other
things, that the holder is not a
U.S. person (or after December 31,
1999, if the holder satisfied
applicable documentary evidence
requirements for establishing that
it is not a U.S. person) and
delivered such statement to the
Trustee or its agent. Such
registered holder will be deemed to
have represented and
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<PAGE>
agreed with the Trustee that so
long as it is the registered holder
of such New Certificate, the
beneficial owner thereof will be a
person described in clauses (b)(i)
or (b)(ii) above and, in the event
of any change in the identity of
the beneficial owner for whom such
registered holder is acting or any
lapse of such appropriate statement
(generally on IRS Form W-8)
previously delivered to the
Trustee, it will promptly deliver a
new certification, or a current
appropriate statement (generally on
IRS Form W-8), as applicable. In
the event such representation is
untrue or such current forms are
not so furnished, the New
Certificate held by such registered
holder will be subject to mandatory
resale as described herein. See
"Description of the New
Certificates--Limitations on
Beneficial Ownership of New
Certificates" herein.
Certificateholder Exchange
Right........................ Holders of both the Amortizing
Class Certificates and Residual
Class Certificates will have the
right on any Scheduled Distribution
Date other than May 15, 2017, on
not less than 30 and not more than
45 days' prior written notice to
the Trustee, to exchange
Certificates of both Classes
representing not less than 10
percent of the Aggregate
Certificate Principal Balance of
all Certificates of such Class for
an equivalent percentage of NSC
Notes held in the Trust. See
"Description of New
Certificates--Exchange of
Certificates for NSC Notes."
Record Dates................. The fifth day immediately preceding
each Distribution Date.
Denominations................ The New Certificates will be
denominated and payable in U.S.
dollars and will be issued in
definitive, fully-registered form
in minimum denominations of
$500,000 Certificate Principal
Balance and integral multiples of
$1.00 in excess thereof.
Federal Income Tax
Consequences................. For U.S. federal income tax
purposes, the Trust will not be
treated as an association taxable
as a corporation (or a publicly
traded partnership treated as an
association). Although the
characterization of the Trust is
not certain, the Trust should be
treated for U.S. federal income tax
purposes as a grantor trust, and
the Trustee intends to report
income, gain, loss and deductions
to the Internal Revenue Service on
that basis. If the Trust were not
classified as a grantor trust, it
would be classified as a
partnership. In either event, the
Trust will not be subject to U.S.
federal income taxation.
Under the grantor trust
characterization, each holder of a
Trust Certificate will be treated
as owning the rights to those
payments on the NSC Notes that are
allocable to that Trust Certificate
and will be taxed under the
"stripped bond" rules of the
Internal Revenue Code of 1986.
Under those rules, a holder of a
Trust Certificate will be required
to include in ordinary gross income
original issue discount income
based on the holder's yield to
maturity for the Trust Certificate.
The exchange of New Certificates
for Old Certificates will not be a
sale or exchange or otherwise a
taxable event for Federal income
tax purposes. See "U.S. Federal
Income Tax Consequences--Exchange
of Old Certificates for New
Certificates".
Ratings...................... The New Certificates will be rated
"Baa1" by Moody's Investors
Service, Inc. and "BBB+" by
Standard & Poor's Rating Services
at issuance. A security rating is
not a recommendation to buy, sell
or hold securities and may be
subject to revision or withdrawal
at any time by the assigning rating
organization.
8
<PAGE>
RISK FACTORS
Prior to tendering Old Certificates in the Exchange Offer,
holders of Old Certificates should carefully review the
information contained and incorporated by reference in this
Prospectus and should particularly consider the following
matters.
Limited Obligations and Interests
The New Certificates will not represent an obligation of,
or interest in, PSSA or any of its affiliates. The New
Certificates will not be insured or guaranteed by any government
agency or instrumentality, PSSA, any Person affiliated with PSSA
or the Trustee, or any other Person.
No Detailed Information About NSC or the NSC Notes
This Prospectus provides limited information with respect
to the NSC Notes and NSC, any risk factors relating thereto, and
any rights or obligations, legal, financial or otherwise, arising
under or related to the NSC Notes. See "Description of the Trust
Assets".
Events of Default
If an event of default on the NSC Notes occurs, the risk of
loss with respect to the NSC Notes lies entirely with the holders
of the Trust Certificates. If a Payment Default or Acceleration
occurs with respect to the NSC Notes, the Trustee will distribute
the NSC Notes to the holders of the Trust Certificates in an
In-Kind Distribution. In connection with an In-Kind Distribution,
a holder will recognize gain or loss on such exchange equal to
the difference between the portion of the amount realized on the
exchange allocable to the holder and the allocable portion of the
holder's basis in the Certificate. See "Description of the New
Certificates--Distribution of the NSC Notes on Payment Default or
Acceleration" herein. An In-Kind Distribution may be treated in
whole or in part as equivalent to a taxable sale or exchange. See
"U.S. Federal Income Tax Consequences--Distributions".
Bankruptcy Risks
The New Certificates are payable solely from payments made
on the NSC Notes by NSC. NSC is subject to laws permitting
bankruptcy, moratorium, reorganization or other actions which, in
the event of financial difficulties of NSC, could result in
delays in distribution, partial distribution or non-distribution,
on the New Certificates. See "Description of the New
Certificates--Distribution of the NSC Notes on Payment Default or
Acceleration" herein.
Maturity and Redemption Considerations
The Residual Class Certificates are not scheduled to
receive any distributions before the in-kind distribution of the
NSC Notes on May 15, 2017. Potentially, the maturity and yield of
the New Certificates could be affected by (i) a cash distribution
to holders of the Trust Certificates upon a Shortened Maturity
Redemption or an Optional Redemption of the NSC Notes or (ii) a
distribution of the NSC Notes to such holders upon an In-Kind
Distribution. In the event of a cash distribution on a Shortened
Maturity Date or an Optional Redemption Date, holders of Trust
Certificates will receive their respective shares (determined
pursuant to formulas described in "Description of the New
Certificates--Shortened Maturity Redemption" and "Description of
the New Certificates--Optional Redemption") of the redemption
price (which price will consist of principal and accrued and
unpaid interest, without premium); holders may then need to
reinvest at the then-prevailing market rates rather than
receiving a fixed-rate coupon of 7.90 percent per annum for the
period remaining prior to May 15, 2017. A Shortened Maturity
Redemption as a result of a Tax Event may increase the amount of
original issue discount required to be included in a holder's
ordinary gross income. See "U.S. Federal Income Tax
Consequences--Purchase and Holding of Trust Certificates." In the
event of an In-Kind Distribution, holders of New Certificates
will receive their share of the NSC Notes (determined pursuant to
a formula described in "Description of the New
Certificates--Distribution of the NSC Notes on Payment Default or
Acceleration") at the time of such distribution, which
distribution will represent a principal amount of NSC Notes less
than the amount of NSC Notes that would be distributed as
scheduled and which distribution will occur prior to the
scheduled distribution on May 15, 2017. An
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<PAGE>
In-Kind Distribution may be treated in whole or in part as
equivalent to a taxable sale or exchange. See "U.S. Federal
Income Tax Consequences--Distributions".
Passive Nature of the Trust
The Trustee with respect to the Trust Certificates will
hold the NSC Notes for the benefit of the holders of the Trust
Certificates. The Trust will generally hold the NSC Notes to May
15, 2017 and not dispose of them, regardless of adverse events,
financial or otherwise, which may affect NSC or the value of the
NSC Notes, except pursuant to an In-Kind Distribution to holders
of the Trust Certificates in exchange for their Trust
Certificates or upon exercise of the Certificateholder Exchange
Right described herein.
Risk Factors Relating to the Certificates and the Exchange Offer
Consequences of Failure to Exchange
Holders of Old Certificates who do not exchange their Old
Certificates for New Certificates pursuant to the Exchange Offer
will continue to be subject to the restrictions on transfer of
such Old Certificates as set forth in the legend thereon as a
consequence of the issuance of the Old Certificates pursuant to
exemptions from, or in transactions not subject to, the
registration requirements of the Securities Act and applicable
state securities laws. In addition, the Old Certificates will
remain subject to the transfer restrictions described therein
pursuant to Rule 3a-7. In general, the Old Certificates may not
be offered or sold, unless registered under the Securities Act,
except pursuant to an exemption from, or in a transaction not
subject to, the Securities Act and applicable state securities
laws. PSSA does not currently anticipate that it will register
the Old Certificates under the Securities Act. To the extent that
Old Certificates are tendered and accepted in the Exchange Offer,
the trading market for Old Certificates could be adversely
affected.
Absence of a Public Market for the New Certificates
Prior to the Exchange Offer, there has been no public
market for the New Certificates and it is uncertain whether such
a market will develop. Neither PSSA nor the Trust intends to
apply for listing of the New Certificates on any securities
exchange or for quotation of the New Certificates on The Nasdaq
Stock Market's National Market or otherwise. The Trust has been
advised by Prudential Securities that it currently intends to
make a market in the New Certificates, as permitted by applicable
laws and regulations, after consummation of the Exchange Offer.
Prudential Securities is not obligated, however, to make a market
in the New Certificates, and any such market-making activity may
be discontinued at any time without notice at the sole discretion
of Prudential Securities. There can be no assurance as to the
liquidity of the market for the New Certificates or that any
active market for the New Certificates will develop or continue.
If an active market does not develop or continue, the market
price and liquidity of the New Certificates may be adversely
affected.
USE OF PROCEEDS
There will be no cash proceeds payable to PSSA or the Trust
from the issuance of the New Certificates pursuant to the
Exchange Offer. PSSA sold the Old Certificates to Prudential
Securities, an affiliate of PSSA, as initial purchaser. The
proceeds from the sale of the Old Certificates were received by
PSSA and were applied to its purchase of the NSC Notes, which,
after the purchase thereof, were deposited by PSSA in the Trust.
PSSA also paid the issuance costs out of the proceeds from the
sale of Old Certificates.
FORMATION OF THE TRUST
Receipts on Corporate Securities Trust, Series NSC 1998-1
was formed under New York law pursuant to the Trust Agreement
dated as of August 28, 1997, as amended by Base Amendment No. 1
dated as of February 27, 1998 and as supplemented by the Series
NSC 1998-1 Supplement dated as of April 13, 1998. Concurrently
with the execution and delivery of the Trust Certificates, PSSA
deposited the NSC Notes with the Trustee. The Trustee, on behalf
of the Trust, accepted the NSC Notes and delivered the Trust
Certificates to PSSA. The Trustee is holding the NSC Notes for
the benefit of the holders of the Trust Certificates.
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<PAGE>
DESCRIPTION OF THE TRUST ASSETS
The assets of the Trust consist solely of $80,000,000
aggregate principal amount of 7.90% Notes due May 15, 2097 issued
by NSC and having the characteristics described in the NSC Notes
Prospectus. The NSC Notes were originally issued by NSC on or
about May 19, 1997 as part of an underwritten public offering of
$350,000,000 aggregate principal amount of such securities (CUSIP
No. 655844AK4) pursuant to a registration statement on Form S-3
(File No. 333-24051) (together with all amendments and exhibits
thereto, the "NSC Notes Registration Statement"), filed by NSC
with the Commission under the Securities Act. Payments of
interest are required to be made on the NSC Notes semiannually on
the fifteenth day of each May and November, commencing November
15, 1997, or if such day is not a business day, on the next
business day.
The NSC Notes deposited in the Trust represent the sole
assets of the Trust that are available to make distributions in
respect of the Trust Certificates. Consequently, the ability of
holders of New Certificates to receive cash distributions in
respect of the New Certificates in the event of an Optional
Redemption or a Shortened Maturity Redemption will depend on the
Trust's receipt of payments on, or in respect of, the NSC Notes.
Holders of New Certificates have no rights with respect to
the NSC Notes except in the event of an In-Kind Distribution.
The NSC Notes Prospectus states that the NSC Notes rank
pari passu with all other unsecured and unsubordinated
indebtedness of NSC. Under the NSC Notes Indenture, the events of
default are as follows: (a) failure to pay principal of or any
premium on any NSC Note when due; (b) failure to pay any interest
on any NSC Note when due, continued for 30 days; (c) failure to
perform any other covenant or warranty of NSC in the NSC Notes
Indenture with respect to the NSC Notes, continued for 90 days
after written notice, as provided in the NSC Notes Indenture; (d)
acceleration of the NSC Notes or any other indebtedness for
borrowed money, in an aggregate principal amount exceeding
$30,000,000, of NSC or any Significant Subsidiary (within the
meaning of the federal securities laws) under the terms of the
instrument or instruments under which such indebtedness is issued
or secured, if such acceleration is not annulled, or such
indebtedness is not discharged, or a sum of money sufficient to
discharge in full such indebtedness is not deposited in trust,
within 10 days after written notice as provided in the NSC Notes
Indenture, and (e) certain events in bankruptcy, insolvency or
reorganization.
The NSC Notes are not subject to a sinking fund. The NSC
Notes may be redeemed, in whole or in part, at any time at the
option of NSC. See "Description of the Trust Assets--Optional
Redemption."
The NSC Notes are denominated in United States dollars and
issued in fully registered form without coupons in denominations
of $1,000 and any integral multiples thereof. The NSC Notes were
issued in book-entry form only and are held through participants
in the Depository Trust Company.
Optional Redemption
The NSC Notes will be redeemable prior to maturity, as a
whole or in part, at the option of NSC (an "Optional
Redemption"), upon not less than 30 nor more than 60 days' prior
written notice, at any time, at a redemption price equal to the
greater of (i) 100% of the principal amount being redeemed and
(ii) the sum of the present values of the remaining scheduled
payments of principal and interest thereon discounted to the date
of redemption (an "Optional Redemption Date") on a semiannual
basis at the Treasury Yield (as defined below) plus 20 basis
points, together with accrued interest to the date of redemption.
In the event of an Optional Redemption,
the Trustee will distribute the payment received on the NSC Notes
on the Optional Redemption Date to the holders of the Amortizing
Class Certificates and the Residual Class Certificates,
respectively, in the same ratio as (i) the present value of all
originally scheduled future payments on the Amortizing Class
Certificates bears to (ii) the present value of all originally
scheduled future payments on the NSC Notes after May 15, 2017,
discounted semiannually in each case at a rate of 7.90% per annum
(such ratio being the "Distribution Ratio") to the Optional
Redemption Date. Such ratio will be calculated by the Company, as
calculation agent (the "Calculation Agent"). In the case of such
an Optional Redemption of less than all of the NSC Notes, the
Trustee will distribute the payment received on the NSC Notes on
the Optional Redemption Date to the holders of the Amortizing
Class Certificates and the Residual Class Certificates on the
basis of the Distribution Ratio as of the Optional Redemption
Date on a pro
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rata basis; such a distribution will result in a reduction (based
on the percentage of NSC Notes redeemed) of the Residual Class
Certificates Certificate Principal Balance and a recalculation of
the Certificate Principal Balance of, and Fixed Payments with
respect to, the Amortizing Class Certificates based on the
remaining NSC Notes after such redemption.
"Treasury Yield" means, with respect to any redemption
date, the rate per annum equal to the semi-annual equivalent
yield to maturity of the Comparable Treasury Issue, assuming a
price of the Comparable Treasury Issue (expressed as a percentage
of its principal amount) equal to the Comparable Treasury Price
for such redemption date.
"Comparable Treasury Issue" means the United States
Treasury security selected by the Independent Investment Banker
as having a maturity most comparable to the remaining term of the
NSC Notes, that would be utilized, at the time of selection and
in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the
remaining term of the NSC Notes.
"Independent Investment Banker" means J.P. Morgan
Securities Inc. or Merrill Lynch, Pierce, Fenner & Smith
Incorporated or, if either such firm is unwilling or unable to
select the Comparable Treasury Issue, an independent investment
banking institution of national standing in the United States
appointed by the Senior Trustee after consultation with the
Corporation.
"Comparable Treasury Price" means, with respect to any
redemption date, (i) the average of the bid and asked prices for
the Comparable Treasury Issue (expressed in each case as a
percentage of its principal amount) on the third business day
preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the
Federal Reserve Bank of New York and designated "Composite 3:30
p.m. Quotations for U.S. Government Securities" or (ii) if such
release (or any successor release) is not published or does not
contain such prices on such business day, the average of the
Reference Treasury Dealer Quotations for such redemption date.
"Reference Treasury Dealer Quotations" means, with respect to
each Reference Treasury Dealer and any redemption date, the
average, as determined by the Trustee, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case
as a percentage of its principal amount) quoted in writing to the
Trustee by such Reference Treasury Dealer at 5:00 p.m., New York,
New York time, on the third business day preceding such
redemption date.
"Reference Treasury Dealer" means each of J.P. Morgan
Securities Inc. and Merrill Lynch Government Securities Inc. and
their respective successors; provided, however, that if one of
the foregoing ceases to be a primary U.S. Government securities
dealer in New York, New York (a "Primary Treasury Dealer") or
otherwise fails to provide a Reference Treasury Dealer Quotation,
NSC will substitute therefor another Primary Treasury Dealer.
Shortened Maturity Redemption
The NSC Notes Prospectus states as follows: NSC intends to
deduct interest paid on the NSC Notes for United States federal
income tax purposes. The Clinton Administration's budget proposal
for Fiscal Year 1998, however, which was released on February 6,
1997, contains a series of proposed tax law changes that, if
enacted, would prohibit an issuer from deducting interest
payments on debt instruments that have a maturity of more than 40
years, such as the NSC Notes described herein. The
Administration's proposal specifies that the changes would be
effective for debt instruments issued on or after the date of the
first Congressional Committee action. There can be no assurance
that legislation affecting NSC's ability to deduct interest paid
on the NSC Notes will not be enacted in the future or that any
such legislation would not be effective retroactively.
The NSC Notes Prospectus states as follows: Upon the
occurrence of a Tax Event (as defined below), NSC will have the
right, without the consent of the holders of the NSC Notes, to
shorten the maturity of the NSC Notes to the minimum extent
required, in the opinion of nationally recognized independent tax
counsel to NSC, such that, after the shortening of the maturity,
interest paid on the NSC Notes will be deductible for United
States federal income tax purposes of, if such counsel is unable
to opine definitively as to such minimum period, the minimum
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extent so required as determined in good faith by the Board of
Directors of NSC, after receipt of an opinion of such counsel
regarding applicable legal standards. There can be no assurance
that NSC would not exercise its right to shorten the maturity of
the NSC Notes upon the occurrence of such a Tax Event and no
assurance as to the period by which such maturity would be
shortened.
The NSC Notes Prospectus states as follows: In the event
that NSC elects to exercise its right to shorten the maturity of
NSC Notes upon the occurrence of a Tax Event, NSC will mail a
notice of shortened maturity to each holder of the NSC Notes by
first-class mail not more than 60 days after the occurrence of
such Tax Event, stating the new maturity date of the NSC Notes.
Such notice shall be effective immediately upon mailing.
The NSC Notes Prospectus states as follows: NSC believes
that the NSC Notes should constitute indebtedness for United
States federal income tax purposes under current law and, in that
case, an exercise of its right to shorten the maturity of the NSC
Notes would not be a taxable event to holders for such purposes.
Prospective investors should be aware, however, that NSC's
exercise of its right to shorten the maturity of the NSC Notes
would be a taxable event to holders for United States federal
income tax purposes if the NSC Notes are treated as equity for
such purposes before the maturity is shortened and the NSC Notes
of shortened maturity are treated as debt for such purposes.
NSC Notes Indenture
The NSC Notes were issued under the NSC Notes Indenture,
dated January 15, 1991, as amended or supplemented, between NSC
and First Trust of New York, N.A., as trustee.
Modification, Amendment and Waiver
The NSC Notes Prospectus states as follows: Modifications
and amendments of the NSC Notes Indenture may be made by NSC and
the NSC Notes Trustee with the consent of the holders of a
majority in aggregate principal amount of the debt securities of
each series affected by such modification amendment; provided,
however, that no such modification or amendment may, without the
consent of the holder of each debt security affected thereby, (1)
change the stated maturity date of the principal of, or any
installment of principal of, premium, if any, or interest, if
any, on, any debt security, (2) reduce the principal, premium, if
any, and/or interest, if any, on, any debt security, (3) reduce
the amount of principal on an original issue discount debt
security payable on acceleration of the maturity thereof, (4)
change the place or currency of payment of principal, premium, if
any, and/or interest, if any, on any debt security, (5) impair
the right to institute suit for the enforcement of any payment on
or with respect to any debt security, (6) reduce the percentage
in principal amount of debt securities of any series, the consent
of the holders of which is required for modification or amendment
of the NSC Notes Indenture or for waiver of certain defaults, (7)
modify the conversion provisions applicable to convertible debt
securities in a manner adverse to the holders thereof or (8)
modify the subordination provisions applicable to any series of
debt securities in a manner adverse to the holders thereof.
The NSC Notes Prospectus states as follows: The holders of
a majority in aggregate principal amount of the debt securities
of each series may, on behalf of all holders of debt securities
of that series, waive, insofar as that series is concerned,
compliance by NSC with certain restrictive provisions of the NSC
Notes Indenture. The holders of a majority in aggregate principal
amount of the debt securities of each series may, on behalf of
all holders of debt securities of that series, waive any past
default under the applicable NSC Notes Indenture with respect to
debt securities of that series, except (1) a default in the
payment of principal, premium, if any, and/or interest, if any,
on any debt security of such series and (2) in respect of a
covenant or provision of the NSC Notes Indenture which cannot be
modified or amended without the consent of the holder of each
debt security of such series affected.
The information under this caption is derived solely from
the description of the NSC Notes contained in the NSC Notes
Prospectus. An investor may wish to read this Prospectus in
conjunction with (i) the NSC Notes Prospectus and (ii) the NSC
Notes Registration Statement, of which the NSC Notes Prospectus
is a part. This Prospectus relates only to New Certificates
offered hereby and does not relate to an offering of the NSC
Notes. No representation is made by the Trust,
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the Trustee or PSSA as to the accuracy or completeness of the
information contained in the NSC Notes Prospectus or the NSC
Notes Registration Statement.
NSC
This Prospectus does not provide information with respect
to NSC. No investigation has been made of the financial condition
or creditworthiness of NSC or any of its subsidiaries in
connection with the issuance of the New Certificates. PSSA is not
an affiliate of NSC. Prospective purchasers of the New
Certificates should consider carefully NSC's financial condition
and its ability to make payments in respect of the NSC Notes. All
information contained in this Prospectus regarding NSC is derived
from the NSC Notes Prospectus. Neither PSSA nor the Trust nor any
of their respective affiliates has participated in the
preparation of the NSC Notes Prospectus or the NSC Notes
Registration Statement, and takes no responsibility for the
accuracy or completeness of the information provided therein.
NSC is presently subject to the informational requirements
of the Exchange Act, and in accordance therewith files reports
and other information (including financial information) with the
Commission. Copies of such reports and other information may be
inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549; Seven World Trade Center, Suite
1300, New York, New York 10048; and Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and
may be obtained from the Public Reference Section of the
Commission at Washington, D.C. 20549, at prescribed rates. The
Commission maintains a Web site at http://www.sec.gov containing
reports, proxy statements and other information regarding
registrants that file electronically with the Commission. In
addition, certain material described above and other information
will also be available for inspection at the offices of the New
York Stock Exchange at 20 Broad Street, New York, New York.
Neither PSSA nor the Trust nor any of their respective affiliates
has participated in the preparation of any of the foregoing
reports or other information filed by NSC with the Commission or
the New York Stock Exchange or has made any investigation with
respect to the information contained therein.
If NSC ceases to be a reporting company under the Exchange
Act, information regarding NSC or the NSC Notes will be limited
to any information received by the Trustee, as the holder of the
NSC Notes, pursuant to the NSC Notes Indenture from NSC or the
trustee under the NSC Notes Indenture (the "NSC Notes Trustee").
The Trustee will furnish such information to registered holders
of the Trust Certificates promptly following receipt.
The Trust will have no assets other than the NSC Notes from
which to make distributions of amounts due in respect of the
Trust Certificates. Consequently, the ability of holders of Trust
Certificates to receive distributions and the timeliness of such
distributions in respect of the New Certificates will depend on
the Trust's receipt of payments on the NSC Notes from NSC.
Ratings
The NSC Notes have been rated "Baa1" and "BBB+" by Moody's
Investors Service, Inc. and Standard & Poor's Rating Services,
respectively. The New Certificates will be rated "Baa1" by
Moody's Investors Service, Inc. and "BBB+" by Standard & Poor's
Rating Services at issuance. Any rating of the NSC Notes or the
New Certificates is not a recommendation to purchase, hold or
sell the New Certificates, and there can be no assurance that a
rating will remain for any given period of time or that a rating
will not be revised or withdrawn entirely by a rating agency if
in its judgment circumstances in the future so warrant.
Prudential Securities and NSC
From time to time, Prudential Securities may be engaged by
NSC as an underwriter or placement agent, in an advisory capacity
or in other business arrangements. In addition, Prudential
Securities or another affiliate of PSSA may make a market in
other outstanding securities of NSC.
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THE EXCHANGE OFFER
The summary herein of certain provisions of the
Registration Rights Agreement does not purport to be complete and
reference is made to the provisions of the Registration Rights
Agreement, filed as an exhibit to the Registration Statement of
which this Prospectus is a part.
Terms of the Exchange Offer
In connection with the sale of the Old Certificates
pursuant to a Purchase Agreement dated as of August 25, 1997 and
the Terms Agreement dated as of April 13, 1998, between PSSA and
Prudential Securities, their respective assignees became entitled
to the benefits of the Registration Rights Agreement incorporated
by reference hereto as described under "Incorporation of Certain
Documents by Reference".
Under the Registration Rights Agreement, except in certain
circumstances, PSSA is obligated to use its best efforts to (i)
file a Registration Statement (the "Exchange Offer Registration
Statement"), of which this Prospectus is a part, for a registered
exchange offer with respect to an issue of New Certificates
identical in all material respects to the Old Certificates within
180 calendar days after April 13, 1998, the date the Old
Certificates were issued, (ii) use its reasonable best efforts to
cause the Registration Statement to become effective at the
earliest practicable time, (iii) use its reasonable best efforts
to consummate the Exchange Offer on or prior to 210 days from
April 13, 1998, and (iv) in connection with the foregoing, (A)
file all pre-effective amendments to such Exchange Offer
Registration Statement as may be necessary in order to cause such
Exchange Offer Registration Statement to become effective, (B)
file, if applicable, a post-effective amendment to such Exchange
Offer Registration Statement pursuant to Rule 430A under the Act
and (C) cause all necessary filings, if any, in connection with
the registration and qualification of the Exchange Certificates
to be made under the Blue Sky laws of such jurisdictions as are
necessary to permit consummation of the Exchange Offer and (iv)
promptly after the effectiveness of such Exchange Offer
Registration Statement, commence and consummate the Exchange
Offer. The Trust will keep the Exchange Offer open for a period
of not less than 30 calendar days and not more than 45 days after
the date notice of the Exchange Offer is mailed to holders. The
Exchange Offer being made hereby, if commenced and consummated
within the time periods described in this paragraph, will satisfy
those requirements under the Registration Rights Agreement.
Upon the terms and subject to the conditions set forth in
this Prospectus and in the Letter of Transmittal (which together
constitute the Exchange Offer), all Old Certificates validly
tendered and not withdrawn prior to 5:00 p.m., New York City
time, on the Expiration Date will be accepted for exchange. New
Certificates of the same class will be issued in exchange for an
equal principal amount of outstanding Old Certificates accepted
in the Exchange Offer. Old Certificates may be tendered only in
minimum denominations of $500,000 Certificate Principal Balance
and integral multiples of $1.00 in excess thereof. This
Prospectus, together with the Letter of Transmittal, is being
sent to all registered holders as of , 1998. The Exchange Offer
is not conditioned upon any minimum principal amount of Old
Certificates being tendered in exchange. However, the obligation
to accept Old Certificates for exchange pursuant to the Exchange
Offer is subject to certain conditions as set forth herein under
"--Conditions".
Old Certificates shall be deemed to have been accepted as
validly tendered when, as and if the Trustee has given oral or
written notice thereof to the Exchange Agent. The Exchange Agent
will act as agent for the tendering holders of Old Certificates
for the purposes of receiving the New Certificates and delivering
New Certificates to such holders.
Based on interpretations by the staff of the Commission, as
set forth in no-action letters issued to third parties, including
the Exchange Offer No-Action Letters, PSSA believes that the New
Certificates issued pursuant to the Exchange Offer may be offered
for resale, resold or otherwise transferred by holders thereof
(other than a broker-dealer who acquires such New Certificates
directly from PSSA for resale pursuant to Rule 144A under the
Securities Act or any other available exemption under the
Securities Act or any holder that is an "affiliate" of PSSA as
defined in Rule 405 under the Securities Act), without compliance
with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Certificates are acquired
in the ordinary course of such holders' business and such holders
are not engaged in, and do not intend to engage in, a
distribution of such New Certificates and have no arrangement
with any person to participate in a distribution of such New
Certificates. By tendering the Old Certificates in exchange for
New Certificates, each holder, other than a broker-dealer, will
represent to the Trust that (i) it is not an affiliate of PSSA
(as defined in Rule 405 under the Securities Act) or a
broker-dealer tendering Old Certificates acquired directly from
the Trust or PSSA for its own account; (ii) any New Certificates
to be received by it will be acquired in the ordinary course of
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<PAGE>
its business; and (iii) it is not engaged in, and does not intend
to engage in, a distribution of such New Certificates and has no
arrangement or understanding to participate in a distribution of
the New Certificates. If a holder of Old Certificates is engaged
in or intends to engage in a distribution of the New Certificates
or has any arrangement or understanding with respect to the
distribution of the New Certificates to be acquired pursuant to
the Exchange Offer, such holder may not rely on the applicable
interpretations of the staff of the Commission and must comply
with the registration and prospectus delivery requirements of the
Securities Act in connection with any secondary resale
transaction. Each Broker-Dealer that receives New Certificates
for its own account ("Restricted Broker-Dealer") pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus
in connection with any resale of such New Certificates. The
Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a Restricted Broker-Dealer will not be
deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a Restricted
Broker-Dealer in connection with resales of New Certificates
received in exchange for Old Certificates where such Old
Certificates were acquired by such Restricted Broker-Dealer as a
result of market-making activities or other trading activities.
PSSA has agreed that for a period of one year it will cause this
Prospectus to be made available to any Restricted Broker-Dealer
for use in connection with any such resale. See "Plan of
Distribution".
If (i) PSSA is not required to file an Exchange Offer
Registration Statement with respect to the New Certificates
because the Exchange Offer is not permitted by applicable law or
(ii) if any holder of Old Certificates shall notify PSSA within
20 Business Days following the consummation of the Exchange Offer
that (A) such holder was prohibited by law or Commission policy
from participating in the Exchange Offer or (B) such holder may
not resell the Exchange Certificates acquired by it in the
Exchange Offer to the public without delivering a prospectus and
the prospectus contained in the Exchange Offer Registration
Statement is not appropriate or available for such resales by
such holder or (C) such holder is a Broker-Dealer and holds Old
Certificates acquired directly from any of the Trust or PSSA or
one of their respective Affiliates, then PSSA shall (x) cause to
be filed, on or prior to 60 days after the date on which PSSA
determines that it is not required to file the Exchange Offer
Registration Statement pursuant to clause (i) above, or 60 days
after the date on which PSSA receives the notice specified in
clause (ii) above, a shelf registration statement pursuant to
Rule 415 under the Securities Act (which may be an amendment to
the Exchange Offer Registration Statement (in either event, the
"Shelf Registration Statement") relating to all Old Certificates
the holders of which shall have provided the information required
by the Registration Rights Agreement, and shall (y) use its best
efforts to cause such Shelf Registration Statement to become
effective on or prior to 190 days after the date on which PSSA
becomes obligated to file such Shelf Registration Statement. PSSA
shall use its best efforts to keep the Shelf Registration
Statement continuously effective, supplemented and amended to the
extent necessary to ensure that it is available for sales of Old
Certificates by the holders thereof entitled to the benefit of
the Shelf Registration Statement, and to ensure that it conforms
with the requirements of the Registration Rights Agreement, the
Securities Act and the policies, rules and regulations of the
Commission as announced from time to time, for a period of not
more than one year following the date on which such Shelf
Registration Statement first becomes effective under the
Securities Act or such shorter period that will terminate when
all the Old Certificates covered by the Shelf Registration
Statement have been sold pursuant to the Shelf Registration
Statement.
