Exhibit 4
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PREFERREDPLUS 8.375% TRUST CERTIFICATES SERIES CZN-1
SERIES SUPPLEMENT
between
MERRILL LYNCH DEPOSITOR, INC.,
as Depositor,
and
THE BANK OF NEW YORK,
as Trustee and Securities Intermediary
Dated as of August 29, 2001
SERIES SUPPLEMENT, dated as of August 29, 2001 (the "Supplement"), by
and between MERRILL LYNCH DEPOSITOR, INC., a Delaware corporation, as Depositor,
THE BANK OF NEW YORK, a New York corporation, as Trustee and Securities
Intermediary.
W I T N E S S E T H:
WHEREAS, the Depositor desires to create the Trust designated herein
(the "Trust") by executing and delivering this Supplement, which shall
incorporate the terms of the Standard Terms for Trust Agreements, dated as of
February 20, 1998 (the "Standard Terms" and, together with this Supplement, the
"Trust Agreement"), by and between the Depositor and the Trustee and Securities
Intermediary, as modified by this Supplement;
WHEREAS, the Depositor desires to deposit the Underlying Securities set
forth on Schedule I attached hereto into the Trust;
WHEREAS, in connection with the creation of the Trust and the deposit
therein of the Underlying Securities, it is desired to provide for the issuance
of the Certificates evidencing undivided interests in the Trust and Call Rights;
and
WHEREAS, the Trustee has joined in the execution of the Standard Terms
and this Supplement to evidence the acceptance by the Trustee of the Trust;
WHEREAS, the Securities Intermediary has joined in the execution of the
Standard Terms and this Supplement to evidence the acceptance by the Securities
Intermediary of its obligations thereunder and hereunder;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants expressed herein, it is hereby agreed by and between the
Depositor and the Trustee and Securities Intermediary as follows:
Section 1. Incorporation of Standard Terms. All of the provisions of
the Standard Terms, a copy of which is attached hereto as Exhibit A, are hereby
incorporated herein by reference in their entirety and this Supplement and the
Standard Terms shall form a single agreement among the parties. In the event of
any inconsistency between the provisions of this Supplement and the provisions
of the Standard Terms, the provisions of this Supplement will control with
respect to the transactions described herein.
Section 2. Definitions. Except as otherwise specified herein or as the
context may otherwise require, the following terms shall have the respective
meanings set forth below for all purposes under this Supplement (Section 2(b)
hereof sets forth terms listed in the Standard Terms that are not applicable to
this Series). Capitalized terms used but not defined herein shall have the
meanings assigned to them in the Standard Terms.
"Allocation Ratio": The allocation amongst the Certificateholders in
accordance with their pro rata interests in the Certificates.
"Authorized Denomination": With respect to Certificates, an aggregate
stated amount of $1,000.
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"Business Day": Any day that is not a Saturday, a Sunday or a legal
holiday or a day on which banking institutions or trust companies in the City of
New York are authorized or obligated by law, regulation or executive order to
close and that also is specified as a Business Day with respect to the
Underlying Securities.
"Call Date": Any Business Day that (i) a Call Holder designates as a
Call Date on or after October 1, 2006; (ii) a Call Holder designates as a Call
Date before October 1, 2006 after receipt by the Call Holder of notice of the
termination of the Trust; or (iii) at any time is deemed a Call Date upon an
acceleration of the Underlying Securities and payment in full by the Underlying
Securities Issuer of all amounts when due.
"Call Holder": The holder of a Call Right.
"Call Price": $25.00 per Certificate being called plus any accrued and
unpaid interest on each Certificate being called to the Call Date.
"Call Right": The right, but not the obligation, pursuant to the
Warrant Agreement and any related Warrant Certificates (as defined in the
Warrant Agreement) of one or more Call Holders to purchase from the
Certificateholders on a Call Date some or all of the Certificates for the Call
Price.
"Certificates": The 1,380,000 trust certificates issued in a stated
amount of $25 each and entitled to receive on each Distribution Date until the
Final Scheduled Distribution Date distributions at a rate of 8.375% per annum on
their stated amount.
"Closing Date": August 29, 2001.
"Collection Period": (i) With respect to each October 1 Distribution
Date, the period beginning on the day after the April 1 Distribution Date of the
current year and ending on such October 1 Distribution Date, inclusive, except
for the October 1, 2001 Distribution Date, as to which the Collection Period
shall be the period beginning on the Cut-off Date and ending on such October 1,
2001 Distribution Date, inclusive, and (ii) with respect to each April 1
Distribution Date, the period beginning on the day after the October 1
Distribution Date of the previous year and ending on such April 1 Distribution
Date, inclusive; provided, however, that clauses (i) and (ii) shall be subject
to Section 9(c) hereof.
