PROSPECTUS
Exchange Offer
for up to
$57,830,000
aggregate certificate principal balance of
Residual Class Certificates
A Class of Receipts on Corporate Securities, Series CHR 1998-1,
Relating to $57,830,000 aggregate principal amount of Chrysler Corporation
7.40% Debentures Due August 1, 2097
The Exchange Offer
We hereby offer to exchange up to $57,830,000 aggregate certificate
principal balance of our Residual Class Certificates (the "New Certificates"),
which are covered by a registration statement under the Securities Act of
1933, as amended (the "Securities Act"), for an equal principal balance of our
outstanding Residual Class Certificates (the "Old Certificates"), which were
issued in a private placement.
The New Certificates
o The New Certificates that we will exchange for your Old
Certificates will be identical in all material respects
to your Old Certificates, except for certain
restrictions on transferring the Old Certificates.
Terms of the Exchange Offer
o Expires 5:00 p.m. New York City time, on April 21, 1999, unless extended.
o Not conditioned upon any minimum certificate principal
balance of the Old Certificates being tendered for
exchange.
o Subject only to certain customary conditions and a
requirement that the exchange offer not violate
applicable law or interpretations of the Securities and
Exchange Commission.
o We will exchange all Old Certificates that you validly tender and
do not withdraw.
o You may withdraw any Old Certificates that you tender
at any time prior to the expiration of the exchange
offer.
o The exchange of the Old Certificates for New Certificates will not
be a taxable exchange.
o We began mailing these prospectuses (and letters of transmittal) on or
about March 20, 1999.
As used herein, "Chrysler" refers to Chrysler Corporation and its successors,
pursuant to the terms of the CHR Debentures Indenture (as defined herein).
Your tendering of Old Certificates for the New Certificates involves certain
risks. See "Risk Factors" beginning on page 11.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES OR PASSED UPON THE
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. WE URGE YOU TO READ THIS PROSPECTUS AND THE RELATED LETTER OF
TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO TENDER YOUR OLD CERTIFICATES
PURSUANT TO THE EXCHANGE OFFER.
---------------------
The date of this prospectus is March 11, 1999.
<PAGE>
TABLE OF CONTENTS
Page
Where You Can Find More Information........................................4
Summary....................................................................5
Risk Factors..............................................................11
Use of Proceeds...........................................................13
Formation of the Trust....................................................13
Description of the Trust Assets...........................................13
The Exchange Offer........................................................18
Description of the New Certificates.......................................24
Description of the Base Trust Agreement...................................30
Certain U.S. Federal Income Tax Consequences..............................33
ERISA Considerations......................................................38
Plan of Distribution......................................................39
Legal Matters.............................................................40
Appendix A - Allocation Schedule.........................................A-1
---------------------
You should rely only on the information contained or incorporated by
reference in this Prospectus. Neither we nor the Receipts on Corporate
Securities Trust (the "Trust") have authorized any other person to provide you
with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. Neither we nor the Trust
are making an offer to sell these securities in any jurisdiction where the
offer or sale is not permitted. You should assume that the information
appearing in this Prospectus, as well as information we filed previously with
the Securities and Exchange Commission and incorporated by reference, is
accurate as of the date on the front cover of those documents only. Our and
the Trust's business, financial condition, results of operations and prospects
may have changed since that date.
<PAGE>
Where You Can Find More Information
We, on the Trust's behalf, will be subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). As a result, we will file reports and other information with the
Securities and Exchange Commission (the "Commission") relating to the Trust.
You may visit the Commission's Public Reference Room in Washington, D.C., New
York, New York or Chicago, Illinois to read and copy any document we file with
the Commission. Please call the Commission at 1-800-SEC-0330 for more
information on its public reference rooms and document copying charges. Our
Commission filings also will be available to you via the Commission's web site
at http://www.sec.gov.
The reports to be filed by us, on the Trust's behalf, primarily will
consist of distribution date statements relating to the distributions made on
the certificates and certain material events regarding the Trust, but not
other financial information or statements. The reports also will refer to the
periodic reports filed by Chrysler Corporation ("Chrysler") and
DaimlerChrysler AG ("DaimlerChrysler") so long as those entities are reporting
companies under the Exchange Act.
No separate financial statements of the Trust have been included or
incorporated by reference herein. We do not believe such financial statements
would be material to you because the Trust's sole asset consists of debt
obligations of an unaffiliated issuer that is a reporting company under the
Exchange Act. See "Description of the Trust Assets--Chrysler."
The Commission allows us to "incorporate by reference" the information we
file with it. This means that we can disclose information to you by referring
you to those documents. Information incorporated by reference is part of this
Prospectus. Later information filed with the Commission updates and supersedes
this Prospectus.
We incorporate by reference the following documents that were filed with
the Commission and are exhibits to the Registration Statement (File No. 333-
68475) of which this Prospectus is a part:
o the Base Trust Agreement dated August 28, 1997 between Prudential
Securities Structured Assets, Inc., as depositor, and The Bank of New
York, as trustee, as amended, which was filed on October 24, 1997 as
Exhibit 4.2 to the Registration Statement on Form S-4 filed by Prudential
Securities Structured Assets, Inc. and the Receipts on Corporate
Securities Trust, Series FDX 1997-1, File No. 333-38745 and
o Base Amendment No. 1 dated February 27, 1998 and Amendment No. 2 dated
April 28, 1998, which were filed on May 6, 1998 as Exhibits 4.4 and 4.5,
respectively, to the Registration Statement on Form S-4 filed by
Prudential Securities Structured Assets, Inc. and the Receipts on
Corporate Securities Trust, Series FDX 1997-1, File No. 333-38745.
This Prospectus incorporates documents by reference that have not been
presented nor delivered to you with this Prospectus. You may request a copy of
these documents, at no cost, by contacting us in writing or by telephone at:
c/o Prudential Securities Structured Assets, Inc.
One New York Plaza
14th Floor
New York, New York 10292-2014
(212) 809-6631
Contact Person: Linda Muller
In order to ensure timely delivery of the documents, any
request should be made by April 15, 1999.
<PAGE>
Summary
This summary may not contain all the information that may be important to
you. You should read the entire Prospectus, including documents incorporated
by reference, before tendering your Old Certificates for exchange.
The Exchange Offer
Who we are We are Prudential Securities Structured Assets, Inc.
Our main role in this transaction is that of depositor and
issuer. This means that we formed the Trust and deposited
with it the Chrysler debentures. The Chrysler debentures
continue to be held by the Trust for your benefit.
What we are
Offering to
Exchange We are offering to exchange up to $57,830,000 aggregate
certificate principal balance of New Certificates for an
equal amount of Old Certificates. You may tender either
all or a portion of your Old Certificates, provided that
you tender them in minimum denominations of $500,000 and
integral multiples of $1.00 in excess of $500,000.
Purpose of
the Exchange
Offer The purpose of the exchange offer is to satisfy our
obligations under a registration rights agreement into
which we entered when we issued the outstanding Chrysler
Certificates. See "The Exchange Offer--Terms of the
Exchange Offer."
Resale of the New
Certificates In making this exchange offer, we are relying on certain
no-action letters issued by the staff of the Commission's
Division of Corporation Finance to third-parties. Our
legal counsel's interpretation of these letters is that the
New Certificates may be offered for resale, resold or
otherwise transferred by you without regard to the
registration and prospectus delivery requirements of the
Securities Act. For you to rely on these no-action
letters, you must (i) not be an affiliate of ours, (ii)
have acquired the New Certificates in the ordinary course
of your business, (iii) not have any arrangement or
understanding with any person to participate in a
distribution of the New Certificates and (iv) not have
purchased the Old Certificates directly from the Trust to
resell pursuant to Rule 144A or any other available
exemption from the Securities Act. See "The Exchange
Offer--Terms of the Exchange Offer."
Consequences of
Failure to
Exchange Old
Certificates If you hold Old Certificates and do not participate in the
exchange offer, then your registration rights would
terminate at the expiration of the exchange offer. As a
result, you will not be able to offer for sale or sell
your Old Certificates unless you register the Old
Certificates under the Securities Act or meet an exemption
from registration. See "Risk Factors--Risk Factors
Relating to the Certificates and the Exchange
Offer--Consequences of Failure to Exchange."
When the Exchange
Offer Expires The exchange offer will expire at 5:00 p.m., New York City
time, on April 21, 1999 (30 calendar days following the
commencement of the exchange offer) unless it is extended.
Conditions to the
Exchange Offer Except for the requirements of applicable federal
and state securities laws, there are no other
federal or state regulatory requirements with
which we or the Trust must comply in connection
with this exchange offer. The exchange offer is
not conditioned upon your tendering any minimum
aggregate amount of Old Certificates. However,
the exchange offer is subject to certain
customary conditions, which may be waived by the
Trust. See "The Exchange Offer--Conditions."
How to Tender your
Old Certificates You can accept the exchange offer by completing,
signing and dating the "Letter of Transmittal."
