As filed with the Securities and Exchange Commission on July 3, 2001
Registration No. 333-
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
DB DEPOSITOR INC.
(Exact name of Registrant as specified in governing instruments)
Delaware application pending
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
c/o Deutsche Banc Alex. Brown Inc.
31 West 52nd Street
New York, New York 10019
(212) 469-5000
(Address of principal executive offices)
James T. Byrne Jr.
Deutsche Banc Alex. Brown Inc.
New York, New York 10019
(212) 250-1869
(Name and address of agent for services)
Copy to
Joseph C. Kopec, Esq. Michael L. Fitzgerald, Esq.
Deutsche Banc Alex. Brown Inc. Sidley Austin Brown & Wood LLP
31 West 52nd Street One World Trade Center
New York, New York 10019 New York, New York 10048
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement 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, please 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 of 1933, 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 of 1933, please 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 expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
============================================================================================================================
Proposed Proposed
Maximum Maximum Amount of
Title of Amount to be Offering Price Aggregate Registration
Securities to Be Registered Registered(1) Per Unit* Offering Price* Fee
- --------------------------------------------------------- ---------------- --------------- ---------------- ----------------
Trust Certificates..................................... $500,000,000 100% $500,000,000 $125,000
========================================================= ================ =============== ================ ================
*Estimated 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 thereafter shall 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 SEC, acting pursuant to said
Section 8(a), may determine.
EXPLANATORY NOTE
This registration statement includes a base prospectus with a corresponding
form of prospectus supplement for offering series of certificates representing
the entire beneficial ownership interest in various trusts to be created from
time to time, the assets of which will consist primarily of a publicly issued,
fixed income debt securities or pools of such debt securities together with
certain other assets as described herein, deposited in trust by DB Depositor
Inc.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell and is not soliciting an offer to buy these securities in any
state where the offer or sale is not permitted.
Subject to Completion, Dated July 3, 2001
Prospectus Supplement
(To Prospectus Dated [______ __,200_])
Trust Certificates,
Series 2001-[ ]
(Underlying Securities will be ____% _________
due ___________, 20__ issued by ____________)
PRINCIPAL BALANCE INTEREST PRICE TO UNDERWRITING
RATE PUBLIC DISCOUNT
[Class ___ certificates] ________ [%][Variable] 100.00% ____%
[Pass Through Rate]
[Class ___ certificates] ________ [%][Variable] 100.00% ____%
[Pass Through Rate]
----------------------
The Trust
o will be formed pursuant to a trust agreement between DB Depositor Inc. and
[Trustee] for the sole purpose of issuing the certificates.
o will issue [three] classes of certificates, the [Class ___
certificates], the [Class ___ Certificates], and the [Class
___ Certificates], all of which [except the Class ___
Certificates] are offered hereby.
The Certificates
o are principally secured by the assets of the Trust, which
consist [primarily] of a [pool of][security][securities]
that are described herein.
o represent an undivided beneficial interest in the assets of
the Trust, which consist solely of the Underlying Securities
described herein.
o currently have no trading market.
o are not insured or guaranteed by any governmental agency.
The Certificates represent non-recourse obligations of the Trust only and do
not represent an interest in or obligation of [Deutsche Bank AG], DB Depositor
Inc., the Trustee, [the fiscal agent] or any of their affiliates.
You should review the information in the section headed "Risk Factors"
beginning on page [S-__ of this prospectus supplement and on page [__] of the
prospectus.
----------------------
For complete information about the offered certificates, you should read both
this prospectus supplement and the accompanying prospectus. This prospectus
supplement must be accompanied by the prospectus if it is being used to offer
and sell the offered certificates.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these certificates or passed upon
the adequacy or accuracy of this prospectus. Any representation to the
contrary is a criminal offense.
Subject to the satisfaction of certain conditions, the underwriters named
below will purchase the offered certificates from DB Depositor Inc. See
"Method of Distribution" in this prospectus supplement. The offered
certificates will be issued in book-entry form only on or about ________,
200_.
----------------------
Deutsche Banc Alex. Brown
The date of this Prospectus Supplement is [___________ __, 200_]
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
We provide information to you about the certificates in two separate documents
that progressively provide more detail: (a) the accompanying prospectus, which
provides general information, some of which may not apply to your series of
certificates and (b) this prospectus supplement, which describes the specific
terms of your series of certificates.
If the terms of your series of certificates vary between this prospectus
supplement and the accompanying prospectus, you should rely on the information
in this prospectus supplement.
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
Summary of Principal Terms................................. S-3
Summary of Prospectus Supplement ...........................S-8
Formation of the Trust ....................................S-14
Risk Factors ..............................................S-14
Description of the Deposited Assets .......................S-15
[Description of Credit Support] ...........................S-19
Yield on the Certificates .................................S-20
Description of the Certificates ...........................S-21
Description of the Trust Agreement ........................S-25
Certain Legal Aspects of the Deposited Assets .............S-28
Certain Federal Income Tax Consequences ...................S-28
Certain State Tax Consequences ............................S-38
ERISA Considerations ......................................S-38
Method of Distribution ....................................S-40
[Listing..................................................S-41]
Ratings ...................................................S-41
Legal Opinions ............................................S-42
Index of Terms for Prospectus Supplement ..................S-43
You can find a listing of the pages where capitalized terms used in this
prospectus supplement and the accompanying prospectus are defined under the
caption "Index of Terms for Prospectus Supplement" beginning on page S-[__] in
this document and under the caption "Index of Terms for Prospectus" beginning
on page [__] in the accompanying prospectus.
TABLE OF CONTENTS
Page
____
Important Notice About Information Presented in this Prospectus and the Accompanying Prospectus Supplement......2
Incorporation of Certain Documents by Reference..................................................................4
Reports to Certificateholders....................................................................................4
Risk Factors.....................................................................................................5
The Depositor...................................................................................................10
Use of Proceeds.................................................................................................10
Formation of the Trust..........................................................................................10
Maturity and Yield Considerations...............................................................................11
Description of the Certificates.................................................................................13
Description of Deposited Assets and Credit Support..............................................................29
Description of the Trust Agreement..............................................................................40
Currency Risks..................................................................................................49
Certain United States Federal Income Tax Consequences...........................................................50
ERISA Considerations............................................................................................56
Underwriting....................................................................................................58
Legal Matters...................................................................................................59
The Underwriters may engage in transactions that stabilize, maintain or
otherwise affect the price of the certificates, including over-allotment,
stabilizing and short-covering transactions in such securities and the
imposition of penalty bids, in each case in connection with the offering of
the certificates. For a description of these activities, see "Method of
Distribution" herein.
--------------
For 90 days following the date of this prospectus supplement, all dealers
selling the offered certificates will deliver a prospectus supplement and
prospectus. This is in addition to the dealers' obligation to deliver a
prospectus when acting as underwriters of the offered certificates and with
respect to their unsold allotments or subscriptions.
You should rely only on the information contained or incorporated by reference
in this prospectus supplement and the accompanying prospectus. We have not
authorized anyone to provide you with different information.
We are not offering the offered certificates in any state where the offer is
not permitted.
We do not claim that the information in this prospectus supplement and the
accompanying prospectus is accurate as of any date other than the dates stated
on the respective covers.
SUMMARY OF PRINCIPAL TERMS
This summary highlights the principal terms of the certificates being
issued by the Trust and of the Underlying Securities. It does not contain all
of the information that you need to consider in making your investment
decision. To understand all of the terms of the offering of the certificates,
you should read carefully this prospectus supplement and the accompanying
prospectus in full. Certain capitalized terms used in this prospectus
supplement are defined on the pages indicated in the "Index of Terms."
The Certificates
The Trust..................................................... DB Depositor Inc. and the Trustee will form the
Series 200_-[ ] Trust.
Securities Offered............................................ [Asset-Backed] [Trust] Certificates, Series
200_-[ ], consisting of class [ ] certificates[,]
[and] class [ ] certificates [and specify others].
Initial certificate:
[Principal Balance]........................................... Class [ ]: [$] [ ].
[Notional Amount]............................................. Class [ ]: [$] [ ].
Final Scheduled
Distribution Date............................................. Class [ ].
Class [ ].
Pass-Through Rates............................................ [The Variable Pass-Through Rates applicable to
the calculation of the interest distributable on
any Distribution Date on the certificates [(other
than the class [ ] certificates)] are equal to
[describe method for determining variable rates].
The initial Variable Pass-Through Rates for the
class [ ] certificates [,] [and] the class [ ]
certificates [and specify others] are
approximately __% [,] [and] ___% [and ___%] per
annum, respectively.] [The Pass-Through Rate
applicable to the calculation of the interest
distributable on any Distribution Date on the
[specify classes] certificates is fixed at ___%
[and ___%, respectively,] per annum.]
Deposited Assets.............................................. The Deposited Assets will consist of the
Underlying Securities and [describe any
additional assets which relate to the Underlying
Securities]. See "--The Underlying Securities" [,
"--Other Deposited Assets"] and "Description of
the Deposited Assets" below.
Original Issue Date........................................... [ ].
Cut-off Date.................................................. [ ].
Distribution Date............................................. [ ], commencing [ ].
Record Date................................................... The [ ] day immediately preceding each
Distribution Date.
[Optional Call]............................................... [On any date on or after [ ] (or
after the announcement of any redemption or other
unscheduled payment of the Underlying Securities)
that any Call Warrant holder designates as a Call
Date, the Class [ ] Certificates may be called
in whole or in part at a call price equal to the
outstanding principal amount thereof, plus any
accrued and unpaid interest to the Call Date.]
[Mandatory Redemption]........................................ [On any date the Underlying Securities are
redeemed, the Certificates shall be redeemed and
the proceeds of such redemption shall be
distributed in the manner set forth under
"Description of the Certificates--Collections and
Distributions."]
Denominations; Specified Currency............................. The class [ ] certificates [,] [and] class [ ]
certificates [and specify others] will be
denominated and payable in [U.S. dollars] [ ]
(the "Specified Currency") and will be available
for purchase in minimum denominations of [$][ ]
and [multiples of [$][ ]].
Interest Accrual Periods...................................... [Monthly] [Quarterly] [Semi-annually] (or, in the
case of the first Interest Accrual Period, from
and including the Original Issue Date to but
excluding the first Distribution Date).
Form of Security.............................................. [Book-entry certificates with The Depository
Trust Company]. See "Description of the
Certificates--Definitive Certificates."
Distributions will be settled in [immediately
available (same-day)] [clearinghouse (next-day)]
funds.
Trustee....................................................... The Bank of New York, as trustee.
Ratings....................................................... [ ] by [ ] and [ ] by [ ]. [Specify specific
ratings requirements for particular classes,
including the extent to which the issuance of the
certificates of a given class is conditioned upon
satisfaction of the ratings of each other class
of certificates.] See "Ratings."
Collection Period............................................. With respect to a Distribution Date, the period
beginning on [ ] and ending at the close of
business on [ ].
The Underlying Securities
Underlying Securities......................................... A [ ]% [floating rate] [publicly traded debt
security due [ ]] [A pool of publicly issued
[debt securities of various issuers]] [preferred
securities of trusts organized to issue
trust-originated preferred securities] [term
preferred stock having an investment grade
rating] [United States treasury securities] [debt
securities of various United States government
sponsored entities] [debt securities of various
foreign government issuers], exclusive of the
Retained Interest [in/having] an aggregate
principal amount of [$][ ].
Underlying Securities Issuer.................................. [Specify issuer] [Pool of various domestic
corporations, limited liability companies,
banking organizations and insurance companies.]
[A trust or other legal entity organized under
the laws of ______________ to issue trust
preferred securities.] [Asset-backed securities.]
[A[ ]%]-[floating rate] [United States treasury
securities] [debt securities of various United
States government sponsored entities ("GSEs")]
[Government Trust Certificates ("GTCs") [Pool of
various foreign private issuers.], exclusive of
the Retained Interest] [in/having] an aggregate
principal amount of [$][ ].
[Foreign Government Guarantor]................................ [Specify guarantor, if any.]
[GSE Issuer].................................................. [Specify issuer] [Pool of various U.S. government
sponsored entity issuers].
Underlying Securities
Original Issue Date........................................... [ ].
Underlying Securities
Final Payment Date............................................ [ ].
Amortization.................................................. [Describe amortization schedule, if any].
Denominations; Underlying
Securities Currency........................................... The Underlying Securities are denominated and
payable in [U.S. dollars] [ ] and are available
in minimum denominations of [$][ ] and [multiples
thereof] [multiples of [$][ ]].
Underlying Securities
Payment Dates................................................. [ ], commencing [ ].
Underlying Securities Rate.................................... [% per annum.] [A [Weighted Average] rate per
annum equal to [specify interest rate formula for
debt security].]
Underlying Securities
Interest Accrual Periods...................................... [Monthly] [Quarterly] [Semi-annually].
Priority...................................................... [Describe senior or subordinated status or
liquidation preference of any of Underlying
Securities].
Security...................................................... [Describe existence of any security for
obligations or state that Underlying Securities
are unsecured].
[Redemption/Put/Other Features]............................... [Describe existence of any redemption, put or
other material features applicable to the
Underlying Securities].
[Optional Call]............................................... [On any Business Day on or after [ ]
(or after the announcement of any redemption or
other unscheduled payment or sale of the
Underlying Securities) that the holder of the
Call Warrants designates as a Call Date, the
Class [ ] Certificates may be called in whole
or in part at a price (the "Call Price") equal to
the outstanding principal amount thereof, plus
any accrued and unpaid interest to the Call Date.
The Class [ ] Certificates are also subject to
a call. See "Description of the Trust
Agreement--Termination" and "Description of Trust
Agreement--Termination" in the prospectus.]
[The Call Warrants]........................................... [The Call Warrants represent the rights to
purchase the Certificates at the Call Price in
connection with an Optional Call. The initial
Call Warrants holder will be the Depositor or an
affiliate thereof. The Call Warrants are not
offered hereby.]
Form of Security.............................................. Book-entry debt securities with DTC [listed on
the [New York] [American] Stock Exchange [specify
other listing].
[Underlying Securities Trustee]............................... [ ]. [The Underlying Securities have been issued
pursuant to an indenture between _______________
and the issuer of the Underlying Securities].
[Fiscal and Paying Agent]..................................... [ ] [The Underlying Securities have been issued
pursuant to a fiscal and paying agency agreement,
between _______________ and the issuer of the
Underlying Securities] [specify other agreement].
Ratings....................................................... [ ] by [ ] [and [ ] by [ ]]. See "Description of
the Underlying Securities--Ratings of Underlying
Securities."
Other Deposited Assets........................................ [Provide similar tabular summary description of
the principal economic terms of any credit
support or other ancillary or incidental asset].
SUMMARY OF PROSPECTUS SUPPLEMENT
The following summary highlights selected information from this prospectus supplement and is
qualified by reference to the detailed information appearing elsewhere herein and in the accompanying
prospectus.
Depositor..................................................... DB Depositor Inc., an indirect wholly-owned
subsidiary of Deutsche Bank AG. See "DB Depositor
Inc." in the accompanying prospectus.
Certificates.................................................. The certificates will be issued pursuant to the
Trust Agreement. The certificates will consist of
[ ] classes, designated as class [ ] certificates
[and] [,] class [ ] certificates [and [specify
other classes]], [all] of which [all but the
class [ ] certificates] are being offered hereby.
The Certificate Principal Balance of a
certificate outstanding at any time
represents the maximum amount that the
certificate holder is entitled to
receive as distributions allocable to
principal. The Certificate Principal
Balance of a certificate will decline
to the extent distributions allocable
to principal are made to holders.
[The class [ ] certificates, which are
not being offered hereby, have in the
aggregate an initial Certificate
Principal Balance of [$] (approximate)
and a [Variable] Pass-Through Rate [of
__%]. The class [ ] certificates
represent the right to receive
distributions in respect of their
Certificate Principal Balance and
interest thereon at their applicable
Pass-Through Rate.] Shortfalls in
collections with respect to the
Deposited Assets will be allocated
solely to the class [ ] certificates to
the extent provided in this prospectus
supplement and, thereafter, will be
allocated among the certificates and
the class [ ] certificates, as provided
in this prospectus supplement. [The
class [ ] certificates will be
transferred by DB Depositor Inc. to an
affiliate on or about [ ], [200_] (the
"Closing Date"), and may be sold at any
time in accordance with any
restrictions in the Trust agreement.]
The Underlying Securities..................................... [Interest] [Dividends] on the Underlying
Securities accrue[s] at the Underlying Securities
Rate for each Underlying Securities Accrual
Period and is payable on each Underlying
Securities Payment Date. The entire principal
amount of the Underlying Securities will be
payable on the Underlying Securities Final
Payment Date. [The Underlying Securities have a
remaining term to maturity of approximately ___
years.] [As of the Cut-off Date, the pool of
Underlying Securities have a weighted average
[interest] [dividend] rate of ___% and a weighted
average remaining term to maturity of
approximately years. [Approximately ___% [specify
if greater than 10%] of such Underlying
Securities consist of debt securities of [name
issuer].]
[United States treasury securities]
[Name obligor] is [a U.S. [limited]
liability company] [banking
organization] [insurance company] whose
principal executive offices are located
at [specify address]]. [The obligor is
subject to the informational
requirements of the Exchange Act and in
accordance therewith files reports and
other information (including financial
information) with the SEC]. [The
obligor makes available to the public
upon request certain annual financial
and other information.]
[[Name obligor] is a foreign private
issuer subject to the informational
requirements of the Exchange Act and
which in accordance therewith files
reports and other information with the
SEC.]
[[Name obligor] is a trust or special
purpose legal entity [or wholly owned
subsidiary of a company] that is
subject to the informational
requirements of the Exchange Act.]
[United States treasury securities]
[Name obligor] is a [U.S.
government-sponsored entity] [specify
other] whose principal executive
offices are located at [specify
address]. The obligor [makes available
to the public upon request certain
annual financial and other
information].
See "Description of the Deposited Assets."
[Other Deposited Assets
and Credit Support]........................................... [The Deposited Assets will also include [direct
obligations of the United States] [describe any
assets that are incidental or relate to the
Underlying Securities, including hedging
contracts such as puts, calls, interest rate and
other basis swaps, currency swaps, floors, caps
collars, or any other credit derivatives] (such
assets, together with the Underlying Securities,
the "Deposited Assets"). See "Description of the
Deposited Assets--Underlying Securities."]
[The certificateholders of the [specify
particular classes] certificates will
have the benefit of [describe credit
support] to support or ensure the
[servicing and] [timely] [ultimate]
distribution of amounts due with
respect to the Deposited Assets,
including providing certain coverage
with respect to losses.]
Distributions................................................. Holders of the certificates will be entitled to
receive on each Distribution Date, to the extent
of Available Funds, after payment of the expenses
of the Trustee and its respective agents up to
the Allowable Expense Amount,
o in the case of each class of
certificates other than the class
[ ] certificates,] distributions
allocable to interest at the
applicable Pass-Through Rate on
the applicable Certificate
Principal Balance,
o [in the case of each class of
certificates other than the class [ ]
certificates,] distributions allocable to
principal, and
o [in the case of each class of
certificates other than the class
[ ] certificates,] distributions
allocable to premium (if any) in
an amount equal to all payments of
premium (if any) received on the
Underlying Securities for the
applicable Collection Period.
Distributions will be made to
certificateholders only if, and to the
extent that, payments are made with
respect to the Deposited Assets or are
otherwise covered by any credit
support. [The holders of the class [ ]
certificates will be entitled to
receive on each Distribution Date
distributions allocable to interest in
an amount equal to [describe Stripped
Interest].] [The holders of the class [
] certificates will not be entitled to
receive any distributions allocable to
principal or premium (if any).] See
"Description of the
Certificates--Distributions."
Special Distribution Dates.................................... If a payment with respect to the Underlying
Securities is made to the Trustee after the
Underlying Securities Payment Date on which
payment was due, then the Trustee will distribute
any such amounts received on the next occurring
Business Day (a "Special Distribution Date") as
if the funds had constituted Available Funds on
the Distribution Date immediately preceding such
Special Distribution Date; provided, however,
that the Record Date for such Special
Distribution Date shall be [five Business Days
(as such term is defined in the prospectus,
"Business Day") prior to the day on] which the
related payment was received from the Underlying
Securities Trustee.
[Subordination................................................ The rights of the holders of the class [ ]
certificates [and specify other classes] to
receive distributions of principal, premium (if
any), and interest with respect to the Deposited
Assets will be subordinated to the rights of the
holders of the other classes of certificates with
respect to losses attributable to principal,
premium (if any) and interest realized on a
Deposited Asset (such losses, "Realized Losses").
See "Description of the Certificate--Allocation of
Losses; Subordination."]
[Redemption][Put][Other Features]............................. [Describe existence of any redemption, put or
other material features applicable to the
Underlying Securities].
[Optional Termination......................................... DB Depositor Inc. may purchase at a price equal
to the [principal amount] [liquidation preference
amount] of the Underlying Securities all the
Deposited Assets in the Trust on any Distribution
Date on which the aggregate [principal amount]
[liquidation preference amount] of the Underlying
Securities remaining in the Trust is less than
[10%] of the aggregate [principal amount]
[liquidation preference amount] of the Deposited
Assets as of the Cut-off Date. This would cause
the termination of the Trust and early retirement
of the certificates. [Specify any other purchase
or repurchase option of DB Depositor Inc. See
"Description of the Trust Agreement--Termination"
herein and "Description of Trust
Agreement--Termination" in the prospectus.]
Certain Federal Income
Tax Consequences.............................................. In the opinion of tax counsel to the Trust, the
Trust will be classified for Federal income tax
purposes [as a grantor trust] [as a partnership]
[as a financial asset securitization investment
trust ("FASIT")] [other] and not as an
association taxable as a corporation. See
"Certain Federal Income Tax Consequences."
Ratings....................................................... It is a condition to the issuance of the
certificates that the certificates have the
ratings specified above under "Summary of
Principal Terms--The Certificates--Ratings." 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. A security rating does
not address the occurrence or frequency of
redemptions or prepayments on, or extensions of
the maturity of, the Deposited Assets, the
corresponding effect on yield to investors [or
whether investors in the class [ ] certificates
may fail to recover fully their initial
investment]. See "Ratings."
ERISA Considerations.......................................... An employee benefit plan subject to the Employee
Retirement Income Security Act of 1974, as
amended ("ERISA"), including an individual
retirement account (an "IRA") or Keogh plan (a
"Keogh") (each, a "Plan") should consult its
advisors concerning the ability of such Plan to
purchase Certificates under ERISA or the Code.
See "ERISA Considerations."
[Listing]..................................................... [The certificates have been approved for listing,
subject to official notice of issuance, on
[_____________]. However, it is unlikely that
trading of the certificates on [_____________]
will be active. See "Method of Distribution"
herein.
FORMATION OF THE TRUST
The Trust will be formed pursuant to the Trust Agreement (including the
series [ ] supplement) between DB Depositor Inc. and the Trustee. At the time
of the execution and delivery of the series [ ] supplement, DB Depositor Inc.
will deposit the Underlying Securities in the Trust. The Trustee, on behalf of
the Trust, will accept such Underlying Securities and will deliver the
certificates in accordance with the instructions of DB Depositor Inc.
The Underlying Securities will be purchased by Deutsche Banc Alex. Brown
Inc. or an affiliate thereof in the secondary market (either directly or
through an affiliate of Deutsche Banc Alex. Brown Inc.). The Underlying
Securities (other than Underlying Securities which are issued by the United
States of America) will not be acquired from [name of the issuer] as part of
any distribution by or pursuant to any agreement with such issuer. [name of
issuer] is [not] participating in this offering and will not receive any of
the proceeds of the sale of the Underlying Securities to Deutsche Banc Alex.
Brown Inc. or the issuance of the certificates. [Neither Deutsche Banc Alex.
Brown Inc. nor any of its affiliates participated in the initial public
offering of the Underlying Securities] [Deutsche Banc Alex. Brown Inc., an
affiliate of DB Depositor Inc., participated in the initial public offering of
the Underlying Securities as a [co-underwriter] [underwriter]].
RISK FACTORS
[No due diligence investigation of the underlying securities, the Underlying
Securities Issuer or [Parent of Affiliate of Underlying Securities Issuer] has
been made by the Depositor, the Underwriters or the Trustee.]
[In connection with the present offering, none of the Depositor, the
underwriters (the "Underwriters") or the Trustee (a) has made, or will make,
any due diligence investigation of the business condition, financial or
otherwise, of the Underlying Securities Issuer [or Parent of Affiliate of
Underlying Securities Issuer] or (b) has verified, or will verify, any reports
or information filed by the Underlying Securities Issuer [or Parent of
Underlying Securities Issuer] with the Securities and Exchange Commission or
otherwise made available to the public.
This Prospectus Supplement does not provide detailed information with
respect to the Underlying Securities or the Underlying Securities Issuer, any
risk factors relating thereto, or any legal, financial or other rights or
obligations arising under or related to the Underlying Securities. It is
strongly recommended that prospective investors in the Certificates consider
publicly available financial and other information regarding the Underlying
Securities Issuer [and Parent of Underlying Securities Issuer]. The issuance
of the Certificates should not be construed as an endorsement by the
Depositor, the Underwriters or the Trustee of the financial condition or
business prospects of the Underlying Securities Issuer [or Parent of
Underlying Securities Issuer]. See "Description of Underlying Securities."]
[The Underlying Securities Issuer is the only payment source.]
[The payments made by the Underlying Securities Issuer on the Underlying
Securities are the only source of payment for your Class [ ] Certificates. The
Underlying Securities Issuer is subject to laws permitting bankruptcy,
moratorium, reorganization or other actions. Financial difficulties could
result in delays in payment, partial payment or nonpayment of the Underlying
Securities and your Class [ ] Certificates. In the event of nonpayment by the
Underlying Securities Issuer, the certificateholders will bear the loss
resulting from such nonpayment. See "Description of the Certificates."]
[In the event of a default on the Underlying Securities, the Depositor will
share pro rata with certificateholders in proceeds of the Underlying
Securities.]
[If a payment default or acceleration on the Underlying Securities occurs
on or before [ ] and the Depositor is not paid accrued interest on such date,
the Depositor will have a claim for such accrued interest, and will share pro
rata with the certificateholders to the extent of such claim in the proceeds
from the recovery on the Underlying Securities. See "Description of the
Certificates--Default on Underlying Securities."]
[Certificateholders are not likely to receive any redemption premiums or
market value appreciation.]
[In certain circumstances, redemption of the Underlying Securities by the
[Underlying Securities Issuer] requires payment of a redemption premium. In
addition, the market value of the Underlying Securities may increase to a
value in excess of their face amounts. However, in such circumstances it is
likely that the Call Warrant holder (initially, the Depositor) would exercise
its right to purchase the Certificates pursuant to an Optional Call. The Call
Price equals the outstanding principal amount of the Certificates, plus
accrued interest. If the Call Warrant holder does exercise its right, a
certificateholder will receive less than if the certificateholder directly
owned the Underlying Securities and will not receive any premium in excess of
the Underlying Securities' market value over their face amounts. See
"Description of the Deposited Assets--Redemption of the Underlying
Securities."]
[A change or withdrawal by the Rating Agencies of their initial ratings may
reduce the market value of the Class [ ] Certificates.]
[At the time of issuance, the Class [ ] Certificates will have ratings
assigned by Moody's and S&P equivalent to the ratings of the Underlying
Securities, which, as of the date of this prospectus supplement were ["[ ]" by
Moody's [and] "[ ]" by S&P [and "[ ]" by Fitch]. It is expected that the
ratings of the Class [ ] Certificates will change if the ratings of the
Underlying Securities change. [[ ] indicates a negative outlook with respect
to the Underlying Securities. A negative outlook means that a rating may be
lowered by [ ].]
Any rating issued with respect to the Class [ ] Certificates is not a
recommendation to purchase, sell or hold a security inasmuch as such ratings
do not comment on the market price of the Class [ ] Certificates or their
suitability for a particular investor. There can be no assurance that the
ratings will remain for any given period of time or that the ratings will not
be revised or withdrawn entirely by the related rating agency if, in its
judgment, circumstances (including, without limitation, the rating of the
Underlying Securities) so warrant. A revision or withdrawal of such rating may
have an adverse effect on the market price of the Class [ ] Certificates.]
[Describe risk factors applicable to the specific Underlying Securities,
other Deposited Assets and any credit derivative arrangements and the
particular structure of the certificates being offered, including factors
relating to the yield on the certificates and risks associated with the
Deposited Assets (including any material risks as a result of any repurchase
option or put and the inclusion in the Deposited Assets of GTCs) and the terms
thereof, as described elsewhere herein.] See "Risk Factors" and "Maturity and
Yield Considerations" in the accompanying prospectus.]
[The Underlying Securities are not guaranteed by the federal government
or any agency or instrumentally thereof, other than the issuer of the
Underlying Securities.]
DESCRIPTION OF THE DEPOSITED ASSETS
General
This prospectus supplement specifies the relevant terms with respect to
the Underlying Securities, but does not provide detailed information with
respect to the Underlying Securities. This prospectus supplement relates only
to the certificates offered hereby and does not relate to the Deposited
Assets. All disclosure contained herein with respect to the Underlying
Securities is derived from publicly available documents. [Describe publicly
available documents.] [The] [Each] issuer of the Underlying Securities is
[not] subject to the information reporting requirements of the Exchange Act.
Although DB Depositor Inc. has no reason to believe the information concerning
the Underlying Securities, [name of issuer] [or each Underlying Securities
prospectus related to the Underlying Securities] and other publicly available
information is not reliable, neither DB Depositor Inc. nor any of the
underwriters has participated in the preparation of such documents, or made
any due diligence inquiry with respect to the information provided therein.
Events affecting the Underlying Securities or [or name of issuer] may have
occurred and may have not yet been publicly disclosed. This would affect the
accuracy or completeness of the publicly available documents described above.
[Use the following where the Underlying Securities consist of a pool of
obligations of multiple obligors.]
[The Deposited Assets will consist primarily of the Underlying
Securities, which are a pool of [treasury securities] [and] publicly traded
debt securities or term preferred stock of [domestic corporations, limited
liability companies, banking organizations, insurance companies or foreign
private issuers] [U.S. government-sponsored entities ("GSEs")] [preferred
securities, or asset-backed securities, of one or more trusts or other special
purpose legal entities] [Multilateral Bank Issuers (as defined in the
prospectus) [Government Trust Certificates ("GTCs")]]. [The Deposited Assets
will consist primarily of the Underlying Securities, which are a pool of
publicly issued debt securities. The Underlying Securities will be purchased
by DB Depositor Inc. in the secondary market (either directly or through an
affiliate of DB Depositor Inc.) and will be deposited into the Trust. The
Underlying Securities will not be acquired either from the respective obligors
on the Underlying Securities or pursuant to any distribution by or agreement
with such obligors].
The composition of the Underlying Securities pool and the distribution by
ratings, remaining term to maturity and interest rate of the Underlying
Securities as of the Cut-off Date are as set forth below:
Composition of the Underlying Securities Pool
as of the Cut-off Date
Number of Underlying Securities:
Aggregate Principal Balance: [$]
Average Principal Balance: [$]
Largest Balance: [$]
Weighted Average Interest Rate: % %
Weighted Average Original Term to Maturity: Years
Weighted Average Remaining Term to Maturity: Years
Longest Remaining Term to Maturity: Years
Distribution by Industry Classification
of the Underlying Securities Pool as of the Cut-off Date
Percent of
Aggregate Aggregate
Principal Principal
Industry Classification Number Balance Balance
- ------------------------- ------ --------- -----------
Total
Distribution by Ratings
of the Underlying Securities Pool as of the Cut-off Date
Percent of
Aggregate Aggregate
Principal Principal
Rating Number Balance Balance
- ------------------------- ------ --------- -----------
Total
Distribution by Remaining Term to Maturity
of the Underlying Securities Pool as of the Cut-off Date
Percent of
Aggregate Aggregate
Principal Principal
Remaining Term To Maturity Number Balance Balance
- ------------------------- ------ --------- -----------
Total
Distribution by Interest Rate
of the Underlying Securities Pool as of the Cut-off Date
Percent of
Aggregate Aggregate
Principal Principal
Rate Range Number Balance Balance
- ------------------------- ------ --------- -----------
Total
[The Underlying Securities consist of debt securities of [domestic
corporate issuers [specify other]]. [The Underlying Securities consist of debt
securities issued or guaranteed by foreign private issuers]. [The Underlying
Securities consist of [treasury securities] [debt securities of U.S.
government-sponsored entities ("GSEs")] [GTCs]]. As of the Cut-off Date, [all
of] [approximately % of] the Underlying Securities were rated [investment
grade] [specify particular rating] by at least one nationally recognized
rating agency, and, based on publicly available information, no obligor of any
Underlying Security was in default in the payment of any installments of
principal, interest or premium (if any) with respect thereto. Any rating of
any of the Underlying Securities is not a recommendation to purchase, hold or
sell such Underlying Security or the certificates, and a rating may not remain
for any given period of time or may be lowered or withdrawn entirely by a
rating agency in the future. See "Ratings" herein and "Risk Factors--Ratings
of the Certificates Subject to Change" in the accompanying prospectus
regarding considerations applicable to the ratings of the Certificates.]
Underlying Securities
The Underlying Securities have been issued pursuant to [an] agreement[s]
(specify other)) between the [various] [issuer[s] of the Underlying Securities
and Underlying Securities [trustee[s]] [fiscal agent[s]] [a certificate of
designation]. The following summary describes certain general terms of such
[indenture[s]] [fiscal agency agreement[s]] [certificates of designation]
[pooling and servicing agreements], but investors should refer to the
indenture[s] [fiscal agency agreement[s]] [certificate[s] of designation]
[pooling and servicing agreement[s]] [itself] [themselves] for all the terms
governing the Underlying Securities.
[Each of] the indenture[s] [fiscal agency agreement[s]] [certificate[s]
of designation] [pooling and servicing agreement[s]] limits the ability of the
[respective] issuer[s] of the Underlying Securities to engage in certain
activities and transactions and requires that the issuer[s] of the Underlying
Securities perform certain obligations with respect to the Underlying
Securities. [Describe material restrictive, financial and other covenants on
the issuer[s] of the Underlying Securities contained in the relevant
document].
[The following is a summary of the typical Underlying Security Events of
Default for each series of Outstanding Debt Securities. [Any additional
Underlying Security Events of Default unique to a Concentrated Underlying
Security have been described following the summary]:
o failure to make payments of principal (and premium, if any) and
interest to holders of the Outstanding Debt Securities when the same
shall be due;
o material breaches of certain representations, warranties or covenants
or failure to observe or perform in any material respect any covenant
or agreement continuing for a specified period of time after notice
thereof is given to the issuer of the Underlying Securities [or GSE
issuer] by [the Underlying Securities trustee or] the holders of not
less than a specified percentage of the Outstanding Debt Securities;
o [failure by the issuer of the Underlying Securities to make any
required payment of principal (and premium, if any) or interest with
respect to certain of the other outstanding debt obligations of the
issuer of the Underlying Securities or the acceleration by or on
behalf of the holders thereof of such securities;]
o certain events of bankruptcy or insolvency relating to the issuer of
the [Underlying Securities]; and
o [describe any additional common events of default with respect to the
pool of Underlying Securities].]
As of the Cut-off Date, [all of] [approximately __% of] the Underlying
Securities were [subject to] [describe any put, call or other conversion or
redemption options applicable to the Underlying Securities] [and [all of]
[approximately ___% of] the Underlying Securities were [describe the nature of
the obligation represented by such Underlying Securities (i.e., senior,
subordinate, secured) and describe commonalities with respect to any
subordination or security provisions or collateral].]
[The [pool of] Underlying Securities, together with any other assets
described below and any credit support described under "Description of Credit
Support," represent the sole assets of the Trust that are available to make
distributions in respect of the certificates.]
[Use the following with respect to each obligor the Underlying Securities
of which represent more than 10% of the total Underlying Securities available
to make distributions in respect of the certificates-only a single obligor is
referred to for purposes of this section of the form of prospectus
supplement.]
[A significant portion of] [Virtually all of] [All of] the Deposited
Assets of the Trust will consist of the [___%] [floating rate] [specify
publicly issued security] due _________ of [specify issuer][, exclusive of the
interest therein retained by DB Depositor Inc. as described below (the
"Retained Interest")], having an [aggregate principal amount] [aggregate
liquidation preference amount] outstanding as of the Cut-off Date of
approximately [$][specify currency] (the "Underlying Securities"). The
Underlying Securities [(other than Underlying Securities which are issued by
the United States of America)] will be purchased by DB Depositor Inc. in the
secondary market (either directly or through an affiliate of DB Depositor
Inc.) and will be deposited into the Trust. The Underlying Securities will not
be acquired either from [name such obligor] or pursuant to any distribution by
or agreement with [name such obligor]. [Describe any put, call or other
conversion or redemption options applicable to the Underlying Securities, as
well as the nature of the obligation represented by such Underlying Securities
(i.e., senior, subordinate, secured)]. As of the Cut-off Date, the foregoing
security comprising [ %] of the Underlying Securities was rated [specify
investment grade rating] [investment grade] by [specify nationally recognized
rating agency or agencies], and, based on publicly available information, the
obligor thereon was not in default in the payment of any installments of
principal, interest or premium (if any) with respect thereto. Any such rating
of such Underlying Securities is not a recommendation to purchase, hold or
sell such Underlying Securities or the certificates, and a rating may not
remain for any given period of time or may be lowered or withdrawn entirely by
a rating agency in the future. See "Ratings" herein and "Risk Factors--Ratings
of the Certificates Subject to Change" in the accompanying prospectus
regarding certain considerations applicable to the ratings of the
certificates.
[According to [name such issuer]'s publicly available documents, [name
such issuer] is a [identify form of domestic corporation trust banking
organization or insurance company] whose principal executive offices are
located at [specify address]. DB Depositor Inc. is not an affiliate of [name
such issuer]. [Name such obligor] is subject to the informational requirements
of the Exchange Act and in accordance therewith files reports and other
information (including financial information) with the SEC [and makes
available to the public upon request certain annual reports containing
financial and other information]. You can request copies of these documents,
upon payment of a duplicating fee, by writing to the SEC. Please call the SEC
at (800) SEC-0330 for further information on the operation of the SEC's public
reference rooms. In addition, such reports and other information [can be
inspected at the offices of the [New York Stock Exchange at 20 Broad Street,
New York, New York 10005] [American Stock Exchange, 86 Trinity Place, New
York, New York 10013]] [may be obtained from [name such obligor], according to
its most recent annual report, upon written or oral request to [name such
obligor]].]
The Trust will have no other significant assets [other than any credit
support or those assets referred to below] from which to make distributions of
amounts due in respect of the certificates. Consequently, the ability of
certificateholders to receive distributions in respect of the certificates
will depend [almost] entirely on the Trust's receipt of payments on the
foregoing Underlying Securities from [name such obligor]. Prospective
purchasers of the certificates should consider carefully [name such obligor]'s
financial condition and its ability to make payments in respect of such
Underlying Securities. This prospectus supplement relates only to the
certificates being offered hereby and does not relate to the Underlying
Securities of [name such obligor]. All information contained in this
prospectus supplement regarding [name such obligor] is derived from the
publicly available documents described in the preceding paragraph. Neither DB
Depositor Inc. nor [any of] the underwriter[s] has participated in the
preparation of such documents, or takes any responsibility for the accuracy or
completeness of the information provided therein.
[The Deposited Assets will also include [direct obligations of the United
States of America][describe any assets which are ancillary or incidental to
the Underlying Securities, including hedging contracts such as puts, calls,
interest rate swaps, currency swaps, floors, caps and collars, and any cash or
other security pledged to support the Underlying Securities] (such assets,
together with the Underlying Securities, the "Deposited Assets").]
[DESCRIPTION OF CREDIT SUPPORT]
[For the benefit [solely] of the [Offered] [class [ ] certificates [and
the class [ ] certificates]], credit support will be obtained [and will
constitute part of the Trust to the extent provided below] to support or
ensure the [servicing and] [timely] [ultimate] distribution of amounts due
with respect to the Deposited Assets, in the form and amount described below.]