"Corporate Trust Office": The office of the Trustee located at 114 West
47th Street, 25th Floor, New York, New York 10036, Attention: Corporate Trust
Department; provided, however, that the office at which certificated securities
are delivered for registration of transfer, cancellation or exchange shall be
the office of the Trustee, located at 111 Broadway, Lower Level, New York, New
York 10006.
"Cut-off Date": August 29, 2001.
"Depository": The Depository Trust Company, its nominees and their
respective successors.
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"Distribution Date": April 1 and October 1 of each year (or if such
date is not a Business Day, the next succeeding Business Day), commencing on
October 1, 2001 and ending on the Final Scheduled Distribution Date.
"Distribution Election": (a) If there occurs an Event of Default (as
defined in the Underlying Securities Indenture) on the Underlying Securities
under clauses (1) or (2) of section 501 of the Underlying Securities Indenture,
then the Trustee, upon receiving notice of such event, shall immediately direct
the Market Agent to sell the Underlying Securities and a pro rata portion of the
Related Assets held by the Trust, in accordance with the Sale Procedures, and
the Liquidation Proceeds, if any, shall be deposited into the Certificate
Account for distribution in accordance with the Allocation Ratio on the first
Business Day following such deposit into the Certificate Account.
(b) If there occurs an acceleration of the date of maturity of the
Underlying Securities and the Underlying Securities are declared to be
immediately due and payable in accordance with the Underlying Securities
Indenture, and the Underlying Securities Issuer:
(i) makes full payment of all amounts when due, then all holders of
outstanding Call Rights will be deemed to have exercised their Call Rights
automatically, and the Trustee, upon receiving such payment from the
underlying Securities Issuer, shall, on the first Business Day following
receipt of such payment, distribute from such payment the following
amounts: (A) the Call Price per Certificate shall be distributed from such
payment on account of each Certificate called from the holder thereof
(which holders, pursuant to Section 2.02(d) of the Warrant Agreement, shall
exclude Certificateholders to whom Delivery Certificates (as defined in the
Warrant Agreement) were delivered in accordance with Section 2.02(d) of the
Warrant Agreement), (B) the stated amount per Certificate plus accrued and
unpaid distributions thereon, which shall be deemed to equal the Call Price
per Certificate, shall be distributed from such payment on account of each
Certificate held by Certificateholders to whom Delivery Certificates were
delivered in accordance with Section 2.02(d) of the Warrant Agreement, and
(C) any amounts remaining shall be distributed pro rata among the Call
Holders exercising their Call Rights and those Certificateholders to whom
Delivery Certificates were delivered in accordance with Section 2.02(d) of
the Warrant Agreement;
(ii) makes a partial payment of all amounts when due, then the Trustee,
upon receiving such payment, shall (A) immediately deposit such payment
into the Certificate Account for distribution in accordance with the
Allocation Ratio on the first Business Day following such deposit into the
Certificate Account; provided, that if the Underlying Securities issuer
places any condition, restriction or obligation on the acceptance of such
partial payment including but not limited to a waiver of any right granted
to a holder of the Underlying Securities, such partial payment will be
rejected by the Trustee and no deposit will be made into the Certificate
Account, (B) distribute a principal amount of the Underlying Securities
equal to the stated amount of outstanding Trust Certificates and a pro rata
portion of the Related Assets in accordance with the Allocation Ratio to
each Certificateholder's last address as it appears in the Certificate
Register within three Business Days of receiving said notice, and (C) if
any Underlying Securities are not distributed pursuant to clause (B),
immediately direct the Market Agent to sell all
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Underlying Securities not so distributed and a pro rata portion of the
Related Assets held by the Trust, in accordance with the Sale Procedures,
and the Liquidation Proceeds, if any, shall be deposited into the
Certificate Account for distribution in accordance with the Allocation
Ratio on the first Business Day following such deposit into the Certificate
Account; or
(iii) fails to make such payment when due, then the Trustee, upon
receiving notice of such failure to make payment, shall (A) distribute a
principal amount of Underlying Securities equal to the stated amount of
outstanding Trust Certificates and a pro rata portion of the Related Assets
in accordance with the Allocation Ratio to each Certificateholder's last
address as it appears in the Certificate Register within three Business
Days of receiving said notice, and (B) if any Underlying Securities are not
distributed pursuant to clause (A), immediately direct the Market Agent to
sell all Underlying Securities not so distributed and a pro rata portion of
the Related Assets held by the Trust, in accordance with the Sale
Procedures, and the Liquidation Proceeds, if any, shall be deposited into
the Certificate Account for distribution in accordance with the Allocation
Ratio on the first Business Day following such deposit into the Certificate
Account.