You must then deliver the Letter of Transmittal,
along with the Old Certificates and any other
required documentation, to the Exchange Agent at
the address set forth below. See "The Exchange
Offer--Procedures for Tendering."
You have the Right to
Withdraw your Tender You may withdraw your tender at any time before
the expiration date. To properly withdraw your
tender you must deliver a notice of withdrawal to
the Exchange Agent at the address set forth
below. See "The Exchange Offer--Procedures for
Tendering."
Guaranteed Delivery
Procedures If you wish to tender your Old Certificates but
they are not immediately available, or you cannot
deliver them together with the Letter of
Transmittal prior to the expiration date, then
you may use the guaranteed delivery procedures
set forth in "The Exchange Offer--Guaranteed
Delivery Procedures."
When you Receive the
New Certificates All New Certificates will be delivered to you
after the expiration date and once the Old
Certificates are accepted. Any and all Old
Certificates will be accepted, subject to certain
conditions, at any time prior to the expiration
date. See "The Exchange Offer--Terms of the
Exchange Offer."
Your U.S. Federal Income
Tax Considerations The exchange offer is not considered a sale,
exchange or other taxable event. See "Certain
U.S. Federal Income Tax Consequences--Exchange of
Old Certificates for New Certificates."
Exchange Agent The Trustee is the "Exchange Agent." The
Trustee's address and telephone and facsimile
numbers are set forth below in "The Exchange
Offer--Exchange Agent."
Fees and Expenses We will bear all costs associated with the
consummation of the exchange offer and compliance
with the Registration Rights Agreement. See "The
Exchange Offer--Fees and Expenses."
How we will
Use the Proceeds Neither we nor the Trust will receive any cash
proceeds as a result of the exchange offer. The
proceeds from the sale of the Old Certificates
were applied to the purchase of the Chrysler
7.40% Debentures due August 1, 2097 (the "CHR
Debentures") and to pay issuance costs. See "Use
of Proceeds."
The New Certificates
Securities that
we are Offering We will issue up to $57,830,000 aggregate
certificate principal balance of New Certificates
under the Securities Act. The New Certificates
will be issued under the same base trust
agreement that covers the Old Certificates.
Subject to the occurrence of certain events, the
New Certificates (together with
an "Amortizing Class" of certificates offered by
a separate prospectus) will constitute the entire
beneficial ownership of the Receipts on Corporate
Securities Trust, Series CHR 1998-1.
The New Certificates are identical in all
material respects to the terms of the Old
Certificates, except the New Certificates are not
subject to certain transfer restrictions that
apply to the Old Certificates.
See "Description of the Trust Assets," "The
Exchange Offer--Terms of the Exchange Offer" and
"Description of the New Certificates."
Distribution on the
New Certificates Your New Certificates will accrete principal at
rate of 6.870% per annum, to a principal amount
of $57,830,000 on August 1, 2018 (assuming that
all are still outstanding on such date). Subject
to the occurrence of an Optional Redemption, a
Shortened Maturity Redemption or an In-Kind
Distribution, on each Scheduled Distribution
Date commencing February 1, 2019 through August
1, 2097, your New Certificates will receive,
from distributions of interest on the CHR
Debentures, if any, a distribution of interest
on the then outstanding principal amount of New
Certificates at a rate of 7.40% per annum.
Subject to the occurrence of an Optional
Redemption, a Shortened Maturity Redemption or
an In-Kind Distribution, on August 1, 2097 your
New Certificates will receive, from distributions
of principal on the CHR Debentures, if any, a
return of principal. Your New Certificates will
not be entitled to any allocation of interest
accrued under the CHR Debentures until February
1, 2019, including interest accrued on or before
August 1, 2018 which is unpaid as of February 1,
2019.
See "Description of the New Certificates--
General" and "--Collections and Distributions
on New Certificates."
Redemption
Optional Redemption Chrysler, at its option, may redeem all or a
portion of the CHR Debentures under certain
circumstances and for a specified redemption
price.
See "Description of the New
Certificates--Optional Redemption of CHR
Debentures."
Maturity Shortening
Redemption Upon the occurrence of certain tax-related
events, Chrysler has the right to
o shorten the maturity of the CHR Debentures or
o redeem the CHR Debentures in whole (but not in
part) for a specified redemption price.
Such a maturity shortening might increase the
amount of original issue discount required to be
included in your ordinary gross income.
See "Description of the New
Certificates--Maturity Shortening Redemption" and
"Certain U.S. Federal Income Tax
Consequences--Purchase and Holding of Trust
Certificates."
In-Kind Distribution If a payment default, acceleration or change in
reporting status occurs on or before August 1,
2018, then the Trustee will make an "In-Kind
Distribution" of the CHR Debentures to those of
you who hold either Amortizing or Residual Class
Certificates. A payment default, acceleration or
change in reporting occurring after August 1,
2018 will cause an In-Kind Distribution to be
made to the Residual Class only. The distribution
would be made according to a distribution ratio
calculated by a calculation agent. See
"Description of the New Certificates--Optional
Redemption of CHR Debentures." After
distribution, your certificates would be
cancelled.
An In-Kind Distribution would terminate any
future distributions by the Trustee to you.
Rather, any future distributions would be made by
Chrysler to those of you who hold CHR Debentures
after the In-Kind Distribution. See "Description
of New Certificates--Distribution of CHR
Debentures on Payment Default, Acceleration or
Change in Reporting Status."
In addition, the In-Kind Distribution could be
treated in whole or in part as the equivalent of
a taxable sale or exchange. See "Certain U.S.
Federal Income Tax Consequences--Distributions."
Exchange of Certificates
for CHR Debentures Commencing August 1, 1999 and terminating
February 1, 2018, any of you that holds both
Amortizing Class Certificates and Residual Class
Certificates (or, if on or after August 1, 2018,
any of you that holds Residual Class
Certificates) will have the right on any
Scheduled Distribution Date, on not less than 30
nor more than 45 days prior written notice to
the Trustee, to exchange certificates of both
classes (or, if on or after August 1, 2018, of
Residual Class Certificates) for CHR Debentures.
See "Description of the New Certificates--
Exchange of Certificates for CHR Debentures."
Limitation on Ownership Upon transfer of a Residual Class Certificate, you
must deliver to the Trustee a certification that
the new beneficial owner of the certificate is
either
o a United States person or
o a non-United States person who is exempt from
withholding under U.S. federal income tax laws
and has completed an IRS Form W-8 in a manner
satisfactory to the Trustee or its agent.
See "Description of the New Certificates --
Limitations on Beneficial Ownership of Residual
Class Certificates."
Record Dates The 15th day immediately preceding each
distribution date.
Denominations The New Certificates will be denominated and
payable in U.S. dollars. They 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.
Your U.S. Federal
Income Tax Consequences 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, then 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,
assuming the CHR Debentures are treated as debt
for U.S. federal income tax consequences, each of
you will be treated as owning the rights to those
payments on the CHR Debentures that are allocable
to your certificate(s) and will be taxed under
the "stripped bond" rules of the Internal Revenue
Code of 1986, as amended (the "Code"). Under
those rules, you will be required to include in
ordinary gross income original issue discount
income based on your yield to maturity for the
certificate.
See "Certain U.S. Federal Income Tax
Consequences."
Ratings The New Certificates at issuance will be rated
"A2" by Moody's Investors Service, Inc. and "A"
by Standard & Poor's Rating Services.
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.
No Further Rule
3a-7 Limitation As a result of the rating assigned to the New
Certificates, they will not be subject to certain
restrictions on transfer that originally were
applicable to the Old Certificates pursuant to
Rule 3a-7 under the Investment Company Act of
1940, as amended.
ERISA Considerations Certain pension, profit sharing or other employee
benefit, or other plans (such as individual
retirement accounts) may be prohibited from
investing in the New Certificates. Investing in
the New Certificates may generate excise tax and
other liabilities under the Employee Retirement
Income Security Act of 1974, as amended, and the
Internal Revenue Code of 1986, as amended. See
"ERISA Considerations."
RISK FACTORS
You should review carefully the information contained elsewhere in this
Prospectus and should especially consider the following risk factors.
Limited Obligations and Interests
The New Certificates will not represent an obligation of, or an interest
in, either us or any of our affiliates. Nor will the New Certificates be
insured or guaranteed by any government agency, or by us, the Trustee, any of
our or the Trustee's affiliates, or any other person.
We Have Not Provided You With Any Detailed Information About Chrysler or the
CHR Debentures
We have not provided you with any detailed information with respect to
o Chrysler or the CHR Debentures,
o any risk factors relating to Chrysler or the CHR Debentures or
o any rights or obligations, legal, financial or otherwise, arising under
or related to the CHR Debentures.
See "Description of the Trust Assets."
Events of Default
If there is ever an event of default on the CHR Debentures, then the risk
of loss related to the CHR Debentures lies entirely with you. If a payment
default, acceleration or change in reporting status occurs with respect to
Chrysler or the CHR Debentures, then the Trustee will distribute the CHR
Debentures to you in an In-Kind Distribution. See "Description of the New
Certificates--Distribution of CHR Debentures on Payment Default, Acceleration
or Change in Reporting Status."
