As filed with the Securities and Exchange Commission on January 7, 1999
Registration No. 333-_______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
20549
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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
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(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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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 by 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 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.
<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 Prudential Structured Assets, Inc. ("PSSA") 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 PSSA 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 in
one of the four highest rating categories by at least one nationally recognized
statistical rating organization.
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 PSSA at a price equal to [ ]% of their [certificate principal
balance], subject to certain conditions. The underwriter[s] expect[s] to offer
the trust certificates for sale from time to time in negotiated transactions or
otherwise at prices determined at the time of sale. The underwriter['s][s']
compensation will be the difference between the price [it] [they] pay[s] to PSSA
for the trust certificates and the amount [it] [they] receive[s] from the sale
of the trust certificates to the public. See "Method of Distribution" herein.
[PRUDENTIAL SECURITIES INCORPORATED]
The date of this prospectus supplement is [ ], [ ].
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
We provide information to you about the trust certificates in two separate
documents that progressively provide more detail:
-- The accompanying prospectus, which provides general information, some of
which may not apply to your trust certificates, and
-- This prospectus supplement, which describes specific terms of your trust
certificates.
IF THE DESCRIPTION OF THE TERMS OF YOUR TRUST CERTIFICATES VARIES BETWEEN
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS, YOU SHOULD RELY ON THE
INFORMATION IN THIS PROSPECTUS SUPPLEMENT.
We include cross-references in this prospectus supplement and the
accompanying prospectus 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 accompanying prospectus provide the pages on which
these captioned sections are located.
Certain terms in this prospectus supplement have been capitalized to
indicate that they have particular meanings. You can find a listing of the pages
where these capitalized terms are defined in this prospectus supplement and the
accompanying prospectus by referring to the "Index of Terms" beginning on page
S-[ ] of this prospectus supplement and on page [ ] of the accompanying
prospectus.
You should rely only on the information provided in this prospectus
supplement and the accompanying prospectus, including any information
incorporated by reference. See "Available Information" and "Incorporation of
Certain Documents by Reference" in the accompanying prospectus. You may request
information incorporated by reference from PSSA 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. We do not claim the
accuracy of the information in this prospectus supplement or in the accompanying
prospectus as of any date other than the dates stated on their respective
covers.
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TABLE OF CONTENTS
SUMMARY OF TERMS..................................................4
RISK FACTORS......................................................8
THE TRUST........................................................12
DESCRIPTION OF THE UNDERLYING SECURITIES.........................12
Terms of Underlying Securities.............................13
Publicly Available Information.............................14
[DESCRIPTION OF THE CREDIT SUPPORT]..............................14
[Reserve Account]..........................................14
[Letter of Credit].........................................14
[Surety Bond]..............................................15
[Other Forms of Credit Enhancement]........................15
YIELD ON THE TRUST CERTIFICATES..................................16
DESCRIPTION OF THE TRUST CERTIFICATES............................16
General....................................................16
Definitive Certificates....................................17
Collections and Distributions..............................17
[Advances].................................................19
Allocation of Losses; Subordination........................19
Exchange of Trust Certificates for Underlying Securities...20
Distributions on Payment Default or Acceleration of the
Underlying Securities......................................21
Distributions on Redemption or Advancement of Maturity
of the Underlying Securities...............................21
Distributions on Termination of Exchange Act Reporting.....21
[Restriction on Transfer of the [ ] Class
Certificates]..............................................22
DESCRIPTION OF THE TRUST AGREEMENT...............................22
General....................................................22
The Trustee................................................22
Actions by Trust Certificateholders........................22
Voting Rights..............................................23
Voting of Underlying Securities; Modification of
Underlying Securities Agreements...........................23
Termination of the Trust...................................24
CERTAIN LEGAL ASPECTS OF THE TRUST ASSETS........................24
THE DEPOSITOR....................................................24
YEAR 2000........................................................25
FEDERAL INCOME TAX CONSEQUENCES..................................26
ERISA CONSIDERATIONS.............................................26
METHOD OF DISTRIBUTION...........................................27
LEGAL OPINIONS...................................................28
RATINGS..........................................................29
INDEX OF TERMS...................................................30
ANNEX A..........................................................31
Interest Payments..........................................32
Principal Payments.........................................33
[Redemption or Conversion Features]........................33
[Security for Underlying Securities].......................33
[Allocation of Collections or Revenues]....................33
[Underlying Securities Events of Default][Early
Amortization Events].......................................33
S-3
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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
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. The assets of the trust will consist of the underlying
securities [, credit support and other assets] described below.
You will receive payment on your trust certificates only if the trustee receives
the corresponding payments due on the underlying securities or other trust
assets. 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 PSSA 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.
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, in the
manner and priority described herein. If the trust experiences losses on the
underlying securities or other trust assets, the losses will be borne by the
different classes of trust certificates as described herein.
The trust certificates will be prepaid prior to their final scheduled
distribution date if the underlying securities are redeemed or the maturity of
the underlying securities is advanced as a result OF [SPECIFY REDEMPTION OR
ADVANCEMENT-OF-MATURITY EVENTS]. In addition, if [SPECIFY DISTRIBUTION EVENTS],
certificateholders will receive an in-kind distribution of the underlying
securities and the trust certificates will be cancelled.
[SPECIFY TERMS OF CERTIFICATES BY
CLASS IN THE FOLLOWING MANNER]
[RESIDUAL CLASS CERTIFICATES]. [The residual class certificates will have an
initial certificate principal balance of [$][ ] and a final scheduled
distribution date of [ ], [ ]. Owners of the residual class certificates will
not receive any cash distributions unless the underlying securities are redeemed
prior to maturity. If you own a residual class certificate which remains
outstanding on the final scheduled distribution date, your trust certificate
will automatically be exchanged for an equivalent principal amount of the
underlying securities on such date. This exchange will occur without any action
on your part.]
[AMORTIZING CLASS CERTIFICATES]. [The amortizing class certificates will have an
initial certificate principal balance of [$][ ] and a final scheduled
distribution date of [ ], [ ]. Owners of the amortizing class certificates will
receive semiannual fixed payments on the [ ] day of each [ ] and [ ] , beginning
on [ ], [ ] and ending on [ ], [ ], if the trustee has received the
corresponding scheduled interest payment on the underlying securities. Each
fixed payment will be equal to [ ] days' of interest on the principal balance of
the amortizing class certificates, calculated at a rate
S-4
<PAGE>
of [ ]% per annum and on the basis of a year of [ ] days.
However, you will not receive some or all of this fixed 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)]
THE UNDERLYING SECURITIES
The underlying securities will consist of [SELECT APPROPRIATE DESCRIPTION]
- -- a publicly issued fixed income debt security or asset backed security or pool
of 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 Securities Exchange Act of 1934 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,
a publicly issued fixed income debt security or pool of debt securities issued
by one or more foreign non-governmental issuers which are subject to the
reporting requirements of the Securities Exchange Act of 1934 and file reports
and other information with the SEC,
a publicly issued fixed income debt security or a pool of debt securities
which represent obligations of the United States of America, or obligations of
any agency thereof guaranteed by the full faith and credit of the United States
of America or obligations of a United States government sponsored enterprise
created pursuant to federal law or
a publicly issued fixed income debt security or pool of debt securities issued
by a foreign government, political subdivision or agency or instrumentality
thereof.]
[USE THE FOLLOWING DESCRIPTIVE FORMAT OR, IF THE TRUST CONSISTS OF A POOL OF
SECURITIES, REFER TO THE TABULAR INFORMATION CONTAINED ELSEWHERE IN THE
PROSPECTUS SUPPLEMENT.]
[[Name of Issuer] issued the underlying securities as part of a public offering
of $[ ] aggregate principal amount of securities on [ ], [ ]. PSSA will acquire
the securities [in the secondary market] and will deposit them into the trust
for the benefit of the certificateholders. The underlying securities are
denominated in [ ] and bear interest at the rate of [ ]% per annum, payable
[semiannually on each [ ] and [ ]]. The underlying securities mature on [ ], [
]. [DESCRIBE WHETHER UNDERLYING SECURITIES ARE SENIOR OR SUBORDINATE, SECURED OR
UNSECURED].]
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:
S-5
<PAGE>
[SPECIFY REDEMPTION OR ADVANCEMENT-OF-MATURITY EVENTS].
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]. See "The Trust
Certificates-Distributions on Redemption or Advance of Maturity of the
Underlying Securities" in this prospectus supplement.
PAYMENT DEFAULT OR ACCELERATION OF THE UNDERLYING SECURITIES. If (1) the
underlying securities issuer defaults in the payment of principal or interest on
the underlying securities or (2) the payment of the underlying securities is
accelerated as the result of any other default under the agreements governing
the underlying securities, then the trustee will [distribute the underlying
securities to the owners of the trust certificates in-kind] [sell the underlying
securities and distribute the sale proceeds to the certificateholders] [SPECIFY
OTHER ACTION]. The trustee will distribute [the underlying securities] [sale
proceeds] as follows: [SPECIFY ALLOCATION METHOD].
TERMINATION OF REPORTING BY UNDERLYING SECURITIES ISSUER. Under certain
circumstances, if [the] [an] underlying securities issuer ceases to provide
periodic reports and other information to the SEC as required by federal
securities law, the trustee will distribute the underlying securities [of such
issuer] to the owners of the trust certificates in-kind as follows: [SPECIFY
ALLOCATION METHOD]
OTHER TRUST ASSETS
[DESCRIBE ANY OTHER TRUST ASSETS, INCLUDING ANY CREDIT SUPPORT, SWAPS OR
DERIVATIVE INSTRUMENTS]
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, as described herein.
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
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Prudential Securities Structured Assets, Inc. ("PSSA") is a Delaware corporation
and a wholly-owned limited-purpose subsidiary of Prudential Securities Group,
Inc. PSSA will acquire the underlying securities and deposit them into the
trust. The trust certificates do not constitute an obligation of PSSA or any of
its affiliates.
FEDERAL TAX STATUS
Special counsel to PSSA 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.
RATINGS
The trust certificates offered by this prospectus supplement will initially be
rated [ ] by [ ]. See "Ratings" in this prospectus supplement.
S-7
<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 HAS ONLY LIMITED ASSETS TO PAY THE TRUST CERTIFICATES: The trust has
no significant assets other than the underlying securities [and other assets or
credit support identified in this prospectus supplement]. No other assets are
available to pay your trust certificates. Consequently, if the underlying
securities and assets that are in the trust are insufficient to pay your trust
certificates, you may experience a loss on your investment. None of PSSA, the
trustee or any of their affiliates is obligated to pay your trust certificates
if the trust assets are insufficient. 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 contains basic information concerning the underlying securities. 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 MARKET FOR YOUR TRUST CERTIFICATES MAY NOT DEVELOP OR CONTINUE; THUS
IT MAY BE DIFFICULT TO RESELL YOUR CERTIFICATES: The underwriter[s] may assist
in resales of the trust certificates but they are not obligated to do so. A
secondary market for the trust certificates may not develop. If a secondary
market does develop, it may not continue or be sufficiently liquid to allow you
to resell your trust certificates and you may experience a loss on your
investment.
THE TRUST WILL NOT ACTIVELY MANAGE THE UNDERLYING SECURITIES TO AVOID LOSSES:
The trust will not dispose of any underlying security except when required by
the trust agreement. If adverse financial conditions arise, the trust will
continue to hold the underlying securities regardless of whether losses could be
reduced by selling or disposing of the securities. On the other hand, if a
default or acceleration of the underlying securities occurs, the trustee will be
required to sell or 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" herein. 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.
THERE ARE NO EVENTS OF DEFAULT UNDER THE TRUST AGREEMENT: The trust agreement
does not provide for any events of default. Payments on your trust certificates
will not be accelerated even if a covenant under the trust agreement has been
breached, unless an event of default has also occurred with respect to the
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<PAGE>
underlying securities and the payments on the 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 YOUR TRUST CERTIFICATES IS SUBJECT TO INTEREST RATE AND
MARKET RISKS: As with other fixed-income investments, the market price of your
trust certificates will vary inversely with prevailing interest rates at the
time of sale. All else being equal, when interest rates rise, the market price
of your trust certificates will fall; when interest rates fall, the market price
of your trust certificates will rise. In addition, the price at which you may be
able to sell 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.
[THE UNDERLYING SECURITIES ARE SUBORDINATE TO OTHER OBLIGATIONS OF THE
UNDERLYING SECURITIES ISSUER]: [If the underlying securities issuer experiences
financial difficulties, the trust (and consequently your trust certificates) may
be paid only after holders of senior obligations of the underlying securities
issuer.] [The underlying securities issuer has an unlimited ability to issue
obligations which are effectively senior to the underlying securities.]
YOUR EXPECTED INVESTMENT YIELD MAY BE REDUCED BY A REDEMPTION, DEFAULT OR
ACCELERATION OF THE UNDERLYING SECURITIES THUS CREATING REINVESTMENT RISK: The
yield which you realize on your investment in the trust certificates may depend
on a number of factors including
the purchase price of your trust certificates,
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 PSSA 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,
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you may be unable to realize a comparable yield when you reinvest the funds
which you receive from the prepayment of your trust certificates.
[YOUR INVESTMENT IS SUBJECT TO THE POTENTIAL INSTABILITY OF ANY INVESTMENT IN A
FOREIGN COUNTRY]: [Because your trust certificates represent an investment in
obligations of foreign [corporations] [governments], you should consider
political, economic, social and other risks which are not typically associated
with an investment in securities of a domestic issuer. Such risks include, but
are not limited to:
-- future political and economic developments abroad, including the risk
that policies of political leaders and government authorities could lead to
high inflation levels and devaluation of the local currency, imposition of
foreign exchange controls to prevent free movement of the local currency,
and nationalization of 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 any withholding tax or 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 abroad or diplomatic developments, and
-- the imposition of various additional governmental laws or restrictions.
THERE ARE SPECIAL RISKS ASSOCIATED WITH ANY INVESTMENT IN SECURITIES OF
FOREIGN ISSUERS AND SECURITIES DENOMINATED AND/OR PAYABLE IN FOREIGN OR
COMPOSITE CURRENCIES. 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.
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[THE TRUST'S ABILITY TO ENFORCE OBLIGATIONS MAY BE LIMITED BY THE FOREIGN STATUS
OF THE UNDERLYING SECURITIES ISSUERS]: The underlying securities consist of debt
securities issued by companies incorporated or organized under the laws of a
foreign country (I.E., foreign issuers). Some or all of the officers, directors
and controlling persons of these foreign issuers may be residents of a foreign
country. In addition, some or all of the assets of the foreign issuers may be
located outside the United States. As a result, it may be difficult for 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. Because of
the foreign status of the underlying securities issuers or guarantors, the trust
may have difficulty obtaining or enforcing legal judgments against them.
Generally, unless a foreign government waives its immunity or a court determines
that the foreign government is not entitled to immunity, the trust will not be
able to obtain a United States judgment against it. Even if the trust were able
to obtain such a judgment against a foreign government, the foreign government
may not have substantial assets which could be levied upon in the United States.
Moreover, the trust may be unable to obtain recognition and enforcement of the
United States judgment in the issuer's country.]
[THE REPORTING PRACTICES OF FOREIGN ISSUERS MAY DIFFER FROM U.S. ISSUERS]:
[While a foreign issuer may make certain information available by filing
periodic reports and other information with the SEC, this information (including
financial information) may differ in timing, form and substance from that
normally available with respect to domestic issuers.]
THE RATINGS OF YOUR TRUST CERTIFICATES ARE SUBJECT TO CHANGE; A RATING DOWNGRADE
MAY RESULT IN REDUCTION IN THE VALUE OF YOUR CERTIFICATES: At the time of
issuance, your trust certificates will be rated in one of the four highest
rating categories by at least one nationally recognized statistical rating
organization (a "rating agency"). Securities ratings do not address the market
price of the trust certificates or their suitability for a particular investor.
You should not construe any rating as a recommendation to buy, hold or sell the
trust certificates. Moreover, a rating agency may revise or withdraw its rating
of your trust certificates at any time. The revision or withdrawal of a rating
may have an adverse effect on the market price or liquidity of your trust
certificates. See "Ratings" in this prospectus supplement.
[YOUR TRUST CERTIFICATES WILL NOT BE LISTED ON AN EXCHANGE OR QUOTATION SYSTEM]:
[Your trust certificates are not required or expected to be listed on any
securities exchange or quoted on any automated quotation system of a registered
securities association. As a result, your ability to determine a market price
for your trust certificates or to resell your trust certificates may be
limited.]
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THE TRUST
The trust (the "Trust") will be formed pursuant to the Base Trust
Agreement, dated as of [ ], [ ] (the "Base Trust Agreement"), by and between
Prudential Securities Structured Assets, Inc. (the "Depositor" or "PSSA") and
The Chase Manhattan Bank, as trustee (the "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 certificates evidencing fractional undivided interests in the trust (the
"Trust Certificates" or "Certificates") to or upon the order of the Depositor.
[The Underlying Securities were purchased in the secondary market. 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 (this "Prospectus Supplement") under
this caption [and in 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 (the "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.
[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
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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:
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]
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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 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
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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.]
[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.]
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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 (each,
a "Class"), 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 [$] [ ] (approximate) and
a [ %] [Variable] Trust Certificate Rate. [The [ ] Class Certificates, which are
not being offered hereby, will be transferred by the Depositor to an affiliate
on the Closing Date, and may be sold at any time by the Depositor in accordance
with the terms of the Trust Agreement.]
[REVISE THE FOLLOWING DESCRIPTION TO REFLECT THE SPECIFIC CHARACTERISTICS
OF EACH CLASS.] Payments received on the Underlying Securities will be
distributed to the holders of the Trust Certificates on each [ ] and [ ],
commencing [ ], [ ] (each, a "Distribution Date"). The final scheduled
Distribution Date for the Underlying Securities (the "Final Scheduled
Distribution Date") is [ ], [ ].
The Trust Certificates [other than the [ ] Class Certificates [AND SPECIFY
OTHERS] (the "Definitive Classes")] will be issued, maintained and transferred
on the book-entry records of The Depository Trust Company, New York, New York
("DTC") and its participants ("DTC Participants") in minimum denominations of
[$][ ] 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.
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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.
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;]
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(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:
"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
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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 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 will 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
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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 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
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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 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 Trustee will
distribute the Underlying Securities of such Underlying Securities Issuer to the
holders of the Trust Certificates in-kind 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
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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 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
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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].
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
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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.
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.]
CERTAIN 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. ("PSGI"). 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 PSGI, 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
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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, 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 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
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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.
[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
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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
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
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].
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[ ] 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, 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.
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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 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.
S-29
<PAGE>
INDEX OF TERMS
[ ] Class Allocation.........23
Advance......................21
Allocation Ratio.............23
Allowable Expense Amount.....20
Available Funds..............20
Base Trust Agreement.........14
Beneficial Owner.............18
Call Premium Percentage......20
Cede.........................18
Certificates.................14
Class........................18
Clearing Agency..............18
Closing Date.................14
Code.........................28
Collection Period............19
Concentrated Underlying
Securities...................34
Credit Support...............16
Credit Support Payments......19
Credit Support Providers.....19
Definitive Classes...........18
Depositor....................14
Distribution Date............18
DOL..........................29
DTC..........................18
DTC Participants.............18
DTC services.................27
Duff & Phelps................31
Eligible Investments.........20
ERISA........................28
Exchange Act.................14
Exchange Date................22
Exchange Right...............22
Extraordinary Trust Expense..22
Final Scheduled
Distribution Date............18
Fitch........................31
Industry.....................27
IRA..........................28
IT...........................27
Letter of Credit.............16
Letter of Credit Bank........16
Liquidation Proceeds.........21
Moody's......................31
Notice of Exchange...........22
OID..........................28
Parties in Interest..........29
Plan.........................28
plan assets..................29
Prospectus...................14
Prospectus Supplement........14
PSGI.........................26
PSSA...................1, 9, 14
publicly-offered security....29
rating agency................13
Regulation...................29
Representative...............30
Required Interest............20
Required Percentage-Remedies.25
Required Premium.............20
Required Principal...........20
Reserve Account..............16
S&P..........................31
SEC..........................14
Securities Act...............29
Series Supplement............14
Specified Currency...........18
Allocation of Losses.........19
Surety.......................17
Surety Bond..................17
Systems......................27
Trust........................14
Trust Agreement..............14
Trust Assets.................16
Trust Certificates...........14
Trustee......................14
Underlying Securities........14
Underlying
Securities Issuer[s].........14
Underlying Securities
Prospectus[es]...............14
Underwriter[s]...............29
Underwriting Agreement.......29
Voting Rights................19
S-30
<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
Section 405 of 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
- ---------------------------------------------------------------------
S-31
<PAGE>
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].
S-32
<PAGE>
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].
S-33
<PAGE>
RECEIPTS ON CORPORATE SECURITIES TRUST [ ]-[ ]
$[ ]
RECEIPTS ON CORPORATE SECURITIES, SERIES [ ]-[ ]
$[ ] [ ] CLASS CERTIFICATES
$[ ] [ ] CLASS CERTIFICATES
PROSPECTUS SUPPLEMENT
-----------------
Underwriter[s]
[PRUDENTIAL SECURITIES INCORPORATED]
You should rely only on the information contained or incorporated by reference
in this prospectus supplement or in the accompanying prospectus. We have not
authorized anyone to provide you with different information.
We are not offering the trust certificates in any state where the offer is not
permitted.
We do not claim the accuracy of the information in this prospectus supplement or
the accompanying prospectus as of any date other than the dates stated on their
respective covers.
Dealers will be required to deliver a prospectus supplement and prospectus when
acting as underwriters of the trust certificates and with respect to their
unsold allotments or subscriptions. In addition, all dealers selling the trust
certificates may be required to deliver a prospectus supplement and prospectus
until [ ], [ ] (90 days after the date of this prospectus supplement).
<PAGE>
[ALTERNATE COVER FOR MARKET MAKING PROSPECTUS SUPPLEMENT]
Prospectus Supplement
(To Prospectus dated [ ], [ ])
[$][ ]
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 Prudential Structured Assets, Inc. ("PSSA") 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 PSSA 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 in
one of the four highest rating categories by at least one nationally recognized
statistical rating organization.
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>
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. ("PSSA").
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS DESCRIBED ON PAGES [ ] THROUGH
[ ] OF THIS PROSPECTUS.
The trust certificates will represent interests in the trust created for that
series of trust certificates only.
The trust certificates will not represent an obligation of PSSA 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 created for that
series of trust certificates only.
The trust certificates will not represent an obligation of PSSA 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
THE TRUST CERTIFICATES IN A SERIES:
- Will represent beneficial interests in a single trust and will be paid
only from the assets of that trust,
- May be divided into multiple classes of trust certificates and, if so,
each class may:
- Receive a different fixed or variable rate of interest;
- Be subordinated to other classes of trust certificates in that
series;
- Represent interests in only certain assets of the trust;
- Receive principal at different times; and
- Have different forms of credit enhancement.
The trust certificates offered by this prospectus will be rated in one of the
four highest rating categories by at least one nationally recognized statistical
rating organization.
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 trust certificates may be offered to the public through different methods as
described in "Plan of Distribution" in this prospectus. Prudential Securities
Incorporated, an affiliate of PSSA, may act as agent or underwriter in
connection with the sale of the trust certificates. This prospectus and the
accompanying prospectus supplement may be used by Prudential Securities
Incorporated in secondary market transactions in connection with the offer and
sale of any trust certificates. Prudential Securities Incorporated may act as
principal or agent in these transactions and sales will be made at prevailing
market prices or otherwise.
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.
IF THE DESCRIPTION OF THE TERMS OF YOUR TRUST CERTIFICATES VARIES BETWEEN
THIS PROSPECTUS AND THE PROSPECTUS SUPPLEMENT, YOU SHOULD RELY ON THE
INFORMATION IN THE PROSPECTUS SUPPLEMENT.
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.
Certain terms in this prospectus have been capitalized to indicate that
they have particular meanings. You can find a listing of the pages where these
capitalized terms are defined in this prospectus by referring to the "Index of
Terms" beginning on page [ ] of this prospectus.
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 PSSA 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. We do not claim the
accuracy of the information in this prospectus or in the prospectus supplement
as of any date other than the dates stated on their respective covers.
<PAGE>
TABLE OF CONTENTS
PAGE
RISK FACTORS......................................................5
PROSPECTUS SUPPLEMENT.............................................9
AVAILABLE INFORMATION............................................10
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE..................10
REPORTS TO TRUST CERTIFICATEHOLDERS..............................11
THE DEPOSITOR....................................................11
USE OF PROCEEDS..................................................11
FORMATION OF THE TRUST...........................................12
MATURITY AND YIELD CONSIDERATIONS................................12
DESCRIPTION OF THE TRUST CERTIFICATES............................13
General......................................................14
Distributions................................................14
Certificate Principal Balance and Notional Amount of
the Trust Certificates.......................................15
Interest on the Trust Certificates...........................15
Optional Exchange............................................17
Default and Remedies.........................................18
Call Rights..................................................18
Put Rights...................................................19
Global Securities............................................19
DESCRIPTION OF THE TRUST ASSETS..................................21
General......................................................21
Principal Economic Terms of Underlying Securities............22
Publicly Available Information...............................23
Other Trust Assets...........................................23
Credit Support...............................................24
Collections..................................................26
DESCRIPTION OF THE TRUST AGREEMENT...............................26
Assignment of Trust Assets...................................27
Collection and Other Administrative Procedures...............27
Retained Interest............................................28
Trustee Compensation and Payment of Expenses.................28
Limitations on Rights of Trust Certificateholders............28
Modification and Waiver......................................29
3
<PAGE>
Replacement Trust Certificates.............................30
Termination................................................30
Duties of the Trustee......................................30
The Trustee................................................30
LIMITATIONS ON ISSUANCE OF BEARER CERTIFICATES...................31
CURRENCY RISKS...................................................31
FEDERAL INCOME TAX CONSEQUENCES..................................32
Tax Status of the Trust....................................33
Income of Certificateholders...............................34
Possible Recharacterization of the Trust as a
Partnership...........................................34
Withholding Taxes..........................................35
State and Other Tax Consequences...........................35
PLAN OF DISTRIBUTION.............................................35
LEGAL MATTERS....................................................37
INDEX OF DEFINED TERMS...........................................38
4
<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 CERTIFICATES ARE SECURED BY THE TRUST ASSETS ONLY: Your trust
certificates will represent an interest in the assets of the applicable trust
only and will not represent an obligation of PSSA, the trustee, the
underwriters, the issuer[s] of the trust assets or any of their affiliates. The
assets of the trust will include certain securities (the underlying securities)
and other assets described in the prospectus supplement for your trust
certificates. See "Description of the Trust Assets" in this prospectus and
"Description of the Underlying Securities" in the applicable prospectus
supplement. Your trust certificates will not be insured or guaranteed by PSSA,
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.
OTHER PUBLICLY AVAILABLE INFORMATION CONCERNING THE UNDERLYING SECURITIES
ISSUERS IS IMPORTANT TO YOUR INVESTMENT DECISION: In deciding whether to invest
in or sell trust certificates, you should obtain and evaluate information
concerning each issuer of the underlying securities as if you were investing
directly in that issuer and its securities. The information that each underlying
securities issuer makes available to the 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. PSSA, the trustee, the underwriters and their affiliates (1)
assume no responsibility for 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 PSSA, the trustee, the underwriters or any of their affiliates of the
financial condition or business prospects of any underlying securities issuer.
REMEDIES UNDER THE TRUST AGREEMENT ARE LIMITED; THE TRUST WILL NOT ACTIVELY
MANAGE THE UNDERLYING SECURITIES TO AVOID LOSSES: The trust agreement
authorizing the issuance of your trust certificates will govern the actions of
the trustee on your behalf. The remedies available to the trustee are
predetermined and limited. Therefore, by virtue of the trust, you will have less
discretion over the exercise of remedies under the underlying securities than if
you had invested
5
<PAGE>
directly in the underlying securities themselves.
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.
SEVERAL FACTORS MAY AFFECT YOUR INVESTMENT YIELD: Numerous factors may affect
the investment yield of your trust certificates. These factors include (1)
whether you purchased your trust certificates at a discount or a premium, (2)
how collections from the trust assets are allocated to the different classes of
trust certificates within your series, (3) whether your trust certificates bear
interest at a fixed or variable rate, if at all, (4) whether the timing of
payments on your trust certificates is sensitive to the rate and timing of
payments on the trust assets, (5) whether the underlying securities are subject
to redemption prior to maturity or acceleration upon default, (6) the financial
and operating condition of the underlying securities issuers, (7) whether your
trust certificates are subject to any call right and (8) certain other terms of
the trust assets. See "Yield and Maturity Considerations" herein.
The applicable prospectus supplement for your trust certificates will set forth
additional information regarding yield and maturity considerations applicable to
your certificates and the trust assets, including the underlying securities. See
"Yield on the Trust Certificates" in the applicable prospectus supplement.
YOUR INVESTMENT MAY INVOLVE SPECIAL CURRENCY-RELATED RISKS: If your trust
certificates are denominated and/or payable in a currency other than U.S.
dollars (I.E., a foreign or composite currency), your investment entails
significant 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 factors over which PSSA, the trustee, the
underwriters and their affiliates have no control, such as 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. Such volatility may be expected in the
future. 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.
6
<PAGE>
Governments may from time to time impose exchange controls that could affect
exchange rates and the availability of foreign currency. These exchange controls
could possibly 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.
THERE ARE SPECIAL RISKS ASSOCIATED WITH ANY INVESTMENT IN SECURITIES OF FOREIGN
ISSUERS AND SECURITIES DENOMINATED AND/OR PAYABLE IN FOREIGN OR COMPOSITE
CURRENCIES. 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.
THE TRUST MAY INCLUDE DERIVATIVES WHICH MAY AFFECT THE VALUE OF YOUR INVESTMENT:
A trust may include various special financial instruments which are generically
called "derivatives" because the value of the instrument is derived from an
underlying security or other asset. These derivatives may include interest rate,
currency, securities, commodity and credit swaps, caps, floors, collars and
options and structured securities having embedded derivatives (such as
structured notes).
Fluctuations in interest rates, currency, securities and commodity rates,
prices, yields and returns may have a significant effect on the yield to
maturity of derivatives or the levels of support that derivatives can provide to
a trust.
You should also be aware that derivatives may be limited to covering only
certain risks. Continued payments on derivatives may be affected by the
financial condition of the parties to the applicable derivative agreements (or,
in some instances, the guarantors of those parties). There can be no assurance
that any of these parties will be able to perform their obligations. Failure of
any party to make required payments under a derivative may result in a delay in,
or failure to make, payments on the applicable trust certificates. In addition,
you should be aware that derivatives may not be effective in hedging certain
risks. Accordingly, even if all obligations under such derivatives were fully
performed, you may experience a loss on your trust certificates.
The applicable prospectus supplement will describe the material terms and risks
of any derivatives which are applicable to your trust certificates.
ISSUANCE OF THE TRUST CERTIFICATES AS GLOBAL SECURITIES MAY LIMIT YOUR ABILITY
TO EXERCISE RIGHTS UNDER OR PLEDGE YOUR TRUST CERTIFICATES: If your trust
certificates are issued as global securities and deposited with, or on behalf
of, a securities depositary, you will not be recognized as a trust
certificateholder under the applicable trust agreement.
7
<PAGE>
In such event, you will only be able to exercise the 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 MAY BE AMENDED WITHOUT YOUR CONSENT: The trust agreement
that governs the terms of your trust certificates may be amended or 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.