Upon consummation of the Exchange Offer, subject to certain
exceptions, holders of Old Certificates who do not exchange their
Old Certificates for New Certificates in the Exchange Offer will
no longer be entitled to registration rights and will not be able
to offer or sell their Old Certificates, unless such Old
Certificates are subsequently registered under the Securities Act
(which, subject to certain limited exceptions, PSSA will have no
obligation to do), except pursuant to an exemption from, or in a
transaction not subject to, the Securities Act and applicable
state securities laws. See "Risk Factors--Risk Factors Relating
to the New Certificates and the Exchange Offer".
NEITHER PSSA NOR THE TRUSTEE MAKES ANY RECOMMENDATION TO
HOLDERS OF OLD CERTIFICATES AS TO WHETHER TO TENDER OR REFRAIN
FROM TENDERING ALL OR ANY PORTION OF THEIR OLD CERTIFICATES
PURSUANT TO THE EXCHANGE OFFER. IN ADDITION, NO ONE HAS BEEN
AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF OLD
CERTIFICATES MUST MAKE THEIR OWN DECISION WHETHER TO TENDER
PURSUANT TO THE EXCHANGE OFFER AND, IF SO, THE AGGREGATE AMOUNT
OF OLD CERTIFICATES TO TENDER AFTER READING THIS PROSPECTUS AND
THE LETTER OF TRANSMITTAL AND CONSULTING WITH THEIR ADVISERS, IF
ANY, BASED ON THEIR OWN FINANCIAL POSITION AND REQUIREMENTS.
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Expiration Date; Extensions; Amendments; Termination
The term "Expiration Date" shall mean 5:00 p.m., New York
City time, on (30 calendar days following the commencement
of the Exchange Offer), unless PSSA, in its sole discretion,
instructs the Exchange Agent to extend the Exchange Offer, in
which case the term "Expiration Date" shall mean the latest date
to which the Exchange Offer is extended.
In order to extend the Expiration Date, PSSA will notify
the Exchange Agent of any extension by oral or written notice and
will cause the Exchange Agent to notify the holders of the Old
Certificates by means of a press release or other public
announcement prior to 9:00 A.M., New York City time, on the next
business day after the previously scheduled Expiration Date. Such
announcement may state that the Trust is extending the Exchange
Offer for a specified period of time.
PSSA reserves the right to cause the Trust and the Exchange
Agent (i) to delay acceptance of any Old Certificates, to extend
the Exchange Offer or to terminate the Exchange Offer and not
permit acceptance of Old Certificates not previously accepted if
any of the conditions set forth herein under "-- Conditions"
shall have occurred and shall not have been waived by PSSA, by
giving oral or written notice of such delay, extension or
termination to the Exchange Agent, or (ii) to cause the Trustee
to amend the terms of the Exchange Offer in any manner deemed by
it to be advantageous to the holders of the Old Certificates. Any
such delay in acceptance, extension, termination or amendment
will be followed as promptly as practicable by oral or written
notice thereof to the Exchange Agent. If the Exchange Offer is
amended in a manner determined by PSSA to constitute a material
change, PSSA will promptly cause such amendment to be disclosed
in a manner reasonably calculated to inform the holders of the
Old Certificates of such amendment.
Without limiting the manner in which the Exchange Agent may
choose to make public announcement of any delay, extension,
amendment or termination of the Exchange Offer, the Exchange
Agent shall have no obligation to publish, advertise, or
otherwise communicate any such public announcement, other than by
making a timely release to an appropriate news agency.
Procedures for Tendering
To tender in the Exchange Offer, a holder must complete,
sign and date the Letter of Transmittal, or a facsimile thereof,
have the signatures thereon guaranteed if required by the Letter
of Transmittal, and mail or otherwise deliver such Letter of
Transmittal or such facsimile, together with any other required
documents, to the Exchange Agent prior to 5:00 p.m., New York
City time, on the Expiration Date. In addition, (A) either (i)
certificates for such Old Certificates must be received by the
Exchange Agent along with the Letter of Transmittal or (ii) the
holder must comply with the guaranteed delivery procedures
described below, and (B) a certification to the effect that the
beneficial owner thereof (whether such registered holder or the
ultimate beneficiary for whom it holds such Old Certificate(s))
is (a) a qualified institutional buyer (as defined in Rule 144A
under the Securities Act) and (b) either (i) a United States
person or (ii) a non-United States person who is exempt from
withholding under U.S. federal income tax laws and has completed,
accurately and in a manner reasonably satisfactory to the Trustee
or its agent, an IRS Form W-8 and delivered such Form to the
Trustee or its agent unless such certificate has already been
provided to the Trustee in connection with the purchase of the
Old Certificate(s) being tendered and the status of the
beneficial owner has not changed. THE METHOD OF DELIVERY OF OLD
CERTIFICATES, LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED
DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS. IF SUCH
DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL,
PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY
DELIVERY. NO LETTERS OF TRANSMITTAL OR OLD CERTIFICATES SHOULD BE
SENT TO PSSA. Delivery of all documents must be made to the
Exchange Agent at its address set forth below. Holders may also
request their respective brokers, dealers, commercial banks,
trust companies or nominees to effect such tender for such
holders.
The tender by a holder of Old Certificates will constitute
an agreement between such holder and the Trust in accordance with
the terms and subject to the conditions set forth herein and in
the Letter of Transmittal.
Only a holder of Old Certificates may tender such Old
Certificates in the Exchange Offer. The term "holder" with
respect to the Exchange Offer means any person in whose name Old
Certificates are registered on the books of the Trustee or any
other person who has obtained a properly completed bond power
from the registered holder.
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Any beneficial owner whose Old Certificates are registered
in the name of a broker, dealer, commercial bank, trust company
or other nominee and who wishes to tender should contact such
registered holder promptly and instruct such registered holder to
tender on his behalf. If such beneficial owner wishes to tender
on his own behalf, such beneficial owner must, prior to
completing and executing the Letter of Transmittal and delivering
his Old Certificates, either make appropriate arrangements to
register ownership of the Old Certificates in such owner's name
or obtain a properly completed bond power from the registered
holder. The transfer of registered ownership may take
considerable time.
Signatures on a Letter of Transmittal or a notice of
withdrawal, as the case may be, must be guaranteed by any member
firm of a registered national securities exchange or of the
National Association of Securities Dealers, Inc., a commercial
bank or trust company having an office or correspondent in the
United States or an "eligible guarantor" institution within the
meaning of Rule 17Ad-15 under the Exchange Act (each an "Eligible
Institution") unless the Old Certificates tendered pursuant
thereto are tendered (i) by a registered holder who has not
completed the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution.
If the Letter of Transmittal is signed by a person other
than the registered holder of any Old Certificates listed
therein, such Old Certificates must be endorsed or accompanied by
bond powers and a proxy which authorizes such person to tender
the Old Certificates on behalf of the registered holder, in each
case as the name of the registered holder or holders appears on
the Old Certificates.
If the Letter of Transmittal or any Old Certificates or
bond powers are signed by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons
should so indicate when signing, and unless waived by the
Trustee, evidence satisfactory to the Trustee of their authority
to so act must be submitted with the Letter of Transmittal.
All questions as to the validity, form, eligibility
(including time of receipt) and withdrawal of the tendered Old
Certificates will be determined by the Trustee in its sole
discretion, which determination will be final and binding. The
Trustee reserves the absolute right to reject any and all Old
Certificates not properly tendered or any Old Certificates which,
if accepted, would, in the opinion of counsel for PSSA, be
unlawful. The Trustee also reserves the absolute right to waive
any irregularities or conditions of tender as to particular Old
Certificates. The Trustee's interpretation of the terms and
conditions of the Exchange Offer (including the instructions in
the Letter of Transmittal) will be final and binding on all
parties. Unless waived, any defects or irregularities in
connection with tenders of Old Certificates must be cured within
such time as the Trustee shall determine. Neither the Trustee nor
PSSA, nor the Exchange Agent nor any other person shall be under
any duty to give notification of defects or irregularities with
respect to tenders of Old Certificates, nor shall any of them
incur any liability for failure to give such notification.
Tenders of Old Certificates will not be deemed to have been made
until such irregularities have been cured or waived. Any Old
Certificates received by the Exchange Agent that are not properly
tendered and as to which the defects or irregularities have not
been cured or waived will be returned without cost to such holder
by the Exchange Agent to the tendering holders of Old
Certificates, unless otherwise provided in the Letter of
Transmittal, as soon as practicable following the Expiration
Date.
In addition, PSSA reserves the right in its sole discretion
(i) to purchase or make offers for any Old Certificates that
remain outstanding subsequent to the Expiration Date or, as set
forth under "-- Conditions", to terminate the Exchange Offer in
accordance with the terms of the Registration Rights Agreement
and (ii) to the extent permitted by applicable law, to purchase
Old Certificates in the open market, in privately negotiated
transactions or otherwise. The terms of any such purchases or
offers could differ from the terms of the Exchange Offer.
Acceptance of Old Certificates for Exchange; Delivery of New
Certificates
Upon satisfaction or waiver of all of the conditions to the
Exchange Offer, all Old Certificates properly tendered will be
accepted, promptly after the Expiration Date, and the New
Certificates will be issued promptly after acceptance of the Old
Certificates. For purposes of the Exchange Offer, Old
Certificates shall be deemed to have been accepted as validly
tendered for exchange when, as and if the Trustee has given oral
or written notice thereof to the Exchange Agent.
In all cases, issuance of New Certificates for Old
Certificates that are accepted for exchange pursuant to the
Exchange Offer will be made only after timely receipt by the
Exchange Agent of certificates for such Old Certificates, a
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properly completed and duly executed Letter of Transmittal and
all other required documents. If any tendered Old Certificates
are not accepted for any reason set forth in the terms and
conditions of the Exchange Offer or if Old Certificates are
submitted for a greater principal amount than the holder desires
to exchange, such unaccepted or nonexchanged Old Certificates
will be returned without expense to the tendering holder thereof
as promptly as practicable after the expiration or termination of
the Exchange Offer.
Guaranteed Delivery Procedures
If a registered holder of the Old Certificates desires to
tender such Old Certificates, and the Old Certificates are not
immediately available, or time will not permit such holder's Old
Certificates or other required documents to reach the Exchange
Agent before the Expiration Date, a tender may be effected if (i)
the tender is made through an Eligible Institution, (ii) prior to
the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed
Letter of Transmittal (or a facsimile thereof) and Notice of
Guaranteed Delivery, substantially in the form provided by PSSA
(by facsimile transmission, mail or hand delivery), setting forth
the name and address of the holder of Old Certificates and the
amount of Old Certificates tendered, stating that the tender is
being made thereby and guaranteeing that within three New York
Stock Exchange (the "NYSE") trading days after the date of
execution of the Notice of Guaranteed Delivery, the certificates
for all physically tendered Old Certificates, in proper form for
transfer, and any other documents required by the Letter of
Transmittal will be deposited by the Eligible Institution with
the Exchange Agent and (iii) the certificates for all physically
tendered Old Certificates, in proper form for transfer, and all
other documents required by the Letter of Transmittal are
received by the Exchange Agent within three NYSE trading days
after the date of execution of the Notice of Guaranteed Delivery.
Withdrawal of Tenders
Tenders of Old Certificates may be withdrawn at any time
prior to 5:00 p.m., New York City time on the Expiration Date.
For a withdrawal to be effective, a written notice of
withdrawal must be received by the Exchange Agent prior to 5:00
p.m., New York City time on the Expiration Date at one of the
addresses set forth below under "--Exchange Agent". Any such
notice of withdrawal must specify the name of the person having
tendered the Old Certificates to be withdrawn, identify the Old
Certificates to be withdrawn (including the principal amount of
such Old Certificates) and (where certificates for Old
Certificates have been transmitted) specify the name in which
such Old Certificates are registered, if different from that of
the withdrawing holder. If certificates for Old Certificates have
been delivered or otherwise identified to the Exchange Agent,
then, prior to the release of such certificates, the withdrawing
holder must also submit the serial numbers of the particular
certificates to be withdrawn and a signed notice of withdrawal
with signatures guaranteed by an Eligible Institution unless such
holder is an Eligible Institution. All questions as to the
validity, form and eligibility (including time of receipt) of
such notices will be determined by the Trustee, whose
determination shall be final and binding on all parties. Any Old
Certificates so withdrawn will be deemed not to have been validly
tendered for exchange for purposes of the Exchange Offer. Any Old
Certificates which have been tendered for exchange but which are
not exchanged for any reason will be returned to the holder
thereof without cost to such holder as soon as practicable after
withdrawal, rejection of tender or termination of the Exchange
Offer. Properly withdrawn Old Certificates may be retendered by
following one of the procedures described under "-- Procedures
for Tendering" above at any time on or prior to the Expiration
Date.
Conditions
Notwithstanding any other term of the Exchange Offer, Old
Certificates will not be required to be accepted for exchange,
nor will New Certificates be issued in exchange for any Old
Certificates, and PSSA may cause the Trustee to terminate or
amend the Exchange Offer as provided herein before the acceptance
of such Old Certificates, if because of any change in law, or
applicable interpretations thereof by the Commission, PSSA
determines that the Trust is not permitted to effect the Exchange
Offer. PSSA has no obligation to, and will not knowingly, permit
acceptance of tenders of Old Certificates by the Trust from
affiliates of PSSA (within the meaning of Rule 405 under the
Securities Act) or from any other holder or holders who are not
eligible to participate in the Exchange Offer under applicable
law or interpretations thereof by the Commission, or if the New
Certificates to be received by such holder or holders of Old
Certificates in the Exchange Offer, upon receipt, will not be
tradable by such holder without restriction under the
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Securities Act and the Exchange Act and without material
restrictions under the "blue sky" or securities laws of
substantially all of the states of the United States.
Exchange Agent
The Bank of New York has been appointed as Exchange Agent
for the Exchange Offer. Questions and requests for assistance and
requests for additional copies of this Prospectus or of the
Letter of Transmittal should be directed to the Exchange Agent
addressed as follows:
By Mail or By Hand:
The Bank of New York
101 Barclay Street, 12 East
New York, N.Y. 10286
Attention: Corporate Trust--Administration
Telephone: (212) 815-5098
Facsimile: (212) 815-5999
Fees and Expenses
The expenses of soliciting tenders pursuant to the Exchange
Offer will be borne by PSSA on behalf of the Trust pursuant to
the Registration Rights Agreement. The principal solicitation for
tenders pursuant to the Exchange Offer is being made by mail;
however, additional solicitations may be made by telegraph,
telephone, telecopy or in person by officers and regular
employees or agents of PSSA on behalf of the Trust.
PSSA will not make any payments to brokers, dealers or
other persons soliciting acceptances of the Exchange Offer. PSSA,
however, will pay on behalf of the Trust the Exchange Agent's
reasonable and customary fees for its services and will reimburse
the Exchange Agent for its reasonable out-of-pocket expenses in
connection therewith. PSSA may also pay on behalf of the Trust,
the reasonable out-of-pocket expenses incurred by brokerage
houses and other custodians, nominees and fiduciaries in
forwarding copies of the Prospectus and related documents to the
beneficial owners of the Old Certificates, and in handling or
forwarding tenders for exchange.
The expenses to be incurred in connection with the Exchange
Offer will be paid by PSSA on behalf of the Trust, including fees
and expenses of the Exchange Agent and Trustee and accounting,
legal, printing and related fees and expenses.
PSSA will pay all transfer taxes, if any, applicable to the
exchange of Old Certificates pursuant to the Exchange Offer. If,
however, certificates representing New Certificates or Old
Certificates for principal amounts not tendered or accepted for
exchange are to be delivered to, or are to be registered or
issued in the name of, any person other than the registered
holder of the Old Certificates tendered, or if tendered Old
Certificates are registered in the name of any person other than
the person signing the Letter of Transmittal, or if a transfer
tax is imposed for any reason other than the exchange of Old
Certificates pursuant to the Exchange Offer, then the amount of
any such transfer taxes (whether imposed on the registered holder
or any other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with the Letter of Transmittal, the
amount of such transfer taxes will be billed directly to such
tendering holder.
DESCRIPTION OF THE NEW CERTIFICATES
General
The New Certificates will be denominated and distributions
with respect thereto will be payable in United States Dollars.
The Trust Certificates represent in the aggregate the entire
beneficial ownership interest in the Trust. The property of the
Trust will consist of (i) the NSC Notes, (ii) all payments on or
collections in respect of the NSC Notes received on or after
April 13, 1998, together with any proceeds thereof, and (iii) all
funds from time to time deposited with the Trustee in accounts
related to the Trust. The property of the Trust will be held for
the benefit of the
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holders of the Trust Certificates by the Trustee. Holders of the
New Certificates will receive payments or distributions on each
Distribution Date as described herein. See "--Collections and
Distributions."
The Trust Certificates represent two classes of undivided
fractional beneficial interests in the assets of the Trust, and
all distributions to holders of the Trust Certificates will be
made only from the property of the Trust as described herein. The
Trust Certificates are comprised of two classes representing the
entire undivided beneficial ownership of the Trust: the Residual
Class and the Amortizing Class (the Old Certificates currently
constitute, and the New Certificates along with any Old
Certificates not tendered in the Exchange Offer, will constitute
the entire Residual Class). The Residual Class has an aggregate
Certificate Principal Balance of $80,000,000. The Amortizing
Class has a current aggregate Certificate Principal Balance of
$69,048,275.30. Subject to the occurrence of an Optional
Redemption, a Shortened Maturity Redemption, or an In-Kind
Distribution, distributions on the Amortizing Class Certificates
will be made semiannually on each Scheduled Distribution Date up
to and including May 15, 2017 in an amount equal to the amount of
interest due and received on the NSC Notes on such Distribution
Date.
Subject to the occurrence of an Optional Redemption, a
Shortened Maturity Redemption, or an In-Kind Distribution, the
Residual Class Certificates evidence fractional undivided
beneficial interests in all principal payments on the NSC Notes
and in interest accrued and paid on the NSC Notes after May 15,
2017 at a rate of 7.90% per annum. The Trust Certificates do not
represent an interest in or obligation of PSSA, NSC, the NSC
Notes Trustee or the Trustee or any affiliate of any of the
foregoing.
The aggregate "Certificate Principal Balance" of the
Residual Class Certificates on any determination date will equal
the aggregate principal amount of the NSC Notes in the Trust as
of such date. The Certificate Principal Balance of any Residual
Class Certificate will represent a pro rata portion of the
then-current aggregate Certificate Principal Balance of all
outstanding Residual Class Certificates, which equals the
principal amount of the NSC Notes that the holder of such
Residual Class Certificate is entitled to receive as an in-kind
distribution on May 15, 2017. In the case of an Optional
Redemption of less than all of the NSC Notes, upon the
distribution of the proceeds from such Optional Redemption, the
Certificate Principal Balance of each Residual Class Certificate
shall be reduced by the same percentage as the percentage of NSC
Notes redeemed.
New Certificates may be transferred or exchanged for like
Certificates of the same Class at the corporate trust office or
agency of the Trustee in the City and State of New York, subject
to the limitations provided in the Trust Agreement, without the
payment of any service charge, other than any tax or governmental
charge payable in connection therewith.
Form of the New Certificates
The New Certificates will be issued in definitive
registered form in minimum denominations of $500,000 Certificate
Principal Balance and integral multiples of $1.00 in excess
thereof.
Collections and Distributions on New Certificates
Subject to the occurrence of an Optional Redemption or a
Shortened Maturity Redemption of the NSC Notes, no cash
distributions will be made on the Residual Class Certificates.
Instead, the Residual Class Certificates outstanding on May 15,
2017 will be terminated and deemed involuntarily surrendered by
the holders thereof in exchange for a principal amount of the NSC
Notes underlying the Residual Class Certificates equal to the
aggregate Certificate Principal Balance of the Residual Class
Certificates. No action by such holders will be required to
effect such termination. Holders of Residual Class Certificates
will be required to physically surrender the Residual Class
Certificates to the Trustee, endorsed to the Trustee with
signature guaranteed and instruct the Trustee as to the name of
the participant in the Depository Trust Company in whose name
such holder's NSC Notes are to be registered; provided that if
the NSC Notes cease to be held through the Depository Trust
Company, the Trustee will provide notice to the holders as to how
such exchange shall be made. The NSC Notes to be delivered to
each holder of New Certificates on May 15, 2017 or earlier upon
an In-Kind Distribution will be registered in the name requested
by such holder by the Trustee and will entitle holders thereof to
the same rights as holders of all other NSC Notes.
Distributions with respect to New Certificates will be made
at the corporate trust office or agency of the Trustee in The
City of New York
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Any cash distribution on the New Certificates, upon a
liquidation of the Trust as described below, will be made (i) in
U.S. Dollars by or on behalf of the Trustee on the date of the
distribution and (ii) by check drawn on, or wire transfer, of
immediately available funds, but, with respect to the latter,
only if appropriate wire transfer instructions have been received
in writing by the Trustee not later than fifteen calendar days
prior to the date of the distribution. If a holder of New
Certificates wishes to receive cash payments by wire transfer,
such holder shall provide appropriate wire transfer instructions
by delivery of a written notice to the Trustee not later than
fifteen calendar days prior to the date of the distribution,
which will remain in effect until revoked by written notice to
such Trustee received not later than fifteen calendar days prior
to the date of the distribution. Any cash distribution by the
Trustee to the New Certificates shall be made, subject to timely
receipt of payments on the NSC Notes and solely to the extent of
Available Funds. See "--Shortened Maturity Redemption" and
"--Optional Redemption." "Available Funds" means, as of any date
of the distribution, the aggregate amount received on or with
respect to the NSC Notes during the period from the preceding
date of the distribution up to and including such date of the
distribution (each such period, a "Collection Period"), and
deposited in the Collection Account and available for
distribution on such date of the distribution.
If a payment with respect to the NSC Notes is made to the
Trustee after the date on which such payment was due, the Trustee
will distribute any such amounts received on the Business Day
thereafter as if such funds had constituted Available Funds on
the date of the distribution immediately preceding such Business
Day; provided, however, that the Record Date for such
distribution shall be fifteen days prior to such Business Day and
no additional amounts will accrue on the Trust Certificates or be
owed to holders of Trust Certificates in respect of such
distribution.
All amounts received on or with respect to the NSC Notes
shall be held uninvested by the Trustee. On May 15, 2017, the
Trustee will distribute the NSC Notes in kind to the holders of
Residual Class Certificates, unless an Optional Redemption, a
Shortened Maturity Redemption, or an In-Kind Distribution has
occurred on or prior to such date.
In the event that PSSA is required to repurchase the NSC
Notes as a result of a breach of its representation and warranty
as to its title to the NSC Notes immediately prior to the
transfer thereof to the Trustee, the Trustee will distribute the
repurchase price received from PSSA to the holders of the
Residual Class Certificates and the Amortizing Class
Certificates, respectively, in the same ratio as (i) the present
value of all originally scheduled future payments on the NSC
Notes after May 15, 2017 bears to (ii) the present value of all
originally scheduled future payments on the Amortizing Class
Certificates, discounted semiannually in each case at a rate of
7.90 percent per annum to the date on which the repurchase price
is distributed. Such ratio will be calculated by PSSA, as
calculation agent, and such distribution will be made fifteen
days after receipt of the repurchase price.
Optional Redemption
The NSC Notes will be redeemable prior to maturity, as a
whole or in part, at the option of NSC (an "Optional
Redemption"), upon not less than 30 nor more than 60 days' prior
written notice, at any time, at a redemption price equal to the
greater of (i) 100% of the principal amount being redeemed and
(ii) the sum of the present values of the remaining scheduled
payments of principal and interest thereon discounted to the date
of redemption (an "Optional Redemption Date") on a semiannual
basis at the Treasury Yield (as defined herein) plus 20 basis
points, together with accrued interest to the date of redemption.
In the event of an Optional Redemption, the Trustee will
distribute the payment received on the NSC Notes on the Optional
Redemption Date to the holders of the Amortizing Class
Certificates and the Residual Class Certificates, respectively,
in the same ratio as (i) the present value of all originally
scheduled future payments on the Amortizing Class Certificates
bears to (ii) the present value of all originally scheduled
future payments on the NSC Notes after May 15, 2017, discounted
semiannually in each case at a rate of 7.90% per annum (such
ratio being the "Distribution Ratio") to the Optional Redemption
Date. Such ratio will be calculated by the Company, as
calculation agent (the "Calculation Agent"). In the case of such
an Optional Redemption of less than all of the NSC Notes, the
Trustee will distribute the payment received on the NSC Notes on
the Optional Redemption Date to the holders of the Amortizing
Class Certificates and the Residual Class Certificates on the
basis of the Distribution Ratio as of the Optional Redemption
Date on a pro rata basis; such a distribution will result in a
reduction (based on the percentage of NSC Notes redeemed) of the
Residual Class Certificates Certificate Principal Balance and a
recalculation of the Certificate Principal Balance of, and Fixed
Payments with respect to, the Amortizing Class Certificates based
on the remaining NSC Notes after such redemption. A table showing
the percentages of such distribution that would be distributable
to the Amortizing Class Certificates and the Residual Class
Certificates, respectively, assuming that such a distribution
date occurs on a Scheduled Distribution Date, is attached hereto
as Appendix A.
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Shortened Maturity Redemption
Upon the occurrence of a Tax Event (as defined below) with
respect to the NSC Notes, NSC has the right to shorten the
maturity of the NSC Notes (i) to the minimum extent required, in
the opinion of nationally recognized independent tax counsel,
such that, after the shortening of the maturity, interest paid on
the NSC Notes will be deductible for U.S. federal income tax
purposes or, (ii) if such counsel is unable to opine definitively
as to such minimum period, the minimum extent so required as
determined in good faith by the Board of Directors of NSC after
receipt of an opinion of such counsel regarding the applicable
legal standards. (Any such new maturity date is referred to
herein as the "Shortened Maturity Date.") If the Shortened
Maturity Date is on or prior to May 15, 2017, the Residual Class
Certificates and the Amortizing Class Certificates will be
redeemed on the Shortened Maturity Date (a "Shortened Maturity
Redemption"). The Trustee will distribute the payment received on
the NSC Notes on the Shortened Maturity Date to the holders of
each class of Certificates on the basis of the Distribution Ratio
as of the Shortened Maturity Date. Such ratio will be calculated
by the Calculation Agent. A Shortened Maturity Redemption as a
result of a Tax Event may increase the amount of original issue
discount required to be included in a holder's ordinary gross
income. See "U.S. Federal Income Tax Consequences--Purchase and
Holding of Trust Certificates." A table showing the percentages
of such distribution that would be distributable to the
Amortizing Class Certificates and the Residual Class
Certificates, respectively, assuming that such a distribution
date occurs on a Scheduled Distribution Date, is attached hereto
as Appendix A.
A "Tax Event" means that NSC shall have received an opinion
of nationally recognized independent tax counsel to the effect
that, as a result of (a) any amendment to, clarification of, or
change (including any announced prospective amendment,
clarification or change) in any law, or any regulation
thereunder, of the United States, (b) any judicial decision,
official administrative pronouncement, ruling, regulatory
procedure or regulation, including any notice or announcement of
intent to adopt or promulgate any ruling, regulatory procedure or
regulation (any of the foregoing, an "Administrative or Judicial
Action"), or (c) any amendment to, clarification of, or change in
any official position with respect to, or any interpretation of,
an Administrative or Judicial Action or a law or regulation of
the United States that differs from the theretofore generally
accepted position or interpretation, in each case, occurring on
or after May 19, 1997, there is more than an insubstantial
increase in the risk that interest paid by NSC on the NSC Notes
is not, or will not be, deductible, in whole or in part, by NSC
for United States federal income tax purposes.
Distribution of the NSC Notes on Payment Default or Acceleration
If a Payment Default or an Acceleration with respect to the
NSC Notes occurs on or prior to May 15, 2017, the Trustee will
make an in-kind distribution (an "In-Kind Distribution") of the
remaining NSC Notes to the holders of the Residual Class
Certificates and the Amortizing Class Certificates. A "Payment
Default" means a default in the payment of any amount due on the
NSC Notes from NSC after the same becomes due and payable (and
the expiration of any applicable grace period on the NSC Notes).
An "Acceleration" means the acceleration of the maturity of the
NSC Notes following the occurrence of any default on the NSC
Notes other than a Payment Default, notwithstanding any
subsequent rescission and annulment of such Acceleration by the
requisite holders of the entire series of NSC Notes. The In-Kind
Distribution will be made to the holders of Amortizing Class
Certificates and Residual Class Certificates on the basis of the
Distribution Ratio as of such Payment Default or Acceleration.
Such ratio will be calculated by the Calculation Agent. To the
extent necessary to avoid a distribution of NSC Notes in
unauthorized denominations, the Trustee will cause the
liquidation in a commercially reasonable manner of such NSC Notes
as are necessary, and will distribute the proceeds therefrom to
the holders of Amortizing Class Certificates and Residual Class
Certificates based on their respective rights to NSC Notes in
unauthorized denominations. An In-Kind Distribution may be
treated in whole or in part as equivalent to a taxable sale or
exchange. See "U.S. Federal Income Tax Consequences--
Distributions." A table showing the percentages of such
distribution that would be distributable to the Amortizing Class
Certificates and the Residual Class Certificates, respectively,
assuming that such distribution occurs on a Scheduled
Distribution Date, is attached hereto as Appendix A.
Exchange of Certificates for NSC Notes
Any holder of both Amortizing Class Certificates and
Residual Class Certificates may, by delivery of a notice to the
Trustee substantially in the form of the Notice of Exchange
attached to a Certificate (a "Notice of Exchange") not less than
30 and not more than 45 days prior to any Scheduled Distribution
Date other than May 15, 2017, elect to exchange Certificates of
both Classes for the NSC Notes on such Scheduled Distribution
Date (the "Exchange Date").
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In order to exercise such right, the holder shall tender to the
Trustee on the Exchange Date immediately succeeding such notice
both (a) Amortizing Class Certificates evidencing the percentage
specified in the Notice of Exchange (which shall not be less than
10%) of the aggregate Certificate Principal Balance of all
Amortizing Class Certificates then outstanding and (b) Residual
Class Certificates evidencing the same percentage of the
aggregate Certificate Principal Balance of all Residual Class
Certificates then outstanding as is represented by the Amortizing
Class Certificates tendered by such holder.
Upon tender of such Certificates, duly endorsed by the
holder to the Trustee, the Trustee shall transfer to the holder
(or its designee specified in the Notice of Exchange) a principal
amount of NSC Notes comprising the same percentage of the NSC
Notes then held in the Trust as the percentage of Amortizing
Class Certificates and Residual Class Certificates tendered by
such holder on such Scheduled Distribution Date, rounded down to
the nearest authorized denomination of NSC Notes. Upon such
exchange, the Trustee shall cancel the tendered Certificates,
provided that if the amount of the NSC Notes delivered to the
holder or its designee was rounded down in accordance with the
preceding sentence, the Trustee shall issue to such holder new
Certificates of each Class evidencing percentage interests of
such Class (regardless of whether such interests would otherwise
be authorized denominations) equal to the amount of such Class in
excess of the amount accepted for such exchange.
