Filed Pursuant to Rule 424(b)(3)
Registration No. 333-111572
PROSPECTUS
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[UBS AG LOGO]
CORPORATE ASSET BACKED CORPORATION
DEPOSITOR
$2,950,000,000
CERTIFICATES
(ISSUABLE IN SERIES)
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YOU SHOULD FULLY REVIEW THE RISK FACTORS BEGINNING ON PAGE 2 OF THIS PROSPECTUS
PRIOR TO INVESTING IN THE CERTIFICATES.
The certificates will not be insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.
We will describe the specific terms of your certificates, and of any other
classes of certificates that are included in the same series, in a prospectus
supplement that will be attached to this prospectus.
The depositor may form trusts from time to time as described in this prospectus.
EACH TRUST
- - may periodically issue certificates in one or more series with one or more
classes;
- - will own a publicly tradable, fixed-income security or a pool of such
securities; and
- - may own other assets described in this prospectus and in the attached
prospectus supplement.
THE CERTIFICATES
- - will represent undivided beneficial ownership interests in the trust assets,
and will be paid only from the trust assets;
- - will be denominated in U.S. dollars or in one or more other currencies, and
any payments to certificate holders may be payable in U.S. dollars or in one
or more other currencies; and
- - will be issued as part of a designated series that may include one or more
classes of certificates.
THE CERTIFICATE HOLDERS
- - will receive interest, principal and other payments from the assets deposited
into the trust.
The Depositor may use this prospectus in the initial sale of the certificates.
In addition, the Depositor, UBS AG, UBS Securities LLC, UBS Financial Services
Inc. or any other affiliate of UBS AG may use this prospectus in a market-making
transaction involving the certificates after their initial sale. Unless the
Depositor or its agent informs the purchaser otherwise in the confirmation of
sale, this prospectus is being used in a market-making transaction.
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 OTHER REGULATORY BODY HAS
APPROVED OR DISAPPROVED OF THE SECURITIES OR PASSED UPON THE ADEQUACY OR
ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
UBS INVESTMENT BANK UBS FINANCIAL SERVICES INC.
THE DATE OF THIS PROSPECTUS IS JUNE 23, 2004.
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Table of Contents
<Table>
<Caption>
Page
Important Notice about Information
Presented in this Prospectus and the
Applicable Prospectus Supplement........ 1
Risk Factors.............................. 2
Where You Can Find More Information....... 5
Incorporation of Documents By Reference... 5
Reports to Holders of Certificates........ 5
The Depositor............................. 6
Use of Proceeds........................... 6
Formation of the Trusts................... 6
Description of the Certificates........... 8
Nature of the Certificates.............. 9
Terms Specified in the Prospectus
Supplement............................ 9
Distributions........................... 11
Interest on the Certificates............ 12
Stripped Certificates................... 14
Principal of the Certificates........... 14
Foreign Currency Certificates........... 14
Inability to Pay in Specified
Currency.............................. 15
Indexed Certificates.................... 15
Multi-Currency Certificates............. 16
Put Option.............................. 16
Transfers and Exchanges................. 16
Global Securities; Holdings in Street
Name.................................. 16
Trust Liquidation Events.................. 19
Maturity and Yield Considerations......... 19
Description of the Trust Assets, including
Credit Support.......................... 20
Underlying Securities................... 20
Principal Economic Terms of Underlying
Securities............................ 23
Publicly Available Information.......... 23
Other Trust Assets...................... 24
Collections............................. 27
</Table>
<Table>
<Caption>
Page
Description of the Trust Agreement........ 29
Assignment of Trust Assets.............. 29
Collection and Other Administrative
Procedures............................ 29
Realization upon Defaulted Trust
Assets................................ 29
Trustee's Compensation; Payment of
Expenses.............................. 30
Matters Regarding the Trustee........... 30
Remedies of Certificate Holders......... 30
Modification and Waiver................. 31
Reports to Certificate Holders;
Notices............................... 32
Annual Compliance Statement............. 33
Replacement Certificates................ 33
Retained Interest....................... 34
Retained Call Options and Retained Call
Rights................................ 34
Termination............................. 34
Duties of the Trustee................... 35
The Trustee............................. 35
Currency Risks............................ 36
Exchange Rates and Exchange Controls.... 36
Foreign Currency Judgments.............. 36
UBS AG.................................... 38
Overview................................ 38
Where You Can Find More Information..... 40
Incorporation of Documents by
Reference............................. 40
Experts................................. 41
United States Federal Income Tax
Consequences............................ 42
Certain ERISA Considerations.............. 42
Plan of Distribution...................... 44
Validity of the Certificates.............. 46
Index of Defined Terms.................... 47
</Table>
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Important Notice about Information Presented in this Prospectus and the
Applicable Prospectus Supplement
We provide information to you about the certificates in two separate documents
that provide progressively 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 applicable prospectus
supplement, which will describe the specific terms of your series of
certificates. See "Description of the Certificates--Terms Specified in the
Prospectus Supplement" for a listing of the items that may be specified in the
applicable prospectus supplement.
If the descriptions of the terms of a particular series of certificates in this
prospectus differ from those in the applicable prospectus supplement, you should
rely on the description in the prospectus supplement.
You should rely only on the information provided in this prospectus and the
applicable 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 as of any date other than the date stated on its cover.
We include cross-references in this prospectus and in the applicable prospectus
supplement to captions in these materials where you can find further related
discussions. The table of contents in each document provides the pages on which
these captions are located.
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Risk Factors
In connection with your investment in the certificates of any series, you should
consider, among other things, the following risk factors and any other risk
factors described in the applicable prospectus supplement.
YOUR CERTIFICATES WILL REPRESENT AN INTEREST IN THE ASSETS OF THE APPLICABLE
TRUST ONLY AND WILL NOT REPRESENT A RECOURSE OBLIGATION OF OR INTEREST IN THE
DEPOSITOR OR ANY OF ITS AFFILIATES. THE PERFORMANCE OF THE UNDERLYING SECURITIES
WILL AFFECT THE VALUE OF YOUR INVESTMENT AND YOU MAY EXPERIENCE A LOSS IF LOSSES
ARE EXPERIENCED ON THE TRUST ASSETS.
Your certificates will represent an interest in the assets of the applicable
trust only and will not represent a recourse obligation of or interest in the
depositor or any of its affiliates. The trust has no significant assets other
than the underlying securities and the other trust assets. No other assets are
available to make payments or distributions with respect to your certificates.
Neither the depositor, the trustee nor any of their affiliates is obligated to
make any payments in respect of your certificates if the underlying securities
and the other trust assets are insufficient. Consequently, if losses are
experienced on the underlying securities and the other trust assets, you may
experience a loss on your investment. Accordingly, you are strongly encouraged
to obtain as much information about the underlying securities as you would if
you were investing directly in the underlying securities. The applicable
prospectus supplement will provide the basic terms of the underlying securities
and will refer you to publicly available information about the issuers of the
underlying securities.
YOUR CERTIFICATES MAY BE REDEEMED IF AN UNDERLYING SECURITIES ISSUER STOPS
MAKING INFORMATION ABOUT ITS FINANCIAL CONDITION AND BUSINESS PUBLICLY
AVAILABLE.
In deciding whether to invest in or to sell certificates, you should obtain and
evaluate information about each issuer of underlying securities as if you were
investing directly in that issuer and its securities. The information that each
underlying securities issuer makes available to the public is important in
considering whether to invest in or sell certificates. See "Description of the
Underlying Securities--Available Information" in the applicable prospectus
supplement.
To the extent that an underlying securities issuer ceases to make information
about itself and the underlying securities publicly available, we will redeem
your certificates as described under "Trust Liquidation Events" in the
applicable prospectus supplement. The depositor, the trustee, the underwriters
and their affiliates (a) have not verified, and have not undertaken to verify,
the accuracy, completeness or continued availability of any information by any
underlying securities issuer (whether or not filed with the SEC), (b) have made
no investigation of the financial condition or creditworthiness of any
underlying securities issuer, and (c) assume no responsibility for any
information considered by any purchaser or potential purchaser of the
certificates that is not contained in this prospectus or the applicable
prospectus supplement.
You should not construe the issuance of the certificates as an endorsement of
the financial condition or business prospects of any underlying securities
issuer by the depositor, the trustee, the underwriters or any of their
affiliates.
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RISK FACTORS
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DISTRIBUTIONS AND OTHER PAYMENTS WITH RESPECT TO YOUR CERTIFICATES AND YOUR
EXPECTED INVESTMENT YIELD MAY BE AFFECTED BY FACTORS SUCH AS THE PERFORMANCE OF
THE TRUST ASSETS, THE REDEMPTION OR ACCELERATION OF THE UNDERLYING SECURITIES
AND THE PRIORITY OF PAYMENTS FOR YOUR CLASS OF CERTIFICATES.
A number of factors may affect the timing of any distribution with respect to
any series or class of certificates and the yield that you realize on your
investment in the certificates, including:
- - the purchase price of your certificates;
- - the performance of the related trust assets;
- - the repurchase of the underlying securities by the issuer of the underlying
securities;
- - whether the maturity of your certificates is shortened as a result of any
early redemption or repayment;
- - the manner and priority in which collections from the underlying securities
and any other trust assets are allocated to each class of the series; and
- - whether the issuer of the underlying securities stops making information about
its financial condition and business publicly available.
None of the depositor, the trustee, the underwriters or their affiliates can
predict if or when a redemption or repayment of the underlying securities will
occur or whether the issuer of the underlying securities stops making
information about its financial condition and business publicly available. If
the certificates are prepaid, your investment in the certificates and the
underlying securities will have a shorter average maturity. If the certificates
are prepaid when prevailing market interest rates are lower than the yield on
your certificates, you may be unable to realize a comparable yield when you
reinvest the funds that you receive from the prepayment of your certificates.
A TRADING MARKET FOR YOUR CERTIFICATES MAY NOT DEVELOP OR CONTINUE; THUS IT MAY
BE DIFFICULT TO RESELL YOUR CERTIFICATES.
Prior to the issuance of any series of certificates there will not be a public
market for those securities. UBS AG, UBS Securities LLC, UBS Financial Services
Inc. and other affiliates of UBS AG currently intend to make a market for the
certificates, although they are not required to do so. UBS AG, UBS Securities
LLC, UBS Financial Services Inc. or any other affiliate of UBS AG may stop any
such market making activities at any time. As market makers, UBS AG, UBS
Securities LLC, UBS Financial Services Inc. or any other affiliate of UBS AG,
UBS Securities LLC, UBS Financial Services Inc. or any other affiliates of UBS
AG may have long or short positions of any series of certificates in their
inventory at any time as a result of their trading in that series of
certificates. The supply and demand for a series of certificates, including the
inventory positions of market makers, may affect the secondary market price for
that series of certificates. Even if a secondary market does develop, it may not
continue or be sufficiently liquid to allow you to resell your certificates, and
you may experience a loss on your investment. You should be prepared to hold
your certificates until they are redeemed.
THE TRUST WILL NOT ACTIVELY MANAGE THE UNDERLYING SECURITIES TO AVOID ADVERSE
EVENTS.
Except as described in this prospectus and the applicable prospectus supplement,
the trust will not dispose of any underlying securities or other trust assets,
regardless of adverse events, financial or otherwise, that may affect the value
of the underlying securities or the underlying securities issuer. If there is a
payment default on any underlying security or any other default that may result
in the
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RISK FACTORS
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acceleration of the underlying security, the trust will dispose of or otherwise
deal with the defaulted underlying security only in the manner provided in the
trust agreement. If provided in the applicable prospectus supplement, if a
payment default on or acceleration of an underlying security occurs, the trust
agreement may provide that the trust will sell or distribute the underlying
security notwithstanding market conditions at the time, and the trustee will not
have discretion to do otherwise. This sale or distribution may result in greater
losses than might occur if the trust continued to hold the underlying security.
THE TRUST AGREEMENT MAY BE AMENDED WITHOUT YOUR CONSENT.
The trust agreement that governs the terms of your certificates may be amended
by the depositor and the trustee without your consent upon compliance with the
conditions specified in the trust agreement. For example, the trust agreement
may be amended in a way that materially adversely affects your certificates if
holders of certificates evidencing not less than the required percentage of
votes specified in the trust agreement consent to the amendment. See
"Description of the Trust Agreement--Modification and Waiver" in this
prospectus.
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Where You Can Find More Information
Each separate trust created by the depositor is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Securities
Exchange Act"), and the depositor files on behalf of each trust reports and
other information with the SEC. You may read and copy any reports, statements
and other information filed with the SEC concerning each trust (a) over the
Internet at the SEC's website at http://www.sec.gov containing reports, proxy
statements and other information regarding registrants that file electronically
with the SEC; (b) at the SEC's public reference facilities at 450 Fifth Street,
N.W., Washington, D.C. 20549; (c) if the applicable prospectus supplement
specifies that the certificates are to be listed on the New York Stock Exchange,
at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York,
New York 10005; (d) if the applicable prospectus supplement specifies that the
certificates are to be listed on the American Stock Exchange, at the offices of
the American Stock Exchange LLC, 86 Trinity Place, New York, New York 10006; or
(e) at the offices of any other stock exchange on which the certificates are to
be listed, as specified in the applicable prospectus supplement. You can also
request copies of these documents, upon payment of a copying fee, by writing to
the SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C.
20549. Please call the SEC at (800) SEC-0330 for further information on the
operation of the public reference facilities. We do not intend to send any
financial reports to certificate holders, other than the reports described under
"Reports to Holders of Certificates" below.
We filed a registration statement on Form S-3 relating to the certificates with
the SEC. This prospectus is part of the registration statement, but the
registration statement includes additional information.
Incorporation of 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. The information incorporated by reference is considered to
be part of this prospectus. You should read the applicable prospectus supplement
to find out what information has been incorporated by reference to other
documents.