An In-Kind Distribution may be treated in whole or in part as equivalent
to a taxable sale or exchange. See "Certain U.S. Federal Income Tax
Consequences--Distributions."
Bankruptcy Risks
The New Certificates are payable solely from payments made on the CHR
Debentures by Chrysler. Chrysler is subject to laws permitting bankruptcy,
moratorium, reorganization or other actions, which, in the event of financial
difficulties of Chrysler, could cause delays in distribution, partial
distribution or non-distribution of payments to you with respect to the New
Certificates. See "Description of the New Certificates--Distribution of CHR
Debentures on Payment Default, Acceleration or Change in Reporting Status."
Maturity and Redemption Considerations
The Residual Class Certificates are not scheduled to receive any
distributions before February 1, 2019. Potentially, the maturity and yield of
the New Certificates could be affected by
o a cash distribution to you upon a maturity shortening redemption or an
optional redemption or
o a distribution of the CHR Debentures to you upon an In-Kind
Distribution.
In the event of a cash distribution on a shortened maturity date, you
o will receive your respective shares of the redemption price, including
principal and accrued and unpaid interest, without premium and
o may then need to reinvest the distribution at the then-prevailing
market rates rather than receiving scheduled distributions on your
certificate(s).
In the event of a maturity shortening, you might have to increase the
original issue discount required to be included in your ordinary gross income.
In the event of a cash distribution on an optional redemption date, you
o will receive your respective shares of the redemption price, including
principal and accrued and unpaid interest, without premium and
o may then need to reinvest the distribution at the then-prevailing
market rates rather than receiving scheduled distributions on your
certificate(s).
See "Description of the New Certificates--Optional Redemption of CHR
Debentures," "Description of the New Certificates--Maturity Shortening
Redemption" and "Certain U.S. Federal Income Tax Consequences--Purchase and
Holding of Trust Certificates."
Upon a payment default, acceleration or change in reporting status
occurring on or before August 1, 2018,
o the Trustee will make an In-Kind Distribution of CHR Debentures to you
and holders of Amortizing Class Certificates,
o you will receive your share of the CHR Debentures pursuant to a
distribution ratio and
o the distribution may be treated in whole or in part as equivalent to a
taxable sale or exchange.
Upon a payment default, acceleration or change in reporting status after
August 1, 2018,
o the Trustee will make an In-Kind Distribution of CHR Debentures to you.
See "Description of the New Certificates--Distribution of CHR Debentures
on Payment Default, Acceleration or Change in Reporting Status" and "Certain
U.S. Federal Income Tax Consequences--Distributions."
Passive Nature of the Receipts on Corporate Securities Trust, Series 1998-1
The Trustee will hold the CHR Debentures for your benefit. The Trust
generally will hold the CHR Debentures to maturity and not dispose of them
regardless of adverse events, financial or otherwise, which may affect
Chrysler or the value of the CHR Debentures. The Trust, however, will
surrender the CHR Debentures pursuant to an In-Kind Distribution to you in
exchange for your certificates.
Risk Factors Relating to the Certificates and the Exchange Offer
Consequences of Failure to Exchange
Those of you who do not exchange your Old Certificates for New
Certificates pursuant to the exchange offer will continue to be subject to the
limitations on transferability applicable to the Old Certificates. This
limitation is due to the fact that the Old Certificates were not issued under
an effective registration statement under the Securities Act. A description of
the limitation can be found on the legend of the Old Certificates.
Resales of the Old Certificates may be made under an effective
registration statement or pursuant to an exemption from the Securities Act and
applicable state securities laws. We do not currently anticipate that we will
register resales of 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 (if any) could be adversely affected.
Absence of a Public Market for the New Certificates
Prior to the exchange offer, there was no public market for the New
Certificates and it is uncertain whether such a market will develop. In
addition, neither we 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. Any such
market-making activity may be discontinued at any time without notice and 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, then the market price and liquidity of the New
Certificates may be affected adversely.
USE OF PROCEEDS
There will be no cash proceeds payable to Prudential Securities
Structured Assets, Inc. ("PSSA") or the Receipts on Corporate Securities
Trust, Series CHR 1998-1 (the "Trust") from the issuance of the New
Certificates pursuant to the Letter of Transmittal and this Prospectus
(together 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 CHR Debentures, 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. PSSA obtained an intercompany loan
from Prudential Securities Group Inc. to the extent the net proceeds from the
sale of the Old Certificates were insufficient to pay the full purchase price
of the CHR Debentures and issuance expenses. Such intercompany loan was repaid
in full from the proceeds of a subsequent sale of the Amortizing Class
Certificates.
FORMATION OF THE TRUST
The Trust was formed under New York law pursuant to the Base Trust
Agreement dated August 28, 1997, as amended by Base Amendment No. 1 dated
February 27, 1998 and Amendment No. 2 dated April 28, 1998, and as
supplemented by the Series CHR 1998-1 Supplement dated June 9, 1998.
Concurrently with the execution and delivery of the Amortizing and Residual
Class Certificates (the "Trust Certificates" or "Certificates"), PSSA
deposited the CHR Debentures with the Trustee. The Trustee, on behalf of the
Trust, accepted the CHR Debentures and delivered the Trust Certificates to
PSSA. The Trustee is holding the CHR Debentures for the benefit of the holders
of the Trust Certificates.
DESCRIPTION OF THE TRUST ASSETS
The assets of the Trust consist solely of $57,830,000 aggregate principal
amount of 7.40% Debentures due August 1, 2097 issued by Chrysler and having
the characteristics described in the CHR Debentures Prospectus. The CHR
Debentures were originally issued by Chrysler on July 15, 1997 as part of an
underwritten public offering of $500,000,000 aggregate principal amount of
such securities (CUSIP No. 171196AT5) pursuant to a registration statement on
Form S-3 (File No. 333-21589) (together with all amendments and exhibits
thereto, the "CHR Debentures Registration Statement"), filed by Chrysler, with
the Commission under the Securities Act. Payments of interest are required to
be made on the CHR Debentures semiannually on the first day of each February
and August, commencing February 1, 1998, or if such day is not a business day,
on the next succeeding business day.
The CHR Debentures deposited in the Trust represent the principal 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
a Maturity Shortening Redemption will depend on the Trust's receipt of
payments on, or in respect of, the CHR Debentures in such an event.
The CHR Debentures Prospectus states that the CHR Debentures rank pari
passu in right of payment with all existing and future unsecured and
unsubordinated indebtedness of Chrysler. Under the "CHR Debentures Indenture,"
the events of default are as follows: (a) default for more than 30 days in the
payment of any interest; (b) default in the payment of principal of, or
premium, if any, when due; (c) failure to perform or breach of any other
covenant or warranty of CHR in the Indenture with respect to the CHR
Debentures, continued for 90 days after written notice has been given by the
Indenture Trustee or the holders of at least 10% in principal amount of the CHR
Debentures, as provided in the Indenture; (d) acceleration of the maturity of
any indebtedness for money borrowed by CHR of $5,000,000 or more at the time
outstanding, if such acceleration is not rescinded or annulled within 10 days
after notice by the Indenture Trustee or the holders of 10% in principal amount
of the CHR Debentures; (e) default in the deposit of any sinking fund payment,
when and as due by the terms of the CHR Debentures; and (f) certain events in
bankruptcy, insolvency or reorganization in respect of Chrysler.
The CHR Debentures may be redeemed by Chrysler prior to maturity. See
"Description of the New Certificates--Optional Redemption of CHR Debentures."
The CHR Debentures are denominated in U.S. dollars and issued in fully
registered form without coupons in denominations of $1,000 and any integral
multiples thereof, unless otherwise specified pursuant to a Resolution of the
Board of Directors. The CHR Debentures were issued in book-entry form only and
are held through participants in the Depository Trust Company.
Optional Redemption of CHR Debentures
On or after August 1, 2087, the CHR Debentures may be redeemed prior to
maturity, as a whole or in part, at the option of Chrysler (a "Late Optional
Redemption"), at any time, at a redemption price equal to 100% of the principal
amount being redeemed and together with accrued interest to the date of
redemption (a "Late Optional Redemption Date"). In addition, prior to August 1,
2087, the CHR Debentures may be redeemed, as a whole or in part at any time, at
the option of Chrysler (an "Early Optional Redemption"; as used herein, the
term "Optional Redemption" shall refer to either a Late Optional Redemption or
an Early Optional Redemption, as the context requires), 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 (as
defined below) of principal and interest thereon discounted to the date of
redemption (an "Early Optional Redemption Date"; as used herein, the term
"Optional Redemption Date" shall refer to either a Late Optional Redemption
Date or an Early Optional Redemption Date, as the context requires) on a
semiannual basis (assuming a 360-day year consisting of twelve 30-day months)
at the Treasury Rate (as defined below) plus 20 basis points together, in
either case, with accrued interest thereon to the date of redemption. The
"Treasury Rate" means, with respect to any redemption date, the rate per annum
equal to the semiannual equivalent yield to maturity (computed as of the second
business day immediately preceding such redemption date) of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (as defined
below) (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price (as defined below) for such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker (as defined below) 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 Debentures. "Independent Investment
Banker" means one of the Reference Treasury Dealers (as defined below)
appointed by Chrysler.