TAX CONSIDERATIONS: Special tax counsel to PSSA has delivered an opinion that
the discussion contained in this prospectus under the caption "Federal Income
Tax Consequences", to the extent it constitutes matters of law or legal
conclusions thereto, is true and correct in all material respects. 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 applicable prospectus
supplement does not 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.
- --------------------------------------------------------------------------------
The prospectus supplement for your trust certificates will set forth
information regarding additional material risk factors, if any.
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The Receipts on Corporate Securities or the Receipts on Government
Securities (the "Trust Certificates") to be issued by separate trusts (each, a
"Trust") established by Prudential Securities Structured Assets, Inc. (the
"Depositor") and offered by this prospectus (this "Prospectus") and by
supplements hereto (each, a "Prospectus Supplement") will be offered from time
to time in one or more series (each, a "Series") and in one or more classes
within each such Series (each, a "Class").
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 (each, as defined herein) of such Series;
(b) the currency or currencies in which the principal, premium, if any, and
any interest on such Series is distributable (the "Specified Currency");
(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 in bearer form ("Bearer Certificates") or registered
form ("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 (the "Trustee") and the
Administrative Agent (as defined herein), if any;
(i) the interest rate (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 date of distribution (each, a "Distribution Date") of any interest,
premium (if any) and/or principal for each Class within such Series;
(k) the dates on which, or periods during which, such Series of Trust
Certificates may be issued (each, an "Original Issue Date");
(l) the final scheduled Distribution Date (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;
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(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).
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 for purposes of this Prospectus to the extent that a
statement contained herein or in any subsequently filed document which also is
or is deemed to be incorporated by reference herein 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.
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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.
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. ("PSGI"). 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 PSGI, 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
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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).
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 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.
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.
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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.
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 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.
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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.
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
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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.
"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
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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 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. 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.
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
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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 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.
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
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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
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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.
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,
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the obligations of one or more of the following GSEs may be included in a Trust:
Federal National Mortgage Association ("Fannie Mae"), Federal Home 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. Debt securities of such 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 by 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. Any such Underlying Securities
that constitute Concentrated Underlying Securities (as defined herein) 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 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.
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.
With respect to any Concentrated Underlying Securities, 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 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, each
Underlying Securities Prospectus and the Underlying Securities themselves.
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
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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.
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
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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
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
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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.
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.
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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.
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
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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
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
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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.
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
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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.
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
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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 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.
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
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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.
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.)
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
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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
ss. 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.
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 includible 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
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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.
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
35
<PAGE>
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.
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
36
<PAGE>
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.
37
<PAGE>
INDEX OF DEFINED TERMS
Administration Fee...........11
Administrative Agent.........11
AID..........................21
Allocation Ratio.............18
Base Rate....................15
Bearer Certificates...........8
Business Day.................14
Calculation Agent............15
Calculation Date.............16
Call Price...................18
Call Right...................18
Call Warrants................33
Callable Series..............18
Cede.........................10
CEDEL........................31
Class.........................8
Clearing Agency..............19
clearing corporation.........19
Code.........................32
Credit Support................8
Cut-off Date.................26
Definitive Certificate.......19
Depositary...................10
Depositor.....................8
Distribution Date.............8
dollar.......................10
DTC..........................10
Euroclear....................31
Exchange Act..................9
Exchangeable Series..........16
Fannie Mae...................21
FFCB.........................21
FHLB.........................21
Final Scheduled Distribution
Date..........................9
Fixed Rate Trust
Certificates.................14
Floating Rate Trust
Certificates.................15
Floating Trust Certificate
Rate.........................15
Foreign Government Guarantor.21
Foreign Government Issuer....21
Freddie Mac..................21
Global Security..............19
GSE..........................21
GSE Issuer...................21
Holders......................10
Interest Reset Date..........16
Interest Reset Period........16
IRS..........................32
Letter of Credit.............24
Letter of Credit Bank........24
Maximum Trust Certificate
Rate.........................15
Minimum Trust Certificate
Rate.........................15
OID..........................34
38
<PAGE>
Optional Exchange............16
Optional Exchange Date.......17
Original Issue Date...........8
Participants.................19
Prospectus....................8
Prospectus Supplement.........8
PSGI.........................10
PSSA..........................1
Put Date.....................18
Put Option...................18
Puttable Underlying
Securities...................18
Realized Losses..............14
Record Date..................13
REFCORP......................21
Registered Certificates.......8
Registration Statement........9
Reserve Account..............25
Retained Interest............11
Sallie Mae...................21
Schedule B...................21
SEC...........................9
Securities Act................9
Series........................8
Special Tax Counsel..........32
Specified Currency............8
Spread.......................15
Spread Multiplier............15
Surety.......................24
Surety Bond..................24
Trust.........................8
Trust Agreement..............11
Trust Assets..............8, 23
Trust Certificate............13
Trust Certificate Account....25
Trust Certificate Rate........8
Trust Certificateholders.....10
Trust Certificates............8
Trustee.......................8
Trustee Fee..................11
TVA..........................21
U.S. dollars.................10
U.S. Person..................31
Underlying Securities.........8
Underlying Securities
Agreement....................14
Underlying Securities
Currency.....................22
Underlying Securities
Interest Accrual Periods.....22
Underlying Securities Issuer..8
Underlying Securities
Payment Dates............... 22
Underlying Securities
Prospectuses.................22
Underlying Securities Rate...22
United States................31
US$..........................10
39
<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).
24.1 Powers of Attorney (included on the signature page of the Registrant
in this Registration Statement)
25.1 Statement of eligibility of Trustee (The Chase Manhattan Bank).
- ---------------------
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.
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<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 6th day of January, 1999.
PRUDENTIAL SECURITIES STRUCTURED
ASSETS, INC.
By: /S/ JEFFREY J. THEODOROU
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.
JANUARY 6, 1999 By: /S/ HOWARD WHITMAN
- -------------------- --------------------
Date Name: Howard Whitman
Title: Chairman of the Board
and Director
JANUARY 6, 1999 By: /S/ JEFFREY J. THEODOROU
- -------------------- --------------------------
Date Name: Jeffrey J. Theodorou
Title: President
(Principal Executive Officer)
JANUARY 6, 1999 By: /S/ WILLIAM J. HORAN
- -------------------- ----------------------
Date Name: William J. Horan
Title: Chief Financial Officer
(Principal Financial and
Accounting Officer)
JANUARY 6, 1999 By: /S/ ELIZABETH W. CASTAGNA
- -------------------- ---------------------------
Date Name: Elizabeth W. Castagna
Title: Treasurer
JANUARY 6, 1999 By: /S/ RUTH LAVELLE
- -------------------- ------------------
Date Name: Ruth Lavelle
Title: Director
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<PAGE>
KNOW ALL PERSONS BY THESE PRESENTS, that each of the undersigned
hereby constitutes and appoints Jeffrey J. Theodorou, Lawrence Motz and Terrance
O'Dwyer, and each of them, his true and lawful attorney-in-fact and agent, each
acting alone, with full power of substitution and resubstitution, for him in his
stead, in each of his offices and capacities as an officer, director, or both of
the Depositor, to sign and to file with the Commission such Registration
Statements on Form S-3, and any and all amendments (including pre-effective and
post-effective amendments), modifications, or supplements thereto, and any
exhibits thereto, and grants to each of said attorneys-in-fact and agents, each
acting alone, full power and authority to sign and file any and all other
documents and to perform and do all and every act and thing whatsoever requisite
and necessary to be done in and about the premises as fully, to all intents and
purposes as he might or could do if personally present at the doing thereof, and
hereby ratifies and confirms all that said attorneys-in-fact and agents, or his
substitute or substitutes, may or shall lawfully do, or cause to be done, by
virtue hereof in connection with the registration of the aforesaid securities.
SIGNATURE TITLE DATE
/S/ HOWARD WHITMAN Chairman of the Board January 6, 1999
------------------ and Director
Howard Whitman
/S/ JEFFREY J. THEODOROU President (Principal January 6, 1999
------------------------ Executive Officer)
Jeffrey J. Theodorou
/S/ WILLIAM J. HORAN Chief Financial January 6, 1999
- -------------------- Officer (Principal
William J. Horan Financial and
Accounting Officer)
/S/ ELIZABETH W. CASTAGNA Treasurer January 6, 1999
- -------------------------
Elizabeth W. Castagna
/S/ RUTH LAVELLE Director January 6, 1999
- ----------------
Ruth Lavelle
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<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).
24.1 Powers of Attorney (included on the signature page of the Registrant
in this Registration Statement.
25.1 Statement of eligibility of Trustee (The Chase Manhattan Bank).
RECEIPTS ON CORPORATE SECURITIES TRUST [ ] - [ ]
RECEIPTS ON CORPORATE SECURITIES, SERIES [ ] - [ ]
UNDERWRITING AGREEMENT
[DATE]
Prudential Securities Incorporated
One Seaport Plaza
New York, New York 10292
Ladies and Gentlemen:
1. INTRODUCTION. Prudential Securities Structured Assets, Inc., a
Delaware corporation (the "Depositor"), proposes to sell to you (also referred
to herein as the "Underwriter") certain Receipts on Corporate Securities, Series
[ ] - [ ] (the "Certificates"), issued in two classes by Receipts on Corporate
Securities Trust [ ] - [ ] (the "Trust"). The Certificates consist of $[ ]
aggregate Certificate Principal Balance of [Residual] Class Certificates and $[
] aggregate Certificate Principal Balance of [Amortizing] Class Certificates.
The property of the Trust will consist principally of $[ ] aggregate principal
amount of [ ]%, [Title of Underlying Securities] due [ ,] [ ] (the "Underlying
Securities") issued by [Name of Underlying Securities Issuer] (the "Underlying
Securities Issuer"), having the characteristics described in a prospectus dated
[ ,] [ ] and a supplement thereto dated [ ,] [ ] (together, the "Underlying
Securities Prospectus"). The Certificates will be issued pursuant to the Base
Trust Agreement dated as of [ ,] [ ], as supplemented by that certain Series [ ]
- - [ ] Supplement dated as of [ ,] [ ] (together, as amended and supplemented
from time to time, the "Trust Agreement"), between the Depositor, as depositor,
and The Chase Manhattan Bank, as trustee (the "Trustee"). Capitalized terms used
and not otherwise defined herein shall have the meanings given to them in the
Trust Agreement.
2. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR. The Depositor
represents and warrants to, and agrees with you that:
(a) The Depositor meets the requirements for use of Form S-3 under
the Securities Act of 1933, as amended (the "Act"), and has filed with the
Securities and Exchange Commission (the "Commission") a registration statement
(Registration No. [ ] - [ ]) under the Act on such Form, including a related
preliminary prospectus and prospectus supplement. The Depositor may have filed
one or more amendments thereto, including the related preliminary prospectus,
each of which amendments has previously been furnished to you. The Depositor
will next file with the Commission either (i) a final prospectus in accordance
<PAGE>
with Rules 430A and 424(b)(1) or 424(b)(4) under the Act or (ii) a final
prospectus in accordance with Rules 415 and 424(b)(2) or 424(b)(5) under the
Act. As filed, such final prospectus shall include all Rule 430A Information
and, except to the extent that you shall agree in writing to a modification,
shall be in all substantive respects in the form furnished to you prior to the
Execution Time (as defined herein) or, to the extent not completed at the
Execution Time, shall contain only such specific additional information and
other changes (beyond that contained in the latest Preliminary Prospectus (as
defined herein) which has previously been furnished to you) as the Depositor has
advised you, prior to the Execution Time, will be included or made therein. If
the Registration Statement (as defined herein) contains the undertaking
specified by Item 512(a) of Regulation S-K, the Registration Statement, at the
Execution Time, meets the requirements set forth in Rule 415(a)(1)(x).
For purposes of this Agreement, "Effective Time" means the date and
time as of which such registration statement, or the most recent post-effective
amendment thereto, if any, was declared effective by the Commission, and
"Effective Date" means the date of the Effective Time. Such registration
statement, as amended at the Effective Time, including all information deemed to
be a part of such registration statement as of the Effective Time pursuant to
Rule 430A(b) under the Act, and including the exhibits thereto and any material
incorporated by reference therein, is hereinafter referred to as the
"Registration Statement", and the form of prospectus relating to the
Certificates, as first filed with the Commission pursuant to and in accordance
with Rule 424(b) under the Act or, if no filing pursuant to Rule 424(b) is
required, as included in the Registration Statement at the Effective Date, is
hereinafter referred to as the "Prospectus". "Execution Time" shall mean the
date and time that this Agreement is executed and delivered by the parties
hereto. "Preliminary Prospectus" shall mean the preliminary prospectus referred
to in the preceding paragraph and the preliminary prospectus, if any, included
in the Registration Statement which at the Effective Date omits Rule 430A
Information. "Rule 430A Information" means information with respect to the
Certificates and the offering of the Certificates permitted to be omitted from
the Registration Statement when it becomes effective pursuant to Rule 430A.
"Rule 415", "Rule 424", "Rule 430A" and "Regulation S-K" refer to such rules or
regulations under the Act. Any reference herein to the Registration Statement, a
Preliminary Prospectus or the Prospectus shall be deemed to refer to and include
the documents incorporated by reference therein pursuant to Item 12 of Form S-3,
which were filed under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), on or before the Effective Date of the Registration Statement
or the issue date of such Preliminary Prospectus or the Prospectus, as the case
may be; and any reference herein to the terms "amend", "amendment" or
"supplement" with respect to the Registration Statement, any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include the filing
of any document under the Exchange Act after the Effective Date of the
Registration Statement, or the issue date of any Preliminary Prospectus or the
Prospectus, as the case may be, deemed to be incorporated therein by reference.
(b) On the Effective Date and on the date of this Agreement, the
Registration Statement did or will, and, when the Prospectus is first filed (if
required) in accordance with Rule 424(b) and on the Closing Date, the Prospectus
(and any supplements thereto) will, comply in all material respects with the
applicable requirements of the Act and the Exchange Act and the respective rules
and regulations of the Commission thereunder (the "Rules and Regulations"); on
the Effective Date, the Registration Statement did not or will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order
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<PAGE>
to make the statements therein not misleading; and, on the Effective Date, the
Prospectus, if not filed pursuant to Rule 424(b), did not or will not, and on
the date of any filing pursuant to Rule 424(b) and on the Closing Date, the
Prospectus (together with any supplement thereto) will not include any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; PROVIDED, HOWEVER, that the Depositor makes no
representation or warranty as to the information contained in or omitted from
the Registration Statement or the Prospectus (or any supplement thereto) in
reliance upon and in conformity with information furnished in writing to the
Depositor by you specifically for use in connection with preparation of the
Registration Statement or the Prospectus (or any supplement thereto). As of the
Closing Date, the Depositor's representations and warranties in the Trust
Agreement will be true and correct.
(c) The assignment and delivery of the Underlying Securities to the
Trust as of the Closing Date will vest in the Trust all the right, title and
interest therein, subject to no prior lien, mortgage, security interest, pledge,
adverse claim, charge or other encumbrance, except as permitted by the Trust
Agreement.
(d) The Trust is not an "investment company" within the meaning of
Investment Company Act of 1940 (the "Investment Company Act"), without taking
account of any exemption arising out of the number of holders of the
Certificates.
(e) The information provided by the Depositor pursuant to Section
5(c) hereof will not, at the date thereof, contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(f) The Depositor has full power (corporate and other) to enter into
this Agreement and the Trust Agreement and to carry out all the terms and
provisions hereof and thereof to be carried out by it.
(g) The execution and delivery of the Trust Agreement have been duly
authorized by the Depositor, and, on and as of the Closing Date, the Trust
Agreement will have been duly executed and delivered by the Depositor and,
assuming due authorization, execution and delivery by the Trustee, will be a
legal, valid, binding and enforceable instrument of the Depositor.
(h) On and as of the Closing Date, assuming due execution and
authentication thereof by the Trustee, the Certificates will be the legal,
valid, binding and enforceable obligations of the Trust, entitled to the
benefits of the Trust Agreement.
(i) The execution and delivery of this Agreement have been duly
authorized by the Depositor and this Agreement has been duly executed and
delivered by the Depositor.
(j) The issuance, offering and sale of the Certificates to the
Underwriter by the Depositor pursuant to this Agreement, the compliance by the
Depositor with the other provisions of this Agreement and the consummation of
the other transactions herein contemplated do not require the consent, approval,
authorization, registration or qualification of
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or with any governmental authority, except such as have been obtained and such
as may be required under the securities or blue sky laws of any jurisdiction.
3. PURCHASE, SALE AND DELIVERY OF THE CERTIFICATES. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Depositor agrees to sell to you,
and you agree to purchase from the Depositor, the [Residual] Class Certificates
at [ ]% of the Certificate Principal Balance thereof, and the [Amortizing] Class
Certificates at [ ]% of the initial Certificate Principal Balance thereof plus
accrued interest, if any, calculated at an annual rate of [ ]% compounded
semiannually. Delivery of and payment for the Certificates shall be made at the
offices of Orrick, Herrington & Sutcliffe LLP, 666 Fifth Avenue, New York, New
York 10103, on or about [ ,] [ ], or such other date as the parties may agree
(the "Closing Date"). Delivery of the Certificates shall be made against payment
of the purchase price in immediately available funds drawn to the order of the
Depositor. The Certificates to be so delivered will be initially represented by
one or more Certificates registered in the name of Cede & Co., the nominee of
The Depository Trust Company ("DTC"). The interests of beneficial owners of the
Certificates will be represented by book entries on the records of DTC and
participating members thereof. Definitive Certificates will be available only
under limited circumstances.
4. OFFERING BY THE UNDERWRITER. It is understood that, after the
Registration Statement becomes effective, you propose to offer the Certificates
for sale to the public (which may include selected dealers), as set forth in the
Prospectus.
5. COVENANTS OF THE DEPOSITOR. The Depositor covenants and agrees
with you that:
(a) The Depositor will use its best efforts to cause the Registration
Statement, and any amendment thereto, if not effective at the Execution Time, to
become effective. Prior to the termination of the offering of the Certificates,
the Depositor will not file any amendment of the Registration Statement or
supplement to the Prospectus unless the Depositor has furnished you a copy for
your review prior to filing and will not file any such proposed amendment or
supplement to which you reasonably object. Subject to the foregoing sentence, if
the Registration Statement has become or becomes effective pursuant to Rule
430A, or filing of the Prospectus is otherwise required under Rule 424(b), the
Depositor will file the Prospectus, properly completed, and any supplement
thereto, with the Commission pursuant to and in accordance with the applicable
paragraph of Rule 424(b) within the time period prescribed thereby and will
provide evidence satisfactory to you of such timely filing.
(b) The Depositor will advise you promptly of any proposal to amend
or supplement the Registration Statement as filed or the related Prospectus and
will not effect such amendment or supplement without your consent, which consent
will not unreasonably be withheld; the Depositor will also advise you promptly
of any request by the Commission for any amendment of or supplement to the
Registration Statement or the Prospectus or for any additional information; and
the Depositor will also advise you promptly of the effectiveness of the
Registration Statement, of any amendment of or supplement to the Registration
Statement or the Prospectus and of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
institution or threat of any proceeding for that
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<PAGE>
purpose, and the Depositor will use its best efforts to prevent the issuance of
any such stop order and to obtain as soon as possible the lifting of any issued
stop order.
(c) If, at any time when a prospectus relating to the Certificates is
required to be delivered under the Act, any event occurs as a result of which
the Prospectus as then amended or supplemented would include an untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend the
Registration Statement or supplement the Prospectus to comply with the Act, the
Exchange Act or the Rules and Regulations, the Depositor promptly will notify
you and will prepare and file, or cause to be prepared and filed, with the
Commission, subject to the second sentence of paragraph (a) of this Section 5,
an amendment or supplement which will correct such statement or omission, or an
amendment or supplement which will effect such compliance. Any such filing shall
not operate as a waiver or limitation of any right of the Underwriter hereunder.
(d) As soon as practicable, but not later than sixteen months after
the original effective date of the Registration Statement, the Depositor will
cause the Trust to make generally available to Certificateholders an earnings
statement of the Trust covering a period of at least twelve months beginning
after the Effective Date of the Registration Statement which will satisfy the
provisions of Section 11(a) of the Act and Rule 158 under the Act.
(e) The Depositor will furnish to you copies of the Registration
Statement (one of which will include all exhibits), each related Preliminary
Prospectus, the Prospectus and all amendments and supplements to such documents,
in each case as soon as available and in such quantities as you request.
(f) The Depositor will arrange for the qualification of the
Certificates for sale under the laws of such jurisdictions in the United States
as you may reasonably designate and will continue such qualifications in effect
so long as required for the distribution.
(g) For a period from the date of this Agreement until the retirement
of the Certificates, or until such time as you shall cease to maintain a
secondary market in the Certificates, whichever occurs first, the Depositor will
deliver to you the annual statements of compliance and the annual independent
certified public accountants' reports, if any, furnished to the Trustee pursuant
to the Trust Agreement, as soon as such statements and reports are furnished to
the Trustee.
(h) So long as any of the Certificates is outstanding, the Depositor
will furnish to you (i) as soon as practicable after the end of the fiscal year
all documents required to be distributed to Certificateholders or filed with the
Commission pursuant to the Exchange Act, the Rules and Regulations thereunder or
any order of the Commission thereunder and (ii) from time to time, any other
information concerning the Depositor or the Trust filed with any government or
regulatory authority which is otherwise publicly available, as you may
reasonably request.
(i) On or before the Closing Date, the Depositor shall, to the extent
necessary, cause its records to be marked to show the Trust's absolute ownership
of the Underlying Securities, and from and after the Closing Date the Depositor
shall not take any action
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<PAGE>
inconsistent with the Trust's ownership of such Underlying Securities, other
than as permitted by the Trust Agreement.
(j) To the extent, if any, that the rating provided with respect to
the Certificates by the rating agency or agencies that initially rate the
Certificates is conditional upon the furnishing of documents or the taking of
any other actions by the Depositor, the Depositor shall furnish such documents
and take any such other actions.
6. PAYMENT OF EXPENSES. The Depositor will pay all expenses incident
to the performance of its obligations under this Agreement, including (i) the
printing and filing of the Registration Statement as originally filed and of
each amendment thereto, (ii) the preparation of this Agreement, (iii) the
preparation, issuance and delivery of the Certificates to the Underwriter, (iv)
the fees and disbursements of the Depositor's counsel and accountants, (v) the
qualification of the Certificates under securities laws in accordance with the
provisions of Section 5(f) hereof, including filing fees and the fees and
disbursements of counsel for you in connection therewith and in connection with
the preparation of any blue sky or legal investment survey, (vi) the printing
and delivery to the Underwriter of copies of the Registration Statement as
originally filed and of each amendment thereto, (vii) the printing and delivery
to you of copies of any blue sky or legal investment survey prepared in
connection with the Certificates, (viii) any fees charged by rating agencies for
the rating of the Certificates and (ix) the fees and expenses of Orrick,
Herrington & Sutcliffe LLP in its role as counsel to the Trust incurred as a
result of providing the opinions required by Section 7(g).
7. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITER. Your obligation
to purchase and pay for the Certificates will be subject to the accuracy of the
representations and warranties on the part of the Depositor herein, to the
accuracy of the statements of officers of the Depositor made pursuant to the
provisions hereof, to the performance by the Depositor of its obligations
hereunder and to the following additional conditions precedent:
(a) If the Registration Statement has not become effective prior to
the Execution Time, unless you agree in writing to a later time, the
Registration Statement shall have become effective not later than (i) 6:00 p.m.
New York City time on the date of determination of the public offering price, if
such determination occurred at or prior to 3:00 p.m. New York City time on such
date, or (ii) 12:00 noon New York City time on the business day following the
day on which the public offering price was determined, if such determination
occurred after 3:00 p.m. New York City time on such date.
(b) The Prospectus and any supplements thereto shall have been filed
(if required) with the Commission in accordance with the Rules and Regulations
and Section 5(a) hereof, and prior to the Closing Date, no stop order suspending
the effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or, to the knowledge of
the Depositor or you, shall be contemplated by the Commission or by any
authority administering any state securities or blue sky law.
(c) The New York Stock Exchange, Inc. ("NYSE") shall have indicated
in writing that the [Amortizing] Class Certificates have been approved for
listing on the NYSE effective upon notice of issuance.
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<PAGE>
(d) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting particularly the business or properties of
the Trust or the Depositor which, in the judgment of the Underwriter, materially
impairs the investment quality of the Certificates or makes it impractical or
inadvisable to market the Certificates; (ii) any suspension or limitation of
trading in securities generally on the NYSE, or any setting of minimum prices
for trading on such exchange; (iii) any banking moratorium declared by Federal
or New York authorities; or (iv) any outbreak or escalation of major hostilities
in which the United States is involved, any declaration of war by Congress, or
any other substantial national or international calamity or emergency if, in the
judgment of the Underwriter, the effect of any such outbreak, escalation,
declaration, calamity or emergency makes it impractical or inadvisable to
proceed with completion of the sale of and payment for the Certificates.
(e) You shall have received an opinion of Orrick, Herrington &
Sutcliffe LLP, counsel to the Depositor, addressed to you, dated the Closing
Date and substantially in the form of drafts to which you have previously agreed
and otherwise in form and substance satisfactory to you and your counsel.
(f) You shall have received an opinion addressed to you of Orrick,
Herrington & Sutcliffe LLP, in its capacity as special tax counsel to the
Depositor confirming that the description of selected federal income tax
consequences to holders of the Certificates that appears in the Prospectus under
the heading "Federal Income Tax Consequences" conforms to the advice given to
the Depositor by Orrick, Herrington & Sutcliffe LLP.
(g) You shall have received from Orrick, Herrington & Sutcliffe LLP,
counsel to the Underwriter, such opinion or opinions, dated the Closing Date and
addressed to you, with respect to the validity of the Certificates and such
other related matters as you shall require and the Depositor shall have
furnished or caused to be furnished to such counsel such documents as they may
reasonably request for the purpose of enabling them to pass upon such matters.
(h) You shall have received an opinion addressed to you and the
Depositor of [_________], counsel to the Trustee, dated the Closing Date and
satisfactory in form and substance to you and your counsel.
(i) You shall have received an opinion addressed to you of internal
counsel of Prudential Securities Incorporated, dated the Closing Date and
satisfactory in form and substance to you.
(j) You shall have received certificates dated the Closing Date of
such of the principal executive, financial and accounting officers of the
Depositor as you may request, dated the Closing Date, in which such officers
shall state that, to the best of their knowledge after reasonable investigation,
(i) the representations and warranties of the Depositor contained in this
Agreement and the Trust Agreement are true and correct, that the Depositor has
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied under such agreements at or prior to the Closing Date,
that no stop order suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose have been instituted or are
contemplated by the Commission and (ii) subsequent to the respective dates as of
which
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information is given in the Registration Statement and the Prospectus, no
material adverse change, or any development involving a prospective material
adverse change, in or affecting particularly the business or properties of the
Trust or the Depositor has occurred, whether or not arising in the ordinary
course of business.
(k) The Certificates shall have been rated "[ ]" by [Moody's
Investors Service, Inc.] [Standard & Poor's Ratings Services] [Duff & Phelps
Credit Rating Co.] [Fitch IBCA, Inc.].
(l) The issuance of the Certificates shall not have resulted in a
reduction or withdrawal by any Rating Agency of the current rating of any
outstanding securities issued or originated by the Trust or the Depositor.
(m) On or before the applicable Closing Date, you shall have received
such further certificates, documents or other information as you may have
reasonably requested from the Depositor.
All opinions, certificates, letters and documents delivered pursuant
to this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to you and your counsel. The
Depositor shall furnish to you such conformed copies of such opinions,
certificates, letters and documents in such quantities as you and your counsel
shall reasonably request.
8. INDEMNIFICATION AND CONTRIBUTION. (a) The Depositor agrees to
indemnify and hold harmless the Underwriter and its affiliates, the respective
directors, officers and controlling persons (within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act), if any, of the Underwriter and
each of the Underwriter's affiliates and any agents and employees of the
Underwriter or any of the Underwriter's affiliates (collectively, "Indemnified
Persons" and individually, an "Indemnified Person") from and against any and all
actions, claims, suits, proceedings, liabilities, losses, damages and expenses
incurred, joint or several (collectively, "Claims"), by any Indemnified Person
(including fees and disbursements of the Underwriter's counsel and each such
Indemnified Person's counsel) which are related to or arise from the
Underwriter's engagement by the Depositor, including claims that relate to or
arise from any actions taken or omitted to be taken (including any untrue or
alleged untrue statements made or any statements omitted or alleged to be
omitted) by the Company or which relate to or arise from securities laws or any
other law or legal theory, and will reimburse the Underwriter and each such
other Indemnified Person for all costs and expenses (including fees and
disbursements of the Underwriter's counsel and each such Indemnified Person's
counsel), as they are incurred, in connection with investigating, preparing for,
providing depositions for, testifying in or defending any such action or claim,
formal or informal, investigation, inquiry or other proceeding, whether or not
in connection with pending or threatened litigation, whether or not the
Underwriter or any Indemnified Person is named as a party thereto and whether or
not any liability results therefrom related to or arising from the foregoing
(collectively, "Costs"). The Depositor will not, however, be responsible for any
Claims which are found in a final judgment by a court of competent jurisdiction
(not subject to further appeal) to have resulted directly and primarily from an
Indemnified Person's gross negligence or willful misconduct.
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(b) The Depositor agrees that neither the Underwriter nor any other
Indemnified Person shall have any liability to the Depositor for or in
connection with such engagement except liability for Claims (i) that are found
in a final judgment by a court of competent jurisdiction (not subject to further
appeal) to have resulted directly and primarily from an Indemnified Person's
gross negligence or willful misconduct or (ii) that arise from written
information relating to the Underwriter furnished to the Depositor by or on
behalf of the Underwriter specifically for inclusion in the Registration
Statement, the Prospectus or in any amendment thereof or supplement thereto, or
any related Preliminary Prospectus. The Depositor acknowledges that the
statements set forth in the last paragraph on the cover page and under the
headings "Plan of Distribution" in the Prospectus and "Method of Distribution"
in the Prospectus Supplement constitute the only information furnished in
writing by or on behalf of the Underwriter for inclusion in the Prospectus or
the Prospectus Supplement and you confirm that such statements are correct. The
Depositor also agrees that the Depositor will not, without the prior written
consent of the Underwriter, settle or compromise or consent to the entry of any
judgment in any pending or threatened Claim in respect of which indemnification
may be sought hereunder (whether or not the Underwriter or any Indemnified
Person is an actual or potential party to such Claim). Such prior written
consent of the Underwriter shall be required only with respect to the
Underwriter determining that such settlement, compromise or consent complies
with the terms of the following sentence and does not impose any material
obligation on the Underwriter or any other Indemnified Person or contain any
admission of culpability on the part of the Underwriter or any Indemnified
Person. Such settlement, compromise or consent shall include an unconditional
release of the Underwriter and each other Indemnified Person from all liability
arising out of such Claim, and the Depositor shall furnish the Underwriter with
a copy of such settlement reasonably in advance of entering into such
settlement.