Reports to Holders of Certificates
On each distribution date, the trustee of each trust will prepare unaudited
reports containing information concerning that trust. Except as otherwise
specified in the applicable prospectus supplement, unless and until definitive
certificates (as defined below) are issued, the trustee of each trust will send
these reports, on behalf of the trust, to Cede & Co., as nominee of The
Depository Trust Company and registered holder of the certificates. If
definitive certificates are issued, the trustee will send the reports to each
registered holder. See "Description of the Certificates--Global Securities;
Holdings in Street Name" and "Description of the Trust Agreement--Reports to
Certificate Holders; Notices." These reports will not constitute financial
statements prepared in accordance with generally accepted accounting principles.
The depositor will also file with the SEC, on behalf of each separate trust,
periodic reports that are required under the Securities Exchange Act. These
reports include Annual Reports on Form 10-K and Current Reports on Form 8-K that
include basic information about transactions made by the trust, but not about
the trustee or the depositor.
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The Depositor
Corporate Asset Backed Corporation was incorporated in the State of Delaware on
November 22, 1993, as a wholly-owned limited purpose subsidiary of Paine Webber
Group Inc., and is now a wholly-owned subsidiary of UBS Americas Inc., successor
by merger to Paine Webber Group Inc. UBS Americas Inc. is a wholly-owned
subsidiary of UBS AG, a Swiss bank, which also owns UBS Securities LLC and UBS
Financial Services Inc., the underwriters. The depositor will not engage in any
business or activities other than creating trusts for the purpose of issuing and
selling securities, issuing notes secured by, and certificates representing
interests in, the trusts from time to time, acquiring, owning, holding, pledging
and transferring assets (including underlying securities and other trust assets)
in connection with the creation of a trust and in related activities. The
depositor does not have, nor is it expected to have, any significant assets.
The principal executive office of the depositor is located at 445 Broad Hollow
Road, Suite 239, Melville, New York 11747 (Telephone: (631) 587-4700).
Use of Proceeds
Unless otherwise specified in the applicable prospectus supplement, the net
proceeds received from the initial issuance of each series or class of
certificates will be used by the depositor to pay expenses (including
underwriting fees) associated with its business of creating trusts to issue
notes and certificates, purchasing the related trust assets and obtaining or
establishing any credit support, and, if specified in the applicable prospectus
supplement, making required deposits into a reserve or other account for the
benefit of the certificate holders of such series or class. We anticipate that
any remaining net proceeds from the initial issuance of each series or class of
certificates will be distributed to the depositor's sole shareholder, UBS
Americas Inc., for its general corporate purposes.
The depositor does not expect to receive any proceeds in connection with any
market-making resales of each series or class of certificates by UBS AG, UBS
Securities LLC, UBS Financial Services Inc. or any other affiliates of UBS AG.
We expect UBS AG, UBS Securities LLC, UBS Financial Services Inc. or any other
affiliates of UBS AG to retain the proceeds of their market-making resales and
not to pay the proceeds to us.
Formation of the Trusts
A separate trust will be created to issue each series of trust certificates.
Each trust will be a New York common law trust, a Delaware statutory trust, or a
type of trust governed by the law of a jurisdiction specified in the applicable
prospectus supplement. The depositor will assign to the trustee named in the
applicable prospectus supplement, or the trustee on behalf of the trust will
acquire, the trust assets for each series of certificates, in each case for the
benefit of the holders of that series of certificates. See "Description of the
Trust Agreement--Assignment of Trust Assets." The trustee named in the
applicable prospectus supplement will hold on behalf of the trust legal title to
the trust assets pursuant to a trust agreement and will receive a fee for its
services. See "Description of the Trust Agreement--Trustee's Compensation;
Payment of Expenses." The trustee will establish a collection account to hold
any funds or other property of the trust. See "Description of the Trust Assets,
including Credit Support--Collections."
The trustee will make payments or distributions with respect to the certificates
only out of the proceeds of the trust assets. The depositor and its affiliates
will have no obligation to make any other payments or distributions with respect
to the certificates.
6
FORMATION OF THE TRUSTS
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Unless otherwise provided in the applicable prospectus supplement, the trust
assets of each trust will consist of:
- - underlying securities, contributed to the trust by the depositor or acquired
by the trustee on behalf of the trust, excluding any interest in such
securities (the "retained interest") or any repurchase right (the "retained
call right") retained by the depositor or any other person;
- - any credit support specified in the applicable prospectus supplement, as
described in that prospectus supplement and in this prospectus under
"Description of Trust Assets, including Credit Support--Other Trust
Assets--Credit Support;" and
- - any rights arising out of the underlying securities, the other trust assets
and all proceeds of the underlying securities and the other trust assets.
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Description of the Certificates
The certificates are "pass-through" securities that represent equity ownership
interests in the assets and rights held by the trust, subject to the obligations
of the trust, if any. All proceeds of the assets and rights will be "passed
through" to certificate holders, except to the extent required to satisfy the
obligations of the trust. The depositor will arrange for the offering of the
certificates by each trust, and will either sell the trust assets to the trust,
or will arrange for the trustee to acquire the trust assets directly on behalf
of the trust, in each case in exchange for the proceeds of the issuance. The
depositor will also arrange for any contractual credit support.
Generally, each trust will hold one or more kinds of bonds, notes or other
fixed-income securities. In some cases, a trust may be the beneficiary of a
guarantee, letter of credit or other instrument that is intended to protect the
holders of certificates from some or all of any losses that may be experienced
on the trust assets. A trust may also enter into swaps, options or other
derivative agreements that result in the trust paying or receiving a fixed or
floating interest rate, payments linked to changes in the value of different
types of securities, or other payments.
Each trust may issue one or more classes of certificates. The certificates will
represent the right of their holders to receive distributions of the proceeds of
the trust assets, including any credit support. If there is only one class of
certificates, then all the certificates will share equally in the proceeds of
the trust assets, including any credit support, until they have been paid in
full. If there is more than one class, then holders of each class of
certificates will have different rights. These differences may relate to the
order in which holders are paid, the way in which income, losses and repayments
of principal are allocated to the different classes, or other rights of the
holders.
The certificates are not debt instruments. The trust will pass through to the
holder of a certificate whatever portion of the proceeds of the trust assets,
including any credit support, that the holder is entitled to under his or her
certificate. If losses are experienced on the trust assets -- for example, if
the issuer of an underlying security does not pay what it owes to the trust, or
a provider of contractual credit support does not make any payment it is
required to make -- then the trust will not be able to pass through the relevant
payments to the holders and may not be able to pay all the amounts due under the
certificates. If a trust issues only one class of certificates, then all the
holders will share these losses equally. If it issues more than one class, then
the losses may be allocated differently among the classes.
Each series of certificates will be issued pursuant to a separate trust
agreement between the depositor and the trustee named in the applicable
prospectus supplement. A form of trust agreement is attached as an exhibit to
the registration statement of which this prospectus forms a part. The provisions
of the trust agreement relating to a particular prospectus supplement may vary
depending upon the nature of the certificates to be issued, the nature of the
trust assets and any credit support.
The depositor's affiliates may purchase certificates at any time and at any
price in the open market or otherwise.
We have been informed that, under the rules, regulations and procedures followed
by DTC and its operations, DTC will take any action permitted to be taken by a
holder only at the direction of one or more participants to whose DTC account
the relevant certificates are credited. Additionally, DTC will take actions with
respect to specified voting rights only at the direction and on behalf of
participants whose holdings of the certificates evidence the specified voting
rights. DTC may take conflicting actions with respect to voting rights, to the
extent that participants whose holdings of certificates evidence the voting
rights authorize conflicting action.
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DESCRIPTION OF THE CERTIFICATES
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The following summaries describe provisions of the trust agreement that may be
applicable to a series of certificates. The applicable prospectus supplement for
a series of certificates will describe any provision of the trust agreement that
materially differs from the description contained in this prospectus. The
following summaries are not complete and are subject to the detailed provisions
of the form of trust agreement, which should be reviewed for a full
understanding of the trust agreement and for other information regarding the
certificates. When we discuss any series, the term "certificate" refers to all
the certificates of that series, whether or not we are offering those
certificates, unless the context otherwise requires.
A copy of the trust agreement for each series in the form executed by the
depositor and the trustee will be filed with the SEC by the depositor as an
exhibit to a current report on Form 8-K following the issuance of the series.
NATURE OF THE CERTIFICATES
There is no limit on the amount of certificates that may be issued under a trust
agreement. The series or classes of certificates to be issued under a trust
agreement will represent the entire beneficial ownership interest in that trust,
and each class will be allocated a specified priority to receive collections
from, and a specified ownership interest of the assets deposited in, the trust,
all as identified and described in the applicable prospectus supplement. The
certificates represent the right to receive distributions in respect of the
certificate principal balance of the certificate and interest payments at the
specified pass-through rate. The distributions will be made out of, and will be
limited to, the proceeds of the trust assets. See "Description of the Trust
Assets, Including Credit Support -- Collections."
Because the certificates represent equity ownership interests in the trust, and
not debt instruments that are obligations of the trust, they do not have a
principal amount or bear interest. However, because the distributions on the
certificates primarily represent distributions of principal and interest on
trust assets that are debt instruments, for convenience, we will designate the
amount of "principal" to which you are entitled as the certificate principal
balance of your certificate, and we will generally designate distributions that
represent a return of your initial investment as "principal," and we will
designate distributions that represent the yield on your investment as
"interest," in accordance with customary market practice.
TERMS SPECIFIED IN THE PROSPECTUS SUPPLEMENT
Each of the following terms and conditions will be described in the applicable
prospectus supplement for the series or classes of certificates in respect of
which this prospectus and the applicable prospectus supplement are being
delivered:
- - the title of the certificates;
- - the series designation of the certificates and, if applicable, the number and
designation of classes within the series;
- - the type, characteristics and specifications of the trust assets deposited by
the depositor into the related trust, or acquired by the trustee on behalf of
the trust and, if any issue of underlying securities represents a significant
portion of the trust assets and any related credit support at the time of the
deposit or acquisition, information about the terms of that issue of
underlying securities, the identity of its issuer and where you may obtain
publicly available information about the issuer;
- - the stated or maximum aggregate certificate principal balance or notional
amount, as applicable, of each class of certificates;
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DESCRIPTION OF THE CERTIFICATES
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- - the dates on which or periods during which the series or classes may be issued
(each, an "original issue date") and their offering price;
- - if applicable, the relative rights and priorities of each class, including the
method for allocating collections from and losses on the trust assets and any
credit support to the holders of each class of certificates;
- - whether the certificates of the series or class are fixed rate certificates or
floating rate certificates and the applicable interest rate (the "pass-through
rate") for each class, including the applicable rate, if fixed (a "fixed
pass-through rate"), or the method of calculating the interest rate, if
variable (a "variable pass-through rate"); the date or dates from which the
interest will accrue; the day-count fraction that will be used to calculate
the interest; and the applicable distribution dates on which interest,
principal and premium, in each case as applicable, on the series or class will
be distributable and the related record dates;
- - any option of the depositor or another third party to purchase or repurchase
any underlying securities or the certificates and the periods within which or
the dates on which, and the terms and conditions upon which, the option may be
exercised, in whole or in part;
- - the denominations in which the series or class will be issuable, if other than
denominations of $1,000 and any integral multiple of $1,000;
- - whether the certificates of any class will be entitled to (a) principal
distributions, with disproportionate, nominal or no interest distributions, or
(b) interest distributions, with disproportionate, nominal or no principal
distributions (in each case, "stripped certificates"), and the applicable
terms of those certificates;
- - whether the principal balance, notional amount or interest payable on any
certificates is indexed or based on any formula and, if so, the method of
applying the formula;
- - whether the certificates of the series or of any class within the series will
be issued in the form of one or more global securities and, if so, the
identity of the securities depositary for the global security or securities,
if not The Depository Trust Company;
- - if a temporary certificate is to be issued with respect to the series or any
class within the series, and how any interest distributable on a distribution
date prior to the issuance of a permanent certificate for the series or class
will be credited on that distribution date;
- - if a temporary global security is to be issued with respect to the series or
class, the terms upon which beneficial interests in the temporary global
security may be exchanged, in whole or in part, for beneficial interests in a
permanent global security or for individual definitive certificates for the
series or class and any terms upon which beneficial interests in a permanent
global security may be exchanged for individual definitive certificates for
the series or class;
- - the currency in which the certificates of the series or class are payable (the
"specified currency"), if other than U.S. dollars;
- - the voting rights of the series or class, including the manner of voting and
the percentages required with respect to particular matters; and
- - the days that will be considered "business days" for purposes of the
certificates;
- - the identity of the trustee and the location of its corporate trust office;
and
- - any other terms of the series or class.
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DESCRIPTION OF THE CERTIFICATES
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Unless otherwise indicated in the applicable prospectus supplement, certificates
of each series will be issued only as registered certificates in denominations
of $1,000 and any multiple of $1,000 and will be payable only in U.S. dollars.
If you purchase the certificates in a market-making transaction, you will
receive information about the price you pay and your trade and settlement dates
in a separate confirmation of sale. A market-making transaction is one in which
UBS AG, UBS Securities LLC, UBS Financial Services Inc. or any other affiliates
of UBS AG resells a certificate that it has previously acquired from another
holder. A market-making transaction in a particular certificate occurs after the
original issuance and sale of the certificate.
DISTRIBUTIONS
Distributions allocable to principal, premium, if any, and interest on the
certificates of each series or class will be made in the specified currency for
those certificates by or on behalf of the trustee on each distribution date as
specified in the applicable prospectus supplement. 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 is other than U.S.
dollars, the trustee will (unless otherwise specified in the applicable
prospectus supplement) arrange to convert all payments in respect of each
certificate into U.S. dollars in the manner described under "-- Foreign Currency
Certificates" below. However, the holder of a certificate of a given series or
class denominated in a specified currency other than U.S. dollars may elect to
receive all distributions in respect of the certificate in the specified
currency by delivering a written notice to the trustee for the series not later
than 15 calendar days prior to the applicable distribution date, except under
the circumstances described under "-- Inability to Pay in Specified Currency"
below. Each election will remain in effect until revoked by written notice to
the trustee, as long as the trustee receives the notice not later than 15
calendar days prior to the applicable distribution date.