(c) If the Underlying Securities Issuer of any Concentrated Underlying
Securities ceases to be a reporting company under the Exchange Act, then the
Trustee, upon receiving notice of such event shall (A) distribute a principal
amount of Underlying Securities equal to the stated amount of outstanding Trust
Certificates and a pro rata portion of the Related Assets in accordance with the
Allocation Ratio to each Certificateholder's last address as it appears in the
Certificate Register within three Business Days of receiving said notice, and
(B) if any Underlying Securities are not distributed pursuant to clause (A),
immediately direct the Market Agent to sell all Underlying Securities not so
distributed and a pro rata portion of the Related Assets held by the Trust, in
accordance with the Sale Procedures, and the Liquidation Proceeds, if any, shall
be deposited into the Certificate Account for distribution in accordance with
the Allocation Ratio on the first Business Day following such deposit into the
Certificate Account.
Upon notice of the events set forth in clause (c) above, the Trustee
shall, 10 days prior to the exercise of such remedy, provide written notice of
the termination of the Trust to the Call Holders. In the case of a sale by the
Market Agent of Underlying Securities and Related Assets pursuant to clause (a)
above, the Trustee shall deliver such Underlying Securities and Related Assets
to the purchaser of such Underlying Securities and Related Assets only against
payment in same day funds and the Trustee shall deposit the same into the
Certificate Account.
"Eligible Investments": As defined in the Standard Terms; provided,
however, that (i) the minimum required rating for long-term instruments will be
equal to the lower of the rating of the Underlying Securities or the Trust
Certificates, and (ii) the rating of any short-term instruments will be A-1+ by
S&P and P1 by Moody's; and provided, further, that any such investment matures
no later than the Business Day prior to the next succeeding Distribution Date.
"Escrow Agent": As will be set forth in the Escrow Agreement.
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"Escrow Agreement": The escrow agreement to be entered into on the Call
Date among a given Call Holder, the Trustee and the Escrow Agent pursuant to
Section 14(b)(iii)(2) hereof.
"Event of Default": (i) 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), (ii) 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 (iii) any other event specified as an event of default in
the Underlying Securities Indenture. For a summary of certain events of default
in the Underlying Securities Indenture, please refer to the Prospectus
Supplement.
"Final Scheduled Distribution Date": October 1, 2046 (or if such date
is not a Business Day, the next succeeding Business Day).
"Fixed Pass-Through Rate": 8.375% per annum.
"Optional Exchange Date": Any Distribution Date.
"Ordinary Expenses": The compensation due to the Trustee for Ordinary
Expenses as defined in the Standard Terms, which, with respect to Ordinary
Expenses other than those referred to in clause (iii) of such definition and
other than the costs of converting to EDGAR format the periodic reports required
for the Trust under the Exchange Act, shall be fixed at $2,000 per annum
(payable in semi-annual installments of $1,000).
"Pass-Through Rate": The Fixed Pass-Through Rate. "Prepaid Ordinary
Expenses": Zero (0).
"Prospectus Supplement": The Prospectus Supplement dated August 24,
2001 relating to the Certificates.
"Rating Agency": Moody's and S&P.
"Record Date": The Business Day immediately preceding each Distribution
Date.
"Series": PREFERREDPLUS 8.375% Trust Certificates Series CZN-1.
"Underlying Securities": The $41,000,000 aggregate principal amount of
7.05% Debentures due October 1, 2046 issued by the Underlying Securities Issuer,
as described in Schedule I hereto.
"Underlying Securities Indenture": As set forth in Schedule I.
"Underlying Securities Issuer": Citizens Communications Company
(formerly Citizens Utilities Company), a Delaware corporation.
"Warrant Agreement": The Warrant Agreement, dated as of August 29,
2001, by and between the Trust and the Warrant Agent (as defined in the Warrant
Agreement).
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(b) The terms listed below are not applicable to this Series.
"Accounting Date"
"Administration Account"
"Administrative Agent"
"Administration Agreement"
"Administrative Agent Termination Event"
"Advance"
"Calculation Agent"
"Eligible Expense"
"Exchange Rate Agent"
"Floating Pass-Through Rate"
"Letter of Credit"
"Limited Guarantor"
"Limited Guaranty"
"Notional Amount"
"Related Assets"
"Reserve Account"
"Requisite Reserve Amount"
"Retained Interest"
"Surety Bond"
"Swap Agreement"
"Swap Counterparty"
"Swap Distribution Amount"
"Swap Guarantee"
"Swap Guarantor"
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"Swap Receipt Amount"
"Swap Termination Payment"
Section 3. Designation of Trust and Certificates. (a) The Trust created
hereby shall be known as the "PREFERREDPLUS Trust Series CZN-1. The Certificates
evidencing certain undivided ownership interests therein shall be known as the
"PREFERREDPLUS 8.375% Trust Certificates Series CZN-1".