"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, (A) the
average of the Reference Treasury Dealer Quotations (as defined below) for such
redemption date after excluding the highest and lowest such Reference Treasury
Dealer Quotations or, (B) if the Trustee obtains fewer than four such Reference
Treasury Dealer Quotations, the average of all such Quotations. "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., on the third business day
preceding such redemption date.
"Reference Treasury Dealer" means each of Salomon Brothers Inc, Chase
Securities Inc., Credit Suisse First Boston Corporation, Goldman, Sachs & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities
Inc., Morgan Stanley & Co. Incorporated and their respective successors;
provided, however, that if any of the foregoing shall cease to be a primary
U.S. Government securities dealer in New York City (a "Primary Treasury
Dealer"), the Company shall substitute therefor another nationally recognized
investment banking firm that is a Primary Treasury Dealer.
"Remaining Scheduled Payments" means, with respect to each CHR Debenture
to be redeemed, the remaining scheduled payments of the principal thereof and
interest thereon that would be due after the related redemption date but for
such redemption; provided, however, that, if such redemption date is not an
interest payment date with respect to such CHR Debenture, the amount of the
next succeeding scheduled interest payment thereon will be reduced by the
amount of interest accrued thereon to such redemption date.
In the event of an Optional Redemption, the Certificates will be redeemed
on the Optional Redemption Date. In such event, the Trustee will distribute
the payment received on the CHR Debentures on the Optional Redemption Date, to
the holders, if any, 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 CHR Debentures after August 1, 2018, discounted
semiannually in each case at a rate of 7.40% per annum (such ratio being the
"Distribution Ratio") to the Optional Redemption Date. Such ratio will be
calculated by the Calculation Agent. In the case of an Optional Redemption of
less than all of the CHR Debentures, the Trustee will distribute the payment
received on the CHR Debentures on the Optional Redemption Date to the holders,
if any, 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 CHR Debentures 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 Base
Trust Agreement) with respect to, the outstanding Amortizing Class
Certificates, if any, based on the remaining CHR Debentures after such
redemption.
Maturity Shortening Redemption
The CHR Debentures Prospectus Supplement states as follows: Chrysler
intends to deduct interest paid on the CHR Debentures for U.S. federal income
tax purposes. However, there have been proposed tax law changes that, among
other things, would have prohibited an issuer from deducting interest payments
on debt instruments with a maturity of more than 40 years. While none of these
proposals have become law, there can be no assurance that similar legislation
affecting Chrysler's ability to deduct interest paid on the CHR Debentures
will not be enacted in the future or that such legislation would not have a
retroactive effective date.
The CHR Debentures Prospectus Supplement states as follows: Upon the
occurrence of a tax event (as defined below in "Description of the New
Certificates--Maturity Shortening Redemption"), Chrysler will have the right
to shorten the maturity of the CHR Debentures to the extent required, in the
opinion of a nationally recognized independent tax counsel experienced in such
matters, so that, after such shortening of the maturity, interest paid on the
CHR Debentures will be deductible for U.S. federal income tax purposes or, if
such counsel is unable to opine definitively as to such a minimum period, the
minimum extent so required as determined in good faith by the Board of
Directors of Chrysler, after receipt of an opinion of such counsel regarding
the applicable legal standards. There can be no assurance that Chrysler would
not exercise its right to shorten the maturity of the CHR Debentures upon the
occurrence of such a tax event or as to the period by which such maturity
would be shortened. In the event that Chrysler elects to exercise its right to
shorten the maturity of the CHR Debentures on the occurrence of a tax event,
Chrysler will mail a notice of shortened maturity to each holder of the CHR
Debentures by first-class mail not more than 60 days after the occurrence of
such tax event, stating the new maturity date of the CHR Debentures. Such
notice shall be effective immediately upon mailing.
The CHR Debentures Prospectus Supplement states as follows: Chrysler
believes that the CHR Debentures constitute indebtedness for U.S. federal
income tax purposes under current law and that the shortening of the maturity
of the CHR Debentures will not be a taxable event to holders. Prospective
investors should be aware, however, that the shortening of the maturity of the
CHR Debentures will be a taxable event to holders if the CHR Debentures are
treated as equity for purposes of U.S. federal income taxation before the
maturity is shortened, assuming that the CHR Debentures of shortened maturity
are treated as debt for such purposes.
The information under this caption is derived solely from the description
of the CHR Debentures contained in the CHR Debentures Prospectus and the CHR
Debentures Prospectus Supplement. An investor may wish to read this Prospectus
in conjunction with (i) the CHR Debentures Prospectus, (ii) the CHR Debentures
Prospectus Supplement and (iii) the CHR Debentures Registration Statement, of
which the CHR Debentures Prospectus is a part. This Prospectus relates only to
the New Certificates offered hereby and does not relate to an offering of the
CHR Debentures. No representation is made by the Trust, the Trustee or PSSA as
to the accuracy or completeness of the information contained in the CHR
Debentures Prospectus, the CHR Debentures Prospectus Supplement or the CHR
Debentures Registration Statement.
CHR Debentures Indenture
The CHR Debentures were issued under the CHR Debentures Indenture, dated
March 1, 1985, between Chrysler and Manufacturers Hanover Trust Company, as
Trustee.
Modification, Amendment and Waiver
The CHR Debentures Prospectus states as follows: The CHR Debentures
Indenture permits Chrysler and the Trustee, with the consent of the holders of
66 2/3% in principal amount of each series of debt securities at the time
outstanding thereunder and affected thereby, to execute supplemental indentures
adding any provisions to or changing or eliminating any of the provisions of
the CHR Debentures Indenture or modifying the rights of the holders of debt
securities of each such series, except that no such supplemental indenture may,
without the consent of the holders of each affected series of debt securities,
(a) change the maturity of debt securities of such series or any installment of
interest thereon or reduce the principal amount thereof or premium, if any, or
interest thereon, or (b) reduce the aforesaid percentage of debt securities of
such series, the consent of the holders of which is required for any such
supplemental indenture. Compliance by Chrysler with certain restrictive
covenants may be waived in particular cases with the consent of the holders of
66 2/3% in principal amount of the outstanding debt securities of each series
affected thereby.
The information under this caption is derived solely from the description
of the CHR Debentures contained in the CHR Debentures Prospectus and the CHR
Debentures Prospectus Supplement. An investor may wish to read this Prospectus
in conjunction with (i) the CHR Debentures Prospectus, (ii) the CHR Debentures
Prospectus Supplement and (iii) the CHR Debentures Registration Statement, of
which the CHR Debentures Prospectus is a part. This Prospectus relates only to
the New Certificates offered hereby and does not relate to an offering of the
CHR Debentures. No representation is made by the Trust, the Trustee or PSSA as
to the accuracy or completeness of the information contained in the CHR
Debentures Prospectus, the CHR Debentures Prospectus Supplement or the CHR
Debentures Registration Statement.
Chrysler
This Prospectus does not provide information with respect to Chrysler. No
investigation has been made of the financial condition or creditworthiness of
Chrysler or any of its subsidiaries, of the potential affects of the Chrysler
and Daimler-Benz AG merger as reported pursuant to the Form 8-K,
dated May 7, 1998, filed by Chrysler with the Commission, or of the ratings on
the CHR Debentures, in connection with the issuance of the New Certificates.
PSSA is not an affiliate of Chrysler. Prospective purchasers of the New
Certificates should consider carefully Chrysler's financial condition and its
ability to make payments in respect of the CHR Debentures. An investor in the
Certificates should obtain and evaluate the same information concerning
Chrysler as it would if it were investing directly in the CHR Debentures. All
information contained in this Prospectus regarding Chrysler is derived from
the CHR Debentures Prospectus. Neither PSSA nor the Trust nor any of their
respective affiliates has participated in the preparation of the CHR
Debentures Prospectus, CHR Debentures Prospectus Supplement or the CHR
Debentures Registration Statement, and takes no responsibility for the
accuracy or completeness of the information provided therein.
DaimlerChrysler, the successor to Chrysler pursuant to Chrysler's merger
with Daimler-Benz AG, presently is 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 also will be available for inspection at
the offices of the New York Stock Exchange at 20 Broad Street, New York, New
York, 10005. 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 Chrysler or DaimlerChrysler with the Commission or the
New York Stock Exchange or has made any investigation with respect to the
information contained therein.
If Chrysler or its successor ceases to be a reporting company under the
Exchange Act, then an In-Kind Distribution will be made. See "Description of
the New Certificates--Distribution of CHR Debentures on Payment Default,
Acceleration or Change in Reporting Status." In that event, the Trust no
longer would provide information regarding the CHR Debentures to the
Certificate holders.