(c) In order to provide for just and equitable contribution, if a
demand for indemnification or reimbursement for Claims or Costs is made pursuant
to these provisions but is not available for any reason, then the Depositor, on
the one hand, and the Underwriter, on the other hand, shall contribute to such
Claims or Costs for which such indemnification or reimbursement is held
unavailable in such proportion as is appropriate to reflect the relative
benefits to the Depositor, on the one hand, and the Underwriter, on the other
hand, in connection with the transaction or transactions from which the Claims
or Costs in question arose. The relative benefits received by the Depositor, on
the one hand, and by the Underwriter, on the other hand, shall be deemed to be
in the same proportion as the value (before deducting expenses) of the
consideration paid by or received by the Depositor in connection with the
transaction or transactions from which the Claims or Costs in question arose
bears to the total fees actually received by the Underwriter in connection
therewith. If the allocation provided by the foregoing sentence is not permitted
by applicable law, then such allocation shall be based not only on such relative
benefits determined as aforesaid but also on the relative fault of the
Depositor, on the one hand, and the Underwriter, on the other hand, as well as
any other relevant equitable considerations. The relative fault of the parties
shall be determined by reference to, among other things, the parties' relative
intents, knowledge, access to information and, if applicable, whether any untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Depositor or by the Underwriter, and any other equitable considerations
appropriate in the circumstances. Any such contribution shall be subject to the
limitation that in any event the Underwriter's aggregate contribution to all
Claims or Costs for which contribution is available hereunder shall not exceed
the amount of
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fees actually received by the Underwriter pursuant to the particular engagement
relating to the transaction or transactions from which the Claims or Costs in
question arose.
The foregoing rights to indemnity, reimbursement and contribution
shall be in addition to any rights that the Underwriter and/or any other
Indemnified Person may have at common law or otherwise. The Depositor hereby
consents to personal jurisdiction, service of process and venue in any court in
which any Claim which is subject to this Agreement is brought against the
Underwriter or any other Indemnified Person.
9. DEFAULTS OF THE UNDERWRITER. If the Underwriter defaults in its
obligations to purchase the Certificates hereunder on the Closing Date and
arrangements satisfactory to the Depositor for the purchase of such Certificates
by other persons are not made within 36 hours after such default, this Agreement
will terminate without liability on the part of the Depositor, except as
provided in Section 11. As used in this Agreement, the term "Underwriter"
includes any person substituted for the Underwriter under this Section. Nothing
herein will relieve a defaulting Underwriter from liability for its default.
10. NO BANKRUPTCY PETITION. The Underwriter covenants and agrees
that, prior to the date which is one year and one day after the payment in full
of all securities issued by the Depositor or by a trust for which the Depositor
was the depositor which securities were rated by any nationally recognized
statistical rating organization, it will not institute against, or join any
other Person in instituting against, the Depositor any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
proceedings under any Federal or state bankruptcy or similar law.
11. SURVIVAL OF REPRESENTATIONS AND OBLIGATIONS. The respective
indemnities, agreements, representations, warranties and other statements of the
Depositor or any of its officers and the Underwriter set forth in or made
pursuant to this Agreement or contained in certificates of officers of the
Depositor submitted pursuant hereto shall remain operative and in full force and
effect, regardless of any investigation or statement as to the results thereof,
made by or on behalf of the Underwriter or of the Depositor or any of their
respective representatives, officers or directors or any controlling person, and
will survive delivery of and payment for the Certificates. If for any reason the
purchase of the Certificates by the Underwriter is not consummated, the
Depositor shall remain responsible for the expenses to be paid or reimbursed by
the Depositor pursuant to Section 6 and the respective obligations of the
Depositor and the Underwriter pursuant to Section 8 shall remain in effect. If
for any reason the purchase of the Certificates by the Underwriter is not
consummated (other than because of a failure to satisfy the conditions set forth
in items (ii), (iii) and (iv) of Section 7(d)), the Depositor will reimburse the
Underwriter, upon demand, for all out-of-pocket expenses (including fees and
disbursements of counsel) reasonably incurred by it in connection with the
offering of the Certificates.
12. NOTICES. All communications hereunder will be in writing and, if
sent to the Underwriter, will be mailed, delivered or telegraphed and confirmed
to it at One New York Plaza, 15th Floor, New York, N.Y. 10292-2015; if sent to
the Depositor, will be mailed, delivered or telegraphed, and confirmed to it at
Prudential Securities Structured Assets, Inc., One New York Plaza, 14th Floor,
New York, NY 10292-2014. Any such notice will take effect at the time of
receipt.
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13. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors, permitted
assigns and representatives and shall inure to the benefit of the Indemnified
Parties hereunder and their successors, permitted assigns and representatives,
and no other person will have any rights or obligations hereunder.
14. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
15. WAIVER OF JURY TRIAL. Each of the Underwriter and the Depositor
waives all right to trial by jury in any action, claim, suit, proceeding or
counterclaim (whether based upon contract, tort or otherwise) relating to or
arising out of this Agreement.
16. APPLICABLE LAW. This Agreement will be governed by, and construed
and enforced in accordance with, the internal laws of the State of New York,
without giving effect to principles of conflict of laws.
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If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicate hereof, whereupon
it will become a binding agreement between the Depositor and the Underwriter in
accordance with its terms.
Very truly yours,
PRUDENTIAL SECURITIES STRUCTURED ASSETS, INC.
By:______________________________________
Authorized Signatory
The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the
date first written above.
PRUDENTIAL SECURITIES INCORPORATED
By:______________________________________
Authorized Signatory
12
================================================================================
SERIES [ ]-[ ] SUPPLEMENT
between
PRUDENTIAL SECURITIES STRUCTURED ASSETS, INC.
as Depositor
and
THE CHASE MANHATTAN BANK
as Trustee
Receipts on Corporate Securities Trust [ ]-[ ]
================================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
PRELIMINARY STATEMENT.........................................................1
SECTION 1. Certain Defined Terms..............................................1
SECTION 2. Creation and Declaration of Trust; Grant of
Underlying Securities; Acceptance by Trustee.......................4
SECTION 3. Designation........................................................4
SECTION 4. Form and Date of the Certificates..................................4
SECTION 5. Aggregate Certificate Principal Balance............................5
SECTION 6. Currency of the Certificates.......................................5
SECTION 7. Certificateholder Exchange Right...................................5
SECTION 8. Distributions......................................................5
SECTION 9. Termination of Trust...............................................7
SECTION 10.Limitation of Powers and Duties....................................8
SECTION 11.Certain Provisions of Base Trust Agreement Not Applicable..........8
SECTION 12.No Investment of Amounts Received on Underlying Securities.........8
SECTION 13.Notices............................................................8
SECTION 14.Access to Certain Documentation....................................8
SECTION 15.Ratification of Agreement..........................................8
SECTION 16.Counterparts.......................................................8
SECTION 17.Governing Law......................................................8
SECTION 18.Trustee Election...................................................9
SECTION 19.Covenant of Depositor..............................................9
EXHIBIT A -- Form of [ ] Class Certificate
SCHEDULE 1 -- Identification of Underlying Securities
-i-
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SERIES [ ]-[ ] SUPPLEMENT dated as of , (this "Series Supplement"), between
Prudential Securities Structured Assets, Inc., a Delaware corporation, as
depositor (the "Depositor"), and The Chase Manhattan Bank, a New York banking
corporation, as trustee (the "Trustee").
PRELIMINARY STATEMENT
Pursuant to the Base Trust Agreement dated as of , (the "Base Trust
Agreement" and, as amended and supplemented pursuant to this Series Supplement,
the "Agreement"), between the Depositor and the Trustee, such parties may at any
time and from time to time enter into a series supplement supplemental to the
Base Trust Agreement for the purpose of creating a trust. Section 5.13 of the
Base Trust Agreement provides that the Depositor may at any time and from time
to time direct the Trustee to authenticate and deliver, on behalf of any such
trust, a new series of trust certificates. Each trust certificate of such new
series of trust certificates will represent a fractional undivided beneficial
interest in such trust. Certain terms and conditions applicable to each such
series are to be set forth in the related series supplement to the Agreement.
Pursuant to this Series Supplement, the Depositor and the Trustee shall
create and establish a new trust to be known as Receipts on Corporate Securities
Trust [ ]-[ ] (the "Trust"), and a new Series of trust certificates to be issued
thereby, which certificates shall be known as the Receipts on Corporate
Securities, Series [ ]-[ ] (the "Certificates"), and the Depositor and the
Trustee shall herein specify certain terms and conditions in respect thereof.
The Certificates shall be issued in Classes consisting of [describe
classes], subject to Section 5.16 of the Base Trust Agreement.
On behalf of and pursuant to the authorizing resolutions of the Board of
Directors of the Depositor, an authorized officer of the Depositor has
authorized the execution, authentication and delivery of the Certificates, and
has authorized the Base Trust Agreement and this Series Supplement in accordance
with the terms of Section 5.13 of the Base Trust Agreement.
SECTION 1. CERTAIN DEFINED TERMS. (a) All terms used in this Series
Supplement that are defined in the Base Trust Agreement, either directly or by
reference therein, have the meanings assigned to such terms therein, except to
the extent such terms are defined or modified in this Series Supplement or the
context requires otherwise. The Base Trust Agreement also contains rules as to
usage which shall be applicable hereto.
(b) Pursuant to Article I of the Base Trust Agreement, the meaning of
certain defined terms used in the Base Trust Agreement shall, when applied to
the trust certificates of a particular Series, be as defined in Article I but
with such additional provisions and modifications as are specified in the
related series supplement. With respect to the Certificates, the following
definitions shall apply:
["Acceleration of Underlying Securities": The acceleration of the maturity
of the Underlying Securities following the occurrence of any default (other than
a Payment Default) with respect to the Underlying Securities under the
Underlying Securities Indenture, and the Trustee receives notice of such
acceleration, notwithstanding any subsequent rescission and annulment of such
acceleration by the requisite holders of the entire series of Underlying
Securities.]
"Aggregate Certificate Principal Balance": As of any date of determination,
[the aggregate principal balance of the Underlying Securities in the Trust as of
such date of determination].
["Amortized Amount": For any Amortizing Class Certificate of $1,000
denomination, initially $1,000. On each Scheduled Distribution Date, the
Amortized Amount will be reduced by the positive difference between (i) the
Fixed Payment made on such Scheduled Distribution Date and (ii) interest accrued
on the Certificate Principal Balance at the Amortizing Class Yield during the
related Interest Accrual Period. On any Optional Redemption Date relating to a
Partial Optional Redemption, the Amortized Amount shall be recalculated based on
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the remaining Underlying Securities after such partial redemption and no effect
shall be given to the allocation to principal provided for in Section 9(d)
hereof.]
"Available Funds": As of any Distribution Date, the aggregate amount
received on or with respect to the Underlying Securities on or with respect to
such Distribution Date.
"Calculation Agent": The Depositor.
"Certificates": Receipts on Corporate Securities, Series [ ]-[ ].
"Certificateholder" or "Holder": With respect to any Certificate, the
Holder thereof.
"Certificate Principal Balance": [For any[ ] Class Certificate, a pro rata
portion of the principal amount of the then outstanding Underlying Securities.
For any [ ] Class Certificate, the Amortized Amount].
"Class": The [ ] Class Certificates or [ ] Class Certificates, as the case
may be.
"Closing Date": __________.
"Corporate Trust Office": The Chase Manhattan Bank, _____, _____, _____,
Attention: _____, or such other corporate trust office as the Trustee shall
designate in writing to the Depositor and the Certificateholders.
"Distribution Date": Any Scheduled Distribution Date, In-Kind Distribution
Date, Shortened Maturity Date, or Optional Redemption Date [describe other
distribution dates].
"Distribution Ratio": With respect to a specified distribution to be made
hereunder on any Distribution Date (other than a Scheduled Distribution Date),
the ratio in which such distribution will be made to the holders of the [ ]
Class Certificates and [ ] Class Certificates, respectively, being the same
ratio as [describe ratio].
"Excess Interest": Penalties, interest on overdue interest or other amounts
paid to holders of the Underlying Securities because of late or defaulted
payments on the Underlying Securities.
"Fixed Payment": Each semiannual installment of interest and Excess
Interest, if any, payable on the Underlying Securities through and including
_____, _____.
"Interest Accrual Period": With respect to any Scheduled Distribution Date,
the period from and including the immediately preceding Scheduled Distribution
Date (or in the case of the first Interest Accrual Period, from and including
____, _____) to but excluding the then current Scheduled Distribution Date.
"Interest Collections": With respect to any Distribution Date, all payments
received by the Trustee from the Underlying Securities Issuer with respect to
the Underlying Securities immediately prior to such Distribution Date, in
respect of (i) interest on the Underlying Securities and (ii) any Excess
Interest.
"Optional Redemption": A redemption of the Underlying Securities, as a
whole or in part from time to time, at the option of _____ pursuant to the
Underlying Securities Indenture, other than a Shortened Maturity Redemption.
"Optional Redemption Date": The date on which an Optional Redemption
occurs.
"Partial Optional Redemption": An Optional Redemption relating to only a
portion of the Underlying Securities.
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"Payment Default": A default in any payment of the principal of, premium,
if any, or interest on the Underlying Securities when the same becomes due and
payable, and the expiration of any applicable grace period for the making of
such payment.
"Place of Distribution": [New York, New York].
"Principal Collections": All principal payments received by the Trustee on
the Underlying Securities, including the principal portion of the redemption
price and the premium, if any, paid in the event of Shortened Maturity
Redemption or an Optional Redemption.
"Rating Agency": At any time after the Closing Date, the Depositor may
designate one or more credit rating agencies as a "Rating Agency" for purposes
of this Agreement by Depositor Order, acknowledged by the Trustee. Thereafter,
references to "the Rating Agency" in the Agreement shall be deemed to be each
such credit rating agency.
"Record Date": With respect to any Distribution Date, the [15th] day
immediately preceding such Distribution Date.
"Scheduled Distribution Date": The first day of each _____ and _____, or,
if any such day is not a Business Day and a Underlying Securities Scheduled
Payment Date, then the Business Day on or immediately following the Underlying
Securities Scheduled Payment Date, commencing _____,_____, through and including
[Scheduled Final Distribution Date]; provided, however, that payment on each
Scheduled Distribution Date shall be subject to receipt of the corresponding
payment of interest or principal, as applicable, on the Underlying Securities.
"Scheduled Final Distribution Date": _______.
"Shortened Maturity Date": A maturity date for the Underlying Securities on
or before _____, _____, designated by the Underlying Securities Issuer, as a
result of a Tax Event.
"Shortened Maturity Redemption": A redemption of the Certificates in whole,
but not in part, as a result of the Shortened Maturity Date occurring on or
prior to _____, _____.
"Specified Currency": [United States Dollars].
["Tax Event": Means that the Underlying Securities Issuer shall have
received an opinion of nationally recognized independent tax counsel to the
effect that, as a result of (a) any amendment to, clarification of or change
(including any announced prospective amendment, clarification or change) in any
law, or any regulation thereunder, of the United States, (b) any judicial
decision, official administrative pronouncement, ruling, regulatory procedure,
notice or announcement, including any notice or announcement of intent to adopt
or promulgate any ruling, regulatory procedure or regulation (any of the
foregoing, an "Administrative or Judicial Action"), or (c) any amendment to,
clarification of or change in any official position with respect to, or any
interpretation of, an Administrative or Judicial Action or a law or regulation
of the United States that differs from the theretofore generally accepted
position or interpretation, in each case, occurring on or after _____, _____,
there is more than an insubstantial increase in the risk that interest paid by
the Underlying Securities Issuer on the Underlying Securities is not, or will
not be, deductible, in whole or in part, by the Underlying Securities Issuer for
United States federal income tax purposes.]
"Trust": Receipts on Corporate Securities Trust [ ]-[ ].
"Trustee": The Chase Manhattan Bank, a New York banking corporation.
"Trust Termination Event": (a) the distribution in-kind of the Underlying
Securities to the [ ] Class Certificateholders on _____, _____ (subject to
Section 8(b) hereof), (b) the payment in full of the Certificates following a
Shortened Maturity Redemption, (c) an In-Kind Distribution, (d) the payment in
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full of the Certificates following an Optional Redemption, other than a Partial
Optional Redemption, or (e) the exchange of Certificates for the last remaining
Underlying Securities pursuant to Section 7. [describe other termination events,
including any applicable Rule Against Perpetuities limitation]
"Underlying Securities": The $______ aggregate principal amount of _____%
[identify Underlying Securities, issued by the Underlying Securities Issuer,
deposited in the Trust by the Depositor and further identified on Schedule 1
hereto.
"Underlying Securities Indenture": The indenture dated as of _____, _____,
between the Underlying Securities Issuer and the Underlying Securities Trustee,
as amended from time to time.
"Underlying Securities Issuer":__________.
"Underlying Securities Scheduled Payment Date": The _____ day of each _____
and_____, commencing on _____, _____; provided, however, that if any Underlying
Securities Scheduled Payment Date would otherwise fall on a day that is not a
Business Day (as defined in the Underlying Securities Indenture), such
Underlying Securities Scheduled Payment Date will be the next following day that
is a Business Day (as so defined).
"Underlying Securities Prospectus": The prospectus of the Underlying
Securities Issuer, dated _____, _____, as supplemented by a supplement thereto
dated _____, ____, with respect to the Underlying Securities.
"Underlying Securities Trustee": The trustee under the Underlying
Securities Indenture.
"Voting Rights": Voting Rights will be allocated between the Classes of
Certificateholders as follows: [describe allocation of voting rights].
SECTION 2. CREATION AND DECLARATION OF TRUST; GRANT OF UNDERLYING
SECURITIES; ACCEPTANCE BY TRUSTEE. (a) The Depositor, concurrently with the
execution and delivery hereof and pursuant to Section 2.1 of the Agreement, has
delivered or caused to be delivered to the Trustee the Underlying Securities in
exchange for the delivery to, or at the direction of the Depositor, of all of
the Certificates, representing the entire beneficial interest in all of the
assets of the Trust.
(b) The Trustee hereby (i) acknowledges such deposit, pursuant to
subsection (a) above, and receipt by it of the Underlying Securities, (ii)
accepts the trusts created hereunder in accordance with the provisions hereof
and of the Agreement but subject to the Trustee's obligation, as and when the
same may arise, to make any payment or other distribution of the assets of the
Trust as may be required pursuant to this Series Supplement, the Agreement and
the Certificates, and (iii) agrees to perform the duties herein or therein
required and any failure to receive reimbursement of expenses and disbursements
under Section 7.5 of the Agreement shall not release the Trustee from its duties
herein or therein.
SECTION 3. DESIGNATION. There is hereby created a Series of trust
certificates to be issued pursuant to the Agreement and this Series Supplement
to be known as the "Receipts on Corporate Securities, Series [ ]-[ ]." The
Certificates shall be issued in _____ Classes, consisting of the [ ] Class
Certificates and the [ ] Class Certificates [identify others].
SECTION 4. FORM AND DATE OF THE CERTIFICATES. (a) The Certificates that are
executed, authenticated and delivered by the Trustee to the Depositor upon
Depositor Order on the Closing Date shall be dated the Closing Date. All other
Certificates that are authenticated after the Closing Date for any other purpose
under the Agreement shall be dated the date of their authentication. The
Certificates and the certificate of authentication of the Trustee thereon shall
be substantially in the form of Exhibit A or Exhibit B hereto, as specified
below, which are hereby incorporated in and expressly made a part of this
Agreement.
(b) The [ ] Class Certificates will be represented by one or more permanent
Certificates in definitive, fully registered form in minimum denominations of
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$______ in Certificate Principal Balance and integral multiples of $_____ in
excess thereof. The [ ] Class Certificates will be represented by one or more
permanent Certificates in definitive, fully registered form in minimum
denominations of $_____ in Certificate Principal Balance and integral multiples
of $ in excess thereof.
SECTION 5. AGGREGATE CERTIFICATE PRINCIPAL BALANCE. The maximum Aggregate
Certificate Principal Balance of the [ ] Class Certificates that may be
executed, authenticated and delivered under the Agreement and this Series
Supplement is $_____. The maximum Aggregate Certificate Principal Balance of the
[ ] Class Certificates that may be authenticated and delivered under the
Agreement and this Series Supplement is $_____. In each case such maximum
amounts shall be calculated without regard to Certificates authenticated and
delivered upon registration of transfer of, or in exchange for, or in lieu of,
other Certificates pursuant to Sections 5.3, 5.4, 5.5 or 5.16 of the Agreement.
The Certificates are issuable in the minimum denominations specified in Section
4.
SECTION 6. CURRENCY OF THE CERTIFICATES. All distributions on the
Certificates will be made in the Specified Currency.
SECTION 7. CERTIFICATEHOLDER EXCHANGE RIGHT. Any Holder of [ ] Class
Certificates and [ ] Class Certificates may, by delivery of a notice to the
Trustee substantially in the form of the Notice of Exchange attached to a
Certificate (a "Notice of Exchange") not less than [30] and not more than [45]
days prior to any Scheduled Distribution Date other than _____, _____, elect to
exchange Certificates of both Classes for Underlying Securities on such
Scheduled Distribution Date (the "Exchange Date") in accordance with this
Section. In order to exercise such right, the holder shall tender to the Trustee
on the Exchange Date immediately succeeding such notice both (a) [ ] Class
Certificates evidencing the percentage specified in the Notice of Exchange of
the Aggregate Certificate Principal Balance of all [ ] Class Certificates then
outstanding and (b) [ ] Class Certificates evidencing the same percentage of the
Aggregate Certificate Principal Balance of all [ ] Class Certificates then
outstanding as is represented by the [ ] Class Certificates tendered pursuant to
clause (a).
Upon tender of such Certificates, duly endorsed by the Holder to the
Trustee, the Trustee shall transfer to the Holder (or its designee specified in
the Notice of Exchange) a principal amount of Underlying Securities comprising
the same percentage of the Underlying Securities then held in the Trust as the
percentage of [ ] Class Certificates and [ ] Class Certificates tendered by such
Holder on such Scheduled Distribution Date, rounded down to the nearest
authorized denomination of 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 each Class evidencing percentage interests of such
Class (regardless of whether such interests would otherwise be authorized
denominations) equal to the amount of such Class in excess of the amount
accepted for such exchange.
The delivery of a Notice of Exchange pursuant to this Section shall be
irrevocable; provided, however, that if (i) the proceeds of an Optional
Redemption, Shortened Maturity Redemption or In-Kind Distribution are to be
distributed on the Exchange Date to which such Notice of Exchange relates or
(ii) if prior to such Exchange Date, the Trustee gives notice to Holders that
the proceeds of an Optional Redemption, Shortened Maturity Redemption or In-Kind
Distribution are scheduled to be distributed on a date subsequent to such
Exchange Date, such Notice of Exchange shall be automatically deemed canceled
and be of no further force and effect.
Any Holder tendering Certificates in exchange for Underlying Securities on
an Exchange Date pursuant to this Section shall be entitled to receive cash
distributions otherwise payable on such Certificates on such Exchange Date
pursuant to Section 8(a).
SECTION 8. DISTRIBUTIONS. (a) Not later than each Scheduled Distribution
Date, the Trustee shall distribute to the Holders of the [ ] Class Certificates,
to the extent of Interest Collections constituting Available Funds, an amount
equal to the Fixed Payment plus any Excess Interest. Each Fixed Payment shall be
allocated first to interest accrued during the related Interest Accrual Period
on the then outstanding Aggregate Certificate Principal Balance of the [ ] Class
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Certificates, with the balance of such Fixed Payment allocated to the repayment
of principal in accordance with the amortization schedule attached hereto as
Schedule 2 (the "Amortization Schedule"). Any Excess Interest shall be allocated
as additional interest and shall not be taken into account in the allocation of
the Fixed Payment. In the event of a Partial Optional Redemption or an exchange
of Certificates for Underlying Securities pursuant to Section 7, the Fixed
Payment to the holders of the [ ] Class Certificates will be reduced, effective
on the next Scheduled Distribution Date, pro rata with the reduction of the
Underlying Securities.
In the event that any Interest Collections are received by the Trustee
after a Scheduled Distribution Date and prior to the final distribution with
respect to the [ ] Class Certificate, the Trustee will distribute such Interest
Collections to the holders of the [ ] Class Certificates as soon as practicable
after receipt.
(b) On _____, _____, the Trustee shall distribute the remaining Underlying
Securities in kind to the [ ] Class Certificateholders; provided that if payment
to the [ ] Class Certificateholders with respect to the Underlying Securities
due on ,_____, _____ is not made by the Underlying Securities Issuer on such
date, the Underlying Securities will not be distributed to the holders of the [
] Class Certificates until such payment is made by the Underlying Securities
Issuer or the Trustee makes an In-Kind Distribution to Certificateholders in
accordance with this Agreement.
(c) In the event of an Optional Redemption on or prior to _____, _____, the
Certificates will be redeemed on the Optional Redemption Date. Such redemption
shall be a redemption of the Certificates as a whole if the Optional Redemption
is redemption of the Underlying Securities as a whole, and shall be a redemption
of the Certificates in part, as described in the next subsection, if the
Optional Redemption is a Partial Optional Redemption. In such event, the Trustee
will distribute the aggregate redemption price received on the Underlying
Securities on the Optional Redemption Date to the holders of the [ ] Class
Certificates and the [ ] Class Certificates, respectively, on the basis of the
Distribution Ratio. Such ratio will be calculated by the Calculation Agent.
(d) In the event of a Partial Optional Redemption, the distribution of the
portion of the redemption price allocable to a particular Class of Certificates
pursuant to the preceding subsection shall be made on a pro rata basis among all
Certificateholders of such Class. Amounts so allocated to the [ ] Class
Certificates shall be allocated first to interest accrued since the start of the
most recent Interest Accrual Period on the then outstanding Certificate
Principal Balance of the [ ] Class Certificates, with the balance of such
distribution allocated to the repayment of principal. At the close of business
on the applicable Optional Redemption Date, the respective Certificate Principal
Balances of the Certificates shall be reduced in accordance with definition of
the term "Certificate Principal Balance."
(e) In the event of a Shortened Maturity Redemption on or prior to the
Scheduled Final Distribution Date, the Certificates shall be redeemed as a whole
on the Shortened Maturity Date. In such event, the Trustee will distribute, the
aggregate redemption price received on the Underlying Securities on the
Shortened Maturity Date to the holders of the [ ] Class Certificates and the [ ]
Class Certificates, respectively, on the basis of the Distribution Ratio. Such
ratio will be calculated by the Calculation Agent.
(f) (i) Upon receipt by the Trustee of actual notice that a Payment Default
or an Acceleration of the Underlying Securities has occurred under the
Underlying Securities Indenture on or before the Scheduled Final
Distribution Date, the Trustee will make an In-Kind Distribution of the
remaining Underlying Securities, pursuant to Section 3.6 of the Agreement,
to the holders of the [ ] Class Certificates and the [ ] Class
Certificates. The Trustee will distribute the Underlying Securities and any
proceeds from liquidation thereof made pursuant to Section 3.6(b) to the
holders of the [ ] Class Certificates and [ ] Class Certificates,
respectively, on the basis of the Distribution Ratio as of the date of such
Payment Default or Acceleration. Such ratio will be calculated by the
Calculation Agent.
(ii) Upon receipt by the Trustee of actual notice that an Underlying
Securities Issuer has ceased to provide periodic information and other
reports to the Commission as required by the Exchange Act , the Trustee
will make an In-Kind Distribution of the Underlying Securities of such
Underlying Securities Issuer, pursuant to Section 3.6 of the Agreement, to
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the holders of the [ ] Class Certificates and the [ ] Class Certificates.
The Trustee will distribute the applicable Underlying Securities and any
proceeds from liquidation thereof made pursuant to Section 3.6(b) to the
holders of the [ ] Class Certificates and the [ ] Class Certificates,
respectively, on the basis of the Distribution Ratio as of the date
specified in the applicable notice from the Depositor. Such ratio will be
calculated by the Calculation Agent.
(g) Distributions of any Purchase Price pursuant to Section 2.5 of the
Agreement shall be distributed in the same ratio set forth in subsection (c)
above discounted to the date on which the Purchase Price is distributed. Such
distribution shall be made fifteen days after receipt of the Purchase Price.
(h) Distributions to the Certificateholders on each Distribution Date will
be made to the Certificateholders of record on the related Record Date of the [
] Class Certificates and [ ] Class Certificates, as applicable.
(i) All distributions to Certificateholders of any Class shall be allocated
pro rata among the Certificates of such Class, based on the respective
Certificate Principal Balances as of the Record Date with respect to such
Distribution Date.
(j) Notwithstanding any provision of the Agreement to the contrary, to the
extent funds are available, the Trustee will initiate payment in immediately
available funds by 10:00 A.M. (New York City time) on each Distribution Date of
all amounts payable to each Certificateholder with respect to any Certificate
held by such Certificateholder or its nominee (without the necessity for any
presentation or surrender thereof or any notation of such payment thereon) in
the manner and at the address as each Certificateholder may from time to time
direct the Trustee in writing fifteen days prior to such Distribution Date
requesting that such payment will be so made and designating the bank account to
which such payments shall be so made. The Trustee shall be entitled to rely on
the last instruction delivered by the Certificateholder pursuant to this Section
8(j) unless a new instruction is delivered in writing 15 days prior to a
Distribution Date.
(k) The rights of the Certificateholders to receive distributions in
respect of the Certificates, and all interests of the Certificateholders in such
distributions, shall be as set forth in this Series Supplement. The Trustee
shall in no way be responsible or liable to the Certificateholders nor shall any
Certificateholder in any way be responsible or liable to any other
Certificateholder in respect of amounts previously distributed on the
Certificates based on their respective Certificate Principal Balances.
(l) The Trustee shall furnish notice to Certificateholders as soon as
practicable after a Responsible Officer learns of a situation giving rise to a
distribution under subsections (c), (d) or (e) hereof.
SECTION 9. TERMINATION OF TRUST. (a) The Trust shall terminate upon the
occurrence of any Trust Termination Event and the distribution to
Certificateholders of all amounts or property required to be distributed to them
and the disposition of all Underlying Securities held by the Trustee.
(b) Promptly after the Trustee has received a notice from the Underlying
Securities Trustee or Underlying Securities Issuer of an Optional Redemption
other than a Partial Optional Redemption, a Shortened Maturity Redemption, a
Payment Default or an Acceleration of the Underlying Securities, the Trustee
shall provide notice to the Certificateholders of the expected occurrence of a
Trust Termination Event and the termination of the Trust.
(c) The obligations of the Trustee will thereupon terminate, except for the
making of final distributions to Certificateholders and the furnishing of any
reports and other information required to be provided to Certificateholders
hereunder and under the Agreement and except as otherwise specified herein and
therein.
SECTION 10. LIMITATION OF POWERS AND DUTIES. (a) The Trustee shall
administer the Trust and the Underlying Securities solely as specified herein
and in the Agreement.
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(b) The Trust is constituted solely for the purpose of acquiring and
holding the Underlying Securities. The Trustee is not authorized to acquire any
other investments or engage in any activities not authorized herein and, in
particular, notwithstanding anything to the contrary in the Agreement, the
Trustee is not authorized (i) to sell, assign, transfer, exchange, pledge,
set-off or otherwise dispose of any of the Underlying Securities, once acquired,
or interests therein, including to Certificateholders except as expressly
provided in Section 3.6 of the Base Trust Agreement or (ii) to do anything that
would materially increase the likelihood that the Trust will fail to qualify as
a grantor trust for United States federal income tax purposes.
[SECTION 11. CERTAIN PROVISIONS OF BASE TRUST AGREEMENT NOT APPLICABLE. The
provisions of Sections 2.2(b), 2.3 (except insofar as incorporated in Section
2.5), 5.16, 6.4 and 8.1(a)(i) of the Base Trust Agreement shall be inapplicable
with respect to the Certificates.]
SECTION 12. [NO] INVESTMENT OF AMOUNTS RECEIVED ON UNDERLYING SECURITIES.
[All amounts received on or with respect to the Underlying Securities shall be
held uninvested by the Trustee without liability for interest thereon.] [Amounts
received by the Trustee on or with respect to the Underlying Securities shall be
invested in Permitted Investments as directed by the Depositor in writing from
time to time.]