(b) The Certificates shall be held through the Depository in book-entry
form and shall be substantially in the form attached hereto as Exhibit B. The
Certificates shall be issued in authorized denominations of $25 and integral
multiples thereof. Except as provided in the Standard Terms, the Trust shall not
issue additional Certificates or incur any indebtedness; provided, however, from
time to time, upon obtaining prior written confirmation by each Rating Agency
that such action will not result in a downgrading or withdrawal of its rating of
the Certificates, the Depositor may, without the consent of the
Certificateholders, increase the amount of the Underlying Securities in the
Trust and the Trust may issue a corresponding amount of additional Certificates
in accordance with Section 5.12(a) of the Standard Terms except that clauses
(v), (vi) and (vii) of Section 5.12(a) shall not apply to this Series.
(c) On each Distribution Date, commencing on October 1, 2001 and ending
on the Final Scheduled Distribution Date or such earlier date if the Underlying
Securities are redeemed prior to the Final Scheduled Distribution Date, the
Certificates will be entitled to receive distributions at a rate of 8.375% per
annum on the stated amount of the Certificates.
(d) On the Final Scheduled Distribution Date, the Certificates will be
entitled to a distribution of the aggregate principal amount of such Underlying
Securities.
(e) Any reference to the principal amount of the Certificates shall be
construed as a reference to the stated amount of the Certificates, unless
otherwise indicated.
Section 4. Satisfaction of Conditions to Initial Execution and Delivery
of Trust Certificates. The Trustee hereby acknowledges receipt, on or prior to
the Closing Date, of:
(i) the Underlying Securities set forth on Schedule I hereto; and
(ii) all documents set forth in Section 5.12 of the Standard Terms
except that clauses (v), (vi) and (vii) of Section 5.12(a) shall not apply to
this Series.
Section 5. Distributions. (a) On each Distribution Date, the Trustee
shall apply solely to thextent of Available Funds in the Certificate Account as
follows:
(i) first, to the Trustee, reimbursement for any approved Extraordinary
Trust Expenses incurred by the Trustee in accordance with Section 6(b) hereof
and approved by not less than 100% of the Certificateholders;
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(ii) second, to the Certificateholders, distributions accrued during
the related Collection Period at the rate of 8.375% per annum on the stated
amount of such Certificates and distributable on such Certificates on such
Distribution Date;
(iii) third, to the Certificateholders, if available, any additional
distribution owed and paid by the Underlying Securities Issuer as a result of a
delay in the receipt by the Trustee of any payment on the Underlying Securities;
(iv) fourth, to the Certificateholders, on the Final Scheduled
Distribution Date only, a distribution of the aggregate principal amount of the
Underlying Securities;
(v) fifth, to the extent there remain Available Funds in the
Certificate Account, to any creditors of the Trust in satisfaction of
liabilities thereto; and
(vi) sixth, to the extent there remain Available Funds in the
Certificate Account, to Merrill Lynch Capital Services, Inc. and if no Available
Funds remain in the Certificate Account then no distribution will be made
pursuant to this Section 5(a)(vi).
Subject to Section 9(c) hereof, to the extent Available Funds are insufficient
to make any required distributions due to the Certificates on any Distribution
Date, any shortfall will be carried over and will be distributed on the next
Distribution Date on which sufficient funds are available on the Available Funds
to pay such shortfall. Neither Merrill Lynch & Co. nor any of its Affiliates
will have any claim against the Trust pursuant to Section 5(a)(vi) if the Trust
fails to make a distribution on a Distribution Date to such person because no
Available Funds remain in the Certificate Account on such Distribution Date.
(b) On the Optional Exchange Date, if applicable, the Trustee shall
distribute to Merrill Lynch & Co. or any of its Affiliates, other than the
Depositor, or any other Person exercising an optional exchange pursuant to
Section 7 hereof, as the case may be, Underlying Securities in accordance with
Section 7 hereof.
Section 6. Trustee's Fees; Escrow Agent's Fees. (a) Payment to the
Trustee of Ordinary Expenses shall be as set forth in a separate agreement
between the Trustee and the Depositor. The Trustee agrees that in the event
Ordinary Expenses are not paid in accordance with such agreement, it shall (i)
not have any claim or recourse against the Trust or the property of the Trust
with respect thereto and (ii) continue to perform all of its services as set
forth herein unless it elects to resign as Trustee in accordance with Section
7.08 of the Standard Terms.
