As filed with the Securities and Exchange Commission on June 9, 1999
Registration No. 333-70233
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
20549
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Amendment No.2
To
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PRUDENTIAL SECURITIES STRUCTURED ASSETS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 31-0944462
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One New York Plaza
14th Floor
New York, New York 10292
(212) 809-6631
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
Felicia Smith, Esq.
Prudential Securities Incorporated
One Seaport Plaza
New York, New York 10292
(212) 214-6324
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
COPY TO:
Al B. Sawyers, Esq.
Orrick, Herrington & Sutcliffe LLP
666 Fifth Avenue
New York, New York 10103
(212) 506-5000
Approximate date of commencement of proposed sale to the public: From time to
time after this Registration Statement becomes effective as determined by market
conditions.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box./_/
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box./x/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering./_/
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering./_/
If delivery of the prospectus is executed to be made pursuant toRule 434,
please check the following box./_/
<PAGE>
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------
TITLE OF AMOUNT TO BE PROPOSED PROPOSED AMOUNT OF
SECURITIES REGISTERED MAXIMUM MAXIMUM REGISTRATION
BEING (2)(3) OFFERING AGGREGATE FEE
REGISTERED(1) PRICE PER OFFERING PRICE(4)
UNIT(4)
Trust $1,000,000 100% $1,000,000 $278.00
Certificates
- -------------------------------------------------------------------------
(1)This registration statement also registers an indeterminate amount of Trust
Certificates to be sold by Prudential Securities Incorporated in connection
with market-making activity.
(2)In United States dollars or the equivalent thereof in one or more foreign or
composite currencies.
(3)Plus such additional principal amount as may be necessary such that, if one
or more classes of Trust Certificates are issued with original issue
discount, the aggregate initial offering price of all Trust Certificates will
equal $1,000,000.
(4) Estimated solely for the purpose of calculating the registration fee.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
EXPLANATORY NOTE
This Registration Statement includes a base prospectus and a form of
prospectus supplement for offering series of trust certificates
representing the entire beneficial interest in various trusts to be created
from time to time, the assets of which will consist primarily of securities
within one of the following categories*: (1) a publicly issued debt
security or asset backed security or a pool of such debt securities or
asset backed securities issued by one or more corporations, banking
organizations, insurance companies or special purpose vehicles (including
trusts, limited liability companies, partnerships or other special purpose
entities); (2) a publicly issued debt security or pool of such debt
securities which represent obligations issued by or guaranteed as to timely
payment by the full faith and credit of a foreign government, political
subdivision or agency or instrumentality thereof; (3) a publicly issued
obligation or obligations of one or more foreign private issuers; or (4) a
publicly issued debt security or pool of such debt securities which
represent obligations of the United States of America, any agency thereof
for the payment of which the full faith and credit of the United States
of America is pledged, or a United States governmental sponsored
organization created pursuant to a federal statute. The trust may also
hold cash pending disbursement by the trustee and may have rights under
credit support, swap or derivative instruments which rights will be
described in the Prospectus Supplement. The base prospectus and form of
prospectus supplement contain bracketed provisions appropriate for the
various categories of trust assets; each set of alternate language, when
combined with the base prospectus and form of prospectus supplement,
constitutes a separate prospectus. Following such prospectus and prospectus
supplement is an alternate cover page, page 2 and method of distribution
section to be used when required by the Securities Act of 1933, as amended
(the "Securities Act"), in connection with market-making transactions in
the securities by affiliates of Prudential Securities Structured Assets,
Inc. (the "Depositor"), where the issuer of the applicable trust assets is
also an affiliate of the Depositor.
- ----------
*Securitizations of items described in clauses (2) and (3) relating to
obligations of foreign governments and foreign private issuers will be
subject to prior review by the Commission.
<PAGE>
Prospectus Supplement
(To Prospectus dated [ ], [ ])
[$][ ]
RECEIPTS ON CORPORATE SECURITIES, SERIES [ ]-[ ]
Issued By
RECEIPTS ON CORPORATE SECURITIES TRUST [ ]-[ ]
Evidencing
FRACTIONAL INTERESTS IN [[TITLE(S) OF UNDERLYING SECURITIES] DUE [ ],
[ ]]
[POOL OF [SPECIFY TYPE OF SECURITIES]]
- --------------------------------------------------------------------------------
PRUDENTIAL SECURITIES STRUCTURED ASSETS, INC.,
Depositor
- ----------------------------------------------
The Trust will [IDENTIFY [IDENTIFY
issue: CLASS OF TRUST CLASS OF
CERTIFICATES] TRUST
CERTIFICATES]
- -----------------------------------------------
Initial
certificate
principal
balance/
notional amount
- -----------------------------------------------
Trust
certificate
rate
- -----------------------------------------------
Distribution
dates
- -----------------------------------------------
Final
scheduled
distribution date
- -----------------------------------------------
You should carefully consider the risk factors described on pages S-[ ] through
S-[ ] in this prospectus supplement and on pages [ ] through [ ] in the
prospectus.
The trust certificates represent interests in the trust only and do not
represent an obligation of the depositor or any of its affiliates. The trust
certificates do not represent a direct obligation of [the issuer[s] of the
underlying securities] or any of [its] [their] affiliates. [The issuer[s] of the
underlying securities [is] [are] not [an] affiliate[s] of the trust or the
depositor and will not receive any proceeds from the sale of the trust
certificates.]
This prospectus supplement may not be used to offer trust certificates unless it
is accompanied by the related prospectus.
The trust certificates offered by this prospectus supplement will be rated
[ ] by [specify rating agency].
<PAGE>
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THE TRUST CERTIFICATES OR DETERMINED THAT THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS ACCURATE OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The underwriter[s] named below ha[s][ve] agreed to [purchase the trust
certificates from the depositor at a price equal to [ ]% of their certificate
principal balance pursuant to a firm commitment underwriting] [offer the trust
certificates for sale on behalf of the depositor on a best efforts basis
[include other information required by Item 501 for a best efforts offering, as
applicable].] See "Method of Distribution" on page S-[28].
[PRUDENTIAL SECURITIES INCORPORATED]
The date of this prospectus supplement is [ ], [ ].
<PAGE>
TABLE OF CONTENTS
SUMMARY OF TERMS..................................................S-4
RISK FACTORS......................................................S-7
THE TRUST........................................................S-10
DESCRIPTION OF THE UNDERLYING SECURITIES.........................S-10
Terms of Underlying Securities.............................S-11
Publicly Available Information.............................S-12
[DESCRIPTION OF THE CREDIT SUPPORT]..............................S-13
[Reserve Account]..........................................S-13
[Letter of Credit].........................................S-13
[Surety Bond]..............................................S-14
[Other Forms of Credit Enhancement]........................S-14
YIELD ON THE TRUST CERTIFICATES..................................S-14
DESCRIPTION OF THE TRUST CERTIFICATES............................S-14
General....................................................S-14
Definitive Certificates....................................S-15
Collections and Distributions..............................S-16
[Advances].................................................S-18
Allocation of Losses; Subordination........................S-18
Exchange of Trust Certificates for Underlying Securities...S-18
Distributions on Payment Default or Acceleration of the
Underlying Securities.................................S-19
Distributions on Redemption or Advancement of Maturity
of the Underlying Securities..........................S-20
Distributions on Termination of Exchange Act Reporting.....S-20
[Restriction on Transfer of the [ ] Class
Certificates].........................................S-20
DESCRIPTION OF THE TRUST AGREEMENT...............................S-20
General....................................................S-20
The Trustee................................................S-21
Actions by Trust Certificateholders........................S-21
Voting Rights..............................................S-21
Voting of Underlying Securities; Modification of
Underlying Securities Agreements......................S-22
Termination of the Trust...................................S-22
LEGAL ASPECTS OF THE TRUST ASSETS................................S-23
THE DEPOSITOR....................................................S-23
YEAR 2000........................................................S-23
FEDERAL INCOME TAX CONSEQUENCES..................................S-24
ERISA CONSIDERATIONS.............................................S-25
S-2
<PAGE>
METHOD OF DISTRIBUTION...........................................S-26
LEGAL OPINIONS...................................................S-27
RATINGS..........................................................S-27
INDEX OF TERMS...................................................S-29
ANNEX A..........................................................S-30
TERMS OF THE UNDERLYING SECURITIES...............................S-30
Interest Payments..........................................S-31
Principal Payments.........................................S-32
[Redemption or Conversion Features]........................S-32
[Security for Underlying Securities].......................S-32
[Allocation of Collections or Revenues]....................S-32
[Underlying Securities Events of Default][Early
Amortization Events]..................................S-32
S-3
<PAGE>
SUMMARY OF TERMS
The following summary highlights selected information from this prospectus
supplement and does not contain all of the information that you need to consider
in making an investment decision. To understand all of the terms of the trust
certificates, you should carefully read this entire prospectus supplement and
the accompanying prospectus.
THE TRUST CERTIFICATES
CLASSES OF CERTIFICATES. The trust will issue the following [ ] classes of trust
certificates:
- -- [IDENTIFY RESIDUAL CLASS, IF ANY]
- -- [IDENTIFY AMORTIZING CLASS, IF ANY]
- -- [IDENTIFY OTHER CLASSES]
Each trust certificate will represent a fractional undivided interest in the
assets of the trust.
[RESIDUAL CLASS CERTIFICATES]
- ---------------------------------
certificate
principal
balance
- ---------------------------------
final scheduled
distribution
date
- ---------------------------------
Owners of the residual class certificates will not receive any cash
distributions unless the underlying securities are redeemed prior to maturity.
If you own a residual class certificate which remains outstanding on the final
scheduled distribution date, your trust certificate will automatically be
exchanged for an equivalent principal amount of the underlying securities on
such date. This exchange will occur without any action on your part.
[AMORTIZING CLASS CERTIFICATES]
- ---------------------------------
certificate
principal
balance
- ---------------------------------
final scheduled
distribution
date
- ---------------------------------
certificate rate
- ---------------------------------
certificate
interest
payment dates
- ---------------------------------
Owners of amortizing class certificates will not receive some or all of the
certificate interest payment if the trustee does not receive the full amount of
the corresponding scheduled interest payment on the underlying securities. If
any distribution date is not a business day, then payment will be made on the
next business day.
Owners of the amortizing class certificates have no right to principal payments
on the underlying securities unless the underlying securities are redeemed.
[DESCRIBE FEATURES OF OTHER CLASSES OF TRUST CERTIFICATES (E.G., INITIAL
CERTIFICATE PRINCIPAL BALANCE OR NOTIONAL AMOUNT, FINAL SCHEDULED DISTRIBUTION
DATE, DISTRIBUTION DATES AND AMOUNTS) IN TABULAR FORM AS APPROPRIATE]
SOURCE OF PAYMENTS ON CERTIFICATES. The trustee will periodically distribute the
amounts which it receives from the underlying securities and other trust assets
(after payment of the expenses of the trust) to the holders of the various
classes of trust certificates to pay interest, then principal and then premium
to the most senior class of trust certificates and, to the extent of remaining
available funds, to each other class of trust certificates in order of
seniority. If the underlying securities or other trust assets are insufficient
to make payments on the trust certificates, you will not receive full payment of
your trust certificates. NONE OF THE DEPOSITOR OR THE TRUSTEE OR ANY OF THEIR
AFFILIATES HAS ANY OBLIGATION TO MAKE PAYMENTS ON THE TRUST CERTIFICATES IF THE
UNDERLYING SECURITIES AND OTHER TRUST ASSETS ARE INSUFFICIENT TO MAKE SUCH
PAYMENTS.
S-4
<PAGE>
THE TRUST ASSETS
TERMS OF THE UNDERLYING SECURITIES
[REPEAT, AS NECESSARY FOR EACH UNDERLYING SECURITY]
- ---------------------------------
name of issuer
- ---------------------------------
original issue
date
- ---------------------------------
outstanding
principal
amount as of
[date]
- ---------------------------------
interest rate
- ---------------------------------
interest
payment dates
- ---------------------------------
maturity date
- ---------------------------------
collateral
- ---------------------------------
specified
currency/
denominations
- ---------------------------------
DISTRIBUTIONS ON THE REDEMPTION OR ADVANCEMENT OF MATURITY OF THE UNDERLYING
SECURITIES. The issuer of the underlying securities may redeem the underlying
securities prior to their final maturity date or advance their final maturity
date if:
- -- [SPECIFY REDEMPTION OR ADVANCEMENT-OF-MATURITY EVENTS, OR, IF FEASIBLE,
PRESENT IN TABULAR FORMAT].
The trustee will distribute the amounts received as a result of any redemption
of the underlying securities to the owners of the trust certificates as follows:
- -- [SPECIFY ALLOCATION METHOD].
If the underlying securities issuer advances the maturity of the underlying
securities, the trustee will sell the underlying securities and allocate the
resulting sale proceeds to the owners of the trust certificates as follows:
- -- [SPECIFY ALLOCATION METHOD].
CASH DISTRIBUTION TO CERTIFICATEHOLDERS ON PAYMENT DEFAULT OR ACCELERATION. The
trustee will [sell the underlying securities and distribute the sale proceeds to
the certificateholders] [SPECIFY OTHER ACTION], if:
- -- [the underlying securities issuer defaults in the payment of principal or
interest on the underlying securities,] or
- -- [the payment of the underlying securities is accelerated as the result of
any other default under the agreements governing the underlying
securities].
- -- [SPECIFY OTHER EVENTS, IF ANY]
IN-KIND DISTRIBUTION TO CERTIFICATEHOLDERS ON FAILURE TO FILE PERIODIC REPORTS,
PAYMENT DEFAULT OR ACCELERATION. The trustee will distribute the underlying
securities to the owners of the trust certificates in-kind if:
- -- [an] underlying securities issuer ceases to provide periodic reports and
other information to the SEC as required by federal securities law,
- -- [the underlying securities issuer defaults in the payment of principal or
interest on the underlying securities, or]
- -- [the payment of the underlying securities is accelerated as the result of a
default under the agreements governing the underlying securities.]
- -- [SPECIFY OTHER EVENTS, IF ANY]
The distribution in-kind will be made as follows: [specify allocation method].
OTHER TRUST ASSETS
[DESCRIBE ANY OTHER TRUST ASSETS, INCLUDING ANY CREDIT SUPPORT, SWAPS OR
DERIVATIVE INSTRUMENTS]
S-5
<PAGE>
CERTIFICATEHOLDER EXCHANGE RIGHT
On any scheduled distribution date on or after [ ], [ ], any holder of both
amortizing class certificates and residual class certificates will have the
right to exchange trust certificates representing an identical percentage (but
not less than 10%) of the aggregate certificate balance of all certificates of
each class for an equivalent percentage of the underlying securities in the
trust.
TERMINATION OF THE TRUST
The trust will terminate upon the occurrence of any of the following events:
[SPECIFY TERMINATION EVENTS].
DENOMINATIONS
You may purchase trust certificates in denominations of [$][ ] and integral
multiples of [$][ ] in excess of [$][ ].
SPECIFIED CURRENCY
The trust certificates will be denominated and payable in [SPECIFY U.S., FOREIGN
OR COMPOSITE CURRENCY (SUCH AS ECU)].
[BOOK-ENTRY] FORM OF SECURITY
The trust certificates will be issued in book-entry form through the facilities
of The Depository Trust Company, New York, New York. You will not receive
definitive securities representing your investment in the trust certificates,
except in limited circumstances described in the accompanying prospectus.
THE TRUSTEE
The Chase Manhattan Bank will serve as trustee and administer the trust. The
trustee's fees will be payable from the trust assets prior to the trust
certificates.
THE DEPOSITOR
The depositor is a Delaware corporation and a wholly-owned limited-purpose
subsidiary of Prudential Securities Group, Inc. The depositor will acquire the
underlying securities and deposit them into the trust. The trust certificates do
not constitute an obligation of the depositor or any of its affiliates.
FEDERAL TAX STATUS
Special counsel to the depositor is of the opinion that under existing law the
trust will be a grantor trust or a partnership for federal income tax purposes.
In general, your trust certificate will be treated as a synthetic debt
instrument issued on the date it is acquired by you. You will be subject to the
original issue discount rules of federal income tax law. See "Federal Income Tax
Consequences" in this prospectus supplement and in the prospectus.
ERISA CONSIDERATIONS
Subject to important considerations described under "ERISA Considerations" in
this prospectus supplement, the [IDENTIFY PARTICULAR CLASSES OF TRUST
CERTIFICATES] are eligible for purchase by persons investing assets of employee
benefit plans or individual retirement accounts. For reasons described under
"ERISA Considerations" in this prospectus supplement, the [IDENTIFY OTHER
CLASSES OF TRUST CERTIFICATES] are not eligible for purchase by persons
investing assets of employee benefit plans or individual retirement accounts
other than an insurance company investing assets of its general account.
S-6
<PAGE>
RISK FACTORS
You should consider the following material risk factors (and any other risk
factors identified in the prospectus) in deciding whether to purchase trust
certificates.
THE TRUST IS A The trust has no significant assets
SPECIAL PURPOSE other than the underlying securities
TRUST AND HAS NO [and other assets or credit support
ASSETS OTHER THAN identified in this prospectus
THE UNDERLYING supplement]. No other assets are
SECURITIES [AND available to pay your trust
THE CREDIT certificates. None of the depositor,
SUPPORT] TO PAY the trustee or any of their affiliates
THE TRUST is obligated to pay your trust
CERTIFICATES; YOU certificates if the trust assets are
MAY EXPERIENCE A insufficient. Consequently, if the
LOSS IF SUCH underlying securities and assets that
ASSETS ARE are in the trust are insufficient to pay
INSUFFICIENT your trust certificates, you may
experience a loss on your investment.
Accordingly, you are strongly encouraged
to obtain as much information concerning
the underlying securities as you would
if you were investing directly in the
underlying securities. This prospectus
supplement provides the material
information concerning the underlying
securities and refers to publicly
available information from the
underlying securities issuers. For
guidance on how to obtain additional
information about the underlying
securities, please see "Description of
the Underlying Securities - Publicly
Available Information" in this
prospectus supplement.
A SECONDARY The underwriter[s] may assist in resales
MARKET FOR YOUR of the trust certificates but they are
TRUST not obligated to do so. A secondary
CERTIFICATES MAY market for the trust certificates may
NOT DEVELOP OR not develop. If a secondary market does
CONTINUE; THUS IT develop, it may not continue or be
MAY BE DIFFICULT sufficiently liquid to allow you to
TO RESELL YOUR resell your trust certificates and you
CERTIFICATES may experience a loss on your investment.
THE TRUST WILL The trust will not dispose of any
NOT ACTIVELY underlying security except when required
MANAGE THE by the trust agreement. If adverse
UNDERLYING financial conditions arise, the trust
SECURITIES TO will continue to hold the underlying
AVOID LOSSES AND securities regardless of whether losses
MAY BE REQUIRED could be reduced by selling or disposing
TO DISPOSE OF THE of the securities. On the other hand,
UNDERLYING if a default or acceleration of the
SECURITIES UNDER underlying securities occurs, the
ADVERSE MARKET trustee will be required to sell or
CONDITIONS distribute the underlying securities
even if market conditions are
unfavorable at the time. See
"Description of the Trust
Certificates-Distributions on Payment
Default or Acceleration of the
Underlying Securities". The trustee
will have no discretion to do
otherwise. If the trustee sells the
underlying securities, you may
experience greater losses than might
occur if the trust continued to hold the
securities.
S-7
<PAGE>
YOUR ABILITY TO The trust agreement does not provide for
ENFORCE COVENANTS any events of default. Payments on your
UNDER THE TRUST trust certificates will not be
AGREEMENT MAY BE accelerated even if a covenant under the
LIMITED BECAUSE trust agreement has been breached,
THERE ARE NO unless an event of default has also
EVENTS OF DEFAULT occurred with respect to the underlying
UNDER THE TRUST securities and the payments on the
AGREEMENT underlying securities have been
accelerated. Consequently, your ability
to enforce covenants of the underlying
securities issuer and the trustee for
the underlying securities contained in
the trust agreement may be limited.
THE MARKET VALUE OF As with other fixed-income investments,
YOUR TRUST the market price of your trust
CERTIFICATES MAY certificates will vary inversely with
DECLINE DUE TO prevailing interest rates at the time of
INTEREST RATE AND sale. All else being equal, when interest
MARKET RISKS; THUS rates rise, the market price of your trust
YOU MAY EXPERIENCE certificates will fall; when interest
A SUBSTANTIAL LOSS rates fall, the market price of your trust
IF YOU SELL YOUR certificates will rise. In addition, the
CERTIFICATES PRIOR price at which you may be able to sell
TO MATURITY your trust certificates will depend on the
supply of and demand for fixed-income
investments similar to the trust
certificates at the time you sell your
trust certificates. Inflationary factors
may also erode potential buyers'
purchasing power. Consequently, if you
sell you trust certificates prior to
maturity, you may experience a substantial
loss on your investment.
YOUR EXPECTED The yield which you realize on your
INVESTMENT YIELD investment in the trust certificates may
MAY BE REDUCED BY A depend on a number of factors including
REDEMPTION, DEFAULT
OR ACCELERATION OF
THE UNDERLYING -- the purchase price of your trust
SECURITIES AND YOUR certificates,
ABILITY TO REINVEST
AT A COMPARABLE
YIELD MAY BE LIMITED -- the degree to which the timing of
payments on your trust certificates is
sensitive to the timing of payments on
the underlying securities, and
-- whether the maturity of your trust
certificates is shortened as a result
of a redemption, default or
acceleration of the underlying
securities.
[IDENTIFY OTHER FACTORS WHICH MAY AFFECT YIELD ON
THE TRUST CERTIFICATES]
Neither the depositor nor the trustee can
predict if or when a redemption, default
or acceleration of the underlying
securities will occur. If the trust
certificates are prepaid or the trustee
distributes the underlying securities
in-kind to the certificateholders, your
investment in the trust certificates and
the underlying securities will have a
shorter average maturity. If the trust
certificates are prepaid when prevailing
market interest rates are lower than the
yield on your trust certificates, you may
be unable to realize a comparable yield
when you reinvest the funds which you
receive from the prepayment of your trust
certificates.
S-8
<PAGE>
[YOUR ABILITY TO [Your trust certificates are not required or
DETERMINE THE VALUE expected to be listed on any securities
OF YOUR CERTIFICATES exchange or quoted on any automated
MAY BE LIMITED quotation system of a registered securities
BECAUSE TRUST association. As a result, your ability to
CERTIFICATES WILL NOT determine a market price for your trust
BE LISTED ON AN certificates or to resell your trust
EXCHANGE OR QUOTATION certificates may be limited.]
SYSTEM]
[YOU MAY EXPERIENCE A [Because your trust certificates represent
LOSS ON YOUR an investment in obligations of foreign
INVESTMENT BECAUSE OF [corporations] [governments], you should
THE POTENTIAL consider political, economic, social and
INSTABILITY OF A other risks which are not typically
FOREIGN COUNTRY] associated with an investment in securities
of a United States issuer. Such risks
include, but are not limited to:
-- the devaluation of the local currency,
imposition of foreign exchange controls
to prevent free movement of the local
currency, and nationalization of an
industry which could make it more
difficult (if not impossible) for the
underlying securities issuer to meet its
debt obligations,
-- the repudiation by the underlying
securities issuer of its foreign debts,
-- the imposition of a moratorium on
payment or the rescheduling of foreign
debts,
-- the levying of a withholding tax or a
confiscatory taxation scheme,
-- exchange rate fluctuations, and the risk
that the underlying securities issuer or
applicable foreign country may not have
sufficient U.S. dollar reserves necessary
to convert local currency to U.S. dollars
in order to pay principal, interest or
other amounts due with respect to your
trust certificates,
-- political or social instability in a
foreign country which make it difficult
(if not impossible) for the underlying
securities issuer to meet its debt
obligations.
YOU ARE STRONGLY ENCOURAGED TO CONSULT YOUR
OWN FINANCIAL, TAX AND LEGAL ADVISORS AS TO
THE RISKS ENTAILED BY AN INVESTMENT IN TRUST
CERTIFICATES WHICH ARE ISSUED BY A FOREIGN
GOVERNMENT OR COMPANY AND/OR DENOMINATED
AND/OR PAYABLE IN A FOREIGN OR COMPOSITE
CURRENCY. SUCH TRUST CERTIFICATES ARE NOT
AN APPROPRIATE INVESTMENT IF YOU ARE
UNSOPHISTICATED WITH RESPECT TO FOREIGN OR
COMPOSITE CURRENCY TRANSACTIONS.
[ENFORCEMENT OF [The underlying securities consist of debt
OBLIGATIONS IN securities issued by companies incorporated
FOREIGN JURISDICTIONS or organized under the laws of a foreign
MAY BE MORE DIFFICULT country (i.e., foreign issuers). The assets
THAN ENFORCEMENT IN of the foreign issuers may be located
THE UNITED outside the United States. As a result, it
may be difficult for
S-9
<PAGE>
STATES] the trust to pursue
lawsuits or obtain or enforce legal
judgments against such issuers in the United
States.]
[The underlying securities will include
obligations or guarantees of: (a) foreign
governments, (b) foreign political
subdivisions, or (c) agencies and
instrumentalities of foreign governments or
political subdivisions. These foreign
entities may be immune from suit, and the
trust may not be able to obtain a United
States judgment against them. Even if a
judgment is obtained in the United States
against the foreign entity, the trust may be
unable to obtain recognition and enforcement
of the United States judgment in the
issuer's country.]
[THE FOREIGN ISSUERS [While a foreign issuer may make certain
DO NOT PREPARE information available by filing periodic
REPORTS IN ACCORDANCE reports and other information with the SEC,
WITH U.S. GENERALLY this information (including financial
APPLIED ACCOUNTING information) may differ in timing, form and
PRINCIPLES, THUS substance from that normally available with
INVESTORS MAY NOT respect to domestic issuers. Accordingly,
HAVE ACCESS TO investors may not have access to the same
INFORMATION NEEDED TO volume of financial information concerning
DETERMINE THE VALUE the issuer of the underlying security that
OF THE TRUST it would have for United States issuers,
CERTIFICATES AND TO thus making it difficult for investors to
DETERMINE WHETHER TO determine the value of the trust
SELL TRUST certificates and whether to sell their trust
CERTIFICATES] certificates.]
[ADDITIONAL RISK [Include additional risk factors as
FACTORS APPLICABLE TO necessary to address risks specific to the
THE SPECIFIC FOREIGN foreign jurisdiction involved.]
ISSUER]
THE TRUST
The Trust will be formed under the laws of the [State of New York]
[identify other jurisdiction] pursuant to the Base Trust Agreement, dated as of
[ ], [ ] (the "Base Trust Agreement"), by and between the Depositor and The
Chase Manhattan Bank, as Trustee, and the Series [ ]-[ ] Supplement dated as of
[ ], [ ] (the "Series Supplement" and together with the Base Trust Agreement,
the "Trust Agreement"), between the Depositor and the Trustee. Concurrently with
the execution and delivery of the Series Supplement, the Depositor will deposit
[IDENTIFY UNDERLYING SECURITIES] (the "Underlying Securities") into the Trust.