SECTION 13. NOTICES. (a) All directions, demands and notices hereunder and
under the Agreement shall be in writing and shall be deemed to have been duly
given when received if personally delivered or mailed by first class mail,
postage prepaid or by express delivery service or by certified mail, return
receipt requested or delivered in any other manner specified herein, (i) in the
case of the Depositor, to Prudential Securities Structured Assets, Inc., One New
York Plaza, 14th Floor, New York, New York 10292-2014, Attention: _____, or such
other address as may hereafter be furnished to the Trustee in writing by the
Depositor, and (ii) in the case of the Trustee, to The Chase Manhattan Bank,
Global Trust Services, 450 West 33rd Street, New York, New York 10001,
Attention: Corporate Trust Department, or such other address as may hereafter be
furnished to the Depositor in writing by the Trustee.
(b) For purposes of delivering notices to the Rating Agency, notices shall
be sent to the address specified by the Depositor's designation.
SECTION 14. ACCESS TO CERTAIN DOCUMENTATION. Access to documentation
regarding the Underlying Securities will be afforded without charge to any
Certificateholder so requesting pursuant to Section 3.9 of the Agreement.
Additionally, the Trustee shall provide at the request of any Certificateholder
without charge to such Certificateholder the name and address of each
Certificateholder of Certificates hereunder as recorded in the Certificate
Register for purposes of contacting the other Certificateholders with respect to
their rights hereunder or for the purposes of effecting purchases or sales of
the Certificates, subject to the transfer restrictions set forth herein.
SECTION 15. RATIFICATION OF AGREEMENT. With respect to the Series issued
hereby, the Base Trust Agreement, as supplemented by this Series Supplement, is
in all respects ratified and confirmed and the Base Trust Agreement as so
supplemented by this Series Supplement shall be read, taken and construed as one
and the same instrument. To the extent there is any inconsistency between the
terms of the Base Trust Agreement and this Series Supplement, the terms of this
Series Supplement shall govern.
SECTION 16. COUNTERPARTS. This Series Supplement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all of such counterparts shall together constitute but one and the
same instrument.
SECTION 17. GOVERNING LAW. This Series Supplement and each Certificate
issued hereunder shall be construed and enforced in accordance with and governed
by the law of the State of New York without regard to principles of conflicts of
law.
[SECTION 18. TRUSTEE ELECTION. In mutual consideration for each
Certificateholder's purchase of a Certificate, each Certificateholder
acknowledges that it intends that the Trust be excluded from the application of
8
<PAGE>
the rules of subchapter K of the Code in the event that the Internal Revenue
Service successfully recharacterizes the Trust as a partnership for federal
income tax purposes, and will be deemed to have consented to the making of a
protective election pursuant to Treasury Regulation Section 1.761-2 as of the
date hereof.]
SECTION 19. COVENANT OF DEPOSITOR. The Depositor hereby covenants that it
will be adequately capitalized at all times. The Depositor hereby further
covenants that it will not purchase or otherwise acquire any Certificates in the
open market or otherwise at any time.
* * * * *
IN WITNESS WHEREOF, the Depositor and the Trustee have caused this Series
Supplement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
PRUDENTIAL SECURITIES STRUCTURED ASSETS,
INC., as Depositor
By__________________________________
Authorized Signatory
THE CHASE MANHATTAN BANK,
a New York banking corporation,
as Trustee
By__________________________________
Vice President
9
<PAGE>
Exhibit A
[Form of [ ] Class Certificate]
NUMBER Certificate Principal Balance $_____
R-___ Aggregate Certificate Principal Balance $_____
CUSIP NO. _____
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFICATE REPRESENTS A FRACTIONAL UNDIVIDED INTEREST IN THE TRUST
AND DOES NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, AND IS NOT GUARANTEED
BY THE DEPOSITOR OR THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER
THIS CERTIFICATE NOR THE TRUST ASSETS ARE INSURED OR GUARANTEED BY ANY
GOVERNMENTAL AGENCY OR ANY OTHER PERSON.
A-1
<PAGE>
RECEIPTS ON CORPORATE SECURITIES TRUST, [ ]-[ ]
RECEIPTS ON CORPORATE SECURITIES
SERIES [ ]-[ ]
[ ] Class Certificates evidencing a fractional undivided beneficial
ownership interest in the Trust, as defined below, the property of which
consists of $ aggregate principal amount of % [Title of Underlying Securities
due , (the "Underlying Securities") issued by , (the "Underlying Securities
Issuer"), and deposited in the Trust by the Depositor, as defined below. The
Underlying Securities were purchased by the Trust from Prudential Securities
Structured Assets, Inc. (the "Depositor") in exchange for the transfer of the
Certificates to the Depositor by the Trust.
THIS CERTIFIES THAT _____ is the registered owner of a nonassessable,
fully-paid, fractional undivided interest in Receipts on Corporate Securities
Trust, [ ]-[ ] formed by the Depositor. Under the Trust Agreement, except upon
or after the occurrence of [an Optional Redemption, a Shortened Maturity
Redemption or an In-Kind Distribution,] there will be distributed to the Holders
of the Certificates an amount equal to the Fixed Payment [plus any Excess
Interest]on the _____ day of each _____ and _____, or, if any such day is not a
Business Day and a Underlying Securities Scheduled Payment Date, then the
Business Day on or immediately following the Underlying Securities Scheduled
Payment Date, commencing _____, _____, through and including _____, _____;
provided that payment on each Scheduled Distribution Date shall be subject to
receipt of the corresponding payment of interest or principal, as applicable, on
the Underlying Securities. Each Fixed Payment shall be allocated first to
interest accrued during the related Interest Accrual Period on the then
outstanding Aggregate Certificate Principal Balance of the Certificates, with
the balance of such Fixed Payment allocated to the repayment of principal in
accordance with the amortization schedule attached to the Series Supplement (the
"Amortization Schedule"). Any Excess Interest shall be allocated as additional
interest and shall not be taken into account in the allocation of the Fixed
Payment. In the event of a Partial Optional Redemption or an exchange of
Certificates for Underlying Securities pursuant to Section 7 of the Series
Supplement referred to below, the Fixed Payment to the holders of the
Certificates and the Certificate Principal Balance of this Certificate will be
reduced in accordance with the Trust Agreement. In the event of an Optional
Redemption or a Shortened Maturity Redemption, the Trustee will distribute the
payments received on the Underlying Securities on the Optional Redemption Date
or the Shortened Maturity Date, as applicable, to the Certificates in the same
ratio as [describe ratio] (such ratio being the "Distribution Ratio") to the
Optional Redemption Date or Shortened Maturity Date, as applicable. Such amounts
will be calculated by the Calculation Agent. In the event of an In-Kind
Distribution pursuant to Section 3.6 of the Base Trust Agreement, the Trustee
shall make such In-Kind Distribution to the Holders of the Certificates on the
basis of the Distribution Ratio to the date on which the Payment Default or
Acceleration of the Underlying Securities occurred. Such ratio shall be
calculated by the Calculation Agent.
The Trust was created pursuant to a Base Trust Agreement dated as of _____,
_____, (the "Base Trust Agreement"), between the Depositor and The Chase
Manhattan Bank, a New York banking corporation, not in its individual capacity
but solely as Trustee (the "Trustee"), as supplemented by 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. This Certificate does not purport to summarize the Trust Agreement and
reference is hereby made to the Trust Agreement for information with respect to
the interests, rights, benefits, obligations, proceeds and duties evidenced
hereby and the rights, duties and obligations of the Trustee with respect
hereto. A copy of the Trust Agreement may be obtained from the Trustee by
written request sent to the Corporate Trust Office. Capitalized terms used but
not defined herein have the meanings assigned to them in the Trust Agreement.
This Certificate is one of the duly authorized Certificates designated as
"Receipts on Corporate Securities, Series [ ]-[ ], [ ] Class Trust Certificates"
(herein called the "[ ] Class Certificates"). The Trust is also issuing
certificates designated as "Receipts on Corporate Securities, Series [ ]-[ ], [
] Class Trust Certificates" (hereinafter called the "[ ] Class Certificates" and
together with the [ ] Class Certificates, the "Certificates") pursuant to the
Trust Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Trust Agreement, to which Trust Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound. The property of the Trust consists of the Underlying
A-2
<PAGE>
Securities and all payments on or collections in respect of the Underlying
Securities accrued on or after the Closing Date, all as more fully specified in
the Trust Agreement.
Subject to the terms and conditions of the Trust Agreement (including the
availability of funds for distribution) and until the obligation created by the
Trust Agreement shall have terminated in accordance therewith, distributions
will be made on each Distribution Date to the Person in whose name this
Certificate is registered on the applicable Record Date. The Record Date
applicable to any Distribution Date is the 15th day immediately preceding such
Distribution Date.
Distributions made on this Certificate will be made as provided in the
Trust Agreement by the Trustee by wire transfer or credit to the appropriate
account of the Holder in immediately available funds, without the presentation
or surrender of this Certificate or the making of any notation hereon. Except as
otherwise provided in the Trust Agreement and notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trustee of the tendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency maintained for that
purpose by the Trustee in the Borough of Manhattan, the City of New York.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee, by manual signature, this Certificate shall not entitle
the holder hereof to any benefit under the Trust Agreement or be valid for any
purpose.
It is the intent of the Depositor and the Certificateholders that, for
purposes of federal income, state and local income and franchise taxes and any
other taxes imposed upon, measured by or based upon gross or net income, the
Trust shall be treated as a grantor trust or, failing that, as a partnership
that is not treated as an association (or publicly traded partnership) taxable
as a corporation, and the Trust Agreement shall be interpreted accordingly.
Except as otherwise required by appropriate taxing authorities, the Depositor
and the other Certificateholders by acceptance of a Certificate, agree to treat,
the Certificates for such tax purposes as interests in such grantor trust. It is
also the intent of the Depositor and the Certificateholders that the Trust be
excluded from the application of the rules of subchapter K of the Code in the
event that the Internal Revenue Service successfully recharacterizes the Trust
as a partnership for federal income tax purposes, and that a protective election
pursuant to Treasury Regulation Section 1.761-2 be made as of the date of
formation of the Trust.
The Certificates are limited in right of distribution to certain payments
and collections respecting the Trust Agreement, all as more specifically set
forth herein and in the Trust Agreement. The registered Holder hereof, by its
acceptance hereof, agrees that it will look solely to the Underlying Securities
(to the extent of its rights therein) for distributions hereunder.
Subject to the next sentence and to certain exceptions provided in the
Trust Agreement, the Trust Agreement permits the amendment thereof and the
modification of the rights and obligations of the Depositor and the Trustee and
the rights of the Certificateholders under the Trust Agreement at any time by
the Depositor and the Trustee with the unanimous consent of the Holders each
Outstanding Class of Certificates. Any such consent by the Holder of this
Certificate (or any predecessor Certificate) shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange hereof or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Trust Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies of the Certificate Registrar maintained by
the Trustee in the Borough of Manhattan, The City of New York, duly endorsed by,
or accompanied by an assignment in the form below and by such other documents as
required by the Trust Agreement signed by, the Holder hereof, and thereupon one
or more new Certificates of the same Class in authorized denominations
evidencing the same principal amount will be issued to the designated transferee
or transferees. The Certificate Registrar appointed under the Trust Agreement is
The Chase Manhattan Bank.
A-3
<PAGE>
No service charge will be made for any registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
transfer or exchange of Certificates.
The Depositor and the Trustee and any agent of the Depositor or the Trustee
may treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Depositor, the Trustee, nor any such
agent shall be affected by any notice to the contrary.
The Trust and the obligations of the Depositor and the Trustee created by
the Trust Agreement with respect to the Certificates will terminate upon (i) the
distribution of the Underlying Securities to the Class Certificateholders on
[the Scheduled Final Distribution Date] (subject to Section 8(b) of the Series
Supplement), (ii) the payment in full of the Certificates after a Shortened
Maturity Redemption, (iii) the occurrence of an In-Kind Distribution, (iv) the
occurrence of an Optional Redemption other than a Partial Optional Redemption,
or (v) the exchange of Certificates for the last remaining Underlying Securities
pursuant to Section 7 of the Series Supplement. [describe other termination
events]
THIS CERTIFICATE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed as of the date set forth below.
THE CHASE MANHATTAN BANK,
on behalf of the Trust and not in its individual capacity
By:______________________________________
Authorized Officer
Dated: _____, _____
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the [ ] Class Certificates described in the Trust Agreement
referred to herein.
THE CHASE MANHATTAN BANK,
By:__________________________________
Authorized Officer
A-4
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR TAXPAYER IDENTIFICATION OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee)
- --------------------------------------------------------------------------------
the within Trust Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
- --------------------------------------------------------------------------------
Attorney to transfer said Trust Certificate on the books of the Certificate
Registrar, with full power of substitution in the premises.
Dated:_______
*
_____________________________________________
Signature Guaranteed;
*
_____________________________________________
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Trust Certificate in every particular,
without alteration, enlargement or any change whatever. Such signature must be
guaranteed by an "eligible guarantor institution" meeting the requirements of
the Certificate Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Certificate Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.
A-5
<PAGE>
Schedule 1
IDENTIFICATION OF UNDERLYING SECURITIES
Terms of Underlying Securities:
Underlying Securities Issuer:..... ________________________________________
Underlying Securities:............ ________________________________________
Issue Date:....................... On or about ____________________________
Original Principal Maturity Date:. _____, _____
Original Principal Amount Issued:. $______________________
CUSIP Number:..................... _______________________
Stated Interest Rate:............. _____%
Interest Payment Dates:........... _____ and _____
Mode of Payment of Underlying [By credit to the account of
Securities:....................... the holder at DTC]
Principal Amount of Underlying
Securities Deposited Under
Trust Agreement:.................. $_____________________
The Underlying Securities will be held by the Trustee for the Owners of
Certificates as [book-entry credits to an account of the Trustee at DTC].
<PAGE>
===============================================================================
BASE TRUST AGREEMENT
between
PRUDENTIAL SECURITIES STRUCTURED ASSETS, INC.
Depositor
and
THE CHASE MANHATTAN BANK
Trustee
Dated as of __________, _____
===============================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I
Definitions and Assumptions
Section 1.1. Definitions.........................................1
Section 1.2. Rules of Construction..............................11
ARTICLE II
Declaration of Trusts; Issuance of Certificates
Section 2.1. Creation and Declaration of Trusts;
Assignment of Underlying Securities.....................12
Section 2.2. Acceptance by Trustee..............................12
Section 2.3. Repurchase or Substitution of Certain
Underlying Securities..............................12
Section 2.4. Representations and Warranties of the
Depositor..........................................13
Section 2.5. Breach of Representation, Warranty or
Covenant...........................................14
Section 2.6. Agreement to Execute, Authenticate and
Deliver Certificates...............................14
Section 2.7. Statement of Intent................................14
ARTICLE III
Administration of each Trust
Section 3.1. Administration of each Trust.......................14
Section 3.2. Collection of Certain Underlying Security Payments.15
Section 3.3. Certificate Account................................15
Section 3.4. Investment of Funds in the Accounts................16
Section 3.5. Maintenance of Credit Support......................17
Section 3.6. In-Kind Distribution Events........................17
Section 3.7. Retained Interest..................................18
Section 3.8. [Intentionally omitted]............................18
Section 3.9. Access to Certain Documentation....................18
Section 3.10. Depositor to Furnish Names and
Addresses of Holders to Trustee....................18
Section 3.11. Preservation of Information,
Communications to Holders..........................18
Section 3.12. Reports by Trustee.................................19
ARTICLE IV
Distributions and Reports to Certificateholders
Section 4.1. Distributions......................................19
Section 4.2. Reports to Certificateholders......................19
Section 4.3. Compliance with Withholding Requirements...........20
Section 4.4. No Charge for Reports to Certificateholders.......20
<PAGE>
ARTICLE V
The Certificates
Section 5.1. The Certificates...................................20
Section 5.2. Execution, Authentication and Delivery.............23
Section 5.3. Temporary Certificates.............................24
Section 5.4. Registration; Registration of Transfer
and Exchange.......................................24
Section 5.5. Mutilated, Destroyed, Lost and Stolen
Certificates......... .............................26
Section 5.6. Distributions on Certificate; Rights
Preserved..........................................27
Section 5.7. Persons Deemed Owners..............................27
Section 5.8. Cancellation.......................................28
Section 5.9. Global Securities..................................28
Section 5.10. Notices to Depositary..............................28
Section 5.11. Definitive Certificates............................29
Section 5.12. Currency of Distributions in Respect of
Certificates.......................................29
Section 5.13. Conditions of Authentication and
Delivery of New Series............................30
Section 5.14. Appointment of Paying Agent.......................30
Section 5.15. Authenticating Agent..............................31
Section 5.16. Optional Exchange.................................32
ARTICLE VI
The Depositor
Section 6.1. Preparation and Filing of Exchange Act
Reports; Obligations of the Depositor..............32
Section 6.2. Merger or Consolidation of the Depositor...........33
Section 6.3. Limitation on Liability of the Depositor...........34
Section 6.4. Depositor May Purchase Certificates................34
Section 6.5. Preferential Collection of Claims
Against Depositor..................................34
ARTICLE VII
Concerning the Trustee
Section 7.1. Duties of Trustee; Notice of Defaults..............34
Section 7.2. Certain Matters Affecting the Trustee..............36
Section 7.3. Trustee Not Liable for Recitals in
Certificates or Underlying Securities..............37
Section 7.4. Trustee May Own Certificates.......................37
Section 7.5. Trustee's Fees and Expenses;
Indemnification; Undertaking for Costs.............37
Section 7.6. Eligibility Requirements for Trustee...............38
Section 7.7. Resignation or Removal of the Trustee..............38
Section 7.8. Successor Trustee..................................39
Section 7.9. Merger or Consolidation of Trustee.................39
Section 7.10. Appointment of Co-Trustee or Separate
Trustee............................................39
Section 7.11. Appointment of Office or Agency................. ..40
Section 7.12. Representations and Warranties of
Trustee............................................40
Section 7.13 Trustee to Act Only in Accordance With
This Agreement or Pursuant to Instructions of
Certificateholders.................................41
Section 7.14. Accounting and Reports to
Certificateholders, Internal Revenue Service
and Others.........................................41
-ii-
<PAGE>
ARTICLE VIII
Termination
Section 8.1. Termination upon Purchase or Liquidation
of All Underlying Securities.......................41
ARTICLE X
Miscellaneous Provisions
Section 9.1. Amendment..........................................42
Section 9.2. Counterparts.......................................43
Section 9.3. Limitation on Rights of
Certificateholders.................................43
Section 9.4. Governing Law......................................43
Section 9.5. Notices............................................43
Section 9.6. Severability of Provisions.........................44
Section 9.7. Notice to Rating Agency............................44
Section 9.8. Grant of Security Interest.........................44
Section 9.9. Nonpetition Covenant...............................45
Section 9.10. No Recourse............................... ........45
Section 9.11. Article and Section References............. .......45
Section 9.12. Conflict with Trust Indenture Act........... ......45
-iii-
<PAGE>
BASE TRUST AGREEMENT dated as of ___________, ____, between Prudential
Securities Structured Assets, Inc., a Delaware corporation, as Depositor, and
The Chase Manhattan Bank, a New York banking corporation, as Trustee.
PRELIMINARY STATEMENT
The Depositor and the Trustee have duly authorized the execution and
delivery of this Base Trust Agreement to provide for one or more Series (and one
or more Classes within each such Series) of Trust Certificates, issuable from
time to time as provided in this Agreement. Each such Series (or each Class
within such Series) of Certificates will be issued only under a separate Series
Supplement to this Agreement duly executed and delivered by the Depositor, if
any, specified in the applicable Series Supplement, and the Trustee. All
representations, covenants and agreements made herein by each of the Depositor
and the Trustee are for the benefit and security of the Certificateholders and,
to the extent provided in the applicable Series Supplement, for the benefit and
security of any Credit Support Provider. The Depositor is entering into this
Agreement, and the Trustee is accepting the trusts created hereby, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged. All terms defined herein shall have meanings solely with respect
to the particular Series Supplement in which these provisions are incorporated.
Incorporation of these provisions into a Series Supplement is for convenience
only, and each Trust created by a Series Supplement shall be a legally separate
and distinct Trust from any other Trust created by any other Series Supplement
into which these provisions may also be incorporated. These provisions shall by
themselves be of no force and effect, and shall only have effect as and to the
extent incorporated by reference in a Series Supplement. The Series Supplement
into which this Base Trust Agreement is incorporated by reference shall together
constitute a single trust agreement and are referred to herein as the "Trust
Agreement". In the event of a conflict between any Series Supplement, including
the Terms Schedule attached thereto, and this Base Trust Agreement, the Series
Supplement shall control.
ARTICLE I
Definitions and Assumptions
Section 1.1. DEFINITIONS. Except as otherwise specified herein or in the
applicable Series Supplement or as the context may otherwise require, the
following terms have the respective meanings set forth below for all purposes of
this Agreement.
"Account": As defined in Section 3.4.
"Accounting Date": With respect to any Series, if applicable, as defined in
the related Series Supplement.
"Affiliate": With respect to any specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control", when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agreement": With respect to any Series of Certificates, this Trust
Agreement and all amendments hereof and, unless the context otherwise requires,
the related Series Supplement.
"Authenticating Agent": As defined in Section 5.15.
"Authorized Newspaper": A newspaper in an official language of the country
of publication customarily published at least once a day, and customarily
published for at least five days in each calendar week, and of general
circulation in such city or cities specified pursuant to Section 5.1 with
respect to the Certificates of any Series. Where successive publications are
required to be made in Authorized Newspapers, the successive publications may be
made in the same or in different newspapers in the same city meeting the
foregoing requirements and in each case on any Business Day in such city.
<PAGE>
"Available Funds": Unless otherwise specified in the applicable Series
Supplement, for any Distribution Date in respect of a given Series or Class, the
sum of (i) all amounts actually received on or with respect to the Underlying
Securities (including Liquidation Proceeds and investment income on amounts in
the Accounts) with respect to such Series during the related Collection Period,
(ii) all amounts received pursuant to any Credit Support Instruments with
respect to such Series for such Distribution Date and (iii) all other amounts,
if any, specified by the applicable Series Supplement; in each case, only to the
extent that such amounts are same day funds.
"Basic Documents": With respect to any Series, if
applicable, as defined in the related Series Supplement.
"Board of Directors": Either the Board of Directors of the Depositor or any
executive or committee of such Board duly authorized under applicable law to act
on behalf of such Board.
"Board Resolution": A copy of a resolution certified by the Secretary or an
Assistant Secretary of the Depositor to have been duly adopted by the Board of
Directors and to be in full force and effect on the date of such certification
and delivery to the Trustee.
"Business Day": With respect to any Place of Distribution specified
pursuant to Section 5.1, any day that is not a Saturday or a Sunday or a day on
which banking institutions or trust companies in such Place of Distribution are
authorized or obligated by law, regulation or executive order to close.
"Calculation Agent": With respect to each Series, as defined in the related
Series Supplement.
"Certificate Account": As defined in Section 3.3.
"Certificate Owners": As defined in Section 5.9.
"Certificate Principal Balance": With respect to an Outstanding
Certificate, as determined at any time, the maximum amount that the Holder
thereof is entitled to receive as distributions allocable to principal payments
on the Underlying Securities. The Certificate Principal Balance, if any, of any
Class within a given Series (other than those Classes, if any, specified in the
related Series Supplement), as of any date of determination, shall be equal to
the aggregate initial Certificate Principal Balance thereof less the sum of all
amounts allocable to prior distributions made to such Class in respect of
principal of the Underlying Securities.
"Certificate Register" and "Certificate Registrar": As respectively defined
in Section 5.4.
"Certificateholder": Any Holder of a Certificate.
"Certificates": Any Trust Certificates authorized by, and authenticated and
delivered under, this Agreement.
"Class": With respect to any Series, any one of the classes of Certificates
of such Series, each consisting of Certificates having identical terms.
"Closing Date": With respect to any Series, the day on which Certificates
of such Series are first executed, authenticated and delivered.
"Code": The Internal Revenue Code of 1986, as amended, and Treasury
Regulations promulgated thereunder.
"Collection Period": With respect to any Distribution Date for a Series (or
Class within such Series),the period specified in the related Series Supplement.
2
<PAGE>
"Commission": The U.S. Securities and Exchange Commission.
"Corporate Trust Office": The principal corporate trust office of the
Trustee located at the address set forth in the related Series Supplement or
such other addresses as the Trustee may designate from time to time by notice to
the Holders and the Depositor, or the principal corporate trust office of any
successor Trustee (or such other addresses as a successor Trustee may designate
from time to time by notice to the Holders and the Depositor).
"Credit Support": With respect to any Series (or any Class within such
Series), a letter of credit, surety bond, swap agreement, put or call option or
other asset intended to support or ensure the timely or ultimate distributions
of amounts due in respect of all or certain of the Underlying Securities for
such Series or Class, which in each case is specified as such in the related
Series Supplement. The Credit Support for any such Series or the related Trust
shall not constitute a Credit Support for any other Series or any other Trust
"Credit Support Instrument": The instrument or document pursuant to which
the Credit Support for a given Series (or any Class within such Series) is
provided, as specified in the applicable Series Supplement.
"Credit Support Provider": With respect to any Series (or any Class within
such Series), the Person, if any, that will provide any Credit Support with
respect to all or a portion of the Underlying Securities for such Series or
Class as specified in the applicable Series Supplement.
"Currency": Dollars or Foreign Currency.
"Cut-off Date": With respect to any Series, the date specified as such in
the related Series Supplement. For purposes of this Agreement, any Underlying
Security acquired by the Depositor after the applicable Cut-off Date but prior
to the applicable Closing Date and included in the related Trust as of such
Closing Date shall be deemed to have been Outstanding as of such Cut-off Date
and references to the principal balance of such Underlying Security as of such
Cut-off Date shall be deemed to be to the principal balance of such Underlying
Security as of the date on which it was acquired by the Depositor.
"Definitive Certificates": As defined in Section 5.9.
"Deleted Underlying Security": A Underlying Security replaced or to be
replaced by a Qualified Substitute Underlying Security.
"Deliver" (and with correlative meaning, "delivers," "delivery" or
"delivered"): when used with respect to any security:
(a) with respect to any security that is a "certificated security"
(as defined in Section 8-102 of the UCC) transfer thereof:
(i) by physical delivery of such certificated security to the
Trustee, provided that if the certificated security is in registered form, it
shall be indorsed to, or registered in the name of, the Trustee or indorsed in
blank;
(ii) by physical delivery of such certificated security,
provided that it is in registered form, to an Intermediary of the Trustee that
is not a "clearing corporation" (as defined in Section 8-102 of the UCC)
specially indorsed to the Trustee and thereafter reregistered in the name of the
Trustee; or
(iii) the crediting by an Intermediary of such certificated
security to a securities account of the Trustee and, to the extent required by
applicable law, the sending by such Intermediary, if not a clearing corporation,
of a confirmation of the purchase of such security and the identification by
such Intermediary by book entry of the security as belonging to the Trustee;
3
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(b) with respect to any security that is either a certificated
security or an uncertificated security (each, as defined in Section 8-102 of the
UCC) credited on the books of a clearing corporation, transfer thereof:
(i) by the crediting of such security to (i) a securities
account of the Trustee or (ii) a securities account of an Intermediary of the
Trustee and the crediting by such Intermediary of such security to a securities
account of the Trustee; and
(ii) to the extent required by applicable law,
(A) in the case of a security (1) that is a certificated
security, by the custody of such security by the clearing corporation
or a custodian or a nominee of either subject to the control of the
clearing corporation and such security being in bearer form or
indorsed in blank by an appropriate person or registered in the name
of the clearing corporation or custodian or a nominee of either, and
(2) that is an uncertificated security, by the registration of such
security in the name of a clearing corporation or a custodian or
nominee of either and
(B) by (1) the making of appropriate entries on the books of the
clearing corporation reducing the account of a transferor on the books
of the clearing corporation and increasing the account of the Trustee
or its designee, if any (which shall be an Intermediary), by the
amount of the obligation or the number of shares or rights
transferred, (2) the sending by the designee, if any, to the Trustee
of confirmation of the purchase of such security by the Trustee and
(3) the identification by such Intermediary by book entry of such
security as belonging to the Trustee;
(c) with respect to any security that is a security maintained in the form
of an entry in the records of a Federal Reserve Bank, (x) the crediting by such
Federal Reserve Bank in its records of such security to the securities account
of the Intermediary and (y) the crediting by such Intermediary of such security
to a securities account of the Trustee;
(d) with respect to any security that is an uncertificated security and
that is not governed by clause (b) or (c) above, transfer thereof
(i) by registration of the transfer thereof to
the Trust, on the books and records of the issuer thereof; or
(ii) by the crediting by an Intermediary of such security to a
securities account of the Trustee and, to the extent required by applicable law,
the sending by such Intermediary of a confirmation of the purchase of such
security and the identification by such Intermediary by book entry of the
security as belonging to the Trustee;
(e) with respect to any "instrument" within the meaning of Section
9-105(a)(9) of the UCC (other than certificated securities) that is susceptible
of physical delivery, transfer thereof to the Trust by physical delivery to the
Trustee, indorsed to the Trustee or its nominee or indorsed in blank; and
(f) with respect to any deposit account with a commercial bank
located in New York, the establishment of such account in the name of the
Trustee, with the funds in such account payable at maturity to an account of the
Trustee.
Notwithstanding the foregoing, with respect to each of the provisions of
paragraphs (a) through (e), delivery may be effected by such additional or
alternative procedures as may hereafter become appropriate to effect the
complete transfer of ownership of any such security to the Trustee free and
clear of any adverse claims, consistent with changes in applicable law or
regulation or the interpretation thereof.
"Depositary": With respect to the Certificates of any Series (or Class
within such Series) issuable in whole or in part in the form of one or more
Global Securities, the Person designated as Depositary by the Depositor pursuant
to Section 5.1 until a successor Depositary shall have become such pursuant to
the applicable
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provisions of this Agreement, and thereafter "Depositary" shall mean or include
each Person who is then a Depositary hereunder, and if at any time there is more
than one such Person, "Depositary" as used with respect to the Certificates of
any such Series or Class shall mean the Depositary with respect to the
Certificates of that Series or Class.
"Depositor": Prudential Securities Structured Assets, Inc., a Delaware
corporation, and, if a successor Person shall have become the Depositor pursuant
to any applicable provisions of this Agreement, "Depositor" shall mean such
successor Person.
"Depositor Order" or "Depositor Request": A written order or request,
respectively, signed in the name of the Depositor by any two of its Chief
Executive Officer, Chief Financial Officer, Chief Operating Officer, President,
a Vice President, its Treasurer, an Assistant Treasurer, its Secretary or an
Assistant Secretary and delivered to the Trustee; provided that (i) any such
order or request shall be signed by either the President or a Vice President and
(ii) no person may sign in a dual capacity.
"Depository Agreement": If applicable, the agreement pursuant to which the
Depositary will agree to act as Depositary with respect to any Series (or Class
within such Series) of Certificates in accordance with Section 5.9.
"Distribution Date": With respect to any Series (or Class within such
Series) of Certificates, each date specified as a "Distribution Date" for such
Series (or Class) in the related Series Supplement.
"Dollar" or "$" or "USD": Such currency of the United States as at the time
of payment is legal tender for the payment of public and private debts.