Except as provided in the following paragraph, distributions with respect to
certificates will be made at the corporate trust office or agency of the trustee
specified in the applicable prospectus supplement. However, any amounts
distributable on the final distribution date of a certificate will be
distributed only upon surrender of the certificate at the corporate trust office
or agency of the trustee specified in the applicable prospectus supplement.
Distributions on certificates in U.S. dollars will be made on each distribution
date to each certificate holder of record on the immediately preceding record
date by wire transfer, in immediately available funds, to the account of such
certificate holder at a bank or other entity having appropriate facilities to
receive wire transfer payments, if the trustee for the series received
appropriate written instructions at least five business days prior to such
distribution date, or, if not, by check mailed to the corresponding certificate
holder at its address of record. As described under "-- Global Securities;
Holdings in Street Name," below, distributions on certificates represented by a
global security will be made to the depositary or its nominee, as holder of the
global security. Furthermore, any certificate holder that elects to receive
payments in a specified currency other than U.S. dollars (as provided above)
will receive those payments by wire transfer of immediately available funds to
an account maintained by the payee with a bank located outside the United
States. The holder of a certificate must provide appropriate wire transfer
instructions to the trustee for the series together with the holder's election
to receive payments in the specified currency.
Unless 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 (a) not a day on which banking institutions are authorized or
required by law or regulation to be closed in (1) The City of New York
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DESCRIPTION OF THE CERTIFICATES
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or (2) if the specified currency for the certificate is other than U.S. dollars,
the financial center of the country issuing the specified currency and (b) if
the pass-through 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 the certificate are transacted
in the London interbank market. The record date with respect to any distribution
date for a series or class of certificates will be specified as in the
applicable prospectus supplement.
INTEREST ON THE CERTIFICATES
Except for classes of stripped certificates described in the applicable
prospectus supplement, each class of certificates of a given series may have a
different pass-through rate, which may be a fixed or variable pass-through rate,
as described below. Unless otherwise specified in the applicable prospectus
supplement, the pass-through rate will be expressed as a rate per annum on a
simple interest basis. In the case of stripped certificates with no or, in some
cases, a nominal certificate principal balance, distributions of interest
("stripped interest") may be paid as described under "-- Stripped Certificates"
below.
Unless otherwise specified in the applicable prospectus supplement,
distributions of interest with respect to a series or class of certificates that
are issued between a record date and the related distribution date will be made
on the next distribution date, for the period beginning on the issue date for
the series or class and ending on the last day of the interest accrual period
ending immediately prior to or on that distribution date.
FIXED RATE CERTIFICATES
Each series or class of certificates with a fixed pass-through rate ("fixed rate
certificates") will bear interest on its outstanding certificate principal
balance, from its original issue date, or from the last date to which interest
has been paid, at the fixed pass-through rate stated in the applicable
prospectus supplement until the principal balance is distributed or made
available for distribution. If so specified in the applicable prospectus
supplement, the pass-through rate for a class may be subject to adjustment from
time to time in response to designated changes in the rating assigned to that
class or series by one or more rating agencies, in accordance with a schedule or
otherwise, all as described in the applicable prospectus supplement. Interest on
each series or class of fixed rate certificates will be distributed in arrears
on each distribution date specified in the applicable prospectus supplement.
Each distribution of interest will include interest accrued through the day
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 class of certificates with a variable pass-through rate
("floating rate certificates") will bear interest on its outstanding certificate
principal balance from its original issue date to the first interest reset date
for such series or class at the initial pass-through rate set forth in the
applicable prospectus supplement. Thereafter, the pass-through 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 "base rate" may be the
London interbank offered rate ("LIBOR"), the commercial paper rate, the Treasury
rate, the Federal Funds rate, the certificate of deposit rate, or another base
rate specified in the applicable prospectus supplement. The "spread" is the
number of basis points specified in the applicable prospectus supplement as
being applicable to the series or class. One basis point equals one
one-hundredth of a percentage point. The "spread multiplier" is the percentage
specified in the applicable prospectus supplement as being applicable to the
series or class. If so specified in the applicable prospectus supplement, the
spread or spread multiplier on a series or class of floating rate certificates
may be
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DESCRIPTION OF THE CERTIFICATES
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subject to adjustment from time to time in response to designated changes in the
rating assigned to that series or class by one or more rating agencies, in
accordance with a schedule or otherwise, all as described in the applicable
prospectus supplement. The applicable prospectus supplement will specify the
base rate, any spread and any spread multiplier that are applicable to a
floating rate certificate.
If specified in the applicable prospectus supplement, floating rate certificates
of a series or class may also have: (a) 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 pass-through rate"), and (b) a
minimum limitation, or floor, on the rate at which interest may accrue during
the interest accrual period ("minimum pass-through rate"). In addition, the
pass-through rate applicable to floating rate certificates may never be higher
than the maximum rate permitted by applicable New York and United States federal
law, which, as of December 2003, was 16%.
The trustee may appoint agents selected by the depositor (each, a "calculation
agent") to calculate pass-through rates on each class of floating rate
certificates. The applicable prospectus supplement will identify the calculation
agent. All determinations of interest by the calculation agent, if any, and
otherwise by the trustee will, in the absence of manifest error, be conclusive
for all purposes and binding on the depositor, the relevant trust and the
holders of certificates of the relevant series.
The pass-through rate on each class of floating rate certificates will be reset
daily, weekly, monthly, quarterly, semiannually or annually, as specified in the
applicable prospectus supplement. The period between each resetting of the
pass-through rate on a class is called an "interest reset period" for that
class, and the first day of each interest reset period is called an "interest
reset date." The interest reset dates with respect to each series or class will
be specified in the applicable prospectus supplement. Unless otherwise specified
in the applicable prospectus supplement, the pass-through rate for the 10 days
immediately prior to the scheduled final distribution date will be the rate in
effect on the 10th day preceding such scheduled final 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, the interest reset date will occur on a
prior or succeeding business day as specified in the applicable prospectus
supplement.
Interest payable in respect of any series or class of floating rate certificates
will be distributed in arrears on the distribution dates specified in the
applicable prospectus supplement and will be equal to 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.
Accrued interest on a floating rate certificate will be calculated by
multiplying the outstanding certificate principal balance by an accrued interest
factor (the "accrued interest factor"). The accrued interest factor will be
computed by adding the interest factors calculated for each day in the period
for which accrued interest is being calculated. The interest factor (expressed
as a decimal calculated to seven decimal places without rounding) for each such
day is computed by dividing the pass-through rate in effect on such day by 360,
or by the actual number of days in the year, as specified in the applicable
prospectus supplement. For purposes of making this calculation, the variable
pass-through rate in effect on any interest reset date will be the applicable
rate as reset on such date.
All percentages resulting from any calculation of the pass-through 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
calculations will be rounded to the nearest one-hundredth of a unit (with five
one-thousandths of a unit being rounded upward).
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DESCRIPTION OF THE CERTIFICATES
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Upon the request of the holder of any floating rate certificate, the calculation
agent will provide the pass-through rate then in effect and, if it has been
determined, the pass-through rate that will become effective on the next
interest reset date with respect to the floating rate certificate.
STRIPPED CERTIFICATES
Each class of stripped certificates will be entitled to interest in an amount
described in the applicable prospectus supplement. Accrued interest on a
stripped certificate with no principal balance, or a nominal principal balance,
will be calculated by multiplying the notional amount specified in the
applicable prospectus supplement by an accrued interest factor. The accrued
interest factor will be computed by adding the interest factors calculated for
each day in the period for which accrued interest is being calculated. The
interest factor (expressed as a decimal calculated to seven decimal places
without rounding) for each day will be computed by dividing the pass-through
rate in effect on such day by 360, or by the actual number of days in the year,
as specified in the applicable prospectus supplement.
For purposes of the stripped certificates, "notional amount" means the notional
principal amount specified in the applicable prospectus supplement on which
interest on stripped certificates will be made on each distribution date.
Reference to the notional amount of a class of stripped certificates does not
indicate that such certificates represent the right to receive any distributions
in respect of principal in such amount; rather, the term "notional amount" is
used solely as a basis for calculating the amount of required interest
distributions and determining relative voting rights, all as specified in the
applicable prospectus supplement.
PRINCIPAL OF THE CERTIFICATES
Unless otherwise specified in the applicable prospectus supplement, each
certificate that is not an interest only stripped certificate will have a
"certificate principal balance" that, at any time, will equal the maximum amount
of principal that the holder will be entitled to receive out of the future cash
flow on the trust assets. 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 to the
distribution (in the manner and priority specified in the applicable prospectus
supplement) until the aggregate certificate principal balance of the class or
classes has been reduced to zero. Distributions of principal of any class of
certificates will be made on a pro rata basis among all the certificates of that
class. The outstanding certificate principal balance of a certificate of any
class will be reduced to the extent of distributions of principal and, if
applicable pursuant to the terms of the related series, by the amount of any net
losses realized on any trust asset ("realized losses") allocated to that class
as a result of the inability to collect from the issuer of the underlying
securities the full amount of payments of principal due in respect of the
underlying securities, or from the obligor under any other trust assets payment
in full of the amount due under the other assets. The initial aggregate
certificate principal balance of each series and each class will be specified in
the applicable prospectus supplement.
Stripped 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, the applicable
prospectus supplement will specify the permissible denominations of the
certificates, the currency or currencies in which the principal and interest of
the certificates are to be paid and any other material terms and conditions
applicable to the certificates.
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DESCRIPTION OF THE CERTIFICATES
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INABILITY TO PAY IN SPECIFIED CURRENCY
Except as described below, if distributions in respect of a certificate are
required to be made in a specified currency other than U.S. dollars and the
currency is unavailable due to the imposition of exchange controls or other
circumstances beyond the depositor's control, or if the currency is no longer
used by the government of the country that issued the currency or for the
settlement of transactions by public institutions of or within the international
banking community, then all distributions in respect of the certificate will be
made in U.S. dollars until the currency is again available or used. The amounts
payable on any date in the affected currency will be converted into U.S. dollars
on the basis of the most recently available market exchange rate for the
currency, or as otherwise indicated in the applicable prospectus supplement.
All of these determinations will be made by the trustee in its sole discretion
and will, in the absence of manifest error, be conclusive for all purposes and
binding on the holders of affected certificates.
INDEXED CERTIFICATES
A series of certificates ("indexed certificates") may have principal (the
"indexed certificate principal balance") and/or interest (the "indexed
interest") determined by reference to:
- - the rate of exchange between the specified currency for the certificate (or
any other currency) and another currency (the "indexed currency") or the
difference in the prices of a specified commodity (the "indexed commodity") on
different dates;
- - the difference in the levels of a specified stock or bond index (the "stock
index" or the "bond index") which may be based on U.S. or foreign stocks or
bonds, on different dates; or
- - another objective price (including an individual security) or economic measure
described in the applicable prospectus supplement.
The manner of determining the indexed certificate principal balance or indexed
interest 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 the determination, will be set forth in the
applicable prospectus supplement, together with any information concerning tax
consequences to the holders of such indexed certificates. If certificates
offered to the public are issued with an indexed certificate principal balance,
the investment grade rating of the certificates will address both (a) the
likelihood that a certificate holder will receive the indexed certificate
principal balance, and (b) the likelihood that payment of the indexed
certificate principal balance will result in a return of the full amount of the
certificate holder's investment. Certificates will not be offered to the public
with an investment grade rating that addresses merely the likelihood of a
certificate holder receiving the indexed certificate principal balance, without
regard to whether receiving such amount could result in an economic loss.
Except as otherwise specified in the applicable prospectus supplement, interest
on an indexed certificate will be payable based on the amount designated as the
"face amount" of the indexed certificate in the applicable prospectus
supplement. The applicable prospectus supplement will describe whether the "face
amount" will be the certificate principal balance of the related indexed
certificate that would be payable upon redemption or repayment prior to the
stated maturity date, the indexed principal balance of the indexed certificate
at the time of redemption or repayment, or another amount described in the
prospectus supplement.
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DESCRIPTION OF THE CERTIFICATES
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MULTI-CURRENCY CERTIFICATES
Certificates ("multi-currency certificates") of a series or class for which
payments of principal and/or interest will be made in more than one currency may
be issued, and rates of exchange will be calculated, as indicated in the
certificates and described in the applicable prospectus supplement. Other
material terms and conditions relating to multi-currency certificates will be
set forth in the certificates and the applicable prospectus supplement.
PUT OPTION
If specified in the applicable prospectus supplement, a holder may put
certificates of a given series or class to the depositor or a third party. The
terms upon which a holder may put its certificates (including the price) will be
specified in the applicable prospectus supplement.
TRANSFERS AND EXCHANGES
Unless otherwise specified in the applicable prospectus supplement, 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 (if the trust is a New York trust) or in the City of
Wilmington, Delaware (if the trust is a Delaware trust) subject to limitations
provided in the applicable trust agreement, including the requirement that
global certificates may be transferred only as a whole to nominees of the
depositary, and representations and indemnities from the holders of the
certificates in connection with lost, destroyed or mutilated certificates. Such
transfers or exchanges will be made free of any service charge (except in the
case of lost, destroyed or mutilated certificates), but the holder must pay any
tax or governmental charge payable in connection with the transfer and exchange.
See "Description of the Trust Agreement--Replacement Certificates" below.
Unless otherwise specified in the applicable prospectus supplement, the trustee
will serve as transfer agent and registrar for the purpose of registering each
series or class of certificates and any transfers or exchanges of certificates.
GLOBAL SECURITIES; HOLDINGS IN STREET NAME
Unless otherwise specified in the applicable prospectus supplement, all
certificates of a given series or class 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, or
another depositary identified in the applicable prospectus supplement (the
"depositary"), and will be registered in the name of a nominee of the
depositary. Global securities may be issued in either temporary or definitive
form. Unless and until it is exchanged in whole or in part for the individual
certificates it represented (each a "definitive certificate"), a global security
may not be transferred except as a whole by the depositary for the global
security to a nominee of the depositary or by a nominee of the depositary to the
depositary or another nominee of the depositary or by the depositary or the
nominee to a successor of the depositary or a nominee of the successor.