The Trustee, on behalf of the Trust, will accept such Underlying Securities and
on or about [ ], [ ] (the "Closing Date") will deliver the Receipts on Corporate
Securities, Series [ ]-[ ] (the "Trust Certificates"), evidencing fractional
undivided interests in the Trust, to or upon the order of the Depositor.
The Underlying Securities were not acquired from the issuer[s] of the
Underlying Securities (the "Underlying Securities Issuer[s]") as part of any
distribution by or pursuant to any agreement with the Underlying Securities
Issuer[s]. The Underlying Securities Issuer[s] [is/are] not participating in
this offering and will not receive any of the proceeds of the sale of the
Underlying Securities to the Depositor or the issuance of the Trust
Certificates.
DESCRIPTION OF THE UNDERLYING SECURITIES
The aggregate principal amount of the Underlying Securities is [$][ ]. The
principal economic terms of the Underlying Securities are set forth [below/in
Annex A hereto which is hereby incorporated herein by reference]. The
information in this prospectus supplement under this caption [and in
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Annex A] is derived solely from the offering document(s) prepared for the
Underlying Securities by the [respective] Underlying Securities Issuer[s] (the
"Underlying Securities Prospectus[es]"). Prospective investors in the Trust
Certificates may wish to read this prospectus supplement and the accompanying
prospectus in conjunction with the Underlying Securities Prospectus[es]. This
prospectus supplement sets forth material terms of the Underlying Securities,
but does not provide detailed information with respect to the Underlying
Securities or the Underlying Securities Issuer[s]. This prospectus supplement
relates only to the Trust Certificates offered hereby and is not an offering
document for the Underlying Securities.
[INCLUDE THE FOLLOWING PARAGRAPH FOR ALL UNDERLYING SECURITIES ISSUERS THAT
ARE NOT GSEs.] The Underlying Securities Issuer[s] [is/are] subject to the
reporting requirements of the Securities Exchange Act of 1934 (the "Exchange
Act") and, accordingly, are required to file periodic reports and other
information with the Securities and Exchange Commission (the "SEC"). For
information on how to obtain such information and reports, please see "-Publicly
Available Information" below.
THE ABILITY OF OWNERS OF THE TRUST CERTIFICATES TO RECEIVE DISTRIBUTIONS
WILL DEPEND ON THE TRUST'S RECEIPT OF DISTRIBUTIONS ON THE UNDERLYING
SECURITIES. CONSEQUENTLY, POTENTIAL INVESTORS IN THE TRUST CERTIFICATES SHOULD
OBTAIN AND EVALUATE THE SAME INFORMATION CONCERNING THE UNDERLYING SECURITIES
AND THE UNDERLYING SECURITIES ISSUER[S] AS ONE WOULD OBTAIN AND EVALUATE IF
INVESTING DIRECTLY IN THE UNDERLYING SECURITIES OR IN OTHER SECURITIES ISSUED BY
THE UNDERLYING SECURITIES ISSUER[S].
None of the Depositor, the Trustee or the Underwriter[s], or any of their
affiliates, have participated in the preparation of (i) any Underlying
Securities Prospectus or (ii) any other document, report or other information
filed by the Underlying Securities Issuer[s] with the SEC or otherwise made
available by the Underlying Securities Issuers to the public or potential
investors in the Trust Certificates. None of the Depositor, the Trustee or the
Underwriter[s], or any of their affiliates, has verified the accuracy or
completeness of such documents or reports. Information contained in such
documents and reports is as of the date(s) stated therein, and comparable
information, if given as of the date hereof, may be materially different. There
can be no assurance that events affecting the Underlying Securities or the
Underlying Securities Issuer[s] have not occurred, which have not yet been
publicly disclosed, which would affect the accuracy of completeness of the
Underlying Securities Prospectus[es] or any other publicly available documents
described above.
The issuance of the Trust Certificates should not be construed as an
endorsement by the Depositor, the Trustee or the Underwriter[s], or any of their
affiliates, of the financial condition or business prospects of the Underlying
Securities Issuer[s].
TERMS OF UNDERLYING SECURITIES
[USE THE FOLLOWING TABLE IF THE UNDERLYING SECURITIES CONSIST OF A SINGLE
SECURITY]
The following table sets forth certain terms of the Underlying Securities
as derived from the Underlying Securities Prospectus.
--------------------------------------------------------
Issuer:
Title:
Dated Date:
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Issue Date:
Stated Maturity Date:
Original Principal Amount
Issued:
Principal Amount Deposited
into the Trust:
Stated Interest Rate:
Interest Payment Dates:
Priority of
Payment/Collateral:
Denominations; Specified
Currency:
Method of Payment:
CUSIP Numbers:
Trustee:
[Other:]
--------------------------------------------------------
[USE THE FOLLOWING LANGUAGE WHERE THE UNDERLYING SECURITIES CONSIST OF A POOL OF
SECURITIES]
Certain terms of the Underlying Securities as derived from the Underlying
Securities Prospectuses are set forth in Annex A hereto.
PUBLICLY AVAILABLE INFORMATION
The following information concerning the Underlying Securities Issuer[s]
has been obtained from the [applicable] Underlying Securities Prospectus[es]:
[INSERT DESCRIPTIVE PARAGRAPH[S] FROM UNDERLYING SECURITIES PROSPECTUS[ES]
IDENTIFYING THE PRINCIPAL EXECUTIVE OFFICE[S] OF THE UNDERLYING SECURITIES
ISSUER[S] AND PROVIDING CONTACT INFORMATION THEREFOR.]
Information concerning the Underlying Securities Issuer[s] may also be
inspected and copied at the public reference facilities maintained by the SEC at
its Public Reference Room, 450 Fifth Street, N.W., Washington, D.C. 20549.
Information regarding the operation of the SEC's Public Reference Room may be
obtained by telephone at (800)732-0330. Information concerning the Underlying
Securities Issuer[s] can also be inspected at the SEC's public reference
facilities at the following Regional Offices of the SEC: New York Regional
Office, Room 1100, 7 World Trade Center, New York, New York 10048 and Chicago
Regional Office, Suite 1400, Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511, and copies of such material
can be obtained from the Public Reference Section of the SEC, Washington, D.C.
20549, at prescribed rates. Such material may also be accessed electronically by
means of the SEC's home page on the Internet at http://www.sec.gov. [In
addition, reports and other information concerning [SPECIFY UNDERLYING
SECURITIES ISSUER[S]] may be
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inspected at the Information Center of the New York Stock Exchange Inc., 20
Broad Street, New York, New York 10005.]
[DESCRIPTION OF THE CREDIT SUPPORT]
[The holders of [IDENTIFY APPLICABLE CLASSES] will have the benefit of
credit support (the "Credit Support") which will be obtained [and constitute
part of the Trust as described below] to support or insure the [timely]
[ultimate] distribution of amounts due with respect to the Trust Certificates,
in the form and amount described below.]
[RESERVE ACCOUNT]
[On the Closing Date, the Depositor will deposit in the Trust, to be held
in a reserve account (the "Reserve Account"), cash, letters of credit and/or
short-term investments acceptable to the Rating Agency initially rating the
Trust Certificates in the amount of [$] [ ]. [In addition, collections with
respect to the Underlying Securities or other trust assets (the "Trust Assets")
which are not distributed to the holders of the Trust Certificates shall be
deposited in the Reserve Account.] Amounts so deposited in the Reserve Account
will be used to make payments of principal of and premium (if any) and interest
on the Certificates, as the same become due, to the extent that funds are not
otherwise available. Immediately after any Distribution Date, amounts in the
Reserve Account in excess of [SPECIFY RESERVE ACCOUNT REQUIREMENT] [may be paid
to the Depositor.]
[LETTER OF CREDIT]
[Simultaneously with its deposit of the Underlying Securities into the
Trust, the Depositor will obtain a letter of credit in favor of the Trustee (the
"Letter of Credit") from [ ] (the "Letter of Credit Bank"). The Letter of Credit
will be irrevocable and will support the [timely] [ultimate] remittance of
amounts due with respect to the [SPECIFY CLASSES] Trust Certificates. [The
maximum amount that may be drawn under the Letter of Credit will initially be
equal to [$] [ ]. Thereafter, the amount of the Letter of Credit with respect to
any Distribution Date will equal [the lesser of (i) [ ]% of the aggregate
Certificate Principal Balance outstanding on the preceding Distribution Date
(after giving effect to any payment of principal made on such preceding
Distribution Date) but in any event not less than [$] [ ], and (ii) the amount
of the Letter of Credit on the preceding Distribution Date, plus [(a)
reimbursement of certain advances under the Letter of Credit and (b) recoveries
on defaulted Underlying Securities] [DESCRIBE OTHER METHODS]. The Letter of
Credit expires on [ ], [ ]. The Trustee will be obligated, in the event of a
drawing on the Letter of Credit, to pursue appropriate remedies against the
Underlying Securities and other Trust Assets and other collateral, and any
realization thereon shall be paid to the Letter of Credit Bank to the extent of
any amounts owing, in the manner and priority specified herein.]
[ADD LANGUAGE REGARDING THE LETTER OF CREDIT BANK WITH RESPECT TO ITS DEBT
RATINGS, ACTIVITIES IN WHICH IT ENGAGES, REGULATORY AUTHORITIES HAVING
JURISDICTION OVER IT AND THE NATURE OF SUCH REGULATION, A NARRATIVE DESCRIPTION
OF ITS ASSETS, LIABILITIES (INCLUDING DEPOSITS) AND EQUITY, AND INCLUDE AN
ADDRESS FOR FURTHER INFORMATION CONCERNING THE LETTER OF CREDIT BANK. IN
ADDITION, TO THE EXTENT THAT THE LETTER OF CREDIT WILL COVER PAYMENT OF 20% OR
MORE OF THE CASHFLOW TO THE APPLICABLE SERIES OF TRUST CERTIFICATES, PROVIDE (OR
INCORPORATE BY REFERENCE) THE AUDITED FINANCIAL STATEMENTS OF THE LETTER OF
CREDIT BANK. TO THE EXTENT THAT THE LETTER OF CREDIT WILL COVER PAYMENT OF
BETWEEN 10 AND 20% OF THE CASHFLOW TO THE APPLICABLE SERIES, PROVIDE (OR
INCORPORATE BY REFERENCE) SUMMARIZED FINANCIAL INFORMATION WITH RESPECT TO THE
LETTER OF CREDIT BANK.]
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[SURETY BOND]
[Simultaneously with its deposit of the Underlying Securities into the
Trust, the Depositor will obtain a surety bond in favor of the Trustee (the
"Surety Bond") from [ ] (the "Surety"). The Surety Bond will guaranty [timely]
[ultimate] distributions of the principal of and premium (if any) and interest
with respect to the [SPECIFY CLASSES] Trust Certificates. The Surety Bond
expires on [ ], [ ]. The Trustee will be obligated, in the event of a drawing on
the Surety Bond, to pursue appropriate remedies against the Underlying
Securities and other Trust Assets and other collateral, and any realization
thereon shall be paid to the Surety to the extent of any amounts owing, in the
manner and priority specified herein.]
[ADD LANGUAGE REGARDING THE ISSUER OF THE SURETY BOND WITH RESPECT TO ITS
DEBT RATINGS, ACTIVITIES IN WHICH IT ENGAGES, REGULATORY AUTHORITIES HAVING
JURISDICTION OVER IT AND THE NATURE OF SUCH REGULATION, A NARRATIVE DESCRIPTION
OF ITS ASSETS, LIABILITIES (INCLUDING DEPOSITS) AND EQUITY, AND INCLUDE AND
ADDRESS FOR FURTHER INFORMATION CONCERNING THE SURETY. IN ADDITION, TO THE
EXTENT THAT THE SURETY BOND WILL COVER PAYMENT OF 20% OR MORE OF THE CASHFLOW TO
THE APPLICABLE SERIES OF TRUST CERTIFICATES, PROVIDE (OR INCORPORATE BY
REFERENCE) THE AUDITED FINANCIAL STATEMENTS OF THE SURETY. TO THE EXTENT THAT
THE SURETY BOND WILL COVER PAYMENT OF BETWEEN 10 AND 20% OF THE CASHFLOW TO THE
APPLICABLE SERIES, PROVIDE (OR INCORPORATE BY REFERENCE) SUMMARIZED FINANCIAL
INFORMATION WITH RESPECT TO THE SURETY.]
[OTHER FORMS OF CREDIT ENHANCEMENT]
[DESCRIBE THE MATERIAL TERMS OF ANY OTHER FORM OF CREDIT ENHANCEMENT WHICH
IS INCLUDED IN THE TRUST, INCLUDING ANY INTEREST RATE, CURRENCY, SECURITIES,
COMMODITY OR CREDIT SWAPS, CAPS, FLOORS, COLLARS OR OPTIONS, AND IDENTIFY EACH
COUNTERPARTY THERETO. TO THE EXTENT THE CREDIT EXPOSURE PURSUANT TO SUCH CREDIT
ENHANCEMENT WILL EQUAL OR EXCEED 20% OF THE CASHFLOW TO THE APPLICABLE SERIES,
PROVIDE (OR INCORPORATE BY REFERENCE) THE AUDITED FINANCIAL STATEMENTS OF THE
APPLICABLE COUNTERPARTY. TO THE EXTENT THAT SUCH EXPOSURE IS BETWEEN 10 AND 20%
OF CASHFLOW TO THE APPLICABLE SERIES, PROVIDE (OR INCORPORATE BY REFERENCE)
SUMMARIZED FINANCIAL INFORMATION WITH RESPECT TO THE COUNTERPARTY.]
YIELD ON THE TRUST CERTIFICATES
[DESCRIBE FACTORS RELATING TO THE TRUST ASSETS, THE TERMS THEREOF AND THE
MANNER AND PRIORITY IN WHICH COLLECTIONS THEREON ARE PAID OR ALLOCATED TO EACH
CLASS OF THE TRUST CERTIFICATES THAT MAY AFFECT THE YIELD ON THE TRUST
CERTIFICATES.] See "Maturity and Yield Considerations" in the Prospectus.
DESCRIPTION OF THE TRUST CERTIFICATES
GENERAL
The Trust Certificates will consist of [ ] Classes of Certificates,
designated as [ ] Class Certificates, [ ] Class Certificates and [ ] Class
Certificates. The Trust Certificates will be denominated and distributions with
respect thereto will be payable in [ ] (the "Specified Currency"). The Trust
Certificates represent in the aggregate the entire beneficial ownership interest
in the Trust. The [ ] Class Certificates have in the aggregate an initial
Certificate Principal Balance of [$] [ ] (approximate) and a [ %] [Variable]
Trust Certificate Rate. The [ ] Class Certificates have in the aggregate an
initial Certificate Principal Balance of [$] [ ] (approximate) and a [ %]
[Variable] Trust Certificate Rate. The [ ] Class Certificates have in the
aggregate an initial Certificate Principal Balance of [$] [ ] (approximate) and
a [ %] [Variable] Trust Certificate Rate. [The [ ] Class Certificates, which are
not being offered hereby, will be transferred by the Depositor to an affiliate
on
S-14
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the Closing Date, and may be sold at any time by the Depositor in accordance
with the terms of the Trust Agreement.]
[REVISE THE FOLLOWING DESCRIPTION TO REFLECT THE SPECIFIC CHARACTERISTICS
OF EACH CLASS.] Payments received on the Underlying Securities will be
distributed to the holders of the Trust Certificates on each [ ] and [ ],
commencing [ ], [ ] (each, a "Distribution Date"). The final scheduled
Distribution Date for the Underlying Securities (the "Final Scheduled
Distribution Date") is [ ], [ ].
The Trust Certificates [other than the [ ] Class Certificates [AND SPECIFY
OTHERS] (the "Definitive Classes")] will be issued, maintained and transferred
on the book-entry records of The Depository Trust Company, New York, New York
("DTC") and its participants ("DTC Participants") in minimum denominations of
[$][ ] and [integral multiplies thereof] [multiplies of [$][ ] in excess
thereof]. [The [ ] Class Certificates [and specify any others] will be offered
in registered, certificated form, in minimum percentage interests corresponding
to the initial Certificate Principal Balance of [$][ ] and integral multiples
thereof, except that one Trust Certificate of each such class may be issued with
an initial Certificate Principal Balance equal to an integral multiple of [$][ ]
plus the excess of the initial aggregate Certificate Principal Balance of such
class over the greatest integral multiple of [$ ] that is not more than such
initial aggregate Certificate Principal Balance.]
The Trust Certificates [(other than the Definitive Classes of Trust
Certificates)] will initially be represented by one or more global certificates
registered in the name of the nominee of DTC (together with any successor
clearing agency selected by the Depositor, the "Clearing Agency"), except as
provided below. The Depositor has been informed by DTC that DTC's nominee will
be Cede & Co. ("Cede"). No beneficial owner of any such Trust Certificate (a
"Beneficial Owner") will be entitled to receive a certificate representing such
person's interest, except as set forth below under "-Definitive Certificates".
Unless and until Definitive Certificates are issued under the limited
circumstances described herein, all references to actions by holders with
respect to any such Certificates shall refer to actions taken by DTC upon
instructions from its DTC Participants. See "-Definitive Certificates" below and
"Description of Certificates-Global Certificates" in the prospectus.
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC will take action permitted to be taken by a Beneficial Owner
only at the direction of one or more DTC Participants to whose DTC account such
Trust Certificates are credited. Additionally, DTC will take such actions with
respect to specified voting rights under the Trust Certificates (the "Voting
Rights") only at the direction and on behalf of DTC Participants whose holdings
of such Certificates evidence such specified Voting Rights. DTC may take
conflicting actions with respect to Voting Rights, to the extent that DTC
Participants whose holdings of Certificates evidence such Voting Rights,
authorize divergent action.
For certain information with respect to DTC and Year 2000 issues, see "Year
2000" herein.
DEFINITIVE CERTIFICATES
Definitive Certificates will be issued to Beneficial Owners or their
nominees respectively, rather than to DTC or its nominee, only if (i) the
Depositor advises the Trustee in writing that DTC is no longer willing or able
to discharge properly its responsibilities as Clearing Agency with respect to a
class of Trust Certificates [(other than the Definitive Classes)] and the
Depositor is unable to locate a qualified successor or (ii) the Depositor, at
its option, elects to terminate the book-entry system through DTC.
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<PAGE>
Upon the occurrence of any event described in the immediately preceding
paragraph, the Trustee is required to notify all DTC Participants of the
availability through DTC of Definitive Certificates. Upon surrender by DTC of
the definitive certificates representing the Trust Certificates [(other than the
Definitive Classes of Trust Certificates)] and receipt of instructions for
re-registration, the Trustee will reissue such Trust Certificates as Definitive
Certificates issued in the respective principal amounts owned by the individual
owners of such Trust Certificates, and thereafter the Trustee will recognize the
holders of such Definitive Certificates as holders under the Trust Agreement.
COLLECTIONS AND DISTRIBUTIONS
Collections on the Underlying Securities and other Trust Assets that are
received for a given period (each, a "Collection Period") pursuant to the
collection procedures described herein and in the prospectus will be applied by
the Trustee on each applicable Distribution Date to the following distributions
in the following order of priority, solely to the extent of Available Funds (as
defined below) on such Distribution Date:
(i) [to the Trustee, all unpaid fees and expenses owed thereto and its
respective agents, up to the Allowable Expense Amount (as defined below)
for the related Collection Period;]
(ii) [to the providers of Credit Support ("Credit Support Providers"),
any amount required to be paid or reimbursed to, or deposited with, any
such person (collectively, "Credit Support Payments");]
(iii) to the Certificateholders of each Class, first to the payment of
Required Interest, second to the payment of Required Principal and third,
to the payment of Required Premium, in each case applicable to such Class,
commencing with the most highly ranked Class and, to the extent Available
Funds remain available, to each other Class in accordance with the ranking
specified herein under "-Allocation of Losses; Subordination";
(iv) [to the Credit Support Providers, any Credit Support Payments;]
(v) [to the Trustee, all its remaining unpaid fees and expenses and
those of its respective agents not otherwise paid pursuant to clause (i)
above;]
(vi) [to the Reserve Account until the balance therein equals the
required amount]; and
(vii) [all remaining amounts, if any, to the Depositor.]
There can be no assurance that collections received from the Underlying
Securities, any other Trust Assets and any applicable Credit Support relating to
the Trust Certificates over a specified period will be sufficient, after payment
of all Allowable Expense Amounts [and payments of all amounts required to be
paid to the Credit Support Providers] for such period, to make all required
distributions on the Trust Certificates. [To the extent Available Funds are
insufficient to make any such distributions due to any such Series or Class, any
shortfall will be carried over and will be distributed on the next Distribution
Date on which sufficient funds exist to pay such shortfalls.]
For purposes hereof, the following terms have the following meanings:
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<PAGE>
"Allowable Expense Amount" means, for any given Collection Period, the
sum of (x) [$] [ ]and (y) amounts in respect of the Allowable Expense
Amount from the preceding Collection Period that have not been applied on
the Distribution Date for such preceding Collection Period.
"Available Funds" for any Distribution Date means the sum of (a) all
amounts actually received on or with respect to the Underlying Securities
and any other Trust Assets (including investment income on Eligible
Investments) received during the preceding Collection Period[,] [and]
(b) amounts available as such Distribution Date pursuant to the Credit
Support described herein [and (c) any additional amount that the
[Depositor] may remit to the Trustee from time to time according to the
terms of the Trust Agreement for application as Available Funds].
"Call Premium Percentage" for any given Distribution Date means [a
fixed percentage] [a percentage that varies depending on [DESCRIBE BASIS
FOR VARIABLE FORMULA, SUCH AS THE APPLICABLE DATE OR OTHER FACTORS OR
INDICES]].
"Eligible Investments" means, with respect to the Certificates, those
investments acceptable to the Rating Agencies as being consistent with the
rating of such Trust Certificates. Generally, Eligible Investments must be
limited to obligations or securities that mature no later than the business
day prior to the next succeeding Distribution Date.
"Required Interest" for the Trust Certificates or any Class thereof on
any given Distribution Date means the accrued and undistributed interest on
the outstanding Certificate Principal Balance [or Notional Amount] of such
outstanding Certificates, computed at the applicable Trust Certificate
Rate.
"Required Premium" for the Trust Certificates or any Class thereof for
any Distribution Date means an amount equal to the product of (a) the
Required Principal for such Certificates on such Distribution Date and
(b) the Call Premium Percentage for such Distribution Date.
"Required Principal" for the Trust Certificates or any Class thereof
for any Distribution Date means the amount received on the Underlying
Securities or other Trust Assets attributable to principal payments thereon
during the related Collection Period, to the extent payable or allocable to
such Certificates. The Certificate Principal Balance of a Certificate
outstanding at any time presents the maximum amount that the holder thereof
is entitled to receive as distribution payable in respect of or allocated
to principal from the cash flow on the Underlying Securities, any other
Trust Assets and any Credit Support obtained for the benefit of such
holder. The Certificate Principal Balance of any class of Trust
Certificates [(other than the [ ] Class Certificates)] as of any date of
determination is equal to the initial Certificate Principal Balance
thereof, reduced by the aggregate of (a) all amounts allocable to principal
previously distributed with respect to such Certificate and (b) any
reductions in the Certificate Principal Balance thereto deemed to have
occurred in connection with allocations of (i) Realized Losses allocable to
principal on the Trust Assets and (ii)Extraordinary Trust Expenses, as
described herein. [The of the [ ] Class Certificates as of any date of
determination is equal to [specify amount].] [Holders of the [ ] Class
Certificates are not entitled to receive any distributions allocable to
principal.]
[Notwithstanding the priorities described above, holders of the [ ] Class
Certificates and the [ ] Class Certificates will be entitled to receive on any
Distribution Date 100% of all principal collections received in the related
Collection Period with respect to the Trust Assets, to be distributed [on a pro
rata basis] in reduction of the Certificate Principal Balance of the [ ] Class
Certificates and the [ ] Class Certificates, if any of the following conditions
shall be satisfied: [DESCRIBE CONDITIONS, IF ANY
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<PAGE>
BY WHICH A CERTAIN CLASS IS GIVEN 100% OF THE PRINCIPAL CASH FLOW OTHER THAN
PURSUANT TO SUBORDINATION THAT IS IN EFFECT FROM THE CLOSING DATE].]
[ADVANCES]
[Subject to the following limitations, the Trustee may, but will not be
obligated to, advance or cause to be advanced on or before each Distribution
Date from its own funds, or other available funds, in an amount equal to the
aggregate of payments of principal, premium (if any) and interest, net of that
portion of the Administrative Fee (as defined herein) attributable to fees and
expenses of the Trustee, that were due during the related Collection Period and
that were delinquent on the related Determination Date (any such advance, an
"Advance").
Advances are required to be made only to the extent they are deemed by the
Trustee to be recoverable from related late collections, insurance proceeds, if
any, or Liquidation Proceeds. The purpose of making such Advance is to maintain
a regular cash flow, rather than to guarantee or insure against losses. The
Trustee will not be required to make any Advances with respect to reductions in
the amount of the payments on the Underlying Securities or other Trust Assets
due to bankruptcy proceedings with respect to such Underlying Securities or
other Trust Assets.
All Advances will be reimbursable from late collections, insurance
proceeds, if any, and any proceeds from the liquidation of the Underlying
Security or Trust Asset ("Liquidation Proceeds") as to which such unreimbursed
Advance was made. In addition, any Advance previously made in respect of any
Underlying Security or Trust Asset that is deemed to be nonrecoverable from
related late collections, insurance proceeds, if any, or Liquidation Proceeds
may be reimbursed to the Trustee out of any funds allocable to any of the
Underlying Securities or other Trust Assets prior to the distributions on the
Certificates.]
ALLOCATION OF LOSSES; SUBORDINATION
The subordination described herein provided by the [ ] Class Certificates
[and the [ ] Class Certificates] is designed to protect holders of the remaining
classes of Trust Certificates from certain losses and other shortfalls with
respect to the Underlying Securities and other Trust Assets. As a result, losses
and other shortfalls with respect to the Underlying Securities and other Trust
Assets will be borne by the remaining classes of Trust Certificates, to the
extent described below, only if such losses and other shortfalls are not so
covered, or the coverage in respect thereof has been exhausted.
[Realized Losses and Extraordinary Trust Expenses will be allocated on any
Distribution Date as follows: [describe allocation among the various classes].]
[An "Extraordinary Trust Expense" is an expense of the Trust is excess of
the Allowable Expense Amount.]
EXCHANGE OF TRUST CERTIFICATES FOR UNDERLYING SECURITIES
The Trust Certificates have been designated as an "Exchangeable Series."