(b) Extraordinary Trust Expenses shall not be paid out of the Deposited
Assets unless (i) the Trustee is satisfied that it will have adequate security
or indemnity in respect of such costs, expenses and liabilities, and (ii) all
the Certificateholders of Certificates then outstanding have voted to require
the Trustee to incur such Extraordinary Trust Expenses. If Extraordinary Trust
Expenses are not approved unanimously as set forth in clause (ii), such
Extraordinary Trust Expenses shall not be an obligation of the Trust, and the
Trustee shall not file any claim against the Trust therefor notwithstanding
failure of Certificateholders to reimburse the Trustee. In addition, if the
conditions in (i) and (ii) are not both satisfied, the Trustee shall not be
obligated to incur any Extraordinary Trust Expense.
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(c) In the event that one or more Call Holders is required to deposit
the Call Price with the Escrow Agent on the Exercise Date pursuant to Section
14(b)(iii)(2) hereof, the Depositor and the Escrow Agent shall enter into an
agreement reasonably acceptable to both parties thereto whereby the Depositor
shall pay to the Escrow Agent a fee in consideration for its services under the
Escrow Agreement or Escrow Agreements, as applicable.
Section 7. Optional Exchange. (a) Merrill Lynch & Co. or any of its
Affiliates (other than the Depositor), if it holds Certificates, or any other
Person (other than the Depositor) holding Certificates with an aggregate stated
amount of $5 million or more acquired pursuant to the exercise of Call Rights
held by it, may notify the Trustee, not less than 30 days but not more than 60
days prior to any Optional Exchange Date, that:
(i) such Person intends to tender an Authorized Denomination of
Certificates that it holds to the Trustee on such Optional Exchange Date in
exchange for a proportional amount of Underlying Securities;
(ii) such exchange will not 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, as amended;
(iii) such exchange will not affect the characterization of the Trust
as a "grantor trust" under the Code,
(iv) in the case of an exchange of less than all outstanding
Certificates, such exchange will not cause a failure to satisfy the minimum
requirements for the Certificates to remain listed on the New York Stock
Exchange, unless the Person tendering such Certificates will hold all
remaining outstanding Certificates upon completion of the exchange for such
Certificates pursuant to this Section 7;
(v) such exchange will not be made with respect to Certificates subject
to outstanding Call Rights held by any Person other than the Person
exercising such exchange; and
(vi) in the case of an exchange by a person other than Merrill Lynch &
Co. or any of its Affiliates (other than the Depositor), such exchange will
be made with respect to an aggregate stated amount of Certificates equal to
the aggregate stated amount of Certificates acquired by such Person pursuant
to the exercise of Call Rights held by it.
Upon tender of such Certificates on such Optional Exchange Date, the Trustee
will deliver to the Person tendering such Certificates an amount of Underlying
Securities having a principal amount equal to the aggregate principal amount of
Underlying Securities then held by the Trust times the aggregate stated amount
of Certificates being tendered divided by the aggregate stated amount of
Certificates then outstanding.
(b) The requirements set forth in paragraphs (a)(ii), (a)(v) and
(a)(vi) of Section 4.07 of the Standard Terms do not apply to an Optional
Exchange pursuant to this Section 7.
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(c) Any costs associated with the exercise of the rights granted under
paragraph (a) of this Section 7 will be borne by the Person exercising such
rights and not by the Trust.
Section 8. Events of Default. Within 30 days of its receipt of notice
of the occurrence of an Event of Default, the Trustee will give notice to the
Certificateholders, transmitted by mail, of all such uncured or unwaived Events
of Default actually known to it. However, unless there is an Event of Default
relating to the payment of principal of 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 Certificateholders.
Section 9. Miscellaneous. (a) The provisions of Section 4.04, Advances,
of the Standard Terms shall not apply to the Certificates.
(b) The Certificateholders shall not be entitled to terminate the Trust
or cause the sale or other disposition of the Underlying Securities; provided,
however, that Certificateholders holding all, but not less than all, of the
outstanding Certificates may exercise their rights under Section 13(b) with
respect to all such Certificates.
(c) If the Trustee has not received payment with respect to a
Collection Period on the Underlying Securities on or prior to the related
Distribution Date, such distribution will be made promptly upon receipt of such
payment. No additional amounts shall accrue on the Certificates or be owed to
Certificateholders as a result of such delay; provided, however, that any
additional interest owed and paid by the Underlying Securities Issuer as a
result of such delay shall be paid to the Certificateholders, proportionately to
the ratio of their respective entitlements to interest payments.
(d) The outstanding principal balance of the Certificates shall not be
reduced by the amount of any Realized Loss.
(e) The Trust may not engage in any business or activities other than
in connection with, or relating to, the holding, protecting and preserving of
the Deposited Assets and the issuance of the Certificates, and other than those
required or authorized by the Trust Agreement or incidental and necessary to
accomplish such activities. The Trust may not issue or sell any certificates or
other obligations other than the Certificates or otherwise incur, assume or
guarantee any indebtedness for money borrowed.