The Trust will have no assets other than the CHR Debentures 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 CHR
Debentures from Chrysler.
Ratings
The CHR Debentures have been rated "A2" and "A" by Moody's Investors
Service, Inc. and Standard & Poor's Rating Services, respectively. The New
Certificates will be rated "A2" by Moody's Investors Service, Inc. and "A" by
Standard & Poor's Rating Services at initial issuance. Any rating of the CHR
Debentures or the New Certificates is not a recommendation to purchase, hold
or sell the CHR Debentures or 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 Chrysler
From time to time, Prudential Securities may be engaged by Chrysler 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 Chrysler.
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 June 9, 1998, between PSSA and Prudential Securities, their respective
assignees became entitled to the benefits of the Registration Rights Agreement
attached as an exhibit hereto.
Under the Registration Rights Agreement, except in certain circumstances,
PSSA is obligated 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 June
9, 1998, the date the Old Certificates were issued and (ii) use its reasonable
best efforts to cause the Registration Statement to become effective within a
certain specified period thereafter. In addition, the Registration Rights
Agreement provides that the Trust shall 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 April 21, 1999 (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 on or about
March 20, 1999. 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 (the "Exchange Offer No-Action
Letters"), legal counsel has advised 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 or the Trust 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 or the Trust (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 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) 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
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 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 within
120 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.
Expiration Date; Extensions; Amendments; Termination
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
April 21, 1999 (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 promptly will
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 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 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 also may 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.
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, then 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 be, in the opinion of counsel for PSSA, 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
tendered properly 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 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, then such unaccepted or unexchanged 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, then a tender may be
effected if (i) the tender is made by or 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 the
Expiration Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent prior to 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 also must 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, in its sole discretion, whose determination shall be final and
binding on all parties. Neither PSSA, the Trust, any affiliates or assigns of
PSSA or the Trust, the Exchange Agent nor any other person shall be under any
duty to give any notification of any irregularities in any notice of
withdrawal or incur any liability for failure to give any such notification.
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 tendered again
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 (i) any change in law, or applicable
interpretations thereof by the Commission or (ii) any stop order issued by the
Commission or any state securities authority suspending the effectiveness of
the Registration Statement, 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 or the Trust (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 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 Trustee 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 Hand or Overnight Courier: By Registered or Certified Mail:
The Bank of New York The Bank of New York
101 Barclay Street 101 Barclay Street - 7 East
Corporate Trust Services Window New York, N.Y. 10286
New York, N.Y. 10286 Attn: Corporate Trust Operations
Attn: Corporate Trust Operations Certmaster Section
Certmaster Section
Telephone: (212) 815-2781
Facsimile: (212) 815-3518
Delivery to other than the above address or facsimile number will not
constitute a valid delivery.
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 also may 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, then 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 U.S. 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 CHR Debentures, (ii) all
payments on or collections in respect of the CHR Debentures received on or
after June 9, 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 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 do not represent an interest
in or obligation of PSSA, Chrysler, the CHR Debentures Indenture Trustee, the
Trustee, Prudential Securities or any affiliate of any of the foregoing.
Subject to the occurrence of an Optional Redemption, a Maturity
Shortening Redemption or an In-Kind Distribution, distribution of a Fixed
Payment on the Amortizing Class Certificates will be made semiannually on each
Scheduled Distribution Date (or if such date is not a Distribution Business
Day (as defined below), on the next succeeding Distribution Business Day) up
to and including August 1, 2018 in an amount equal to the amount of interest
due and received on the CHR Debentures on such Scheduled Distribution Date.
The amount of interest and principal (the "Total Cashflow") due on the CHR
Debentures on each Scheduled Distribution Date is the product of (i) 7.40%,
(ii) 180 divided by 360 and (iii) $57,830,000 (less the principal amount of
any CHR Debentures redeemed in part upon an Optional Redemption or exchanged
for Certificates as described herein). A "Distribution Business Day" is the
first New York Business Day (as defined below) following the day on which
payments on the CHR Debentures are due. A "New York Business Day" means any
day other than a Saturday, Sunday or legal holiday on which banking
institutions or trust companies in New York City are authorized or obligated
by law, regulation or executive order to be closed.
The aggregate purchase price of Residual Class Certificates represents
25.650% of the face amount of the CHR Debentures. The Residual Class
Certificates will accrete principal at the rate of 6.870% per annum, to a
principal amount of $57,830,000 on August 1, 2018 (assuming that all are still
outstanding on such date). Subject to the occurrence of an Optional
Redemption, a Maturity Shortening Redemption or an In-Kind Distribution, on
each Scheduled Distribution Date commencing February 1, 2019 through August 1,
2097, the Residual Class Certificates will receive, from distributions of
interest on the CHR Debentures, if any, a distribution of interest on the then
outstanding principal amount of the Residual Class Certificates at a rate of
7.40% per annum. Subject to the occurrence of an Optional Redemption, a
Maturity Shortening Redemption or an In-Kind Distribution, on August 1, 2097
the Residual Class Certificates will receive, from distributions of principal
on the CHR Debentures, if any, a return of principal on the Residual Class
Certificates. The Residual Class Certificates will not be entitled to any
allocation of interest accrued under the CHR Debentures until February 1,
2019, including interest accrued on or before August 1, 2018 which is unpaid
as of February 1, 2019.
The aggregate "Certificate Principal Balance" of the Amortizing Class
Certificates initially will be $48,096,190. On any Scheduled Distribution
Date, the aggregate Certificate Principal Balance will be reduced by the
positive difference between (i) the semiannual Fixed Payment made on such
Scheduled Distribution Date and (ii) interest accrued on the aggregate
Certificate Principal Balance at the Yield to Amortizing Class Final
Distribution Date from the prior Scheduled Distribution Date (or, in the case
of the initial Distribution Date, such interest accrued from February 1,
1998). The Certificate Principal Balance of any Amortizing Class Certificate
will represent a pro rata portion of the then-current aggregate Certificate
Principal Balance of all outstanding Amortizing Class Certificates. In the
case of an Optional Redemption of less than all of the CHR Debentures, upon
the distribution of the proceeds from such Optional Redemption, the
Certificate Principal Balance of each Amortizing Class Certificate shall be
reduced by the same percentage as the percentage of CHR Debentures 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 Base
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
Distributions by the Trustee pursuant to the terms of the Certificates
and the Base Trust Agreement shall be made, subject to timely receipt of
payments on the CHR Debentures and, in the case of cash distributions, solely
to the extent of available funds, as follows:
(i) with respect to the Amortizing Class
Certificates, on each Scheduled Distribution Date through
and including August 1, 2018 and
(ii) with respect to the Residual Class
Certificates, on each Scheduled Distribution Date commencing
February 1, 2019 through and including August 1, 2097
(except as provided below);
subject, in each case, to the provisions discussed under "--Optional
Redemption of CHR Debentures," "--Maturity Shortening Redemption" and
"--Distribution of CHR Debentures on Payment Default, Acceleration or Change
in Reporting Status."
"Available Funds" means, as of any Scheduled Distribution Date, the
aggregate amount received on or with respect to the CHR Debentures during the
period from the preceding Scheduled Distribution Date up to and including such
Scheduled Distribution Date (each such period, a "Collection Period"), and
deposited in the Collection Account and available for distribution on such
Scheduled Distribution Date.
If a payment with respect to the CHR Debentures is made to the Trustee
after the CHR Debentures Payment Date on which such payment was due, then the
Trustee will distribute any such amounts received on the first New York
Business Day thereafter as if such funds had constituted Available Funds on
the Scheduled Distribution Date 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
Certificates or be owed to the holders of the Certificates in respect of such
distribution.
All amounts received on or with respect to the CHR Debentures shall be
held uninvested by the Trustee. On August 1, 2097, the Trustee will distribute
the remaining Available Funds to the holders of Residual Class Certificates,
unless an Optional Redemption, a Maturity Shortening Redemption, an In-Kind
Distribution or certain circumstances of non-payment by Chrysler has occurred
on or prior to such date.
In the event that PSSA is required to repurchase the CHR Debentures as a
result of a breach of its representation and warranty as to its title to the
CHR Debentures immediately prior to the transfer thereof to the Trustee, the
Trustee will distribute the repurchase price received from PSSA to the holders
of the Amortizing Class Certificates and the Residual Class Certificates on
the basis of the distribution ratio as of the date of such repurchase. Such
ratio will be calculated by the "Calculation Agent," and such distribution
will be made fifteen days after receipt of the repurchase price. See
"--Optional Redemption of CHR Debentures" for a definition of the distribution
ratio.
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.