Accordingly, commencing on [ ], [ ], any holder of both Amortizing Class
Certificates and Residual Class Certificates may, by delivery of a notice to the
Trustee substantially in the form of the Notice of Exchange attached to a Trust
Certificate (a "Notice of Exchange"), elect to exchange Trust Certificates of
both Classes for a pro rata share of the Underlying Securities on any
Distribution Date (an "Exchange Date"). Such Notice of Exchange must be received
by the Trustee not less than 30 nor more than 45 days prior to the Exchange
Date. In order to exercise such exchange right (the "Exchange Right"), the
holder
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shall tender to the Trustee on the Exchange Date both (a) Amortizing Class
Certificates evidencing the percentage specified in the Notice of Exchange
(which shall not be less than 10%) of the aggregate Certificate Principal
Balance of all Amortizing Class Certificates then outstanding and (b) Residual
Class Certificates evidencing the same percentage of the aggregate Certificate
Principal Balance of all Residual Class Certificates then outstanding as is
represented by the Amortizing Class Certificates tendered by such holder.
Upon tender of such Certificates, duly endorsed by the holder to the
Trustee, the Trustee shall transfer to the holder (or its designee) a principal
amount of the Underlying Securities comprising the same percentage of the
Underlying Securities then held in the Trust as the percentage of the applicable
Class of Certificates tendered by such holder on such Exchange Date, rounded
down to the nearest authorized denomination of the Underlying Securities. Upon
such exchange, the Trustee shall cancel the tendered Certificates, provided that
if the amount of Underlying Securities 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 the appropriate Class evidencing
percentage interests of such Class (regardless of whether such interests would
otherwise be authorized denominations) equal to the amount of such Class in
excess of the amount accepted for such exchange.
The delivery of a Notice of Exchange shall be irrevocable; provided,
however, that if (i) the proceeds of an optional redemption, a shortened
maturity redemption or an in-kind distribution of the Underlying Securities 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 an
in-kind distribution of the Underlying Securities are scheduled to be
distributed on a date subsequent to such Exchange Date, such Notice of Exchange
shall be automatically deemed cancelled and be of no further force and effect.
Any holder tendering Trust Certificates in exchange for Underlying
Securities on an Exchange Date shall be entitled to receive cash distributions
otherwise payable on such Trust Certificates on such Exchange Date.
Because initially and unless and until Definitive Certificates are issued
each Trust Certificate will be represented by one or more global certificates
registered in the name of DTC or its nominee, DTC or its nominee, as applicable,
will be the Certificateholder of such Trust Certificate and therefore will be
the only entity that can exercise an Exchange Right. In order to ensure that DTC
or its nominee will timely exercise the Exchange Right with respect to a
particular Trust Certificate, the Beneficial Owner of such Trust Certificate
must instruct the broker or other direct or indirect DTC Participant through
which it holds an interest in such Trust Certificate to notify DTC of its desire
to exercise the Exchange Right. Different securities firms or banks have
different cut-off times for accepting instructions from their customers and,
accordingly, each Beneficial Owner should consult the broker or other direct or
indirect DTC Participant through which it holds an interest in a Trust
Certificate in order to ascertain the cut-off time by which such an instruction
must be given in order for timely notice to be delivered to DTC or its nominee.
DISTRIBUTIONS ON PAYMENT DEFAULT OR ACCELERATION OF THE UNDERLYING SECURITIES
If there is a payment default on the Underlying Securities or an
acceleration of the Underlying Securities (see "Description of the Underlying
Securities " herein), the Trustee will [sell the Underlying Securities and
allocate the proceeds from the sale of the Underlying Securities between the [ ]
Class Certificates and the [ ] Class Certificates in accordance with the
Allocation Ratio][distribute the Underlying Securities between the [ ] Class
Certificates and the [ ] Class Certificates in accordance
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with the Allocation Ratio (as defined below)][submit to a vote of the holders of
the Trust Certificates to decide the appropriate remedy].
As used herein, "Allocation Ratio" means [the ratio of the [ ] Class
Allocation to the [ ] Class Allocation. The "[ ] Class Allocation" means the sum
of the present values (discounted at the rate of [ ]% per annum) of each of the
unpaid interest coupons due or to become due on the Underlying Securities on or
prior to the Final Scheduled Distribution Date. The "[ ] Class Allocation" means
the sum of the present values (discounted at the rate of [ ]% per annum) of each
of the unpaid interest coupons due or to become due on the Underlying Securities
after the Final Scheduled Distribution Date plus the sum of the present values
(discounted as the rate of [ ]% per annum) of each of the principal amounts of
the Underlying Securities (in each case assuming that the Underlying Securities
were paid when due and were not redeemed prior to their stated maturity).]
[SPECIFY OTHER ALLOCATION RATIO METHODOLOGY].
DISTRIBUTIONS ON REDEMPTION OR ADVANCEMENT OF MATURITY OF THE UNDERLYING
SECURITIES
If there is a redemption of the Underlying Securities upon the occurrence
of a Tax Event [or] [SPECIFY OTHER EVENTS] (see "Description of the Underlying
Securities " herein), the proceeds of such redemption will be allocated between
the [ ] Class Certificates and the [ ] Class Certificates in accordance with the
Allocation Ratio. [If there is an advance of maturity of the Underlying
Securities upon the occurrence of a Tax Event (see "Description of the
Underlying Securities" herein), the Underlying Securities will be sold and the
proceeds from such sale will be allocated between the [ ] Class Certificates and
the [ ] Class Certificates in accordance with the Allocation Ratio.]
DISTRIBUTIONS ON TERMINATION OF EXCHANGE ACT REPORTING
If an Underlying Securities Issuer ceases to provide periodic reports and
other information to the SEC as required by the Exchange Act, the Underlying
Securities of such Underlying Securities Issuer will be distributed in-kind to
the holders of the Trust Certificates no later than the date the next periodic
report is required to be made by the Underlying Securities Issuer, as follows:
[SPECIFY ALLOCATION METHOD]. After any such distribution, the Certificateholders
would be the direct holders of the distributed Underlying Securities.
CONSEQUENTLY, POTENTIAL INVESTORS IN THE TRUST CERTIFICATES SHOULD OBTAIN AND
EVALUATE THE SAME INFORMATION CONCERNING THE UNDERLYING SECURITIES ISSUER[S] AND
THE UNDERLYING SECURITIES AS ONE WOULD OBTAIN AND EVALUATE IF INVESTING DIRECTLY
IN THE UNDERLYING SECURITIES. See "Description of the Underlying Securities"
above and "Annex A - Terms of the Underlying Securities" attached hereto.
[RESTRICTION ON TRANSFER OF THE [ ] CLASS CERTIFICATES]
[Because the [ ] Class Certificates are subordinate to the [ ] Class
Certificates and the [ ] Class Certificates to the extent set forth herein, the
[ ] Class Certificates may not be purchased by or transferred to persons
investing assets of employee benefit plans or individual retirement accounts,
except upon the delivery of an opinion of counsel as described herein. See
"ERISA Considerations" herein.]
DESCRIPTION OF THE TRUST AGREEMENT
GENERAL
The Trust Certificates will be issued pursuant to the Trust Agreement, a
form of which is filed as an exhibit to the Registration Statement. A Current
Report on Form 8-K relating to the Trust Certificates containing a copy of the
Trust Agreement as executed will be filed by the Depositor with the SEC
following the issuance and sale of the Trust Certificates. The Trust created
under the Trust Agreement
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will consist of (i) the Underlying Securities [(exclusive of any interest
retained by the Depositor which is not part of the Trust)], (ii) all payments on
or collections in respect of the Underlying Securities due after the [Closing
Date], together with any proceeds thereof[,] [and] [(iii) any Credit Support in
respect of any Class or Classes of Trust Certificates] [and (iv) the rights of
the Depositor under the purchase agreement for the Underlying Securities between
the Depositor and the seller of the Underlying Securities]. [In addition, the
Certificateholders of the Trust Certificates may also have the benefit of
certain Credit Support discussed above. See "Description of the Credit
Support".] Reference is made to the prospectus for important information in
addition to that set forth herein regarding the Trust, the terms and conditions
of the Trust Agreement and the Trust Certificates. The material terms of the
Trust Agreement are summarized below and in the prospectus. Such summaries do
not purport to be complete and are subject to the detailed provisions contained
in the form of Trust Agreement, to which reference is hereby made for a full
description of such provisions, including the definition of certain terms used
herein.
THE TRUSTEE
The Chase Manhattan Bank, a New York banking corporation, will act as
Trustee for the Trust Certificates and the Trust pursuant to the Trust
Agreement. The Trustee's offices are located at [ ] and its telephone number is
( ) [ ]-[ ]. The Trust Agreement will provide that the Trustee and any
director, officer, employee or agent of the Trustee will be indemnified by the
Trust and will be held harmless against any loss, liability or expense incurred
in connection with any legal action relating to the Trust Agreement or the Trust
Certificates or the performance of the Trustee's duties under the Trust
Agreement, other than any loss, liability or expense (i) that constitutes a
specific liability of the Trustee under the Trust Agreement or (ii) incurred by
reason of willful misfeasance, bad faith or negligence in the performance of the
Trustee's duties under the Trust Agreement.
ACTIONS BY TRUST CERTIFICATEHOLDERS
No Trust Certificateholder will have the right to institute any proceeding
with respect to the Trust Agreement, unless (i) such Trust Certificateholder
previously has given to the Trustee written notice of a continuing breach,
(ii) Trust Certificateholders evidencing not less than the Required
Percentage-Remedies of the aggregate Voting Rights have requested in writing
that the Trustee institute such proceeding in its own name as Trustee,
(iii) such Trust Certificateholder or Trust Certificateholders have offered the
Trustee such reasonable indemnity as it may require against the costs,
liabilities or expenses to be incurred thereon or thereby, and (iv) the Trustee
has for 30 days failed to institute such proceeding. "Required
Percentage-Remedies" means [ ]% of the Voting Rights.
There are no events of default under the Trust Agreement.
VOTING RIGHTS
[At all times,] [Subject to the succeeding paragraph,] [ ]% of all Voting
Rights will be allocated among all holders of the [ ] Class Certificates and the
[ ] Class Certificates [in accordance with the Allocation Ration] [in proportion
to the outstanding Certificate Principal Balances [or s] of their respective
Certificates]. Within each Class of Trust Certificates, Voting Rights will be
allocated among all holders of such Class in proportion to the then outstanding
[Certificate Principal Balances] [s] of their respective Trust Certificates.
[SPECIFY CONDITIONS, IF ANY, UNDER WHICH THE ALLOCATION OF VOTING RIGHTS
MIGHT CHANGE FROM THE FOREGOING METHODOLOGY].
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VOTING OF UNDERLYING SECURITIES; MODIFICATION OF UNDERLYING SECURITIES
AGREEMENTS
The Trustee, as holder of the Underlying Securities, has the right to vote
and give consents and waivers in respect of such Underlying Securities as
permitted by the Clearing Agency and except as otherwise limited by the Trust
Agreement. In the event that the Trustee receives a request from the Clearing
Agency, the trustee for the Underlying Securities or an Underlying Securities
Issuer for it consent to any amendment, modification or waiver of the Underlying
Securities, the Underlying Securities Agreement or any other documents
thereunder or relating thereto, or receives any other solicitation for any
action with respect to Underlying Securities, the Trustee shall mail notice of
such proposed amendment, modification, waiver or solicitation to each
Certificateholder of record as of such date. The Trustee shall request
instructions from the Certificateholders as to whether or not to consent to or
vote to accept such amendment, modification, waiver or solicitation. The Trustee
shall consent or vote, or refrain from consenting or voting, in the same
proportion (based on the relative Certificate Principal Balances [and Notional
Amounts] of the Trust Certificates) as the Trust Certificates were actually
voted or not by the Certificateholders thereof as of date determined by the
Trustee prior to the date on which such consent or vote is required [after
weighing the votes of the [ ] Class Certificateholders and the [ ] Class
Certificateholders according to the Allocation Ratio]; provided, however, that,
notwithstanding anything to the contrary, the Trustee shall at no time vote or
consent to any matter (i) unless such vote or consent would not (based on an
opinion of counsel) alter the status of the Trust for federal income tax
purposes, (ii) which would alter the timing or amount of any payment on the
Underlying Securities, except in the event of an event of default or early
amortization event with respect to the Underlying Securities or an event which
with the passage of time would become such an event of default or early
amortization event and with the unanimous consent of all Outstanding
Certificates or (iii) which would result in the exchange or substitution of any
of the outstanding Underlying Securities pursuant to a plan for the refunding or
refinancing of such Underlying Securities, but only with the consent of
Certificateholders representing 100% of the aggregate voting rights of each
outstanding Class of the Trust Certificates. The Trustee shall have no liability
for any failure to act resulting from Certificateholders' late return of
directions requested by the Trustee from the Certificateholders.
In the event that an offer is made by the Underlying Securities Issuer to
issue new obligations in exchange and substitution for any of the Underlying
Securities pursuant to a plan for the refunding or refinancing of the Underlying
Securities, or any other offer is made for the Underlying Securities, the
Trustee shall notify the Certificateholders of such offer as promptly as
practicable. The Trustee must reject any such offer unless (i) the Trustee is
directed by the affirmative vote of all of the Certificateholders to accept such
offer and (ii) the Trustee has received the tax opinion described above.
If an event of default under the Underlying Securities Agreement occurs and
is continuing and if directed by all the holders of outstanding Trust
Certificates, the Trustee shall vote the Underlying Securities in favor of
directing, or taking such other action as may be appropriate to direct, the
trustee for the Underlying Securities to declare the unpaid principal amount of
the Underlying Securities and any accrued and unpaid interest thereon to be due
and payable. In connection with a vote concerning whether to declare the
acceleration of the Underlying Securities, the interests of the holders of Trust
Certificates may differ from each other and from the interests of the holders of
any other securities issued by the Underlying Securities Issuer.
TERMINATION OF THE TRUST
The Trust will terminate upon the occurrence of any of the following
events: [specify termination events]. See "Description of the Trust
Agreement Termination" in the prospectus.
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The Depositor will have the right to purchase all remaining Underlying
Securities in the Trust and thereby effect early retirement of the Trust
Certificates on any Distribution Date, [(a)] if the aggregate principal amount
of the Underlying Securities at the time of any such purchase is not more than
[specify percentage not greater than 10%] of the aggregate principal amount of
the Underlying Securities as of the Closing Date [and (b)at the option of the
Depositor at [SPECIFY WHEN AND ON WHAT TERMS ANY SUCH OPTION MAY BE EXERCISED];
provided, however, that the right to exercise any such option is contingent on
such exercise being consistent with the continued satisfaction by the Depositor
and the Trust of the applicable requirements for exemption under Rule 3a-7 under
the Investment Company Act of 1940 and all applicable rules, regulations and
interpretations thereunder. In the event the Depositor exercises any such
option, the portion of the purchase price allocable to the Trust Certificates of
each Class will be, to the extent of available funds, [100% of their then
aggregate outstanding Certificate Principal Balance or Notional Amount, as
applicable, plus with respect to the [ ] Class Certificates [SPECIFY PERIOD]
interest thereon at the Fixed Trust Certificate Rate or the then applicable
Variable Trust Certificate Rate, as the case may be, plus, with respect to each
Class of Trust Certificates, any previously accrued but unpaid interest
thereon.] [SPECIFY ALTERNATIVE ALLOCATIONS METHOD IF DIFFERENT FROM ABOVE.]
LEGAL ASPECTS OF THE TRUST ASSETS
[DESCRIBE ANY APPLICABLE LEGAL ASPECTS OF THE UNDERLYING SECURITIES OR
OTHER TRUST ASSETS OR RELATING TO THE ENFORCEABILITY BY THE CERTIFICATEHOLDERS
OF THE SECURITY INTEREST, IF ANY, SECURING SUCH UNDERLYING SECURITIES OR TRUST
ASSETS.]
THE DEPOSITOR
The Depositor was incorporated in the State of Delaware on May 30, 1995, as
a wholly-owned, limited-purpose subsidiary of Prudential Securities Group, Inc.
The Depositor will not engage in any business or other activities other than
issuing and selling securities from time to time and acquiring, owning, holding
and transferring assets (including the Underlying Securities, other Trust Assets
and Credit Support) in connection therewith or with the creation of the Trust
and in activities related or incidental thereto. The Depositor is a separate
legal entity the assets of which are not available to satisfy the claims of
creditors of Prudential Securities Group, Inc., Prudential Securities
Incorporated or any other affiliate.
The Depositor's only obligations with respect to the Trust Certificates
will be, pursuant to certain representations and warranties concerning the
Underlying Securities [and Credit Support], to assign and deliver the Underlying
Securities [and Credit Support] and certain related documents to the Trustee.
The Depositor has not guaranteed and is not otherwise obligated with respect to
the Trust Certificates.
The principal executive office of the Depositor is located at One New York
Plaza, 14th Floor, New York, New York 10292-2014 (Telephone: (212) 809-6631).
See "The Depositor" in the prospectus.
YEAR 2000
Certain information technology ("IT") and non-IT systems (i.e., embedded
technology such as microcontrollers) may utilize older computer programs that
were written using two digits rather than four to define the applicable year.
Consequently, such computer programs may recognize a date using "00" as the Year
1900 rather than the Year 2000. These computer programs may fail to operate
properly in the Year 2000 and after if they are not modified or replaced to
comply with Year 2000 requirements.
Various Underlying Securities Issuers may not timely conduct or complete a
Year 2000 assessment and there can be no assurance that any Term Assets Issuers
will make any necessary
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modifications or replacements of their IT or non-IT systems in time, if at all.
Failure to do so could result in a disruption of operations of various
Underlying Securities Issuers, including, among other things, a temporary
inability to process funds or engage in similar normal business practices. As a
result, payments to Certificateholders may be interrupted or impaired.
[SUMMARIZE YEAR 2000 DISCLOSURE FROM UNDERLYING SECURITIES PROSPECTUS(ES)
CONCERNING READINESS, COSTS, MATERIAL RISKS AND CONTINGENCY PLANS, AS
APPLICABLE]
[INCLUDE YEAR 2000 DISCLOSURE FROM THE TRUSTEE, AS APPROPRIATE]
DTC. DTC has provided the following information regarding Year 2000 issues
for inclusion in this prospectus supplement. None of the Depositor, the
Underwriter[s] or the Trustee assumes any responsibility for the accuracy or
completeness thereof:
DTC management is aware that some computer applications, systems and
the like for processing data ("Systems") that are dependent on calendar
dates, including dates before, on and after January 1, 2000, may encounter
"Year 2000 problems." DTC has informed its Participants and other members
of the financial community (the "Industry") that it has developed and is
implementing a program so that its Systems, as the same relate to timely
payment of distributions (including principal and income payments) to
securityholders, book-entry deliveries, and settlements of trades within
DTC ("DTC services"), continue to function appropriately. This program
includes a technical assessment and a remediation plan, each of which is
complete. Additionally, DTC's plan includes a testing phase, which is
expected to be completed within appropriate time frames.
However, DTC's ability to perform properly its services is also
dependent upon other parties, including but not limited to issuers and
their agents, as well as third party vendors from whom DTC licenses
software and hardware, and third party vendors on whom DTC relies for
information or the provisions of services, including telecommunication and
electrical utility service providers, among others. DTC has informed the
Industry that it is contacting (and will continue to contact) third party
vendors from whom DTC acquires services to: (i) impress upon them the
importance of such services being Year 2000 compliant; and (ii) determine
the extent of their efforts for Year 2000 remediation (and, as appropriate,
testing) of their services. In addition, DTC is in the process of
developing such contingency plans as it deems appropriate.
According to DTC, the foregoing information with respect to DTC has
been provided to the Industry for informational purposes only and is not
intended to serve as a representation, warranty or contract modification of
any kind.
FEDERAL INCOME TAX CONSEQUENCES
Orrick, Herrington & Sutcliffe LLP, Special Tax Counsel, has delivered an
opinion that the Trust will be a grantor trust or a partnership for federal
income tax purposes and not an association taxable as a corporation (or publicly
traded partnership treated as a corporation). Although such treatment is not
certain, the Trustee intends for tax reporting purposes to treat the Trust as a
grantor trust and the balance of this discussion assumes that the Trust will be
so classified. For a discussion of the consequences of recharacterization of the
Trust as a partnership for federal income tax purposes, see "-Possible
Recharacterization of the Trust as a Partnership" in "Federal Income Tax
Consequences" in the prospectus.
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<PAGE>
[INSERT A DISCUSSION OF THE TAX CHARACTERIZATION OF THE UNDERLYING
SECURITIES AS APPROPRIATE]
In general, each Trust Certificate will be treated as a synthetic debt
instrument issued on the date it is acquired by the holder thereof. Each
Certificateholder will be subject to the original issue discount ("OID") rules
of the Internal Revenue Code of 1986 (the "Code") and Treasury Regulations with
respect to such Trust Certificates. Under those rules, the Certificateholder
(whether on the cash or accrual method of accounting) will be required to
include in income the OID on its Trust Certificate as it accrues on a daily
basis, on a constant yield method regardless of when cash payments are received.
The amount of OID on the Trust Certificate generally will be equal to the excess
of all amounts payable on the Trust Certificate over the amount paid to acquire
the Trust Certificate and the constant yield used in accruing OID generally will
be the yield to maturity of the Trust Certificate as determined by such holder
based on that holder's purchase price for the Trust Certificate. The amount of
OID that is reported in income in any particular year will not necessarily bear
any relationship to the amount of distributions, if any, paid to a holder in
that year.
Payments made on a Trust Certificate to a person that is not a U.S. Person
and has no connection with the United States other than holding its Trust
Certificate generally will be made free of United States federal withholding
tax, provided that (i) the holder is not related (directly or indirectly) to
certain other specified persons and (ii) the holder complies with certain
identification and certification requirements imposed by the IRS.
See "Federal Income Tax Consequences" in the prospectus.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and Section 4975 of the Code impose certain requirements on (a) an employee
benefit plan (as defined in Section 3(3) of ERISA), (b) a plan described in
Section 4975(e)(1) of the Code, including an individual retirement account
("IRA") or Keogh plan, or (c) any entity whose underlying assets include plan
assets by reason of a plan's investment in the entity (each, a "Plan").
ERISA and Section 4975 of the Code prohibit certain transactions involving
the assets of a Plan and persons who have specified relationships to the Plan,
i.e., "parties in interest" within the meaning of ERISA or "disqualified
persons" within the meaning of the Code (collectively, "Parties in Interest").
Thus, a Plan fiduciary considering an investment in Trust Certificates should
consider whether such an investment might constitute or give rise to a
prohibited transaction under ERISA or Section 4975 of the Code. The Underlying
Securities Issuer, the Underwriter[s], the Trustee and their respective
affiliates may be Parties in Interest with respect to any Plans.
If an investment in Trust Certificates by a Plan were to result in the
assets of the Trust being deemed to constitute "plan assets" of such Plan,
certain aspects of such investment, including the operations of the Trust and
the deemed extension of credit between the Underlying Securities Issuer and the
holder of a Trust Certificate (as a result of the Underlying Securities being
deemed to be plan assets), as well as subsequent transactions involving the
Trust or its assets, might constitute or result in prohibited transactions under
Section 406 of ERISA and Section 4975 of the Code unless exemptive relief were
available under an applicable exemption issued by the United States Department
of Labor (the "DOL"). Neither ERISA nor the Code defines the term "plan assets."
Under Section 2510.3-101 of the DOL regulations (the "Regulation"), a Plan's
assets may include the assets of an entity if the Plan acquires an "equity
interest" in such entity unless an exception applies under the Regulation. Thus,
if a Plan acquires a Trust Certificate, for certain purposes (including the
prohibited transaction provisions of Section 406 of ERISA and Section 4975 of
the Code), the Plan would be considered to own an undivided interest in the
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underlying assets of the Trust unless such Trust Certificate is a
"publicly-offered security" or another exception applies under the Regulation.
[The Underwriter[s] expect[s] that the Trust Certificates will satisfy the
criteria for treatment as publicly-offered securities under the Regulation.] A
publicly-offered security is a security that is (i) freely transferable, (ii)
part of a class of securities that is owned by 100 or more investors independent
of the issuer and of one another at the conclusion of the initial offering, and
(iii) either is (A) part of a class of securities registered under Section 12(b)
or 12(g) of the Exchange Act, or (B) sold to the Plan as part of an offering of
securities to the public pursuant to an effective registration statement under
the Securities Act of 1933, as amended (the "Securities Act"), and the class of
securities of which such security is a part is registered under the Exchange Act
within 120 days (or such later time as may be allowed by the Commission) after
the end of the fiscal year of the issuer during which the offering of such
securities to the public occurred.
[The Underwriter[s] will verify that there will be at least 100 separate
purchasers (whom the Underwriter[s] ha[s][ve] no reason to believe are not
independent of the Depositor or of one another) at the conclusion of the initial
offering.] There is no assurance that the 100 independent investor requirement
of the "public-offered security" exception will, in fact, be satisfied.
NOTHING HEREIN SHALL BE CONSTRUED AS A REPRESENTATION THAT AN INVESTMENT IN
THE TRUST CERTIFICATES WOULD MEET ANY OR ALL OF THE RELEVANT LEGAL REQUIREMENTS
WITH RESPECT TO INVESTMENTS BY, OR IS APPROPRIATE FOR, PLANS GENERALLY OR ANY
PARTICULAR PLAN. ANY PLAN OR ANY OTHER ENTITY THE ASSETS OF WHICH ARE DEEMED TO
BE "PLAN ASSETS," SUCH AS AN INSURANCE COMPANY INVESTING ASSETS OF ITS GENERAL
ACCOUNT, PROPOSING TO ACQUIRE TRUST CERTIFICATES SHOULD CONSULT WITH ITS
COUNSEL.
METHOD OF DISTRIBUTION
[MODIFY, AS APPROPRIATE FOR A BEST EFFORTS OFFERING] Subject to the terms
and conditions set forth in the Underwriting Agreement, dated as of [ ], [ ]
(the "Underwriting Agreement"), the Depositor has agreed to sell and [Prudential
Securities Incorporated (an affiliate of the Depositor)] (each of the
Underwriters named below, including Prudential Securities Incorporated (an
affiliate of the Depositor)] (the "Underwriter[s]")[,] has [severally] agreed to
purchase the [Trust Certificates] [principal amount of each Class of Trust
Certificates set forth below opposite its name].
[ ] CLASS [ ] CLASS [ ] CLASS
CERTIFICATES CERTIFICATE CERTIFICATES
Prudential $ $ $
Securities
Incorporated.....
----------------------
Total......
[Prudential Securities Incorporated has] [The several Underwriters have]
agreed, subject to the terms and conditions set forth in the Underwriting
Agreement, to purchase all Trust Certificates offered hereby if any of such
Trust Certificates are purchased. [In the event of default by any Underwriter,
the Underwriting Agreement provides that, in certain circumstances, the purchase
commitments of non-defaulting Underwriters may be increased or the Underwriting
Agreement may be terminated.]