[The Letter of Credit
Simultaneously with DB Depositor Inc.'s assignment of the Deposited
Assets to the Trust, DB Depositor Inc. will obtain the letter of credit from [
] in favor of the Trustee on behalf of the certificateholders. The letter of
credit will be irrevocable and will [support the [timely][ultimate] remittance
of amounts due with respect to the Deposited Assets]. [The maximum amount that
the Trustee may draw under the letter of credit will initially be equal to
[$]. The initial amount of the letter of credit will be [$] . 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 Deposited Assets]
[describe other methods]. The letter of credit expires on , 20__. The Trustee
will be obligated, in the event of a drawing on the letter of credit, to
pursue appropriate remedies against the Deposited 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 it engages in, 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 aggregate principal amount of the certificates covered
thereby, provide information of financial and other matters with respect to
the letter of credit bank, if necessary.]]
[The Surety Bond
Simultaneously with DB Depositor Inc.'s assignment of the Deposited
Assets to the Trust, DB Depositor Inc. will obtain the surety bond from [ ] in
favor of the Trustee on behalf of the certificateholders. The surety bond will
guaranty [timely] [ultimate] distributions of the principal of and premium (if
any) and interest with respect to the [Offered][class[ ]] certificates. The
surety bond expires on , 20__. The Trustee will be obligated, in the event of
a drawing on the surety bond, to pursue appropriate remedies against the
Deposited 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 it engages in, 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 surety. In addition,
to the extent that the surety bond will cover payment of 20% or more of the
aggregate principal amount of the certificates covered thereby, provide
information of financial and other matters with respect to the issuer of the
surety bond, if necessary.]]
[Reserve Account
DB Depositor Inc. will deposit with trustee on the Closing Date cash,
letters of credit and short-term investments acceptable to the Rating Agency
initially rating the certificates in the amount of [$] . [Collections with
respect to the Deposited Assets not distributed with respect to the
certificates shall be deposited in the Reserve Account.] Amounts deposited in
the Reserve Account will be used by the Trustee to make payments of principal
of and premium (if any) and interest on the certificates to the extent that
funds are not otherwise available. Immediately after any Distribution Date,
amounts in the Reserve Account in excess of [indicate formula] [may be paid to
DB Depositor Inc.]
YIELD ON THE CERTIFICATES
[Describe factors relating to the Deposited Assets, the terms thereof and
the manner and priority in which collections thereon are allocated to the
certificateholders of each class of the certificates, as described elsewhere
herein.] See "Maturity and Yield Considerations" in the prospectus.
DESCRIPTION OF THE CERTIFICATES
General
The certificates will consist of [ ] classes of certificates, designated
as class [ ][,] [and] class [ ] [and class___] certificates. The certificates
will be denominated and distributions with respect thereto will be payable in
the Specified Currency. The certificates represent in the aggregate the entire
beneficial ownership interest in the related trust. The class [ ] certificates
have in the aggregate an initial [Certificate Principal Balance] [Notional
Amount] of [$]________ (approximate) and a [___%] [Variable] Pass-Through
Rate. The class [ ] certificates have in the aggregate an initial [Certificate
Principal Balance] [Notional Amount] of [$]________ (approximate) and a [___%]
[Variable] Pass-Through Rate. [The class [ ] certificates have in the
aggregate an initial [Certificate Principal Balance] [Notional Amount] of
[$]________ (approximate) and a [___%] [Variable] Pass-Through Rate.] [The
class [ ] certificates, which are not being offered hereby, will be
transferred by DB Depositor Inc. to an affiliate on the Closing Date, and may
be sold at any time by DB Depositor Inc. in accordance with the terms of the
Trust Agreement.]
The certificates [(other than the class [ ] certificates [and specify
others] (the "Definitive Classes"))] will be issued, maintained and
transferred on the book-entry records of DTC and its Participants in minimum
denominations of [$ ] and [integral multiples thereof] [multiples 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 Notional Amounts or Certificate Principal
Balances, as applicable, of [$ ] and integral multiples thereof, except that
one certificate of each such class may be issued with an initial Notional
Amount or Certificate Principal Balance, as applicable, equal to an integral
multiple of [$ ] plus the excess of the initial aggregate Notional Amount or
Certificate Principal Balance, as applicable, of such class over the greatest
integral multiple of [$ ] that is not more than such initial aggregate
Notional Amount or Certificate Principal Balance, as applicable.]
The certificates [(other than the definitive classes of certificates)]
will each 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 DB Depositor Inc., the "Clearing Agency"), except
as provided below. DB Depositor Inc. has been informed by DTC that DTC's
nominee will be CEDE & Co. No holder of any such certificate 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 certificateholders with respect to any such
certificates shall refer to actions taken by DTC upon instructions from its
Participants. See "--Definitive Certificates" below and "Description of
Certificates--Global Securities" in the prospectus.
Under the rules, regulations and procedures creating and affecting DTC
and its operations, DTC will take action permitted to be taken by a
certificateholder under the Trust Agreement only at the direction of one or
more Participants to whose DTC account such certificates are credited.
Additionally, DTC will take such actions with respect to specified Voting
Rights only at the direction and on behalf of 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
Participants whose holdings of certificates evidence such Voting Rights,
authorize divergent action.
Definitive Certificates
Definitive certificates will be issued to certificate owners or their
nominees, respectively, rather than to DTC or its nominee, only if (i) DB
Depositor Inc. advises the Trustee in writing that DTC is no longer willing or
able to discharge properly its responsibilities as Clearing Agency with
respect to each class of certificates [(other than the definitive classes)]
and DB Depositor Inc. is unable to locate a qualified successor or (ii) DB
Depositor Inc., 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 Participants of the
availability through DTC of definitive certificates. Upon surrender by DTC of
the definitive certificates representing the certificates [(other than the
definitive classes of certificates)] and receipt of instructions for
re-registration, the Trustee will reissue such certificates as definitive
certificates issued in the respective principal amounts owned by the
individual owners of the certificates. Thereafter the Trustee will recognize
the holders of the definitive certificates as certificateholders under the
Trust Agreement.
Distributions
Collections on the Deposited Assets that are received by the Trustee for
a given Collection Period pursuant to the collection procedures described
herein and in the prospectus and deposited from time to time into the
Certificate Account 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:
o to the Trustee, all unpaid fees and expenses of the Trustee and its
respective agents, up to the Allowable Expense Amount (as defined
below) for the related Collection Period;
o [to the [providers of credit support ("Credit Support Providers")]
[swap or derivative counterparty], any amounts required to be paid or
reimbursed to, or deposited with, any such person;]
o to the certificateholders of each class of such series, first, to the
payment of Required Interest [and on a pro rata basis to the Credit
Support Providers for the payment of any Credit Support Payments],
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";
o [to the Credit Support Providers, any credit support payments;] and
o to the Trustee, all its remaining unpaid fees and expenses and those
of its respective agents not otherwise paid pursuant to clause (i)
above.
Collections received from the Deposited Assets and any applicable credit
support relating to the certificates over a specified period may not be
sufficient, after payment of all Allowable Expense Amounts [and payment of all
amounts required to be paid to the Credit Support Providers] for such period,
to make all required distributions to the certificateholders of the
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 distributable on the next Distribution Date on which
sufficient funds exist to pay the shortfall.
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 received on or with respect to the Deposited Assets
(including investment income on Eligible Investments) received during
the preceding Collection Period[,] [and] (b) amounts available as of
such Distribution Date pursuant to the credit support described
herein [and (c) any additional amount that DB Depositor Inc. 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 Agency as
being consistent with the rating of such certificates, as specified
in the Trust agreement. Generally, Eligible Investments must be
limited to obligations or securities that mature not later than the
business day prior to the next succeeding Distribution Date.
"Required Interest" for the certificates or any class
thereof on any given Distribution Date means the accrued and unpaid
interest on the outstanding Certificate Principal Balance [or
Notional Amount] of such certificates, computed at the applicable
Pass-Through Rate.
"Required Premium" for the 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 certificates or any class
thereof for any Distribution Date means the amount received on the
Deposited Assets attributable to principal payments thereon during
the related Collection Period, to the extent allocable to such
certificates. The Certificate Principal Balance of a certificate
outstanding at any time represents the maximum amount that the holder
thereof is entitled to receive as distributions allocable to
principal from the cash flow on the Underlying Securities, the other
assets in the Trust and any credit support obtained for the benefit
of such holder. The Certificate Principal Balance of any class of
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 deemed to have occurred in connection with allocations of (i)
Realized Losses allocable to principal on the Deposited Assets and
(ii) Extraordinary Trust Expenses, as described herein. [The Notional
Amount 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 Deposited 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 its own
funds, or funds in the Certificate Account that are not included in the
Available Funds for the Distribution Date, in an amount equal to the aggregate
of payments of principal, premium (if any) and interest, net of that portion
of the Available Funds 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 Advances
is to maintain a regular cash flow to the certificateholders, 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
Deposited Assets due to bankruptcy proceedings with respect to the Deposited
Assets.
All Advances will be reimbursable to the Trustee from late collections,
insurance proceeds, if any, and any proceeds from the liquidation of the
Deposited Asset ("Liquidation Proceeds") as to which such unreimbursed Advance
was made. In addition, any Advances previously made in respect of any
Deposited Asset that are deemed by the Trustee to be nonrecoverable from
related late collections, insurance proceeds, if any, or Liquidation Proceeds
may be reimbursed to the Trustee out of any funds in the Certificate Account
allocable to any of the Deposited Assets prior to the distributions on the
certificates.
Allocation of Losses; Subordination [specify if necessary]
[The subordination described herein provided by the class [ ]
certificates [and the class [ ] certificates] is designed to protect holders
of the remaining classes of certificates from certain losses and other
shortfalls with respect to the Deposited Assets. As a result, losses and other
shortfalls with respect to the Deposited Assets will be borne by the remaining
classes of 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 a given trust in
excess of the Allowable Expense Amount, including certain reimbursements to DB
Depositor Inc. described in the prospectus under "Description of
Certificates--[Certain Matters Regarding the Administrative Agent and DB
Depositor Inc."] and certain reimbursements to the Trustee described under
"Description of the Trust Agreement--The Trustee" herein.]
[Redemption [Put][Other Features] [Describe existence of any redemption,
put or other material features applicable to the Underlying Securities].
[The Call Warrant; Optional Call
On any Business Day on or after [ ] (or after the announcement of any
redemption or other unscheduled payment or sale of the Underlying Securities)
that the Call Warrant holder designates as a call date (a "Call Date"), the
Call Warrant holder may exercise its option to purchase, in whole or in part,
the Class [ ] Certificates at par value plus any accrued and unpaid interest
to the Call Date (the "Call Warrant"); provided that the Call Warrant holder
pays the purchase price on or prior to such Call Date (an "Optional Call").
The Call Warrants are not being offered by this prospectus supplement. DB
Depositor Inc., or an affiliate thereof, will be the initial Call Warrant
holder, but the Call Warrants are transferable. The Class [ ] Certificates are
also subject to such a call.]
[Restrictions 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 a Plan
except upon the delivery of an opinion of counsel as described herein. See
"ERISA Considerations."]
DESCRIPTION OF THE TRUST AGREEMENT
General
The certificates will be issued pursuant to a Trust Agreement (the "Trust
Agreement"), a form of which is filed as an exhibit to the registration
statement that includes the accompanying prospectus. A Current Report on Form
8-K relating to the certificates containing a copy of the Trust agreement as
executed will be filed by DB Depositor Inc. with the SEC following the
issuance and sale of the certificates. The Trust created under the Trust
Agreement (including the Series 200_-[ ] supplement) will consist of:
o the Deposited Assets (exclusive of any Retained Interest, which is
not part of the Trust);
o all payments on or collections in respect of the Deposited Assets due
after the Cut-off Date, together with any proceeds thereof[,] [and];
o [any credit support in respect of any class or classes of
certificates] [and;
o the rights of DB Depositor Inc. under the purchase agreement between
DB Depositor Inc. and the seller of the Underlying Securities].
[In addition, the holders of the certificates may also have the benefit
of certain credit support discussed above. See "Description of Credit
Support."] Reference is made to the accompanying prospectus for important
information in addition to that set forth herein regarding the Trust, the
terms and conditions of the Trust Agreement and the certificates. The
following summaries of certain provisions of the Trust Agreement 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 Bank of New York, a New York corporation, (or any successor trustee
appointed by an officer of DB Depositor Inc.) will act as Trustee for the
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 certificates or the
performance of the Trustee's duties under the Trust Agreement, other than any
loss, liability or expense (i) that constitutes a specific liability of the
Trustee under the Trust Agreement or (ii) incurred by reason of willful
misfeasance, bad faith or negligence in the performance of the Trustee's
duties under the Trust Agreement or as a result of a breach, or by reason of
reckless disregard, of the Trustee's obligations and duties under the Trust
Agreement.
Events of Default
An event of default with respect to any class of certificates under the
Trust Agreement, other than a class of certificates representing an interest
in preferred stock will consist of:
o [a default in the payment of any interest on any Underlying Security
after the same becomes due and payable (subject to any applicable
grace period);
o a default in the payment of the principal of or any installment of
principal of any Underlying Security when the same becomes due and
payable; and
o the occurrence and continuance of such other events specified in the
applicable series supplement.]
[Describe remedies available to certificateholders upon the occurrence
and continuance of an event of default, including, as applicable, directing
the Trustee to vote the Underlying Securities in favor of declaring the
principal balance of and any accrued interest on the Outstanding Debt
Securities to be immediately due and payable].
The Trust Agreement will provide that, within 30 days after the
occurrence of an event of default in respect of the certificates of any class,
the Trustee will give to the holders of such certificates notice, transmitted
by mail, of all such uncured or unwaived events of default known to it.
However, except in the case of an event of default relating to the payment of
principal of or premium, if any, or interest on any of the Underlying
Securities, the Trustee will be protected in withholding such notice if in
good faith it determines that the withholding of such notice is in the
interest of the holders of the certificates of such class.
No holder of any certificate will have the right to institute any
proceeding with respect to the Trust Agreement, unless (i) the holder
previously has given to the Trustee written notice of a continuing breach,
(ii) the holders of certificates of such series evidencing not less than the
"Required Percentage--Remedies" specified in the applicable series supplement
of the aggregate Voting Rights of such series have requested in writing that
the Trustee institute such proceeding in its own name as trustee, (iii) the
holder or holders have offered the Trustee reasonable indemnity, (iv) the
Trustee has for 15 days failed to institute such proceeding and (v) no
direction inconsistent with such written request has been given to the Trustee
during such 15-day period by the holders of certificates of such series
evidencing not less than the Required Percentage. ["Required
Percentage--Remedies" shall mean [ %] of the Voting Rights.]
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 [and specify other classes] in proportion to
the then outstanding Certificate Principal Balances [or Notional Amounts] of
their respective certificates and [ ]% of all Voting Rights will be allocated
among all holders of the class [ ] certificates in proportion to the then
outstanding [Certificate Principal Balances] [Notional Amounts] of their
respective certificates. [Specify whether and under what circumstances voting
will be class-by-class.]
[Specify conditions, if any, under which allocation of Voting Rights
might change from the foregoing percentages.] ["Required
Percentage--Amendment" of Voting Rights necessary to consent to amendment or
modification of the Trust shall be [ %].] ["Required Percentage--Waiver" shall
mean [ %] [of the Voting Rights].]
Voting of Underlying Securities, [Modification of Indenture]
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 [DTC] [Federal Reserve Bank] and except as otherwise limited by
the Trust Agreement. In the event that the Trustee receives a request from
[DTC] [Federal Reserve Bank] the [Underlying Securities trustee] [the fiscal
agent] [or the issuer of the Underlying Securities] [or GSE issuer] for its
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 mail a notice of such proposed amendment,
modification, waiver or solicitation to each certificateholder of record as of
such date. The Trustee shall request instructions from the 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
certificates, as applicable) as the certificates of the Trust were actually
voted or not voted by the certificateholders thereof as of a date determined
by the Trustee prior to the date on which such consent or vote is required;
provided, however, that, notwithstanding anything to the contrary, 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 as a
grantor trust for Federal income tax purposes, (ii) which would alter the
timing or amount of any payment on the Underlying Securities, including,
without limitation, any demand to accelerate the Underlying Securities, except
in the event of an event of default with respect to the Underlying Securities
or an event which with the passage of time would become an event of default
with respect to the Underlying Securities and with the unanimous consent of
all holders of 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 except in the event of a default under the [indenture] [Underlying
Securities] and only with the consent of certificateholders representing 100%
of the aggregate voting rights of each outstanding class of the certificates.
The Trustee will not be liable for any failure to act resulting from
certificateholders' late return of, or failure to return, directions requested
by the Trustee from the certificateholders.
In the event that an offer is made by the [issuer of the Underlying
Securities] [or GSE issuer] to issue new obligations in exchange and
substitution for any of the Underlying Securities or any other offer is made
for the Underlying Securities, the Trustee will notify the certificateholders
of such offer as promptly as practicable. The Trustee must reject any such
offer unless an event of default under the indenture [Underlying Securities]
has occurred, the Trustee is directed by the affirmative vote of all of the
certificateholders to accept such offer and the Trustee has received the tax
opinion described above. Accordingly, a certificateholder generally would be
required to effect a withdrawal of Requested Underlying Securities from the
Trust in order to accept such offer. See "Description of
Certificates--Optional Exchange" in the prospectus.
[If an event of default under the [indenture] [Underlying Securities]
occurs and is continuing and if directed by all the holders of outstanding
class [ ] certificates and[, unless the class [ ] certificates are no longer
outstanding, by all the holders of outstanding class [ ] certificates,] the
Trustee will vote the Underlying Securities in favor of directing, or take
such other action as may be appropriate to direct, the Underlying Securities
trustee 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 certificateholders' interests of each class may
differ and the interests of either class may differ from holders of other
outstanding debt securities of the Underlying Securities issuer[s].]
Termination
The circumstances under which the obligations created by the Trust
agreement will terminate in respect of the certificates are described in
"Description of Certificates--Termination" in the prospectus. [Describe
additional termination provisions.]DB Depositor Inc. will have the right to
purchase all remaining Deposited Assets in the Trust and thereby effect early
retirement of the certificates on any Distribution Date, [(a)] once the
aggregate principal amount of the Deposited Assets at the time of any such
purchase is less than [10%] of the aggregate principal amount of the Deposited
Assets as of the Cut-off Date [and (b) at the option of DB Depositor Inc. 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 DB Depositor Inc. continued satisfaction 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 DB Depositor Inc. exercises any such option, the
portion of the purchase price allocable to the 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 certificates [one month's] [three month's] [specify
other period] interest thereon at the Fixed Pass-Through Rate or the then
applicable Variable Pass-Through Rate, as the case may be, plus, with respect
to each class of certificates, any previously accrued but unpaid interest
thereon.] [Specify alternative allocation method if different from above.] In
no event will the Trust created by the Trust Agreement for the certificates
continue beyond the expiration of 21 years from the death of the survivor of
the person or persons named in the Trust Agreement. See "Description of Trust
Agreement--Termination" in the prospectus.
CERTAIN LEGAL ASPECTS OF THE DEPOSITED ASSETS
[Describe any applicable legal aspects of the Deposited Assets or
relating to the enforceability by the certificateholders of the security
interest, if any, securing such Deposited Assets.]
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of the material federal income tax
consequences of the purchase, ownership and disposition of the certificates by
an initial holder of certificates. Such consequences will depend on the terms
of the certificate, whether the Trust is treated as a grantor trust, as a
partnership or a FASIT for federal income tax purposes, and the assets
collateralizing or otherwise supporting such certificate. The consequences of
owning certificates which are deemed for federal income tax purposes to be
interests in a grantor trust, in a partnership or in a FASIT are discussed
separately below under the captions "Grantor Trust Certificates", "Partnership
Certificates" and "FASIT Certificates" respectively. The applicable Trust
agreement would include provisions appropriate to the particulars of the
transaction and to the relevant federal income tax status of the Trust and
related certificates.
This summary is based upon laws, regulations, rulings and decisions
currently in effect, all of which are subject to change, possibly on a
retroactive basis. The discussion does not deal with all federal tax
consequences applicable to all categories of investors, some of which may be
subject to special rules. In addition, this summary is generally limited to
investors who will hold the certificates as "capital assets" (generally,
property held for investment) within the meaning of Section 1221 of the
Internal Revenue Code of 1986, as amended (the "Code"), and who do not hold
their certificates as part of a "straddle," a "hedge" or a "conversion
transaction," persons that have a "functional currency" other than the U.S.
dollar and investors in pass-through entities. Investors should consult their
own tax advisors to determine the federal, state, local and other tax
consequences of the purchase, ownership and disposition of the certificates.
[This prospectus supplement for each series of certificates will describe the
consequences that relate to the specific certificates issued pursuant
thereto.]
The Trust will be provided with an opinion of Sidley Austin Brown & Wood
LLP (a limited liability partnership), special federal tax counsel to DB
Depositor Inc. ("Federal Tax Counsel") regarding certain federal income tax
matters discussed below. An opinion of Federal Tax Counsel, however, is not
binding on the Internal Revenue Service (the "Service") or the courts.
Prospective investors should note that no rulings have been or will be sought
from the Service with respect to any of the federal income tax consequences
discussed below, and no assurance can be given that the Service will not take
contrary positions.
Tax Status of Trust as a Grantor Trust
In the opinion of Federal Tax Counsel, the Trust will be classified as a
grantor trust and not as an association (or publicly traded partnership)
taxable as a corporation for federal income tax purposes. Accordingly, each
owner of a certificate (a "certificate owner") will be subject to federal
income taxation as if it owned directly the portion of the Deposited Assets
allocable to such certificates, and as if it paid directly its share of
expenses paid by the Trust. The following discussion assumes that the
Underlying Securities were not issued with original issue discount ("OID")
and, accordingly, the certificate owners will not realize OID except with
respect to a "stripped interest" (as defined below).
Income of Certificate Owners
In General, a certificate owner will allocate the amount it pays for its
certificate among the Underlying Securities and the Deposited Assets in the
Trust other than the Underlying Securities (the "Other Deposited Assets")
allocable to such certificate, in proportion to their relative fair market
values on the date of purchase of the certificate. A certificate owner would
calculate separately its income, gain, loss or deduction realized with respect
to each such asset.
The federal income tax treatment of a holder of a particular class of
certificates will depend upon whether the interest in the Underlying
Securities represented by such class will be considered, in whole or in part,
to be a "stripped bond" or "stripped coupon" (together, a "stripped interest")
within the meaning of Section 1286 of the Code. A class of certificates will
not be considered to represent a stripped interest in the Underlying
Securities to the extent the certificate is entitled to receive a
proportionate amount of all principal and interest on the Underlying
Securities. A class of certificates will be considered in its entirety to
represent a stripped interest in the Underlying Securities if it is entitled
to receive interest on the Underlying Securities which is disproportionately
less than the principal which it is entitled to receive on the Underlying
Securities, or if it is entitled to receive all or part of the interest on the
Underlying Securities but no principal on the Underlying Securities. In
addition, if a class of certificates is entitled to receive interest and
principal on the Underlying Securities, but the interest it is entitled to
receive on the Underlying Securities is disproportionately more than the
principal it is entitled to receive on the Underlying Securities, it could be
argued that the certificates represent (a) an interest in the Underlying
Securities that is not a stripped interest to the extent it represents a
proportional amount of all the principal and interest on the Underlying
Securities and (b) a stripped interest in the Underlying Securities to the
extent of any additional interest to which it is entitled on the Underlying
Securities. If a certificate represents in part a stripped interest and in
part not a stripped interest, such interests will be treated as two separate
items for tax purposes and a purchaser of certificates will be required to
allocate its purchase price among the two items (as well as any other
Deposited Assets) in proportion to their relative fair market values on the
date of purchase.
Tax Treatment of Certificates to the Extent They are Not Stripped
Interests. To the extent a class of certificates does not represent a stripped
interest in the Underlying Securities, each certificate owner will be required
to report on its federal income tax return, in a manner consistent with its
method of accounting, its share of the gross income of the Trust, including
interest and discount earned on the Underlying Securities, income derived from
the other Deposited Assets held by the Trust, and any gain or loss upon
collection or disposition of the Underlying Securities or other Deposited
Assets. The portion of each monthly payment to a certificate owner that is
allocable to principal on the Underlying Securities (other than amounts
representing discount, as described below) will represent a recovery of
capital, which will reduce the tax basis of such certificate owner's undivided
interest in the Underlying Securities.
To the extent that the portion of the purchase price of a certificate
allocated to a certificate owner's undivided interest in a Underlying Security
is greater than or less than the portion of the principal balance of the
Underlying Security allocable to the certificate, such interest in the
Underlying Security will have been acquired at a premium or discount, as the
case may be. In determining whether a certificate owner has purchased its
interest in the Underlying Securities at a premium or discount, a portion of
the purchase price for a certificate will be allocated to (i) the other
Deposited Assets (including any accrued interest thereon) held by the Trust
and (ii) the accrued interest on the Underlying Securities at the time of
purchase as though such accrued interest were a separate asset, thus, in each
case, reducing the portion of the purchase price allocable to the certificate
owner's undivided interest in the Underlying Securities (the "Allocated
Purchase Price"). To the extent that the Allocated Purchase Price is less than
the principal balance of an Underlying Security, the certificate owner's
interest in such Underlying Security will be treated as purchased at a "market
discount." The market discount on a Underlying Security will, however, be
considered to be zero if it is less than a statutorily defined de minimis
amount. Conversely, to the extent that the Allocated Purchase Price exceeds
the principal balance of an Underlying Security, the certificate owner's
interest therein will be treated as purchased with "bond premium." See the
discussion below under "Bond Premium."
For example, if the Allocated Purchase Price paid by a certificate owner
who purchases a certificate in the initial public offering were equal or
almost equal to the portion of the principal balance of the Underlying
Security that is allocable to the certificate, there would be no significant
amount of discount or premium with respect to its interest in such Underlying
Security. Moreover, if the total purchase price of a certificate is equal to
the principal amount of the Underlying Securities allocable to the
certificate, because a portion of such purchase price will be allocated to the
other Deposited Assets of the Trust, in the aggregate a certificate owner's
interest in the Underlying Securities will have been purchased at a discount.
In general, under the market discount provisions of the Code, principal
payments received by the Trust, and all or a portion of the gain recognized
upon a sale or other disposition of an Underlying Security or upon the sale or
other disposition of a certificate, will be taxable as ordinary income to the
extent of accrued market discount, and a portion of the interest deduction
attributable to any indebtedness treated as incurred or continued to purchase
or carry an Underlying Security (or a certificate) must be deferred. The
ordinary income treatment on principal payments and dispositions and deferral
of interest deductions described in the preceding sentence will not apply if a
certificate owner elects to include market discount in income currently as it
accrues for each taxable year during which it holds the certificate. Any such
election will also apply to all debt instruments held by the certificate owner
during the year in which the election is made and all debt instruments
acquired thereafter. Market discount will accrue in the manner to be provided
in Treasury regulations, but the Conference Report accompanying the Tax Reform
Act of 1986 states that, until such regulations are issued, taxpayers may
elect to accrue market discount either (i) under a constant yield (economic
accrual) method or (ii) in the proportion that the stated interest paid on the
obligation for the current period bears to total remaining interest on the
obligation.
Tax Treatment of Certificates to the Extent They Are Stripped Interests.
To the extent a class of certificates represents a stripped interest in the
Underlying Securities, each such certificate will be subject to the OID rules.
The amount of OID on a stripped interest is equal to the excess of all amounts
payable on the stripped interest (other than qualified stated interest) over
the portion of the purchase price for the certificate allocable to the
stripped interest.
Under the Treasury Regulations issued under Section 1286 of the Code (the
"Treasury Regulations"), the interest payable with respect to the stripped
interest will, in the appropriate circumstances, be treated as "qualified
stated interest" if it represents a fixed periodic payment on principal on the
Underlying Securities to which the stripped interest (i.e., the certificate
owner) is also entitled. If none of the amounts payable to a certificate owner
with respect to a stripped interest constitute qualified stated interest, then
the stripped interest will have OID in an amount equal to the excess of all
payments to be received on the stripped interest over the purchase price for
the certificate allocable to the stripped interest. Moreover, in determining
the amount paid for the stripped interest, a portion of the purchase price for
a certificate must be allocated to the certificate owner's share of other
Deposited Assets and to accrued interest.
The tax treatment of a certificate owner will depend upon whether the
amount of OID on the stripped interest represented by the certificate is less
than a statutorily defined de minimis amount. In general, under the
Regulations, the amount of OID with respect to the stripped interest will be
de minimis if it is less than 1/4 of one percent multiplied by the product of
the "stated redemption price at maturity" and the number of full years
remaining after the purchase date until the maturity of such stripped
interest. However, if the stripped interest provides for amortization of
principal, the amount of OID will be de minimis if it is less than 1/4 of one
percent multiplied by the product of the stated redemption price at maturity
and the weighted average maturity (i.e., the sum of the amounts obtained by
multiplying the amount of each payment under the stripped interest (other than
a payment of qualified stated interest) by a fraction, the numerator of which
is the number of complete years from the purchase date until the payment is
made and the denominator of which is the stated redemption price at maturity)
of the stripped interest. In general, "stated redemption price at maturity"
means the sum of all amounts payable on the stripped interest other than
qualified stated interest.
If the amount of OID on the stripped interest represented by the
certificate is de minimis under the rules discussed above, the stripped
interest would not be treated as having OID. Each certificate owner would be
required to report on its federal income tax return its share of the gross
income of the Trust, including interest on the Underlying Securities and any
gain upon sale or disposition by the Trust of the Underlying Securities. Such
gross income would exceed the Pass-Through Rate on the certificate by an
amount equal to the certificate owner's share of the expenses of the Trust for
the period during which it owns a certificate. Each certificate owner would be
required to include the de minimis OID in income as each principal payment on
the stripped interest is received, in proportion to the amount that each
principal payment bears to the stated principal amount of the stripped
interest; such income would be capital gain, short-term or long-term depending
upon the certificate owner's holding period in the certificate. The
certificate owner would be entitled to deduct its share of expenses of the
Trust to the extent described below. Any amounts received by a certificate
owner from any credit support or any subordination feature will be treated for
federal income tax purposes as having the same characteristics as the payments
they replace.
Except as described below, a certificate owner would report its share of
the income of the Trust under its usual method of accounting. Accordingly,
except as described below, interest on an Underlying Security would be
includible in a certificate owner's gross income when it accrues on the
Underlying Securities, or, in the case of certificate owners who are cash
basis taxpayers, when received by the administrative agent, if any, or
otherwise the Trustee on behalf of certificate owners. Because the interest
collected on the Underlying Securities generally is paid to certificate owners
in the following month, the amount of interest includible in a certificate
owner's gross income during any calendar month will not equal the interest
distributed in that month.
If the OID with respect to the stripped interest in the Underlying
Securities represented by a certificate is not treated as being de minimis, a
certificate owner will be required to include in income, in addition to any
qualified stated interest on the stripped interest as described above, any OID
on the stripped interest. OID must be included in income as it accrues on a
daily basis, regardless of when cash payments are received, using a method
reflecting a constant yield as described below. Such treatment could result in
the accrual of income by such certificate owner prior to the receipt of cash
by such certificate owner. Under the rules described below, the amounts
includible in income by a certificate owner on a stripped interest that has
OID are lesser in the early years and greater in the later years than the
amounts that would be includible on a straight-line basis.
In general, if a stripped interest has OID the certificate owner will be
required, whether such certificate owner uses the cash or the accrual method
of tax accounting, to include in ordinary gross income the sum of the "daily
portions" of OID on the stripped interest for all days during the taxable year
that the certificate owner owns the certificate. The daily portions of OID on
a stripped interest are determined by allocating to each day in any "accrual
period" a ratable portion of the OID allocable to that accrual period. The
amount of OID on a stripped interest allocable to each accrual period is
determined by (i) multiplying the "adjusted issue price" (as defined below) of
the stripped interest by a fraction, the numerator of which is the annual
yield to maturity of the stripped interest and the denominator of which is the
number of accrual periods in a year and (ii) subtracting from that product the
amount of qualified stated interest (if any) payable on the stripped interest
during (or allocable to) such accrual period.
An "accrual period" would generally be each period ending on an interest
payment date on the Underlying Securities, although Treasury regulations allow
a certificate owner to elect other accrual periods of no more than a year in
length, as long as each scheduled payment on the Underlying Securities occurs
at the end of an accrual period.
The "adjusted issue price" of a stripped interest at the beginning of any
accrual period is the purchase price for a certificate allocable to the
stripped interest (including accrued interest, if any) (i) increased by the
amount of OID allocable to all prior accrual periods and (ii) reduced by the
amount of all payments other than qualified stated interest payments (if any)
in all prior accrual periods. In addition, if an interval between payments of
qualified stated interest contains more than one accrual period, the adjusted
issue price at the beginning of each accrual period in the interval is
increased by the amount of qualified stated interest that has accrued prior to
the first day of the accrual period but that is not payable until the end of
the interval.
The Trustee intends to account for OID, if any, reportable by certificate
owners by reference to the price paid for a certificate by an initial
purchaser, although the amount of OID will differ for subsequent purchasers.
Such subsequent purchasers should consult their tax advisors regarding the
proper calculation of OID.
Bond Premium. In the event that a certificate represents either an
unstripped interest in an Underlying Security, or a stripped interest which
includes qualified stated interest, and the stripped or unstripped interest is
treated as having been purchased at a premium (i.e., the purchase price of a
certificate allocable to the Underlying Security exceeds the total amount
payable on the Underlying Security to the certificateholder other than
qualified stated interest), such premium will be amortizable by the
certificate owner as an offset to interest income (with a corresponding
reduction in the certificate owner's basis) under a constant yield method over
the term of the underlying Underlying Security if an election under Section
171 of the Code is made or was previously in effect. Any such election will
also apply to all debt instruments held by the certificate owner during the
year in which the election is made and all debt instruments acquired
thereafter.
Election to Treat All Interest as Original Issue Discount. Any
certificate owner may elect to include in gross income all interest (including
stated interest, OID, de minimis OID, market discount and de minimis market
discount, as adjusted by any bond premium or acquisition premium) that accrues
on an unstripped or stripped interest using the constant yield method
described above, treating the instrument as having been issued on the
certificate owner's acquisition date at an issue price equal to such owner's
adjusted basis with no interest payments being qualified stated interest. Such
an election with respect to a unstripped or stripped interest having
amortizable bond premium or market discount would constitute, respectively, an
election to apply the market discount rules or bond premium rules with respect
to all other debt instruments with market discount or amortizable bond
premium, as the case may be, of such certificate owner.
Modification or Exchange of Underlying Securities. Depending upon the
circumstances, it is possible that a modification of the terms of the
Underlying Securities, or a substitution of other assets for the Underlying
Securities following a default on the Underlying Securities, would be a
taxable event to certificate owners on which they would recognize gain or
loss.
Foreign Tax Credits. Any foreign income taxes withheld from payments to
the Trust will be includible in the income of certificate owners and will
likewise be deductible to certificate owners, or, alternatively, certificate
owners may be eligible for a U.S. foreign tax credit subject to various
limitations.
Other Deposited Assets of the Trust
[Describe tax consequences of the other Deposited Assets.]
Deductibility of Trust's Fees and Expenses
In computing its federal income tax liability, a certificate owner will
be entitled to deduct, consistent with its method of accounting, its share of
reasonable administrative fees, trustee fees and other fees paid or incurred
by the Trust as provided in Section 162 or 212 of the Code and any allowable
amortization deductions with respect to certain other assets of the Trust. If
a certificate owner is an individual, estate or trust, the deduction for his
share of fees will be a miscellaneous itemized deduction that may be
disallowed in whole or in part.
Purchase and Sale of a Certificate
A certificate owner's tax basis in a certificate generally will equal the
cost of such certificate, increased by any amounts of undistributed taxable
income (e.g., OID or market discount) and reduced by any amortized premium
(each as described above) and any payments other than payments of qualified
stated interest on an underlying Underlying Security made on such certificate.
If a certificate is sold, gain or loss will be recognized equal to the
difference between the proceeds of sale allocable to each of the assets of the
Trust and the certificate owner's adjusted basis in each of the foregoing. Any
gain or loss will be a capital gain or loss if the certificate was held as a
capital asset, except that gain will be treated in whole or in part as
ordinary interest income to the extent of the certificate owner's interest in
accrued market discount not previously taken into income on Underlying
Securities.
Backup Withholding
Payments made on the certificates and proceeds from the sale of the
certificates will not be subject to a "backup" withholding tax of 31% unless,
in general, the certificate owner fails to comply with certain reporting
procedures and is not an exempt recipient under applicable provisions of the
Code.
Foreign Certificate Owners
To the extent that amounts paid to certificate owners that are not United
States Persons ("foreign certificate owners") are treated as interest with
respect to Underlying Securities originated after July 18, 1984, such amounts
generally will not be subject to the annual 30% withholding tax, provided that
such foreign certificate owner (i) fulfills certain certification
requirements, (ii) does not own at least 10% of the total combined voting
power of all classes of stock of the Underlying Securities Issuer (or 10% of
the capital or profits of an issuer which is a partnership for federal income
tax purposes) and (iii) is not a "related controlled foreign corporation."
Under such requirements, the holder must certify, under penalties of perjury,
that it is not a "United States Person" and provide its name and address.
A foreign holder that is not an individual or corporation (or an entity
treated as a corporation for federal income tax purposes) holding a
certificate on its own behalf may have substantially increased certification
requirements and should consult its tax advisor.
[Describe the federal income tax consequences to foreign certificate
owners of an interest in any other Deposited Assets of the Trust.]
A "United States Person" means a citizen or resident of the U.S., a
corporation, partnership or other entity created or organized in or under the
laws of the U.S., a state thereof or the District of Columbia, an estate the
income of which is includible in gross income for U.S. federal income tax
purposes, regardless of its source, or a trust with respect to which a court
within the United States is able to exercise primary supervision over its
administration and one or more United States fiduciaries have the authority to
control all of its substantial decisions.
Tax Characterization of The Trust as a Partnership
With respect to a trust intended to qualify as a partnership for federal
income tax purposes, DB Depositor Inc. and the administrative agent, if any,
have agreed, and the certificate owners will agree by their purchase of
certificates, to treat the Trust as a partnership for purposes of federal,
state and local income, franchise and any other tax measured in whole or in
part by income. However, the proper characterization of the arrangement
involving the Trust, the certificate owners, DB Depositor Inc. and the
administrative agent, if any, is not entirely clear because there is no
directly comparable authority.
If the Trust were deemed to be a "publicly traded partnership" it could
be subject to corporate income tax. Any such corporate income tax could
materially reduce or eliminate cash that would otherwise be distributable with
respect to the certificates (and certificate owners could be liable for any
such tax that is unpaid by the Trust). A publicly traded partnership is taxed
in the same manner as a corporation unless at least 90% of its gross income
consists of specified types of "qualifying income." Such qualifying income
includes, among other things, interest income not derived in the conduct of a
financial or insurance business, dividend income, and gain from the
disposition of assets producing such income. In the opinion of Federal Tax
Counsel, because of the nature of the income of the Trust, the Trust will not
be a publicly traded partnership taxable as a corporation.
Partnership Taxation
As a partnership, the Trust will not be subject to federal income tax,
but each certificate owner will be required to separately take into account
such holder's allocable share of income, gains, losses, deductions and credits
of the Trust. The Trust's income will consist primarily of [ ] and any gain
upon collection or disposition [ ]. The Trust's deductions will consist
primarily of [ ].