DTC has advised the depositor as follows: DTC is a limited-purpose trust company
organized under the New York Banking Law, a "banking organization" within the
meaning of the New York Banking Law, 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 Securities Exchange Act. DTC holds securities that its participants
("direct participants") deposit with DTC. DTC also facilitates the settlement
among direct participants of securities transactions, such as transfers and
pledges, in deposited securities through computerized book-entry changes in
direct participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct participants include securities
brokers and dealers, banks,
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DESCRIPTION OF THE CERTIFICATES
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trust companies, clearing corporations and certain other organizations. DTC is
owned by a number of its direct participants and by the New York Stock Exchange,
Inc., the American Stock Exchange LLC, and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to others
such as securities brokers and dealers, banks, and trust companies that clear
through or maintain a custodial relationship with a direct participant, either
directly or indirectly ("indirect participants"). The rules applicable to DTC
and its direct and indirect participants are on file with the SEC.
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
certificate principal balances or notional amounts of the individual
certificates represented by the global security to the accounts of its
participants. The accounts to be credited will be designated by the underwriters
of the certificates, or, if the certificates are offered and sold directly
through one or more agents, by the depositor 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 the global security or by participants or persons that hold through
participants. The laws of some states require that some purchasers of securities
take physical delivery of the securities. The limitations on the ownership of
beneficial interest and these state 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 holder
of the global security, the depositary or the nominee, as the case may be, will
be considered the sole holder of the individual certificates represented by the
global security for all purposes. Except as set forth 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
individual certificates and will not be considered to be the holder of the
certificates under the trust agreement. Because the depositary can act only on
behalf of its participants, the ability of a beneficial owner of any certificate
to pledge that certificate to persons that do not participate in the
depositary's system, or otherwise to act with respect to such certificate, may
be limited due to the lack of a physical certificate for the certificate.
Distributions of principal of, and any premium and 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 holder of the global security. None of
the depositor, the trustee for such certificates, any paying agent or the
registrar for the certificates will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
interests in the global security or for maintaining, supervising or reviewing
any records relating to the beneficial interests.
The depositor expects that the depositary for certificates of a given class and
series, upon receipt of any distribution or payment in respect of a global
security representing any of such certificates, will immediately credit
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 the depositary. The depositor also expects that
payments by participants to owners of beneficial interests in the global
security held through such participants will be governed by standing
instructions and customary practices and will be the responsibility of the
participants.
If the depositary for certificates of any series or class is at any time
unwilling or unable to continue as depositary and a successor depositary is not
appointed by the depositor within 90 days, the trustee will issue individual
definitive certificates of the same series or class in exchange for the global
securities representing the certificates. In addition, the trustee will issue
definitive certificates if any underlying securities issuer evidencing more than
10% of the aggregate principal amount of the underlying
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DESCRIPTION OF THE CERTIFICATES
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securities suspends its Securities Exchange Act reporting requirements at a time
when the reporting requirements with respect to the certificates have not been
suspended or terminated. In that event, the trustee will issue individual
definitive certificates of the same series or class in exchange for the global
securities representing such certificates. In any such instance, an owner of a
beneficial interest in a global security (or the participant through which it
holds its interest) will be entitled to physical delivery of individual
definitive certificates of the class represented by the global security equal in
principal balance to the beneficial interest and to have such definitive
certificates registered in its name. Any individual definitive certificates of
the class will be issued in definitive form as registered certificates in the
minimum denominations and integral multiples of such minimum denominations as
specified in the applicable prospectus supplement.
If the certificates cease to be held in the form of a global security, or if the
certificates are issued initially in non-global or definitive form, investors
may choose to hold their certificates in their own names or in "street name."
Certificates held by an investor in street name would be registered in the name
of a bank, broker or other financial institution that the investor chooses, and
the investor would hold only a beneficial interest in those certificates through
an account that he or she maintains at the institution.
For certificates held in street name, only those intermediary banks, brokers and
other financial institutions in whose names the certificates are registered will
be recognized as the holders of those certificates and the trustee will make all
payments on those certificates to those institutions. The depositor expects that
these institutions will pass along the payments they receive to their customers
who are the beneficial owners, but only because they agree to do so in their
customer agreements or are otherwise legally required to do so. Investors who
hold certificates in street name will be indirect holders of the certificates.
The applicable prospectus supplement will describe any material terms of the
depositary arrangement with respect to any class or series of certificates to
the extent not described above.
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Trust Liquidation Events
Each prospectus supplement will contain information with respect to any events
that may lead to liquidation of the trust assets, the method of liquidation of
the trust assets and applicable trust and distribution of the proceeds of the
trust assets to the holders of certificates subject to the priorities set forth
in the applicable prospectus supplement, as well as remedies, if any, of the
certificate holders upon the occurrence of any of these events.
Maturity and Yield Considerations
Each prospectus supplement will contain information with respect to the type of
underlying securities deposited in the related trust, their maturities and the
terms, if any, upon which the underlying securities may be subject to early
redemption, early repayment, amortization, acceleration or extension of
maturity. Early redemption may be at the option of an underlying securities
issuer or a third party or may be mandatory upon the occurrence of specified
events. Generally, payment on the underlying securities may be accelerated if
the issuer of the securities defaults under the terms of the underlying
securities.
The maturity and yield of any class or series of certificates may be affected by
optional or mandatory early redemption, early repayment, amortization,
acceleration or extension of maturity of the underlying securities or call
option on the certificates or trust assets. Furthermore, early redemption,
repayment, amortization or acceleration of payment on the underlying securities
will reduce the weighted average life of the underlying securities and the
related certificates. Extension of maturity of the underlying securities will
increase the weighted average life of the underlying securities and the related
certificates.
Tax, accounting, economic and other factors, including factors specific to the
particular issuer, will influence whether an underlying securities issuer or
third party exercises a right of redemption, repurchase or extension of maturity
in respect of its securities. The extent of any redemptions may be influenced by
prepayments on the obligations that secure or back an issue of underlying
securities. Other things being equal, if prevailing interest rates fall
significantly below the interest rates on the underlying securities, the
likelihood of redemption would be expected to increase. We cannot assure you,
however, that a redeemable underlying security will in fact be repaid prior to
its stated maturity.
We cannot predict the probability of negative developments affecting any
underlying security.
If the certificates are purchased at a discount, their yield to maturity will be
reduced by slower than expected payments on the trust assets. If the
certificates are purchased at a premium, faster than expected payments will
reduce their yield.
If the pass-through rate for any series or class of certificates is based on
variable or adjustable interest rates, the yield to maturity of the certificates
will be reduced if such variable or adjustable interest rates fall. If any
series or class of certificates represents an interest in a pool of underlying
securities of different issuers, disproportionate principal payments on
underlying securities having higher than average interest rates will reduce the
yield on the certificates.
The applicable prospectus supplement for each class or series of certificates
will provide additional information regarding yield and maturity considerations
applicable to that class or series and the related trust assets, including the
underlying securities.
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Description of the Trust Assets, including Credit Support
UNDERLYING SECURITIES
The trust assets for a given series of certificates will not constitute trust
assets for any other series or class of certificates. The certificates of each
class of a given series will possess an equal and ratable interest in the trust
assets for that class. The applicable prospectus supplement may, however,
specify that assets constituting trust assets for a given series may be
beneficially owned solely by, or deposited solely for the benefit of, one or
more classes within such series. In that event, the other classes of that series
will not possess any beneficial ownership interest in those specified assets.
Each certificate will represent an ownership interest, as specified for the
series or class of certificates, in (a) a designated publicly tradable
fixed-income security or a pool of such securities (the "underlying
securities"), that are purchased either by the trustee on behalf of the trust or
by the depositor (or its affiliates), in the secondary market and deposited into
a trust as described in the applicable prospectus supplement, and (b) any other
assets related or incidental to the underlying securities, purchased and
deposited into a trust either by the trustee on behalf of the trust or by the
depositor (or its affiliates). All such other assets for any given series,
together with the underlying securities, and any assets obtained through
foreclosure or settlement, are referred to as the "trust assets."
A fixed-income security is "publicly tradable" if it has been registered under
the Securities Act of 1933 (the "Securities Act") or is exempt from
registration. Any underlying securities that are corporate securities, trust
preferred securities or foreign government securities and that represent 10% or
more of the principal amount of the underlying securities with respect to any
series of certificates are referred to as "concentrated underlying securities."
The underlying securities will consist of one or more of the following:
PRIVATE SECTOR SECURITIES
Private sector securities will consist of corporate securities, trust preferred
securities and asset-backed securities:
- - Corporate securities consist of senior or subordinated debt obligations, or
investment grade term preferred stock, consisting of one or more of the types
of securities described below. Corporate securities may consist of:
- Publicly tradable fixed-income securities of one or more banks, insurance
companies or other corporations or entities organized under the laws of
the United States or any state, the District of Columbia or the
Commonwealth of Puerto Rico that are subject to the informational
requirements of the Securities Exchange Act and that file reports and
other information with the SEC or (for some depository institutions) with
a federal bank or thrift regulatory agency. If any of these securities is
a concentrated underlying security, the depositor must reasonably believe
(based on publicly available information) that the issuer is eligible to
make a primary offering of common stock on Form S-3 at the time the
certificates are offered.
- Publicly tradable fixed-income securities of one or more foreign private
issuers (as defined in Rule 405 under the Securities Act) that are
subject to the informational requirements of the Securities Exchange Act
and that file reports and other information with the SEC. If any of these
securities is a concentrated underlying security, the depositor must
reasonably believe (based on publicly available information) that the
issuer is eligible to make a primary offering of common stock on Form F-3
at the time certificates are offered.
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DESCRIPTION OF THE TRUST ASSETS, INCLUDING CREDIT SUPPORT
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- - Trust preferred securities are publicly tradable preferred equity securities
issued by one or more trusts or other special purpose legal entities
established for the purpose of issuing common and preferred equity securities
and investing the proceeds in subordinated debt obligations of issuers that
are subject, or are wholly-owned subsidiaries of parent companies that are
subject, to the informational requirements of the Securities Exchange Act and
that file reports and other information with the SEC. In the case of these
wholly-owned subsidiaries, the parent companies will have fully and
unconditionally guaranteed those obligations on a subordinated or
non-subordinated basis. If any of these trust preferred securities is a
concentrated underlying security, the depositor must reasonably believe (based
on publicly available information) that the guarantor with respect of the
trust preferred securities is eligible to make a primary offering of common
stock on Form S-3 or Form F-3 at the time the certificates are offered.
Trust preferred securities generally have economic characteristics that mirror
those of the subordinated debt obligations that are the trust's principal
assets. Trust preferred securities generally pay dividends at a rate
approximately equal to the interest rate on the subordinated debt obligations,
and these dividends and interest payments generally are due on or about the
same date.
- - Asset-backed securities are publicly tradable asset-backed notes or
pass-through certificates issued by one or more trusts or other special
purpose legal entities with at least $75,000,000 in outstanding securities
held by non-affiliates. Asset-backed notes are secured by, and asset-backed
pass-through certificates represent an interest in, a fixed or revolving pool
of financial assets. Such financial assets will consist primarily 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, inventory loans, equipment leases and other
assets that by their terms convert into cash within a limited time period.
Asset-backed notes generally are issued pursuant to indentures and
asset-backed pass-through certificates generally are issued pursuant to
pooling and servicing agreements or trust agreements. A separate servicing
agreement typically is executed in connection with asset-backed notes. These
servicing agreements, indentures, pooling and servicing agreements and trust
agreements collectively are referred to as "asset-backed agreements."
Asset-backed securities deposited as underlying securities will be issued by a
trust or other special purpose legal entity that at the time the underlying
asset-backed securities are issued (a) is subject to the informational
requirements of the Securities Exchange Act and (b) files reports and other
information with the SEC.
DOMESTIC GOVERNMENT SECURITIES
Domestic government securities will consist of Treasury securities and GSE
securities.
- - Treasury securities are securities issued or guaranteed by the United States
of America, or by any of its agencies if the full faith and credit of the
United States of America is pledged for their payment.
- - GSE securities are fixed-income securities issued or guaranteed by one or more
of the following U.S. government sponsored entities ("GSEs"): Federal National
Mortgage Association, Federal Home Loan Mortgage Corporation, Student Loan
Marketing Association, Resolution Funding Corporation, Federal Home Loan Banks
(to the extent these obligations represent the joint and several obligations
of the twelve Federal Home Loan Banks), Tennessee Valley Authority and Federal
Farm Credit Banks. These securities generally are exempt from registration
under the Securities Act and are not required to be registered under the
Securities Exchange Act. Securities issued or guaranteed by any GSE will be
included in a trust only if the organization makes publicly available its
annual report including financial statements or similar financial information
with respect to the organization. Unless otherwise specified in the applicable
prospectus supplement, GSE securities are not guaranteed
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DESCRIPTION OF THE TRUST ASSETS, INCLUDING CREDIT SUPPORT
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by the United States of America and do not constitute a debt or obligation of
the United States of America or any of its agencies or instrumentalities other
than the applicable GSE.
FOREIGN GOVERNMENT SECURITIES
Foreign government securities are publicly tradable obligations issued or
guaranteed by a foreign government, political subdivision or agency or
instrumentality.
MULTILATERAL BANK ISSUERS
A trust may own obligations of one or more multilateral bank issuers. A
"multilateral bank issuer" means any one of 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.