The delivery of a Notice of Exchange shall be irrevocable;
provided, however, that if (i) the proceeds of an Optional
Redemption, a Shortened Maturity Redemption or an In-Kind
Distribution are to be distributed on the Exchange Date to which
such Notice of Exchange relates or (ii) if prior to such Exchange
Date, the Trustee gives notice to holders that the proceeds of an
Optional Redemption, a Shortened Maturity Redemption or an
In-Kind Distribution are scheduled to be distributed on a date
subsequent to such Exchange Date, such Notice of Exchange shall
be automatically deemed canceled and be of no further force and
effect.
Any holder tendering Certificates in exchange for the NSC
Notes on an Exchange Date shall be entitled to receive cash
distributions otherwise payable on such Certificates on such
Exchange Date.
Limitations on Beneficial Ownership of New Certificates.
Each registered holder of a New Certificate will be
required to deliver to the Trustee a certification (which will be
included in the Letter of Transmittal) upon purchase of the
Certificate to the effect that the beneficial owner thereof
(whether such registered holder or the ultimate beneficiary for
whom it holds such Certificate) is (a) a qualified institutional
buyer (as defined in Rule 144A under the Securities Act) and (b)
either (i) a United States person or (ii) a non-United States
person who is exempt from withholding under U.S. federal income
tax laws and has completed, accurately and in a manner reasonably
satisfactory to the Trustee or its agent, an appropriate
statement (generally on IRS Form W-8), signed under penalties of
perjury, identifying the holder and stating, among other things,
that the holder is not a U.S. person (or, after December 31,
1999, if the holder satisfied applicable documentary evidence
requirements for establishing that it is not a U.S. person) and
delivered such statement to the Trustee or its agent. Such
registered holder will be deemed to have represented and agreed
with the Trustee that so long as it is the registered holder of
such Certificate, the beneficial owner thereof will be a person
described in clauses (b)(i) or (b)(ii) above and, in the event of
any change in the identity of the beneficial owner for whom such
registered holder is acting or any lapse of an appropriate
statement (generally on IRS Form W-8) previously delivered to the
Trustee, it will promptly deliver a new certification or an
appropriate statement (generally on IRS Form W-8), as applicable.
In the event such representation is untrue or such current forms
are not so furnished, the Certificate held by such registered
holder will be subject to mandatory resale as described below.
If the Trustee determines that the deemed representation
made by such registered holder is incorrect or if such registered
holder does not provide the current Form W-8 as described above
within ten days after the prior such Form has lapsed, then, the
Trustee will furnish a notice to such registered holder stating
that (i) such registered holder must, within 30 calendar days
from the date of such notice, effect the registration of transfer
of its New Certificate to a person that certifies that the
beneficial owner of the Certificate is a U.S. person or exempt
from U.S. withholding tax as described above and (ii) if such
transfer does not occur by the thirtieth day, the registered
holder will be deemed to have appointed Prudential Securities
and/or Prudential-Bache Securities (U.K.) Inc. as its broker(s)
to sell such registered holder's certificate on its behalf to
such an exempt person at a commercially reasonable price (net of
customary brokerage commissions) within the next succeeding five
business days.
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The foregoing restrictions on transfer also apply to
transfers conducted in the secondary market.
DESCRIPTION OF THE TRUST AGREEMENT
General
The following summary of certain provisions of the Trust
Agreement and the Trust Certificates does not purport to be
complete and such summary is qualified in its entirety by
reference to the detailed provisions of the Trust Agreement
incorporated by reference hereto as described under
"Incorporation of Certain Documents by Reference." Article and
section references in parentheses below are to articles and
sections in the Trust Agreement. Wherever particular sections or
defined terms of the Trust Agreement are referred to, such
sections or defined terms are incorporated herein by reference as
part of the statement made, and the statement is qualified in its
entirety by such reference.
The Trustee
The Bank of New York, a New York banking corporation, acts
as trustee of the Trust pursuant to the Trust Agreement. The
Trustee's offices are located at 101 Barclay Street, 12 East
Street, New York, New York 10286, Attention: Corporate Trust.
The Trust Agreement provides that the Trustee and any
director, officer, employee or agent thereof will be indemnified
by PSSA and held harmless against any loss, liability or expense
incurred in connection with any legal action relating to the
Trust Agreement or the Trust Certificates or the performance of
the Trustee's duties under the Trust Agreement, other than any
loss, liability or expense (i) that constitutes a specific
liability of the Trustee under the Trust Agreement or (ii)
incurred by reason of willful misfeasance, bad faith or
negligence in the performance of the Trustee's duties under the
Trust Agreement or as a result of a breach, or by reason of
reckless disregard, of the Trustee's obligations and duties under
the Trust Agreement. Pursuant to the Trust Agreement, as
compensation for the performance of its duties thereunder, the
Trustee is entitled to payment of trustee fees and reimbursement
of expenses by PSSA pursuant to a separate agreement with PSSA,
but shall not have any claim against the Trust with respect
thereto.
The Trustee makes no representations as to the validity or
sufficiency of the Trust Agreement, the New Certificates or the
NSC Notes or any related document. The Trustee is required to
perform only those duties specifically required under the Trust
Agreement. However, upon receipt of the various certificates,
reports or other instruments required to be furnished to it, the
Trustee is required to examine such documents and to determine
whether they conform to the applicable requirements of the Trust
Agreement.
The Trustee is unaffiliated with, but may have normal
banking relationships with, PSSA and its affiliates.
The Trust Agreement and, upon consummation of the Exchange
Offer, the provisions of the Trust Indenture Act of 1939, as
amended, incorporated by reference therein, contain limitations
on the rights of the Trustee thereunder, should it become a
creditor of the Trust, to obtain payment of claims in certain
cases or to realize on certain property received by it in respect
of any such claims, as security or otherwise. The Trustee is
permitted to engage in other transactions; provided, however,
that if it acquires any conflicting interest (as defined) it must
eliminate such conflict or resign.
Event of Default
There are no events of default with respect to the Trust
Certificates.
Voting Rights
Voting rights will be allocated between the holders of
Residual Class Certificates, on the one hand, and the holders of
Amortizing Class Certificates on the other, respectively, at any
date of determination in the same ratio as (i) the present value
of all originally scheduled future payments on the NSC Notes
after May 15, 2017 bears to (ii) the present value of all
originally scheduled future payments on the Amortizing Class
Certificates, discounted semiannually
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in each case at a rate of 7.90 percent per annum to the date of
determination. Such ratio will be calculated by the Calculation
Agent. All voting rights with respect to the Residual Class
Certificates will be allocated among all holders of Residual
Class Certificates in proportion to the respective Certificate
Principal Balances of the then-outstanding Residual Class
Certificates held by such holders on any date of determination.
All voting rights with respect to the Amortizing Class
Certificates will be allocated among all holders of Amortizing
Class Certificates in proportion to the respective Notional
Amounts of the then-outstanding Amortizing Class Certificates
held by such holders on any date of determination.
The required percentage of Voting Rights of those Classes
of Trust Certificates that are materially adversely affected by
any modification or amendment of the Trust Agreement necessary to
consent to such modification or amendment is 100%.
Voting with Respect to the NSC Notes
The Trustee, as the holder of the NSC Notes, has the right
to vote and give consents and waivers in respect of the NSC Notes
as permitted by the NSC Notes Indenture with respect thereto and
except as otherwise limited by the Trust Agreement. In the event
that the Trustee receives a request from NSC for its consent to
any amendment, modification or waiver of the NSC Notes or any
document relating thereto, or receives any other solicitation for
any action with respect to the NSC Notes, the Trustee shall mail
a notice of such proposed amendment, modification, waiver or
solicitation to each Certificateholder of record as of such date.
The Trustee shall request instructions from the holders of
Amortizing Class Certificates and Residual Class Certificates as
to whether or not to consent to or vote to accept such amendment,
modification, waiver or solicitation. The Trustee shall consent
or vote, or refrain from consenting or voting, in the same
proportion (based on the relative Voting Rights of the
Certificates) as the Certificates of the Trust were actually
voted or not voted by the holders of Amortizing Class
Certificates and Residual Class Certificates thereof as of a date
determined by the Trustee prior to the date on which such consent
or vote is required; provided, however, that, notwithstanding
anything to the contrary herein, the Trustee shall at no time
vote in favor of or consent to any matter (i) which would alter
the timing or amount of any payment on the NSC Notes, including,
without limitation, any demand to accelerate the NSC Notes, (ii)
which would result in the exchange or substitution of any NSC
Note pursuant to a plan for the refunding or refinancing of such
NSC Note, (iii) which would alter the currency in which any
payment is required to be made on the NSC Notes, (iv) which would
change the voting rights granted to holders of the NSC Notes
under the NSC Notes Indenture, or (v) which would impair in any
material respect any rights of the Trustee or holders of the NSC
Notes to enforce remedies against NSC under the NSC Notes
Indenture, except in each case with the unanimous consent of the
holders of Amortizing Class Certificates and Residual Class
Certificates, and subject to the requirement that such vote or
consent would not, based on an Opinion of Counsel, cause the
Trust to fail to be characterized as a grantor trust for U.S.
federal income tax purposes or result in a sale or exchange of
any Certificate for federal income tax purpose. The Trustee shall
have no liability for any failure to act resulting from the
holders of Amortizing Class Certificates and Residual Class
Certificates' late return of, or failure to return, directions
requested by the Trustee from the holders of Amortizing Class
Certificates and Residual Class Certificates.
Modification and Waiver
The Trust Agreement may be amended by PSSA and the Trustee,
without notice to or consent of the holders of Trust
Certificates, for certain purposes including (i) to cure any
ambiguity, (ii) to correct or supplement any provision therein
which may be inconsistent with any other provision therein, (iii)
to add or supplement any Credit Support (as defined in the Trust
Agreement) for the benefit of any holders of Trust Certificates,
(iv) to add to the covenants, restrictions or obligations of PSSA
or the Trustee for the benefit of the holders of Trust
Certificates, (v) to add, change or eliminate any other
provisions with respect to matters or questions arising under
such Trust Agreement, or (vi) to comply with any requirements
imposed by the Internal Revenue Code of 1986 (the "Code");
provided that (x) any such amendment described in (i) through
(vi) will not, as evidenced by an Opinion of Counsel, cause the
Trust to fail to qualify as a grantor trust for federal income
tax purposes or result in a sale or exchange of any Certificate
for tax purposes and (y) the Trustee has received (1) a
certificate of PSSA to the effect that such amendment will not
have a material adverse effect on any class of holders of Trust
Certificates and (2) written confirmation from each Rating Agency
rating such Trust Certificates, if any, that such amendment will
not cause such Rating Agency to reduce or withdraw the then
current rating thereof. Without limiting the generality of the
foregoing, the Trust Agreement may also be modified or amended
from time to time by PSSA and the Trustee, with the consent of
the holders of Certificates of each class evidencing not less
than the "Required Percentage--Amendment" of the Voting Rights of
those Trust
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Certificates of such Classes that are affected by such
modification or amendment for the purpose of adding any provision
to or changing in any manner or eliminating any provision of the
Trust Agreement or of modifying in any manner the rights of such
holders of Trust Certificates; provided that any such amendment
shall not, as evidenced by an Opinion of Counsel, cause the Trust
to fail to qualify as a grantor trust for federal income tax
purposes.
No such modification or amendment may, however, (i) reduce
in any manner the amount of or alter the timing of, distributions
or payments which are required to be made on any Certificate
without the consent of the holder of such Trust Certificate or
(ii) reduce the aforesaid Required Percentage of Voting Rights
required for the consent to any such amendment without the
consent of the holders of all Certificates covered by the Trust
Agreement then outstanding.
Reports to Holders of Trust Certificates; Notices
Reports to Holders of Trust Certificates. With each
distribution to holders of Trust Certificates, the Trustee will
forward or cause to be forwarded to each such holder of Trust
Certificates and to PSSA a statement setting forth: (i) the
amount of such distribution to holders of Trust Certificates of
such Class allocable to principal, if any, on the Trust
Certificates of such Class; (ii) the amount of compensation
received by the Trustee for the period relating to such
Distribution Date, (iii) the aggregate stated principal amount
or, if applicable, notional principal amount of the NSC Notes and
the current interest rate thereon at the close of business on
such Distribution Date; and (iv) the aggregate Certificate
Principal Balance or aggregate Notional Amount, if applicable, of
each Class of Trust Certificates at the close of business on such
Distribution Date, separately identifying any reduction in such
aggregate Certificate Principal Balance or aggregate Notional
Amount due to the allocation of any Realized Losses or otherwise.
In the case of information furnished pursuant to subclauses (i)
and (ii) above, the amounts shall be expressed as a U.S. dollar
amount per minimum denomination of Trust Certificates or for such
other specified portion thereof. Subject to the occurrence of a
Shortened Maturity Redemption or an In-Kind Distribution, the
holders of New Certificates will receive no such reports until
the distribution in-kind on May 15, 2017. Within a reasonable
period of time after the end of each calendar year, the Trustee
shall furnish to each person who at any time during the calendar
year was a holder of Trust Certificates a statement containing
the information set forth in subclauses (i) and (ii) above,
aggregated for such calendar year or the applicable portion
thereof during which such person was a holder of Trust
Certificates. Such obligation of the Trustee shall be deemed to
have been satisfied to the extent that substantially comparable
information shall be provided by the Trustee pursuant to any
requirements of the Code as are from time to time in effect.
Notices. Any notice required to be given to a holder of a
Registered Certificate will be mailed to the address of such
holder set forth in the applicable Certificate Register.
Replacement Certificates
If a New Certificate is mutilated, destroyed, lost or
stolen, it may be replaced at the corporate trust office or
agency of the applicable Trustee in the City and State of New
York, upon payment by the holder of such expenses as may be
incurred by the applicable Trustee in connection therewith and
the furnishing of such evidence and indemnity as such Trustee may
require. Mutilated Certificates must be surrendered before new
Certificates will be issued.
Termination of the Trust
The Trust shall terminate upon the earliest of (i) the
distribution of the NSC Notes on May 15, 2017, (ii) the date of
any Optional Redemption or Shortened Maturity Redemption or (iii)
the date of an In-Kind Distribution.
The final distribution will be made only upon surrender and
cancellation of the Trust Certificates at an office or agency
appointed by the Trustee.
Governing Law
The Trust Agreement and the Trust Certificates will be
governed by, and construed in accordance with, the laws of the
State of New York without reference to such State's principles of
conflicts of law. Upon consummation of the Exchange Offer, the
Trust Agreement will be subject to the provisions of the Trust
Indenture Act of 1939, as amended, that are required to be part
of the Trust Agreement and will, to the extent applicable, be
governed by such provisions.
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U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of U.S. federal income tax
consequences material to the purchase, ownership and disposition
of Trust Certificates and the exchange of Old Certificates for
New Certificates (the "Exchange") pursuant to the Exchange Offer.
The summary does not purport to be a comprehensive description of
all of the tax consequences that may be relevant to a decision to
purchase Trust Certificates by any particular investor, including
tax consequences that arise from rules of general application to
all taxpayers or to certain classes of taxpayers or that are
generally assumed to be known by investors. Thus, for example,
except where otherwise noted, the discussion below is addressed
to holders that are "U.S. persons" and that hold Trust
Certificates as capital assets. It does not discuss state, local
or foreign tax consequences, nor does it discuss all the tax
consequences that may be relevant to a holder subject to special
rules, including dealers in securities or commodities, banks,
savings and loan associations and similar financial institutions,
tax-exempt organizations, insurance companies, taxpayers that
hold Trust Certificates as part of a hedged or integrated
transaction (such as a "straddle" or "conversion transaction")
for U.S. federal income tax purposes, or taxpayers whose
functional currency is other than the U.S. dollar. It also does
not discuss tax consequences for individuals or entities taxed as
individuals. The discussion below is based on the Code and the
regulations issued thereunder, and interpretations of law,
rulings and decisions currently in effect, all of which are
subject to change. Any such change may be applied retroactively,
and may adversely affect the U.S. federal income tax consequences
described herein.
The term "U.S. person" means a citizen or resident of the
United States, a corporation, partnership or other entity created
or organized in or under the laws of the United States or any
political subdivision thereof, an estate the income of which is
subject to U.S. federal income taxation regardless of its source,
or a trust if (i) a U.S. court is able to exercise primary
supervision over the trust's administration and (ii) one or more
U.S. persons have the authority to control all of the trust's
substantial decisions.
PROSPECTIVE HOLDERS SHOULD CONSULT THEIR TAX ADVISORS AS TO
THE U.S. FEDERAL TAX CONSEQUENCES TO THEM OF THE EXCHANGE, AND OF
ACQUIRING, HOLDING AND DISPOSING OF TRUST CERTIFICATES,
INCLUDING, IN PARTICULAR, THE APPLICATION IN THEIR PARTICULAR
CIRCUMSTANCES OF THE TAX CONSEQUENCES DISCUSSED BELOW, AS WELL AS
THE APPLICATION OF STATE, LOCAL, FOREIGN OR OTHER TAX LAWS.
Exchange of Old Certificates for New Certificates
In the opinion of Cleary, Gottlieb, Steen & Hamilton, the
Exchange will not be a taxable event for U.S. federal income tax
purposes. As a result, a holder of an Old Certificate whose Old
Certificate is accepted in the Exchange Offer will not recognize
gain on the Exchange. The New Certificates will have the same
"issue price" (and "adjusted issue price" immediately after the
Exchange) as the Old Certificates, and each tendering holder will
have the same adjusted basis and holding period in the New
Certificates as it had in the Old Certificates immediately before
the Exchange.
Characterization of the Trust
For U.S. federal income tax purposes, the Trust will not be
treated as an association taxable as a corporation (or a publicly
traded partnership treated as an association) in the opinion of
Cleary, Gottlieb, Steen & Hamilton. Although the characterization
of the Trust is not certain, the Trust should be treated for U.S.
federal income tax purposes as a grantor trust, and the Trustee
intends to report income, gain, loss and deductions to the
Internal Revenue Service ("IRS") on that basis. If the Trust were
not classified as a grantor trust, it would be classified as a
partnership. As a consequence, the Trust will not be subject to
U.S. federal income taxation.
Prospective investors should be aware that no rulings have
been or are expected to be sought from the IRS with respect to
the classification of the Trust (or any of the other U.S. federal
income tax consequences discussed in this summary) and there can
be no assurance that the IRS will agree with the characterization
of the Trust as a grantor trust (or with the other U.S. federal
income tax consequences discussed herein). See "--Alternative
Characterizations." Accordingly, prospective purchasers are urged
to consult their tax advisers regarding the U.S. federal income
tax classification of the Trust.
Under the U.S. federal income tax rules applicable to
grantor trusts, a holder of a Trust Certificate will be treated
as owning the rights to those payments on the NSC Notes that are
allocable to that Trust Certificate. The sale of a Trust
Certificate will be considered a sale of a holder's interest in
those payments. In addition, a holder may deduct its pro rata
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share of the fees and other deductible expenses paid by the
Trust, at the same time and to the same extent as such items
would be deducted by the holder if the holder paid directly a pro
rata portion of the amounts paid by the Trust.
The NSC Notes Prospectus indicates that the NSC Notes
underlying the Trust Certificates were sold based on NSC's belief
that they constitute indebtedness of NSC for U.S. federal income
tax purposes. The following discussion is based on the assumption
that the NSC Notes will constitute debt instruments in their
entirety. Except for the discussion under "--Alternative
Characterizations," the following also assumes that the Trust
will be classified as a grantor trust.
Purchase and Holding of Trust Certificates
A purchaser of a Trust Certificate will be treated as
having acquired the rights to those payments on the NSC Notes
that are allocable to that Trust Certificate and will be taxed
under the "stripped bond" rules of the Code. The holder will be
treated as having purchased a newly issued, single debt
instrument providing for payments equal to the payments on the
NSC Notes allocable to the Trust Certificate, and having original
issue discount ("OID") equal to the excess of the sum of such
payments over the holder's purchase price for the Trust
Certificate (which would be treated as the "issue price"). In
determining the purchase price for a Trust Certificate for this
purpose, a portion of the purchase price of the Trust Certificate
may be separately allocated to amounts held by the Trust pending
distribution to holders (the recovery of which amounts would not
be taxable). Any such allocation would reduce the amount paid for
(and the amount payable on) such Trust Certificate.
Under the OID rules, in general, each holder of a Trust
Certificate, whether such holder uses the cash or the accrual
method of tax accounting, will be required to include in ordinary
gross income the sum of the "daily portions" of OID on the Trust
Certificate for all days during the taxable year that the holder
owns the Trust Certificate. The daily portions of OID on a Trust
Certificate are determined by allocating to each day in any
accrual period a ratable portion of the OID allocable to that
accrual period. Accrual periods may be any length and may vary in
length over the term of a Trust Certificate, provided that no
accrual period is longer than one year and each scheduled payment
of principal or interest occurs on either the final day or the
first day of an accrual period. The amount of OID on a Trust
Certificate allocable to each accrual period is determined by
multiplying the "adjusted issue price" of the Trust Certificate
at the beginning of the accrual period by the yield to maturity
of such Trust Certificate (appropriately adjusted to reflect the
length of the accrual period). The yield to maturity of a Trust
Certificate is the discount rate that causes the present value of
all payments on the Trust Certificate as of its issue date to
equal the issue price of such Trust Certificate. The "adjusted
issue price" of a Trust Certificate at the beginning of any
accrual period will generally be the sum of its issue price and
the amount of OID allocable to all prior accrual periods, reduced
by the amount of all payments made with respect to such Trust
Certificate in all prior accrual periods.
Because holders of Residual Class Certificates will not be
receiving current distributions, OID will be includible as income
prior to the receipt of cash attributable to such income and the
amount of OID includible in income will increase each year.
It is not clear how the possibility of a Shortened Maturity
Redemption or an Optional Redemption, and the resulting
distribution to Amortizing Class Certificate holders of a portion
of the payment received by the Trust on the Shortened Maturity
Date or Optional Redemption Date, as the case may be, should be
taken into account for purposes of determining the taxation of
holders at, and prior to, the Shortened Maturity Date or Optional
Redemption Date (including, but not limited to, the amount of OID
required to be included by holders in ordinary gross income). The
Trustee intends to take the position that the possibility of a
Shortened Maturity Redemption or Optional Redemption should not
affect the U.S. federal income tax consequences to holders prior
to the Shortened Maturity Date or Optional Redemption Date. Under
this treatment, if the maturity of the NSC Notes was shortened as
a result of a Shortened Maturity Redemption, a holder would be
treated, solely for OID purposes, as acquiring a newly issued OID
bond, and would be required to determine OID on the newly issued
bond taking into account the Shortened Maturity Date and the
amount required to be distributed to the holder on that date. The
amount of OID required to be included in the holder's ordinary
gross income as a result of the redetermination could be more or
less than the amount determined without taking into account the
Shortened Maturity Redemption. In addition, under this treatment,
if the maturity of the NSC Notes was shortened as a result of an
Optional Redemption, a holder would be treated as disposing of
the NSC Notes in whole, in the case of an Optional Redemption of
all of the NSC Notes, or in part, in the case of an Optional
Redemption of less than all of the NSC Notes, on the Optional
Redemption Date with the consequences described below under
"--Sale or Exchange of Certificates or NSC Notes." There can be
no assurance, however, that the IRS will not take a different
position on the
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effect of a potential Shortened Maturity Redemption or Optional
Redemption, which position may have less favorable tax
consequences. See "-Alternative Characterizations." Prospective
purchasers should consult their tax advisers with respect to the
effect of a potential Shortened Maturity Redemption or Optional
Redemption.
The Trust currently intends, for information reporting
purposes, to account for OID reportable by holders of Trust
Certificates by reference to the first price at which a
substantial amount of the Trust Certificates is sold to
purchasers (other than Prudential Securities), even though the
amount of OID will differ for subsequent purchasers. Such
prospective purchasers should consult their tax advisers
regarding the proper calculation of OID.
Distributions
Cash distributions on the Trust Certificates and the
distribution of the NSC Notes on May 15, 2017, to Residual Class
Certificate holders will not be subject to additional taxation.
An In-Kind Distribution may be treated in whole or in part as
equivalent to a sale or exchange.
Optional Exchange of Certificates for the NSC Notes
The distribution of a principal amount of the NSC Notes
comprising a specified percentage of the NSC Notes then held in
the Trust in exchange for the same percentage of Amortizing Class
Certificates and Residual Class Certificates, and the issuance of
new Certificates, if any, evidencing smaller equal percentage
interests of each such Class will not be subject to additional
taxation. The treatment of a holder that exchanges such
Certificates for the NSC Notes is unclear. The provisions of the
Code and Treasury regulations relating to stripped bonds do not
specifically provide authority or a mechanism for ceasing to
apply the stripped bond rules under such circumstances. It
therefore appears likely that such a holder would be required to
continue to report income, gain or loss on the NSC Notes so
acquired in the same manner as if it still held the Certificates
surrendered in exchange for the NSC Notes.
Sale or Exchange of Certificates or NSC Notes
A Certificateholder's tax basis in a Certificate generally
will equal the cost of the Certificate increased by any amounts
includible in income as OID, and reduced by any payments made on
the Certificate.
Upon the sale or exchange of a Certificate, a holder
generally will recognize gain or loss equal to the difference
between the amount realized on the sale or exchange and the
holder's tax basis in the Certificate. Gain or loss recognized by
a holder on the sale or exchange of a Certificate generally will
be capital gain or loss, and will be long-term capital gain or
loss if the holder is considered to have held the Certificate for
more than one year at the time of the disposition. Under recently
enacted legislation, long-term capital gain recognized by an
individual holder generally will be subject to a maximum rate of
20 percent in respect of Trust Certificates held for more than
one year, effective for amounts properly taken into account on or
after January 1, 1998.
A holder will recognize gain or loss on any sale by the
Trust of the NSC Notes, including in connection with an In-Kind
Distribution or pursuant to an Optional Redemption of all or part
of the NSC Notes, equal to the difference between the portion of
the amount realized on the sale allocable to the holder and the
allocable portion of the holder's basis in the Certificate. In
the event of an Optional Redemption of less than all of the NSC
Notes, a holder will calculate gain or loss by assuming that the
NSC Notes consist of two debt instruments, one of which is
retired and one of which remains outstanding. The adjusted issue
price, holder's adjusted basis and accrued but unpaid OID of the
NSC Notes, determined immediately before the partial Optional
Redemption, will be allocated between those two instruments based
on the portion of the NSC Notes that is treated as retired by the
partial Optional Redemption.
Alternative Characterizations
As noted above, there can be no assurance that the IRS will
agree with the characterization of the Trust as a grantor trust.
It is possible that the IRS could seek to classify the Trust as a
partnership, although even if the IRS were successful the Trust
would not be subject to U.S. federal income tax. While not
certain, if the Trust is classified as a partnership, it should
be eligible for the election out of the partnership tax rules of
subchapter K of the Code, under Treasury Regulation Section
1.761-2. In mutual consideration for each holder's purchase of a
Trust Certificate, each holder of a Trust Certificate is deemed
to have consented to the making of such a protective election as
of the date of
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formation of the Trust. As a result of the election, each holder
of a Trust Certificate would be required to report its respective
share of the items of income, deductions and credits of the Trust
on its respective U.S. federal income tax return in a manner
substantially similar to the U.S. federal income tax reporting
required under the grantor trust rules. However, if the Trust
were not eligible to make the election, the method of taxation of
holders of Trust Certificates could differ significantly from the
treatment described in this summary. Among those differences, (i)
the Trust would be required to account for its income and
deductions at the Trust level, and to utilize a taxable year for
reporting purposes, (ii) income from the NSC Notes would be taxed
under the rules of the Code applicable to whole debt instruments
rather than under the "stripped bond" rules described above, and
(iii) each holder would be required to separately take into
account such holder's distributive share of income and deductions
of the Trust. A holder would take into account its distributive
share of Trust income and deductions for each taxable year of the
Trust in the holder's taxable year which ends with or within the
Trust's taxable year. Prospective purchasers are urged to consult
their tax advisers regarding the U.S. federal income tax
classification of the Trust.
Adverse tax consequences might also result if the IRS takes
a different position than the position described above under
"--Purchase and Holding of Trust Certificates" with respect to
the effect on holders of a potential distribution to Amortizing
Class Certificate holders of a portion of the payment received by
the Trust on an Optional Redemption Date or a Shortened Maturity
Date. For example, the IRS might treat the Amortizing Class
Certificate as a right to payments on the NSC Notes coupled with
a separate agreement, in the nature of a put option, between
Amortizing Class Certificate holders, on the one hand, and
Residual Class Certificate holders, on the other hand. Under this
characterization, an Optional Redemption or Shortened Maturity
Redemption would be a taxable event. Moreover, the existence of a
deemed put option might trigger the Code's "straddle" rules, in
which case, among other matters, gain or loss on the sale of a
Trust Certificate would be short-term capital gain or loss
regardless of the period during which the holder held the Trust
Certificate.
Non-U.S. Holders
A holder that is not a U.S. person and that is not subject
to U.S. federal income tax as a result of any direct or indirect
connection to the United States other than its ownership of a
Trust Certificate will not be subject to United States income or
withholding tax, except as described below and under
"--Information Reporting and Backup Withholding," in respect of
interest income or gain on the NSC Notes if the holder provides
an appropriate statement (generally on IRS Form W-8), signed
under penalties of perjury, identifying the holder and stating,
among other things, that the holder is not a U.S. person (or,
after December 31, 1999, if the holder satisfied applicable
documentary evidence requirements for establishing that it is not
a U.S. person) and if the holder is not a "10-percent
shareholder" or related "controlled foreign corporation" with
respect to NSC. If these conditions are not met, a 30 percent
withholding tax will apply to interest income from the Trust
Certificates, unless an income tax treaty reduces or eliminates
such tax or unless the interest is effectively connected with the
conduct of a trade or business within the United States by such
holder. In the latter case, such holder will be subject to U.S.
federal income tax with respect to all income from the NSC Notes
at regular rates applicable to U.S. taxpayers.
A holder that is not a U.S. person may also be subject to
U.S. federal income taxation with respect to a Trust Certificate
if it is a personal holding company, a corporation that
accumulates earnings to avoid U.S. taxes on shareholders or a
private foundation under the Code.
Information Reporting and Backup Withholding
The Trustee will furnish or make available to each party
registered during such calendar year as a holder, such
information as is required under the Code or regulations under
the Code to enable each holder to file its U.S. federal income
tax returns.
Certain holders that are U.S. persons or that otherwise are
subject to United States federal income taxation on a net income
basis in respect of the Note ("U.S. holders") may be subject to a
31 percent backup withholding tax in respect of distributions
made on a Trust Certificate and proceeds from the sale of a Trust
Certificate to or through certain brokers if they do not provide
their taxpayer identification numbers (generally on IRS Form
W-9). Persons who are not U.S. holders may be required to comply
with applicable certification procedures to establish that they
are not U.S. holders in order to avoid the application of
information reporting requirements and backup withholding tax.
Any amounts so withheld from distributions on the Trust
Certificate would be allowed as a credit against the holder's
U.S. federal income
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tax liability, or upon application by the holder to the IRS,
would be refunded by the IRS to the extent it exceeds such
liability.
PLAN OF DISTRIBUTION
Each broker or dealer that receives New Certificates for
its own account pursuant to the Exchange Offer must acknowledge
that it will deliver a prospectus in connection with any resale
of such New Certificates. This Prospectus, as it may be amended
or supplemented from time to time, may be used by a broker or
dealer in connection with resales of New Certificates received in
exchange for Old Certificates where such Old Certificates were
acquired as a result of market-making activities or other trading
activities. PSSA has agreed that it will make this Prospectus, as
amended or supplemented, available to any broker or dealer for
use in connection with any such resale for a period of one year.