The tax items of a partnership are allocable to the partners in
accordance with the Code, Treasury Regulations and the partnership agreement
(here, the Trust Agreement and related documents). The Trust Agreement will
provide that each class of certificate owners will be allocated taxable income
of the Trust for each monthly period equal to the sum of (i) the amount
payable (or accruing) at the Pass-Through Rate on such class of certificates
for such month (to the extent such amount would not economically represent a
return of capital); (ii) an amount equivalent to interest that accrues during
such month on amounts previously due on such class of certificates but not yet
distributed; (iii) any Trust income for such month attributable to discount on
the Underlying Securities that corresponds to any excess of the principal
amount of such class of certificates over their initial issue price; and (iv)
[any other income economically accruing for such class of certificates during
such month. [All remaining taxable income of the Trust will be allocated to
the [ ]]. It is believed that this allocation will be valid under applicable
Treasury regulations, although no assurance can be given that the Service
would not require a greater amount of income to be allocated to certificate
owners. Moreover, even under the foregoing method of allocation, holders may
be allocated income equal to the entire Pass-Through Rate plus the other items
described above even though the Trust might not have sufficient cash to make
current cash distributions of such amount. Thus, cash basis holders in effect
could be required to report income from the certificates on the accrual basis.
In addition, tax allocations and tax reporting will be done on a uniform basis
for all certificate owners, even though their certificates may have been
purchased at different times and at different prices.
An individual taxpayer's miscellaneous itemized deductions (which do not
include interest expense) are subject to limitations and as a result may be
disallowed in whole or in part. Those limitations, which also apply to estates
and trusts, would apply to a certificate owner's share of expenses of the
Trust (including fees to the administrative agent, if any) and might result in
such holder being taxed on an amount of income that exceeds the amount of cash
actually distributed to such holder over the life of the Trust.
If the Trust holds a large number of Underlying Securities, it intends to
make all tax calculations relating to income and allocations to certificate
owners on an aggregate basis. Were the Service to require that such
calculations be made separately for each Underlying Security, the Trust might
be required to incur additional expense but DB Depositor Inc. believes that
there would not be a material adverse effect on certificate owners.
A certificate owner would increase or decrease its tax basis in its
certificate for its allocable share of the Trust's income or loss,
respectively. Any cash distributions by the Trust to a certificate owner will
constitute (i) first, a return of capital to the extent of such certificate
owner's tax basis in the certificate (with a corresponding dollar-for-dollar
reduction in such tax basis), and (ii) thereafter, to the extent in excess
thereof, gain on the sale or exchange of such certificate owner's certificate.
See "Disposition of Certificates" below.
Discount and Premium
DB Depositor Inc. believes that the Underlying Securities were not issued
with OID and, therefore, the Trust should not have OID income. However, the
purchase price paid by the Trust for the Underlying Securities may be greater
or less than the remaining principal balance of the Underlying Securities at
the time of purchase. If so, the Underlying Securities will have been acquired
at a premium or discount, as the case may be. (As indicated above, if the
Trust acquires a large number of Underlying Securities it will make this
calculation on an aggregate basis, but might be required to recompute it on an
instrument-by-instrument basis.)
The Trust will make an election that will result in any market discount
on the Underlying Securities being included in income currently as such
discount accrues over the life of the Underlying Securities. As indicated
above in the discussion of "Partnership Taxation," a portion of such market
discount income may be allocated to certificate owners.
Modification or Exchange of Underlying Securities
Depending upon the circumstances, it is possible that a modification of
the terms of the Underlying Securities, or a substitution of other assets for
the Underlying Securities following a default on the Underlying Securities,
would be a taxable event to certificate owners on which they would recognize
gain or loss.
Foreign Tax Credits
Any foreign income taxes withheld from payments to the Trust will be
includible in the income of certificate owners and will likewise be deductible
to certificate owners, or, alternatively, certificate owners may be eligible
for a U.S. foreign tax credit subject to various limitations.
Tax Consequences of Other Assets Held by Trust
The manner in which income with respect to the other assets of the Trust
should be accrued will depend on the nature of those assets.
[Discuss specific tax consequences of other assets.]
Section 708 Termination
Under Section 708 of the Code, the Trust will be deemed to terminate for
federal income tax purposes if 50% or more of the capital and profits
interests in the Trust are sold or exchanged within a 12-month period. Were
such a termination to occur, the Trust would be considered to have contributed
its assets to a new partnership and distributed the interests in the new
partnership in liquidation to the certificate owners. If any such constructive
termination occurs, the Trust does not intend to comply with certain technical
requirements that might be applicable for various reasons including the likely
lack of relevant data. As a result, the Trust may be subject to certain tax
penalties and may incur additional expenses. Moreover, the Schedule K-1
information thereafter distributed to the certificate owners may be incorrect.
Disposition of Certificates. Generally, capital gain or loss will be
recognized on a sale or other disposition of certificates in an amount equal
to the difference between the amount realized and the seller's tax basis in
the certificates sold. A certificate owner's tax basis in a certificate will
generally equal its cost, increased by his share of trust income includible in
his income (including for the taxable year of sale) and decreased by his share
of deductible trust losses and any distributions received with respect to such
certificate. In addition, both his tax basis in, and the amount realized on a
sale of, a certificate would include the holder's share of liabilities of the
Trust. A holder acquiring certificates at different prices may be required to
maintain a single aggregate adjusted tax basis in such certificate and, upon
sale or other disposition of some of the certificates, allocate a pro rata
portion of such aggregate tax basis to the certificates sold (rather than
maintaining a separate tax basis in each certificate for purposes of computing
gain or loss on a sale of that certificate).
On the sale of a certificate, any gain attributable to the holder's share
of any accrued market discount on the Underlying Securities that has not
otherwise been included in the holder's income would generally be treated as
ordinary income to the holder and would give rise to special tax reporting
requirements. The Trust does not expect to have any other assets that would
give rise to such special reporting requirements. Thus, to avoid those special
reporting requirements, the Trust will elect to include market discount in
income as it accrues.
If a certificate owner is required to recognize an aggregate amount of
income (not including income attributable to disallowed itemized deductions
described above) over the life of the certificates that exceeds the aggregate
cash distributions with respect thereto, such excess will generally give rise
to a capital loss upon the retirement of the certificate.
Allocations Between Transferors and Transferees
In general, the Trust's taxable income and losses will be determined
monthly and the tax items for a particular calendar month allocable to a
particular class of certificates will be apportioned among holders of such
certificates in proportion to the principal amount of such certificates owned
by them as of the first business day following the end of such month. As a
result, a holder purchasing certificates may be allocated tax items (which
will affect its tax liability and tax basis) attributable to periods before
the actual transaction. The use of such a monthly convention may not be
permitted by existing regulations. If such a convention is not allowed (or
only applies to transfers of less than all of a partner's interest), taxable
income or losses of the Trust might be reallocated among the certificate
owners. The Trustee is authorized to revise the Trust's method of allocation
between transferors and transferees to conform to a method permitted by future
regulations.
Section 754 Election
In the event that a certificate owner sells its certificates at a profit
(loss), the purchasing certificate owner will have a higher (lower) basis in
the certificates than the selling certificate owner had. The tax basis of the
Trust's assets will not be adjusted to reflect that higher (or lower) basis
unless the Trust were to file an election under Section 754 of the Code. In
order to avoid the administrative complexities that would be involved in
keeping accurate accounting records, as well as potentially onerous
information reporting requirements, the Trust will not make such election. As
a result certificate owners might be allocated a greater or lesser amount of
trust income than would be appropriate based on their own purchase price for
certificates.
Administrative Matters
The Trustee is required to keep complete and accurate books of the Trust.
Such books will be maintained for financial reporting and tax purposes on an
accrual basis and the fiscal year of the Trust will be the calendar year. The
Trustee will file a partnership information return (Internal Revenue Service
Form 1065) with the Service for each taxable year of the Trust and will report
each certificate owner's allocable share of items of trust income and expense
to holders and the Service on Schedule K-1. The Trust will provide the
Schedule K-1 information to nominees that fail to provide the Trust with the
information statement described below and such nominees will be required to
forward such information to the beneficial owners of the certificates.
Generally, holders must file tax returns that are consistent with the
information return filed by the Trust or be subject to penalties, unless the
holder notifies the Service of all such inconsistencies.
Under Code Section 6031, any person that holds certificates as a nominee
at any time during a calendar year is required to furnish the Trust with a
statement containing certain information on the nominee, the beneficial owners
and the certificates so held. Such information includes (i) the name, address
and taxpayer identification number of the nominee and (ii) as to each
beneficial owner (x) the name, address and taxpayer identification number of
such person, (y) whether such person is not a United States Person, a
tax-exempt entity, or a foreign government, an international organization, or
any wholly-owned agency or instrumentality of either of the foregoing, and (z)
certain information on certificates that were held, bought or sold on behalf
of such person throughout the year. In addition, brokers and financial
institutions that hold certificates through a nominee are required to furnish
directly to the Trust information as to themselves and their ownership of
certificates. A clearing agency registered under Section 17A of the Exchange
Act is not required to furnish any such information statement to the Trust.
The information referred to above for any calendar year must be furnished to
the Trust on or before the following January. Nominees, brokers and financial
institutions that fail to provide the Trust with the information described
above may be subject to penalties.
DB Depositor Inc., as the tax matters partner, will be responsible for
representing the certificate owners in any dispute with the Service. The Code
provides for administrative examination of a partnership as if the partnership
were a separate and distinct taxpayer. Generally, the statute of limitations
for partnership items does not expire before three years after the date on
which the partnership information return is filed. Any adverse determination
following an audit of the return of the Trust by the appropriate taxing
authorities could result in an adjustment of the returns of the certificate
owners and, under certain circumstances, a certificate owner may be precluded
from separately litigating a proposed adjustment to the items of the Trust. An
adjustment could also result in an audit of a certificate owner's returns and
adjustments of items not related to the income (or loss) of the Trust.
Tax Consequences to Foreign Certificate Owners
It is not clear whether the Trust would be considered to be engaged in a
trade or business in the United States for purposes of Federal withholding
taxes with respect to non-U.S. persons because there is no clear authority
dealing with that issue under facts substantially similar to those described
herein. Although it is not expected that the Trust would be engaged in a trade
or business in the United States for such purposes, the Trust expects to
withhold as if it were so engaged in order to protect the Trust from possible
adverse consequences of a failure to withhold. The Trust expects to withhold
on the portion of its taxable income that is allocable to foreign certificate
owners pursuant to Code Section 1446, as if such income were effectively
connected to a U.S. trade or business, at a rate of 35% for foreign holders
that are taxable as corporations and 39.6% for all other foreign holders.
Subsequent adoption of Treasury regulations or the issuance of other
administrative pronouncements may require the Trust to change its withholding
procedures. In determining a holder's nonforeign status, the Trust may rely on
Form W-8 BEN, Form W-9 or the holder's certification of nonforeign status
signed under penalties of perjury.] A foreign holder that is not an individual
or corporation (or an entity treated as a corporation for federal income tax
purposes) holding a certificate on its own behalf may have substantially
increased certification requirements and should consult its tax advisor.
Each foreign holder might be required to file a U.S. individual or
corporate income tax return (including, in the case of a corporation, the
branch profits tax) on its share of the Trust's income. Each foreign holder
must obtain a taxpayer identification number from the Service and submit that
number to the Trust on Form W-8 BEN in order to assure appropriate crediting
of the taxes withheld. A foreign holder generally would be entitled to file
with the Service a claim for refund with respect to taxes withheld by the
Trust, taking the position that no taxes were due because the Trust was not
engaged in a U.S. trade or business. The Trust will cooperate in any such
refund claim if it can do so without incurring any out-of-pocket cost. No
assurance can be given as to whether any such refund claim would be granted.
The foregoing summary will be modified, as necessary, to reflect
differences caused by the precise nature of the Deposited Assets relating to a
given series of certificates.
Backup Withholding
Payments made on the certificates and proceeds from the sale of the
certificates will not be subject to a "backup" withholding tax of 31% unless,
in general, the certificate owner fails to comply with certain reporting
procedures and is not an exempt recipient under applicable provisions of the
Code.
Tax Characterization of The Trust as a FASIT
Upon the proposed issuance of certificates representing interests in a
FASIT and the promulgation of final Treasury Regulations relating to the
federal income taxation of FASITs and to the federal income tax consequences
of the ownership of FASIT interests, this prospectus supplement relating to
such certificates will describe the requirements for the classification of the
Trust as a FASIT and the consequences to a holder of owning such certificates.
CERTAIN STATE TAX CONSEQUENCES
[Describe any applicable state tax consequences that may arise, including
as a result of the specific nature of the Deposited Assets relating to a given
series of certificates or the degree of servicing required with respect to
such Deposited Assets.]
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and 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 or (c) any entity whose underlying assets are treated
as assets of any such plan by reason of such plan's investment in the entity
(each, a "Plan").
In accordance with ERISA's fiduciary standards, before investing in a
Certificate, a Plan fiduciary should determine whether such an investment is
permitted under the governing Plan instruments and is appropriate for the Plan
in view of its investment policy and the composition of its portfolio. Other
provisions of ERISA and the Code prohibit certain transactions (including
loans or other extension of credit) involving the assets of a Plan and persons
who have specified relationships to the Plan ("parties in interest" within the
meaning of ERISA or "disqualified persons" within the meaning of Section 4975
of the Code). Thus, a Plan fiduciary considering an investment in Certificates
should also consider whether such an investment might constitute or give rise
to a non-exempt prohibited transaction under ERISA or the Code.
Trust Assets as "Plan Assets"
Under a "look-through rule" set forth in Section 2510.3-101 of the United
States Department of Labor ("DOL") regulations (the "Regulation"), a Plan's
assets may include an interest in the underlying assets of an entity (such as
a trust) for certain purposes under ERISA if the Plan acquires an equity
interest in such entity. Thus, unless an exception to the look-through rule
applies, an investment in Certificates by a Plan might result in the assets of
the Trust being deemed to constitute Plan assets, which in turn might mean
that certain aspects of such investment, including the operation of the Trust,
might be subject to the prohibited transaction provisions under ERISA and the
Code. [Specify whether the certificates will qualify for an exception from the
Plan Assets look-through rule under such Regulation.]
If assets of the Trust were deemed to be Plan assets, transactions
involving the Depositor, Underwriter, Trustee, Market Agent, Underlying
Securities Trustee and the Company might constitute non-exempt prohibited
transactions with respect to a Plan holding a Certificate unless (i) one or
more prohibited transaction class exemptions ("PTCEs") applies or (ii) in the
case of the Company, it is not a disqualified person or party in interest with
respect to such Plan. Plans maintained or contributed to by the Depositor,
Underwriter, Trustee, Market Agent, Underlying Securities Trustee and the
Company, or any of their affiliates ("Excluded Plans"), should not acquire or
hold any certificate.
If the Trust is deemed to hold Plan Assets, the Underlying Securities
would appear to be an indirect loan between the Company and any Plan owning
certificates; however, such loan, by itself, would not constitute a prohibited
transaction unless the Company that is the obligor is a party in interest or
disqualified person with respect to such Plan.
Prohibited Transaction Exemptions
Certain prohibited transaction class exemptions could apply to the
acquisition and holding of Certificates by Plans, and the operation of the
Trust, including, but not limited to: PTCE 84-14 (an exemption for certain
transactions determined by an independent qualified professional asset
manager), PTCE 91-38 (an exemption for certain transactions involving bank
collective investment funds), PTCE 90-1 (an exemption for certain transactions
involving insurance company pooled separate accounts); PTCE 95-60 (an
exemption for certain transactions involving insurance company general
accounts) and PTCE 96-23 (an exemption for transactions effected by in-house
asset managers).
The Underwriter is a broker-dealer registered under the Securities
Exchange Act of 1934, as amended, and customarily purchases and sells
securities for its own account in the ordinary course of its business as a
broker-dealer. Accordingly, the sale of Certificates by the Underwriter to
Plans may be exempt under PTCE 75-1 if the following conditions are satisfied:
(i) the Underwriter is not a fiduciary with respect to the Plan and is a party
in interest or disqualified person solely by reason of Section 3(14)(B) of
ERISA or Section 4975(e)(2)(B) of the Code or a relationship to a person
described in such Sections, (ii) the transaction is at least as favorable to
the Plan as an arm's-length transaction with an unrelated party and is not a
prohibited transaction within the meaning of Section 503(b) of the Code, and
(iii) the Plan maintains for at least six years such records as are necessary
to determine whether the conditions of PTCE 75-1 have been met.
The custodial and other services rendered by the Trustee, Market Agent
and Underlying Securities Trustee might be exempt pursuant to Section
408(b)(2) of ERISA and Section 4975(d)(2) of the Code, which exempt services
necessary for the establishment or operation of a Plan under a reasonable
contract or arrangement and for which no more than reasonable compensation is
paid. An arrangement would not be treated as reasonable unless it can be
terminated upon reasonably short notice under the circumstances without
penalty. The Trustee and the Market Agent may each be terminated upon 60 days
prior notice and the approval of Certificateholders owning more than 66 2/3%
of the aggregate beneficial interest of Certificates. The Depositor believes
the compensation of the Trustee and Market Agent is reasonable under the
circumstances. The statutory exemption for services noted above does not
provide exemptive relief from prohibited transactions described in Section
406(b) of ERISA or Section 4975(c)(1)(E) or (F) of the Code. In that regard, a
fiduciary with respect to a Plan should consider whether a sale of a portion
of the Underlying Securities by the Market Agent to Deutsche Banc Alex. Brown
Inc. or its affiliates might constitute a non-exempt prohibited transaction by
reason of the relationship between the Market Agent and any such purchaser,
notwithstanding the sale procedure to accept the highest bid submitted and the
certification of the highest bid and identity of bidders to the Trustee, or
the possibility that the Market Agent may not solicit Deutsche Banc Alex.
Brown Inc. and its affiliates to avoid the possibility of a non-exempt
prohibited transaction. The Market Agent shall, prior to any sale of
Underlying Securities to Deutsche Banc Alex. Brown Inc. or any of its
affiliates, certify in writing to the Trustee that any such purchaser
submitted the highest of at least three bids and shall identify the other
bidders.
By acquiring and holding a Certificate, a Plan shall be deemed to have
represented and warranted to the Depositor, Trustee, Market Agent and
Underwriter that such acquisition and holding of a Certificate does not
involve a non-exempt prohibited transaction with respect to such Plan,
including with respect to the activities of the Trust.
METHOD OF DISTRIBUTION
Subject to the terms and conditions set forth in the underwriting
agreement, dated as of [ ], _______, DB Depositor Inc. has agreed to sell and
[Deutsche Banc Alex. Brown Inc. (an affiliate of DB Depositor Inc.)] [each of
the underwriters named below, including Deutsche Banc Alex. Brown Inc. (an
affiliate of DB Depositor Inc.)] [,] has [severally] agreed to purchase, the
[Certificates] [the principal amount of each class of Certificates set forth
below opposite its name].
Class [ ] Class [ ] Class [ ]
--- --- ---
Deutsche Banc Alex. Brown Inc............ $__________ $__________ $__________
Total............................. ========== ========== ==========
[Deutsche Banc Alex. Brown Inc. has] [The several underwriters have] agreed,
subject to the terms and conditions set forth in the underwriting agreement,
to purchase all Certificates offered hereby if any of such 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.]
DB Depositor Inc. has been advised by the underwriter[s] that [it][they]
propose[s] to offer the 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 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 Certificates for whom they may act as agents. The
underwriter[s] and any dealers that participate with the underwriter[s] in the
distribution of Certificates may be deemed to be underwriters, and any profit
on the resale of Certificates by them may be deemed to be underwriting
discounts, or commissions under the Securities Act.
The underwriting agreement provides that DB Depositor Inc. 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.
Deutsche Banc Alex. Brown Inc. is an affiliate of DB Depositor Inc., and
the participation by Deutsche Banc Alex. Brown Inc. in the offering of the
certificates complies with Section 2720 of the Conduct Rules of the National
Association of Securities Dealers, Inc. regarding underwriting securities of
an affiliate.
[In connection with the sale of the Class [ ] Certificates, Securities
and Exchange Commission rules permit the underwriter[s] to engage in
transactions that stabilize the price of the Class [ ] Certificates. These
transactions may include purchases for the purpose of fixing or maintaining
the price of the Class [ ] Certificates. The underwriter[s] may create a short
position in the Class [ ] Certificates in connection with the offering. That
means they sell a larger number of the Class [ ] Certificates than is shown on
the cover page of this prospectus supplement. If they create a short position,
the underwriter[s] may purchase Class [ ] Certificates in the open market to
reduce the short position. If the underwriter[s] purchase the Class [ ]
Certificates to stabilize the price or to reduce their short position, the
price of the Class [ ] Certificates could be higher than it might be if they
had not made such purchases. The underwriter[s] make no representation or
prediction about any effect that these purchases may have on the price of the
Class [ ] Certificates. The underwriter[s] may suspend any of these activities
at any time.
[In addition to stabilization transactions, the underwriter[s] may
exchange a certain percentage of the Class [ ] Certificates never distributed
to investors for a like percentage of the Underlying Securities in accordance
with the Series 200_ - [ ] supplement to the Trust Agreement.]
[The underwriter[s] may also impose a penalty bid on certain dealers and
selling group members. This means that if the underwriter[s] purchase Class [
] Certificates in the open market to reduce the underwriter[s'] short position
or to stabilize the price of the Class [ ] Certificates, they may reclaim the
amount of the selling concession from the underwriter[s] or selling group
members who sole those Class [ ] Certificates as part of this offering.]
[LISTING]
[The certificates are a new issue of securities with no established
trading market. The certificates will be approved for listing, subject to
official notice of issuance, on the [name of exchange]. The certificates will
be eligible for trading on [name of exchange] within the 30-day period after
the initial delivery thereof but it is not likely that substantial amounts of
the certificates will be traded on [name of exchange]. In order to meet one of
the requirements for listing the certificates on [name of exchange], the
underwriter[s] have undertaken to sell the certificates to a minimum of 400
beneficial owners. The underwriter[s] have told the Company that they
presently intend to make a market in the certificates prior to commencement of
trading on [name of exchange], as permitted by applicable laws and
regulations. The underwriter[s] are not obligated, however, to make a market
in the certificates. Any market making by the underwriter[s] may be
discontinued at any time at the sole discretion of the underwriter[s]. No
assurance can be given as to whether a trading market for the certificates
will develop or as to the liquidity of any trading market.]
RATINGS
It is a condition to the issuance of the certificates that the
certificates be rated not lower than [specify ratings applicable to each
class] by [Standard & Poor's, a division of The McGraw-Hill Companies, Inc.
("Standard & Poor's")][Moody's Investors Service, Inc. ("Moody's")] [and]
[Fitch, Inc. ("Fitch")] (the "Rating[Agency][Agencies]"). The ratings address
the likelihood of the receipt by the certificateholders of payments required
under the Trust Agreement, and are based primarily on the credit quality of
the Deposited Assets and any providers of credit support, as well as on the
relative priorities of the certificateholders of each class of the
certificates with respect to collections and losses with respect to the
Deposited Assets. The rating on the certificates does not, however, constitute
a statement regarding the occurrence or frequency of redemptions or
prepayments on, or extensions of the maturity of, the Deposited Assets, the
corresponding effect on yield to investors, or whether investors in the class
[ ] certificates [specify class with Notional Amount] may fail to recover
fully their initial investment.
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 any
other security rating.
DB Depositor Inc. has not requested a rating on the certificates by any
rating agency other than the Rating [Agency] [Agencies]. However, there can be
no assurance as to whether any other rating agency will rate the certificates,
or, if it does, what rating would be assigned by any such other rating agency.
A rating on the certificates by another rating agency, if assigned at all, may
be lower than the ratings assigned to the certificates by the Rating [Agency]
[Agencies].
LEGAL OPINIONS
Certain legal matters relating to the certificates will be passed upon
for DB Depositor Inc. and the underwriter[s] by Sidley Austin Brown & Wood
LLP, New York, New York.
Index of Terms For Prospectus Supplement
Advance..........................................S-20
Allocated Purchase Price.........................S-25
Allowable Expense Amount.........................S-19
Available Funds..................................S-19
Business Day.....................................S-10
Call Premium Percentage..........................S-19
Clearing Agency..................................S-18
Closing Date......................................S-8
Code.............................................S-24
Credit Support Providers.........................S-19
Definitive Classes...............................S-18
Deposited Assets............................S-9, S-16
DOL..............................................S-33
Eligible Investments.............................S-19
ERISA......................................S-12, S-32
Excluded Plans...................................S-33
Extraordinary Trust Expense......................S-20
FASIT............................................S-11
Federal Tax Counsel..............................S-24
Fitch............................................S-35
GSEs........................................S-6, S-13
GTCs........................................S-6, S-13
IRA..............................................S-12
Keogh............................................S-12
Liquidation Proceeds.............................S-20
look-through rule................................S-33
market discount..................................S-25
Moody's..........................................S-35
OID..............................................S-24
Other Deposited Assets...........................S-24
Plan.......................................S-12, S-34
PTCEs............................................S-33
Rating [Agency] [Agencies].......................S-35
Regulation.......................................S-33
Required Interest................................S-19
Required Premium.................................S-19
Required Principal...............................S-19
Retained Interest...........................S-15, S-8
Service..........................................S-24
Special Distribution Date........................S-10
Specified Currency................................S-5
Standard & Poor's................................S-35
Trust Agreement..................................S-21
Underlying Securities............................S-15
United States Person.............................S-28
No person has been authorized to give any information or make any
representations other than those contained in this Prospectus Supplement, and,
if given or made, such information or representations must not be relied upon
as having been authorized. This Prospectus Supplement does not constitute an
offer to sell or the solicitation of an offer to buy any securities other than
the securities to which it related or an offer to sell or the solicitation of
an offer to buy such securities in any circumstances in which such offer or
solicitation would be unlawful. Neither the delivery of the Prospectus
Supplement nor any sale made hereunder shall, under any circumstances, create
any implications that there has been no change in the affairs of the Company
since the date hereof or that the information contained herein is correct as
of any time subsequent to its date.
Summary of Principal Terms........................ S-3
Summary of Prospectus Supplement .................S-8
Formation of the Trust ...........................S-14
Risk Factors .....................................S-14
Description of the Deposited Assets ..............S-15
[Description of Credit Support] ..................S-19
Yield on the Certificates ........................S-20
Description of the Certificates ..................S-21
Description of the Trust Agreement ...............S-25
Certain Legal Aspects of the Deposited Assets ....S-28
Certain Federal Income Tax Consequences ..........S-28
Certain State Tax Consequences ...................S-38
ERISA Considerations .............................S-38
Method of Distribution ...........................S-40
[Listing..........................................S-41]
Ratings ..........................................S-41
Legal Opinions ...................................S-42
Index of Terms for
Prospectus Supplement ............................S-43
Important Notice About Information Presented in this
Prospectus and the Accompanying
Prospectus Supplement...........................2
Incorporation of Certain Documents by Reference...4
Reports to Certificateholders.....................5
Risk Factors......................................5
The Depositor.....................................10
Use of Proceeds...................................10
Formation of the Trust............................10
Maturity and Yield Considerations.................11
Description of the Certificates...................13
Description of Deposited Assets and Credit
Support..........................................30
Description of the Trust Agreement................42
Currency Risks....................................51
Certain United States Federal Income
Tax Consequences.................................53
ERISA Considerations..............................59
Underwriting......................................61
Legal Matters.....................................62
(LOGO)
Trust Certificates
Series 2001-[ ]
Underlying Securities
due ___________, 20__
Issued by ________________
Prospectus Supplement
[__________ __, 20__]
Subject to Completion,
Dated _____, 2001
Deutsche Banc Alex. Brown
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange is effective. This prospectus is not an offer to sell
and is not soliciting an offer to buy these securities in any state where the
offer or sale is not permitted.
Prospectus
Subject to Completion, Dated July 3, 2001
- ----------------------------------------------------------------------------
Trust Certificates
(Issuable in Series)
DB Depositor Inc.
Depositor
The trust -
o May periodically issue asset-backed certificates in one or more
series with one or more classes; and
o will own -
o a publicly issued security or a pool of securities;
o payments due on those securities; and/or
o other assets described in this prospectus and in the
accompanying prospectus supplement.
The certificates -
o will represent interests in the trust and will be paid only from the
trust assets;
o will be denominated and sold for U.S. dollars or for one or more
foreign or composite currencies and any payments to
certificateholders may be payable in U.S. dollars or in one or more
foreign or composite currencies; and
o will be issued as part of a designated series which may include one
or more classes of certificates and enhancement.
The certificateholders -
o will receive interest and principal payments from the assets
deposited with the trust.
Consider carefully the risk factors beginning on page [5] in this prospectus.
Unless otherwise specified in the applicable prospectus supplement, the
certificates are not insured or guaranteed by any government agency.
The certificates will represent interests in the trust only and will not
represent interests in the or obligations of DB Depositor, Inc., Deutsche Bank
AG or of the administrative agent of the trust or any of their affiliates.
This prospectus may be used to offer and sell any series of certificates only
if accompanied by the prospectus supplement for that series. Neither the
Securities and Exchange Commission nor any state securities commission has
approved these certificates or determined that this prospectus is accurate or
complete. Any representation to the contrary is a criminal offense.
The date of this Prospectus is [_____________ __, 2001.]
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED
IN THIS PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT
We provide information to you about the certificates in two separate
documents that progressively provide more detail: (a) this prospectus, which
provides general information, some of which may not apply to a particular
series of certificates, including your series, and (b) the accompanying
prospectus supplement, which will describe the specific terms of your series
of certificates, including:
o the currency or currencies in which the principal, premium, if any,
and any interest are distributable;
o the number of classes of such series and, with respect to each class
of such series, its designation, aggregate principal amount or, if
applicable, Notional Amount and authorized denominations;
o information concerning the type, characteristics and specifications
of the securities deposited with the trust (the "Underlying
Securities") and any other assets deposited with the trust (together
with the Underlying Securities, the "Deposited Assets") and any
credit support for such series or class;
o the relative rights and priorities of each such class (including the
method for allocating collections from the Deposited Assets to the
certificateholders of each class and the relative ranking of the
claims of the certificateholders of each class to the Deposited
Assets);
o the name of the trustee and the administrative agent, if any, for the
series;
o the Certificate Rate or the terms relating to the applicable method
of calculation thereof;
o the time and place of distribution (a "Distribution Date") of
interest, premium (if any) and/or principal (if any);
o the date of issue;
o the Final Scheduled Distribution Date, (defined in the Prospectus
Supplement), if applicable;
o the offering price;
o any exchange, redemption, call, or repurchase terms, whether
mandatory or optional, and any other specific terms of certificates
of each series or class.
See "Description of Certificates--General" for a listing of other
items that may be specified in the applicable prospectus supplement.
If the terms of a particular series of certificates vary between this
prospectus and the prospectus supplement, you should rely on the information
in the prospectus supplement.
You should rely only on the information provided in this prospectus
and the accompanying prospectus supplement including the information
incorporated by reference. We have not authorized anyone to provide you with
different information. We are not offering the certificates in any state where
the offer is not permitted. We do not claim the accuracy of the information in
this prospectus or the accompanying prospectus supplement as of any date other
than the dates stated on their respective covers.
TABLE OF CONTENTS
Important Notice About Information Presented in this Prospectus and the Accompanying
Prospectus Supplement...........................................................................................2
Where You Can Find More Information..............................................................................4
Incorporation of Certain Documents By Reference..................................................................4
Reports to Certificateholders....................................................................................5
Important Currency Information...................................................................................5
Risk Factors.....................................................................................................5
The Depositor...................................................................................................10
Use of Proceeds.................................................................................................10
Formation of the Trust..........................................................................................10
Maturity and Yield Considerations...............................................................................11
Description of the Certificates.................................................................................13
Description of Deposited Assets and Credit Support..............................................................30
Description of the Trust Agreement..............................................................................41
Currency Risks..................................................................................................51
Certain United States Federal Income Tax Consequences...........................................................53
ERISA Considerations............................................................................................59
Underwriting....................................................................................................61
Legal Matters...................................................................................................62
WHERE YOU CAN FIND MORE INFORMATION
Each trust is subject to the informational requirements of the Exchange
Act and we file on behalf of each trust, reports and other information with
the Securities and Exchange Commission or the SEC. You may read and copy any
reports, statements or other information we file at the SEC's public reference
room in Washington, D.C. You can request copies of these documents, upon
payment of a duplicating fee, by writing to the SEC. Please call the SEC at
(800) SEC-0330 for further information on the operation of the public
reference rooms. Our SEC filings are also available to the public on the SEC
Internet site (http://www.sec.gov). We do not intend to send any financial
reports to certificateholders.
We filed a registration statement relating to the certificates with the
SEC. This prospectus is part of the registration statement, but the
registration statement includes additional information.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" information we file with
it, which means that we can disclose important information to you by referring
you to those documents. We are incorporating by reference all documents that
we have filed with the SEC pursuant to the Exchange Act prior to the date of
this prospectus. The information incorporated by reference is considered to be
part of this prospectus. Information that we file later with the SEC will
automatically update the information in this prospectus. In all cases, you
should rely on the later information over different information included in
this prospectus or the accompanying prospectus supplement. We incorporate by
reference any future SEC reports filed by or on behalf of the trust until we
terminate our offering of the certificates.
As a recipient of this prospectus, you may request a copy of any document
we incorporate by reference, except exhibits to the documents (unless the
exhibits are specifically incorporated by reference), at no cost, by writing
or calling us at: Secretary of DB Depositor Inc., 31 West 52nd Street, New
York, New York 10019, (212) 250-1869.
REPORTS TO CERTIFICATEHOLDERS
Except as otherwise specified in the applicable prospectus supplement,
unless and until definitive certificates 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., as nominee of DTC and registered holder of the 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
certificateholders in accordance with the trust agreement. See "Description of
the Certificates--Global Securities" and "Description of the Trust
Agreement--Reports to 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
certificateholders.
IMPORTANT CURRENCY INFORMATION
References herein to "U.S. dollars" "US$," "dollar" or "$" are to the
lawful currency of the United States.
Purchasers are required to pay for each certificate in the currency in
which the certificate is denominated. Currently, there are limited facilities
in the United States for conversion of U.S. dollars into foreign currencies
and vice versa, and banks do not currently offer non-U.S. dollar checking or
savings account facilities in the United States. However, if requested by a
prospective purchaser of a certificate denominated in a currency other than
U.S. dollars, Deutsche Bank AG will arrange for the exchange of U.S. dollars
into such currency to enable the purchaser to pay for the certificate.
Requests must be made on or before the fifth Business Day (as defined below)
preceding the date of delivery of the certificate or by a later date as
determined by Deutsche Bank AG. Each exchange will be made by Deutsche Bank AG
on the terms and subject to the conditions, limitations and charges that
Deutsche Bank AG may from time to time establish in accordance with its
regular foreign exchange practice. All costs of exchange will be borne by the
purchaser.
For definitions of certain terms used herein, refer to "Index of Defined
Terms" beginning on page I-1.
RISK FACTORS
In connection with an investment in the certificates of any series,
prospective purchasers should consider, among other things, (1) the risk
factors set forth below and (2) any additional risk factors set forth in the
applicable prospectus supplement.
The trust consists of limited assets and payments on the certificates will be
made solely from Deposited Assets
The only material assets expected to be in a trust are Underlying
Securities and any other Deposited Assets corresponding to the related series
(or class within such series) of certificates being offered. The certificates
do not represent obligations of the Depositor, any administrative agent,
Deutsche Banc Alex. Brown Inc. ("DBAB") or any of their respective affiliates
and, unless otherwise specified in the applicable prospectus supplement, are
not insured or guaranteed by the Depositor, any administrative agent or DBAB.
Accordingly, certificateholders' receipt of distributions in respect of the
certificates will depend entirely on the performance of and the trust's
receipt of payments with respect to the Deposited Assets.
The certificates are obligations of the issuing trust and there will be no
recourse to Deutsche Bank AG, the Depositor or their affiliates
The certificates will not represent a recourse obligation of, or interest
in, the Depositor, any administrative agent, DBAB, the issuer of the
Underlying Securities or any of their respective affiliates. The certificates
will not be insured or guaranteed by the Depositor, DBAB, Deutsche Bank AG or
any of their respective affiliates. The obligations, if any, of the Depositor
with respect to the certificates of any series will only be pursuant to
certain limited representations and warranties with respect to an Underlying
Security or other Deposited Assets, and recourse with respect to the
satisfaction of any such obligations will be limited to any recourse for a
breach of a corresponding representation or warranty that the Depositor may
have against the seller of such Underlying Security or other Deposited Assets
to the Depositor. The Depositor does not have, and is not expected in the
future to have, any assets with which to satisfy any claims arising from a
breach of any representation or warranty.
The certificates may not be a liquid investment
There can be no assurance that an active public market for any series (or
class within such series) of certificates will develop or, if a public market
develops, as to the liquidity of the trading market for such certificates.
DBAB has advised the Depositor that it intends to make a market in the
certificates, as permitted by applicable laws and regulations, after the
issuance thereof. DBAB is not obligated, however, to make a market in the
certificates of any series or class within such series and any such
market-making activity may be discontinued at any time without notice at the
sole discretion of DBAB. If an active public market for the certificates does
not develop or continue, the market prices and liquidity of the certificates
may be adversely affected.
Early payments may leave an investor unable to reinvest in comparable
investments.
The timing of distributions of interest, premium (if any) and principal
on the certificates will be affected by any early redemption, amortization or
prepayment of the related Underlying Securities. The applicable Prospectus
Supplement will describe any puts, calls or other mandatory or optional
redemption or early amortization features, any extension of maturity
provisions applicable to such Underlying Securities.
The timing of distributions on the certificates will also be affected by
any exchange of the related Underlying Securities pursuant to a tender offer
or otherwise, the manner and priority in which collections from the Underlying
Securities and any other Deposited Assets are allocated to each class of such
series and the performance of the related Deposited Assets. Early payment or
amortization may adversely affect an investor by returning principal to the
investor when prevailing interest rates have declined and reinvestment of such
funds at the rate applicable to the certificates is not possible. These
factors may be influenced by a variety of accounting, tax, economic, social
and other factors. See "Maturity and Yield Considerations."
Extension of maturity may cause illiquidity and loss of more favorable
investment opportunities.
The timing of distributions of interest, premium (if any) and principal
of Underlying Securities will also be affected by any extension of maturity of
the related Underlying Securities, which may be caused by, the manner and
priority in which collections from the Underlying Securities and any other
Deposited Assets are allocated to each class of such series and the
performance of the related Deposited Assets.. The applicable Prospectus
Supplement will describe any extension of maturity provisions applicable to
the Underlying Securities. Extension of maturity prevents an investor from
obtaining principal funds at the originally scheduled maturity date and may
prevent an investor from obtaining favorable reinvestment at a time when
prevailing interest rates have risen. These factors may be influenced by a
variety of accounting, tax, economic, social and other factors. See "Maturity
and Yield Considerations."
A change in the characterization of the trust could result in adverse tax
consequences to the certificateholders
Prospective investors should be aware that no rulings have been sought
from the Internal Revenue Service ("IRS"). If the trust is characterized or
treated as a corporation for federal income tax consequences, 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. See "Federal Income Tax Considerations"
herein and in the related Prospectus Supplement.
If the Underlying Securities represent the obligations of foreign issuers it
may be difficult or impossible to obtain or realize upon judgments against
such obligors and the value of the certificates could be adversely affected
The Underlying Securities may include obligations of foreign issuers.
Consequently, it may be difficult for the applicable trust as a holder of the
Underlying Securities to obtain or realize upon judgments in the United States
against the obligor. Even if an issuer is amenable to suit in the United
States, the enforceability of any judgment obtained may be limited by a lack
of substantial assets which can be levied upon in the United States or the
inability to obtain recognition and enforcement of the judgment in the
issuer's country. Because the Underlying Securities may represent direct or
indirect obligations of foreign issuers, the certificates could be adversely
affected by political, economic and other risks attendant on holding the
obligations of a foreign issuer which are not typically associated with an
investment in securities of a domestic issuer. Such risks include:
o future political and economic developments;
o moratorium on payment or rescheduling of external debts;
o confiscatory taxation;
o imposition of any withholding tax;
o exchange rate fluctuations;
o political or social instability or diplomatic developments; and
o the imposition of additional governmental laws or restrictions.
