As filed with the Securities and Exchange Commission on May 10, 2006
Registration No. 333-[______]
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------------
STRUCTURED PRODUCTS CORP.
(Exact name of Registrant as specified in its charter)
DELAWARE 13-3692801
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
390 Greenwich Street
New York, New York 10013
(212) 816-7496
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
Scott Flood, Secretary
Structured Products Corp.
390 Greenwich Street
New York, New York 10013
(212) 816-7496
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
Copy to:
Al B. Sawyers
Orrick, Herrington & Sutcliffe LLP
666 Fifth Avenue
New York, New York 10103
------------------------------
Approximate date of commencement of proposed sale to the public: From time to
time after this Registration Statement becomes effective in light of market
conditions.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering.[_]
If delivery of the prospectus is executed to be made pursuant to Rule 434,
please check the following box.[_]
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------------
TITLE OF SECURITIES AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
BEING REGISTERED REGISTERED OFFERING PRICE PER UNIT AGGREGATE OFFERING PRICE REGISTRATION FEE
Trust Certificates 1,000,000 100% 100% $107.00
- --------------------------------------------------------------------------------------------------------------------------
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
EXPLANATORY NOTES
This Registration Statement includes:
[] A form of base prospectus and a form of prospectus supplement for offering
series of Certificates representing the entire beneficial interest in
various trusts to be created from time to time, the assets of which will
consist primarily of securities within one of the following categories: (1)
a debt security or asset backed security or a pool of such debt securities
or asset backed securities issued or by their terms guaranteed by one or
more corporations, banking organizations, insurance companies or special
purpose vehicles (including trusts, limited liability companies,
partnerships or other special purpose entities); (2) a debt security or
pool of such debt securities which represent obligations issued or by their
terms guaranteed by a foreign government, political subdivision or agency
or instrumentality thereof; (3) an obligation or obligations of one or more
foreign private issuers; or (4) a debt security or pool of such debt
securities which represent obligations of the United States of America, any
agency thereof for the payment of which the full faith and credit of the
United States of America is pledged, or a United States governmental
sponsored organization created pursuant to a federal statute. All of such
securities will either be publicly issued or available for resale pursuant
to an exemption from registration under the Securities Acts of 1933, as
amended (the "Securities Act"). The forms of prospectus and prospectus
supplement each contain bracketed provisions appropriate to the various
categories of trust assets; each set of alternate bracketed language, when
combined with the form of base prospectus and form of prospectus
supplement, constitutes a separate prospectus.
PROSPECTUS SUPPLEMENT
(To Prospectus dated [ ], 200_)
[TIERS(R)][CORTS(R)][NAME] [CALLABLE] _____________-BACKED CERTIFICATES,
SERIES_________ 200_
STRUCTURED PRODUCTS CORP.
SPONSOR AND DEPOSITOR
$__________________ CERTIFICATE PRINCIPAL BALANCE, [____%][VARIABLE]
PASS-THROUGH RATE
ISSUED BY
[TIERS(R)][CORTS(R)][NAME] [CALLABLE] _____________-BACKED CERTIFICATES
TRUST ________ 200_
ISSUING ENTITY
The [TIERS(R)][CORTS(R)][NAME] [Callable] _________-Backed Certificates
Trust 200_Series 200_ will issue [a single class][____ classes] of certificates.
The Class [__] certificates (the "Certificates") are being offered by this
Prospectus Supplement and the accompanying Prospectus.
o The Certificates will represent a beneficial interest only in
[SELECT ONE OF THE FOLLOWING BRACKETED SELECTIONS][Alternative
1: specify debt security or asset backed security or a pool of
such debt securities or asset backed securities issued or by
their terms guaranteed by one or more corporations, banking
organizations, insurance companies or special purpose vehicles
(including trusts, limited liability companies, partnerships
or other special purpose entities)][Alternative 2: specify
obligations of one or more foreign private issuers]
[Alternative 3: specify debt security or pool of such debt
securities which represent obligations of the United States of
America, any agency thereof for the payment of which the full
faith and credit of the United States of America is pledged,
or a United States governmental sponsored organization created
pursuant to a federal statute][Alternative 4: specify debt
security or pool of such debt securities which represent
obligations issued by or by their terms guaranteed by a
foreign government, political subdivision or agency or
instrumentality thereof][maturing in ___ years] issued by
[specify issuers], and having the characteristics described
herein under "Description of the Underlying Securities."
The securities will be held by [TIERS(R)][CORTS(R)][NAME]
[Callable] __________________-Backed Certificates Trust
______ 200_Series 200_. The securities have a different
[interest rate][currency][maturity][credit risk] than do the
Certificates. The Certificates do not represent the obligation
of or any interest in the depositor and sponsor, or any of its
affiliates.
o [[Interest will accrue on the Certificates at rate equal to
____.] [The Class ____ Certificates will receive all scheduled
interest payments received by the Trust on or before ____ on
the securities held by the Trust. [The Class ____ Certificates
will receive a distribution of the securities in kind on
_____.]]
o [[TIERS(R)][CORTS(R)][NAME] [Callable] _________-Backed
Certificates Trust ____200_Series 200_ will enter into a [swap
agreement][derivative transaction] with ____ as its
counterparty. [TIERS(R)][CORTS(R)][NAME] [Callable]
_________-Backed Certificates Trust ____200_ Series 200_ will
pay to the counterparty the [interest][principal][other]
amounts [TIERS(R)][CORTS(R)][NAME] [Callable] _________-Backed
Certificates Trust ____200_Series 200_ receives on the
securities. In exchange, the counterparty will pay to
[TIERS(R)][CORTS(R)][NAME] [Callable] _________-Backed
Certificates Trust ____200_ Series 200_ the scheduled
distributions on the Certificates.] [Describe for
each [swap agreement][derivative transaction.]]
o [If the securities default, or if [TIERS(R)][CORTS(R)][NAME]
[Callable] _________-Backed Certificates Trust 200_Series 200_
is terminated or fails to perform its obligations, the [swap
agreement][derivative transaction] will terminate early. Early
termination of the [swap agreement][derivative transaction]
may result in losses to the purchaser of the Certificates,
which may be as much as the entire investment. See "Risk
Factors."]
o [Payments of [interest][principal] will vary based on
performance of an index. A [decline][increase] in the value of
the index will result in losses to the purchaser of the
certificates, which may be as much as the entire investment.
See "Risk Factors."]
o [The Class __ Certificates are not entitled to distributions
of principal. If the securities are prepaid or redeemed early,
returns on the Class ____ Certificates will be adversely
affected and holders of the Class ____ Certificates may not
recover the initial investment. See "Risk Factors."]
o [In addition to the Certificates being offered pursuant to
this prospectus supplement, the [TIERS(R)][CORTS(R)][NAME]
[Callable] _________-Backed Certificates Trust ____200_ Series
200_ will issue [___] class[es] of [interest only]
certificates][and][one class of call [rights][warrants]]which
are not being offered pursuant to this prospectus supplement.]
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THESE SECURITIES OR DETERMINED THAT THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The Certificates may [not] be purchased by pension plan investors
subject to the requirements of the Employee Retirement Income Security Act of
1974 [only through special arrangements]. See "ERISA Considerations" in the
prospectus.
INVESTING IN THE CERTIFICATES INVOLVES CERTAIN RISKS, WHICH ARE
DESCRIBED IN THE "RISK FACTORS" SECTION BEGINNING ON PAGE S-[__] IN THIS
PROSPECTUS SUPPLEMENT AND ON PAGE [__] IN THE PROSPECTUS.
The Certificates are expected to be approved for listing, subject to
official notice of issuance, on the [New York Stock Exchange][American Stock
Exchange][other]. Trading of the Certificates on the [New York Stock
Exchange][American Stock Exchange][other] is expected to commence within a
[__]-day period after the initial delivery thereof. No guarantee can be given
that a secondary market for the certificates will develop or that the
certificates will remain listed on the [New York Stock Exchange][American Stock
Exchange][other]. See "Underwriting" herein.
Per Certificate Total
-------------------- ------------------------------
Public offering price..................................... $[__] $[__]
Underwriting discount..................................... $[__] $[__]
Proceeds to trust (before expenses)....................... $[__] $[__]
The underwriter expects to deliver your Certificates in book-entry form
only through The Depository Trust Company on or about [__], 20[__].
CITIGROUP
____ ____, 200_
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
We provide information to you about the [TIERS][CORTS][NAME] in two
separate documents that progressively provide more detail: (a) the accompanying
prospectus, which provides general information, some of which may not apply to
the [TIERS][CORTS][NAME] and (b) this prospectus supplement, which describes the
specific terms of your [TIERS][CORTS][NAME].
You are urged to read both the accompanying prospectus and this
prospectus supplement in full to obtain material information concerning the
[TIERS][CORTS][NAME]. This prospectus supplement may be used to offer the
[TIERS][CORTS][NAME] only if accompanied by the prospectus.
We include cross-references in this prospectus supplement and the
accompanying prospectus to captions in these materials where you can find
further related discussions. The Table of Contents for this prospectus
supplement and the accompanying prospectus identify the pages where these
sections are located.
You can find a listing of the pages where capitalized terms used in
this prospectus supplement and the accompanying prospectus are defined under the
caption "Index of Terms" beginning on page S-[__] in this prospectus supplement
and beginning on page [43] in the accompanying prospectus.
We have filed a registration statement relating to the
[TIERS][CORTS][NAME] with the Securities and Exchange Commission. This
prospectus supplement and the accompanying prospectus are a part of the
registration statement, but the registration statement includes additional
information. See "Available Information" in the accompanying prospectus.
You should rely only on the information contained in this prospectus
supplement or the accompanying prospectus. We have not authorized any other
person to provide you with different information. If anyone provides you with
different or inconsistent information, you should not rely on it. We are not
making an offer to sell these securities in any jurisdiction where the offer or
sale is not permitted. We do not claim the accuracy of the information appearing
in this prospectus supplement or the accompanying prospectus as of any date
other than the dates on their respective front covers.
For 90 days following the date of this prospectus supplement, all
dealers selling [TIERS][CORTS][NAME] will deliver a prospectus supplement and
prospectus, and such delivery obligation generally may be satisfied through the
filing of the prospectus supplement and prospectus with the SEC. This is in
addition to any dealer's obligation to deliver a prospectus supplement and
accompanying prospectus when acting as an underwriter of the
[TIERS][CORTS][NAME] and with respect to their unsold allotments or
subscriptions.
6
[EUROPEAN ECONOMIC AREA
In relation to each Member State of the European Economic Area which
has implemented the prospectus Directive (each, a Relevant Member State), the
underwriter has represented and agreed that, with effect from and including the
date on which the prospectus Directive is implemented in that Relevant Member
State ("the Relevant Implementation Date"), it has not made and will not make an
offer of notes to the public in that Relevant Member State prior to the
publication of a prospectus in relation to the notes which has been approved by
the competent authority in that Relevant Member State or, where appropriate,
approved in another Relevant Member State and notified to the competent
authority in that Relevant Member State, all in accordance with the prospectus
Directive, except that it may, with effect from and including the Relevant
Implementation Date, make an offer of notes to the public in that Relevant
Member State at any time:
(a) to legal entities which are authorized or regulated to operate in
the financial markets or, if not so authorized or regulated, whose corporate
purpose is solely to invest in securities;
(b) to any legal entity which has two or more of (1) an average of at
least 250 employees during the last financial year, (2) a total balance sheet of
more than (euro)43,000,000 and (3) an annual net turnover of more than
(euro)50,000,000, as shown in its last annual or consolidated accounts; or
(c) in any other circumstances which do not require the publication by
the issuer of a prospectus pursuant to Article 3 of the prospectus Directive.
For the purposes of this provision, the expression an "offer of notes
to the public" in relation to any notes in any Relevant Member State means the
communication in any form and by any means of sufficient information on the
terms of the offer and the notes to be offered so as to enable an investor to
decide to purchase or subscribe the notes, as the same may be varied in that
Relevant Member State by any measure implementing the prospectus Directive in
that Relevant Member State and the expression prospectus Directive means
Directive 2003/71/EC and includes any relevant implementing measure in each
Relevant Member State.
The underwriter has represented and agreed that:
(a) (i) it is a person whose ordinary activities involve it in
acquiring, holding, managing or disposing of investments (as principal or agent)
for the purposes of its business and (ii) it has not offered or sold and will
not offer or sell the notes other than to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or who it is reasonable
to expect will acquire, hold, manage or dispose of investments (as principal or
agent) for the purposes of their businesses where the issue of the notes would
otherwise constitute a contravention of Section 19 of the Financial Services and
Markets Act (the "FSMA") by the issuer;
(b) it has only communicated or caused to be communicated and will
only communicate or cause to be communicated an invitation or inducement to
engage in investment
activity (within the meaning of Section 21 of the FSMA) received by it in
connection with the issue or sale of the notes in circumstances in which
Section 21(1) of the FSMA does not apply to the issuer; and
(c) it has complied and will comply with all applicable provisions of
the FSMA with respect to anything done by it in relation to the notes in, from
or otherwise involving the United Kingdom.
The offer in The Netherlands of the notes included in this offering is
exclusively limited to persons who trade or invest in securities in the conduct
of a profession or business (which include banks, stockbrokers, insurance
companies, pension funds, other institutional investors and finance companies
and treasury departments of large enterprises).
UNITED KINGDOM
The underwriter has represented and agreed that:
(d) it has only communicated or caused to be communicated and will
only communicate or cause to be communicated an invitation or inducement to
engage in investment activity (within the meaning of Section 21 of the Financial
Services and Markets Act 2000 (the "FSMA")) received by it in connection with
the issue or sale of the [TIERS][CORTS][NAME] in circumstances in which Section
21(1) of the FSMA does not apply to the issuer; and
(e) it has complied and will comply with all applicable provisions of
the FSMA with respect to anything done by it in relation to the
[TIERS][CORTS][NAME] in, from or otherwise involving the United Kingdom.
NOTICE TO UNITED KINGDOM INVESTORS
The distribution of this prospectus supplement (A) if made by a person
who is not an authorized person under the FSMA, is being made only to, or
directed only at persons who (1) are outside the United Kingdom, or (2) have
professional experience in matters relating to investments, or (3) are persons
falling within Articles 49(2)(a) through (d) ("high net worth companies,
unincorporated associates, etc.") or 19 (Investment Professionals) of the
Financial Services and Market Act 2000 (Financial Promotion) Order 2005 (all
such persons together being referred to as the "Relevant Persons"). This
prospectus supplement must not be acted on or relied on by persons who are not
Relevant Persons. Any investment or investment activity to which this prospectus
supplement relates, including the offered [TIERS][CORTS][NAME], is available
only to Relevant Persons and will be engaged in only with Relevant Persons.
Potential investors in the United Kingdom are advised that all, or
most, of the protections afforded by the United Kingdom regulatory system will
not apply to an investment in the issuer and that compensation will not be
available under the United Kingdom Financial Services Compensation Scheme.]
TABLE OF CONTENTS
PAGE
SUMMARY......................................................................S-1
RISK FACTORS.................................................................S-5
FORMATION OF THE TRUST.......................................................S-9
USE OF PROCEEDS..............................................................S-9
THE UNDERLYING SECURITIES ISSUER.............................................S-9
DESCRIPTION OF THE UNDERLYING SECURITIES....................................S-10
DESCRIPTION OF THE CERTIFICATES.............................................S-12
DESCRIPTION OF SWAP AGREEMENT...............................................S-17
DESCRIPTION OF THE TRUST AGREEMENT..........................................S-19
FEDERAL INCOME TAX CONSEQUENCES.............................................S-21
ERISA CONSIDERATIONS........................................................S-22
METHOD OF DISTRIBUTION......................................................S-23
RATINGS.....................................................................S-24
LEGAL OPINIONS..............................................................S-25
INDEX OF TERMS..............................................................S-26
APPENDIX A...................................................................A-1
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SUMMARY
This summary highlights selected information from this prospectus supplement. It
does not contain all of the information you need to consider in making your
investment decision. To understand all of the terms of the offering of the
[TIERS][CORTS][NAME], you should read carefully this prospectus supplement and
the accompanying prospectus in full.
Certificates .........................The [TIERS(R)][CORTS(R)][NAME] [Callable]
_________-Backed Certificates Trust ______
200_Series 200_ will issue ____ class[es]
of certificates, [all of which]
[___ of which, class[es] ____ [and ____]]
will be offered pursuant to this
prospectus supplement. [The ___ other
classes of certificates [and the Call
[Rights][Warrants]], will be sold
separately in private transactions.] We
refer to the certificates being offered
pursuant to this prospectus supplement as
the "Certificates". The Certificates will
be denominated in the Specified Currency.
The total principal amount of Certificates
being issued is ____ (the "Initial
Certificate Principal Balance"). The
Certificates will be issued in
[book-entry records of the Depository
Trust Company][definitive form] in minimum
denominations of ____.]
Sponsor and Depositor ................Structured Products Corp., a Delaware
corporation. We refer to Structured
Products Corp. as the "Company" or, as the
context requires, the "sponsor" or the
"depositor."
The Trustee ..........................[Identify]
[Administrative Agent ................[None].]
Issuing Entity .......................[TIERS(R)][CORTS(R)][NAME] [Callable]
_________-Backed Certificates Trust
____200_Series 200_, which will be formed
under a Trust Agreement between the
Depositor and the Trustee.
[The Trust is a
[Delaware][other][business][statutory]
trust.] We refer to the [Trust] as the
"Trust" or the "issuing entity."
Underlying Securities ................[The Depositor will deposit into the
Trust][The Trust will acquire in the
secondary market from the [Depositor]
[Underwriter][or an affiliate of the
[Depositor][Underwriter]] with the
proceeds of sale
================================================================================
s-1
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of the Certificates [and other
certificates and [Call [Rights][Warrants]
issued by the Trust] the following fixed
income securities (the "Underlying
Securities"): [SELECT ONE OF THE FOLLOWING
BRACKETED SELECTIONS][Alternative 1:
specify debt security or asset backed
security or a pool of such debt securities
or asset backed securities issued or
guaranteed by their terms by one or more
corporations, banking organizations,
insurance companies or special purpose
vehicles (including trusts, limited
liability companies, partnerships or other
special purpose entities)][Alternative 2:
specify obligations of one or more foreign
private issuers][Alternative 3: specify
debt security or pool of such debt
securities which represent obligations of
the United States of America, any agency
thereof for the payment of which the full
faith and credit of the United States of
America is pledged, or a United States
governmental sponsored organization
created pursuant to a federal statute]
[Alternative 4: specify debt security or
pool of such debt securities which
represent obligations issued by or by
their terms guaranteed by a foreign
government, political subdivision or
agency or instrumentality thereof]
[maturing in ___ years] issued by [specify
issuers], and having the characteristics
described herein under "Description of
the Underlying Securities."
Underlying Securities Issuer .........The issuer of the Underlying Securities
[deposited into][purchased by] the Trust
is [identify][repeat for each]. The
Underlying Securities Issuer is not
participating in this offering and has no
obligations under the Certificates.
[Information about the Underlying
Securities Issuer is available in the
Underlying Securities Issuer's filings
with the Commission.]
[Underlying Securities Guarantor .....Pursuant to a [guarantee][or identify
other form of credit support], [Identify]
has [guaranteed payment of interest,
premium (if any) and principal outstanding
should the Underlying Securities Issuer
fail to pay]. The Underlying Securities
Guarantor is not participating in this
offering and has no obligations under the
Certificates. Information about the
Underlying Securities Guarantor is
================================================================================
s-2
================================================================================
available in the Underlying Securities
Guarantor's filings with the Commission.]
Closing Date..........................On or about _____
Interest and Principal
Distributions.........................[Interest will be distributed each ____
(each a "Distribution Date"). The interest
rate for the Certificates is [____% per
annum][variable] (the "Interest Rate").
The Trust will pass through interest to
the holders of the Certificates
("Certificateholders") based on payments
[received by the Trust under the
securities][to the Trust by the Swap
Counterparty under the Swap Agreement].
[Distributions of interest for [a given
period] will be based on the value of
[specify index] determined as of the ____
day prior to the first day][on the last
day] (the "Interest Reset Date") [other
basis of determination] of that [period]
[by the Calculation Agent under the Swap
Agreement][under the terms of the
Underlying Securities.]]
Principal will be distributed [on a final
Distribution Date occurring on ___ (the
"Final Scheduled Distribution Date")][or
as the Trust receives distributions of
principal on the Underlying Securities it
holds]. [Describe any other
distributions.] [Distributions of
principal on the Class ____ Certificates
may be less than the full principal
amount of the Certificates [if the Trust
is required to make a termination payment
under the Swap Agreement] [or describe
other event which may cause lower
principal distribution].]
[The Class ____ Certificates have an
amortizing principal balance. The
Class ____ Certificates will receive all
scheduled payments on interest that the
Trust receives on or before ___ on the
Underlying Securities it holds. Each
payment will reflect partial amortization
of the principal balance of the Class ____
Certificates and a distribution of
interest at a rate of ____ % per annum.]
[The Class ____ Certificates will not
receive scheduled distributions of
interest or principal, but will receive a
distribution of the Underlying Securities
on ___ .]
================================================================================
s-3
================================================================================
[If the Underlying Securities are in
default or are redeemed early [or the Call
[Rights][Warrants] are exercised][or the
[Underlying Securities Issuer][Underlying
Securities Guarantor] ceases to file, or
is no longer required to file, certain
reports required under the securities laws
for public issuers][or describe other
termination events], the Trust will
terminate and the Underlying Securities or
proceeds of redemption will be divided
between the Class ____ and Class ____
Certificates. The percentage share of the
Underlying Securities received by each
Class will vary based on when the Trust
terminates. See "Description of the
Certificates."]
[[I/O][Name] Certificates.............On the closing date, the Trust will also
issue [__] class[es] of [interest only]
certificates (the "[I/O][Name]
Certificates"]). The [I/O][Name]
Certificates are not offered by this
prospectus supplement. The [I/O][Name]
Certificates are being offered only to
"qualified institutional buyers" as
defined in Rule 144A under the Securities
Act [specify other restrictions, if any].
[The [I/O][Name] Certificates] will
evidence the right to receive
[semi-annual][quarterly][other] interest
payments on the [principal][notional]
amount of the [I/O][Name] Certificates
(which as of the date of issuance will
be $[__]) at an interest rate of [__]% per
year.][Or specify other rights of [I/O]
[Name] Certificates to receive
distributions.] [Scheduled distributions
on the [I/O][Name] Certificates will rank
[on a parity] [subordinate] [senior] with
scheduled interest distributions on the
Certificates.] [Each class of [I/O][Name]
Certificates will have a claim on a
portion of the proceeds of the liquidation
or distribution in-kind of the Underlying
Securities in certain circumstances.]
[Call [Rights][Warrants] .............The [Certificates may be called for
redemption][Underlying Securities may be
purchased] by the holder of the call
[rights][warrants][on or after _______] at
a price equal to [describe calculation of
call [right][warrant] exercise price].]
[Describe other events which may [allow]
[require] the holder of the [call rights]
[warrants] to [call the Certificates for
redemption][purchase the Underlying
Securities].
================================================================================
s-4
================================================================================
On the closing date, the call [rights]
[warrants] will be held by [the Depositor]
[other initial holder]. The warrants may
be sold or transferred by [initial holder]
at any time in whole or in part to one or
more qualified institutional buyers (as
defined in Rule 144A under the Securities
Act), and further sold or transferred by
any such subsequent holder(s) from time to
time. The call [rights][warrants] are not
being offered pursuant to this prospectus
supplement.]
Early termination of the Trust........The Trust will terminate early if (i) the
Underlying Securities Issuer redeems the
Underlying Securities, (ii) the Trust is
no longer permitted under Item 1100(c)(2)
of Regulation AB to refer to the
[Underlying Securities
Issuer's][Underlying Securities
Guarantor's] periodic reports filed under
the Exchange Act, including by reason of
the [Underlying Securities
Issuer][Underlying Securities Guarantor]
no longer being subject to the reporting
requirements of, or ceasing to file
periodic reports under, the Exchange Act,
and information about the [obligor on]
[guarantor of] the Underlying Securities
no longer being available in accordance
with the rules of the SEC, (iii) a payment
default on, or an acceleration of, the
Underlying Securities occurs, [(iv) the
call [rights][warrants] are exercised,] or
[(v) the early termination of all
outstanding swap transactions in whole].
[Specify additional and different trust
termination events.]
[[Depositor] .........................[______]
[Optional Exchange....................[Holders of the Certificates have a
limited right][The Depositor and its
affiliates, but not any other Holder of
the Certificates, will have a limited
right] to exchange Certificates for
corresponding portions of the Underlying
Securities. The [Depositor's] right to
make such an exchange is subject to
restrictions on advance notice, frequency,
and minimum amount of the exchange. [In
addition, an exchanging Certificateholder
will be responsible for a partial
termination payment under the Swap
Agreement.]]
================================================================================
s-5
================================================================================
Trustee and Servicer..................[_______]. We refer to [______] as
"[_____]" or the "Trustee." On the
closing date, the Company will provide the
Trustee with certain information relating
to the Underlying Securities Issuer and
the Underlying Securities. Based on this
information, the Trustee will perform
certain servicing and administrative
functions with respect to the Certificates
and the Trust, including: performing
distribution calculations, remitting
distributions on the distribution dates to
Certificate holders and preparing
[semi-annual][or specify other frequency]
statements to Certificate holders that
detail the payments received and the
activity on the Underlying Securities
during the applicable collection period.
Trustee Compensation .................As compensation for the performance of its
duties as Trustee, the Trustee will be
entitled to payment of Trustee fees and
reimbursement of expenses [by the Trust
from the interest [and principal] payments
received by the Trust with respect to the
Underlying Securities][by the Depositor
pursuant to a separate agreement with the
Depositor, but will not have any claim
against the Trust with respect thereto].
[Swap Counterparty....................[identify]]
[Swap Agreement.......................Swap Counterparty will enter into [an
interest rate swap][a cross-currency swap]
[a call put option transaction][other
transaction] with the Trust. The Trust
[will pay to the Swap Counterparty the
[interest][principal] amounts the Trust
receives on the Underlying Securities
[will][may be required to] deliver to the
Swap Counterparty the Underlying
Securities on dates at a price of ____.
The Trust will receive payments under the
Swap Agreement on the same dates the Trust
makes distributions on the Certificates.
The Trust will apply the payments it
receives under the Swap Agreement to make
distributions of interest [and principal]
on the Certificates.]
[Swap Agreement
Guarantee.............................[Entity] will guarantee the obligations of
Swap Counterparty under the Swap
Agreement.]
================================================================================
s-6
================================================================================
[Calculation Agent ...................[Entity] will act as Calculation Agent
under the Swap Agreement and will
calculate the value of index from time to
time.]
[Exchange Rate Agent .................[Entity] will act as Exchange Rate Agent
and will calculate applicable rates of
exchange between U.S. dollars and
specified currency for investors
purchasing the Certificates with U.S.
dollars.]
[Credit Enhancement ..................The credit enhancements include [a
financial guaranty insurance policy]
[letter of credit][guarantee]
[subordination features].
[Describe]]
[Retained Interest....................Describe any retained interest of the
Depositor]
Tax Status............................The Depositor will receive an opinion that
the Trust [should][will] be characterized
as a grantor trust and will not be
characterized as an association taxable as
a corporation.
Rating................................The Certificates must be assigned a rating
of ____ by[identify rating agency or
agencies] in order to be issued. [Rating
agency] may maintain ongoing rating
surveillance with respect to the
Certificates, but neither the Trustee nor
the Depositor will monitor any changes in
the rating of the Certificates after the
Closing Date.
ERISA Considerations .................A plan subject to the fiduciary
responsibility provisions of the Employee
Retirement Income Security Act of 1974, as
amended, or Section 4975 or the Internal
Revenue Code [may not purchase the
Certificates][must make special
arrangements with the Depositor and the
Trustee in order to purchase the
Certificates][should consult with its
counsel before making an investment in the
Certificates]. See "ERISA Considerations."
[Listing..............................The Certificates are expected to be
approved for listing, subject to official
notice of issuance, on the [New York Stock
Exchange][American Stock Exchange][other].
Trading of the Certificates on the [New
York Stock Exchange][American Stock
Exchange][other] is expected to commence
within a [__]-day period after the initial
delivery thereof. No guarantee can be
given that a secondary market for
================================================================================
s-7
================================================================================
the certificates will develop or that the
certificates will remain listed on the
[New York Stock Exchange][American Stock
Exchange][other]. See "Underwriting"
herein.]
================================================================================
s-8
RISK FACTORS
In addition to the risk factors discussed in the Prospectus, prospective
purchasers of the Certificates should carefully consider the following risk
factors:
[DESCRIBE ANY SPECIAL RISK FACTORS FROM UNDERLYING SECURITIES.]
[NO INVESTIGATION INTO THE BUSINESS CONDITION OF THE UNDERLYING SECURITIES
ISSUER HAS BEEN MADE BY THE COMPANY, UNDERWRITER OR TRUSTEE.
None of the Company, the Underwriter, or the Trustee, or any of their respective
affiliates, has made any investigation into the business condition, financial or
otherwise, of the Underlying Securities Issuer [or][the Swap
Counterparty][or][the Swap guarantor][or][the credit enhancement provider], or
has verified or will verify any reports or information filed by the Underlying
Securities Issuer [or][the Swap Counterparty][or][the Swap guarantor][or][the
credit enhancement provider] with the SEC or otherwise made available to the
public nor can any of the Company, the Underwriter, or the Trustee, or any of
their respective affiliates, assure that the Underlying Securities Issuer
[or][the Swap Counterparty][or][the Swap guarantor][or][the credit enhancement
provider] will continue to file such reports in the future. Prospective
investors in the Certificates should carefully consider publicly available
financial and other information regarding the Underlying Securities Issuer
[and][the Swap Counterparty][and][the Swap guarantor][and][the credit
enhancement provider] in making their investment decision. See "The Underlying
Securities Issuer," "Description of the Underlying Securities" herein.]
[THE UNDERLYING SECURITIES ISSUER [DESCRIBE OTHER PAYMENT SOURCE] IS THE ONLY
PAYMENT SOURCE
The payments made by the Underlying Securities Issuer on the Underlying
Securities are the only sources of payments for your Certificates[, except in
the case where a holder of the [call rights][warrants] exercises a [call
right][warrant] with respect to [your Certificates][the Underlying
Securities][describe other payment source]. The Underlying Securities Issuer
[describe other payment source] is subject to laws permitting bankruptcy,
liquidation, moratorium, reorganization or other actions; should the Underlying
Securities Issuer [or][described other payment source] experience financial
difficulties, there could be a delay in payment, partial payment or non-payment
of your Certificates. In the event of nonpayment on the Underlying Securities by
the Underlying Securities Issuer [or][describe other payment source], you will
bear the risk of such nonpayment. See "Description of the Certificates--Recovery
on Underlying Securities [or describe other payment source] Following Payment
Default or Acceleration" herein.]
[CERTAIN PAYMENTS TO [COMPANY][UNDERWRITER]
On [____], 20[__], as payment of the balance of the purchase price for the
Underlying Securities, the Trustee will pay to the [Company][Underwriter][or
identify other affiliate of the Company which will sell the Underlying
Securities to the Trust] the amount of the interest accrued on the Underlying
Securities from [______], 20[__] to but not including the closing date. In the
event the [Company][Underwriter][or identify other affiliate of the Company
which will sell the Underlying Securities to the Trust] is not paid such accrued
interest on such date, the
s-9
[Company][Underwriter][or identify other affiliate of the Company which will
sell the Underlying Securities to the Trust] will have a claim for such accrued
interest, and will share on a parity with the Certificateholders [and the
[holders of the certificates issued by the Trust and not offered pursuant to
this prospectus supplement] to the extent of such claim in the proceeds from the
recovery of the Underlying Securities. See "Description of the Certificates--
Recovery on Underlying Securities [or describe other payment source] Following
Payment Default or Acceleration" herein.
[PREPAYMENTS WILL AFFECT YIELD AND RECOVERY OF INVESTMENT
The Underlying Securities [can be redeemed early at the option of the Underlying
Securities Issuer [specify dates or conditions][may amortize early as a result
of [describe amortization features of underlying security.]] If the Underlying
Securities are redeemed early, the Trust will be terminated and
Certificateholders will receive a return of principal before the scheduled
maturity of the Certificates][proceeds of the redemption will be divided between
the Class ____ and Class ____ Certificates based on [the outstanding Class ____
Certificate Principal Balance determined on the termination date][or specify
other method for allocation among Classes]. See "Description of the
Certificates--Collections and Distributions."] See "Risk Factors" in the
Prospectus.
If the Underlying Securities are redeemed early, the Trust [and the Swap
Agreement] will terminate[, and the Trust may be required to pay a termination
payment. See "--Liability for Swap Termination Payments" in this section and
"Risk Factors--Trust May Include Derivatives which Could Affect the Value of the
Certificates" in the Prospectus.
[The Class ____ Certificates are not entitled to distributions of principal but
receive interest cash flows from the Underlying Securities for so long as the
Underlying Securities are outstanding. If the Underlying Securities are prepaid
or redeemed early or the Trust is wound up early, returns on the Class
____Certificates will be adversely affected. Such prepayment, redemption or wind
up may occur before holders of the Class ____ Certificates have recovered the
initial investment.]