The Depositor has been advised by the Underwriter[s] that [it] [they]
propose[s] to offer the Trust Certificates from time to time in negotiated
transactions or otherwise at varying prices to be determined at the time of
sale. The Underwriter[s] may effect such transactions by selling Trust
Certificates to or through dealers and such dealers may receive compensation in
the form of underwriting discounts,
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concessions or commissions from the Underwriter[s] and any purchasers of Trust
Certificates for whom they may act as agents. The Underwriter[s] and any dealers
that participate with the Underwriter[s] in the distribution of Trust
Certificates may be deemed to be underwriters, and any profit on the resale of
Trust Certificates by them may be deemed to be underwriting discounts or
commissions under the Securities Act.
The Underwriting Agreement provides that the Depositor will indemnify the
Underwriter[s] against certain civil liabilities, including liabilities under
the Securities Act, or will contribute to payments the Underwriter[s] may be
required to make in respect thereof.
[Prudential Securities Incorporated (the "Representative"), on behalf of
the Underwriter[s], may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids in accordance with Regulation M
under the Exchange Act. Over-allotment involves syndicate sales in excess of the
offering size, which creates a syndicate short position. Stabilizing
transactions permit bids to purchase the underlying security so long as the
stabilizing bids do not exceed a specified maximum. Syndicate covering
transactions involve purchases of the Trust Certificates offered hereby in the
open market after the distribution has been completed in order to cover
syndicate short positions. Penalty bids permit the Representative to reclaim a
selling concession from a syndicate member when the Trust Certificates offered
hereby originally sold by such syndicate member are purchased in a syndicate
covering transaction to cover syndicate short positions. Such stabilizing
transactions, syndicate covering transactions and penalty bids may cause the
price of the Trust Certificates offered hereby to be higher than it would
otherwise be in the absence of such transactions.]
Prudential Securities Incorporated is an affiliate of the Depositor, and
the participation by Prudential Securities Incorporated is the offering of the
Trust Certificates complies with Rule 2720 of the Conduct Rules of the National
Association of Securities Dealers, Inc. regarding underwriting securities of an
affiliate.
LEGAL OPINIONS
The validity of the Trust Certificates and certain federal income tax
matters will be passed upon for the Depositor and the Underwriter[s] by Orrick,
Herrington & Sutcliffe LLP, New York, New York.
RATINGS
It is a condition to the issuance of the Trust Certificates that the Trust
Certificates have ratings assigned by [Moody's Investors Service, Inc.
("Moody's"), Standard & Poor's Ratings Group ("S&P"), Fitch IBCA, Inc. ("Fitch")
and Duff & Phelps Credit Rating Company ("Duff & Phelps")] of [ ], [ ], [ ] and
[ ], respectively.
The rating[s] address[es] the likelihood of the receipt by Trust
Certificateholders of payments required under the Trust Agreement, and [is/are]
based primarily on the credit quality of the Underlying Securities [and the
Credit Support]. The rating[s] on the Trust Certificates do[es] not, however,
constitute a statement regarding the occurrence or frequency of redemptions or
prepayments on, or extensions of the maturity of, the Underlying Securities, and
the corresponding effect on yield to investors.
A security rating is not a recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at any time by the assigning rating
agency. Each security rating should be evaluated independently of similar
ratings on different securities. The revision or withdrawal of a rating may have
an adverse effect on the market price or liquidity of the Trust Certificates.
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<PAGE>
The Depositor has not requested a rating on the Trust Certificates by any
rating agency other than the rating agencies listed above. However, there can be
no assurance as to whether any other rating agency will rate the Trust
Certificates, or, if it does, what rating would be assigned by any such other
rating agency. A rating on the Trust Certificates by another rating agency, if
assigned at all, may be lower than the ratings assigned to the Trust
Certificates by the rating agencies listed above.
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INDEX OF TERMS
[ ] Class Allocation........ S-20
Advance......................S-18
Allocation Ratio.............S-20
Allowable Expense Amount.....S-17
Available Funds..............S-17
Base Trust Agreement.........S-10
Beneficial Owner.............S-15
Call Premium Percentage......S-17
Cede.........................S-15
Clearing Agency..............S-15
Closing Date.................S-10
Code.........................S-25
Collection Period............S-16
Concentrated Underlying
Securities...................S-31
Credit Support...............S-13
Credit Support Payments......S-16
Credit Support Providers.....S-16
Definitive Classes...........S-15
Distribution Date............S-15
DOL..........................S-25
DTC..........................S-15
DTC Participants.............S-15
DTC services.................S-24
Duff & Phelps................S-27
Eligible Investments.........S-17
ERISA........................S-25
Exchange Act.................S-11
Exchange Date................S-18
Exchange Right...............S-18
Extraordinary Trust Expense..S-18
Final Scheduled
Distribution Date............S-15
Fitch........................S-27
Industry.....................S-24
IRA..........................S-25
IT...........................S-23
Letter of Credit.............S-13
Letter of Credit Bank........S-13
Liquidation Proceeds.........S-18
Moody's......................S-27
Notice of Exchange...........S-18
OID..........................S-25
Parties in Interest..........S-25
Plan.........................S-25
plan assets..................S-25
publicly-offered security....S-26
Regulation...................S-25
Representative...............S-27
Required Interest............S-17
Required Percentage-Remedies.S-21
Required Premium.............S-17
Required Principal...........S-17
Reserve Account..............S-13
S&P..........................S-27
SEC..........................S-11
Securities Act...............S-26
Series Supplement............S-10
Specified Currency...........S-14
Allocation of Losses.........S-16
Surety.......................S-14
Surety Bond..................S-14
Systems......................S-24
Trust Agreement..............S-10
Trust Assets.................S-13
Trust Certificates...........S-10
Underlying Securities........S-10
Underlying Securities
Issuer[s]....................S-10
Underlying Securities
Prospectus[es]...............S-11
Underwriter[s]...............S-26
Underwriting Agreement.......S-26
Voting Rights................S-15
S-29
<PAGE>
ANNEX A
TERMS OF THE UNDERLYING SECURITIES
The Underlying Securities will consist of a pool of publicly issued
[specify, as applicable] [(1) debt securities or asset backed securities issued
by one or more corporations, banking institutions, insurance companies or
special purpose vehicles (including trusts, limited liability companies,
partnerships or other special purpose entities) organized under the laws of the
United States of America or any state, the District of Columbia or the
Commonwealth of Puerto Rico, which are subject to the informational requirements
of the Exchange Act and file reports and other information with the SEC, or (for
certain banking institutions) with the Comptroller of the Currency, the Board of
Governors of the Federal Reserve System, the Federal Deposit Insurance
Corporation or the Office of Thrift Supervision, as applicable, (2) fixed income
debt securities issued by one or more foreign private issuers (as defined in
Rule 405 under the Securities Act) and subject to the reporting requirements of
the Exchange Act and file reports and other information with the SEC, (3) fixed
income debt securities which represent obligations of the United States of
America, any agency thereof for the payment of which the full faith and credit
of the United States of America is pledged or a United States government
sponsored enterprise created pursuant to federal law or (4) fixed income debt
securities issued by a foreign government, political subdivision or agency or
instrumentality thereof.]
The composition of the pool of Underlying Securities and the distribution
by ratings, remaining term to maturity and interest rate of the Underlying
Securities as of [ ], [ ], as derived from the relevant Underlying Securities
Prospectuses, is set forth below:
Composition of the Underlying Securities Pool
as of [ ], [ ]
Number of Underlying Securities:
Aggregate Principal Balance:
Average Principal Balance:
Largest Balance:
Weighted Average Interest Rate:
Weighted Average Original Term to Maturity:
Weighted Average Remaining Term to Maturity:
Longest Remaining Term to Maturity:
Distribution by Rating
of the Underlying Securities Pool as of [ ], [ ]
- ---------------------------------------------------------------------
Rating Number Aggregate Percentage of
Principal Aggregate
Balance Principal
Balance
- ---------------------------------------------------------------------
Total
- ---------------------------------------------------------------------
Distribution by Remaining Term to Maturity
of the Underlying Securities Pool as of [ ], [ ]
- ---------------------------------------------------------------------
Remaining Term Number Aggregate Percentage of
to Maturity Principal Aggregate
Balance Principal
Balance
- ---------------------------------------------------------------------
Total
- ---------------------------------------------------------------------
Distribution by Interest Rate
of the Underlying Securities Pool as of [ ], [ ]
- ---------------------------------------------------------------------
Interest Rate Number Aggregate Percentage of
Principal Aggregate
Balance Principal
Balance
- ---------------------------------------------------------------------
Total
- ---------------------------------------------------------------------
Certain information concerning each of the Underlying Securities that
comprise more than ten percent of aggregate principal amount of the Underlying
Securities pool ("Concentrated Underlying Securities"), as derived from the
applicable Underlying Securities Prospectus[es], is set forth below:
[Duplicate the following presentation for each Concentrated Underlying
Security]
[Name of Underlying Securities Issuer]
[Title of Underlying Securities]
Principal Amount Deposited into Trust: [$] [ ]
Dated Date: [ ],
[ ]
Issue Date: [ ],
[ ]
Stated Interest Rate: [ ]%
Stated Maturity [ ],
Date/Scheduled Final [ ]
Distribution Date:
Interest Payments
The Underlying Securities Prospectus states as follows: [Insert interest
payment section from the Underlying Securities Prospectus].
Principal Payments
The Underlying Securities Prospectus states as follows: [Insert principal
payment section from the Underlying Securities Prospectus].
[Redemption or Conversion Features]
The Underlying Securities Prospectus states as follows: [Insert redemption
or conversion feature section from the Underlying Securities Prospectus].
[Security for Underlying Securities]
The Underlying Securities Prospectus states as follows: [Insert security
section from the Underlying Securities Prospectus].
[Allocation of Collections or Revenues]
The Underlying Securities Prospectus states as follows: [Insert allocation
of collections or revenues section from the Underlying Securities Prospectus].
[Underlying Securities Events of Default][Early Amortization
Events]
The Underlying Securities Prospectus states as follows: [Insert events of
default/early amortization events section from the Underlying Securities
Prospectus].
<PAGE>
RECEIPTS ON CORPORATE SECURITIES TRUST [ ]-[ ]
$[ ]
RECEIPTS ON CORPORATE SECURITIES, SERIES [ ]-[ ]
$[ ] [ ] CLASS CERTIFICATES
$[ ] [ ] CLASS CERTIFICATES
PROSPECTUS SUPPLEMENT
-----------------
Underwriter[s]
[PRUDENTIAL SECURITIES INCORPORATED]
You should rely only on the information contained or incorporated by reference
in this prospectus supplement or in the accompanying prospectus. We have not
authorized anyone to provide you with different information.
We are not offering the trust certificates in any state where the offer is not
permitted.
The delivery of this prospectus supplement and the accompanying prospectus at
any time does not imply that the information in this prospectus supplement and
the accompanying prospectus is correct as of any date after the dates on their
covers. We not that if any material change occurs while this prospectus
supplement and the accompanying prospectus are required by law to be delivered,
we will update the relevant information in this prospectus supplement and the
accompanying prospectus to incorporate the material change.
Dealers will be required to deliver a prospectus supplement and prospectus when
acting as underwriters of the trust certificates and with respect to their
unsold allotments or subscriptions. In addition, all dealers selling the trust
certificates may be required to deliver a prospectus supplement and prospectus
until [ ], [ ] (90 days after the date of this prospectus supplement).
<PAGE>
PROSPECTUS
- --------------------------------------------------------------------------------
TRUST CERTIFICATES
(ISSUABLE IN SERIES)
PRUDENTIAL SECURITIES STRUCTURED ASSETS, INC.
Depositor
- --------------------------------------------------------------------------------
The trust certificates offered by this prospectus will be issued in series. Each
series of trust certificates will represent beneficial interests in a separate
trust established by Prudential Securities Structured Assets, Inc., as
depositor.
You should carefully consider the risk factors described on pages [ ]
through [ ] of this prospectus.
The trust certificates will represent interests in the trust and will not
represent an obligation of the depositor or any of its affiliates.
The trust certificates will not represent a direct obligation of any of the
issuers of the trust assets.
This prospectus may be used to offer and sell trust certificates only if it
is accompanied by the prospectus supplement for such trust certificates.
You should carefully consider the risk factors described on pages [ ]
through [ ] of this prospectus.
The trust certificates will represent interests in the trust and will not
represent an obligation of the depositor or any of its affiliates.
The trust certificates will not represent a direct obligation of any of the
issuers of the trust assets.
This prospectus may be used to offer and sell trust certificates only if it
is accompanied by the prospectus supplement for such trust certificates.
EACH TRUST WILL CONSIST OF:
One or more debt securities or asset backed securities issued by:
- Domestic corporations, banking institutions, insurance companies or
special purpose asset backed securities issuers;
- Foreign, non-governmental issuers;
- The United States of America, certain federal agencies or government
sponsored enterprises created under federal law; or
- Foreign governments, political subdivisions, agencies or
instrumentalities.
- Any other assets described in the prospectus supplement
EACH SERIES OF TRUST CERTIFICATES:
Will be payable only from the assets of the trust created for that series;
Will be rated in one of the four highest rating categories of a nationally
recognized rating agency; and
May include multiple classes of trust certificates and credit enhancement.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the trust certificates or determined
that this prospectus is accurate or complete. Any representation to the contrary
is a criminal offense.
The date of this prospectus is
[ ], [ ].
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS
AND THE PROSPECTUS SUPPLEMENT
We provide information to you about the trust certificates in two separate
documents that progressively provide more detail:
- this prospectus, which provides general information, some of which may
not apply to your trust certificates, and
- the prospectus supplement, which describes specific terms of your trust
certificates.
We include cross-references in this prospectus and the prospectus
supplement to captioned sections of these documents where you may find further
related discussions. The following table of contents and the table of contents
included in the prospectus supplement provide the pages on which these captioned
sections are located.
You should rely only on the information provided in this prospectus and the
prospectus supplement, including any information incorporated by reference. You
may request information incorporated by reference from the depositor at
(212)809-6631 or at the following address: Prudential Securities Structured
Assets, Inc., One New York Plaza, 14th Floor, New York, New York 10292-2014. We
have not authorized anyone to provide you with different information. We are not
offering the trust certificates in any state where the offer is not permitted.
<PAGE>
TABLE OF CONTENTS
Page
RISK FACTORS......................................................2
PROSPECTUS SUPPLEMENT.............................................5
AVAILABLE INFORMATION.............................................6
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...................6
REPORTS TO TRUST CERTIFICATEHOLDERS...............................6
THE DEPOSITOR.................................................... 7
USE OF PROCEEDS...................................................7
FORMATION OF THE TRUST........................................... 8
MATURITY AND YIELD CONSIDERATIONS.................................8
DESCRIPTION OF THE TRUST CERTIFICATES.............................9
General....................................................10
Distributions..............................................10
Certificate Principal Balance and Notional Amount of
the Trust Certificates................................11
Interest on the Trust Certificates.........................11
Optional Exchange..........................................13
Default and Remedies.......................................14
Call Rights................................................15
Put Rights.................................................15
Global Securities..........................................15
DESCRIPTION OF THE TRUST ASSETS..................................17
General....................................................17
Principal Economic Terms of Underlying Securities..........19
Publicly Available Information.............................19
Other Trust Assets.........................................20
Credit Support.............................................20
Collections................................................22
DESCRIPTION OF THE TRUST AGREEMENT...............................22
Assignment of Trust Assets.................................23
Collection and Other Administrative Procedures.............23
Retained Interest..........................................24
Trustee Compensation and Payment of Expenses...............24
Limitations on Rights of Trust Certificateholders..........25
(i)
<PAGE>
Modification and Waiver....................................25
Replacement Trust Certificates.............................26
Termination................................................26
Duties of the Trustee......................................26
The Trustee................................................27
LIMITATIONS ON ISSUANCE OF BEARER CERTIFICATES...................27
CURRENCY RISKS...................................................28
FEDERAL INCOME TAX CONSEQUENCES..................................28
Tax Status of the Trust....................................29
Income of Certificateholders...............................30
Possible Recharacterization of the Trust as a
Partnership...........................................31
Withholding Taxes..........................................31
Possible Characterization of the Underlying Securities
as Equity Securities..................................31
State and Other Tax Consequences...........................32
PLAN OF DISTRIBUTION.............................................32
LEGAL MATTERS....................................................33
INDEX OF DEFINED TERMS...........................................34
(ii)
<PAGE>
RISK FACTORS
You should consider the following material risk factors (and any other
material risk factors identified in the applicable prospectus supplement) in
deciding whether to purchase trust certificates.
- -----------------------------------------------------------------------
Your Trust Your trust certificates will represent an
Certificates Are interest in the assets of the applicable trust
Secured by the Trust only and will not represent an obligation of
Assets Only; the the depositor, the trustee, the underwriters,
Performance of the the issuer[s] of the trust assets or any of
Underlying Securities their affiliates. The assets of the trust
Will Affect the Value will include certain securities (the
of Your Investment underlying securities) and other assets
and You May described in the prospectus supplement for
Experience a Loss if your trust certificates. See "Description of
the Trust Assets are the Trust Assets" in this prospectus and
Insufficient to Pay "Description of the Underlying Securities" in
Your Trust the applicable prospectus supplement. Your
Certificates trust certificates will not be insured or
guaranteed by the depositor, the trustee, the
underwriters or any of their affiliates. If
the trust assets are insufficient to make
payments on your trust certificates, you will
experience a loss of some or all of your
investment.
Your Ability to Make In deciding whether to invest in or sell trust
an Informed certificates, you should obtain and evaluate
Investment Decision information concerning each issuer of the
May Be Impeded if an underlying securities as if you were investing
Underlying Securities directly in that issuer and its securities.
Issuer Ceases to Make The information that each underlying
Information Publicly securities issuer makes available to the
Available public is important in considering whether to
invest in or sell trust certificates. See
"Description of the Underlying Securities -
Publicly Available Information" in the
applicable prospectus supplement.
Accordingly, to the extent that an underlying
securities issuer ceases to make information
about itself and the underlying securities
publicly available, your ability to make an
informed decision to purchase or sell trust
certificates could be impeded. the depositor,
the trustee, the underwriters and their
affiliates (1) have not verified, and have not
undertaken to verify, the accuracy,
completeness or continued availability of any
such information by an underlying securities
issuer (whether or not filed with the SEC),
(2) have made no investigation of the
financial condition or creditworthiness of any
underlying securities issuer, and (3) assume
no responsibility for any information
considered by any purchaser or potential
purchaser of the trust certificates that is
not expressly contained in this prospectus or
the applicable prospectus supplement.
You should not construe the issuance of the
trust certificates as an endorsement by the
depositor, the trustee, the underwriters or
any of their affiliates of the financial
condition or business prospects of any
underlying securities issuer.
Remedies Under the The trust agreement authorizing the issuance
Trust Agreement Are of your trust certificates will govern the
Limited; The Trust actions of the trustee on your behalf. The
Will Not Actively remedies available to the trustee are
Manage the Underlying predetermined and limited. Therefore, by
Securities to Avoid virtue of the trust, you will have less
Losses discretion over the exercise of remedies under
the underlying securities than if you had
invested directly in the underlying securities
themselves.
2
<PAGE>
Each trust will generally hold the related
trust assets to the final scheduled
distribution date for the trust certificates.
Even if adverse financial or other events or
conditions occur, the trust will not dispose
of the underlying securities or other trust
assets prior to the final scheduled
distribution date, except in certain limited
circumstances. The applicable prospectus
supplement will describe the particular
circumstances, if any, under which a trust
asset may be disposed of prior to maturity.
Trust Certificates If your trust certificates are denominated
Denominated in and/or payable in a currency other than U.S.
Foreign Currency dollars (i.e., a foreign or composite
Involve Special currency), your investment entails significant
Currency-Related Risks currency-related risks. Such risks include
the possibility of:
- Significant changes in exchange rates between the U.S.
dollar and the foreign currency, and
- the imposition or modification of foreign exchange
controls.
These risks generally depend on economic,
social and political events and the supply of
and demand for the relevant currencies. In
recent years, rates of exchange between the
U.S. dollar and certain foreign currencies
have been highly volatile. You should be
aware, however, that past fluctuations in any
particular exchange rate do not necessarily
indicate fluctuations in the rate that may
occur during the term of your trust
certificates. If the currency in which your
trust certificate is denominated and/or
payable depreciates in value against the U.S.
dollar, the effective yield of your trust
certificate (on a dollar-equivalent basis)
would decrease and you may experience a loss
on your investment, which may be substantial.
Governments may from time to time impose
exchange controls that could affect exchange
rates and the availability of foreign
currency. These exchange controls could
restrict or prohibit distributions of amounts
due on your trust certificates. Even if there
are no actual exchange controls in place, it
is possible that sufficient amounts of foreign
currency may not be available to make
distributions of principal, interest or
premium on your trust certificates. See
"Currency Risks" in this prospectus.
YOU ARE STRONGLY ENCOURAGED TO CONSULT YOUR
OWN FINANCIAL, TAX AND LEGAL ADVISORS AS TO
THE RISKS ENTAILED BY AN INVESTMENT IN TRUST
CERTIFICATES WHICH ARE ISSUED BY A FOREIGN
GOVERNMENT OR COMPANY AND/OR DENOMINATED
AND/OR PAYABLE IN A FOREIGN OR COMPOSITE
CURRENCY. SUCH TRUST CERTIFICATES ARE NOT AN
APPROPRIATE INVESTMENT IF YOU ARE
UNSOPHISTICATED WITH RESPECT TO FOREIGN OR
COMPOSITE CURRENCY TRANSACTIONS.
3
<PAGE>
Issuance of the Trust If your trust certificates are issued as
Certificates as global securities and deposited with, or on
Global Securities May behalf of, a securities depositary, you will
Limit Your Ability to not be recognized as a trust certificateholder
Exercise Rights Under under the applicable trust agreement. In such
or Pledge Your Trust event, you will only be able to exercise the
Certificates rights of trust certificateholders indirectly
through the securities depositary and its
participants (e.g., banks and
broker-dealers). As a result, your ability to
pledge your trust certificates to persons or
entities that do not participate in the
depositary's system, or to otherwise to act
with respect to such trust certificates, may
be limited. See "Description of the Trust
Certificates-Global Securities" in this
prospectus and any further description
contained in the applicable prospectus
supplement.
The Trust Agreement The trust agreement that governs the terms of
May Be Amended your trust certificates may be amended or
Without Your Consent otherwise modified without your consent upon
compliance with certain conditions specified
in the trust agreement. See "Description of
the Trust Agreement - Modification and Waiver"
in this prospectus. Any amendment or other
modification of the applicable trust agreement
could have a material adverse effect on your
trust certificates.
No Rulings Will Be Orrick, Herrington & Sutcliffe LLP, special
Obtained From the tax counsel, has delivered an opinion that the
Internal Revenue trust will not be characterized as an
Service Concerning association taxable as a corporation (or
the Trust publicly traded partnership treated as an
Certificates And The association) for federal income tax
Internal Revenue purposes. Special tax counsel has not
Service May Disagree delivered (and unless otherwise indicated in
With Special Tax the applicable prospectus supplement does not
Counsel intend to deliver) any other opinions
regarding the trust or your trust certificates.
You should be aware that no rulings have been,
or will be, sought from the Internal Revenue
Service, and that legal opinions are not
binding on the IRS or the courts.
Accordingly, there can be no assurance that
the IRS or the courts will agree with special
tax counsel's opinions. If, contrary to
special tax counsel's opinion, the trust is
characterized or treated as a corporation for
federal income tax purposes, among other
consequences, the trust would be subject to
federal income tax (and similar state income
or franchise taxes) on its income and
distributions on your trust certificates would
be impaired. See "Federal Income Tax
Consequences" in this prospectus and in the
applicable prospectus supplement.
No Certainty of Except as discussed under "- Federal Income
Characterization for Tax Consequences," the discussion under
Tax Purposes of the "Federal Income Tax Consequences" in this
Underlying Securities prospectus assumes that the Underlying
Securities will be characterized as
indebtedness for federal income tax purposes.
If the assumption were not correct and the
Underlying Securities are treated as equity
securities for federal income tax purposes,
the timing and character of income on the
Certificates may differ from that otherwise
discussed under "Federal Income Tax
Consequences" and, with respect to any
particular investor, might be adverse. See
"Federal Income Tax Consequences - Federal
Income Tax Consequences" in this prospectus.
The prospectus supplement for your trust certificates will set forth
information regarding additional material risk factors, if any.
4
<PAGE>
The Receipts on Corporate Securities (the "Trust Certificates") to be
issued by separate trusts (each, a "Trust") established by the depositor and
offered by this prospectus and by supplements hereto will be offered from time
to time in one or more Series and in one or more Classes within each such
Series.
PROSPECTUS SUPPLEMENT
The prospectus supplement relating to a Series of Trust Certificates to be
offered hereby will set forth with respect to such Series:
(a) the specific designation and Certificate Principal Balance and/or
Notional Amount of such Series;
(b) the Specified Currency or Currencies in which the principal, premium,
if any, and any interest on such Series is distributable;
(c) the number of Classes and, with respect to each such Class, its
designation and Certificate Principal Balance or Notional Amount and the minimum
denominations of the Trust Certificates;
(d) whether the Trust Certificates of such Series and each Class within
such Series will be issued as Bearer Certificates or Registered Certificates;
(e) a description of the assets deposited in the Trust for such Series (the
"Trust Assets"), including the debt securities or asset backed securities (the
"Underlying Securities"), derivative instruments, and letters of credit, surety
bonds, reserve accounts or other credit support, if any (the "Credit Support"),
deposited therein;
(f) the identity of each issuer of the Underlying Securities (each, an
"Underlying Securities Issuer") and each obligor with respect to any of the
other Trust Assets;
(g) the relative rights and priorities of each Series or Class;
(h) the name of the Trustee for such Series and the Administrative Agent,
if any;
(i) the Trust Certificate Rate for each Class or the applicable method of
calculation thereof and the basis on which such Trust Certificate Rate is
computed;
(j) the Distribution Date of any interest, premium (if any) and/or
principal for each Class within such Series;
(k) the Original Issue Date(s) on which, or periods during which, such
Series of Trust Certificates may be issued;
(l) the Final Scheduled Distribution Date, if applicable, for each Class
within such Series;
(m) the remedies upon the occurrence of a payment default on the Underlying
Securities;
(n) the applicable Required Percentages and Voting Rights (each, as defined
herein) with regard to certain actions by the Depositor or the Trustee with
respect to the applicable Trust; and
(o) any other material terms of the Trust Certificates (including terms
relating to the rights of the Trust or any third party to redeem or purchase
such Trust Certificates prior to the Final Scheduled Distribution Date).