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DESCRIPTION OF THE TRUST ASSETS, INCLUDING CREDIT SUPPORT
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PRINCIPAL ECONOMIC TERMS OF UNDERLYING SECURITIES
The applicable prospectus supplement will disclose the name of each underlying
securities issuer with respect to the applicable series of certificates. In
addition, the applicable prospectus supplement will include a description of the
following terms, as applicable, of any concentrated underlying security:
- - the title and series of the underlying securities and their aggregate
principal amount, denomination and form;
- - whether the underlying securities are senior or subordinated to any other
obligations of the underlying securities issuer;
- - whether the underlying securities are secured or unsecured and, if secured,
the nature of any collateral;
- - the dates on which, or the range of dates within which, the principal of (and
any premium on) the underlying securities will be payable;
- - the rate or rates, or the method of determining the rate or rates, at which
the underlying securities will bear interest, if any ("underlying securities
rate"); the date or dates from which the interest will accrue ("underlying
securities interest accrual periods"); and the dates on which the interest
will be payable ("underlying securities payment dates");
- - the obligation, if any, of the underlying securities issuer to redeem the
underlying securities pursuant to any sinking fund or analogous provisions, or
the option of a holder, and the periods within which (or the dates on which),
the prices at which and the terms and conditions upon which the underlying
securities may be redeemed or repurchased, in whole or in part, pursuant to
the underlying securities;
- - the periods within which (or the dates on which), the prices at which and the
terms and conditions upon which the underlying securities may be redeemed, if
applicable, in whole or in part, at the option of the underlying securities
issuer;
- - whether the underlying securities were issued at a price lower than their
principal amount (other than by a de minimis amount);
- - if other than U.S. dollars, the foreign currency in which the underlying
securities are denominated, or in which payment of the principal of and any
premium or interest on the underlying securities will be made (the "underlying
securities currency"), and the circumstances, if any, when the underlying
currency may be changed; and
- - any rating of the underlying securities by a securities rating agency.
If a trust is comprised of a pool of underlying securities, the applicable
prospectus supplement will, to the extent applicable, describe the composition
of the underlying securities pool as of the date that is specified in the
applicable prospectus supplement as the cut-off date (the "cut-off date") or
closing date (the "closing date"), whichever is applicable to that pool, and, on
an aggregate, percentage or weighted average basis, as applicable, the
characteristics of the pool with respect to the applicable terms listed above.
PUBLICLY AVAILABLE INFORMATION
In addition to the foregoing, the applicable prospectus supplement will
describe, with respect to each concentrated underlying securities issuer, the
existence and type of financial reporting information that is made publicly
available by the underlying securities issuer. The prospectus supplement will
also disclose where and how prospective purchasers of the certificates may
obtain the publicly available
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DESCRIPTION OF THE TRUST ASSETS, INCLUDING CREDIT SUPPORT
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information. This information will typically consist of the underlying
securities issuer's annual report, which contains financial statements or
similar financial information, and can be obtained from the SEC, if so specified
in the applicable prospectus supplement, or from the office of the underlying
securities issuer identified in the applicable prospectus supplement.
OTHER TRUST ASSETS
In addition to the underlying securities, the trustee on behalf of the trust or
the depositor may also acquire and deposit into a trust other assets related or
incidental to the underlying securities or necessary to provide the certificates
with their desired economic terms. Furthermore, the trustee, on behalf of the
trust, and to the extent described in the applicable prospectus supplement, may
enter into hedging contracts and other derivative agreements. The applicable
prospectus supplement will, to the extent appropriate, contain disclosure with
respect to the trust assets other than the underlying securities that is
analogous to the disclosure provided with respect to the underlying securities.
SWAPS, CAPS, FLOORS, OPTIONS, FORWARD CONTRACTS AND CREDIT DERIVATIVES
Any derivative agreements that are included in the trust assets may include, but
are not limited to, puts, calls, interest rate, currency, securities, commodity
and credit swaps, total return swaps, credit default swaps, caps, floors,
collars and options, forward contracts and structured securities with embedded
derivatives. Some of the main categories of hedging contracts and derivative
agreements that may be deposited into a trust are described below.
The applicable prospectus supplement will specify the amount, type and other
relevant terms of each derivative agreement with respect to any such series or
class and information with respect to the derivatives counterparties, including
financial information with respect to any counterparty providing 20% or more of
the cash flow of that series or class, unless the counterparty is subject to the
informational requirements of the Securities Exchange Act, in which case this
information will be incorporated by reference to the counterparty's public
filings under the Securities Exchange Act.
SWAPS
Swaps involve the trust's exchange with another party of their respective
commitments to pay or receive amounts computed by reference to specified fixed
or floating interest rates, currency rates, securities prices, yields or returns
(including baskets of securities or securities indices) or commodity prices,
based on a notional principal amount (that is, a reference amount with respect
to which such obligations are determined). An example of a swap is an exchange
of floating rate interest payments for fixed rate payments. For many types of
swaps, no actual exchange of principal occurs, although currency swaps and some
other types of swaps involve exchanges of the notional amount at the beginning
and end of the transactions. Periodic payments in the same currency due on the
same date under the same swap transaction are generally netted so that the party
owing the greater aggregate amount pays the difference to the party owing the
lesser aggregate amount.
CAPS AND FLOORS
To the extent that a specified rate, price, yield or return exceeds a
predetermined level, the purchaser of a cap is entitled to receive payments in
the amount of the excess, computed by reference to a notional principal amount,
from the party selling the cap. To the extent that a specified rate, price,
yield or return declines below a predetermined level, the purchaser of a floor
is entitled to receive payments in the amount of the decline computed by
reference to a notional principal amount from the party selling the floor.
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DESCRIPTION OF THE TRUST ASSETS, INCLUDING CREDIT SUPPORT
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OPTIONS
The purchaser of a call option is entitled to purchase the asset that is subject
to the call option at the predetermined strike price. The purchaser of a put
option is entitled to require the issuer of the put option to purchase the asset
that is subject to the put option at a predetermined strike price. Options are
sold on various securities, such as bonds, equities, currencies and commodities.
Options can be structured as securities, such as warrants, or can be embedded in
securities. Commodity-linked or equity-linked bonds are securities with embedded
option characteristics. Options may be settled by physical delivery or cash
payment.
FORWARD CONTRACTS
Forward contracts involve the purchase and sale of a specified security,
commodity, currency or other financial instrument at a specified price and date
in the future, and may be settled by physical delivery or cash payment. Forward
contracts may also be embedded in other instruments such as notes or warrants.
CREDIT DERIVATIVES
Credit derivatives involve swap and option contracts designed to permit a party
to assume or lay off credit risk on loans, debt securities or other assets (the
"reference assets"), or in relation to a particular company, organization or
country (the "reference entity"), without being required to actually purchase or
sell the reference assets. Credit derivatives may also be embedded in other
instruments such as notes or warrants. Credit derivatives give one party to a
transaction the right to dispose of or acquire an asset (or group of assets), or
the right to receive or make a payment from the other party, upon the occurrence
of specified credit events relating to the referenced assets or reference
entity. If a specified credit event occurs, the trust may be entitled to receive
payments from, or may be required to make payments to, the swap counterparty,
generating either a loss or a gain for the trust under the credit derivative
transaction under which the credit event occurred.
Under a credit default swap agreement in which the trust acts as "protection
seller," for example, the trust would agree, in return for a fee, to assume the
payment default or other credit risk on a security, loan or other payment
obligation that is not owned by the trust (a "reference obligation") or on the
obligations of a reference entity generally. If a payment default or other
specified credit event occurs with respect to the reference obligation or
reference entity, the trust would suffer a loss. This would result from (a) a
provision requiring the trust to pay the counterparty the difference between the
face amount of a reference obligation and its then current market value, which
difference the trust would have to pay from the proceeds of the sale of some or
all the trust assets, (b) a provision requiring the trust to pay the face amount
of the reference obligation to the counterparty in exchange for physical
delivery to the trust of the reference obligation, which would then either be
distributed in kind to certificate holders or sold (and the proceeds
distributed) or (c) other provisions set forth in the applicable prospectus
supplement with similar economic effect. Similarly, if so provided 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
obligation for a predetermined price upon the occurrence of a payment default
by, or other specified credit event with respect to, the issuer of the reference
obligation, thus assuming the risk of loss on the reference obligation.
Reference obligations will be securities of the same types as the underlying
securities described in this prospectus, or will be loans made to, or other
payment obligations of, entities whose debt obligations are eligible to be
underlying securities. The applicable prospectus supplement will include
information regarding reference obligations and their issuers that is analogous
to that provided with respect to underlying securities.
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DESCRIPTION OF THE TRUST ASSETS, INCLUDING CREDIT SUPPORT
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CREDIT SUPPORT
As specified in the applicable prospectus supplement, the trust assets for a
series or class of certificates may include, or the holders of any series or
class may have the benefit of, credit support. Credit support may be provided by
any combination of the following means or any other means described in the
applicable prospectus supplement. The applicable prospectus supplement will set
forth whether the trust assets include, or the holders of the series or class
have the benefit of, credit support. If so, it will specify the amount, type and
other relevant terms of each element of credit support with respect to any such
series or class and information with respect to the obligors of each element,
including financial information with respect to any obligor providing credit
support for 20% or more of the aggregate principal amount of that series or
class, unless the obligor is subject to the informational requirements of the
Securities Exchange Act.
Any 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
certificate holders of such class or as otherwise specified in the applicable
prospectus supplement. In addition, if so provided in the applicable prospectus
supplement, the obligor of any other forms of credit support may be reimbursed
for amounts paid pursuant to the credit support out of amounts otherwise payable
to one or more of the unsupported classes of the certificates of such series.
SUBORDINATION
As discussed below under "--Collections," the rights of the holders of a class
of certificates to receive collections from the relevant trust and any credit
support obtained for the benefit of the holders of a class may be subordinated
to the rights of the holders of one or more other classes of that series to the
extent described in the applicable prospectus supplement. Subordination
accordingly provides some additional credit support to holders of the more
senior classes. For example, if losses are realized during a given period on the
trust assets such that the collections received on the trust assets are
insufficient to make all distributions on the certificates of the series, those
realized losses will be allocated to the holders of the class or classes of that
series that are subordinated to another class, to the extent and in the manner
provided in the applicable prospectus supplement. In addition, if the applicable
prospectus supplement says so, some amounts otherwise payable to holders of any
class that is subordinated may instead 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.
LETTER OF CREDIT; FINANCIAL GUARANTY INSURANCE POLICY
The holders of any series or class may, if specified in the applicable
prospectus supplement, have the benefit of a letter or letters of credit issued
by a bank (a "letter of credit bank") or a financial guaranty insurance policy
or policies issued by a financial guaranty insurance company (an "insurer"). In
either case, the trustee or other person specified in the applicable prospectus
supplement will use reasonable efforts to cause the letter of credit or the
insurance policy, as the case may be, to be obtained, to be kept in full force
and effect (unless coverage has been exhausted through payment of claims) and to
timely pay the related fees or premiums unless, as described in the applicable
prospectus supplement, the payment of such fees or premiums is otherwise
provided for. The trustee or other person specified in the applicable prospectus
supplement will make, or cause to be made, draws under the letter of credit or
the insurance policy, 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 insurance policy will be
reduced to the extent of any prior unreimbursed draws. The applicable prospectus
supplement will describe the manner, priority and source of funds by which any
draws are to be repaid.
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DESCRIPTION OF THE TRUST ASSETS, INCLUDING CREDIT SUPPORT
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If specified in the applicable prospectus supplement, if the letter of credit
bank or the insurer ceases to satisfy any credit rating or other applicable
requirements specified in the applicable prospectus supplement, the trustee or
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 insurance policy, 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 insurer, as applicable, will continue to
satisfy such requirements or that it will be possible to obtain any such
substitute letter of credit, insurance policy or similar credit enhancement that
provides equivalent coverage for the same cost. To the extent it is not
available, the credit support otherwise provided by the letter of credit or the
insurance policy (or similar credit enhancement) may be reduced to the level
otherwise available for the same cost as the original letter of credit or
insurance policy.
RESERVE ACCOUNTS
If provided in the applicable prospectus supplement, the trustee or another
person specified in the prospectus supplement will deposit or cause to be
deposited into an account maintained with an eligible institution (which may be
the trustee) (a "reserve account") any combination of cash or permitted
investments in specified amounts. These amounts will be applied and maintained
in the manner and under the conditions specified in the applicable prospectus
supplement. In the alternative or in addition to this initial deposit, a reserve
account may be funded through the application of a portion of collections
received on the trust assets for the series, in the manner and priority
specified in the applicable prospectus supplement. Amounts deposited in the
reserve account may be distributed to holders of a specified class or group of
classes within the series, or may be used for other purposes, in the manner and
to the extent provided in the applicable prospectus supplement. Amounts
deposited in any reserve account will be invested in permitted investments by,
or at the direction of, the trustee, the depositor or another person named in
the applicable prospectus supplement.
COLLECTIONS
The trust agreement will establish procedures by which the trustee or another
person specified in the prospectus supplement will be obligated, for the benefit
of the holders of each series of certificates, to administer the related trust
assets, including making collections of all payments, and depositing the
collections into a segregated account maintained or controlled by the applicable
trustee for the benefit of that series (each a "collection account"). The
trustee will make all determinations, as to the appropriate application of such
collections and other amounts available for distribution.
Amounts in the collection account will first be applied to the payment of any
administrative or collection or other expenses of the trust expenses and then to
credit support-related ongoing fees (such as insurance premiums, letter of
credit fees or any required account deposits), then to deposits in any reserve
account, payments due under any swaps, derivatives or other contracts to which
the trust is a party and then to the payment of amounts then due and owing on
the certificates of the series and classes within the series, all in the manner
and according to the 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 trust assets during a given collection
period or on or by specified dates. There can be no assurance that amounts
received from the trust assets, including any credit support obtained for the
benefit of certificate holders for a particular series or class of certificates,
over a specified period will be sufficient, after payment of all prior expenses
and fees for that period, to pay amounts then intended to be distributed to
holders of such certificates. The applicable prospectus supplement will also set
forth the manner and priority by which any realized loss will be allocated to
the classes of any series of certificates, if applicable.
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DESCRIPTION OF THE TRUST ASSETS, INCLUDING CREDIT SUPPORT
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If specified in the applicable prospectus supplement, the trustee will be
entitled to withdraw or cause to be withdrawn from the collection account, prior
to the distribution of the proceeds to certificate holders, amounts representing
its normal administrative compensation on the trust assets and unreimbursed
administrative expenses incurred with respect to the trust assets. Furthermore,
all liabilities of the trust must be satisfied before any amounts are
distributed to the certificate holders. However, the trust is not expected to
have any liabilities at such time.