Optional Redemption of CHR Debentures
On or after August 1, 2087, the CHR Debentures may be redeemed prior to
maturity, as a whole or in part, at the option of Chrysler (a "Late Optional
Redemption"), at any time, at a redemption price equal to 100% of the
principal amount being redeemed and together with accrued interest to the date
of redemption (a "Late Optional Redemption Date"). In addition, prior to
August 1, 2087, the CHR Debentures may be redeemed, as a whole or in part at
any time, at the option of Chrysler (an "Early Optional Redemption"; as used
herein, the term "Optional Redemption" shall refer to either a Late Optional
Redemption or an Early Optional Redemption, as the context requires), 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 "Early Optional Redemption Date"; as used herein, the term
"Optional Redemption Date" shall refer to either a Late Optional Redemption
Date or an Early Optional Redemption Date, as the context requires) on a
semiannual basis (assuming a 360-day year consisting of twelve 30-day months)
at the Treasury Rate plus 20 basis points together, in either case, with
accrued interest thereon to the date of redemption. The "Treasury Rate" means,
with respect to any redemption date, the rate per annum equal to the
semiannual equivalent yield to maturity (computed as of the second business
day immediately preceding such redemption date) of the Comparable Treasury
Issue, assuming a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
In the event of an Optional Redemption, the Certificates will be redeemed
on the Optional Redemption Date. In such event, the Trustee will distribute
the payment received on the CHR Debentures on the Optional Redemption Date, to
the holders, if any, 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 CHR Debentures after August 1, 2018, discounted
semiannually in each case at a rate of 7.40% per annum (such ratio being the
"Distribution Ratio") to the Optional Redemption Date. Such ratio will be
calculated by the Calculation Agent. In the case of an Optional Redemption of
less than all of the CHR Debentures, the Trustee will distribute the payment
received on the CHR Debentures on the Optional Redemption Date to the holders,
if any, 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 CHR Debentures 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 Base
Trust Agreement) with respect to, the outstanding Amortizing Class
Certificates, if any, based on the remaining CHR Debentures after such
redemption. A table showing the percentages of such distribution that would be
distributable to the Amortizing Class Certificates and Residual Class
Certificates, respectively, assuming that such a distribution date occurs an a
Scheduled Distribution Date, is attached hereto as Appendix A.
Maturity Shortening Redemption
Upon the occurrence of a tax event (as defined below) with respect to the
CHR Debentures, Chrysler has the right to shorten the maturity of the CHR
Debentures (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 CHR Debentures will be deductible by Chrysler
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 Chrysler after
receipt of an opinion of such counsel regarding the applicable legal
standards. Chrysler also has the right to redeem the CHR Debentures in whole
(but not in part), on not less than 30 nor more than 60 days' notice, if a tax
event occurs and a nationally recognized independent tax counsel opines that
there would be, notwithstanding any shortening of the maturity of the CHR
Debentures, more than an insubstantial risk that interest paid by Chrysler on
the CHR Debentures would not be deductible in whole (or in part) by Chrysler
for U.S. federal income tax purposes. The redemption price available to
Chrysler would be equal to the greater of (i) 100% of the principal amount of
the CHR Debentures, plus accrued interest to the date of redemption or (ii)
the sum of the present values of the Remaining Scheduled Payments of principal
and interest thereon discounted to the date of redemption on a semiannual
basis (assuming a 360-day year consisting of twelve 30-day months) at the
Treasury Rate plus 35 basis points, plus accrued interest to the date of
redemption. Chrysler must exercise its redemption right within 90 days
following the tax event. Any such new maturity date is referred to herein as
the "Shortened Maturity Date." If the Shortened Maturity Date is on or prior
to August 1, 2018, (a) the Amortizing Class Certificates and the Residual
Class Certificates will be redeemed on the Shortened Maturity Date and (b) the
Trustee will distribute the payment received on the CHR Debentures 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. If the Shortened Maturity Date is
after August 1, 2018, the Residual Class Certificates would be redeemed on the
Shortened Maturity Date and the Trustee would distribute the payments received
on the CHR Debentures on the Shortened Maturity Date to the holders of such
Certificates. Either such redemption will be referred to herein as a "Maturity
Shortening 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 distribution
occurs on a Scheduled Distribution Date, is attached hereto as Appendix A.
A "Tax Event" means that Chrysler 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, notice or
announcement, including any notice or announcement of intent to adopt or
promulgate any ruling, regulatory procedure or regulation (any of the
foregoing, an "Administrative or Judicial Action") or (c) any amendment to,
clarification of, or change in any official position with respect to, or any
interpretation of, 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 July 15, 1997,
there is more than an insubstantial increase in the risk that interest paid by
Chrysler on the CHR Debentures is not, or will not be, deductible, in whole or
in part, by Chrysler for U.S. federal income tax purposes.
Distribution of CHR Debentures on Payment Default, Acceleration or
Change in Reporting Status
If a Payment Default or an Acceleration with respect to the CHR
Debentures, or a Change in Reporting Status with respect to Chrysler, occurs,
then the Trustee will make an In-Kind Distribution of the remaining CHR
Debentures to the holders of the Residual Class Certificates and, if still
outstanding, the Amortizing Class Certificates. A "Payment Default" means a
default in the payment of any amount due on the CHR Debentures from Chrysler
after the same becomes due and payable (and the expiration of any applicable
grace period on the CHR Debentures), and such default continues unremedied
beyond the period specified in the CHR Debentures Indenture or other
authorizing document for the CHR Debentures (or if no such period is
specified, three days). An "Acceleration" means the acceleration of the
maturity of the CHR Debentures following the occurrence of any default on the
CHR Debentures other than a Payment Default, notwithstanding any subsequent
recission and annulment of such Acceleration by the requisite holders of the
entire series of CHR Debentures. A "Change in Reporting Status" means that
Chrysler is no longer subject to the informational requirements of the
Exchange Act. The In-Kind Distribution will be made to the holders of Residual
Class Certificates and, if still outstanding, the Amortizing Class
Certificates on the basis of the Distribution Ratio as of such Payment
Default, Acceleration or Change in Reporting Status. Such ratio will be
calculated by the Calculation Agent. To the extent necessary to avoid a
distribution of CHR Debentures in unauthorized denominations, the Trustee will
cause the liquidation in a commercially reasonable manner of such CHR
Debentures 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 CHR Debentures. 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. If a Payment Default, Acceleration or Change in Reporting
Status occurs after August 1, 2018, then the Trustee will make an In-Kind
Distribution to the holders of the Residual Class Certificates.
Exchange of Certificates for CHR Debentures
Commencing August 1, 1999, any holder of both Amortizing Class
Certificates and Residual Class Certificates (or, if on or after August 1,
2018, any holder of 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, elect to exchange Certificates
of both classes for CHR Debentures (or on or after August 1, 2018, of Residual
Class Certificates) on such Scheduled Distribution Date (the "Exchange Date").
In order to exercise such right, the holder shall tender to the Trustee on the
Exchange Date immediately succeeding such notice (i) if the Exchange Date is
prior to August 1, 2018, 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 or (ii) if the Exchange Date is
on or after August 1, 2018, Residual Class Certificates evidencing at least
10% of the aggregate Certificate Principal Balance of all Residual Class
Certificates then outstanding.
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 CHR Debentures comprising the
same percentage of the CHR Debentures 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 CHR
Debentures 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, 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 CHR Debentures 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 Residual Class Certificates
Each registered holder of a Residual Class 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 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. 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 (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 previously delivered to the
Trustee, it will promptly deliver a new certification or a current 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.
No Further Rule 3a-7 Limitation
As a result of the rating assigned to the New Certificates, they will not
be subject to certain restrictions on transfer that were originally applicable
to the Old Certificates pursuant to Rule 3a-7 under the Investment Company Act
of 1940, as amended (the "Investment Company Act").
Description of the Base Trust Agreement
General
The following summary of certain provisions of the Base 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 Base
Trust Agreement incorporated by reference hereto as described under "Where You
Can Find More Information." Article and section references in parentheses
below are to articles and sections in the Base Trust Agreement. Wherever
particular sections or defined terms of the Base 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 Base Trust Agreement. The Trustee's offices are
located at 101 Barclay Street, 12E, New York, New York 10286,
Attention--Corporate Trust.
The Base 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 Base Trust Agreement or the Trust
Certificates or the performance of the Trustee's duties under the Base Trust
Agreement, other than any loss, liability or expense (i) that constitutes a
specific liability of the Trustee under the Base Trust Agreement or (ii)
incurred by reason of willful misfeasance, bad faith or negligence in the
performance of the Trustee's duties under the Base Trust Agreement or as a
result of a breach, or by reason of reckless disregard, of the Trustee's
obligations and duties under the Base Trust Agreement. Pursuant to the Base
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 Base Trust Agreement, the New Certificates or the CHR Debentures or any
related document. The Trustee is required to perform only those duties
specifically required under the Base 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 Base
Trust Agreement.
The Trustee is unaffiliated with, but may have normal banking
relationships with, PSSA and its affiliates.
The Base Trust Agreement and, upon consummation of the Exchange Offer,
the provisions of the Trust Indenture Act of 1939, as amended (the "Indenture
Act"), 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 in the "Indenture Act") it must
eliminate such conflict or resign.