In addition, until such date, all brokers or dealers effecting
transactions in the New Certificates may be required to deliver a
prospectus.
PSSA will not receive any proceeds from any sale of New
Certificates by brokers or dealers. New Certificates received by
brokers or dealers for their own account pursuant to the Exchange
Offer may be sold from time to time in one or more transactions
in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Certificates or a
combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such
prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or through brokers or
dealers who may receive compensation in the form of commissions
or concessions from any such broker or dealer and/or the
purchasers of any such New Certificates. Any broker or dealer
that resells New Certificates that were received by it for its
own account pursuant to the Exchange Offer and any broker or
dealer that participates in a distribution of such New
Certificates may be deemed to be an "underwriter" within the
meaning of the Securities Act and any profit on any such resale
of New Certificates and any commissions or concessions received
by any such persons may be deemed to be underwriting compensation
under the Securities Act. The Letter of Transmittal states that
by acknowledging that it will deliver and by delivering a
prospectus, a broker or dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
Starting on the Expiration Date, PSSA will promptly send
additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker or dealer that
requests such documents in the Letter of Transmittal. PSSA has
agreed to pay all expenses incident to the Exchange Offer
(including the expenses of one counsel for the Holders of the
Certificates) other than commissions or concessions of any
brokers or dealers and will indemnify the Holders of the New
Certificates (including any broker or dealers) against certain
liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the New Certificates and certain United
States federal income taxation matters will be passed upon for
the Trust by Cleary, Gottlieb, Steen & Hamilton, New York, New
York.
32
<PAGE>
INDEX OF DEFINED TERMS
Administrative Action.................................... 7
Acceleration............................................. 22
Amortizing Class Certificates............................ 6
Available Funds.......................................... 21
Calculation Agent........................................ 6
Certificate Principal Balance............................ 20
Certificateholder Exchange Right 7
Code..................................................... 25
Collection Period........................................ 21
Commission............................................... cover
EDGAR.................................................... 1
Eligible Institution..................................... 17
Exchange................................................. 26
Exchange Act............................................. 1
Exchange Agent........................................... 5
Exchange Offer........................................... cover
Exchange Offer No-Action Letters......................... cover
Exchange Offer Registration Statement.................... 14
Expiration Date.......................................... cover
Fixed Payment............................................ 5
NSC...................................................... cover
NSC Notes................................................ cover
NSC Notes NSC Notes Indenture............................ 7
NSC Notes Prospectus..................................... cover
NSC Notes Registration Statement......................... 2
NSC Notes Series......................................... 12
NSC Notes Trustee........................................ 13
holder................................................... 17
In-Kind Distribution..................................... 22
IRS...................................................... 27
Letter of Transmittal.................................... cover
Shortened Maturity Redemption............................ cover
New Certificates......................................... cover
NYSE..................................................... 18
OID...................................................... 28
Old Certificates......................................... cover
Optional Redemption...................................... 6
Payment Default.......................................... 22
PSGI..................................................... 2
Prudential Securities.................................... cover
PSSA..................................................... cover
Registration Rights Agreement............................ cover
Registration Statement................................... 1
Restricted Broker-Dealer................................. cover
Residual Class Certificates.............................. 6
Rule 3a-7................................................ 5
Securities Act........................................... cover
Shelf Registration Statement............................. 15
Shortened Maturity Date.................................. cover
Tax Event................................................ 7
Trust.................................................... cover
Trust Agreement.......................................... cover
Trust Certificates....................................... cover
Trustee.................................................. cover
U.S. holders............................................. 30
U.S. person.............................................. 27
33
<PAGE>
APPENDIX A
Relative Percentages Distributable upon Optional Redemption,
Shortened Maturity Redemption or In-Kind Distribution *
DEFAULT JUST PRIOR DEFAULT JUST AFTER
TO INTEREST PAYMENT INTEREST PAYMENT
------------------------- -------------------------
Amortizing Step-up Amortizing Step-up
Date Tranche Tranche Tranche Tranche
---- ------- ------- ------- -------
November 15, 1998 77.06% 22.94% 76.15% 23.85%
May 15, 1999 76.15% 23.85% 75.21% 24.79%
November 15, 1999 75.21% 24.79% 74.23% 25.77%
May 15, 2000 74.23% 25.77% 73.21% 26.79%
November 15, 2000 73.21% 26.79% 72.15% 27.85%
May 15, 2001 72.15% 27.85% 71.05% 28.95%
November 15, 2001 71.05% 28.95% 69.91% 30.09%
May 15, 2002 69.91% 30.09% 68.72% 31.28%
November 15, 2002 68.72% 31.28% 67.48% 32.52%
May 15, 2003 67.48% 32.52% 66.20% 33.80%
November 15, 2003 66.20% 33.80% 64.87% 35.13%
May 15, 2004 64.87% 35.13% 63.48% 36.52%
November 15, 2004 63.48% 36.52% 62.03% 37.97%
May 15, 2005 62.03% 37.97% 60.53% 39.47%
November 15, 2005 60.53% 39.47% 58.98% 41.02%
May 15, 2006 58.98% 41.02% 57.36% 42.64%
November 15, 2006 57.36% 42.64% 55.67% 44.33%
May 15, 2007 55.67% 44.33% 53.92% 46.08%
November 15, 2007 53.92% 46.08% 52.10% 47.90%
May 15, 2008 52.10% 47.90% 50.21% 49.79%
November 15, 2008 50.21% 49.79% 48.24% 51.76%
May 15, 2009 48.24% 51.76% 46.20% 53.80%
November 15, 2009 46.20% 53.80% 44.07% 55.93%
May 15, 2010 44.07% 55.93% 41.86% 58.14%
November 15, 2010 41.86% 58.14% 39.57% 60.43%
May 15, 2011 39.57% 60.43% 37.18% 62.82%
November 15, 2011 37.18% 62.82% 34.70% 65.30%
May 15, 2012 34.70% 65.30% 32.12% 67.88%
November 15, 2012 32.12% 67.88% 29.44% 70.56%
May 15, 2013 29.44% 70.56% 26.65% 73.35%
November 15, 2013 26.65% 73.35% 23.75% 76.25%
May 15, 2014 23.75% 76.25% 20.74% 79.26%
November 15, 2014 20.74% 79.26% 17.61% 82.39%
May 15, 2015 17.61% 82.39% 14.35% 85.65%
November 15, 2015 14.35% 85.65% 10.97% 89.03%
May 15, 2016 10.97% 89.03% 7.46% 92.54%
November 15, 2016 7.46% 92.54% 3.80% 96.20%
May 15, 2017 3.80% 96.20% 0.00% 100.00%
- --------
* The proceeds of any Optional Redemption, Shortened Maturity
Redemption, or In-Kind Distribution occurring on any of the
above Scheduled Distribution Dates with respect to the NSC
Notes will be allocated according to the above percentages
if such proceeds are distributed on the above Scheduled
Distribution Dates. The proceeds of any such event
occurring on dates other than Scheduled Distribution Dates
will be distributed in accordance with the ratio described
in the Prospectus.
<PAGE>
=================================================================
No person has been authorized to give any information or to make
any representations other than those contained or incorporated by
reference in this Prospectus and the accompanying Letter of
Transmittal and, if given or made, such information or
representations must not be relied upon as having been authorized
by the Trust, PSSA or the Exchange Agent. Neither this Prospectus
nor the accompanying Letter of Transmittal, or both together,
constitute an offer to sell or the solicitation of an offer to
buy securities in any jurisdiction to any person to whom it is
unlawful to make such offer or solicitation. Neither the delivery
of this Prospectus, nor the accompanying Letter of Transmittal,
or both together, nor any sale made hereunder shall, under any
circumstances, create an implication that there has been no
change in the affairs of the Trust since the date hereof or
thereof or that the information contained herein is correct at
any time subsequent to the date hereof or thereof.
TABLE OF CONTENTS
Page
Available Information..........................................1
Incorporation of Certain Documents
by Reference..............................................1
Prospectus Summary.............................................2
Risk Factors..................................................10
Use of Proceeds...............................................11
Formation of the Trust........................................11
Description of the Trust Assets...............................12
The Exchange Offer............................................16
Description of the New Certificates...........................21
Description of the Trust Agreement............................25
Certain U.S. Federal Income
Tax Consequences...........................................29
Plan of Distribution..........................................32
Legal Matters.................................................33
Index of Defined Terms........................................34
Appendix A -- Allocation Schedule.............................A-1
=================================================================
=================================================================
Receipts on Corporate
Securities Trust, Series NSC 1998-1
Offer to Exchange
Receipts on Corporate Securities,
Series NSC 1998-1, Residual Class
which have been registered under the
Securities Act of 1933, as amended,
for any and all outstanding
Receipts on Corporate Securities,
Series NSC 1998-1, Residual Class
=================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
PSSA's Bylaws provide that PSSA shall indemnify each of its
directors and officers who was or is a party or is threatened to
be made a party to any threatened, pending or contemplated
action, suit or proceeding, whether civil, criminal,
administrative or investigative by reason of the fact that he is
or was a director or officer of PSSA other than an action by or
in the right of PSSA (for which PSSA may indemnify such persons
under certain circumstances).
Section 145 of the Delaware General Corporation Law (the
"GCL") provides as follows:
"(a) A corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact that
he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit
or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe
that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was
brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
(c) To the extent that a director, officer, employee or
agent of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred
to in subsections (a) and (b) of this section, or in defense of
any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of
this section (unless ordered by a court) shall be made by the
corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he has
met the applicable standard of conduct set forth in subsections
(a) and (b). Such determination shall be made (1) by a majority
vote of the board of directors who are not parties to such
action, suit or proceeding, even though less than a quorum, or
(2) if there are no such directors, or if such directors so
direct, by independent legal counsel in a written opinion, or (3)
by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an
officer or director in defending any civil, criminal,
administrative, or investigative action, suit or proceeding may
be paid by the corporation in advance of the final disposition of
such action, suit or proceeding upon receipt of undertaking by or
on behalf of such director or officer to repay such amount if it
shall ultimately be determined that he is not entitled to be
indemnified by the corporation as
II-1
<PAGE>
authorized in this section. Such expenses (including attorneys'
fees) incurred by other employees and agents may be so paid upon
such terms and conditions, if any, as the board of directors
deems appropriate.
(f) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other subsections of
this section shall not be deemed exclusive of any other rights to
which those seeking indemnification or advancement of expenses
may be entitled under any bylaw, agreement, vote of stockholders
or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while
holding such office.
(g) A corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted
against him and incurred by him in any such capacity, or arising
out of his status as such, whether or not the corporation would
have the power to indemnify him against such liability under this
section.
(h) For purposes of this section, references to "the
corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have
had power and authority to indemnify its directors, officers, and
employees or agents, so that any person who is or was a director,
officer, employee or agent for such constituent corporation, or
is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall
stand in the same position under this section with respect to the
resulting or surviving corporation as he would have with respect
to such constituent corporation if its separate existence had
continued.
(i) For purposes of this section, references to "other
enterprises" shall include employee benefit plans; references to
"fines" shall include any excise taxes assessed on a person with
respect to an employee benefit plan; and references to "serving
at the request of the corporation" shall include any service as a
director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director,
officer, employee, or agent with respect to an employee benefit
plan, its participants, or beneficiaries; and a person who acted
in good faith and in a manner he reasonably believed to be in the
interest of the participants and beneficiaries of an employee
benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to
in this section.
(j) The indemnification and advancement of expenses
provided by, or granted pursuant to, this section shall, unless
otherwise provided when authorized or ratified, continue as to a
person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive
jurisdiction to hear and determine all actions for advancement of
expenses or indemnification brought under this section or under
any bylaw, agreement, vote of stockholders or disinterested
directors, or otherwise. The Court of Chancery may summarily
determine a corporation's obligation to advance expenses
(including attorneys' fees)."
The Amended and Restated Certificate of Incorporation also
limit the personal liability of directors to PSSA and its
stockholders for monetary damages resulting from certain breaches
of the directors' fiduciary duties. The Amended and Restated
Certificate of Incorporation of PSSA provide as follows:
"No director of the Corporation shall be personally liable
to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director; provided that the
provisions of this Article Eleventh shall not eliminate or limit
the liability of a director (a) for any breach of the Director's
duty of loyalty to the Corporation and to its stockholders, (b)
for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law of the State of
Delaware or (iv) for any transaction from which such director
derived any improper personal benefit. If the GCL is amended
after the filing of this Amended and Restated Certificate of
Incorporation so as to authorize corporate action further
eliminating or limiting the personal liability of directors, then
the liability of each director of the Corporation shall be
eliminated or limited to the fullest extent permitted by the law
of the State of Delaware as the same exists from time to time.
Any repeal or modification of this Article Eleventh by the
stockholders of the Corporation shall not adversely affect any
elimination or limitation on the personal liability of a director
existing at the time of such repeal or modification."
II-2
<PAGE>
Item 21. Exhibits.
Exhibit
Number Exhibit Description
- ------- -------------------
Exhibit 4.1 Form of Receipts on Corporate Securities,
Series NSC 1998-1, Residual Class (included in
Exhibit 4.3).
Exhibit 4.2 Trust Agreement, dated as of August 28, 1997,
between Prudential Securities Structured Assets,
Inc. and The Bank of New York, as trustee.*
Exhibit 4.3 Series Supplement, Series NSC 1998-1 dated as of
April 13, 1998 between Prudential Securities
Structured Assets, Inc. and The Bank of New
York, as trustee.
Exhibit 4.4 Base Amendment No. 1 dated as of February 27,
1998 between Prudential Securities Structured
Assets, Inc. and The Bank of New York, as
trustee.
Exhibit 5.1 Opinion of Cleary, Gottlieb, Steen & Hamilton
relating to the New Certificates.+
Exhibit 8.1 Opinion of Cleary, Gottlieb, Steen & Hamilton
relating to certain federal income tax matters
(included in Exhibit 5.1).+
Exhibit 23.1 Consent of Cleary, Gottlieb, Steen & Hamilton
(included in Exhibit 5.1).+
Exhibit 24.1 Powers of Attorney (included on the signature
page of the Registrants in this Registration
Statement).
Exhibit 25.1 Statement of Eligibility of The Bank of New
York, as Trustee, relating to Trust
Certificates, on Form T-1.
Exhibit 99.1 Form of Letter of Transmittal.+
Exhibit 99.2 Form of Notice of Guaranteed Delivery.+
Exhibit 99.3 Registration Rights Agreement dated as of April
13, 1998 between Prudential Securities
Structured Assets, Inc. and Prudential
Securities Incorporated.
* Incorporated by reference to the Registration Statement on
Form S-4 filed by Prudential Securities Structured Assets
and the Receipts on Corporate Securities Trust, Series FDX
1997-1, File No. 333-38745.
+ To be filed by amendment.
II-3
<PAGE>
Item 22. Undertakings.
The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by Section
l0(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the
registration (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the registration
statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities
offered (if the total dollar value of securities
offered would not exceed that which was
registered) and any deviation from the low or
high and of the estimated maximum offering range
may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and
price represent no more than 20 percent change
in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee"
table in the effective registration statement;
(iii) To include any material information with respect
to the plan of distribution not previously
disclosed in the registration statement or any
material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) shall not apply if the registration
statement is on Form S-3, Form S-8, or Form F-3
and the information required to be included in a
post-effective amendment by those paragraphs is
contained in periodic reports filed by the
registrants pursuant to section 13 or section
15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
The undersigned registrants hereby undertake that, for
purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plans
annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrants, pursuant to
the foregoing provisions, or otherwise, the registrants have been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrants of expenses incurred or paid by a director, officer
or controlling person of the registrants in the successful
defense of any action, suit or proceeding) is asserted by any
such director, officer or controlling person in connection with
the securities being registered, the registrants will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question of whether or not such indemnification
is against public policy as expressed in the Securities Act of
1933 and will be governed by the final adjudication of such
issue.
II-4
<PAGE>
The undersigned registrants hereby undertake to
respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11, or
13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of
the registration statement through the date of responding to the
request.
The undersigned registrants hereby undertake to supply
by means of a post-effective amendment all information concerning
a transaction, and PSSA being acquired involved therein, that was
not the subject of and included in the registration statement
when it became effective.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act,
the registrants have duly caused this registration statement to
be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on
September 15, 1998.
PRUDENTIAL SECURITIES STRUCTURED ASSETS,
INC.
By: /s/ Christopher Perry
----------------------------
Christopher Perry
President
RECEIPTS ON CORPORATE SECURITIES TRUST,
SERIES NSC 1998-1
By: PRUDENTIAL SECURITIES STRUCTURED
ASSETS, INC.
By: /s/ Christopher Perry
---------------------------
Christopher Perry
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person
whose signature appears below hereby constitutes and appoints
Christopher Perry and Terrance O'Dwyer, and each of them, his or
her true and lawful attorneys-in-fact and agents, each acting
alone, with full power of substitution and resubstitution, for
him or her and in his or her name, place and stead, in any and
all capacities, to sign a Registration Statement on Form S-4 of
Prudential Securities Structured Assets, Inc. with respect to
securities issued by Receipts on Corporate Securities Trust,
Series NSC 1998-1, and any and all amendments thereto, including
post-effective amendments, and to file the same, with all
exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, each acting alone, full power and
authority to do and perform to all intents and purposes as he or
she might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, each acting alone, or
the substitutes for each attorneys-in-fact and agents, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of
1933, this registration statement has been signed by the
following persons in the capacities and on the date indicated
above.
Signature Title
- --------- -----
/s/ Howard Whitman Chairman of the Board
- --------------------------- and Director
Howard Whitman
/s/ Christopher Perry President
- --------------------------- (Principal Executive Officer)
Christopher Perry
/s/ William J. Horan Chief Financial Officer
- --------------------------- (Principal Financial and
William J. Horan Accounting Officer)
/s/ Elizabeth W. Castagna Treasurer
- ---------------------------
Elizabeth W. Castagna
<PAGE>
/s/ Alan D. Hogan Director
- ---------------------------
Alan D. Hogan
/s/ Ruth Lavalle Director
- ---------------------------
Ruth Lavelle
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit Description
- ------- -------------------
Exhibit 4.1 Form of Receipts on Corporate Securities,
Series NSC 1998-1, Residual Class (included in
Exhibit 4.3).
Exhibit 4.2 Trust Agreement, dated as of August 28, 1997,
between Prudential Securities Structured Assets,
Inc. and The Bank of New York, as trustee.*
Exhibit 4.3 Series Supplement, Series NSC 1998-1 dated as of
April 13, 1998 between Prudential Securities
Structured Assets, Inc. and The Bank of New
York, as trustee.
Exhibit 4.4 Base Amendment No. 1 dated as of February 27,
1998 between Prudential Securities Structured
Assets, Inc. and The Bank of New York, as
trustee.
Exhibit 5.1 Opinion of Cleary, Gottlieb, Steen & Hamilton
relating to the New Certificates.+
Exhibit 8.1 Opinion of Cleary, Gottlieb, Steen & Hamilton
relating to certain federal income tax matters
(included in Exhibit 5.1).+
Exhibit 23.1 Consent of Cleary, Gottlieb, Steen & Hamilton
(included in Exhibit 5.1).+
Exhibit 24.1 Powers of Attorney (included on the signature
page of the Registrants in this Registration
Statement).
Exhibit 25.1 Statement of Eligibility of The Bank of New
York, as Trustee, relating to Trust
Certificates, on Form T-1.
Exhibit 99.1 Form of Letter of Transmittal.+
Exhibit 99.2 Form of Notice of Guaranteed Delivery.+
Exhibit 99.3 Registration Rights Agreement dated as of April
13, 1998 between Prudential Securities
Structured Assets, Inc. and Prudential
Securities Incorporated.
* Incorporated by reference to the Registration Statement on
Form S-4 filed by Prudential Securities Structured Assets
and the Receipts on Corporate Securities Trust, Series FDX
1997-1, File No. 333-38745.
+ To be filed by amendment.
Exhibit 4.3
===============================================================
SERIES NSC 1998-1 SUPPLEMENT
between
PRUDENTIAL SECURITIES STRUCTURED ASSETS, INC.
as Depositor
and
THE BANK OF NEW YORK
as Trustee
Receipts on Corporate Securities Trust, Series NSC 1998-1
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TABLE OF CONTENTS
Page
PRELIMINARY STATEMENT....................................... 1
SECTION 1. Certain Defined Terms.......................... 1
SECTION 2. Creation and Declaration of Trust;
Grant of Term Assets; Acceptance by Trustee.... 5
SECTION 3. Designation.................................... 5
SECTION 4. Form and Date of the Certificates.............. 5
SECTION 5. Aggregate Certificate Principal Balance........ 6
SECTION 6. Currency of the Certificates................... 6
SECTION 7. Certain Provisions Regarding
Transfer and Exchange.......................... 6
SECTION 8. Certificateholder Exchange Right............... 7
SECTION 9. Distributions.................................. 8
SECTION 10. Termination of Trust........................... 10
SECTION 11. Limitation of Powers and Duties................ 10
SECTION 12. Certain Provisions of Base Trust Agreement
Not Applicable................................. 10
SECTION 13. Modification and Amendment
of Base Trust Agreement........................ 10
SECTION 14. No Investment of Amounts Received on
Term Assets.................................... 11
SECTION 15. Rule 144A Information.......................... 11
SECTION 16. Notices........................................ 11
SECTION 17. Access to Certain Documentation................ 11
SECTION 18. Ratification of Agreement...................... 11
SECTION 19. Counterparts................................... 11
SECTION 20. Governing Law.................................. 11
SECTION 21. Trustee Election............................... 11
SECTION 22. Covenant of Depositor.......................... 12
EXHIBIT A -- Form of Amortizing Class Certificate
EXHIBIT B -- Form of Residual Class Certificate
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SCHEDULE 1 -- Identification of Term Assets
SCHEDULE 2 -- Amortization Schedule
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SERIES NSC 1998-1 SUPPLEMENT dated as of April 13, 1998 (this
"Series Supplement") between Prudential Securities Structured
Assets, Inc., a Delaware corporation, as depositor (the
"Depositor"), and The Bank of New York, a New York banking
corporation, as trustee (the "Trustee").
PRELIMINARY STATEMENT
Pursuant to the Base Trust Agreement dated as of
August 28, 1997, as amended by Base Amendment No.1 dated as of
February 27, 1998 (together, the "Base Trust Agreement" and, as
amended and supplemented pursuant to this Series Supplement, the
"Agreement"), among the Depositor and the Trustee, such parties
may at any time and from time to time enter into a series
supplement supplemental to the Base Trust Agreement for the
purpose of creating a trust. Section 5.13 of the Base Trust
Agreement provides that the Depositor may at any time and from
time to time direct the Trustee to authenticate and deliver, on
behalf of any such trust, a new series of trust certificates.
Each trust certificate of such new series of trust certificates
will represent a fractional undivided beneficial interest in such
trust. Certain terms and conditions applicable to each such
series are to be set forth in the related series supplement to
the Agreement.
Pursuant to this Series Supplement, the Depositor and
the Trustee shall create and establish a new trust to be known as
Receipts on Corporate Securities Trust, Series NSC 1998-1 (the
"Trust"), and a new Series of trust certificates to be issued
thereby, which certificates shall be known as the Receipts on
Corporate Securities, Series NSC 1998-1 (the "Certificates"), and
the Depositor and the Trustee shall herein specify certain terms
and conditions in respect thereof.
The Certificates shall be issued in two Classes
consisting of (a) the Amortizing Class Certificates (the
"Amortizing Class Certificates") and (b) the Residual Class
Certificates (the "Residual Class Certificates"), subject to
Section 5.16 of the Base Trust Agreement.
On behalf of and pursuant to the authorizing
resolutions of the Board of Directors of the Depositor, an
authorized officer of the Depositor has authorized the execution,
authentication and delivery of the Certificates, and has
authorized the Base Trust Agreement and this Series Supplement in
accordance with the terms of Section 5.13 of the Base Trust
Agreement.
SECTION 1. Certain Defined Terms. (a) All terms used
in this Series Supplement that are defined in the Base Trust
Agreement, either directly or by reference therein, have the
meanings assigned to such terms therein, except to the extent
such terms are defined or modified in this Series Supplement or
the context requires otherwise. The Base Trust Agreement also
contains rules as to usage which shall be applicable hereto.
(b) Pursuant to Article I of the Base Trust Agreement,
the meaning of certain defined terms used in the Base Trust
Agreement shall, when applied to the trust certificates of a
particular Series, be as defined in Article I but with such
additional provisions and modifications as are specified in the
related series supplement. With respect to the Certificates, the
following definitions shall apply:
"Acceleration of Term Assets": The acceleration of the
maturity of the Term Assets following the occurrence of any
default (other than a Payment Default) with respect to the Term
Assets under the Indenture, and the Trustee receives notice of
such acceleration, notwithstanding any subsequent rescission and
annulment of such acceleration by the requisite holders of the
entire series of Term Assets.
"Aggregate Amortized Amount": The aggregate Amortized
Amount of all the Amortizing Class Certificates.
"Aggregate Certificate Principal Balance": For the
Residual Class Certificates as of any date of determination, the
aggregate principal balance of the Term Assets in the Trust as of
such date of determination. For
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the Amortizing Class Certificates as of any date of
determination, the Aggregate Amortized Amount as of such date of
determination.
"Amortized Amount": For any Amortizing Class
Certificate of $1,000 denomination, initially $1,000. On each
Scheduled Distribution Date, the Amortized Amount will be reduced
by the positive difference between (i) the Fixed Payment made on
such Scheduled Distribution Date and (ii) interest accrued on the
Certificate Principal Balance at the Amortizing Class Yield
during the related Interest Accrual Period. On any Optional
Redemption Date relating to a Partial Optional Redemption, the
Amortized Amount shall be recalculated based on the remaining
Term Assets after such partial redemption and no effect shall be
given to the allocation to principal provided for in Section 9(d)
hereof.
"Amortizing Class Certificates": A Class of securities
issued pursuant to this Agreement representing an undivided
interest in the distributions described in Section 9 hereto
payable to such Class.
"Amortizing Class Final Distribution Date": May 15,
2017.
"Amortizing Class Yield": 6.375% per annum.
"Available Funds": As of any Distribution Date, the
aggregate amount received on or with respect to the Term Assets
on or with respect to such Distribution Date.
"Calculation Agent": The Depositor.
"Certificates": Receipts on Corporate Securities,
Series NSC 1998-1.
"Certificateholder" or "Holder": With respect to any
Amortizing Class Certificate or Residual Class Certificate, the
Holder thereof.
"Certificate Principal Balance": For any Residual Class
Certificate, a pro rata portion of the principal amount of the
then outstanding Term Assets. For any Amortizing Class
Certificate, the Amortized Amount.
"Class": The class of Certificates constituted by the
Amortizing Class Certificates or the Residual Class Certificates.
"Closing Date": April 13, 1998.
"Corporate Trust Office": The Bank of New York, 101
Barclay Street (12E) Street, New York, N.Y. 10286, Attention:
Corporate Trust or such other corporate trust office as the
Trustee shall designate in writing to the Depositor and the
Certificateholders.
"Distribution Date": Any Scheduled Distribution Date,
In-Kind Distribution Date, Shortened Maturity Date, or Optional
Redemption Date.
"Distribution Ratio": With respect to a specified
distribution to be made hereunder on any Distribution Date (other
than a Scheduled Distribution Date), the ratio in which such
distribution will be made to the holders of the Amortizing Class
Certificates and the Residual Class Certificates, respectively,
being the same ratio as (i) the present value of all originally
scheduled future payments on the Amortizing Class Certificates
bears to (ii) the present value of all originally scheduled
future payments on the Term Assets after May 15, 2017, in each
case discounted semiannually at a rate of 7.90% per annum to the
Distribution Date (or, in the case of Section 9(f), the date
specified therein).
"Excess Interest": Penalties, interest on overdue
interest or other amounts paid to holders of the Term Assets
because of late or defaulted payments on the Term Assets.
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"Exchange Certificate": Any Certificate of a Class to
be issued pursuant to this Agreement in the Exchange Offer in
exchange for an Initial Certificate of such Class at the request
of the holder of such Initial Certificate.
"Exchange Offer": The offer registered by the
Depositor and the Trust pursuant to the Exchange Offer
Registration Statement in which the Trust offers to holders of
the Initial Certificates of a Class the opportunity to exchange
such outstanding Initial Certificates for Exchange Certificates
of the same Class in an aggregate principal amount equal to the
Aggregate Certificate Principal Balance of the Initial
Certificates tendered in such offer by such Holders.
"Exchange Offer Registration Statement": The
registration statement under the Securities Act relating to the
Exchange Offer, including the related prospectus, prepared and
signed by the Depositor on behalf of the Trust and in no event by
the Trustee.
"Fixed Payment": Each semiannual installment of
interest and Excess Interest, if any, payable on the Term Assets
through and including May 15, 2017.
"Indenture": The supplement to an indenture dated as
of January 15, 1991 between NSC and First Trust of New York,
National Association, as trustee, as amended from time to time,
pursuant to which the Term Assets were issued.
"Initial Certificate": Any Amortizing Class
Certificate or Residual Class Certificate to be originally
issued, authenticated and delivered pursuant to this Agreement on
the Closing Date.
"Interest Accrual Period": With respect to any
Scheduled Distribution Date, the period from and including the
immediately preceding Scheduled Distribution Date (or in the case
of the first Interest Accrual Period, from and including November
15, 1997) to but excluding the then current Scheduled
Distribution Date.
"Interest Collections": With respect to any
Distribution Date, all payments received by the Trustee from NSC
with respect to the Term Assets immediately prior to such
Distribution Date, in respect of (i) interest on the Term Assets
and (ii) any Excess Interest.
'NSC": Norfolk Southern Corporation, a Virginia
corporation.
"Optional Redemption": A redemption of the Term Assets,
as a whole or in part from time to time, at the option of NSC
pursuant to the Indenture, other than a Shortened Maturity
Redemption.
"Optional Redemption Date": The date on which an
Optional Redemption occurs.
"Partial Optional Redemption": An Optional Redemption
relating to only a portion of the Term Assets.
"Payment Default": A default in any payment of the
principal of, premium, if any, or interest on the Term Assets
when the same becomes due and payable, and the expiration of any
applicable grace period for the making of such payment.
"Place of Distribution": New York, New York.
"Principal Collections": All principal payments
received by the Trustee on the Term Assets, including the
principal portion of the redemption price and the premium, if
any, paid in the event of Shortened Maturity Redemption or an
Optional Redemption.
"Private Placement Legend": As defined in Section 4(c)
hereof.
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"Rating Agency": Initially none. At any time after the
Closing Date, the Depositor may designate one or more credit
rating agencies as a "Rating Agency" for purposes of this
Agreement by Depositor Order, acknowledged by the Trustee.
Thereafter, references to "the Rating Agency" in the Agreement
shall be deemed to be each such credit rating agency.
"Record Date": With respect to any Distribution Date,
the 15th day immediately preceding such Distribution Date.
"Registration Rights Agreement": A registration rights
agreement between the Depositor and Prudential Securities
Incorporated dated April 13, 1998 relating to the Exchange Offer.
"Residual Class Certificates": A Class of securities
issued pursuant to this Agreement representing an undivided
interest in the distributions described in Section 9 hereof
payable to such Class.