(f) The Trust may not consolidate, amalgamate, merge with or into, or
be replaced by or convey, transfer or lease its properties and assets
substantially as an entirety to, any another entity or permit any other entity
to consolidate, amalgamate, merge with or into, or replace the Trust.
(g) Except as expressly provided in the Trust Agreement, the Trust may
not sell the Underlying Securities.
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(h) If the Trustee resigns or is removed as Trustee in accordance with
Section 7.08 of the Trust Agreement, in addition to providing the Depositor with
written notice, the Trustee shall also provide the Rating Agencies with written
notice.
(i) Merrill Lynch & Co. shall act as the Market Agent and shall serve
in such capacity in accordance with the terms of the Market Agent Agreement
attached hereto as Exhibit C.
(j) Notwithstanding anything in the Trust Agreement to the contrary,
the Trustee may be removed upon 60 days prior written notice delivered by
Certificateholders holding Certificates that represent the Required
Percentage-Removal, and such removal shall take effect upon the appointment of a
successor Trustee and its acceptance of such appointment as provided in the
Trust Agreement.
Section 10. Notices. All directions, demands and notices hereunder or
under the Standard Terms shall be in writing and shall be delivered as set forth
below (unless written notice is otherwise provided to the Trustee).
If to the Depositor, to:
Merrill Lynch Depositor, Inc.
c/o Merrill Lynch & Co.
World Financial Center
New York, NY 10281
Attention: Barry N. Finkelstein
Telephone: (212) 449-9001
Facsimile: (212) 449-9054
If to the Trustee, to:
The Bank of New York
c/o United States Trust Company of New York
114 West 47th Street
25th Floor
New York, New York 10036
Attention: Corporate Trust Department
-PREFERREDPLUS Trust Series CZN-1
Telephone: (212) 852-1667
Facsimile: (212) 852-1625
If to the Securities Intermediary, to:
The Bank of New York
c/o United States Trust Company of New York
114 West 47th Street
25th Floor
New York, New York 10036
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Attention: Corporate Trust Department
- PREFERREDPLUS Trust Series CZN-1
Telephone: (212) 852-1667
Facsimile: (212) 852-1625
If to the Rating Agencies, to:
Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Attention: CBO/CLO Monitoring Department
Telephone: (212) 553-1494
Facsimile: (212) 553-0355
and to:
Standard & Poor's
55 Water Street, 41st Floor
New York, New York 10041
Attention: Structured Finance Surveillance Group
Telephone: (212) 438-2482
Facsimile: (212) 438-2664
Section 11. Governing Law. This Supplement and the transactions
described herein shall be construed in accordance with and governed by the law
of the State of New York.
Section 12. Counterparts. This Supplement may be executed in any number
of counterparts, each of which shall be deemed to be an original, and all such
counterparts shall constitute but one and the same instrument.
Section 13. Termination of the Trust. (a) The Trust shall terminate
upon the earlier of (i) the payment in full at maturity or sale by the Trust
after a payment default on the Underlying Securities and the distribution in
full of all amounts due to the Certificateholders, (ii) the distribution to the
Certificateholders of all Underlying Securities in accordance with the
Distribution Election, (iii) the exchange of all outstanding Certificates for
Underlying Securities pursuant to one or more Optional Exchanges, (iv) the Final
Scheduled Distribution Date and (v) the holders of all, but not less than all,
of the Certificates exercising their election in Section 13(b) below.
(b) Certificateholders who hold all, but not less than all, of the
outstanding Certificates may, upon prior written notice to the Rating Agencies,
elect to terminate the Trust at any time; provided that (i) the exercise of such
termination right would not cause the Trust or the Depositor to fail to satisfy
the applicable requirements for exemption under Rule 3a-7 under the Investment
Company Act of 1940, as amended and (ii) if and for so long as the call warrants
remain outstanding, all of the Call Holders have consented to such termination.
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(c) To the extent that the provisions of this Section 13 conflict with
Section 10.01 of the Standard Terms, the latter shall control.
Section 14. Sale of Underlying Securities; Call Right
(a) In the case of Extraordinary Trust Expenses approved by 100% of the
Certificateholders of a given Class, pursuant to Section 6(b) hereof, the
Trustee may sell all or a portion of the Underlying Securities to pay such
Extraordinary Trust Expenses.