Risks with respect to currency exchange rates and exchange controls may exist
The certificates of any given series (or class within such series) may be
denominated in a currency other than U.S. dollars. This prospectus does not
describe all the risks of an investment in such certificates, and the
Depositor disclaims any responsibility to advise prospective purchasers of
such risks as they exist from time to time. Prospective purchasers should
consult their own financial and legal advisors as to the risks entailed by an
investment in certificates denominated in a currency other than U.S. dollars.
See "Currency Risks." In addition, there are risks associated with Underlying
Securities denominated in a currency other than the local currency of a
foreign government. Governments have from time to time imposed, and may in the
future impose, exchange controls that could affect the availability of a
currency for making distributions in respect of Underlying Securities
denominated in such currency.
The trust may include derivatives which could adversely affect the value of
the certificates
A trust may include various derivative instruments, including interest
rate, currency and credit swaps, caps, floors, collars and options and
structured securities having embedded derivatives (such as structured notes).
Fluctuations in securities, currency 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. In addition,
derivatives may be limited to covering only certain risks. Continued payments
on derivatives may be affected by the financial condition of the
counterparties thereto (or, in some instances, the guarantor thereunder).
There can be no assurance that counterparties will be able to perform their
obligations. Failure by a counterparty (or the related guarantor, if any) to
make required payments may result in the delay or failure to make payments on
the related securities and risks. In addition, the notional amounts on which
payments are made may vary under certain circumstances and may not bear any
correlation to principal amounts of the related securities. The applicable
prospectus supplement will identify the material terms, the risks and the
counterparty for any derivative instrument in a trust and will describe the
agreement with the counterparty.
There exists a risk of loss if public information not available with respect
to the Underlying Securities.
A prospective purchaser of certificates should obtain and evaluate the
same information concerning each issuer of Underlying Securities as it would
obtain and evaluate if it were investing directly in the Underlying Securities
or in other securities issued by that issuer. The publicly available
information concerning an issuer of Underlying Securities is important in
considering whether to invest in or sell certificates. To the extent such
information ceases to be available, an investor's ability to make an informed
decision to purchase or sell certificates could be impeded. See "Description
of Deposited Assets and Credit Support--Publicly Available Information."
A reduction or withdrawal of rating could occur which may adversely affect
the value of the certificates
At the time of issuance, the certificates of a series (or each class of
such series) will be rated in one of the investment grade categories by one or
more nationally recognized rating agencies. The rating agencies may rate a
series or class of certificates on the basis of several factors, including the
related Deposited Assets, any credit support and the relative priorities of
the certificateholders of such series or class to receive collections from,
and to assert claims against, the trust with respect to such Deposited Assets
and any credit support. The rating agencies are solely responsible for
selecting the criteria for rating the certificates.
Any rating issued with respect to the certificates is not a
recommendation to purchase, sell or hold a security; such ratings do not
comment on the market price of the certificates or their suitability for a
particular investor. There can be no assurance that the ratings will remain
for any given period of time or that any rating will not be revised or
withdrawn entirely by the related rating agency if, in its judgment,
circumstances (including, without limitation, the rating of the Underlying
Securities) so warrant. A revision or withdrawal of such rating may have an
adverse effect on the market price of the certificates.
The Trustees does not actively manage the Trust for investors.
Each trust will generally hold the related Deposited Assets to maturity
and not dispose of them, regardless of adverse events, financial or otherwise,
which may affect any issuer of Underlying Securities or the value of the
Deposited Assets. Except as indicated below, a certificateholder will not be
able to dispose of or take other actions with respect to any Deposited Assets.
Under certain circumstances described in the applicable prospectus supplement,
the trustee will (or will at the direction of a specified percentage of
certificateholders of the relevant series) dispose of, or take certain other
actions in respect of, the Deposited Assets. In certain limited circumstances,
such as a mandatory redemption of Underlying Securities or the exercise by a
third party of the right to purchase Underlying Securities (as described below
under "Description of Deposited Assets--Principal Terms of Underlying
Securities"), the trustee may dispose of the Deposited Assets prior to
maturity. The applicable prospectus supplement will describe the particular
circumstances, if any, under which a Deposited Asset may be disposed of prior
to maturity.
Optional Exchange for Deposited Assets will generally be unavailable
Although the applicable prospectus supplement for a series of
certificates may designate that series as an Exchangeable Series and may state
that a certificateholder may exchange certificates of the Exchangeable Series
for a pro rata portion of Deposited Assets of the related trust, any such
Optional Exchange Right will be exercisable only if the exercise of that right
(i) would not affect the trust's ability to be exempt under Rule 3a-7 under
the Investment Company Act of 1940, as amended, and all applicable rules,
regulations and interpretations thereunder, and (ii) would not affect the
characterization of the trust as a "grantor trust" under the Code. See
"Description of the Certificates--Optional Exchange." Accordingly, the
Optional Exchange Right described in this prospectus under the heading
"Description of the Certificates--Optional Exchange" and further described in
the applicable prospectus supplement will be available only to the Depositor,
DBAB, the trustee and their respective affiliates and designees. Other
certificateholders generally will not be able to exchange their certificates
of an Exchangeable Series for a pro rata portion of the Deposited Assets of
the related trust. In addition, the exercise of an Optional Exchange Right
will decrease the aggregate amount of certificates of the applicable
Exchangeable Series outstanding.
----------------------
The accompanying prospectus supplement for each series of certificates
will specify information regarding additional risk factors, if any, applicable
to such series (and each class within such series).
THE DEPOSITOR
DB Depositor Inc., a Delaware corporation, is an indirect, wholly owned,
limited purpose subsidiary of Deutsche Bank AG. The principal office of the
Depositor is located at 31 West 52nd Street, New York, New York 10019. Its
telephone number is (212) 250-1869.
The Certificate of Incorporation of the Depositor provides that the
Depositor may conduct any lawful activities necessary or incidental to serving
as depositor of one or more trusts that may issue and sell certificates. The
Certificate of Incorporation of the Depositor provides that any securities,
except for subordinated securities, issued by the Depositor must be rated in
one of the four highest categories available by any rating agency rating the
series. Formation of a grantor trust will not relieve the Depositor of its
obligation to issue only securities, except for subordinated securities, rated
in one of the four highest rating categories. Pursuant to the terms of the
trust agreement, the Depositor may not issue any securities which would result
in the lowering of the then current ratings of the outstanding certificates of
any series.
USE OF PROCEEDS
Unless otherwise specified in the applicable prospectus supplement, the
net proceeds to be received from the sale of each series or class of
certificates (whether or not offered hereby) will be used by the Depositor to
purchase the related Deposited Assets and arrange credit support including, if
specified in the applicable prospectus supplement, making required deposits
into any reserve account or the applicable certificate account for the benefit
of the certificateholders of such series or class. Any remaining net proceeds,
if any, will be used by the Depositor for general corporate purposes.
FORMATION OF THE TRUST
A separate trust will be created for each series of trust certificates.
The Depositor will assign the Deposited Assets for each series of certificates
to the trustee named in the applicable prospectus supplement, in its capacity
as trustee, for the benefit of the certificateholders of such series. See
"Description of the Trust Agreement--Assignment of Deposited Assets." The
trustee named in the applicable prospectus supplement will administer the
Deposited Assets pursuant to the trust agreement and will receive a fee for
these services. Any administrative agent named in the applicable prospectus
supplement will perform the tasks as are specified therein and in the trust
agreement and will receive a fee for these services as specified in the
prospectus supplement. See "Description of the Trust Agreement--Collection and
Other Administrative Procedures" and "--Retained Interest; Administrative
Agent Compensation and Payment of Expenses." The trustee or an administrative
agent, if applicable, will either cause the assignment of the Deposited Assets
to be recorded or will obtain an opinion of counsel that no recordation is
required to obtain a first priority perfected security interest in such
Deposited Assets.
Unless otherwise stated in the prospectus supplement, the Depositor's
assignment of the Deposited Assets to the trustee will be without recourse to
the Depositor (except as to certain limited representations and warranties, if
any).
To the extent described in the applicable prospectus supplement, the
obligations of an administrative agent will consist primarily of:
o its contractual administrative obligations, if any, under the trust
agreement;
o its obligation, if any, to make cash advances in the event of
delinquencies in payments on or with respect to any Deposited Assets
in amounts described under "Description of the Trust
Agreement--Advances in Respect of Delinquencies;" and
o its obligations, if any, to purchase Deposited Assets as to which
there has been a breach of specified representations and warranties
or as to which the documentation is materially defective.
The obligations of an administrative agent, if any, named in the
applicable prospectus supplement to make advances will be limited to amounts
which the administrative agent believes ultimately would be recoverable under
any credit support, insurance coverage, the proceeds of liquidation of the
Deposited Assets or from other sources available for such purposes. See
"Description of the Trust Agreement--Advances in Respect of Delinquencies."
Unless otherwise specified in the applicable prospectus supplement, each
trust will consist of:
o the Deposited Assets, or interests therein, exclusive of any interest
in such assets (the "Retained Interest") retained by the Depositor or
any previous owner thereof, as from time to time are specified in the
trust agreement;
o such assets as from time to time are identified as deposited in the
related certificate account;
o property, if any, acquired on behalf of certificateholders by
foreclosure or repossession and any revenues received thereon;
o those elements of credit support, if any, provided with respect to
any 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 Deposited Assets and Credit
Support--Credit Support";
o the rights of the Depositor relating to any breaches of
representations or warranties by the issuer of the Deposited Assets;
and
o the rights of the trustee in any cash advances, reserve fund or
surety bond, if any, as described under "Description of the Trust
Agreement--Advances in Respect of Delinquencies."
MATURITY AND YIELD CONSIDERATIONS
Each prospectus supplement will contain any applicable information with
respect to the type and maturities of the related Underlying Securities and
the terms, if any, upon which such Underlying Securities may be subject to
early redemption (either by the applicable obligor or pursuant to a
third-party call option), repayment (at the option of the holders thereof) or
extension of maturity. The provisions of the Underlying Securities with
respect to redemption, repayment or extension of maturity will, unless
otherwise specified in the applicable prospectus supplement, affect the
weighted average life of the related series of certificates.
The effective yield to holders of the certificates of any series (and
class within such series) may be affected by aspects of the Deposited Assets
or any credit support or the manner and priorities of allocations of
collections with respect to the Deposited Assets between the classes of a
given series. With respect to any series of certificates the Underlying
Securities of which consist of one or more redeemable securities, extendable
securities or securities subject to a third-party call option, the yield to
maturity of such series (or class within such series) may be affected by any
optional or mandatory redemption or repayment or extension of the related
Underlying Securities prior to the stated maturity thereof. A variety of tax,
accounting, economic, and other factors will influence whether an issuer
exercises any right of redemption in respect of its securities. The rate of
redemption may also be influenced by prepayments on the obligations a
government sponsored entity issuer holds for its own account. All else
remaining equal, if prevailing interest rates fall significantly below the
interest rates on the related Underlying Securities, the likelihood of
redemption would be expected to increase. There can be no certainty as to
whether any Underlying Security redeemable at the option of its issuer will be
repaid prior to its stated maturity.
Unless otherwise specified in the applicable prospectus supplement, each
of the Underlying Securities will 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 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 Deposited Assets--Underlying Securities--Indentures." If an
issuer of Underlying Securities 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
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 the ability of an issuer of Underlying
Securities to satisfy its obligations under the Underlying Securities,
including the company's operating and financial condition, leverage, and
economic, geographic, legal and social factors. In addition, if the Underlying
Securities are issued by a foreign government and the foreign government
issuer or guarantor repudiates or places any limitation or moratorium on the
payment of external indebtedness or imposes any confiscatory or withholding
tax, the timing and amount of payments on the certificates may be materially
and adversely affected. A variety of factors could influence a foreign
government's willingness or ability to satisfy its obligations under the
related Underlying Securities. We cannot predict the probability of a
moratorium or other action affecting any Underlying Security.
The extent to which the yield to maturity of such certificates may vary
from the anticipated yield due to the rate and timing of payments on the
Deposited Assets will depend upon the degree to which they 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 Deposited Assets.
The yield to maturity of any series (or class) of certificates will also
be affected by variations in the interest rates applicable to, and the
corresponding payments in respect of, such certificates, to the extent that
the Certificate Rate for such series (or class) is based on variable or
adjustable interest rates. With respect to any series of certificates
representing an interest in a pool of government, foreign government or
corporate debt securities, 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 Certificate Rates on such certificates may affect the yield on
the certificates.
A variety of economic, social, political, tax, accounting and other
factors may affect the degree to which any of the Underlying Securities are
redeemed or called (whether by the applicable obligor or pursuant to a
third-party call option) or the maturity of such Underlying Securities is
extended, as specified in the applicable prospectus supplement. There can be
no assurance as to the rate or likelihood of redemption, third-party call or
extension of maturity of any Underlying Security. The applicable prospectus
supplement will, to the extent available, provide further information with
respect to any such experience applicable to the related Underlying
Securities.
The accompanying prospectus supplement for each series of certificates
will set forth additional information regarding yield and maturity
considerations applicable to such series (and each class within such series)
and the related Deposited Assets, including the applicable Underlying
Securities.
DESCRIPTION OF THE CERTIFICATES
Each series (or, if more than one class exists, the classes within such
series) of certificates will be issued pursuant to the standard terms and the
series supplement, which together compose the trust agreement, among the
Depositor, the trustee and the securities intermediary named in the applicable
prospectus supplement, a form of which trust agreement is attached as an
exhibit to the registration statement. The provisions of the trust agreement
may vary depending upon the terms of the certificates to be issued thereunder
and the nature of the Deposited Assets, the credit support, if any, and the
related trust. The following summaries describe certain provisions of the
trust agreement that may be applicable to each series of certificates. The
applicable prospectus supplement for a series of certificates will describe
any material provision of the trust agreement that is not described herein or
the description of which is materially different from the description 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
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 "certificate"
refers to all the certificates of that series (and each class within such
series), whether or not offered hereby and by the applicable prospectus
supplement, unless the context otherwise requires.
A copy of the series supplement relating to each series of 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
There is no limit on the amount of certificates that may be issued under
the trust agreement, and the trust agreement will provide that certificates of
the applicable series may be issued in multiple classes. The series (or
classes within such series) of certificates to be issued under the trust
agreement will represent the entire beneficial ownership interest in the trust
for such series created pursuant to the trust agreement and 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 Deposited Assets-- Credit
Support--Collections."
Reference is made to the applicable prospectus supplement for a
description of the following terms of the series of certificates in respect of
which this prospectus and such prospectus supplement are being delivered:
(i) the title of such certificates;
(ii) the series of such certificates and, if applicable, the
number and designation of classes of such series;
(iii) material information concerning the type, characteristics
and specifications of the Deposited Assets being deposited
into the related trust by the Depositor (including, with
respect to any Underlying Security which at the time of such
deposit represents a significant portion of all such
Deposited Assets and any related credit support, information
concerning the material terms of each such Underlying
Security, the identity of the issuer thereof and where
publicly available information regarding such issuer may be
obtained);
(iv) the dates on which, or periods during which, such series of
certificates may be issued (each, an "Original Issue Date")
and the offering price thereof;
(v) the limit, if any, upon the aggregate principal amount or
Notional Amount, as applicable, of each class thereof;
(vi) if applicable, the relative rights and priorities of each
class (including the method for allocating collections from
and defaults or losses on the Deposited Assets to the
certificateholders of each class);
(vii) whether the certificates of such series are Fixed Rate
Certificates or Floating Rate Certificates and the
applicable interest rate (the "Certificate Rate"), or the
method of calculation thereof applicable to such series, if
variable (a "Floating Certificate Rate"), the date or dates
from which such interest will accrue, the applicable
Distribution Dates on which interest, principal and premium,
in each case as applicable, on such series or class will be
distributable and the related Determination Dates, if any;
(viii) the circumstances and conditions under which any of the
Depositor, DBAB or the trustee, or their respective
affiliates and designees, may exercise an Optional Exchange
Right (to the extent that the exercise of such right (a)
would not affect the trust's ability to be exempt under Rule
3a-7 under the Investment Company Act of 1940, as amended,
and all applicable rules, regulations and interpretations
thereunder and (b) would not affect the treatment of the
trust as a "grantor trust" under the Code) and the periods
within which or the dates on which, and the terms and
conditions upon which any such Optional Exchange may be
exercised, in whole or in part;
(ix) the option, if any, of any certificateholder of such series
or class to withdraw a portion of the assets of the trust in
exchange for surrendering such certificateholder's
certificate or of the Depositor or administrative agent, if
any, or another third party to purchase or repurchase any
Deposited Assets (in each case to the extent not
inconsistent with the Depositor's continued satisfaction 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) and the
periods within which or the dates on which, and the terms
and conditions upon which any such option may be exercised,
in whole or in part;
(x) the option, if any, of any specified third party (which may
include one or more of the Depositor, DBAB or their
respective affiliates) to purchase certificates held by a
certificateholder and the periods within which or the dates
on which, and the terms and conditions upon which any such
option may be exercised, in whole or in part;
(xi) the mandatory or optional redemption, call, repurchase at
the option of the Depositor or otherwise, if any;
(xii) the rating of each series or each class within such series
offered hereby (provided, however, that one or more classes
within such series not offered hereunder may be unrated or
may be rated below investment grade);
(xiii) if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which such series or
class within such series will be issuable;
(xiv) whether the certificates of any class within a given series
are to be entitled to (1) principal distributions, with
disproportionate, nominal or no interest distributions, or
(2) interest distributions, with disproportionate, nominal
or no principal distributions ("Strip Certificates"), and
the applicable terms thereof;
(xv) whether the certificates of such series or of any class
within such series are to be issued as registered
certificates and whether coupons will be attached thereto;
(xvi) the identity of the Depositary, if other than DTC, for the
certificates;
(xvii) if other than U.S. dollars, the currency applicable to the
certificates of such series or class for purposes of
denominations and distributions on such series or each class
within such series (the "Specified Currency") and the
circumstances and conditions, if any, when such currency may
be changed, at the election of the Depositor or a
certificateholder, and the currency or currencies in which
any principal of or any premium or any interest on such
series or class are to be distributed pursuant to such
election;
(xviii) any additional Administrative Agent Termination Events, if
applicable, provided for with respect to such class;
(xix) all applicable Required Percentages and Voting Rights
relating to the manner and percentage of votes of
certificateholders of such series and each class within such
series required with respect to certain actions by the
Depositor or the trustee under the trust agreement or with
respect to the applicable trust;
(xx) remedies upon the occurrence of a payment default on the
Underlying Securities on an acceleration of the Underlying
Securities; and
(xxi) all other material terms of such series or class within such
series of certificates.
Unless otherwise indicated in the applicable prospectus supplement,
certificates of each series (including any class of certificates not offered
hereby) will be issued only as registered certificates in denominations of
$1,000 and any integral multiple thereof and will be payable only in U.S.
dollars. The authorized denominations of registered certificates of a given
series or class within such series having a Specified Currency other than U.S.
dollars will be set forth in the applicable prospectus supplement.
The United States federal income tax consequences and ERISA consequences
relating to any series or any class within such series of certificates will be
described in the applicable prospectus supplement. In addition, the prospectus
supplement will describe the risks, specific terms and any other material
information relating to any certificates which will receive payments in a
Specified Currency other than U.S. dollars. Unless otherwise specified in the
applicable prospectus supplement, the U.S. dollar equivalent of the public
offering price or purchase price of a certificate having a Specified Currency
other than U.S. dollars will be determined on the basis of the noon buying
rate in New York City for cable transfers in foreign currencies as certified
for customs purposes by the Federal Reserve Bank of New York (the "Market
Exchange Rate") for such Specified Currency on the applicable issue date. As
specified in the applicable prospectus supplement, such determination will be
made by the Depositor, the trustee, the administrative agent, if any, or an
agent thereof as exchange rate agent for each series of certificates (the
"Exchange Rate Agent").
Unless otherwise specified in the applicable prospectus supplement,
registered certificates may be transferred or exchanged for like certificates
of the same series and class at the corporate trust office or agency of the
applicable trustee in the City and State of New York, subject to the
limitations provided in the trust agreement, without the payment of any
service charge, other than any tax or governmental charge payable in
connection therewith. The Depositor may at any time purchase certificates at
any price in the open market or otherwise. Certificates so purchased by the
Depositor may, at the discretion of the Depositor, be held or resold or
surrendered to the trustee for cancellation of such certificates.
Distributions
Distributions allocable to principal, premium (if any) and interest on
the certificates of each series (and class within such series) will be made in
the Specified Currency for such certificates 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
"Determination Date"). If the Specified Currency for a given series or class
within such series is other than U.S. dollars, the administrative agent, if
any, or otherwise the trustee, will (unless otherwise specified in the
applicable prospectus supplement) arrange to convert all payments in respect
of each certificate of such series or class to U.S. dollars in the manner
described in the following paragraph. The certificateholder of a registered
certificate of a given series or class within such series denominated in a
Specified Currency other than U.S. dollars may (if the applicable prospectus
supplement and such certificate so indicate) elect to receive all
distributions in respect of such certificate in the Specified Currency by
delivery of a written notice to the trustee and administrative agent, if any,
for such series not later than fifteen calendar days prior to the applicable
Distribution Date, except under the circumstances described under "Currency
Risks--Payment Currency" below. An election will remain in effect until
revoked by written notice to such trustee and administrative agent, if any,
received by each of them not later than fifteen calendar days prior to the
applicable Distribution Date.
Unless otherwise specified in the applicable prospectus supplement, in
the case of a registered certificate of a given series or class within such
series having a Specified Currency other than U.S. dollars, the amount of any
U.S. dollar distribution in respect of such registered certificate will be
determined by the Exchange Rate Agent based on the highest firm bid quotation
expressed in U.S. dollars received by the Exchange Rate Agent at approximately
11:00 a.m., New York City time, on the second Business Day preceding the
applicable Distribution Date (or, if no such rate is quoted on such date, the
last date on which such rate was quoted), from three (or, if three are not
available, then two) recognized foreign exchange dealers in The City of New
York (one of which may be the Offering Agent and another of which may be the
Exchange Rate Agent) selected by the Exchange Rate Agent, for the purchase by
the quoting dealer, for settlement on such Distribution Date, of the aggregate
amount payable in such Specified Currency on such payment date in respect of
all registered certificates. All currency exchange costs will be borne by the
certificateholders of such registered certificates by deductions from such
distributions. If no such bid quotations are available, such distributions
will be made in such Specified Currency, unless such Specified Currency is
unavailable due to the imposition of exchange controls or to other
circumstances beyond the Depositor's control, in which case such distributions
will be made as described under "Currency Risks--Payment Currency" below.
Unless otherwise specified in the applicable prospectus supplement and
except as specified in the succeeding paragraph, distributions with respect to
registered 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 or at the principal London office of the applicable trustee;
provided, however, that any such amounts distributable on the final
Distribution Date of a certificate will be distributed only upon surrender of
such certificate at the applicable location set forth above.
Unless otherwise specified in the applicable prospectus supplement,
distributions on registered certificates in U.S. dollars will be made, except
as described below, by check mailed to the registered certificateholders of
such certificates (which, in the case of global securities, will be a nominee
of the Depositary); provided, however, that, in the case of a series or class
of registered certificates issued between a Determination Date and the related
Distribution Dates, interest for the period beginning on the issue date for
such series or class and ending on the last day of the interest accrual period
ending immediately prior to or coincident with such Distribution Date will,
unless otherwise specified in the applicable prospectus supplement, be
distributed on the next succeeding Distribution Date to the registered
certificateholders of the registered certificates of such series or class on
the related Determination Date. A certificateholder of $10,000,000 (or the
equivalent thereof in a Specified Currency other than U.S. dollars) or more in
aggregate principal amount of registered certificates of a given series shall
be entitled to receive such U.S. dollar distributions by wire transfer of
immediately available funds, but only if appropriate wire transfer
instructions have been received in writing by the trustee for such series not
later than fifteen calendar days prior to the applicable Distribution Date.
Simultaneously with the election by any certificateholder to receive payments
in a Specified Currency other than U.S. dollars (as described above), such
certificateholder shall provide appropriate wire transfer instructions to the
trustee for such series, and all such payments will be made by wire transfer
of immediately available funds to an account maintained by the payee with a
bank located outside the United States.
Except as otherwise specified in the applicable prospectus supplement,
"Business Day" with respect to any certificate means any day, other than a
Saturday or Sunday, that is (i) not a day on which banking institutions are
authorized or required by law or regulation to be closed in (a) The City of
New York or (b) if the Specified Currency for such certificate is other than
U.S. dollars, the financial center of the country issuing such Specified
Currency (which, in the case of ECU, shall be Brussels, Belgium) and (ii) if
the Certificate Rate for such certificate is based on LIBOR, a London Banking
Day. "London Banking Day" with respect to any certificate means any day on
which dealings in deposits in the Specified Currency of such certificate are
transacted in the London interbank market. The Determination Date with respect
to any Distribution Date for a series or class of registered certificates
shall be specified as such in the applicable prospectus supplement.
Interest on the Certificates
General. Each class of certificates (other than certain classes of Strip
Certificates) of a given series may have a different Certificate Rate, which
may be a Fixed or Floating Certificate Rate, as described below. In the case
of Strip Certificates with a nominal or no Certificate Principal Balance, such
distributions of interest will be in an amount described in the applicable
prospectus supplement. For purposes hereof, "Notional Amount" means the
notional principal amount specified in the applicable prospectus supplement on
which interest on Strip Certificates with a nominal or no Certificate
Principal Balance will be made on each Distribution Date. Reference to the
Notional Amount of a class of Strip Certificates herein or in a prospectus
supplement does not indicate that such certificates represent the right to
receive any distribution in respect of principal in such amount, but rather
the term "Notional Amount" is used solely as a basis for calculating the
amount of required distributions and determining certain relative Voting
Rights, all as specified in the applicable prospectus supplement. The
Certificate Rate will be described in the applicable prospectus supplement and
will be based upon the rate of interest received on the Underlying Securities,
credit support, if any, and any payments payable in respect of the Retained
Interest (if any).
Fixed Rate Certificates. Each series (or, if more than one class exists,
each class within such series) of certificates with a fixed Certificate Rate
("Fixed Rate Certificates") will bear interest, on the outstanding Certificate
Principal Balance (or Notional Amount, if applicable), 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 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
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 certificates by one or more rating agencies, in
accordance with a schedule or otherwise, all as described in such prospectus
supplement. Unless otherwise set forth in the applicable prospectus
supplement, interest on each series or class of Fixed Rate 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. Unless otherwise specified in the applicable prospectus
supplement, interest on Fixed Rate Certificates will be computed on the basis
of a 360-day year of twelve 30-day months.
Floating Rate Certificates. Each series (or, if more than one class
exists, each class within such series) of certificates with a variable
Certificate Rate ("Floating Rate Certificates") will bear interest, on the
outstanding Certificate Principal Balance (or Notional Amount, if applicable),
from its Original Issue Date to the first Interest Reset Date for such series
or class at the initial Certificate Rate set forth on the face thereof and in
the applicable prospectus supplement ("Initial Certificate Rate"). Thereafter,
the Certificate Rate on such series or class for each Interest Reset Period
will be determined by reference to an interest rate basis (the "Base Rate"),
plus or minus the Spread, if any, or multiplied by the Spread Multiplier, if
any. 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 or class, and the
"Spread Multiplier" is the percentage that may be specified in the applicable
prospectus supplement as being applicable to such series or class, except that
if so specified in the applicable prospectus supplement, the Spread or Spread
Multiplier on such series or any such class or classes of Floating Rate
Certificates may be subject to adjustment from time to time in response to
designated changes in the rating assigned to such 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, unless
otherwise specified therein, will designate one of the following Base Rates as
applicable to a Floating Rate Certificate:
o LIBOR (a "LIBOR Certificate");
o the Commercial Paper Rate (a "Commercial Paper Rate Certificate");
o the Treasury Rate (a "Treasury Rate Certificate");
o the Federal Funds Rate (a "Federal Funds Rate Certificate");
o the CD Rate (a "CD Rate Certificate"); or
o such other Base Rate (which may be based on, among other things, one
or more market indices or the interest and/or other payments (whether
scheduled or otherwise) paid, accrued or available with respect to a
designated asset, pool of assets or type of asset) as is specified in
such prospectus supplement and in such certificate.
The "Index Maturity" for any series or class of Floating Rate
Certificates is the period of maturity of the instrument or obligation from
which the Base Rate is calculated. "H.15(519)" means the publication entitled
"Statistical Release H.15(519), Selected Interest Rates," or any successor
publications, published by the Board of Governors of the Federal Reserve
System. "Composite Quotations" means the daily statistical release entitled
"Composite 3:30 p.m. Quotations for U.S. Government Securities" published by
the Federal Reserve Bank of New York.
As specified in the applicable prospectus supplement, Floating Rate
Certificates of a given series or class 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 Certificate Rate") and (ii) a minimum
limitation, or floor, on the rate at which interest may accrue during any such
interest accrual period ("Minimum Certificate Rate"). In addition to any
Maximum Certificate Rate that may be applicable to any series or class of
Floating Rate Certificates, the Certificate Rate applicable to any series or
class of Floating Rate Certificates will in no event be higher than the
maximum rate permitted by applicable law, as the same may be modified by
United States law of general application.
The Depositor will appoint, and enter into agreements with, agents (each
a "Calculation Agent") to calculate Certificate Rates on each series or class
of Floating Rate Certificates. The applicable prospectus supplement will set
forth the identity of the Calculation Agent for each series or class of
Floating Rate Certificates. All determinations of interest by the Calculation
Agent shall, in the absence of manifest error, be conclusive for all purposes
and binding on the holders of Floating Rate Certificates of a given series or
class.
The Certificate Rate on each class of Floating Rate Certificates will be
reset daily, weekly, monthly, quarterly, semiannually or annually (such period
being the "Interest Reset Period" for such class, 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, and any class within such series of Floating Rate Certificates, will
be specified in the applicable prospectus supplement; provided, however, that
unless otherwise specified in such prospectus supplement, the Certificate Rate
in effect for the ten days immediately prior to the Final Scheduled
Distribution Date (as defined in the prospectus supplement) will be that in
effect on the tenth day preceding such Final Scheduled Distribution Date. If
an Interest Reset Date for any class of Floating Rate Certificates would
otherwise be a day that is not a Business Day, such Interest Reset Date will
occur on a prior or succeeding Business Day, specified in the applicable
prospectus supplement.
Unless otherwise specified in the applicable prospectus supplement,
interest payable in respect of Floating Rate Certificates shall be the accrued
interest from and including the Original Issue Date of such series or class or
the last Interest Reset Date to which interest has accrued and been
distributed, as the case may be, to but excluding the immediately following
Distribution Date.
With respect to a Floating Rate Certificate, accrued interest shall be
calculated by multiplying the Certificate Principal Balance of such
certificate (or, in the case of a Strip Certificate with no or a nominal
Certificate Principal Balance, the Notional Amount specified in the applicable
prospectus supplement) 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. Unless otherwise
specified in the applicable prospectus supplement, 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 Certificates, Commercial Paper Rate
Certificates, Federal Funds Rate Certificates and CD Rate Certificates or by
the actual number of days in the year, in the case of Treasury Rate
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.
Unless otherwise specified in the applicable prospectus supplement, all
percentages resulting from any calculation of the Certificate Rate on a
Floating Rate 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 Certificates will be rounded to the nearest
one-hundredth of a unit (with .005 of a unit being rounded upward).
Interest on any series (or class within such series) of Floating Rate
Certificates will be distributable on the Distribution Dates and for the
interest accrual periods as and to the extent specified in the applicable
prospectus supplement.
Upon the request of the holder of any Floating Rate Certificate of a
given series or class, the Calculation Agent for such series or class 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 Certificate.
(1) CD Rate Certificates. Each CD Rate Certificate will bear interest for
each Interest Reset Period at the Certificate Rate calculated with reference
to the CD Rate and the Spread or Spread Multiplier, if any, specified in such
certificate and in the applicable prospectus supplement.
Unless otherwise specified in the applicable prospectus supplement, the
"CD Rate" for each Interest Reset Period shall be the rate as of the second
Business Day prior to the Interest Reset Date for such Interest Reset Period
(a "CD Rate Determination Date") for negotiable United States dollar
certificates of deposit having the Index Maturity designated in the applicable
prospectus supplement as published in H.15(519) under the heading "CDs
(Secondary Market)." In the event that such rate is not published prior to
3:00 p.m., New York City time, on the CD Rate Calculation Date pertaining to
such CD Rate Determination Date, then the "CD Rate" for such Interest Reset
Period will be the rate on such CD Rate Determination Date for negotiable
United States dollar certificates of deposit of the Index Maturity designated
in the applicable prospectus supplement as published in Composite Quotations
under the heading "Certificates of Deposit." If by 3:00 p.m., New York City
time, on such CD Rate Calculation Date, such rate is not yet published in
either H.15(519) or Composite Quotations, then the "CD Rate" for such Interest
Reset Period will be calculated by the Calculation Agent for such CD Rate
Certificate and will be the arithmetic mean of the secondary market offered
rates as of 10:00 a.m., New York City time, on such CD Rate Determination
Date, of three leading nonbank dealers in negotiable U.S. dollar certificates
of deposit in The City of New York (which may include the underwriters or
their affiliates) selected by the Calculation Agent for such CD Rate
Certificate for negotiable certificates of deposit of major United States
money center banks of the highest credit standing (in the market for
negotiable certificates of deposit) with a remaining maturity closest to the
Index Maturity designated in the applicable prospectus supplement [in a
denomination of $5,000,000][in an amount that is representative for a single
transaction in that market at that time]; provided, however, that if the
dealers selected as aforesaid by such Calculation Agent are not quoting
offered rates as mentioned in this sentence, the "CD Rate" for such Interest
Reset Period will be the same as the CD Rate for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset Period, the
Initial Certificate Rate).
The "CD Rate Calculation Date" pertaining to any CD Rate Determination
Date shall be the first to occur of (a) the tenth calendar day after such CD
Rate Determination Date or, if such day is not a Business Day, the next
succeeding Business Day or (b) the second Business Day preceding the date any
distribution of interest is required to be made following the applicable
Interest Reset Date.
(2) Commercial Paper Rate Certificates. Each Commercial Paper Rate
Certificate will bear interest for each Interest Reset Period at the
Certificate Rate calculated with reference to the Commercial Paper Rate and
the Spread or Spread Multiplier, if any, specified in such certificate and in
the applicable prospectus supplement.
Unless otherwise specified in the applicable prospectus supplement, the
"Commercial Paper Rate" for each Interest Reset Period will be determined by
the Calculation Agent for such Commercial Paper Rate Certificate as of the
second Business Day prior to the Interest Reset Date for such Interest Reset
Period (a "Commercial Paper Rate Determination Date") and shall be the Money
Market Yield on such Commercial Paper Rate Determination Date of the rate for
commercial paper having the Index Maturity specified in the applicable
prospectus supplement, as such rate shall be published in H.15(519) under the
heading "Commercial Paper" [(with an Index Maturity of one month or three
months being deemed to be equivalent to an Index maturity of 30 days or 90
days, respectively).] In the event that such rate is not published prior to
3:00 p.m., New York City time, on the Commercial Paper Rate Calculation Date
pertaining to such Commercial Paper Rate Determination Date, then the
"Commercial Paper Rate" for such Interest Reset Period shall be calculated by
the Calculation Agent and shall be the Money Market Yield on such Commercial
Paper Rate Determination Date of the rate for commercial paper of the
specified Index Maturity as published in Composite Quotations under the
heading "Commercial Paper." If by 3:00 p.m., New York City time, on such
Commercial Paper Rate Calculation Date such rate is not yet published in
either H.15(519) or Composite Quotations, then the "Commercial Paper Rate" for
such Interest Reset Period shall be the Money Market Yield of the arithmetic
mean of the offered rates, as of 11:00 a.m., New York City time, on such
Commercial Paper Rate Determination Date of three leading dealers of
commercial paper in The City of New York (which may include the underwriters
or their affiliates) selected by the Calculation Agent for such Commercial
Paper Rate Certificate for commercial paper of the specified Index Maturity
placed for an industrial issuer whose bonds are rated "AA" or the equivalent
by a nationally recognized rating agency; provided, however, that if the
dealers selected as aforesaid by such Calculation Agent are not quoting
offered rates as mentioned in this sentence, the "Commercial Paper Rate" for
such Interest Reset Period will be the same as the Commercial Paper Rate for
the immediately preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the Initial Certificate Rate).
"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
[OBJECT OMITTED]
where "D" refers to the applicable per annum rate for commercial paper
quoted on a bank discount basis and expressed as a decimal, and "M" refers to
the actual number of days in the specified Index Maturity.
The "Commercial Paper Rate Calculation Date" pertaining to any Commercial
Paper Rate Determination Date shall be the first to occur of (a) the tenth
calendar day after such Commercial Paper Rate Determination Date or, if such
day is not a Business Day, the next succeeding Business Day or (b) the second
Business Day preceding the date any distribution of interest is required to be
made following the applicable Interest Reset Date.
(3) Federal Funds Rate Certificates. Each Federal Funds Rate Certificate
will bear interest for each Interest Reset Period at the Certificate Rate
calculated with reference to the Federal Funds Rate and the Spread or Spread
Multiplier, if any, specified in such certificate and in the applicable
prospectus supplement.
Unless otherwise specified in the applicable prospectus supplement, the
"Federal Funds Rate" for each Interest Reset Period shall be the effective
rate on the Interest Reset Date for such Interest Reset Period (a "Federal
Funds Rate Determination Date") for United States dollar Federal Funds as
published in H.15(519) under the heading "Federal Funds (Effective)." In the
event that such rate is not published prior to 3:00 p.m., New York City time,
on the Federal Funds Rate Calculation Date pertaining to such Federal Funds
Rate Determination Date, the "Federal Funds Rate" for such Interest Reset
Period shall be the rate on such Federal Funds Rate Determination Date as
published in Composite Quotations under the heading "Federal Funds/Effective
Rate." If by 3:00 p.m., New York City time, on such Federal Funds Rate
Calculation Date such rate is not yet published in either H.15(519) or
Composite Quotations, then the "Federal Funds Rate" for such Interest Reset
Period [shall be the rate on such Federal Funds Rate Determination Date made
publicly available by the Federal Reserve Bank of New York which is equivalent
to the rate which appears in H.15(519) under the heading "Federal Funds
(Effective)"; provided, however, that if such rate is not made publicly
available by the Federal Reserve Bank of New York by 3:00 p.m., New York City
time, on such Federal Funds Rate Calculation Date, the "Federal Funds Rate"
for such Interest Reset Period will be the same as the Federal Funds Rate in
effect for the immediately preceding Interest Reset Period (or, if there was
no such Interest Reset Period, the Initial Certificate Rate). Unless otherwise
specified in the applicable prospectus supplement, in the case of a Federal
Funds Rate Certificate that resets daily, the Certificate Rate on such
certificate for the period from and including a Monday to but excluding the
succeeding Monday will be reset by the Calculation Agent for such certificate
on such second Monday (or, if not a Business Day, on the next succeeding
Business Day) to a rate equal to the average of the Federal Funds Rate in
effect with respect to each such day in such week.][will be calculated by the
Calculation Agent and will be the arithmetic mean of the rates for the last
transaction in overnight United States dollar federal funds arranged by three
leading brokers of federal funds transactions in The City of New York (which
may include the underwriters or their affiliates) selected by the Calculation
Agent prior to 9:00 A.M., New York City time, on such Federal Funds
Determination Date; provided, however, that if the brokers so selected by the
Calculation Agent are not quoting as mentioned in this sentence, the "Federal
Funds Rate" determined as of such Federal Funds Rate Determination Date will
be the Federal Funds Rate in effect on such Federal Funds Rate Determination
Date.]
The "Federal Funds Rate Calculation Date" pertaining to any Federal Funds
Rate Determination Date shall be the next succeeding Business Day.
(4) LIBOR Certificates. Each LIBOR Certificate will bear interest for
each Interest Reset Period at the Certificate Rate calculated with reference
to LIBOR and the Spread or Spread Multiplier, if any, specified in such
certificate and in the applicable prospectus supplement.