[IF A PAYMENT DEFAULT OR AN ACCELERATION OCCURS WITH RESPECT TO THE UNDERLYING
SECURITIES, HOLDERS OF THE CERTIFICATES MAY HAVE A CLAIM IN LIQUIDATION LOWER
THAN PRINCIPAL AMOUNT OF CERTIFICATES
If a payment default on, or an acceleration of, the Underlying Securities
occurs, funds or property received by the Trust will be allocated to the
Certificateholders [and the holders of certificates issued by the Trust and not
offered pursuant to this prospectus supplement] based on [specify method for
allocation among Classes]. Any such allocation of funds may cause the
Certificateholders to receive less than they would have received if they owned
the Underlying Securities directly. See "Description of the
Certificates-Recovery on Underlying Securities [or describe other payment
source] Following Payment Default or Acceleration".]
s-10
POSSIBLE EARLY TERMINATION OF THE TRUST FOLLOWING THE [UNDERLYING SECURITIES
ISSUER][UNDERLYING SECURITIES GUARANTOR] CEASING TO REPORT COULD RESULT IN A
LOSS TO CERTIFICATEHOLDERS.
The Trust will terminate if the Trust is no longer permitted under Item
1100(c)(2) of Regulation AB to refer to the [Underlying Securities
Issuer's][Underlying Securities Guarantor's] periodic reports filed under the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), including
by reason of the [Underlying Securities Issuer][Underlying Securities Guarantor]
no longer being subject to the reporting requirements of, or ceasing to file
periodic reports under, the Exchange Act, and information about the [obligor on]
[guarantor of] the Underlying Securities no longer being available in accordance
with the rules of the SEC. If the Trust so terminates, the Underlying Securities
will be sold in accordance with the trust agreement and [unless the call
[rights] [warrants] are exercised, or are deemed exercised,] the proceeds of the
liquidation of the Underlying Securities will be distributed pro rata to the
Certificateholders [and the holders of the [[I/O][Name] Certificates] [and the
call [rights] [warrants] will expire worthless]. [Describe other method of
allocation of liquidation proceeds between holders of Certificates and holders
of [I/O][Name] Certificates.] [Describe whether call [rights] [warrants] may
become exercisable and/or deemed to be exercised in connection with SEC
Reporting Failure.] [The termination of the Trust under these circumstances will
cause an early termination the Swap Agreement which could result in a
termination payment due from the Trust to the Swap Counterparty. See "Risk
Factors--Liability for Swap Termination Payments" herein.]
[THERE MAY NOT BE A LIQUID SECONDARY MARKET FOR THE CERTIFICATES
Although application [has been][will be] made to list the Certificates on the
[New York Stock Exchange][American Stock Exchange][other], there can be no
assurance that the Certificates will be approved or, once listed, will continue
to be eligible for trading thereon. There can also be no assurance as to whether
there will be a secondary market in the Certificates or, if there is such a
secondary market, whether such market will be liquid or illiquid. If the
secondary market for the Certificates is limited, there may be few buyers if you
decide to sell your Certificates prior to their maturity date. This may affect
the price you will receive on the Certificates. There is currently no secondary
market for the Certificates.]
[THE MARKET VALUE OF THE UNDERLYING SECURITIES MAY DECLINE
[The Class ____ Certificates do not receive allocations of either interest or
principal until the Final Scheduled Distribution Date. The market value of the
Class ____ Certificates from time to time will be sensitive to changes in
interest rates, more so than the Underlying Securities.]
[CURRENCY RISKS
The Certificates are not denominated in U.S. dollars. Depreciation of the
[specified currency] against the U.S. dollar will result in a decrease in the
effective yield of such Certificate for an investor who pays dollars to purchase
the Certificates. The value of the U.S. dollar in comparison to the [specified
currency] depends on economic and political factors, the supply and demand for
such currencies, and government interventions, and can be highly unpredictable.
[In recent years, rates of exchange between the U.S.
dollar and [specified] currency have been volatile.]
The [specified currency] may become unavailable, due to exchange controls or
other events beyond the control of the Depositor or the Trust. In such
circumstances, the Exchange Rate
s-11
Agent will determine in its sold discretion when and how to make distributions
on the Certificates. This may include a delay until the [specified currency] is
again available or a distribution in another currency at rates determined by the
Exchange Rate Agent.
Courts in the United States customarily have not rendered judgments for money
damages denominated in any currency other than U.S. dollars. In the New York
courts, 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 exchange rate prevailing on
the date of judgment.
Prospective purchasers of such Certificates should consult their own financial
and legal advisors about risks related to investments in currencies other than
U.S. dollars.]
[LIABILITY FOR SWAP TERMINATION PAYMENTS
[The Swap Agreement] [Each swap transaction] may be terminated early if
o the [related] Underlying Securities default [or are redeemed
early];
o the Trust or the Swap Counterparty fails to make the required
payments under the agreement;
o the Swap Agreement becomes illegal or invalid;
o the Trust or the Swap Counterparty becomes bankrupt;
o withholding taxes are imposed on payments made by the Trust or
Swap Counterparty under the Swap Counterparty;
o the Swap Counterparty is involved in a merger and disaffirms
the Swap Agreement; or
o [other]
At any time of early termination the Swap Agreement each swap transaction may
have value to either the Trust or the Swap Counterparty; if so, the other party
will be required to pay that value as a termination payment. The termination
payment corresponds to the estimated cost to the Trust or the Swap Counterparty
of entering into a replacement Swap Agreement swap transaction. Such cost
depends on the comparative value of the remaining [specify] payments to be made
by the Trust and the remaining [specify] payments to be made by the Swap
Counterparty.
The holders of the Certificates will effectively pay any termination payment
payable by the Trust, in proportion to the amount of their investment, up to the
limit of the Trust's assets. The value of [the Swap Agreement][each swap
transaction] may be highly volatile, and it is not possible to estimate the
maximum amount of the termination payment.]
s-12
[HIGH YIELD UNDERLYING SECURITIES--GREATER DEFAULT RISK
The Underlying Securities [are][include] high yield corporate debt obligations
of U.S. [and other] issuers rated below investment grade. [The Underlying
Securities are not secured by any collateral.] [High yield debt obligations are
generally unsecured.] They [are][may] also be subordinated to other obligations
of the Underlying Securities Issuer and have greater credit and liquidity risk
than is typically associated with investment grade corporate obligations. High
yield obligations are often issued in connection with leveraged acquisitions or
recapitalizations. In such transactions, security issuers incur a substantially
higher amount of indebtedness than the level at which they had previously
operated.
High yield debt obligations have historically experienced greater default rates
than has been the case for investment grade securities. Although studies have
been made of historical default rates in the high yield market, future default
rates may differ.]
[ALTERNATIVE TAX CHARACTERIZATION
The Depositor will receive an opinion of counsel that the Trust [will][should]
be treated as a grantor trust or as a partnership for federal income tax
purposes. See "Federal Income Tax Considerations" in this Prospectus Supplement
for a discussion of the consequences of any alternative characterization of the
Trust that might be asserted by the IRS.]
[EMERGING MARKET UNDERLYING SECURITIES--SPECIAL RISKS
The Underlying Securities [include][are] emerging market securities, and are
subject to special risks.
Investing in the debt of emerging markets issuers involves special credit risks
not associated with investing in more established capital markets such as the
United States and Western Europe. The risks may include:
o risks attributable to fluctuations in foreign exchange rates;
o political, economic and diplomatic instability;
o hyperinflation;
o expropriation;
o different legal systems;
o exchange controls;
o confiscatory taxation;
o nationalization of private businesses; or
o other governmental restrictions]
s-13
[SPECIAL CREDIT RISKS
Foreign investments may also be subject to foreign withholding taxes or other
taxes or changes in the rates or methods of Price and Liquidity Risks taxation
applicable to the Trust or to the Underlying Securities Issuer.
The Underlying Securities are also subject to special price volatility and
liquidity risks. [Specify market][and other] emerging markets have smaller
capital markets with substantially less volume than capital markets of
non-emerging markets. As a result, the securities traded there are generally
less liquid and prices are generally more volatile. A limited number of issuers
often represent a disproportionately large percentage of market capitalization
and trading value in [specify market][and other] emerging markets. In addition,
large investors trading significant blocks of securities, or dealers making
large dispositions of securities resulting from failure to meet margin calls,
may significantly affect price and liquidity in emerging markets. Should the
Certificateholders receive a distribution of the Underlying Securities in kind,
as a result of early termination of the Swap Agreement or the Trust, such
factors may affect the price at which the Certificateholders' can dispose of the
Underlying Securities and their ability to do so quickly.]
[AVAILABLE INFORMATION FOR EMERGING MARKETS
Disclosure and regulatory standards in emerging markets are often less stringent
than those in other international securities markets. Many emerging market
countries have a low level of monitoring and regulation of the market and market
participants, and limited and uneven enforcement of existing regulations. An
investor may be able to obtain little publicly available information about an
issuer in an emerging market country. The Underlying Securities Issuer may not
be subject to accounting, auditing and financial reporting standards comparable
to those of companies in non-emerging markets. As a result, traditional
investment measurements, such as price/earnings ratios, may not be useful in
emerging markets.]
[DESCRIBE ANY OTHER RISK FACTORS RELATING TO THE CERTIFICATES]
THE SPONSOR AND DEPOSITOR
Structured Products Corp., or the "Company", was incorporated in the
State of Delaware on November 23, 1992, as an indirect, wholly-owned,
limited-purpose finance subsidiary of Citigroup Financial Products Inc.
("Citigroup"). The Company's address is 390 Greenwich Street, New York, New York
10013 and its telephone number is (212) 816-7496. As provided in its certificate
of incorporation, the Company's business consists of, and is limited to,
acquiring, holding and disposing of underlying securities, entering into certain
derivative transactions in connection with such underlying securities, acting as
depositor of trusts in connection with series of trust certificates, issuing and
selling certificates and notes relating to such underlying securities (and
pursuant to certain restrictions unrelated to such underlying securities),
registering the trust certificates with the SEC and complying on behalf of each
trust with the related reporting and filing requirements under the Exchange Act,
and engaging in other related activities and transactions. The first
securitization transaction sponsored by the Company took place over ten (10)
years ago.
s-14
The Company [has deposited the Underlying Securities with the Trustee on behalf
of the Trust][has caused the Trustee, on behalf of the Trust to purchase the
Underlying Securities from the Company or another of its broker-dealer
affiliates, who have acquired the Underlying Securities at negotiated prices in
secondary market transactions].
The Company's certificate of incorporation requires that the depositor have an
independent director not associated with Citigroup, and that the depositor not
allow Citigroup to act on behalf of or be responsible for liabilities of the
depositor. The limited activities of the Company are also intended to prevent
the Company from having any indebtedness that could result in the initiation of
any insolvency proceeding in relation to the Company.
The duties of the Company as depositor under the trust agreement following the
issuance of the Certificates are limited to: (i) giving notice of the discovery
by the depositor of any breach of its representations or warranties made in
connection with establishment of the Trust; (ii) providing certain limited
information about the Trust in the event the Trust is no longer subject to
reporting obligations under the Exchange Act; (iii) filing periodic reports in
relation to the Trust under the Exchange Act for so long as such reporting
obligations apply to the Trust; (iv) providing for the payment of the fees and
expenses of the Trustee pursuant to a separate agreement and providing
indemnification to the Trustee; [and] (v) appointing a replacement trustee in
the event of the Trustee's resignation or removal[; and (vi) appointing a
replacement warrant agent in relation to the warrants in the event of the
existing agent's resignation or removal][identify any other duties of the
depositor under the Trust Agreement].
FORMATION OF THE TRUST
[TIERS][CorTS][NAME][_________-Backed Certificates Trust ____ 20__] (the
"Trust") will be formed pursuant to the trust agreement dated as of _________,
as supplemented by the Series __ Supplement dated as of _________ [as a [common
law][Delaware][other][business][statutory] trust]. [The trust agreement will be
qualified as an indenture under the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act").] SELECT ONE OF THE FOLLOWING BRACKETED
SELECTIONS][Alternative 1: Concurrently with the execution and delivery of the
trust agreement, the Trustee, on behalf of the Trust, shall purchase, at the
direction of the Depositor, the Underlying Securities in the secondary market
from the Underwriter. The Trustee will pay the purchase price for the Underlying
Securities by delivering to, or at the direction of, the Underwriter, all of the
Certificates [and the call [rights] [warrants]][and the [I/O][Name]
Certificates].] [Alternative 2: Concurrently with the execution and delivery of
the trust agreement, the Company will deposit with the Trustee the [Underlying
Securities][proceeds from the sale of the Certificates [and the [call [rights]
[warrants]] [and the [I/O][Name] Certificates] to the Underwriter, with
instructions to use such funds for the specific purpose of purchasing the
Underlying Securities]. The Trustee, on behalf of the Trust, will accept [the
Underlying Securities][such funds, purchase the Underlying Securities] and
deliver the Certificates to or upon the order of the Company.] The Trustee will
hold the Underlying Securities [or describe other payment source] for the
benefit of the Certificateholders.
s-15
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the Certificates
will be used to purchase the Underlying Securities [or describe other payment
source], which, once acquired, will be sold by [the Company][or][the
Underwriter][or][____] to the Trust and will be the sole Deposited Assets (as
defined in the Prospectus) of the Trust.
THE UNDERLYING SECURITIES ISSUER
As described below, the [Underlying Securities Issuer][Underlying Securities
Guarantor] is required to file annual, quarterly and current reports, proxy
statements and other information reports with the Commission in accordance with
the Exchange Act. This prospectus supplement does not provide information with
respect to the Underlying Securities Issuer [or the Underlying Securities
Guarantor]. No investigation has been made of the financial condition or
creditworthiness of the Underlying Securities Issuer [or the Underlying
Securities Guarantor] or any of [its][their] subsidiaries in connection with the
issuance of the Certificates. Neither the Underlying Securities Issuer [nor the
Underlying Securities Guarantor] is involved in any way with the issuance of the
Certificates or has any responsibility to take the holders of the Certificates
into account. [The Company is not an affiliate of the Underlying Securities
Issuer [or the Underlying Securities Guarantor].]
The [Underlying Securities Issuer][Underlying Securities Guarantor] is subject
to the informational requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act,") and in accordance therewith files reports and
other information (including financial information) with the Commission.
Information about the [Underlying Securities Issuer][Underlying Securities
Guarantor] is not set forth in this prospectus supplement and instead
Certificateholders are directed to the publicly available information about the
[Underlying Securities Issuer][Underlying Securities Guarantor] filed in
accordance with the Exchange Act. You may read and copy any documents filed by
the [Underlying Securities Issuer][Underlying Securities Guarantor] at the
Commission's public reference room at 450 Fifth Street, N.W., Washington, D.C.
20549 (File No. 001-14965). Please call the Commission at 1-800-SEC-0330 for
further information on the public reference room. The [Underlying Securities
Issuer][Underlying Securities Guarantor]'s filings with the Commission are also
available to the public through the Commission's website at http://www.sec.gov
and through the [New York Stock Exchange, 11 Wall Street, New York, New York
10005][or identify other exchange]. In addition, such reports and other
information can be obtained from the [Underlying Securities Issuer][Underlying
Securities Guarantor] at its address specified in its most recent publicly
available reports. The reports and other information filed by the [Underlying
Securities Issuer][Underlying Securities Guarantor] with the Commission or the
[New York Stock Exchange][other exchange] are not incorporated by reference into
this prospectus supplement or the accompanying prospectus.
The Trust will have no assets other than the Underlying Securities [or describe
other payment source] from which to make distributions of amounts due in respect
of the Certificates. Consequently, the ability of Certificateholders to receive
distributions in respect of the Certificates will depend principally on the
Trust's receipt of payments on the Underlying
s-16
Securities [or describe other payment source] from the Underlying Securities
Issuer [or Underlying Securities Guarantor].
THIS PROSPECTUS SUPPLEMENT, THE ACCOMPANYING PROSPECTUS, THE UNDERLYING
SECURITIES PROSPECTUS AND THE UNDERLYING SECURITIES REGISTRATION STATEMENT
DESCRIBE THE MATERIAL TERMS OF THE UNDERLYING SECURITIES. THIS PROSPECTUS
SUPPLEMENT IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN CONJUNCTION
WITH, (I) THE ACCOMPANYING PROSPECTUS, (II) THE UNDERLYING SECURITIES PROSPECTUS
AND (III) THE UNDERLYING SECURITIES REGISTRATION STATEMENT OF WHICH SUCH
UNDERLYING SECURITIES PROSPECTUS IS A PART. NO REPRESENTATION IS MADE BY THE
TRUST, THE TRUSTEE, THE UNDERWRITER OR THE DEPOSITOR AS TO THE ACCURACY OR
COMPLETENESS OF THE INFORMATION CONTAINED IN THE UNDERLYING SECURITIES
PROSPECTUS OR THE UNDERLYING SECURITIES REGISTRATION STATEMENT. NEITHER THE
UNDERLYING SECURITIES PROSPECTUS NOR THE UNDERLYING SECURITIES REGISTRATION
STATEMENT IS INCORPORATED INTO THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS.
DESCRIPTION OF THE UNDERLYING SECURITIES [OR DESCRIBE OTHER PAYMENT SOURCE]
GENERAL
The Underlying Securities of the Trust will consist solely of initially $______
aggregate principal amount of _________ __ _____, due _________ issued by the
Underlying Securities Issuer[, having the following characteristics [SELECT ONE
OF THE FOLLOWING BRACKETED SELECTIONS][Alternative 1: specify debt security or
asset backed security or a pool of such debt securities or asset backed
securities issued or by their terms guaranteed by one or more corporations,
banking organizations, insurance companies or special purpose vehicles
(including trusts, limited liability companies, partnerships or other special
purpose entities)][Alternative 2: specify obligations of one or more foreign
private issuers][Alternative 3: specify debt security or pool of such debt
securities which represent obligations of the United States of America, any
agency thereof for the payment of which the full faith and credit of the United
States of America is pledged, or a United States governmental sponsored
organization created pursuant to a federal statute][Alternative 4: specify debt
security or pool of such debt securities which represent obligations issued by
or by their terms guaranteed by a foreign government, political subdivision or
agency or instrumentality thereof][maturing in ___ years] issued by [specify
issuers], and having the characteristics described herein under "Description of
Underlying Securities." [SELECT ONE OF THE FOLLOWING BRACKETED SELECTIONS]
[Alternative 1: specify debt security or asset backed security or a pool of such
debt securities or asset backed securities issued or by their terms guaranteed
by one or more corporations, banking organizations, insurance companies or
special purpose vehicles (including trusts, limited liability companies,
partnerships or other special purpose entities)][Alternative 2: specify
obligations of one or more foreign private issuers][Alternative 3: specify debt
security or pool of such debt securities which represent obligations of the
United States of America, any agency thereof for the payment of which the full
faith and credit of the United States of America is pledged, or a United States
governmental sponsored organization created pursuant to a federal statute]
[Alternative 4: specify debt security or pool of such debt securities which
represent obligations issued by or by their terms guaranteed by a foreign
government, political subdivision or agency or instrumentality thereof][maturing
in ___ years] issued by [specify issuers], and
s-17
having the characteristics described herein under "Description of Underlying
Securities." The Underlying Securities were originally issued by the
Underlying Securities Issuer as part of [an underwritten public offering of
$_________ aggregate principal amount of such securities, pursuant to a
registration statement on Form S-3 (together with all amendments and exhibits
thereto, the "Underlying Securities Registration Statement"), filed by the
Underlying Securities Issuer with the SEC [an offering of $______________
aggregate principal amount of such securities which have not been registered
under the Securities Act and are being sold to the Trust pursuant to [describe
exemption from registration under the Securities Act].] Distributions are
required to be made on the Underlying Securities [or describe other payment
source][monthly][semiannually][or other] on the ___ day of each _____________,
commencing _____________ (each, a "Underlying Securities Payment Date"), or if
such day is not a Business Day, on the next succeeding Business Day.
The Underlying Securities [or describe other payment source] deposited in the
Trust represent the sole assets of the Trust that are available to make
distributions in respect of the Certificates. Consequently, the ability of
Certificateholders to receive distributions in respect of the Certificates will
depend on the Trust's receipt of payments on, or in respect of, the Underlying
Securities [or describe other payment source]. This prospectus supplement
relates only to the Certificates being offered hereby and does not relate to an
offering of the Underlying Securities [or describe other payment source].
[The disclosure under this caption in the prospectus supplement is intended
primarily to identify the Underlying Securities [or describe other payment
source] and does not purport to summarize the Underlying Securities [or describe
other payment source] or to provide information with respect to the Underlying
Securities Issuer. Appendix A to this prospectus supplement, which contains the
pricing terms of the Underlying Securities, is derived solely from the
description thereof in the [Underlying Securities Prospectus][Underlying
Securities Offering Document]. Such information does not purport to be complete
and is qualified in its entirety by, and should be read in conjunction with [(i)
the Underlying Securities Prospectus, and (ii) the Underlying Securities
Registration Statement, of which the Underlying Securities Prospectus is a
part][the Underlying Securities Offering Document]. No representation is made by
the Trust, the Trustee or the Company as to the accuracy or completeness of the
information contained in the [Underlying Securities Prospectus or the Underlying
Securities Registration Statement.][Underlying Securities Offering Document.
Copies of the Underlying Securities Offering Document shall be furnished to
prospective certificateholders by the Depositor upon request.]]
The depositor estimates the market price of the Underlying Securities, as of the
business day immediately preceding the date of this prospectus supplement, as
____% of their principal amount (plus accrued interest). [This market price is
based on one or more prices reported or available to the depositor for actual
sales occurring on [date].][describe any other applicable means of estimation of
market price]. [The foregoing market price of the Underlying Securities does not
reflect the cost or value of the swap agreements to the Trust and is not
intended to indicate the market value of the Certificates.]
[The following is a description of the material terms of the Underlying
Securities, which has been taken solely from the Underlying Securities Offering
Document. THE UNDERLYING
s-18
SECURITIES OFFERING DOCUMENT WILL NOT BE MADE AVAILABLE TO CERTIFICATEHOLDERS BY
THE TRUSTEE, THE DEPOSITOR, THE UNDERWRITER OR ANY OF THEIR AFFILIATES. FOR AN
UNDERSTANDING OF THE MATERIAL TERMS OF THE UNDERLYING SECURITIES,
CERTIFICATEHOLDERS MAY HAVE TO RELY SOLELY ON THE FOLLOWING DESCRIPTION OF THE
MATERIAL TERMS OF THE UNDERLYING SECURITIES]
[DISTRIBUTIONS The Underlying Securities Issuer will make
distributions of [ ] on the Underlying Securities on
[ ], commencing [ ], 200[].]
[MATURITY DATE [__________ __________]]
[INTEREST ACCRUAL [Interest will accrue on the Terms Assets at a rate
of [ ] from [ ] to [ ] and from [ ] to blank for the first interest
accrual period.]]
[REDEMPTIONS [Underlying Securities shall be redeemable in whole
and in part upon [ ], with not less than [ ] days and not more
than [ ] days notice at a redemption price equal to [ ]]]
[PUTS [Holders of the Underlying Securities (which includes the Trustee) shall
have the option to sell their Terms Assets to the Underlying Securities Issuer
in whole [or in part] upon [ ], with not less than [ ] days and not more than [
] days notice, at a price equal to [ ].]]
[EVENTS OF DEFAULT] [Any one of the following events constitutes an "Event of
Default" under the [ ] (an "Event of Default") with respect to the
Underlying Securities:
(i) the default by the Underlying Securities Issuer in the
payment of any principal or interest when due under the [ ];
(ii) the default in the performance of, or breach, in any
material respect, of any covenant or warranty of the Underlying
Securities Issuer contained in the [ ] and such default or breach
continues uncured for a period of [ ] days after there has been given
written notice of such default or breach to the Underlying Securities
Issuer by the holders of at least [ ]% of the aggregate outstanding
principal amount of the Underlying Securities; and
(iii) the occurrence of certain events of bankruptcy or
insolvency with respect to the [Underlying Securities Issuer]
[others].]
RATINGS
The Underlying Securities have been rated "______" by ___________. Any rating of
the Underlying Securities is not a recommendation to purchase, hold or sell such
Underlying Securities or the Certificates, and there can be no assurance that a
rating will remain for any given period of time or that a rating will not be
revised or withdrawn entirely by a rating agency if in its judgment
circumstances in the future so warrant. You will not be notified of any changes
to any ratings of the Underlying Securities.
s-19
CITIGROUP GLOBAL MARKETS INC. AND THE UNDERLYING SECURITIES ISSUER
From time to time, Citigroup Global Markets Inc. may be engaged by the
Underlying Securities Issuer as an underwriter or placement agent, in an
advisory capacity or in other business arrangements. In addition, Citigroup
Global Markets Inc. or another affiliate of the Company may make a market in
other outstanding securities of the Underlying Securities Issuer.
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be denominated and distributions with respect thereto will
be payable in United States Dollars, which will be the Specified Currency as
such term is defined in the Prospectus. The Certificates represent in the
aggregate the entire beneficial ownership interest in the Trust. [The property
of the Trust will be pledged by the Trust to secure payments on the
Certificates.] The property of the Trust will consist of (i) the Underlying
Securities [or describe other payment source], (ii) all payments on or
collections in respect of the Underlying Securities [or describe other payment
source] accrued on or after the Closing Date, together with any proceeds
thereof, and (iii) all funds from time to time deposited with the Trustee in
accounts related to the Trust. [The property of the Trust will be held for the
benefit of the Certificateholders [and the holders of the [I/O][Name]
Certificates] by the Indenture Trustee.] Certificateholders will receive
payments on each Distribution Date as described herein. See " Collections and
Distributions."
The Certificates do not represent an interest in or obligation of the Company,
the Underlying Securities Issuer, [the Underlying Securities Guarantor,] [the
Underlying Securities Trustees,] the Trustee or Citigroup Global Markets Inc. or
any affiliate thereof.
The aggregate principal amount of the Certificates will initially be
$______________. The principal amount of any Certificate will represent a pro
rata portion of the then-current aggregate principal amount of all outstanding
Certificates.
The aggregate Certificate Principal Balance of the Certificates will initially
be $______________. The Certificate Principal Balance of any Certificate will
represent a pro rata portion of the then-current aggregate Certificate Principal
Balance of all outstanding Certificates.
The [monthly] [quarterly] [semiannual] [or other] Fixed Payment payable on the
Certificates will be allocated between interest and return of principal
according to the table attached as Appendix B hereto [or describe other method
of allocation]. Although payments on the Certificates are denominated as
principal and interest, the Certificates generally represent indirect beneficial
ownership of solely the interest payments on the Underlying Securities [or
describe other payment source] and will be paid solely from interest payments on
the Underlying Securities [or describe other payment source]. CERTIFICATEHOLDERS
HAVE NO RIGHT TO ANY PORTION OF THE PRINCIPAL PAYMENTS ON THE UNDERLYING
SECURITIES [or describe other payment source].
s-20
FORM OF THE CERTIFICATES
The Certificates will be delivered in registered form. [The Certificates will be
issued, maintained and transferred on the book-entry records of DTC and its
Participants in minimum denominations of $1,000 and integral multiples thereof.]
[The Certificates will each initially be represented by one or more global
certificates, registered in the name of the nominee of DTC (together with any
successor clearing agency selected by the Company, the "Clearing Agency"),
except as provided below; the Company has been informed by DTC that DTC's
nominee will be Cede & Co. No Certificateholder will be entitled to receive a
note or certificate representing such Certificateholder's interest, except as
set forth below under "Definitive Certificates." Unless and until Definitive
Certificates (as defined below) are issued under the limited circumstances
described herein, all references to actions by Certificateholders with respect
to any such Certificates shall refer to actions taken by DTC upon instructions
from its Participants. See "Definitive Certificates" below and "Description of
the Certificates-Global Certificates" in the Prospectus.]
[Under the rules, regulations and procedures creating and affecting DTC and its
operations, DTC will take action permitted to be taken by a Certificateholder
under the Indenture or Trust Agreement, as applicable, only at the direction of
one or more Participants to whose DTC account such Certificates are credited.
Additionally, DTC will take such actions with respect to specified Voting Rights
(as defined herein) only at the direction and on behalf of Participants whose
holdings of such Certificates evidence such specified Voting Rights. DTC may
take conflicting actions with respect to Voting Rights, to the extent that
Participants whose holdings of Certificates evidence such Voting Rights
authorize divergent action.]
DEFINITIVE CERTIFICATES
Definitive Certificates will be issued to owners of Certificates or their
nominees, respectively, rather than to [DTC] or its nominee, only if (i) the
Company advises the Trustee in writing that DTC is no longer willing or able to
discharge properly its responsibilities as Clearing Agency with respect to the
Certificates and the Company is unable to locate a qualified successor or (ii)
the Company, at its option, elects to terminate the book-entry system through
[DTC].
[Upon the occurrence of any event described in the immediately preceding
paragraph, the Trustee is required to notify all Participants of the
availability through DTC of Definitive Certificates. Upon surrender by DTC of
the definitive certificates representing the Certificates and receipt of
instructions for re-registration, the Trustee will reissue such Certificates as
Definitive Certificates issued in the respective principal amounts owned by the
individual owners of such Certificates, and thereafter the Trustee will
recognize the holders of such Definitive Certificates as Certificateholders
under the Trust Agreement.]
[LISTING ON THE [NEW YORK STOCK] EXCHANGE
The Certificates are expected to be approved for listing, subject to official
notice of issuance, on the [New York Stock] Exchange. There can be no assurance
that the Certificates will remain listed on the [New York Stock] Exchange.]
s-21
INTEREST ACCRUAL
For each Distribution Date, interest shall accrue on the Certificates during the
period (the "Interest Accrual Period") commencing on and including the prior
Distribution Date to, but excluding, such Distribution Date, except that the
initial Interest Accrual Period shall commence on ______________.
Interest will accrue on each Certificate for each Interest Accrual Period ending
on or prior to the Final Distribution Date at the Yield to Final Distribution
Date (such accrued interest, the "Periodic Interest"). Periodic Interest shall
be payable (together with principal on Certificates) on the Distribution Dates
related to each applicable Interest Accrual Period.
See "Description of the Certificates-Interest on the Certificates" in the
Prospectus.
COLLECTIONS, DISTRIBUTIONS AND PRIORITY OF PAYMENTS
Distributions by the Indenture Trustee and the Certificate Trustee pursuant to
the terms of the Certificates, respectively, [and the Indenture] and the Trust
Agreement, respectively, shall be made, subject to timely receipt of payments on
the Underlying Securities [or describe other payment source] and, in the case of
cash distributions, solely to the extent of funds held under the Indenture and
Trust Agreement, as applicable, on each Distribution Date through the Final
Distribution Date, subject to the provisions discussed under "Description of the
Certificates--Recovery on Underlying Securities Following Payment Default or
Acceleration."
If a payment with respect to the Underlying Securities [or describe other
payment source] is made to the Trustee after the [______________] Payment Date
on which such payment was due, the Trustee will distribute any such amounts
received on the Business Day following such receipt; provided, however, that the
Record Date for such distribution shall be five days prior to such Business Day.
No additional amounts will accrue on the Certificates or be owed to
Certificateholders in respect of such distribution.
All amounts received on or with respect to the Underlying Securities [or
describe other payment source] shall be held uninvested by the Trustee.
On each Distribution Date, the Trustee will distribute Interest Collections (as
defined below) for such Distribution Date in the Collection Account pro rata to
the Certificateholders [and the holders of the [I/O][Name] Certificates] for the
payment of Fixed Payments, but only to the extent that such Interest Collections
were accrued prior to the Final Distribution Date.
"Interest Collections" means, with respect to any Distribution Date, all
payments received by the Trustee, during the Collection Period ending
immediately prior to such Distribution Date, in respect of (i) interest on the
Underlying Securities [or describe other payment source], and (ii) penalties or
other amounts required to be paid because of late payments on the Underlying
Securities [or describe other payment source]. "Collection Period" means each
period from and including the preceding Distribution Date (or, in the case of
the first Distribution Date, from and including the Closing Date) up to and
including the first Business Day preceding such Distribution Date.
s-22
ADDITIONAL UNDERLYING SECURITIES, CERTIFICATES [AND CALL [RIGHTS] [WARRANTS]]
[AND [I/O][NAME] CERTIFICATES]
From time to time hereafter, additional Underlying Securities may be [sold
to][deposited with] the Trust without your consent, in which case additional
Certificates [and additional [I/O][Name] Certificates] will be issued in a
principal [notional] amount equal to [[__]% of] the principal amount of
Underlying Securities so [sold to][deposited with] the Trustee on behalf of the
Trust. Any such additional Certificates issued will rank pari passu with the
Certificates issued on the date hereof [and any such additional Underlying
Securities will be subject to additional call [rights] [warrants]].
ACTION UPON [UNDERLYING SECURITIES ISSUER]FAILING TO REPORT UNDER THE EXCHANGE
ACT
Information about [Underlying Securities Issuer][Underlying Securities
Guarantor] is not provided in this Prospectus Supplement, and instead reference
is made to reports, proxy statements and other information of [Underlying
Securities Issuer][Underlying Securities Guarantor] made publicly available by
[Underlying Securities Issuer][Underlying Securities Guarantor] pursuant to its
periodic reports filed under the Exchange Act. If the Trust is no longer
permitted under Item 1100(c)(2) of Regulation AB to refer to such reports, proxy
statement and other information, including by reason of the [Underlying
Securities Issuer][Underlying Securities Guarantor] no longer being subject to
the reporting requirements of, or ceasing to file periodic reports under, the
Exchange Act, the Trust will be terminated, thus causing a liquidation of any
Underlying Securities held in the Trust (an "SEC Reporting Failure"). [Unless
the call [rights] [warrants] are exercised, or are deemed exercised, as
described below, the] [The] proceeds of the liquidation of the Underlying
Securities will be distributed pro rata to the Certificateholders [and the
holders of the [[I/O][Name] Certificates] [and the call [rights] [warrants] will
expire worthless]. [Describe other method of allocation of liquidation proceeds
between holders of Certificates and holders of [I/O][Name] Certificates.]
[Describe whether call [rights] [warrants] may become exercisable and/or deemed
to be exercised in connection with SEC Reporting Failure.]