"Scheduled Distribution Date": The fifteenth day of
each May and November, or, if any such day is not a Business Day
and a Term Assets Scheduled Payment Date, then the Business Day
on or immediately following the Term Assets Scheduled Payment
Date, commencing May 15, 1998, through and including May 15,
2017; provided, however, that payment on each Scheduled
Distribution Date shall be subject to receipt of the
corresponding payment of interest or principal, as applicable,
on the Term Assets.
"Scheduled Final Distribution Date": May 15, 2017.
"Shortened Maturity Date": A maturity date for the
Term Assets on or before May 15, 2017, designated by NSC, as a
result of a Tax Event.
"Shortened Maturity Redemption": A redemption of the
Certificates in whole, but not in part, as a result of the
Shortened Maturity Date occurring on or prior to May 15, 2017.
"Specified Currency": United States Dollars.
"Tax Event": Means that NSC shall have received an
opinion of nationally recognized independent tax counsel to the
effect that, as a result of (a) any amendment to, clarification
of, or change (including any announced prospective amendment,
clarification or change) in any law, or any regulation
thereunder, of the United States, (b) any judicial decision,
official administrative pronouncement, ruling, regulatory
procedure or regulation, including any notice or announcement of
intent to adopt or promulgate any ruling, regulatory procedure or
regulation (any of the foregoing, an "Administrative or Judicial
Action"), or (c) any amendment to, clarification of or change in
any official position with respect to, or any interpretation of,
an Administrative or Judicial Action or a law or regulation of
the United States that differs from the theretofore generally
accepted position or interpretation, in each case, occurring on
or after May 19, 1997, there is more than an insubstantial
increase in the risk that interest paid by NSC on the Term Assets
is not, or will not be, deductible, in whole or in part, by NSC
for United States federal income tax purposes.
"Term Assets": The $80,000,000 aggregate principal
amount of 7.90% Notes due May 15, 2097 issued by NSC, deposited
in the Trust by the Depositor and further identified on Schedule
1 hereto.
"Term Assets Scheduled Payment Date": The fifteenth
day of each May and November, commencing on May 15, 1998;
provided, however, that if any Term Assets Scheduled Payment Date
would otherwise fall on a day that is not a Business Day (as
defined in the Indenture), such Term Assets Scheduled Payment
Date will be the next following day that is a Business Day (as so
defined).
"Term Assets Prospectus": The prospectus of NSC, dated
May 14, 1997, as supplemented by a supplement thereto dated May
14, 1997, with respect to the Term Assets.
"Term Assets Trustee": The trustee under the Indenture.
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"Trust": Receipts on Corporate Securities Trust, Series
NSC 1998-1.
"Trustee": The Bank of New York, a New York banking
corporation.
"Trust Termination Event": (a) the distribution in
kind of the Term Assets to the Residual Class Certificateholders
on May 15, 2017 (subject to Section 9(b) hereof), (b) the payment
in full of the Certificates following a Shortened Maturity
Redemption, (c) an In-Kind Distribution, (d) the payment in full
of the Certificates following an Optional Redemption, other than
a Partial Optional Redemption, or (e) the exchange of
Certificates for the last remaining Term Assets pursuant to
Section 8.
"Voting Rights": Voting Rights will be allocated
between the Amortizing Class Certificateholders, on the one hand,
and the Residual Class Certificateholders, on the other, at any
date of determination in the same ratio as (i) the present value
of all originally scheduled future payments on the Amortizing
Class Certificates bears to (ii) the present value of all
originally scheduled future payments on the Term Assets after May
15, 2017, in each case discounted semiannually at a rate of 7.90%
per annum to the date of determination. Such ratio will be
calculated by the Calculation Agent. Subject to the foregoing,
"Voting Rights" shall mean (a) with respect to the Amortizing
Class Certificates, the voting rights allotted to such Class,
allocated among all Holders of Amortizing Class Certificates in
proportion to the respective Amortized Amount held by such
Holders on any date of determination, and (b) with respect to the
Residual Class Certificates, the voting rights allotted to such
Class, allocated among all Holders of Residual Class Certificates
in proportion to the respective Certificate Principal Balances
held by such Holders on any date of determination.
SECTION 2. Creation and Declaration of Trust; Grant of
Term Assets; Acceptance by Trustee. (a) The Depositor,
concurrently with the execution and delivery hereof and pursuant
to Section 2.1 of the Agreement, has delivered or caused to be
delivered to the Trustee the Term Assets in exchange for the
delivery to, or at the direction of the Depositor, of all of the
Certificates, representing the entire beneficial interest in all
of the assets of the Trust.
(b) The Trustee hereby (i) acknowledges such deposit,
pursuant to subsection (a) above, and receipt by it of the Term
Assets, (ii) accepts the trusts created hereunder in accordance
with the provisions hereof and of the Agreement but subject to
the Trustee's obligation, as and when the same may arise, to make
any payment or other distribution of the assets of the Trust as
may be required pursuant to this Series Supplement, the Agreement
and the Certificates, and (iii) agrees to perform the duties
herein or therein required and any failure to receive
reimbursement of expenses and disbursements under Section 7.5 of
the Agreement shall not release the Trustee from its duties
herein or therein.
SECTION 3. Designation. There is hereby created a
Series of trust certificates to be issued pursuant to the
Agreement and this Series Supplement to be known as the "Receipts
on Corporate Securities, Series NSC 1998-1." The Certificates
shall be issued in two Classes, consisting of the Amortizing
Class Certificates and the Residual Class Certificates.
SECTION 4. Form and Date of the Certificates. (a) The
Certificates that are executed, authenticated and delivered by
the Trustee to the Depositor upon Depositor Order on the Closing
Date shall be dated the Closing Date. All other Certificates that
are authenticated after the Closing Date for any other purpose
under the Agreement shall be dated the date of their
authentication. The Certificates and the certificate of
authentication of the Trustee thereon shall be substantially in
the form of Exhibit A or Exhibit B hereto, as specified below,
which are hereby incorporated in and expressly made a part of
this Agreement. The Exchange Certificates and the certificate of
authentication of the Trustee thereon shall be substantially in
the same form with those changes as are noted in Exhibits A and
B.
(b) The Amortizing Class Certificates will be
represented by one or more permanent Certificates in definitive,
fully registered form in minimum denominations of $250,000 in
Certificate Principal Balance and integral multiples of $1.00 in
excess thereof. The Residual Class Certificates will be
represented by one or more
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permanent Certificates in definitive, fully registered form in
minimum denominations of $500,000 in Certificate Principal
Balance and integral multiples of $1.00 in excess thereof.
(c) In the event Initial Certificates are tendered in
an Exchange Offer, such Initial Certificates shall be exchanged
for one or more Exchange Certificates of the same Class in
definitive, fully registered form in the same denominations set
forth in Section 4(b).
(d) The Certificates shall bear the following legends.
Each Initial Residual Certificate and each Amortizing
Class Certificate shall bear the following legend (the "Private
Placement Legend") on the face thereof:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER JURISDICTION.
Each Certificate shall bear the following legend;
provided that the following legend may be removed from Exchange
Certificates of a Class upon such time, if any, as the Depositor
has furnished a Depositor Order pursuant to Section 7(c) hereof:
THE TRUST HAS NOT BEEN REGISTERED AS AN INVESTMENT
COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED. ANY
TRANSFER OF THIS CERTIFICATE MAY ONLY BE MADE IN ACCORDANCE WITH
RULE 3a-7 OF SUCH ACT.
SECTION 5. Aggregate Certificate Principal Balance.
The maximum Aggregate Certificate Principal Balance of the
Amortizing Class Certificates that may be executed, authenticated
and delivered under the Agreement and this Series Supplement is
$69,977,735. The maximum Aggregate Certificate Principal Balance
of the Residual Class Certificates that may be authenticated and
delivered under the Agreement and this Series Supplement is
$80,000,000. In each case such maximum amounts shall be
calculated without regard to Certificates authenticated and
delivered upon registration of transfer of, or in exchange for,
or in lieu of, other Certificates pursuant to Sections 5.3, 5.4,
5.5 or 5.16 of the Agreement. The Certificates are issuable in
the minimum denominations specified in Section 4.
SECTION 6. Currency of the Certificates. All
distributions on the Certificates will be made in the Specified
Currency.
SECTION 7. Certain Provisions Regarding Transfer and
Exchange. (a) In the event that the Depositor delivers to the
Trustee a copy of an Officers' Certificate certifying that an
Exchange Offer Registration Statement has been declared effective
by the Commission and that the Trust has offered Exchange
Certificates of a Class to the Holders of the related Class of
Initial Certificates in accordance with the Exchange Offer, the
Trustee shall exchange, upon request of any such Holder, such
Holder's Initial Certificates for Exchange Certificates of the
related Class upon the terms set forth in the Exchange Offer and
in accordance with Section 4(c) hereof, provided that the Initial
Certificates so surrendered for exchange are duly endorsed and
accompanied by a letter of transmittal or written instrument of
transfer in form satisfactory to the Trustee, in addition to any
certifications and representations required by the provisions of
the Registration Rights Agreement, and duly executed by the
Holder thereof or such Holder's attorney who shall be duly
authorized in writing to execute such document on the behalf of
such Holder.
The Trustee shall not be required (i) to issue,
register the transfer of or exchange any Certificate during the
period of 15 days ending on (and including) any Distribution
Date.
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(b) Upon receipt of a Depositor Request to the effect
that specified Initial Certificates of a Class (the "Registered
Certificates") have been registered under the Securities Act, if
Initial Certificates of such Class are issued upon the transfer,
exchange or replacement of the Registered Certificates, or if a
request is made to remove such Private Placement Legend on the
Registered Certificates, the Trustee shall execute, authenticate
and deliver Initial Certificates of such Class that do not bear
the Private Placement Legend.
(c) In connection with each transfer of a Certificate,
the transferee will be required to complete the certification
annexed to such Certificate unless the Depositor has furnished a
Depositor Order to the effect that such transfer form is no
longer required to assure compliance with Rule 3a-7.
(d) In connection with each transfer of a Residual
Class Certificate, the transferee will be required to deliver to
the Trustee a certification upon purchase of such Certificate to
the effect that the beneficial owner thereof (whether such
registered holder or the ultimate beneficiary for whom it holds
such Certificate) is either (i) a United States person, or (ii) a
non-United States person who is exempt from withholding under
U.S. federal income tax laws and has completed, accurately and in
a manner reasonably satisfactory to the Trustee or its agent, an
appropriate statement (generally on IRS Form W-8), signed under
penalties of perjury, identifying the beneficial owner and
stating that the beneficial owner is not a United States person
(or, after December 31, 1999, has satisfied applicable
documentary evidence requirements for establishing that it is not
a United States person) and delivered such statement (or
documentary evidence) to the Trustee or its agent.
Such transferee will be deemed to have represented and
agreed with the Trustee that so long as it is the registered
holder of such Certificate, the beneficial owner thereof will be
a person described in clauses (i) or (ii) above and, in the event
of any change in the identity of the beneficial owner for whom
such registered holder is acting or any lapse of a Form W-8 (or
documentary evidence) previously delivered to the Trustee, the
registered holder will promptly deliver a new certification or a
current Form W-8 (or documentary evidence), as applicable. In the
event such representation is untrue or such current forms (or
documentary evidence) are not so furnished, the Certificate held
by such registered holder will be subject to mandatory resale as
described below.
If a Responsible Officer has actual knowledge or
reason to know that the certification or deemed representation
made by such registered holder is incorrect or if such registered
holder does not provide the current Form W-8 (or documentary
evidence) as described above within ten days after the prior such
Form (or documentary evidence) has lapsed, then, the Trustee will
furnish a notice to such registered holder stating that (i) such
registered holder must, within 30 calendar days from the date of
such notice, effect the registration of transfer of its Residual
Class Certificate to a person that certifies that the beneficial
owner of the Certificate is a U.S. person or exempt from U.S.
withholding tax as described above and (ii) if such transfer does
not occur by the thirtieth day, the Holder will be deemed
irrevocably to have appointed Prudential Securities Incorporated
or Prudential-Bache Securities (U.K.) Inc. (either a "Broker") as
its broker to sell such Holder's Certificate on its behalf to a
qualified purchaser at a fair market price (net of customary
brokerage commissions) within the next succeeding five Business
Days. For purposes of effectuating such sale pursuant to clause
(ii) of the preceding sentence, the Trustee is hereby irrevocably
appointed the agent and attorney-in-fact of the Holder to, and
shall, (a) instruct the broker to effect the foregoing sale, (b)
receive from the broker the net proceeds from such sale for the
account of the Holder and (c) deliver to or upon the order of the
broker a new Certificate issued in exchange for the Certificate
of the Holder sold by the broker (whereupon the Holder's
Certificate will be deemed to have been surrendered and canceled
and cease to be outstanding for any purpose hereunder or entitled
to any rights or benefits hereunder). The Trustee shall pay to
the Holder, within five Business Days of receipt thereof from the
broker, the net proceeds of such sale, such payment to be made in
the same manner as such Holder received its most recent payment
on the Certificate. Each Holder, by its acceptance of a
Certificate, hereby consents to and agrees with the provisions of
this Section 7.
SECTION 8. Certificateholder Exchange Right. Any
Holder of both Amortizing Class Certificates and Residual Class
Certificates may, by delivery of a notice to the Trustee
substantially in the form of the Notice of Exchange attached to a
Certificate (a "Notice of Exchange") not less than 30 and not
more than 45 days prior to any Scheduled Distribution Date other
than May 15, 2017, elect to exchange Certificates of both Classes
for Term Assets on such Scheduled Distribution Date (the
"Exchange Date") in accordance with this Section. In order to
exercise such right, the holder shall tender to the Trustee on
the Exchange Date immediately
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succeeding such notice both (a) Amortizing Class Certificates
evidencing the percentage specified in the Notice of Exchange
(which shall not be less than 10%) of the Aggregate Certificate
Principal Balance of all Amortizing Class Certificates then
outstanding and (b) Residual Class Certificates evidencing the
same percentage of the Aggregate Certificate Principal Balance of
all Residual Class Certificates then outstanding as is
represented by the Amortizing Class Certificates tendered
pursuant to clause (a).
Upon tender of such Certificates, duly endorsed by the
Holder to the Trustee, the Trustee shall transfer to the Holder
(or its designee specified in the Notice of Exchange) a principal
amount of Term Assets comprising the same percentage of the Term
Assets then held in the Trust as the percentage of Amortizing
Class Certificates and Residual Class Certificates tendered by
such Holder on such Scheduled Distribution Date, rounded down to
the nearest authorized denomination of Term Assets. Upon such
exchange, the Trustee shall cancel the tendered Certificates,
provided that if the amount of Term Assets delivered to the
Holder or its designee was rounded down in accordance with the
preceding sentence, the Trustee shall issue to such Holder new
Certificates of each Class evidencing percentage interests of
such Class (regardless of whether such interests would otherwise
be authorized denominations) equal to the amount of such Class in
excess of the amount accepted for such exchange.
The delivery of a Notice of Exchange pursuant to this
Section shall be irrevocable; provided, however, that if (i) the
proceeds of an Optional Redemption, Shortened Maturity Redemption
or In-Kind Distribution are to be distributed on the Exchange
Date to which such Notice of Exchange relates or (ii) if prior to
such Exchange Date, the Trustee gives notice to Holders that the
proceeds of an Optional Redemption, Shortened Maturity Redemption
or In-Kind Distribution are scheduled to be distributed on a date
subsequent to such Exchange Date, such Notice of Exchange shall
be automatically deemed canceled and be of no further force and
effect.
Any Holder tendering Certificates in exchange for Term
Assets on an Exchange Date pursuant to this Section shall be
entitled to receive cash distributions otherwise payable on such
Certificates on such Exchange Date pursuant to Section 9(a).
SECTION 9. Distributions. (a) Not later than each
Scheduled Distribution Date, the Trustee shall distribute to the
Holders of the Amortizing Class Certificates, to the extent of
Interest Collections constituting Available Funds, an amount
equal to the Fixed Payment plus any Excess Interest. Each Fixed
Payment shall be allocated first to interest accrued during the
related Interest Accrual Period at a rate equal to the Amortizing
Class Yield on the then outstanding Aggregate Certificate
Principal Balance of the Amortizing Class Certificates, with the
balance of such Fixed Payment allocated to the repayment of
principal in accordance with the amortization schedule attached
hereto as Schedule 2 (the "Amortization Schedule"). Any Excess
Interest shall be allocated as additional interest and shall not
be taken into account in the allocation of the Fixed Payment. In
the event of a Partial Optional Redemption or an exchange of
Certificates for Term Assets pursuant to Section 8, the Fixed
Payment to the holders of the Amortizing Class Certificates will
be reduced, effective on the next Scheduled Distribution Date,
pro rata with the reduction of the Term Assets, and the Trustee
shall thereafter adjust the Amortization Schedule on the basis of
the new Aggregate Certificate Principal Balances following the
Optional Redemption Date.
In the event that any Interest Collections are received
by the Trustee after a Scheduled Distribution Date and prior to
the final distribution with respect to the Amortizing Class
Certificate, the Trustee will distribute such Interest
Collections to the holders of the Amortizing Class Certificates
as soon as practicable after receipt.
(b) On May 15, 2017, the Trustee shall distribute the
remaining Term Assets in kind to the Residual Class
Certificateholders; provided that if payment to the Amortizing
Class Certificateholders with respect to the Term Assets due on
May 15, 2017 is not made by NSC on such date, the Term Assets
will not be distributed to the holders of the Residual Class
Certificates until such payment is made by NSC or the Trustee
makes an In- Kind Distribution to Certificateholders in
accordance with this Agreement.
(c) In the event of an Optional Redemption on or prior
to May 15, 2017, the Certificates will be redeemed on the
Optional Redemption Date. Such redemption shall be a redemption
of the Certificates as a whole if the Optional Redemption is
redemption of the Term Assets as a whole, and shall be a
redemption of the
8
<PAGE>
Certificates in part, as described in the next subsection, if the
Optional Redemption is a Partial Optional Redemption. In such
event, the Trustee will distribute the aggregate redemption price
received on the Term Assets on the Optional Redemption Date to
the holders of the Amortizing Class Certificates and the Residual
Class Certificates, respectively, on the basis of the
Distribution Ratio. Such ratio will be calculated by the
Calculation Agent.
(d) In the event of a Partial Optional Redemption, the
distribution of the portion of the redemption price allocable to
a particular Class of Certificates pursuant to the preceding
subsection shall be made on a pro rata basis among all
Certificateholders of such Class. Amounts so allocated to the
Amortizing Class Certificates shall be allocated first to
interest accrued since the start of the most recent Interest
Accrual Period at a rate equal to the Amortizing Class Yield on
the then outstanding Certificate Principal Balance of the
Amortizing Class Certificates, with the balance of such
distribution allocated to the repayment of principal. At the
close of business on the applicable Optional Redemption Date, the
respective Certificate Principal Balances of the Certificates
shall be reduced in accordance with definition of the term
"Certificate Principal Balance."
(e) In the event of a Shortened Maturity Redemption on
or prior to May 15, 2017, the Certificates shall be redeemed as a
whole on the Shortened Maturity Date. In such event, the Trustee
will distribute the aggregate redemption price received on the
Term Assets on the Shortened Maturity Date to the holders of the
Amortizing Class Certificates and the Residual Class
Certificates, respectively, on the basis of the Distribution
Ratio. Such ratio will be calculated by the Calculation Agent.
(f) Upon a Payment Default or an Acceleration of the
Term Assets under the Indenture on or before May 15, 2017, the
Trustee will make an In-Kind Distribution of the remaining Term
Assets, pursuant to Section 3.6 of the Agreement, to the holders
of the Amortizing Class Certificates and the Residual Class
Certificates. The Trustee will distribute the Term Assets and any
proceeds from liquidation thereof made pursuant to Section 3.6(b)
to the holders of the Amortizing Class Certificates and Residual
Class Certificates, respectively, on the basis of the
Distribution Ratio as of the date of such Payment Default or
Acceleration. Such ratio will be calculated by the Calculation
Agent.
(g) Distributions of any Purchase Price pursuant to
Section 2.5 of the Agreement shall be distributed in the same
ratio set forth in subsection (c) above discounted to the date on
which the Purchase Price is distributed. Such distribution shall
be made fifteen days after receipt of the Purchase Price.
(h) Distributions to the Certificateholders on each
Distribution Date will be made to the Certificateholders of
record on the related Record Date of the Amortizing Class
Certificates and Residual Class Certificates, as applicable.
(i) All distributions to Certificateholders of any
Class shall be allocated pro rata among the Certificates of such
Class, based on the respective Certificate Principal Balances as
of the Record Date with respect to such Distribution Date.
(j) Notwithstanding any provision of the Agreement to
the contrary, to the extent funds are available, the Trustee will
initiate payment in immediately available funds by 10:00 A.M.
(New York City time) on each Distribution Date of all amounts
payable to each Certificateholder with respect to any Certificate
held by such Certificateholder or its nominee (without the
necessity for any presentation or surrender thereof or any
notation of such payment thereon) in the manner and at the
address as each Certificateholder may from time to time direct
the Trustee in writing fifteen days prior to such Distribution
Date requesting that such payment will be so made and designating
the bank account to which such payments shall be so made. The
Trustee shall be entitled to rely on the last instruction
delivered by the Certificateholder pursuant to this Section 9(j)
unless a new instruction is delivered 15 days prior to a
Distribution Date.
(k) The rights of the Certificateholders to receive
distributions in respect of the Certificates, and all interests
of the Certificateholders in such distributions, shall be as set
forth in this Series Supplement. The Trustee shall in no way be
responsible or liable to the Certificateholders nor shall any
Certificateholder in any way
9
<PAGE>
be responsible or liable to any other Certificateholder in
respect of amounts previously distributed on the Certificates
based on their respective Certificate Principal Balances.
(l) The Trustee shall furnish notice to
Certificateholders as soon as practicable after a Responsible
Officer learns of a situation giving rise to a distribution under
subsections (c), (d) or (e) hereof.
SECTION 10. Termination of Trust. (a) The Trust shall
terminate upon the occurrence of any Trust Termination Event and
the distribution to Certificateholders of all amounts or property
required to be distributed to them and the disposition of all
Term Assets held by the Trustee.
(b) Promptly after the Trustee has received a notice
from the Term Assets Trustee or NSC of an Optional Redemption
other than a Partial Optional Redemption, a Shortened Maturity
Redemption, a Payment Default or an Acceleration of the Term
Assets, the Trustee shall provide notice to the
Certificateholders of the expected occurrence of a Trust
Termination Event and the termination of the Trust.
(c) The obligations of the Trustee will thereupon
terminate, except for the making of final distributions to
Certificateholders and the furnishing of any reports and other
information required to be provided to Certificateholders
hereunder and under the Agreement and except as otherwise
specified herein and therein.
SECTION 11. Limitation of Powers and Duties. (a) The
Trustee shall administer the Trust and the Term Assets solely as
specified herein and in the Agreement.
(b) The Trust is constituted solely for the purpose of
acquiring and holding the Term Assets. The Trustee is not
authorized to acquire any other investments or engage in any
activities not authorized herein and, in particular,
notwithstanding anything to the contrary in the Agreement, the
Trustee is not authorized (i) to sell, assign, transfer,
exchange, pledge, set-off or otherwise dispose of any of the Term
Assets, once acquired, or interests therein, including to
Certificateholders except as expressly provided as Section 3.6 of
the Base Trust Agreement or (ii) to do anything that would
materially increase the likelihood that the Trust will fail to
qualify as a grantor trust for United States federal income tax
purposes.
SECTION 12. Certain Provisions of Base Trust Agreement
Not Applicable. The provisions of Sections 2.2(b), 2.3 (except
insofar as incorporated in Section 2.5), 5.16, 6.4 and 8.1(a)(i)
of the Base Trust Agreement shall be inapplicable with respect to
the Certificates.
SECTION 13. Modification and Amendment of Base Trust
Agreement. (a) In addition to, and notwithstanding anything to
the contrary in, the Base Trust Agreement or this Series
Supplement, the Trustee, upon receipt of a Depositor Order, shall
amend this Series Supplement to provide for the issuance of the
Initial Certificates of a Class or Exchange Certificates of a
Class in the form of a Global Security issued to a Depositary
specified by the Depositor. Such amendment shall not require the
consent of any Certificateholders or compliance with any other
conditions contained in Section 9.1 of the Base Trust Agreement.
(b) The penultimate sentence of Section 3.1(b) of the
Base Trust Agreement is amended for purposes of this Series
Supplement and the Certificates as follows: (1) by substituting a
comma for the word "or" at the end of clause (i), and (2) by
inserting after the words "Term Asset" and immediately preceding
the word "except" the following:
"(iii) which would alter the currency in which any payment is
required to be made on the Term Assets, (iv) which would change
the voting rights granted to holders of the Term Assets under the
Indenture, or (v) which would impair in any material respect any
rights of the Trustee or holders of the Term Assets to enforce
remedies against NSC under the Indenture,"
(c) Section 9.1(a) of the Base Trust Agreement is
amended for purposes of this Series Supplement and the
Certificates by deleting from clause (x) thereof the phrase ",
but not (vi),".
10
<PAGE>
(d) Clause (ii) of the proviso to the first sentence
of Section 9.1(b) of the Base Trust Agreement is amended by
deleting the existing text after the word "without" and inserting
the following in its place: "the unanimous consent of the Holders
of Certificates of such Series or Class".
SECTION 14. No Investment of Amounts Received on Term
Assets. All amounts received on or with respect to the Term
Assets shall be held uninvested by the Trustee without liability
for interest thereon.
SECTION 15. Rule 144A Information. If the Depositor
with respect to the Trust is not subject to Section 13 or 15(d)
of the Exchange Act with respect to such Certificate, then
Trustee will furnish, upon request, to holders and prospective
purchasers of Initial Certificates information, which upon
request by the Trustee shall be assembled and delivered to the
Trustee by the Depositor, satisfying the requirement of
subsection (d)(4)(i) of Rule 144A.
SECTION 16. Notices. (a) All directions, demands and
notices hereunder and under the Agreement shall be in writing and
shall be deemed to have been duly given when received if
personally delivered or mailed by first class mail, postage
prepaid or by express delivery service or by certified mail,
return receipt requested or delivered in any other manner
specified herein, (i) in the case of the Depositor, to Prudential
Securities Structured Assets, Inc., One New York Plaza, 15th
Floor, New York, New York 10292-2014, Attention: Linda Muller, or
such other address as may hereafter be furnished to the Trustee
in writing by the Depositor, and (ii) in the case of the Trustee,
to The Bank of New York, 101 Barclay Street (12E), New York, New
York 10286, Attention: Corporate Trust, or such other address as
may hereafter be furnished to the Depositor in writing by the
Trustee.
(b) For purposes of delivering notices to the Rating
Agency, notices shall be sent to the address specified by the
Depositor's designation.
SECTION 17. Access to Certain Documentation. Access to
documentation regarding the Term Assets will be afforded without
charge to any Certificateholder so requesting pursuant to Section
3.9 of the Agreement. Additionally, the Trustee shall provide at
the request of any Certificateholder without charge to such
Certificateholder the name and address of each Certificateholder
of Certificates hereunder as recorded in the Certificate Register
for purposes of contacting the other Certificateholders with
respect to their rights hereunder or for the purposes of
effecting purchases or sales of the Certificates, subject to the
transfer restrictions set forth herein.
SECTION 18. Ratification of Agreement. With respect to
the Series issued hereby, the Base Trust Agreement, as
supplemented by this Series Supplement, is in all respects
ratified and confirmed and the Base Trust Agreement as so
supplemented by this Series Supplement shall be read, taken and
construed as one and the same instrument. To the extent there is
any inconsistency between the terms of the Base Trust Agreement
and this Series Supplement, the terms of this Series Supplement
shall govern.
SECTION 19. Counterparts. This Series Supplement may be
executed in any number of counterparts, each of which so executed
shall be deemed to be an original, but all of such counterparts
shall together constitute but one and the same instrument.
SECTION 20. Governing Law. This Series Supplement and
each Certificate issued hereunder shall be construed in
accordance with and governed by the law of the State of New York
without regard to principles of conflicts of law.
SECTION 21. Trustee Election. In mutual consideration
for each Certificateholder's purchase of a Certificate, each
Certificateholder acknowledges that it intends that the Trust be
excluded from the application of the rules of subchapter K of the
Code in the event that the Internal Revenue Service successfully
recharacterizes the Trust as a partnership for federal income tax
purposes, and will be deemed to have consented to the making of a
protective election pursuant to Treasury Regulation Section
1.761-2 as of the date hereof.
11
<PAGE>
SECTION 22. Covenant of Depositor. The Depositor
hereby covenants that it will be adequately capitalized at all
times. The Depositor hereby further covenants that it will not
purchase or otherwise acquire any Certificates in the open market
or otherwise at any time.
* * * * *
12
<PAGE>
IN WITNESS WHEREOF, the Depositor and the Trustee have
caused this Series Supplement to be duly executed by their
respective officers thereunto duly authorized as of the day and
year first above written.
PRUDENTIAL SECURITIES STRUCTURED ASSETS,
INC., as Depositor
By /s/ C. Christopher Perry
------------------------
Authorized Signatory
THE BANK OF NEW YORK,
a New York banking corporation,
as Trustee
By /s/ Fernando Acebedo
--------------------
Authorized Signatory
14
<PAGE>
Exhibit A
[Form of Amortizing Class Certificate]
NUMBER Certificate Principal Balance $____________
R-___ Aggregate Certificate
Principal Balance $69,977,735
CUSIP NO. 755920AF2
SEE REVERSE FOR CERTAIN DEFINITIONS
THE HOLDER OF THIS CERTIFICATE SHALL HAVE NO RIGHT TO
PRINCIPAL PAYMENTS IN RESPECT OF THE TERM ASSETS EXCEPT IN THE
EVENT OF AN OPTIONAL REDEMPTION OR A SHORTENED MATURITY
REDEMPTION (AS SUCH TERMS ARE DEFINED IN THE TRUST AGREEMENT
REFERRED TO HEREIN) ON OR PRIOR TO MAY 15, 2017. THE REGISTERED
HOLDER HEREOF, BY ITS ACCEPTANCE HEREOF, AGREES THAT IT WILL LOOK
SOLELY TO THE TRUST PROPERTY (TO THE EXTENT OF ITS RIGHTS
THEREIN) FOR DISTRIBUTIONS HEREUNDER.
THIS CERTIFICATE REPRESENTS A FRACTIONAL UNDIVIDED
INTEREST IN THE TRUST AND DOES NOT EVIDENCE AN OBLIGATION OF, OR
AN INTEREST IN, AND IS NOT GUARANTEED BY THE DEPOSITOR OR THE
TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS
CERTIFICATE NOR THE TRUST ASSETS ARE INSURED OR GUARANTEED BY ANY
GOVERNMENTAL AGENCY OR ANY OTHER PERSON.
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER JURISDICTION.
THE TRUST HAS NOT BEEN REGISTERED AS AN INVESTMENT
COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED. ANY
TRANSFER OF THIS CERTIFICATE MAY ONLY BE MADE IN ACCORDANCE WITH
RULE 3a-7 OF SUCH ACT.
A-1
<PAGE>
RECEIPTS ON CORPORATE SECURITIES TRUST, SERIES NSC 1998-1
RECEIPTS ON CORPORATE SECURITIES
SERIES NSC 1998-1
Amortizing Class Certificates evidencing a fractional
undivided beneficial ownership interest in the Trust, as defined
below, the property of which consists of $80,000,000 aggregate
principal amount of 7.90% Notes due May 15, 2097 (the "Term
Assets") issued by Norfolk Southern Corporation, a Virginia
corporation ("NSC"), and deposited in the Trust by the Depositor,
as defined below. The Term Assets were purchased by the Trust
from Prudential Securities Structured Assets, Inc. (the
"Depositor") in exchange for the transfer of the Certificates to
the Depositor by the Trust.