Events 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 CHR Debentures after August 1, 2018 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 7.40% 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 Base Trust Agreement necessary to consent to such
modification or amendment is 100%.
Voting with Respect to the CHR Debentures; Waivers
The Trustee, as the holder of the CHR Debentures, has the right to vote
and give consents and waivers in respect of the CHR Debentures as permitted by
the CHR Debentures Indenture with respect thereto and except as otherwise
limited by the Base Trust Agreement. In the event that the Trustee receives a
request from Chrysler for its consent to any amendment, modification or waiver
of the CHR Debentures or any document relating thereto, or receives any other
solicitation for any action with respect to the CHR Debentures including a
tender offer for the CHR Debentures by Chrysler (an "Issuer Tender Offer"),
the Trustee shall mail a notice of such proposed amendment, modification,
waiver or solicitation to each holder of Trust Certificates of record as of
such date. The Trustee shall request instructions from the holders of Trust
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 Trust Certificates) as the Trust
Certificates of the Trust were actually voted or not voted by the holders of
Trust 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 CHR Debentures, including, without limitation,
any demand to accelerate the CHR Debentures, (ii) which would result in the
exchange or substitution of any of the CHR Debentures pursuant to a plan for
the refunding or refinancing of such CHR Debentures, (iii) which would alter
the currency in which any payment is required to be made on the CHR
Debentures, (iv) which would change the voting rights granted to holders of
the CHR Debentures under the CHR Debentures Indenture or (v) which would
impair in any material respect any rights of the Trustee or holders of the CHR
Debentures to enforce remedies against Chrysler under the CHR Debentures
Indenture, except in each case with the unanimous consent of the holders of
Amortizing Class Certificates and Residual Class Certificates, or vote in
favor of an Issuer Tender Offer except with the consent of the holders of 66
2/3% in interest of Certificates then outstanding (as reflected in the
Distribution Ratio) and, in the event that any such Issuer Tender Offer shall
not include the payment of all accrued interest and principal in full on the
CHR Debentures subject to such Issuer Tender Offer, unless such Issuer Tender
Offer satisfies the Rating Agency Condition (as defined in the Base Trust
Agreement), 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 U.S. federal income tax
purpose. The Trustee shall have no liability for any failure to act resulting
from holders of Trust Certificates' late return of, or failure to return,
directions requested by the Trustee from the holders of Trust Certificates.
Modification and Amendment
The Base 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 therein, (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 Base 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 Base Trust Agreement, (vi) to comply with any
requirements imposed by the Internal Revenue Code of 1986 (the "Code"), (vii)
to evidence and provide for the acceptance of appointment hereunder of a
Trustee other than The Bank of New York as Trustee for a series of
certificates, and to add to or change any of the provisions of the Base Trust
Agreement as shall be necessary to provide for or facilitate the
administration of the separate trusts thereunder by more than one trustee,
pursuant to the requirements of the Certificates, (viii) to evidence and
provide for the acceptance of appointment hereunder by a successor trustee
with respect to the certificates of one or more series or to add or change any
of the provisions of the Base Trust Agreement as shall be necessary to provide
for or facilitate the administration of the separate trusts thereunder or (ix)
to provide for the issuance of new certificates issued pursuant to an optional
exchange; provided that (a) any such amendment described in (i) through (ix),
but not (vii), will not, as evidenced by an Opinion of Counsel, cause the
Trust to fail to qualify as a grantor trust for U.S. federal income tax
purposes or result in a sale or exchange of any Certificate for tax purposes
and (b) the Trustee has received (1) an officer's 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 Base Trust
Agreement also may 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 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 Base 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
U.S. federal income tax purposes.
No such modification or amendment, however, may (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 Base 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 CHR Debentures and the current interest rate thereon at the close of
business on such Distribution Date; (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, (v) any information reasonably requested by a holder to enable such
holder to prepare its tax returns, provided that such information is
reasonably attainable in the requested form and (vi) as to any series (or any
class within such series) for which Credit Support has been obtained, the
amount or notional amount of coverage of each element of Credit Support (and
rating, if any, thereof) included therein as of the close of business on such
Distribution Date.
In the case of information furnished pursuant to subclauses (i) and (iii)
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. 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 (iii) 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, then 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 (i) receipt and distribution to the
holders of Certificates entitled thereto of all amounts owed under the Base
Trust Agreement in respect of the CHR Debentures, (ii) the occurrence of any
Shortened Maturity Redemption, (iii) the occurrence of any Optional Redemption
of all CHR Debentures then held by the Trust, (iv) the occurrence of an
In-Kind Distribution of all CHR Debentures then held by the Trust or (v) the
delivery of the last remaining CHR Debentures then held by the Trust, to
holders in exchange for certificates.
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 Base 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 Base Trust Agreement will be subject to the provisions
of the Indenture Act that are required to be part of the Base Trust Agreement
and, to the extent applicable, will be governed by such provisions.
CERTAIN 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 or partnership created or organized in or under the laws of the
United States or any state thereof (including the District of Columbia) (other
than a partnership that is not treated as a United States person, the term
"United States person" being used herein with the meaning given to such term
in the Code and the regulations issued thereunder), 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 United States persons have the
authority to control all of the trust's substantial decisions. To the extent
provided in Treasury regulations, certain trusts in existence prior to August
20, 1996 and treated as United States persons prior to such date that elect to
be treated as United States persons are also considered U.S. persons.
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 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 Brown & Wood LLP, 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 or loss 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 taxable
as a corporation) in the opinion of Brown & Wood LLP. 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, then 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, nor are
any 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 CHR Debentures 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
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 CHR Debentures Prospectus indicates that the CHR Debentures
underlying the Trust Certificates were sold based on Chrysler's belief that
they constitute indebtedness of Chrysler for U.S. federal income tax purposes.
The following discussion is based on the assumption that the CHR Debentures
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 CHR Debentures 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 (or may under a literal reading of the Code be required to
treat each payment as a separate debt instrument each with its own issue price
based on its relative fair market value) providing for payments equal to the
payments on the CHR Debentures 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 generally will 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 Maturity Shortening as a result
of a Tax Event, and the resulting distribution to Amortizing Class Certificate
holders of a portion of the payment received by the Trust on the Shortened
Maturity Date, should be taken into account for purposes of determining the
taxation of holders at, and prior to, the Shortened Maturity 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 Maturity Shortening should not affect the U.S. federal income
tax consequences to holders prior to the Maturity Shortening. Under this
treatment, if the maturity of the CHR Debentures was shortened as a result of
a Tax Event, 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 Maturity Shortening. There can be no assurance,
however, that the IRS will not take a different position on the effect of a
potential Maturity Shortening, 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
Maturity Shortening.
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 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 CHR Debentures
The distribution of a principal amount of CHR Debentures comprising a
specified percentage of the CHR Debentures 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, of each such class
will not be subject to additional taxation. The treatment of a holder that
exchanges such Certificates for such CHR Debentures 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. As a consequence, a holder, and
any subsequent purchaser from such holder, could be required to continue to
report income, gain or loss on the CHR Debentures so acquired in the same
manner as if it still held the Certificates surrendered in exchange for the
CHR Debentures.
Sale or Exchange of Trust Certificates or the CHR Debentures
The tax basis of a holder of a Trust Certificate in a Trust Certificate
generally will equal the cost of the Trust Certificate increased by any
amounts includible in income as OID, and reduced by any payments made on the
Trust Certificate.
Upon the sale or exchange of a Trust Certificate (other than the
Exchange), 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 Trust Certificate. Gain or loss recognized by an
individual holder on the sale or exchange of a Trust 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 Trust Certificate for more than one
year at the time of the disposition. Long-term capital gains recognized by an
individual holder generally are subject to reduced maximum tax rates.
A holder will recognize gain or loss on any sale by the Trust of the CHR
Debentures, including in connection with an In-Kind Distribution or pursuant to
an Optional Redemption of all or part of the CHR Debentures, 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 Trust
Certificate. In the event of an Optional Redemption of less than all of the CHR
Debentures, a holder will calculate gain or loss by assuming that the CHR
Debentures 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 CHR Debentures, determined immediately before
the partial Optional Redemption, will be allocated between those two
instruments based on the portion of the CHR Debentures 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 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 CHR Debentures 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.
Although denominated as debentures, the Trust Assets exhibit significant
equity features and there can be no assurances that the IRS will agree with
the characterization of the Trust Assets as debt for U.S. federal income tax
purposes. If the Trust Assets were treated as equity, the "interest" payments
on them would be considered dividends to the extent of Chrysler's earnings and
profits as determined under federal income tax principles. To the extent such
payments on the Trust Assets exceed Chrysler's earnings and profits, such
portion would be reduced by a corresponding amount. Such reduction in basis
could cause the recognition of gain, or increase the amount of gain otherwise
recognized, on the sale, disposition or redemption of the Trust Assets or the
Certificates. In addition, if "interest" payments were treated as equity,
payments made to a holder that was not a U.S. person would be subject to 30
percent withholding tax (unless (i) such rate were reduced by treaty and such
non-U.S. person provides an appropriate statement (e.g., a Form 1001) to that
effect or (ii) such payment is effectively connected to the conduct of a trade
or business by the non-U.S. person in the United States and such non-U.S.
person provides an appropriate statement to that effect (e.g., a Form 4224)).