RECOVERY ON UNDERLYING SECURITIES [OR DESCRIBE OTHER PAYMENT SOURCE] FOLLOWING
PAYMENT DEFAULT OR ACCELERATION
If a Payment Default or an Acceleration occurs, the Certificate Trustee will
promptly give notice to The Depository Trust Company ("DTC") or, for any
Certificates which are not then held by DTC or any other depository, directly to
the registered holders of the Certificates thereof. Such notice will set forth
(i) the identity of the issuer of the Underlying Securities [or describe other
payment source], (ii) the date and nature of such Payment Default or
Acceleration, (iii) the amount of the interest or principal in default, (iv) the
Certificates affected by the Payment Default or Acceleration, and (v) any other
information which the Trustee may deem appropriate.
In the event of a Payment Default, the Trustee is required to proceed against
the Underlying Securities Issuer on behalf of the Certificateholders to enforce
the Underlying Securities [or describe other payment source] or otherwise to
protect the interests of the Certificateholders, subject to the receipt of
indemnity in form and substance satisfactory to the Trustee; provided that
holders of Certificates representing a majority of the voting rights on the
Certificates will be entitled to direct the Trustee in any such proceeding or
direct the Trustee to sell the Underlying
s-23
Securities [or describe other payment source], subject to the Trustee's receipt
of satisfactory indemnity. In the event of an Acceleration and a corresponding
payment on the Underlying Securities [or describe other payment source], the
Trustee will distribute the proceeds to the Certificateholders [and holders of
the [I/O][Name] Certificates] no later than two Business Days after the receipt
of immediately available funds.
A "Payment Default" means a default in the payment of any amount due on the
Underlying Securities [or describe other payment source] after the same becomes
due and payable (and the expiration of any applicable grace period on the
Underlying Securities [or describe other payment source]). An "Acceleration"
means the acceleration of the maturity of the Underlying Securities [or describe
other payment source] after the occurrence of any default on the Underlying
Securities [or describe other payment source] other than a Payment Default.
In the event that the Trustee receives money or other property in respect of the
Underlying Securities [or describe other payment source] (other than a scheduled
payment on or with respect to an interest payment date) as a result of a Payment
Default on the Underlying Securities [or describe other payment source]
(including from the sale thereof), the Trustee will promptly give notice as
provided in the Trust Agreement to DTC, or for any Certificates which are not
then held by DTC or any other depository, directly to the registered holders of
the Certificates then outstanding and unpaid. Such notice will state that, not
later than 30 days after the receipt of such moneys or other property (including
the Underlying Securities), the Trustee will allocate and distribute such moneys
or liquidate such property and distribute the cash proceeds to the holders of
Certificates [and holders of the [I/O][Name] Certificates] then outstanding and
unpaid, pro rata by principal [notional] amount (after deducting the costs
incurred in connection therewith and subject to the provisions set forth under
"Description of the Trust Agreement -- The Trustee" herein). [Describe other
method of allocation of proceeds between holders of Certificates and holders of
[I/O][Name] Certificates.] [Describe whether call [rights] [warrants] may become
exercisable and/or deemed to be exercised in connection with a Payment Default
or Acceleration.]
Interest and principal payments on the Underlying Securities [or describe other
payment source] are payable solely by the Underlying Securities Issuer.
[CREDIT SUPPORT
For the benefit solely of the Class ____ Certificates, credit support will be
obtained and will constitute part of the Trust to the extent provided below, in
the form of a[n][letter of credit][insurance policy][reserve
account][subordination feature] as described below.
[Simultaneously with the [sale of] [Depositor's assignment of] the Underlying
Securities to the Trust, the Depositor will obtain a letter of credit (the
"Letter of Credit") from a letter of credit issuer in favor of the Trustee on
behalf of the Certificateholders. The Letter of Credit will be irrevocable and
will support the [timely][ultimate] remittance of amounts due with respect to
the Underlying Securities. The maximum amount that the Trustee may draw under
the Letter of Credit will initially be equal to ____ . The initial amount of the
Letter of Credit will be ___ . Thereafter, the amount of the Letter of Credit
with respect to any Distribution Date will equal the lesser of (i) ____% of the
aggregate Certificate Principal Balance outstanding on the preceding
s-24
Distribution Date (after giving effect to any payment of principal made on such
preceding Distribution Date) but in any event not less than ____, and (ii) the
amount of the Letter of Credit on the preceding Distribution Date, plus (a)
reimbursement of certain advances under the Letter of Credit and (b) recoveries
on defaulted Underlying Securities describe other methods. The Letter of Credit
expires on ______ . The Trustee will be obligated, in the event of a drawing on
the Letter of Credit, to pursue appropriate remedies against the Underlying
Securities and other collateral, and any realization thereon shall be paid to
LOC Issuer to the extent of any amounts owing, in the manner and priority
applicable to the Certificates that have been paid with proceeds of the Letter
of Credit.]
[Add description of the LOC Issuer with respect to its [credit/debt] ratings,
activities it engages in, regulatory authorities having jurisdiction over it and
the nature of such regulation, a narrative description of its assets,
liabilities (including deposits) and equity, and include an address for further
information concerning the LOC Issuer. In addition, to the extent that the
Letter of Credit will cover payment of 20% or more of the aggregate principal
amount of the Certificates covered thereby, provide or incorporate by reference
financial statements and other information with respect to the LOC Issuer.]
[Simultaneously with the Depositor's assignment of the Underlying Securities to
the Trust, the Depositor will obtain the financial guaranty insurance policy
(the "Policy") from [identify] (the "Insurer") in favor of the Trustee on behalf
of the Certificateholders. The Policy will guaranty scheduled payments of
principal, premium (if any) and interest with respect to the Class ____
Certificates. The Policy expires on ____. The Trustee will be obligated, in the
event of a drawing on the Policy, to pursue appropriate remedies against the
Underlying Securities and other collateral, and any realization thereon shall be
paid to the Insurer to the extent of any amounts owing, in the manner and
priority applicable to the Certificates that have been paid with proceeds of the
Policy.]
[Add language regarding the issuer of the Policy with respect to its insurance
strength ratings, activities it engages in, regulatory authorities having
jurisdiction over it and the nature of such regulation, a narrative description
of its assets, liabilities (including deposits) and equity, and include an
address for further information concerning the Insurer. In addition, to the
extent that the Policy will cover payment of 20% or more of the aggregate
principal amount of the Certificates covered thereby, provide or incorporate by
reference financial statements and other information with respect to the issuer
of the Policy.]
[The Depositor will establish for the benefit of the Trustee on the Closing Date
a Reserve Account containing [cash, letters of credit and short-term
investments] acceptable to the rating agency initially rating the Certificates
in the amount of ____ . Collections with respect to the Underlying Securities
not distributed with respect to the Certificates shall be deposited in the
Reserve Account. Amounts so deposited in such Reserve Account will be used by
the Trustee to make payments of principal of and premium (if any) and interest
on the Certificates to the extent that funds are not otherwise available.
Immediately after any Distribution Date, amounts in the Reserve Account in
excess of [indicate formula] may be paid to the Depositor.]
[The subordination described herein provided by the Class ____ Certificates is
designed to protect holders of the remaining Classes of Certificates from
certain losses and other shortfalls
s-25
with respect to the Underlying Securities. As a result, losses and other
shortfalls with respect to the Underlying Securities will be borne by the
remaining Classes of Certificates, to the extent described below, only if such
losses and other shortfalls are not so covered, or the coverage in respect
thereof has been exhausted.]]
[DESCRIPTION OF SWAP AGREEMENT
As described in the Prospectus, the Trust will enter into a Swap Agreement with
[specify Swap Counterparty] in the form of a master agreement published by the
International Swaps and Derivatives Association, Inc. [in 1992].
[The Swap Agreement will document an interest rate swap transaction between the
Trust and the Swap Counterparty under which the Trust will pay to the Swap
Counterparty the [fixed rate][floating rate] coupon payments received in respect
of the Certificates and receive from the Swap Counterparty [floating rate][fixed
rate] payments. The swap transaction will have the effect, subject to
performance by the Swap Counterparty of its obligations under the Swap
Agreement, of converting the coupon otherwise applicable to the Certificates
into the effective coupon the Trust will distribute with respect to the
Certificates.]
[The Swap Agreement will document a cross-currency swap transaction between the
Trust and the Swap Counterparty under which the Trust will pay to the Swap
Counterparty the [fixed rate][floating rate][foreign currency][dollar] coupon
and principal payments received on the Underlying Securities, and will receive
from the Swap Counterparty [floating rate][fixed rate][dollar][foreign currency]
payments. The transaction will have the effect, subject to performance by the
Swap Counterparty of its obligations under the Swap Agreement, of converting the
interest rate and currency otherwise applicable to payment of interest and
principal under the Certificates into the interest rate and currency in which
the Trust will make distributions with respect to the Certificates.]
[The Swap Agreement will document an option transaction between the Trust and
the Swap Counterparty under which the Trust will [purchase a put option
from][grant a call option to] the Swap Counterparty with respect to the
Certificates or the Underlying Securities, and the Trust will make a payment to
the Swap Counterparty of ____, and the Swap Counterparty will make a payment to
the Trust of ____. [The call option will effectively reserve to the Swap
Counterparty the right to realize all or a portion of the gain from an increase
in the market value of the specified Underlying Securities at or prior to the
maturity of the Certificates or to effect a conversion of the Certificates into
the right to receive another security.][The put option will entitle the Trust to
put to the Swap Counterparty the Certificates at par, thereby protecting the
Trust from a decline in the market value of the related Certificates in
circumstances where the Certificates may be outstanding on the Final Scheduled
Distribution Date with respect to the Certificates.][The Trust Agreement will
provide that the Trust will automatically exercise the put option, unless
otherwise instructed by the Certificateholders, if the market value of the
Certificates on the exercise date for the put option is less than the par value
of such Certificates.]]
[The notional amount of the [interest rate][currency] swap transaction will be
equivalent to the principal amount of Certificates held by the Trust. Payment
dates and payment accrual periods under the Swap Agreement will match the
Distribution Dates and Interest Periods on the
s-26
Certificates. The [floating rate][index value] applicable to payments during
each period under the Swap Agreement will be established by the Calculation
Agent on each payment date based on the value of [the [floating rate] as of the
__ day prior to the first day of the Interest Period][the index as of
the ___ day prior to the last day of the Interest Period.] The value of
[floating rate][index] will be determined by reference to the [screen] or in the
event such [screen][rate][value] is unavailable by reference to quotations from
market makers obtained by the Calculation Agent.]
[The significance percentage (as defined in, and calculated in accordance with,
Item 1115 of Regulation AB) is [less than 10%] [at least 10% but less than 20%]
[20% or more].]
[Add financial information relating to the counterparty to the Swap Agreement
required by Item 1115 of Regulation AB if significance percentage thresholds are
met or exceeded.]
REPORTS IN RELATION TO THE CERTIFICATES
For so long as the Company is subject to the reporting requirements of the
Exchange Act, the Company will file distribution reports on Form 10-D in
relation to the Trust following each distribution date for the Certificates,
will file an annual report of Form 10-K in relation to the Certificates, and may
file additional public reports in relation to the Trust and the Certificates
from time to time. The name of the Trust for purposes of obtaining reports on
the EDGAR system is The [TIERS(R)][CORTS(R)][NAME] [Callable] ___________-Backed
Certificates Trust ____ 20__Series 20__, and the CIK number in relation to the
Trust is [o]. The public may read and copy any materials filed with the
Commission at the Commission's Public Reference Room at 100 F Street, NE,
Washington, DC 20549. The public may obtain information on the operation of the
Public Reference Room by calling the Securities and Exchange Commission at
1-800-SEC-0330. The Commission maintains an Internet site that contains reports,
proxy and information statements, and other information regarding issuers that
file electronically with the Commission at http://www.sec.gov. [The trustee
[will][may] make reports available through its website at [______]. [Given the
limited nature of reporting in relation to the Trust, reports will not be
separately made available through any website of the Company [or the Trustee].]
DESCRIPTION OF THE TRUST AGREEMENT
GENERAL
The Certificates will be issued pursuant to the Trust Agreement, a form of which
is filed as an exhibit to the Registration Statement of which this Prospectus
Supplement and the Prospectus form a part. A Current Report on Form 8-K relating
to the Certificates containing a copy of the Trust Agreement as executed will be
filed by the Company with the Commission following the issuance and sale of the
Certificates. The assets of the Trust created under the Trust Agreement will
consist of (i) the Underlying Securities [or describe other payment source],
(ii) all payments on or collections in respect of the Underlying Securities [or
describe other payment source] accrued on or after the Closing Date, together
with any proceeds thereof, and (iii) all funds from time to time deposited with
the Trustee in accounts related to the Trust. Reference is made to the
Prospectus for important information in addition to that set forth herein
regarding the Trust, the terms and conditions of the Trust Agreement and the
Certificates. The following summaries of certain provisions of the Trust
Agreement do not purport to be complete and are subject to the detailed
provisions contained in the form of Trust Agreement, to which reference is
hereby made for a full description of such provisions, including the definition
of certain terms used herein.
s-27
AFFILIATE EXCHANGE RIGHT
Each affiliate of the Depositor, but not the Depositor itself, will have the
right, subject to the limitations contained in the Trust Agreement, on any date
to tender to the Trustee Certificates [of each Class] comprising the same
percentage of the aggregate Certificate Principal Balance of the Certificates,
and to receive in exchange a principal amount of Underlying Securities [or
describe other payment source] comprising the same percentage of the Underlying
Securities [or describe other payment source] deposited in the Trust.
THE TRUSTEE AND THE SERVICER
[Trustee to provide trustee and servicer experience for these types of assets
pursuant to 1108 and 1109 of Reg. AB.]
______________________________, will act as trustee for the Certificates and the
Trust pursuant to the Trust Agreement. The Trustee's offices are located at
______________________________ and its telephone number is ____________________.
[Describe any business relationship, agreement, arrangement, transaction or
understanding that is entered into outside the ordinary course of business or is
on terms other than would be obtained in an arm's length transaction with an
unrelated third party, apart from the transactions contemplated by the related
Trust Agreement, between the Depositor and the Trustee, or any affiliates of
such parties, that exist on the closing date for the related Series of
Certificates or that existed during the immediately preceding two years and that
is material to an investor's understanding of such Series of Certificates.]
The Trust Agreement will provide that the Trustee and any director, officer,
employee or agent thereof will be indemnified by the Trust and held harmless
against any loss, liability or expense incurred in connection with any legal
action relating to the Trust Agreement or the Certificates or the performance of
the Trustee's duties under the Trust Agreement, other than any loss, liability
or expense (i) that constitutes a specific liability of the Trustee under the
Trust Agreement or (ii) incurred by reason of willful misfeasance, bad faith or
negligence in the performance of the Trustee's duties under the Trust Agreement
or as a result of a breach, or by reason of reckless disregard, of the Trustee's
obligations and duties under the Trust Agreement.
Pursuant to the Trust Agreement, as compensation for the performance of its
duties under such agreement, the Trustee shall be entitled to payment of trustee
fees and reimbursement of expenses [by the Trust from the interest [and
principal] payments received by the Trust with respect to the Underlying
Securities][by the Company pursuant to a separate agreement with the Company,
but shall not have any claim against the Trust with respect thereto][If paid by
Trust, itemize fees and expenses to be paid].
NOTICES TO RATING AGENCIES
The Trustee shall use its best efforts promptly to provide notice to each rating
agency with respect to each of the following of which it has actual knowledge:
(i) any change or amendment to the Trust Agreement; (ii) the resignation or
termination of the Trustee; (iii) the appointment of a successor Trustee; (iv)
the final payment to the Certificateholders; (v) any change in the
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location of the segregated account maintained by the Trustee for the benefit of
the Certificateholders into which to which the Underlying Securities and all
payments made on or with respect to the related Underlying Securities shall be
credited; (vi) any liquidation or distribution of the Trust following
termination event with respect to the Trust[; and (vii) [describe any other
event requiring notice to rating agencies].
TRUST NOT PERMITTED TO ENTER INTO OTHER TRANSACTIONS
The activities of the Trust will generally be limited to acquiring the
Underlying Securities and any additional Underlying Securities and issuing the
Certificates [and the call [rights] [warrants]][and the [I/O] [Name]
Certificates] and any Certificates [and call [rights] [warrants]][and [I/O]
[Name] Certificates] issued upon the acquisition of any additional Underlying
Securities.
BANKRUPTCY REMOTENESS
[Describe any provisions which address whether declaration of bankruptcy,
receivership or similar proceeding with respect to the Trust can occur.]
EVENT OF DEFAULT
There are no events of default with respect to the Certificates. If a Payment
Default or Acceleration occurs (or other default with respect to the Underlying
Securities [or describe other payment source] occurs), the Trustee will act upon
the instruction of Certificateholders to recover amounts due on the Underlying
Securities [or describe other payment source] and distribute the proceeds from
such recovery (after deducting the costs incurred in connection therewith) to
the Certificateholders. See "Description of the Certificates--Recovery on
Underlying Securities [or describe other payment source] Following Payment
Default or Acceleration" herein.
VOTING RIGHTS
Certificateholders will have 100% of the total Voting Rights. All Voting Rights
with respect to the Certificates will be allocated among all Certificateholders
in proportion to the respective Certificate Principal Balances of the
then-outstanding Certificates held by such Certificateholders on any date of
determination.
The required percentage of Voting Rights of those Certificates that are
materially adversely affected by any modification or amendment of the Trust
Agreement necessary to consent to such modification or amendment shall be
_____%.
VOTING OF UNDERLYING SECURITIES
The Trustee, as holder of the Underlying Securities [or describe other payment
source], has the right to vote and give consents and waivers in respect of such
Underlying Securities [or describe other payment source] as permitted by the
depositary with respect thereto and except as otherwise limited by the Trust
Agreement. In the event that the Trustee receives a request from the Underlying
Securities Issuer for its consent to any amendment, modification or waiver of
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the Underlying Securities or any document relating thereto, or receives any
other solicitation for any action with respect to the Underlying Securities, the
Trustee shall mail a notice of such proposed amendment, modification, waiver or
solicitation to each Certificateholder of record as of such date. The Trustee
shall request instructions from the Certificateholders as to whether or not to
consent to or vote to accept such amendment, modification, waiver or
solicitation. The Trustee shall consent or vote, or refrain from consenting or
voting, in the same proportion (based on the relative Certificate Principal
Balances of the Certificates) as the Certificates of the Trust were actually
voted or not voted by the Certificateholders thereof as of a date determined by
the Trustee prior to the date on which such consent or vote is required;
provided, however, that, notwithstanding anything to the contrary stated herein,
the Trustee shall at no time vote in favor of or consent to any matter (i) which
would defer the timing or reduce the amount of any then presently scheduled
payment on the Underlying Securities [or describe other payment source],
including, without limitation, the deferral or elimination of any then existing
right of Certificateholders to demand to accelerate the Underlying Securities
following a default thereon [or describe other payment source] or (ii) which
would result in the exchange or substitution of any Underlying Security [or
describe other payment source] pursuant to a plan for the refunding or
refinancing of such Underlying Security [or describe other payment source],
except in each case with the unanimous consent of the Certificateholders and
subject to the requirement that such vote or consent would not, based on an
opinion of counsel, materially increase the risk that the Trust would fail to
qualify as a grantor trust for federal income tax purposes. The Trustee shall
have no liability for any failure to act resulting from Certificateholders' late
return of, or failure to return, directions requested by the Trustee from the
Certificateholders.
[REPORTS AS TO COMPLIANCE]
The Trustee will be required to deliver to the Company by not later than [--] of
each year, starting in the year following the year of issuance of the related
Certificates, an officer's certificate stating that:
o a review of the activities of the Trustee during the preceding
calendar year and of performance under the Trust Agreement has been made under
such officer's supervision; and
o to the best of such officer's knowledge, based on such review,
the Trustee has fulfilled all of its obligations under the Trust agreement for
such year, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status of such default, including the steps being taken by the trustee to
remedy such default.
In addition, on or prior to [--] of each year, commencing with the year
following the year of issuance of the related Certificates, the Trustee will be
required to deliver to the depositor an Assessment of Compliance that contains
the following:
o a statement of the Trustee's responsibility for assessing
compliance with the servicing criteria applicable to it under the Trust
Agreement;
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o a statement that the Trustee used certain of the criteria in
Item 1122(d) of Regulation AB (17 CFR 229.1122) to assess compliance with the
applicable servicing criteria under the trust agreement;
o the Trustee's assessment of compliance with the applicable
servicing criteria during and as of the end of the prior calendar year, setting
forth any material instance of noncompliance identified by the Trustee; and
o a statement that a registered public accounting firm has
issued an attestation report on the Trustee's assessment of compliance with the
applicable servicing criteria under the trust agreement during and as of the end
of the prior calendar year.
The Trustee will also be required to simultaneously deliver an attestation
report of a registered public accounting firm, prepared in accordance with the
standards for attestation engagements issued or adopted by the Public Company
Accounting Oversight Board, that expresses an opinion, or states that an opinion
cannot be expressed, concerning the Trustee's assessment of compliance with the
applicable servicing criteria under the trust agreement.
Certificateholders will be able to obtain copies of these statements and reports
without charge upon written request to the Trustee.
The fiscal year of the Trust will mean each twelve-month period ending on the
30th day of June (commencing with the twelve-month period ending
June 30, ______). The Company reserves the right to change the timing of the
fiscal year but no fiscal year may exceed 12 months.]
AMENDMENT OF TRUST AGREEMENT
The Trust Agreement may be amended for certain purposes without notice to or
consent of the Certificateholders. See the section of the accompanying
prospectus entitled "Description of Trust Agreement--Modification and Waiver".
TERMINATION OF THE TRUST
The Trust shall terminate upon (i) the payment in full of amounts due and owing
on the Certificates, [(ii) the [distribution in kind][liquidation] of the
Underlying Securities [and the distribution of the proceeds of such liquidation]
to the Certificateholders [and the holders of the [I/O] [Name] Certificates]
after a Payment Default or an Acceleration thereof [or the [Underlying
Securities Issuer] [Underlying Securities Guarantor]] ceasing to file, or no
longer being required to file, reports under the Exchange Act][or (iii) the
[distribution in kind][liquidation] of the Underlying Securities upon the tender
by an affiliate of the Depositor of 100% of each of the then-outstanding
Certificates in exchange for 100% of the Underlying Securities][or (iv) the
exercise or deemed exercise of call [rights] [warrants] for 100% of the
Underlying Securities and the payment in full of the exercise price in
connection therewith]. See "Description of the Trust Agreement-Termination" in
the Prospectus.
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FEDERAL INCOME TAX CONSEQUENCES
SCOPE OF OPINION
In the opinion of Orrick, Herrington & Sutcliffe LLP, Special Tax Counsel, the
Trust will be a grantor trust or a partnership for federal income tax purposes
and not an association taxable as a corporation (or publicly traded partnership
treated as a corporation).
GENERAL
For tax reporting purposes, the Trustee intends to treat the Trust as a grantor
trust and the balance of this discussion assumes that the Trust will be so
classified. However, for a discussion of the consequences of recharacterization
of the Trust as a partnership for federal income tax purposes, see "--Possible
Recharacterization of the Trust as a Partnership in "Certain Federal Income Tax
Considerations" in the Prospectus.
[INSERT DISCUSSION OF TAX CHARACTERIZATION OF UNDERLYING SECURITIES AS
APPROPRIATE]
[In general, each certificate will be treated as a synthetic debt instrument
issued on the date it is acquired by the holder of such certificate. Each
certificateholder will be subject to the original issue discount ("OID") rules
of the Code and Treasury Regulations with respect to such certificates. Under
those rules, the certificateholder (whether on the cash or accrual method of
accounting) will be required to include in income the OID on its certificate as
it accrues on a daily basis, under a constant yield method, regardless of when
cash payments are received. The amount of OID on the certificates generally will
be equal to the excess of all amounts payable on the certificate over the amount
paid to acquire the certificate and the constant yield used in accruing OID
generally will be the yield to maturity of the certificate as determined by such
holder based on that holder's purchase price for the certificate. The amount of
OID that is reported in income in any particular year will not necessarily bear
any relationship to the amount of distributions, if any, paid to a holder in
that year.]
Payments made on a certificate to a person that is not a U.S. Person and has no
connection with the United States other than holding its Certificate generally
will be made free of United States federal withholding tax, provided that (i)
the holder is not related (directly or indirectly) to certain other specified
persons and (ii) the holder complies with certain identification and
certification requirements imposed by the IRS.
See " Certain Federal Income Tax Considerations" in the Prospectus.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
Section 4975 of the Code impose certain requirements on (a) an employee benefit
plan (as defined in Section 3(3) of ERISA), (b) a plan described in Section
4975(e)(1) of the Code, including an individual retirement account ("IRA") or
Keogh plan or (c) any entity whose underlying assets include plan assets by
reason of a plan's investment in the entity (each, a "Plan").
In accordance with ERISA's general fiduciary standards, before investing in a
Certificate, a Plan fiduciary should determine whether such an investment is
permitted under the governing Plan instruments and is appropriate for the Plan
in view of its overall investment policy and the composition and diversification
of its portfolio. Other provisions of ERISA and Section 4975 of
s-32
the Code prohibit certain transactions involving the assets of a Plan and
persons who have specified relationships to the Plan, i.e., "parties in
interest" within the meaning of ERISA or "disqualified persons" within the
meaning of the Code (collectively, "Parties in Interest"). Thus, a Plan
fiduciary considering an investment in Certificates should also consider whether
such an investment might constitute or give rise to a prohibited transaction
under ERISA or Section 4975 of the Code. The Underlying Securities Issuer, the
Underwriter, the Trustee and their respective affiliates may be Parties in
Interest with respect to many Plans.
An investment in Certificates by a Plan might result in the assets of the Trust
being deemed to constitute plan assets, which in turn might mean that certain
aspects of such investment, including the deemed extension of credit between the
Underlying Securities Issuer and the holder of a Certificate (as a result of the
Underlying Securities being deemed to be plan assets) might be prohibited
transactions under ERISA and Section 4975 of the Code unless exemptive relief
were available under an applicable exemption issued by the United States
Department of Labor (the "DOL"). Neither ERISA nor the Code defines the term
"plan assets." Under Section 2510.3-101 of the DOL regulations (the
"Regulation"), a Plan's assets may include the assets of an entity if the Plan
acquires an "equity interest" in such entity. Thus, if a Plan acquired a
Certificate, for certain purposes (including the prohibited transaction
provisions of ERISA and Section 4975 of the Code), the Plan would be considered
to own an undivided interest in the underlying assets of the Trust unless an
exception applied under the Regulation.
Each purchaser of a Certificate, as applicable, and each fiduciary who causes
any entity to purchase a Certificate will be deemed to have represented and
warranted that either (i) it is neither a Plan nor an entity the assets of which
are deemed to be "plan assets" or (ii) its purchase and holding of such
Certificate will not constitute or result in a non-exempt prohibited
transaction. In this regard, prospective Plan investors as to which the
Underlying Securities Issuer, the Underwriter or any of their affiliates may be
a Party in Interest may wish to consider the exemptive relief available under
the following prohibited transaction class exemptions ("PTCE"): (A) the
qualified in-house asset manager ("INHAM") exemption (PTCE 96-23), (B) the
insurance company general account exemption (PTCE 95-60), (C) the bank
collective investment fund exemption (PTCE 91-38), (D) the insurance company
pooled separate account exemption (PTCE 90-1), (E) the qualified professional
asset manager ("QPAM") exemption (PTCE 84-14), and (F) the broker-dealer
exemption (PTCE 75-1).
NOTHING HEREIN SHALL BE CONSTRUED AS A REPRESENTATION THAT AN INVESTMENT IN THE
CERTIFICATES WOULD MEET ANY OR ALL OF THE RELEVANT LEGAL REQUIREMENTS WITH
RESPECT TO INVESTMENTS BY, OR IS APPROPRIATE FOR, PLANS GENERALLY OR ANY
PARTICULAR PLAN. ANY PLAN OR ANY OTHER ENTITY THE ASSETS OF WHICH ARE DEEMED TO
BE "PLAN ASSETS," SUCH AS AN INSURANCE COMPANY INVESTING ASSETS OF ITS GENERAL
ACCOUNT, PROPOSING TO ACQUIRE CERTIFICATES SHOULD CONSULT WITH ITS COUNSEL.
METHOD OF DISTRIBUTION
Subject to the terms and conditions set forth in the Underwriting Agreement,
dated [______________] (the "Underwriting Agreement"), the Company has agreed to
sell and Citigroup Global Markets Inc. (an affiliate of the Company [and the
Underlying Securities Issuer]) (the "Underwriter[s]") has agreed to purchase,
all the Certificates.
s-33
The Underwriter has agreed, subject to the terms and conditions set forth in the
Underwriting Agreement, to purchase all Certificates offered hereby, if any such
Certificates are purchased, at a price of $_______________, which will
constitute the aggregate proceeds to the Company, before deducting expenses
estimated at $_______________.
The Company has been advised by the Underwriter that it proposes to offer the
Certificates from time to time in negotiated transactions or otherwise at
varying prices to be determined at the time of sale. Any profit on the resale of
Certificates by the Underwriter will constitute underwriting compensation under
the Securities Act.
The Underwriting Agreement provides that the Company will indemnify the
Underwriter against certain civil liabilities, including liabilities under the
Securities Act, or will contribute to payments the Underwriter may be required
to make in respect thereof.
Citigroup Global Markets Inc. is an affiliate of the Company [and the Underlying
Securities Issuer], and the participation by Citigroup Global Markets Inc. in
the offering of the Certificates complies with Schedule E of the By-Laws of the
National Association of Securities Dealers, Inc. regarding underwriting
securities of an affiliate.
RATINGS
It is a condition to the establishment of the Trust and the issuance of the
Certificates that the Certificates be rated identically to the Underlying
Securities by ______________. ___________ has/have rated the Underlying
Securities "______."
The ratings address the likelihood of the receipt by Certificateholders of
payments required under the Trust Agreement, and are based primarily on the
credit quality of the Underlying Securities.
A security rating is not a recommendation to buy, sell or hold securities and
may be subject to revision or withdrawal at any time by the assigning Rating
Agency. Each security rating should be evaluated independently of any other
security rating.
The Company has not requested a rating on the Certificates by any rating agency
other than the Rating Agencies. However, there can be no assurance as to whether
any other rating agency will rate the Certificates, or, if it does, what rating
would be assigned by any such other rating agency. A rating on the Certificates
by another rating agency, if assigned at all, may be lower than the ratings
assigned to the Certificates by the Rating Agencies.
LEGAL OPINIONS
Certain legal matters relating to the Certificates will be passed upon for the
Company and for the Underwriter by Orrick, Herrington & Sutcliffe LLP, New York,
New York.