"Eligible Account": Either (i) an account or accounts maintained with a
Federal or State chartered depository institution or trust company the long term
unsecured debt obligations of which are rated by the Rating Agency the higher of
(w) at least the then current long-term rating of the Underlying Securities or
(x) in one of its two highest long-term rating categories (unless otherwise
specified in the Series Supplement) at the time any amounts are held in deposit
therein or (ii) a trust account or accounts maintained as a segregated account
or as segregated accounts and held by a Federal or State chartered depository
institution or trust company in trust for the benefit of the Certificateholders,
provided, however, that such depositary institution or trust company (y) has a
long-term rating in one of the four highest categories by the Rating Agency or
(z) is the Trustee.
"Exchange Act": The Securities Exchange Act of 1934, as amended.
"Exchange Act Reports": As defined in Section 6.1 hereof.
"Exchange Rate Agent": With respect to any Series (or Class within such
Series) of Certificates, if applicable, the Depositor or its agent so specified
in the related Series Supplement.
"Executive Officer": With respect to any corporation other than the
Trustee, the Chief Executive Officer, Chief Operating Officer, Chief Financial
Officer, President, any Vice President, the Secretary or the Treasurer of such
corporation; with respect to the Trustee, any Vice President, any Assistant Vice
President or any Assistant Treasurer; with respect to any partnership, any
general partner thereof.
"Foreign Currency": A currency issued by the government of any country
other than the United States or a composite currency the value of which is
determined by reference to the values of the currencies of any group of
countries.
"Global Security": A Certificate evidencing all or part of a Series (or
Class within such Series) of Certificates, issued to the Depositary for such
Series or Class in accordance with Section 5.9 and bearing the legend prescribed
therein.
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"Grant": To sell, convey, assign, transfer, deposit, set over and confirm
to the Trustee pursuant to this Agreement and a related Series Supplement; and
the terms "Granted" and "Granting" have the meanings correlative to the
foregoing. A Grant of any Underlying Securities or of any other instrument shall
include all rights, powers and options (but none of the obligations) of the
Granting party thereunder, including the immediate and continuing right to claim
for, collect, receive and give receipt for principal, premium, if any, and
interest payments in respect of such Underlying Securities and all other moneys
payable thereunder, to give and receive notices and other communications, to
make waivers or other agreements, to exercise all rights and options, to bring
Proceedings in the name of the Granting party or otherwise, and generally to do
and receive anything that the Granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"Holder": The registered holder of a Certificate.
"In-Kind Distribution": A distribution by the Trustee of certain Underlying
Securities pursuant to Section 3.6 hereof and the Series Supplement.
"Independent": When used with respect to any specified Person means that
the Person specifies he or she (1) is in fact independent of the Depositor and
of any Affiliate of the Depositor, (2) does not have any direct or indirect
financial interest in the Depositor or in any Affiliate of the Depositor that is
material with respect to such Person and (3) is not connected with the
Depositor, as an officer, employee, promoter, underwriter, trustee, partner,
director or person performing similar functions.
"Independent Certificate" means a certificate of an Independent Person, as
required by the TIA.
"Intermediary" shall mean a clearing corporation or a person, including a
bank or broker, that in the ordinary course of its business maintains securities
accounts for others and is acting in that capacity.
"Investment Company Act" means the Investment Company Act of 1940, as
amended.
"Letter of Credit": With respect to any Series or Class within such Series,
the letter of credit, if any, providing for the payment of all or a portion of
amounts due in respect of such Series or Class, issued to the Trustee for the
benefit of the Holders of such Series or Class, issued by the related Credit
Support Provider, all as specified in the related Series Supplement.
"Limited Guarantor": With respect to the Underlying Securities relating to
any Series (or Class within such Series), a Person specified in the related
Series Supplement as providing a guarantee or insurance policy or other credit
enhancement supporting the distributions in respect of such Series (or Class) as
and to the extent specified in such Series Supplement.
"Limited Guaranty": With respect to any Series or Class within such Series,
any guarantee of or insurance policy or other comparable form of credit
enhancement with respect to amounts required to be distributed in respect of
such Series or Class or payments under all or certain of the Underlying
Securities relating to such Series or Class, executed and delivered by a Limited
Guarantor in favor of the Trustee, for the benefit of the Certificateholders, as
specified in the related Series Supplement.
"Liquidation Proceeds": The amounts received by the Trustee in connection
with the repurchase, substitution or sale of a Underlying Security.
"Notional Amount": With respect to any Class of Certificates, if
applicable, the initial notional amount specified in the related Series
Supplement on which distributions of interest may be determined at the
applicable interest rate payable on the Underlying Securities.
"Officer's Certificate": A certificate signed by any one (or, if specified
in this Agreement or any Series Supplement, more than one) Executive Officer of
the Depositor or, in the case of the Trustee, a Responsible Officer.
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"Opinion of Counsel": A written opinion of counsel, who may, except as
otherwise expressly provided in this Agreement, be counsel for the Depositor
acceptable to the Trustee, except that any opinion of counsel relating to (i)
federal income tax characterization, (ii) the Investment Company Act, and (iii)
the qualification of any account required to be maintained pursuant to this
Agreement as an Eligible Account must state that it is an opinion of counsel who
is in fact Independent of the Depositor.
"Outstanding": With respect to Certificates of a specified Series (or Class
within such Series), as of any date of determination, all such Certificates
theretofore authenticated and delivered under this Agreement and the related
Series Supplement except:
(i) Certificates theretofore canceled by the Certificate Registrar or
delivered to the Certificate Registrar for cancellation or lost or missing
Certificates, in exchange for which no new Certificates have been issued,
but with respect to which final payment has been made; and
(ii) Certificates in exchange for or in lieu of which other
Certificates have been authenticated and delivered pursuant to this
Agreement, unless proof satisfactory to the Trustee is presented that any
such Certificates are held by a bona fide purchaser in whose hands such
Certificates are valid obligations of the Trust;
provided, however, that in determining whether the Holders of the required
percentage of the aggregate Voting Rights of the Certificates have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Certificates beneficially owned by the Depositor, or any Affiliate thereof,
shall be disregarded and deemed not to be Outstanding, and the Voting Rights to
which its Holder would otherwise be entitled shall not be taken into account in
determining whether the requisite percentage of aggregate Voting Rights
necessary to effect any such consent or take any such action has been obtained
except that, in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Certificates with respect to which the Depositor has provided the
Trustee an Officer's Certificate stating that such Certificates are so owned
shall be so disregarded. Certificates so owned that have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee by certifying to such effect in an Officer's
Certificate the pledgee's right so to act with respect to such Certificates and
that the pledgee is not, to the actual knowledge of the Trustee without any duty
of investigation, the Depositor or any Affiliate thereof so owned.
"Participant": A broker, dealer, bank, other financial institution or other
Person for whom from time to time a Depositary effects book-entry transfers and
pledges of securities deposited with the Depositary.
"Paying Agent": As defined in Section 5.14.
"Percentage Interest": With respect to a Certificate of any Series or Class
within a Series, the portion of such Series or Class evidenced by such
Certificate, expressed as a percentage, equal to the product of (x) a fraction,
the numerator of which is the initial Certificate Principal Balance or Notional
Amount, as applicable, represented by such Certificate and the denominator of
which is the aggregate initial Certificate Principal Balance or Notional Amount,
as applicable, of all the Certificates of such Series or Class and (y) 100.
"Permitted Investments": With respect to any Series, unless otherwise
specified in the related Series Supplement, any one or more of the following
obligations or securities, provided that the total return specified by the terms
of each such obligation or security is at least equal to the purchase price
thereof and that such Obligations, by their terms, convert into cash within a
finite period of time:
(i) direct obligations of, and obligations the timely payment of
principal and interest on which are fully guaranteed by, the United
States, the Federal Home Loan Mortgage Corporation, the Federal
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National Mortgage Association, the Federal Farm Credit System or any agency
or instrumentality of the United States the obligations of which are backed
by the full faith and credit of the United States of America; provided that
obligations of, or guaranteed by, the Federal Home Loan Mortgage
Corporation, the Federal National Mortgage Association or the Federal Farm
Credit System shall be Permitted Investments only if, at the time of
investment, it has the rating specified in such Series Supplement for
Permitted Investments;
(ii) demand and time deposits in, certificates of deposit of, or
banker's acceptances issued by any depository institution or trust company
(including the Trustee or any agent of the Trustee acting in their
respective commercial capacities) incorporated under the laws of the
United States or any State and subject to supervision and examination by
Federal and/or State banking authorities so long as the commercial paper
and/or the short-term debt obligations of such depository institution or
trust company (or, in the case of a depository institution which is the
principal subsidiary of a holding company, the commercial paper or other
short-term debt obligations of such holding company) at the time of such
investment or contractual commitment providing for such investment have
the rating specified in such Series Supplement for Permitted Investments;
provided, however, that such rating shall be no lower than the rating on
the Underlying Securities at the time of purchase of the investments;
(iii) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States or any State
that have the rating specified in such Series Supplement for Permitted
Investments at the time of such investment or contractual commitment
providing for such investment; provided, however, that such rating shall
be no lower than the rating on the Underlying Securities; provided,
further, that securities issued by any particular corporation will not be
Permitted Investments to the extent that investment therein will cause the
then outstanding principal amount of securities issued by such corporation
and held as part of the Trust for such Series to exceed 10% of the
aggregate outstanding principal balances and amounts of all the Underlying
Securities and Permitted Investments held as part of the Trust for such
Series;
(iv) commercial paper having at the time of such investment the
rating specified in the Series Supplement for Permitted Investments;
(v) money market funds having at the time of such investment the
rating specified in the Series Supplement for Permitted Investments,
including without limitation money market funds for which the Trustee or
an affiliate of the Trustee serves as an investment advisor,
administrator, shareholder servicing agent and/or custodian or
subcustodian;
(vi) a deposit of any bank (including the Trustee and its
affiliates), trust company or financial institution authorized to engage
in the banking business having at the time of such investment the capital
and surplus levels and rating specified in the Series Supplement for such
bank, trust company or financial institution; and
(vii) repurchase agreements or other similar obligations from a
counterparty having at the time of such investment the rating specified in
the Series Supplement or which obligations under such agreement or other
contract are collateralized to such level.
"Person": Any individual, corporation, partnership, joint venture,
association, joint stock company, limited liability company, trust (including
any beneficiary thereof), unincorporated organization or government or any
agency or political subdivision thereof.
"Place of Distribution": With respect to any Series (or Class within such
Series) of Certificates, the place or places where the principal of (and
premium, if any) and interest on the Certificates of such Series (or Class) are
distributable as specified pursuant to Section 5.1.
"Predecessor Certificate": With respect to any particular Certificate,
every previous Certificate evidencing all or a portion of the same interest as
that evidenced by such particular Certificate; and, for the purpose of this
definition, any Certificate authenticated and delivered under Section 5.5 in
lieu of a lost, destroyed or stolen Certificate shall be deemed to evidence the
same interest as the lost, destroyed or stolen Certificate.
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"Proceeding": Any suit in equity, action at law or other judicial or
administrative proceeding.
"Purchase Price": With respect to any Underlying Security required to be
repurchased by the Depositor pursuant to Sections 2.3 or 2.5 and as confirmed by
an Officer's Certificate from the Depositor to the Trustee, an amount equal to
the sum of (i) 100% of the principal balance (if any) thereof as of the date of
such repurchase, (ii) accrued and unpaid interest thereon from the immediately
preceding interest payment date on the Underlying Security, or if no interest
has been paid to the Trust with respect thereto, from the Cut-Off Date, in each
case adjusted, if applicable, to the rate at which interest on such Underlying
Security is distributable to the applicable Certificateholder, as specified in
the applicable Series Supplement, on the principal balance of such Underlying
Security as of the close of business on the Business Day immediately preceding
the date of purchase or such other day as may be specified in the applicable
Series Supplement on which such purchase is to occur, (iii) expenses reasonably
incurred or to be incurred by the Trustee in respect of the breach or defect
giving rise to the purchase obligation, including any expenses arising out of
the enforcement of the purchase obligation and (iv) any realized losses
previously incurred with respect to such Underlying Security and allocated to
Certificateholders on or before the date of purchase. Notwithstanding the
foregoing, if the Underlying Security was a zero coupon bond, a discount
security, or an interest-only security, the Purchase Price shall be as defined
in the Series Supplement.
"Qualified Substitute Underlying Security": With respect to any Series and
any Underlying Security, as defined in the Series Supplement.
"Rating Agency": With respect to any Series (or Class within such Series),
as defined in the related Series Supplement.
"Rating Agency Condition": With respect to any action or occurrence, unless
otherwise specified in the applicable Series Supplement, that each Rating Agency
shall have been given 10 days (or such shorter period acceptable to each Rating
Agency) prior notice thereof and that each Rating Agency shall have notified the
Depositor, the Trustee in writing that such action or occurrence will not result
in a reduction or withdrawal of the then current rating of any Certificate of
the applicable Series.
"Record Date": With respect to any Distribution Date for any Series (or
Class within such Series) of Certificates, the date specified in the related
Series Supplement.
"Required Interest": Unless otherwise specified in the related Series
Supplement, with respect to the Outstanding Certificates of any Series or any
Class thereof, the accrued and undistributed interest on the Certificate
Principal Balance or Notional Amount of such Outstanding Certificates computed
at the applicable Pass Through Rate.
"Required Percentage--Amendment": Unless otherwise specified in the related
Series Supplement, 66 2/3% of the aggregate Voting Rights of Certificates of
such Series (or of a designated Class or group of Classes within such Series)
(either voting as separate Classes or as a single Class) applicable to such
matter, all as specified in the applicable Series Supplement.
"Required Percentage--Definitive Certificates": Unless otherwise specified
in the related Series Supplement, greater than 50% of the aggregate Voting
Rights of Certificates of such Series.
"Required Percentage--Direction of Trustee": Unless otherwise specified in
the related Series Supplement, greater than 50% of the aggregate Voting Rights
of Certificates of such Series.
"Required Percentage--Remedies": Unless otherwise specified in the related
Series Supplement, 66 2/3% of the aggregate Voting Rights of Certificates of
such Series.
"Required Percentage--Removal of Trustee": Unless otherwise specified in
the related Series Supplement, greater than 50% of the aggregate Voting Rights
of Certificates of such Series.
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"Required Principal": As determined for any Distribution Date for a given
Series (or Class within such Series), unless otherwise specified in the related
Series Supplement, the amounts on deposit in the Certificate Account allocable
to principal payments on the Underlying Securities and required to be
distributed in respect of Certificates of such Series (or Class) in accordance
with the terms of such Certificates and such related Series Supplement.
"Required Rating": With respect to any Series (or Class within such
Series), the rating category (or categories) specified in the Series Supplement
that, as a condition to the issuance of such Series or Class or the subsequent
sale of such securities in an offering registered under the Securities Act, is
(or are) the lowest category (or categories) in which the Certificates of such
Series or Class may be categorized by the Rating Agency.
"Requisite Reserve Amount": As of any date with respect to any Series (or
Class within such Series) of Certificates, the amount, if any, required to be
maintained in the Reserve Account, if any, for such Series or Class as specified
in or determined pursuant to the related Series Supplement.
"Reserve Account": An Eligible Account, if any, created and maintained for
the purposes described in Section 3.5.
"Responsible Officer": With respect to the Trustee, any officer within the
Corporate Trust Office of the Trustee, including any Vice President, Assistant
Vice President, Assistant Treasurer, Assistant Secretary or any other officer of
the Trustee, as have been assigned to the administration of the Trust.
"Retained Interest": If applicable, with respect to any Underlying
Security, an ownership interest in and a right to a portion of the payments
thereon by the obligor thereof, as specified in the Underlying Securities
Schedule to the related Series Supplement, held by the Person so specified in
such Underlying Securities Schedule.
"Rule 3a-7" means Rule 3a-7 under the Investment Company Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Scheduled Final Distribution Date": With respect to any Certificate, the
date on which all the unpaid principal of (and premium, if any, on) such
Certificate is scheduled, without giving effect to any prepayment, exchange or
early termination, to become due and payable as provided therein and in the
applicable Series Supplement.
"Series": A separate series of Certificates issued pursuant to this
Agreement and a related Series Supplement, which series may be divided into two
or more Classes, as provided in such Series Supplement.
"Series Supplement": An agreement supplemental to this Agreement that
authorizes the issuance of a particular Series (and each Class within such
Series) of Certificates.
"Specified Currency": As defined in the related Series Supplement.
"State": Any one of the 50 states of the United States or the District of
Columbia.
"Surety Bond": If so specified in the Series Supplement, with respect to
any Series (or Class within such Series) of Certificates, the surety bond
providing for the distribution under certain circumstances specified in such
Series Supplement of amounts to the Certificateholders of such Series (or
Class), which surety bond will be issued to the Trustee for the benefit of such
Certificateholders by the related Credit Support Provider, all as specified in
such Series Supplement.
"TIA": The Trust Indenture Act of 1939, as amended.
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"Trust": With respect to any Series, the segregated asset or pool of assets
subject hereto, constituting the trust created hereby and by the related Series
Supplement and to be administered hereunder and thereunder, consisting of those
Underlying Securities and the Credit Support, if applicable, and all sums
distributed in respect thereof that are specified as being part of the Trust for
such Series in the related Series Supplement, all for the benefit of the
Certificateholders of such Series as of any particular time.
"Trust Asset Instrument": Any instrument or agreement evidencing a
Underlying Security or a Credit Support Instrument.
"Trustee": With respect to any Series, the Person so specified in the
applicable Series Supplement (which Person shall have agreed pursuant to such
Series Supplement to assume all the duties, obligations, responsibilities and
liabilities of the Trustee as set forth in this Agreement and such Series
Supplement with respect to the related Series of Certificates) for such Series
or any co-trustee appointed pursuant to Section 7.10, until a successor Person
shall have become the Trustee pursuant to the applicable provisions of this
Agreement and the applicable Series Supplement, and thereafter "Trustee" shall
mean such successor Person.
"Trust Termination Event": With respect to any Series, as specified in the
related Series Supplement.
"UCC" means the Uniform Commercial Code as in effect in the State of New
York, as amended from time to time.
"Underlying Securities": With respect to any Series, the asset or assets
Granted as part of the Trust for such Series or acquired (or, in the case of an
agreement, entered into) by the Trustee for the benefit of the Holders of such
Series and, if and to the extent provided in the applicable Series Supplement,
for the benefit of any Credit Support Provider, all as identified in the
Underlying Securities Schedule to the related Series Supplement. The Underlying
Securities for any such Series or the related Trust shall not constitute
Underlying Securities for any other Series or any other Trust.
"Underlying Securities Issuer": As defined in the related Series
Supplement.
"Underlying Securities Schedule": With respect to any Series, a listing of
the Underlying Securities for such Series as of the Closing Date, including,
with respect to each Underlying Security, the obligor and the principal balance
thereof, which shall be attached to such Series Supplement as Schedule A.
"United States": The United States of America (including the States), its
territories, its possessions and other areas subject to its jurisdiction.
"Voting Rights": With respect to any Series (or Class within such Series)
of Certificates, the portion of the aggregate voting rights of the Certificates
of such Series or Class which shall be allocated to any Certificate as specified
in the applicable Series Supplement.
Section 1.2. RULES OF CONSTRUCTION. Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning to it
in accordance with generally accepted accounting principles as in effect
in the United States from time to time;
(iii) "or" is not exclusive;
(iv) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision;
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(v) "including" means including without limitation; and
(vi) words in the singular include the plural and words in the plural
include the singular.
ARTICLE II
Declaration of Trusts; Issuance of Certificates
Section 2.1. CREATION AND DECLARATION OF TRUSTS; ASSIGNMENT OF UNDERLYING
SECURITIES. (a) The Depositor, concurrently with the execution and delivery
hereof, does hereby agree to Grant to the Trustee, on behalf and for the benefit
of the Certificateholders of each given Series of Certificates and without
recourse, all the right, title and interest of the Depositor, including any
security interest therein for the benefit of the Depositor, in, to and under the
Underlying Securities attributable to each such Series (except for the
Underlying Securities attributable to such Series which are not Granted by the
Depositor, as specified in the Underlying Securities Schedule to the applicable
Series Supplement), now existing or hereafter acquired, in each case as
identified on the applicable Underlying Securities Schedule, and all other
assets included or to be included in the respective Trust for the benefit of the
Certificateholders of each such Series. Each such Grant will include all
interest, premium (if any) and principal received by or on behalf of the
Depositor of, on or with respect to any such Underlying Securities due after the
applicable Cut-off Date, and, unless otherwise specified in the Series
Supplement, will exclude (i) all interest, premium (if any) and principal of, on
or with respect to any such Underlying Securities due on or before the
applicable Cut-off Date and (ii) any Retained Interest in any such Underlying
Security.
(b) In connection with each Grant referred to in the preceding
paragraph, the Depositor shall, not later than the applicable Closing Date, (i)
deposit the Underlying Securities for a given Series with the Trustee by
Delivery of such Underlying Securities.
(c) Unless otherwise specified in the applicable Series Supplement,
the Grant of such Underlying Securities by the Depositor for a given Series
accomplished hereby and by such Series Supplement is absolute and is intended by
the parties hereto as a sale.
Section 2.2. ACCEPTANCE BY TRUSTEE. With respect to each Series, the
Trustee will acknowledge receipt by it, or by a custodian on its behalf, of the
related Underlying Securities and the related documents referred to in Section
2.1, now existing or hereafter acquired, and declares that it will hold such
Underlying Securities and documents and all other documents delivered to it
pursuant to this Agreement, and that it will hold all such assets and such other
assets comprising the Trust for a given Series of Certificates, in trust for the
exclusive use and benefit of all present and future Certificateholders of such
Series and for the purposes and subject to the terms and conditions set forth in
this Agreement.
Section 2.3. REPURCHASE OR SUBSTITUTION OF CERTAIN UNDERLYING SECURITIES .
(a) Except to the extent provided for in a Series Supplement relating to a given
Series of Certificates, upon discovery or receipt of notice pursuant to Section
2.2 that a Trust Asset Instrument is missing or defective, the Trustee shall
immediately notify the Depositor and the Rating Agency that such document is
defective or missing and, unless the Depositor provides to the Trustee an
Officer's Certificate stating such missing or defective document will not have a
materially adverse effect on the related Trust, the Depositor shall cure such
defect within 60 days from the date on which it was first notified of such
missing document or defect, and if the Depositor does not deliver such missing
document or cure such defect in all material respects during such period, the
Depositor shall repurchase such Underlying Security from the Trustee at the
applicable Purchase Price within 75 days after the date on which it was first
notified of such missing document or defect. The Purchase Price for the
repurchased asset underlying the defective or missing Trust Asset Instrument
shall be delivered to the Trustee directly for deposit in the Certificate
Account and the Trustee, upon receipt of such deposit, shall release to the
Depositor the related documents in its possession and shall execute and deliver
such instruments of transfer or assignment, in each case without recourse, as
shall be necessary to vest in the Depositor any such asset released pursuant
hereto, and the Trustee shall have no further obligations with regard to such
documents.
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Any such repurchase price will be distributed to Certificateholders of the
related Series or Class as described in the related Series Supplement. The
foregoing notwithstanding, if and to the extent the Series Supplement provides,
the Depositor may, as an alternative to repurchasing any such Underlying
Security as provided above, cause such Underlying Security to be removed from
the Trust (in which case it shall become a Deleted Underlying Security) by
agreeing to substitute, within the time period set forth above, one or more
Qualified Substitute Underlying Securities in the manner and subject to the
limitations set forth in Section 2.3(b) and the related Series Supplement. It is
understood and agreed that the obligation of the Depositor to repurchase or
substitute for any Underlying Security as to which a constituent document is
missing or a defect in a constituent document exists shall, if such defect is
not cured or such missing document is not provided, constitute (unless otherwise
specified in the applicable Series Supplement) the sole remedy respecting such
omission or defect available to the Certificateholders or the Trustee on behalf
of the Certificateholders.
(b) If and to the extent provided for in a Series Supplement relating
to a given Series of Certificates, with respect to any Deleted Underlying
Security for which the Depositor substitutes a Qualified Substitute Underlying
Security or Securities, such substitution shall be effected by the Depositor
delivering to the Trustee or a custodian on its behalf such Qualified Substitute
Underlying Security or Securities and such documents and agreements, with all
necessary endorsements thereon, as would be required under the terms of Section
2.1, together with an Officer's Certificate of the Depositor certifying that
each such Qualified Substitute Underlying Security satisfies the definition
thereof and the requirements under this Section. The Trustee or such custodian
shall acknowledge receipt of such Qualified Substitute Underlying Security or
Securities. The Depositor shall give or cause to be given written notice to the
Certificateholders of such Series and the Rating Agency that such substitution
has taken place and shall amend the Underlying Security Schedule to reflect the
removal of such Deleted Underlying Security from the terms of this Agreement and
the substitution of the Qualified Substitute Underlying Security or Securities.
Upon such substitution, such Qualified Substitute Underlying Security or
Securities shall be subject to the terms of this Agreement in all respects,
including those related to the representations and warranties as of the date of
substitution. Any further terms upon which such substitution may be effected
shall be specified in the applicable Series Supplement.
Section 2.4. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR . The
Depositor hereby represents and warrants to the Trustee that as of the Closing
Date or as of such other date specifically provided herein or in the applicable
Series Supplement:
(a) the Depositor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware;
(b) with respect to each Series Supplement, to the Depositor's
knowledge, the information set forth in the Underlying Security Schedule
with respect to each Underlying Security is true and correct in all
material respects at the date or dates respecting which such information
is furnished;
(c) the execution and delivery of this Agreement by the Depositor and
its performance of and compliance with the terms of this Agreement will
not violate the Depositor's certificate of incorporation or by-laws or
constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, or result in the breach or
acceleration of, any material contract, agreement or other instrument to
which the Depositor is a party or which may be applicable to the Depositor
or any of its assets;
(d) the Depositor has the full power and authority to enter into and
consummate all transactions contemplated by this Agreement, has duly
authorized the execution, delivery and performance of this Agreement and
has duly executed and delivered this Agreement. This Agreement, upon its
execution and delivery by the Depositor and assuming due authorization,
execution and delivery by the Trustee, will constitute a valid, legal and
binding obligation of the Depositor, enforceable against it in accordance
with the terms hereof, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, receivership, moratorium or other
laws relating to or affecting the rights of creditors generally, and by
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general equity principles (regardless of whether such enforcement is considered
a proceeding in equity or at law);
(e) the Underlying Securities are owned by the Depositor free and
clear of any right, charge, security interest or lien or claim and the
Depositor has the right to Grant the applicable Underlying Securities to
the Trustee;
(f) the Depositor is not in violation, and the execution and delivery
of this Agreement by the Depositor and its performance and compliance with
the terms of this Agreement will not constitute a violation, of any order
or decree of any court or any order or regulation of any Federal, State,
municipal or governmental agency having jurisdiction over the Depositor or
its properties, which violation would reasonably be expected to have a
material and adverse effect on the condition (financial or otherwise) or
operations of the Depositor or its properties or on the performance of its
duties hereunder; and
(vii) any additional representations and warranties, if any, that may
be specified in the applicable Series Supplement.
It is understood and agreed that the representations and warranties of the
Depositor set forth in this Section 2.4 shall survive delivery of the respective
documents to the Trustee and shall inure to the benefit of the Trustee on behalf
of the Certificateholders notwithstanding any restrictive or qualified
endorsement or assignment. Upon discovery by any of the Depositor or the Trustee
of a breach of any of the foregoing representations and warranties which
materially and adversely affects the interests of the Certificateholders, the
party discovering such breach shall give prompt written notice thereof to the
other parties.
Section 2.5. BREACH OF REPRESENTATION, WARRANTY OR COVENANT. Within 90 days
of the earlier of discovery by the Depositor or receipt of notice by the
Depositor of a breach of any representation or warranty of the Depositor set
forth in Section 2.4 that materially and adversely affects the interests of the
Certificateholders of a given Series of Certificates, the Depositor shall cure
such breach in all material respects; PROVIDED THAT, a breach by the Depositor
of its representation and warranty in Section 2.4(e) shall be cured by a
repurchase or substitution of such Underlying Security in the manner prescribed
by Section 2.3 of this Agreement.
Section 2.6. AGREEMENT TO EXECUTE, AUTHENTICATE AND DELIVER CERTIFICATES.
With respect to each Series of Certificates and the related Trust, the Trustee
hereby agrees and acknowledges that it will, concurrently with the Grant to and
receipt by it of the related Underlying Securities, cause the Certificates of
such series to be executed, authenticated and delivered to, and upon Depositor
Order, in authorized denominations evidencing ownership of the entire Trust for
such Series, all in accordance with the terms and subject to the conditions of
Sections 5.2 and 5.13.
Section 2.7. STATEMENT OF INTENT. It is the intention of the parties hereto
that, for purposes of federal income taxes, state and local income and franchise
taxes and any other taxes imposed upon, measured by or based upon gross or net
income, the Trust shall be treated as a grantor trust, but failing that, as a
partnership. The terms of this Agreement shall be interpreted to further this
intention of the parties. The parties hereto agree that, unless otherwise
required by appropriate tax authorities, the Trust shall file or cause to be
filed annual or other necessary returns, reports and other forms consistent with
such intended characterization. Each Certificateholder and each beneficial owner
of a Certificate by acceptance of its Certificate (or its beneficial interest
therein) agrees, unless otherwise required by appropriate tax authorities, to
file its own tax returns and reports in a manner consistent with such
characterization.
ARTICLE III
Administration of each Trust
Section 3.1. ADMINISTRATION OF EACH TRUST. (a) The Trustee shall administer
the Underlying Securities for each given Trust for the benefit of the
Certificateholders of the related Series. In engaging in such
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activities, the Trustee shall, subject to the provisions of Article VI hereof,
follow or cause to be followed collection procedures in accordance with the
terms of this Agreement and the applicable Series Supplement, the respective
Underlying Securities and any applicable Credit Support Instruments. With
respect to each Trust, and subject only to the above-described standards and the
terms of this Agreement, the related Series Supplement and the respective
Underlying Securities and applicable Credit Support Instruments, if any, the
Trustee shall have full power and authority, acting alone or through its agent,
to do or cause to be done any and all things in connection with such
administration which it deems necessary to comply with the terms of this
Agreement and the applicable Series Supplement.
(b) The parties acknowledge that the Trustee, as the holder of the
Underlying Securities, has the right to vote and give consents and waivers in
respect of the Underlying Securities and enforce the other rights, if any, of a
holder of the Underlying Securities, except as otherwise limited by this
Agreement. In the event that the Trustee receives a request from the Underlying
Securities Trustee, the Underlying Securities Issuer or, if applicable, the
Depositary with respect to the Underlying Securities, for the Trustee's consent
to any amendment, modification or waiver of the Underlying Securities, the
Indenture or any other document thereunder, or relating thereto, or receives any
other solicitation for any action with respect to the Underlying Securities, the
Trustee shall within ten Business Days mail a notice of such proposed amendment,
modification, waiver or solicitation to each Certificateholder of record as of
the date of such request. The Trustee shall request instructions from the
Certificateholders as to what action to take in response to such request and
shall be protected in taking no action if no direction is received. Except as
otherwise provided herein, the Trustee shall consent or vote, or refrain from
consenting or voting, in the same proportion (based on the Voting Rights of the
Certificates) as the Certificates of the Trust were actually voted or not voted
by the Holders thereof as of the date determined by the Trustee prior to the
date such vote or consent is required; provided, however, that, notwithstanding
anything to the contrary in this Agreement, the Trustee shall at no time vote in
favor of or consent to any matter (i) that would alter the timing or amount of
any payment on the Underlying Securities (including, without limitation, any
demand to accelerate the Underlying Securities) or (ii) that would result in the
exchange or substitution of any Underlying Security pursuant to a plan for the
refunding or refinancing of such Underlying Security, except in each case with
the unanimous consent of the Certificateholders and subject to the requirement
that such vote would not materially increase the likelihood that the Trust will
fail to qualify as a grantor trust for federal income tax purposes, such
determination to be based solely on an Opinion of Counsel. The Trustee shall
have no liability for any failure to act or to refrain from acting resulting
from the Certificateholders' late return of, or failure to return, directions
requested by the Trustee from the Certificateholders.