The relative priorities of distributions with respect to collections from the
trust assets assigned to each class of a given series of certificates may
permanently or temporarily change over time upon the occurrence of 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 some
amounts, such as principal, may be different from the relative distribution
priority assigned to that class for payments of other amounts, such as interest
or premium.
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Description of the Trust Agreement
A separate trust will be created to issue each series of certificates, pursuant
to a separate trust agreement between the depositor and the trustee. The trust
agreement will govern the related series of certificates and will be qualified
under the Trust Indenture Act of 1939. The following summary of material
provisions of the trust agreement and the certificates is not complete, and is
qualified in its entirety by reference to the more detailed provisions of the
form of trust agreement that is filed as an exhibit to the registration
statement of which this prospectus forms a part. The applicable prospectus
supplement for certificates of a series will describe any material provision of
the trust agreement or the certificates that is not described in this
prospectus.
ASSIGNMENT OF TRUST ASSETS
When any series of certificates is issued, the trustee on behalf of the trust,
or the depositor, will acquire and transfer the underlying securities and any
other trust assets specified in the applicable prospectus supplement to the
trust. However, any retained interest and any retained call rights will not be
transferred to the trust (see "--Retained Interest" and "--Retained Call Options
and Retained Call Rights"). If specified in the applicable prospectus
supplement, the trustee will, concurrently with the assignment, deliver or cause
to be delivered the certificates to the depositor in exchange for the trust
assets or the funds necessary to acquire the trust assets. Each trust asset will
be identified in a schedule attached as an exhibit to the trust agreement and
the applicable prospectus supplement. The schedule will include the information
with respect to the trust assets specified under "Description of the Trust
Assets, including Credit Support" above.
COLLECTION AND OTHER ADMINISTRATIVE PROCEDURES
With respect to any series of certificates, the trustee, directly or through its
agents, will make reasonable efforts to collect all scheduled payments under the
trust assets and will follow, or cause to be followed, any collection procedures
that it would follow with respect to comparable financial assets that it held
for its own account. However, these procedures must be consistent with the trust
agreement and any related instrument governing the underlying securities, any
credit support for the trust assets (collectively, the "credit support
instruments") and any other trust assets. Except as otherwise described in the
applicable prospectus supplement, the trustee will not be required to expend or
risk its own funds or to otherwise incur personal financial liability.
REALIZATION UPON DEFAULTED TRUST ASSETS
The trustee will present claims under each applicable credit support instrument,
and will take such normal and customary steps as necessary to receive payment or
to permit recovery under those instruments with respect to defaulted trust
assets.
The trustee will be obligated to follow or cause to be followed normal and
customary practices and procedures as it deems necessary or advisable to recover
upon the defaulted trust asset. However, it will 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 trust asset are less than the sum
of (a) the outstanding principal amount of the defaulted trust asset, (b)
interest accrued on the asset at the applicable interest rate and (c) the
aggregate amount of expenses incurred by the trustee or its agents in connection
with the collection proceedings to the extent reimbursable from the assets of
the trust under the trust agreement, and not reimbursed to the trustee by the
depositor in accordance with the depositor's obligations under the trust
agreement, the trust will realize a loss in the amount of the difference. If
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DESCRIPTION OF THE TRUST AGREEMENT
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specified in the applicable prospectus supplement, the trustee will be entitled
to withdraw or cause to be withdrawn from the related collection account out of
the net proceeds recovered on any defaulted trust asset, prior to the
distribution of the proceeds to certificate holders, amounts representing its
normal administrative compensation on the trust assets and unreimbursed
administrative expenses incurred with respect to the trust assets.
TRUSTEE'S COMPENSATION; PAYMENT OF EXPENSES
The applicable prospectus supplement will specify the amount of the trustee's
compensation payable by the trust, if any, or if the trustee's compensation is
to be payable by any other person, and the priority of the trustee's claim on
collections on the trust assets for payment of its compensation with respect to
the relevant series of certificates.
To the extent specified in the applicable prospectus supplement, the depositor
will reimburse the trustee for its reasonable out-of-pocket expenses, including
payment of reasonable fees and disbursements of the trustee's accountants and
counsel, collection costs and any other expenses described in the prospectus
supplement.
Unless otherwise specified in the applicable prospectus supplement, if the
trustee has received any amount from DTC in respect of distributions on the
underlying securities or any other trust asset or agreement to which the trust
is a party and DTC, pursuant to the terms of the depositary agreement in respect
of the underlying securities, requires that the trustee repay such amounts, the
trustee shall have the right to reimbursement of such amounts, from the
certificate holders with respect to any such amounts distributed to certificate
holders, and from the swap counterparty with respect to any such amounts
distributed to the swap counterparty.
MATTERS REGARDING THE TRUSTEE
The trust agreement for each series will provide that neither the trustee nor
any director, officer, employee or agent of the trustee will incur any liability
under the trust agreement except for its own negligent action, negligent failure
to act or its own willful misconduct or bad faith. Unless otherwise specified in
the applicable prospectus supplement, the trust agreement provides that the
trustee and any director, officer, employee or agent of the trustee will be
entitled to indemnification by the depositor and will be held harmless against
any loss, liability or reasonable expense (including attorney's fees) that
results from any legal action relating to the administration of the trust and
the performance of its duties under the trust agreement, other than any loss,
liability or expense incurred by reason of the trustee's own willful misconduct,
negligence or bad faith in the performance of the trustee's duties under the
trust agreement. In addition, the trust agreement will provide that except as
specifically provided, the trustee will not be under any obligation to appear
in, prosecute or defend any legal action that is not incidental to its
responsibilities under the trust agreement or which in its opinion may involve
it in any expense or liability unless the trustee has received indemnification
satisfactory to it. The applicable prospectus supplement will describe how legal
expenses and costs of these actions and any resulting liability resulting will
be paid or otherwise be allocated.
REMEDIES OF CERTIFICATE HOLDERS
Any holder of certificates of a series may institute any proceeding with respect
to the certificates or the applicable trust agreement only if the following
conditions are satisfied:
- - the holder must have given the trustee written notice of a continuing breach
of the trust agreement or an event of default in respect of the underlying
securities;
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DESCRIPTION OF THE TRUST AGREEMENT
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- - the holders of certificates evidencing not less than the percentage specified
in the applicable prospectus supplement have made a written request to the
trustee to institute the proceeding in its own name as trustee;
- - for 15 days the trustee must have neglected or refused to institute the
requested proceeding; and
- - the holders of certificates evidencing not less than the percentage specified
in the applicable prospectus supplement have not given an inconsistent
direction to the trustee during the 15-day period.
The trustee, however, is under no obligation to exercise any of the rights or
powers vested in it by the trust agreement or to make any investigation of
related matters or to institute, conduct or defend any litigation under or in
relation to the trust agreement at the request, order or direction of any of the
holders of certificates covered by the trust agreement, unless the holders have
offered the trustee reasonable security or indemnity against the costs, expenses
and liabilities which may be incurred by the trustee.
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 that series without notice to or consent of the
holders of any certificates, for some purposes including:
- - to cure any error or ambiguity;
- - to correct or supplement any provision in the trust agreement that is
inconsistent with any other provision in the trust agreement;
- - to add or supplement any credit support for the benefit of any holders of
certificates, except that if any such addition affects any class of holders
differently from any other class of certificate holders, then the depositor
must obtain an opinion of counsel stating that the addition will not have a
material adverse effect on the interests of any affected class of certificate
holders and the trust must have received an opinion of counsel that the
addition will not adversely affect the classification of the trust for federal
income tax purposes;
- - to add to the covenants, restrictions or obligations of the depositor or the
trustee for the benefit of the certificate holders;
- - to provide for the appointment of a successor trustee to the trustee or for
the appointment of more than one trustee;
- - to add, change or eliminate any other provisions with respect to matters or
questions arising under the trust agreement, so long as (a) the addition,
change or elimination does not, as evidenced by an opinion of counsel,
adversely affect in any material respect the interests of the certificate
holders or holders of any retained call options or retained call rights, (b)
the addition, change or elimination will not, as evidenced by an opinion of
counsel, adversely affect the intended classification of the trust for federal
income tax purposes or result in a sale or exchange of any certificate for tax
purposes and (c) the trustee has received written confirmation from each
rating agency that has rated any certificates that the amendment will not
cause the rating agency to reduce or withdraw the then current rating of any
certificates; or
- - to comply with any requirements imposed by the Internal Revenue Code.
In addition, the trust agreement may (if confirmation has been received from
each rating agency rating any class of certificates that the amendment will not
result in a reduction or withdrawal of that class of certificates) be amended by
the depositor and the trustee, with the consent of the holders of
31
DESCRIPTION OF THE TRUST AGREEMENT
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certificates whose certificates evidence more than 50% of the voting rights of
the outstanding certificates, to add any provision to or change or eliminate any
provision of the trust agreement or to modify in any manner the rights of those
certificate holders. However, if the amendment would materially adversely affect
any class of certificates, or the rating of any class of certificates by any
rating agency that has rated the certificates at the request of the depositor,
the required percentage of votes of the affected class specified in the related
trust agreement will be specified in the applicable prospectus supplement.
No amendment to the trust agreement may (a) reduce in any manner the amount of,
or alter the timing of, collections of payments on trust assets or distributions
or payments which are required to be made on any certificate, (b) reduce the
required percentage of voting rights specified above required for the consent to
any such amendment (c) as evidenced by an opinion of counsel, adversely affect
the intended classification of the trust for federal income tax purposes, (d)
cause the termination of the trust without, in each case, the consent of the
holders of all outstanding certificates issued pursuant to the trust agreement,
or (e) change any provisions relating to any retained call options or retained
call rights that would adversely affect the holders of any retained call options
or retained call rights without the consent of all of the holders of any
retained call options or retained call rights without the consent of all of the
holders of any retained call options or retained call rights.
Unless the applicable prospectus supplement specifies a different required
percentage, or otherwise provides, holders of certificates evidencing more than
50% of the voting rights in respect of the outstanding certificates with respect
to those certificates of the voting rights of a given class may, on behalf of
all holders of that class, (a) waive, with respect to that class, compliance by
the depositor or the trustee with any restrictive provision of the trust
agreement before the time for compliance and (b) waive any past default under
the trust agreement with respect to certificates of that class, except that the
consent of the holders of each outstanding certificate will be required to waive
either a default in the failure to distribute amounts received as principal of
and any premium or any interest on any certificate or a default in respect of a
covenant or provision the amendment of which would require the consent of the
holder of each outstanding certificate.
REPORTS TO CERTIFICATE HOLDERS; NOTICES
REPORTS TO CERTIFICATE HOLDERS
Unless otherwise specified in the applicable prospectus supplement, on the next
business day following each distribution to certificate holders of any series or
class of certificates or as soon after each distribution date as practicable,
the trustee will prepare and forward or cause to be prepared and forwarded to
each certificate holder (and to any option agent in respect of any retained call
options or retained call rights), to the depositor and to any other parties
specified in the trust agreement for that series, a statement setting forth:
- - the amount of the distribution to holders of that class that is allocable to
principal of or any interest or premium on the certificates of that class, and
the aggregate amount of unpaid interest as of that distribution date;
- - in the case of floating rate certificates, the pass-through rate applicable to
that distribution date, as calculated in accordance with the method specified
in the applicable prospectus supplement;
- - if compensation is received by the trustee from the trust, the amount of
compensation received by the trustee for the period relating to that
distribution date and other customary information that the trustee deems
necessary or desirable to enable certificate holders to prepare their tax
returns;
- - the aggregate stated principal amount or, if applicable, notional principal
amount of the trust assets and the current interest rate (or weighted average
interest rate) on the trust assets at the close of business on that
distribution date;
32
DESCRIPTION OF THE TRUST AGREEMENT
- --------------------------------------------------------------------------------
- - if applicable, the current rating of the applicable trust assets assigned by
each rating agency then rating the certificates;
- - the aggregate certificate principal balance or aggregate notional amount, if
applicable, of each class of certificates (including any class of certificates
not offered to the public) at the close of business on that distribution date,
separately identifying any reduction in the aggregate certificate principal
balance or aggregate notional amount due to the allocation of any realized
losses or otherwise; and
- - as to any series or class for which credit support has been obtained, the
amount of credit support available as of the close of business on that
distribution date.
In the case of information furnished pursuant to the first and third paragraphs
listed above, the amounts must be expressed as a U.S. dollar amount (or its
equivalent in any other specified currency) per minimum denomination of
certificates or for another specified portion. Within a reasonable period of
time after the end of each calendar year, the trustee must furnish to each
person who at any time during the calendar year was a certificate holder a
statement containing the information set forth in the first and fourth
paragraphs listed above, aggregated for that calendar year or the applicable
portion of the calendar year during which the person was a certificate holder.
This obligation of the trustee will be deemed to have been satisfied to the
extent that substantially comparable information has been provided by the
trustee pursuant to any requirements of the Internal Revenue Code as are from
time to time in effect.
NOTICES
Any notice required to be given to a holder of a registered certificate will be
mailed to the address of such holder set forth in the applicable certificate
register. As noted above, for as long as DTC is the sole registered holder, all
notices will be sent to DTC. See "Description of the Certificates--Global
Securities; Holdings in Street Name."
ANNUAL COMPLIANCE STATEMENT
If specified in the applicable prospectus supplement, the trust agreement will
provide that a firm of independent public accountants will furnish an annual
statement to the trustee to the effect that the firm has examined documents and
records relating to the administration of the trust assets during the related
12-month period (or, in the case of the first such report, the period beginning
on the original issue date). This report will provide the firm's findings, based
on these procedures, as to whether the administration was conducted in
compliance with the terms of the trust agreement. The report will identify any
exceptions found during the examination. The report will not be an audit.
If specified in the applicable prospectus supplement, the trust agreement will
also require the trustee to deliver to the depositor, on or before February 15th
of each year, an annual statement signed by an officer of the trustee to the
effect that the trustee has fulfilled its obligations under the trust agreement
throughout the preceding year with respect to the certificates issued pursuant
to the trust agreement.