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INDEX OF TERMS
$ 2
Acceleration..................................................................23
Accounting Period.............................................................29
Administration Fee.............................................................9
Administrative Agent Termination Events.......................................44
AID...........................................................................28
Base Rate.....................................................................16
Bearer Certificates...........................................................12
Business Day..................................................................15
Calculation Agent.............................................................17
Calculation Date..................................................18, 19, 20, 22
CD Rate.......................................................................18
CD Rate Determination Date....................................................18
CD Reference Rate Certificate.................................................16
Cede...........................................................................2
Certificate...................................................................11
Certificate Account...........................................................38
Certificate of Non-U.S. Beneficial Ownership..................................51
Certificateholder..............................................................7
Certificateholders.............................................................3
Certificates...................................................................1
Citigroup.....................................................................14
Clearing Agency...............................................................20
Clearstream...................................................................51
Code..........................................................................54
Collection Period.............................................................22
Commercial Paper Rate.........................................................18
Commercial Paper Rate Determination Date......................................19
Commercial Paper Reference Rate Certificate...................................16
Company.................................................................1, 14, 8
Composite Quotations..........................................................16
Concentrated Underlying Securities....................................27, 28, 29
Coupons.......................................................................12
Credit Support Instruments....................................................41
Cut-off Date..................................................................39
Definitive Certificate........................................................25
Depositary....................................................................25
Deposited Asset Provider......................................................40
Deposited Assets...........................................................3, 36
depositor......................................................................1
Determination Date............................................................13
Distribution Date..............................................................3
DOL...........................................................................31
dollar.........................................................................2
DTC...........................................................................22
ERISA.........................................................................31
Euroclear.....................................................................51
Event of Default..............................................................19
Exchange......................................................................16
Exchange Rate Agent...........................................................13
Exchangeable Series...........................................................22
Fannie Mae....................................................................28
Federal Funds Rate............................................................19
Federal Funds Rate Determination Date.........................................19
Federal Funds Reference Rate Certificate......................................16
FFCB..........................................................................28
FHLB..........................................................................28
Final Scheduled Distribution Date..............................................3
Fiscal Agent..............................................................32, 34
Fixed Pass-Through Rate.......................................................12
Fixed Rate Certificates.......................................................15
Floating Rate Certificates....................................................16
Freddie Mac...................................................................28
Global Certificate............................................................12
GSE...........................................................................28
GSE Issuer....................................................................28
H.15(519).....................................................................16
Index Maturity................................................................16
Initial Certificate Principal Balance..........................................1
Insurer.......................................................................24
Interest Accrual Period.......................................................21
Interest Collections..........................................................22
Interest Rate..................................................................3
Interest Reset Date........................................................3, 17
Interest Reset Period.........................................................17
IRA...........................................................................31
IRS........................................................................4, 53
issuing entity.................................................................1
Letter of Credit..........................................................23, 37
Letter of Credit Bank.........................................................37
LIBOR Determination Date......................................................20
LIBOR Reference Rate Certificate..............................................16
London Banking Day............................................................15
Market Exchange Rate..........................................................13
Maximum Pass-Through Rate.....................................................16
Minimum Pass-Through Rate.....................................................16
Money Market Yield............................................................19
Nonrecoverable Advance........................................................43
s-35
Notional Amount...............................................................15
Offering Agent.................................................................2
OID.......................................................................30, 55
Optional Exchange Date........................................................23
Original Issue Date...........................................................11
outstanding debt securities...................................................31
participants..................................................................25
Parties in Interest...........................................................31
Pass-Through Rate.............................................................12
Payment Default...............................................................23
Periodic Interest.............................................................21
Plan..........................................................................31
Policy........................................................................24
Prospectus Supplement..........................................................1
PTCE..........................................................................32
Purchase Price................................................................49
Rating Agency..................................................................4
Realized Losses...............................................................22
REFCORP.......................................................................28
Reference Entity..............................................................26
Registered Certificates.......................................................13
Regulation....................................................................31
Related Proceeds..............................................................43
Required Percentage...........................................................45
Reserve Account...............................................................38
Retained Interest..............................................................9
Reuters Screen LIBO Page......................................................20
Sallie Mae....................................................................28
Schedule B....................................................................29
Secured Underlying Securities.................................................32
Senior Underlying Securities..................................................31
Series.........................................................................1
Special Tax Counsel...........................................................53
sponsor........................................................................1
Spread........................................................................16
Spread Multiplier.............................................................16
Strip Certificates............................................................12
Stripped Interest.............................................................15
Sub-Administration Agreement..................................................41
Sub-Administrative Agent......................................................41
Subordinated Underlying Securities............................................31
Surety........................................................................37
Surety Bond...................................................................37
Term Asset Events of Default..........................................31, 33, 35
Treasury bills................................................................21
Treasury Rate Determination Date..............................................22
Treasury Reference Rate Certificate...........................................16
Treasury Securities...........................................................28
Trust...................................................................1, 15, 2
Trust Agreement................................................................9
Trust Indenture Act.......................................................15, 30
Trustee's Fee..................................................................9
TVA...........................................................................28
U.S. dollars...................................................................2
U.S. Person...................................................................51
U.S.$..........................................................................2
Underlying Securities...........................................1, 3, 27, 28, 29
Underlying Securities Currency................................................35
Underlying Securities Indenture...............................................30
Underlying Securities Interest Accrual Periods................................35
Underlying Securities Issuer...............................................7, 28
Underlying Securities Issuers.........................................27, 28, 29
Underlying Securities Offering Document...............................27, 28, 29
Underlying Securities Payment Date............................................17
Underlying Securities Payment Dates...........................................35
Underlying Securities Rate....................................................35
Underlying Securities Registration Statement..................................17
Underwriter[s]................................................................32
Underwriting Agreement........................................................32
United States.................................................................51
USD............................................................................2
Variable Pass-Through Rate....................................................12
Voting Rights.................................................................45
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APPENDIX A
IDENTIFICATION OF UNDERLYING SECURITIES
1. SUMMARY OF TERMS OF THE UNDERLYING SECURITIES
TERMS OF UNDERLYING SECURITIES
- --------------------------------------- ---------------- ---------------------
Underlying Securities Issuer:
Underlying Securities:
Dated:
Original Principal Maturity Date:
Original Par Value Amount Issued:
CUSIP Number:
Stated Interest Rate:
Interest Payment Dates:
Mode of Payment of Underlying
Securities:
Par Value Amount of Underlying
Securities Deposited Under Trust
Agreement:
The Underlying Securities will be held by the Trustee for the Owners of
Certificates as book-entry credits to an account of the Trustee at [DTC].
AVAILABLE INFORMATION
The Underlying Securities Issuer is subject to the information requirements of
the Securities Exchange Act of 1934 and in accordance therewith files reports
and other information with the Commission. Such reports, proxy and information
statements and other information filed by the Underlying Securities Issuer with
the Commission can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
Copies of such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Commission maintains a Web site at http://www.sec.gov containing
reports, proxy statements and other information regarding registrants that file
electronically with the Commission. [In addition, certain material described
above and other information will also be available for
inspection at the offices of the New York Stock Exchange at 20 Broad Street,
New York, New York.]
No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus Supplement or the Prospectus in connection with the offer made by
this Prospectus Supplement and the Prospectus, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Underwriter. This Prospectus Supplement and the Prospectus do not
constitute an offer or solicitation by anyone in any jurisdiction in which such
offer or solicitation is not authorized or in which the person making such offer
or solicitation is not authorized or in which the person making such offer or
solicitation is not qualified to do so or to anyone to whom it is unlawful to
make such offer or solicitation. Neither the delivery of this Prospectus
Supplement or the accompanying Prospectus, nor any sale made hereunder and
thereunder, shall, under any circumstances, create any implication that the
information contained herein and in the accompanying Prospectus is correct as of
any time subsequent to the date hereof; however, if any material change occurs
while this Prospectus Supplement or the accompanying Prospectus is required by
law to be delivered, this Prospectus Supplement or the accompanying Prospectus
will be amended or supplemented accordingly.
2. EXCERPTS FROM THE UNDERLYING SECURITIES PROSPECTUS
Set forth below are certain sections or excerpts of certain sections of the
Underlying Securities Prospectus, which may be summarized in part and which set
forth the material terms of the Underlying Securities. There is no assurance
that such sections have not been amended. All references to section numbers set
forth below in Section 2 of this Annex relate to the section numbers of the
Underlying Securities Prospectus. As used below the following terms have the
meanings hereby assigned:
================================================================================
$
STRUCTURED PRODUCTS CORP.
-------------------------
PROSPECTUS
SUPPLEMENT
Dated [______][__], 200__
Until [date], all dealers that effect transactions in these securities, whether
or not participating in this offering, may be required to deliver a prospectus.
This is in addition to the dealers' obligation to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
================================================================================
SUBJECT TO COMPLETION, DATED [______] [__], 200[_].
PROSPECTUS
Trust Certificates
(Issuable in Series)
Structured Products Corp.
Depositor and Sponsor
The trust certificates offered hereby and by supplements to this Prospectus will
be offered from time to time in one or more series and in one or more classes
within each such series. Certificates of each respective series and class will
be offered on terms to be determined at the time of sale as described in the
related prospectus supplement accompanying the delivery of this Prospectus.
Certificates may be sold for United States dollars or for one or more foreign
currencies, and the principal of, premium, if any, and any interest to be
distributed in respect of certificates may be payable in United States dollars
or in one or more foreign currencies. Each series and class of certificates may
be issuable as individual securities in registered form without coupons or in
bearer form with or without coupons attached or as one or more global securities
in registered or bearer form.
Each series of certificates will represent in the aggregate the entire
beneficial ownership interest in securities, issued by one or more issuers,
together with, if specified in the applicable prospectus supplement, rights
under swap or other derivative agreements or certain other assets to be
deposited in a trust for the benefit of holders of certificates of such series
by Structured Products Corp. pursuant to a trust agreement and a series
supplement thereto with respect to a given series among the Company, as
depositor or transferor, the administrative agent, if any, and the trustee named
in the related prospectus supplement. Each term asset or term assets, in the
case of debt securities with a common obligor, which represent ten percent or
more of the total of term assets in the trust consist of [SELECT ONE OF THE
BRACKETED SECTIONS][Alternative 1: a fixed income debt security or asset backed
security or pool of such debt securities or asset backed securities issued or by
their terms guaranteed by one or more corporations, banking organizations,
insurance companies or special purpose vehicles (including trusts, limited
liability companies, partnerships or other special purpose entities) organized
under the laws of the United States of America or any state which are subject to
the informational requirements of the Securities Exchange Act of 1934 and which
in accordance therewith file reports and other information with the Securities
and Exchange Commission] [Alternative 2: a fixed income debt security or pool of
such debt securities issued or by their terms guaranteed by one or more foreign
private issuers (as such term is defined in Rule 405 of the Securities Act of
1933) subject to the informational requirements of the Securities Exchange Act
of 1934 and which in accordance therewith file reports and other information
with the Securities and Exchange Commission] [Alternative 3: a fixed income debt
security or pool of such debt securities which represent obligations of the
United States of America or any agency thereof for the payment of which the full
faith and credit of the United States of America is pledged or a United States
governmental sponsored organization created pursuant to a federal statute]
[Alternative 4: a fixed income debt security or pool of such debt securities
which represent obligations issued or by their terms guaranteed by a foreign
government, political subdivision or agency or instrumentality thereof]. If so
specified in the related prospectus supplement, the trust for a series of
certificates may also include, or the certificateholders of such certificates
may have the benefit of, any combination of insurance policies, letters of
credit, reserve accounts and other types of rights or assets designed to support
or ensure the servicing and distribution of amounts due in respect of the assets
deposited into the trust. See "Description of Certificates" and "Description of
Deposited Assets and Credit Support."
PROSPECTIVE INVESTORS SHOULD CONSIDER, AMONG OTHER THINGS, THE INFORMATION SET
FORTH UNDER "RISK FACTORS" COMMENCING ON [PAGE 3] OF THIS PROSPECTUS AND IN THE
RELATED PROSPECTUS SUPPLEMENT.
Each class of certificates of any series will represent the right, which may be
senior to those of one or more of the other classes of such series, to receive
specified portions of payments of principal, interest and certain other amounts
on the assets deposited into the trust in the manner described herein and in the
related prospectus supplement. A series may include two or more classes
differing as to the timing, sequential order or amount of distributions of
principal, interest or premium and one or more classes within such series may be
subordinated in certain respects to other classes of such series. The
certificates of each series (or class within such series) offered hereby will be
rated at the time of issuance in one of the recognized investment grade rating
categories by one or more nationally recognized rating agencies.
To the extent provided herein and in the applicable prospectus supplement,
Structured Products Corp.'s only obligations with respect to each series of
certificates will be, pursuant to certain representations and warranties
concerning the assets deposited into a trust, to assign and deliver the assets
deposited into a trust and certain related documents to the applicable trustee
and, in certain cases, to provide for the credit support, if any. The principal
obligations of an administrative agent, if any is named in the applicable
prospectus supplement, with respect to a series of certificates will be pursuant
to its contractual administrative obligations and, only as and to the extent
provided in the related prospectus supplement, its obligation to make certain
cash advances in the event of payment delinquencies on the assets deposited into
a trust. See "Description of Trust Agreement--Advances in Respect of
Delinquencies."
The certificates of each series will not represent an obligation of or interest
in Structured Product's Corp., any administrative agent or any of their
respective affiliates, except to the limited extent described herein and in the
related prospectus supplement. The certificates will not be guaranteed or
insured by any governmental agency or instrumentality, or by Structured Products
Corp., any administrative agent or their respective affiliates.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The certificates may be offered and sold to or through underwriters, through
dealers or agents or directly to purchasers, as more fully described under "Plan
of Distribution" herein and "Method of Distribution" in the related prospectus
supplement. This Prospectus may not be used to consummate sales of certificates
offered hereby unless accompanied by a prospectus supplement.
The date of this Prospectus is _______, 200_
TABLE OF CONTENTS
PAGE
PROSPECTUS SUPPLEMENT..........................................................1
AVAILABLE INFORMATION..........................................................1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE................................1
REPORTS TO CERTIFICATEHOLDERS..................................................2
[IMPORTANT CURRENCY INFORMATION]...............................................2
RISK FACTORS...................................................................2
THE COMPANY....................................................................8
USE OF PROCEEDS................................................................8
FORMATION OF THE TRUST.........................................................8
MATURITY AND YIELD CONSIDERATIONS..............................................9
DESCRIPTION OF CERTIFICATES...................................................10
DESCRIPTION OF DEPOSITED ASSETS AND CREDIT SUPPORT............................27
DESCRIPTION OF TRUST AGREEMENT................................................39
[LIMITATIONS ON ISSUANCE OF BEARER CERTIFICATES...............................49
[CURRENCY RISKS]..............................................................50
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS.....................................52
PLAN OF DISTRIBUTION..........................................................56
LEGAL OPINIONS................................................................58
INDEX OF TERMS................................................................59
PROSPECTUS SUPPLEMENT
The supplement to this Prospectus (each a "Prospectus Supplement") relating to a
series (a "Series") of trust certificates ("Certificates") to be offered thereby
and hereby will set forth information relating to the Certificates, including,
among other things, the following with respect to such Series: the specific
designation, aggregate principal amount, and pass through rate for the
Certificates. See "Description of Certificates--General" for a listing of the
items that may be specified in the applicable Prospectus Supplement. The terms
of the trust certificates described in the applicable Prospectus Supplement may
supplement and/or modify any related general discussion in this Prospectus.
AVAILABLE INFORMATION
The Company filed a registration statement relating to the Certificates with the
Securities and Exchange Commission. This prospectus is a part of the
registration statement, but the registration statement includes additional
information.
The Company will file with the SEC all required annual reports on Form 10-K,
periodic reports on Form 10-D and current reports on Form 8-K. The Company does
not intend to send any financial reports to Certificateholders.
You may read and copy any reports, statements or other information the Company
files at the SEC's public reference room at 100 F Street, N.E., Washington, D.C.
20549. You can request copies of these documents, upon payment of a duplicating
fee, by writing to the SEC. Please call the SEC at (800) SEC-0330 for further
information on the operation of the public reference rooms. The Company's SEC
filings are also available to the public on the SEC internet web site
(http://www.sec.gov). The Company's SEC filings may be located by using the SEC
Central Index Key (CIK) for [_______], [______]. For purposes of any electronic
version of this prospectus, the preceding uniform resource locator, or URL, is
an inactive textual reference only. The Company has taken steps to ensure that
this URL was inactive at the time the electronic version of this prospectus was
created.
[Reports that are filed with the SEC by the Company pursuant to the Exchange Act
may be accessed by any investor, free of charge, through an internet web site at
http://[_____]. In the event this internet web site is temporarily unavailable,
the Company will provide to investors electronic or paper copies of such reports
free of charge upon request. For purposes of any electronic version of this
prospectus, the URL in this paragraph is an inactive textual reference only. The
Company has taken steps to ensure that the URL in this paragraph was inactive at
the time it created any electronic version of this prospectus.]
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company "incorporates by reference" information it files with the SEC, which
means that it can disclose important information to you be referring you to
those documents. The information incorporated by reference is considered to be
part of this prospectus. Information that the Company files later with the SEC
will automatically update the information in this prospectus. In all cases, you
should rely on the later information over different information included in this
1
prospectus or the related prospectus supplement. The Company incorporates by
reference any future annual, monthly and special SEC reports and proxy materials
filed by or on behalf of the issuing entity until the Company terminates its
offering of the Certificates.
As a recipient of this prospectus, you may request a copy of any document the
Company incorporates by reference, except exhibits to the documents (unless the
exhibits are specifically incorporated by reference), at no cost, by writing or
calling: Structured Products Corp., 390 Greenwich Street, New York, New York
10013, Attention: Secretary, (212) 816-6000.
REPORTS TO CERTIFICATEHOLDERS
Unless and until Definitive Certificates are issued, on each Distribution Date
unaudited reports containing information concerning the related trust (the
"Trust") will be prepared by the related Trustee and sent on behalf of each
Trust only to Cede & Co. ("Cede"), as nominee of DTC and registered holder of
the Certificates. See "Description of Certificates--Global Certificates" and
"Description of Trust Agreement--Reports to Certificateholders; Notice." Such
reports will not constitute financial statements prepared in accordance with
generally accepted accounting principles.
For so long as the Company is subject to the reporting requirements of the
Exchange Act, the Company will file distribution reports on Form 10-D in
relation to each Trust following each distribution date for the Certificates
issued by such Trust, will file an annual report of Form 10-K in relation to
such Certificates, and may file additional public reports in relation to each
Trust and the Certificates related to such Trust from time to time. The
Prospectus Supplement for each Trust shall specify the name and CIK number of
the Trust for purposes of obtaining reports on the EDGAR system. The public may
read and copy any materials filed with the Commission at the Commission's Public
Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain
information on the operation of the Public Reference Room by calling the
Securities and Exchange Commission at 1-800-SEC-0330. The Commission maintains
an Internet site that contains reports, proxy and information statements, and
other information regarding issuers that file electronically with the Commission
at http://www.sec.gov. [The Trustee [will][may] make reports available with
respect to each Trust through its website at [______]. [Given the limited nature
of reporting in relation to each Trust, reports will not be separately made
available through any website of the Company [or the Trustee].]
[IMPORTANT CURRENCY INFORMATION]
[Purchasers are required to pay for each Certificate in the Specified Principal
Currency for such Certificate. Currently, there are limited facilities in the
United States for conversion of U.S. dollars into foreign currencies and vice
versa, and banks do not currently offer non-U.S. dollar checking or savings
account facilities in the United States. However, if requested by a prospective
purchaser of a Certificate having a Specified Principal Currency other than U.S.
dollars, Citigroup Global Markets Inc. (the "Offering Agent") will arrange for
the exchange of U.S. dollars into such Specified Principal Currency to enable
the purchaser to pay for such Certificate. Such request must be made on or
before the fifth Business Day (as defined herein) preceding the date of delivery
of such Certificate or by such later date as is determined by the Offering
Agent. Each such exchange will be made by the Offering Agent on such terms and
2
subject to such conditions, limitations and charges as the Offering Agent may
from time to time establish in accordance with its regular foreign exchange
practice. All costs of exchange will be borne by the purchaser.
References herein to "U.S. dollars," "U.S.$," "USD," "dollar" or "$" are to the
lawful currency of the United States.]
RISK FACTORS
In connection with an investment in the Certificates of any Series, prospective
investors should consider, among other things, the material risk factors set
forth below and any additional material risk factors set forth in the applicable
Prospectus Supplement.
The Certificates May Not Be a Liquid Investment. There will be no market for any
Series (or Class within such Series) of Certificates prior to the issuance
thereof, and there can be no assurance that a secondary market will develop or,
if it does develop, that it will provide Certificateholders with liquidity of
investment or will continue for the life of such Certificates.
Certificates Are Limited Obligations and Are Not Recourse Obligations of the
Company or Its Affiliates. The Certificates will not represent a recourse
obligation of or interest in the Company or any of its affiliates. The
Certificates of each Series will not be insured or guaranteed by any government
agency or instrumentality, the Company, any Person affiliated with the Company
or the Issuer[, or any other Person]. The obligations, if any, of the Company
with respect to the Certificates of any Series will only be pursuant to certain
limited representations and warranties with respect to the securities deposited
into the Trust (the "Underlying Securities") or other assets deposited therein
(together with the Underlying Securities, the "Deposited Assets").
Trust Consists of Limited Assets and Payments on the Certificates Will Be Made
Solely from Deposited Assets. The only material assets expected to be in a Trust
are the Deposited Assets corresponding to the related Series (or Class) of
Certificates being offered. The Certificates are not insured or guaranteed by
the Company, any Administrative Agent or any of their affiliates. Accordingly,
Certificateholders' receipt of distributions in respect of the Certificates will
depend entirely on the performance of and the Trust's receipt of payments with
respect to the Deposited Assets and any Credit Support identified in the related
Prospectus Supplement. See "Description of Deposited Assets and Credit Support."
[Payments on the Underlying Securities are Subordinate to other Obligations of
the Underlying Securities Issuer. Payments on the Underlying Securities are
subordinate to other obligations of the Underlying Securities Issuer, and the
Underlying Securities Issuer will not be permitted to make payments on the
Underlying Securities unless it has paid amounts due on its obligations which
are senior to the Underlying Securities. Investors in the Certificates may
suffer a greater loss than if payments on the Underlying Securities were not
subordinated.]
Average Life and Yield of Certificates May Vary Thus Creating Reinvestment Risk.
The timing of distributions of interest, premium (if any) and principal of any
Series (or of any Class within such Series) of Certificates is affected by a
number of factors, including the performance of the related Deposited Assets,
the extent of any early redemption, repayment, amortization, acceleration of
payment rate, slow down of payment rate or extension of maturity or
3
amortization with respect to the related Underlying Securities (or portion
thereof) and the manner and priority in which collections from such Underlying
Securities and any other Deposited Assets are allocated to each Class of such
Series. Certain of these factors may be influenced by a variety of accounting,
tax, economic, social and other factors. The related Prospectus Supplement will
discuss any calls, puts or other redemption options, any extension of maturity
provisions and certain other terms applicable to such Underlying Securities and
any other Deposited Assets. See "Maturity and Yield Considerations."
Tax Considerations Should Be Reviewed. Special Tax Counsel has delivered an
opinion to the Company that the discussion contained in this Prospectus under
the caption "Certain Federal Income Tax Considerations," to the extent it
constitutes matters of law or legal conclusions thereto, is true and correct in
all material respects. Special Tax Counsel has also delivered an opinion that
the Trust will not be characterized as an association taxable as a corporation
(or publicly traded partnership treated as an association) for federal income
tax purposes. Special Tax Counsel has not delivered (and does not intend to
deliver) any other opinions regarding the Trust or the Certificates. Prospective
investors should be aware that no rulings have been sought from the Internal
Revenue Service ("IRS"), and that legal opinions are not binding on the IRS or
the courts. Accordingly, there can be no assurance that the IRS or the courts
will agree with Special Tax Counsel's opinions. If, contrary to Special Tax
Counsel's opinion, the Trust is characterized or treated as a corporation for
federal income tax consequences, among other consequences, the Trust would be
subject to federal income tax (and similar state income or franchise taxes) on
its income and distributions to Certificateholders would be impaired. See
"Certain Federal Income Tax Considerations" in this Prospectus and in the
related Prospectus Supplement.
Investment Company Act of 1940 Considerations Should Be Reviewed. The Investment
Company Act of 1940 defines as an "investment company" companies engaged in the
business of investing, reinvesting, owning, holding, or trading in securities.
Unless an exclusion or safe harbor applies, a company is an investment company
if it owns "investment securities" with a value exceeding forty percent (40%) of
the value of its total assets on an unconsolidated basis, excluding government
securities and cash items. One exclusion from the definition of "investment
company" is provided to certain issuers of asset backed securities that comply
with Rule 3a-7 of the Investment Company Act. The Company believes, based on
opinion of counsel, that each Issuer formed for the issuance of securities is
and will remain exempt from the registration requirements of the Investment
Company Act based on Rule 3a-7 of the Investment Company Act. Registration under
the Investment Company Act or a determination that an Issuer failed to register
likely would have a material adverse impact on the Company or that Issuer, and
distributions to holders of the Certificates of that Issuer could be seriously
impaired.
Limited Nature of Rating; Reduction or Withdrawal of Rating Could Occur Which
May Adversely Affect the Value of the Certificates. At the time of issue, the
Certificates of any given Series (or each Class of such Series that is offered
hereby) will be rated in one of the investment grade categories by one or more
nationally recognized rating agencies (a "Rating Agency"). The rating of any
Series or Class of Certificates is based primarily on the related Deposited
Assets and any Credit Support and the relative priorities of the
Certificateholders of such Series or Class to receive collections from, and to
assert claims against, the Trust with respect to such Deposited Assets and any
Credit Support. The rating is not a recommendation to purchase, hold or sell
4
Certificates, inasmuch as such rating does not comment as to market price or
suitability for a particular investor. In addition, the rating does not address
the likelihood that the principal amount of any Series or Class will be paid
prior to any final legal maturity date. There can be no assurance that the
rating will remain for any given period of time or that the rating will not be
lowered or withdrawn entirely by the Rating Agency if in its judgment
circumstances in the future so warrant. Any Class or Classes of a given Series
of Certificates may not be offered pursuant to this Prospectus, in which case
such Class or Classes may or may not be rated in an investment grade category by
a Rating Agency.
Global Certificates Limit Direct Voting and Ability to Pledge Certificates. The
Certificates of each Series (or, if more than one Class exists, each Class of
such Series) will initially be represented by one or more Global Certificates
deposited with, or on behalf of, a Depositary (as defined herein) and will not
be issued as individual definitive Certificates to the purchasers of such
Certificates. Consequently, unless and until such individual definitive
Certificates of a particular Series or Class are issued, such purchasers will
not be recognized as Certificateholders under the Trust Agreement. Hence, until
such time, such purchasers will only be able to exercise the rights of
Certificateholders indirectly through the Depositary and its respective
participating organizations and, as a result, the ability of any such purchaser
to pledge that Certificate to persons or entities that do not participate in the
Depositary's system, or to otherwise act with respect to such Certificate, may
be limited. See "Description of Certificates--Global Certificates" and
"Limitations on Issuance of Bearer Certificates" and any further description
contained in the related Prospectus Supplement.
[Risks With Respect to Currency, Exchange Rates and Exchange Controls May Exist.
The Certificates of any given Series (or Class within such Series) may be
denominated in a currency other than U.S. dollars to the extent specified in the
applicable Prospectus Supplement. An investment in a Certificate having a
Specified Currency other than U.S. dollars entails significant risks that are
not associated with a similar investment in a U.S. dollar-denominated security.
Such risks include, without limitation, the possibility of significant changes
in rates of exchange between the U.S. dollar and such Specified Currency and the
possibility of the imposition or modification of foreign exchange controls with
respect to such Specified Currency. Such risks generally depend on factors over
which the Company has no control, such as economic and political events and the
supply of and demand for the relevant currencies. In recent years, rates of
exchange between the U.S. dollar and certain currencies have been highly
volatile, and such volatility may be expected in the future. Past fluctuations
in any particular exchange rate do not necessarily indicate, however,
fluctuations in the rate that may occur during the term of any Certificate.
Depreciation of the Specified Currency for a Certificate against the U.S. dollar
would decrease the effective yield of such Certificate below its Pass-Through
Rate and, in certain circumstances, could result in a loss to the investor on a
U.S. dollar basis.
Governments have from time to time imposed, and may in the future impose,
exchange controls that could affect exchange rates and the availability of a
Specified Currency for making distributions in respect of Certificates
denominated in such 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 in respect
of such Certificate would not be available.
5
IT IS STRONGLY RECOMMENDED THAT PROSPECTIVE PURCHASERS CONSULT THEIR OWN
FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN
CERTIFICATES DENOMINATED IN A CURRENCY OTHER THAN U.S. DOLLARS. SUCH
CERTIFICATES ARE NOT AN APPROPRIATE INVESTMENT FOR PERSONS WHO ARE
UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS. SEE "CURRENCY
RISKS."
Trust May Include Derivatives Which Could Affect the Value of the Certificates.
A Trust may include various derivative instruments, including interest rate and
currency swaps, caps, floors, collars and options and structured securities
having embedded derivatives (such as structured notes). Swaps involve the
exchange with another party of their respective commitments to pay or receive
amounts computed by reference to specified fixed or floating interest rates or
currency rate and a notional principal amount (i.e., the reference amount with
respect to which such obligations are determined, although no actual exchange of
principal occurs except for currency swaps); for example, an exchange of
floating rate payments for fixed rate payments. Interim payments are generally
netted, with the difference being paid by one party to the other. The purchase
of a cap entitles the purchaser, to the extent that a specified rate, price,
yield or return exceeds a predetermined level, to receive payments computed by
reference to a specified fixed or floating rate, price, yield or return and a
notional principal amount from the party selling such cap. The purchase of a
floor entitles the purchaser, to the extent that a specified rate, price, yield
or return declines below a predetermined level, to receive payments computed by
reference to a specified fixed or floating rate, price, yield or return and a
notional principal amount from the party selling such floor. Options function in
a manner similar to caps and floors, and exist on various underlying securities.
Options can also be structured as securities such as warrants or can be embedded
in securities with option-like characteristics. Forward contracts involve the
purchase and sale of a specified security, currency or other financial
instrument at a specified price and date in the future, and may be settled by
physical delivery or cash payment.
Fluctuations in interest and currency rates may have a significant effect on the
yield to maturity of derivatives or the levels of support that derivatives can
provide to a Trust. In addition, derivatives may be limited to covering only
certain risks. Continued payments on derivatives may be affected by the
financial condition of the counterparties thereto (or, in some instances, the
guarantor thereunder). There can be no assurance that counterparties will be
able to perform their obligations. Failure by a counterparty (or the related
guarantor, if any) to make required payments may result in the delay or failure
to make payments on the related securities and risks. In addition, the notional
amounts on which payments are made may vary under certain circumstances and may
not bear any correlation to principal amounts of the related securities. The
terms and risks of the relevant derivatives will be described in the related
Prospectus Supplement. Further, the relevant Prospectus Supplement will identify
the material terms, the material risks and the counterparty for any derivative
instrument in a Trust which is the result of an agreement with such counterparty
to the extent that such agreement is material.
Publicly Available Information or Non-Public Information which may be Obtained
from the Trustee Concerning Underlying Securities Issuers Should Be Reviewed;
Risk of Loss if Such Information Not Available. To the extent possible, it is
strongly recommended that each prospective purchaser of Certificates obtain and
evaluate any publicly available information or non-public information that may
be obtained from the Trustee named in the applicable Prospectus Supplement
concerning each of the Underlying Securities and each issuer of
6
Underlying Securities (each a "Underlying Securities Issuer") as it would obtain
and evaluate if it were investing directly in the Underlying Securities or in
other securities issued by the Underlying Securities Issuer. If the Trustee
named in the applicable Prospectus Supplement does not make available non-public
information with respect to Underlying Securities which have not been registered
under the Securities Act, the applicable Prospectus Supplement will describe the
material terms of the Underlying Securities. In the case of publicly issued
Underlying Securities, the publicly-available information, and in the case of
Underlying Securities which have not been registered under the Securities Act,
any information that the Trustee may disseminate to prospective
Certificateholders, in each case concerning the applicable Underlying Securities
and publicly available information concerning a Underlying Securities Issuer is
important in considering whether to invest in or sell Certificates. To the
extent such information is unavailable or ceases to be available, an investor's
ability to make an informed decision to purchase or sell Certificates (and the
value of the Certificates) could be impeded. The information in this Prospectus
and any Prospectus Supplement concerning the Underlying Securities and the
Underlying Securities Issuers has been obtained from publicly available
documents or from documents obtained from the Underlying Securities Issuer, and
none of the Company, the Trustee or any of their affiliates has undertaken, or
will undertake, any investigation of the accuracy or completeness of such
documents (whether or not filed with the Commission) or the financial condition
or creditworthiness of any Underlying Securities Issuer. The issuance of
Certificates of any Series should not be construed as an endorsement by the
Company or the Trustee or any of their affiliates of the financial condition or
business prospects of any Underlying Securities Issuer.
Remedies Available to Certificateholders Are Limited Due to Passive Nature of
the Trust. The remedies available to a Trustee of a relevant Trust are
predetermined and therefore an investor in the Certificates has less discretion
over the exercise of remedies than if such investor directly invested in the
Underlying Securities. Each Trust will generally hold the related Deposited
Assets to maturity and not dispose of them, regardless of adverse events,
financial or otherwise, which may affect any Underlying Securities Issuer or the
value of the Deposited Assets. Except as indicated below, a holder will not be
able to dispose of or take other actions with respect to any Deposited Assets.
Under certain circumstances described in the applicable Prospectus Supplement,
the Trustee will (or will at the direction of a specified percentage of holders
of Certificates (each a "Certificateholder") of the relevant Series) dispose of,
or take certain other actions in respect of, the Deposited Assets. In certain
limited circumstances, such as a mandatory redemption of Underlying Securities
or the exercise by a third party of the right to purchase Underlying Securities
(as described below under "Description of Trust Agreement -- Termination"), the
Trustee may dispose of the Deposited Assets prior to maturity. The applicable
Prospectus Supplement will describe the particular circumstances, if any, under
which a Deposited Asset may be disposed of prior to maturity.
Optional Exchange for Deposited Assets Will Generally Be Unavailable. Although
the Prospectus Supplement for a Series of Certificates may designate such Series
as an Exchangeable Series (as defined herein) and may provide that a
Certificateholder may exchange Certificates of the Exchangeable Series for a pro
rata portion of Deposited Assets of the related Trust, any such Optional
Exchange Right will be exercisable only to the extent that the exercise of such
right would not be inconsistent with Structured Products Corp.'s (the "Company")
or Trust's continued satisfaction of the applicable requirements for exemption
under Rule 3a-7
7
under the Investment Company Act of 1940, as amended, and all
applicable rules, regulations and interpretations thereunder and subject to the
limitations described herein. See "Description of Certificates -- Optional
Exchange." Accordingly, the optional exchange right described in this Prospectus
under the heading "Description of Certificates -- Optional Exchange" and further
described in the relevant Prospectus Supplement may be available only to the
Company and its affiliates and designees. Other Certificateholders will
generally not be able to exchange their Certificates of an Exchangeable Series
for a pro rata portion of the Deposited Assets of the related Trust. In
addition, the exercise of an optional exchange right will decrease the
outstanding aggregate amount of Certificates of the applicable Exchangeable
Series.
The Prospectus Supplement for each Series of Certificates will set forth
information regarding any additional material risk factors applicable to such
Series (and each Class within such Series).
THE COMPANY
The Company was incorporated in the State of Delaware on November 23, 1992, as
an indirect, wholly-owned, limited-purpose finance subsidiary of Citigroup
Global Markets Holdings Inc. The Company will not engage in any business or
other activities other than issuing and selling securities from time to time and
acquiring, owning, holding, pledging and transferring assets (including
Deposited Assets and Credit Support) in connection therewith or with the
creation of a Trust and in activities related or incidental thereto. The Company
does not have, nor is it expected to have, any significant unencumbered assets.
The Company's principal executive offices are located at 390 Greenwich Street,
New York, New York 10013 (telephone (212) 816-7496).
USE OF PROCEEDS
The net proceeds to be received from the sale of each Series or Class of
Certificates (whether or not offered hereby) will be used by the Company for
such purposes as may be specified in the applicable Prospectus Supplement. Such
purposes may include, without limitation, purchasing the related Deposited
Assets (or providing a Trust with funds to purchase such Deposited Assets) and
arranging certain Credit Support including, if specified in the related
Prospectus Supplement, making required deposits into any reserve account or
other account for the benefit of the Certificateholders of such Series or Class.
Any remaining net proceeds will be used by the Company to pay general
administrative expenses or other amounts due in connection with the issuance of
the certificates.