THIS CERTIFIES THAT [ ] is the registered owner of a
nonassessable, fully-paid, fractional undivided interest in
Receipts on Corporate Securities Trust, Series NSC 1998-1 formed
by the Depositor. Under the Trust Agreement, except upon or after
the occurrence of an Optional Redemption, a Shortened Maturity
Redemption or an In-Kind Distribution, there will be distributed
to the Holders of the Amortizing Class Certificates an amount
equal to the Fixed Payment plus any Excess Interest on the
fifteenth day of each May and November, or, if any such day is
not a Business Day and a Term Assets Scheduled Payment Date, then
the Business Day on or immediately following the Term Assets
Scheduled Payment Date, commencing May 15, 1998 through and
including May 15, 2017; provided that payment on each Scheduled
Distribution Date shall be subject to receipt of the
corresponding payment of interest or principal, as applicable, on
the Term Assets. Each Fixed Payment shall be allocated first to
interest accrued during the related Interest Accrual Period at a
rate equal to the Amortizing Class Yield on the then outstanding
Aggregate Certificate Principal Balance of the Amortizing Class
Certificates, with the balance of such Fixed Payment allocated to
the repayment of principal in accordance with the amortization
schedule attached to the Series Supplement as Schedule 2 (the
"Amortization Schedule"). Any Excess Interest shall be allocated
as additional interest and shall not be taken into account in the
allocation of the Fixed Payment. In the event of a Partial
Optional Redemption or an exchange of Certificates for Term
Assets pursuant to Section 8 of the Series Supplement referred to
below, the Fixed Payment to the holders of the Amortizing Class
Certificates and the Certificate Principal Balance of this
Certificate will be reduced in accordance with the Trust
Agreement. In the event of an Optional Redemption or a Shortened
Maturity Redemption, the Trustee will distribute the payments
received on the Term Assets on the Optional Redemption Date or
the Shortened Maturity Date, as applicable, to the holders of the
Amortizing Class Certificates and holders of the Residual Class
Certificates, respectively, in the same ratio as (i) the present
value of all originally scheduled future payments on the
Amortizing Class Certificates bears to (ii) the present value of
all originally scheduled future payments on the Term Assets after
May 15, 2017, discounted semiannually in each case at a rate of
7.90% per annum (such ratio being the "Distribution Ratio") to
the Optional Redemption Date or Shortened Maturity Date, as
applicable. Such amounts will be calculated by the Calculation
Agent. In the event of an In-Kind Distribution pursuant to
Section 3.6 of the Base Trust Agreement, the Trustee shall make
such In-Kind Distribution to the Holders of the Amortizing Class
Certificates and the Holders of the Residual Class Certificates,
respectively, on the basis of the Distribution Ratio to the date
on which the Payment Default or Acceleration of the Term Assets
occurred. Such ratio shall be calculated by the Calculation
Agent.
The Trust was created pursuant to a Base Trust
Agreement dated as of August 28, 1997, as amended by Base
Amendment No. 1 dated as of February 27, 1988 (together, the
"Base Trust Agreement"), between the Depositor and The Bank of
New York, a New York banking corporation, not in its individual
capacity but solely as Trustee (the "Trustee"), as supplemented
by the Series NSC 1998-1 Supplement dated as of April 13, 1998
(the "Series Supplement" and, together with the Base Trust
Agreement, the "Trust Agreement"), between the Depositor and the
Trustee. This Certificate does not purport to summarize the Trust
Agreement and reference is hereby made to the Trust Agreement for
information with respect to the interests, rights, benefits,
obligations, proceeds and duties evidenced hereby and the rights,
duties and obligations of the Trustee with respect hereto. A
A-2
<PAGE>
copy of the Trust Agreement may be obtained from the Trustee by
written request sent to the Corporate Trust Office. Capitalized
terms used but not defined herein have the meanings assigned to
them in the Trust Agreement.
This Certificate is one of the duly authorized
Certificates designated as "Receipts on Corporate Securities,
Series NSC 1998-1, Amortizing Class Certificates" (herein called
the "Amortizing Class Certificates"). The Trust is also issuing
certificates designated as "Receipts on Corporate Securities,
Series NSC 1998-1, Residual Class Certificates" (hereinafter
called the "Residual Class Certificates" and together with the
Amortizing Class Certificates, the "Certificates") pursuant to
the Trust Agreement. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Trust
Agreement, to which Trust Agreement the Holder of this
Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound. The property of the Trust consists of
the Term Assets and all payments on or collections in respect of
the Term Assets accrued on or after the Closing Date, all as more
fully specified in the Trust Agreement.
Subject to the terms and conditions of the Trust
Agreement (including the availability of funds for distribution)
and until the obligation created by the Trust Agreement shall
have terminated in accordance therewith, distributions will be
made on each Distribution Date to the Person in whose name this
Certificate is registered on the applicable Record Date. The
Record Date applicable to any Distribution Date is the 15th day
immediately preceding such Distribution Date.
Distributions made on this Certificate will be made as
provided in the Trust Agreement by the Trustee by wire transfer
or credit to the appropriate account of the Holder in immediately
available funds, without the presentation or surrender of this
Certificate or the making of any notation hereon. Except as
otherwise provided in the Trust Agreement and notwithstanding the
above, the final distribution on this Certificate will be made
after due notice by the Trustee of the tendency of such
distribution and only upon presentation and surrender of this
Certificate at the office or agency maintained for that purpose
by the Trustee in the Borough of Manhattan, the City of New York.
Reference is hereby made to the further provisions of
this Certificate set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set
forth at this place.
Unless the certificate of authentication hereon has
been executed by or on behalf of the Trustee, by manual
signature, this Certificate shall not entitle the holder hereof
to any benefit under the Trust Agreement or be valid for any
purpose.
It is the intent of the Depositor and the
Certificateholders that, for purposes of federal income, state
and local income and franchise taxes and any other taxes imposed
upon, measured by or based upon gross or net income, the Trust
shall be treated as a grantor trust or, failing that, as a
partnership that is not treated as an association (or publicly
traded partnership) taxable as a corporation, and the Trust
Agreement shall be interpreted accordingly. Except as otherwise
required by appropriate taxing authorities, the Depositor and the
other Certificateholders by acceptance of a Certificate, agree to
treat, the Certificates for such tax purposes as interests in
such grantor trust. It is also the intent of the Depositor and
the Certificateholders that the Trust be excluded from the
application of the rules of subchapter K of the Code in the event
that the Internal Revenue Service successfully recharacterizes
the Trust as a partnership for federal income tax purposes, and
that a protective election pursuant to Treasury Regulation
Section 1.761-2 be made as of the date of formation of the Trust.
A-3
<PAGE>
THIS CERTIFICATE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO ITS CONFLICT-OF-LAW PROVISIONS.
IN WITNESS WHEREOF, the Trustee has caused this
Certificate to be duly executed as of the date set forth below.
THE BANK OF NEW YORK,
a New York banking corporation
By:___________________________
Authorized Signatory
Dated: [ ], 1998
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Amortizing Class Certificates
described in the Trust Agreement referred to herein.
THE BANK OF NEW YORK,
a New York banking corporation, not in its
individual capacity but solely as Trustee,
By:__________________________
Authorized Signatory
A-4
<PAGE>
(REVERSE OF TRUST CERTIFICATE)
The Certificates are limited in right of distribution
to certain payments and collections respecting the Trust
Agreement, all as more specifically set forth herein and in the
Trust Agreement. The registered Holder hereof, by its acceptance
hereof, agrees that it will look solely to the Term Assets (to
the extent of its rights therein) for distributions hereunder.
Subject to the next sentence and to certain exceptions
provided in the Trust Agreement, the Trust Agreement permits the
amendment thereof and the modification of the rights and
obligations of the Depositor and the Trustee and the rights of
the Certificateholders under the Trust Agreement at any time by
the Depositor and the Trustee with the unanimous consent of the
Holders each Outstanding Class of Certificates. Any such consent
by the Holder of this Certificate (or any predecessor
Certificate) shall be conclusive and binding on such Holder and
upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange hereof
or in lieu hereof whether or not notation of such consent is made
upon this Certificate. The Trust Agreement also permits the
amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
The Certificates are issuable in fully registered form
only in minimum Certificate Principal Balances of $250,000 and
integral multiples of $1.00 in excess thereof. As provided in the
Trust Agreement and subject to certain limitations therein set
forth, Certificates are exchangeable for new Certificates of the
same principal amount, Class, original issue date and maturity,
in authorized denominations as requested by the Holder
surrendering the same.
As provided in the Trust Agreement and subject to
certain limitations therein set forth, the transfer of this
Certificate is registrable in the Certificate Register upon
surrender of this Certificate for registration of transfer at the
offices or agencies of the Certificate Registrar maintained by
the Trustee in the Borough of Manhattan, The City of New York,
duly endorsed by, or accompanied by an assignment in the form
below and by such other documents as required by the Trust
Agreement signed by, the Holder hereof, and thereupon one or more
new Certificates of the same Class in authorized denominations
evidencing the same principal amount will be issued to the
designated transferee or transferees. The Certificate Registrar
appointed under the Trust Agreement is The Bank of New York.
No service charge will be made for any registration of
transfer or exchange, but the Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of
Certificates.
The Depositor and the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes,
and neither the Depositor, the Trustee, nor any such agent shall
be affected by any notice to the contrary.
The Trust and the obligations of the Depositor and the
Trustee created by the Trust Agreement with respect to the
Certificates will terminate upon (i) the distribution of the Term
Assets to the Residual Class Certificateholders on May 15, 2017
(subject to Section 9(b) of the Series Supplement), (ii) the
payment in full of the Certificates after a Shortened Maturity
Redemption, (iii) the occurrence of an In-Kind Distribution, (iv)
the occurrence of an Optional Redemption other than a Partial
Optional Redemption, or (v) the exchange of Certificates for the
last remaining Term Assets pursuant to Section 8 of the Series
Supplement.
A-5
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells,
assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR TAXPAYER
IDENTIFICATION OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
- -----------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee)
- -----------------------------------------------------------------
the within Trust Certificate, and all rights thereunder, hereby
irrevocably constituting and appointing
- -----------------------------------------------------------------
Attorney to transfer said Trust Certificate on the books of the
Certificate Registrar, with full power of substitution in the
premises.
Dated:
-----------
---------------------------*
Signature Guaranteed;
---------------------------*
* NOTICE: The signature to this assignment must correspond with
the name as it appears upon the face of the within Trust
Certificate in every particular, without alteration, enlargement
or any change whatever. Such signature must be guaranteed by an
"eligible guarantor institution" meeting the requirements of the
Certificate Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee
program" as may be determined by the Certificate Registrar in
addition to, or in substitution for, STAMP, all in accordance
with the Securities Exchange Act of 1934, as amended.
[TO BE COMPLETED BY PURCHASER:
The undersigned represents and warrants that it is an
institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act of 1933, as amended.
Dated:
----------- *
--------------------]1
(Signature)
- ------------------
1 Bracketed Certification to be omitted in Exchange Certificates
of this Class upon delivery of a Depositor Order to such effect
pursuant to Section 7(c) of the Series Supplement.
A-6
<PAGE>
NOTICE OF EXCHANGE
To: The Bank of New York, acting not in its
individual capacity but as trustee (the "Trustee") of receipts on
Corporate Securities Trust, Series NSC 1998-1 (the "Trust")
created pursuant to the Series Supplement dated as of April 13,
1998 (the "Series Supplement") to the Base Trust Agreement dated
as of August 28, 1997, as amended (together, the "Trust
Agreement"). (Capitalized terms used and not defined herein have
the meanings ascribed thereto in the Trust Agreement).
By the delivery of this duly completed Notice of
Exchange, the undersigned registered holder of Amortizing Class
Certificates and Residual Class Certficates of Trust
irrevocably exercises its option under, and subject to the terms
and conditions of, Section 8 of the series Supplement to
exchange (a) Amortizing Class Certificates evidencing the
percentage specified below (the "Specified Percentage") (which
shall not be less than 10%)of the Aggregate Certificate
Principal Balance of all outstanding Residual Class Certificates
of the Trust and (b) Residual Class Certificates evidencing the
Specified Percentage of the Aggregate Certificate Principal
Balance for all outstanding Residual Class Certificates of the
Trust for Terms Assets representing the Specified Percentage of
all terms Assets held in the Trust (subject to rounding down to
authorized denominations as provided in Section 8 of the Series
Supplement).
The undersigned irrevocably undertakes to deliver to
the Trustee on the Exchange Date specified below the specified
amount of Amortizing Class Certificates and Residual Class
Certificates held of record by the undersigned in exchange for
Term Assets in the specified Percentage (subject to rounding as
described above).
Exchange Date: (must be the Scheduled
Distribution Date occurring not less than 30 nor more than 45
days after the giving of this Notice).
Certificates to be Tendered:
- ------------------------------------------------------------------------------
Specified
Principal Amount Percentage of
Certificate Principal Amount of Certificate entire Class
Class Number of Certificate to be Exchanged* to be Exchanged**
- ----- ------ -------------- ---------------- -----------------
- -----------------------------------------------------------------------------
Amortizing $R-- $ $
- -----------------------------------------------------------------------------
Residual $R-- $ $ {________%
- ------------------------------------------------------------------------------
- --------
* If not completed, the Holder will be deemed to have agreed
to exchange the entire Certificate Principal Balance
represented by its Certificates.
** Must be not less than 10% and must represent the identical
percentage of the respective Aggregate Certificate Principal
Balances of all outstanding Amortizing Class Certificates
and Residual Class Certificates issued by the Trust.
A-7
<PAGE>
Registration instruction for Term Assets (Note: must be eligible
participant of book-entry depository system if Term Assets are
held through that system):
Dated: ________________
______________________________________ *
Signature Guaranteed;
_______________________________________*
* NOTICE: The signature to this assignment must correspond with
the name as it appears upon the face of the Trust Certificate
surrendered in connection with the exchange in every particular,
without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Certificate
Registrar, which requirements include membership or participation
in STAMP or such other "signature guarantee program" as may be
determined by the Certificate Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
A-8
<PAGE>
Exhibit B
[Form of Residual Class Certificate]
NUMBER Certificate Principal Balance $____________
R-___ Aggregate Certificate
Principal Balance $80,000,000
CUSIP NO. 755920AE5
SEE REVERSE FOR CERTAIN DEFINITIONS
THE HOLDER OF THIS CERTIFICATE SHALL HAVE NO RIGHT TO
PAYMENTS IN RESPECT OF THE TERM ASSETS EXCEPT IN THE EVENT OF AN
OPTIONAL REDEMPTION OR A SHORTENED MATURITY REDEMPTION (AS SUCH
TERMS ARE DEFINED IN THE TRUST AGREEMENT REFERRED TO HEREIN) ON
OR PRIOR TO AUGUST 1, 2017. THE REGISTERED HOLDER HEREOF, BY ITS
ACCEPTANCE HEREOF, AGREES THAT IT WILL LOOK SOLELY TO THE TRUST
PROPERTY (TO THE EXTENT OF ITS RIGHTS THEREIN) FOR DISTRIBUTIONS
HEREUNDER.
THIS CERTIFICATE REPRESENTS A FRACTIONAL UNDIVIDED
INTEREST IN THE TRUST AND DOES NOT EVIDENCE AN OBLIGATION OF, OR
AN INTEREST IN, AND IS NOT GUARANTEED BY THE DEPOSITOR OR THE
TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS
CERTIFICATE NOR THE TRUST ASSETS ARE INSURED OR GUARANTEED BY ANY
GOVERNMENTAL AGENCY OR ANY OTHER PERSON.
[THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER JURISDICTION.]2
[THE TRUST HAS NOT BEEN REGISTERED AS AN INVESTMENT
COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED. ANY
TRANSFER OF THIS CERTIFICATE MAY ONLY BE MADE IN ACCORDANCE WITH
RULE 3a-7 OF SUCH ACT.]3
THE RESIDUAL CLASS CERTIFICATES MAY ONLY BE HELD BY
PERSONS WHO CERTIFY THAT THE BENEFICIAL OWNER THEREOF IS EXEMPT
FROM WITHHOLDING UNDER U.S. FEDERAL INCOME TAX LAWS.
- --------------
2 Bracketed Legend to be omitted in Exchange Certificates of
this Class.
3 Bracketed Legend to be omitted in Exchange Certificates upon
Depositor Order, if any, delivered pursuant to Section 7(c).
B-1
<PAGE>
RECEIPTS ON CORPORATE SECURITIES TRUST, SERIES NSC 1998-1
RECEIPTS ON CORPORATE SECURITIES
ON SERIES NSC 1998-1
Residual Class Certificates evidencing a fractional
undivided beneficial ownership interest in the Trust, as defined
below, the property of which consists of $80,000,000 aggregate
principal amount of 7.90% Debentures due May 15, 2097 (the "Term
Assets") issued by Norfolk Southern Corporation, a Virginia
corporation ("NSC"), and deposited in the Trust by the Depositor,
as defined below. The Term Assets were purchased by the Trust
from Prudential Securities Structured Assets, Inc. (the
"Depositor") in exchange for the transfer of the Certificates to
the Depositor by the Trust.
THIS CERTIFIES THAT [ ] is the registered owner of a
nonassessable, fully-paid, fractional undivided interest in
Receipts on Corporate Securities Trust, Series NSC 1998-1 formed
by the Depositor. Under the Trust Agreement, this Certificate
will be terminated and deemed involuntarily surrendered by the
holder hereof in exchange for a principal amount of the Term Assets
underlying this Certificate equal to the Certificate Principal
Balance hereof on May 15, 2017, unless an Optional Redemption,
a Shortened Maturity Redemption or an In-Kind Distribution (as
such terms are defined in the Trust Agreement) has occurred on or
prior to such date; provided that if payment to the Amortizing
Class Certificateholders with respect to the Term Assets due on
May 15, 2017 is not made by NSC on such date, the Terms Assets
will not be distributed to the holders of the Residual Class
Certificates until such payment is made by NSC or the Trustee
makes an In-Kind Distribution to Certificateholders in accordance
with the Trust Agreement. With respect to any distribution to the
Residual class Certificates (as defined below), the percentage of
such distribution to which this Certificateholder is entitled on
any such Distribution Date is such Certificateholder's Percentage
Interest of such distribution. In the event of an Optional
Redemption or a Shortened Maturity Redemption, the Trustee will
distribute the payments received on the Term Assets on the
Optional Redemption Date or the Shortened Maturity Date, as
applicable, to the holders of the Amortizing Class Certificates
and holders of the Residual Class Certificates, respectively, in
the same ratio as (i) the present value of all originally
scheduled future payments on the Amortizing Class Certificates
bears to (ii) the present value of all originally scheduled
future payments on the Term Assets after May 15, 2017,
discounted semiannually in each case at a rate of 7.90% per annum
(such ratio being the "Distribution Ratio") to the Optional
Redemption Date or Shortened Maturity Date, as applicable. Such
amounts will be calculated by the Calculation Agent. In the event
of an In-Kind Distribution pursuant to Section 3.6 of the Base
Trust Agreement, the Trustee shall make such In-Kind Distribution
to the Holders of the Amortizing Class Certificates and the
Holders of the Residual Class Certificates, respectively, on the
basis of the Distribution Ratio to the date on which the Payment
Default or Acceleration of the Term Assets occurred. Such ratio
shall be calculated by the Calculation Agent. In the Event of a
Partial Optional Redemption, the Certificate Principal Balance of
this Certificate will be reduced in accordance with the Trust
Agreeement.
The Trust was created pursuant to a Base Trust
Agreement dated as of August 28, 1997, as amended by Base
Amendment No. 1 dated as of February 27, 1988 (together, the
"Base Trust Agreement"), between the Depositor and The Bank of
New York, a New York banking corporation, not in its individual
capacity but solely as Trustee (the "Trustee"), as supplemented
by the Series NSC 1998-1 Supplement dated as of April 13, 1998
(the "Series Supplement" and, together with the Base Trust
Agreement, the "Trust Agreement"), between the Depositor and the
Trustee. This Certificate does not purport to summarize the Trust
Agreement and reference is hereby made to the Trust Agreement for
information with respect to the interests, rights, benefits,
obligations, proceeds and duties evidenced hereby and the rights,
duties and obligations of the Trustee with respect hereto. A copy
of the Trust Agreement may be obtained from the Trustee by
written request sent to the Corporate Trust Office. Capitalized
terms used but not defined herein have the meanings assigned to
them in the Trust Agreement.
This Certificate is one of the duly authorized
Certificates designated as "Receipts on Corporate Securities,
Series NSC 1998-1, Residual Class Certificates" (herein called
the "Residual Class Certificates"). The Trust is also issuing
certificates designated as "Receipts on Corporate Securities,
Series NSC 1998-1, Amortizing Class Certificates" (hereinafter
called the "Residual Class Certificates" and together with the
Residual Class Certificates, the "Certificates") pursuant to
the Trust Agreement. This Certificate is issued under and is
subject to
B-2
<PAGE>
the terms, provisions and conditions of the Trust Agreement, to
which Trust Agreement the Holder of this Certificate by virtue of
the acceptance hereof assents and by which such Holder is bound.
The property of the Trust consists of the Term Assets and all
payments on or collections in respect of the Term Assets accrued
on or after the Closing Date, all as more fully specified in the
Trust Agreement.
Subject to the terms and conditions of the Trust
Agreement (including the availability of funds for distribution)
and until the obligation created by the Trust Agreement shall
have terminated in accordance therewith, distributions will be
made on each Distribution Date to the Person in whose name this
Certificate is registered on the applicable Record Date. The
Record Date applicable to any Distribution Date is the day
immediately preceding such Distribution Date.
Reference is hereby made to the further provisions of
this Certificate set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set
forth at this place.
Unless the certificate of authentication hereon has
been executed by or on behalf of the Trustee, by manual
signature, this Certificate shall not entitle the holder hereof
to any benefit under the Trust Agreement or be valid for any
purpose.
It is the intent of the Depositor and the
Certificateholders that, for purposes of federal income, state
and local income and franchise taxes and any other taxes imposed
upon, measured by or based upon gross or net income, the Trust
shall be treated as a grantor trust or, failing that, as a
partnership that is not treated as an association (or publicly
traded partnership) taxable as a corporation or a public traded
partnership, and the Trust Agreement shall be interpreted
accordingly. Except as otherwise required by appropriate taxing
authorities, the Depositor and the other Certificateholders by
acceptance of a Certificate, agree to treat, the Certificates for
such tax purposes as interests in such grantor trust. It is also
the intent of the Depositor and the Certificateholders that the
Trust be excluded from the application of the rules of subchapter
K of the Code in the event that the Internal Revenue Service
successfully recharacterizes the Trust as a partnership for
federal income tax purposes, and that a protective election
pursuant to Treasury Regulation Section 1.761-2 be made as of the
date of formation of the Trust.
B-3
<PAGE>
THIS CERTIFICATE SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICT-OF-LAW PROVISIONS.
IN WITNESS WHEREOF, the Trustee has caused this
Certificate to be duly executed as of the date set forth below.
THE BANK OF NEW YORK,
a New York banking corporation
By:____________________________
Authorized Signatory
Dated: [ ], 1998
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Residual Class Certificates
described in the Trust Agreement referred to herein.
THE BANK OF NEW YORK,
a New York banking corporation, not in its
individual capacity but solely as Trustee,
By:_________________________________
Authorized Signatory
B-4
<PAGE>
(REVERSE OF TRUST CERTIFICATE)
The Certificates are limited in right of distribution
to certain payments and collections respecting the Trust
Agreement, all as more specifically set forth herein and in the
Trust Agreement. The registered Holder hereof, by its acceptance
hereof, agrees that it will look solely to the Term Assets (to
the extent of its rights therein) for distributions hereunder.
Subject to the next sentence and to certain exceptions
provided in the Trust Agreement, the Trust Agreement permits the
amendment thereof and the modification of the rights and
obligations of the Depositor and the Trustee and the rights of
the Certificateholders under the Trust Agreement at any time by
the Depositor and the Trustee with the unanimous consent of the
Holders each Outstanding Class of Certificates. Any such consent
by the Holder of this Certificate (or any predecessor
Certificate) shall be conclusive and binding on such Holder and
upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange hereof
or in lieu hereof whether or not notation of such consent is made
upon this Certificate. The Trust Agreement also permits the
amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
The Certificates are issuable in fully registered form
only in minimum Certificate Principal Balances of $500,000 and
integral multiples of $1.00 in excess thereof. As provided in the
Trust Agreement and subject to certain limitations therein set
forth, Certificates are exchangeable for new Certificates of the
same principal amount, Class, original issue date and maturity,
in authorized denominations as requested by the Holder
surrendering the same.
As provided in the Trust Agreement and subject to
certain limitations therein set forth, the transfer of this
Certificate is registrable in the Certificate Register upon
surrender of this Certificate for registration of transfer at the
offices or agencies of the Certificate Registrar maintained by
the Trustee in the Borough of Manhattan, The City of New York,
duly endorsed, by or accompanied by an assignment in the form
below and by such other documents as required by the Trust
Agreement signed by, the Holder hereof, and thereupon one or more
new Certificates of the same Class in authorized denominations
evidencing the same principal amount will be issued to the
designated transferee or transferees. The Certificate Registrar
appointed under the Trust Agreement is The Bank of New York.
No service charge will be made for any registration of
transfer or exchange, but the Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of
Certificates.
The Depositor and the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes,
and neither the Depositor, the Trustee, nor any such agent shall
be affected by any notice to the contrary.
The Trust and the obligations of the Depositor and the
Trustee created by the Trust Agreement with respect to the
Certificates will terminate upon (i) the distribution of the Term
Assets to the Residual Class Certificateholders on May 15, 2017
(subject to Section 9(b) of the Series Supplement), (ii) the
payment in full of the Certificates after a Shortened Maturity
Redemption, (iii) the occurrence of an In-Kind Distribution, (iv)
the occurrence of an Optional Redemption other than a Partial
Optional Redemption, or (v) the exchange of Certificates for the
last remaining Term Assets pursuant to Section 8 of the Series
Supplement.
B-5
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells,
assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR TAXPAYER IDENTIFICATION OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- -------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee)
- -------------------------------------------------------------------------------
the within Trust Certificate, and all rights thereunder, hereby
irrevocably constituting and appointing
- -------------------------------------------------------------------------------
Attorney to transfer said Trust Certificate on the books of the
Certificate Registrar, with full power of substitution in the
premises.
Dated: -------------------------
-----------------------------*
Signature Guaranteed;
-----------------------------*
* NOTICE: The signature to this assignment must correspond with
the name as it appears upon the face of the within Trust
Certificate in every particular, without alteration, enlargement
or any change whatever. Such signature must be guaranteed by an
"eligible guarantor institution" meeting the requirements of the
Certificate Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee
program" as may be determined by the Certificate Registrar in
addition to, or in substitution for, STAMP, all in accordance
with the Securities Exchange Act of 1934, as amended.
B-6
<PAGE>
TO BE COMPLETED BY PURCHASER:
The undersigned represents and warrants that the
beneficial owner hereof is either (i) a United States person, or
(ii) a non-United States person who is exempt from withholding
under U.S. federal income tax laws and has completed, accuratedly
and in a manner reasonably satifactory to the Trustee or its
agent, and appropriate statement (generally on IRS Form W-8),
signed under penalties of perjury, identifying the beneficial
owner and stating that the beneficial owner is not a United
States person (or, after December 31, 1999, has satisfied
applicable documentary evidence requirements for establishing
that it is not a United States person) and delivered such
statement (or documentary evidence) to the Trustee or its agent.
Dated:--------------------- --------------------------------
(Signature)
[The undersigned represents and warrants that it is "a
qualified institutional buyer" (as defined in Rule 144A
under the Securities Act of 1933, as amended).
Dated:--------------------- --------------------------------]4
(Signature)
- --------
4 Bracketed Certification to be omitted in Exchange
Certificates of this Class upon delivery of a Depositor
Order to such effect pursuant to Section 7(c) of the Series
Supplement.
B-7
<PAGE>
NOTICE OF EXCHANGE
To: The Bank of New York, acting not in its individual
capacity but as trustee (the "Trustee") of Receipts on Corporate
Securities Trust, Series NSC 1998-1 (the "Trust") created
pursuant to the Series Supplement dated as of April 13, 1998 (the
"Series Supplement") to the Base Trust Agreement dated as of
August 28, 1997, as amended (together, the "Trust Agreement").
(Capitalized terms used and not defined herein have the meanings
ascribed thereto in the Trust Agreement).
By delivery of this duly completed Notice of Exchange,
the undersigned registered holder of Amortizing Class
Certificates and Residual Class Certificates of the Trust
irrevocably exercises its option under, and subject to the terms
and conditions of, Section 8 of the Series Supplement to exchange
(a) Amortizing Class Certificates evidencing the percentage
specified below (the "Specified Percentage") (which shall not be
less than 10%) of the Aggregate Certificate Principal Balance of
all outstanding Amortizing Class Certificates of the Trust and
(b) Residual Class Certificates evidencing the Specified
Percentage of the Aggregate Certificate Principal Balance of all
outstanding Residual Class Certificates of the Trust for Term
Assets representing the Specified Percentage of all Term Assets
held in the Trust (subject to rounding down to authorized
denominations as provided in Section 8 of the Series Supplement).
The undersigned irrevocably undertakes to deliver to
the Trustee on the Exchange Date specified below the specified
amount of Amortizing Class Certificates and Residual Class
Certificates held of record by the undersigned in exchange for
Term Assets in the Specified Percentage (subject to rounding as
described above).
Exchange Date: ________________________ (must be the
Scheduled Distribution Date occurring not less than 30 nor more
than 45 days after the giving of this Notice).
Certificates to be Tendered:
- -------------------------------------------------------------------------------
Specified
Principal Amount Percentage of
Certificate Principal Amount of Certificate entire Class to
Class Number of Certificate to be Exchanged* be Exchanged**
- ----- ------ -------------- ---------------- --------------
- -------------------------------------------------------------------------------
Amortizing $R-- $ $
- -------------------------------------------------------------------------------
Residual $R-- $ $ {________%
- -------------------------------------------------------------------------------
- --------
* If not completed, the Holder will be deemed to have agreed
to exchange the entire Certificate Principal Balance
represented by its Certificates.
** Must be not less than 10% and must represent the identical
percentage of the respective Aggregate Certificate Principal
Balances of all outstanding Amortizing Class Certificates
and Residual Class Certificates issued by the Trust.
B-8
<PAGE>
Registration instruction for Term Assets (Note: must be eligible
participant of book-entry depository system if Term Assets are
held through that system):
Dated: ________________
______________________________________*
*
Signature Guaranteed;
______________________________________*
* NOTICE: The signature to this assignment must correspond with
the name as it appears upon the face of the Trust Certificate
surrendered in connection with the exchange in every particular,
without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Certificate
Registrar, which requirements include membership or participation
in STAMP or such other "signature guarantee program" as may be
determined by the Certificate Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
B-9
<PAGE>
Schedule 1
IDENTIFICATION OF TERM ASSETS
Terms of Term Assets:
NSC: ........................... Norfolk Southern Corporation
Term Assets: ................... 7.90% Notes due May 15, 2097
Issue Date: .................... On or about May 19, 1997
Original Principal
Maturity Date: ................. May 15, 2097
Original Principal
Amount Issued: ................. $350,000,000
CUSIP Number: .................. 655844AK4
Stated Interest Rate: .......... 7.90%
Interest Payment Dates: ........ May 15 and November 15
Mode of Payment of
Term Assets: ................... By credit to the account of
the holder at DTC
Principal Amount of Term
Assets Deposited Under
Trust Agreement: ............... $80,000,000
The Term Assets will be held by the Trustee for the
Owners of Certificates as book-entry credits to an account of the
Trustee at DTC.