With respect to LIBOR indexed to the offered rate for U.S. dollar
deposits, unless otherwise specified in the applicable prospectus supplement,
"LIBOR" for each Interest Reset Period will be determined by the Calculation
Agent for any LIBOR Certificate as follows:
On the second London Banking Day prior to the Interest Reset Date for
such Interest Reset Period (a "LIBOR Determination Date"), the Calculation
Agent for such LIBOR Certificate will determine the arithmetic mean of the
offered rates for deposits in U.S. dollars for the period of the Index
Maturity specified in the applicable prospectus supplement, commencing on such
Interest Reset Date, which appear on the Reuters Screen LIBO Page at
approximately 11:00 a.m., London time, on such LIBOR Determination Date.
"Reuters Screen LIBO Page" means the display designated as page "LIBOR" on the
Reuters Monitor Money Rates Service (or such other page may replace the LIBO
page on that service for the purpose of displaying London interbank offered
rates of major banks). If at least two such offered rates appear on the
Reuters Screen LIBO Page, "LIBOR" for such Interest Reset Period will be the
arithmetic mean of such offered rates as determined by the Calculation Agent
for such LIBOR Certificate.
If fewer than two offered rates appear on the Reuters Screen LIBO Page on
such LIBOR Determination Date, the Calculation Agent for such LIBOR
Certificate will request the principal London offices of each of four major
banks in the London interbank market selected by such Calculation Agent to
provide such Calculation Agent with its offered quotations for deposits in
U.S. dollars for the period of the specified Index Maturity, commencing on
such Interest Reset Date, to prime banks in the London interbank market at
approximately 11:00 a.m., London time, on such LIBOR Determination Date and in
a principal amount equal to an amount of not less than $1,000,000 that is
representative of a single transaction in such market at such time. If at
least two such quotations are provided, "LIBOR" for such Interest Reset Period
will be the arithmetic mean of such quotations. If fewer than two such
quotations are provided, "LIBOR" for such Interest Reset Period will be the
arithmetic mean of rates quoted by three major banks in The City of New York
selected by the Calculation Agent for such LIBOR Certificate at approximately
11:00 a.m., New York City time, on such LIBOR Determination Date for loans in
U.S. dollars to leading European banks, for the period of the specified Index
Maturity, commencing on such Interest Reset Date, and in a principal amount
equal to an amount of not less than $1,000,000 that is representative of a
single transaction in such market at such time; provided, however, that if
fewer than three banks selected as aforesaid by such Calculation Agent are
quoting rates as specified in this sentence, "LIBOR" for such Interest Reset
Period will be the same as LIBOR for the immediately preceding Interest Reset
Period (or, if there was no such Interest Reset Period, the Initial
Certificate Rate).
If LIBOR with respect to any LIBOR Certificate is indexed to the offered
rates for deposits in a currency other than U.S. dollars, the applicable
prospectus supplement will specify the method for determining such rate.
(5) Treasury Rate Certificates. Each Treasury Rate Certificate will bear
interest for each Interest Reset Period at the Certificate Rate calculated
with reference to the Treasury Rate and the Spread or Spread Multiplier, if
any, specified in such certificate and in the applicable prospectus
supplement.
Unless otherwise specified in the applicable prospectus supplement, the
"Treasury Rate" for each Interest Reset Period will be the rate for the
auction held on the Treasury Rate Determination Date for such Interest Reset
Period of direct obligations of the United States ("Treasury bills") having
the Index Maturity specified in the applicable prospectus supplement, as such
rate shall be published in H.15(519) under the heading "U.S. Government
Certificates-Treasury bills-auction average (investment)" or, in the event
that such rate is not published prior to 3:00 p.m., New York City time, on the
Treasury Rate Calculation Date pertaining to such Treasury Rate Determination
Date, the auction average rate (expressed as a bond equivalent on the basis of
a year of 365 or 366 days, as applicable, and applied on a daily basis) on
such Treasury Rate Determination Date as otherwise announced by the United
States Department of the Treasury. In the event that the results of the
auction of Treasury bills having the specified Index Maturity are not
published or reported as described above by 3:00 p.m., New York City time, on
such Treasury Rate Calculation Date, or if no such auction is held on such
Treasury Rate Determination Date, then the "Treasury Rate" for such Interest
Reset Period shall be calculated by the Calculation Agent for such Treasury
Rate Certificate and shall be a yield to maturity (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) of the arithmetic mean of the secondary market bid
rates, as of approximately 3:30 p.m., New York City time, on such Treasury
Rate Determination Date, of three leading primary United States government
securities dealers selected by such Calculation Agent for the issue of
Treasury bills with a remaining maturity closest to the specified Index
Maturity; provided, however, that if the dealers selected as aforesaid by such
Calculation Agent are not quoting bid rates as mentioned in this sentence,
then the "Treasury Rate" for such Interest Reset Period will be the same as
the Treasury Rate for the immediately preceding Interest Reset Period (or, if
there was no such Interest Reset Period, the Initial Certificate Rate).
The "Treasury Rate Determination Date" for any Interest Reset Period will
be the day which the Interest Reset Date for such Interest Reset Period falls
on which Treasury bills would normally be auctioned. Treasury bills are
normally sold at auction every Monday, unless a Monday is a legal holiday, in
which case the auction is normally held on the following Tuesday or the
preceding Friday. If, as the result of a legal holiday, an auction is held on
the preceding Friday, that Friday will be the Treasury Rate Determination Date
for the Interest Reset Period commencing in the following week. Unless
otherwise specified in the applicable prospectus supplement, if an auction
date falls on any day that would otherwise be an Interest Reset Date for a
Treasury Rate Certificate, then such Interest Reset Date shall instead be the
Business Day immediately following such auction date.
The "Treasury Rate Calculation Date" pertaining to any Treasury Rate
Determination Date shall be the first to occur of (a) the tenth calendar day
after such Treasury Rate Determination Date or, if such a day is not a
Business Day, the next succeeding Business Day or (b) the second Business Day
preceding the date any distribution of interest is required to be made
following the applicable Interest Reset Date.
Principal of the Certificates
Unless otherwise specified in the applicable prospectus supplement, each
certificate (other than certain classes of Strip Certificates) will have a
"Certificate Principal Balance" which, 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 Deposited Assets and other assets
included in the related trust. Unless otherwise specified in the applicable
prospectus supplement, distributions generally will be applied to
undistributed accrued interest on, then to principal of, and then to premium
(if any) on, each such certificate of the class or classes entitled thereto
(in the manner and priority specified in such prospectus supplement) until the
aggregate Certificate Principal Balance of such class or classes has been
reduced to zero. The outstanding Certificate Principal Balance of a
certificate will be reduced to the extent of distributions of principal
thereon, and, if applicable pursuant to the terms of the related series, by
the amount of any net losses realized on any Deposited Asset ("Realized
Losses") allocated thereto. Unless otherwise specified in the applicable
prospectus supplement, the initial aggregate Certificate Principal Balance of
all classes of certificates of a series will equal the outstanding aggregate
principal balance of the related Deposited Assets as of the applicable Cut-off
Date. The initial aggregate Certificate Principal Balance of a series and each
class thereof will be specified in the applicable prospectus supplement.
Distributions of principal of any class of certificates will be made on a pro
rata basis among all the certificates of such class. Strip Certificates with
no Certificate Principal Balance will not receive distributions of principal.
Foreign Currency Certificates
If the specified currency of any certificate is not U.S. dollars (a
"Foreign Currency Certificate"), certain provisions with respect thereto will
be specified in the applicable prospectus supplement which will set forth the
denominations, the currency or currencies in which the principal and interest
with respect to such certificate are to be paid and any other terms and
conditions relating to the non-U.S. dollar denominations or otherwise
applicable to the certificates.
Indexed Certificates
From time to time, the trust may offer a series of certificates ("Indexed
Certificates"), the principal amount payable at the stated maturity date of
which (the "Indexed Principal Amount") and/or interest with respect to which
is determined by reference to:
o the rate of exchange between the specified currency for such
certificate and the other currency or composite currency (the
"Indexed Currency"") specified therein;
o the difference in the price of a specified commodity (the "Indexed
Commodity") on specified dates;
o the difference in the level of a specified stock index (the "Stock
Index"), which may be based on U.S. or foreign stocks, on specified
dates; or
o such other objective price or economic measure as are described in
the applicable prospectus supplement.
The manner of determining the Indexed Principal Amount of an Indexed
Certificate, and historical and other information concerning the Indexed
Currency, Indexed Commodity, Stock Index or other price or economic measure
used in such determination, will be specified in the applicable prospectus
supplement, together with any information concerning tax consequences to the
holders of such Indexed Certificates.
Unless otherwise specified in the applicable prospectus supplement,
interest on an Indexed Certificate will be payable based on the amount
designated in the applicable prospectus supplement as the "Face Amount" of
such Indexed Certificate. The applicable prospectus supplement will describe
whether the principal amount of the related Indexed Certificate that would be
payable upon redemption or repayment prior to the stated maturity date will be
the Face Amount of such Indexed Certificate, the Indexed Principal Amount of
such Indexed Certificate at the time of redemption or repayment, or another
amount described in such prospectus supplement.
Dual Currency Certificates
Certificates may be issued as dual currency certificates ("Dual Currency
Certificates"), in which case payments of principal and/or interest in respect
of Dual Currency Certificates will be made in such currencies, and rates of
exchange will be calculated upon such bases, as indicated in the certificates
and described in the applicable prospectus supplement. Other material terms
and conditions relating to Dual Currency Certificates will be specified in the
certificates and the applicable prospectus supplement.
Credit Derivatives
If so specified in the applicable prospectus supplement, a trust issuing
a series of certificates may enter into a credit derivative arrangement such
as a credit default swap agreement. Under such a swap agreement the trust
would agree, in return for a fee or other consideration, to assume the default
or other credit risk on a security not owned by the trust (a "Reference
Security"). Upon the occurrence of a default or other objective credit event
with respect to the Reference Security, the trust would suffer the resulting
loss pursuant to (i) a provision requiring the trust to pay the counterparty
the difference between the Face Amount of the Reference Security and its then
current market value as determined by independent quotations (which payment
would be made from the proceeds of the sale of the Underlying Securities),
(ii) a provision requiring the trust to deliver the Underlying Securities to
the counterparty in exchange for the Reference Securities, which would then
either be distributed in kind to certificateholders or sold (and the proceeds
distributed) or (iii) other provisions specified in the applicable prospectus
supplement with similar effects. Similarly, if so specified in the applicable
prospectus supplement, a trust may enter into a Put Option arrangement
pursuant to which the trust will agree to purchase a Reference Security for a
predetermined price, thus assuming the risk of loss thereon.
Reference Securities will be of the same types as the Underlying
Securities described herein. The applicable prospectus supplement will include
information regarding Reference Securities and the issuer thereof that is
similar to that provided with respect to Underlying Securities.
Optional Exchange
If a holder may exchange certificates of any given series for a pro rata
portion of the Deposited Assets (an "Exchangeable Series"), the terms upon
which a holder may exchange certificates of any Exchangeable Series for a pro
rata portion of the Deposited Assets of the related trust will be specified in
the applicable prospectus supplement and the related trust agreement; provided
that, any right of exchange shall be exercisable only to the extent that such
exchange would not be inconsistent with the Depositor's and such trust's
continued satisfaction 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. Such terms may relate to, but are
not limited to, the following:
o a requirement that the exchanging holder tender to the trustee
certificates of each class within such Exchangeable Series;
o a minimum Certificate Principal Balance or Notional Amount, as
applicable, with respect to each certificate being tendered for
exchange;
o 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;
o specified dates during which a holder may effect such an exchange
(each, an "Optional Exchange Date");
o limitations on the right of an exchanging holder to receive any
benefit upon exchange from any credit support or other non-Underlying
Securities deposited in the applicable trust; and
o 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 as specified in the applicable prospectus supplement, if
applicable.
Unless otherwise specified in the applicable prospectus supplement, in
order for a certificate of a given Exchangeable Series (or class within such
Exchangeable Series) to be exchanged by the applicable certificateholder, the
trustee for such certificate must receive, at least 30 (or such shorter period
acceptable to the trustee) but not more than 45 days prior to an Optional
Exchange Date (i) such certificate with the form entitled "Option to Elect
Exchange" on the reverse thereof duly completed, or (ii) in the case of
registered certificates, a telegram, telex, facsimile transmission or letter
from a member of a national securities exchange or the National Association of
Securities Dealers, Inc., the Depositary (in accordance with its normal
procedures) or a commercial bank or trust company in the United States setting
forth the name of the holder of such registered certificate, the Certificate
Principal Balance or Notional Amount of the registered certificate to be
exchanged, the certificate number or a description of the tenor and terms of
the registration certificate, a statement that the option to elect exchange is
being exercised thereby and a guarantee that the registered certificate to be
exchanged with the form entitled "Option to Elect Exchange" on the reverse of
the registered certificate duly completed will be received by such trustee not
later than five Business Days after the date of such telegram, telex,
facsimile transmission or letter. If the procedure described in clause (ii) of
the preceding sentence is followed, then such registered certificate and form
duly completed must be received by such trustee by such fifth Business Day.
Any tender of a certificate by the holder for exchange shall be irrevocable.
The exchange option may be exercised by the holder of a certificate for less
than the entire Certificate Principal Balance of such certificate provided
that the Certificate Principal Balance or Notional Amount, as applicable, of
such certificate remaining outstanding after redemption is an authorized
denomination and all other exchange requirements specified in the applicable
prospectus supplement are satisfied. Upon such partial exchange, such
certificate shall be cancelled and a new certificate or certificates for the
remaining Certificate Principal Balance thereof shall be issued (which, in the
case of any registered certificate, shall be in the name of the holder of such
exchanged certificate).
Unless otherwise specified in the applicable prospectus supplement, until
definitive certificates are issued, each certificate will be represented by a
global security, the Depositary's nominee will be the certificateholder of
such certificate and therefore will be the only entity that can exercise a
right of exchange. In order to ensure that the Depositary's nominee will
timely exercise a right of exchange with respect to a particular certificate,
the beneficial owner of such certificate must instruct the broker or other
direct or indirect participant through which it holds an interest in such
certificate to notify the Depositary of its desire to exercise a right of
exchange. Different firms 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 participant through
which it holds an interest in a 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 the Depositary.
Unless otherwise specified in the applicable prospectus supplement, upon
the satisfaction of the foregoing conditions and any applicable conditions
with respect to the related Deposited Assets, as described in such prospectus
supplement, the applicable certificateholder will be entitled to receive a
distribution of a pro rata share of the Deposited Assets related to the
Exchangeable Series (and class within such Exchangeable Series) of the
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 certificateholder, upon
satisfaction of such conditions, may direct the related trustee to sell, on
behalf of the certificateholder, such pro rata share of the Deposited Assets.
In such event, the certificateholder will be entitled to receive the net
proceeds of such sale, less any costs and expenses incurred by the trustee in
facilitating the sale, subject to any additional adjustments specified in the
prospectus supplement.
Default and Remedies
If there is a payment default on or acceleration of the Underlying
Securities, then: (i) the trustee will sell all of such Underlying Securities
and a pro rata portion of the Related Assets and distribute the proceeds from
the sale to the certificateholders in accordance with the Allocation Ratio
(any such sale may result in a loss to the certificateholders of the relevant
series if the sale price is less than the purchase price for such Underlying
Securities), (ii) the trustee will distribute such Underlying Securities and a
pro rata portion of the Related Assets in kind to the certificateholders in
accordance with the Allocation Ratio, or (iii) the Depositor will provide to
the certificateholders the financial and other information required by the
SEC. The choice of remedies will be specified for a given series in the
prospectus supplement, and the trustee, Depositor and 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 Deposited Assets of that
series. The applicable prospectus supplement for any series with more than one
class will specify the Allocation Ratio for that series. In addition to
default or 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 certificateholders of different classes of a given
series in accordance with their economic interests. Further, the Allocation
Ratio applies in the event of a sale or distribution of Underlying Securities
once an issuer of Concentrated Underlying Securities ceases to file periodic
reports under the Exchange Act, as discussed below under "Description of
Deposited Assets--Principal Terms of Underlying Securities."
Call Right
DBAB, 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 certificates of a
given series or class from the holders thereof (the "Call on Certificates") or
all or some of the Underlying Securities of a given series from the trust (the
"Call on Underlying Securities" and, together with the Call on Certificates,
the "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:
o the initial holder of the Call Right;
o whether the Certificate Principal Balance or Notional Amount (as
defined below) of each certificate being purchased pursuant to the
Call Right must be an Authorized Denomination;
o the Call Date or Dates; and
o the Call Price.
After receiving notice of the exercise of a Call Right, the trustee will
provide notice thereof as specified in the standard terms. Upon the
satisfaction of any applicable conditions to the exercise of a Call Right,
each certificateholder will be entitled to receive (in the case of a purchase
of less than all of the certificates) payment of a pro rata share of the Call
Price paid in connection with such exercise. In addition, in conjunction with
the exercise of a Call on Underlying Securities in respect of all or a portion
of the Underlying Securities, the certificates will be redeemed in whole, pro
rata or in accordance with the Allocation Ratio, as applicable and as
specified in the applicable prospectus supplement. A Call Right is not
expected to be exercised unless the value of the Underlying Securities exceeds
the Call Price payable upon exercise of the Call Right.
Put Right
Certificates may be issued with Underlying Securities that permit the
holder thereof to require the issuer of the Underlying Securities 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 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 certificates of the Callable Series will be redeemed as described in
"Description of the Certificates--Call Right." The Depositor will not issue a
series of 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) affect the characterization of the trust as a "grantor trust"
under the Code.
Global Securities
Unless otherwise specified in the applicable prospectus supplement, all
certificates of a given series (or, if more than one class exists, any given
class within that series) will, upon issuance, be represented by one or more
global securities. The global securities will be deposited with, or on behalf
of, The Depository Trust Company ("DTC"), New York, New York (for registered
certificates denominated and payable in U.S. dollars), or such other
depositary identified in the applicable prospectus supplement (the
"Depositary"), and registered in the name of a nominee of the Depositary.
Global securities may be issued in registered form and in either temporary or
permanent form. Unless and until it is exchanged in whole or in part for the
individual 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.
DTC has advised the Depositor as follows: DTC is a limited-purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code, and a "clearing agency" registered pursuant to
the provisions of Section 17A of the Exchange Act. DTC was created to hold
securities of its participating organizations and to facilitate the clearance
and settlement of securities transactions among the institutions that have
accounts with the Depositary ("participants") in such securities through
electronic book-entry changes in the accounts of the Depositary participants,
thereby eliminating the need for physical movement of securities certificates.
The Depositary's participants include securities brokers and dealers
(including DBAB), banks, trust companies, clearing corporations, and certain
other organizations, some of whom (and/or their representatives) own the
Depositary. Access to the 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. DTC has confirmed to the Depositor that it intends to follow such
procedures.
Upon the issuance of a global security, the Depositary for the global
security will credit, on its book-entry registration and transfer system, the
respective principal amounts or notional amounts, if applicable, of the
individual certificates represented by such global security to the accounts of
its participants. The accounts to be credited shall be designated by the
underwriters of such certificates, or, if such 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 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 that hold through participants. The laws of some
states require that certain purchasers of securities take physical delivery of
such securities. Such limits and such 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 the global security, the Depositary or the nominee, as the case may
be, will be considered the sole certificateholder of the individual
certificates represented by such global security for all purposes under the
trust agreement governing the certificates. Except as specified below, owners
of beneficial interests in a global security will not be entitled to have any
of the individual certificates represented by the global security registered
in their names, will not receive or be entitled to receive physical delivery
of any certificates and will not be considered the certificateholder thereof
under the trust agreement governing the certificates. Because the Depositary
can only act on behalf of its participants, the ability of a holder of any
certificate to pledge that certificate to persons or entities that do not
participate in the Depositary's system, or to otherwise act with respect to
the certificate, may be limited due to the lack of a physical certificate for
the certificate.
Distributions of principal of (and premium, if any) and any interest on
individual certificates represented by a global security will be made to the
Depositary or its nominee, as the case may be, as the certificateholder of the
global security. None of the Depositor, the administrative agent, if any, the
trustee, any paying agent, any securities intermediary or the certificate
registrar will have responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial interests in a global
security or for maintaining, supervising or reviewing any records relating to
such beneficial interests.
The Depositor expects that the Depositary for certificates of a given
class and series, upon receipt of any distribution of principal, premium or
interest in respect of a definitive global security representing any
certificates, will credit immediately participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the
principal amount of the global security as shown on the records of such
Depositary. The Depositor also expects that payments by participants to owners
of beneficial interests in a global security held through such participants
will be governed by standing instructions and customary practices, as is now
the case with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such
participants.
If the Depositary for certificates of a given class of any series is at
any time unwilling or unable to continue as Depositary and a successor
depositary is not appointed by the Depositor within ninety days, the Depositor
will issue individual definitive certificates in exchange for the global
security or securities representing such certificates. In addition, the
Depositor may at any time and in its sole discretion determine not to have any
certificates of a given class represented by one or more global securities
and, in such event, will issue individual definitive certificates of such
class in exchange for the global security or securities representing such
certificates. Further, if the Depositor so specifies with respect to the
certificates of a given class, an owner of a beneficial interest in a global
security representing certificates of such class may, on terms acceptable to
the Depositor and the Depositary of the 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
class represented by the global security equal in principal amount or Notional
Amount, if applicable, to such beneficial interest and to have definitive
certificates registered in its name (if the certificates of such class are
issuable as registered certificates). Individual definitive certificates of
such class so issued will be issued as registered certificates in
denominations, unless otherwise specified by the Depositor or in the
applicable prospectus supplement, of $1,000 and integral multiples thereof if
the certificates of such class are issuable as registered certificates.
The applicable prospectus supplement will specify any specific terms of
the depositary arrangement with respect to any class or series of certificates
being offered thereby to the extent not specified or different from the
description above.
DESCRIPTION OF DEPOSITED ASSETS AND CREDIT SUPPORT
General
Each 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
certificates in a designated, publicly issued, security or a pool of
securities (the "Underlying Securities"), purchased by the Depositor (or an
affiliate thereof) in the secondary market and assigned to a trust as
described in the applicable prospectus supplement. The Underlying Securities
will represent one or more of the following:
o publicly issued debt obligations or investment grade term preferred
stock of one or more corporations, limited liability companies,
banking organizations or insurance companies organized under the laws
of the United States or any state, the District of Columbia or the
Commonwealth of Puerto Rico, which in each case 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 depository institutions) with a federal bank or
thrift regulatory agency ("Domestic Corporate Securities") and which,
if such security or securities are Concentrated Underlying
Securities, the Depositor reasonably believes (based on publicly
available information) meet the market capitalization and other
requirements for a primary issuance of common stock on Form S-3 at
the time of offering of the certificates;
o publicly issued debt securities or investment grade term preferred
stock 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
file reports and other information with the SEC ("Foreign Private
Securities" and together with Domestic Corporate Securities, the
"Corporate Securities") and which, if such securities are
Concentrated Underlying Securities, the Depositor reasonably believes
(based on publicly available information) are eligible for a primary
offering of common stock on Form S-3 at the time of offering of the
certificates;
o preferred securities of one or more trusts or other special purpose
legal entities that hold obligations of issuers that are subject, or
are wholly-owned subsidiaries of companies that are subject (in which
case such parent companies have fully and unconditionally guaranteed
such obligations on a subordinate or non-subordinate basis), to the
informational requirements of the Exchange Act and which, in
accordance therewith, file reports and other information with the SEC
("Trust Preferred Securities") and, if such Trust Preferred
Securities are Concentrated Underlying Securities, that the Depositor
reasonably believes (based on publicly available information) are
eligible for a primary offering of common stock on Form S-3 or Form
S-3 at the time of the offering of the certificates;
o asset-backed securities of one or more trusts or other special
purpose legal entities (having outstanding at least $75,000,000 in
securities held by non-affiliates) which (unless the depositor is a
GSE described below) are subject at the time of issuance of the
asset-backed securities to the informational requirements of the
Exchange Act and which in accordance therewith, file reports and
other information with the SEC, ("Asset-Backed Securities" and
together with Corporate Securities and Trust Preferred Securities,
the "Private Sector Securities");
o an obligation issued or guaranteed by 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 ("Treasury Securities");
o an obligation of one or more U.S. government sponsored entities
("GSEs") described below (see "Underlying Securities-Domestic
Government Securities");
o Government Trust Certificates ("GTCs") described below; or
o an obligation issued by a Multilateral Bank Issuer (as defined
below).
Notwithstanding any requirement stated or incorporated herein relating to
reporting under the Exchange Act, it should be noted that the issuers of the
Underlying Securities are not participating in any offering of trust
certificates and that the Depositor and DBAB will not perform the analysis and
review of such issuers that an underwriter of the Underlying Securities would
perform. The reasonableness of the Depositor's belief as to an Underlying
Security issuer's eligibility to issue common stock on Form S-3 or Form S-3
should be evaluated in light of these limitations.
This prospectus relates only to the certificates offered hereby and does
not relate to the Underlying Securities. The following description of the
Underlying Securities is intended only to summarize certain characteristics of
the Underlying Securities the Depositor is permitted to deposit in a trust and
is not a complete description of any prospectus relating to any Underlying
Security, and, if applicable, Underlying Securities Indenture and as qualified
by the applicable prospectus supplement, prospectus relating to any Underlying
Security, if any, and to the extent applicable, the statement of terms or
similar document with respect to any Underlying Security, and if applicable,
the Underlying Securities Indenture.
Underlying Securities
Private Sector Securities
Private Sector Securities will be:
o Corporate Securities;
o Trust Preferred Securities; or
o Asset-Backed Securities.
Corporate Securities. Corporate Securities may consist of senior or
subordinated debt obligations, or investment grade term preferred stock issued
by domestic or foreign issuers, as described above.
Debt obligations may be issued with a wide variety of terms and
conditions. Set forth below is a description of certain features that may be
associated with one or more Underlying Securities consisting of debt
obligations.
Indentures. With respect to senior or subordinated debt obligations, the
applicable prospectus supplement will specify whether each Underlying Security
will have been issued pursuant to an agreement (each, an "Underlying
Securities Indenture") between the issuer of the Underlying Securities and a
trustee (the "Underlying Securities Trustee"). If so specified in the
applicable prospectus supplement, the Underlying Securities Indenture, if any,
and the Underlying Securities Trustee, if any, will be qualified under the
Trust Indenture Act of 1939 (the "Trust Indenture Act") and the Underlying
Securities Indenture will contain certain provisions required by the Trust
Indenture Act.
Certain Covenants. If specified in the applicable prospectus supplement,
the Underlying Securities that consist of senior or subordinated debt
obligations will be issued pursuant to an Underlying Securities Indenture.
Indentures generally contain covenants intended to protect security holders
against the occurrence or effects of certain specified events, including
restrictions limiting the issuer's, and in some cases any of its subsidiary's,
ability to:
o consolidate, merge, or transfer or lease assets;
o incur or suffer to exist any lien, charge, or encumbrance upon any of
its property or assets;
o incur, assume, guarantee or suffer to exist any indebtedness for
borrowed money if the payment of such indebtedness is secured by the
grant of such a lien; or
o declare or pay any cash dividends, or make any distributions on or in
respect of, or purchase, redeem, exchange or otherwise acquire or
retire for value any capital stock or subordinated indebtedness of
the issuer or its subsidiaries, if any.
An indenture may also contain financial covenants which, among other
things, require the maintenance of certain financial ratios or the creation or
maintenance of reserves. Subject to specified exceptions, indentures typically
may be amended or supplemented and past defaults may be waived with the
consent of the indenture trustee, the consent of the holders of not less than
a specified percentage of the outstanding securities, or both.
The Underlying Securities Indenture related to one or more Underlying
Securities included in a trust may include some, all or none of the foregoing
provisions or variations thereof or additional covenants not discussed herein.
To the extent that the Underlying Securities are investment grade debt they
are unlikely to contain significant restrictive covenants although certain
non-investment grade debt may not be subject to restrictive covenants either.
There can be no assurance that any such provision will protect the trust as a
holder of the Underlying Securities against losses.
The prospectus supplement for any series of certificates will describe
material covenants in relation to any Underlying Securities (including Foreign
Government Securities) that represent ten percent or more of the total
Underlying Securities with respect to that series of certificates (a
"Concentrated Underlying Security") and, as applicable, will describe material
covenants that apply to all of the securities in any pool of Underlying
Securities.
Events of Default. Indentures generally provide that any one of a number
of specified events will constitute an event of default with respect to the
securities issued thereunder. Such events of default typically include the
following or variations thereof:
o failure by the issuer to pay an installment of interest or principal
on the securities at the time required (subject to any specified
grace period) or to redeem any of the securities when required
(subject to any specified grace period);
o failure by the issuer to observe or perform any covenant, agreement
or condition contained in the securities or the indenture, as the
case may be, which failure is materially adverse to security holders
and continues for a specified period after notice thereof is given to
the issuer by the indenture trustee or the holders of not less than a
specified percentage of the outstanding securities; or
o failure by the issuer to make any required payment of principal (and
premium, if any) or interest with respect to certain of the other
outstanding debt obligations of the issuer or the acceleration by or
on behalf of the holders thereof of such securities.
Remedies. Indentures for Corporate Securities generally provide that upon
the occurrence of an event of default, the indenture trustee may, and upon the
written request of the holders of not less than a specified percentage of the
outstanding securities, the indenture trustee must, take such action as it may
deem appropriate to protect and enforce the rights of the security holders.
Certain indentures provide that the indenture trustee or a specified
percentage of the holders of the outstanding securities have the right to
declare all or a portion of the principal and accrued interest on the
outstanding securities immediately due and payable upon the occurrence of
certain events of default, subject to the issuer's right to cure, if
applicable. Generally, an indenture will contain a provision entitling the
indenture trustee thereunder to be indemnified by the security holders prior
to proceeding to exercise any right or power under such indenture with respect
to such securities at the request of such security holders. An indenture is
also likely to limit a security holder's right to institute certain actions or
proceedings to pursue any remedy under the indenture unless certain conditions
are satisfied, including consent of the indenture trustee, that the proceeding
be brought for the ratable benefit of all holders of the security, and/or the
indenture trustee, after being requested to institute a proceeding by the
owners of at least a specified minimum percentage of the securities, shall
have refused or neglected to comply with such request within a reasonable
time.
Each Underlying Securities Indenture or Underlying Security may include
some, all or none of the foregoing provisions or variations thereof or
additional events of default not discussed herein. The prospectus supplement
with respect to any series of certificates will describe the events of default
under the Underlying Securities with respect to any Concentrated Underlying
Security ("Underlying Security Events of Default") and applicable remedies
with respect thereto. With respect to any trust comprised of a pool of
securities, the applicable prospectus supplement will describe certain common
Underlying Security Events of Default with respect to such pool. There can be
no assurance that any such provision will protect the trust, as a holder of
the Underlying Securities, against losses. If an Underlying Security Event of
Default occurs and the indenture trustee as a holder of the Underlying
Securities is entitled to vote or take such other action to declare the
principal amount of an Underlying Security and any accrued and unpaid interest
thereon to be due and payable, the certificateholders' objectives may differ
from those of holders of other securities of the same series and class as any
Underlying Security ("Outstanding Debt Securities") in determining whether to
declare the acceleration of the Underlying Securities.
Subordination. As specified in the applicable prospectus supplement,
certain of the Underlying Securities with respect to any trust may be either
senior ("Senior Underlying Securities") or subordinated ("Subordinated
Underlying Securities") in right to payment to other existing or future
indebtedness of the issuer of the Underlying Securities. With respect to
Subordinated Underlying Securities, to the extent of the subordination
provisions of such securities, and after the occurrence of certain events,
security holders and direct creditors whose claims are senior to Subordinated
Underlying Securities, if any, may be entitled to receive payment of the full
amount due thereon before the holders of any subordinated debt securities are
entitled to receive payment on account of the principal (and premium, if any)
or any interest on such securities. Consequently, the trust as a holder of
subordinated debt may suffer a greater loss than if it held unsubordinated
debt of the issuer of the Underlying Securities. There can be no assurance,
however, that in the event of a bankruptcy or similar proceeding the trust as
a holder of Senior Underlying Securities would receive all payments in respect
of such securities even if holders of subordinated securities receive amounts
in respect of such securities. Reference is made to the prospectus supplement
used to offer any series of certificates for a description of any
subordination provisions with respect to any Concentrated Underlying
Securities and the percentage of Senior Underlying Securities and Subordinated
Underlying Securities, if any, in a trust comprised of a pool of securities.
Secured Obligations. Certain of the Underlying Securities with respect to
any trust may represent secured obligations of the issuer of the Underlying
Securities ("Secured Underlying Securities"). Generally, unless an event of
default shall have occurred and is continuing, or with respect to certain
collateral or as otherwise specified in the indenture pursuant to which such
securities were offered and sold, an issuer of secured obligations has the
right to remain in possession and retain exclusive control of the collateral
securing a security and to collect, invest and dispose of any income related
to the collateral. The indenture pursuant to which any secured indebtedness is
issued may also contain provisions for release, substitution or disposition of
collateral under specified circumstances with or without the consent of the
indenture trustee or upon the direction of not less than a specified
percentage of the security holders. The indenture pursuant to which any
secured indebtedness is issued will also provide for the disposition of the
collateral upon the occurrence of specified events of default with respect
thereto. In the event of a default in respect of any secured obligation,
security holders may experience a delay in payments on account of principal
(and premium, if any) or any interest on such securities pending the sale of
any collateral and prior to or during such period the related collateral may
decline in value. If proceeds of the sale of collateral following an indenture
event of default are insufficient to repay all amounts due in respect of any
secured obligations, the holders of such securities (to the extent not repaid
from the proceeds of the sale of the collateral) would have only an unsecured
claim ranking pari passu with the claims of all other general unsecured
creditors.
The Underlying Securities Indenture with respect to any Secured
Underlying Security may include, some, all or none of the foregoing provisions
or variations thereof. The prospectus supplement used to offer any series of
certificates which includes Concentrated Underlying Securities which are
Secured Underlying Securities, will describe the security provisions of the
Underlying Securities and the related collateral. With respect to any trust
comprised of a pool of securities, a substantial portion of which are Secured
Underlying Securities, the applicable prospectus supplement will disclose
general information with respect to such security provisions and the
collateral.
Trust Preferred Securities. As specified in the applicable prospectus
supplement, a trust may include one or more Trust Preferred Securities. Trust
Preferred Securities are preferred equity securities issued by a trust, such
as a Delaware statutory business trust, established for the purpose of issuing
common and preferred equity securities and investing the proceeds in certain
subordinated debt obligations. The subordinated debt obligations are issued by
the parent of the trust, i.e., the company to whom the trust issues its common
equity securities, or by an affiliate of such parent. Trust Preferred
Securities generally have economic characteristics that mirror those of the
subordinated debt obligations that are the trusts' principal assets.
Specifically, the Trust Preferred Securities generally have a liquidation
preference equal to the principal balance of the subordinated debt obligations
and are subject to mandatory redemption on the maturity date of the
subordinated debt obligations, or such earlier date as the issuer optionally
prepays the subordinated debt. The Trust Preferred Securities generally pay
dividends at a rate approximately equal to the interest rate on the
subordinated debt obligations, and such dividends and interest payments
generally are due on or about the same date.
The trusts that issue Trust Preferred Securities generally have no assets
other than the subordinated debt obligations issued by such trusts'
affiliates. Such subordinated debt obligations are subordinated to all other
unsubordinated debt of such affiliates, including such debt issued subsequent
to issuance of such subordinated debt obligations.
In view of the relationship of the trusts that issue Trust Preferred
Securities to their parent companies and in view of certain undertakings by
such parents, such trusts in each case will not file reports under the
Exchange Act so long as their parent companies file reports under the Exchange
Act.
Asset-Backed Securities. As specified in the applicable prospectus
supplement, a trust may include one or more Asset-Backed Securities.
Asset-Backed Securities may be asset-backed notes or pass-through
certificates, in each case issued by a trust or other special-purpose entity.
Asset-backed notes are secured by, and pass-through certificates represent an
interest in, a fixed or revolving pool of financial assets. Such financial
assets may consist of secured or unsecured consumer or other receivables, such
as automobile loans or contracts, automobile leases, credit card receivables,
home equity or other mortgage loans, trade receivables, floor plan (inventory)
loans, automobile leases, equipment leases, and other assets that produce
streams of payments. Asset-backed notes generally are issued pursuant to
indentures and pass-through certificates generally are issued pursuant to
pooling and servicing agreements. A separate servicing agreement typically is
executed in connection with asset-backed notes (such servicing agreements,
indentures and pooling and servicing agreements, the "Asset-Backed
Agreements").
The Asset-Backed Agreements provide for the appointment of a trustee and
the segregation of the transferred pool of assets from the other assets of the
transferor. Such segregation generally is only required to the extent
necessary to perfect the interest of the trustee in the assets against claims
of unsecured creditors of the transferor of the assets. Where so required by
the Uniform Commercial Code (the "UCC") (for instance, home equity loan notes)
certain of the documents evidencing the underlying receivables are delivered
to the possession of the trustee or other custodian for the holders of the
Asset-Backed Securities. In the case of most assets, either no documents
evidence the receivables (for instance, credit card receivables) or documents
exist, but the UCC does not require their possession to perfect a transfer
(for instance, automobile installment sales contracts). In these cases, the
transferor segregates the assets only on its own books and records, such as by
marking its computer files, and perfects the trustee's interest by filing a
financing statement under the UCC. This method of segregation and perfection
presents the risk that the trustee's interest in the assets could be lost as a
result of negligence or fraud, such that the trustee and the Asset-Backed
Security holders become unsecured creditors of the transferor of the assets.
Domestic Government Securities
Domestic Government Securities will be:
o Treasury Securities;
o GSEs; or
o GTCs.
GSEs. As specified in the applicable prospectus supplement, the
obligations of one or more of the following GSEs may be included in a trust:
Federal National Mortgage Association, Federal Home Loan Mortgage Corporation,
Student Loan Marketing Association, Resolution Funding Corporation, Federal
Home Loan Banks (to the extent such obligations represent the joint and
several obligations of the twelve Federal Home Loan Banks), Tennessee Valley
Authority and Federal Farm Credit Banks. GSE debt securities generally are
exempt from registration under the Securities Act pursuant to Section 3(a)(2)
of the Securities Act (or are deemed by statute to be so exempt) and are not
required to be registered under the Exchange Act. The securities of any GSE
will be included in a trust only to the extent (A) its obligations are
supported by the full faith and credit of the U.S. government or (B) the
organization makes publicly available its annual report, which shall include
financial statements or similar financial information with respect to the
organization. Based on information contained in the offering document pursuant
to which any GSE issuer's securities were originally offered, the applicable
prospectus supplement will specify information with respect to the public
availability of information with respect to any GSE issuer the debt securities
of which constitute more than ten percent of the Underlying Securities for any
series of certificates as of the date of the prospectus supplement. The
specific terms and conditions of the Underlying Securities will be specified
in the applicable prospectus supplement.
In the case of a GSE issuer there will generally be a fiscal agent with
respect to any related Underlying Security whose actions will be governed by a
fiscal agency agreement. A fiscal agent is not a trustee for the holders of
the Underlying Securities and does not have the same responsibilities or
duties to act for the holders of a GSE's securities as would a trustee. Unless
otherwise specified in the applicable prospectus supplement, the Underlying
Securities with respect to any GSE issuer will not be guaranteed by the United
States and do not constitute a debt or obligation of the United States or of
any agency or instrumentality thereof other than the related GSE.
Contractual and Statutory Restrictions. A GSE issuer and the related
Underlying Securities may be subject to contractual and statutory restrictions
which may provide some protection to securityholders against the occurrence or
effects of specified events. Unless otherwise specified in the applicable
prospectus supplement, each GSE is limited to the activities as will promote
its statutory purposes as set forth in the publicly available information with
respect to the issuer. See "Description of the Deposited Assets--Publicly
Available Information" in the applicable prospectus supplement. A GSE's
promotion of its statutory purposes, as well as its statutory, structural and
regulatory relationships with the federal government may cause or require the
GSE to conduct its business in a manner that differs from that an enterprise
which is not a GSE might employ.