(c) Except as is otherwise provided in the Series Supplement, the
Trustee shall act as the sole Authenticating Agent, Paying Agent, and
Certificate Registrar.
(d) The duties of the Trustee shall be performed in accordance with
applicable local, State and Federal law. The Depositor will make, or cause to be
made, any and all filings, reports, notices or applications with, and seek any
comments and authorizations from, the Commission and any State securities
authority on behalf of the Trust for each Series to the extent required by law
or otherwise deemed necessary or appropriate by the Depositor, and the Trustee
will cooperate with the Depositor in such connection to the extent it is
provided with appropriate information, materials and responses by the Depositor.
(e) The Trustee shall provide the Depositor as soon as practicable
copies of each notice, report or other communication relating to the Underlying
Securities and Underlying Securities Issuer received by it in its capacity as
holder of the Underlying Securities or in its capacity as Trustee. In addition,
the Trustee shall furnish to the Depositor copies of all pleadings, complaints
and other documents received by it relating to any Proceeding involving the
Trust or the Certificates.
Section 3.2. COLLECTION OF CERTAIN UNDERLYING SECURITY PAYMENTS. With
respect to any Series or Class of Certificates until such time as the Underlying
Securities in question are distributed to Certificateholders pursuant to an
In-Kind Distribution, the Trustee shall make reasonable efforts to collect all
payments required to be made pursuant to the terms of the Underlying Securities
or any related Credit Support Instruments in a manner consistent with the terms
of this Agreement, such Underlying Securities and any related Trust Asset
Instruments,
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including making demand on Underlying Securities Issuer or the Credit Support
Provider for payment pursuant to such Trust Asset Instrument. The Trustee shall
have no obligation to institute any Proceedings with respect to any default
under any Trust Asset Instrument except as provided in the Series Supplement.
Section 3.3. CERTIFICATE ACCOUNT. (a) For each Series of Certificates, the
Trustee shall establish and maintain one or more Eligible Accounts
(collectively, the "Certificate Account"), held in trust for the benefit of the
Certificateholders of such Series. The Trustee on behalf of such
Certificateholders shall possess all right, title and interest in all funds on
deposit from time to time in each Certificate Account and in all proceeds
thereof. With respect to each Series of Certificates, the Certificate Account
shall be under the sole dominion and control of the Trustee for the benefit of
the related Certificateholders. With respect to each Series of Certificates,
except as otherwise specified in the Series Supplement, the Trustee shall
deposit or cause to be deposited in the Certificate Account no later than the
Business Day on which amounts collected with respect to the Underlying
Securities are received, any Credit Support and all Liquidation Proceeds related
to such Series including:
(i) all payments on account of principal of such
Underlying Securities;
(ii) all payments on account of interest on such Underlying
Securities;
(iii) all payments on account of premium (if any) on such Underlying
Securities;
(iv) any payments in respect of any such Credit Support;
(v) any interest or investment income earned on funds deposited in
the related Accounts; and
(vi) any Purchase Price of such Underlying Securities.
Unless otherwise specified in the applicable Series Supplement, it is
understood and agreed that payments in the nature of prepayment or redemption
penalties, late payment charges or assumption fees which may be received by the
Trustee shall be deposited by the Trustee in the Certificate Account and shall
not be retained by the Trustee for its own account.
If, at any time, the Certificate Account for any Series ceases to be an
Eligible Account, the Trustee shall within 10 Business Days (or such longer
period, not to exceed 30 calendar days, as to which the Rating Agency Condition
is met) establish a new Certificate Account meeting the conditions specified
above and transfer any cash and any investments on deposit in the Certificate
Account to such new Certificate Account, and from the date such new Certificate
Account is established, it shall be the Certificate Account for such Series.
(b) If requested in writing by the Depositor or the Rating Agency, if
any, the Trustee shall give notice to the Depositor and the Rating Agency, if
any, of the location of each Eligible Account constituting the Certificate
Account and prior to any change thereof.
(c) The Trustee shall determine the appropriate application of
Available Funds with respect to any Distribution Date for which application is
to be made on any such Distribution Date in accordance with the terms of Section
4.1 and the related Series Supplement.
Section 3.4. INVESTMENT OF FUNDS IN THE ACCOUNTS. The Depositor, on behalf
of the Trust, may direct the Trustee in writing to direct any depository
institution maintaining the Certificate Account or the Reserve Account, if any,
for the applicable Series and any other segregated Eligible Account the contents
of which are held for the benefit of Certificateholders of such Series (each, an
"Account") to invest the funds therein in one or more Permitted Investments
bearing interest or sold at a discount, which shall be held to maturity unless
payable on demand and which funds shall not be reinvested upon the maturity or
demand for payment of such Permitted Investment. If the Depositor does not
provide any investment directions to the Trustee, funds held in any Account will
be invested in the Permitted Investments specified in clause (ii) of the
definition thereof. Investments of such funds shall be invested in Permitted
Investments that will mature so that such funds will be available for
distribution
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on the Distribution Date on which such amounts are to be applied as
distributions to Certificateholders. In the event amounts on deposit in an
Account are at any time invested in a Permitted Investment payable on demand,
the Trustee shall:
(x) consistent with any notice required to be given thereunder,
demand that payment thereon be made on the last day such Permitted
Investment may otherwise mature hereunder in an amount equal to the lesser
of (1) all amounts then payable thereunder and (2) the amount required to
be withdrawn on such date; and
(y) demand same day payment of all amounts due thereunder upon a
determination by the Trustee that such Permitted Investment would not
constitute a Permitted Investment in respect of funds thereafter on
deposit in any Account.
Section 3.5. MAINTENANCE OF CREDIT SUPPORT. If specified in the applicable
Series Supplement, on the applicable Closing Date, the Trustee or, if so
specified in the applicable Series Supplement, the Depositor, shall, to the
extent specified in the applicable Series Supplement, establish and maintain, or
enter into, as applicable, a Reserve Account either as a part of the related
Trust or outside it, for the benefit of a Credit Support Provider, as specified
in the applicable Series Supplement. To the extent specified in the applicable
Series Supplement, the Depositor will make or cause to be made any initial
deposit to the Certificate Account or any Reserve Account for the related Series
as of the Closing Date. Unless the Series Supplement for a given Series provides
otherwise, if a Reserve Account exists for such Series, collections with respect
to the Underlying Securities for such Series not distributed to the
Certificateholders of such Series shall be deposited in the Reserve Account.
Amounts on deposit in the Reserve Account and amounts available pursuant to
any Credit Support for such Series shall be applied by the Trustee to make
distributions of principal of and premium (if any) and interest on the
Certificates of such Series as required pursuant to Section 4.1 and the
applicable Series Supplement to the extent that funds are not otherwise
available for such purpose. If specified in such Series Supplement, immediately
after each Distribution Date, amounts on deposit in the Reserve Account for such
Series in excess of a specified amount shall be paid to the Person so specified
in such Series Supplement.
Section 3.6. IN-KIND DISTRIBUTION EVENTS. (a) If:
(i) default is made in the payment of any installment of interest on
any Underlying Security when the same becomes due and payable, and such
default continues unremedied beyond the period specified in the indenture
or other authorizing document for such Underlying Security (or, if no such
period is specified, three days);
(ii) default is made in the payment of the principal of or any
installment of the principal of any Underlying Security when the same
becomes due and payable, and such default continues unremedied for the
period specified in the indenture or other authorizing document for such
Underlying Security (or, if no such period is specified, three days);
(iii) there is an acceleration of the maturity of the Underlying
Securities following a default (other than that described in clauses (i)
and (ii) above) in the indenture or other authorizing document for such
Underlying Security and the Trustee receives actual notice of such
acceleration, notwithstanding any subsequent rescission or annulment of
such acceleration; or
(iv) there occurs any other event for which the Series Supplement
requires an In-Kind Distribution;
then, as soon as practicable, the Trustee shall institute an In-Kind
Distribution of the Underlying Securities in question to the Holders of
Outstanding Certificates in the manner described by the Series Supplement,
subject to any conditions contained in a Credit Support Instrument relating to
such Underlying Securities as further specified in the related Series
Supplement. In connection therewith, the Trustee shall use its best reasonable
efforts in accordance
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with such normal and customary procedures it shall deem necessary or advisable,
and shall have the power and authority, acting alone, to do any and all things
in connection therewith and the administration of the Trust as it may deem
necessary or advisable.
(b) To the extent necessary to avoid an In-Kind Distribution of
Underlying Securities in unauthorized denominations, the Trustee shall liquidate
in a commercially reasonable manner such Underlying Securities as are not
distributable in authorized denominations. After deduction of all reasonable
costs of such liquidation, the proceeds from such liquidation shall be
distributed to Certificateholders based on their respective rights to Underlying
Securities in unauthorized denominations.
(c) In the event that the Trustee receives money or other property in
respect of Underlying Securities after an In-Kind Distribution has occurred on
such Underlying Securities, the Trustee shall promptly give notice (as provided
in Section 9.5 hereof) to the Depository and shall distribute such moneys or
other property to the Holders of the Outstanding Certificates as allocable to
the Underlying Securities to which each such Holder received in the In-Kind
Distribution. Property received (other than cash) in such circumstance shall be
liquidated by the Trustee in a commercially reasonable manner and the proceeds
thereof, after deduction of all reasonable costs of such liquidation,
distributed in cash, only to the extent necessary to avoid distribution of
fractional interests in such property on the same basis as the In-Kind
Distribution.
(d) The Trustee may request, and rely upon, instructions from the
Depositor in liquidating the Underlying Securities pursuant to paragraph (b) or
(c) above.
Section 3.7. RETAINED INTEREST. The Retained Interest, if any, in any
Underlying Security shall initially be held by the Person so specified in the
related Series Supplement as and to the extent specified in Schedule A thereof.
With respect to each Underlying Security, the Retained Interest shall be
deducted by the Trustee, at the written direction of the Depositor from
applicable collections in respect of such Underlying Security. Unless otherwise
provided in the applicable Series Supplement, collections in respect of Retained
Interest shall not be deposited in the Certificate Account for the applicable
Series and shall not constitute a part of the Trust for such Series, but shall
instead be distributed to the holder of such Retained Interest, provided that
the Series Supplement for any Series with respect to which there is a Retained
Interest may provide that, notwithstanding the terms contained herein,
commingled amounts received in respect of assets inclusive of Underlying
Securities and Retained Interest may initially be deposited in a separate and
discrete Eligible Account established by the Trustee at the written direction of
the Depositor and such Series Supplement may provide for additional terms
relating thereto. Unless otherwise provided in the applicable Series Supplement,
after deduction of all applicable fees as provided for in this Agreement, on
each Distribution Date the Trustee shall allocate on a pari passu basis any
partial recovery on a Underlying Security between (a) the Retained Interest, if
any, and (b) distributions to Certificateholders of the applicable Series.
Section 3.8. [Intentionally omitted]
Section 3.9. ACCESS TO CERTAIN DOCUMENTATION. The Trustee shall provide to
any Federal, State or local regulatory authority that may assert authority over
any Certificateholder access to the documentation regarding the Underlying
Securities required by applicable laws and regulations. Such access shall be
afforded without charge, but only upon reasonable request and during normal
business hours at the offices of the Trustee designated by each of them. In
addition, access to the documentation regarding the Underlying Securities
related to a given Series (or Class within such Series) will be provided to any
Certificateholder of such Series (or Class) upon reasonable written request
during normal business hours at the offices of the Trustee designated by each of
them at the expense of the Certificateholder requesting such access.
Section 3.10. DEPOSITOR TO FURNISH NAMES AND ADDRESSES OF HOLDERS TO
TRUSTEE. The Depositor shall furnish or cause to be furnished to the Trustee not
more than five days before each Distribution Date, and at such other times as
the Trustee may request in writing, a list, in such form as the Trustee may
reasonably require, to the extent such information is in the possession or
control of the Depositor or any of its paying agents, of the Holders of
Certificates as of the close of business on the applicable record date of the
Underlying Securities;
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provided, however, that so long as the Trustee maintains the Certificate
Register, no such list shall be required to be furnished.
Section 3.11. PRESERVATION OF INFORMATION, COMMUNICATIONS TO HOLDERS.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Holders of Certificates contained in
the most recent list furnished to the Trustee as provided in Section 3.10 and
the names and addresses of Holders of Certificates received by the Trustee in
its capacity as Certificate registrar. The Trustee may destroy any list
furnished to it as provided in such Section 3.10 upon receipt of a new list so
furnished.
(b) Holders shall have the right to communicate pursuant to TIA
Section 312(b) with other Holders with respect to their rights under this
Agreement or under the Certificates.
(c) Irrespective of whether the TIA shall apply to this Agreement,
the Depositor, the Trustee, the Paying Agent and the Certificate Registrar shall
have the protections provided pursuant to TIA Section 312(c).
Section 3.12. REPORTS BY TRUSTEE. If required by TIA Section 313(a), within
60 days after [May 15] of each year, the Trustee shall mail to (i) each Holder
as required by TIA Section 313(c) and (ii) the Depositor, a brief report dated
as of such date that complies with TIA Section 313(a). The Trustee also shall
comply with TIA Section 313(b). A copy of any report delivered pursuant to this
Section 3.12 shall, at the time of its mailing to Holders and the Depositor, be
filed by the Trustee with the Commission and each stock exchange, if any, on
which the Certificates are listed. The Depositor shall notify the Trustee if and
when the Certificates are listed on any stock exchange.
ARTICLE IV
Distributions and Reports to Certificateholders
Section 4.1. DISTRIBUTIONS. On each Distribution Date for a given Series of
Certificates, the Trustee shall apply Available Funds in the Certificate Account
for such Series in the manner and priority set forth in the Series Supplement
for such Series. Notwithstanding any other provisions in this Agreement, the
right of the Holder of any Certificate to receive any such distributions in the
manner and priority set forth in the Series Supplement for such Series and to
institute suit for the enforcement of any such payment on or after the date such
payment is payable, shall not be impaired without the consent of such Holder.
Section 4.2. REPORTS TO CERTIFICATEHOLDERS. Unless otherwise specified in
the applicable Series Supplement, on the next Business Day following each such
Distribution Date the Trustee, as specified in such Series Supplement, shall
forward or cause to be forwarded to the Depositor, each Certificateholder of
such Series and such other Persons as may be specified in such Series
Supplement, a statement setting forth:
(i) the amount of the distribution on such Distribution Date to
Certificateholders of each Class of such Series allocable to principal,
and interest, if applicable, on the Certificates of each such Class; and
the amount of aggregate unpaid interest accrued or accreted, if
applicable, as of such Distribution Date;
(ii) [any information reasonably requested by a Certificateholder to
enable such Certificateholders to prepare their tax returns, provided that
such information is reasonably attainable in the requested form, and the
amount of compensation received by the Trustee for the period;]
(iii) the aggregate stated principal amount or, if applicable,
notional amount of the Underlying Securities related to such Series and
the current interest rate or rates thereon at the close of business on
such Distribution Date;
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(iv) the aggregate Certificate Principal Balance (or Notional Amount,
if applicable) of each Class of such Series at the close of business on
such Distribution Date, separately identifying any reduction in such
aggregate Certificate Principal Balance or aggregate Notional Amount due
to the allocation of any Realized Losses or otherwise; and
(v) as to any Series (or any Class within such Series) for which
Credit Support has been obtained, the amount or notional amount of
coverage of each element of Credit Support (and rating, if any, thereof)
included therein as of the close of business on such Distribution Date.
In the case of information furnished pursuant to subclauses (i) and
(iii) above, the amounts shall be expressed as a Dollar amount (or the
equivalent thereof in any other Specified Currency) per minimum denomination of
Certificates or for such other specified portion thereof. Within a reasonable
period of time after the end of each calendar year, the Trustee shall furnish to
each person who at any time during each such calendar year was a
Certificateholder a statement containing the information set forth in subclauses
(i) and (iii) above, aggregated for such calendar year or the applicable portion
thereof during which such person was a Certificateholder. Such obligation of the
Trustee shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Trustee pursuant to any
requirements of the Code as are from time to time in effect.
Section 4.3. COMPLIANCE WITH WITHHOLDING Requirements. If any withholding
tax is imposed on the payment (or allocations of income) to any
Certificateholder, such tax shall reduce the amount otherwise distributable to
such Holder. The Trustee is hereby authorized and directed to retain from
amounts otherwise distributable to any Holder sufficient funds for the payment
of any tax that is legally owed by the Trust (but such authorization shall not
prevent the Trustee from contesting any such tax in appropriate proceedings and
withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings), or that the Trustee may otherwise determine it is obligated
to withhold under applicable law or regulation. The amount of any withholding
tax imposed with respect to any Holder shall be treated as cash distributed to
such Holder at the time it is withheld by the Trustee and remitted to the
appropriate taxing authority. If there is a possibility that withholding tax is
payable with respect to a distribution, the Trustee may in its sole discretion
withhold such amounts in accordance with this Section 4.3. If any Holder wishes
to apply for a refund of any such withholding tax, the Trustee shall reasonably
cooperate with such Holder in making such claim so long as such Holder agrees to
reimburse the Trustee for any out-of-pocket expenses incurred. The Trustee shall
use reasonable efforts to give notice to each Holder of any such withholding
requirement at least 10 days prior to the date of the payment from which amounts
are required to be withheld.
Section 4.4. NO CHARGE FOR REPORTS TO CERTIFICATEHOLDERS. The Trustee shall
deliver all notices or reports required to be delivered to or by the Trustee or
the Depositor to the Certificateholders without charge to such
Certificateholders.
ARTICLE V
The Certificates
Section 5.1. THE CERTIFICATES. The Certificates of any Series (or Class
within such Series) will be issued in fully-registered form as Certificates and
shall be substantially in the form of the exhibits with respect thereto attached
to the applicable Series Supplement. The aggregate Certificate Principal Balance
or Notional Amount of Certificates that may be authenticated and delivered under
this Agreement is unlimited.
The Certificates may be issued in one or more Series, each of which
Series may be issued in one or more Classes, with such further particular
designations added or incorporated in such title for the Certificates of any
particular Series or Class within such Series as the Board of Directors (or a
Person authorized by a Board Resolution) may determine. Each Certificate shall
bear upon its face the designation so selected for the Series and Class to which
it belongs. All Certificates of the same Series and
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Class shall be identical in all respects except for the denominations thereof.
All Certificates of all Classes within any one Series at any time Outstanding
shall be identical except for differences among the Certificates of the
different Classes within such Series specified in the applicable Series
Supplement. Except as otherwise provided in a Series Supplement, all
Certificates of a particular Series (and all Classes within such Series) issued
under this Agreement shall be in all respects equally and ratably entitled to
the benefits hereof without preference, priority or distinction on account of
the actual time or times of authentication and delivery, all in accordance with
the terms and provisions of this Agreement.
Each Series (and all Classes within such Series) of Certificates shall be
created by a Series Supplement authorized by the Board of Directors (or a Person
authorized by a Board Resolution) and establishing the terms and provisions of
such Series. The several Series may differ as between Series and any Class may
vary as between the other Classes within any given Series in respect of any of
the following matters:
(1) designation of such Series and Class;
(2) the dates on which or periods during which the Certificates
of such Series and Class may be issued;
(3) the number of Classes, the maximum Certificate Principal
Balance or Notional Amount of Certificates of each Class that may be
issued and any priorities or subordination among Classes of a Series with
respect to distributions from the Trust;
(4) if applicable, for each Class of Certificates with a
specified interest rate, such rate or the method for calculating such
rate;
(5) the terms of the Letter of Credit, if any, or of the Surety
Bond, if any, or of any other Credit Support for the benefit of the
Certificateholders of such Series or Class or group of Classes;
(6) the places, if any, in addition to or instead of the
Corporate Trust Office of the Trustee (in the case of Certificates), where
the principal of (and premium, if any) and interest on Certificates of
such Series and Class shall be distributable;
(7) the Collection Periods, the Distribution
Dates and the Scheduled Final Distribution Dates for such
Series and Class;
(8) the types of Underlying Securities that will be included in
the Trust for such Series and the manner and priorities of allocating
distributions with respect to collections of principal (and premium, if
any) and interest payments allocable to such Underlying Securities among
Holders of Certificates of different Classes (including whether the
Certificates of any such Class are to be entitled to receive principal
distributions with disproportionate, nominal or no interest distributions,
or interest distributions with disproportionate, nominal or no principal
distributions, and, in each case, the applicable terms thereof);
(9) the amount, if any, to be deposited on the Closing Date in
the Certificate Account for such Series;
(10) the manner in which the Reserve Account, if any, is to be
funded, the amount, if any, to be deposited therein on the Closing Date
and the Requisite Reserve Amount, if any, for such Series or Class;
(11) whether the Certificates of such Series or Class are to be
issued as discount certificates and the amount of discount with which such
Certificates may be issued;
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(12) whether the Certificates of such Series or Class are to be issued in
whole or in part in the form of one or more Global Securities and, in such case,
the Depositary for such Global Security or Securities and the terms and
conditions, if any, upon which interests in such Global Security or Securities
may be exchanged in whole or in part for the individual Certificates represented
thereby;
(13) if other than Dollars, the Currency in which Certificates of such
Series or Class shall be denominated or in which distributions of the principal
of (and premium, if any) and interest on such Certificates may be made and any
other terms concerning such payment;
(14) if the principal of (and premium, if any) or interest on Certificates
of such Series or Class are to be distributable, at the election of the
Depositor or a Holder thereof, in a Currency other than that in which such
Certificates are denominated or distributable without such election, the periods
within which and the terms and conditions upon which such election may be made
and the time and the manner of determining the exchange rate between the
Currency in which such Certificates are denominated or distributable without
such election and the Currency in which such Certificates are to be distributed
if such election is made;
(15) any additional representations, warranties or covenants provided for
with respect to Certificates of such Series;
(16) provisions with respect to the terms for which the definitions set
forth in Article I permit or require further specification in the related Series
Supplement, including:
(a) "Available Funds";
(b) "Basic Documents";
(c) "Calculation Agent";
(d) "Closing Date";
(e) "Collection Period";
(f) "Corporate Trust Office";
(g) "Credit Support";
(h) "Credit Support Instrument";
(i) "Credit Support Provider";
(j) "Cut-off Date";
(k) "Depositary";
(l) "Depository Agreement";
(m) "Distribution Date";
(n) "Global Securities";
(o) "Grant";
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(p) "Letter of Credit";
(q) "Limited Guarantor";
(r) "Limited Guaranty";
(s) "Notional Amount";
(t) "Permitted Investments";
(u) "Place of Distribution";
(v) "Purchase Price";
(w) "Rating Agency";
(x) "Rating Agency Condition";
(y) "Record Date";
(z) "Required Percentage";
(aa) "Requisite Reserve Amount";
(ab) "Retained Interest";
(ac) "Scheduled Final Distribution Date";
(ad) "Specified Currency";
(ae) "Surety Bond";
(af) "Trust";
(ag) "Trustee";
(ah) "Trust Termination Event";
(ai) "Underlying Securities";
(aj) "Underlying Securities Issuer";
(ak) "Underlying Securities Schedule";
(al) "Voting Rights".
(22) rights and remedies provided to any Credit Support Provider with
respect to all or a portion of the Trust for such Series or Class;
(23) any restrictions on the sale and transfer of the Certificates,
including restrictions arising out of the Securities Act, the Investment Company
Act, the Employee Retirement Income Security Act of 1974, as amended, or the
Code; and
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(24) any other provisions expressing or referring to the terms and
conditions upon which the Certificates of such Series or Class are to be issued
under this Agreement that do not prevent such Certificates from receiving the
Required Rating.
A different Trustee may be appointed by the Depositor for each Series of
Certificates prior to the issuance of such Series provided that the Rating
Agency Condition is met. If the initial Trustee is to be other than The Chase
Manhattan Bank, then such Series Supplement shall provide for the appointment of
such Trustee, as applicable, of such Series and shall add or change any of the
provisions of this Agreement as shall be necessary to provide for or facilitate
the administration of the trusts hereunder and of the Underlying Securities; it
being understood that nothing contained herein or in such Series Supplement
shall constitute the Trustees for different Series as co-trustees for the same
Series and that each Trustee shall be a trustee of a trust or trusts separate
and apart from any trust or trusts hereunder of any other Trustee. Upon final
appointment of any new Trustee, the Trustee shall provide a notice of such
appointment to the Rating Agency not later than 15 days following such
appointment.
Section 5.2. EXECUTION, AUTHENTICATION AND DELIVERY. (a) The Certificates
shall be executed on behalf of the Trust by the Trustee by its authorized
officer pursuant to Depositor Order. The signature may be manual or facsimile.
Certificates bearing the manual or facsimile signature of individuals who were
at any time the authorized officer of the Trustee shall be binding,
notwithstanding that such individuals or any of them have ceased to be an
authorized officer prior to the authentication and delivery of such Certificates
or did not hold such offices at the date of such Certificates.
(b) Each Certificate shall be dated as of the later of the date
specified in the related Series Supplement and the date of its authentication.
(c) No Certificate shall be entitled to any benefit under this
Agreement or be valid or obligatory for any purpose, unless there appears on
such Certificate a certificate of authentication substantially in one of the
forms provided for herein executed by the Trustee by the manual signature of one
of its authorized officers, and such certificate upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder and is entitled to the benefits of this
Agreement.
Section 5.3. TEMPORARY CERTIFICATES. Pending the preparation of Definitive
Certificates of any Series (or Class within such Series), the Trustee may
execute, authenticate and deliver upon receipt of a Depositor Order, temporary
Certificates which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially of the tenor
of the Definitive Certificates in lieu of which they are issued, in registered
form and with such appropriate insertions, omissions, substitutions and other
variations as may be authorized by such Depositor Order. Any such temporary
Certificate may be in global form, representing all or a portion of the
Outstanding Certificates of such Series or Class. Every such temporary
Certificate shall be executed, authenticated and delivered by the Trustee upon
the same conditions and in substantially the same manner, and with the same
effect, as the Definitive Certificate or Definitive Certificates in lieu of
which it is issued.
If temporary Certificates of any Series (or Class within such Series) are
issued, the Depositor will cause Definitive Certificates of such Series or Class
to be prepared without unreasonable delay and (a) after the preparation of
Definitive Certificates of such Series or Class, the temporary Certificates of
such Series or Class shall be exchangeable for Definitive Certificates of such
Series or Class upon surrender of the temporary Certificates of such Series or
Class at the office of the Trustee in a Place of Distribution for such Series or
Class, without charge to the Holder, except as provided in Section 5.4 in
connection with a transfer and (b) upon surrender for cancellation of any one or
more temporary Certificates of any Series or Class within such Series the
Trustee shall execute, authenticate and deliver in exchange therefor Definitive
Certificates with a like Certificate Principal Balance or Notional Amount, as
applicable, of the same Series (or Class within such Series) of authorized
denominations and of like tenor. Until so exchanged, temporary Certificates of
any Series (or Class within such Series) shall in all respects be entitled to
the same benefits under this Agreement as Definitive Certificates of such Series
or Class, except as otherwise specified in the applicable Series Supplement with
respect to the payment of interest on Global Securities in temporary form.
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Upon any exchange of a portion of a temporary Global Security for a
definitive Global Security or for the individual Definitive Certificates
represented thereby pursuant to this Section 5.3 or Section 5.4, the temporary
Global Security shall be endorsed by the Trustee to reflect the reduction of the
aggregate Certificate Principal Balance or Notional Amount, as applicable,
evidenced thereby, whereupon the aggregate Certificate Principal Balance or
Notional Amount, as applicable, of such temporary Global Security shall be
reduced for all purposes by the amount so exchanged and endorsed.
Section 5.4. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE. The
Trustee shall cause to be kept a register for each Series of Certificates (the
registers maintained in such office and in any other office or agency of the
Trustee in a Place of Distribution being herein sometimes collectively referred
to as the "Certificate Register") in which the Trustee, as registrar and
transfer agent (the "Certificate Registrar"), shall provide for the registration
of Certificates and the registration of transfers and exchanges of Certificates.
The Trustee is hereby initially appointed Certificate Registrar for the purpose
of registering Certificates and transfers and exchanges of Certificates as
herein provided; provided, however, that the Trustee may appoint one or more
co-Certificate Registrars. Upon any resignation of any Certificate Registrar,
the Depositor shall promptly appoint a successor or, in the absence of such
appointment, assume the duties of Certificate Registrar.
If a Person other than the Trustee is appointed by the Depositor as
Certificate Registrar, the Depositor will give the Trustee prompt written notice
of the appointment of a Certificate Registrar and of the location, and any
change in the location, of the Certificate Register, and the Trustee shall have
the right to rely upon a certificate executed on behalf of the Certificate
Registrar by an Executive Officer thereof as to the names and addresses of the
Holders of the Certificates and the principal amounts and numbers of such
Certificates.
Upon surrender for registration of transfer of any Certificate of any
Series (or Class within such Series) at the office or agency of the Trustee, if
the Depositor has notified the Trustee that the requirements of Section 8-
401(1) of the UCC are met to the Depositor's satisfaction and upon satisfaction
of any transfer restrictions set forth in the related Series Supplement, the
Trustee shall execute, authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Certificates of any authorized
denominations, of a like Series, Class and aggregate Certificate Principal
Balance or Notional Amount, as applicable.
Notwithstanding any other provision of this Section, unless and until it is
exchanged in whole or in part for the individual Certificates represented
thereby, a Global Security representing all or a portion of the Certificates of
a Series (or Class within such Series) may not be transferred except as a whole
by the Depositary for such Series or Class 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 Depositary
for such Series or Class or a nominee of such successor Depositary.
At the option of the Holder, Certificates of any Series (or Class within
such Series) (other than a Global Security, except as set forth below) may be
exchanged for other Certificates of the same Series or Class of any authorized
denomination or denominations of like tenor and aggregate Certificate Principal
Balance or Notional Amount, as applicable, upon surrender of the Certificates to
be exchanged at the office or agency of the Trustee maintained for such purpose.
Whenever any Certificates are so surrendered for exchange, the Trustee
shall execute, authenticate and deliver the Certificates that the Holder making
the exchange is entitled to receive.
If at any time the Depositary for the Certificates of a Series (or Class
within such Series) notifies the Depositor that it is unwilling or unable to
continue as Depositary for the Certificates of such Series or Class or if at any
time the Depositary for the Certificates of such Series or Class shall no longer
be eligible under Section 5.9(b), the Depositor shall appoint a successor
Depositary with respect to the Certificates of such Series or Class. If a
successor Depositary for the Certificates of such Series or Class is not
appointed by the Depositor within 90 days after the Depositor receives such
notice or becomes aware of such ineligibility, the Depositor's election pursuant
to Section 5.1 shall no longer be effective with respect to the Certificates of
such Series or Class and the Depositor will execute, and the Trustee, upon
receipt of a Depositor Order for the authentication and delivery of individual
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Certificates of such Series or Class, will authenticate and deliver individual
Certificates of such Series or Class in an aggregate Certificate Principal
Balance or Notional Amount, as applicable, equal to the aggregate Certificate
Principal Balance or Notional Amount, as applicable, of the Global Security or
Securities representing Certificates of such Series or Class in exchange for
such Global Security or Securities.