<PAGE>
Schedule 2
AMORTIZING CLASS CERTIFICATES
SCHEDULE OF AMORTIZING PAYMENTS*
DATE INTEREST PRINCIPAL TOTAL REMAINING
---- PAYMENT PAYMENT CASHFLOW BALANCE
------- ------- -------- -------
May 15, 1998 $2,230,540.30 $929,459.70 $3,160,000.00 $69,048,275.30
November 15, 1998 $2,200,913.78 $959,086.22 $3,160,000.00 $68,089,189.08
May 15, 1999 $2,170,342.90 $989,657.10 $3,160,000.00 $67,099,531.98
November 15, 1999 $2,138,797.58 $1,021,202.42 $3,160,000.00 $66,078,329.56
May 15, 2000 $2,106,246.75 $1,053,753.25 $3,160,000.00 $65,024,576.31
November 15, 2000 $2,072,658.37 $1,087,341.63 $3,160,000.00 $63,937,234.68
May 15, 2001 $2,037,999.36 $1,122,000.64 $3,160,000.00 $62,815,234.04
November 15, 2001 $2,002,235.59 $1,157,764.41 $3,160,000.00 $61,657,469.63
May 15, 2002 $1,965,331.84 $1,194,668.18 $3,160,000.00 $60,462,801.47
November 15, 2002 $1,927,251.80 $1,232,748.20 $3,160,000.00 $59,230,053.27
May 15, 2003 $1,887,957.95 $1,272,042.05 $3,160,000.00 $57,958,011.22
November 15, 2003 $1,847,411.61 $1,312,588.39 $3,160,000.00 $56,645,422.83
May 15, 2004 $1,805,572.85 $1,354,427.15 $3,160,000.00 $55,290,995.68
November 15, 2004 $1,762,400.49 $1,397,599.51 $3,160,000.00 $53,893,396.17
May 15, 2005 $1,717,852.00 $1,442,148.00 $3,160,000.00 $52,451,248.17
November 15, 2005 $1,671,883.54 $1,488,116.46 $3,160,000.00 $50,963,131.71
May 15, 2006 $1,624,449.82 $1,535,550.18 $3,160,000.00 $49,427,581.53
November 15, 2006 $1,575,504.16 $1,584,495.84 $3,160,000.00 $47,843,085.69
May 15, 2007 $1,524,998.36 $1,635,001.64 $3,160,000.00 $46,208,084.05
November 15, 2007 $1,472,882.68 $1,687,117.32 $3,160,000.00 $44,520,966.73
May 15, 2008 $1,419,105.81 $1,740,894.19 $3,160,000.00 $42,780,072.54
November 15, 2008 $1,363,614.81 $1,796,385.19 $3,160,000.00 $40,983,687.35
May 15, 2009 $1,306,355.03 $1,853,644.97 $3,160,000.00 $39,130,042.38
November 15, 2009 $1,247,270.10 $1,912,729.90 $3,160,000.00 $37,217,312.48
May 15, 2010 $1,186,301.84 $1,973,698.16 $3,160,000.00 $35,243,614.32
November 15, 2010 $1,123,390.21 $2,036,609.79 $3,160,000.00 $33,207,004.53
May 15, 2011 $1,058,473.27 $2,101,526.73 $3,160,000.00 $31,105,477.80
November 15, 2011 $991,487.10 $2,168,512.90 $3,160,000.00 $28,936,964.90
May 15, 2012 $922,365.76 $2,237,634.24 $3,160,000.00 $26,699,330.66
November 15, 2012 $851,041.16 $2,308,958.84 $3,160,000.00 $24,390,371.82
May 15, 2013 $777,443.10 $2,382,556.90 $3,160,000.00 $22,007,814.92
November 15, 2013 $701,499.10 $2,458,500.90 $3,160,000.00 $19,549,314.02
May 15, 2014 $623,134.38 $2,536,865.62 $3,160,000.00 $17,012,448.40
November 15, 2014 $542,271.79 $2,617,728.21 $3,160,000.00 $14,394,720.19
May 15, 2015 $458,831.71 $2,701,168.29 $3,160,000.00 $11,693,551.90
November 15, 2015 $372,731.97 $2,787,268.03 $3,160,000.00 $8,906,283.87
May 15, 2016 $283,887.80 $2,876,112.20 $3,160,000.00 $6,030,171.67
November 15, 2016 $192,211.72 $2,967,788.28 $3,160,000.00 $3,062,383.39
May 15, 2017 $97,616.61 $3,062,383.39 $3,160,000.00 $0.00
- --------
* Subject to change pursuant to Section 9(a) of the Agreement
following a Partial Optional Redemption.
Exhibit 4.4
BASE AMENDMENT NO. 1, dated as of February 27, 1998,
between Prudential Securities Structured Assets, Inc., a Delaware
corporation (the "Company"), and The Bank of New York, as Trustee
(the "Trustee"), to the Base Trust Agreement, dated as of August
28, 1997 (the "Base Agreement"), between the Company and the
Trustee.
RECITALS
--------
The Base Agreement, together with the Series FDX 1997-1
Supplement between the Company and the Trustee dated as of August
28, 1997 and Amendment No. 1 thereto dated as of December 9,
1997, constitutes the Trust Agreement that created the Receipts
of Corporate Securities Trust, Series FDX 1997-1 (the "Series FDX
1997-1 Trust Agreement"). The Base Agreement, together with the
Series BLS 1998-1 Supplement between the Company and the Trustee
dated as of January 30, 1998, constitutes the Trust Agreement
that created the Receipts on Corporate Securities Trust, Series
BLS 1998-1 (the "Series BLS 1998-1 Trust Agreement" and, together
with the Series FDX 1997-1 Trust Agreement, the "Existing Trust
Agreements"). The Base Agreement, together with any applicable
Series Supplement entered into from time to time hereafter, will
constitute the Trust Agreement (each, a "Subsequent Trust
Agreement") creating the specific Trust described in such Series
Supplement.
The Company and the Trustee are entering into this Base
Amendment No. 1 for the purpose of (i) amending each of the
Existing Trust Agreements and (ii) amending the Base Agreement so
that the provisions set forth in Article One hereof will be
included in each Subsequent Trust Agreement unless the related
Series Supplement provides otherwise.
Accordingly, the Company and the Trustee agree as
follows:
ARTICLE ONE
SECTION 1.01. Amendment of Section 6.1 of the Base
Agreement. Section 6.1 of the Base Agreement shall be amended and
restated to read as follows:
Section 6.1. Preparation and Filing of Registration
Statements under the Securities Act and Exchange Act Reports;
Obligations of the Depositor. (a) The Depositor shall:
(i) on behalf and in the name of the Trust (and
in its own name as Depositor if required by the
Commission), prepare, sign and file with the
Commission, registration statements under the
Securities Act for purposes of registering under such
Act any Series or Class (or any portion thereof) of
Certificates to be registered in accordance with the
related Series Supplement as well as any other
instrument or document necessary or appropriate for
the foregoing purpose;
(ii) on behalf and in the name of the Trust (and
in its own name as Depositor if required by the
Commission), prepare, sign and file with the
Commission, within the time period set forth below,
copies of the annual reports
<PAGE>
and of the information, documents and other reports
(or copies of such portions of any of the foregoing as
the Commission may from time to time by rules and
regulations prescribe), if any, which the Trust
(and/or the Depositor on behalf of the Trust) may be
required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act (collectively,
"Exchange Act Reports") with respect to the Trust. The
names of such Reports and the dates on which they are
required to be filed with the Commission are as
follows:
(A) Form 8-K, within the time requirement
prescribed by the Exchange Act if the filing of
Form 8-K is necessary;
(B) Form 10-K, within the time requirement
prescribed by the Exchange Act; and
(C) such other reports, including amendments
to any reports, as may be required pursuant to
Section 13 or 15(d) of the Exchange Act.
(iii) deliver to the Trustee within 15 days after
the Depositor is required to file the same with the
Commission, such additional information, documents and
reports with respect to compliance by the Depositor
with the conditions and covenants of this Agreement,
if any, as may be required to be filed with the
Commission from time to time by such rules and
regulations; and
(iv) deliver to the Trustee, which shall then
transmit by mail to all Holders described in TIA
Section 313(c), in the manner and to the extent
provided therein, such summaries of any information,
documents and reports required to be filed by the
Depositor and received pursuant to clauses (i) and
(ii) of this Section 6.1(a), if any, as may be
required by rules and regulations prescribed from time
to time by the Commission.
(b) The Depositor shall deliver to the Trustee,
not less often than annually, an Officer's Certificate
signed by an Executive Officer who is the principal
executive officer, principal financial officer or principal
accounting officer of the Depositor, dated as of the date
set forth in the Series Supplement for such year, stating
that:
(i) a review of the activities of the Depositor
during such fiscal year and of performance under this
Agreement has been made under such Executive Officer's
supervision; and
(ii) to the best of such Executive Officer's
knowledge, based on such review, the Depositor has
fulfilled all of its obligations under this Agreement
throughout such year, or, if there has been a default
in the fulfillment of any such obligation, specifying
each such default known to such Executive Officer and
the nature and status thereof. A copy of such
certificate may be obtained by any
2
<PAGE>
Holder by a request in writing to the Depositor
addressed to the Corporate Trust Office of the
Trustee.
(c) Upon any application or request by the
Depositor to the Trustee to take any action under the
provisions of this Agreement, which action is subject to
the satisfaction of a condition precedent (including any
covenants compliance with which constitutes a condition
precedent), the Depositor shall furnish to the Trustee: (i)
an Officer's Certificate stating that all conditions
precedent, if any, provided for in this Agreement relating
to the proposed action have been complied with, (ii) an
Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been
complied with and (iii) (if required by the TIA) an
Independent Certificate from a firm of certified public
accountants meeting the applicable requirements of the TIA,
except that, in the case of any such application or request
as to which the furnishing of such documents is
specifically required by any provision of this Agreement,
no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance
with a condition or covenant provided for in this Agreement
shall include:
(i) a statement that such signatory of such
certificate or opinion has read or has caused to be
read such covenant or condition and the definitions
herein relating thereto;
(ii) a brief statement as to the nature and scope
of the examination or investigation upon which the
statements or opinions contained in such certificate
or opinion are based;
(iii) a statement that, in the judgment of each
such signatory, such signatory has made such
examination or investigations as is necessary to
enable such signatory to express an informed opinion
as to whether or not such covenant or condition has
been complied with; and
(iv) a statement as to whether, in the opinion of
each such signatory, such condition or covenant has
been complied with.
ARTICLE TWO
MISCELLANEOUS PROVISIONS
SECTION 2.01. Capitalized Terms. For purposes of this
Base Amendment No. 1, except as otherwise stated herein, terms
used in capitalized form in this Base Amendment No. 1 and defined
in the Base Agreement have the meanings specified in the Base
Agreement.
3
<PAGE>
SECTION 2.02. Regarding the Trustee. All of the
provisions of each of the Trust Agreements with respect to the
rights, duties and immunities of the Trustee shall be applicable
in respect hereof as fully and with like effect as if set forth
herein in full.
SECTION 2.03. Continuing Effect. Except as expressly
amended by this Base Amendment No. 1, the Existing Trust
Agreements remain in full force and effect in accordance with
each of their terms and are hereby in all respects ratified and
confirmed.
SECTION 2.04. References to the Trust Agreement. All
references to the Trust Agreement in each of the Existing Trust
Agreements, any Trust Certificate or in any other document
executed or delivered in connection therewith, shall, from the
date hereof, be deemed a reference to the relevant Trust
Agreement as amended hereby, unless the context requires
otherwise.
SECTION 2.05. Governing Law. THIS BASE AMENDMENT NO. 1
SHALL BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 2.06. Counterparts. This Base Amendment No. 1
may be executed in any number of counterparts, each of which so
executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same
instrument.
SECTION 2.07. Effectiveness. This Base Amendment No. 1
shall become effective as of the date first written above.
* * *
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Base Amendment No. 1 to be duly executed as of the day and year
first above written.
PRUDENTIAL SECURITIES STRUCTURED
ASSETS, INC.
as Depositor
By: /s/ Terrance O'Dwyer
--------------------
Name: Terrance O'Dwyer
Title: Senior Vice President
THE BANK OF NEW YORK
as Trustee
By: /s/ Fernando Acebedo
--------------------
Name: Fernando Acebedo
Title: Assistant Treasurer
5
Exhibit 25.1
=================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
PRUDENTIAL SECURITIES STRUCTURED ASSETS, INC.
(Exact name of obligor as specified in its charter)
Delaware 31-0944462
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
One New York Plaza
14th Floor
New York, New York 10292
(Address of principal executive offices) (Zip code)
RECEIPTS ON CORPORATE SECURITIES TRUST, SERIES NSC 1998-1
(Exact name of obligor as specified in its charter)
New York N/A
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
c/o The Bank of New York
101 Barclay Street, 12 East
New York, New York 10286
(Address of principal executive offices) (Zip code)
----------------------
Receipts on Corporate Securities, Series NSC 1998-1,
Residual Class Certificates
(Title of the indenture securities)
=================================================================
<PAGE>
1. General information. Furnish the following information as to
the Trustee:
(a) Name and address of each examining or supervising
authority to which it is subject.
- -----------------------------------------------------------------
Name Address
- -----------------------------------------------------------------
Superintendent of Banks 2 Rector Street, New York, N.Y.
of the State of New York 10006, and Albany, N.Y. 12203
Federal Reserve Bank of 33 Liberty Plaza, New York,
New York N.Y. 10045
Federal Deposit Insurance Washington, D.C. 20429
Corporation
New York Clearing House New York, New York 10005
Association
(b) Whether it is authorized to exercise corporate trust
powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe
each such affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the
Commission, are incorporated herein by reference as an
exhibit hereto, pursuant to Rule 7a-29 under the Trust
Indenture Act of 1939 (the "Act") and 17 C.F.R. 229.10(d).
1. A copy of the Organization Certificate of The Bank of
New York (formerly Irving Trust Company) as now in
effect, which contains the authority to commence
business and a grant of powers to exercise corporate
trust powers. (Exhibit 1 to Amendment No. 1 to Form
T-1 filed with Registration Statement No. 33-6215,
Exhibits 1a and 1b to Form T-1 filed with Registration
Statement No. 33-21672 and Exhibit 1 to Form T-1 filed
with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee.
(Exhibit 4 to Form T-1 filed with Registration
Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b)
of the Act. (Exhibit 6 to Form T-1 filed with
Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the
Trustee published pursuant to law or to the
requirements of its supervising or examining
authority.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The
Bank of New York, a corporation organized and existing under the
laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in The City of New York, and State
of New York, on the 10th day of August, 1998.
THE BANK OF NEW YORK
By: /s/ MICHAEL CULHANE
-----------------------
Name: MICHAEL CULHANE
Title: VICE PRESIDENT
<PAGE>
Exhibit 7
- -----------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business
March 31, 1998, published in accordance with a call made by the
Federal Reserve Bank of this District pursuant to the provisions
of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin ............................ $ 6,397,993
Interest-bearing balances ..................... 1,138,362
Securities:
Held-to-maturity securities ................... 1,062,074
Available-for-sale securities ................. 4,167,240
Federal funds sold and Securities pur-
chased under agreements to resell.............. 391,650
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................36,538,242
LESS: Allowance for loan and
lease losses ..............631,725
LESS: Allocated transfer risk
reserve..........................0
Loans and leases, net of unearned
income, allowance, and reserve .............. 35,906,517
Assets held in trading accounts ................. 2,145,149
Premises and fixed assets (including
capitalized leases) ........................... 663,928
Other real estate owned ......................... 10,895
Investments in unconsolidated
subsidiaries and associated
companies ..................................... 237,991
Customers' liability to this bank on
acceptances outstanding ....................... 992,747
Intangible assets ............................... 1,072,517
Other assets .................................... 1,643,173
-----------
Total assets .................................... $55,830,236
===========
LIABILITIES
Deposits:
In domestic offices ........................... $24,849,054
Noninterest-bearing ......10,011,422
Interest-bearing .........14,837,632
In foreign offices, Edge and
Agreement subsidiaries, and IBFs .............. 15,319,002
Noninterest-bearing .........707,820
Interest-bearing .........14,611,182
Federal funds purchased and Securities
sold under agreements to repurchase............ 1,906,066
Demand notes issued to the U.S.
Treasury ...................................... 215,985
Trading liabilities ............................. 1,591,288
Other borrowed money:
With remaining maturity of one year
or less ..................................... 1,991,119
With remaining maturity of more than
one year through three years................. 0
With remaining maturity of more than
three years ................................. 25,574
Bank's liability on acceptances exe-
cuted and outstanding ......................... 998,145
Subordinated notes and debentures ............... 1,314,000
Other liabilities ............................... 2,421,281
-----------
Total liabilities ............................... 50,631,514
-----------
EQUITY CAPITAL
Common stock .................................... 1,135,284
Surplus ......................................... 731,319
Undivided profits and capital
reserves ...................................... 3,328,050
Net unrealized holding gains
(losses) on available-for-sale
securities .................................... 40,198
Cumulative foreign currency transla-
tion adjustments .............................. ( 36,129)
------------
Total equity capital ............................ 5,198,722
------------
Total liabilities and equity
capital ....................................... $55,830,236
===========
I, Robert E. Keilman, Senior Vice President and Comptroller
of the above-named bank do hereby declare that this Report of
Condition has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System
and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of
this Report of Condition and declare that it has been examined by
us and to the best of our knowledge and belief has been prepared
in conformance with the instructions issued by the Board of
Governors of the Federal Reserve System and is true and correct.
-
Thomas A. Renyi |
Alan R. Griffith | Directors
J. Carter Bacot |
-
Exhibit 99.3
Receipts on Corporate Securities Trust, Series NSC 1998-1
$80,000,000 Residual Class Certificates
$69,977,735 Amortizing Class Certificates
Prudential Securities Structured Assets, Inc.
Depositor
REGISTRATION RIGHTS AGREEMENT
-----------------------------
This Registration Rights Agreement (this "Agreement") is
made and entered into as of April 13, 1998 by and between
Prudential Securities Structured Assets, Inc., a Delaware
corporation (the "Company"), and Prudential Securities
Incorporated (the "Initial Purchaser"), which has agreed pursuant
to the Purchase Agreement described below to purchase from the
Company an aggregate of $80,000,000 in certificate principal
amount of Receipts on Corporate Securities, Series NSC 1998-1,
Residual Class Certificates and an aggregate of $69,977,735
certificate principal amount of Receipts on Corporate Securities,
Series NSC 1998-1, Amortizing Class Certificates (together, the
"Initial Certificates"). The Initial Certificates evidence a
class of undivided interest in Receipts on Corporate Securities
Trust, Series NSC 1998-1 (the "Trust") to be formed pursuant to
the Trust Agreement dated as of August 28, 1997, between the
Company, as depositor, and The Bank of New York, as trustee
(together with any successor trustee, the "Trustee"), as
supplemented by the Series NSC 1998-1 Supplement, to be dated as
of April 13, 1998 (together, and as amended from time to time,
the "Trust Agreement"). The property of the Trust will consist
principally of $80,000,000 aggregate principal amount of 7.90%
Debentures due May 15, 2097 (the "Term Assets") issued by Norfolk
Southern Corporation ("NSC") and transferred by the Company to
the Trust in exchange for the Initial Certificates and certain
other interests in the Trust.
This Agreement is made pursuant to the Terms Agreement,
dated April 13, 1998 between the Company and the Initial
Purchaser, which Terms Agreement incorporates by reference the
document entitled "Prudential Securities Structured Assets,
Inc.--Receipts of Corporate Securities--Offered From Time to Time
in Series, Purchase Agreement--Basic Provisions", dated August
25, 1997 (together, the "Purchase Agreement"). In order to induce
the Initial Purchaser to purchase the Initial Certificates, the
Company has agreed to provide the registration rights set forth
in this Agreement. The execution and delivery of this Agreement
is a condition to the obligations of the Initial Purchaser under
the Purchase Agreement.
The parties hereby agrees as follows:
Section 1. Definitions. As used in this Agreement, the
following capitalized terms shall have the following meanings:
Act: The Securities Act of 1933, as amended.
<PAGE>
Affiliate: With respect to any specified person, any other
person that, directly or indirectly, is in control of, is
controlled by, or is under common control with, such specified
person. For purposes of this definition, control of a person
means the power, direct or indirect, to direct or cause the
direction of the management and policies of such person whether
by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Broker-Dealer: Any broker or dealer registered under the
Exchange Act.
Broker-Dealer Transfer Restricted Securities: The Exchange
Certificates that are acquired by a Broker-Dealer in the Exchange
Offer in exchange for Initial Certificates that such
Broker-Dealer acquired for its own account as a result of
market-making activities or other trading activities (other than
Initial Certificates acquired directly from any of the Company or
its Affiliates).
Business Day: Any day except a Saturday, Sunday or other
day in the City of New York, or in the city of the corporate
trust office of the Trustee, on which banks are authorized to
close.
Certificated Securities: As defined in the Trust Agreement.
Certificates: The Initial Certificates and the Exchange Certificates.
Closing Date: As defined in the Purchase Agreement.
Commission: The Securities and Exchange Commission.
Consummate: The Exchange Offer shall be deemed
"Consummated" for purposes of this Agreement upon the occurrence
of the latest to occur of (a) the filing and effectiveness under
the Act of the Exchange Offer Registration Statement relating to
the Exchange Certificates to be issued in the Exchange Offer, (b)
the maintenance of such Registration Statement continuously
effective and the keeping of the Exchange Offer open for a period
not less than the minimum period required pursuant to Section
2(b) hereof, and (c) the issuance by the Trustee pursuant to the
Trust Agreement of the Exchange Certificates in the same
aggregate principal amount as the aggregate principal amount of
the Initial Certificates tendered by Holders thereof pursuant to
the Exchange Offer.
Distribution Date: As defined in the Trust Agreement and
the Certificates.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Certificates: Any of the Receipts on Corporate
Securities, Series NSC 1998-1, Residual Class Certificates to be
issued pursuant to the Trust Agreement (i) in the Exchange Offer,
(ii) in exchange for Exchange Certificates or (iii) upon the
request of any Holder of Initial Certificates covered by a Shelf
Registration Statement, in exchange for such Initial
Certificates.
2
<PAGE>
Exchange Offer: The registration by the Company on behalf
of the Trust under the Act of the Exchange Certificates pursuant
to the Exchange Offer Registration Statement pursuant to which
the Company on behalf of the Trust shall offer the Holders of all
outstanding Transfer Restricted Securities the opportunity to
exchange all such outstanding Transfer Restricted Securities for
Exchange Certificates in an aggregate principal amount equal to
the aggregate principal amount of the Transfer Restricted
Securities tendered in such exchange offer by such Holders.
Exchange Offer Registration Statement: The Registration
Statement relating to the Exchange Offer, including the related
Prospectus.
Exempt Resales: The transactions in which the Initial
Purchaser proposes to sell the Initial Certificates to certain
"qualified institutional buyers," as such term is defined in Rule
144A under the Act.
Holders: With respect to a Transfer Restricted Security,
the owner thereof.
Indemnified Holder: As defined in Section 6(a).
NASD: National Association of Securities Dealers, Inc.
Person: An individual, partnership, corporation, trust,
unincorporated organization, or a government or agency or
political subdivision thereof.
Prospectus: The prospectus included in a Registration
Statement at the time such Registration Statement is declared
effective, as amended or supplemented by any prospectus
supplement and by all other amendments thereto, including
post-effective amendments, and all material incorporated by
reference into such Prospectus.
Rating Agencies: Moody's Investors Service, Inc. and
Standard & Poor's Ratings Services.
Registrar: As defined in the Trust Agreement.
Registration Default: As defined in Section 4.
Registration Statement: Any registration statement filed by
the Company on behalf of the Trust relating to (a) an offering of
Exchange Certificates pursuant to an Exchange Offer or (b) the
registration for resale of Transfer Restricted Securities
pursuant to the Shelf Registration Statement, in each case, (i)
which is filed pursuant to the provisions of this Agreement and
(ii) including the Prospectus included therein, all amendments
and supplements thereto (including post-effective amendments) and
all exhibits and material incorporated by reference therein.
Restricted Broker-Dealer: Any Broker-Dealer which holds
Broker-Dealer Transfer Restricted Securities.
3
<PAGE>
Shelf Registration Statement: As defined in Section 3(a).
TIA: The Trust Indenture Act of 1939, as in effect on the
date of the Trust Agreement.
Transfer Restricted Securities: Each Certificate, until the
earliest to occur of (a) the date on which such Certificate is
exchanged in the Exchange Offer and entitled to be resold to the
public by the Holder thereof without complying with the
prospectus delivery requirements of the Act, (b) the date on
which such Certificate has been disposed of in accordance with a
Shelf Registration Statement, (c) the date on which such
Certificate is disposed of by a Broker-Dealer pursuant to the
"Plan of Distribution" contemplated by the Exchange Offer
Registration Statement (including delivery of the Prospectus
contained therein) or (d) the date on which such Certificate is
distributed to the public pursuant to Rule 144 under the Act.
Underwritten Offering: An offering in which Certificates
are sold to an underwriter for reoffering to the public.
Section 2. Registered Exchange Offer.
(a) Unless (i) the Exchange Offer shall not be permitted by
applicable federal law (after the procedures set forth in Section
4(a)(i) below have been complied with), and (ii) the credit
rating assigned to NSC by both Rating Agencies falls below
investment grade prior to any of the periods described in this
Section 2(a) or Section 2(b) below, the Company shall (i) cause
the Exchange Offer Registration Statement to be filed with the
Commission within 180 days after the Closing Date, (ii) use its
reasonable best efforts to cause such Exchange Offer Registration
Statement to become effective at the earliest practicable time
thereafter, (iii) in connection with the foregoing, (A) file all
pre-effective amendments to such Exchange Offer Registration
Statement as may be necessary in order to cause such Exchange
Offer Registration Statement to become effective, (B) file, if
applicable, a post-effective amendment to such Exchange Offer
Registration Statement pursuant to Rule 430A under the Act and
(C) cause all necessary filings, if any, in connection with the
registration and qualification of the Exchange Certificates to be
made under the Blue Sky laws of such jurisdictions as are
necessary to permit Consummation of the Exchange Offer and (iv)
promptly after the effectiveness of such Exchange Offer
Registration Statement, commence and Consummate the Exchange
Offer. The Exchange Offer shall be on the appropriate form
permitting registration of the Exchange Certificates to be
offered in exchange for the Initial Certificates that are
Transfer Restricted Securities and to permit sales of
Broker-Dealer Transfer Restricted Securities by Restricted
Broker-Dealers as contemplated by Section 2(c) below.
(b) The Company will mail or cause to be mailed to each
Holder a copy of the Prospectus forming part of the Exchange
Offer Registration Statement, together with an appropriate letter
of transmittal and related documents. The Company shall use its
best efforts to cause the Exchange Offer Registration Statement
to be effective continuously, and shall keep the Exchange Offer
open for a period of not less than 30 days and not more than 45
days after the date notice of the Exchange Offer is mailed to the
Holders; provided, however, that in no event
4
<PAGE>
shall such period be less than the minimum period required under
applicable federal and state securities laws to Consummate the
Exchange Offer. The Company shall cause the Exchange Offer to
comply with all applicable federal and state securities laws. No
securities other than the Certificates shall be included in the
Exchange Offer Registration Statement. The Company shall use its
reasonable best efforts to cause the Exchange Offer to be
Consummated on the earliest practicable date after the Exchange
Offer Registration Statement has become effective, but in no
event later than 210 days following the Closing Date.
(c) The Company shall include a "Plan of Distribution"
section in the Prospectus contained in the Exchange Offer
Registration Statement and indicate therein that any Restricted
Broker-Dealer which holds the Initial Certificates that are
Transfer Restricted Securities and that were acquired for the
account of such Broker-Dealer as a result of market-making
activities or other trading activities, may exchange such Initial
Certificates (other than Transfer Restricted Securities acquired
directly from the Company or an Affiliate thereof) pursuant to
the Exchange Offer; however, such Broker-Dealer may be deemed to
be an "underwriter" within the meaning of the Act and must,
therefore, deliver a prospectus meeting the requirements of the
Act in connection with its initial sale of each Exchange
Certificate received by such Broker-Dealer in the Exchange Offer,
which prospectus delivery requirement may be satisfied by the
delivery by such Broker-Dealer of the Prospectus contained in the
Exchange Offer Registration Statement; provided, however, that by
delivering a Prospectus, a Broker-Dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Act.
Such "Plan of Distribution" section shall also contain all other
information with respect to such sales of Broker-Dealer Transfer
Restricted Securities by Restricted Broker-Dealers that the
Commission may require in order to permit such sales pursuant
thereto, but such "Plan of Distribution" shall not name any such
Broker-Dealer or disclose the amount of the Certificates held by
any such Broker-Dealer, except to the extent required by the
Commission as a result of a change in policy after the date of
this Agreement.
The Company shall use its best efforts to keep the Exchange
Offer Registration Statement continuously effective, supplemented
and amended as required by the provisions of Section 4(c) below
to the extent necessary to ensure that it is available for sales
of Broker-Dealer Transfer Restricted Securities by Restricted
Broker-Dealers, and to ensure that such Registration Statement
conforms with the requirements of this Agreement, the Act and the
policies, rules and regulations of the Commission as announced
from time to time, for a period of one year from the date on
which the Exchange Offer is Consummated.
The Company shall promptly provide sufficient copies of the
latest version of such Prospectus to such Restricted
Broker-Dealers promptly upon request, and in no event later than
one day after such request, at any time during such one-year
period in order to facilitate such sales.
5
<PAGE>
Section 3. Shelf Registration.
(a) Shelf Registration. Unless the credit rating assigned
to NSC by both Rating Agencies falls below investment grade prior
to any of the periods described in this Section 3(a), if (i) the
Company is not required to file an Exchange Offer Registration
Statement with respect to the Exchange Certificates because the
Exchange Offer is not permitted by applicable law (after the
procedures set forth in Section 4(a)(i) below have been complied
with) or (ii) if any Holder of Transfer Restricted Securities
shall notify the Company within 20 Business Days following the
Consummation of the Exchange Offer that (A) such Holder was
prohibited by law or Commission policy from participating in the
Exchange Offer or (B) such Holder may not resell the Exchange
Certificates acquired by it in the Exchange Offer to the public
without delivering a prospectus and the Prospectus contained in
the Exchange Offer Registration Statement is not appropriate or
available for such resales by such Holder or (C) such Holder is a
Broker-Dealer and holds Initial Certificates acquired directly
from any of the Company or one of its Affiliates, then the
Company shall (x) cause to be filed, on or prior to 60 days after
the date on which the Company determine that they are not
required to file the Exchange Offer Registration Statement
pursuant to clause (i) above, or 60 days after the date on which
the Company receive the notice specified in clause (ii) above, a
shelf registration statement pursuant to Rule 415 under the Act
(which may be an amendment to the Exchange Offer Registration
Statement (in either event, the "Shelf Registration Statement"))
relating to all Transfer Restricted Securities the Holders of
which shall have provided the information required pursuant to
Section 3(b) hereof, and shall (y) use its best efforts to cause
such Shelf Registration Statement to become effective within 120
days after the date on which the Company become obligated to file
such Shelf Registration Statement. The Company shall use its best
efforts to keep the Shelf Registration Statement discussed in
this Section 4(a) continuously effective, supplemented and
amended as required by and subject to the provisions of Sections
4(b) and (c) hereof to the extent necessary to ensure that it is
available for sales of Transfer Restricted Securities by the
Holders thereof entitled to the benefit of this Section 3(a), and
to ensure that it conforms with the requirements of this
Agreement, the Act and the policies, rules and regulations of the
Commission as announced from time to time, for a period of not
more than one year (as extended pursuant to Section 4(c)(i))
following the date on which such Shelf Registration Statement
first becomes effective under the Act or such shorter period that
will terminate when all the Certificates covered by the Shelf
Registration Statement have been sold pursuant to the Shelf
Registration Statement.