Copies of the annual accountants' statements, if any, and the statement of the
officers of the trustee may be obtained by certificate holders without charge
upon written request to the trustee at the address provided in the applicable
prospectus supplement.
REPLACEMENT CERTIFICATES
If a 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 (if the trust is a New York trust) or in the City of
Wilmington, Delaware (if the trust is a Delaware trust), or any other location
specified
33
DESCRIPTION OF THE TRUST AGREEMENT
- --------------------------------------------------------------------------------
in the applicable prospectus supplement, upon payment by the holder of any
expenses incurred by the trustee in connection with the replacement and the
furnishing of such evidence and indemnity as the trustee or the depositor may
require. Mutilated certificates must be surrendered before new certificates will
be issued.
RETAINED INTEREST
The prospectus supplement for a series of certificates will specify whether the
depositor or any other party will retain any ownership, beneficial or security
interest in a portion of, the underlying securities to be deposited into the
related trust (the "retained interest"), which retained interest will not be
part of the trust assets. If there is a retained interest, the interest will be
established on an asset-by-asset basis and will be specified in the trust
agreement or an exhibit to the trust agreement. Payments in respect of the
retained interest will be deducted from payments received on the underlying
security related to the retained interest and, in general, will not be property
of the related trust or available to the certificate holders. Unless otherwise
specified in the applicable prospectus supplement, any partial recovery on an
underlying security will be applied pro rata to the retained interest and the
portion of the underlying security deposited into the trust.
RETAINED CALL OPTIONS AND RETAINED CALL RIGHTS
If specified in the applicable prospectus supplement, as a condition to its
purchase of a certificate, each certificate holder may be required to grant to
the depositor the option (each, a "call option") to repurchase its certificates
or the depositor or another specified party may retain the right (a "retained
call right") to repurchase the underlying securities to be deposited into the
related trust, which retained call right will not be part of the trust assets.
The transferability of each call option, the conditions, if any, to exercise of
each call option and the call price of each call option will be specified in the
applicable prospectus supplement. If there are retained call rights, these will
be established on an asset-by-asset basis and will be specified in the
applicable trust agreement or in an exhibit thereto, and the exercise price of
the retained call rights will be at least equal to the principal balance of the
certificates plus any accrued interest, and the proceeds will be distributed by
the trustee to the certificate holders.
TERMINATION
The trust agreement will terminate and the trust will dissolve, wind-up and
terminate 30 days after the final distribution by the trustee of all moneys or
other property or proceeds of the underlying securities and other trust assets
including the proceeds of any repurchase of all the underlying securities by the
issuer of such securities due to the exercise of its retained call rights with
respect to the underlying securities or any sale or other liquidation of the
trust assets, in each case in accordance with the terms of the trust agreement.
The termination may occur following the scheduled maturity of the underlying
securities, as a result of a trust liquidation event, as described under "Trust
Liquidation Events" above, or the exercise of the retained call options or
retained call rights. In no event, however, will any trust continue beyond the
date specified in the applicable prospectus supplement. Written notice of
termination of a trust will be provided to each certificate holder, to the
depositor and to any other party specified in the trust agreement as described
above under "--Reports to Certificate Holders; Notices--Notices." The final
distribution on the related certificates 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.
Upon the occurrence of a trust liquidation event that causes a liquidation of
some but not all of the underlying securities, the trustee will effect that
partial liquidation as provided in the related prospectus supplement. In the
case of any other trust liquidation event, all trust assets will be
34
DESCRIPTION OF THE TRUST AGREEMENT
- --------------------------------------------------------------------------------
liquidated and, following the distribution of the proceeds of the liquidation,
the trust will terminate. See "Description of the Trust Agreement--Trust
Liquidation Events" in the prospectus supplement.
DUTIES OF THE TRUSTEE
The trustee will make no representations as to the validity or sufficiency of
the trust agreement, the certificates of any series or any trust asset, credit
support or related document. The trustee for a series is required to perform
only those duties that are specifically required under the trust agreement with
respect to that series. However, upon receipt of the various certificates,
reports or other instruments required to be furnished to it, the trustee is
required to examine those documents and to determine whether they conform to the
applicable requirements of the trust agreement.
THE TRUSTEE
The trustee, and co-trustee, if any, 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 and co-trustee, if any, will be unaffiliated with the depositor, but it
may have normal banking relationships with the depositor and its affiliates. The
address of the trustee's, and the co-trustee's, if any, corporate trust office
will be either the address specified in the applicable prospectus supplement or
any other address that the trustee, or if applicable, the co-trustee designates
from time to time by notice to the certificate holders and the depositor.
35
- --------------------------------------------------------------------------------
Currency Risks
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in a certificate with a specified currency other than U.S. dollars
entails significant risks for investors whose base currency is the U.S. dollar.
These risks include the possibility of significant changes in rates of exchange
between the U.S. dollar and the specified currency and the possibility that
foreign exchange controls could be imposed or modified with respect to the
specified currency. These risks 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 some other
currencies have been highly volatile, and this level of 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 pass-through rate
and, in some 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 that currency. 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 would not
be available. In that event, such payments will be made in the manner set forth
below under "--Inability to Pay in Specified Currency" or as otherwise specified
in the applicable prospectus supplement.
YOU SHOULD CONSULT YOUR FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS ENTAILED BY
AN INVESTMENT IN CERTIFICATES DENOMINATED IN A CURRENCY OTHER THAN U.S. DOLLARS.
THESE TYPES OF CERTIFICATES ARE NOT AN APPROPRIATE INVESTMENT FOR PERSONS WHO
ARE NOT SOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS.
The information provided in this prospectus is directed to prospective
purchasers of certificates who are United States residents. The applicable
prospectus supplement for some issuances of certificates may provide 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, the certificates.
Any prospectus supplement relating to certificates with a specified currency
other than U.S. dollars will contain information concerning the historical
exchange rates for that currency against the U.S. dollar, a description of such
currency, any exchange controls affecting the currency and any other relevant
information about the currency.
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. The New York Judiciary Law
36
CURRENCY RISKS
- --------------------------------------------------------------------------------
provides 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. There will be no provision for
any further payments if exchange rates continue to change after the judgment is
rendered.
37
UBS AG
OVERVIEW
UBS AG and subsidiaries ("UBS") comprise one of the world's leading financial
firms, serving a discerning global client base. As an organization, it combines
financial strength with a global culture that embraces change. As an integrated
firm, UBS creates added value for clients by drawing on the combined resources
and expertise of all its businesses.
UBS is the world's leading wealth management business, a global investment
banking and securities firm with a strong institutional and corporate client
franchise, a key asset manager and, with roughly a quarter of the Swiss lending
market, the market leader in Swiss corporate and individual client banking.
On December 31, 2003, UBS employed approximately 66,000 people. With
headquarters in Zurich, Switzerland and Basel, Switzerland, UBS operates in over
50 countries and from all major international centers.
UBS is managed through four Business Groups and its Corporate Center, each of
which is summarized below.
Further information about UBS, including more detailed descriptions of the
Business Groups and Corporate Center, is contained in UBS AG's Annual Report on
US Securities and Exchange Commission Form 20-F for the year ended December 31,
2003 (the "Form 20-F"), which is incorporated by reference into this prospectus.
WEALTH MANAGEMENT & BUSINESS BANKING
Wealth Management provides a comprehensive range of products and services
individually tailored for wealthy clients around the world via its global branch
network and through financial intermediaries. With CHF 701 billion in invested
assets on December 31, 2003, more than 140 years of wealth management experience
and an extensive branch network comprising 112 offices in Switzerland and 56
offices around the world, it is the world's largest private bank.
Business Banking Switzerland is the leading bank in Switzerland. At the end of
2003, it had around 3.5 million individual client accounts, and relationships
with around some 150,000 corporate clients, including institutional investors,
public entities and foundations based in Switzerland, as well as 3,000 financial
institutions worldwide. Clients have invested assets of CHF 212 billion with
Business Banking. With a total loan book of CHF 139 billion on December 31,
2003, it leads the Swiss lending and retail mortgage market.
GLOBAL ASSET MANAGEMENT
The Global Asset Management business is one of the world's leading asset
managers, providing investment management solutions to private clients,
financial intermediaries and institutional investors. It is distinguished by its
integrated global investment processes and the breadth, depth and scope of
investment capabilities which enable it to offer investment solutions in nearly
every major asset class. Invested assets totaled CHF 574 billion on December 31,
2003, making it one of the largest global institutional asset managers, the
second largest mutual fund manager in Europe, and the largest mutual fund
manager in Switzerland.
38
UBS AG
- --------------------------------------------------------------------------------
INVESTMENT BANK
UBS's Investment Bank operates globally as a client-driven investment banking
and securities firm. Its salespeople, research analysts and investment bankers
provide products and services to the world's key institutional investors,
intermediaries, banks, insurance companies, corporations, sovereign governments,
supranational organizations and private investors. For both its own corporate
and institutional clients and the individual clients of other parts of UBS, the
Investment Bank provides product innovation, research and advice, and
comprehensive access to the world's capital markets.
WEALTH MANAGEMENT USA
Wealth Management USA is one of the biggest US wealth managers. With CHF 634
billion in invested assets and nearly 2 million private client relationships,
its focus is on wealth management services to the core affluent (clients with
more than USD 500,000 in investable assets) and to high net worth individuals
(clients with more than USD 5 million in investable assets). It has almost 7,800
financial advisors in 366 branch office locations that build and maintain
consultative relationships with their clients.
CORPORATE CENTER
UBS's portfolio of businesses is planned and managed for the long-term
maximization of shareholder value. Corporate Center creates sustainable value
for shareholders and stakeholders by partnering with the Business Groups to
ensure that the firm operates as an effective and integrated whole with a common
vision and set of values.
CORPORATE INFORMATION
The legal and commercial name of the company is UBS AG. The company was
incorporated under the name SBC AG on February 28, 1978 for an unlimited
duration and entered in the Commercial Register of Canton Basle-City on that
day. On December 8, 1997, the Company changed its name to UBS AG. The company in
its present form was created on June 29, 1998 by the merger of Union Bank of
Switzerland (founded 1862) and Swiss Bank Corporation (founded 1872). UBS AG is
entered in the Commercial Registers of Canton Zurich and Canton Basle-City. The
registration number is CH-270.3.004.646-4.
UBS AG is incorporated and domiciled in Switzerland and operates under Swiss
Company Law and Swiss Federal Banking Law as an Aktiengesellschaft, a
corporation that has issued shares of common stock to investors.
The address and telephone number of UBS AG's two registered offices and
principal places of business are: Bahnhofstrasse 45, CH-8098 Zurich,
Switzerland, telephone +41-1-234 11 11; and Aeschenvorstadt 1, CH-4051 Basel,
Switzerland, telephone +41-61-288 20 20.
UBS AG shares are listed on the SWX Swiss Exchange and traded through virt-x
which is majority owned by the SWX Swiss Exchange. They are also listed on the
New York Stock Exchange and on the Tokyo Stock Exchange.
39
UBS AG
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CAPITALIZATION OF UBS
The following table sets forth the consolidated capitalization of UBS in
accordance with International Financial Reporting Standards and translated into
U.S. Dollars.
<Table>
<Caption>
CHF USD
AS OF MARCH 31, 2004 (In millions)
- -------------------------------------------------------------------------------
Debt
Short Term Debt Issued(1)................................. 106,113 83,754
Long Term Debt Issued(1).................................. 60,773 47,968
------- -------
Total Debt Issued......................................... 166,886 131,722
Minority Interest(2)........................................ 4,606 3,635
Shareholders' Equity........................................ 37,602 29,679
------- -------
Total Capitalization........................................ 209,094 165,036
======= =======
</Table>
- ------------
(1) Includes Money Market Paper and Medium Term Notes as per Balance Sheet
position.
(2) Includes Trust preferred securities.
Swiss francs (CHF) amounts have been translated into U.S. dollars (USD) at the
rate of CHF 1 = USD 0.78929.
WHERE YOU CAN FIND MORE INFORMATION
UBS AG is subject to the informational requirements of the Securities Exchange
Act and files reports and other information with the SEC under File No. 1-15060.
You may read and copy any reports, statements and other information that UBS AG
files with the SEC (i) over the Internet at the SEC's website at
http://www.sec.gov containing reports, proxy statements and other information
regarding registrants that file electronically with the SEC; (ii) at the SEC's
public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the SEC's regional offices located at 233 Broadway, New York, New York 10279,
and Citicorp Center, Suite 1400, 500 West Madison Street, Chicago, Illinois
60661; (iii) at the New York Stock Exchange, Inc., 20 Broad Street, New York,
New York 10005; (iv) at the American Stock Exchange LLC, 86 Trinity Place, New
York, New York 10006; (v) over the Internet at UBS AG's web site at
http://www.ubs.com/investor-relations; and (vi) at no cost, upon request to UBS
AG, Investor Relations G41B, P.O. Box, CH-8098 Zurich, Switzerland, Phone:
011-41-1-234-41-00, Fax: 011-44-1-234-34-15, E-mail:
SH-investorrelations@ubs.com.
INCORPORATION OF DOCUMENTS BY REFERENCE
We are incorporating by reference in this prospectus UBS AG's (a) Annual Report
on Form 20-F for the year ended December 31, 2003, which UBS AG filed with the
SEC on March 31, 2004 and (b) Forms 6-K filed with the SEC on April 22, 2004,
May 4, 2004 and May 11, 2004. We are also incorporating all subsequent reports
that UBS AG files with the SEC on Form 20-F under the Securities Exchange Act
after the date of this prospectus and prior to the termination of the offering
of the certificates. We may also incorporate any reports on Form 6-K that UBS AG
submits to the SEC after the date of this prospectus and prior to the
termination of the offering of the certificates if the Form 6-K filing
specifically states that it is incorporated by reference into this prospectus or
into registration statements that UBS AG files with the SEC. Information that
UBS AG files with or submits to the SEC later 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.