Neither the United States nor any agency thereof is obligated to finance
any GSE issuer's operations or to assist a GSE issuer in any manner.
Prospective purchasers should consult the publicly available information with
respect to each GSE issuer for a more detailed description of the regulatory
and statutory restrictions on the related GSE's activities.
Events of Default. Underlying Securities issued by a GSE Issuer may
provide that any one of a number of specified events will constitute an event
of default with respect to the securities issued thereunder. Events of default
typically include the following or variations thereof:
o failure by the issuer to pay an installment of interest or principal
on the securities at the time required (subject to any specified
grace period) or to redeem any of the securities when required
(subject to any specified grace period);
o failure by the issuer to observe or perform any covenant, agreement
or condition contained in the securities or the indenture or
authorizing legislation or regulation, as the case may be, which
failure is materially adverse to security holders and continues for a
specified period after notice thereof is given to the issuer by the
fiscal agent or the holders of not less than a specified percentage
of the outstanding securities; and
o failure by the issuer to make any required payment of principal (and
premium, if any) or interest with respect to certain of the other
outstanding debt obligations of the issuer or the acceleration by or
on behalf of the holders thereof of such securities.
GTCs. As specified in the applicable prospectus supplement, a trust may
include one or more GTCs. GTCs are certificates evidencing undivided
fractional interests in a trust, the assets of which consist of promissory
notes (the "GTC Notes"), payable in U.S. Dollars, of a certain foreign
government, backed a full faith and credit guaranty issued by the United
States of America, acting through the Defense Security Assistance Agency of
the Department of Defense, of the due and punctual payment of 90% of all
payments of principal and interest due on the GTC Notes and a security
interest in collateral, consisting of non-callable securities issued or
guaranteed by the United States government thereof, sufficient to pay the
remaining 10% of all payments of principal and interest due on the GTC Notes.
Multilateral Bank Issuers
As specified in the applicable prospectus supplement, a trust may include
obligations of one or more Multilateral Bank Issuers. A "Multilateral Bank
Issuer" means the International Bank for Reconstruction and Development, the
Inter-American Development Bank, the Asian Development Bank, the African
Development Bank, the International Finance Corporation, the European Bank for
Reconstruction and Development, or another multilateral development bank that
has a comparable volume of outstanding securities and files with the SEC
comparable publicly available information, and the securities of which are
exempted from registration under the Securities Act.
Principal Terms of Underlying Securities
Reference is made to the applicable prospectus supplement for each series
of certificates for a description of the following terms, as applicable, of
any Concentrated Underlying Security:
(i) the title and series of such Underlying Securities, and the
aggregate principal amount, denomination and form thereof;
(ii) whether such debt securities are senior or subordinated to any
other existing or future obligations of the issuer of the
Underlying Securities;
(iii) whether any of the obligations are secured or unsecured and the
nature of any collateral;
(iv) the limit, if any, upon the aggregate principal amount of such
debt securities;
(v) the dates on which, or the range of dates within which, the
principal of (and premium, if any, on) such debt 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 (the
"Underlying Securities Rate"); the date or dates from which such
interest will accrue (the "Underlying Securities Interest Accrual
Periods"); and the dates on which such interest will be payable
(the "Underlying Securities Payment Dates");
(vii) the obligation, if any, of the issuer of the Underlying Securities
to redeem the Outstanding Debt Securities pursuant to any sinking
fund or similar 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 debt 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 debt securities
may be redeemed, if any, in whole or in part, at the option of the
issuer of the Underlying Securities;
(ix) the periods within which or the dates on which, the prices at
which and the terms and conditions upon which the holder of the
underlying securities may require the issuer of the puttable
underlying securities to repurchase or otherwise repay such
puttable underlying securities;
(x) whether the Underlying Securities were issued at a price lower
than the principal amount thereof;
(xi) if other than U.S. 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;
(xii) material events of default or restrictive covenants provided for
with respect to such Underlying Securities;
(xiii) the rating thereof, if any; and
(xiv) any other material terms of such Underlying Securities.
With respect to a trust containing a pool of Underlying Securities, the
applicable prospectus supplement will describe the composition of the
Underlying Securities pool as of the Cut-off Date, 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 the terms set forth in (ii),
(iii), (v), (vi), (vii), (viii) and (ix) of the preceding paragraph and any
other material terms regarding such pool of securities.
Publicly Available Information
In addition to the foregoing, with respect to each Concentrated
Underlying Security the applicable prospectus supplement will disclose the
identity of the applicable obligor and the Underlying Securities Trustee, if
applicable, and will describe the existence and type of certain information
that is made publicly available by each obligor regarding such Underlying
Security and will disclose where and how prospective purchasers of the
certificates may obtain publicly available information about the obligor.
Publicly available information will typically consist of the quarterly and
annual reports filed under the Exchange Act by the issuer with, and which are
available from, the SEC. Such information will typically consist of the
obligor'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 the obligor
identified in the applicable prospectus supplement. However, the precise
nature of such publicly available information and where and how it may be
obtained with respect to any given GSE issuer will vary, and, as described
above, will be specified in the applicable prospectus supplement.
If an issuer of Concentrated Underlying Securities ceases to file
periodic reports under the Exchange Act, the Depositor, on behalf of the
trust, will continue to be subject to the reporting requirements of the
Exchange Act, but certain information with respect to such issuer may be
unavailable.
Unless otherwise specified in the applicable prospectus supplement, in
the event that an issuer of a Concentrated Underlying Security (or the issuers
of Underlying Securities the combined principal balances of which exceed ten
percent of the aggregate principal balance of the Underlying Securities)
underlying a series of trust certificates ceases to file periodic reports
required under the Exchange Act, the Depositor shall within a reasonable
period of time (i) file periodic reports containing the information that such
issuer(s) would otherwise file or (ii) instruct the trustee to distribute
within a reasonable period of time such Underlying Security or Securities to
the certificateholders pursuant to the procedures set forth in the trust
agreement or (iii) instruct the trustee to sell such Underlying Security or
Securities and distribute the proceeds from such sale to the
certificateholders in accordance with the Allocation Ratio (any such sale will
result in a loss to the certificateholders of the relevant series if the sale
price is less than the purchase price for such Concentrated Underlying
Securities).
Other Deposited Assets
The Depositor may deposit, assets other than the Underlying Securities,
into a trust assets related or incidental to one or more of such Underlying
Securities or to some other asset deposited in the trust, including hedging
contracts and other similar arrangements (such as puts, calls, interest rate
swaps, currency swaps, floors, caps and collars), cash and assets ancillary or
incidental to the foregoing or to the Underlying Securities (including assets
obtained through foreclosure or in settlement of claims with respect thereto),
credit derivatives and direct obligations of the United States (all such
assets for any given series, together with the related Underlying Securities,
the "Deposited Assets"). To the extent described in the applicable prospectus
supplement, the trustee on behalf of the certificateholders of a trust may
enter into an agreement constituting or providing for the purchase of certain
assets as described above. 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.
Unless otherwise specified in the applicable prospectus supplement, the
Deposited Assets for a given series of certificates and the related trust will
not constitute Deposited Assets for any other series of certificates and the
related trust and the certificates of each class of a given series possess an
equal and ratable undivided ownership interest in such Deposited Assets. The
applicable prospectus supplement may, however, specify that certain assets
constituting a part of the Deposited 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 Deposited Assets.
Credit Support
As specified in the applicable prospectus supplement for a given series
of certificates, the trust for any series of certificates may include, or the
certificateholders of such series (or any class or group of classes within
such series) may have the benefit of, credit support for any class or group of
classes within such series. 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
specify whether the trust for any class or group of classes of certificates
contains, or the certificateholders of such 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,
including financial information with respect to any obligor providing credit
support for 20% or more of the aggregate principal amount of such class or
classes unless such obligor is subject to the informational requirements of
the Exchange Act.
Subordination. As discussed below under "--Collections," the rights of
the certificateholders of any given class within a series of certificates to
receive collections from the trust for such series and any credit support
obtained for the benefit of the certificateholders of such series (or classes
within such series) may be subordinated to the rights of the
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
certificateholders of those other classes. For example, if losses are realized
during a given period on the Deposited Assets relating to a series of
certificates such that the collections received thereon are insufficient to
make all distributions on the certificates of such series, those realized
losses would be allocated to the certificateholders of any class of any such
series that is subordinated to another class, to the extent and in the manner
specified in the applicable prospectus supplement. In addition, if so
specified in the applicable prospectus supplement, certain amounts otherwise
payable to certificateholders of any class that is subordinated to another
class may be required to be deposited into a reserve account. Amounts held in
any reserve account may be applied as described below under "--Reserve
Accounts" and in the applicable prospectus supplement.
If so specified in the applicable prospectus supplement, the credit
support for any series or class of certificates may include, in addition to
the subordination of certain classes of such series and the establishment of a
reserve account, any of the 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 certificateholders of such class or as otherwise specified in the
applicable prospectus supplement. In addition, if so specified 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 certificates
of such series.
Letter of Credit; Surety Bond. The certificateholders of any series (or
class or group of classes of certificates within such series) may, if
specified in the applicable prospectus supplement, have the benefit of a
letter or letters of credit issued by a bank or a surety bond or bonds issued
by a surety company. In either case, the trustee 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, unless
otherwise specified in the applicable prospectus supplement in a timely manner
the fees or premiums therefor. The trustee 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 specify the manner,
priority and source of funds by which any such draws are to be repaid.
Unless otherwise specified in the applicable prospectus supplement, in
the event that the letter of credit bank or the surety, as applicable, ceases
to satisfy any credit rating or other applicable requirements specified in the
applicable prospectus supplement, the trustee or such other person specified
in the applicable 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 specified in the applicable prospectus
supplement, the trustee or such other person named in the prospectus
supplement will deposit or cause to be deposited into a reserve account
maintained with an eligible institution (which may be the trustee) 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 Deposited Assets for a given series of
certificates, in the manner and priority specified in the applicable
prospectus supplement. Amounts deposited in such reserve account may be
distributed to 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 specified 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 named in
the applicable prospectus supplement.
Collections
The trust agreement will establish procedures by which the trustee or
such other person specified in the prospectus supplement is obligated to
administer the related Deposited Assets. This will include making collections
of all payments made on the Deposited Assets and depositing the collections
from time to time prior to any applicable Distribution Date into a segregated
certificate account maintained or controlled by the trustee for the benefit of
such series. An administrative agent, if any is appointed pursuant to the
applicable prospectus supplement, 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 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 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 certificates and the particular requirements relating to the segregation
and investment of collections received on the Deposited Assets during a given
collection period or on or by certain specified dates. Amounts received from
the Deposited Assets and any credit support obtained for the benefit of
certificateholders for a particular series or class of certificates over a
specified period may not be sufficient, after payment of all prior expenses
and fees for such period, to pay amounts then due and owing to holders of such
certificates. The applicable prospectus supplement will also specify the
manner and priority by which any Realized Losses will be allocated among the
classes of any series of 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 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 relative distribution
priority assigned to each class of a given series for purposes of payments of
certain amounts, such as principal, may be different from the relative
distribution priority assigned to each such class for payments of other
amounts, such as interest or premium.
DESCRIPTION OF THE TRUST AGREEMENT
The following summary of certain provisions of the trust agreement that
may be applicable to each series of certificates does not purport to be
complete, and such summary is qualified in its entirety by reference to the
detailed provisions of the form of trust agreement filed as an exhibit to the
registration statement. Wherever defined terms of the standard terms or the
series supplement 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.
Assignment of Deposited Assets
At the time of issuance of any series of certificates, the Depositor will
cause the Underlying Securities to be included in the related trust, and any
other Deposited Asset specified in the prospectus supplement, to be assigned
to the related trustee, together with all principal, premium (if any) and
interest received by or on behalf of the Depositor on or with respect to such
Deposited 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. The
trustee will, concurrently with such assignment, deliver the certificates to
the Depositor in exchange for certain assets to be deposited in the trust.
Each Deposited Asset will be identified in a schedule appearing as an exhibit
to the trust agreement. The schedule will include certain statistical
information with respect to each Underlying Security and each other Deposited
Asset as of the Cut-off Date, and in the event any Underlying Security is a
Concentrated Underlying Security, the schedule will include, to the extent
applicable, information regarding the payment terms thereof, the Retained
Interest, if any, with respect thereto, the maturity or terms thereof, the
rating, if any, thereof and certain other information.
In addition, the Depositor will, with respect to each Deposited 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
Deposited Asset to the trustee. The trustee (or such custodian) will review
the documents within such period as is permitted in the prospectus supplement,
and the trustee (or such custodian) will hold the documents in trust for the
benefit of the certificateholders.
With respect to the types of Deposited Assets specified in the applicable
prospectus supplement if and to the extent described therein, if any document
is found to be missing or defective in any material respect, the trustee (or
such custodian) will immediately notify the administrative agent, if any, and
the Depositor, and the administrative agent, if any, and the trustee will
immediately notify the relevant person who sold the applicable Deposited Asset
to the Depositor (the "Deposited Asset Provider"). To the extent specified in
the applicable prospectus supplement, if the Deposited Asset Provider cannot
cure such omission or defect within 60 days after receipt of notice, the
Deposited Asset Provider will be obligated, within 90 days of receipt of
notice, to repurchase the related Deposited Asset from the trustee at the
Purchase Price or provide a substitute for the Deposited Asset. There can be
no assurance that a Deposited Asset Provider will fulfill this repurchase or
substitution obligation. Although the administrative agent, if any, or
otherwise the trustee is obligated to use its best efforts to enforce this
obligation, neither such administrative agent nor the Depositor will be
obligated to repurchase or substitute for such Deposited Asset if the
Deposited Asset Provider defaults on its obligation. Unless otherwise
specified in the applicable prospectus supplement, when applicable, this
repurchase or substitution obligation constitutes the sole remedy available to
the certificateholders or the trustee for omission of, or a material defect
in, or failure to provide, a constituent document.
Each of the Depositor and the administrative agent, if any, 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 or any such administrative
agent, as the case may be, which materially and adversely affects the
interests of the certificateholders, the Depositor or any such administrative
agent, respectively, will be obligated to cure the breach in all material
respects.
Collection and Other Administrative Procedures
General. With respect to any series of certificates the trustee or such
other person specified in the prospectus supplement directly or through
sub-administrative agents, will make reasonable efforts to collect all
scheduled payments under the Deposited Assets. The trustee will follow the
collection procedures, 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 (collectively, the "credit support instruments") and provided
that, except as otherwise expressly specified in the applicable prospectus
supplement, it shall not be required to expend or risk its own funds or
otherwise incur personal financial liability.
Sub-Administration. Any trustee or administrative agent may delegate its
obligations in respect of the Deposited Assets to third parties they deem
qualified to perform such obligations (each, a "sub-administrative agent").
However, the trustee or administrative agent will remain obligated with
respect to such obligations under the trust agreement. Each sub-administrative
agent will be required to perform the customary functions of an administrator
of comparable financial assets, including, if applicable, collecting payments
from obligors and remitting such collections to the trustee; maintaining
accounting records relating to the Deposited Assets, attempting to cure
defaults and delinquencies; and enforcing any other remedies with respect
thereto all as and to the extent provided in the applicable sub-administration
agreement.
The agreement between any administrative agent or trustee and a
sub-administrative agent will be consistent with the terms of the trust
agreement and the assignment to the sub-administrator by itself will not
result in a withdrawal or downgrading of the rating of any class of
certificates issued pursuant to the trust agreement. Although each such
sub-administration agreement will be a contract solely between such
administrative agent and the sub-administrative agent, the trust agreement
pursuant to which a series of certificates is issued will provide that, if for
any reason the administrative agent for the series of certificates is no
longer acting in such capacity, the trustee or any successor administrative
agent must recognize the sub-administrative agent's rights and obligations
under the sub-administration agreement.
The administrative agent or trustee will be solely liable for all fees
owed by it to any sub-administrative agent, irrespective of whether the
compensation of the administrative agent or trustee, as applicable, pursuant
to the trust agreement with respect to the particular series of certificates
is sufficient to pay such fees. However, a sub-administrative agent may be
entitled to a Retained Interest in certain Deposited Assets to the extent
specified in the applicable prospectus supplement. Each sub-administrative
agent will be reimbursed by the administrative agent, if any, or otherwise the
trustee for certain expenditures which it makes, generally to the same extent
the administrative agent or trustee, as applicable, would be reimbursed under
the terms of the trust agreement relating to such series. See "--Retained
Interest; Administrative Agent Compensation and Payment of Expenses."
The administrative agent or trustee may require any sub-administrative
agent to agree to indemnify the administrative agent or trustee, as
applicable, for any liability or obligation sustained in connection with any
act or failure to act by the sub-administrative agent.
Realization upon Defaulted Deposited Assets. Unless otherwise specified
in the applicable prospectus supplement, the trustee, on behalf of the
certificateholders of a given series (or any class or classes within such
series), will present claims under each applicable credit support instrument,
and will take reasonable steps as are necessary to receive payment or to
permit recovery with respect to defaulted Deposited Assets. As set forth
above, all collections by or on behalf of the trustee or administrative agent
under any credit support instrument are to be deposited in the certificate
account for the related trust, subject to withdrawal as described above.
Unless otherwise specified in the applicable prospectus supplement, if
recovery on a defaulted Deposited Asset under any related credit support
instrument is not available, the trustee will be obligated to follow, or cause
to be followed, normal practices and procedures as it deems necessary or
advisable to realize upon the defaulted Deposited Asset. However, except as
otherwise expressly specified in the applicable prospectus supplement, the
trustee shall not be required to expend or risk its own funds or otherwise
incur personal financial liability. If the proceeds of any liquidation of the
defaulted Deposited Asset are less than the sum of (i) the outstanding
principal balance of the defaulted Deposited Asset, (ii) interest accrued but
unpaid thereon at the applicable interest rate, and (iii) the aggregate amount
of expenses incurred by the administrative agent and the trustee in connection
with such proceedings to the extent reimbursable from the assets of the trust
under the trust agreement, the trust will realize a loss in the amount of such
difference. Only if and to the extent specified in the applicable prospectus
supplement, the administrative agent or trustee, as so provided, will be
entitled to withdraw or cause to be withdrawn from the related certificate
account out of the net proceeds recovered on any defaulted Deposited Asset,
prior to the distribution of such proceeds to certificateholders, amounts
representing its normal administrative compensation on the Deposited Asset,
unreimbursed administrative expenses incurred with respect to the Deposited
Asset and any unreimbursed advances of delinquent payments made with respect
to the Deposited Asset.
Retained Interest; Administrative Agent Compensation and Payment of Expenses
The prospectus supplement for a series of certificates will specify
whether there will be any Retained Interest in the Deposited Assets, and, if
so, the owner thereof. A Retained Interest will be established on an
asset-by-asset basis and will be specified in an exhibit to the applicable
series supplement to the trust agreement. A Retained Interest in a Deposited
Asset represents a specified interest therein. Payments in respect of the
Retained Interest will be deducted from payments on the Deposited Assets as
received and, in general, will not be deposited in the applicable certificate
account or become a part of the related trust. Unless otherwise specified in
the applicable prospectus supplement, any partial recovery of interest on a
Deposited Asset, after deduction of all applicable administration fees, will
be allocated between the Retained Interest (if any) and interest distributions
to certificateholders on a pari passu basis.
The applicable prospectus supplement will specify the administrative
agent's, if any, and the trustee's compensation, and the source, manner and
priority of payment thereof, with respect to a given series of certificates.
If and to the extent specified in the applicable prospectus supplement,
in addition to amounts payable to any sub-administrative agent, the
administrative agent, if any or the trustee, will pay from its compensation
certain expenses incurred in connection with its administration of the
Deposited Assets, including, without limitation, payment of the fees and
disbursements of the trustee, if applicable, and independent accountants,
payment of expenses incurred in connection with distributions and reports to
certificateholders, and payment of any other expenses described in the
applicable prospectus supplement.
Advances in Respect of Delinquencies
Unless otherwise specified in the applicable prospectus supplement, the
administrative agent or the trustee will have no obligation to make any
advances with respect to collections on the Deposited Assets or in favor of
the certificateholders of the related series of certificates. However, to the
extent specified in the applicable prospectus supplement, the administrative
agent or the trustee will advance on or before each Distribution Date its own
funds or funds held in the certificate account for such series that are not
part of the funds available for distribution for such Distribution Date. The
amount of funds advanced will equal the aggregate of payments of principal,
premium (if any) and interest (net of related administration fees and any
Retained Interest) with respect to the Deposited Assets that were due during
the related Collection Period (as defined in the applicable prospectus
supplement) and were delinquent on the related Determination Date, subject to
(i) any such administrative agent's or trustee's good faith determination that
such advances will be reimbursable from Related Proceeds and (ii) such other
conditions as may be specified in the prospectus supplement.
Advances are intended to maintain a regular flow of scheduled interest,
premium (if any) and principal payments to holders of the class or classes of
certificates entitled thereto, rather than to guaranty or insure against
losses. Unless otherwise specified in the applicable prospectus supplement,
advances of an administrative agent's or trustee's funds will be reimbursable
only out of related recoveries on the Deposited Assets (and amounts received
under any form of credit support) for such series with respect to which such
advances were made (as to any Deposited Assets, "Related Proceeds"); provided,
however, that any advance will be reimbursable from any amounts in the
certificate account for the series to the extent that the administrative agent
or trustee shall determine, in its sole judgment, that the advance (a
"Nonrecoverable Advance") is not ultimately recoverable from Related Proceeds.
If advances have been made by the administrative agent or trustee from excess
funds in the certificate account for any series, the administrative agent or
trustee will replace the funds in such certificate account on any future
Distribution Date to the extent that funds in the certificate account on the
Distribution Date are less than payments required to be made to
certificateholders on such date. If so specified in the applicable prospectus
supplement, the obligations, if any, of an administrative agent or trustee to
make advances, may be secured by a cash advance reserve fund or a surety bond.
If applicable, information regarding the characteristics of, and the identity
of any obligor on, any such surety bond, will be specified in the applicable
prospectus supplement.
Certain Matters Regarding the Administrative Agent and the Depositor
An administrative agent, if any, for each series of certificates under
the trust agreement will be named in the applicable prospectus supplement. The
entity serving as administrative agent for any such series may be the trustee,
the Depositor, an affiliate of either thereof, the Deposited Asset Provider or
any third party and may have other normal business relationships with the
trustee, the Depositor, their affiliates or the Deposited Asset Provider.
The trust agreement will provide that an administrative agent may resign
from its obligations and duties under the trust agreement with respect to any
series of certificates only if such resignation, and the appointment of a
successor, will not result in a withdrawal or downgrading of the rating of any
class of certificates of such series, or upon a determination that its duties
under the trust agreement with respect to such series are no longer
permissible under applicable law. No resignation will become effective until
the trustee or a successor has assumed the administrative agent's obligations
and duties under the trust agreement with respect to such series.
The trust agreement will further provide that neither an administrative
agent, the Depositor nor any director, officer, employee, or agent of the
administrative agent or the Depositor will incur any liability to the related
trust or certificateholders for any action taken, or for refraining from
taking any action, in good faith pursuant to the trust agreement or for errors
in judgment; provided, however, that none of the administrative agent, the
Depositor nor any such person will be protected against any liability that
would otherwise be imposed by reason of willful misfeasance, bad faith or
gross negligence in the performance of duties thereunder or by reason of
reckless disregard of obligations and duties thereunder. The standard terms
will further provide that, unless otherwise provided in the applicable series
supplement thereto, an administrative agent, the Depositor and any director,
officer, employee or agent of the administrative agent or the Depositor will
be entitled to indemnification by the related 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 certificates, other than any
loss, liability or expense incurred by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties thereunder or by reason
of reckless disregard of obligations and duties thereunder. In addition, the
trust agreement will provide that neither an administrative agent nor the
Depositor will be under any obligation to appear in, prosecute or defend any
legal action which is not incidental to their respective responsibilities
under the trust agreement or which in its opinion may cause it to incur any
expense or liability. Each of the administrative agent or the Depositor may,
however, in its discretion undertake any action which it may deem necessary or
desirable with respect to the trust agreement and the rights and duties of the
parties thereto and the interests of the certificateholders thereunder. The
applicable prospectus supplement will describe how the legal expenses and
costs of such action and any liability resulting therefrom will be allocated.
Any person into which an administrative agent may be merged or
consolidated, or any person resulting from any merger or consolidation to
which an administrative agent is a part, or any person succeeding to the
business of an administrative agent, will be the successor of the
administrative agent under the trust agreement with respect to the
certificates of any given series.
Administrative Agent Termination Events; Rights Upon Administrative Agent
Termination Event
Unless otherwise specified in the applicable prospectus supplement,
"Administrative Agent Termination Events" under the trust agreement with
respect to any given series of certificates will consist of the following:
o any failure by an administrative agent to remit to the trustee any
funds in respect of collections on the Deposited Assets and credit
support, if any, as required under the trust agreement, that
continues unremedied for five days after the giving of written notice
of such failure to the administrative agent by the trustee or the
Depositor, or to the administrative agent, the Depositor and the
trustee by the holders of such certificates evidencing not less than
25% of the Voting Rights (as defined below);
o any failure by an administrative agent duly to observe or perform in
any material respect any of its other covenants or obligations under
the trust agreement with respect to such series which continues
unremedied for thirty days after the giving of written notice of such
failure to the administrative agent by the trustee or the Depositor,
or to the administrative agent, the Depositor and the trustee by the
holders of such certificates evidencing not less than 25% of the
Voting Rights; and
o specified events of insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings and certain actions by
or on behalf of an administrative agent indicating its insolvency or
inability to pay its obligations.
Any additional Administrative Agent Termination Events with respect to
any given series of certificates will be specified in the applicable
prospectus supplement. In addition, the applicable prospectus supplement and
the related series supplement to the trust agreement will specify as to each
matter requiring the vote of holders of certificates of a class or group of
classes within a given series, the circumstances and manner in which the
Required Percentage applicable to each matter is calculated. "Required
Percentage" means with respect to any matter requiring a vote of holders of
certificates of a given series, the specified percentage (computed on the
basis of outstanding Certificate Principal Balance or Notional Amount, as
applicable) of certificates 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 prospectus
supplement and the related series supplement to the trust agreement. "Voting
Rights" evidenced by any certificate will be the portion of the voting rights
of all the certificates in the related series allocated in the manner
described in the applicable prospectus supplement.
Unless otherwise specified in the applicable prospectus supplement, so
long as an Administrative Agent Termination Event under the trust agreement
with respect to a given series of certificates remains unremedied, the
Depositor or the trustee may, and at the direction of holders of such
certificates evidencing not less than the "Required Percentage--Administrative
Agent Termination" (as defined in the prospectus supplement, if applicable) of
the Voting Rights, terminate all the rights and obligations of the
administrative agent under the trust agreement relating to the applicable
trust and in and to the related Deposited Assets (other than any Retained
Interest of such administrative agent). The trustee will then succeed to all
the responsibilities, duties and liabilities of the administrative agent under
the trust agreement with respect to such series (except that if the trustee is
prohibited by law from obligating itself to make advances regarding delinquent
Deposited Assets, then the trustee will not be so obligated) and will be
entitled to similar compensation arrangements. In the event that the trustee
is unwilling or unable to act, it may or, at the written request of the
holders of such certificates evidencing not less than the "Required
Percentage--Administrative Agent Termination" of the Voting Rights, it will
appoint, or petition a court of competent jurisdiction for the appointment of,
an administration agent acceptable to the rating agency with a net worth at
the time of such appointment of at least $15,000,000 to act as successor to
such administrative agent under the trust agreement with respect to such
series. Pending such appointment, the trustee is obligated to act in such
capacity (except that if the trustee is prohibited by law from obligating
itself to make advances regarding delinquent Deposited Assets, then the
trustee will not be so obligated). The trustee and any such successor may
agree upon the compensation be paid to such successor, which in no event may
be greater than the compensation payable to such administrative agent under
the trust agreement with respect to such series.
No certificateholder will have the right under the trust agreement to
institute any proceeding with respect thereto unless the holder previously has
given to the trustee written notice of breach and unless the holders of
certificates evidencing not less than the "Required Percentage--Remedies" (as
defined in the prospectus supplement) of the Voting Rights have made written
request upon the trustee to institute such proceeding in its own name as
trustee thereunder and have offered to the trustee reasonable indemnity, and
the trustee for fifteen days has neglected or refused to institute any such
proceeding. 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 of matters arising thereunder 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 certificates covered by the trust
agreement, unless the 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
Unless otherwise specified in the applicable prospectus supplement, the
trust agreement for each series of certificates may be amended by the
Depositor and the trustee with respect to such series, without notice to or
consent of the certificateholders, for specified purposes including:
o to cure any ambiguity;
o to correct or supplement any provision therein which may be
inconsistent with any other provision therein or in the prospectus
supplement;
o to add or supplement any credit support for the benefit of any
certificateholders (provided that if any such addition affects any
series or class of certificateholders differently than any other
series or class of certificateholders, then such addition will not,
as evidenced by an opinion of counsel, have a material adverse effect
on the interests of any affected series or class of
certificateholders);
o to add to the covenants, restrictions or obligations of the
Depositor, the administrative agent, if any, or the trustee for the
benefit of the certificateholders;
o to add, change or eliminate any other provisions with respect to
matters or questions arising under such trust agreement so long as
(x) any such addition, change or elimination will not, as evidenced
by an opinion of counsel, affect the tax status of the trust or
result in a sale or exchange of any certificate for 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 to qualify, reduce or withdraw the then current
rating thereof; or
o to comply with any requirements imposed by the Code.
Without limiting the generality of the foregoing, unless otherwise
specified in the applicable prospectus supplement, 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 evidencing not less
than the "Required Percentage--Amendment" (as defined in the prospectus
supplement) of the Voting Rights of those certificates that are materially
adversely affected by such modification or amendment for the purpose of adding
any provision to or changing in any manner or eliminating any provision of the
trust agreement or of modifying in any manner the rights of such
certificateholders; provided, however, that in the event modification or
amendment would materially adversely affect the rating of any series or class
by each rating agency, the "Required Percentage--Amendment" specified in the
related series supplement to the trust agreement shall include an additional
specified percentage of the certificates of such series or class.
Except as otherwise specified in the applicable prospectus supplement, no
such modification or amendment may, however, (i) reduce in any manner the
amount of or alter the timing of, distributions or payments which are required
to be made on any certificate without the consent of the holder of such
certificate or (ii) reduce the aforesaid Required Percentage of Voting Rights
required for the consent to any amendment without the consent of the holders
of all certificates covered by the trust agreement then outstanding.
Unless otherwise specified in the applicable prospectus supplement,
holders of certificates evidencing not less than the "Required
Percentage--Waiver" (as defined in the prospectus supplement) of the Voting
Rights of a given series may, on behalf of all certificateholders of that
series, (i) waive, insofar as that series is concerned, compliance by the
Depositor, the trustee or the administrative agent, if any, with certain
restrictive provisions, if any, of the trust agreement before the time for
such compliance and (ii) waive any past default under the trust agreement with
respect to certificates of that series, except a default in the failure to
distribute amounts received as principal of (and premium, if any) or any
interest on any such certificate and except a default in respect of a covenant
or provision the modification or amendment of which would require the consent
of the holder of each outstanding certificate affected thereby.
Reports to Certificateholders; Notices
Reports to Certificateholders. Unless otherwise specified in the
applicable prospectus supplement, with each distribution to certificateholders
of any class of certificates of a given series, the administrative agent or
the trustee, as specified in the applicable prospectus supplement, will
forward or cause to be forwarded to each such certificateholder, to the
Depositor and to such other parties as may be specified in the trust
agreement, a statement setting forth:
(i) the amount of such distribution to certificateholders of
such class allocable to principal of or interest or premium,
if any, on the certificates of such class; and the amount of
aggregate unpaid interest as of such Distribution Date;
(ii) in the case of certificates with a variable Certificate
Rate, the Certificate Rate applicable to such Distribution
Date, as calculated in accordance with the method specified
herein and in the applicable prospectus supplement;
(iii) the amount of compensation received by the administrative
agent, if any, and the trustee for the period relating to
such Distribution Date, and such other customary information
as the administrative agent, if any, or otherwise the
trustee deems necessary or desirable to enable
certificateholders to prepare their tax returns;
(iv) if advances are provided for, the aggregate amount of
advances included in such distribution, and the aggregate
amount of unreimbursed advances at the close of business on
such Distribution Date;
(v) the aggregate stated principal amount or, if applicable,
notional principal amount of the Deposited Assets and the
current interest rate thereon at the close of business on
such Distribution Date;
(vi) the aggregate Certificate Principal Balance or aggregate
Notional Amount, if applicable, of each class of
certificates (including any class of certificates not
offered hereby) 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
(vii) as to any series (or class within such series) for which
credit support has been obtained, the amount of coverage of
each element of credit support included therein as of the
close of business on such Distribution Date.
In the case of information furnished with respect to the amounts of
distributions or the amounts of compensation of the administrative agent and
the trustee, the amounts shall be expressed as a U.S. dollar amount (or
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
administrative agent or the trustee, as specified in the applicable prospectus
supplement, shall furnish to each person who at any time during the calendar
year was a certificateholder a statement containing the information set forth
above with respect to the amounts of distributions or the amounts of
compensation of the administrative agent and the trustee, aggregated for such
calendar year or the applicable portion thereof during which such person was a
certificateholder. Such obligation of the administrative agent or the trustee,
as applicable, will be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the administrative
agent or the trustee, as applicable, pursuant to any requirements of the Code
as are from time to time in effect.
Notices. Unless otherwise specified in the applicable prospectus
supplement, any notice required to be given to a holder of a registered
certificate will be mailed to the last address of such holder set forth in the
applicable certificate register.
Evidence as to Compliance
If so specified in the applicable prospectus supplement, the trust
agreement will provide that commencing on a certain date and on or before a
specified date in each year thereafter, a firm of independent public
accountants will furnish a statement to the trustee to the effect that such
firm has examined certain documents and records relating to the administration
of the Deposited Assets during the related 12-month period (or, in the case of
the first such report, the period ending on or before the date specified in
the prospectus supplement, which date shall not be more than one year after
the related Original Issue Date) and that, on the basis of certain agreed upon
procedures considered appropriate under the circumstances, such firm is of the
opinion that such administration was conducted in compliance with the terms of
the trust agreement, except for such exceptions as such firm shall believe to
be immaterial and such other exceptions and qualifications as shall be set
forth in such report.
The trust agreement may also provide for delivery to the Depositor, the
administrative agent, if any, and the trustee on behalf of the
certificateholders, on or before a specified date in each year, of an annual
statement signed by two officers of the trustee to the effect that the trustee
has fulfilled its obligations under the trust agreement throughout the
preceding year with respect to any series of certificates.
Copies of the annual accountants' statement, if any, and the statement of
officers of the trustee may be obtained by certificateholders without charge
upon written request to either the administrative agent or the trustee, as
applicable, at the address specified in the applicable prospectus supplement.
Replacement Certificates
Unless otherwise specified in the applicable prospectus supplement, if a
registered certificate is mutilated, destroyed, lost or stolen, it may be
replaced at the corporate trust office or agency of the applicable trustee in
the City and State of New York or at the principal London office of the
applicable trustee, or such other location as may be specified in the
applicable prospectus supplement, upon payment by the holder of such expenses
as may be incurred by the applicable trustee in connection therewith and the
furnishing of such evidence and indemnity as such trustee may require.
Mutilated certificates must be surrendered before new certificates will be
issued.
Termination
The obligations created by the trust agreement for each series of
certificates will terminate upon the payment to certificateholders of that
series of all amounts held in the related certificate account or by an
administrative agent, if any, and required to be paid to them pursuant to the
trust agreement following the earlier of (i) the final payment or other
liquidation of the last Deposited Asset subject thereto or the disposition of
all property acquired upon foreclosure or liquidation of any such Deposited
Asset and (ii) the purchase of all the assets of the trust by the party
entitled to effect such termination, under the circumstances and in the manner
specified in the applicable prospectus supplement. In no event, however, will
any trust created by the trust agreement continue beyond the respective date
specified in the applicable prospectus supplement. Written notice of
termination of the obligations with respect to the related series of
certificates under the trust agreement will be provided as set forth above
under "--Reports to Certificateholders; Notices--Notices," and the final
distribution will be made only upon surrender and cancellation of the
certificates at an office or agency appointed by the trustee which will be
specified in the notice of termination.
Any purchase of Deposited Assets and property acquired in respect of
Deposited Assets evidenced by a series of certificates will be made at a price
approximately equal to the aggregate fair market value of all the assets in
the trust (as determined by the trustee, the administrative agent, if any,
and, if different than both such persons, the person entitled to effect such
termination), in each case taking into account accrued interest at the
applicable interest rate to the first day of the month following such purchase
or, to the extent specified in the applicable prospectus supplement, a
specified price as determined therein (such price, a "Purchase Price"). The
exercise of such right will effect early retirement of the certificates of
that series, but the right of the person entitled to effect such termination
is subject to the aggregate principal balance of the outstanding Deposited
Assets for such series at the time of purchase being less than the percentage
of the aggregate principal balance of the Deposited Assets at the Cut-off Date
for that series specified in the applicable prospectus supplement.
Duties of the Trustee
The trustee makes no representations as to the validity or sufficiency of
the trust agreement, the certificates of any series or any Deposited Asset or
related document. The trustee is not accountable for the use or application by
or on behalf of any administrative agent of any funds paid to the
administrative agent or its designee in respect of such certificates or the
Deposited Assets, or deposited into or withdrawn from the related certificate
account or any other account by or on behalf of the administrative agent. If
no Administrative Agent Termination Event has occurred and is continuing with
respect to any given series, 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 certificates under the trust
agreement will be named in the applicable prospectus supplement. The
commercial bank, national banking association or trust company serving as
trustee will be unaffiliated with, but may have banking relationships with or
provide financial services to, the Depositor, any administrative agent or any
of their affiliates.
CURRENCY RISKS
Exchange Rates and Exchange Controls
An investment in a certificate having a Specified Currency other than
U.S. dollars entails significant risks that are not associated with a similar
investment in a security denominated in U.S. dollars. Such risks include,
without limitation, the possibility of significant changes in rates of
exchange between the U.S. dollar and such Specified Currency and the
possibility of the imposition or modification of foreign exchange controls
with respect to such Specified Currency. Such risks generally depend on
factors over which the Depositor has no control, such as economic and
political events and the supply of and demand for the relevant currencies. In
recent years, rates of exchange between the U.S. dollar and certain currencies
have been highly volatile, and such volatility may be expected in the future.
Fluctuations in any particular exchange rate that have occurred in the past
are not necessarily indicative, however, of fluctuations in the rate that may
occur during the term of any certificate. Depreciation of the Specified
Currency for a certificate against the U.S. dollar would result in a decrease
in the effective yield of such certificate below its 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 as well as the availability
of a Specified Currency for making distributions in respect of certificates
denominated in such currency. At present, the Depositor has identified the
following currencies in which distributions of principal, premium and interest
on certificates may be made: Australian dollars, Canadian dollars, Danish
kroner, Italian lire, Japanese yen, New Zealand dollars, U.S. dollars and ECU.
However, certificates distributable with Specified Currencies other than those
listed may be issued at any time. 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 certificate, the currency in which amounts then due to be
distributed in respect of such certificate are distributable would not be
available. In that event, such payments will be made in the manner set forth
above under "Description of Certificates--General" or as otherwise specified
in the applicable prospectus supplement.
As specified in the applicable prospectus supplement, certain of the
Underlying Securities may be denominated in a currency other than the
Specified Currency. Although payments in respect of principal and interest on
the certificates will be made in the Specified Currency, such payments may be
based in whole or in part upon receipt by the related trust of payments in the
Underlying Securities Currency. An investment in certificates supported by
Underlying Securities denominated in a currency other than the Specified
Currency entails significant risks not associated with an investment in
securities supported by obligations denominated in the same currency as the
currency of payment on such securities. Such risks include, without
limitation, the possibility of significant changes in rates of exchange
between the Specified Currency and the Underlying Securities Currency and the
possibility of the imposition or modification of foreign exchange controls
with respect to either the Specified Currency or the Underlying Securities
Currency.
PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL
ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN CERTIFICATES DENOMINATED
IN A CURRENCY OTHER THAN U.S. DOLLARS. SUCH CERTIFICATES ARE NOT AN
APPROPRIATE INVESTMENT FOR PERSONS WHO ARE UNSOPHISTICATED WITH RESPECT TO
FOREIGN CURRENCY TRANSACTIONS.
The information set forth in this prospectus is directed to prospective
purchasers of certificates who are United States residents. The applicable
prospectus supplement for certain issuances of certificates may specify
certain information applicable to prospective purchasers who are residents of
countries other than the United States with respect to matters that may affect
the purchase or holding of, or receipt of distributions of principal, premium
or interest in respect of, such certificates.
Any prospectus supplement relating to certificates having a Specified
Currency other than U.S. dollars will contain information concerning
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.
Payment Currency
Except as described below or unless otherwise specified in the applicable
prospectus supplement, if distributions in respect of a certificate are
required to be made in a Specified Currency other than U.S. dollars and such
currency is unavailable due to the imposition of exchange controls or other
circumstances beyond the Depositor's control or is no longer used by the
government of the country issuing such currency or 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 U.S. dollars until such currency is again available or so used. The amounts
so payable on any date in such currency shall be converted into U.S. dollars
on the basis of the most recently available Market Exchange Rate for such
currency or as otherwise indicated in the applicable prospectus supplement.
If distribution in respect of a certificate is required to be made in ECU
and ECU is no longer used in the European Monetary System, then all
distributions in respect of such certificate shall be made in U.S. dollars
until ECU is again so used. The amount of each distribution in U.S. dollars
shall be computed on the basis of the equivalent of the ECU in U.S. dollars,
determined as described below, as of the second Business Day prior to the date
on which such distribution is to be made.
The equivalent of the ECU in U.S. dollars as of any date (the "Day of
Valuation") shall be determined for the certificates of any series and class
by the applicable trustee on the following basis. The component currencies of
the ECU for this purpose (the "Components") shall be the currency amounts that
were components of the ECU as of the last date on which the ECU was used in
the European Monetary System. The equivalent of the ECU in U.S. dollars shall
be calculated by aggregating the U.S. dollar equivalents of the Components.
The U.S. dollar equivalent of each of the Components shall be determined by
such trustee on the basis of the most recently available Market Exchange Rates
for such Components or as otherwise indicated in the applicable prospectus
supplement.
If the official unit of any component currency is altered by way of
combination or subdivision, the number of units of that currency as a
Component shall be divided or multiplied in the same proportion. If two or
more component currencies are consolidated into a single currency, the amounts
of those currencies as Components shall be replaced by an amount in such
single currency equal to the sum of the amounts of the consolidated component
currencies expressed in such single currency. If any component currency is
divided into two or more currencies, the amount of that currency as a
Component shall be replaced by amounts of such two or more currencies, each of
which shall be equal to the amount of the former component currency divided by
the number of currencies into which that currency was divided.
All determinations referred to above made by the applicable trustee shall
be at its sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and binding on the related certificateholders of
such series.
Foreign Currency Judgments
Unless otherwise specified in the applicable prospectus supplement, the
certificates will be governed by and construed in accordance with the law of
the State of New York. Courts in the United States customarily have not
rendered judgments for money damages denominated in any currency other than
the U.S. dollar. A 1987 amendment to the Judiciary Law of the State of New
York provides, however, that an action based upon an obligation denominated in
a currency other than U.S. dollars will be rendered in the foreign currency of
the underlying obligation and converted into U.S. dollars at the rate of
exchange prevailing on the date of the entry of the judgment or decree.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of the material federal income tax
consequences of the purchase, beneficial ownership and disposition of a
Certificate purchased at initial issuance and held as a capital asset within
the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended
(the "Code"), but does not purport to be a comprehensive description of all of
the tax considerations that may be relevant to a decision to purchase a
certificate. Such consequences generally will depend on the terms of the
specific certificate and the assets collateralizing or otherwise supporting
such certificate. Except as otherwise noted, this discussion deals only with
an owner of a certificate that is (i) a citizen or resident of the United
States (ii) a corporation or partnership created or organized in the United
States or under the laws of the United States or any State (including the
District of Columbia), (iii) an estate the income of which is subject to U.S.
federal income taxation regardless of its source, or (iv) a trust if a court
within the United States is able to exercise primary supervision over its
administration and one or more United States persons have the authority to
control all of its substantive decisions (each, a "U.S. Holder").
This summary is based upon laws, regulations, rulings and decisions
currently in effect, all of which are subject to change, possibly on a
retroactive basis. It does not deal with all federal tax consequences
applicable to a holder of certificates in light of such holder's particular
circumstances. In particular, it does not discuss all the tax consequences
that may be relevant to certain categories of investors subject to special
rules such as certain financial institutions, insurance companies and dealers,
investors who hold their certificates as part of a "straddle," a "hedge" or a
"conversion transaction," and investors that have a "functional currency"
other than the U.S. dollar.
Prospective investors should consult their own tax advisors to determine
the federal, state, local and other tax consequences applicable to them of the
purchase, ownership and disposition of the certificates, including the
advisability of making any of the elections described below, as well as any
tax consequences arising under the law of any state or other taxing
jurisdiction.
The Trust will be provided with an opinion of Sidley Austin Brown & Wood
LLP, special federal tax counsel to DB Depositor Inc. ("Federal Tax Counsel")
regarding certain federal income tax matters discussed below. Further, the tax
consequences arising from the ownership of any series of certificates with
special characteristics will be set forth in the applicable Prospectus
Supplement and a legal opinion of Federal Tax Counsel will be filed with the
Commission in connection with each such series of certificates. In such
opinion, Federal Tax Counsel will opine as to the tax disclosure regarding the
certificates specified in this Prospectus and the applicable prospectus
supplement. An opinion of Federal Tax Counsel, however, is not binding on the
Internal Revenue Service (the "Service") or the courts. Prospective investors
should note that no rulings have been or will be sought from the Service with
respect to any of the federal income tax consequences discussed below, and no
assurance can be given that the Service will not take contrary positions.
Tax Status of Trust as a Grantor Trust
The following discussion assumes that the trust will be classified as a
grantor trust and not as an association (or publicly traded partnership)
taxable as a corporation for federal income tax purposes. Accordingly, each
certificate owner will be treated as the owner of a pro rata undivided
interest in the Deposited Assets in the Trust for federal income tax purposes.
If the trust will be classified for federal income tax purposes as an
entity other than a grantor trust, the applicable prospectus supplement will
contain a description of the material federal income tax consequences to
investors of the purchase, beneficial ownership and disposition of interests
in the trust.
Income of Certificate Owners
In General. Each U.S. Holder of a certificate will be subject to federal
income taxation as if it owned directly the portion of the Deposited Assets
allocable to such certificate, and as if it paid directly its share of
expenses paid by the trust. Except as described below, a U.S. Holder would
report its share of the income of the trust under its usual method of
accounting. Because the payments collected on the Underlying Securities
generally are paid to U.S. Holders in the following month, the amounts
includible in a U.S. Holder's gross income attributable to the Underlying
Securities during any calendar month will not equal the amounts distributed in
that month.
A U.S. Holder will allocate the amount it pays for its certificate among
the Underlying Securities, the interest accrued on the Underlying Securities
that are treated as debt for federal income tax purposes (the "Underlying Debt
Securities") and the Deposited Assets in the Trust other than the Underlying
Debt Securities (the "Other Deposited Assets") allocable to such certificate,
in proportion to their relative fair market values on the date of purchase of
the certificate. A U.S. Holder would calculate separately its income, gain,
loss or deduction realized with respect to each such asset.
This discussion assumes that the trust will be treated as a grantor trust
for federal income tax purposes. Should the trust be treated as an entity
other than a grantor trust for federal income tax purposes, the applicable
prospectus supplement will contain a description of the material federal
income tax consequences to investors of the purchase, beneficial ownership and
disposition of interests in the Trust.
Underlying Debt Securities. Except as provided below, each U.S. Holder of
a certificate will be required to report on its federal income tax return its
pro rata share of the stated interest that is unconditionally payable at least
annually at a single fixed rate ("qualified stated interest") on the
Underlying Debt Securities in accordance with its regular method of
accounting.
Original Issue Discount. The Underlying Debt Securities may have
originally been sold with original issue discount ("OID"). As provided in the
Code and the applicable regulations (the "OID Regulations"), OID is the excess
of the "stated redemption price" of a note (generally, the sum of all payments
on the note other than qualified stated interest) over its "issue price"
(generally, the initial offering price to the public, excluding bond houses
and brokers, at which a substantial amount of such Underlying Debt Securities
has been sold).
An Underlying Debt Security issued with a de minimis amount of OID (i.e.,
one-quarter of one percent of the stated redemption price multiplied by the
number of complete years to its maturity) is not treated as having been issued
with OID. A U.S. Holder having an interest in an Underlying Debt Security with
a de minimis amount of OID will include such OID in income as capital gain on
a pro rata basis as principal payments are made on the Underlying Debt
Security.
A U.S. Holder of certificates representing an interest in an Underlying
Debt Security having more than a de minimis amount of OID (an "OID Underlying
Security") is required to include OID in income as it accrues, which may be
before the receipt of the cash attributable to such income, based on a
compounding of interest at a constant rate (using the yield to maturity of the
Underlying Debt Security as originally issued). In general, OID must be
included in ordinary gross income the sum of the "daily portions" of OID for
all days during the taxable year that the U.S. Holder owns the certificate.
The daily portions of OID are determined by allocating to each day in any
"accrual period" a ratable portion of the OID allocable to that accrual
period. The amount of OID allocable to each accrual period is determined by
(i) multiplying the "adjusted issue price" of the stripped interest by a
fraction, the numerator of which is the annual yield to maturity of the
stripped interest and the denominator of which is the number of accrual
periods in a year and (ii) subtracting from that product the amount of
qualified stated interest (if any) payable on the stripped interest during (or
allocable to) such accrual period.
An "accrual period" would generally be each period ending on an interest
payment date on the Underlying Debt Securities, although Treasury regulations
allow a U.S. Holder to elect other accrual periods of no more than a year in
length, as long as each scheduled payment on the Underlying Debt Securities
occurs at the end of an accrual period.
The "adjusted issue price" at the beginning of any accrual period is the
purchase price for a certificate allocable to the Underlying Debt Security
(including accrued interest, if any) (i) increased by the amount of OID
allocable to all prior accrual periods and (ii) reduced by the amount of all
payments other than qualified stated interest payments (if any) in all prior
accrual periods. In addition, if an interval between payments of qualified
stated interest contains more than one accrual period, the adjusted issue
price at the beginning of each accrual period in the interval is increased by
the amount of qualified stated interest that has accrued prior to the first
day of the accrual period but that is not payable until the end of the
interval.
The trustee intends to account for OID, if any, reportable by U.S.
Holders by reference to the price paid for a certificate by an initial
purchaser, although the amount of OID will differ for subsequent purchasers.
Such subsequent purchasers should consult their tax advisors regarding the
proper calculation of OID.
Stripped Interests. A class of certificates will not be considered to
represent a "stripped bond" or "stripped coupon" (together, a "stripped
interest") within the meaning of Section 1286 of the Code to the extent the
class is entitled to receive a proportionate amount of all principal and
interest on the Underlying Debt Securities. A class of certificates will be
considered in its entirety to represent a stripped interest in the Underlying
Debt Securities if it is entitled to receive interest on the Underlying Debt
Securities which is disproportionately less than the principal which it is
entitled to receive on the Underlying Debt Securities, or if it is entitled to
receive all or part of the interest on the Underlying Debt Securities but no
principal on the Underlying Debt Securities. In addition, if a class of
certificates is entitled to receive interest and principal on the Underlying
Debt Securities, but the interest it is entitled to receive on the Underlying
Debt Securities is disproportionately more than the principal it is entitled
to receive on the Underlying Debt Securities, it could be argued that the
certificates represents (a) an interest in the Underlying Debt Securities that
is not a stripped interest to the extent it represents a proportional amount
of all the principal and interest on the Underlying Debt Securities and (b) a
stripped interest in the Underlying Debt Securities to the extent of any
additional interest to which it is entitled on the Underlying Debt Securities.
If a certificate represents, in part a stripped interest and, in part not a
stripped interest, such interests will be treated as two separate items for
tax purposes and a purchaser of certificates will be required to allocate its
purchase price among the two items (as well as any other Deposited Assets) in
proportion to their relative fair market values on the date of purchase.
In addition to any qualified stated interest, a holder of a certificate
representing a stripped interest having more than a de minimis amount of OID
will be required to include such OID in income as it accrues on a daily basis
under rules similar to those applicable to OID Underlying Securities (as
described above). For these purposes, the amount of OID on a stripped interest
is equal to the excess of all amounts payable on the stripped interest (other
than qualified stated interest) over the portion of the purchase price for the
certificate allocable to the stripped interest. Under the Treasury regulations
issued under Section 1286 of the Code, the interest payable with respect to
the stripped interest will, in the appropriate circumstances, be treated as
"qualified stated interest" if it represents a fixed periodic payment on
principal on the Underlying Debt Securities to which the holder is also
entitled. If none of the amounts payable to a holder with respect to a
stripped interest constitutes qualified stated interest, then the stripped
interest will have OID in an amount equal to the excess of all payments to be
received on the stripped interest over the purchase price for the certificate
allocable to the stripped interest.
If the amount of OID on the stripped interest represented by the
certificate is de minimis, the stripped interest will not be treated as having
OID. The amount of OID with respect to a stripped interest will generally be
de minimis if it is less than one-quarter of one percent of the stated
redemption price at maturity multiplied by the number of complete years
remaining after the purchase date until the maturity of such stripped
interest. However, if the stripped interest provides for amortization of
principal, the amount of OID will be de minimis if it is less than one-quarter
of one percent of the stated redemption price at maturity multiplied by the
weighted average maturity (i.e., the sum of the amounts obtained by
multiplying the amount of each payment under the stripped interest (other than
a payment of qualified stated interest) by a fraction, the numerator of which
is the number of complete years from the purchase date until the payment is
made and the denominator of which is the stated redemption price at maturity)
of the stripped interest. Each U.S. Holder of a certificate would be required
to include the de minimis OID in income as each principal payment on the
stripped interest is received, in proportion to the amount that each principal
payment bears to the stated principal amount of the stripped interest. Such
income would be capital gain, short-term or long-term depending upon the U.S.
Holder's holding period in the certificate.
Principal Repayments. The portion of each monthly payment to a U.S.
Holder that is allocable to principal on the Underlying Debt Securities (other
than amounts representing discount, as described below) will represent a
recovery of capital, which will reduce the tax basis of such U.S. Holder's
undivided interest in the Underlying Debt Securities.
Acquisition Premium. If a certificate represents an interest in an OID
Underlying Security purchased with an acquisition premium (i.e., at a price in
excess of its adjusted issue price but less than its stated redemption price),
the annual amount includible in the income of the holder of such certificate
as OID is generally reduced by that portion of the excess properly allocable
to such year. Unless a holder of a certificate makes the accrual method
election described below, acquisition premium is allocated on a pro rata basis
to each accrual of OID, so that such holder is allowed to reduce each accrual
of OID by a constant fraction.
Market Discount. If a Certificate represents an interest in an Underlying
Debt Security purchased at a "market discount" (i.e., at a price less than the
stated redemption price or, in the case of an OID Underlying Security, the
adjusted issue price), the holder of such certificate will be required (unless
such difference is less than a de minimis amount) to treat any principal
payments on, or any gain realized upon the disposition or retirement of, the
Underlying Debt Security as interest income to the extent of the market
discount that accrued while such certificateholder held such Underlying Debt
Security. A U.S. Holder may elect to include such market discount in income on
a current basis. Market discount is considered to be de minimis if it is less
than one-quarter of one percent of such Underlying Debt Security's stated
redemption price multiplied by the number of complete years to maturity after
the holder acquired the certificate. If an Underlying Debt Security with more
than a de minimis amount of market discount is disposed of in a nontaxable
transaction (other than a nonrecognition transaction described in Section
1276(d) of the Code), accrued market discount will be includible as ordinary
income to the certificateholder as if such certificateholder had sold the
certificate at its then fair market value. A U.S. Holder of a certificate that
represents an interest in an Underlying Debt Security purchased at a market
discount that does not elect to include market discount in income on a current
basis also may be required to defer the deduction for a portion of the
interest expense on any indebtedness incurred or continued to purchase or
carry the certificate until the deferred income is realized.
Amortizable Bond Premium. Except as noted below, a holder of a
certificate representing an interest in an Underlying Debt Security purchased
for an amount in excess of the principal amount (or in the case of an OID
Underlying Security, the remaining stated redemption price) will be treated as
having premium with respect to the Underlying Debt Security in the amount of
such excess. A U.S. Holder of a certificate that represents an OID Underlying
Security with premium is not required to include in income any OID with
respect to such Underlying Debt Security. If such a U.S. Holder makes an
election under Section 171(c)(2) of the Code to treat such premium as
"amortizable bond premium" the amount of interest that must be included in
such U.S. Holder's income for such accrual period (where such Underlying Debt
Security is not optionally redeemable prior to its maturity date) will be
reduced by the portion of the premium allocable to such period based on the
Underlying Debt Security's yield to maturity. If such Underlying Debt Security
may be called prior to maturity after the U.S. Holder has acquired it, the
U.S. Holder generally may not assume that the call will be exercised and must
amortize premium to the maturity date. If the Underlying Debt Security is in
fact called, any unamortized premium may be deducted in the year of the call.
If a U.S. Holder makes the election under Section 171(c)(2), the election also
shall apply to all bonds the interest on which is not excludible from gross
income ("Fully Taxable Bonds") held by the certificateholder at the beginning
of the first taxable year to which the election applies and to all such Fully
Taxable Bonds thereafter acquired by it, and is irrevocable without the
consent of the Service. If such an election is not made, such U.S. Holder must
include the full amount of each interest payment in income in accordance with
its regular method of accounting and will receive a tax benefit from the
premium only in computing its gain or loss upon the sale or other disposition
or retirement of the Underlying Debt Security.
Election to Treat All Interest as OID. Any U.S. Holder may elect to
include in gross income all interest (including stated interest, OID, de
minimis OID, market discount and de minimis market discount, as adjusted by
any bond premium or acquisition premium) that accrues on an unstripped or
stripped interest using the constant yield method described above, treating
the instrument as having been issued on the U.S. Holder's acquisition date at
an issue price equal to such owner's adjusted basis with no interest payments
being qualified stated interest. Such an election with respect to a unstripped
or stripped interest having amortizable bond premium or market discount would
constitute, respectively, an election to apply the market discount rules or
bond premium rules with respect to all other debt instruments with market
discount or amortizable bond premium, as the case may be, of such U.S. Holder.
Other Deposited Assets
The applicable prospectus supplement will contain a summary of the
material federal income tax consequences to a U.S. Holder of the Deposited
Assets other than Underlying Debt Securities held by the Trust.
Modification or Exchange of Deposited Asset. Depending upon the
circumstances, it is possible that a modification of the terms of a Deposited
Asset, or a substitution of other assets for the Deposited Asset following a
default on the Deposited Asset, would be a taxable event to U.S. Holders on
which they would recognize gain or loss.
Foreign Tax Credits. Any foreign income taxes withheld from payments to
the trust will be includible in the income of U.S. Holders and will likewise
be deductible to U.S. Holders, or, alternatively, U.S. Holders may be eligible
for a U.S. foreign tax credit subject to various limitations.
Deductibility of Trust's Fees and Expenses. In computing its federal
income tax liability, a U.S. Holder will be entitled to deduct, consistent
with its method of accounting, its share of reasonable administrative fees,
trustee fees and other fees paid or incurred by the Trust as provided in
Section 162 or 212 of the Code and any allowable amortization deductions with
respect to certain other assets of the Trust. If a U.S. Holder is an
individual, estate or trust, this deduction of fees will be a miscellaneous
itemized deduction that may be disallowed in whole or in part.
Sale, Exchange, Disposition or Retirement of a Certificate. Upon the
sale, exchange or other disposition of a certificate, or upon the retirement
of a certificate, a U.S. Holder will recognize gain or loss equal to the
difference, if any, between the amount realized upon the disposition or
retirement and the U.S. Holder's tax basis in the certificate. A U.S. Holder's
tax basis for determining gain or loss on the disposition or retirement of a
certificate will be the cost of such certificate to such holder, increased by
the amount of OID and any market discount includible in such holder's gross
income with respect to an Underlying Debt Security, and decreased by the
amount of any payments under an Underlying Debt Security that are part of its
stated redemption price and by the portion of any premium applied to reduce
interest payments as described above.
Gain or loss upon the disposition or retirement of a certificate will be
capital gain or loss, except to the extent the gain represents accrued stated
interest, original issue or market discount on the certificate not previously
included in gross income, to which extent such gain or loss would be treated
as ordinary income. Any capital gain or loss will be long-term capital gain or
loss if at the time of disposition or retirement the certificate has been held
for more than one year.
Backup Withholding. Payments made on the certificates and proceeds from
the sale of the certificates generally will not be subject to a "backup"
withholding tax of 31% unless, in general, the U.S. Holder fails to comply
with certain reporting procedures and is not an exempt recipient under
applicable provisions of the Code.
Foreign Certificateholders
Withholding at the Source. To the extent that amounts paid to a
certificateholder that is not a U.S. Holder (a "Foreign Certificateholder")
are treated as U.S. source interest with respect to Underlying Debt Securities
originated after July 18, 1984, such amounts generally will not be subject to
U.S. withholding tax, provided that such Foreign Certificateholder (i)
fulfills certain certification requirements, (ii) the Foreign
Certificateholder does not actually or constructively own 10% or more of the
capital or profits of, or 10% or more of the combined voting power of the
stock of, the issuer of an Underlying Debt Security; (iii) the Foreign
Certificateholder is not a controlled foreign corporation related to the
issuer of an Underlying Debt Security within the meaning of Code section
864(d)(4); and (iv) the Foreign Certificateholder is not a bank receiving
interest pursuant to a loan agreement with the issuer of an Underlying Debt
Security entered into in the ordinary course of its trade or business. Under
such requirements, the holder must certify, under penalties of perjury, that
it is not a "United States Person" and provide its name and address.
A Foreign Certificateholder that does not have certain present or former
connections with the United States (e.g., holding a certificate in connection
with the conduct of a trade or business within the United States or being
present in the United States for 183 days or more during a taxable year)
generally will not be subject to federal income tax, and no withholding of
such tax will be required, with respect to any gain realized upon the
disposition or retirement of a certificate.
The applicable prospectus supplement will contain a summary of the
material federal income tax consequences to a Foreign Certificateholder of the
Deposited Assets other than Underlying Debt Securities held by the Trust.
Information Reporting and Backup Withholding. Payments made on the
Deposited Assets and proceeds from the sale of the certificates will not be
subject to a "backup" withholding tax of 31 percent unless, in general, the
Foreign Certificateholder fails to comply with certain reporting procedures
and is not an exempt recipient under applicable provisions of the Code.
THE FEDERAL TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION
ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A CERTIFICATEHOLDER'S PARTICULAR
SITUATION. CERTIFICATEHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH
RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE OWNERSHIP AND DISPOSITION OF
THE CERTIFICATES, INCLUDING THE TAX CONSEQUENCES UNDER THE TAX LAWS OF THE
UNITED STATES, STATES, LOCALITIES, COUNTRIES OTHER THAN THE UNITED STATES AND
ANY OTHER TAXING JURISDICTIONS AND THE POSSIBLE EFFECTS OF CHANGES IN SUCH TAX
LAWS.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and 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)(i) of the Code or (c) any entity whose underlying assets include Plan
Assets by reason of a plan's investment in the entity (each, a "Plan").
In accordance with ERISA's general fiduciary standards, before
investing in a certificate, a Plan fiduciary should determine whether such an
investment is permitted under the governing Plan instruments and appropriate
for the Plan in view of the Plan's overall investment policy and the
composition and diversification of its portfolio. Other provisions of ERISA
and the Code prohibit certain transactions (including loans or other
extensions of credit) involving the assets of a Plan and persons who have
certain specified relationships to the Plan ("Parties in Interest" within the
meaning of ERISA or "Disqualified Persons" within the meaning of the Code).
Thus, a Plan fiduciary considering an investment in certificates should also
consider whether such an investment might constitute or give rise to a
prohibited transaction under ERISA or the Code.
Trust Assets as "Plan Assets"
An investment in certificates by a Plan might result in the assets of
the trust being deemed to constitute Plan Assets, which in turn might mean
that certain aspects of such investment, including the operation of the trust,
might be prohibited transactions under ERISA and the Code. Under Section
2510.3-101 of the United States Department of Labor regulations (the
"Regulation"), "Plan Assets" may include an interest in the underlying assets
of an entity (such as a trust) for certain purposes, including the prohibited
transaction provisions of ERISA and the Code, if the Plan acquires an "equity
interest" in such entity. Thus, if a Plan acquired a certificate, for certain
purposes under ERISA and the Code (including the prohibited transaction
provisions) the Plan would be considered to own its share of the underlying
assets of the trust unless (1) such certificate is a "publicly-offered
security" as defined in such Regulation or (2) equity participation by
"benefit plan investors" is not considered "significant" under such
Regulation.
Under the Regulation, a publicly offered security is a security that
is (1) freely transferable, (2) 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 (3) 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 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.
Participation by benefit plan investors in the certificates would not
be significant if immediately after the most recent acquisition of a
certificate, whether or not from the Depositor or DBAB, less than 25% of (1)
the value of such class of certificates and (2) the value of any other class
of certificates that is not a publicly offered security under the Regulation,
were held by benefit plan investors, which are defined as Plans and employee
benefit plans not subject to ERISA (for example, governmental plans).
It is anticipated that certain offerings of certificates will be
structured so that assets of the trust will not be deemed to constitute Plan
Assets. In such cases, the applicable prospectus supplement will indicate
either that the certificates will be considered publicly-offered securities
under the Regulation or that participation by benefit plan investors will not
be significant for purposes of the Regulation.
In other instances, however, the offering of certificates may not be so
structured. Thus, the assets of the trust may be deemed to be Plan Assets and
transactions involving the Depositor, an underwriter, the trustee, any trustee
with respect to Underlying Securities, any obligors with respect to Underlying
Securities or affiliates of such obligors might constitute prohibited
transactions with respect to a Plan holding a certificate unless (i) one or
more prohibited transaction class exemptions ("PTCEs") applies or (ii) in the
case of an issuer of Underlying Securities, it is not a Disqualified Person or
party in interest with respect to such Plan. Plans maintained or contributed
to by the Depositor, an underwriter, the trustee, a trustee with respect to
Underlying Securities, any issuer of underlying securities, or any of their
affiliates, should not acquire or hold any certificate.
If the trust is deemed to hold Plan Assets, the Underlying Securities
would appear to be an indirect loan between the issuer of the Underlying
Securities and any Plan owning certificates; however, such loan, by itself,
would not constitute prohibited transaction unless such obligor is a party in
interest or Disqualified Person with respect to such Plan.
Prohibited Transaction Exemptions
Certain prohibited transaction exemptions could apply to the acquisition
and holding of certificates by Plans, and the operation of the trust,
including, but not limited to: PTCE 84-14 (an exemption for certain
transaction determined by an independent qualified professional asset
manager); PTCE 91-38 (an exemption for certain transactions involving bank
collective investment funds); PTCE 90-1 (an exemption for certain transactions
involving insurance company pooled separate accounts); PTCE 95-60 (an
exemption for certain transactions involving insurance company pooled general
accounts) and PTCE 96-23 (an exemption for certain transactions effected by
in-house asset managers).
If the underwriter with respect to an offering of certificates is a
broker-dealer registered under the Exchange Act, and customarily purchases and
sells securities for its own account in the ordinary course of its business as
a broker-dealer, sales of certificates by such underwriter to Plans may be
exempt under PTCE 75-1 if the following conditions are satisfied: (i) the
underwriter is not a fiduciary with respect to the Plan and is party in
interest or Disqualified Person solely by reason of Section 3(14)(B) of ERISA
or Section 4975(e)(2)(B) of the Code or a relationship to a person described
in such Sections, (ii) the transaction is at least as favorable to the Plan as
an arms-length transaction with an unrelated party and is not a prohibited
transaction within the meaning of Section 503(b) of the Code, and (iii) the
Plan maintains for at least six years such records as are necessary to
determine whether the conditions of PTCE 75-1 have been met.
The custodial and other services tendered by the trustee and any trustee
with respect to Underlying Securities might be exempt pursuant to Section
408(b)(2) of ERISA and Section 4975(d)(2) of the Code, which exempt services
necessary for the establishment or operation of a Plan under a reasonable
contract or arrangement and for which no more than reasonable compensation is
paid. An arrangement would not be treated as reasonable unless it can be
terminated upon reasonably short notice under the circumstances without
penalty. The statutory exemption for services noted above does not provide
exemptive relief from prohibited transactions described in Section 406(b) of
ERISA or Section 4975(c)(1)(E) or (F) of the Code.
The Prospectus Supplement relating to any offering of certificates that
will result in the trust assets being deemed to constitute Plan Assets will
provide that, by acquiring and holding a certificate, a Plan shall be deemed
to have represented and warranted to the Depositor, trustee, and underwriter
that such acquisition and holding of a certificate does not involve a
non-exempt prohibited transaction with respect to such Plan, including with
respect to the activities of the trust.
ANY PLAN OR INSURANCE COMPANY INVESTING ASSETS OF ITS GENERAL ACCOUNT
PROPOSING TO ACQUIRE CERTIFICATES SHOULD CONSULT WITH ITS COUNSEL.
UNDERWRITING
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 specify the material
terms of the offering of any series of certificates, which may include the
names of any underwriters, or initial purchasers, the purchase price of the
certificates and the proceeds to the Depositor from such sale, whether the
certificates are being offered by the applicable prospectus supplement in
connection with trading activities that may create a short position or are
being issued to cover such short position, any underwriting discounts and
other items constituting underwriters' compensation, any initial public
offering price, any discounts or concessions allowed or reallowed or paid to
dealers, any securities exchanges on which the certificates may be listed, any
restrictions on the sale and delivery of certificates in bearer form and the
place and time of delivery of the certificates to be offered thereby.
If underwriters are used in the sale, 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.
Certificates may be offered to the public either through underwriting
syndicates represented by managing underwriters or by underwriters without a
syndicate. The managing underwriters or underwriters in the United States will
include DBAB. Unless otherwise specified in the applicable prospectus
supplement, the obligations of the underwriters to purchase the certificates
will be subject to certain conditions precedent and the underwriters will be
obligated to purchase all of the certificates if any 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.
Certificates may also be sold through agents designated by the Depositor
from time to time. Any agent involved in the offer or sale of certificates
will be named, and any commissions payable by the Depositor to such agent will
be specified, in the applicable prospectus supplement. Unless otherwise
indicated in the applicable prospectus supplement, any agent will act on a
best-efforts basis for the period of its appointment.
If so specified in the applicable prospectus supplement, the Depositor
will authorize agents, underwriters or dealers to solicit offers by certain
specified institutions to purchase 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
specified 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 certificates may be deemed to be underwriters and any
discounts or commissions received by them on the sale or resale of
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 or
their affiliates may be required to make in respect thereof. Agents and
underwriters and their affiliates may be customers of, engage in transactions
with, or perform services for, the Depositor or its affiliates in the ordinary
course of business.
DBAB is an affiliate of the Depositor. DBAB's participation in the offer
and sale of certificates complies with the requirements of Section 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 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 certificates. Any affiliate of the
underwriters so acting will be named, and its affiliation with the
underwriters described, in the applicable prospectus supplement. The
underwriters or their affiliates may act as principals or agents in connection
with market-making transactions relating to the certificates or trading
activities that create a short position. The prospectus supplement related to
the certificates for which a market is being made or a short position is being
either created or covered will be delivered by such underwriters or
affiliates.
LEGAL MATTERS
The validity of the certificates will be passed upon for the Depositor
and the underwriters by Sidley Austin Brown & Wood LLP, New York, New York or
other counsel identified in the applicable prospectus supplement.
INDEX OF DEFINED TERMS
$ .................................................3
Administrative Agent Termination Events............38
Allocation Ratio...................................22
Asset-Backed Agreements............................29
Asset-Backed Securities............................26
Base Rate..........................................15
Business Day.......................................14
Calculation Agent..................................15
Call on Certificates...............................23
Call on Underlying Securities......................23
Call Right.........................................23
Callable Series....................................23
CD Rate............................................16
CD Rate Calculation Date...........................17
CD Rate Certificate................................15
CD Rate Determination Date.........................16
Certificate Rate...................................11
Certificates of Deposit............................16
Code...............................................45
Commercial Paper Rate..............................17
Commercial Paper Rate Calculation Date.............17
Commercial Paper Rate Certificate..................15
Commercial Paper Rate Determination Date...........17
Components.........................................44
Composite Quotations...............................15
Concentrated Underlying Security...................27
Corporate Securities...............................25
Cut-off Date.......................................35
Day of Valuation...................................44
Depositary.........................................23
Deposited Asset Provider...........................35
Deposited Assets................................2, 33
Determination Date.................................13
Disqualified Persons...............................50
Distribution Date...................................2
Domestic Corporate Securities......................25
Dual Currency Certificates.........................10
ERISA..............................................50
Exchange Rate Agent................................13
Exchangeable Series................................21
Face Amount........................................20
Federal Funds Rate.................................15
Federal Funds Rate Calculation Date................18
Federal Funds Rate Certificate.....................15
Federal Funds Rate Determination Date..............18
Federal Tax Counsel................................45
Fixed Rate Certificates............................14
Floating Certificate Rate..........................11
Floating Rate Certificates.........................15
Foreign Certificateholder..........................49
Foreign Currency Certificate.......................19
Fully Taxable Bonds................................48
GSEs...............................................26
GTC Notes..........................................31
GTCs...............................................26
H.15(519)..........................................15
Index Maturity.....................................15
Indexed Certificates...............................20
Indexed Commodity..................................20
Indexed Currency...................................20
Indexed Principal Amount...........................20
Initial Certificate Rate...........................15
Interest Reset Date................................16
Interest Reset Period..............................15
LIBOR..............................................15
LIBOR Certificate..................................15
LIBOR Determination Date...........................18
London Banking Day.................................14
Market Exchange Rate...............................13
Maximum Certificate Rate...........................15
Minimum Certificate Rate...........................15
Money Market Yield.................................17
Multilateral Bank Issuer...........................31
Nonrecoverable Advance.............................37
Notional Amount....................................14
OID................................................46
OID Regulations....................................46
OID Underlying Security............................46
Option to Elect Exchange...........................21
Optional Exchange Date.............................21
Original Issue Date................................11
Other Deposited Assets.............................46
Outstanding Debt Securities........................28
Parties in Interest................................50
Plan...............................................50
Plan Assets........................................50
Private Sector Securities..........................26
PTCEs..............................................50
Purchase Price.....................................42
Put Date...........................................23
Put Option.........................................23
Puttable Underlying Securities.....................23
Realized Losses....................................19
Reference Security.................................21
Regulation.........................................50
Related Proceeds...................................37
Required Percentage................................39
Retained Interest...................................9
Reuters Screen LIBO Page...........................18
Secured Underlying Securities......................28
Senior Underlying Securities.......................28
Service............................................45
Specified Currency.................................12
Spread.............................................15
Spread Multiplier..................................15
Stock Index........................................20
Strip Certificates.................................12
Subordinated Underlying Securities.................28
Treasury bills.....................................19
Treasury Rate......................................19
Treasury Rate Calculation Date.....................19
Treasury Rate Certificate..........................15
Treasury Rate Determination Date...................19
Treasury Securities................................26
Trust Indenture Act................................27
Trust Preferred Securities.........................25
U.S. dollars........................................4
U.S. Holder........................................45
United States Person...............................49
UCC................................................29
Underlying Debt Securities.........................46
Underlying Securities............................2,25
Underlying Securities Currency.....................31
Underlying Securities Indenture....................27
Underlying Securities Interest Accrual Periods.....31
Underlying Securities Payment Dates................31
Underlying Securities Rate.........................31
Underlying Securities Trustee......................27
Underlying Security Events of Default..............28
US$.................................................4
Voting Rights......................................39
Part II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses expected to be incurred in connection with the issuance and
distribution of the securities being registered, other than underwriting
compensation, are as set forth below. All such expenses, except for the SEC
registration and filling fees, are estimated:
SEC Registration Fee $125,000.00
Legal Fees and Expenses $200,000.00
Accounting Fees and Expenses $40,000.00
Trustee's Fees and Expenses $12,000.00
(including counsel Fees)
Blue Sky Qualification Fees $12,500.00
and expenses
Printing and Engraving Fees $100,000.00
Rating Agency Fees $100,000.00
Miscellaneous $20,000.00
----------
Total $609,500.00
===========
--------------
* All amounts, except the SEC Registration Fee, are estimates of
aggregate expenses incurred or to be incurred in connection the
issuance and distribution of Securities in an aggregate principal
amount assume for these purposes to be equal to $500,000,000 of
Securities registered hereby.
** To be filed by amendment.
Item 15. Indemnification of Directors and Officers.
Under Section 8(b) of the proposed form of Underwriting Agreement, the
Underwriters are obligated under certain circumstances to indemnify certain
controlling persons of the Registrant against certain liabilities, including
liabilities under the Securities Act of 1933, as amended.
The Registrant's Certificate of Incorporation provides for
indemnification of directors and officers of the Registrant to the full extent
permitted by Delaware law.
Section 145 of the Delaware General Corporation Law provides, in
substance, that Delaware corporations shall have the power, under specified
circumstances, to indemnify their directors, officers, employees and agents in
connection with actions, suits or proceedings brought against them by a third
party or in the right of the corporation, by reason of the fact that they were
or are such directors, officers, employees or agents, against expenses
incurred in any such action, suit or proceeding. The Delaware General
Corporation Law also provides that the Registrant may purchase insurance on
behalf of any such director, officer, employee or agent.
Item 16. Exhibits:
(a) Financial Statements:
None
(b) Exhibits:
1.1 Form of Underwriting Agreement
3.1 Certification of Incorporation of DB Depositor Inc.*
3.2 Form of Bylaws of DB Depositor Inc.*
4.1 Form of Trust Agreement, with form of Certificate attached
thereto*
5.1 Opinion of Sidley Austin Brown & Wood LLP as to legality
(including consent of such firm)*
8.1 Opinion of Sidley Austin Brown & Wood LLP as to certain tax
matters (including consent of such firm)*
23.1 Consents of Sidley Austin Brown & Wood LLP (included in
Exhibits 5.1 and 8.1)*
25.1(a) Statement of Eligibility of Trustee*
- ---------------------
* to be filed by amendment
Item 17. Undertakings.
(a) Undertaking Pursuant to Rule 415.
The Registrant hereby undertakes:
(1) To file, curing any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933,
as amended;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the
Registration Statement (or the most recent
post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth in
the Registration Statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed
in the Registration Statement or any material
change of such information in the Registration
Statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933,as amended, each such post-effective
amendment shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) Filing Incorporating Subsequent Exchange Act
Documents by Reference.
The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933, as amended, each filing of the registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934, as amended (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934, as amended), that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein,
and the offering of such securities at the time shall be deemed to be
the initial bona fide offering thereof.
(c) Undertaking in respect of indemnification.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to directors,
officers and controlling persons of the Registrant, pursuant to the
foregoing provisions, 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 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, as the case may be, 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 Act and will be governed by the final adjudication
of such issue.
(d) Undertaking in respect to the eligibility of the
Trustee.
The undersigned Registrant hereby undertakes to file an application
for the purpose of determining the eligibility of the trustee to act
under subsection (a) of Section 310 of the Trust Indenture Act in
accordance with the rules and regulations prescribed by the
Commission under Section 305(b)(2) of the Act.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the undersigned hereby certifies on behalf of DB Depositor Inc. (the
"Company") that he has reasonable grounds to believe that the Company meets
all of the requirements for filing on Form S-3 and the Company 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 the
2nd of July, 2001.