(b) The Call Terms are as follows:
(i) The initial holder of the Call Rights is an affiliate of Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and such
affiliate may transfer the Call Rights, in whole or in part, to one or more
third parties in privately negotiated transactions;
(ii) A Call Holder that has met the exercise requirements set forth in
paragraph (b)(iii) of this Section 14 may, on the Call Date, exercise its
option to purchase, in whole or in part, an Authorized Denomination of
Certificates at the Call Price;
(iii) In order to exercise its Call Right on a Call Date, a Call Holder
must, not less than 30 days (or not less than five days in the case of
receipt of notice of termination of the Trust) but not more than 60 days
prior to such Call Date:
(1) notify the Trustee in writing of its intention to exercise
such Call Right (which notice is irrevocable),
(2) deposit the Call Price with the Escrow Agent (the "Escrow
Deposit") to be held in escrow pursuant to an Escrow Agreement
reasonably satisfactory to the Trustee and substantially in the form
attached hereto as Exhibit D (to be entered into immediately preceding
delivery of the Call Price by such Call Holder to the Escrow Agent)
until such Call Price is paid by the Trustee to the Certificateholders
in accordance with paragraph (c) of this Section 14, and
(3) provide the Trustee with any other documents customary for a
transaction of this nature, including a certificate of the Call Holder
certifying the solvency of such Call Holder on such date; provided that
the Call Holder need not provide any such solvency certificate if the
rating of the senior, unsecured long-term debt of the Call Holder, or
the Call Holder's credit support provider, if applicable, by Moody's
and S&P is in one of the investment grade categories of Moody's and
S&P, respectively, on such date.
The provision of this Section 14(b)(iii)(1) through (3) shall not apply if
Warrants are being exercised upon an acceleration of the Underlying Securities
and payment in full by the Underlying Securities Issuer of all amounts due upon
such acceleration.
14
(c) In connection with any exercise of the Call Rights, the Trustee
shall select by lot (or by such other reasonable procedure as may be established
by the Trustee) a stated amount of the outstanding Certificates to be
surrendered by the Certificateholders thereof to the Trustee upon any such
exercise, deliver such Certificates to the exercising Call Holder and the
proceeds of the Call Price shall be distributed pro rata among such
Certificateholders on the Call Date in accordance with the provisions of the
Warrant Agreement.
Section 15. Amendments. Notwithstanding anything in the Trust Agreement
to the contrary, in addition to the other restrictions on modification and
amendment contained herein, the Trustee shall not enter into any amendment or
modification of the Trust Agreement that would adversely affect in any material
respect the interests of the Certificateholders or the Call Holders without the
consent of 100% of such Certificateholders or Call Holders, as the case may be;
provided, however, that no such amendment or modification will be permitted if
the Trustee has been advised by the Depositor that such amendment or
modification would alter the status of the Trust as a "grantor trust" for
federal income tax purposes. Further, no amendment shall be permitted pursuant
to paragraphs (vi), (vii) and (x) of Section 11.01(a) of the Standard Terms
without prior written confirmation by each Rating Agency that such amendment
will not result in a downgrading or withdrawal of its rating of the
Certificates. The Trustee may consult with counsel and shall be entitled to rely
upon an Opinion of Counsel for purposes of determining compliance with the
provisions of this Section 15.
Section 16. 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 the Underlying Securities as permitted
by the Depository and except as otherwise limited by the Trust Agreement. In the
event that the Trustee receives a request from the Depository, the Underlying
Securities trustee or the Underlying Securities Issuer for its consent to any
amendment, modification or waiver of the Underlying Securities, the Underlying
Securities 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 outstanding
principal balances of the Certificates) 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 in the Trust
Agreement to the contrary, the Trustee shall at no time vote on 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 or result in the imposition of tax upon the Certificateholders, or
(ii) that 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 a default under the Underlying
Securities or an event that with the passage of time would become an event of
default under the Underlying Securities and with the consent of 100% of the
Certificateholders, or (iii) that 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
15
Underlying Securities Indenture and only with the consent of 100% of the
Certificateholders and 100% of the Call Holders. The Trustee shall have no
liability for any failure to act resulting from Certificateholders' or Call
Holders' late return of, or failure to return, directions requested by the
Trustee from the Certificateholders and Call Holders.
If an offer is made by the Underlying Securities Issuer to issue new
obligations in exchange and substitution for any of the Underlying Securities,
pursuant to a plan for the refunding or refinancing of the outstanding
Underlying Securities or any other offer is made for the Underlying Securities,
the Trustee shall notify the Certificateholders, the Call Holders and the Rating
Agencies of such offer promptly. The Trustee must reject any such offer unless
the Trustee is directed by the affirmative vote of 100% of the
Certificateholders and 100% of the Call Holders to accept such offer, the
Trustee has received the tax opinion described above and if the Trustee is so
directed, the Trustee shall promptly notify the Rating Agencies of such
direction accompanied by evidence of the affirmative vote of such
Certificateholders and Call Holders.