The Depositor may at any time and in its sole discretion determine that
individual Certificates of any Series (or Class within such Series) issued in
the form of one or more Securities shall no longer be represented by such Global
Security or Securities. In such event, upon receipt of a Depositor Order for the
authentication and delivery of individual Certificates of such Series or Class,
the Trustee shall execute, authenticate and deliver individual Certificates of
such Series or Class in an aggregate Certificate Principal Balance or Notional
Amount, as applicable, equal to the aggregate Certificate Principal Balance or
Notional Amount, as applicable, of the Global Security or Securities
representing Certificates of such Series or Class in exchange for such Global
Security or Securities.
If specified by the Depositor pursuant to Section 5.1 with respect to a
Series (or Class within such Series) of Certificates, the Depositary for such
Series may surrender a Global Security for such Series or Class in exchange in
whole or in part for individual Certificates of such Series or Class on such
terms as are acceptable to the Depositor and such Depositary. Thereupon, upon
receipt of a Depositor Order, the Trustee shall execute, authenticate and
deliver, without service charge,
(i) to each Person specified by such Depositary a new individual
Certificate or Certificates of the same Series or Class, of any authorized
denomination as requested by such Person in an aggregate Certificate
Principal Balance or Notional Amount, as applicable, equal to and in
exchange for such Person's beneficial interest in the Global Security; and
(ii) to such Depositary a new Global Security in a denomination equal
to the difference, if any, between the aggregate Certificate Principal
Balance or Notional Amount, as applicable, of the surrendered Global
Security and the aggregate Certificate Principal Balance or Notional
Amount, as applicable, of individual Certificates delivered to Holders
thereof.
In any exchange provided for in any of the preceding three paragraphs, upon
receipt of a Depositor Order, the Trustee will execute, authenticate and deliver
individual Certificates in registered form in authorized denominations.
Upon the exchange of a Global Security for individual Certificates, such
Global Security shall be canceled by the Trustee. Individual Certificates issued
in exchange for a Global Security pursuant to this Section 5.4 shall be
registered in such names and in such authorized denominations as the Depositary
for such Global Security, pursuant to instructions from its Participants, any
indirect participants or otherwise, shall instruct the Trustee in writing. The
Trustee shall deliver such Certificates to the Persons in whose names such
Certificates are so registered.
All Certificates issued upon any registration of transfer or exchange of
Certificates shall constitute complete and indefeasible evidence of ownership in
the Trust related to such Certificates and be entitled to the same benefits
under this Agreement as the Certificates surrendered upon such registration of
transfer or exchange.
Every Certificate presented or surrendered for registration of transfer or
exchange shall (if so required by the Trustee or the Certificate Registrar) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar, duly executed, by the
Holder thereof or his attorney duly authorized in writing, with such signature
guaranteed by a brokerage firm or financial institution that is a member of a
Securities Approved Medallion Program such as Securities Transfer Agents
Medallion Program (STAMP), Stock Exchange Medallion Program (SEMP) or New York
Stock Exchange Inc. Medallion Signature Program (MSP).
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No service charge shall be made to a Holder for any registration of
transfer or exchange of Certificates, but the Depositor may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Certificates,
other than exchanges pursuant to Section 5.3 not involving any transfer.
Section 5.5. MUTILATED, DESTROYED, LOST AND STOLEN CERTIFICATES. If (i) any
mutilated Certificate is surrendered to the Trustee at its Corporate Trust
Office (in the case of Certificates) or (ii) the Trustee receives evidence to
its satisfaction of the destruction, loss or theft of any Certificate, and there
is delivered to the Trustee such security or indemnity as it may require to hold
it and any Paying Agent harmless, and the Trustee has not received notice that
such Certificate has been acquired by a BONA FIDE purchaser, then the Trustee
shall execute, authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate a new Certificate of the same
Series and Class of like tenor, form, terms and principal amount, bearing a
number not contemporaneously Outstanding.
Upon the issuance of any new Certificate under this Section, the Trustee
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in respect thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Certificate of any Series or Class issued pursuant to this
Section shall constitute complete and indefeasible evidence of ownership in the
Trust related to such Series, whether or not the destroyed, lost or stolen
Certificate shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Agreement equally and proportionately with any and all
other Certificates of that Series or Class duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates.
Section 5.6. DISTRIBUTIONS ON CERTIFICATES; RIGHTS PRESERVED. (a) All
Interest Collections on any Distribution Date shall be distributed in the manner
prescribed in the applicable Series Supplement to the Person in whose name such
Certificate (or one or more Predecessor Certificates) is registered at the close
of business on the related Record Date notwithstanding the cancellation of such
Certificate upon any transfer or exchange subsequent to such related Record
Date. Distributions on Certificates, other than a final distribution, shall be
made at the Corporate Trust Office (except as otherwise specified in the Series
Supplement pursuant to Section 5.1) or, at the option of the Trustee, by check
mailed to the address of the Person entitled thereto as such address shall
appear in the Certificate Register or, if provided pursuant to Section 5.1 and
in accordance with arrangements satisfactory to the Trustee, at the option of
the Holder by wire transfer to an account designated by the Holder.
(b) Subject to the foregoing provisions of this Section 5.6, each
Certificate delivered under this Agreement upon transfer of or in exchange for
or in lieu of any other Certificate shall carry the rights to interest accrued
and undistributed, and to accrue, that were carried by such other Certificate.
(c) All computations of interest due with respect to any Certificate
of any Series or Class within such Series shall be made as specified in the
Series Supplement applicable to that particular Series or Class of Certificates.
(d) With respect to any computations or calculations to be made under
this Agreement, the applicable Series Supplement and the Certificates, except as
otherwise provided, (i) all percentages resulting from any calculation of
accrued interest 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
(ii) all currency amounts will be rounded to the nearest one-hundredth of a unit
(with .005 of a unit being rounded upward).
(e) Notwithstanding any other provisions in this Agreement, the right
of the Holder of any Certificate to receive any of the payments described above
in this Section 5.6, and to institute suit for the
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enforcement of any such payment on or after the date such payment is payable,
shall not be impaired without the consent of such Holder.
Section 5.7. PERSONS DEEMED OWNERS. The Depositor and the Trustee and any
agent of the Depositor or the Trustee may treat the Person in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving distributions of principal of (and premium, if any) and (subject to
Section 5.6) interest, if any, on such Certificate and for all other purposes
whatsoever, whether or not such Certificate be overdue, and neither the
Depositor, the Trustee, nor any agent of the Depositor or the Trustee shall be
affected by notice to the contrary. All distributions made to any Holder, or
upon his order, shall be valid, and, to the extent of the sum or sums paid,
effectual to satisfy and discharge the liability for moneys distributable upon
such Certificate.
None of the Depositor, the Trustee, or any of their agents will have any
responsibility or liability for any aspect of the records relating to or
distributions made on account of beneficial ownership interests in a Global
Security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
In connection with any notice or other communication to be provided to
Holders pursuant to this Agreement by the Trustee with respect to any consent or
other action to be taken by Holders, the Trustee shall establish a record date
for such consent or other action and in the case of Global Certificates, give
the Depository notice of such record date not less than 15 calendar days in
advance of such record date to the extent possible. Such record date shall be
the later of thirty (30) days prior to the first solicitation of such consent or
other action or the date of the most recent list of Holders furnished to the
Trustee pursuant to Section 3.11 hereof.
Section 5.8. CANCELLATION. Unless otherwise specified pursuant to Section
5.1 for Certificates of any Series, all Certificates surrendered for payment,
redemption, transfer or exchange shall, if surrendered to any Person other than
the Trustee, be delivered to the Trustee and shall be promptly canceled by it.
No Certificates shall be authenticated in lieu of or in exchange for any
Certificates canceled as provided in this Section, except as expressly permitted
by this Agreement.
Section 5.9. GLOBAL SECURITIES. (a) If the Series Supplement pursuant to
Section 5.1 provides that a Series (or Class within such Series) of Certificates
shall be represented by one or more Global Securities, then the Trustee shall
execute, authenticate and deliver one or more Global Securities that (i) shall
represent the aggregate initial Certificate Principal Balance or Notional
Amount, as applicable, of the Certificates of such Series or Class to be
represented by such one or more Global Securities, (ii) shall be registered, in
the name of the Depositary for such Global Security or Securities or the nominee
of such Depositary, (iii) shall be delivered by the Trustee to such Depositary
or pursuant to such Depositary's instruction and (iv) shall bear a legend
substantially to the following effect: "Unless and until it is exchanged in
whole or in part for the individual Certificates represented hereby, this Global
Security may not be transferred except as a whole by the Depositary to a nominee
of the Depositary or by a nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary."
No Holder of a Certificate of such Series or Class will receive a
Definitive Certificate representing such Holder's interest in such Certificate
or Certificates, except as provided in Section 5.11. Unless and until
definitive, fully registered Certificates (the "Definitive Certificates") have
been issued to Holders of such Series or Class pursuant to Section 5.11:
(i) the provisions of this Section 5.9 shall be in
full force and effect;
(ii) the Certificate Registrar and the Trustee shall be entitled to
deal with the Depositary for all purposes of this Agreement (including the
distribution of principal of, and premium, if any, and interest on the
Certificates and the giving of instructions, notices or directions
hereunder) as the sole Holder of the Certificates of such Series or Class,
and shall have no obligation to the owners of beneficial interests in such
Series or Class (collectively, the "Certificate Owners");
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(iii) to the extent that the provisions of this Section 5.9 conflict
with any other provisions of this Agreement, the provisions of this
Section 5.9 shall control;
(iv) the rights of Certificate Owners of such Series or Class shall
be exercised only through the Depositary and shall be limited to those
established by law and agreements between such Certificate Owners and the
Depositary or its Participants; and
(v) whenever this Agreement requires or permits actions to be taken
based upon instructions or directions of Holders of Certificates of such
Series or Class evidencing a specified percentage of the aggregate Voting
Rights of such Series or Class, the Depositary shall be deemed to
represent such percentage only to the extent that it has received
instructions to such effect from Certificate Owners of such Series or
Class or Participants in such Depositary's system owning or representing,
respectively, such required percentage of the beneficial interest in the
Certificates of such Series or Class and has delivered such instructions
to the Trustee.
(b) Each Depositary designated pursuant to Section 5.1 for a Global
Security in registered form must, at the time of its designation and at all
times while it serves as such Depositary, be a clearing agency registered under
the Exchange Act and any other applicable statute or regulation.
Section 5.10. NOTICES TO DEPOSITARY. Whenever a notice or other
communication to the Holders of a Series or Class within such Series represented
by one or more Global Securities is required under this Agreement, unless and
until Definitive Certificates for such Series or Class shall have been issued to
such Certificate Owners pursuant to Section 5.11, the Trustee shall give all
such notices and communications specified herein to be given to Holders of the
Certificates of such Series to the Depositary, and shall have no obligation to
the Certificate Owners.
Section 5.11. DEFINITIVE CERTIFICATES. If in respect of a Series (or Class
within such Series) represented by one or more Global Securities (i) the
Depositor advises the Trustee in writing that the Depositary is no longer
willing or able to properly discharge its responsibilities with respect to the
Certificates of such Series or Class and the Depositor is unable to locate a
qualified successor or (ii) the Depositor at its option advises the Trustee in
writing that it elects to terminate the book-entry system for such Series or
Class through the Depositary, Certificate Owners representing beneficial
interests aggregating at least a majority (or such other Required
Percentage--Definitive Certificates that may be specified in a Series
Supplement) of the Voting Rights of the Certificates of such Series or Class
advise the Depositary in writing that the continuation of a book-entry system
for such Series or Class through the Depositary is no longer in the best
interests of the Certificate Owners of such Series or Class, then the Depositary
shall notify all Certificate Owners or Participants in the Depositary's system
with respect to such Series or Class and the Trustee of the occurrence of any
such event and of the availability of Definitive Certificates for such Series or
Class to Certificate Owners of such Series or Class requesting the same. Upon
surrender to the Trustee of the Global Securities of such Series or Class by the
Depositary, accompanied by registration instructions, the Trustee shall execute,
authenticate the Definitive Certificates of such Series or Class in accordance
with the instructions of the Depositary. None of the Depositor, the Certificate
Registrar or the Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of Definitive Certificates of such Series
or Class, the Trustee shall recognize the holders of the Definitive Certificates
of such Series or Class as Holders.
Section 5.12. CURRENCY OF DISTRIBUTIONS IN RESPECT OF
CERTIFICATES.
(a) Except as otherwise specified pursuant to Section 5.1 for
Certificates of any Series (or Class within such Series), distributions of the
principal of (and premium, if any) and interest on Certificates of such Series
or Class will be made in Dollars.
(b) For purposes of any provision of the Agreement where the Holders
of Outstanding Certificates may perform an act that requires that a specified
percentage of the aggregate Voting Rights of the Certificates perform such act
and for purposes of determining the amount of a distribution payable to
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Certificateholders, the principal of or notional amount of, as applicable, the
Outstanding Certificates denominated in a Foreign Currency will be the amount in
Dollars based upon exchange rates, determined as specified pursuant to Section
5.1 for Certificates of such Series, as of the date for determining whether the
Holders entitled to perform such act have performed it or as of the date of such
distribution, as the case may be.
(c) With respect to Certificates of any Series (or Class within such
Series), any decision or determination to be made regarding exchange rates shall
be made by an Exchange Rate Agent appointed by the Depositor; provided that such
Exchange Rate Agent shall accept such appointment in writing and the terms of
such appointment shall be acceptable to the Trustee and shall, in the opinion of
the Depositor at the time of such appointment, require such Exchange Rate Agent
to make such determination by a method consistent with the method provided in
the applicable Series Supplement for the making of such decision or
determination. All decisions and determinations of such Exchange Rate Agent
regarding exchange rates shall be in its sole discretion and shall, in the
absence of manifest error, be conclusive for all purposes and irrevocably
binding upon the Depositor, the Trustee and all Holders of the Certificates of
such Series or Class.
(d) If distributions in respect of a Certificate are required to be
made in a Specified Currency other than Dollars and such currency is unavailable
due to the imposition of exchange controls or other circumstance beyond the
control of the Trustee and the Depositor or is no longer used by the government
of the country issuing such Specified Currency or is no longer commonly used for
the settlement of transactions by public institutions of or within the
international banking community, then all distributions in respect of such
Certificate shall be made in Dollars until such Specified Currency is again so
used in the manner specified in the related Series Supplement.
Section 5.13. CONDITIONS OF AUTHENTICATION AND DELIVERY OF NEW SERIES.
Certificates of a new Series may be issued at any time and from time to time
after the execution and delivery of this Agreement. The Trustee shall execute,
authenticate and deliver such Certificates upon a Depositor Order and upon
delivery by the Depositor to the Trustee of the following:
(1) Board Resolution. A Board Resolution (or action by a Person
authorized by Board Resolution) authorizing the execution, authentication
and delivery of the Certificates and specifying the Series, the Classes
within such Series and their respective Scheduled Final Distribution
Dates, priorities as to distributions of principal, premium (if any) and
interest, aggregate initial Certificate Principal Balances and Notional
Amounts, if any, and Pass Through Rates of, if any, each Class of such
Series of Certificates to be authenticated and delivered and the method of
calculation thereof.
(2) Series Supplement. A Series Supplement consistent with the
applicable provisions of this Agreement, accompanied by a Board Resolution
(or action by a Person authorized by Board Resolution) authorizing such
Series Supplement (and, in the case of the first Series to be
authenticated and delivered hereunder, authorizing this Agreement).
(3) Certificates of the Depositor.
(a) An Officer's Certificate of the Depositor, dated as of the
Closing Date, to the effect that the Depositor is not in breach of this
Agreement and that the issuance of the Certificates applied for will not
result in any breach of any of the terms, conditions, or provisions of, or
constitute a default under, the Depositor's Certificate of Incorporation
or bylaws, or any indenture, mortgage, deed of transfer or other agreement
or instrument to which the Depositor is a party or by which it or its
property is bound or any order of any court or administrative agency
entered in any Proceeding to which the Depositor is a party or by which it
or its property may be bound or to which it or its property may be
subject.
(b) An Officer's Certificate of the Depositor, dated as of the
Closing Date, to the effect that attached thereto are true and correct
copies of letters signed by the Rating Agency (or other evidence
satisfactory to the Trustee) and confirming that the related Certificates
have received the Required Rating.
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(4) Requirements of Series Supplement. Such other funds, accounts,
documents, certificates, agreements, instruments or opinions as may be
required by the terms of the Series Supplement creating such Series.
If all the Certificates of a Series are not to be originally issued at the
same time, then the documents required to be delivered pursuant to this Section
5.13 must be delivered only once, prior to the authentication and delivery of
the first Certificate of such Series; provided, however, that any subsequent
Depositor Order to the Trustee to authenticate Certificates of such Series upon
original issuance shall constitute a representation and warranty by the
Depositor that, as of the date of such request, the statements made in the
Officer's Certificates delivered pursuant to this Section 5.13 shall be true and
correct as if made on such date.
Section 5.14. APPOINTMENT OF PAYING AGENT. The Trustee may appoint one or
more paying agents (each, a "Paying Agent") with respect to the Certificates of
any Series. The Trustee may remove the Paying Agent if the Trustee determines in
its sole discretion that the Paying Agent shall have failed to perform its
obligations under this Agreement in any material respect. The Paying Agent shall
initially be the Trustee and any co-paying agent chosen by the Depositor and
acceptable to the Trustee, including, if and so long as any Series or Class
within such Series is listed on the Luxembourg Stock Exchange and such exchange
so requires, a co-paying agent in Luxembourg or another European city. Any
Paying Agent shall be permitted to resign as Paying Agent upon 30 days' notice
to the Trustee. In the event that the Trustee shall no longer be the Paying
Agent, the Trustee shall appoint a successor or additional Paying Agent. The
Trustee shall cause each successor to act as Paying Agent to execute and deliver
to the Trustee an instrument in which such successor or additional Paying Agent
shall agree with the Trustee that (i) it will hold all sums, if any, held by it
for distribution to the Certificateholders in trust for the benefit of the
Certificateholders entitled thereto until such sums shall be distributed to such
Certificateholders and (ii) it will give the Trustee notice of any default by
any obligor on the applicable Series of Certificates or on the Underlying
Securities. The Paying Agent shall return all unclaimed funds to the Trustee and
upon removal shall also return all funds in its possession to the Trustee. The
provisions of Sections 7.1, 7.2, 7.3, 7.5 and 7.9 shall apply to the Trustee
also in its role as Paying Agent, for so long as the Trustee shall act as Paying
Agent. Any reference in this Agreement to the Paying Agent shall include any
co-paying agent unless the context requires otherwise. Notwithstanding anything
contained herein to the contrary, the appointment of a Paying Agent pursuant to
this Section 5.14 shall not release the Trustee from the duties, obligations,
responsibilities or liabilities arising under this Agreement other than with
respect to funds paid to such Paying Agent.
Section 5.15. AUTHENTICATING AGENT. (a) The Trustee may appoint one or more
Authenticating Agents (each, an "Authenticating Agent") with respect to the
Certificates of any Series which shall be authorized to act on behalf of the
Trustee in authenticating such Certificates in connection with the issuance,
delivery and registration of transfer or exchange of such Certificates. Whenever
reference is made in this Agreement to the authentication of Certificates by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication on behalf of the Trustee by an Authenticating
Agent and a certificate of authentication executed on behalf of the Trustee by
an Authenticating Agent. Each Authenticating Agent must be acceptable to the
Depositor. Notwithstanding anything contained herein to the contrary, the
appointment of an Authenticating Agent pursuant to this Section 5.15 shall not
release the Trustee from the duties, obligations, responsibilities or
liabilities arising under this Agreement.
(b) Any institution succeeding to the corporate agency business of
any Authenticating Agent shall continue to be an Authenticating Agent without
the execution or filing of any power or any further act on the part of the
Trustee or such Authenticating Agent. An Authenticating Agent may at any time
resign by giving notice of resignation to the Trustee and to the Depositor. The
Trustee may at any time terminate the agency of an Authenticating Agent by
giving notice of termination to such Authenticating Agent and to the Depositor.
Upon receiving such a notice of resignation or upon such a termination, or in
case at any time an Authenticating Agent shall cease to be acceptable to the
Trustee or the Depositor, the Trustee promptly may appoint a successor
Authenticating Agent. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and duties
of its predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless acceptable to the Depositor. The Trustee agrees to pay to each
Authenticating Agent from time to time reasonable compensation for
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its services under this Section. The provisions of Section 7.1, 7.2, 7.3, 7.5
and 7.9 shall be applicable to any Authenticating Agent.
(c) Pursuant to an appointment made under this Section, the
Certificates may have endorsed thereon, in lieu of the Trustee's certificate of
authentication, an alternate certificate of authentication in substantially the
following form:
This is one of the Certificates described in the Trust Agreement and the
related Series Supplement.
----------------------------
as Authenticating Agent
for the Trustee,
By__________________________
Authorized Officer
Section 5.16. OPTIONAL EXCHANGE. (a) In connection with any Series, the
Depositor may exchange any Certificates or all Certificates within a Class or a
Series for a newly created Class or Classes of Certificates evidencing interests
in the related Trust, having such terms as are provided in a Depositor Request;
provided that (i) in no case shall the aggregate distributions payable on such
newly created Class or Classes of Certificates exceed the aggregate
distributions payable on the Certificates exchanged by the Depositor for the
newly created Class of Certificates; (ii) in no case shall the issuance of such
newly created Certificates adversely affect the rights or interests of Holders
of Certificates not so exchanged; (iii) the Rating Agency Condition, if any, is
satisfied; (iv) such exchange would not, as evidenced by an opinion of Counsel,
(a) be inconsistent with the Trust's continued satisfaction of the applicable
requirements for exemption under Rule 3a-7 (or other applicable rule or
exemption) under the Investment Company Act and (b) cause the Trust to fail to
be characterized as a grantor trust under federal income tax purposes.
(b) Upon completion of any such exchange, new Certificates in a form
mutually agreed upon by the Depositor and the Trustee shall be executed,
authenticated and delivered in accordance with Sections 5.1, 5.2 and 5.3 MUTATIS
MUTANDIS.
ARTICLE VI
The Depositor
Section 6.1. PREPARATION AND FILING OF EXCHANGE ACT REPORTS; OBLIGATIONS OF
THE DEPOSITOR. (a) The Depositor shall:
(i) on behalf of the Trust, prepare, sign and file with the
Commission, within the time period set forth below, copies of the annual
reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may from time to
time by rules and regulations prescribe), if any, which the Depositor on
behalf of the Trust may be required to file with the Commission pursuant
to Section 13 or 15(d) of the Exchange Act (collectively, "Exchange Act
Reports") with respect to the Trust. The names of such Reports and the
dates on which they are required to be filed with the Commission are as
follows:
(A) Form 8-K, within the time requirement prescribed by the
Exchange Act if the filing of Form 8-K is necessary;
(B) Form 10-K, within the time requirement prescribed by the
Exchange Act; and
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(C) such other reports as may be required pursuant to Section 13
or 15(d) of the Exchange Act.
(ii) deliver to the Trustee within 15 days after the Depositor is
required to file the same with the Commission, such additional
information, documents and reports with respect to compliance by the
Depositor with the conditions and covenants of this Agreement, if any, as
may be required to be filed with the Commission from time to time by such
rules and regulations; and
(iii) deliver to the Trustee, which shall then transmit by mail to
all Holders as described in TIA Section 313(c), in the manner and to the
extent provided therein, such summaries of any information, documents and
reports required to be filed by the Depositor and received pursuant to
clauses (i) and (ii) of this Section 6.1(a), if any, as may be required by
rules and regulations prescribed from time to time by the Commission.
(b) The Depositor shall deliver to the Trustee, not less often than
annually, an Officer's Certificate signed by an Executive Officer who is the
principal executive officer, principal financial officer or principal accounting
officer of the Depositor, dated as of the date set forth in the Series
Supplement for such year, stating that:
(i) a review of the activities of the Depositor during such fiscal
year and of performance under this Agreement has been made under such
Executive Officer's supervision; and
(ii) to the best of such Executive Officer's knowledge, based on such
review, the Depositor has fulfilled all of its obligations under this
Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to
such Executive Officer and the nature and status thereof. A copy of such
certificate may be obtained by any Holder by a request in writing to the
Depositor addressed to the Corporate Trust Office of the Trustee.
(c) Upon any application or request by the Depositor to the Trustee
to take any action under the provisions of this Agreement, which action is
subject to the satisfaction of a condition precedent (including any covenants
compliance with which constitutes a condition precedent), the Depositor shall
furnish to the Trustee: (i) an Officer's Certificate stating that all conditions
precedent, if any, provided for in this Agreement relating to the proposed
action have been complied with, (ii) an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent, if any, have been
complied with and (iii) (if required by the TIA) an Independent Certificate from
a firm of certified public accountants meeting the applicable requirements of
the TIA, except that, in the case of any such application or request as to which
the furnishing of such documents is specifically required by any provision of
this Agreement, no additional certificate or opinion need be furnished. Every
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Agreement shall include:
(i) a statement that such signatory of such certificate or opinion
has read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(iii) a statement that, in the judgment of each such signatory, such
signatory has made such examination or investigations as is necessary to
enable such signatory to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
Section 6.2. MERGER OR CONSOLIDATION OF THE DEPOSITOR . (a) Subject to the
following paragraph, the Depositor will keep in full effect its existence,
rights and franchises as a corporation under the laws of the jurisdiction of its
incorporation and will obtain and preserve its qualification to do business as a
foreign corporation
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in each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the Certificates or
any of the Underlying Securities and to perform its respective duties under this
Agreement.
(b) The Depositor may consolidate or merge with or into any other
Person, provided that:
(i) the Person (if other than the Depositor) formed by or surviving
such consolidation or merger shall expressly assume, by an agreement
supplemental hereto executed and delivered to the Trustee, in form
satisfactory to the Trustee, the performance or observance of every
agreement and covenant of this Agreement on the part of the Depositor, as
applicable, to be performed or observed, all as provided herein and in the
applicable Series Supplement or Supplements; and
(ii) the Depositor shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such consolidation
or merger and such supplemental agreement comply with this Article VI and
that all conditions precedent herein provided for relating to such
transaction have been complied with.
Section 6.3. LIMITATION ON LIABILITY OF THE Depositor. (a) Unless otherwise
expressly specified in this Agreement or a Series Supplement, the Depositor
shall not be under any obligation to expend or risk its own funds or otherwise
incur financial liability in the performance of its duties hereunder or under a
Series Supplement or in the exercise of any of its rights or powers if
reasonable grounds exist for believing that the repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it.
(b) Neither the Depositor, nor any of the directors, officers,
employees or agents of the Depositor shall be under any liability to any Trust
or the Certificateholders of any Series for any action taken, or for refraining
from the taking of any action, in good faith pursuant to this Agreement, or for
errors in judgment; provided, however, that this provision shall not protect the
Depositor or any such person against any breach of warranties, representations
or covenants made herein, or against any specific liability imposed pursuant
hereto, or against any liability which would otherwise be imposed by reason of
willful misfeasance, bad faith or gross negligence in the performance of duties
or by reason of reckless disregard of obligations and duties hereunder.
The Depositor shall not be under any obligation to appear in, prosecute or
defend any legal action unless such action is related to its respective duties
under this Agreement and, in its opinion, does not involve it in any expense or
liability; provided, however, that the Depositor may in its discretion undertake
any such action which it may deem necessary or desirable with respect to this
Agreement and the rights and duties of the parties hereto and the interests of
the Certificateholders hereunder. The legal expenses and costs of such action
and any liability resulting (except any loss, liability or expense incurred by
reason of willful misfeasance, bad faith or gross negligence in the performance
of duties hereunder or by reason of reckless disregard of obligations and duties
hereunder) shall be allocated as specified in the applicable Series Supplement.
Section 6.4. DEPOSITOR MAY PURCHASE CERTIFICATES. The Depositor may at any
time purchase Certificates in the open market or otherwise. Certificates so
purchased by the Depositor may, at the discretion of the Depositor, be held or
resold. Certificates beneficially owned by the Depositor will be disregarded for
purposes of determining whether the required percentage of the aggregate Voting
Rights has given any request, demand, authorization, direction, notice, consent
or waiver hereunder.
Section 6.5. PREFERENTIAL COLLECTION OF CLAIMS AGAINST DEPOSITOR.
Irrespective of whether the TIA shall apply to this Agreement, the Trustee shall
comply with TIA Section 311(a), excluding any creditor relationship listed in
TIA Section 311(b). A trustee who has resigned or been removed shall be subject
to TIA Section 311(a) to the extent required by TIA Section 311(a).
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ARTICLE VII
Concerning the Trustee
Section 7.1. DUTIES OF TRUSTEE; NOTICE OF DEFAULTS. (a) The Trustee prior
to the occurrence of a default under a Trust Asset Instrument and after the
curing of all such defaults, undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement and the related Series
Supplement. During the period in which such a default is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Agreement, and
shall use the same degree of care and skill in their exercise as a prudent man
would exercise or use under the circumstances in the conduct of such person's
own affairs. Any permissive right of the Trustee enumerated in this Agreement
shall not be construed as a duty.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments (other
than the Underlying Securities) furnished to the Trustee which are specifically
required to be furnished pursuant to any provision of this Agreement, shall
examine them to determine whether they conform to the requirements of this
Agreement. If any such instrument is found not to conform to the requirements of
this Agreement, the Trustee shall take action as it deems appropriate to have
the instrument corrected, and if the instrument is not corrected to the
Trustee's satisfaction, the Trustee will provide notice thereof to the Depositor
and Certificateholders.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own misconduct; provided, however, that:
(i) prior to the occurrence of a default under a Trust Asset
Instrument, and after the curing of all such defaults, the duties and
obligations of the Trustee shall be determined solely by the express
provisions of this Agreement, the Trustee shall not be liable except for
the performance of such duties and obligations as are specifically set
forth in this Agreement, no implied covenants or obligations shall be read
into this Agreement against the Trustee and, in the absence of bad faith
on the part of the Trustee, the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Trustee or
upon any directions or information supplied by the Depositor that conform
to the requirements of this Agreement;
(ii) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(iii) the Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of Holders of the Required
Percentage--Direction of Trustee of the aggregate Voting Rights of a given
Series (or Class or group of Classes within such Series) relating to the
time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon
the Trustee, under this Agreement;
(iv) the Trustee shall not be required to expend or risk its own
funds or otherwise incur financial liability in the performance of any of
its duties hereunder or in the exercise of any of its rights or powers if
there is reasonable ground for believing that the repayment of such funds
or adequate indemnity against such risk or liability is not reasonably
assured to it, and none of the provisions contained in this Agreement
shall in any event require the Trustee to perform;
(v) except for actions expressly authorized by this Agreement, the
Trustee shall take no actions reasonably likely to impair the interests of
the Trust in any Underlying Security now existing or hereafter acquired or
to impair the value of any Underlying Security now existing or hereafter
acquired;
(vi) except as expressly provided in this Agreement, the Trustee
shall not engage in any activity other than those required or authorized
by the terms of this Agreement. In particular, after the Closing Date
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the Trustee shall not purchase or otherwise acquire any additional
securities, modify or permit the modification of any Trust Asset Instrument
or otherwise vary the investment of the Certificateholders or incur or
modify any obligations, (a) except as expressly required or permitted by
the terms of this Agreement or (b) unless the Trustee obtains, at the
expense of the Certificateholders, an Opinion of Counsel to the effect that
such acquisition, incurrence or modification will not cause the Trust
(unless otherwise indicated in a related Series Supplement) to fail to be
classified as a grantor trust for federal income tax purposes; and
(vii) in the event that the Paying Agent or the Certificate Registrar
shall fail to perform any obligation, duty or agreement in the manner or
on the day required to be performed by the Paying Agent or Certificate
Registrar, as the case may be, under this Agreement, the Trustee shall be
obligated promptly upon its knowledge thereof to perform such obligation,
duty or agreement in the manner so required and
(d) The Trustee shall have the legal power to exercise all of the
rights, powers and privileges of holders of the Underlying Securities in which
the Certificates evidence an interest. However, neither the Trustee (except as
specifically provided herein or in the TIA) nor the Depositor shall be under any
obligation whatsoever to appear in, prosecute or defend any action, suit or
other proceeding in respect of Underlying Securities or Certificates.