5
<PAGE>
AVAILABLE INFORMATION
The Depositor has filed with the Securities and Exchange Commission (the
"SEC") a registration statement on Form S-3 (together with all amendments and
exhibits, the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), relating to the Trust Certificates. This
prospectus does not contain all the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the SEC. For further information, reference is hereby made to the
Registration Statement. The Depositor, on behalf of the Trust, is subject to the
periodic reporting requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and in accordance therewith will file reports and
other information with the SEC. Such reports and other information concerning
the Trust may be inspected and copied at the public reference facilities
maintained by the SEC at its Public Reference Room, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Information regarding the operation of the SEC's Public
Reference Room is available by telephone at (800) 732-0330. Such reports and
information concerning the Trust are also available at the SEC's public
reference facilities located at the following Regional Offices of the SEC: New
York Regional Office, Room 1100, 7 World Trade Center, New York, New York 10048
and Chicago Regional Office, Suite 1400, Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and copies of such
material can be obtained from the Public Reference Section of the SEC,
Washington, D.C. 20549, at prescribed rates. Such material may also be accessed
electronically by means of the SEC's home page on the Internet at
http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed by the Depositor on behalf of the Trust pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this prospectus and prior to the termination of the offering of the Trust
Certificates shall be deemed to be incorporated by reference in this prospectus.
Such documents may include, without limitation, Annual Reports on Form 10-K and
Current Reports on Form 8-K. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded to the extent that a statement in any subsequently
filed document modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this prospectus. The Depositor will provide without
charge to each person to whom a copy of this prospectus is delivered, on the
written or oral request of any such person, a copy of any or all of the
documents incorporated herein by reference, except the exhibits to such
documents (unless such exhibits are specifically incorporated by reference in
such documents). Written requests for such copies should be directed to
Prudential Securities Structured Assets, Inc., One New York Plaza, 14th Floor,
New York, New York 10292-2014. Telephone requests for such copies should be
directed to the Depositor at (212) 809-6631.
REPORTS TO TRUST CERTIFICATEHOLDERS
Unless and until Definitive Certificates (as defined herein) are issued,
unaudited reports containing information concerning the related Trust will be
prepared annually by the related Trustee and sent on behalf of the related Trust
only to Cede & Co. ("Cede"), as nominee of The Depository Trust Company ("DTC"),
or its successor, as securities depository for the Trust Certificates (the
"Depositary") and registered holders (the "Trust Certificateholders" or
"Holders") of the Trust Certificates. If Definitive Certificates are issued,
such reports will be prepared by the related Trustee and sent on behalf of the
related Trust directly to the Trust Certificateholders in accordance with the
Trust Agreement. See "Description of the Trust Certificates-Global Securities"
and "Description of the Trust Agreement-Reports to Trust Certificateholders;
Notices". Such reports will not constitute financial statements prepared in
accordance with generally accepted accounting principles. The Depositor, on
behalf of each Trust, will cause to be filed with the SEC such periodic reports
as are required under the Exchange Act. The Depositor does not intend to send
any financial reports to Trust Certificateholders.
6
<PAGE>
References herein to "U.S. dollars", "US$", "dollar" or "$" are to the
lawful currency of the United States.
For definitions of certain terms used herein, refer to "Index of Defined
Terms", beginning on page [ ].
THE DEPOSITOR
The Depositor was incorporated in the State of Delaware on May 30, 1995, as
a wholly-owned, limited-purpose direct subsidiary of Prudential Securities
Group, Inc. The Depositor will not engage in any business or other activities
other than issuing and selling securities from time to time and acquiring,
owning, holding and transferring assets (including the Underlying Securities,
other Trust Assets and Credit Support) in connection therewith or with the
creation of Trusts and in activities related or incidental thereto. The
Depositor does not have, nor is it expected to have, any significant
unencumbered assets. The Depositor is a separate legal entity the assets of
which are not available to satisfy the claims of creditors of Prudential
Securities Group, Inc., Prudential Securities Incorporated or any other
affiliate.
The Depositor's only obligations with respect to the Trust Certificates of
any Series will be, pursuant to certain representations and warranties
concerning the Underlying Securities and the Credit Support, if any, for such
Series, to assign the Underlying Securities, any such Credit Support and any
related documents to the Trustee. The Depositor will not guarantee or otherwise
be obligated with respect to the Trust Certificates.
The principal executive office of the Depositor is located at One New York
Plaza, 14th Floor, New York, New York 10292-2014 (Telephone: (212) 809-6631).
USE OF PROCEEDS
If the related Trust Assets are to be purchased by the Depositor, the net
proceeds to be received from the sale of each Series of Trust Certificates
(whether or not offered hereby) will be transferred to the Depositor for such
purchase. In addition, the Depositor may use such net proceeds to arrange
certain Credit Support, if any, including, if specified in the applicable
prospectus supplement, required deposits into any Reserve Account or the
applicable Trust Certificate Account (as defined herein) for the benefit of the
Trust Certificateholders of such Series or Class. The remaining net proceeds, if
any, will be used by the Depositor for purposes related to the deposit of Trust
Assets into one or more Trusts and the preparation, distribution and filing by
the Depositor of periodic reports and other information, including, but not
limited to, the fees and expenses of the Depositor incurred in connection with
the ongoing activities of the Trust(s).
7
<PAGE>
FORMATION OF THE TRUST
Each Series (or, if more than one Class exists, the Classes within such
Series) of Trust Certificates will be issued pursuant to a base trust agreement
and a supplement thereto (together, the "Trust Agreement") between the Depositor
and the Trustee named in the applicable prospectus supplement; a form of which
Trust Agreement is attached as an exhibit to the Registration Statement. The
Depositor will assign and deliver the Trust Assets for each Series of Trust
Certificates to the Trustee named in the applicable prospectus supplement, in
its capacity as Trustee, for the benefit of the Holders of such Series. See
"Description of the Trust Agreement-Assignment of Trust Assets". The
Trustee will administer the Trust Assets pursuant to the Trust Agreement and
will receive a fee for such services (the "Trustee Fee"). Any administrative
agent named in the applicable prospectus supplement (the "Administrative Agent")
will perform such tasks as are specified therein and in the Trust Agreement and
will receive a fee (the "Administration Fee") for its services. The Trustee or
an Administrative Agent, if applicable, will either cause the assignment of the
Trust Assets to be recorded on the books and records of DTC or will obtain an
opinion of counsel that no recordation is required to obtain a first priority
perfected security interest in such Trust Assets.
The Depositor's assignment of the Trust Assets to the Trustee will be
without recourse to the Depositor (except as to certain limited representations
and warranties, if any).
The applicable prospectus supplement will set forth the jurisdiction in
which the Trust was established and the property of each Trust, which may
consist of (i) the Trust Assets, or interests therein, exclusive of any interest
in such assets (the "Retained Interest") retained or acquired by the Depositor,
or any previous owner thereof or any other person or entity, as from time to
time are specified in the Trust Agreement; (ii) such assets as from time to time
are identified as deposited in the related Trust Certificate Account; (iii)
rights under the agreement or agreements pursuant to which the Depositor or the
Trustee has acquired such Trust Assets; (iv) those elements of Credit Support,
if any, provided with respect to any Series (or Class within such Series) that
are specified as being part of the related Trust in the applicable prospectus
supplement, as described therein and under "Description of the Trust
Assets-Credit Support" herein; and (v) any cash or other property received
upon the sale, exchange, collection or other disposition of any of the
foregoing. Each Trust will be formed under the laws of, and have its principal
place of business in, the United States, any of its States or Territories or the
District of Columbia.
MATURITY AND YIELD CONSIDERATIONS
Each prospectus supplement will, to the extent applicable, contain
information with respect to the types and maturities of the related Underlying
Securities and the terms, if any, upon which such Underlying Securities may be
subject to early redemption or repayment. Provisions for optional or mandatory
redemption or repayment prior to stated maturity, if exercised, will reduce the
weighted average life of Underlying Securities and the related Series (or Class
within such Series) of Trust Certificates. A variety of tax, accounting,
economic and other factors will influence whether the applicable Underlying
Securities Issuer exercises any right of redemption in respect of its
securities. All else remaining equal, if prevailing interest rates are below the
interest rates on the related Underlying Securities, the likelihood of
redemption would be expected to increase. There can be no assurance that any
Underlying Security redeemable at the option of an Underlying Securities Issuer
will remain outstanding until its stated maturity.
In addition, the effective yield to holders of the Trust Certificates of
any Series (and Class within such Series) may be affected by certain terms of
the Trust Assets or the manner and priorities of allocations of collections with
respect to such Trust Assets between Classes of a given Series.
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As specified in the applicable prospectus supplement, each of the
Underlying Securities may be subject to acceleration upon the occurrence of
certain events of default under the terms of the Underlying Securities. The
maturity and yield on the Trust Certificates will be affected by any early
repayment of the Underlying Securities as a result of the acceleration of the
Underlying Securities by or on behalf of the holders thereof. See "Description
of Trust Assets-Underlying Securities Indenture". If an Underlying Securities
Issuer becomes subject to a bankruptcy proceeding, the timing and amount of
payments with respect to the principal of, the premium on, if any, and the
interest to be distributed in respect of the Trust Certificates may be
materially and adversely affected. Several factors influence the performance of
issuers that are corporations or other business entities; these factors may
affect an Underlying Securities Issuer's ability to satisfy its obligations
under the Underlying Securities, including the company's operating and financial
condition, leverage, and economic, geographic, legal and social factors.
The extent to which the yield to maturity of such Trust Certificates may
vary from the anticipated yield will depend on the rate and timing of payments
on the Trust Assets, the degree to which the Trust Certificates are purchased at
a discount or premium and the degree to which the timing of payments thereon is
sensitive to the rate and timing of payments on the Trust Assets.
To the extent that the Trust Certificate Rate, if any, for such Series (or
Class) is based on variable or adjustable interest rates, the yield to maturity
of any Series (or Class) of Trust Certificates will also be affected by
variations in the interest rates applicable to, and the corresponding payments
in respect of, such Trust Certificates. With respect to any Series of Trust
Certificates representing an interest in a pool of debt or other eligible
securities, disproportionate principal payments (whether resulting from
differences in amortization schedules, payments due on scheduled maturity or
upon early redemption) on the related Underlying Securities having interest
rates higher or lower than the then applicable Trust Certificate Rates, if any,
applicable to such Certificates may affect the yield thereon.
The prospectus supplement for each Series of Trust Certificates will set
forth additional information regarding yield and maturity considerations
applicable to such Series (and each Class within such Series) and the related
Trust Assets, including the applicable Underlying Securities.
DESCRIPTION OF THE TRUST CERTIFICATES
The provisions of the Trust Agreement for a Series of Trust Certificates
may vary depending upon the terms of both the Trust Certificates to be issued
thereunder and the Trust Assets, as well as any Credit Support with respect to
the Trust. The following summaries describe the material provisions of the Trust
Agreement which may be applicable to each Series of Trust Certificates. The
applicable prospectus supplement for a Series of Trust Certificates will
describe any material provision of the Trust Agreement or the Trust Certificates
that is not described herein. The following summaries do not purport to be
complete and are subject to the detailed provisions of the form of Trust
Agreement to which reference is hereby made for a full description of such
provisions, including the definition of certain terms used, and for other
information regarding the Trust Certificates. Wherever particular defined terms
of the Trust Agreement are referred to, such defined terms are incorporated
herein by reference as part of the statement made, and the statement is
qualified in its entirety by such reference. As used herein with respect to any
Series, the term "Trust Certificate" refers to all the Trust Certificates of
that Series (and each Class within such Series), whether or not offered hereby
and by the applicable prospectus supplement, unless the context otherwise
requires.
A copy of the supplement to the Trust Agreement relating to each Series of
Trust Certificates issued from time to time will be filed by the Depositor as an
exhibit to a Current Report on Form 8-K, which will be filed with the SEC
following the issuance of such Series.
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General
The Series (or Classes within such Series) of Trust Certificates to be
issued under a Trust Agreement will represent the entire beneficial ownership
interest in the Trust for such Series created pursuant to such Trust Agreement.
Each such Class will be allocated certain relative priorities to receive
specified collections from, and a certain percentage ownership interest of the
assets deposited in, such Trust, all as identified and described in the
applicable prospectus supplement. See "Description of the Trust
Assets-Collections" herein. Reference is made to the applicable prospectus
supplement for a description of additional material terms of the Series of Trust
Certificates in respect of which this prospectus and such prospectus supplement
are being delivered. See "Prospectus Supplement" herein.
The United States federal income tax consequences and ERISA consequences
relating to any Series or any Class within such Series of Trust Certificates
will be described in this prospectus and the applicable prospectus supplement.
In addition, any special considerations with respect to the issuance of any
Series or Class within such Series of Trust Certificates on which the principal
of and any premium and interest are distributable in a Specified Currency other
than U.S. dollars will be described in the applicable prospectus supplement.
Transfers of beneficial ownership interests in any Global Security (as
defined herein) will be effected in accordance with the normal procedures of DTC
or any other specified Depositary. If Definitive Certificates are issued in the
limited circumstances described herein, they may be transferred or exchanged for
like Trust Certificates of the same Series at the corporate trust office or
agency of the applicable Trustee in The City of New York, subject to the
limitations set forth in the Trust Agreement, without the payment of any service
charge, other than any tax or governmental charge payable in connection
therewith.
Distributions
Distributions allocable to principal, premium (if any) and interest on the
Trust Certificates of each Series (and each Class within such Series) will be
made by or on behalf of the Trustee on each Distribution Date as specified in
the applicable prospectus supplement, and the amount of each distribution will
be determined as of the close of business on the date specified in the
applicable prospectus supplement (the "Record Date").
Except as provided in the succeeding paragraph, distributions with respect
to Trust Certificates will be made at the corporate trust office or agency of
the Trustee specified in the applicable prospectus supplement in The City of New
York; provided that any such amounts distributable on the Final Scheduled
Distribution Date of a Trust Certificate will be distributed only upon surrender
of such Trust Certificate at the applicable location set forth above.
Distributions on Trust Certificates will be made, except as provided below,
by check mailed to the Trust Certificateholders listed on the relevant Record
Date in the ownership register maintained for that purpose under the Trust
Agreement (which, in the case of Global Securities, will be a nominee of the
Depositary). A Trust Certificateholder of $10,000,000 or more in aggregate
principal amount of Trust Certificates of a given Series, and any holder of a
Global Security, shall be entitled to receive such distributions by wire
transfer of immediately available funds, but only if appropriate wire transfer
instructions have been received in writing by the Trustee for such Series not
later than 10 calendar days prior to the applicable Distribution Date.
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"Business Day" with respect to any Trust Certificate means any day (i)which
is not a Saturday, a Sunday or a legal holiday or a day on which banking
institutions or trust companies in The City of New York are authorized or
obligated by law, regulation or executive order to close and (ii) is a "business
day," as such term is used in the indenture, trust agreement, fiscal agency
agreement or other authorizing document for the Underlying Securities (each, an
"Underlying Securities Agreement").
Certificate Principal Balance and Notional Amount of the Trust
Certificates
Each Trust Certificate will have either a Certificate Principal Balance or
a Notional Amount. The Certificate Principal Balance of a Trust Certificate, at
any time, will equal the maximum amount that the holder thereof will be entitled
to receive in respect of principal out of the future cash flow on the Trust
Assets and Credit Support and other assets included in the related Trust. The
Notional Amount of a Trust Certificate represents the principal amount of the
Trust Assets and Credit Support in the related Trust in respect of which such
Trust Certificate is entitled to receive the payments of interest made on such
principal amount, to the extent specified in the related prospectus supplement.
The outstanding Certificate Principal Balance of a Trust Certificate will be
reduced to the extent of distributions thereon in respect of principal on the
underlying Trust Assets and Credit Support, and, if applicable pursuant to the
terms of the related Series, by the amount of any net losses realized on any
Trust Asset ("Realized Losses") allocated thereto. The outstanding Notional
Amount of a Trust Certificate may also be subject to reduction, if and to the
extent described in the applicable prospectus supplement. The initial aggregate
Certificate Principal Balance and initial aggregate Notional Amount of a Series
and each Class thereof will be specified in the related prospectus supplement.
Distributions of principal of any Class of Trust Certificates will be made on a
pro-rata basis among all the Trust Certificates of such Class. Trust
Certificates with no Certificate Principal Balance will not receive
distributions of principal.
Interest on the Trust Certificates
Each Class of Trust Certificates of a given Series may have a different
Trust Certificate Rate, which may be a fixed rate or floating rate, as described
below. In the case of Strip Trust Certificates with a nominal or no Certificate
Principal Balance, such distributions of interest will be made as described in
the applicable prospectus supplement.
Fixed Rate Trust Certificates. Each Series of Trust Certificates with a
fixed Certificate Rate ("Fixed Rate Trust Certificates") will bear interest, on
the outstanding Trust Certificate Principal Balance, from its Original Issue
Date, or from the last date to which interest has been paid, at the fixed
Certificate Rate stated on the face thereof and in the applicable prospectus
supplement until the principal amount thereof is distributed or made available
for repayment (or, in the case of Fixed Rate Trust Certificates with a nominal
or no principal amount, until the Notional Amount thereof is reduced to zero),
except that, if so specified in the applicable prospectus supplement, the Trust
Certificate Rate for such Series or any such Class or Classes may be subject to
adjustment from time to time in response to designated changes in the rating
assigned to such Trust Certificates by one or more Rating Agencies, in
accordance with a schedule or otherwise, all as described in such prospectus
supplement. Interest on each Series or Class of Fixed Rate Trust Certificates
will be distributable in arrears on each Distribution Date specified in such
prospectus supplement. Each such distribution of interest shall include interest
accrued through the day specified in the applicable prospectus supplement.
Interest on Fixed Rate Trust Certificates will be computed on the basis
specified in the applicable prospectus supplement.
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Floating Rate Trust Certificates. Each Series of Trust Certificates with a
variable Certificate Rate ("Floating Rate Trust Certificates") will bear
interest, on the outstanding Certificate Principal Balance, from its Original
Issue Date to but excluding the first Interest Reset Date (as defined herein)
for such Series at the initial Trust Certificate Rate set forth on the face
thereof and in the applicable prospectus supplement. Thereafter, the Trust
Certificate Rate on such Series (the "Floating Trust Certificate Rate") for each
Interest Reset Period (as defined herein) will be determined by reference to an
interest rate basis (the "Base Rate"), plus or minus the Spread (as defined
herein), if any, or multiplied by the Spread Multiplier (as defined herein), if
any. The Base Rate for any Series of Trust Certificates will be a fluctuating
rate of interest that is publicly available and is established by reference to
quotations provided by third parties of the interest rate from time to time
prevailing on loans or other extensions of credit in a specified credit market.
The "Spread" is the number of basis points (one basis point equals one
one-hundredth of a percentage point) that may be specified in the applicable
prospectus supplement as being applicable to such Series, and the "Spread
Multiplier" is the percentage that may be specified in the applicable prospectus
supplement as being applicable to such Series, except that if so specified in
the applicable prospectus supplement, the Spread or Spread Multiplier on such
Series of Floating Rate Trust Certificates may be subject to adjustment from
time to time in response to designated changes in the rating assigned to such
Trust Certificates by one or more Rating Agencies, in accordance with a schedule
or otherwise, all as described in such prospectus supplement. The applicable
prospectus supplement will designate the Base Rate applicable to a Floating Rate
Trust Certificate. Interest will be payable only from cash received by the
Trustee from the Underlying Securities or other assets deposited in the Trust
and available for application to such payment, notwithstanding the accrual of
interest on the Certificate Principal Balance at a higher rate.
As specified in the applicable prospectus supplement, Floating Rate Trust
Certificates of a given Series may also have either or both of the following (in
each case expressed as a rate per annum on a simple interest basis): (i) a
maximum limitation, or ceiling, on the rate at which interest may accrue during
any interest accrual period specified in the applicable prospectus supplement
("Maximum Trust Certificate Rate") and (ii) a minimum limitation, or floor, on
the rate at which interest may accrue during any such interest accrual period
("Minimum Trust Certificate Rate"). In addition to any Maximum Trust Certificate
Rate that may be applicable to any Series of Floating Rate Trust Certificates,
the Trust Certificate Rate applicable to any Series of Floating Rate Trust
Certificates will in no event be higher than the maximum rate permitted by
applicable New York and United States federal law.
The Depositor will appoint, and enter into agreements with, agents (each, a
"Calculation Agent") to calculate Floating Trust Certificate Rates on each
Series of Floating Rate Trust Certificates. The applicable prospectus supplement
will set forth the identity of the Calculation Agent for each Series of Floating
Rate Trust Certificates. All determinations of interest by the Calculation Agent
shall, if made on a commercially reasonable basis and in good faith, be
conclusive for all purposes and binding on the holders of Floating Rate Trust
Certificates of a given Series.
The Floating Trust Certificate Rate will be reset daily, weekly, monthly,
quarterly, semiannually or annually (such period being the "Interest Reset
Period", and the first day of each Interest Reset Period being an "Interest
Reset Date"), as specified in the applicable prospectus supplement. Interest
Reset Dates with respect to each Series will be specified in the applicable
prospectus supplement. If an Interest Reset Date for any Series of Floating Rate
Trust Certificates would otherwise be a day that is not a Business Day, such
Interest Reset Date will occur on the next Business Day, except that, in the
case of a LIBOR Trust Certificate, if such Business Day would fall in the next
calendar month, such Interest Reset Date will be the immediately preceding
Business Day.
Interest payable in respect of Floating Rate Trust Certificates shall be
the accrued interest from and including the Original Issue Date of such Series
or the last Interest Reset Date to which interest has accrued and been
distributed, as the case may be, to but excluding the immediately following
Distribution Date. With respect to a Floating Rate Trust Certificate, accrued
interest shall be calculated by multiplying the Certificate Principal Balance
Trust of such Trust Certificate by an accrued interest factor. Such accrued
interest factor will be computed by adding the interest factors calculated for
each day in the period for which accrued interest is being calculated. The
interest factor (expressed as a decimal calculated to seven decimal places
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without rounding) for each such day is computed by dividing the Certificate Rate
in effect on such day by 360, in the case of LIBOR Trust Certificates,
Commercial Paper Rate Trust Certificates, Federal Funds Rate Trust Certificates,
Prime Rate Trust Certificates and CD Rate Trust Certificates or by the actual
number of days in the year, in the case of Treasury Rate Trust Certificates. For
purposes of making the foregoing calculation, the variable Certificate Rate in
effect on any Interest Reset Date will be the applicable rate as reset on such
date.
All percentages resulting from any calculation of the Trust Certificate
Rate on a Floating Rate Trust Certificate will be rounded, if necessary, to the
nearest 1/100,000 of 1% (.0000001), with five one-millionths of a percentage
point rounded upward, and all currency amounts used in or resulting from such
calculation on Floating Rate Trust Certificates will be rounded to the nearest
one-hundredth of a unit (with .005 of a unit being rounded upward).
Interest on any Series of Floating Rate Trust Certificates will be
distributable on the Distribution Dates and for the interest accrual periods as
and to the extent set forth in the applicable prospectus supplement.
The "Calculation Date", where applicable, pertaining to a Record Date will
be the earlier of (i) the tenth calendar day after such Record Date or, if any
such day is not a Business Day, the next succeeding Business Day or (ii) the
Business Day preceding the applicable Distribution Date.
Upon the request of the holder of any Floating Rate Trust Certificate of a
given Series, the Calculation Agent for such Series will provide the Certificate
Rate then in effect and, if determined, the Certificate Rate that will become
effective on the next Interest Reset Date with respect to such Floating Rate
Trust Certificate.
Optional Exchange
The Trust Agreement for any given Series of Trust Certificates may provide
that the Holder of any Trust Certificate of such Series (or Class within such
Series) may exchange its Trust Certificate for a pro rata portion of the Trust
Assets for such Series (an "Optional Exchange"). If the Trust Agreement does
provide for an Optional Exchange right, the applicable prospectus supplement
will designate such Series as an "Exchangeable Series". The terms upon which a
Trust Certificateholder may exchange Trust Certificates of any Exchangeable
Series for a pro rata portion of the Trust Assets of the related Trust will be
specified in the related prospectus supplement; provided that any right of
Optional Exchange shall be exercisable only to the extent that (i) such Optional
Exchange would not be inconsistent with continued satisfaction by the Trust and
the Depositor of the applicable requirements for exemption under Rule 3a-7 under
the Investment Company Act of 1940 and (ii) such Optional Exchange would not
materially and adversely affect the characterization of the Trust for federal
income tax purposes. Unless explicitly provided for in the prospectus
supplement, an opinion of counsel addressing clauses (i) and (ii) will not be
required to be delivered in connection with the exercise of the Optional
Exchange. Such terms may include, but are not limited to, the following:
(a) a requirement that the exchanging Trust Certificateholder tender to the
Trustee Certificates of each Class within such Exchangeable Series;
(b) a minimum Certificate Principal Balance or Notional Amount, as
applicable, with respect to each Certificate being tendered for exchange;
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(c) a requirement that the Certificate Principal Balance or Notional
Amount, as applicable, of each Certificate tendered for exchange be an integral
multiple of an amount specified in the prospectus supplement;
(d) specified dates during which a holder may effect such an exchange
(each, an "Optional Exchange Date");
(e) limitations on the right of an exchanging Trust Certificateholder to
receive any benefit upon exchange from any Credit Support or other assets (other
than the Underlying Securities) deposited in the applicable Trust; and
(f) adjustments to the value of the proceeds of any exchange based upon the
required prepayment of future expense allocations and the establishment of a
reserve for any anticipated Extraordinary Trust Expenses.
Upon the satisfaction of the foregoing conditions and any applicable
conditions with respect to the related Trust Assets, as described in the
applicable prospectus supplement, the applicable Trust Certificateholder will be
entitled to receive a distribution of a pro rata share of the Trust Assets
related to the Exchangeable Series of the Trust Certificate being exchanged, in
the manner and to the extent described in such prospectus supplement.
Alternatively, to the extent so specified in the applicable prospectus
supplement, the applicable Trust Certificateholder, upon satisfaction of such
conditions, may direct the related Trustee to sell, on behalf of such Trust
Certificateholder, such pro rata share of the Trust Assets, in which event the
Trust Certificateholder shall be entitled to receive the net proceeds of such
sale, less any costs and expenses incurred by such Trustee in facilitating such
sale, subject to any additional adjustments set forth in the prospectus
supplement.
Default and Remedies
If there is a payment default on or acceleration of the Underlying
Securities, then the Trustee of the relevant Trust will exercise one of the
following remedies: (i) sell all of such Underlying Securities and distribute
the proceeds from such sale to the Trust Certificateholders in accordance with
the Allocation Ratio (as defined herein) (any such sale may result in a loss to
the Trust Certificateholders of the relevant Series if the sale price is less
than the purchase price for such Underlying Securities), (ii) distribute such
Underlying Securities in kind to the Trust Certificateholders in accordance with
the Allocation Ratio, or (iii) elect either (i) or (ii) based upon a majority of
votes cast by the affected Trust Certificateholders. The choice of remedies will
be set forth for a given Series in the prospectus supplement, and the Trustee,
the Depositor and the Trust Certificateholders will have no discretion in this
respect.