DB DEPOSITOR INC.
By: /s/ Richard Ferguson
-------------------------------
Richard Ferguson
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following persons
in the capacities and on the dates indicated:
Signature Position Date
/s/ Richard Ferguson Chairman of the Board July 2, 2001
- ---------------------------------
Richard Ferguson
/s/ Douglas Barnard Director, Senior Vice President and July 2, 2001
- ---------------------------------
Douglas Barnard Treasurer (Principal Accounting and
Financial Officer)
/s/ Nigel Cree Director July 2, 2001
- ---------------------------------
Nigel Cree
/s/ Donna Milrod President and Chief Executive Officer July 2, 2001
- ---------------------------------
Donna Milrod
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
1.1 Form of Underwriting Agreement
3.1 Certification of Incorporation of DB Depositor Inc.*
3.2 Form of Bylaws of DB Depositor Inc.*
4.1 Form of Trust Agreement, with form of Certificate attached
thereto*
5.1 Opinion of Sidley Austin Brown & Wood LLP as to legality
(including consent of such firm)*
8.1 Opinion of Sidley Austin Brown & Wood LLP as to certain tax
matters (including consent of such firm)*
3.3 Consents of Sidley Austin Brown & Wood LLP (included in
Exhibits 5.1 and 8.1)*
25.1(a) Statement of Eligibility of Trustee*
- ---------------------
* to be filed by amendment
Exhibit 1.1
DEUTSCHE BANK TRUST CERTIFICATES
SERIES 2001-[ ] TRUST
UNDERWRITING AGREEMENT
[ ], 2001
DEUTSCHE BANC ALEX. BROWN INC.
31 West 52nd St.
New York, NY 10019
[other underwriter]
[address]
[city, state, zip code]
Ladies and Gentlemen:
DB Depositor Inc. (the "Depositor"), a Delaware corporation, proposes
to form a trust (the "Trust"), which will issue and sell a series (a "Series")
of its Trust Certificates registered under the registration statement referred
to in Section 1(a) hereof (the "Certificates"). The primary assets (the
"Primary Assets") of the Trust will be $[ ] aggregate principal amount of [ ]%
[floating rate] [publicly traded debt security due [ ]] [A pool of publicly
issued [debt securities of various issuers]] [preferred securities of trusts
organized to issue trust-originated preferred securities] [term preferred
stock having an investment grade rating] [United States treasury securities]
[debt securities of various United States government sponsored entities] [debt
securities of various foreign government issuers] [issued by [ ] [a pool of
various domestic corporations, limited liability companies, banking
organizations and insurance companies] [a trust or other legal entity
organized under the laws of ______________ to issue trust preferred
securities.] [the United States] [various United States government sponsored
entities ("GSEs")] [a pool of various foreign private issuer securities.]].
The Certificates will evidence a proportionate undivided beneficial ownership
interest in certain distributions of the Trust. The Certificates will be
issued by the Trust, pursuant to a Standard Terms for Trust Agreements, dated
as of [ ], 2001 between the Depositor and The Bank of New York, as trustee
(the "Trustee"), as supplemented by a Series Supplement, dated as of [ ], 2001
(the "Series Supplement" and, together with the Standard Terms, the "Trust
Agreement"). Deutsche Banc Alex. Brown Inc. and [other underwriter] (each an
"Underwriter" and together the "Underwriters") pursuant to this agreement (the
"Underwriting Agreement" or "this Agreement") are purchasing the Certificates
set forth next to their respective names at the prices set forth on Schedule A
hereto, except that the amount purchased by each Underwriter may change in
accordance with Section 10 of this Underwriting Agreement.
Capitalized terms used and not otherwise defined herein shall have
the meanings assigned thereto in the Trust Agreement. This Underwriting
Agreement and the Trust Agreement are referred to together herein as the
"Operative Agreements".
SECTION 1. Representations and Warranties of the Depositor. The Depositor
represents and warrants to, and agrees with each of you that:
(a) A Registration Statement on Form S-3 (No. 333-[ ]) with
respect to the Certificates has (i) been prepared by the Depositor in
conformity with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and the rules and regulations (the
"Rules and Regulations") of the United States Securities and Exchange
Commission (the "Commission") thereunder, (ii) been filed with the
Commission under the Securities Act and (iii) become effective under
the Securities Act. Copies of such Registration Statement have been
delivered by the Depositor to the Underwriters. As used in this
Underwriting Agreement, "Effective Time" means the date and the time
as of which such Registration Statement, or the most recent
post-effective amendment thereto, if any, was declared effective by
the Commission; "Effective Date" means the date of the Effective
Time; "Registration Statement" means such registration statement, at
the Effective Time, including any documents incorporated by reference
therein at such time; and "Prospectus" means the final prospectus
dated [ ], 2001, as supplemented by the final prospectus supplement
dated [ ], 2001 (the "Prospectus Supplement") relating to the
Certificates, to be filed with the Commission pursuant to paragraphs
(2), (3) or (5) of Rule 424(b) of the Rules and Regulations.
Reference made herein to the Prospectus shall be deemed to refer to
and include any documents incorporated by reference therein pursuant
to Item 12 of Form S-3 under the Securities Act as of the date of the
Prospectus and any reference to any amendment or supplement to the
Prospectus shall be deemed to refer to and include any document filed
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), after the date of such Prospectus, as the case may be, and
incorporated by reference in such Prospectus, as the case may be, and
any reference to any amendment to the Registration Statement shall be
deemed to include any report of the Depositor filed with the
Commission pursuant to Section 13(a) or 15(d) of the Exchange Act
after the Effective Time that is incorporated by reference in the
Registration Statement. The Commission has not issued any order
preventing or suspending the use of the Prospectus. There are no
contracts or documents of the Depositor which are required to be
filed as exhibits to the Registration Statement pursuant to the
Securities Act or the Rules and Regulations which have not been so
filed or incorporated by reference therein on or prior to the
Effective Date of the Registration Statement. The conditions for use
of Form S-3, as set forth in the General Instructions thereto, have
been satisfied.
(b) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the Registration
Statement or the Prospectus will, when they become effective or are
filed with the Commission, as the case may be, conform in all
respects to the requirements of the Securities Act and the Rules and
Regulations. The Registration Statement, as of the Effective Date
thereof and of any amendment thereto, did not contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading. The Prospectus as of its date, and as amended
or supplemented as of the Closing Date, does not and will not contain
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 no representation or warranty is made as to
information contained in or omitted from the Registration Statement
or the Prospectus in reliance upon and in conformity with written
information furnished to the Depositor in writing by any Underwriter
expressly for use therein. The only information furnished by the
Underwriters or on behalf of the Underwriters for use in connection
with the preparation of the Registration Statement or the Prospectus
is described in Section 8(e) hereof.
(c) The documents incorporated by reference in the
Prospectus, when they became effective or were filed with the
Commission, as the case may be, conformed in all material respects to
the requirements of the Securities Act or the Exchange Act, as
applicable, and the Rules and Regulations of the Commission
thereunder, and none of such documents contained an untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; and any further documents so filed and incorporated by
reference in the Prospectus, when such documents become effective or
are filed with the Commission, as the case may be, will conform in
all material respects to the requirements of the Securities Act or
the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
(d) Since the respective dates as of which information is
given in the Prospectus, there has not been any material adverse
change in the general affairs, management, financial condition, or
results of operations of the Depositor, otherwise than as set forth
or contemplated in the Prospectus as supplemented or amended as of
the Closing Date.
(e) The Depositor has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Delaware, is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in which its
ownership or lease of property or the conduct of its business
requires such qualification, and has all power and authority
necessary to own or hold its properties, to conduct the business in
which it is engaged and to enter into and perform its obligations
under the Operative Agreements to which it is a party and to cause
the Certificates to be issued.
(f) There are no actions, proceedings or investigations
pending with respect to which the Depositor has received service of
process before, or threatened by, any court, administrative agency or
other tribunal to which the Depositor is a party or of which any of
its properties is the subject (i) which if determined adversely to
the Depositor would have a material adverse effect on the business or
financial condition of the Depositor, (ii) which assert the
invalidity of any of the Operative Agreements to which it is a party
or the Certificates, (iii) which seek to prevent the issuance of the
Certificates or the consummation by the Depositor of any of the
transactions contemplated by any of the Operative Agreements to which
it is a party or (iv) which might materially and adversely affect the
performance by the Depositor of its obligations under, or the
validity or enforceability of any of the Operative Agreements to
which it is a party or the Certificates.
(g) This Underwriting Agreement has been, and the Trust
Agreement when executed and delivered as contemplated hereby and
thereby, will have been, duly authorized, executed and delivered by
the Depositor, and this Underwriting Agreement constitutes, and the
Trust Agreement when executed and delivered as contemplated herein,
will constitute, legal, valid and binding instruments enforceable
against the Depositor in accordance with their respective terms,
subject as to enforceability to (i) applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws
affecting creditors' rights generally, (ii) general principles of
equity (regardless of whether enforcement is sought in a proceeding
in equity or at law), and (iii) with respect to rights of indemnity
under this Underwriting Agreement and the Trust Agreement,
limitations of public policy under applicable securities laws.
(h) The execution, delivery and performance by the Depositor
of the Operative Agreements to which it is a party and the
consummation of the transactions contemplated hereby and thereby, and
the issuance and delivery of the Certificates do not and will not
conflict with or result in a breach or violation of any of the terms
or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Depositor is a party, by which the Depositor
is bound or to which any of the properties or assets of the Depositor
or any of its subsidiaries is subject, which breach or violation
would have a material adverse effect on the business, operations or
financial condition of the Depositor, nor will such actions result in
any violation of the provisions of the Certificate of Incorporation
or By-Laws of the Depositor or any statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Depositor or any of its properties or assets,
which breach or violation would have a material adverse effect on the
business, operations or financial condition of the Depositor.
(i) When the Certificates are duly and validly executed and
authenticated by the Trustee and delivered in accordance with the
Trust Agreement, the Certificates will be duly and validly issued and
outstanding and entitled to the benefits and security afforded by the
Trust Agreement.
(j) No consent, approval, authorization, order, registration
or qualification of or with any court or governmental agency or body
of the United States is required for the issuance of the Certificates
and the sale of the Certificates to the Underwriters, or the
consummation by the Depositor of the other transactions contemplated
by the Operative Agreements, except such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or blue sky laws in connection with the
purchase and distribution of the Certificates by the Underwriters or
as have been obtained.
(k) The Depositor possesses all material licenses,
certificates, authorities or permits issued by the appropriate state,
federal or foreign regulatory agencies or bodies necessary to conduct
the business now conducted by it and as described in the Prospectus,
and the Depositor has not received notice of any proceedings relating
to the revocation or modification of any such license, certificate,
authority or permit which if decided adversely to the Depositor
would, singly or in the aggregate, materially and adversely affect
the conduct of its business, operations or financial condition.
(l) At the time of execution and delivery of the Trust
Agreement, the Depositor will: (i) be the sole beneficial owner of
the Primary Assets being transferred to the Trustee pursuant thereto,
free and clear of any lien, mortgage, pledge, charge, encumbrance,
adverse claim or other security interest (collectively, "Liens");
(ii) not have assigned to any Person any of its right or title in the
Primary Assets, in the Trust Agreement or in the Certificates being
issued; and (iii) have the power and authority to sell its interest
in the Primary Assets to the Trust and to sell the Certificates to
the Underwriters. Upon execution and delivery of the Trust Agreement
by the Trustee, the Trust will have acquired beneficial ownership of
all of the Depositor's right, title and interest in and to the
Primary Assets. Upon delivery to the Underwriters of the
Certificates, the Underwriters will have good title to the
Certificates, free and clear of any Liens.
(m) As of the Closing Date, the Primary Assets included in
the related Trust will meet the eligibility criteria described in the
Prospectus and will conform in all material respects to the
descriptions thereof contained in the Prospectus.
(n) Neither the Depositor nor the Trust created by the Trust
Agreement is an "investment company" within the meaning of such term
under the Investment Company Act of 1940 (the "1940 Act") and the
Rules and Regulations of the Commission thereunder.
(o) At the Closing Date, the Certificates and the Trust
Agreement will conform in all material respects to the descriptions
thereof contained in the Prospectus.
(p) At the Closing Date, [the Class [ ] Certificates will
have been rated [o] by Moody's Investors Service, Inc. ("Moody's"),
[o] by Standard & Poor's. a division of The McGraw-Hill Companies,
Inc. ("S&P") and [o] by Fitch, Inc. ("Fitch", and together with
Moody's and S&P, the "Rating Agencies").] At the Closing Date, [the
Class [ ] Certificates will have been rated [o] by S&P, [o] by
Moody's and [o] by Fitch, and the Class [ ] Certificates will have
been rated [o] by S&P, [o] by Moody's and [o] by Fitch.]
(q) Any taxes, fees and other governmental charges in
connection with the execution, delivery and issuance of the Operative
Agreements and the Certificates have been paid or will be paid at or
prior to the Closing Date.
(r) At the Closing Date, each of the representations and
warranties of the Depositor set forth in the Trust Agreement will be
true and correct in all material respects.
Any certificate signed by an officer of the Depositor and delivered
to the Underwriters or counsel for the Underwriters in connection with an
offering of the Certificates shall be deemed to be a representation and
warranty as to the matters covered thereby to each person to whom the
representations and warranties in this Section 1 are made.
SECTION 2. Purchase and Sale. The commitment of the Underwriters to
purchase the Certificates pursuant to this Underwriting Agreement shall be
deemed to have been made on the basis of the representations and warranties
herein contained and shall be subject to the terms and conditions herein set
forth. The Depositor agrees to instruct the Trustee to issue the Certificates
and agrees to sell to the Underwriters, and the Underwriters severally agree
(except as provided in Sections 10 and 11) to purchase from the Depositor, the
aggregate principal amount of the Certificates at the purchase price or prices
set forth next to their respective names in Schedule A, except that the amount
purchased by each Underwriter may change in accordance with Section 10 of this
Underwriting Agreement.
SECTION 3. Delivery and Payment. Delivery of and payment for the
Certificates to be purchased by the Underwriters shall be made at the offices
of Sidley Austin Brown & Wood LLP, One World Trade Center, New York, New York
10048 or at such other place as shall be agreed upon by the Underwriters and
the Depositor at 10:00 a.m., New York time on [ ], 2001, or at such other time
or date as shall be agreed upon in writing by the Underwriters and the
Depositor (such date being referred to as the "Closing Date"). Payment shall
be made to the Depositor by wire transfer of same day funds payable to the
account of the Depositor. Delivery of the Certificates shall be made to the
Underwriters for the accounts of the Underwriters against payment of the
purchase price thereof. The Certificates shall be in such authorized
denominations and registered in such names as the Underwriters may request in
writing at least two business days prior to the Closing Date. The Certificates
will be made available for examination by the Underwriters no later than 2:00
p.m. New York City time on the first business day prior to the Closing Date.
SECTION 4. Offering by the Underwriters. It is understood that,
subject to the terms and conditions hereof, the Underwriters propose to offer
the Certificates for sale to the public as set forth in the Prospectus.
SECTION 5. Covenants of the Depositor. The Depositor agrees
as follows:
(a) To prepare the Prospectus in a form approved by the
Underwriters and to file such Prospectus pursuant to Rule 424(b)
under the Securities Act not later than the Commission's close of
business on the second business day following the availability of the
Prospectus to the Underwriters and to make no further amendment or
any supplement to the Registration Statement or to the Prospectus
prior to the Closing Date except as permitted herein; to advise the
Underwriters, promptly after it receives notice thereof, of the time
when any amendment to the Registration Statement has been filed or
becomes effective prior to the Closing Date or any supplement to the
Prospectus or any amended Prospectus has been filed prior to the
Closing Date and to furnish the Underwriters with copies thereof; to
file promptly all reports and any definitive proxy or information
statements required to be filed by the Depositor with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of the Prospectus and, for so long as the
delivery of a prospectus is required in connection with the offering
or sale of the Certificates to advise the Underwriters promptly of
its receipt of notice of the issuance by the Commission of any stop
order or of: (i) any order preventing or suspending the use of the
Prospectus; (ii) the suspension of the qualification of the
Certificates for offering or sale in any jurisdiction; (iii) the
initiation of or threat of any proceeding for any such purpose; (iv)
any request by the Commission for the amending or supplementing of
the Registration Statement or the Prospectus or for additional
information. In the event of the issuance of any stop order or of any
order preventing or suspending the use of the Prospectus or
suspending any such qualification, the Depositor promptly shall use
its best efforts to obtain the withdrawal of such order by the
Commission.
(b) To furnish promptly to the Underwriters and to counsel
for the Underwriters a signed copy of the Registration Statement as
originally filed with the Commission, and of each amendment thereto
filed with the Commission, including all consents and exhibits filed
therewith.
(c) To deliver promptly to the Underwriters such number of
the following documents as the Underwriters shall reasonably request:
(i) conformed copies of the Registration Statement as originally
filed with the Commission and each amendment thereto (in each case
including exhibits); (ii) the Prospectus and any amended or
supplemented Prospectus; and (iii) any document incorporated by
reference in the Prospectus (including exhibits thereto). If the
delivery of a prospectus is required at any time in connection with
the offering or sale of the Certificates, and if at such time any
events shall have occurred as a result of which the Prospectus as
then amended or supplemented would include any untrue statement of a
material fact or omit to state any material fact necessary in order
to make the statements therein, in light of the circumstances under
which they were made when such Prospectus is delivered, not
misleading, or, if for any other reason it shall be necessary during
the same period to amend or supplement the Prospectus or to file
under the Exchange Act any document incorporated by reference in the
Prospectus in order to comply with the Securities Act or the Exchange
Act, the Depositor shall notify the Underwriters and, upon the
Underwriters' request, shall file such document and prepare and
furnish without charge to the Underwriters and to any dealer in
securities as many copies as the Underwriters may from time to time
reasonably request of an amended Prospectus or a supplement to the
Prospectus which corrects such statement or omission or effects such
compliance.
(d) To file promptly with the Commission any amendment to
the Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Depositor or the
Underwriters, be required by the Securities Act or requested by the
Commission.
(e) To furnish the Underwriters and counsel for the
Underwriters, prior to filing with the Commission, and to obtain the
consent of the Underwriters for the filing of the following documents
relating to the Certificates: any (i) amendment to the Registration
Statement or supplement to the Prospectus, or document incorporated
by reference in the Prospectus, or (ii) Prospectus pursuant to Rule
424 of the Rules and Regulations.
(f) To make generally available to holders of the
Certificates as soon as practicable, but in any event not later than
ninety (90) days after the close of the period covered thereby, a
statement of earnings of the Trust (which need not be audited)
complying with Section 11(a) of the Securities Act and the Rules and
Regulations (including, at the option of the Depositor, Rule 158) and
covering a period of at least twelve (12) consecutive months
beginning not later than the first day of the first fiscal quarter
following the Closing Date.
(g) To use its best efforts, in cooperation with the
Underwriters, to qualify the Certificates for offering and sale under
the applicable securities laws of such states and other jurisdictions
of the United States or elsewhere as the Underwriters may designate,
and maintain or cause to be maintained such qualifications in effect
for as long as may be required for the distribution of the
Certificates; provided, however, that in connection therewith, the
Depositor shall not be required to qualify as a foreign corporation
or to file a general consent to service of process in any
jurisdiction. The Depositor will file or cause the filing of such
statements and reports as may be required by the laws of each
jurisdiction in which the Certificates have been so qualified.
(h) To file or cause the Trustee to file on behalf of the
Trust, on a timely basis, any documents and any amendments thereof as
may be required to be filed by it pursuant to the Exchange Act.
(i) So long as the Certificates shall be outstanding the
Depositor shall cause the Trustee, pursuant to the Trust Agreement,
to deliver to the Underwriters as soon as such information, documents
and reports, as applicable, are available to be furnished: (i) copies
of all reports filed with the Commission and copies of each notice
published or mailed to any holders of Certificates pursuant to the
Trust Agreement, and (ii) such other information with respect to the
Trust or its financial condition or results of operations, as the
Underwriter may reasonably request, including, but not limited to,
information necessary or appropriate to the maintenance of a
secondary market in any Certificates.
(j) To apply the net proceeds from the sale of the
Certificates in the manner set forth in the Prospectus Supplement.
SECTION 6. Conditions to the Underwriters' Obligations. The
obligations of each Underwriter to purchase the Certificates pursuant to this
Underwriting Agreement are subject to: (i) the accuracy on and as of the
Closing Date of the representations and warranties on the part of the
Depositor herein contained; (ii) the performance by the Depositor of all of
its obligations hereunder; and (iii) the following conditions as of the
Closing Date:
(a) The Underwriters shall have received confirmation of the
effectiveness of the Registration Statement. No stop order suspending
the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose shall have
been initiated or threatened by the Commission. Any request of the
Commission for inclusion of additional information in the
Registration Statement or the Prospectus shall have been complied
with.
(b) Neither Underwriter shall have discovered and disclosed
to the Depositor on or prior to the Closing Date that the
Registration Statement or the Prospectus or any amendment or
supplement thereto contains an untrue statement of a fact or omits to
state a fact which, in the opinion of such Underwriter and its
counsel, is material and is required to be stated therein or is
necessary to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters
relating to the authorization, form and validity of the Operative
Agreements, the Certificates, the Registration Statement and the
Prospectus, and all other legal matters relating to this Underwriting
Agreement and the transactions contemplated hereby shall be
satisfactory in all respects to the Underwriters and their counsel,
and the Depositor shall have furnished to Underwriter and their
counsel all documents and information that they may reasonably
request to enable them to pass upon such matters.
(d) Sidley Austin Brown & Wood LLP, counsel to the
Depositor, shall have furnished to the Underwriters their written
opinion, addressed to the Underwriters and dated the Closing Date, in
form and substance satisfactory to the Underwriters.
(e) [o], counsel to the Trustee, shall have furnished to the
Underwriters their written opinion, addressed to the Underwriters and
dated as of the applicable Closing Date, in form and substance
satisfactory to the Underwriters.
(f) Joseph Kopec, in-house counsel to the Depositor, shall
have furnished to the Underwriters [his][her] written opinion,
addressed to the Underwriters and dated as of the applicable Closing
Date, in form and substance satisfactory to the Underwriters.
(g) If applicable, the Underwriters shall have received
letters dated the Closing Date from counsel rendering opinions to any
Rating Agency rating the Certificates, to the effect that the
Underwriters may rely upon their opinion to such Rating Agency, as if
such opinion were rendered to the Underwriters.
(h) The Underwriters shall have received such opinion or
opinions, dated the Closing Date, with respect to the incorporation
of the Depositor, the validity of the Registration Statement, the
Prospectus and other related matters as the Underwriters may require,
and the Depositor shall have furnished to such counsel such documents
as they request for the purpose of enabling them to pass upon such
matters.
(i) The Underwriters shall have received a certificate or
certificates signed by such of the principal executive, financial and
accounting officers of the Depositor as the Underwriters may request,
dated the applicable Closing Date, in which such officers, to the
best of their knowledge after reasonable investigation, shall state
that (i) the representations and warranties of the Depositor in this
Agreement are true and correct; (ii) the Depositor has complied with
all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to the Closing Date; (iii) 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; (iv) subsequent to the respective dates as of
which information is given in the Prospectus, and except as set forth
or contemplated in the Prospectus, there has not been any material
adverse change in the general affairs, capitalization, financial
condition or results of operations of the Depositor; (v) except as
otherwise stated in the Prospectus, there are no material actions,
suits or proceedings pending before any court or governmental agency,
authority or body or, to their knowledge, threatened, which could
have a material effect upon the Depositor or upon the transactions
contemplated by this Agreement; and (vi) attached thereto are true
and correct copies of a letter from the rating agency or agencies
rating the Certificates subject to this Agreement confirming that,
unless otherwise specified in the applicable Underwriting Agreement
that the Certificates have been rated in the same rating categories
established by such agency or agencies as the rating of the
Underlying Securities and that such rating has not been lowered since
the date of such letter.
(j) The Trustee shall have furnished to the Underwriters a
certificate of the Trustee, signed by one or more duly authorized
officers of the Trustee, dated the Closing Date, as to the due
authorization, execution and delivery of the Trust Agreement by the
Trustee and the due execution, authentication and delivery of the
Certificates by the Trustee thereunder.
(k) The Depositor shall have furnished to the Underwriters
such further information, certificates and documents as the
Underwriters may reasonably have requested not less than three full
business days prior to the Closing Date.
(l) Subsequent to the execution and delivery of this
Underwriting Agreement, none of the following shall have occurred:
(i) trading in securities generally on the New York Stock Exchange,
the American Stock Exchange or the over-the-counter market shall have
been suspended or minimum prices shall have been established on
either of such exchanges or such market by the Commission, by such
exchange or by any other regulatory body or governmental authority
having jurisdiction; (ii) a banking moratorium shall have been
declared by federal or state authorities; (iii) the United States
shall have become engaged in hostilities, there shall have been an
escalation of hostilities involving the United States or there shall
have been a declaration of a national emergency or war by the United
States; or (iv) there shall have occurred such a material adverse
change in general economic, political or financial conditions (or the
effect of international conditions on the financial markets of the
United States shall be such) as to make it in each of the instances
set forth in clauses (i), (ii), (iii) and (iv) herein, in the
judgment of the Underwriters, impractical or inadvisable to proceed
with the public offering or delivery of the Certificates on the terms
and in the manner contemplated in the Prospectus.
If any condition specified in this Section 6 shall not have been
fulfilled when and as required to be fulfilled, this Underwriting Agreement
may be terminated by the Underwriters by notice to the Depositor at any time
at or prior to the Closing Date, and such termination shall be without
liability of any party to any other party except as provided in Section 7.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Underwriting Agreement shall be deemed to be in compliance
with the provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Underwriters.
SECTION 7. Payment of Expenses. As between the Depositor and the
Underwriters, the [Depositor] agrees to pay all expenses incident to the
performance of its obligations under this Agreement, including without
limitation those relating to: (a) the costs incident to the authorization,
issuance, sale and delivery of the Certificates and any taxes payable in
connection therewith; (b) a portion of the fees previously paid to the
Commission with respect to the filing under the Securities Act of the
Registration Statement and any amendments and exhibits thereto; (c) the costs
of distributing the Registration Statement as originally filed and each
amendment thereto and any post-effective amendments thereof (including, in
each case, exhibits), the Prospectus and any amendment or supplement to the
Prospectus (including the Prospectus Supplement) or any document incorporated
by reference therein, all as provided in this Underwriting Agreement; (d) the
costs of reproducing and distributing this Underwriting Agreement; (e) the
fees and expenses of qualifying the Certificates under the securities laws of
the several jurisdictions as provided in Section 5(h), if necessary, hereof
and of preparing, printing and distributing a Blue Sky Memorandum and a Legal
Investment Survey (including related fees and expenses of counsel to the
Underwriters); (f) any fees charged by securities rating services for rating
the Certificates; and (g) all other costs and expenses incident to the
performance of the obligations of the Depositor (including costs and expenses
of your counsel).
If this Underwriting Agreement is terminated by the Underwriters in
accordance with the provisions of Section 6 or Section 11, the Depositor shall
cause the Underwriters to be reimbursed for all reasonable out-of-pocket
expenses, including fees and disbursements of Sidley Austin Brown & Wood LLP,
counsel for the Underwriters.
SECTION 8. Indemnification and Contribution. (a) The Depositor agrees
to indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Securities
Act from and against any and all loss, claim, damage or liability, joint or
several, or any action in respect thereof (including, but not limited to, any
loss, claim, damage, liability or action relating to purchases and sales of
the Certificates), to which such Underwriter or any such controlling person
may become subject, under the Securities Act or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based upon, (i)
any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement, or any amendment thereof or supplement thereto,
(ii) the omission or alleged omission to state in the Registration Statement
or any amendment thereof or supplement thereto a material fact required to be
stated therein or necessary to make the statements therein not misleading,
(iii) any untrue statement or alleged untrue statement of a material fact
contained in the Prospectus, or any amendment thereof or supplement thereto,
or (iv) the omission or alleged omission to state in the Prospectus or any
amendment thereof or supplement thereto a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and shall reimburse
each Underwriter and each such controlling person promptly upon demand for any
legal or other expenses reasonably incurred by such Underwriter or such
controlling person in connection with investigating or defending or preparing
to defend against any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that the Depositor shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, any untrue statement or
alleged untrue statement or omission or alleged omission made in the
Prospectus, or any amendment thereof or supplement thereto, or the
Registration Statement, or any amendment thereof or supplement thereto, in
reliance upon and in conformity with written information furnished to the
Depositor by or on behalf of such Underwriter specifically for inclusion
therein, it being understood that the only information furnished by Deutsche
Banc Alex. Brown Inc. or [other underwriter's name] or on behalf of either
such Underwriter for use in connection with the preparation of the
Registration Statement or the Prospectus is described in Section 8(e) hereof.
The foregoing indemnity agreement is in addition to any liability which the
Depositor may otherwise have to each Underwriter or any controlling person of
each Underwriter.
(b) Each Underwriter, severally and not jointly, agrees to indemnify
and hold harmless the Depositor, each of their directors, each of the officers
of the Depositor who signed the Registration Statement, and each person, if
any, who controls the Depositor within the meaning of Section 15 of the
Securities Act against any and all loss, claim, damage or liability, or any
action in respect thereof, to which the Depositor or any such director,
officer or controlling person may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, (i) any untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement, or any amendment
thereof or supplement thereto, (ii) the omission or alleged omission to state
in the Registration Statement or any amendment thereof or supplement thereto a
material fact required to be stated therein or necessary to make the
statements therein not misleading, (iii) any untrue statement or alleged
untrue statement of a material fact contained in the Prospectus, or any
amendment thereof or supplement thereto, or (iv) the omission or alleged
omission to state in the Prospectus, or any amendment thereof or supplement
thereto a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Depositor by or on behalf of such Underwriter specifically for inclusion
therein, and shall reimburse the Depositor and any such director, officer or
controlling person for any legal or other expenses reasonably incurred by the
Depositor or any director, officer or controlling person in connection with
investigating or defending or preparing to defend against any such loss,
claim, damage, liability or action as such expenses are incurred. The only
information furnished by Deutsche Banc Alex. Brown Inc. or [other
underwriter's name] or on behalf of either such Underwriter for use in
connection with the preparation of the Registration Statement or the
Prospectus is described in Section 8(e) hereof. The foregoing indemnity
agreement is in addition to any liability which the Underwriters may otherwise
have to the Depositor or any such director, officer or controlling person.
(c) Promptly after receipt by any indemnified party under this
Section 8 of notice of any claim or the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against
any indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however,
that the failure to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify any indemnifying party shall not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 8.
If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to
assume the defense thereof with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the indemnified
party of its election to assume the defense of such claim or action, except to
the extent provided in the next following paragraph, the indemnifying party
shall not be liable to the indemnified party under this Section 8 for any
legal or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs of
investigation.
Any indemnified party shall have the right to employ separate counsel
in any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless: (i) the employment thereof has been specifically authorized by the
indemnifying party in writing; (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party and in the reasonable judgment of such counsel it is
advisable for such indemnified party to employ separate counsel; or (iii) the
indemnifying party has failed to assume the defense of such action and employ
counsel reasonably satisfactory to the indemnified party, in which case, if
such indemnified party notifies the indemnifying party in writing that it
elects to employ separate counsel at the expense of the indemnifying party,
the indemnifying party shall not have the right to assume the defense of such
action on behalf of such indemnified party, it being understood, however, the
indemnifying party shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for
the reasonable fees and expenses of more than one separate firm of attorneys
(in addition to one local counsel per jurisdiction) at any time for all such
indemnified parties, which firm shall be designated in writing by the
applicable Underwriter, if the indemnified parties under this Section 8
consist of the Underwriters or any of their respective controlling persons, or
the Depositor, if the indemnified parties under this Section 8 consist of the
Depositor or any of the Depositor's directors, officers or controlling
persons.
Each indemnified party, as a condition of the indemnity agreements
contained in Sections 8(a) and (b), shall use its best efforts to cooperate
with the indemnifying party in the defense of any such action or claim. No
indemnifying party shall be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with its written consent or if there be a final
judgment for the plaintiff in any such action, the indemnifying party agrees
to indemnify and hold harmless any indemnified party from and against any loss
or liability by reason of such settlement or judgment.
Notwithstanding the foregoing paragraph, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than
thirty (30) days after receipt by such indemnifying party of the aforesaid
request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement.
(d) If the indemnification provided for in this Section 8 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Sections 8(a) or (b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Depositor and the related Underwriter from the offering of the
Certificates or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law or if the indemnified party failed to give the
notice required under Section 8(c), in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Depositor and the related Underwriter with
respect to the statements or omissions which resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any other
relevant equitable considerations.
The relative benefits of the related Underwriter and the Depositor
shall be deemed to be in such proportion as the total net proceeds from the
offering (before deducting expenses) received by the Depositor bear to the
total underwriting discounts and commissions received by the related
Underwriter from time to time in negotiated sales of the related Certificates.
The relative fault of the related Underwriter and the Depositor shall
be determined by reference to whether the untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact
relates to information supplied by the Depositor or by the related
Underwriter, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission
and other equitable considerations.
The Depositor and each of the Underwriters agree that it would not be
just and equitable if contributions pursuant to this Section 8(d) were to be
determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purposes) or by any other method of allocation which does
not take into account the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the loss, claim,
damage or liability, or action in respect thereof, referred to above in this
Section 8(d) shall be deemed to include, for purposes of this Section 8(d),
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
For purposes of this Section 8, in no case shall any Underwriter be
responsible for any amount in excess of (x) the amount received by such
Underwriter in connection with its resale of the related Certificates over (y)
the amount paid by such Underwriter to the Depositor for the related
Certificates by such Underwriter hereunder. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) Each of the Underwriters confirms that the information set forth
in the Prospectus Supplement under the heading "Method of Distribution" (as
such information relates to such Underwriter) is correct, and the parties
hereto acknowledge that such information constitutes the only information
furnished in writing by or on behalf of each such Underwriter for use in
connection with the preparation of the Registration Statement or the
Prospectus.
SECTION 9. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Underwriting Agreement or contained in certificates of officers of the
Depositor or the Company submitted pursuant hereto shall remain operative and
in full force and effect, regardless of any investigation made by or on behalf
of the Underwriters or controlling persons thereof, or by or on behalf of the
Depositor, and shall survive delivery of any Certificates to the Underwriters.
SECTION 10. [Default by One of the Underwriters. If one of the
Underwriters participating in the public offering of the Certificates shall
fail at the Closing Date to purchase the Certificates which it is obligated to
purchase hereunder (the "Defaulted Certificates"), then the non-defaulting
Underwriter shall have the right, within 24 hours thereafter, to purchase all,
but not less than all, of the Defaulted Certificates in such amounts as may be
agreed upon and upon the terms herein set forth. If, however, the
non-defaulting Underwriter has not completed such arrangements within such
24-hour period, then:
(a) if the aggregate principal amount of Defaulted
Certificates does not exceed 10% of the aggregate principal amount of
the Certificates to be purchased pursuant to this Underwriting
Agreement, the non-defaulting Underwriter shall be obligated to
purchase the full amount thereof, or
(b) if the aggregate principal amount of Defaulted
Certificates exceeds 10% of the aggregate principal amount of the
Certificates to be purchased pursuant to this Underwriting Agreement,
this Underwriting Agreement shall terminate, without any liability on
the part of the non-defaulting Underwriter.
No action taken pursuant to this Section 10 shall relieve a
defaulting Underwriter from the liability with respect to any default of such
Underwriter under this Underwriting Agreement.
In the event of a default by any Underwriter as set forth in this
Section 10, the non-defaulting Underwriter and the Depositor shall have the
right to postpone the Closing Date for a period not exceeding five Business
Days in order that any required changes in the Registration Statement or
Prospectus or in any other documents or arrangements may be effected.]
SECTION 11. Termination of this Underwriting Agreement. The
Underwriters may terminate this Underwriting Agreement immediately upon notice
to the Depositor, at any time at or prior to the Closing Date if any of the
events or conditions described in Section 6(l) of this Underwriting Agreement
shall occur and be continuing. In the event of any such termination, the
covenant set forth in Section 5(f), the provisions of Section 7, the indemnity
agreement set forth in Section 8, and the provisions of Sections 9 and 16
shall remain in effect.
SECTION 12. Notices. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to Deutsche Banc Alex Brown Inc, shall be delivered or
sent by mail, telex or facsimile transmission to Deutsche
Banc Alex Brown Inc., 31 West 52nd St., New York, New York
10019 Attention: Asset Backed Securities Group
(Fax: 212- ).
(b) if to [[other underwriter's name], shall be delivered or
sent by mail, telex or facsimile transmission to care of ,
[address], Attention: [ ] (Fax: [ ])].
(c) if to the Depositor, shall be delivered or sent by mail,
telex or facsimile transmission to care of DB Depositor
Inc., 31 West 52nd Street, New York, New York 10019,
Attention: [Chief Counsel (Fax: 212- )].
SECTION 13. Persons Entitled to the Benefit of this Underwriting
Agreement. This Underwriting Agreement shall inure to the benefit of and be
binding upon the Underwriters and the Depositor and their respective
successors. This Underwriting Agreement and the terms and provisions hereof
are for the sole benefit of only those persons, except that the
representations, warranties, indemnities and agreements contained in this
Underwriting Agreement shall also be deemed to be for the benefit of the
person or persons, if any, who control the Underwriters within the meaning of
Section 15 of the Securities Act, and for the benefit of directors of the
Depositor, officers of the Depositor who have signed the Registration
Statement and any person controlling the Depositor within the meaning of
Section 15 of the Securities Act. Nothing in this Underwriting Agreement is
intended or shall be construed to give any person, other than the persons
referred to in this Section 13, any legal or equitable right, remedy or claim
under or in respect of this Underwriting Agreement or any provision contained
herein.
SECTION 14. Survival. The respective indemnities, representations,
warranties and agreements of the Depositor and the Underwriters contained in
this Underwriting Agreement, or made by or on behalf of them, respectively,
pursuant to this Underwriting Agreement shall survive the delivery of and
payment for the Certificates and shall remain in full force and effect,
regardless of any investigation made by or on behalf of any of them or any
person controlling any of them.
SECTION 15. Definition of the Term "Business Day". For purposes of this
Underwriting Agreement, "Business Day" means any day on which the New York
Stock Exchange is open for trading.
SECTION 16. Governing Law; Submission to Jurisdiction. This
Underwriting Agreement shall be governed by and construed in accordance with
the laws of the State of New York without giving effect to the conflict of law
rules thereof.
The parties hereto hereby submit to the jurisdiction of the United
States District Court for the Southern District of New York and any court in
the State of New York located in the City and County of New York, and
appellate court from any thereof, in any action, suit or proceeding brought
against it or in connection with this Underwriting Agreement or any of the
related documents or the transactions contemplated hereunder or for
recognition or enforcement of any judgment, and the parties hereto hereby
agree that all claims in respect of any such action or proceeding may be heard
or determined in New York State court or, to the extent permitted by law, in
such federal court.
SECTION 17. Counterparts. This Underwriting Agreement may be executed
in counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
SECTION 18. Headings. The headings herein are inserted for convenience
of reference only and are not intended to be part of, or to affect the meaning
or interpretation of, this Underwriting Agreement.
* * *
If the foregoing correctly sets forth the agreement between the
Depositor and the Underwriters, please indicate your acceptance in the space
provided for the purpose below.
Very truly yours,
DB DEPOSITOR INC.
By: ___________________________
Name:
Title:
By: ___________________________
Name:
Title:
CONFIRMED AND ACCEPTED, as of the date first above written:
DEUTSCHE BANC ALEX. BROWN INC.
By: ___________________________
Name:
Title:
By: ___________________________
Name:
Title:
[OTHER UNDERWRITER]
By: ___________________________
Name:
Title:
SCHEDULE A
Class [ ] Certificates
Underwriter Original Principal Balance Purchase Price
Deutsche Banc Alex. Brown Inc.
[Other Underwriter]