FORMATION OF THE TRUST
The Company will sell, assign or cause to be sold or assigned the Deposited
Assets for each Series of Certificates to the Trustee named in the applicable
Prospectus Supplement, in its capacity as Trustee, for the benefit of the
Certificateholders of such Series. See "Description of Trust
Agreement--Assignment of Deposited Assets." The trust formed in connection with
the issuance of Certificates may be a common law trust or a statutory or
business trust. The Trustee named in the applicable Prospectus Supplement will
administer the Deposited Assets pursuant to the trust agreement and a series
supplement thereto with respect to a given Series (collectively,
8
the "Trust Agreement") and will receive a fee for such services (the "Trustee's
Fee"). The Trustee Fee shall be paid either by the Trust from the interest [and
principal] payments received by the Trust with respect to the Underlying
Securities or by the Depositor pursuant to a separate agreement with the
Depositor, as specified in the applicable Prospectus Supplement. Any
Administrative Agent named in the applicable Prospectus Supplement will perform
such tasks as are specified therein and in the Trust Agreement and will receive
a fee for such services (the "Administration Fee") as specified in the
Prospectus Supplement. See "Description of Trust Agreement--Collection and Other
Administrative Procedures" and "--Retained Interest; Administrative Agent
Compensation and Payment of Expenses."
The Company's assignment of the Deposited Assets to the Trustee will be without
recourse. To the extent provided in the applicable Prospectus Supplement, the
obligations of an Administrative Agent, if any, so named therein with respect to
the Deposited Assets will consist primarily of its contractual administrative
obligations, if any, under the Trust Agreement, its obligation, if any, to make
certain cash advances in the event of delinquencies in payments on or with
respect to any Deposited Assets in amounts described under "Description of Trust
Agreement--Advances in Respect of Delinquencies," and its obligations, if any,
to purchase Deposited Assets as to which there has been a breach of certain
representations and warranties or as to which the documentation is materially
defective. The obligations of an Administrative Agent, if any, named in the
applicable Prospectus Supplement to make advances will be limited to amounts
which any such Administrative Agent believes ultimately would be recoverable
under any Credit Support, insurance coverage, the proceeds of liquidation of the
Deposited Assets or from other sources available for such purposes. See
"Description of Trust Agreement--Advances in Respect of Delinquencies."
To the extent provided in the related Prospectus Supplement, each Trust will
consist of (i) the applicable Deposited Assets, or interests therein, exclusive
of any interest in such assets (the "Retained Interest") retained by the Company
or any previous owner thereof, as from time to time are specified in the Trust
Agreement; (ii) such collections as from time to time are identified as
deposited in the related Certificate Account; (iii) property, if any, acquired
on behalf of Certificateholders by foreclosure or repossession and any revenues
received thereon; (iv) those elements of Credit Support, if any, provided with
respect to any Class within such Series that are specified as being part of the
related Trust in the applicable Prospectus Supplement, as described therein and
under "Description of Deposited Assets and Credit Support--Credit Support"; (v)
the rights of the Company under the agreement or agreements entered into by the
Trustee on behalf of the Certificateholders which constitute, or pursuant to
which the Trustee has acquired, such Deposited Assets; and (vi) the rights of
the Trustee in any cash advance, reserve fund or surety bond.
MATURITY AND YIELD CONSIDERATIONS
Each Prospectus Supplement will, to the extent applicable, contain information
with respect to the type and maturities of the related Underlying Securities and
the terms, if any, upon which such Underlying Securities may be subject to early
redemption (either by the applicable obligor or pursuant to a third-party call
option), repayment (at the option of the holders thereof) or extension of
maturity. The provisions of the Underlying Securities with respect to the
foregoing may affect the weighted average life of the related Series of
Certificates.
9
The effective yield to holders of the Certificates of any Series (and Class
within such Series) may be affected by certain aspects of the Deposited Assets
or any Credit Support or the manner and priorities of allocations of collections
with respect to such Deposited Assets between the Classes of a given Series. The
yield to maturity of any Series (or Class within such Series) may be affected by
any optional or mandatory redemption, repayment, amortization or extension of
maturity of the related Underlying Securities. A variety of tax, accounting,
economic, and other factors will influence whether any applicable party
exercises any right of redemption, repurchase or extension in respect of its
securities. The rate of redemption may also be influenced by prepayments on the
obligations a Underlying Securities Issuer holds for its own account. All else
remaining equal, if prevailing interest rates fall significantly below the
interest rates on the related Underlying Securities, the likelihood of
redemption would be expected to increase. There can be no certainty as to
whether any Term Asset redeemable at the option of a Underlying Securities
Issuer will be repaid prior to its stated maturity.
To the extent specified in the related Prospectus Supplement, each of the
Underlying Securities will be subject to acceleration upon the occurrence of
certain Term Asset Events of Default (as defined herein). The maturity and yield
on the Certificates will be affected by any early repayment of the Underlying
Securities as a result of the acceleration of the Underlying Securities. See
"Description of Deposited Assets and Credit Support."
The extent to which the yield to maturity of such Certificates may vary from the
anticipated yield due to the rate and timing of payments on the Deposited Assets
will depend upon the degree to which they are purchased at a discount or premium
and the degree to which the timing of payments thereon is sensitive to the rate
and timing of payments on the Deposited Assets.
The yield to maturity of any Series (or Class) of Certificates will also be
affected by variations in the interest rates applicable to, and the
corresponding payments in respect of, such Certificates, to the extent that the
Pass-Through Rate for such Series (or Class) is based on variable or adjustable
interest rates. With respect to any Series of Certificates, disproportionate
principal payments (whether resulting from differences in amortization
schedules, payments due on scheduled maturity or upon early redemption) on the
related Underlying Securities having interest rates higher or lower than the
then applicable Pass-Through Rates applicable to such Certificates may affect
the yield thereon.
The Prospectus Supplement for each Series of Certificates will set forth
additional information regarding yield and maturity considerations applicable to
such Series (and each Class within such Series) and the related Deposited
Assets, including the applicable Underlying Securities.
DESCRIPTION OF CERTIFICATES
Each Series (or, if more than one Class exists, the Classes within such Series)
of Certificates will be issued pursuant to a Trust Agreement and a separate
series supplement thereto among the Company, the Administrative Agent, if any,
and the Trustee named in the related Prospectus Supplement, a form of which
Trust Agreement is attached as an exhibit to the Registration Statement. The
provisions of the Trust Agreement (as so supplemented) may vary depending upon
the nature of the Certificates to be issued thereunder and the nature of the
Deposited Assets, Credit Support and related Trust.
10
The following summaries describe material provisions of the Trust Agreement
which may be applicable to each Series of Certificates. The applicable
Prospectus Supplement for a Series of Certificates will describe any material
provision of the Trust Agreement or the applicable Certificates that is not
described in this Prospectus. The following summaries do not purport to be
complete and are subject to the detailed provisions of the form of Trust
Agreement to which reference is hereby made for a full description of such
provisions, including the definition of certain terms used, and for other
information regarding the Certificates. As used herein with respect to any
Series, the term "Certificate" refers to all the Certificates of that Series,
whether or not offered hereby and by the related Prospectus Supplement, unless
the context otherwise requires.
GENERAL
There is no limit on the amount of Certificates that may be issued under the
Trust Agreement, and the Trust Agreement will provide that Certificates of the
applicable Series may be issued in multiple Classes. The Series (or Classes
within such Series) of Certificates to be issued under the Trust Agreement will
represent the entire beneficial ownership interest in the Trust for such Series
created pursuant to the Trust Agreement and each such Class will be allocated
certain relative priorities to receive specified collections from, and a certain
percentage ownership interest of the assets deposited in, such Trust, all as
identified and described in the applicable Prospectus Supplement. See
"Description of Deposited Assets and Credit Support--Collections."
Reference is made to the related Prospectus Supplement for a description of the
following terms of the Series (and if applicable, Classes within such Series) of
Certificates in respect of which this Prospectus and such Prospectus Supplement
are being delivered: (i) the title of such Certificates; (ii) the Series of such
Certificates and, if applicable, the number and designation of Classes of such
Series; (iii) certain information concerning the type, characteristics and
specifications of the Deposited Assets being deposited into the related Trust by
the Company (and, with respect to any Term Asset which at the time of such
deposit represents a significant portion of all such Deposited Assets and any
related Credit Support, certain information concerning the terms of each such
Term Asset, the identity of the issuer thereof and where publicly available
information regarding such issuer may be obtained); (iv) the limit, if any, upon
the aggregate principal amount or notional amount, as applicable, of each Class
thereof; (v) the dates on which or periods during which such Series or Classes
within such Series may be issued (each, an "Original Issue Date"), the offering
price thereof and the applicable Distribution Dates on which the principal, if
any, of (and premium, if any, on) such Series or Classes within such Series will
be distributable; (vi) if applicable, the relative rights and priorities of each
such Class (including the method for allocating collections from and defaults or
losses on the Deposited Assets to the Certificateholders of each such Class);
(vii) whether the Certificates of such Series or each Class within such Series
are Fixed Rate Certificates or Floating Rate Certificates (each as defined
below) and the applicable interest rate (the "Pass-Through Rate") for each such
Class, including the applicable rate, if fixed (a "Fixed Pass-Through Rate"), or
the terms relating to the particular method of calculation thereof applicable to
such Series or each Class within such Series, if variable (a "Variable
Pass-Through Rate"); the date or dates from which such interest will accrue; the
applicable Distribution Dates on which interest, principal and premium, in each
case as applicable, on such Series or Class will be distributable and the
related Record Dates, if
11
any; (viii) the option, if any, of any Certificateholder of such Series or Class
to withdraw a portion of the assets of the Trust in exchange for surrendering
such Certificateholder's Certificate or to put the Certificate to the Company or
a third party or of the Company or Administrative Agent, if any, or another
third party to purchase or repurchase any Deposited Assets (in each case to the
extent not inconsistent with the Company's or Trust's continued
satisfaction of the applicable requirements for
exemption under Rule 3a-7 under the Investment Company Act of 1940 and all
applicable rules, regulations and interpretations thereunder) and the periods
within which or the dates on which, and the terms and conditions upon which any
such option may be exercised, in whole or in part; (ix) the rating of such
Series or each Class within such Series offered hereby (provided, however, that
one or more Classes within such Series not offered hereunder may be unrated or
may be rated below investment grade); (x) if other than denominations of $1,000
and any integral multiple thereof, the denominations in which such Series or
Class within such Series will be issuable; (xi) whether the Certificates of any
Class within a given Series are to be entitled to (1) principal distributions,
with disproportionate, nominal or no interest distributions, or (2) interest
distributions, with disproportionate, nominal or no principal distributions
("Strip Certificates"), and the applicable terms thereof; (xii) whether the
Certificates of such Series or of any Class within such Series are to be issued
as Registered Certificates or in bearer form with or without coupons attached
("Bearer Certificates") or both and, if Bearer Certificates are to be issued,
whether coupons ("Coupons") will be attached thereto; whether Bearer
Certificates of such Series or Class may be exchanged for Registered
Certificates of such Series or Class and the circumstances under which and the
place or places at which any such exchanges, if permitted, may be made; (xiii)
whether the Certificates of such Series or of any Class within such Series are
to be issued in the form of one or more global securities in registered or
bearer form (each a "Global Certificate") and, if so, the identity of the
Depositary (as defined herein), if other than The Depository Trust Company, for
such Global Certificate or Certificates; (xiv) all applicable Required
Percentages and Voting Rights (each as defined below) relating to the manner and
percentage of votes of Certificateholders of such Series and each Class within
such Series required with respect to certain actions by the Company or the
applicable Administrative Agent, if any, or the Trustee; (xv) if other than U.S.
dollars, the Specified Currency applicable to the Certificates of such Series or
Class for purposes of denominations and distributions on such Series or each
Class within such Series and the circumstances and conditions, if any, when such
Specified Currency may be changed, at the election of the Company or a
Certificateholder, and the currency or currencies in which any principal of or
any premium or any interest on such Series or Class are to be distributed
pursuant to such election; (xvi) any additional Administrative Agent Termination
Events (as defined herein), if applicable, provided for with respect to such
Class; and [(___)] any other terms of such Series or Class within such Series of
Certificates not inconsistent with the provisions of the Trust Agreement
relating to such Series.
The United States federal income tax consequences and ERISA consequences
relating to any Series or any Class within such Series of Certificates will be
described in this Prospectus and in the applicable Prospectus Supplement. In
addition, any risk factors, the specific terms and other information with
respect to the issuance of any Series or Class within such Series of
Certificates on which the principal of and any premium and interest are
distributable in a Specified Currency other than U.S. dollars will be described
in the applicable Prospectus Supplement relating to such Series or Class. The
U.S. dollar equivalent of the public offering price or purchase price of a
Certificate having a Specified Principal Currency other than U.S. dollars will
be determined on
12
the basis of the noon buying rate in New York City for cable
transfer in foreign currencies as certified for customs purposes by the Federal
Reserve Bank of New York (the "Market Exchange Rate") for such Specified
Principal Currency on the applicable issue date. As specified in the applicable
Prospectus Supplement such determination will be made by the Company, the
Trustee, the Administrative Agent, if any, or an agent thereof as exchange rate
agent for each Series of Certificates (the "Exchange Rate Agent").
Certificates issued as individual securities in registered form without coupons
("Registered Certificates") may be transferred or exchanged for like
Certificates of the same Series and Class at the corporate trust office or
agency of the applicable Trustee in the City and State of New York, subject to
the limitations provided in the Trust Agreement, without the payment of any
service charge, other than any tax or governmental charge payable in connection
therewith. Bearer Certificates will be transferable by delivery. Provisions with
respect to the exchange of Bearer Certificates will be described in the
applicable Prospectus Supplement. Registered Certificates may not be exchanged
for Bearer Certificates. The Company may at any time purchase Certificates at
any price in the open market or otherwise. Certificates so purchased by the
Company may, at the discretion of the Company, be held or resold or surrendered
to the Trustee for cancellation of such Certificates.
DISTRIBUTIONS
Distributions allocable to principal, premium (if any) and interest on the
Certificates of each Series (and Class within such Series) will be made in the
Specified Currency for such Certificates by or on behalf of the Trustee on each
Distribution Date as specified in the related Prospectus Supplement and the
amount of each distribution will be determined as of the close of business on
the date specified in the related Prospectus Supplement (the "Determination
Date"). [If the Specified Currency for a given Series or Class within such
Series of Registered Certificates is other than U.S. dollars, the Administrative
Agent, if any, or otherwise the Trustee will arrange to convert all payments in
respect of each Certificate of such Series or Class into U.S. dollars in the
manner described in the following paragraph. The Certificateholder of a
Registered Certificate of a given Series or Class within such Series denominated
in a Specified Currency other than U.S. dollars may (if the applicable
Prospectus Supplement and such Certificate so indicate) elect to receive all
distributions in respect of such Certificate in the Specified Currency by
delivery of a written notice to the Trustee and Administrative Agent, if any,
for such Series not later than fifteen calendar days prior to the applicable
Distribution Date, except under the circumstances described under "Currency
Risks--Payment Currency" below. Such election will remain in effect until
revoked by written notice to such Trustee and Administrative Agent, if any,
received by each of them not later than fifteen calendar days prior to the
applicable Distribution Date.]
[In the case of a Registered Certificate of a given Series or Class within such
Series having a Specified Currency other than U.S. dollars, the amount of any
U.S. dollar distribution in respect of such Registered Certificate will be
determined by the Exchange Rate Agent based on the highest firm bid quotation
expressed in U.S. dollars received by the Exchange Rate Agent at approximately
11:00 a.m., New York City time, on the second Business Day preceding the
applicable Distribution Date (or, if no such rate is quoted on such date, the
last date on which such rate was quoted), from three (or, if three are not
available, then two) recognized foreign
13
exchange dealers in The City of New York (one of which may be the Offering Agent
and another of which may be the Exchange Rate Agent) selected by the Exchange
Rate Agent, for the purchase by the quoting dealer, for settlement on such
Distribution Date, of the aggregate amount payable in such Specified Currency on
such payment date in respect of all Registered Certificates. All currency
exchange costs will be borne by the Certificateholders of such Registered
Certificates by deductions from such distributions. If no such bid quotations
are available, such distributions will be made in such Specified Currency,
unless such Specified Currency is unavailable due to the imposition of exchange
controls or to other circumstances beyond the Company's control, in which case
such distributions will be made as described under "Currency Risks--Payment
Currency" below. The applicable Prospectus Supplement will specify such
information with respect to Bearer Certificates.]
Except as provided in the succeeding paragraph, distributions with respect to
Certificates will be made (in the case of Registered Certificates) at the
corporate trust office or agency of the Trustee specified in the applicable
Prospectus Supplement; provided, however, that any such amounts distributable on
the final Distribution Date of a Certificate will be distributed only upon
surrender of such Certificate at the applicable location set forth above. No
distribution on a Bearer Certificate will be made by mail to an address in the
United States or by wire transfer to an account maintained by the
Certificateholder thereof in the United States.
Distributions on Registered Certificates in U.S. dollars will be made, except as
provided below, by check mailed to the Registered Certificateholders of such
Certificates (which, in the case of Global Certificates, will be a nominee of
the Depositary); provided, however, that, in the case of a Series or Class of
Registered Certificates issued between a Record Date (as defined herein) and the
related Distribution Dates, interest for the period beginning on the issue date
for such Series or Class and ending on the last day of the interest accrual
period ending immediately prior to or coincident with such Distribution Date
will be distributed on the next succeeding Distribution Date to the Registered
Certificateholders of the Registered Certificates of such Series or Class on the
related Record Date. A Certificateholder of $10,000,000 (or the equivalent
thereof in a Specified Principal Currency other than U.S. dollars) or more in
aggregate principal amount of Registered Certificates of a given Series shall be
entitled to receive such U.S. dollar distributions by wire transfer of
immediately available funds, but only if appropriate wire transfer instructions
have been received in writing by the Trustee for such Series not later than
fifteen calendar days prior to the applicable Distribution Date. Simultaneously
with the election by any Certificateholder to receive payments in a Specified
Currency other than U.S. dollars (as provided above), such Certificateholder
shall provide appropriate wire transfer instructions to the Trustee for such
Series, and all such payments will be made by wire transfer of immediately
available funds to an account maintained by the payee with a bank located
outside the United States.
"Business Day" with respect to any Certificate means any day, other than a
Saturday or Sunday, that is (i) not a day on which banking institutions are
authorized or required by law or regulation to be closed in [(a)] The City of
New York [or (b) if the Specified Currency for such Certificate is other than
U.S. dollars, the financial center of the country issuing such Specified
Currency] and (ii) 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 such Certificate are transacted in the London interbank
14
market. The Record Date with respect to any Distribution Date for a Series or
Class of Registered Certificates shall be specified as such in the applicable
Prospectus Supplement.
INTEREST ON THE CERTIFICATES
General. Each Class of Certificates (other than certain Classes of Strip
Certificates) of a given Series may have a different Pass-Through Rate, which
may be a fixed or variable Pass-Through Rate, as described below. In the case of
Strip Certificates with no or, in certain cases, a nominal Certificate Principal
Balance, such distributions of interest will be in an amount (as to any
Distribution Date, "Stripped Interest") described in the related Prospectus
Supplement. For purposes hereof, "Notional Amount" means the notional principal
amount specified in the applicable Prospectus Supplement on which interest on
Strip Certificates with no or, in certain cases, a nominal Certificate Principal
Balance will be made on each Distribution Date. Reference to the Notional Amount
of a Class of Strip Certificates herein or in a Prospectus Supplement does not
indicate that such Certificates represent the right to receive any distributions
in respect of principal in such amount, but rather the term "Notional Amount" is
used solely as a basis for calculating the amount of required distributions and
determining certain relative voting rights, all as specified in the related
Prospectus Supplement.
Fixed Rate Certificates. Each Series (or, if more than one Class exists, each
Class within such Series) of Certificates with a fixed Pass-Through Rate ("Fixed
Rate Certificates") will bear interest, on the outstanding Certificate Principal
Balance (or Notional Amount, if applicable), from its Original Issue Date, or
from the last date to which interest has been paid, at the fixed Pass-Through
Rate stated on the face thereof and in the applicable Prospectus Supplement
until the principal amount thereof is distributed or made available for payment
(or in the case of Fixed Rate Certificates with no or a nominal principal
amount, until the Notional Amount thereof is reduced to zero), except that, if
so specified in the applicable Prospectus Supplement, the Pass-Through Rate for
such Series or any such Class or Classes may be subject to adjustment from time
to time in response to designated changes in the rating assigned to such
Certificates by one or more rating agencies, in accordance with a schedule or
otherwise, all as described in such Prospectus Supplement. Interest on each
Series or Class of Fixed Rate Certificates will be distributable in arrears on
each Distribution Date specified in such Prospectus Supplement. Each such
distribution of interest shall include interest accrued through the day
specified in the applicable Prospectus Supplement. Interest on Fixed Rate
Certificates will be computed on the basis of a 360-day year of twelve 30-day
months.
Floating Rate Certificates. Each Series (or, if more than one Class exists, each
Class within such Series) of Certificates with a variable Pass-Through Rate
("Floating Rate Certificates") will bear interest, on the outstanding
Certificate Principal Balance (or Notional Amount, if applicable), from its
Original Issue Date to the first Interest Reset Date (as defined herein) for
such Series or Class at the Initial Pass-Through Rate set forth on the face
thereof and in the applicable Prospectus Supplement. Thereafter, the
Pass-Through Rate on such Series or Class for each Interest Reset Period (as
defined herein) will be determined by reference to an interest rate basis (the
"Base Rate"), plus or minus the Spread, if any, or multiplied by the Spread
Multiplier, if any. The "Spread" is the number of basis points (one basis point
equals one one-hundredth of a percentage point) that may be specified in the
applicable Prospectus Supplement as being applicable to such Series or Class,
and the "Spread Multiplier" is the percentage that may be
15
specified in the applicable Prospectus Supplement as being applicable to such
Series or Class, except that if so specified in the applicable Prospectus
Supplement, the Spread or Spread Multiplier on such Series or any such Class or
Classes of Floating Rate Certificates may be subject to adjustment from time to
time in response to designated changes in the rating assigned to such
Certificates by one or more rating agencies, in accordance with a schedule. The
applicable Prospectus Supplement, will designate one of the following Base Rates
as applicable to a Floating Rate Certificate: (i) LIBOR (a "LIBOR Reference Rate
Certificate"), (ii) the Commercial Paper Rate (a "Commercial Paper Reference
Rate Certificate"), (iii) the Treasury Rate (a "Treasury Reference Rate
Certificate"), (iv) the Federal Funds Rate (a "Federal Funds Reference Rate
Certificate"), (v) the CD Rate (a "CD Reference Rate Certificate") or (vi) such
other Base Rate (which may be based on, among other things, one or more market
indices or the interest and/or other payments (whether scheduled or otherwise)
paid, accrued or available with respect to a designated asset, pool of assets or
type of asset) as is set forth in such Prospectus Supplement and in such
Certificate. The "Index Maturity" for any Series or Class of Floating Rate
Certificates is the period of maturity of the instrument or obligation from
which the Base Rate is calculated. "H.15(519)" means the publication entitled
"Statistical Release H.15(519), Selected Interest Rates," or any successor
publication, published by the Board of Governors of the Federal Reserve System.
"Composite Quotations" means the daily statistical release entitled "Composite
3:30 p.m. Quotations for U.S. Government Certificates" published by the Federal
Reserve Bank of New York.
As specified in the applicable Prospectus Supplement, Floating Rate Certificates
of a given Series or Class may also have either or both of the following (in
each case expressed as a rate per annum on a simple interest basis): (i) a
maximum limitation, or ceiling, on the rate at which interest may accrue during
any interest accrual period specified in the applicable Prospectus Supplement
("Maximum Pass-Through Rate") and (ii) a minimum limitation, or floor, on the
rate at which interest may accrue during any such interest accrual period
("Minimum Pass-Through Rate"). In addition to any Maximum Pass-Through Rate that
may be applicable to any Series or Class of Floating Rate Certificates, the
Pass-Through Rate applicable to any Series or Class of Floating Rate
Certificates will in no event be higher than the maximum rate permitted by
applicable law, as the same may be modified by United States law of general
application. The Floating Rate Certificates will be governed by the law of the
State of New York and, under such law as of the date of this Prospectus, the
maximum rate of interest, with certain exceptions, is 25% per annum on a simple
interest basis.
The Company will appoint, and enter into agreements with, agents (each a
"Calculation Agent") to calculate Pass-Through Rates on each Series or Class of
Floating Rate Certificates. The applicable Prospectus Supplement will set forth
the identity of the Calculation Agent for each Series or Class of Floating Rate
Certificates. All determinations of interest by the Calculation Agent shall, in
the absence of manifest error, be conclusive for all purposes and binding on the
holders of Floating Rate Certificates of a given Series or Class.
The Pass-Through Rate on each Class of Floating Rate Certificates will be reset
daily, weekly, monthly, quarterly, semiannually or annually (such period being
the "Interest Reset Period" for such Class, and the first day of each Interest
Reset Period being an "Interest Reset Date"), as specified in the applicable
Prospectus Supplement. Interest Reset Dates with respect to each Series, and any
Class within such Series of Floating Rate Certificates will be specified in the
16
applicable Prospectus Supplement; provided, however, the Pass-Through Rate in
effect for the ten days immediately prior to the Scheduled Final Distribution
Date will be that in effect on the tenth 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, such Interest
Reset Date will occur on a prior or succeeding Business Day, specified in the
applicable Prospectus Supplement.
Interest payable in respect of Floating Rate Certificates shall be the accrued
interest from and including the Original Issue Date of such Series or Class or
the last Interest Reset Date to which interest has accrued and been distributed,
as the case may be, to but excluding the immediately following Distribution
Date.
With respect to a Floating Rate Certificate, accrued interest shall be
calculated by multiplying the Certificate Principal Balance of such Certificate
(or, in the case of a Strip Certificate with no or a nominal Certificate
Principal Balance, the Notional Amount specified in the applicable Prospectus
Supplement) by an accrued interest factor. Such accrued interest factor will be
computed by adding the interest factors calculated for each day in the period
for which accrued interest is being calculated. 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,
in the case of LIBOR Reference Rate Certificates, Commercial Paper Reference
Rate Certificates, Federal Funds Reference Rate Certificates and CD Reference
Rate Certificates or by the actual number of days in the year, in the case of
Treasury Reference Rate Certificates. For purposes of making the foregoing
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
calculation on Floating Rate Certificates will be rounded to the nearest
one-hundredth of a unit (with .005 of a unit being rounded upward).
Interest on any Series (or Class within such Series) of Floating Rate
Certificates will be distributable on the Distribution Dates and for the
interest accrual periods as and to the extent set forth in the applicable
Prospectus Supplement.
Upon the request of the holder of any Floating Rate Certificate of a given
Series or Class, the Calculation Agent for such Series or Class will provide the
Pass-Through Rate then in effect and, if determined, the Pass-Through Rate that
will become effective on the next Interest Reset Date with respect to such
Floating Rate Certificate.
(1) CD Reference Rate Certificates. Each CD Reference Rate Certificate will bear
interest for each Interest Reset Period at the Pass-Through Rate calculated with
reference to the CD Rate and the Spread or Spread Multiplier, if any, specified
in such Certificate and in the applicable Prospectus Supplement.
17
The "CD Rate" for each Interest Reset Period shall be the rate as of the second
Business Day prior to the Interest Reset Date for such Interest Reset Period (a
"CD Rate Determination Date") for negotiable certificates of deposit having the
Index Maturity designated in the applicable Prospectus Supplement as published
in H.15(519) under the heading "CDs (Secondary Market)." In the event that such
rate is not published prior to 3:00 p.m., New York City time, on the Calculation
Date (as defined herein) pertaining to such CD Rate Determination Date, then the
CD Rate for such Interest Reset Period will be the rate on such CD Rate
Determination Date for negotiable certificates of deposit of the Index Maturity
designated in the applicable Prospectus Supplement as published in Composite
Quotations under the heading "Certificates of Deposit." If by 3:00 p.m., New
York City time, on such Calculation Date such rate is not yet published in
either H.15(519) or Composite Quotations, then the CD Rate for such Interest
Reset Period will be calculated by the Calculation Agent for such CD Reference
Rate Certificate and will be the arithmetic mean of the secondary market offered
rates as of 10:00 a.m., New York City time, on such CD Rate Determination Date,
of three leading nonbank dealers in negotiable U.S. dollar certificates of
deposit in The City of New York selected by the Calculation Agent for such CD
Reference Rate Certificate for negotiable certificates of deposit of major
United States money center banks of the highest credit standing (in the market
for negotiable certificates of deposit) with a remaining maturity closest to the
Index Maturity designated in the related Prospectus Supplement in a denomination
of $5,000,000; provided, however, that if the dealers selected as aforesaid by
such Calculation Agent are not quoting offered rates as mentioned in this
sentence, the CD Rate for such Interest Reset Period will be the same as the CD
Rate for the immediately preceding Interest Reset Period (or, if there was no
such Interest Reset Period, the Initial Pass-Through Rate).
The "Calculation Date" pertaining to any CD Rate Determination Date shall be the
first to occur of (a) the tenth calendar day after such CD Rate Determination
Date or, if such day is not a Business Day, the next succeeding Business Day or
(b) the second Business Day preceding the date any distribution of interest is
required to be made following the applicable Interest Reset Date.
(2) Commercial Paper Reference Rate Certificates. Each Commercial Paper
Reference Rate Certificate will bear interest for each Interest Reset Period at
the Pass-Through Rate calculated with reference to the Commercial Paper Rate and
the Spread or Spread Multiplier, if any, specified in such Certificate and in
the applicable Prospectus Supplement.
The "Commercial Paper Rate" for each Interest Reset Period will be determined by
the Calculation Agent for such Commercial Paper Reference Rate Certificate as of
the second Business Day prior to the Interest Reset Date for such Interest Reset
Period (a "Commercial Paper Rate Determination Date") and shall be the Money
Market Yield (as defined herein) on such Commercial Paper Rate Determination
Date of the rate for commercial paper having the Index Maturity specified in the
applicable Prospectus Supplement, as such rate shall be published in H.15(519)
under the heading "Commercial Paper." In the event that such rate is not
published prior to 3:00 p.m., New York City time, on the Calculation Date (as
defined herein) pertaining to such Commercial Paper Rate Determination Date,
then the Commercial Paper Rate for such Interest Reset Period shall be the Money
Market Yield on such Commercial Paper Rate Determination Date of the rate for
commercial paper of the specified Index Maturity as published in Composite
Quotations under the heading "Commercial Paper." If by 3:00 p.m., New York
18
City time, on such Calculation Date such rate is not yet published in either
H.15(519) or Composite Quotations, then the Commercial Paper Rate for such
Interest Reset Period shall be the Money Market Yield of the arithmetic mean of
the offered rates, as of 11:00 a.m., New York City time, on such Commercial
Paper Rate Determination Date of three leading dealers of commercial paper in
The City of New York selected by the Calculation Agent for such Commercial Paper
Reference Rate Certificate for commercial paper of the specified Index Maturity
placed for an industrial issuer whose bonds are rated "AA" or the equipment by a
nationally recognized rating agency; provided, however, that if the dealers
selected as aforesaid by such Calculation Agent are not quoting offered rates as
mentioned in this sentence, the Commercial Paper Rate for such Interest Reset
Period will be the same as the Commercial Paper Rate for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset Period,
the Initial Pass-Through Rate).
"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
Money Market Yield = D x 360 x 100
-------
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the specified Index Maturity.
The "Calculation Date" pertaining to any Commercial Paper Rate Determination
Date shall be the first to occur of (a) the tenth calendar day after such
Commercial Paper Rate Determination Date or, if such day is not a Business Day,
the next succeeding Business Day or (b) the second Business Day preceding the
date any distribution of interest is required to be made following the
applicable Interest Reset Date.
(3) Federal Funds Reference Rate Certificates. Each Federal Funds Reference Rate
Certificate will bear interest for each Interest Resort Period at the
Pass-Through Rate calculated with name to the Federal Funds Rate and the Spread
or Spread Multiplier, if any, specified in such Certificate and in the
applicable Prospectus Supplement.
The "Federal Funds Rate" for each Interest Reset Period shall be the effective
rate on the Interest Reset Date for such Interest Reset Period (a "Federal Funds
Rate Determination Date") for Federal Funds as published in H.15(519) under the
heading "Federal Funds (Effective)." In the event that such rate is not
published prior to 3:00 p.m., New York City time on the Calculation Date (as
defined herein) pertaining to such Federal Funds Rate Determination Date, the
Federal Funds Rate for such Interest Reset Period shall be the rate on such
Federal Funds Rate Determination Date as published in Composite Quotations under
the heading "Federal Funds/Effective Rate." If by 3:00 p.m., New York City time,
on such Calculation Date such rate is not yet published in either H.15(519) or
Composite Quotations, then the Federal Funds Rate for such Interest Reset Period
shall be the rate on such Federal Funds Rate Determination Date made publicly
available by, the Federal Reserve Bank of New York which is equivalent to the
rate which appears in H.15(519) under the heading "Federal Funds (Effective),"
provided, however, that if such rate is not made publicly available by the
Federal Reserve Bank of New
19
York by 3:00 p.m., New York City time, on such
Calculation Date, the Federal Funds Rate for such Interest Reset Period will be
the same as the Federal Funds Rate in effect for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset Period, the
Initial Pass-Through Rate). In the case of a Federal Funds Reference Rate
Certificate that resets daily, the Pass-Through Rate on such Certificate for the
period from and including a Monday to but excluding the succeeding Monday will
be reset by the Calculation Agent for such Certificate on such second Monday
(or, if not a Business Day, on the next succeeding Business Day) to a rate equal
to the average of the Federal Funds Rates in effect with respect to each such
day in such week.