The "Allocation Ratio" is the allocation between Classes of a given Series
of the total expected cash flows from the Trust Assets of that Series. The
prospectus supplement for any Series with more than one Class will set forth the
Allocation Ratio for that Series. In addition to distributions as a result of
default on or of the acceleration on Underlying Securities, the Allocation Ratio
relates to voting rights held by owners of Underlying Securities because such
rights will be allocated among the Trust Certificateholders of different Classes
of a given Series in accordance with their economic interests.
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Call Rights
Prudential Securities Incorporated or the Depositor or, if so specified in
the relevant prospectus supplement, a transferee as a result of a private
placement to eligible investors, may hold the right to purchase all or some of
the Trust Certificates of a given Series or Class from the holders thereof prior
to maturity (a "Call Right"). If one or more specified persons holds a Call
Right, the applicable prospectus supplement will designate such Series as a
"Callable Series". The terms upon which any such specified person or entity may
exercise a Call Right will be specified in the applicable prospectus supplement.
Such terms may relate to, but are not limited to, the following:
(a) a requirement that the Certificate Principal
Balance of each Trust Certificate being purchased
be an integral multiple of an amount specified in
the prospectus supplement;
(b) specified dates during which a Call Right may be
exercised, which may include any and all times
that the Trust Certificates remain outstanding; and
(c) the price or prices at which a Call Right may be
exercised, which may include fixed dollar amounts
or be calculated as a percentage of the principal
amount of the Trust Certificates outstanding
(each, a "Call Price").
After receiving notice of the exercise of a Call Right, the Trustee will
provide notice thereof as specified in the Trust Agreement. Upon the
satisfaction of any applicable conditions to the exercise of a Call Right, each
Trust Certificateholder will be entitled to receive (in the case of a purchase
of less than all of the Trust Certificates) payment of a pro rata share of the
Call Price paid in connection with such exercise.
Put Rights
Trust Certificates may be issued with Underlying Securities that permit the
holder thereof to require the Underlying Securities Issuer to repurchase or
otherwise repay (in each case, a "Put Option") such Underlying Securities
("Puttable Underlying Securities") on or after a fixed date. In such cases, the
Trustee for such Series of Trust Certificates will be required to exercise the
Put Option on the first date such option is available to be exercised (the "Put
Date") and the Put Date will also be the Final Scheduled Distribution Date with
respect to such Series; provided, however, if the holder of a Call Right has
exercised that right prior to the Final Scheduled Distribution Date, then the
Trust Certificates of the Callable Series will be repurchased as described above
under in "Description of the Trust Certificates-Call Right". The Depositor will
not issue a Series of Trust Certificates with Puttable Underlying Securities if
it would either (i) cause the Trust or Depositor to fail to satisfy the
applicable requirements for exemption under Rule 3a-7 under the Investment
Company Act of 1940 or (ii) materially and adversely affect the characterization
of the applicable Trust for federal income tax purposes.
Global Securities
Unless issued in definitive or bearer form as specified in the applicable
prospectus supplement, all Trust Certificates of a given Series will, upon
issuance, be represented by one or more global securities (each a "Global
Security") that will be deposited with, or on behalf of, the Depositary, and
registered in the name of a nominee of the Depositary. Unless and until it is
exchanged in whole or in part for the individual Trust Certificates represented
thereby (each, a "Definitive Certificate"), a Global Security may not be
transferred except as a whole by the Depositary for such Global Security to a
nominee of such Depositary or by a nominee of such Depositary to such Depositary
or another nominee of such Depositary or by such Depositary or any such nominee
to a successor of such Depositary or a nominee of such successor.
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The Depository Trust Company has advised the Depositor as follows: The
Depository Trust Company is a limited-purpose trust company organized under the
laws of the State of New York, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code, and a "Clearing Agency" registered pursuant to the provisions of Section
17A of the Exchange Act. The Depository Trust Company was created to hold
securities of its Participants and to facilitate the clearance and settlement of
securities transactions among the institutions that have accounts with such
Depositary ("Participants") in such securities through electronic book-entry
changes in accounts of the Participants, thereby eliminating the need for
physical movement of securities certificates. Such Depositary's Participants
include securities brokers and dealers (including Prudential Securities
Incorporated), banks (including The Chase Manhattan Bank), trust companies,
clearing corporations and certain other organizations, some of which (and/or
their representatives) own such Depositary. Access to such Depositary's
book-entry system is also available to others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly.
Upon the issuance of a Global Security, the Depositary for such Global
Security will credit, on its book-entry registration and transfer system, the
respective principal amounts of the individual Trust Certificates represented by
such Global Security to the accounts of its Participants. The accounts to be
accredited shall be designated by the underwriters of such Trust Certificates,
or, if such Trust Certificates are offered and sold directly through one or more
agents, by the Depositor or such agent or agents. Ownership of beneficial
interests in a Global Security will be limited to Participants or persons or
entities that may hold beneficial interests through Participants. Ownership of
beneficial interests in a Global Security will be shown on, and the transfer of
that ownership will be effected only through, records maintained by the
Depositary for such Global Security or by Participants or persons or entities
that hold through Participants. The laws of some states require that certain
purchasers of securities take physical delivery of such securities. Prospective
investors in the Trust Certificates are advised to consult their own legal
advisors concerning the applicability of any such restrictions. Such
requirements and similar laws may limit the market for beneficial interests in a
Global Security.
So long as the Depositary for a Global Security, or its nominee, is the
owner of such Global Security, such Depositary or such nominee, as the case may
be, will be considered the sole Trust Certificateholder of the individual Trust
Certificates represented by such Global Security for all purposes under the
Trust Agreement governing such Trust Certificates. Except as set forth below,
owners of beneficial interests in a Global Security will not be entitled to have
individual Trust Certificates represented by such Global Security registered in
their names, will not receive or be entitled to receive physical delivery of any
such Trust Certificates and will not be considered the Trust Certificateholders
thereof under the Trust Agreement governing such Trust Certificates. Because the
Depositary can only act on behalf of its Participants, the ability of a holder
of any Trust Certificate to pledge that Trust Certificate to persons or entities
that do not participate in the Depositary's system, or to otherwise act with
respect to such Trust Certificate, may be limited due to the lack of a physical
certificate for such Trust Certificate.
Distributions of principal of (and premium, if any) and any interest on
individual Trust Certificates represented by a Global Security will be made to
the Depositary or its nominee, as the case may be, as the Trust
Certificateholder of such Global Security. None of the Depositor, the Trustee
for such Trust Certificates, any Paying Agent or the Trust Certificate Registrar
for such Trust Certificates will have responsibility or liability for any aspect
of the records relating to or payments made on account of beneficial interests
in such Global Security or for maintaining, supervising or reviewing any records
relating to such beneficial interests.
The Depositor expects that the Depositary for Trust Certificates of a given
Series, upon receipt of any distribution of principal, premium or interest in
respect of a definitive Global Security representing any of such Trust
Certificates, will immediately credit Participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such Global Security as shown on the records of such Depositary. The
Depositary also expects that payments by Participants to owners of beneficial
interests in such Global Security held through such Participants will be
registered in "street name" and will be the responsibility of such Participants.
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If the Depositary for Trust Certificates of a given Series is at any time
unwilling or unable to continue as depository and a successor depository is not
appointed by the Depositor within 90 days, the Depositor will issue individual
Definitive Certificates in exchange for the Global Security or Securities
representing such Trust Certificates. In addition, the Depositor may at any time
and in its sole discretion determine not to have any Trust Certificates of a
given Series represented by one or more Global Securities and, in such event,
will issue Definitive Certificates of such Series in exchange for the Global
Security or Securities representing such Trust Certificates. Further, if the
Depositor so specifies with respect to the Trust Certificates of a given Series,
an owner of a beneficial interest in a Global Security representing Trust
Certificates of such Series may, on terms acceptable to the Depositor and the
Depositary for such Global Security, receive individual Definitive Certificates
in exchange for such beneficial interest. In any such instance, an owner of a
beneficial interest in a Global Security will be entitled to physical delivery
of individual Definitive Certificates of the Series represented by such Global
Security equal in principal amount to such beneficial interest and to have such
Definitive Certificates registered in its name.
The applicable prospectus supplement will set forth any specific terms of
the depository arrangement with respect to any Series of Trust Certificates
being offered thereby to the extent not set forth or different from the
description set forth above.
DESCRIPTION OF THE TRUST ASSETS
General
Each Trust Certificate of each Series (or if more than one Class exists,
each Class (whether or not each such Class is offered hereby) within such
Series) will represent an ownership interest specified for such Series (or
Class) of Trust Certificates in one or more of the following categories of
Underlying Securities:
(i) a publicly issued debt security or asset backed security or pool of
such debt securities or asset backed securities issued by one or more
corporations, banking organizations, insurance companies or special purpose
vehicles (including trusts, limited liability companies, partnerships or other
special purpose entities) organized under the laws of the United States or any
state, the District of Columbia or the Commonwealth of Puerto Rico, which are
subject to the informational requirements of the Exchange Act and which, in
accordance therewith, file reports and other information with the SEC or (for
certain banking institutions) with the Comptroller of the Currency, the Board of
Governors of the Federal Reserve System, the Federal Deposit Insurance
Corporation or the Office of Thrift Supervision, as applicable.
(ii) a publicly issued direct obligation or pool of publicly issued direct
obligations of one or more foreign private issuers (as such term is defined in
Rule 405 under the Securities Act) subject to the informational requirements of
the Exchange Act and which in accordance therewith files reports and other
information with the SEC.
(iii) a publicly issued obligation or pool of publicly issued obligations
issued or guaranteed by (i) the United States of America or any agency thereof
for the payment of which the full faith and credit of the United States of
America is pledged or (ii) a U.S. government sponsored enterprise created
pursuant to federal statute (a "GSE"). As specified in the applicable prospectus
supplement, the obligations of one or more of the following GSEs may be included
in a Trust: Federal National Mortgage Association ("Fannie Mae"), Federal Home
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Loan Mortgage Association ("Freddie Mac"), Student Loan Marketing Association
("Sallie Mae"), Resolution Funding Corporation ("REFCORP"), Federal Home Loan
Banks ("FHLB") (to the extent such obligations represent the joint and several
obligation of the twelve Federal Home Loan Banks), Tennessee Valley Authority
("TVA") and Federal Farm Credit Banks ("FFCB"). A Trust may also include
securities guaranteed by the United States Agency for International Development
("AID") and government trust certificates ("GTC"). GTCs are certificates
evidencing undivided fractional interests in a trust, the assets of which
consist of promissory notes (the "GTC Notes"), payable in U.S. Dollars, of a
certain foreign government, backed by a full faith and credit guaranty issued by
the United States of America, acting through the Defense Security Assistance
Agency of the Department of Defense, of the due and punctual payment of 90% of
all payments of principal and interest due on the GTC Notes and a security
interest in collateral, consisting of non-callable securities issued or
guaranteed by the United States government or agencies thereof, sufficient to
pay the remaining 10% of all payments of principal and interest due on the GTC
Notes. Debt securities of GSEs may be exempted from registration under the
Securities Act by Section 3(a)(2) of the Securities Act (or deemed by statute to
be so exempt) and are not required to be registered under the Exchange Act. The
securities of any such GSE will be included in a Trust only to the extent (A)
its obligations are supported by the full faith and credit of the federal
government or (B) such organization makes publicly available its annual report
which shall include financial statements or similar financial information with
respect to such organization (any such GSE, a "GSE Issuer").
(iv) a publicly issued obligation or pool of publicly issued obligations
issued or guaranteed as to timely payment by the full faith and credit of a
foreign government, political subdivision or agencies or instrumentalities
thereof (a "Foreign Government Issuer" or "Foreign Government Guarantor,"
as applicable). Any such publicly issued foreign government debt
securities may include both registered and unregistered offerings. To the
extent any such Underlying Security is unregistered, the applicable
Prospectus Supplement will describe the applicable exemption from the
registration requirements of the Securities Act. To the extent such Underlying
Security is registered, the Underlying Security will represent an obligation
issued or guaranteed by a foreign government, one of its political subdivisions
or an agency or instrumentality of which has offered debt securities in the
United States pursuant to a registration statement filed with the SEC containing
information required by Schedule B of the Securities Act ("Schedule B"), which
qualifies as a "seasoned" issuer under federal securities law practice (which
requires that the issuer qualifies to register securities on From F-3 and that
its securities are of sufficient volume to be followed by market analysts) and
which issuer or guarantor the Depositor reasonably believes (based on publicly
available information) is eligible to use Schedule B as of the time of offering
of the applicable Trust Certificates hereunder.
With respect to any Concentrated Underlying Securities (as defined below),
the applicable prospectus supplement will set forth (i) information regarding
the public availability of information concerning the applicable Underlying
Securities Issuer(s), and (ii) the material terms of the Concentrated Underlying
Securities, in each case as derived from (a) the offering documents (the
"Underlying Securities Prospectuses") utilized by such Underlying Securities
Issuer(s) in connection with the initial offering of such Underlying Securities
and (b) other publicly available information. The term "Concentrated Underlying
Securities" refers to any Underlying Security, or group of Underlying Securities
with a common obligor, which constitutes more than ten percent of the aggregate
principal amount of the Underlying Securities for any Series of Trust
Certificates as of the date of the applicable prospectus supplement.
The following is a general description of the Trust Assets which the
Depositor is permitted to include in a Trust and does not purport to be a
complete description of any such Trust Asset. This description is qualified in
its entirety by reference to the applicable prospectus supplement.
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Principal Economic Terms of Underlying Securities
The applicable prospectus supplement will disclose the name of each
Underlying Securities Issuer with respect to the applicable Series of Trust
Certificates. In addition, reference is made to the applicable prospectus
supplement with respect to each Series of Certificates for a description of the
following terms, as applicable, of any Concentrated Underlying Securities: (i)
the title and series of such Underlying Securities, the aggregate principal
amount, denomination and form thereof; (ii) whether such Underlying Securities
are senior or subordinated to any other obligations of the Underlying Securities
Issuer; (iii) whether any of the Underlying Securities are secured or unsecured
and the nature of any collateral; (iv) the limit, if any, upon the aggregate
principal amount of such Underlying Securities; (v) the dates on which, or the
range of dates within which, the principal of (and premium, if any, on) such
Underlying Securities will be payable; (vi) the rate or rates or the method of
determination thereof, at which such Underlying Securities will bear interest,
if any ("Underlying Securities Rate"); the date or dates from which such
interest will accrue ("Underlying Securities Interest Accrual Periods"); and the
dates on which such interest will be payable ("Underlying Securities Payment
Dates"); (vii) the obligation, if any, of the Underlying Securities Issuer to
redeem the Underlying Securities pursuant to any sinking fund or analogous
provisions, or at the option of a holder thereof, and the periods within which
or the dates on which, the prices at which and the terms and conditions upon
which such Underlying Securities may be redeemed or repurchased, in whole or in
part, pursuant to such obligation; (viii) the periods within which or the dates
on which, the prices at which and the terms and conditions upon which such
Underlying Securities may be redeemed, if any, in whole or in part, at the
option of the Underlying Securities Issuer; (ix) whether the Underlying
Securities were issued at a price lower than the principal amount thereof; (x)
if other than United States dollars, the foreign or composite currency in which
such debt securities are denominated, or in which payment of the principal of
(and premium, if any) or any interest on such Underlying Securities will be made
(the "Underlying Securities Currency"), and the circumstances, if any, when such
currency of payment may be changed; (xi) material events of default or
restrictive covenants provided for with respect to such Underlying Securities;
(xii) the rating thereof, if any; and (xiii) any other material terms of such
Underlying Securities.
With respect to a Trust comprised of a pool of Underlying Securities, the
related prospectus supplement will, to the extent applicable, describe the
composition of the Underlying Securities pool, certain material events of
default or restrictive covenants common to the Underlying Securities, and, on an
aggregate, percentage or weighted average basis, as applicable, the
characteristics of the pool with respect to certain terms set forth above in the
preceding paragraph and any other material terms regarding such pool of
securities.
Publicly Available Information
In addition to the foregoing, the applicable prospectus supplement will
describe, with respect to each Underlying Securities Issuer of Concentrated
Underlying Securities, the existence and type of certain information that is
made publicly available by such Underlying Securities Issuer regarding the
Underlying Securities and will disclose where and how prospective purchasers of
the Trust Certificates may obtain such publicly available information with
respect to each such Underlying Securities Issuer. Such information will
typically consist of such Underlying Securities Issuer's annual report, which
contains financial statements or similar financial information, and can be
obtained from the SEC, if so specified in the applicable prospectus supplement,
or from the office of such Underlying Securities Issuer identified in the
related prospectus supplement. However, the precise nature of such publicly
available information and where and how it may be obtained with respect to any
given Underlying Securities Issuer will vary, and, as described above, will be
set forth in the applicable prospectus supplement.
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Other Trust Assets
In addition to the Underlying Securities, the Depositor may also deposit
into a given Trust, or the Trustee on behalf of the Trust Certificateholders of
a Trust may enter into an agreement constituting or providing for the purchase
of (to the extent described in the related prospectus supplement), certain
assets related or incidental to one or more of such Underlying Securities or to
some other asset deposited in the Trust, including hedging contracts and other
similar arrangements (such as puts, calls, interest rate swaps, currency swaps,
floors, caps and collars), cash and assets ancillary or incidental to the
foregoing or to the Underlying Securities (including assets obtained through
foreclosure or in settlement of claims with respect thereto) (all such assets
for any given Series, together with the related Underlying Securities, the
"Trust Assets"). The applicable prospectus supplement will to the extent
appropriate contain analogous disclosure with respect to the foregoing assets as
referred to above with respect to the Underlying Securities.
The Trust Assets for a given Series of Trust Certificates and the related
Trust will not constitute Trust Assets for any other Series of Trust
Certificates. The Trust Certificates of each Class of a given Series will
generally possess an equal and ratable interest in the related Trust Assets.
However, the applicable prospectus supplement may specify that certain assets
constituting a part of the Trust Assets relating to any given Series may be
beneficially owned solely by or deposited solely for the benefit of one Class or
a group of Classes within such Series. In such event, the other Classes of such
Series will not possess any beneficial ownership interest in those specified
assets constituting a part of the Trust Assets.
Credit Support
As specified in the applicable prospectus supplement for a given Series of
Trust Certificates, the Trust for any Series of Trust Certificates may include,
or the Trust Certificateholders of such Series (or any Class or group of Classes
within such Series) may have the benefit of, Credit Support. Credit Support
directly benefits the relevant Trust and thereby benefits Trust
Certificateholders. Such Credit Support may be provided by any combination of
the following means described below or any other means described in the
applicable prospectus supplement. The applicable prospectus supplement will set
forth whether the Trust for any Class or Classes of Trust Certificates contains,
or the Trust Certificateholders of such Trust Certificates have the benefit of,
Credit Support and, if so, the amount, type and other relevant terms of each
element of Credit Support with respect to any such Class or Classes and certain
information with respect to the obligors of each such element. In addition, the
applicable prospectus supplement will include (or incorporate by reference, as
applicable) audited financial statements for any obligor providing Credit
Support for 20% or more of the cash flow of the relevant Series and summarized
financial information for any obligor providing Credit Support for between 10
and 20% of the cash flow of such Series.
Subordination. As discussed below under "-Collections", the rights of the
Trust Certificateholders of any given Class within a Series of Trust
Certificates to receive collections from the Trust for such Series and any
Credit Support may be subordinated to the rights of the Trust Certificateholders
of one or more other Classes of such Series to the extent described in the
applicable prospectus supplement. Such subordination accordingly provides some
additional Credit Support to those Trust Certificateholders of those other
Classes. For example, if losses are realized during a given period on the Trust
Assets relating to a Series of Trust Certificates such that the collections
received thereon are insufficient to make all distributions on the Trust
Certificates of such Series, those Realized Losses would be allocated to the
Trust Certificateholders of any Class of any such Series that is subordinated to
another Class, to the extent and in the manner provided in the applicable
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prospectus supplement. In addition, if so provided in the applicable prospectus
supplement, certain amounts otherwise payable to Trust Certificateholders of any
Class that is subordinated to another Class may be required to be deposited into
a Reserve Account.
If so provided in the applicable prospectus supplement, the Credit Support
for any Series or Class of Trust Certificates may include, in addition to
subordination, other forms of Credit Support described below. Any such other
forms of Credit Support that are solely for the benefit of a given Class will be
limited to the extent necessary to make required distributions to the Trust
Certificateholders of such Class or as otherwise specified in the applicable
prospectus supplement. In addition, if so provided in the applicable prospectus
supplement, the obligor of any other forms of Credit Support may be reimbursed
for amounts paid pursuant to such Credit Support out of amounts otherwise
payable to one or more of the Classes of the Trust Certificates of such Series.
Further, payments to be made in respect of any forms of Credit Support arranged
for on behalf of the Trust Certificateholders may be required to be paid prior
to any distributions that must be made to Trust Certificateholders.
Letter of Credit; Surety Bond. The Trust Certificateholders of any Series
(or Class or group of Classes of Trust Certificates within such Series) may, if
specified in the applicable prospectus supplement, have the benefit of a letter
or letters of credit (a "Letter of Credit") issued by a bank (a "Letter of
Credit Bank") or a surety bond or bonds (a "Surety Bond") issued by a surety
company (a "Surety"). In either case, the Trustee, the Depositor or such other
person specified in the applicable prospectus supplement will use its reasonable
efforts to cause the Letter of Credit or the Surety Bond, as the case may be, to
be obtained, to be kept in full force and effect (unless coverage thereunder has
been exhausted through payment of claims) and to pay timely the fees or premiums
therefor unless, as described in the applicable prospectus supplement, provision
has otherwise been made for the payment of such fees or premiums. The Trustee,
the Depositor or such other person specified in the applicable prospectus
supplement will make or cause to be made draws under the Letter of Credit or the
Surety Bond, as the case may be, under the circumstances and to cover the
amounts specified in the applicable prospectus supplement. Any amounts otherwise
available under the Letter of Credit or the Surety Bond will be reduced to the
extent of any prior unreimbursed draws thereunder. The applicable prospectus
supplement will provide the manner, priority and source of funds by which any
such draws are to be repaid.
If so provided in the applicable prospectus supplement, if the Letter of
Credit Bank or the Surety, as applicable, ceases to satisfy any credit rating or
other applicable requirements specified in the prospectus supplement, the
Trustee, the Depositor or such other person specified in the prospectus
supplement will use its reasonable efforts to obtain or cause to be obtained a
substitute Letter of Credit or Surety Bond, as applicable, or other form of
credit enhancement providing similar protection, that meets such requirements
and provides the same coverage to the extent available for the same cost. There
can be no assurance that any Letter of Credit Bank or any Surety, as applicable,
will continue to satisfy such requirements or that any such substitute Letter of
Credit, Surety Bond or similar credit enhancement will be available providing
equivalent coverage for the same cost. To the extent not so available, the
Credit Support otherwise provided by the Letter of Credit or the Surety Bond (or
similar credit enhancement) may be reduced to the level otherwise available for
the same cost as the original Letter of Credit or Surety Bond.
Reserve Accounts. If so provided in the applicable prospectus supplement,
the Trustee or such other person specified in the prospectus supplement will
deposit or cause to be deposited into an account maintained with an eligible
institution (which may be the Trustee) (a "Reserve Account") any combination of
cash or permitted investments in specified amounts, which will be applied and
maintained in the manner and under the conditions specified in such prospectus
supplement. In the alternative or in addition to such deposit, a Reserve Account
may be funded through application of a portion of collections received on the
Trust Assets for a given Series of Trust Certificates, in the manner and
priority specified in the applicable prospectus supplement. Amounts may be
distributed to Trust Certificateholders of such Class or group of Classes within
such Series, or may be used for other purposes, in the manner and to the extent
provided in the applicable prospectus supplement. Amounts deposited in any
Reserve Account will be invested in certain permitted investments by, or at the
direction of, the Trustee, the Depositor or such other person as may be
specified in the applicable prospectus supplement.
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Other Credit Support. If so provided in the related prospectus supplement,
the Trust may include, or the Trust Certificateholders of any Series (or any
Class or group of Classes within such Series) may have the benefit of, one or
more interest rate, currency, securities, commodity or credit swaps, caps,
floors, collars or options. The prospectus supplement will identify the
counterparty to any such instrument and will provide a description of the
material terms thereof.
Collections
The Trust Agreement will establish procedures by which the Trustee, the
Administrative Agent, if any, or such other person as may be specified in the
prospectus supplement is obligated, for the benefit of the Trust
Certificateholders of each Series of Trust Certificates, to administer the
related Trust Assets, including making collections of all payments made thereon,
depositing from time to time prior to any applicable Distribution Date such
collections into a segregated trust account maintained or controlled by the
applicable Trustee for the benefit of such Series (each a "Trust Certificate
Account"). An Administrative Agent, if any is appointed, will direct the
Trustee, and otherwise the Trustee will make all determinations, as to the
appropriate application of such collections and other amounts available for
distribution to the payment of any administrative or collection expenses (such
as the administrative fee) and certain Credit Support-related ongoing fees (such
as insurance premiums, letter of credit fees or any required account deposits)
and to the payment of amounts then due and owing on the Trust Certificates of
such Series (and Classes within such Series), all in the manner and priorities
described in the applicable prospectus supplement. The applicable prospectus
supplement will specify the collection periods, if applicable, and Distribution
Dates for a given Series of Trust Certificates and the particular requirements
relating to the segregation and investment of collections received on the Trust
Assets during a given collection period or on or by certain specified dates.
There can be no assurance that amounts received from the Trust Assets and any
Credit Support obtained for the benefit of Trust Certificateholders for a
particular Series or Class of Trust Certificates over a specified period will be
sufficient, after payment of all prior expenses and fees for such period, to pay
amounts then due and owing to holders of such Trust Certificates. The applicable
prospectus supplement will also set forth the manner and priority by which any
Realized Loss will be allocated among the Classes of any Series of Trust
Certificates, if applicable.
The relative priorities of distributions with respect to collections from
the assets of the Trust assigned to Classes of a given Series of Trust
Certificates may permanently or temporarily change over time upon the occurrence
of certain circumstances specified in the applicable prospectus supplement.
Moreover, the applicable prospectus supplement may specify that the Allocation
Ratio in respect of each Class of a given Series for purposes of payments of
certain amounts, such as principal, may be different from the Allocation Ratio
assigned to each such Class for payments of other amounts, such as interest or
premium.