(b) Provision by Holders of Certain Information in
Connection with the Shelf Registration Statement. No Holder of
Transfer Restricted Securities may include any of its Transfer
Restricted Securities in any Shelf Registration Statement
pursuant to this Agreement unless and until such Holder furnishes
to the Company in writing, within 20 days after receipt of a
request therefor, such information specified in item 507 of
Regulation S-K under the Act for use in connection with any Shelf
Registration Statement or Prospectus or preliminary prospectus
included therein. Each Holder as to which any Shelf Registration
Statement is being effected agrees to furnish promptly to the
Company all information required to be disclosed in order to make
the information previously furnished to the Company by such
Holder not materially misleading.
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Section 4. Registration Procedures.
(a) Exchange Offer Registration Statement. In connection
with the Exchange Offer, the Company shall comply with all
applicable provisions of Section 4(c) below, shall use its best
efforts to effect such exchange and to permit the sale of
Broker-Dealer Transfer Restricted Securities being sold in
accordance with the intended method or methods of distribution
thereof, and shall comply with all of the following provisions:
(i) If, following the date hereof there has been
published, or otherwise communicated by the staff of the
Commission (the "Staff") a change in Commission policy with
respect to exchange offers such as the Exchange Offer, such
that in the reasonable opinion of counsel to the Company
there is a substantial question as to whether the Exchange
Offer is permitted by applicable federal law, the Company
hereby agrees to seek a no-action letter or other favorable
decision from the Commission allowing the Company to
Consummate an Exchange Offer for such Initial Certificates.
The Company hereby agrees to pursue the issuance of such a
decision by the Staff. In connection with the foregoing,
the Company hereby agrees to take all such other actions as
are reasonably requested by the Staff or otherwise
reasonably required in connection with the issuance of such
decision, including without limitation (A) participating in
telephonic conferences with the Staff, (B) delivering to
the Commission staff an analysis prepared by counsel to the
Company setting forth the legal bases, if any, upon which
such counsel has concluded that such an Exchange Offer
should be permitted and (C) diligently pursuing a favorable
resolution (if possible) by the Commission staff of such
submission.
(ii) As a condition to its participation in the
Exchange Offer pursuant to the terms of this Agreement,
each Holder of Transfer Restricted Securities shall
furnish, upon the request of the Company, prior to the
Consummation of the Exchange Offer, a written
representation to the Company (which may be contained in
the letter of transmittal contemplated by the Exchange
Offer Registration Statement) to the effect that (A) it is
not an Affiliate of the Company or NSC, (B) it is not
engaged in, and does not intend to engage in, and has no
arrangement or understanding with any person to participate
in, a distribution of the Exchange Certificates to be
issued in the Exchange Offer and (C) it is acquiring the
Exchange Certificates in its ordinary course of business.
Each Holder hereby acknowledges and agrees that any
Broker-Dealer and any such Holder using the Exchange Offer
to participate in a distribution of the securities to be
acquired in the Exchange Offer (1) could not under
Commission policy as in effect on the date of this
Agreement rely on the position of the staff of the
Commission enunciated in Morgan Stanley and Co., Inc.
(available June 5, 1991) (the "Morgan Stanley Letter") and
Exxon Capital Holdings Corporation (available May 13, 1988)
(the "Exxon Capital Letter"), as interpreted in the
Commission staff's letter to Shearman & Sterling dated July
2, 1993, and similar no-action letters (including, if
applicable, any no-action letter obtained pursuant to
clause (i) above), and (2) must comply with the
registration and prospectus delivery requirements of the
Act in connection with a secondary resale transaction and
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<PAGE>
that such a secondary resale transaction must be covered by
an effective registration statement containing the selling
security holder information required by Item 507 or 508, as
applicable, of Regulation S-K if the resales are of
Exchange Certificates obtained by such Holder in exchange
for Initial Certificates acquired by such Holder directly
from any of the Company or an Affiliate thereof.
(iii) Prior to effectiveness of the Exchange Offer
Registration Statement, the Company shall provide a
supplemental letter to the Commission (A) stating that the
Company is registering the Exchange Offer in reliance on
the position of the staff of the Commission enunciated in
the Exxon Capital Letter, the Morgan Stanley Letter and, if
applicable, any no-action letter obtained pursuant to
clause (i) above, (B) including a
representation that the Company has not entered into any
arrangement or understanding with any Person to distribute
the Exchange Certificates to be received in the Exchange
Offer and that, to the best of the Company's information
and belief, each Holder participating in the Exchange Offer
is acquiring the Exchange Certificates in its ordinary
course of business and has no arrangement or understanding
with any Person to participate in the distribution of the
Exchange Certificates received in the Exchange Offer and
(C) any other undertaking or representation required by the
Commission as set forth in any no-action letter obtained
pursuant to clause (i) above.
(b) Shelf Registration Statement. In connection with the
Shelf Registration Statement, the Company shall comply with all
the provisions of Section 4(c) below and shall use its best
efforts to effect such registration to permit the sale of the
Transfer Restricted Securities being sold in accordance with the
intended method or methods of distribution thereof (as indicated
in the information furnished to the Company pursuant to Section
3(b)), and pursuant thereto the Company will prepare and file
with the Commission a Registration Statement relating to the
registration on any appropriate form under the Act, which form
shall be available for the sale of the Transfer Restricted
Securities in accordance with the intended method or methods of
distribution thereof within the time periods and otherwise in
accordance with the provisions hereof.
(c) General Provisions. In connection with any Registration
Statement and any related Prospectus required by this Agreement
to permit the sale or resale of Transfer Restricted Securities
(including, without limitation, any Exchange Offer Registration
Statement and the related Prospectus, to the extent that the same
are required to be available to permit sales of Broker-Dealer
Transfer Restricted Securities by Restricted Broker-Dealers), the
Company shall:
(i) use its best efforts to keep such Registration
Statement continuously effective and provide all requisite
financial statements for the period specified in Section 2
or 3 of this Agreement, as applicable. Upon the occurrence
of any event that would cause any such Registration
Statement or the Prospectus contained therein (A) to
contain a material misstatement or omission or (B) not to
be effective and usable for resale of Transfer Restricted
Securities during the period required by this Agreement,
the Company shall file promptly an appropriate amendment to
such Registration Statement, (1) in the case of
8
<PAGE>
clause (A), correcting any such misstatement or omission,
and (2) in the case of clauses (A) and (B), use its best
efforts to cause such amendment to be declared effective
and such Registration Statement and the related Prospectus
to become usable for its intended purposes as soon as
practicable thereafter, and shall advise the
underwriter(s), if any, and selling Holders of Certificates
covered by such Registration Statement (and, if requested
by such Persons, confirm such advice in writing) of any
circumstances covered by clause (A) or (B);
(ii) prepare and file with the Commission such
amendments and post-effective amendments to the
Registration Statement as may be necessary to keep the
Registration Statement effective for the applicable period
set forth in Section 2 or 3, or such shorter period as will
terminate when all Transfer Restricted Securities covered
by such Registration Statement have been sold; cause the
Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Act, and to comply fully with Rules 424,
430A, 434 and 462, as applicable, under the Act in a timely
manner; and comply with the provisions of the Act with
respect to the disposition of all securities covered by
such Registration Statement during the applicable period in
accordance with the intended method or methods of
distribution by the sellers thereof set forth in such
Registration Statement or supplement to the Prospectus;
(iii) advise the underwriter(s), if any, and selling
Holders promptly (and, if requested by such Persons,
confirm such advice in writing), (A) when the Prospectus or
any Prospectus supplement or post-effective amendment has
been filed, and, with respect to any Registration Statement
or any post-effective amendment thereto, when the same has
become effective, (B) of any request by the Commission for
amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information
relating thereto, (C) of the issuance by the Commission of
any stop order suspending the effectiveness of the
Registration Statement under the Act or of the suspension
by any state securities commission of the qualification of
the Transfer Restricted Securities for offering or sale in
any jurisdiction, or the initiation or threatening of any
proceeding for any of the preceding purposes, (D) of the
existence of any fact or the happening of any event that
makes any statement of a material fact made in the
Registration Statement, the Prospectus, any amendment or
supplement thereto or any document incorporated by
reference therein untrue, or that requires the making of
any additions to or changes in the Registration Statement
in order to make the statements therein not misleading, or
that requires the making of any additions to or changes in
the Prospectus in order to make the statements therein, in
the light of the circumstances under which they were made,
not misleading. If at any time the Commission shall issue
any stop order suspending the effectiveness of the
Registration Statement, or any state securities commission
or other regulatory authority shall issue an order
suspending the qualification or exemption from
qualification of the Transfer Restricted Securities under
state securities or Blue Sky laws, the Company shall use
its best efforts to obtain the withdrawal or lifting of
such order at the earliest possible time;
9
<PAGE>
(iv) furnish to the Initial Purchaser, each selling Holder
named in any Registration Statement or Prospectus and each
of the underwriter(s) in connection with such sale, if any,
before filing with the Commission, copies of any
Registration Statement or any Prospectus included therein
or any amendments or supplements to any such Registration
Statement or Prospectus (but excluding all documents
incorporated by reference after the initial filing of such
Registration Statement), which documents will be subject to
the review and comment of such Holders and underwriter(s)
in connection with such sale, if any, for a period of at
least five Business Days, and the Company will not file any
such Registration Statement or Prospectus or any amendment
or supplement to any such Registration Statement or
Prospectus (excluding all such documents incorporated by
reference) to which the selling Holders of the Transfer
Restricted Securities covered by such Registration
Statement or the underwriter(s) in connection with such
sale, if any, shall reasonably object within five Business
Days after the receipt thereof. A selling Holder or
underwriter, if any, shall be deemed to have reasonably
objected to such filing if such Registration Statement,
amendment, Prospectus or supplement, as applicable, as
proposed to be filed, contains a material misstatement or
omission or fails to comply with the applicable
requirements of the Act;
(v) make available at reasonable times for inspection
by the selling Holders, any managing underwriter
participating in any disposition pursuant to such
Registration
Statement and any attorney or accountant retained by such
selling Holders or any of such underwriter(s), all
financial and other records relating to the Trust, and
cause the officers, directors and employees of the Company
to supply all readily obtainable information reasonably
requested by any such Holder, underwriter, attorney or
accountant in connection with such Registration Statement
or any post-effective amendment thereto subsequent to the
filing thereof and prior to its effectiveness;
(vi) if requested by any selling Holders or the
underwriter(s) in connection with such sale, if any,
promptly include in any Registration Statement or
Prospectus, pursuant
to a supplement or post-effective amendment if necessary,
such information as such selling Holders and
underwriter(s), if any, may reasonably request to have
included therein, including, without limitation,
information relating to the "Plan of Distribution" of the
Transfer Restricted Securities, information with respect to
the principal amount of Transfer Restricted Securities
being sold to such underwriter(s), the purchase price being
paid therefor and any other terms of the offering of the
Transfer Restricted Securities to be sold in such offering;
and make all required filings of such Prospectus supplement
or post-effective amendment as soon as practicable after
the Company is notified of the matters to be included in
such Prospectus supplement or post-effective amendment;
(vii) furnish to each selling Holder and each of the
underwriter(s) in connection with such sale, if any,
without charge, at least one copy of the Registration
Statement, as first filed with the Commission, and of each
amendment thereto, including all documents incorporated by
reference therein and all exhibits (including exhibits
incorporated therein by reference);
10
<PAGE>
(viii) deliver to each selling Holder and each of the
underwriter(s), if any, without charge, as many copies of
the Prospectus (including each preliminary prospectus) and
any amendment or supplement thereto as such Persons
reasonably may request; the Company hereby consents to the
use (in accordance with law) of the Prospectus and any
amendment or supplement thereto by each of the selling
Holders and each of the underwriter(s), if any, in
connection with the offering and the sale of the Transfer
Restricted Securities covered by the Prospectus or any
amendment or supplement thereto;
(ix) enter into such agreements (including an
underwriting agreement) and make such representations and
warranties and take all such other actions in connection
therewith in order to expedite or facilitate the
disposition of the Transfer Restricted Securities pursuant
to any Registration Statement contemplated by this
Agreement as may be reasonably requested by any Holder of
Transfer Restricted Securities or underwriter in connection
with any sale or resale pursuant to any Registration
Statement contemplated by this Agreement, and in such
connection, whether or not an underwriting agreement is
entered into and whether or not the registration is an
Underwritten Offering, the Company shall:
(A) furnish (or in the case of paragraph (2), use
its best efforts to furnish) to each selling Holder
and each underwriter, if any, upon the effectiveness
of the Shelf Registration Statement and each
post-effective amendment thereto and to each
Restricted Broker-Dealer upon Consummation of the
Exchange Offer and the effective date of any
post-effective amendment to the Exchange Offer
Registration Statement:
(1) a certificate, dated the date of
Consummation of the Exchange Offer or the date of
effectiveness of the Shelf Registration
Statement, as the case may be, signed on behalf
of the Company by the President or any Vice
President, confirming, as of the date thereof,
the matters set forth in paragraphs (g) and (q)
of Section 2 of the Purchase Agreement (to the
extent applicable) and such other matters as the
Holders, underwriter(s) and/or Restricted Broker
Dealers may reasonably request; and
(2) a letter, dated the date of Consummation
of the Exchange Offer (and the effective date of
any post-effective amendment to the Exchange
Offer Registration Statement) or the date of
effectiveness of the Shelf Registration Statement
(and each post-effective amendment thereto), as
the case may be, of counsel for the Company
substantially to the effect that such counsel
have participated in conferences with officers
and other representatives of the Company and the
Trustee, and have considered the matters required
to be stated therein and the statements contained
therein, and, although such counsel have not
independently verified the accuracy, completeness
or fairness of such statements; and that such
counsel advise that, on the basis of the
foregoing, no information came to such counsel's
11
<PAGE>
attention that caused such counsel to believe
that the applicable Registration Statement, at
the time such Registration Statement or any
post-effective amendment thereto became effective
and, in the case of the Exchange Offer
Registration Statement, as of the date of
Consummation of the Exchange Offer or the
effective date of any post-effective amendment to
the Exchange Offer Registration Statement,
contained an untrue statement of a material fact
or omitted to state a material fact required to
be stated therein or necessary to make the
statements therein, in the light of the
circumstances under which they were made, not
misleading, or that the Prospectus contained in
such Registration Statement as of its date and,
in the case of the opinion dated the date of
Consummation of the Exchange Offer, as of the
date of Consummation, contained an untrue
statement of a material fact or omitted to state
a material fact necessary in order to make the
statements therein, in the light of the
circumstances under which they were made, not
misleading. Without limiting the foregoing, such
counsel may state further that such counsel
assume no responsibility for and express no
advice as to any financial statements,
Certificates and schedules thereto, and any other
accounting or financial data included in any
Registration Statement contemplated by this
Agreement or the related Prospectus; and
(B) set forth in full or incorporate by reference
in the underwriting agreement, if any, in connection
with any sale or resale pursuant to any Shelf
Registration Statement the indemnification provisions
and procedures of Section 6 with respect to all
parties to be indemnified pursuant to said Section;
and
(C) deliver such other documents and certificates
as may be reasonably requested by the selling Holders,
the underwriter(s), if any, and Restricted Broker
Dealers, if any, to evidence compliance with clause
(A) above and with any customary conditions contained
in the underwriting agreement or other agreement
entered into by the Company pursuant to this clause
(ix).
The above shall be done at each closing under such
underwriting or similar agreement, as and to the extent
required thereunder, and if at any time the representations
and warranties of the Company contemplated in (A)(1) above
cease to be true and correct, the Company shall so advise
the underwriter(s), if any, the selling Holders and each
Restricted Broker-Dealer promptly and, if requested by such
Persons, shall confirm such advice in writing;
(x) prior to any public offering of Transfer
Restricted Securities, cooperate with the selling Holders,
the underwriter(s), if any, and its counsel in connection
with the registration and qualification of the Transfer
Restricted Securities under the securities or Blue Sky laws
of such jurisdictions as the selling Holders or
underwriter(s), if any, may request and do any and all
other acts or things necessary or advisable to enable the
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<PAGE>
disposition in such jurisdictions of the Transfer
Restricted Securities covered by the applicable
Registration Statement; provided, however, that none of the
Company shall be required to register or qualify as a
foreign corporation where it is not now so qualified or to
take any action that would subject it to the service of
process in suits or to taxation, other than as to matters
and transactions relating to the Registration Statement, in
any jurisdiction where it is not now so subject;
(xi) use its best efforts to cause the disposition of
the Transfer Restricted Securities covered by the
Registration Statement to be registered with or approved by
such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof or the
underwriter(s), if any, to consummate the disposition of
such Transfer Restricted Securities, subject to the proviso
contained in clause (x) above;
(xii) subject to Section 4(c)(i), if any fact or event
contemplated by Section 4(c)(iii)(D) above shall exist or
have occurred, prepare a supplement or, if required,
post-effective amendment to the Registration Statement or
related Prospectus or any document incorporated therein by
reference or file any other required document so that, as
thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an
untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in
the light of the circumstances under which they were made,
not misleading;
(xiii) provide a CUSIP number for all Initial
Certificates or Exchange Certificates covered by a
Registration Statement not later than the effective date of
such Registration Statement and use its best efforts to
ensure that all Exchange Certificates have the same CUSIP
number;
(xiv) cooperate and assist in any filings required to
be made with the NASD and in the performance of any due
diligence investigation by any underwriter (including any
"qualified independent underwriter") that is required to be
retained in accordance with the rules and regulations of
the NASD, and use its best efforts to cause such
Registration Statement to become effective and approved by
such governmental agencies or authorities as may be
necessary to enable the Holders selling Transfer Restricted
Securities to consummate the disposition of such Transfer
Restricted Securities;
(xv) cause the Trust Agreement to be qualified under
the TIA not later than the effective date of the first
Registration Statement required by this Agreement and, in
connection therewith, cooperate with the Trustee and the
Holders of Certificates to effect such changes to the Trust
Agreement as may be required for such Trust Agreement to be
so qualified in accordance with the terms of the TIA; and
execute and use its best efforts to cause the Trustee to
execute, all documents that may be required to effect such
changes and all other forms and documents required to be
filed with the Commission to enable such Trust Agreement to
be so qualified in a timely manner; and
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<PAGE>
(xvi) provide promptly to each Holder upon request each
document filed with the Commission with respect to the
Trust pursuant to the requirements of Section 13 or Section
15(d) of the Exchange Act.
(d) Restrictions on Holders. Each Holder agrees by
acquisition of a Transfer Restricted Security that, upon receipt
of the notice referred to in Section 4(c)(i) or Section
4(c)(iii)(D), such Holder will forthwith discontinue disposition
of Transfer Restricted Securities pursuant to the applicable
Registration Statement until such Holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section
4(c)(xv), or until it is advised in writing by the Company that
the use of the Prospectus may be resumed, and has received copies
of any additional or supplemental filings that are incorporated
by reference in the Prospectus (the "Advice"). If so directed by
the Company, each Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies
then in such Holder's possession, of the Prospectus covering such
Transfer Restricted Securities that was current at the time of
receipt of either such notice. In the event the Company shall
give any such notice, the time period regarding the effectiveness
of such Registration Statement set forth in Section 2 or 3, as
applicable, shall be extended by the number of days during the
period from and including the date of the giving of such notice
pursuant to Section 4(c)(i) or Section 4(c)(iii)(D) to and
including the date when each selling Holder covered by such
Registration Statement shall have received the copies of the
supplemented or amended Prospectus contemplated by Section
4(c)(xii) or shall have received the Advice.
Section 5. Registration Expenses. All expenses
incident to the Company's performance of or compliance with this
Agreement will be borne by the Company, regardless of whether a
Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and expenses
(including filings made by any purchaser or Holder with the NASD
(and, if applicable, the fees and expenses of any "qualified
independent underwriter") and its counsel that may be required by
the rules and regulations of the NASD); (ii) all fees and
expenses of compliance with federal securities and state Blue Sky
or securities laws; (iii) all expenses of printing (including
printing certificates for the Exchange Certificates to be issued
in the Exchange Offer and printing of Prospectuses), messenger
and delivery services and telephone; (iv) all reasonable fees and
disbursements of counsel for the Company and the Trust; (v) all
application and filing fees in connection with listing the
Certificates on a national securities exchange or automated
quotation system pursuant to the requirements hereof; and (vi)
all rating agency fees in connection with obtaining any rating of
the Exchange Certificates sought by the Company.
The Company will, in any event, bear its internal expenses
(including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties) and
the fees and expenses of any Person, including special experts,
retained by the Company.
The Company will not be responsible for the fees and
expenses of counsel to the Initial Purchaser or any Holder.
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<PAGE>
Section 6. Indemnification. (a) The Company agrees to
indemnify and hold harmless (i) each Holder and (ii) each person,
if any, who controls (within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act) any Holder (any of the persons
referred to in this clause (ii) being hereinafter referred to as
a "controlling person") and (iii) the respective officers,
directors, partners, employees, representatives and agents of any
Holder or any controlling person (any person referred to in
clause (i), (ii) or (iii) may hereinafter be referred to as an
"Indemnified Holder"), to the fullest extent lawful, from and
against any and all losses, claims, damages, liabilities,
judgments, actions and expenses (including without limitation and
as incurred, reimbursement of all reasonable costs of
investigating, preparing, pursuing or defending any claim or
action, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, including the reasonable
fees and expenses of counsel to any Indemnified Holder) directly
or indirectly caused by, related to, based upon, arising out of
or in connection with any untrue statement or alleged untrue
statement of a material fact contained in any Registration
Statement, preliminary prospectus or Prospectus (or any amendment
or supplement thereto), or any omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages, liabilities or expenses
are caused by an untrue statement or omission or alleged untrue
statement or omission that is made in reliance upon and in
conformity with information relating to such Holder furnished in
writing to the Company by such Holder expressly for use therein.
This indemnity agreement will be in addition to any liability
that the Company may otherwise have.
In case any action or proceeding (including any
governmental or regulatory investigation or proceeding) shall be
brought or asserted against any of the Indemnified Holders with
respect to which indemnity may be sought against the Company,
such Indemnified Holder shall promptly notify the Company in
writing (provided that the failure to give such notice shall not
relieve the Company of its obligations pursuant to this
Agreement). Such Indemnified Holder shall have the right to
employ its own counsel in any such action and the fees and
expenses of such counsel shall be paid, as incurred, by the
Company; provided, however the such Indemnified Holder shall
promptly reimburse the Company for any amounts paid in respect of
this Section 6(a) if it is ultimately determined that an
Indemnified Holder is not entitled to indemnification hereunder.
The Company shall not, in connection with any one such action or
proceeding or separate but substantially similar or related
actions or proceedings in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel) at any time for such
Indemnified Holders, which firm shall be designated by the
Holders. The Company shall be liable for any settlement of any
such action or proceeding effected with its prior written
consent, which consent shall not be withheld unreasonably, and
each Company agrees to indemnify and hold harmless each
Indemnified Holder from and against any loss, claim, damage,
liability or expense by reason of any settlement of any action
effected with its written consent. Notwithstanding the
immediately preceding sentence, if at any time an Indemnified
Holder shall have requested an indemnifying party to reimburse
the Indemnified Holder for fees and expenses of counsel as
contemplated by the second sentence of this paragraph, the
indemnifying party agrees that it shall be liable for any
settlement of any
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<PAGE>
proceeding effected without its written consent if (i) such
settlement is entered into more than twenty business days after
receipt by such indemnifying party of the aforesaid request and
(ii) such indemnifying party shall not have reimbursed the
Indemnified Holder in accordance with such request prior to the
date of such settlement. The Company shall not, without the prior
written consent of each Indemnified Holder, settle or compromise
or consent to the entry of judgment in or otherwise seek to
terminate any pending or threatened action, claim, litigation or
proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not any Indemnified Holder is
a party thereto), unless such settlement, compromise, consent or
termination includes an unconditional release of each Indemnified
Holder from all liability arising out of such action, claim,
litigation or proceeding.
(b) Each Holder of Transfer Restricted Securities agrees,
severally and not jointly, to indemnify and hold harmless the
Company, and its directors, officers, and any person controlling
(within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) the Company, and the respective officers,
directors, partners, employees, representatives and agents of
each such person, to the same extent as the foregoing indemnity
from the Company to each of the Indemnified Holders, but only
with respect to claims and actions based on information relating
to such Holder furnished in writing by such Holder expressly for
use in any Registration Statement. In case any action or
proceeding shall be brought against the Company or its directors
or officers or any such controlling person in respect of which
indemnity may be sought against a Holder of Transfer Restricted
Securities, such Holder shall have the rights and duties given
the Company, and the Company, such directors or officers or such
controlling person shall have the rights and duties given to each
Holder by the preceding paragraph. In no event shall any Holder
be liable or responsible for any amount in excess of the amount
by which the total received by such Holder with respect to its
sale of Transfer Restricted Securities pursuant to a Registration
Statement exceeds (i) the amount paid by such Holder for such
Transfer Restricted Securities and (ii) the amount of any damages
which such Holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged
omission. This indemnity agreement will be in addition to any
liability that any such Holder may otherwise have.
(c) If the indemnification provided for in this Section 6
is unavailable to or insufficient to hold harmless an indemnified
party under Section 6(a) or Section 6(b) (other than by reason of
exceptions provided in those Sections) in respect of any losses,
claims, damages, liabilities or expenses referred to therein,
then each applicable indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is
appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Holders, on the other hand,
from its sale of Transfer Restricted Securities or if such
allocation is not permitted by applicable law, the relative fault
of the Company, on the one hand, and of the Indemnified Holder,
on the other hand, in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations.
The relative fault of the Company, on the one hand, and of the
Indemnified Holder, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged
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omission to state a material fact relates to information supplied
by the Company or by the Indemnified Holder and the parties'
relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The amount paid
or payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in the second
paragraph of Section 6(a), any legal or other fees or expenses
reasonably incurred by such party in connection with
investigating or defending any action or claim.
The Company and each Holder of Transfer Restricted
Securities agree that it would not be just and equitable if
contribution pursuant to this Section 6(c) were determined by pro
rata allocation (even if the Holders were treated as one entity
for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to in
the immediately preceding paragraph. The amount paid or payable
by an indemnified party as a result of the losses, claims,
damages, liabilities or expenses referred to in the immediately
preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 6, no Holder or
its related Indemnified Holders shall be required to contribute,
in the aggregate, any amount in excess of the amount by which the
total received by such Holder with respect to the sale of its
Transfer Restricted Securities pursuant to a Registration
Statement exceeds the sum of (A) the amount paid by such Holder
for such Transfer Restricted Securities plus (B) the amount of
any damages which such Holder has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Holders'
obligations to contribute pursuant to this Section 6(c) are
several in proportion to the respective principal amount of
Transfer Restricted Securities held by each of the Holders
hereunder and not joint.
(e) The provisions of this Section 6 will remain in full
force and effect, regardless of any investigation made by or on
behalf of any Holder or the Company or any of the officers,
directors or controlling persons referred to in this Section 6,
and will survive the sale by a Holder of Certificates covered by
a Registration Statement.
Section 7. Underwritten Offering. No Holder may participate
in any Underwritten Offering hereunder unless such Holder (a)
agrees to sell such Holder's Transfer Restricted Securities on
the basis provided in customary underwriting arrangements entered
into in connection therewith and (b) completes and executes all
reasonable questionnaires, powers of attorney, and other
documents required under the terms of such underwriting
arrangements.
Section 8. Selection of Underwriters. For any Underwritten
Offering, the investment banker or investment bankers and manager
or managers for any Underwritten Offering that will administer
such offering will be selected by the Holders of a majority in
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aggregate principal amount of the Transfer Restricted Securities
included in such offering. Such investment bankers and managers
are referred to herein as the "underwriters."
Section 9. Miscellaneous.
(a) Amendments and Waivers. The provisions of this
Agreement may not be amended, modified or supplemented, and
waivers or consents to or departures from the provisions hereof
may not be given unless (i) in the case of Section 4 hereof and
this Section 9(a)(i), the Company has obtained the written
consent of Holders of all outstanding Transfer Restricted
Securities and (ii) in the case of all other provisions hereof,
the Company has obtained the written consent of Holders of a
majority of the outstanding principal amount of Transfer
Restricted Securities, provided that, with respect to any matter
that directly or indirectly affects the rights of the Initial
Purchaser, the Company shall obtain the written consent of the
Initial Purchaser against which such amendment, modification,
supplement, waiver or consent is to be effective. Notwithstanding
the foregoing, a waiver or consent to departure from the
provisions hereof that relates exclusively to the rights of
Holders whose securities are being tendered pursuant to the
Exchange Offer and that does not affect directly or indirectly
the rights of other Holders whose securities are not being
tendered pursuant to such Exchange Offer may be given by the
Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities subject to such Exchange Offer.
(b) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by
hand-delivery, first-class mail (registered or certified, return
receipt requested), or air courier guaranteeing overnight
delivery:
(i) if to a Holder, at the address set forth on
the records of the Trustee under the Trust Agreement; and
(ii) if to the Company:
Prudential Securities Structured Assets, Inc.
One New York Plaza
New York, New York 10292
Attention: Robert Troiano
and Lawrence Motz
(i) if to the Initial Purchaser:
Prudential Securities Incorporated
One New York Plaza
New York, New York 10292
Attention: Debt Transactions Group
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All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt acknowledged, if
telecopied; and on the next business day, if timely delivered to
an air courier guaranteeing overnight delivery.
(c) Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the successors and assigns
of each of the parties, including without limitation and without
the need for an express assignment, subsequent Holders of
Transfer Restricted Securities; provided, however, that this
Agreement shall not inure to the benefit of or be binding upon a
successor or assign of a Holder unless and to the extent such
successor or assign acquired Transfer Restricted Securities
directly from such Holder.
(d) Counterparts. This Agreement may be executed in
any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute
one and the same agreement.
(e) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise
affect the meaning hereof.
(f) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICTS-OF-LAW PROVISIONS.
(g) Severability. In the event that any one or more of
the provisions contained herein, or the application thereof in
any circumstance, is held invalid, illegal or unenforceable, to
the extent permitted by law the validity, legality and
enforceability of any such provision in every other respect and
of the remaining provisions contained herein shall not be
affected or impaired thereby.
(h) Entire Agreement. This Agreement is intended by
the parties as a final expression of its agreement and intended
to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or
referred to herein with respect to the registration rights
granted with respect to the Transfer Restricted Securities. This
Agreement supersedes all prior or contemporaneous oral, and all
prior written, agreements and understandings between the parties
with respect to such subject matter.
(i) Certificates Held by the Company. Whenever the
consent or approval of Holders of a majority in principal amount
of the Transfer Restricted Securities is required hereunder, the
Transfer Restricted Securities held by any of the Company or its
Affiliates (other than subsequent Holders who are deemed to be
Affiliates solely by reason of its holdings of such Transfer
Restricted Securities) shall not be counted in determining
whether such consent or approval was given by Holders of such
required majority.
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IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
PRUDENTIAL SECURITIES STRUCTURED
ASSETS, INC.
By /s/ C. Christopher Perry
-------------------------
Name: C. Christopher Perry
Title: Senior Vice President
PRUDENTIAL SECURITIES INCORPORATED
By /s/ Lawrence S. Motz
---------------------
Name: Lawrence S. Motz
Title: Vice President
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