40
UBS AG
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As a recipient of this prospectus, you may request a copy, at no cost, of any or
all of the document(s) we incorporate by reference, except exhibits to the
documents (unless the exhibits are specifically incorporated by reference), at
no cost, by writing or calling UBS AG at: UBS AG, Investor Relations G41B, P.O.
Box, CH-8098 Zurich, Switzerland, Phone: 011-41-1-234-41-00, Fax:
011-41-1-234-34-15, E-mail: SH-investorrelations@ubs.com, Internet:
www.ubs.com/investor-relations.
EXPERTS
The consolidated balance sheets of UBS AG at December 31, 2003 and 2002 and the
related consolidated statements of income, cash flows and changes in
shareholders' equity for each of the three years in the period ended December
31, 2003 incorporated by reference into this prospectus have been audited by
Ernst & Young Ltd., independent auditors, as set forth in their report thereon
incorporated by reference into this prospectus, and are included in reliance
upon such report given upon the authority of such firm as experts in accounting
and auditing.
41
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United States Federal Income Tax Consequences
The applicable prospectus supplement for each series will contain a general
discussion of the material United States federal income tax consequences of the
purchase, ownership and disposition of the certificates by a holder of
certificates. These consequences will depend on the terms of the certificates
and whether the trust is classified as a grantor trust, as a partnership or
otherwise for federal income tax purposes, and will also depend on the trust
assets relating to the certificates. The trust agreement for each series will
include provisions appropriate to the particulars of the transaction and to the
relevant United States federal income tax classification of the trust and
related certificates.
Unless otherwise specified in the applicable prospectus supplement, it is
generally anticipated that, for United States federal income tax purposes, each
trust will be classified as a grantor trust, and not as a partnership or as an
association or publicly traded partnership taxable as a corporation, and the
certificates will be treated as evidencing an undivided ownership interest in
the trust assets.
With respect to each series of certificates, the trust for that series will be
provided with an opinion of Sullivan & Cromwell LLP, special federal tax counsel
to the depositor and the trust, regarding the United States federal income tax
classification of the trust. However, opinions of counsel are not binding on the
Internal Revenue Service (the "IRS") or the courts. In addition, prospective
investors in any particular series of certificates should be aware that no
rulings will be sought from the IRS with respect to any of the federal income
tax consequences discussed in the applicable prospectus supplement, and no
assurance can be given that the IRS will not take contrary positions.
Accordingly, prospective investors in any particular series of certificates
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.
Certain ERISA Considerations
Title I of the Employee Retirement Income Security Act of 1974 ("ERISA") and
section 4975 of the Internal Revenue Code impose certain restrictions on many
retirement plans and other employee benefit plans and arrangements
(collectively, "plans") and on persons who are "parties in interest" as defined
in ERISA or "disqualified persons" as defined in section 4975 of the Internal
Revenue Code with respect to those plans. ERISA imposes certain duties on
persons who are considered fiduciaries of plans and also prohibits certain
transactions between a plan, its fiduciaries and/or parties in interest with
respect to the plan. The Internal Revenue Code imposes a tax on some types of
prohibited transactions between a plan and a disqualified person with respect to
the plan. Certain employee benefit plans, such as governmental plans and church
plans (provided no election has been made under section 410(d) of the Internal
Revenue Code), are not subject to the restrictions of ERISA or the Internal
Revenue Code, and assets of these plans may be invested in each series of
certificates without regard to the ERISA considerations described below, subject
to the provisions of applicable federal, state and local law.
Investments by plans are subject to ERISA's general fiduciary requirements,
including the requirement of investment prudence and diversification and the
requirement that a plan's investments be made in accordance with the documents
governing the plan. Therefore, each plan fiduciary, before acquiring any
certificates, must determine that an investment in the certificates satisfies
these general fiduciary requirements.
Plan fiduciaries must also determine whether the acquisition and holding of any
certificates and the operations of the related trust would result in direct or
indirect prohibited transactions. The purchase and holding of a certificate or
any interest in a certificate by or on behalf of a plan could result in
42
CERTAIN ERISA CONSIDERATIONS
- --------------------------------------------------------------------------------
prohibited transactions and the imposition of excise taxes and civil penalties
under ERISA or the Internal Revenue Code unless a Department of Labor prohibited
transaction exemption applies and the conditions for the exemption are
satisfied. The operations of the trust for a series of certificates could
similarly result in prohibited transactions if plans that purchase the
certificates issued by the trust are deemed to own an interest in the underlying
assets of the trust. There also may be an improper delegation by the plan
fiduciaries of the responsibility to manage plan assets if plans that purchase
any series of certificates are deemed to own an interest in the underlying
assets of the related trust. The applicable prospectus supplement for each
series will specify whether plans are likely to be deemed to own the underlying
assets of the applicable trust. Plan fiduciaries should carefully review with
their legal advisors whether the purchase or holding of a certificate would be a
prohibited transaction or would otherwise be impermissible under ERISA or
section 4975 of the Internal Revenue Code. See "ERISA Considerations" in the
applicable prospectus supplement.
The Department of Labor has issued several prohibited transaction class
exemptions ("PTCEs") from certain of the prohibited transaction provisions of
ERISA and the Internal Revenue Code. For example, the sale of certificates by
the underwriters to plans may be exempt under PTCE 75-1 if the conditions of
that PTCE are satisfied. Other PTCEs also may be available to the acquisition
and holding of a certificate. Plan fiduciaries should consider whether a PTCE is
available and whether such an exemption would cover all possible prohibited
transactions. See "ERISA Considerations" in the applicable prospectus
supplement.
By acquiring and holding a certificate, a plan will be deemed to have
represented and warranted to the depositor, the trustee and the underwriter that
the acquisition and holding of a certificate does not involve a non-exempt
prohibited transaction with respect to the plan, including with respect to the
activities of the related trust.
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Plan of Distribution
PLAN OF DISTRIBUTION FOR THE INITIAL OFFER AND SALE OF CERTIFICATES
Certificates may be offered in any of three ways: (a) through underwriters or
dealers; (b) directly to one or more purchasers; or (c) through agents. The
applicable prospectus supplement will set forth the terms of the offering of any
series of certificates, which may include the names of any underwriters, or
initial purchasers, the purchase price of the certificates and the proceeds to
the depositor from the sale, any underwriting discounts and other items
constituting underwriters' compensation, any initial public offering price, any
discounts or concessions allowed or reallowed or paid to dealers, any securities
exchanges on which the certificates may be listed and the place and time of
delivery of the certificates.
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 in the United States will include either or both of UBS Securities
LLC and UBS Financial Services Inc., which are affiliates of the depositor.
Unless otherwise provided in the applicable prospectus supplement, the
obligations of the underwriters to purchase the certificates will be subject to
conditions precedent, and the underwriters will be obligated to purchase all of
the certificates if any of the 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 set
forth, 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 indicated in the applicable prospectus supplement, the depositor will
authorize agents, underwriters or dealers to solicit offers by specified
institutions to purchase certificates at the public offering price described in
the prospectus supplement pursuant to delayed delivery contracts providing for
payment and delivery on a future date specified in the prospectus supplement.
These contracts will be subject only to those conditions described in the
applicable prospectus supplement and the prospectus supplement will set forth
the commissions payable for solicitation of the contracts.
Any underwriters, dealers or agents participating in the distribution of
certificates may be deemed to be underwriters and any discounts or commissions
they receive 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 some civil liabilities, including
liabilities under the Securities Act, or to contribution with respect to
payments that the agents or underwriters may be required to make in respect of
those liabilities. Agents and underwriters may be customers of, engage in
transactions with, or perform services for, the depositor or its affiliates in
the ordinary course of business.
Unless otherwise set forth in the applicable prospectus supplement, the
underwriters may purchase and sell the certificates in the open market. These
transactions may include stabilizing transactions and purchases to cover short
positions created by the underwriters, and the imposition of a penalty bid, in
connection with the offering. Stabilizing transactions consist of bids or
purchases for the purpose of preventing or retarding a decline in the market
price of the certificates; and short positions created by the underwriters
involve the sale by the underwriters of a greater number of certificates than
they are
44
PLAN OF DISTRIBUTION
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required to purchase from the trust in the offering. The underwriters also may
impose a penalty bid, whereby selling concessions allowed to broker-dealers in
respect of the certificates sold in the offering may be reclaimed by the
underwriters if the certificates are repurchased by the underwriters in
stabilizing or covering transactions. These activities may stabilize, maintain
or otherwise affect the market price of the certificates, which may be higher
than the price that might otherwise prevail in the open market; and these
activities, if commenced, may be discontinued at any time. These transactions
may be effected in the over-the-counter market or otherwise.
As to each series of certificates, we will offer only those classes rated in one
of the investment grade rating categories by a rating agency. Any certificates
of unrated classes or classes rated below investment grade may be retained by
the depositor or sold at any time to one or more purchasers in a transaction
exempt from registration under the Securities Act.
Because the NASD views the certificates as interests in a direct participation
program, the offering is being made in compliance with Rule 2810 of the NASD's
Conduct Rules. The underwriters may not confirm sales to any discretionary
account without the prior specific written approval of a customer.
MARKET-MAKING RESALES
This prospectus may be used by UBS AG, UBS Securities LLC, UBS Financial
Services Inc. or any other affiliate of UBS AG in connection with offers and
sales of the certificates in market-making transactions. In a market-making
transaction, each of UBS AG, UBS Securities LLC, UBS Financial Services Inc. or
any other affiliate of UBS AG may resell a certificate it acquires from other
holders, after the original offering and sale of the certificate. Resales of
this kind may occur in the open market or may be privately negotiated at
prevailing market prices at the time of resale or at related or negotiated
prices. In these transactions, UBS AG, UBS Securities LLC, UBS Financial
Services Inc. or any other affiliate of UBS AG may act as principal or agent,
including as agent for the counterparty in a transaction in which it acts as
principal, or as agent for both counterparties in a transaction in which it does
not act as principal. UBS AG, UBS Securities LLC, UBS Financial Services Inc. or
any other affiliate of UBS AG may receive compensation in the form of discounts
and commissions, including from both counterparties in some cases.
The depositor does not expect to receive any proceeds from market-making
transactions. The depositor does not expect that UBS AG, UBS Securities LLC, UBS
Financial Services Inc. or any other affiliate of UBS AG that engages in these
transactions will pay any proceeds from its market-making resales to the
depositor.
Information about the trade and settlement dates, as well as the purchase price,
for a market-making transaction will be provided to the purchaser in a separate
confirmation of sale.
Unless the depositor or an agent informs you in your confirmation of sale that
your certificate is being purchased in its original offering and sale, you may
assume that you are purchasing your security in a market-making transaction.
MATTERS RELATING TO INITIAL OFFERING AND MARKET-MAKING RESALES
UBS AG, UBS Securities LLC and UBS Financial Services Inc. do not expect the
amount of certificates held, as a result of market-making resales, by accounts
over which it exercises discretionary authority to exceed, at any time, five
percent of the aggregate initial offering price (that is, $147,000,000) of all
of the certificates. In compliance with NASD guidelines, the maximum commission
or discount to be received by any NASD member or independent broker dealer may
not exceed 8% of the aggregate principal amount of the securities offered
pursuant to this prospectus; however, it is anticipated that the maximum
commission or discount to be received in any particular offering of certificates
will be significantly less than this amount.
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Validity of the Certificates
The validity of the certificates and their federal income tax status will be
passed upon for the depositor and the applicable trust by Sullivan & Cromwell
LLP, New York, New York.
46
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INDEX OF DEFINED TERMS
The following is an index of defined terms used in this prospectus and the page
where each definition appears.
<Table>
<Caption>
DEFINED TERMS PAGE
- ------------------------------------------------------------------
accrued interest factor..................................... 13
asset-backed agreements..................................... 21
banking organization........................................ 16
base rate................................................... 12
bond index.................................................. 15
business day................................................ 11
calculation agent........................................... 13
call option................................................. 34
certificate................................................. 9
certificate principal balance............................... 4
collection account.......................................... 27
concentrated underlying securities.......................... 20
credit support instruments.................................. 29
cut-off date................................................ 23
definitive certificate...................................... 16
depositary.................................................. 16
determination date.......................................... 11
direct participants......................................... 16
DTC......................................................... 16
ERISA....................................................... 42
face amount................................................. 15
fixed pass-through rate..................................... 10
fixed rate certificates..................................... 12
floating rate certificates.................................. 12
Form 20-F................................................... 38
GSEs........................................................ 21
indexed certificate principal balance....................... 15
indexed certificates........................................ 15
indexed commodity........................................... 15
indexed currency............................................ 15
indexed interest............................................ 15
indirect participants....................................... 17
insurer..................................................... 26
interest factor............................................. 13
interest reset date......................................... 13
interest reset period....................................... 13
IRS......................................................... 42
letter of credit bank....................................... 26
LIBOR....................................................... 12
London banking day.......................................... 12
</Table>
47
INDEX OF DEFINED TERMS
- --------------------------------------------------------------------------------
<Table>
<Caption>
DEFINED TERMS PAGE
- ------------------------------------------------------------------
maximum pass-through rate................................... 13
minimum pass-through rate................................... 13
multi-currency certificates................................. 16
multilateral bank issuer.................................... 22
notional amount............................................. 14
original issue date......................................... 10
pass-through................................................ 8
pass-through rate........................................... 10
plans....................................................... 42
PTCEs....................................................... 43
publicly tradable........................................... 20
realized losses............................................. 14
reference assets............................................ 25
reference entity............................................ 25
reference obligation........................................ 25
reserve account............................................. 27
retained interest........................................... 6,34
Securities Act.............................................. 20
Securities Exchange Act..................................... 5
specified currency.......................................... 10
spread...................................................... 12
spread multiplier........................................... 12
stock index................................................. 15
street name................................................. 18
stripped certificates....................................... 10
stripped interest........................................... 12
trust assets................................................ 20
UBS......................................................... 38
underlying securities....................................... 20
underlying securities currency.............................. 23
underlying securities interest accrual periods.............. 23
underlying securities payment dates......................... 23
underlying securities rate.................................. 23
variable pass-through rate.................................. 10
</Table>
48