DESCRIPTION OF THE TRUST AGREEMENT
The following summaries describe material provisions of the Trust
Agreement. The applicable prospectus supplement for a Series of Trust
Certificates will describe any material provision of the Trust Agreement that is
not described herein. The following summaries do not purport to be complete, and
such summaries are qualified in their entirety by reference to the detailed
provisions of the form of Trust Agreement to which reference is hereby made for
a full description of such provisions, including the definition of certain terms
used, and for other information regarding the Trust Certificates. Wherever
particular defined terms of the Trust Agreement are referred to, such defined
terms are incorporated herein by reference as part of the statement made, and
the statement is qualified in its entirety by such reference. For information on
how to obtain a copy of the Trust Agreement, see "Available Information" herein.
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Assignment of Trust Assets
At the time any Series of Trust Certificates is issued, the Depositor will
cause the Underlying Securities and the Trust Assets specified in the prospectus
supplement, if any, to be assigned and delivered to the Trustee to be deposited
in the related Trust, together with all principal, premium (if any) and interest
received by or on behalf of the Depositor on or with respect to such Underlying
Securities and other Trust Assets after the cut-off date specified in the
prospectus supplement (the "Cut-off Date"), other than principal, premium (if
any) and interest due on or before the Cut-off Date and other than any Retained
Interest. Concurrently with such assignment, the Depositor will execute, and the
Trustee will authenticate and deliver, the Trust Certificates to the Depositor
in exchange for the Underlying Securities and other Trust Assets, if any. Each
Trust Asset will be identified in a schedule to the Trust Agreement. Such
schedule will include certain summary identifying information with respect to
each Underlying Security and each other Trust Asset as of the Cut-off Date. Such
schedule will include, to the extent applicable, information regarding the
payment terms of any Concentrated Underlying Security, the Retained Interest, if
any, with respect thereto, the maturity or terms thereof, the rating, if any,
thereof and any other material information with respect thereto.
In addition, the Depositor will, with respect to each Trust Asset, deliver
or cause to be delivered to the Trustee (or to the custodian hereinafter
referred to) all documents necessary to transfer ownership of such Trust Asset
to the Trustee. The Trustee (or such custodian) will hold such documents in
trust for the benefit of the Trust Certificateholders.
The Depositor will make certain representations and warranties regarding
its authority to enter into, and its ability to perform its obligations under,
the Trust Agreement. Upon a breach of any such representation of the Depositor
which materially and adversely affects the interests of the Trust
Certificateholders, the Depositor will be obligated to cure the breach in all
material respects.
Collection and Other Administrative Procedures
General. With respect to any Series of Trust Certificates, the Trustee or
such other person specified in the prospectus supplement, directly or through
administrative agents, will establish and maintain certain accounts for the
benefit of the holders of the relevant Trust Certificates and will deposit in
such accounts all amounts received by it in respect of the Trust Assets. The
Trustee on behalf of the Trust may direct any depository institution maintaining
such accounts to invest the funds in such accounts in one or more Eligible
Investments (as defined in the Trust Agreement) bearing interest or sold at a
discount. Any earnings with respect to such investments will be paid to, and any
losses with respect to such investments will be solely for the account of, the
Trust Certificateholders (and, if applicable, the holder of the Retained
Interest) in accordance with the Allocation Ratio. Further, the Trustee or such
other person specified in the prospectus supplement will make reasonable efforts
to collect all scheduled payments under the Trust Assets and will follow or
cause to be followed such collection procedures, if any, as it would follow with
respect to comparable financial assets that it held for its own account,
provided that such procedures are consistent with the Trust Agreement and any
related instrument governing any Credit Support and provided further that,
except as otherwise expressly set forth in the applicable prospectus supplement,
it shall not be required to expend or risk its own funds or otherwise incur
personal financial liability.
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Realization upon Defaulted Trust Assets. The Trustee will present claims
under each applicable Credit Support instrument and will take such reasonable
steps as are necessary to receive payment or to permit recovery thereunder with
respect to defaulted Trust Assets. As set forth above, all collections by or on
behalf of the Trustee under any Credit Support instrument are to be deposited in
the Trust Certificate Account for the related Trust, subject to withdrawal as
described above.
The Trustee will be obligated to follow or cause to be followed such normal
practices and procedures as it deems necessary or advisable to realize upon any
defaulted Trust Asset; provided that, the Trustee will not be required to expend
or risk its own funds or otherwise incur financial liability in taking any such
action. If the proceeds of any liquidation of the defaulted Trust Asset are less
than the sum of (i) the outstanding principal balance of the defaulted Trust
Asset, (ii) interest accrued but unpaid thereon at the applicable interest rate
and (iii) the aggregate amount of expenses incurred by the Trustee in connection
with such proceedings to the extent reimbursable from the assets of the Trust
under the Trust Agreement, the Trust for the applicable Series will realize a
loss in the amount of such difference. To the extent provided in the applicable
prospectus supplement, the Trustee will be entitled to withdraw or cause to be
withdrawn from the related Trust Certificate Account out of the net proceeds
recovered on any defaulted Trust Asset, prior to the distribution of such
proceeds to Trust Certificateholders, amounts representing its normal
administrative compensation on the Trust Asset, unreimbursed administrative
expenses incurred with respect to the Trust Asset and any unreimbursed advances
of delinquent payments made with respect to the Trust Asset.
Retained Interest
The prospectus supplement for a Series of Trust Certificates will specify
whether there will be any Retained Interest in the Trust Assets, and, if so, the
owner thereof. If so provided, the Retained Interest will be established on an
asset-by-asset basis and will be specified in an exhibit to the applicable Trust
Agreement. A Retained Interest in a Trust Asset represents a specified ownership
interest therein and a right to a portion of the payments thereon. Payments in
respect of the Retained Interest will be deducted from payments on the Trust
Assets as received and, in general, will not be deposited in the applicable
Trust Certificate Account or become a part of the related Trust. After the
Trustee deducts all applicable fees (as provided for in the Trust Agreement)
from any partial recovery on an Underlying Security, the Trustee will allocate
any such partial recovery between the holder of the Retained Interest (if any)
and the Trust Certificateholders of the applicable Series.
Trustee Compensation and Payment of Expenses
The Trustee will be entitled to receive from the Depositor or an affiliate
of the Depositor as compensation for the Trustee's services hereunder, trustee's
fees pursuant to a separate agreement between the Trustee and the Depositor, and
will be reimbursed for all reasonable expenses, disbursements and advances
incurred or made by the Trustee (including the reasonable compensation,
disbursements and expenses of its counsel and other persons not regularly in its
employ). The Depositor will agree to indemnify and hold harmless the Trustee and
its successors, assigns, agents and servants against any and all loss, liability
or reasonable expense (including attorney's fees) incurred by it in connection
with the administration of the trust and the performance of its duties
thereunder; the disclosure by the Depositor with respect to the Underlying
Securities except where such information is based on erroneous information from
the Trustee; any registration statement of the Certificates of any Series under
the Securities Act; registration of the arrangement created by the Trust
Agreement under the Investment Company Act; any failure by the Depositor to file
Exchange Reports on behalf of the Trust as may be required; and any defect in
the rights of the Trust to the Underlying Securities arising under a breach of
warranty by the Depositor made pursuant to the Trust Agreement.
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Limitations on Rights of Trust Certificateholders
No Trust Certificateholder of a given Series will have the right under the
Trust Agreement to institute any proceeding with respect thereto unless (i) such
Trust Certificateholder previously has given to the Trustee written notice of a
continuing breach, (ii) Trust Certificateholders evidencing not less than the
Required Percentage-Remedies of the aggregate Voting Rights have made written
request upon the Trustee to institute such proceeding in its own name as
Trustee, (iii) such Trust Certificateholder or Trust Certificateholders have
offered the Trustee reasonable indemnity, (iv) the Trustee for 30 days has
failed to institute any such proceeding and (v) no direction inconsistent with
such written request has been given to the Trustee during such 30 day period by
Trust Certificateholders evidencing not less than the Required
Percentage-Remedies of the aggregate Voting Rights. The Trustee, however,
is under no obligation to exercise any of the trusts or powers vested in it by
the Trust Agreement or to make any investigation into the facts of matters
arising under the Trust Agreement or stated in any document believed by it to be
genuine, unless requested in writing to do so by Trust Certificateholders of the
Required Percentage-Direction of Trustee (as defined in the Trust
Agreement) or to institute, conduct or defend any litigation thereunder or in
relation thereto at the request, order or direction of any of the holders of
Trust Certificates covered by the Trust Agreement, unless such Trust
Certificateholders have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred therein or
thereby.
Modification and Waiver
The Trust Agreement may be amended from time to time by the Depositor and
the Trustee without notice to or the consent of any of the Certificateholders
for any of the following purposes: (i) to cure any ambiguity or to correct or
supplement any provision therein which may be defective or inconsistent with any
other provision therein; (ii) to add or supplement any Credit Support for the
benefit of any Certificateholders; (iii) to add to the covenants, restrictions
or obligations of the Depositor or the Trustee for the benefit of the
Certificateholders; (iv) to add, change or eliminate any other provisions with
respect to matters or questions arising under the Trust Agreement; (v) to comply
with any requirements imposed by the Code; (vi) to evidence and provide for the
acceptance of appointment hereunder of a Trustee other than the party named
presently as Trustee for a Series of Certificates, and to add to or change any
of the provisions of the Trust Agreement as shall be necessary to provide for or
facilitate the administration of the separate Trusts hereunder by more than one
Trustee; (vii) 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 Trust Agreement as shall
be necessary to provide for or facilitate the administration of the trusts
hereunder; or (viii) to provide for the issuance of new Certificates; so long as
(x) any such amendment described in (i) through (viii), but not (vi), will not,
as evidenced by an Opinion of Counsel, cause the Trust (unless otherwise
specified in a related Series Supplement) to fail to be characterized as a
grantor trust for federal income tax purposes or result in a sale or exchange of
any Certificate for federal income tax purposes and (y) the Trustee has received
an Officer's Certificate from the Depositor that such amendment will not have a
material adverse effect on any Class of Certificateholders.
Without limiting the generality of the foregoing, with respect to any
Series, the Trust Agreement may also be modified or amended from time to time by
the Depositor and the Trustee with the consent of the Holders of Certificates
representing the Required Percentage--Amendment of the aggregate Voting Rights
of each Class voting as a Class, of those Certificates to which such
modification or amendment relates for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Trust
Agreement or of modifying in any manner the rights of the Holders of
Certificates; provided, however, that no such amendment shall (i) reduce in any
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manner the amount of, or alter the timing of, payments received on Underlying
Securities which are required to be distributed on any Certificate without the
unanimous consent of the Holders of such Certificates, (ii) adversely affect in
any material respect the interests of the Holders of any Series (or Class within
such Series) of Certificates in a manner other than as described in (i), without
the consent of the Holders of Certificates of such Series or Class evidencing
not less than the Required Percentage--Amendment of the aggregate Voting Rights
of such Series or Class or (iii) reduce the percentage of aggregate Voting
Rights required by (ii), as described in (ii), without the consent of the
Holders of all Certificates of such Series or Class then Outstanding; and
provided further that the Depositor shall furnish to the Trustee an Opinion of
Counsel (unless otherwise indicated in a related Series Supplement) stating
that, in the opinion of such counsel, any such amendment would not cause the
Trust to fail to be characterized as a grantor trust for federal income tax
purposes or result in a sale or exchange of any Certificate for federal income
tax purposes.
Replacement Trust Certificates
If a mutilated Trust Certificate is surrendered at the corporate trust
office or agency of the Trustee or the Depositor and the Trustee receive
satisfactory evidence that such Trust Certificate has been lost, destroyed or
stolen it may be replaced upon payment by the holder of such expenses as may be
incurred by the Trustee in connection therewith and the furnishing of such
security and indemnity as the Trustee and the Depositor may require to hold each
of them and any paying agent harmless; provided that neither the Depositor nor
the Trustee has received notice that such Trust Certificate was acquired by a
bona fide purchaser. Mutilated Trust Certificates must be surrendered before new
Trust Certificates will be issued.
Termination
The respective obligations and responsibilities under the Trust Agreement
of the Depositor and the Trustee (other than the obligations of the Trustee to
make distributions to Holders of the Certificates of any given Series) will
terminate (subject to surviving rights of indemnity) upon the distribution to
such Holders of all amounts held in all the Accounts for such Series and
required to be paid to such Holders pursuant to the Trust Agreement on the
Distribution Date coinciding with or following the earlier to occur of (i) if
and as provided in the Series Supplement for such Series, the purchase by, and
at the sole option of the Depositor, as provided in the Series Supplement for
such Series, of all remaining Underlying Securities for such Series in the Trust
for such Series on any Distribution Date, provided that such option may be
exercised only if the aggregate principal amount of such Underlying Securities
at the time of any such purchase is less than 10% (or such other percentage as
may be specified in such Series Supplement) of the aggregate principal amount of
all Underlying Securities deposited in such Trust as of the applicable Cut-off
Date and (ii) the final payment on or other liquidation (which may include
redemption or other purchase thereof by the applicable Underlying Security
Issuer) of the last Underlying Security remaining in the Trust for such Series
or the disposition of all property acquired upon foreclosure or liquidation of
any such Underlying Security; provided, however, that in no event shall the
trust continue to exist if its continued existence would result in a violation
of any applicable common-law or statutory Rule Against Perpetuities.
Duties of the Trustee
The Trustee makes no representations as to the validity or sufficiency of
the Trust Agreement, the recitals contained therein, the Trust Certificates of
any Series or any Trust Asset or related document and is not accountable for the
use or application by the Depositor of any of the Trust Certificates or the
Trust Assets, or the proceeds thereof. The Trustee is required to perform only
those duties specifically required under the Trust Agreement with respect to
such Series. However, upon receipt of the various certificates, reports or other
instruments required to be furnished to it, the Trustee is required to examine
such documents and to determine whether they conform to the applicable
requirements of the Trust Agreement.
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The Trustee
The Trustee for any given Series of Trust Certificates under the Trust
Agreement will be named in the applicable prospectus supplement. The commercial
bank, national banking association or trust company serving as Trustee will be
unaffiliated with, but may have banking relationships with or provide financial
services to, the Depositor, any Administrative Agent and their affiliates.
LIMITATIONS ON ISSUANCE OF BEARER CERTIFICATES
In compliance with United States federal income tax laws and regulations,
the Depositor and any underwriter, agent or dealer participating in the offering
of any Bearer Certificate will agree that, in connection with the original
issuance of such Bearer Certificate and during the period ending 40 days after
the issue date of such Bearer Certificate, they will not offer, sell or deliver
such Bearer Certificate, directly or indirectly, to a U.S. Person or to any
person within the United States, except to the extent permitted under U.S.
Treasury regulations.
Bearer Certificates will bear a legend to the following effect: "Any United
States Person who holds this obligation will be subject to limitations under the
United States income tax laws, including the limitations provided in Sections
1650(j) and 1287(a) of the Internal Revenue Code". The sections referred to in
the legend provide that, with certain exceptions, a United States taxpayer who
holds Bearer Certificates will not be allowed to deduct any loss with respect
to, and will not be eligible for capital gain treatment with respect to any gain
realized on a sale, exchange, redemption or other disposition of, such Bearer
Certificates.
As used herein, "United States" means the United States of America and its
possessions, and "U.S. Person" means a citizen or resident of the United States,
a corporation, partnership or other entity created or organized in or under the
laws of the United States, or an estate or trust the income of which is subject
to United States federal income taxation regardless of its source.
Pending the availability of a definitive Global Security or individual
Bearer Certificates, as the case may be, Trust Certificates that are issuable as
Bearer Certificates may initially be represented by a single temporary Global
Security, without interest coupons, to be deposited with a common depositary in
London for Morgan Guaranty Trust Company of New York, Brussels Office, as
operator of the Euroclear System ("Euroclear"), and Centrale de Livraison de
Valeurs Mobilieres S.A. ("CEDEL") for credit to the accounts designated by or on
behalf of the purchases thereof. Following the availability of a definitive
Global Security in bearer form, without coupons attached, or individual Bearer
Certificates and subject to any further limitations described in the applicable
prospectus supplement, the temporary Global Security will be exchangeable for
interests in such definitive Global Security or for such individual Bearer
Certificates, respectively, only upon receipt of a Certificate of Non-U.S.
Beneficial Ownership. A "Certificate of Non-U.S. Beneficial Ownership" is a
certificate to the effect that a beneficial interest in a temporary Global
Security is owned by a person that is not a U.S. Person or is owned by or
through a financial institution in compliance with applicable U.S. Treasury
regulations. No Bearer Certificate will be delivered in or to the United States.
If so specified in the applicable prospectus supplement, interest on a temporary
Global Security will be distributed to each of Euroclear and CEDEL with respect
to that portion of such temporary Global Security held for its account, but only
upon receipt as of the relevant Distribution Date of a Certificate of Non-U.S.
Beneficial Ownership.
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CURRENCY RISKS
An investment in a Trust Certificate having a Specified Currency other than
U.S. dollars entails significant risks that are not associated with a similar
investment in a U.S. dollar-denominated security. Such risks include, without
limitation, the possibility of significant changes in rates of exchange between
the U.S. dollar and such Specified Currency and the possibility of the
imposition or modification of foreign exchange controls with respect to such
Specified Currency. Such risks generally depend on factors over which the
Depositor has no control, such as economic and political events and the supply
of and demand for the relevant currencies. In recent years, rates of exchange
between the U.S. dollar and certain currencies have been highly volatile, and
such volatility may be expected in the future. Past fluctuations in any
particular exchange rate do not necessarily indicate, however, fluctuations in
the rate that may occur during the term of any Trust Certificate. Depreciation
of the Specified Currency for a Trust Certificate against the U.S. dollar would
decrease the effective yield of such Trust Certificate below its Trust
Certificate Rate and, in certain circumstances, could result in a loss to the
investor on a U.S. dollar basis.
Governments have from time to time imposed, and may in the future impose,
exchange controls that could affect exchange rates and the availability of a
Specified Currency for making distributions in respect of Trust Certificates
denominated in such currency. At present, the Depositor has identified the
following currencies in which distributions of principal, premium and interest
on Trust Certificates may be made: Australian dollars, Canadian dollars, Danish
kroner, Italian lire, Japanese yen, New Zealand dollars, U.S. dollars and ECU.
However, Trust Certificates distributable in another Specified Currency may be
issued at any time, based upon investor demand for Trust Certificates
denominated in such currencies. There can be no assurance that exchange controls
will not restrict or prohibit distributions of principal, premium or interest in
any Specified Currency. Even if there are no actual exchange controls, it is
possible that, on a Distribution Date with respect to any particular Trust
Certificate, the currency in which amounts then due to be distributed in respect
of such Trust Certificate would not be available.
IT IS STRONGLY RECOMMENDED THAT PROSPECTIVE PURCHASERS CONSULT THEIR OWN
FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN TRUST
CERTIFICATES DENOMINATED IN A CURRENCY OTHER THAN U.S. DOLLARS. SUCH TRUST
CERTIFICATES ARE NOT AN APPROPRIATE INVESTMENT FOR PERSONS WHO ARE
UNSOPHISTICATED WITH RESPECT TO FOREIGN OR COMPOSITE CURRENCY TRANSACTIONS.
Any prospectus supplement relating to Trust Certificates having a Specified
Currency other than U.S. dollars will contain historical exchange rates for such
currency against the U.S. dollar, a description of such currency, any exchange
controls affecting such currency and any other required information concerning
such currency. Such prospectus supplement will also discuss risk factors
relating to any such Specified Currency.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material United States federal income tax
consequences of the ownership of the Trust Certificates as of the date hereof.
(Certain minor and incidental consequences are discussed as well.) It is based
on the advice of Orrick, Herrington & Sutcliffe LLP, Special Tax Counsel
("Special Tax Counsel"), which has delivered an opinion to the Depositor that
the discussion below, to the extent it constitutes matters of law or legal
conclusions thereto, is true and correct in all material respects.
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Special Tax Counsel has also delivered an opinion that the Trust will not
be characterized as an association taxable as a corporation (or publicly traded
partnership treated as an association) for federal income tax purposes. Special
Tax Counsel has not delivered (and unless otherwise indicated in the prospectus
supplement does not intend to deliver) any other opinions regarding the Trust or
the Trust Certificates. Prospective investors should be aware that no rulings
have been, or will be, sought from the Internal Revenue Service (the "IRS"), and
that legal opinions are not binding on the IRS or the courts. Accordingly, there
can be no assurance that the IRS or the courts will agree with Special Tax
Counsel's opinions. If, contrary to Special Tax Counsel's opinion, the Trust is
characterized or treated as a corporation for federal income tax purposes, among
other consequences, the Trust would be subject to federal income tax (and
similar state income or franchise taxes) on its income and distributions to
Certificateholders would be impaired. In light of Special Tax Counsel's opinion,
however, the balance of this discussion assumes that the Trust will not be
characterized or treated as a corporation.
This summary is based on the Internal Revenue Code of 1986 (the "Code") as
well as Treasury regulations and administrative and judicial rulings and
practice. Legislative, judicial and administrative changes may occur, possibly
with retroactive effect, that could alter or modify the continued validity of
the statements and conclusions set forth herein. This summary is intended as an
explanatory discussion of the consequences of holding the Trust Certificates
generally and does not purport to furnish information in the level of detail or
with the investor's specific tax circumstances that would be provided by an
investor's own tax advisor. Accordingly, it is strongly recommended that each
prospective investor consult with its own tax advisor regarding the application
of United States federal income tax laws, as well as any state, local, foreign
or other tax laws, to their particular situations.
Except with respect to certain withholding tax matters discussed below
under "Withholding Taxes", the discussion is limited to consequences to U.S.
Persons. For purposes of this discussion, a U.S. Person is: (i) a citizen or
resident of the United States, (ii) a corporation or partnership organized in or
under the laws of the United States, any state thereof or the District of
Columbia, or (iii) an estate or trust that is a United States Person within the
meaning of Section 7701(a)(30) of the Code. References herein to a holder or
Certificateholder are references to the beneficial owner of a Certificate.
Except as discussed below under "Possible Characterization of the
Underlying Securities as Equity Securities," for the purposes of this
discussion, the Depositor and Special Tax Counsel have assumed, without inquiry,
that the Underlying Securities will be characterized as indebtedness for federal
income tax purposes. The prospectus supplement may contain additional
information about the federal income tax characterization of the Underlying
Securities.
Tax Status of the Trust
The Trustee intends for tax reporting purposes to treat the Trust as a
grantor trust. Prospective investors should be aware, however, that certain of
the terms of Trust Certificates (for example, the allocation of the proceeds of
a disposition of the Underlying Securities) may be viewed by the IRS as
inconsistent with the grantor trust rules and, accordingly, unless otherwise
indicated in the prospectus supplement, Special Tax Counsel is not able to
deliver an opinion that the Trust will be treated as a grantor trust.
Nonetheless, because treating the Trust as a grantor trust is the more
appropriate approach for tax reporting purposes, the Trustee currently intends
to treat the trust as a grantor trust and, except as specifically indicated
otherwise under "Possible Recharacterization of the Trust as a Partnership"
below, the balance of this discussion assumes that the Trust will be so
classified. (The Trust Agreement prohibits the Trust from electing to be taxed
as a corporation.)
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Each Certificateholder will be treated, for federal income tax purposes,
(i) as if it had purchased its pro rata interest of the Trust's underlying
assets and (ii) as if it were the obligor on its pro rata portion of the Trust's
obligations. Thus, for example, if the Trust Certificates are subject to early
redemption on account of the Trust being the obligor under any call options
("Call Warrants"), each Certificateholder will be treated as if it had sold Call
Warrants with respect to the Underlying Securities in an amount representing its
pro rata interest in the Trust. Further, if the income of the Trust is used
(directly or indirectly) to pay expenses of the Trust, the holders will be
treated as if each had first earned its pro rata share of that income and then
paid its share of the expense. Prospective investors should be aware that
expenses of the Trust may be subject to limitations on deductibility, which may
depend on each particular investor's circumstances, but would include, in the
case of an individual (or entity treated as an individual) Section 67 of the
Code that allows miscellaneous itemized deductions only to the extent that in
the aggregate they exceed 2 percent of adjusted gross income.
The Trust has identified the Underlying Securities and any Call Warrants as
part of an integrated transaction within the meaning of Treasury Regulation
Section 1.1275-6. Among other consequences of such identification is the
treatment generally of each Trust Certificate as a synthetic debt instrument
issued on the date it is acquired by the holder thereof. Similar treatment will
also generally apply to Trust Certificates representing "stripped coupons"
and/or "stripped bonds," which generally will be the case when Trust
Certificates are issued in multiple classes and the different classes represent
the ownership of differing percentage ownership interests of the right to
interest and principal on the Underlying Securities. It is also possible that
each Trust Certificate will be treated as an actual debt instrument issued on
the Closing Date. In that case, the Trust Certificates would be taxed like
conventional debt instruments and the discussion under "Income of
Certificateholders" would not apply. If a Series of Trust Certificates has more
than one Class and some but not all classes are treated as actual debt
instruments issued on the Closing Date, income on the Classes not so treated may
be treated as unrelated business taxable income (and thus subject to tax) in the
hands of pension plans, individual retirement accounts and other tax-exempt
investors.
Income of Certificateholders
Original Issue Discount. Each Certificateholder will be subject to the
original issue discount ("OID") rules of the Code and Treasury Regulations with
respect to such Trust Certificates. Under those rules, the Certificateholder
(whether on the cash or accrual method of accounting) will be required to
include in income the OID on the Trust Certificates as it accrues on a daily
basis, on a constant yield method regardless of when cash payments are received.
The amount of OID on a Trust Certificate generally will be equal to the excess
of all amounts payable on the Trust Certificate over the amount paid to acquire
the Trust Certificate and the constant yield used in accruing OID generally will
be the yield to maturity of a Trust Certificate as determined by each holder
based on that holder's purchase price for the Trust Certificate. It is unclear
whether the holder of a Trust Certificate should, in calculating OID, assume
that the Underlying Securities will, or will not, be called pursuant to any Call
Warrant. It is unclear how actual and expected future prepayments or losses on
the Underlying Securities are to be taken into account.
The Trustee intends for information reporting purposes to account for OID,
if any, reportable by Certificateholders by reference to the price paid for a
Trust Certificate by an initial purchaser at an assumed issue price, although
the amount of OID will differ for other purchasers. Such purchasers should
consult their tax advisors regarding the proper calculation of OID.
The amount of OID that is reported in income in any particular year will
not necessarily bear any relationship to the amount of distributions, if any,
paid to a holder in that year.
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Purchase and Sale of a Trust Certificate. A Certificateholder's tax basis
in a Trust Certificate generally will equal the cost of the Trust Certificates
increased by any amounts includable in income as OID, and reduced by any
payments made on the Trust Certificates. If a Trust Certificate is sold or
redeemed, capital gain or loss will be recognized equal to the difference
between the proceeds of sale and the Certificateholder's adjusted basis in the
Trust Certificates.