Finally, assuming the Trust were treated as a grantor trust and the Trust
Assets were treated as equity, amounts accrued on the Certificates would be
treated as stripped dividends/ stripped preferred stock under section 305(e)
of the Code. Potential investors in Certificates should consult their tax
advisors as to how section 305(e) applies in this case.
Adverse tax consequences also might 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 a Shortened Maturity Date. For example, the
IRS might treat the Amortizing Class Certificate as a right to payments on the
CHR Debentures 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, a Maturity Shortening event 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 CHR Debentures if the holder provides an
appropriate statement (generally an 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 and if the holder is not a "10-percent
shareholder" or related "controlled foreign corporation" with respect to
Chrysler. 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 CHR Debentures at regular rates
applicable to U.S. taxpayers.
A holder that is not a U.S. person also may 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
U.S. 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 tax liability, or upon application by the holder to the IRS, would be
refunded by the IRS to the extent it exceeds such liability.
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and Section 4975 of the Code, prohibit pension, profit
sharing or other employee benefit or other plans (such as individual
retirement accounts) that are subject to Title I of ERISA or to Section 4975
of the Code (collectively, the "Plans") from engaging in certain transactions
involving "plan assets" with any person that is a "party in interest" under
ERISA or "disqualified person" under the Code with respect to the Plans. A
violation of these "prohibited transaction" rules may generate excise tax and
other liabilities under ERISA and the Code for such persons.
ERISA also imposes certain duties on persons who are fiduciaries of Plans
subject to ERISA, including the requirements of investment prudence and
diversification, and the requirement that such a Plan's investments be made in
accordance with the documents governing the Plan. Under ERISA, any person who
exercises any authority or control with respect to the management or
disposition of the assets of a Plan is considered to be a fiduciary of such
Plan.
Pursuant to Department of Labor Regulation ss.2510.3-101 (the "Plan
Assets Regulation"), in general, when a Plan acquires an equity interest in an
entity such as the Trust, then, unless certain exceptions apply, the Plan's
assets include both the equity interest and an undivided interest in each of
the underlying assets of the entity. In general, an "equity interest" is
defined under the Plan Assets Regulation as any interest in an entity other
than an instrument which is treated as indebtedness under applicable local law
and which has no substantial equity features. It is anticipated that the New
Certificates, like the Old Certificates, will be considered equity interests
in the Trust for purposes of the Plan Assets Regulation, and that the assets
of the Trust may therefore constitute plan assets if such Certificates are
acquired by Plans. In such event, the fiduciary and prohibited transaction
restrictions of ERISA and section 4975 of the Code would apply to transactions
involving the assets of the Trust.
In addition, Plan fiduciaries must determine whether the acquisition and
holding of New Certificates would result in prohibited transactions if Plans
that acquired the New Certificates were deemed to own an interest in the
underlying assets of the Trust under the rules discussed above. Accordingly, a
Plan fiduciary considering an investment in the Trust should consider whether
Chrysler, the Trustee, or any of their affiliates is a party in interest or
disqualified person with respect to the Plan. Depending on the relevant facts
and circumstances, certain prohibited transaction exemptions may apply to the
acquisition or holding of the New Certificates--for example, Prohibited
Transaction Class Exemption ("PTE") 96-23, which exempts certain transactions
effected on behalf of a Plan by an "in-house asset manager"; PTE 95-60, which
exempts certain transactions between insurance company general accounts and
parties in interest; PTE 91-38, which exempts certain transactions between
bank collective investment funds and parties in interest; PTE 90-1, which
exempts certain transactions between insurance company pooled separate
accounts and parties in interest; PTE 84-14, which exempts certain
transactions effected on behalf of a Plan by a "qualified professional asset
manager"; and PTE 75-1, which exempts certain transactions effected through a
bank supervised by the United States or a State. There can be no assurance
that any of these exemptions will apply with respect to any Plan's acquisition
of the New Certificates, or that such an exemption, if it did apply, would
apply to all prohibited transactions that may occur in connection with such
investment, including, for example, transactions involving plan assets arising
in the operations of the Trust.
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 promptly will 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 broker or dealer
and will indemnify the holder of the New Certificates (including any broker or
dealer) against certain liabilities, including liabilities under the
Securities Act.
LEGAL MATTERS
The validity of the New Certificates and certain U.S. federal income
taxation matters will be passed upon for the Trust by Brown & Wood llp, New
York, New York.
APPENDIX A
RECEIPTS ON CORPORATE SECURITIES TRUST, SERIES CHR 1998-1
ALLOCATION SCHEDULE FOR DISTRIBUTION FOLLOWING ANY OPTIONAL REDEMPTION, MATURITY
SHORTENING REDEMPTION OR IN-KIND DISTRIBUTION*
<TABLE>
<CAPTION>
DISTRIBUTION JUST PRIOR DISTRIBUTION JUST AFTER
TO INTEREST PAYMENT INTEREST PAYMENT
---------------------------- -----------------------------
Amortizing Residual Amortizing Residual
Date Class Class Class Class
- --------------------- ------------- ------------- -------------- -----------
<S> <C> <C> <C> <C>
August 1, 1998 77.45% 22.55% 76.62% 23.38%
February 1, 1999 76.62% 23.38% 75.75% 24.25%
August 1, 1999 75.75% 24.25% 74.86% 25.14%
February 1, 2000 74.86% 25.14% 73.93% 26.07%
August 1, 2000 73.93% 26.07% 72.96% 27.04%
February 1, 2001 72.96% 27.04% 71.96% 28.04%
August 1, 2001 71.96% 28.04% 70.92% 29.08%
February 1, 2002 70.92% 29.08% 69.85% 30.15%
August 1, 2002 69.85% 30.15% 68.73% 31.27%
February 1, 2003 68.73% 31.27% 67.58% 32.42%
August 1, 2003 67.58% 32.42% 66.38% 33.62%
February 1, 2004 66.38% 33.62% 65.13% 34.37%
August 1, 2004 65.13% 34.87% 63.84% 36.16%
February 1, 2005 63.84% 36.16% 62.50% 37.50%
August 1, 2005 62.50% 37.50% 61.12% 38.88%
February 1, 2006 61.12% 38.88% 59.68% 40.32%
August 1, 2006 59.68% 40.32% 58.19% 41.81%
February 1, 2007 58.19% 41.81% 56.64% 43.36%
August 1, 2007 56.64% 43.36% 55.04% 44.96%
February 1, 2008 55.04% 44.96% 53.37% 46.63%
August 1, 2008 53.37% 46.63% 51.65% 48.35%
February 1, 2009 51.65% 48.35% 49.86% 50.14%
August 1, 2009 49.36% 50.14% 48.00% 52.00%
February 1, 2010 48.00% 52.00% 46.08% 53.92%
August 1, 2010 46.08% 53.92% 44.08% 55.92%
February 1, 2011 44.08% 55.92% 42.01% 57.99%
August 1, 2011 42.01% 57.99% 39.87% 60.13%
February 1, 2012 39.87% 60.13% 37.64% 62.36%
August 1, 2012 37.64% 62.36% 35.34% 64.66%
February 1, 2013 35.34% 64.66% 32.94% 67.06%
August 1, 2013 32.94% 67.06% 30.46% 69.54%
February 1, 2014 30.46% 69.54% 27.89% 72.11%
August 1, 2014 27.89% 72.11% 25.22% 74.78%
February 1, 2015 25.22% 74.78% 22.46% 77.54%
August 1, 2015 22.46% 77.54% 19.59% 80.41%
February 1, 2016 19.59% 80.41% 16.61% 83.39%
August 1, 2016 16.61% 83.39% 13.53% 86.47%
February 1, 2017 13.53% 86.47% 10.33% 89.67%
August 1, 2017 10.33% 89.67% 7.01% 92.99%
February 1, 2018 7.01% 92.99% 3.57% 96.43%
August 1, 2018 3.57% 96.43% 0.00% 100.00%
</TABLE>
* The proceeds of any Optional Redemption, Maturity Shortening
Redemption or In-Kind Distribution occurring on any of the above
Scheduled Distribution Dates with respect to the CHR Debentures will
be allocated to the above percentages if such proceeds are
distributed on the above Scheduled Distributed Dates. The proceeds of
any such event occurring on the dates other than Scheduled
Distribution Dates will be distributed in accordance with the ratio
described in the Prospectus.
==============================================================================
$57,830,000
Receipts on Corporate
Securities Trust, Series CHR 1998-1
Offer to Exchange
Receipts on Corporate Securities,
Series CHR 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 CHR 1998-1, Residual Class
March 11, 1999