(e) Neither the Trustee nor the Depositor shall have any obligation
on or with respect to the Underlying Securities, except as provided in this
Article VII with respect to the Trustee; and their respective obligations with
respect to Certificates shall be solely as set forth in this Agreement.
(f) If there is an event of default (as defined in the indenture or
other document pursuant to which the Underlying Securities were issued) with
respect to any Underlying Security and written notice of such default has been
provided to the Trustee or if a payment default with respect to any Underlying
Security has occurred, the Trustee shall promptly give notice to the Depositor
or, if the Certificates are Definitive Certificates, directly to Holders thereof
as provided in Section 9.5 hereof (and in the manner and to the extent provided
in TIA Section 313(c)) within 90 days after such event of default occurs. Such
notice shall set forth (i) the identity of the Underlying Securities, (ii) the
date and nature of such default, (iii) the face amount of the obligation to
which such default relates, (iv) the identifying numbers of the Series and Class
of Certificates, or any combination, as the case may be, evidencing the
obligations (or portions thereof) described above in clause (iii), and (v) any
other information which the Trustee may deem appropriate. Except in the case of
a default in payment of principal or interest (including payments pursuant to a
redemption of any Certificate), the Trustee may withhold the notice to Holders
if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of the Holders.
(g) Holders of Certificates shall have no recourse against the
Depositor or the Trustee for payment defaults on the Underlying Securities.
Section 7.2. CERTAIN MATTERS AFFECTING THE TRUSTEE. (a) Except as otherwise
provided in Section 7.1:
(i) the Trustee may request and rely upon and shall be protected in
acting or refraining from acting upon any resolution, Officer's
Certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
bond or other paper or document reasonably believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(ii) the Trustee may consult with counsel and any written advice or
Opinion of Counsel shall be full and complete authorization and protection
in respect of any action taken or suffered or omitted by it hereunder in
good faith and in accordance with such written advice or Opinion of
Counsel;
(iii) the Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by this Agreement or to institute, conduct
or defend any litigation hereunder or in relation hereto, at the
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request, order or direction of any of the Certificateholders, pursuant to
the provisions of this Agreement, unless such Certificateholders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby;
provided, however, that nothing contained herein, shall relieve the Trustee
of the obligations upon the occurrence of a default under a Trust Asset
Instrument (that has not been cured or waived) to exercise such of the
rights and powers vested in it by this Agreement, and to use the same
degree of care and skill in their exercise as a prudent man would exercise
or use under the circumstances in the conduct of such person's own affairs;
(iv) the Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it
by this Agreement;
(v) prior to the occurrence of any default under a Trust Asset
Instrument and after the curing of such defaults, the Trustee shall not be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, appraisal, approval, bond or other paper or
document believed by it to be genuine, unless requested in writing to do
so by Holders of the Required Percentage--Direction of Trustee of the
aggregate Voting Rights of the affected Series (or Class or Classes within
any such Series), as specified by the applicable Series Supplement;
provided, however, that if the payment within a reasonable time to the
Trustee of the costs, expenses or liabilities likely to be incurred by it
in the making of such investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to it by the
terms of this Agreement, the Trustee may require reasonable indemnity
against such expense or liability as a condition to taking any such
action;
(vi) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian and shall not be liable for such persons' actions
if it has selected such persons with reasonable care; and
(vii) the Trustee shall not be personally liable for any loss
resulting from the investment of funds held in any Certificate Account or
Reserve Account at the direction of the Depositor pursuant to Section 3.4.
(b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by it without the
possession of any of the Certificates of any Series (or Class within such
Series), or the production thereof at the trial or other Proceeding relating
thereto, and any such suit, action or proceeding instituted by the Trustee shall
be brought in its name for the benefit of all the Holders of such Certificates,
subject to the provisions of this Agreement.
Section 7.3. TRUSTEE NOT LIABLE FOR RECITALS IN CERTIFICATES OR UNDERLYING
SECURITIES. The Trustee assumes no responsibility for the correctness of the
recitals contained herein and in the Certificates or in any document issued in
connection with the sale of the Certificates (other than the signature and
authentication on the Certificates). Except as set forth in Section 7.12, the
Trustee makes no representations or warranties as to the validity or sufficiency
of this Agreement or of the Certificates of any Series (other than the signature
and authentication on the Certificates) or of any Underlying Security or related
document. The Trustee shall not be accountable for the use or application by the
Depositor of any of the Certificates or of the proceeds of such Certificates.
Section 7.4. TRUSTEE MAY OWN CERTIFICATES. The Trustee in its individual
capacity or any other capacity may become the owner or pledgee of Certificates
with the same rights it would have if it were not Trustee.
Section 7.5. TRUSTEE'S FEES AND EXPENSES; INDEMNIFICATION; UNDERTAKING FOR
COSTS. (a) The Trustee shall 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] [payable from distributions on the Underlying Securities in
the amounts and in the manner specified in the applicable Series Supplement],
and shall be reimbursed for all reasonable expenses, disbursements and advances
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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 shall indemnify and hold harmless the Trustee and its
successors, assigns, officers, directors, employees, 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 this 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 this 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
Section 2.4 hereof. The Trustee shall notify the Depositor promptly of any claim
for which it may seek indemnity. Failure by the Trustee to so notify the
Depositor shall not relieve the Depositor of its obligations hereunder. The
Depositor need not reimburse any expense or indemnify against any loss,
liability or expense incurred by the Trustee through the Trustee's own willful
misconduct, negligence or bad faith. In the absence of actual knowledge of a
Responsible Officer that a tax filing signed by the Trustee on behalf of the
Trust pursuant to Section 7.14 is incorrect, the execution of such a filing
shall not be deemed to be willful misconduct, negligent or in bad faith. The
indemnities contained in this Section 7.5(a) shall survive the resignation or
termination of the Trustee or the termination of this Agreement.
(b) Failure by the Depositor to pay, reimburse or indemnify the
Trustee shall not entitle the Trustee to any payment, reimbursement or
indemnification from the Trust, nor shall such failure release the Trustee from
the duties it is required to perform under this Agreement. Any unpaid,
unreimbursed or unindemnified amounts shall not be borne by the Trust and shall
not constitute a claim against the Trust, but shall be borne by the Trustee in
its individual capacity.
(c) All parties to this Agreement agree, and each Holder of any
Certificate by such Holder's acceptance thereof shall be deemed to have agreed,
that any court may in its discretion require, in any Proceeding for the
enforcement of any right or remedy under this Agreement, or in any Proceeding
against the Trustee for any action taken, suffered or omitted by it as Trustee,
the filing by any party litigant in such Proceeding of an undertaking to pay the
costs of such Proceeding and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such Proceeding, having due regard to the merits and good faith of
the claims or defenses made by such party litigant; but the provisions of this
Section 7.5(c) shall not apply to:
(i) any Proceeding instituted by the Trustee;
(ii) any Proceeding instituted by any Holder, or group of Holders, in
each case holding in the aggregate Outstanding Certificates representing
more than 10% of the Voting Rights; or
(iii) any Proceeding instituted by any Holder for the enforcement of
the payment of principal or interest on or after the respective due dates
expressed in such Certificate and in this Agreement (or, in the case of
redemption, on or after the redemption date).
Section 7.6. ELIGIBILITY REQUIREMENTS FOR TRUSTEE. (a) The Trustee shall at
all times satisfy the requirements of TIA Section 310(a) and Section (a)(4)(i)
of Rule 3a-7. The Trustee hereunder shall at all times be a corporation which is
not an Affiliate of the Depositor (but may have normal banking relationships
with the Depositor or any obligor with respect to the Underlying Securities with
respect to such Series of Certificates and their respective Affiliates)
organized and doing business under the laws of any State or the United States,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $50,000,000 and subject to supervision or
examination by Federal or State authority. If such corporation or association
publishes reports of conditions at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section the combined capital and surplus of such corporation or
association shall be deemed to be its combined capital and surplus as set forth
in its most recent report of conditions so published. Such corporation or
association must be rated in one of the four highest rating categories by the
Rating Agency.
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(b) The Trustee shall comply with Section 310(b); provided, however,
that there shall be excluded from the operation of TIA Section 310(b)(1), any
Series Supplement under which other securities are outstanding evidencing
ownership interest in obligations of the Underlying Securities Issuer if the
requirements for such exclusion set forth in TIA Section 310(b)(1) are met.
Section 7.7. RESIGNATION OR REMOVAL OF THE TRUSTEE. (a) The Trustee
may, with respect to any Series of Certificates, at any time resign and be
discharged from any trust hereby created by giving written notice thereof to the
Depositor, the Rating Agency and to all Certificateholders of such Series. Upon
receiving such notice of resignation, the Depositor shall promptly appoint a
successor trustee for such Series by written instrument, in duplicate, which
instrument shall be delivered to the resigning Trustee and to the successor
trustee. A copy of such instrument shall be delivered to such Certificateholders
by the Depositor. If no such successor trustee shall have been so appointed and
have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee for such Series.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 7.6 and shall fail to resign after
written request therefor by the Depositor, or if at any time the Trustee shall
become incapable of acting, or shall be adjudged bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Depositor may remove the Trustee and appoint a successor trustee by written
instrument, in duplicate, which instrument shall be delivered to the Trustee so
removed and to the successor trustee. A copy of such instrument shall be
delivered to the Certificateholders by the Depositor.
(c) The Holders of Certificates of any Series representing the
Required Percentage--Removal of Trustee of the aggregate Voting Rights may at
any time remove the Trustee and appoint a successor trustee by written
instrument or instruments, in triplicate, signed by such Holders or their
attorneys-in-fact and duly authorized, one complete set of which instruments
shall be delivered to the Depositor, one complete set to the Trustee so removed
and one complete set to the successor trustee so appointed. A copy of such
instrument shall be delivered to the Certificateholders by the Depositor.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor trustee as
provided in Section 7.8.
Section 7.8. SUCCESSOR TRUSTEE. (a) Any successor trustee appointed as
provided in Section 7.7 shall execute, acknowledge and deliver to the Depositor
and to its predecessor trustee an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the predecessor trustee
shall become effective and such successor trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder (either with respect to a given Series
of Certificates or with respect to all Certificates issued under this
Agreement), with the like effect as if originally named as trustee herein. The
predecessor trustee shall deliver to the successor trustee all documents and
statements held by it hereunder, and the Depositor and the predecessor trustee
shall execute and deliver such instruments and do such other things as may
reasonably be required for more fully and certainly vesting and confirming in
the successor trustee all such rights, powers, duties and obligations. No
successor trustee shall accept appointment as provided in this Section unless at
the time of such acceptance such successor trustee shall be eligible under the
provisions of Section 7.6.
(b) Upon acceptance of appointment by a successor trustee as provided
in this Section, the Depositor shall transmit notice of the succession of such
trustee hereunder to all Holders of Certificates and to the Rating Agency in the
manner provided in Section 7.7.
Section 7.9. MERGER OR CONSOLIDATION OF TRUSTEE. Any corporation or
association into which the Trustee may be merged or converted or with which it
may be consolidated or any corporation or association resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation
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or association succeeding to the trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided such corporation or association
shall be eligible under the provisions of Section 7.6, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
Section 7.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE. (a)
Notwithstanding any other provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction in which any part of the
Trust for a given Series may at the time be located, the Depositor and the
Trustee acting jointly shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the Trustee to act as
co-trustee or co-trustees, jointly with the Trustee, or separate trustee or
separate trustees, of all or any part of such Trust, and to vest in such Person
or Persons, in such capacity, such title to such Trust, or any part thereof,
and, subject to the other provisions of this Section 7.10, such powers, duties,
obligations, rights and trusts as the Depositor and the Trustee may consider
necessary or desirable. If the Depositor shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, the
Trustee alone shall have the power to make such appointment. No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility as
a successor trustee under Section 7.6 hereunder and no notice to Holders of
Certificates of the appointment of co-trustee or co-trustees or separate trustee
or trustees shall be required under Section 7.8 hereof. Notwithstanding anything
contained herein to the contrary, the appointment of a co-trustee pursuant to
this Section 7.10 shall not release the Trustee from the duties, obligations,
responsibilities or liabilities arising under this Agreement.
(b) In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 7.10, all rights, powers, duties and
obligations conferred or imposed upon the Trustee shall be conferred or imposed
upon and exercised or performed by the Trustee and such separate trustee or
co-trustee jointly, except to the extent that under any law of any jurisdiction
in which any particular act or acts are to be performed by the Trustee, the
Trustee shall be incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties and obligations (including the holding
of title to such Trust or any portion thereof in any such jurisdiction) shall be
exercised and performed by such separate trustee or co-trustee at the direction
of the Trustee.
(c) Any notice, request or other writing given to the Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article VII. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may, at any time, constitute
the Trustee, its agent or attorney-in-fact, with full power and authority, to
the extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all its
estates, properties, rights, remedies and trusts shall vest in and be exercised
by the Trustee, to the extent permitted by law, without the appointment of a new
or successor trustee.
Section 7.11. APPOINTMENT OF OFFICE OR AGENCY. As specified in a Series
Supplement, the Trustee shall appoint an office or agency in the City of New
York where the Certificates may be surrendered for registration of transfer or
exchange, and presented for the final distribution with respect thereto, and
where notices and demands to or upon the Trustee in respect of the Certificates
of the related Series and this Agreement may be served.
Section 7.12. REPRESENTATIONS AND WARRANTIES OF Trustee. The Trustee
represents and warrants that:
(i) the Trustee is duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or
association;
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(ii) neither the execution nor the delivery by the Trustee of this
Agreement, nor the consummation by it of the transactions contemplated
hereby nor compliance by it with any of the terms or provisions hereof
will violate its charter documents or by-laws; and
(iii) the Trustee has full power, authority and right to execute,
deliver and perform its duties and obligations as set forth herein and in
each Series Supplement to which it is a party and has taken all necessary
action to authorize the execution, delivery and performance by it of this
Agreement.
Section 7.13. TRUSTEE TO ACT ONLY IN ACCORDANCE WITH THIS AGREEMENT OR
PURSUANT TO INSTRUCTIONS OF Certificateholders. The Trustee shall only take such
action or shall refrain from taking such action under this Agreement as directed
pursuant to a specific provision of this Agreement or, if required hereunder, by
all the Certificateholders, and the Trustee shall not otherwise act in respect
of the Trust; provided, however, that the Trustee shall not be required to take
any such action if it reasonably determines, or receives, at the expense of the
Certificateholders, an Opinion of Counsel (with copies thereof delivered to the
Certificateholders and the Depositor), that such action (i) is inconsistent with
the purpose of the Trust set forth in Section 2.7 or contrary to the terms
hereof.
Section 7.14. ACCOUNTING AND REPORTS TO CERTIFICATEHOLDERS, INTERNAL
REVENUE SERVICE AND OTHERS. The Trustee shall (a) maintain the books of the
Trust on a calendar year basis on the cash method of accounting, (b) after the
close of each calendar year, deliver to each Certificateholder, as may be
required by the Code and applicable Treasury Regulations or otherwise, such
information for such year as may be required to enable each Certificateholder to
prepare its federal income tax returns, (c) cause independent public accountants
to prepare such tax returns relating to the Trust, execute and file such returns
and make such elections, as may from time to time be directed by the Depositor,
under any New York State, New York City or federal statute or rule or regulation
thereunder so as to maintain the Trust's characterization as other than an
association taxable as a corporation for federal income tax purposes, (d) cause
such tax returns to be signed on behalf of the Trust in the manner required by
law and (e) collect or cause to be collected any withholding tax as described in
and in accordance with Subsection 4.3 with respect to income or distributions to
Certificateholders.
ARTICLE VIII
Termination
Section 8.1. TERMINATION UPON PURCHASE OR LIQUIDATION OF ALL UNDERLYING
SECURITIES. (a) The respective obligations and responsibilities under this
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
as hereafter set forth) shall 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
this 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, In-Kind Distribution or
other liquidation (which may include redemption or other purchase thereof by the
applicable Underlying Securities 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 created hereby continue to
exist if such continued existence would violate any applicable common-law or
statutory Rule Against Perpetuities.
(b) The Depositor shall exercise its option to purchase all the
Underlying Securities remaining in the Trust pursuant to clause (i) of Section
8.1(a) not later than 91 days prior to the anticipated date of purchase of all
such Underlying Securities, at a price as may be specified in the applicable
Series Supplement; provided, however, that such price shall not be less than the
then outstanding aggregate principal amount of such Underlying Securities
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as determined on the date of purchase. The proceeds of such purchase will be
deposited into the Certificate Account and applied in the same manner and
priority that collections on Underlying Securities would be applied as provided
in the applicable Series Supplement.
(c) Written notice of any termination shall be provided as set forth
in Section 9.5.
(d) Upon presentation and surrender of the Certificates by the
Certificateholders on the Scheduled Final Distribution Date, or the Distribution
Date coinciding with or next following the earlier to occur of the occurrences
specified in clauses (i) and (ii) of Section 8.1(a), with respect to the
applicable Series of Certificates, the Trustee shall distribute to each Holder
presenting and surrendering its Certificates the amount otherwise distributable
on such Distribution Date in accordance with Section 4.1 in respect of the
Certificates so presented and surrendered, if not in connection with the
purchase by the Depositor of all the Underlying Securities. Any funds not
distributed on such Distribution Date shall be set aside and held in trust for
the benefit of Certificateholders not presenting and surrendering their
Certificates in the aforesaid manner, and shall be disposed of in accordance
with this Section 8.1 and Section 4.1 hereof. Immediately following the deposit
of funds in trust hereunder, the Trust for such Series shall terminate.
ARTICLE IX
Miscellaneous Provisions
Section 9.1. AMENDMENT. (a) This 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 herein which may be defective or
inconsistent with any other provision herein; (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 this 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
Chase Manhattan Bank, as Trustee for a Series of Certificates, and to add to or
change any of the provisions of this Agreement as shall be necessary to provide
for or facilitate the administration of the separate Trusts hereunder by more
than one Trustee, pursuant to the requirements of Section 5.1 hereof; (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 this 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 issued pursuant to Section 5.16
hereof; 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.
(b) Without limiting the generality of the foregoing, with respect to
any Series, this 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 this 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 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
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that (x) 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 and (y)
the Trustee has received written confirmation from each Rating Agency rating
such Certificates that such amendment will not cause such Rating Agency rating
such Certificates to reduce or withdraw the then current rating thereof.
Notwithstanding any other provision of this Agreement, for purposes of the
giving or withholding of consents pursuant to this Section 9.1, Certificates
registered in the name of the Depositor, or any Affiliate thereof, shall be
entitled to Voting Rights with respect to matters affecting such Certificates.
Notwithstanding any other provision of this Agreement, this Section 9.1(b) shall
not be amended without the unanimous consent of the Holders of all such
Certificates.
(c) Promptly after the execution of any such amendment or
modification, the Trustee shall furnish a copy of such amendment or modification
to each Certificateholder of the affected Series or Class and to the Rating
Agency. It shall not be necessary for the consent of Certificate-holders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe.
Section 9.2. COUNTERPARTS. This Agreement may be executed simultaneously in
any number of counterparts, each of which counterparts shall be deemed to be an
original, and such counterparts shall constitute but one and the same
instrument.
Section 9.3. LIMITATION ON RIGHTS OF Certificateholders. (a) The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the applicable Trust,
nor otherwise affect the rights, obligations and liabilities of the parties
hereto or any of then.
(b) No Certificateholder of a given Series shall have any right to
vote (except as expressly provided for herein) or in any manner otherwise
control the operation and management of any Trust, or the obligations of the
parties hereto, nor shall anything herein set forth, or contained in the terms
of the Certificates, be construed so as to constitute the Certificateholders
from time to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.
(c) No Certificateholder of a given Series shall have any right by
virtue of any provision of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless (i) such Holder previously shall have given to the Trustee a written
notice of breach and of the continuance thereof and unless also the Holders of
Certificates of such Series evidencing not less than the Required
Percentage--Remedies of the aggregate Voting Rights of such Series shall have
made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Trustee, for 30 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding. It is
understood and agreed that the Trustee shall not be obligated to make any
investigation of matters arising under this Agreement or to institute, conduct
or defend any litigation hereunder or in relation hereto at the request, order
or direction of any Certificateholders unless such Certificateholders have
offered to the Trustee the reasonable indemnity referred to above. It is further
understood and agreed, and expressly covenanted by each Certificateholder of
each Series with every other Certificateholder of such Series and the Trustee,
that no one or more Holders of Certificates of such Series shall have any right
in any manner whatever by virtue of any provision of this Agreement to affect,
disturb or prejudice the rights of the Holders of any other of the Certificates
of such Series, or to obtain or seek to obtain priority over or preference to
any other such Holder, or to enforce any right under this Agreement, except in
the manner herein provided and for the equal, ratable and common benefit of all
Certificateholders of such Series. For the protection and enforcement
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of the provisions of this Section, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 9.4. GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the law of the State of New York
without regard to principles of conflicts of law.
Section 9.5. NOTICES. All directions, demands and notices hereunder shall
be in writing and shall be delivered as set forth in the applicable Series
Supplement. Any notice required to be provided to a Holder of a Certificate
shall be given by first class mail, postage prepaid, at the last address of such
Holder as shown in the Certificate Register. Any notice so mailed within the
time prescribed in this Agreement shall be conclusively presumed to have been
duly given when mailed, whether or not the Certificateholder receives such
notice.
Section 9.6. SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then to the extent permitted by law such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
Section 9.7. NOTICE TO RATING AGENCY. The Trustee shall use its best
efforts promptly to provide notice to each Rating Agency, with a copy to the
Depositor, with respect to each of the following of which any of its Responsible
Officers has actual knowledge:
(i) any change or amendment to this Agreement;
(ii) the resignation or termination of the Trustee;
(iii) the repurchase or substitution of Underlying Securities, if
any, pursuant to Section 2.3;
(iv) the final payment to Holders of the Certificates of any Class;
and
(v) any change in the location of the Certificate Account.
Any such notice pursuant to this Section shall be in writing and shall be deemed
to have been duly given if personally delivered or mailed by first class mail,
postage prepaid, or by express delivery service to each Rating Agency at the
address specified in the applicable Series Supplement.
Section 9.8. GRANT OF SECURITY INTEREST. It is the express intent of the
parties hereto that each conveyance of any Underlying Securities by the
Depositor to the Trustee be, and be construed as, a sale of the Underlying
Securities by the Depositor and not a pledge of any Underlying Securities by the
Depositor to secure a debt or other obligation of the Depositor. However, in the
event that, notwithstanding the aforementioned intent of the parties, any
Underlying Securities are held to be property of the Depositor, then, (a) it is
the express intent of the parties that such conveyance be deemed a pledge of
such Underlying Securities by the Depositor to the Trustee to secure a debt or
other obligation of the Depositor and (b)(1) this Agreement shall also be deemed
to be a security agreement within the meaning of Articles 8 and 9 of the UCC as
in effect from time to time in the State of New York, or such other State as may
be specified in the related Series Supplement; (2) the conveyance provided for
in Section 2.1 hereof shall be deemed to be a grant by the Depositor to the
Trustee of a first priority security interest in all the Depositor's right,
title and interest in and to such Underlying Securities and all amounts payable
to the holders of such Underlying Securities in accordance with the terms
thereof and all proceeds of the conversion, voluntary or involuntary, of the
foregoing into cash, instruments, securities or other property, including all
amounts from time to time held or invested in the applicable Certificate
Account, whether in the form of cash, instruments, securities or other property;
(3) the obligations secured by such security agreement shall be deemed to be all
the Depositor's obligations under this Agreement, including the obligation to
provide to the Certificateholders the benefits of this Agreement relating to
such Underlying Securities and the applicable Trust; and (4) notifications to
persons holding such property,
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and acknowledgments, receipts or confirmations from persons holding such
property, shall be deemed notifications to, or acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as applicable)
of the Trustee for the purpose of perfecting such security interest under
applicable law. Accordingly, the Depositor hereby grants to the Trustee a
security interest in the Underlying Securities and all other property described
in clause (2) of the preceding sentence, for the purpose of securing to the
Trustee the performance by the Depositor of the obligations described in clause
(3) of the preceding sentence. Notwithstanding the foregoing, the parties hereto
intend the Grant pursuant to Section 2.1 to be a true, absolute and
unconditional sale of the Underlying Securities and assets constituting the
applicable Trust by the Depositor to the Trustee. The Depositor shall, to the
extent consistent with this Agreement, take such actions as may be necessary to
ensure that, if this Agreement were deemed to create a security interest in the
Underlying Securities, such security interest would be deemed to be a perfected
security interest of first priority under applicable law and will be maintained
as such for so long as any of the Underlying Securities remain outstanding.
Without limiting the generality of the foregoing, the Depositor, shall file, or
shall cause to be filed, all filings identified by the Depositor to be necessary
to maintain the effectiveness of any original filings identified by the
Depositor to be necessary under the UCC as in effect in any jurisdiction to
perfect the Trustee's security interest in or lien on the Underlying Securities,
including (x) continuation statements and (y) such other statements as may be
occasioned by (1) any change of name of the Depositor or the Trustee, (2) any
change of location of the place of business or the chief executive office of the
Depositor or (3) any transfer of any interest of the Depositor in any Underlying
Security.
Section 9.9. NONPETITION COVENANT. Notwithstanding any prior termination of
this Agreement, each of the Trustee (including any Co-Trustee), any agent
(including the Authenticating Agent, the Calculation Agent and the Paying Agent)
and the Depositor agrees that it shall not, until the date which is one year and
one day after the earlier of a Trust Termination Event or the Scheduled Final
Distribution Date, as defined in the related Series Supplement, acquiesce,
petition or otherwise invoke or cause the Trust to invoke the process of the
United States of America, any State or other political subdivision thereof or
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government for the purpose of
commencing or sustaining a case by or against the Trust under a Federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Trust or all or any part of the property or assets of the Trust or ordering the
winding up or liquidation of the affairs of the Trust.
Section 9.10. NO RECOURSE. Provided that there exists no default on the
Underlying Securities, neither the Trustee (including any Co-Trustee), any agent
(including the Authenticating Agent, the Calculation Agent and the Paying Agent)
nor the Depositor shall have any recourse to the Underlying Securities, except
as specifically provided in the related Series Supplement.
Section 9.11. ARTICLE AND SECTION REFERENCES. All article and section
references used in this Agreement, unless otherwise provided, are to articles
and sections in this Agreement.
Section 9.12. CONFLICT WITH TRUST INDENTURE ACT.
(a) If any provision hereof limits, qualifies or conflicts with
another provision hereof that is required to be included in this Agreement by
any of the provisions of the TIA, such required provision shall control.
(b) The provisions of the TIA Sections 310 through 317 that impose
duties on any Person (including the provisions automatically deemed included
herein unless expressly excluded by this Agreement) are a part of and govern
this Agreement, whether or not physically contained herein.
(c) Except as expressly provided in this Agreement, all provisions
specifically referencing the TIA shall be inapplicable until such time as this
Agreement is qualified under the TIA.
45
<PAGE>
IN WITNESS WHEREOF, the Depositor and the Trustee have caused their
names to be signed hereto by their respective officers thereunto duly
authorized, in each case as of the day and year first above written.
PRUDENTIAL SECURITIES STRUCTURED
ASSETS, INC., a Delaware
corporation, as Depositor
By:_____________________________
Authorized Signatory
THE CHASE MANHATTAN BANK,
a New York banking corporation, as
Trustee
By:_______________________________
Vice President
EXHIBIT 5.1
January 7, 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 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.
<PAGE>
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
January 7, 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 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).
<PAGE>
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
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2)
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
New York 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 Park Avenue
New York, New York 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
---------------------------------------------------------
Prudential Securities Structured Assets, Inc.
(Exact name of obligor as specified in its charter)
Delaware 31-0944462
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
One New York Plaza
New York, NY 10292
(Address of principal executive offices) (Zip Code)
----------
Trust Certificates
(Title of the indenture securities)
================================================================================
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
New York State Banking Department, State House, Albany, New York 12110.
Board of Governors of the Federal Reserve System, Washington, D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty Street, New
York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b)Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of Eligibility.
1. A copy of the Articles of Association of the Trustee as now in effect,
including the Organization Certificate and the Certificates of Amendment dated
February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being contained
in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act (see
Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 14th day of December 1998.
THE CHASE MANHATTAN BANK
By: /s/Michael A. Smith
-------------------
Michael A. Smith
Vice President
2
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business September 30, 1998, in accordance with a
call made by the Federal Reserve Bank of this District pursuant to the
provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Millions
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin.................................... $ 11,951
Interest-bearing balances............................ 4,551
Securities:.............................................
Held to maturity
securities.............................................. 1,740
Available for sale
securities.............................................. 48,537
Federal funds sold and securities purchased under
agreements to resell................................. 29,730
Loans and lease financing receivables:
Loans and leases, net of unearned income $127,379
Less: Allowance for loan and lease losses .2,719
Less: Allocated transfer risk reserve ......... 0
----
Loans and leases, net of unearned income,
allowance, and reserve..................................124,660
Trading Assets..............................................51,549
Premises and fixed assets (including capitalized
leases)......................................................3,009
Other real estate owned...................................... 272
Investments in unconsolidated subsidiaries and
associated companies...................................... 300
Customers' liability to this bank on acceptances
outstanding...............................................1,329
Intangible assets............................................1,429
Other assets................................................13,563
-------
TOTAL ASSETS..............................................$292,620
=====================================================================
4
<PAGE>
LIABILITIES
Deposits
In domestic offices .................................... $98,760
Noninterest-bearing .............. $39,071
Interest-bearing ...................59,689
-------
In foreign offices, Edge and Agreement,
subsidiaries and IBF's....................................75,403
Noninterest-bearing .....................................$ 3,877
Interest-bearing .........................................71,526
Federal funds purchased and securities sold under agree-
ments to repurchase..........................................34,471
Demand notes issued to the U.S. Treasury .....................1,000
Trading liabilities..........................................41,589
Other borrowed money (includes mortgage indebtedness
and obligations under capitalized leases):
With a remaining maturity of one year or less ........... 3,781
With a remaining maturity of more than one year .
through three years.....................................213
With a remaining maturity of more than three years......... 104
Bank's liability on acceptances executed and outstanding .....1,329
Subordinated notes and debentures....................... 5,408
Other liabilities............................................12,041
TOTAL LIABILITIES...........................................274,099
--------
EQUITY CAPITAL
Perpetual preferred stock and related surplus ....................0
Common stock..................................................1,211
Surplus (exclude all surplus related to preferred stock)... 10,441
Undivided profits and capital reserves...................... 6,287
Net unrealized holding gains (losses)
on available-for-sale securities................................566
Cumulative foreign currency translation adjustments ............ 16
TOTAL EQUITY CAPITAL........................................ 18,521
------
TOTAL LIABILITIES AND EQUITY CAPITAL..................... $292,620
=====================================================================
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY)
THOMAS G. LABRECQUE) DIRECTORS
WILLIAM B. HARRISON, JR.)
5