Possible Recharacterization of the Trust as a Partnership
As indicated above, it is possible that the IRS will seek to recharacterize
the Trust as a partnership. If the IRS were to successfully recharacterize the
Trust as a partnership, the Trust would not be subject to federal income tax.
Under Treasury Regulation 1.761-2, certain partnerships may "elect out" of
subchapter K of the Code (partnership tax accounting). Although subject to
uncertainty, the Trust is likely to be eligible for this election. Assuming that
it is so eligible, each Certificateholder will be required to report its
respective share of the items of income, deductions, and credits of the
organization on their respective returns (making such elections as to individual
items as may be appropriate) in a manner consistent with the exclusion of the
Trust from partnership tax accounting. Such reporting should be substantially
similar to the income tax reporting that would be required under the grantor
trust rules. In mutual consideration for each holder's purchase of Trust
Certificate, each such holder is deemed to consent to the Trust's making of a
protective election out of subchapter K of the Code.
If the election to be excluded from the partnership tax accounting
provisions of the Code is not effective, among other consequences, (i) the Trust
would be required to account for its income and deductions at the Trust level
(not necessarily taking into account any particular holder's circumstances,
including any difference between the holder's basis in its Trust Certificates
and the Trust's basis in its assets) and to utilize a taxable year for reporting
purposes and (ii) each holder would be required to separately take into account
such holder's distributive share of income and deductions of the Trust. A holder
would take into account its distributive share of Trust income and deductions
for each taxable year of the Trust in the holder's taxable year which ends with
or within the Trust's taxable year. A holder's share of the income of the Trust
computed at the Trust level would not necessarily be the same if computed under
the OID rule described above under "Income of Certificateholders" and, in
particular, may not take account of any difference in the yield on the
Certificate to the holder based on the Certificateholder's purchase price and
the yield on the Underlying Securities determined at the Trust level.
Withholding Taxes
Payments made on a Trust Certificate to a person that is not a U.S. Person
and has no connection with the United States other than holding its certificates
generally will be made free of United States federal withholding tax, provided
that (i) the holder is not related (directly or indirectly) to the obligor,
guarantor, if any, or sponsor of the Underlying Securities, the Depositor, the
holder of any other class of Trust Certificates (if such Series provides for
multiple classes of Trust Certificates), the holder of any Call Warrant or the
counterparty on any notional principal contract or other derivative contract of
which the Trust is a party and (ii) the holder complies with certain
identification and certification requirements imposed by the IRS.
Possible Characterization of the Underlying Securities as Equity Securities
As noted above, for the purposes of the forgoing discussion, the Depositor
and Special Tax Counsel have assumed, without inquiry, that the Underlying
Securities will be characterized as indebtedness for federal income tax
consequences. If the assumption were not correct and the Underlying Securities
are treated as equity securities for federal income tax purposes, the timing and
character of income on the Certificates may differ from that discussed above
and, with respect to any particular investor, might be adverse.
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If the offering materials relating to the Underlying Securities indicated
that counsel to the issuer of the Underlying Securities provided an opinion
regarding the tax characterization of those securities in connection with their
original issue the prospectus supplement will so indicate. Neither the Depositor
nor Special Tax Counsel will investigate the circumstances surrounding the
issuance of the opinion and neither will make any representation as to its
accuracy or continuing applicability.
If an Underlying Security were treated as an equity security for federal
income tax purposes, depending on, among other things, the nature of the issuer
of the Underlying Security as a partnership or corporation for federal income
tax purposes, among other potential consequences: (i) income paid to non-U.S.
investors may be subject to a 30% withholding tax, unless that tax were
eliminated under a treaty between the United States and the country of residence
of the investor (ii) the integration rules of Treasury Regulation Section
1.1275-6 (discussed above) might not apply, (iii) gain on the sale of the
Certificates that would otherwise be long-term capital gain might be
characterized as short-term capital gain or ordinary income, (iv) the OID rules
(discussed above) may not apply, however, the rules of section 305(c) or 305(e)
relating to stock issued with redemption premium or stripped preferred stock may
apply, and (v) the rules described under "Possible Recharacterization of the
Trust as a Partnership" would more likely apply.
Prospective investors should consult with their own tax advisors regarding
the likelihood that the Underlying Securities of any particular series may be
recharacterized and the effect, if any, such a characterization would have on
them.
State and Other Tax Consequences
In addition to the federal income tax consequences described above,
potential investors should consider the state, local and foreign tax
consequences of the acquisition, ownership and disposition of the Trust
Certificates. State, local and foreign tax law may differ substantially from
federal tax law, and this discussion does not purport to describe any aspect of
the tax law of a state or other jurisdiction (including whether the Trust, if
treated as a partnership for federal income tax purposes, would be treated as a
partnership under any state or local jurisdiction). Therefore, it is strongly
recommended that prospective purchasers consult their own tax advisors with
respect to such matters.
PLAN OF DISTRIBUTION
Trust Certificates may be offered in any of three ways: (i) through
underwriters or dealers; (ii) directly to one or more purchasers; or (iii)
through agents. The applicable prospectus supplement will set forth the terms of
the offering of any Series of Certificates, which may include the names of any
underwriters, or initial purchasers, the purchase price of such Trust
Certificates and the proceeds to the Depositor from such sale, any underwriting
discounts and other items constituting underwriters' compensation, any initial
public offering price, any discounts or concessions allowed or reallowed or paid
to dealers, any securities exchanges on which such Trust Certificates may be
listed, any restrictions on the sale and delivery of Trust Certificates in
bearer form and the place and time of delivery of the Trust Certificates to be
offered thereby.
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If underwriters are used in the sale, Trust Certificates will be acquired
by the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. Such Trust
Certificates may be offered to the public either through underwriting syndicates
represented by managing underwriters or by underwriters without a syndicate.
Such managing underwriters or underwriters in the United States will include
Prudential Securities Incorporated, an affiliate of the Depositor. The
obligations of the underwriters to purchase such Trust Certificates will be
subject to certain conditions precedent, and the underwriters will be obligated
to purchase all such Trust Certificates if any of such Trust Certificates are
purchased. Any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers may be changed from time to time.
Trust Certificates may also be sold through agents designated by the
Depositor from time to time. Any agent involved in the offer or sale of Trust
Certificates will be named, and any commissions payable by the Depositor to such
agent will be set forth, in the applicable prospectus supplement. Unless
otherwise indicated in the applicable prospectus supplement, any such agent will
act on a best efforts basis for the period of its appointment.
If so indicated in the applicable prospectus supplement, the Depositor will
authorize agents, underwriters or dealers to solicit offers by certain specified
institutions to purchase Trust Certificates at the public offering price
described in such prospectus supplement pursuant to delayed delivery contracts
providing for payment and delivery on a future date specified in such prospectus
supplement. Such contracts will be subject only to those conditions set forth in
the applicable prospectus supplement and such prospectus supplement will set
forth the commissions payable for solicitation of such contracts.
Any underwriters, dealers or agents participating in the distribution of
Trust Certificates may be deemed to be underwriters and any discounts or
commissions received by them on the sale or resale of Trust Certificates may be
deemed to be underwriting discounts and commissions under the Securities Act.
Agents and underwriters may be entitled under agreements entered into with the
Depositor to indemnification by the Depositor against certain civil liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments that the agents or underwriters may be required to make in respect
thereof. Agents and underwriters may be customers of, engage in transactions
with, or perform services for, the Depositor or its affiliates in the ordinary
course of business.
Prudential Securities Incorporated is an affiliate of the Depositor and is
a wholly owned subsidiary of Prudential Securities Group Inc., the parent
corporation of the Depositor. The participation of Prudential Securities
Incorporated in the offer and sale of Trust Certificates complies with the
requirements of Rule 2720 of the Conduct Rules of the National Association of
Securities Dealers, Inc. regarding underwriting securities of an affiliate.
As to each Series of Certificates, only those Trust Classes rated in one of
the investment grade rating categories by a Rating Agency will be offered
hereby. Any unrated Classes or Classes rated below investment grade may be
retained by the Depositor or sold at any time to one or more purchasers.
Affiliates of the Underwriters may act as agents or underwriters in
connection with the sale of the Trust Certificates. Any affiliate of the
Underwriters so acting will be named, and its affiliation with the Underwriters
described, in the related prospectus supplement. Also, affiliates of the
Underwriters may act as principals or agents in connection with market-making
transactions relating to the Trust Certificates. A prospectus supplement will be
prepared with respect to the Trust Certificates for use by such affiliates in
connection with offers and sales related to market-making transactions in the
Trust Certificates.
LEGAL MATTERS
The validity of the Trust Certificates and certain federal income tax
matters will be passed upon for the Depositor and the Underwriters by Orrick,
Herrington & Sutcliffe LLP, New York, New York or other counsel identified in
the applicable prospectus supplement.
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INDEX OF DEFINED TERMS
Administration Fee.............. 8
Administrative Agent............ 8
AID.............................18
Allocation Ratio................14
Base Rate.......................12
Business Day....................11
Calculation Agent...............12
Calculation Date................13
Call Price......................15
Call Right......................15
Callable Series.................15
Call Warrants...................30
Cede.............................6
CEDEL...........................27
Certificate of Non-U.S.
Beneficial Ownership............27
Clearing Agency.................16
Code............................29
Credit Support...................5
Cut-off Date....................23
Definitive Certificate..........15
Depositary.......................6
dollar...........................7
DTC..............................6
Euroclear.......................27
Exchange Act.....................6
Exchangeable Series.............13
Fannie Mae......................17
FFCB............................18
FHLB............................18
Fixed Rate Trust Certificates...11
Floating Rate Trust Certificates12
Floating Trust Certificate Rate 12
Foreign Government Guarantor....18
Foreign Government Issuer.......18
Freddie Mac.....................18
Global Security.................15
GSE.............................17
GSE Issuer......................18
GTC.............................18
GTC Notes.......................18
Holders..........................6
Interest Reset Date.............12
Interest Reset Period...........12
IRS.............................29
Letter of Credit................21
Letter of Credit Bank...........21
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Maximum Trust Certificate Rate..12
Minimum Trust Certificate Rate..12
OID.............................30
Optional Exchange...............13
Optional Exchange Date..........14
Participants....................16
Put Date........................15
Put Option......................15
Puttable Underlying Securities..15
Realized Losses.................11
Record Date.....................10
REFCORP.........................18
Registration Statement...........6
Reserve Account.................21
Retained Interest................8
Sallie Mae......................18
Schedule B......................18
SEC..............................6
Securities Act...................6
Special Tax Counsel.............28
Spread..........................12
Spread Multiplier...............12
Surety..........................21
Surety Bond.....................21
Trust............................5
Trust Agreement..................8
Trust Assets.................5, 20
Trust Certificate................5
Trust Certificate Account.......22
Trust Certificateholders.........6
Trust Certificates...............5
Trustee Fee......................8
TVA.............................18
U.S. dollars.....................7
U.S. Person.....................27
Underlying Securities............5
Underlying Securities Agreement 11
Underlying Securities Currency..19
Underlying Securities Interest
Accrual Periods ..............19
Underlying Securities Issuer.....5
Underlying Securities Payment
Dates ..........................19
Underlying Securities
Prospectuses....................18
Underlying Securities Rate......19
United States...................27
US$..............................7
35
<PAGE>
[ALTERNATE COVER FOR MARKET MAKING PROSPECTUS SUPPLEMENT]
Prospectus Supplement
(To Prospectus dated [ ], [ ])
[$][ ]
RECEIPTS ON CORPORATE SECURITIES, SERIES [ ]-[ ]
Issued By
RECEIPTS ON CORPORATE SECURITIES TRUST [ ]-[ ]
Evidencing
FRACTIONAL INTERESTS IN [[TITLE(S) OF UNDERLYING SECURITIES] DUE [ ],[ ]]
[POOL OF [SPECIFY TYPE OF SECURITIES]]
PRUDENTIAL SECURITIES STRUCTURED ASSETS, INC.,
Depositor
PRUDENTIAL SECURITIES STRUCTURED ASSETS, INC.,
Depositor
- ----------------------------------------------
The Trust will [IDENTIFY [IDENTIFY
issue: CLASS OF TRUST CLASS OF
CERTIFICATES] TRUST
CERTIFICATES]
- -----------------------------------------------
Initial
certificate
principal
balance/
notional amount
- -----------------------------------------------
Trust
certificate
rate
- -----------------------------------------------
Distribution
dates
- -----------------------------------------------
Final
scheduled
distribution date
- -----------------------------------------------
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS DESCRIBED ON PAGES S-[ ] THROUGH
S-[ ] IN THIS PROSPECTUS SUPPLEMENT AND ON PAGES [ ] THROUGH [ ] IN THE
PROSPECTUS.
The trust certificates represent interests in the trust only and do not
represent an obligation of the depositor or any of its affiliates. The trust
certificates do not represent a direct obligation of [the issuer[s] of the
underlying securities] or any of [its] [their] affiliates. [The issuer[s] of the
underlying securities [is] [are] not [an] affiliate[s] of the trust or the
depositor and will not receive any proceeds from the sale of the trust
certificates.]
This prospectus supplement may not be used to offer trust certificates unless it
is accompanied by the related prospectus.
The trust certificates offered by this prospectus supplement will be rated [ ]
by [SPECIFY RATING AGENCY].
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THE TRUST CERTIFICATES OR DETERMINED THAT THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS ACCURATE OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus Supplement is to be used by the Underwriter in connection with
offers and sales related to market making transactions in the Certificates in
which the Underwriter acts as principal. The Underwriter may also act as agent
in such transactions. Sales will be made at prices related to prevailing prices
as the time of sale.
[PRUDENTIAL SECURITIES INCORPORATED]
The date of this prospectus supplement is [ ], [ ].
<PAGE>
PLAN OF DISTRIBUTION
This Prospectus Supplement is to be used by Prudential Securities
Incorporated (the "Underwriter") in connection with offers and sales related to
market making transactions in the Trust Certificates in which the Underwriter
acts as principal. The Underwriter may also act as agent in such transactions.
Sales will be made at prices related to prevailing market prices at the time of
sale.
<PAGE>
PART II
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemized list of the estimated expenses to be incurred
in connection with the offering of the securities being offered hereunder other
than underwriting discounts and commissions.
Registration Fee........................... $ 278.00
Printing and Engraving Expenses............ 50,000.00
Trustee's Fees............................. 300,000.00
Legal Fees and Expenses.................... 400,000.00
Securities Exchange Listing Fees, Blue Sky 10,000.00
Fees and Expenses..........................
Accountants' Fees and Expenses............. 75,000.00
Rating Agency Fees......................... 200,000.00
Miscellaneous.............................. 25,000.00
-------------
Total................................... $1,060,278.00
Item 15....INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Depositor's Bylaws provide that the Depositor shall indemnify each of
its directors and officers who was or is a party or is threatened to be made a
party to any threatened, pending or contemplated action, suit or proceeding,
whether civil, criminal, administrative or investigative by reason of the fact
that he is or was a director or officer of the Depositor other than an action by
or in the right of the Depositor (for which the Depositor may indemnify such
persons under certain circumstances).
Section 145 of the Delaware General Corporation Law (the "GCL") provides
as follows:
"(a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of NOLO CONTENDERE or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
II-1
<PAGE>
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b). Such
determination shall be made (1) by a majority vote of the board of directors who
are not parties to such action, suit or proceeding, even though less than a
quorum, or (2) if there are no such directors, or if such directors so direct,
by independent legal counsel in a written opinion, or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative, or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of undertaking
by or on behalf of such director or officer to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
corporation as authorized in this section. Such expenses (including attorneys'
fees) incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was
II-2
<PAGE>
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent for such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(i) For purposes of this section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise Provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(k)..The Court of Chancery is hereby vested with exclusive jurisdiction to
hear and determine all actions for advancement of expenses or indemnification
brought under this section or under any bylaw, agreement, vote of stockholders
or disinterested directors, or otherwise. The Court of Chancery may summarily
determine a corporation's obligation to advance expenses (including attorneys'
fees)."
The Amended and Restated Certificate of Incorporation also limits the
personal liability of directors to the Depositor and its stockholders for
monetary damages resulting from certain breaches of the directors' fiduciary
duties. The Amended and Restated Certificate of Incorporation of the Depositor
provides as follows:
"No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided that the provisions of this Article Eleventh shall
not eliminate or limit the liability of a director (a) for any breach of the
Director's duty of loyalty to the Corporation and to its stockholders, (b) for
acts
II-3
<PAGE>
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the General Corporation Law
of the State of Delaware or (iv) for any transaction from which such director
derived any improper personal benefit. If the GCL is amended after the filing of
this Amended and Restated Certificate of Incorporation so as to authorize
corporate action further eliminating or limiting the personal liability of
directors, then the liability of each director of the Corporation shall be
eliminated or limited to the fullest extent permitted by the law of the State of
Delaware as the same exists from time to time. Any repeal or modification of
this Article Eleventh by the stockholders of the Corporation shall not adversely
affect any elimination or limitation on the personal liability of a director
existing at the time of such repeal or modification."
- ---------------------
Item 16....EXHIBITS
1.1 Form of proposed Underwriting Agreement for Trust Certificates.*
4.1 Form of Trust Agreement, with form of Trust Certificate attached
thereto.*
5.1 Opinion of Orrick, Herrington & Sutcliffe LLP with respect to legality.
8.1 Opinion of Orrick, Herrington & Sutcliffe LLP with respect to tax
matters.
23.1 Consents of Orrick, Herrington & Sutcliffe LLP (included in its
opinions filed as Exhibits 5.1 and 8.1).
25.1 Statement of eligibility of Trustee (The Chase Manhattan Bank).*
_________________
*Incorporated by reference from Registration Statement on Form S-3 (File
No. 333-70233 filed on January 7, 1999.
---------------------
Item 17. UNDERTAKINGS
------------
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being
made of the securities registered hereby, a post-effective amendment to this
registration statement: (i) to include any prospectus required by Section
10(a)(3) of the Securities Act; (ii) to reflect in the prospectus any facts or
events arising after the effective date of this registration statement (or the
most recent post-effective amendment hereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in this
registration statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high and of the estimated maximum offering range may be reflected in the form of
Prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and (iii) to
include any material information with respect to the plan of distribution not
previously disclosed in this registration statement or any material change to
such information in this
II-4
<PAGE>
registration statement; PROVIDED, HOWEVER, that the undertakings set forth in
clauses (i) and (ii) above do not apply if the information required to be
included in a post-effective amendment by those clauses is contained in periodic
reports filed by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are
incorporated by reference in this registration statement.
(b) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(d) That, for purposes of determining any liability under the
Securities Act, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act that is incorporated by
reference in this registration statement shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(e) That insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling person of
the registrant pursuant to the provisions above, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(f) That, for purposes of determining any liability under the
Securities Act, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and contained in
the form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared effective.
(g) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at the time shall be deemed
to be the initial BONA FIDE offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
the requirements for filing on Form S-3, reasonably believes that the security
rating requirement contained in Transaction Requirement B.5. of Form S-3 will be
met by the time of the sale of the securities registered hereunder and has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on this 9th day of June, 1999.
PRUDENTIAL SECURITIES STRUCTURED
ASSETS, INC.
By: *
------------------------
Name: Jeffrey J. Theodorou
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
June 9, 1999 By: *
- -------------------- ---------------------------
Date Name: Howard Whitman
Title: Chairman of the Board
and Director
June 9, 1999 By: *
- -------------------- --------------------------
Date Name: Jeffrey J. Theodorou
Title: President
(Principal Executive Officer)
June 9, 1999 By: *
- -------------------- ---------------------------
Date Name: William J. Horan
Title: Chief Financial Officer
(Principal Financial and
Accounting Officer)
June 9, 1999 By: *
- -------------------- ---------------------------
Date Name: Elizabeth W. Castagna
Title: Treasurer
June 9, 1999 By: *
- -------------------- ---------------------------
Date Name: Ruth Lavelle
Title: Director
*The undersigned, by signing his name hereto does hereby sign this Amendment
No. 1 on behalf of each of the persons indicated above pursuant to a power of
attorney filed with Registration Statement on Form S-3 (File No. 333-70233)
filed on January 7, 1999.
By: /s/ Lawrence S. Motz
---------------------------
Name: Lawrence S. Motz
Title: Attorney-in-Fact
II-6
<PAGE>
EXHIBIT INDEX
Description of Exhibit
Exhibit
No.
1.1 Form of proposed Underwriting Agreement for Trust Certificates.*
4.1 Form of Trust Agreement, with form of Trust Certificates attached
thereto.*
5.1 Opinion of Orrick, Herrington & Sutcliffe LLP with respect to legality.
8.1 Opinion of Orrick, Herrington & Sutcliffe LLP with respect to tax
matters.
23.1 Consents of Orrick, Herrington & Sutcliffe LLP (included in its
opinions filed as Exhibits 5.1 and 8.1).
25.1 Statement of eligibility of Trustee (The Chase Manhattan Bank).*
_________________
*Incorporated by reference from Registration Statement on Form S-3 (File
No. 333-70233 filed on January 7, 1999.
II-7
EXHIBIT 5.1
June 9, 1999
Prudential Securities Structured Assets, Inc.
One New York Plaza, 14th Floor
New York, New York 10292
Re: PRUDENTIAL SECURITIES STRUCTURED ASSETS, INC.
REGISTRATION STATEMENT ON FORM S-3
---------------------------------------------
Ladies and Gentlemen:
At your request, we have examined the Registration Statement on Form S-3
filed by Prudential Securities Structured Assets, Inc., a Delaware corporation
(the "Registrant"), with the Securities and Exchange Commission on the date
hereof (the "Registration Statement"), in connection with the registration under
the Securities Act of 1933, as amended (the "Act"), of certain trust
certificates (the "Certificates"). The Certificates are issuable in series
(each, a "Series"). Each Series of Certificates will be issued under a separate
Series Supplement to that certain Base Trust Agreement (together, the "Trust
Agreement") by and between the Registrant and a trustee named therein,
establishing an individual trust for such Series (each, a "Trust"). Each Series
of Certificates is to be sold as set forth in the Registration Statement, any
amendments thereto, and the prospectus and prospectus supplement relating to
such Series.
We have examined such instruments, documents and records as we deemed
relevant and necessary as a basis of our opinion hereinafter expressed. In such
examination, we have assumed the following: (a) the authenticity of original
documents and the genuineness of all signatures; (b) the conformity to the
originals of all documents submitted to us as copies; and (c) the truth,
accuracy and completeness of the information, representations and warranties
contained in the records, documents, instruments and certificates we have
reviewed.
Based on such examination, we are of the opinion that when the
Certificates of each Series have been duly executed, authenticated and delivered
in accordance with the Trust Agreement and sold in the manner described in the
Registration Statement, any amendment thereto and the prospectus and prospectus
supplement relating thereto, the Certificates of such Series will be legally
issued, fully paid, binding and non-assessable obligations of the Trust created
by the Trust Agreement, and the holders of the Certificates of such Series will
be entitled to the benefits of the Trust Agreement except as enforcement thereof
may be limited by applicable bankruptcy, insolvency, reorganization,
arrangement, fraudulent conveyance, moratorium, or other laws relating to or
affecting the rights of creditors generally and general
<PAGE>
principles of equity, including without limitation concepts of materiality,
reasonableness, good faith and fair dealing, and the possible unavailability of
specific performance or injunctive relief, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name wherever appearing in the
Registration Statement and each prospectus contained therein. In giving such
consent, we do not consider that we are "experts," within the meaning of the
term as used in the Act or the rules and regulations of the Securities and
Exchange Commission issued thereunder, with respect to any part of the
Registration Statement, including this opinion as an exhibit or otherwise.
Very truly yours,
/s/ Orrick, Herrington & Sutcliffe LLP
--------------------------------------
ORRICK, HERRINGTON & SUTCLIFFE LLP
EXHIBIT 8.1
June 9, 1999
Prudential Securities Structured Assets, Inc.
One New York Plaza, 14th Floor
New York, New York 10292
Re: PRUDENTIAL SECURITIES STRUCTURED ASSETS, INC.
REGISTRATION STATEMENT ON FORM S-3
---------------------------------------------
Ladies and Gentlemen:
We have advised Prudential Securities Structured Assets, Inc., a Delaware
corporation (the "Registrant"), in connection with the above captioned
registration statement on Form S-3 (the "Registration Statement") with respect
to certain federal income tax aspects of the issuance of trust certificates (the
"Certificates"). As described in the Registration Statement, the Certificates
will be issued from time to time in series (each, a "Series"), with each Series
being issued by an individual trust to be formed by the Registrant pursuant to a
separate Series Supplement to that certain Base Trust Agreement (together, the
"Trust Agreement") between the Registrant and a trustee named therein (the
"Trustee"). Capitalized terms not otherwise defined herein are used as defined
in the Registration Statement.
In that connection, we are generally familiar with the proceedings
required to be taken in connection with the proposed authorization, issuance and
sale of any Series of Certificates and we have examined copies of such
documents, corporate records and other instruments as we have deemed necessary
or appropriate for the purposes of this opinion, including the Registration
Statement and the exhibits to the Registration Statement. We have assumed that
each Series of Certificates is executed and delivered and has terms consistent
with those contemplated by the Registration Statement.
Based on the foregoing and assuming that the Trust Agreement with respect
to each Series of Certificates is executed and delivered in substantially the
form we have examined and that the transactions contemplated to occur under the
Registration Statement and the Trust Agreement in fact occur in accordance with
the terms thereof, we hereby confirm that we are of the opinion that: (i) while
the description of federal income tax consequences to holders of the
Certificates that appears under the heading "Federal Income Tax Consequences" in
the prospectus supplement (the "Prospectus Supplement") and the prospectus (the
"Prospectus") does not purport to discuss all possible income tax ramifications
of the proposed issuance, with
<PAGE>
respect to those tax consequences which are discussed, the description is
accurate in all material respects and (ii) each Trust will be a grantor trust or
partnership for federal income tax purposes and not an association taxable as a
corporation (or publicly traded partnership treated as an association).
This opinion is based on the facts and circumstances set forth in the
Prospectus Supplement and the Prospectus and in the other documents reviewed by
us. Our opinion as to the matters set forth herein could change with respect to
a particular Series of Certificates as a result of changes in facts and
circumstances, changes in the terms of documents reviewed by us, or changes in
the law subsequent to the date hereof. As the Registration Statement
contemplates Series of Certificates with numerous different characteristics, the
particular characteristics of each Series of Certificates must be considered in
determining the applicability of this opinion to a particular Series of
Certificates.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name wherever appearing in the
Registration Statement and the Prospectus and Prospectus Supplement contained
therein. In giving such consent, we do not consider that we are "experts,"
within the meaning of the term as used in the Act or the rules and regulations
of the Commission issued thereunder, with respect to any part of the
Registration Statement, including this opinion as an exhibit or otherwise.
Very truly yours,
/s/ Orrick, Herrington & Sutcliffe LLP
--------------------------------------
ORRICK, HERRINGTON & SUTCLIFFE LLP