The "Calculation Date"" pertaining to any Federal Funds Rate Determination Date
shall be the next succeeding Business Day.
(4) LIBOR Reference Rate Certificates. Each LIBOR Reference Rate Certificate
will bear interest for each Interest Reset Period at the Pass-Through Rate
calculated with reference to LIBOR and the Spread or Spread Multiplier, if any,
specified in such Certificate and in the applicable Prospectus Supplement.
With respect to LIBOR indexed to the offered rates for U.S. dollar deposits,
"LIBOR" for each Interest Reset Period will be determined by the Calculation
Agent for any LIBOR Reference Rate Certificate as follows:
(i) On the second London Banking Day prior to the Interest Reset Date for such
Interest Reset Period (a "LIBOR Determination Date"), the Calculation Agent for
such LIBOR Reference Rate Certificate will determine the arithmetic mean of the
offered rates for deposits in U.S. dollars for the period of the Index Maturity
specified in the applicable Prospectus Supplement, commencing on such Interest
Reset Date, which appear on the Reuters Screen LIBO Page at approximately 11:00
a.m., London time, on such LIBOR Determination Date. "Reuters Screen LIBO Page"
means the display designated as page "LIBOR" on the Reuters Monitor Money Rates
Service (or such other page may replace the LIBO page on that service for the
purpose of displaying London interbank offered rates of major banks). If at
least two such offered rates appear on the Reuters Screen LIBO Page, "LIBOR" for
such Interest Reset Period will be the arithmetic mean of such offered rates as
determined by the Calculation Agent for such LIBOR Reference Rate Certificate.
(ii) If fewer than two offered rates appear on the Reuters Screen LIBO Page on
such LIBOR Determination Date, the Calculation Agent for such LIBOR Reference
Rate Certificate will request the principal London offices of each of four major
banks in the London interbank market selected by such Calculation Agent to
provide such Calculation Agent with its offered quotations for deposits in U.S.
dollars for the period of the specified Index Maturity, commencing on such
Interest Reset Date, to prime banks in the London interbank market at
approximately 11:00 a.m., London time, on such LIBOR Determination Date and in a
principal amount equal to an amount of not less than $1,000,000 that is
representative of a single transaction in such market at such time. If at least
two such quotations are provided, "LIBOR" for such Interest Reset Period will be
the arithmetic mean of such quotations. If fewer than two such quotations are
provided, "LIBOR" for such Interest Reset Period will be the arithmetic mean of
rates quoted by three major banks in The City of New York selected by the
Calculation Agent for such LIBOR
20
Reference Rate Certificate at approximately 11:00 a.m., New York City time, on
such LIBOR Determination Date for loans in U.S. dollars to leading European
banks, for the period of the specified Index Maturity, commencing on such
Interest Reset Date, and in a principal amount equal to an amount of not less
than $1,000,000 that is representative of a single transaction in such market at
such time; provided, however, that if fewer than three banks selected as
aforesaid by such Calculation Agent are quoting rates as mentioned in this
sentence, "LIBOR" for such Interest Reset Period will be the same as LIBOR for
the immediately preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the Initial Pass-Through Rate).
If LIBOR with respect to any LIBOR Reference Rate Certificate is indexed to the
offered rates for deposits in a currency other than U.S. dollars, the applicable
Prospectus Supplement will set forth the method for determining such rate.
(5) Treasury Reference Rate Certificates. Each Treasury Reference Rate
Certificate will bear interest for each Interest Reset Period at the
Pass-Through Rate calculated with reference to the Treasury Rate and the Spread
or Spread Multiplier, if any, specified in such Certificate and in the
applicable Prospectus Supplement.
The Treasury Rate for each Interest Reset Period will be the rate for the
auction held on the Treasury Rate Determination Date (as defined herein) for
such Interest Reset Period of direct obligations of the United States ("Treasury
bills") having the Index Maturity specified in the applicable Prospectus
Supplement, as such rate shall be published in H.15(519) under the heading "U.S.
Government Certificates-Treasury bills-auction average (investment)" or, in the
event that such rate is not published prior to 3:00 p.m., New York City time, on
the Calculation Date (as defined herein) pertaining to such Treasury Rate
Determination Date, the auction average rate (expressed as a bond equivalent on
the basis of a year of 365 or 366 days, as applicable, and applied on a daily
basis) on such Treasury Rate Determination Date as otherwise announced by the
United States Department of the Treasury. In the event that the results of the
auction of Treasury bills having the specified Index Maturity are not published
or reported as provided above by 3:00 p.m., New York City time, on such
Calculation Date, or if no such auction is held on such Treasury Rate
Determination Date, then the Treasury Rate for such Interest Reset Period shall
be calculated by the Calculation Agent for such Treasury Reference Rate
Certificate and shall be a yield to maturity (expressed as a bond equivalent on
the basis of a year of 365 or 366 days, as applicable, and applied on a daily
basis) of the arithmetic mean of the secondary market bid rates, as of
approximately 3:30 p.m., New York City time, on such Treasury Rate Determination
Date, of three leading primary United States government securities dealers
selected by such Calculation Agent for the issue of Treasury bills with a
remaining maturity closest to the specified Index Maturity; provided, however,
that if the dealers selected as aforesaid by such Calculation Agent are not
quoting bid rates as mentioned in this sentence, then the Treasury Rate for such
Interest Reset Period will be the same as the Treasury Rate for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset Period,
the Initial Pass-Through Rate).
The "Treasury Rate Determination Date" for each Interest Reset Period will be
the day of the week in which the Interest Reset Date for such Interest Reset
Period falls on which Treasury bills would normally be auctioned. Treasury bills
are normally sold at auction on Monday of each week, unless that day is a legal
holiday, in which case the auction is normally held on the
21
following Tuesday, except that such auction may be held on the preceding Friday.
If, as the result of a legal holiday, an auction is so held on the preceding
Friday, such Friday will be the Treasury Rate Determination Date pertaining to
the Interest Reset Period commencing in the next succeeding week. If an auction
date shall fall on any day that would otherwise be an Interest Reset Date for a
Treasury Reference Rate Certificate, then such Interest Reset Date shall instead
be the Business Day immediately following such auction date.
The "Calculation Date"" pertaining to any Treasury Rate Determination Date shall
be the first to occur of (a) the tenth calendar day after such Treasury Rate
Determination Date or, if such a day is not a Business Day, the next succeeding
Business Day or (b) the second Business Day preceding the date any distribution
of interest is required to be made following the applicable Interest Reset Date.
PRINCIPAL OF THE CERTIFICATES
Each Certificate (other than certain Classes of Strip Certificates) will have a
Certificate Principal Balance which, at any time, will equal the maximum amount
that the holder thereof will be entitled to receive in respect of principal out
of the future cash flow on the Deposited Assets and other assets included in the
related Trust. Distributions generally will be applied to undistributed accrued
interest on, then to principal of, and then to premium (if any) on, each such
Certificate of the Class or Classes entitled thereto (in the manner and priority
specified in such Prospectus Supplement) until the aggregate Certificate
Principal Balance of such Class or Classes has been reduced to zero. The
outstanding Certificate Principal Balance of a Certificate will be reduced to
the extent of distributions of principal thereon, and, if applicable pursuant to
the terms of the related Series, by the amount of any net losses realized on any
Deposited Asset ("Realized Losses") allocated thereto. The initial aggregate
Certificate Principal Balance of a Series and each Class thereof will be
specified in the related Prospectus Supplement. Distributions of principal of
any Class of Certificates will be made on a pro rata basis among all the
Certificates of such Class. Strip Certificates with no Certificate Principal
Balance will not receive distributions of principal.
OPTIONAL EXCHANGE
If a holder may exchange Certificates of any given Series for a pro rata portion
of the Deposited Assets, the applicable Prospectus Supplement will designate
such Series as an "Exchangeable Series". The terms upon which a holder may
exchange Certificates of any Exchangeable Series for a pro rata portion of the
Deposited Assets of the related Trust will be specified in the related
Prospectus Supplement; provided that any right of exchange shall be exerciseable
only to the extent that such exchange would not be inconsistent with the
Company's and such Trust's continued satisfaction of the applicable requirements
for exemption under Rule 3a-7 under the Investment Company Act of 1940 and all
applicable rules, regulations and interpretations thereunder and provided
further that no holder (other than the Depositor or one of its affiliates) may
exercise such exchange right prior to (i) six months after the original issuance
date of the related Certificates and (ii) 180 days after the date on which
notice of such holder's decision to exercise such exchange right is delivered to
the Trustee. Such terms may relate to, but are not limited to, the following:
22
(a) a requirement that the exchanging holder tender to the
Trustee Certificates of each Class within such Exchangeable Series;
(b) a minimum Certificate Principal Balance or Notional
Amount, as applicable, with respect to each Certificate being tendered
for exchange;
(c) a requirement that the Certificate Principal Balance or
Notional Amount, as applicable, of each Certificate tendered for
exchange be an integral multiple of an amount specified in the
Prospectus Supplement;
(d) specified dates during which a holder may effect such an
exchange (each, an "Optional Exchange Date");
(e) limitations on the right of an exchanging holder to
receive any benefit upon exchange from any Credit Support or other
non-Underlying Securities deposited in the applicable Trust; and
(f) adjustments to the value of the proceeds of any exchange
based upon the required prepayment of future expense allocations and
the establishment of a reserve for any anticipated Extraordinary Trust
Expenses.
In order for a Certificate of a given Exchangeable Series (or Class within such
Exchangeable Series) to be exchanged by the applicable Certificateholder, the
Trustee for such Certificate must receive, at least 30 (or such shorter period
acceptable to the Trustee) but not more than 45 days prior to an Optional
Exchange Date (i) such Certificate with the form entitled "Option to Elect
Exchange" on the reverse thereof duly completed, or (ii) in the case of
Registered Certificates, a telegram, telex, facsimile transmission or letter
from a member of a national securities exchange or the National Association of
Securities Dealers, Inc., the Depositary (in accordance with its normal
procedures) or a commercial bank or trust company in the United States setting
forth the name of the holder of such Registered Certificate, the Certificate
Principal Balance or Notional Amount of such Registered Certificate to be
exchanged, the certificate number or a description of the tenor and terms of
such Registered Certificate, a statement that the option to elect exchange is
being exercised thereby and a guarantee that the Registered Certificate to be
exchanged with the form entitled "Option to Elect Exchange" on the reverse of
the Registered Certificate duly completed will be received by such Trustee not
later than five Business Days after the date of such telegram, telex, facsimile
transmission or letter. If the procedure described in clause (ii) of the
preceding sentence is followed, then such Registered Certificate and form duly
completed must be received by such Trustee by such fifth Business Day. Any
tender of a Certificate by the holder for exchange shall be irrevocable. The
exchange option may be exercised by the holder of a Certificate for less than
the entire Certificate Principal Balance of such Certificate, provided that the
Certificate Principal Balance or Notional Amount, as applicable, of such
Certificate remaining outstanding after redemption is an authorized denomination
and all other exchange requirements set forth in the related Prospectus
Supplement are satisfied. Upon such partial exchange, such Certificate shall be
cancelled and a new Certificate or Certificates for the remaining Certificate
Principal Balance thereof shall be issued (which, in the case of any Registered
Certificate, shall be in the name of the holder of such exchanged Certificate).
23
Because initially and unless and until Definitive Certificates are issued each
Certificate will be represented by a Global Certificate, the Depositary's
nominee will be the Certificateholder of such Certificate and therefore will be
the only entity that can exercise a right of exchange. In order to ensure that
the Depositary's nominee will timely exercise a right of exchange with respect
to a particular Certificate, the beneficial owner of such Certificate must
instruct the broker or other direct or indirect participant through which it
holds an interest in such Certificate to notify the Depositary of its desire to
exercise a right of exchange. Different firms have different cut-off times for
accepting instructions from their customers and, accordingly, each beneficial
owner should consult the broker or other direct or indirect participant through
which it holds an interest in a Certificate in order to ascertain the cut-off
time by which such an instruction must be given in order for timely notice to be
delivered to the Depositary.
Upon the satisfaction of the foregoing conditions and any applicable conditions
with respect to the related Deposited Assets, as described in the applicable
Prospectus Supplement, the applicable Certificateholder will be entitled to
receive a distribution of a pro rata share of the Deposited Assets related to
the Exchangeable Series (and Class within such Exchangeable Series) of the
Certificate being exchanged, in the manner and to the extent described in such
Prospectus Supplement, and would therefore own the Deposited Assets and have the
ability to enforce their rights directly as owners of the Deposited Assets.
Alternatively, to the extent so specified in the applicable Prospectus
Supplement, the applicable Certificateholder, upon satisfaction of such
conditions, may direct the related Trustee to sell, on behalf of such
Certificateholder, such pro rata share of the Deposited Assets, in which event
the Certificateholder shall be entitled to receive the net proceeds of such
sale, less any costs and expenses incurred by such Trustee in facilitating such
sale, subject to any additional adjustments set forth in the Prospectus
Supplement.
PUT OPTION
If specified in the applicable Prospectus Supplement, a holder may put
Certificates of a given Series to the Company or a third party. The terms upon
which a holder may put its Certificates (including the price) will be specified
in the related Prospectus Supplement; provided, however, any put option shall be
exerciseable only to the extent that such put would not be inconsistent with the
Company's or Trust's continued satisfaction of the applicable requirements for
exemption under Rule 3a-7 under the Investment Company Act of 1940 and all
applicable rules, regulations and interpretations thereunder.
GLOBAL CERTIFICATES
All Certificates of a given Series (or, if more than one Class exists, any given
Class within that Series) will, upon issuance, be represented by one or more
Global Certificates that will be deposited with, or on behalf of, The Depository
Trust Company, New York, New York (for Registered Certificates denominated and
payable in U.S. dollars), or such other depositary identified in the related
Prospectus Supplement (the "Depositary"), and registered in the name of a
nominee of the Depositary. Global Certificates may be issued in either
registered or bearer form and in either temporary or definitive form. See
"Limitations on Issuance of Bearer Certificates" for provisions applicable to
Certificate issued in bearer form. Unless and until it is exchanged in whole or
in part for the individual Certificates represented thereby (each a
24
"Definitive Certificate"), a Global Certificate may not be transferred except as
a whole by the Depositary for such Global Certificate to a nominee of such
Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by such Depositary or any such nominee to a
successor of such Depositary or a nominee of such successor.
The Depository Trust Company has advised the Company as follows: The Depository
Trust Company is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Exchange Act. The Depository Trust Company was created to hold securities of its
participants and to facilitate the clearance and settlement of securities
transactions among the institutions that have accounts with such Depositary
("participants") in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of securities certificates. Such Depositary's participants include securities
brokers and dealers (including the Offering Agent), banks, trust companies,
clearing corporations, and certain other organizations, some of whom (and/or
their representatives) own such Depositary. Access to such Depositary's
book-entry system is also available to others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a participant, either directly or indirectly. The Depository Trust Company has
confirmed to the Company that it intends to follow such procedures.
Upon the issuance of a Global Certificate, the Depositary for such Global
Certificate will credit, on its book-entry registration and transfer system, the
respective principal amounts of the individual Certificates represented by such
Global Certificate to the accounts of its participants. The accounts to be
accredited shall be designated by the underwriters of such Certificates, or, if
such Certificates are offered and sold directly through one or more agents, by
the Company or such agent or agents. Ownership of beneficial interests in a
Global Certificate will be limited to participants or Persons that may hold
beneficial interests through participants. Ownership of beneficial interests in
a Global Certificate will be shown on, and the transfer of that ownership will
be effected only through, records maintained by the Depositary for such Global
Certificate or by participants or Persons that hold through participants. The
laws of some states require that certain purchasers of securities take physical
delivery of such securities. Such limits and such laws may limit the market for
beneficial interests in a Global Certificate.
So long as the Depositary for a Global Certificate, or its nominee, is the owner
of such Global Certificate, such Depositary or such nominee, as the case may be,
will be considered the sole Certificateholder of the individual Certificates
represented by such Global Certificate for all purposes. Except as set forth
below, owners of beneficial interests in a Global Certificate will not be
entitled to have any of the individual Certificates represented by such Global
Certificate registered in their names, will not receive or be entitled to
receive physical delivery of any such Certificates and will not be considered
the Certificateholder thereof under the Trust Agreement governing such
Certificates. Because the Depositary can only act on behalf of its participants,
the ability of a holder of any Certificate to pledge that Certificate to persons
or entries that do not participate in the Depositary's system, or to otherwise
act with respect to such Certificate, may be limited due to the lack of a
physical certificate for such Certificate.
25
Subject to the restrictions discussed under "Limitations on Issuance of Bearer
Certificates" below, distributions of principal of (and premium, if any) and any
interest on individual Certificates represented by a Global Certificate will be
made to the Depositary or its nominee, as the case may be, as the
Certificateholder of such Global Certificate. None of the Company, the
Administrative Agent, if any, the Trustee for such Certificates, any Paying
Agent or the Certificate Registrar for such Certificates will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial interests in such Global Certificate or
for maintaining, supervising or reviewing any records relating to such
beneficial interests. Receipt by owners of beneficial interests in a temporary
Global Certificate of payments of principal, premium or interest in respect
thereof will be subject to the restrictions discussed below under "Limitations
on Issuance of Bearer Certificates" below.
The Company expects that the Depositary for Certificates of a given Class and
Series, upon receipt of any distribution of principal, premium or interest in
respect of a definitive Global Certificate representing any of such
Certificates, will credit immediately participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such Global Certificate as shown on the records of such Depositary.
The Company also expects that payments by participants to owners of beneficial
interests in such Global Certificate held through such participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "street name," and will be the responsibility of such participants. Receipt
by owners of beneficial interests in a temporary Global Certificate of payments
of principal, premium or interest in respect thereof will be subject to the
restrictions discussed below under "Limitations on Issuance of Bearer
Certificates."
If the Depositary for Certificates of a given Class of any Series is at any time
unwilling or unable to continue as depositary and a successor depositary is not
appointed by the Company within ninety days, the Company will issue individual
Definitive Certificates in exchange for the Global Certificate or Certificates
representing such Certificates. In addition, the Company may at any time and in
its sole discretion determine not to have any Certificates of a given Class
represented by one or more Global Certificates and, in such event will issue
individual Definitive Certificates of such Class in exchange for the Global
Certificate or Certificates representing such Certificates. Further, if the
Company so specifies with respect to the Certificates of a given Class, an owner
of a beneficial interest in a Global Certificate representing Certificates of
such Class may, on terms acceptable to the Company and the Depositary for such
Global Certificate, receive individual Definitive Certificates in exchange for
such beneficial interest. In any such instance, an owner of a beneficial
interest in a Global Certificate will be entitled to physical delivery of
individual Definitive Certificates of the Class represented by such Global
Certificate equal in principal amount to such beneficial interest and to have
such Definitive Certificates registered in its name (if the Certificates of such
Class are issuable as Registered Certificates). Individual Definitive
Certificates of such Class so issued will be issued as (a) Registered
Certificates in denominations, unless otherwise specified by the Company, of
$1,000 and integral multiples thereof if the Certificates or such Class are
issuable as Registered Certificates, (b) as Bearer Certificates in the
denomination or denominations specified by the Company if the Certificates of
such Class are issuable as Bearer Certificates or (c) as either Registered or
Bearer Certificates, if the Certificates of such Class are issuable in either
form. See, however, "Limitations on Issuance of Bearer Certificates" below for a
description of certain restrictions on
26
the issuance of individual Bearer Certificates in exchange for beneficial
interests in a Global Certificate.
The applicable Prospectus Supplement will set forth any material terms of the
depositary arrangement with respect to any Class or Series of Certificates being
offered thereby to the extent not set forth above.
DESCRIPTION OF DEPOSITED ASSETS AND CREDIT SUPPORT
GENERAL
[SELECT ONE OF THE BRACKETED SECTIONS]
[Alternative 1] [Each Certificate of each Series (or if more than one Class
exists, each Class (whether or not each such Class is offered hereby) within
such Series) will represent an ownership interest in a designated, fixed income
debt security or asset backed security or a pool of such debt securities or
asset backed securities (the "Underlying Securities") issued by one or more
issuers (the "Underlying Securities Issuers"), purchased by a Trust with
proceeds from, and at the direction of, the Company or purchased by the Company
(or an affiliate thereof) in the secondary market and assigned to a Trust as
described in the applicable Prospectus Supplement. Each Term Asset, or
Underlying Securities, in the case of debt securities with a common obligor,
that represent ten percent (10%) or more of the pool of Term assets as of the
date of the related Prospectus Supplement ("Concentrated Underlying Securities")
will be issued or by their terms guaranteed by one or more corporations, banking
organizations, insurance companies or special purpose vehicles (including
trusts, limited liability companies, partnerships or other special purpose
entities) organized under the laws of the United States or any state, which are
subject to the informational requirements of the Exchange Act and which, in
accordance therewith, file reports and other information with the Commission.
Based on information contained in the offering document pursuant to which
Underlying Securities were originally offered (a "Underlying Securities Offering
Document"), the applicable Prospectus Supplement shall set forth certain
information with respect to the public availability of information with respect
to any Underlying Securities Issuer the debt securities of which are
Concentrated Underlying Securities. Material terms of the Concentrated
Underlying Securities will be included in the related Prospectus Supplement.]
[Alternative 2] [Each Certificate of each Series (or if more than one Class
exists, each Class (whether or not each such Class is offered hereby) within
such Series) will represent an ownership interest in a designated, fixed income
debt security or pool of such debt securities (the "Underlying Securities"),
purchased by the Company (or an affiliate thereof) in the secondary market and
assigned to a Trust as described in the applicable Prospectus Supplement. Each
Term Asset, or Underlying Securities, in the case of debt securities with a
common obligor, that represent ten percent (10%) or more of the pool of Term
assets as of the date of the related Prospectus Supplement ("Concentrated
Underlying Securities") will represent direct obligations of one or more foreign
private issuers (as such term is defined in Rule 405 of the Securities Act) (the
"Underlying Securities Issuers") subject to the informational requirements of
the Exchange Act and which in accordance therewith file reports and other
information with the Commission. Based on information contained in the offering
document pursuant to which Underlying
27
Securities were originally offered (a "Underlying Securities Offering
Document"), the applicable Prospectus Supplement
shall set forth certain information with respect to the public availability of
information with respect to any Underlying Securities Issuer the debt securities
of which are Concentrated Underlying Securities. Material terms of the
Concentrated Underlying Securities will be included in the related Prospectus
Supplement.]
[Alternative 3] [Each Certificate of each Series (or if more than one Class
exists, each Class (whether or not each such Class is offered hereby) within
such Series) will represent an ownership interest specified for such Series (or
Class) of Certificates in a designated, fixed income debt security or a pool of
such debt securities (the "Underlying Securities") assigned to a Trust as
described in the applicable Prospectus Supplement. The respective issuer of any
Term Asset is referred to herein as a "Underlying Securities Issuer". Each Term
Asset, or Underlying Securities, in the case of debt securities with a common
obligor, that represent ten percent (10%) or more of the pool of Term assets as
of the date of the related Prospectus Supplement ("Concentrated Underlying
Securities") will represent an obligation (i) issued or by their terms
guaranteed by the United States of America or any agency thereof for the payment
of which the full faith and credit of the United States of America is pledged
("Treasury Securities") or (ii) of a U.S. governmental sponsored organization
created pursuant to federal statute (a "GSE"). As specified in the applicable
Prospectus Supplement, the obligations of one or more of the following GSEs may
be included in a Trust: Federal National Mortgage Association ("Fannie Mae"),
Federal Home Loan Mortgage Association ("Freddie Mac"), Student Loan Marketing
Association ("Sallie Mae"), Resolution Funding Corporation ("REFCORP"), Federal
Home Loan Banks ("FHLB") (to the extent such obligations represent the joint and
several obligation of the twelve Federal Home Loan Banks), Tennessee Valley
Authority ("TVA") and Federal Farm Credit Banks ("FFCB"). The Trusts may also
include securities guaranteed by the United States Agency for International
Development ("AID") and government trust certificates. Debt securities of such
GSEs may be exempt from registration under the Securities Act pursuant to
Section 3(a)(2) of the Securities Act (or deemed by statute to be so exempt) and
are not required to be registered under the Exchange Act. Concentrated
Underlying Securities of any such GSE will be included in a Trust only to the
extent (A) its obligations are supported by the full faith and credit of the
U.S. government or (B) such organization makes publicly available its annual
report which shall include financial statements or similar financial information
with respect to such organization (any such GSE, a "GSE Issuer"). Based on
information contained in the offering document pursuant to which Underlying
Securities were originally offered (a "Underlying Securities Offering
Document"), the applicable Prospectus Supplement shall set forth certain
information with respect to the public availability of information with respect
to any Underlying Securities Issuer the debt securities of which constitute
Concentrated Underlying Securities. Material terms of the Concentrated
Underlying Securities will be included in the related Prospectus Supplement.]
[Alternative 4] [Each Certificate of each Series (or if more than one Class
exists, each Class (whether or not each such Class is offered hereby) within
such Series) will represent an ownership interest in a designated, fixed income
debt security or a pool of such debt securities (the "Underlying Securities"),
purchased by the Company (or an affiliate thereof) in the secondary market and
assigned to a Trust as described in the applicable Prospectus Supplement. Each
Term Asset will represent an obligation issued or by their terms guaranteed by a
foreign government, political subdivision or agency or instrumentality thereof
(the "Underlying
28
Securities Issuers"). Each Term Asset, or Underlying
Securities, in the case of debt securities with a common obligor, that represent
ten percent (10%) or more of the pool of Term assets as of the date of the
related Prospectus Supplement ("Concentrated Underlying Securities") will
represent an obligation issued or by their terms guaranteed by a foreign
government or a political subdivision or agency or instrumentality thereof which
has offered debt securities in the United States pursuant to a registration
statement filed with the Commission containing information required by Schedule
B of the Securities Act ("Schedule B"), which qualifies as a "seasoned" issuer
under Commission practice and which issuer or guarantor the Company reasonably
believes (based on publicly available information) is eligible to use Schedule B
as of the time of any offering of Certificates hereunder. The Underlying
Securities may include, but shall not be limited to, obligations of any or all
of the following Foreign Governments (which may include, but shall not be
limited to, obligations guaranteed by the following): Austria, Australia,
Canada, Canadian Provinces, Denmark, Finland, France, Germany, Ireland, Japan,
Norway, Italy, Spain, Sweden and the United Kingdom. The Prospectus Supplement
for any series will set forth the Foreign Government obligations included in the
related Trust. Based on information contained in the offering document pursuant
to which Underlying Securities were originally offered (a "Underlying Securities
Offering Document"), the applicable Prospectus Supplement shall set forth
certain information with respect to the public availability of information with
respect to any Underlying Securities Issuer the debt securities of which
constitute Concentrated Underlying Securities. Material terms of the
Concentrated Underlying Securities will be included in the related Prospectus
Supplement.]
The following is a general description of the Deposited Assets which the Company
is permitted to include in a Trust and does not purport to be a complete
description of any such Deposited Asset. This description is qualified in its
entirety by reference to the applicable Prospectus Supplement, the Underlying
Securities Prospectus and the Underlying Securities themselves. Material
information regarding the actual Deposited Assets, as of the Cut-off Date (as
defined herein), will be provided in the Prospectus Supplement used to offer a
Series of Certificates.
UNDERLYING SECURITIES
[INCLUDE FOR ALTERNATIVES 1 AND 2 ONLY]
[General. As specified in the related Prospectus Supplement each Term Asset will
have been issued pursuant to an agreement (each, a "Underlying Securities
Indenture") between the Underlying Securities Issuer and the Underlying
Securities Trustee. Unless otherwise specified, the Underlying Securities
Indenture and the Underlying Securities Trustee will be qualified under the
Trust Indenture Act of 1939 (the "Trust Indenture Act") and the Underlying
Securities Indenture will contain certain provisions required by the Trust
Indenture Act.
Certain Covenants. Indentures generally contain covenants intended to protect
security holders against the occurrence or effects of certain specified events,
including restrictions limiting the issuer's, and in some cases any
subsidiary's, ability to: (i) consolidate, merge, or transfer or lease assets;
(ii) incur or suffer to exist any lien, charge, or encumbrance upon any of its
property or assets, or to incur, assume, guarantee or suffer to exist any
indebtedness for borrowed money if the payment of such indebtedness is secured
by the grant of such a lien; (iii) declare or pay any cash dividends, or make
any distribution on or in respect of, or purchase, redeem, exchange or
29
otherwise acquire or retire for value any capital stock or subordinated
indebtedness of the issuer or its subsidiaries, if any. An indenture may also
contain financial covenants which, among other things, require the maintenance
of certain financial ratios or the creation or maintenance of reserves. Subject
to certain exceptions, indentures typically may be amended or supplemented and
past defaults may be waived with the consent of the indenture trustee, the
consent of the holders of not less than a specified percentage of the
outstanding securities, or both.
The Underlying Securities Indenture related to one or more Underlying Securities
included in a Trust may include some, all or none of the foregoing provisions or
variations thereof or additional covenants not discussed herein. To the extent
that the Underlying Securities are investment grade debt they are unlikely to
contain significant restrictive covenants although certain non-investment grade
debt may not be subject to restrictive covenants either. There can be no
assurance that any such provision will protect the Trust or Trustee as a holder
of the Underlying Securities against losses. The Prospectus Supplement used to
offer any Series of Certificates will describe material covenants in relation to
any Concentrated Term Asset and, as applicable, will describe material covenants
which are common to any pool of Underlying Securities.
Events of Default. Indentures generally provide that any one of a number of
specified events will constitute an event of default with respect to the
securities issued thereunder. Such events of default typically include the
following or variations thereof: (i) failure by the issuer to pay an installment
of interest or principal on the securities at the time required (subject to any
specified grace period) or to redeem any of the securities when required
(subject to any specified grace period); (ii) failure by the issuer to observe
or perform any covenant, agreement, or condition contained in the securities or
the indenture which failure is materially adverse to security holders and
continues for a specified period after notice thereof is given to the issuer by
the indenture trustee or the holders of not less than a specified percentage of
the outstanding securities; (iii) failure by the issuer to make any required
payment of principal (and premium, if any) or interest with respect to certain
of the other outstanding debt obligations of the issuer or the acceleration by
or on behalf of the holders thereof of such securities, and (iv) certain events
of insolvency or bankruptcy with respect to the Underlying Securities Issuer.
Remedies. Indentures generally provide that upon the occurrence of an event of
default, the indenture trustee may, and upon the written request of the holders
of not less than a specified percentage of the outstanding securities must, take
such action as it may deem appropriate to protect and enforce the rights of the
security holders. Certain indentures provide that the indenture trustee or a
specified percentage of the holders of the outstanding securities have the right
to declare all or a portion of the principal and accrued interest on the
outstanding securities immediately due and payable upon the occurrence of
certain events of default, subject to the issuer's right to cure, if applicable.
Generally, an indenture will contain a provision entitling the trustee
thereunder to be indemnified by the security holders prior to proceeding to
exercise any right or power under such indenture with respect to such securities
at the request of such security holders. An indenture is also likely to limit a
security holder's right to institute certain actions or proceedings to pursue
any remedy under the indenture unless certain conditions are satisfied,
including consent of the indenture trustee, that the proceeding be brought for
the ratable benefit of all holders of the security, and/or the indenture
trustee, after being requested to institute a
30
proceeding by the owners of at least a specified minimum percentage of the
securities, shall have refused or neglected to comply with such request within a
reasonable time.
Each Underlying Securities Indenture may include some, all or none of the
foregoing provisions or variations thereof or additional events of default not
discussed herein. The Prospectus Supplement with respect to any Series of
Certificates will describe the events of default under the Underlying Securities
Indenture with respect to any Concentrated Term Asset ("Term Asset Events of
Default") and applicable remedies with respect thereto. With respect to any
Trust comprised of a pool of securities, the applicable Prospectus Supplement
will describe certain common Term Asset Events of Default with respect to such
pool. There can be no assurance that any such provision will protect the Trust,
as a holder of the Underlying Securities, against losses. If a Term Asset Event
of Default occurs and the Trustee as a holder of the Underlying Securities is
entitled to vote or take such other action to declare the principal amount of a
Underlying Securities and any accrued and unpaid interest thereon to be due and
payable, the Certificateholders' objectives may differ from those of holders of
other securities of the same series and class as any Term Asset ("outstanding
debt securities") in determining whether to declare the acceleration of the
Underlying Securities.
Subordination. As set forth in the applicable Prospectus Supplement, certain of
the Underlying Securities with respect to any Trust may be either senior
("Senior Underlying Securities") or subordinated ("Subordinated Underlying
Securities") in right to payment to other existing or future indebtedness of the
Underlying Securities Issuer. With respect to Subordinated Underlying
Securities, to the extent of the subordination provisions of such securities,
and after the occurrence of certain events, security holders and direct
creditors whose claims are senior to Subordinated Underlying Securities, if any,
may be entitled to receive payment of the full amount due thereon before the
holders of any subordinated debt securities are entitled to receive payment on
account of the principal (and premium, if any) or any interest on such
securities. Consequently, the Trust or Trustee as a holder of subordinated debt
may suffer a greater loss than if it held unsubordinated debt of the Underlying
Securities Issuer. There can be no assurance, however, that in the event of a
bankruptcy or similar proceeding the Trust or Trustee as a holder of Senior
Underlying Securities would receive all payments in respect of such securities
even if holders of subordinated securities receive amounts in respect of such
securities. Reference is made to the Prospectus Supplement used to offer any
Series of Certificates for a description of any subordination provisions with
respect to any Concentrated Underlying Securities and the percentage of Senior
Underlying Securities and Subordinated Underlying Securities, if any, in a Trust
comprised of a pool of securities.