If an event of default under the Underlying Securities Indenture occurs
and is continuing, and if directed by 100% of the Certificateholders, the
Trustee shall 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.
Section 17. Call Right Documentation. Simultaneously with the execution
hereof, the Depositor hereby directs the Trustee, in the name of and on behalf
of the Trust, to enter into a Warrant Agreement and any related Warrant
Certificates (as defined in the Warrant Agreement) evidencing the Call Rights
and to make representations contained therein on behalf of the Trust. At the
direction of the Depositor, the Trustee shall execute such further documents as
may be required to evidence any transfer of any or all of the rights, interests
or obligations under the Warrant Agreement and any related Warrant Certificates.
Section 18. Third Party Beneficiary. The Escrow Agent and each Call
Holder shall be third party beneficiaries of this Trust Agreement.
Section 19. Nonpetition Covenant. Solely with respect to the Trust and
the Series and for no other purpose, Section 11.07 of the Standard terms is
hereby deleted and replaced with the following:
Section 11.07. Nonpetition Covenant. Notwithstanding any prior
termination of this Trust Agreement, each of the Trustee (including any
Administrative Agent, Authenticating Agent and Paying Agent) and the Depositor
agrees that it shall not, until the date which is one year and one day after the
termination of the PREFERREDPLUS Trust Series CZN-1, acquiesce, petition or
otherwise invoke or cause the Trust to invoke the process of the United States,
any State or other political subdivision thereof or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government for the purpose of commencing or sustaining a case by
or against the Trust under a Federal or state bankruptcy, insolvency or similar
law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of such Trust or all or any part of the
property or assets of such Trust or ordering the winding up or liquidation of
the affairs of such Trust.
16
IN WITNESS WHEREOF, the parties hereto have caused this Supplement to
be duly executed by their respective authorized officers as of the date first
written above.
Merrill Lynch Depositor, Inc.,
as Depositor
By:
--------------------------------------
Name: Barry N. Finkelstein
Title: President
The Bank of New York,
not in its individual capacity
but as Trustee
By:
--------------------------------------
Name: Andres E. Serrano
Title: Authorized Signer
The Bank of New York,
as Securities Intermediary
By:
--------------------------------------
Name: Andres E. Serrano
Title: Authorized Signer
17
SCHEDULE I
PREFERREDPLUS 8.375% TRUST CERTIFICATES, SERIES CZN-1
UNDERLYING SECURITIES SCHEDULE
Underlying Securities: $41,000,000 7.05% Debentures (principal amount
$1,000 per debenture) due October 1, 2046 of the
Underlying Securities Issuer
Underlying Securities Indenture: Indenture dated as of August 15, 1991, between the
Underlying Securities Issuer, and the Underlying
Securities Trustee as supplemented by an eighth
supplemental indenture dated as of December 1, 1996
between the Underlying Securities Issuer, and the
Underlying Securities Trustee
Underlying Securities Issuer: Citizens Communications Company (formerly Citizens
Utilities Company), a Delaware corporation.
Underlying Securities Trustee: The Chase Manhattan Bank (formerly known as
Chemical Bank)
Underlying Securities 177342AP7
CUSIP Number:
Underlying Securities December 3, 1996
Original Issue Date:
Underlying Securities $200,000,000 7.05% Debentures due October 1, 2046
Original Amount Issued: (principal amount $1,000 per debenture)
Underlying Securities 33-51529
Commission Filing Number:
Underlying Securities October 1, 2046
Maturity Date:
Underlying Securities October 1, 2046
Principal Payment Date:
Underlying Securities April 1 and October 1, or if any such date is not a
Interest Payment Dates: business day, then the next succeeding business day
to the persons in whose names the underlying
securities are registered at the close of business
on
March 15 or September 15 prior to the payment
date, subject to certain exceptions.
Underlying Securities 7.05 % per annum.
Interest Rate:
Underlying Securities March 15 and September 15.
Record Dates:
Underlying Securities None.
Collateral:
Underlying Securities None.
Amortization:
Underlying Securities Semi-annual.
Accrual Periods:
Underlying Securities The Underlying Securities are denominated and
Authorized Denomination payable in U.S. dollars and are available in
and Specified Currency: minimum denominations of $1,000 and integral
multiples thereof.
Underlying Securities "Baa2" by Moody's and "BBB" by S&P.
Rating as of Closing:
Underlying Securities Form: Book-entry security with DTC.
EXHIBIT A
Standard Terms for Trust Agreements
(begins on next page)
EXHIBIT B
Form of Certificate
(begins on next page)
EXHIBIT C
Market Agent Agreement
(begins on next page)
EXHIBIT D
Form of Escrow Agreement
(begins on next page)