Secured Obligations. Certain of the Underlying Securities with respect to any
Trust may represent secured obligations of the Underlying Securities Issuer
("Secured Underlying Securities"). Generally, unless an event of default shall
have occurred, or with respect to certain collateral or as otherwise set forth
in the indenture pursuant to which such securities were offered and sold, an
issuer of secured obligations generally has the right to remain in possession
and retain exclusive control of the collateral securing a security and to
collect, invest and dispose of any income related to the collateral. The
indenture pursuant to which any secured indebtedness is issued may also contain
certain provisions for release, substitution or disposition of collateral under
certain circumstances with or without the consent of the indenture trustee or
upon the direction of not less than a specified percentage of the security
holders. The indenture pursuant
31
to which any secured indebtedness is `issued will also provide for the
disposition of the collateral upon the occurrence of certain events of default
with respect thereto. In the event of a default in respect of any secured
obligation, security holders may experience a delay in payments on account of
principal (and premium, if any) or any interest on such securities pending the
sale of any collateral and prior to or during such period the related collateral
may decline in value. If proceeds of the sale of collateral following an
indenture event of default are insufficient to repay all amounts due in respect
of any secured obligations, the holders of such securities (to the extent not
repaid from the proceeds of the sale of the collateral) would have only an
unsecured claim ranking pari passu with the claims of all other general
unsecured creditors.
The Underlying Securities Indenture with respect to any Secured Term Asset may
include, some, or all or none of the foregoing provisions or variations thereof.
The Prospectus Supplement used to offer any Series of Certificates which
includes Concentrated Underlying Securities which are Secured Underlying
Securities, will describe the security provisions of such Underlying Securities
and the related collateral. With respect to any Trust comprised of a pool of
securities, a substantial portion of which are Secured Underlying Securities,
the applicable Prospectus Supplement will disclose certain general information
with respect to such security provisions and the collateral.]
[INCLUDE FOR ALTERNATIVE 4 ONLY]
General. None of the Underlying Securities will have been issued pursuant to an
indenture and no trustee is provided for with respect to any Term Asset.
Generally, there will be a fiscal agent (each a "Fiscal Agent") for the Foreign
Government Issuer with respect to the Term Asset whose actions will be governed
by a fiscal agency agreement. A Fiscal Agent does not have the same
responsibilities or duties to act on behalf of the holders of a Foreign
Government's debt securities as would a trustee.
Contractual Restrictions. There will generally be few, if any, contractual
restrictions on the Foreign Government Issuers or Foreign Government Guarantors
in respect of the Underlying Securities. The Underlying Securities by their
terms and provisions may, however, restrict certain actions of the related
Foreign Governments and may also require, among other things, the creation or
maintenance of reserves or a sinking fund or contain an undertaking or pledge of
the Foreign Government not to encumber its assets to secure any other external
indebtedness without providing like security for the related Term Asset. Certain
actions in respect of the debt securities of Foreign Governments may also be
subject to proper executive, legislative or administrative approval.
The Prospectus Supplement used to offer any Series of Certificates will describe
material covenants or undertakings in relation to any Concentrated Term Asset
and, as applicable, will describe material covenants or undertakings which are
common to any pool of Underlying Securities. There can be no assurance that any
such provision will protect the Trust as a holder of the Underlying Securities
against losses. In the event of a breach of any such covenant or undertaking it
may not be possible to force any action in respect of the Underlying Securities
or to obtain an enforceable judgment against a Foreign Government.
32
Events of Default. Debt securities issued by foreign governments generally
provide that any one of a number of specified events will constitute an event of
default with respect to such securities. Such events of default typically
include the following or variations thereof: (i) failure by the issuer to pay an
installment of interest or principal on the securities at the time required
(subject to any specified grace period) or to redeem any of the securities when
required (subject to any specified grace period); (ii) failure by the issuer to
observe or perform any covenant, agreement, or condition contained in the
securities which failure is materially adverse to security holders and continues
for a specified period after notice thereof; (iii) the declaration of a
moratorium on payment of interest or principal in respect of external
indebtedness and (iv) failure by the issuer to make any required payment of
principal (and premium, if any) or interest with respect to certain of the other
outstanding debt obligations of the issuer (including other external
indebtedness) or the acceleration by or on behalf of the holders thereof of such
securities.
Each Term Asset may include some, all or none of the foregoing provisions or
variations thereof or additional events of default not discussed herein. The
Prospectus Supplement with respect to any Series of Certificates will describe
the events of default under the Underlying Securities with respect to any
Concentrated Term Asset ("Term Asset Events of Default") and applicable remedies
with respect thereto. With respect to any Trust comprised of a pool of
securities, the applicable Prospectus Supplement will describe certain common
Term Asset Events of Default with respect to such pool. There can be no
assurance that any such provision will protect the Trust, as a holder of the
Underlying Securities, against losses. If a Term Asset Event of Default occurs
and the Trustee as a holder of the Underlying Securities is entitled to vote or
take such other action to declare the principal amount of a Underlying
Securities and any accrued and unpaid interest thereon to be due and payable,
the Certificateholders' objectives may differ from those of holders of other
outstanding debt securities in determining whether to declare the acceleration
of a Term Asset.
Remedies. Generally, upon the occurrence of an event of default, the holders of
not less than a specified percentage of the outstanding securities of a Foreign
Government may enforce their rights under the securities including, in some
cases, the right to declare all or a portion of the principal and accrued
interest on the outstanding securities immediately due and payable, subject to
the issuer's right to cure, if applicable. A fiscal agency agreement will not
typically provide for the agent to enforce the rights of the security holders as
would an indenture trustee. Consequently, any rights in respect of the
Underlying Securities must be pursued through the Trustee as a holder thereof in
the manner prescribed with respect to the Underlying Securities. There can be no
assurance that the Trustee will be able to enforce any contractual obligation
against a Foreign Government. Additionally, where action may be taken in respect
of the Underlying Securities only by a specified percentage of the holders of
the outstanding debt securities, the Trustee's ability to influence such action
will be limited by the proportion of such securities held by the Trust.]
[INCLUDE FOR ALTERNATIVE 3 ONLY]
[General. None of the Underlying Securities will have been issued pursuant to an
indenture, and no trustee is provided for with respect to any Term Asset. There
will generally be a fiscal agent ("Fiscal Agent") for a GSE Issuer with respect
to any related Term Asset whose actions will be governed by a fiscal agency
agreement. A Fiscal Agent is not a trustee for the holders of the
33
Underlying Securities and does not have the same responsibilities or duties to
act for the holders of a GSE's securities as would a trustee.
The applicable prospectus supplement will make reference to any disclosure
documents prepared in connection with the issuance of Terms Assets by Freddie
Mac or Fannie Mae.
Contractual and Statutory Restrictions. A GSE Issuer and the related Underlying
Securities may be subject to certain contractual and statutory restrictions
which may provide some protection to certificateholders against the occurrence
or effects of certain specified events. In general, each GSE is limited to such
activities as will promote its statutory purposes as set forth in the publicly
available information with respect to such issuer. See "Description of the
Underlying Securities" in the related Prospectus Supplement. A GSE's promotion
of its statutory purposes, as well as its statutory, structural and regulatory
relationships with the federal government, may cause or require such GSE to
conduct its business in a manner that differs from that an enterprise which is
not a GSE might employ.
Neither the United States or any agency thereof is obligated to finance any GSE
Issuer's operations or to assist a GSE Issuer in any manner. Prospective
purchasers should consult the publicly available information with respect to
each GSE Issuer for a more detailed description of the regulatory and statutory
restrictions on the related GSE's activities.
Events of Default. Underlying Securities issued by a GSE Issuer may provide that
any one of a number of specified events will constitute an event of default with
respect thereto. Such events of default typically include the following or
variations thereof: (i) failure by the issuer to pay an installment of interest
or principal on the securities at the time required (subject to any specified
grace period) or to redeem any of the securities when required (subject to any
specified grace period); (ii) failure by the issuer to observe or perform any
covenant, agreement or condition contained in the securities or authorizing
legislation or regulation, as the case may be, which failure is materially
adverse to security holders and continues for a specified period after notice
thereof; and (iii) certain events of insolvency or bankruptcy with respect to
the GSE Issuer. The Underlying Securities will generally provide that upon the
occurrence of an event of default the holders of not less than a specified
percentage of the outstanding securities may declare all or a portion of the
principal and accrued interest on the outstanding securities immediately due and
payable, subject to the issuer's right to cure, if applicable.
Each Term Asset may include some, all or none of the foregoing provisions or
variations thereof or additional events of default not discussed herein. The
Prospectus Supplement with respect to any Series of Certificates will describe
the events of default under the Underlying Securities with respect to any
Concentrated Term Asset ("Term Asset Events of Default") and applicable remedies
with respect thereto. With respect to any Trust comprised of a pool of
securities, the applicable Prospectus Supplement will describe certain common
Term Asset Events of Default with respect to such pool. There can be no
assurance that any such provision will protect the Trust, as a holder of the
Underlying Securities, against losses. If a Term Asset Event of Default occurs
and the Trustee as a holder of the Underlying Securities is entitled to vote or
take such other action to declare the principal amount of a Term Asset and any
accrued and unpaid interest thereon to be due and payable, the
Certificateholders' objectives may differ from those of
34
holders of other securities of the same series and class as any Term Asset in
determining whether to declare the acceleration of a Term Asset.]
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, reference is made to the applicable Prospectus Supplement with respect
to each Series of Certificates for a description of the following terms, as
applicable, of any Concentrated Term Asset: (i) the title and series of such
Underlying Securities, the aggregate principal amount, denomination and form
thereof; (ii) whether such securities are senior or subordinated to any other
obligations of the issuer; (iii) whether any of the obligations are secured or
unsecured and the nature of any collateral; (iv) the limit, if any, upon the
aggregate principal amount of such debt securities; (v) the dates on which, or
the range of dates within which, the principal of (and premium, if any, on) such
debt securities will be payable; (vi) the rate or rates or the method of
determination thereof, at which such Underlying Securities will bear interest,
if any ("Underlying Securities Rate"); the date or dates from which such
interest will accrue ("Underlying Securities Interest Accrual Periods"); and the
dates on which such interest will be payable ("Underlying Securities Payment
Dates"); (vii) the obligation, if any, of the Underlying Securities Issuer to
redeem the outstanding debt securities pursuant to any sinking fund or analogous
provisions, or at the option of a holder thereof, and the periods within which
or the dates on which, the prices at which and the terms and conditions upon
which such debt securities may be redeemed or repurchased, in whole or in part,
pursuant to such obligation; (viii) the periods within which or the dates on
which, the prices at which and the terms and conditions upon which such debt
securities may be redeemed, if any, in whole or in part, at the option of the
Underlying Securities Issuer; (ix) whether the Underlying Securities were issued
at a price lower than the principal amount thereof; (x) if other than United
States dollars, the foreign currency in which such debt securities are
denominated, or in which payment of the principal of (and premium, if any) or
any interest on such Underlying Securities will be made (the "Underlying
Securities Currency"), and the circumstances, if any, when such currency of
payment may be changed; (xi) material events of default or restrictive covenants
provided for with respect to such Underlying Securities; (xii) the rating
thereof, if any; and (xiii) any other material terms of such Underlying
Securities.
With respect to a Trust comprised of a pool of Underlying Securities, the
related Prospectus Supplement will, to the extent applicable, describe the
composition of the Underlying Securities pool as of the Cut-off Date, certain
material events of default or restrictive covenants common to the Underlying
Securities, and, on an aggregate, percentage or weighted average basis, as
applicable, the characteristics of the pool with respect to certain terms set
forth above in the preceding paragraph and any other material terms regarding
such pool of securities.
PUBLICLY AVAILABLE INFORMATION
In addition to the foregoing, the applicable Prospectus Supplement will
disclose, with respect to each Underlying Issuer, the financial information
described in Item 1112(b) of Regulation AB, to the extent required to be
disclosed pursuant to such Item.
35
OTHER DEPOSITED ASSETS
In addition to the Underlying Securities, the Company may also deposit into a
given Trust, or the Trustee on behalf of the Certificateholders of a Trust, may
enter into an agreement constituting or providing for the purchase of, to the
extent described in the related Prospectus Supplement, certain assets related or
incidental to one or more of such Underlying Securities or to some other asset
deposited in the Trust, including hedging contracts and other similar
arrangements (such as puts, calls, interest rate swaps, currency swaps, floors,
caps and collars, cash and assets ancillary or incidental to the foregoing or to
the Underlying Securities (including assets obtained through foreclosure or in
settlement of claims with respect thereto) (all such assets for any given
Series, together with the related Underlying Securities, the "Deposited
Assets"). The applicable Prospectus Supplement will to the extent appropriate
contain analogous disclosure with respect to the foregoing assets as referred to
above with respect to the Underlying Securities.
The Deposited Assets for a given Series of Certificates and the related Trust
will not constitute Deposited Assets for any other Series of Certificates and
the related Trust and the Certificates of each Class of a given Series possess
an equal and ratable interest in such Deposited Assets. The applicable
Prospectus Supplement may, however, specify that certain assets constituting a
part of the Deposited Assets relating to any given Series may be beneficially
owned solely by or deposited solely for the benefit of one Class or a group of
Classes within such Series. In such event, the other Classes of such Series will
not possess any beneficial ownership interest in those specified assets
constituting a part of the Deposited Assets.
CREDIT SUPPORT
As specified in the applicable Prospectus Supplement for a given Series of
Certificates, the Trust for any Series of Certificates may include, or the
Certificateholders of such Series (or any Class or group of Classes within such
Series) may have the benefit of, Credit Support for any Class or group of
Classes within such Series. Such Credit Support may be provided by any
combination of the following means described below. The applicable Prospectus
Supplement will set forth whether the Trust for any Class or group of Classes of
Certificates contains, or the Certificateholders of such Certificates have the
benefit of, Credit Support and, if so, the amount, type and other relevant terms
of each element of Credit Support with respect to any such Class or Classes and
certain information with respect to the obligors of each such element.
Subordination. As discussed below under "--Collections," the rights of the
Certificateholders of any given Class within a Series of Certificates to receive
collections from the Trust for such Series and any Credit Support obtained for
the benefit of the Certificateholders of such Series (or Classes within such
Series) may be subordinated to the rights of the Certificateholders of one or
more other Classes of such Series to the extent described in the related
Prospectus Supplement. Such subordination accordingly provides some additional
credit support to those Certificateholders of those other Classes. For example,
its losses are realized during a given period on the Deposited Assets relating
to a Series of Certificates such that the collections received thereon are
insufficient to make all distributions on the Certificates of such Series, those
realized losses would be allocated to the Certificateholder of any Class of such
Series that is subordinated to another Class, to the extent and in the manner
provided in the related Prospectus Supplement. In addition, if so provided in
the applicable Prospectus Supplement, certain
36
amounts otherwise payable to Certificateholders of any Class that is
subordinated to another Class may be required to be deposited into a reserve
account. Amounts held in any reserve account may be applied as described below
under "-Reserve Accounts" and in the related Prospectus Supplement.
If so provided in the related Prospectus Supplement, the Credit Support for any
Series or Class of Certificates may include, in addition to the subordination of
certain Classes of such Series and the establishment of a reserve account, any
of the other forms of Credit Support described below. Any such other forms of
Credit Support that are solely for the benefit of a given Class will be limited
to the extent necessary to make required distributions to the Certificateholders
of such Class. In addition, if so provided in the applicable Prospectus
Supplement, the obligor of any other forms of Credit Support may be reimbursed
for amounts paid pursuant to such Credit Support out of amounts otherwise
payable to one or more of the Classes of the Certificates of such Series.
Letter of Credit; Surety Bond. The Certificateholders of any Series (or Class or
group of Classes of Certificates within such Series) may, if specified in the
applicable Prospectus Supplement, have the benefit of a letter or letters of
credit (a "Letter of Credit") issued by a bank (a "Letter of Credit Bank") or a
surety bond or bonds (a "Surety Bond") issued by a surety company (a "Surety").
In either case, the Trustee or such other person specified in the applicable
Prospectus Supplement will use its reasonable efforts to cause the Letter of
Credit or the Surety Bond, as the case may be, to be obtained, to be kept in
full force and effect (unless coverage thereunder has been exhausted through
payment of claims) and to pay timely the fees or premiums therefor unless, as
described in the related Prospectus Supplement, the payment of such fees or
premiums is otherwise provided for. The Trustee or such other person specified
in the applicable Prospectus Supplement will make or cause to be made draws
under the Letter of Credit or the Surety Bond, as the case may be, under the
circumstances and to cover the amounts specified in the applicable Prospectus
Supplement. Any amounts otherwise available under the Letter of Credit or the
Surety Bond will be reduced to the extent of any prior unreimbursed draws
thereunder. The applicable Prospectus Supplement will describe the manner,
priority and source of funds by which any such draws are to be repaid.
In the event that the Letter of Credit Bank or the Surety, as applicable, ceases
to satisfy any credit rating or other applicable requirements specified in the
related Prospectus Supplement, the Trustee or such other person specified in the
applicable Prospectus Supplement will use its reasonable efforts to obtain or
cause to be obtained a substitute Letter of Credit or Surety Bond, as
applicable, or other form of credit enhancement providing similar protection,
that meets such requirements and provides the same coverage to the extent
available for the same cost. There can be no assurance that any Letter of Credit
Bank or any Surety, as applicable, will continue to satisfy such requirements or
that any such substitute Letter of Credit, Surety Bond or similar credit
enhancement will be available providing equivalent coverage for the same cost.
To the extent not so available, the credit support otherwise provided by the
Letter of Credit or the Surety Bond (or similar credit enhancement) may be
reduced to the level otherwise available for the same cost as the original
Letter of Credit or Surety Bond.
The applicable Prospectus Supplement shall include a description of the Letter
of Credit Bank or Surety with respect to its [credit/debt/insurance strength]
ratings, activities it engages in,
37
regulatory authorities having jurisdiction over it and the nature of such
regulation, a narrative description of its assets, liabilities (including
deposits) and equity, and include an address for further information concerning
the Letter of Credit Bank or Surety. In addition, to the extent that the Letter
of Credit or Surety Bond will cover payment of 20% or more of the aggregate
principal amount of the Certificates covered thereby, the applicable Prospectus
Supplement will provide or incorporate by reference financial statements and
other information with respect to the Letter of Credit Bank or Surety.
Reserve Accounts. If so provided in the related Prospectus Supplement, the
Trustee or such other person specified in the Prospectus Supplement will deposit
or cause to be deposited into an account maintained with an eligible institution
(which may be the Trustee) (a "Reserve Account") any combination of cash or
permitted investments in specified amounts, which will be applied and maintained
in the manner and under the conditions specified in such Prospectus Supplement.
In the alternative or in addition to such deposit, a Reserve Account may be
funded through application of a portion of collections received on the Deposited
Assets for a given Series of Certificates, in the manner and priority specified
in the applicable Prospectus Supplement Amounts may be distributed to
Certificateholders of such Class or group of Classes within such Series, or may
be used for other purposes, in the manner and to the extent provided in the
related Prospectus Supplement. Amounts deposited in any Reserve Account will be
invested in certain permitted investments by, or at the direction of, the
Trustee, the Company or such other person named in the related Prospectus
Supplement.
Other Credit Support. If so provided in the related Prospectus Supplement, the
Trust may include, or the Certificateholders of any Series (or any Class or
group of Classes within such Series) may have the benefit of, one or more
interest rate or currency swaps, caps, floors, collars or options. The
Prospectus Supplement will identify the counterparty to any such instrument and
will provide a description of the material terms thereof.
COLLECTIONS
The Trust Agreement will establish procedures by which the Trustee or such other
person specified in the Prospectus Supplement is obligated, for the benefit of
the Certificateholders of each Series of Certificates, to administer the related
Deposited Assets, including making collections of all payments made thereon,
depositing from time to time prior to any applicable Distribution Date such
collections into a segregated account maintained or controlled by the applicable
Trustee for the benefit of such Series (each a "Certificate Account"). An
Administration Agent, if any is appointed pursuant to the applicable Prospectus
Supplement, will direct the Trustee, and otherwise the Trustee will make all
determinations, as to the appropriate application of such collections and other
amounts available for distribution to the payment of any administrative or
collection expenses (such as any administrative fee) and certain Credit
Support-related ongoing fees (such as insurance premiums, letter of credit fees
or any required account deposits) and to the payment of amounts then due and
owing on the Certificates of such Series (and Classes within such Series), all
in the manner and priorities described in the related Prospectus Supplement. The
applicable Prospectus Supplement will specify the collection periods, if
applicable, and Distribution Dates for a given Series of Certificates and the
particular requirements relating to the segregation and investment of
collections received on the Deposited Assets during a given collection period or
on or by certain specified dates. There can be no
38
assurance that amounts received from the Deposited Assets and any Credit Support
obtained for the benefit of Certificateholders for a particular Series or Class
of Certificates over a specified period will be sufficient, after payment of all
prior expenses and fees for such period, to pay amounts then due and owing to
holders of such Certificates. The applicable Prospectus Supplement will also set
forth the manner and priority by which any Realized Loss will be allocated among
the Classes of any Series of Certificates, if applicable.
The relative priorities of distributions with respect to collections from the
assets of the Trust assigned to Classes of a given Series of Certificates may
permanently or temporarily change over time upon the occurrence of certain
circumstances specified in the applicable Prospectus Supplement. Moreover, the
applicable Prospectus Supplement may specify that the relative distribution
priority assigned to each Class of a given Series for purposes of payments of
certain amounts, such as principal, may be different from the relative
distribution priority assigned to each such Class for payments of other amounts,
such as interest or premium.
DESCRIPTION OF TRUST AGREEMENT
GENERAL
The following summary of material provisions of the Trust Agreement and the
Certificates does not purport to be complete and such summary is qualified in
its entirety by reference to the detailed provisions of the form of Trust
Agreement filed as an exhibit to the Registration Statement. The applicable
Prospectus Supplement for a Series of Certificates will describe any applicable
material provision of the Trust Agreement or the Certificates that is not
described herein. Wherever particular sections or defined terms of the Trust
Agreement are referred to, such sections or defined terms are incorporated
herein by reference as part of the statement made, and the statement is
qualified in its entirety by such reference.
ASSIGNMENT OF DEPOSITED ASSETS
At the time of issuance of any Series of Certificates, the Company will cause
the Underlying Securities to be included in the related Trust, and any other
Deposited Asset specified in the Prospectus Supplement, to be assigned to the
related Trustee, together with all principal, premium (if any) and interest
received by or on behalf of the Company on or with respect to such Deposited
Assets after the cut-off date specified in the Prospectus Supplement (the
"Cut-off Date"), other than principal, premium (if any) and interest due on or
before the Cut-off Date and other than any Retained Interest. If specified in
the Prospectus Supplement, the Trustee will, concurrently with such assignment,
deliver the Certificates to the Company in exchange for certain assets to be
deposited in the Trust. Each Deposited Asset will be identified in a schedule
appearing as an exhibit to the Trust Agreement. Such schedule will include
certain statistical information with respect to each Term Asset and each other
Deposited Asset as of the Cut-off Date, and in the event any Term Asset
represents ten percent or more of the total Underlying Securities with respect
to any Series of Certificates, such schedule will include, to the extent
applicable, information regarding the payment terms thereof, the Retained
Interest, if any, with respect thereto, the maturity or term thereof, the
rating, if any, thereof and certain other information with respect thereto.
39
In addition, the Company will, with respect to each Deposited Asset, deliver or
cause to be delivered to the Trustee (or to the custodian hereinafter referred
to) all documents necessary to transfer ownership of such Deposited Asset to the
Trustee. The Trustee (or such custodian) will review such documents upon receipt
thereof or within such period as is permitted in the Prospectus Supplement, and
the Trustee (or such custodian) will hold such documents in trust for the
benefit of the Certificateholders.
With respect to certain types of Deposited Assets specified in the applicable
Prospectus Supplement only if and to the extent provided therein, if any such
document is found to be missing or defective in any material respect, the
Trustee (or such custodian) shall immediately notify the Administrative Agent,
if any, and the Company, and the Administrative Agent, if any, and otherwise the
Trustee shall immediately notify the relevant person who sold the applicable
Deposited Asset to the Company (a "Deposited Asset Provider"). To the extent
specified in the applicable Prospectus Supplement, if the Deposited Asset
Provider cannot cure such omission or defect within 60 days after receipt of
such notice, the Deposited Asset Provider will be obligated, within 90 days of
receipt of such notice, to repurchase the related Deposited Asset from the Trust
at the Purchase Price (as defined herein) or provide a substitute for such
Deposited Asset. There can be no assurance that a Deposited Asset Provider will
fulfill this repurchase or substitution obligation. Although the Administrative
Agent, if any, or otherwise an Administrator, on behalf of the Trustee is
obligated to use its best efforts to enforce such obligation, neither such
Administrative Agent nor the Company will be obligated to repurchase or
substitute for such Deposited Asset if the Deposited Asset Provider defaults on
its obligation. When applicable, this repurchase or substitution obligation
constitutes the sole remedy available to the Certificateholders or the Trustee
for omission of, or a material defect in, or failure to provide, a constituent
document, and the Trust and the Certificateholders will not have any continuing
direct or indirect liability under the Trust Agreement as sellers of the assets
of the Trust in enforcing such obligation.
Each of the Company and the Administrative Agent, if any, will make certain
representations and warranties regarding its authority to enter into, and its
ability to perform its obligations under, the Trust Agreement. Upon a breach of
any such representation of the Company or any such Administrative Agent, as the
case may be, which materially and adversely affects the interests of the
Certificateholders, the Company or any such Administrative Agent, respectively,
will be obligated to cure the breach in all material respects.
COLLECTION AND OTHER ADMINISTRATIVE PROCEDURES
General. With respect to any Series of Certificates, the Trustee or such other
person specified in the Prospectus Supplement, directly or through
sub-administrative agents, will make reasonable efforts to collect all scheduled
payments under the Deposited Assets and will follow or cause to be followed such
collection procedures, if any, as it would follow with respect to comparable
financial assets that it held for its own account, provided that such procedures
are consistent with the Trust Agreement and any related instrument governing any
Credit Support (collectively, the "Credit Support Instruments") and provided
that, it shall not be required to expend or risk its own funds or otherwise
incur personal financial liability.
40
Sub-Administration. Any Trustee or Administrative Agent may delegate its
obligations in respect of the Deposited Assets to third parties they deem
qualified to perform such obligations (each, a "Sub-Administrative Agent"), but
the Trustee or Administrative Agent will remain obligated with respect to such
obligations under the Trust Agreement. Each Sub-Administrative Agent will be
required to perform the customary functions of an administrator of comparable
financial assets, including, if applicable, collecting payments from obligors
and remitting such collections to the Trustee; maintaining accounting records
relating to the Deposited Assets, attempting to cure defaults and delinquencies;
and enforcing any other remedies with respect thereto all as and to the extent
provided in the applicable Sub-Administration Agreement (as defined herein).
The agreement between any Administrative Agent or Trustee and a
Sub-Administrative Agent (a "Sub-Administration Agreement") will be consistent
with the terms of the Trust Agreement and such assignment to the
Sub-Administrator by itself will not result in a withdrawal or downgrading of
the rating of any Class of Certificates issued pursuant to the Trust Agreement.
With respect to any Sub-Administrative Agreement between an Administrative Agent
and a Sub-Administrative Agent, although each such Sub-Administration Agreement
will be a contract solely between such Administrative Agent and the
Sub-Administrative Agent, the Trust Agreement pursuant to which a Series of
Certificates is issued will provide that, if for any reason such Administrative
Agent for such Series of Certificates is no longer acting in such capacity, the
Trustee or any successor Administrative Agent must recognize the
Sub-Administrative Agent's rights and obligations under such Sub-Administration
Agreement.
The Administrative Agent or Trustee, as applicable, will be solely liable for
all fees owed by it to any Sub-Administrative Agent, irrespective of whether the
compensation of the Administrative Agent or Trustee, as applicable, pursuant to
the Trust Agreement with respect to the particular Series of Certificates is
sufficient to pay such fees. However, a Sub-Administrative Agent may be entitled
to a Retained Interest in certain Deposited Assets to the extent provided in the
related Prospectus Supplement. Each Sub-Administrative Agent will be reimbursed
by the Administrative Agent, if any, or otherwise the Trustee for certain
expenditures which it makes, generally to the same extent the Administrative
Agent or Trustee, as applicable, would be reimbursed under the terms of the
Trust Agreement relating to such Series. See "--Retained Interest;
Administrative Agent Compensation and Payment of Expenses."
The Administrative Agent or Trustee, as applicable, may require any
Sub-Administrative Agent to agree to indemnify the Administrative Agent or
Trustee, as applicable, for any liability or obligation sustained by the
Administrative Agent or Trustee, as applicable, in connection with any act or
failure to act by the Sub-Administrative Agent.
Realization upon Defaulted Deposited Assets. As administrator with respect to
the Deposited Assets, the Trustee (or an Administrator on its behalf), on behalf
of the Certificateholders of a given Series (or any Class or Classes within such
Series), will present claims under each applicable Credit Support Instrument,
and will take such reasonable steps as are necessary to receive payment or to
permit recovery thereunder with respect to defaulted Deposited Assets. As set
forth above, all collections by or on behalf of the Trustee or Administrative
Agent under any Credit Support Instrument are to be deposited in the Certificate
Account for the related Trust, subject to withdrawal as described above.
41
If recovery on a defaulted Deposited Asset under any related Credit Support
Instrument is not available, the Trustee will be obligated to follow or cause to
be followed such normal practices and procedures as it deems necessary or
advisable to realize upon the defaulted Deposited Asset, provided that it shall
not be required to expend or risk its own funds or otherwise incur personal
financial liability. If the proceeds of any liquidation of the defaulted
Deposited Asset are less than the sum of (i) the outstanding principal balance
of the defaulted Deposited Asset, (ii) interest accrued thereon at the
applicable interest rate and (iii) the aggregate amount of expenses incurred by
the Administrative Agent and the Trustee, as applicable, in connection with such
proceedings to the extent reimbursable from the assets of the Trust under the
Trust Agreement, the Trust will realize a loss in the amount of such difference.
Only if and to the extent provided in the applicable Prospectus Supplement, the
Administrative Agent or Trustee, as so provided, will be entitled to withdraw or
cause to be withdrawn from the related Certificate Account out of the net
proceeds recovered on any defaulted Deposited Asset, prior to the distribution
of such proceeds to Certificateholders, amounts representing its normal
administrative compensation on the Deposited Asset, unreimbursed administrative
expenses incurred with respect to the Deposited Asset and any unreimbursed
advances of delinquent payments made with respect to the Deposited Asset.
RETAINED INTEREST; ADMINISTRATIVE AGENT COMPENSATION AND PAYMENT OF EXPENSES
The Prospectus Supplement for a Series of Certificates will specify whether
there will be any Retained Interest in the Deposited Assets, and, if so, the
owner thereof. If so provided, the Retained Interest will be established on an
asset-by-asset basis and will be specified in an exhibit to the applicable
series supplement to the Trust Agreement. A Retained Interest in a Deposited
Asset represents a specified interest therein. Payments in respect of the
Retained Interest will be deducted from payments on the Deposited Assets as
received and, in general, will not be deposited in the applicable Certificate
Account or become a part of the related Trust. Any partial recovery of interest
on a Deposited Asset, after deduction of all applicable administration fees,
will be allocated between the Retained Interest (if any) and interest
distributions to Certificateholders on a pari passu basis.
The applicable Prospectus Supplement will specify the Administrative Agent's, if
any, and the Trustee's compensation, and the source, manner and priority of
payment thereof, with respect to a given Series of Certificates.
If and to the extent specified in the applicable Prospectus Supplement, in
addition to amounts payable to any Sub-Administrative Agent, the Administrative
Agent, if any, and otherwise the Trustee will pay from its compensation certain
expenses incurred in connection with its administration of the Deposited Assets,
including, without limitation, payment of the fees and disbursements of the
Trustee, if applicable, and independent accountants, payment of expenses
incurred in connection with distributions and reports to Certificateholders, and
payment of any other expenses described in the related Prospectus Supplement.
[NO] ADVANCES IN RESPECT OF DELINQUENCIES
The Administrative Agent, if any, specified in the applicable Prospectus
Supplement will have no obligation to make any advances with respect to
collections on the Deposited Assets or in
42
favor of the Certificateholders of the related Series of Certificates. [However,
to the extent provided in the applicable Prospectus Supplement, any such
Administrative Agent will advance on or before each Distribution Date its own
funds or funds held in the Certificate Account for such Series that are not part
of the funds available for distribution for such Distribution Date, in an amount
equal to the aggregate of payments of principal, premium (if any) and interest
(net of related administration fees and any Retained Interest) with respect to
the Deposited Assets that were due during the related Collection Period and were
delinquent on the related Determination Date, subject to (i) any such
Administrative Agent's good faith determination that such advances will be
reimbursable from Related Proceeds (as defined herein) and (ii) such other
conditions as may be specified in the Prospectus Supplement.]
[Advances, if any, are intended to maintain a regular flow of scheduled
interest, premium (if any) and principal payments to holders of the Class or
Classes of Certificates entitled thereto, rather than to guarantee or insure
against losses. Advances of an Administrative Agent's funds, if any, will be
reimbursable only out of related recoveries on the Deposited Assets (and amounts
received under any form of Credit Support) for such Series with respect to which
such advances were made (as to any Deposited Assets, "Related Proceeds");
provided, however, that any such advance will be reimbursable from any amounts
in the Certificate Account for such Series to the extent that such
Administrative Agent shall determine, in its sole judgment, that such advance (a
"Nonrecoverable Advance") is not ultimately recoverable from Related Proceeds.
If advances have been made by such Administrative Agent from excess funds in the
Certificate Account for any Series, such Administrative Agent will replace such
funds in such Certificate Account on any future Distribution Date to the extent
that funds in such Certificate Account on such Distribution Date are less than
payments required to be made to Certificateholders on such date. If so specified
in the related Prospectus Supplement, the obligations, if any, of an
Administrative Agent to make advances may be secured by a cash advance reserve
fund or a surety bond. If applicable, information regarding the characteristics
of, and the identity of any obligor on, any such surety bond, will be set forth
in the related Prospectus Supplement.]
CERTAIN MATTERS REGARDING THE ADMINISTRATIVE AGENT AND THE COMPANY
An Administrative Agent, if any, for each Series of Certificates under the Trust
Agreement will be named in the related Prospectus Supplement. The entity serving
as Administrative Agent for any such Series may be the Trustee, the Company, an
affiliate of either of them, the Deposited Asset Provider or any third party and
may have other normal business relationships with the Trustee, the Company,
their affiliates or the Deposited Asset Provider.
The Trust Agreement will provide that an Administrative Agent may resign from
its obligations and duties under the Trust Agreement with respect to any Series
of Certificates only if such resignation, and the appointment of a successor,
will not result in a withdrawal or downgrading of the rating of any Class of
Certificates of such Series or upon a determination that its duties under the
Trust Agreement with respect to such Series are no longer permissible under
applicable law. No such resignation will become effective until the Trustee or a
successor has assumed the Administrative Agent's obligations and duties under
the Trust Agreement with respect to such Series.
43
The Trust Agreement will further provide that neither such an Administrative
Agent, the Company nor any director, officer, employee, or agent of the
Administrative Agent or the Company will incur any liability to the related
Trust or Certificateholders for any action taken, or for refraining from taking
any action, in good faith pursuant to the Trust Agreement or for errors in
judgment; provided, however, that none of the Administrative Agent, the Company
nor any such person will be protected against any liability that would otherwise
be imposed by reason of willful misfeasance, bad faith or negligence in the
performance of duties thereunder or by reason of reckless disregard of
obligations and duties thereunder. The Trust Agreement may further provide that,
unless otherwise provided in the applicable series supplement thereto, such an
Administrative Agent, the Company and any director, officer, employee or agent
of the Administrative Agent or the Company will be entitled to the
indemnification by the related Trust and will be held harmless against any loss,
liability or expense incurred in connection with any legal action relating to
the Trust Agreement or the Certificates, other than any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence in
the performance of duties thereunder or by reason of reckless disregard of
obligations and duties thereunder. In addition, the Trust Agreement will provide
that neither such an Administrative Agent nor the Company will be under any
obligation to appear in, prosecute or defend any legal action which is not
incidental to their respective responsibilities under the Trust Agreement or
which in its opinion may involve it in any expense or liability. Each of such
Administrative Agent or the Company any, however, in its discretion undertake
any such action which it may deem necessary or desirable with respect to the
Trust Agreement and the rights and duties of the parties thereto and the
interests of the Certificateholders thereunder. The applicable Prospectus
Supplement will describe how such legal expenses and costs of such action and
any liability resulting therefrom will be allocated.
Any person into which an Administrative Agent may be merged or consolidated, or
any person resulting from any merger or consolidation to which an Administrative
Agent is a part, or any person succeeding to the business of an Administrative
Agent, will be the successor of the Administrative Agent under the Trust
Agreement with respect to the Certificates of any given Series.
ADMINISTRATIVE AGENT TERMINATION EVENTS; RIGHTS UPON ADMINISTRATIVE AGENT
TERMINATION EVENT
"Administrative Agent Termination Events" under the Trust Agreement with respect
to any given Series of Certificates will consist of the following: (i) any
failure by an Administrative Agent to remit to the Trustee any funds in respect
of collections on the Deposited Assets and Credit Support, if any, as required
under the Trust Agreement, that continues unremedied for five days after the
giving of written notice of such failure to the Administrative Agent by the
Trustee or the Company, or to the Administrative Agent, the Company and the
Trustee by the holders of such Certificates evidencing not less than 25% of the
Voting Rights (as defined herein); (ii) any failure by an Administrative Agent
duly to observe or perform in any material respect any of its other covenants or
obligations under the Trust Agreement with respect to such Series which
continues unremedied for thirty days after the giving of written notice of such
failure to the Administrative Agent by the Trustee or the Company, or to the
Administrative Agent, the Company and the Trustee by the holders of such
Certificates evidencing not less than 25% of the Voting Rights; and (iii)
certain events of insolvency, readjustment of debt, marshalling of assets
44
and liabilities or similar proceedings and certain actions by or on behalf of an
Administrative Agent indicating its insolvency or inability to pay its
obligations. Any additional Administrative Agent Termination Events with respect
to any given Series of Certificates will be set forth in the applicable
Prospectus Supplement. In addition, the applicable Prospectus Supplement and the
related series supplement to the Trust Agreement will specify as to each matter
requiring the vote of holders of Certificates of a Class or group of Classes
within a given Series, the circumstances and manner in which the Required
Percentage (as defined herein) applicable to each such matter is calculated.
"Required Percentage" means, with respect to any matter requiring a vote of
holders of Certificates of a given Series, the specified percentage (computed on
the basis of outstanding Certificate Principal Balance or Notional Amount, as
applicable) of Certificates of a designated Class or group of Classes within
such Series (either voting as separate classes or as a single class) applicable
to such matter, all as specified in the applicable Prospectus Supplement and the
related series supplement to the Trust Agreement. "Voting Rights" evidenced by
any Certificate will be the portion of the voting rights of all the Certificates
in the related Series allocated in the manner described in the Prospectus
Supplement.
So long as an Administrative Agent Termination Event under the Trust Agreement
with respect to a given Series of Certificates remains unremedied, the Company
or the Trustee may, and at the direction of holders of such Certificates
evidencing not less than the "Required Percentage--Administrative Agent
Termination" of the Voting Rights, the Trustee will, terminate all the rights
and obligations of such Administrative Agent under the Trust Agreement relating
to the applicable Trust and in and to the related Deposited Assets (other than
any Retained Interest of such Administrative Agent), whereupon the Trustee will
succeed to all the responsibilities, duties and liabilities of such
Administrative Agent under the Trust Agreement with respect to such Series
(except that if the Trustee is prohibited by law from obligating itself to make
advances regarding delinquent Deposited Assets, then the Trustee will not be so
obligated) and will be entitled to similar compensation arrangements. In the
event that the Trustee is unwilling or unable so to act, it may, or, at the
written request of the holders of such Certificates evidencing not less than the
"Required Percentage--Termination" of the Voting Rights, it will appoint, or
petition a court of competent jurisdiction for the appointment of, an
administration agent with a net worth at the time of such appointment of at
least $15,000,000 to act as successor to such Administrative Agent under the
Trust Agreement with respect to such Series. Pending such appointment, the
Trustee is obligated to act in such capacity (except that if the Trustee is
prohibited by law from obligating itself to make advances regarding delinquent
Deposited Assets, then the Trustee will not be so obligated). The Trustee and
any such successor may agree upon the compensation to be paid to such successor,
which in no event may be greater than the compensation payable to such
Administrative Agent under the Trust Agreement with respect to such Series.
REMEDIES OF CERTIFICATEHOLDERS
Any Certificateholder may institute any proceeding with respect to the
applicable Trust Agreement subject to the following conditions: (i) such holder
previously has given to the Trustee written notice of breach; (ii) the holders
of Certificates evidencing not less than the "Required Percentage--Remedies" of
the Voting Rights have made written request upon the Trustee to institute such
proceeding in its own name as Trustee thereunder and have offered to the Trustee
reasonable indemnity; and (iii) the Trustee for fifteen days has neglected or
refused
45
to institute any such proceeding. The Trustee, however, is under no
obligation to exercise any of the trusts or powers vested in it by the Trust
Agreement or to make any investigation of matters arising thereunder or to
institute, conduct or defend any litigation thereunder or in relation thereto at
the request, order or direction of any of the holders of Certificates covered by
the Trust Agreement, unless such Certificateholders have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby.
MODIFICATION AND WAIVER
The Trust Agreement for each Series of Certificates may be amended by the
Company and the Trustee with respect to such Series, without notice to or
consent of the Certificateholders, for certain purposes including (i) to cure
any ambiguity, (ii) to correct or supplement any provision therein which may be
inconsistent with any other provision therein or in the Prospectus Supplement,
(iii) to add or supplement any Credit Support for the benefit of any
Certificateholders (provided that if any such addition affects any series or
class of Certificateholders differently than any other series or class of
Certificateholders, then such addition will not, as evidenced by an opinion of
counsel, have a material adverse effect on the interests of any affected series
or class of Certificateholders), (iv) to add to the covenants, restrictions or
obligations of the Company, the Administrative Agent, if any, or the Trustee for
the benefit of the Certificateholders, (v) to add, change or eliminate any other
provisions with respect to matters or questions arising under such Trust
Agreement, so long as (x) any such addition, change or elimination will not, as
evidenced by an opinion of counsel, affect the tax status of the Trust or result
in a sale or exchange of any Certificate for tax purposes and (y) the Trustee
has received written confirmation from each Rating Agency rating such
Certificates that such amendment will not cause such Rating Agency to reduce or
withdraw the then current rating thereof, or (vi) to comply with any
requirements imposed by the Code. Without limiting the generality of the
foregoing, the Trust Agreement may also be modified or amended from time to time
by the Company, and the Trustee, with the consent of the holders of Certificates
evidencing not less than the "Required Percentage--Amendment" of the Voting
Rights of those Certificates that are materially adversely affected by such
modification or amendment for the purpose of adding any provision to or changing
in any manner or eliminating any provision of the Trust Agreement or of
modifying in any manner the rights of such Certificateholders; provided,
however, that in the event such modification or amendment would materially
adversely affect the rating of any Series or Class by each Rating Agency, the
"Required Percentage--Amendment" specified in the related series supplement to
the Trust Agreement shall include an additional specified percentage of the
Certificates of such Series or Class.
No such modification or amendment may, however, (i) reduce in any manner the
amount of or alter the timing of, distributions or payments which are required
to be made on any Certificate without the consent of the holder of such
Certificate or (ii) reduce the aforesaid Required Percentage of Voting Rights
required for the consent to any such amendment without the consent of the
holders of all Certificates covered by the Trust Agreement then outstanding.
Holders of Certificates evidencing not less than the "Required
Percentage--Waiver" of the Voting Rights of a given Series may, on behalf of all
Certificateholders of that Series, (i) waive, insofar as that Series is
concerned, compliance by the Company, the Trustee or the Administrative Agent,
if any, with certain restrictive provisions, if any, of the Trust Agreement
46
before the time for such compliance and (ii) waive any past default under the
Trust Agreement with respect to Certificates of that Series, except a default in
the failure to distribute amounts received as principal of (and premium, if any)
or any interest on any such Certificate and except a default in respect of a
covenant or provision the modification or amendment of which would require the
consent of the holder of each outstanding Certificate affected thereby.
REPORTS TO CERTIFICATEHOLDERS; NOTICES
Reports to Certificateholders. With each distribution to Certificateholders of
any Class of Certificates of a given Series, the Administrative Agent or the
Trustee, if provided in the related Prospectus Supplement, will forward or cause
to be forwarded to each such Certificateholder, to the Company and to such other
parties as may be specified in the Trust Agreement, a statement setting forth:
(i) the amount of such distribution to Certificateholders of
such Class allocable to principal of or interest or premium, if any, on
the Certificates of such Class; and the amount of aggregate unpaid
interest as of such Distribution Date;
(ii) in the case of Certificates with a variable Pass-Through
Rate, the Pass-Through Rate applicable to such Distribution Date, as
calculated in accordance with the method specified herein and in the
related Prospectus Supplement;
(iii) the amount of compensation received by the
Administrative Agent, if any, and the Trustee for the period relating
to such Distribution Date, and such other customary information as the
Administrative Agent, if any, or otherwise the Trustee deems necessary
or desirable to enable Certificateholders to prepare their tax returns;
(iv) if the Prospectus Supplement provides for advances, the
aggregate amount of advances included in such distribution, and the
aggregate amount of unreimbursed advances at the close of business on
such Distribution Date;
(v) the aggregate stated principal amount or, if applicable,
notional principal amount of the Deposited Assets and the current
interest rate thereon at the close of business on such Distribution
Date;
(vi) the aggregate Certificate Principal Balance or aggregate
Notional Amount, if applicable, of each Class of Certificates
(including any Class of Certificates not offered hereby) at the close
of business on such Distribution Date, separately identifying any
reduction in such aggregate Certificate Principal Balance or aggregate
Notional Amount due to the allocation of any Realized Losses or
otherwise;
(vii) as to any Series (or Class within such Series) for which
Credit Support has been obtained, the amount of coverage of each
element of Credit Support included therein as of the close of business
on such Distribution Date.
In the case of information furnished pursuant to subclauses (i) and (iii) above,
the amounts shall be expressed as a U.S. dollar amount (or equivalent thereof in
any other Specified Currency) per minimum denomination of Certificates or for
such other specified portion thereof. Within a
47
reasonable period of time after the end of each calendar year, the
Administrative Agent, if any, or the Trustee shall furnish to each person who at
any time during the calendar year was a Certificateholder a statement containing
the information set forth in subclauses (i) and (iii) above, aggregated for such
calendar year or the applicable portion thereof during which such person was a
Certificateholder. Such obligation of the Administrative Agent or the Trustee,
as applicable, shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Administrative
Agent or the Trustee, as applicable, pursuant to any requirements of the Code as
are from time to time in effect.
Notices. 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. Any notice required to be given to a holder of a Bearer
Certificate will be published in a newspaper of general circulation in the city
or cities specified in the Prospectus Supplement relating to such Bearer
Certificate.
EVIDENCE AS TO COMPLIANCE
The Trust Agreement will provide that commencing on a certain date and on or
before a specified date in each following year, a firm of independent public
accountants will furnish an annual statement to the Trustee to the effect that
such firm has examined specified documents and records relating to the
administration of the Deposited Assets and other Trust property during the
related 12-month period (or, in the case of the first such report, the period
ending on or before the date specified in the Prospectus Supplement, which date
shall not be more than one year after the related Original Issue Date), and
that, on the basis of specified agreed procedures considered appropriate under
the circumstances, they are of the opinion that such administration was
conducted in compliance with the terms of the Trust Agreement, except for any
exceptions as they believe to be immaterial and any other exceptions and
qualifications as are identified in the report.
If so specified in the applicable Prospectus Supplement, the Trust Agreement
will also provide for delivery to the Company, the Administrative Agent, if any,
and the Trustee on behalf of the Certificateholders, on or before a specified
date in each year, of an annual statement signed by two officers of the Trustee
to the effect that the Trustee has fulfilled its obligations under the Trust
Agreement throughout the preceding year with respect to any Series of
Certificates.
Copies of the annual accountants' statement and the statement of officers of the
Trustee, if any, may be obtained by Certificateholders without charge upon
written request to either the Administrative Agent or the Trustee, as
applicable, at the address set forth in the related 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 (in the case of Registered Certificates) or at the principal
London office of the applicable Trustee (in the case of Bearer Certificates), or
such other location as may be specified in the applicable Prospectus Supplement,
upon payment by the holder of such expenses as may be incurred by the applicable
48
Trustee in connection therewith and the furnishing of such evidence and
indemnity as such Trustee may require. Mutilated Certificates must be
surrendered before new Certificates will be issued.
TERMINATION
The obligations created by the Trust Agreement for each Series of Certificates
will terminate upon the payment to Certificateholders of that Series of all
amounts held in the related Certificate Account or by an Administrative Agent,
if any, and required to be paid to them pursuant to the Trust Agreement
following the earlier of (i) the final payment or other liquidation of the last
Deposited Asset subject thereto or the disposition of all property acquired upon
foreclosure or liquidation of any such Deposited Asset and (ii) the purchase of
all the assets of the Trust by the party entitled to effect such termination,
under the circumstances and in the manner set forth in the related Prospectus
Supplement. In no event, however, will any trust created by the Trust Agreement
continue beyond the respective date specified in the related Prospectus
Supplement. Written notice of termination of the obligations with respect to the
related Series of Certificates under the Trust Agreement will be provided as set
forth above under "--Reports to Certificateholders; Notices--Notices," and the
final distribution will be made only upon surrender and cancellation of the
Certificates at an office or agency appointed by the Trustee which will be
specified in the notice of termination.
CALL [RIGHTS] [WARRANTS]
If specified in the applicable Prospectus Supplement, the Trust may issue call
[rights] [warrants] which entitle the holder thereof to [call the Certificates
for redemption] [purchase the Deposited Assets] [on or after a date specified in
the Prospectus Supplement] at a price specified and calculated in the manner set
forth in the Prospectus Supplement. [The Prospectus Supplement shall also
describe other events which may [allow][require] the holder of the call
[rights][warrants] to [call the Certificates for redemption][purchase the
Underlying Securities].
Any purchase of Deposited Assets and property acquired in respect of Deposited
Assets evidenced by a Series of Certificates shall be made at a price
approximately equal to the aggregate fair market value of all the assets in the
Trust (as determined by the Trustee, the Administrative Agent, if any, and, if
different than both such persons, the person entitled to effect such
termination), in each case taking into account accrued interest at the
applicable interest rate to the first day of the month following such purchase
or, to the extent specified in the applicable Prospectus Supplement, a specified
price as determined therein, which price will not be less than the outstanding
principal balance of the Certificates plus accrued interest, if any, thereon
(such price, a "Purchase Price"). The exercise of a call [right] [warrant] will
effect early retirement of the Certificates of that Series, but the right of the
person entitled to effect such termination is subject to the aggregate principal
balance of the outstanding Deposited Assets for such Series at the time of
purchase being not more than 10% of the aggregate principal balance of the
Deposited Assets at the Cut-off Date for that Series, or such smaller percentage
as shall be specified in the related Prospectus Supplement. The Trust and the
Certificateholders shall have no continuing direct or indirect liability under
the Trust Agreement as sellers of the assets of the Trust in effecting such
termination.
49
DUTIES OF THE TRUSTEE
The Trustee makes no representations as to the validity or sufficiency of the
Trust Agreement, the Certificates of any Series or any Deposited Asset or
related document and is not accountable for the use or application by or on
behalf of any Administrative Agent of any funds paid to such Administrative
Agent or its designee in respect of such Certificates or the Deposited Assets,
or deposited into or withdrawn from the related Certificate Account or any other
account by or on behalf of such Administrative Agent. The Trustee is required to
perform only those duties specifically required under the Trust Agreement with
respect to such Series. However, upon receipt of the various certificates,
reports or other instruments required to be furnished to it, the Trustee is
required to examine such documents and to determine whether they conform to the
applicable requirements of the Trust Agreement.
On the closing date for each Series of Certificates, the Depositor will provide
the Trustee with certain information relating to the Underlying Issuer and the
Underlying Securities. Based on this information, the Trustee will calculate the
amount of interest to be paid with respect to the Certificates on each
distribution date. In addition, the Trustee will perform distribution
calculations, remit distributions on the distribution dates to
Certificateholders and prepare semi-annual statements to Certificateholders
detailing the payments received and the activity on the Underlying Securities
during the relevant collection period. [The Trustee shall make a distribution
date statement available to the Certificateholders on each distribution date via
the Trustee's internet website at [_______]. Certificateholders with questions
may direct them to the Trustee at [________]. In performing these obligations,
the Trustee will be able to conclusively rely on the information provided to it
by the Depositor at closing, and the Trustee will not be required to recompute,
recalculate or verify the information provided to it by the Company.
In addition to having express duties under the trust agreement, the Trustee, as
a fiduciary, also has certain duties unique to fiduciaries under applicable law.
In general, the Trustee will be subject to certain federal laws and, because the
trust agreement is governed by New York law, certain New York state laws. [As a
national bank acting in a fiduciary capacity, the Trustee will, in the
administration of its duties under the trust agreement, be subject to certain
regulations promulgated by the Office of the Comptroller of the Currency,
specifically those set forth in Chapter 12, Part 9 of the Code of Federal
Regulations.] [Or set forth other regulatory requirements.] New York common law
has required fiduciaries of common law trusts formed in New York to perform
their duties in accordance with the "prudent person" standard, which requires
the Trustee to exercise such diligence and care in the administration of the
Trust as a person of ordinary prudence would employ in managing his own
property.
[Describe any other duties and responsibilities of the Trustee set forth in the
Trust Agreement and under applicable law as required by Item 1109(c) of
Regulation AB]
THE TRUSTEE
The Trustee for any given Series of Certificates under the related Trust
Agreement will be named in the related Prospectus Supplement. The commercial
bank, national banking association or trust company serving as Trustee, will be
unaffiliated with, but may have normal banking relationships with, the Company,
any Administrative Agent and their respective affiliates. The
50
related Prospectus Supplement shall describe any business relationship,
agreement, arrangement, transaction or understanding that is entered into
outside the ordinary course of business or is on terms other than would be
obtained in an arm's length transaction with an unrelated third party, apart
from the transactions contemplated by the related Trust Agreement, between the
Depositor and the Trustee, or any affiliates of such parties, that exist on the
closing date for the related Series of Certificates or that existed during the
immediately preceding two years and that is material to an investor's
understanding of such Series of Certificates.
REMOVAL AND REPLACEMENT OF TRUSTEE
The Trustee for any given Series of Certificates, may at any time resign and be
discharged from such Series by giving written notice thereof to the Depositor,
the Administrative Agent, if any, the Rating Agency and to all
Certificateholders of such Series. Upon receiving such notice of resignation,
the Depositor shall promptly appoint a successor Trustee for such Series. If a
successor Trustee is not appointed by the Depositor or does not accepted
appointment within 30 days after the resigning Trustee gave its notice of
resignation, the resigning Trustee may petition a court of competent
jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible to act as such and shall
fail to resign after written request by the Depositor, or if at any time the
Trustee shall become incapable of acting, or certain bankruptcy related events
shall occur with respect to the Trustee, then the Depositor may remove the
Trustee and appoint a successor Trustee. Notice of such appointment shall be
delivered to the Certificateholders and the Administrative Agent, if any, by the
Depositor.
The Holders of Certificates of any Series representing the Required
Percentage--Removal of Trustee of the aggregate Voting Rights may at any time
remove the Trustee and appoint a successor Trustee by written instrument or
instruments, in triplicate, signed by such Holders or their attorneys-in-fact
and duly authorized, one complete set of which instruments shall be delivered to
the Depositor, one complete set to the Trustee so removed and one complete set
to the successor trustee so appointed. A copy of such instrument shall be
delivered to the Certificateholders and the Administrative Agent, if any, by the
Depositor.
Any resignation or removal of the Trustee and appointment of a successor trustee
shall not become effective until acceptance of appointment by the successor
trustee.
Expenses associated with changing from a Trustee to successor Trustee will be
paid [by the Trust from the interest [and principal] payments received by the
Trust with respect to the Underlying Securities] [by the Depositor pursuant to a
separate agreement with the Depositor] [or specify other source of payment].
BANKRUPTCY REMOTENESS
The applicable Prospectus Supplement shall describe any provisions in the Trust
Agreement for the related Series of Certificates which address whether
declaration of bankruptcy, receivership or similar proceeding with respect to
the Trust can occur.
51
[LIMITATIONS ON ISSUANCE OF BEARER CERTIFICATES]
[In compliance with United States federal income tax laws and regulations, the
Company and any underwriter, agent or dealer participating in the offering of
any Bearer Certificate will agree that, in connection with the original issuance
of such Bearer Certificate and during the period ending 40 days after the issue
date of such Bearer Certificate, they will not offer, sell or deliver such
Bearer Certificate, directly or indirectly, to a U.S. Person or to any person
within the United States, except to the extent permitted under U.S. Treasury
regulations.
Bearer Certificates will bear a legend to the following effect: "Any United
States Person who holds this obligation will be subject to limitations under the
United States income tax laws, including the limitations provided in Sections
1650(j) and 1287(a) of the Internal Revenue Code." The sections referred to in
the legend provide that, with certain exceptions, a United States taxpayer who
holds Bearer Certificates will not be allowed to deduct any loss with respect
to, and will not be eligible for capital gain treatment with respect to any gain
realized on a sale, exchange, redemption or other disposition of, such Bearer
Certificates.
As used herein, "United States" means the United States of America and its
possessions, and "U.S. Person" means a citizen or resident of the United States,
a corporation, partnership or other entity created or organized in or under the
laws of the United States, or an estate or trust the income of which is subject
to United States Federal income taxation regardless of its source.
Pending the availability of a definitive Global Certificate or individual Bearer
Certificates, as the case may be, Certificates that are issuable as Bearer
Certificates may initially be represented by a single temporary Global
Certificate, without interest coupons, to be deposited with a common depositary
in London for Morgan Guaranty Trust Company of New York, Brussels Office, as
operator of the Euroclear System ("Euroclear"), and Clearstream Banking
("Clearstream") for credit to the accounts designated by or on behalf of the
purchases thereof. Following the availability of a definitive Global Certificate
in bearer form, without coupons attached, or individual Bearer Certificates and
subject to any further limitations described in the applicable Prospectus
Supplement, the temporary Global Certificate will be exchangeable for interests
in such definitive Global Certificate or for such individual Bearer
Certificates, respectively, only upon receipt of a Certificate of Non-U.S.
Beneficial Ownership. A "Certificate of Non-U.S. Beneficial Ownership" is a
certificate to the effect that a beneficial interest in a temporary Global
Certificate is owned by a person that is not a U.S. Person or is owned by or
through a financial institution in compliance with applicable U.S. Treasury
regulations. No Bearer Certificate will be delivered in or to the United States.
If so specified in the applicable Prospectus Supplement, interest on a temporary
Global Certificate will be distributed to each of Euroclear and Clearstream with
respect to that portion of such temporary Global Certificate held for its
account, but only upon receipt as of the relevant Distribution Date of a
Certificate of Non-U.S. Beneficial Ownership.]
52
[CURRENCY RISKS]
[EXCHANGE RATES AND EXCHANGE CONTROLS]
[An investment in a Certificate having a Specified Currency other than U.S.
dollars entails significant risks that are not associated with a similar
investment in a security denominated in U.S. dollars. Such risks include,
without limitation, the possibility of significant changes in rates of exchange
between the U.S. dollar and such Specified Currency and the possibility of the
imposition or modification of foreign exchange controls with respect to such
Specified Currency. Such risks generally depend on factors over which the
Company has no control, such as economic and political events and the supply of
and demand for the relevant currencies. In recent years, rates of exchange
between the U.S. dollar and certain currencies have been highly volatile, and
such volatility may be expected in the future. Fluctuations in any particular
exchange rate that have occurred in the past are not necessarily indicative,
however, of fluctuations in the rate that may occur during the term of any
Certificate. Depreciation of the Specified Currency for a Certificate against
the U.S. dollar would result in a decrease in the effective yield of such
Certificate below its Pass-Through Rate and, in certain circumstances, could
result in a loss to the investor on a U.S. dollar basis.
Governments have from time to time imposed, and may in the future impose,
exchange controls that could affect exchange rates as well as the availability
of a Specified Currency for making distributions in respect of Certificates
denominated in such currency. At present, the Company has identified the
following currencies in which distributions of principal, premium and interest
on Certificates may be made: Euros, Australian dollars, Canadian dollars, Danish
kroner, Japanese yen, New Zealand dollars, and U.S. dollars. However,
Certificates distributable with Specified Currencies other than those listed may
be issued at any time. There can be no assurance that exchange controls will not
restrict or prohibit distributions of principal, premium or interest in any
Specified Currency. Even if there are no actual exchange controls, it is
possible that, on a Distribution Date with respect to any particular
Certificate, the currency in which amounts then due to be distributed in respect
of such Certificate are distributable would not be available. In that event,
such payments will be made in the manner set forth above under "Description of
Certificates--General".
IT IS STRONGLY RECOMMENDED THAT PROSPECTIVE PURCHASERS CONSULT THEIR OWN
FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN
CERTIFICATES DENOMINATED IN A CURRENCY OTHER THAN U.S. DOLLARS. SUCH
CERTIFICATES ARE NOT AN APPROPRIATE INVESTMENT FOR PERSONS WHO ARE
UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS.
The information set forth in this Prospectus is directed to prospective
purchasers of Certificates who are United States residents. The applicable
Prospectus Supplement for certain issuances of Certificates may set forth
certain information applicable to prospective purchasers who are residents of
countries other than the United States with respect to matters that may affect
the purchase or holding of, or receipt of distributions of principal, premium or
interest in respect of, such Certificates.
53
Any Prospectus Supplement relating to Certificates having a Specified Currency
other than U.S. dollars will contain information concerning historical exchange
rates for such currency against the U.S. dollar, a description of such currency,
any exchange controls affecting such currency and any other required information
concerning such currency.
PAYMENT CURRENCY
Except as set forth below, if distributions in respect of a Certificate are
required to be made in a Specified Currency other than U.S. dollars and such
currency is unavailable due to the imposition of exchange controls or other
circumstances beyond the Company's control or is no longer used by the
government of the country issuing such currency or for the settlement of
transactions by public institutions of or within the international banking
community, then all distributions in respect of such Certificate shall be made
in U.S. dollars until such currency is again available or so used. The amounts
so payable on any date in such currency shall be converted into U.S. dollars on
the basis of the most recently available Market Exchange Rate for such currency.
If the official unit of any component currency is altered by way of combination
or subdivision, the number of units of that currency as a Component shall be
divided or multiplied in the same proportion. If two or more component
currencies are consolidated into a single currency, the amounts of those
currencies as Components shall be replaced by an amount in such single currency
equal to the sum of the amounts of the consolidated component currencies
expressed in such single currency. If any component currency is divided into two
or more currencies, the amount of that currency as a Component shall be replaced
by amounts of such two or more currencies, each of which shall be equal to the
amount of the former component currency divided by the number of currencies into
which that currency was divided.
All determinations referred to above made by the applicable Trustee shall be at
its sole discretion and shall, in the absence of manifest error, be conclusive
for all purposes and binding on the related Certificateholders of such Series.
FOREIGN CURRENCY JUDGMENTS
The Certificates will be governed by and construed in accordance with the law of
the State of New York. Courts in the United States customarily have not rendered
judgments for money damages denominated in any currency other than the U.S.
dollar. A 1987 amendment to the Judiciary Law of the State of New York provides,
however, that an action based upon an obligation denominated in a currency other
than U.S. dollars will be rendered in the foreign currency of the underlying
obligation and converted into U.S. dollars at the rate of exchange prevailing on
the date of the entry of the judgment or decree.]
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
SCOPE OF OPINION
In the opinion of Orrick, Herrington & Sutcliffe LLP, special tax counsel
("Special Tax Counsel") (i) the Trust will be a grantor trust or partnership for
federal income tax purposes and not an association taxable as a corporation (or
publicly traded partnership treated as an
54
association) and (ii) each certificateholder will be treated, for federal income
tax purposes, as a holder of an equity interest in the Trust. Special Tax
Counsel has not delivered (and does not intend to deliver) any other opinions
regarding the Trust or the Certificates. If in connection with the issuance of
any Certificates, special tax counsel renders an opinion with regard to the
characterization of the Trust that is materially different from the opinion
contained in clause (i) above, such opinion will be filed on with the Commission
in a Current Report on Form 8-K.
Prospective investors should review the tax section set forth in the related
prospectus supplement because information therein supersedes the information set
forth in this prospectus. Prospective investors should be aware that no rulings
have been sought from the Internal Revenue Service (the "IRS"), and that legal
opinions are not binding on the IRS or the courts. Accordingly, there can be no
assurance that the IRS or the courts will agree with Special Tax Counsel's
opinions. If, contrary to Special Tax Counsel's opinion, the Trust is
characterized or treated as a corporation for United States federal income tax
purposes, among other consequences, the Trust would be subject to United States
federal income tax (and similar state income or franchise taxes) on its income
and distributions to Certificateholders would be impaired. In light of Special
Tax Counsel's opinion, however, the balance of this discussion assumes that the
Trust will not be characterized or treated as a corporation.
GENERAL
The following summary of the material United States income tax consequences of
the ownership of the certificates is based on the Internal Revenue Code of 1986
(the "Code") as well as Treasury regulations and administrative and judicial
rulings and practice. Legislative, judicial and administrative changes may
occur, possibly with retroactive effect, that could alter or modify the
continued validity of the statements and conclusions set forth in this
Prospectus. This summary is intended as an explanatory discussion of the
consequences of holding the certificates generally and does not purport to
furnish information in the level of detail or with the investor's specific tax
circumstances that would be provided by an investor's own tax advisor.
Accordingly, it is strongly recommended that each prospective investor consult
with its own tax advisor regarding the application of United States federal
income tax laws, as well as any state, local, foreign or other tax laws, to its
particular situation.
Except with respect to certain withholding tax matters discussed below under
"Withholding Taxes with Respect to Non-U.S. Persons," the discussion is limited
to consequences to U.S. Persons. For purposes of this discussion, a U.S. Person
is:
o a citizen or resident of the United States,
o a corporation or partnership organized in or under the laws of
the United States, any state of the United States or the
District of Columbia, or
o an estate or trust that is a United States person within the
meaning of Section 7701(a)(30) of the Code.
For the purposes of this discussion, the Company and Special Tax Counsel have
assumed, without inquiry, that the Underlying Securities will be characterized
as indebtedness for United
55
States federal income tax purposes. The related prospectus supplement may
contain additional information about the United States federal income tax
characterization of the Underlying Securities.
TAX STATUS OF THE TRUST
The Trustee intends for tax reporting purposes to treat the Trust as a grantor
trust. Prospective investors should be aware, however, that certain of the terms
of the Certificates (for example, the allocation of the proceeds of a
disposition of the Underlying Securities) may be viewed by the IRS as
inconsistent with the grantor trust rules and, accordingly, the Trust may be
viewed by the IRS as a partnership for federal income tax purposes. Nonetheless,
because treating the Trust as a grantor trust is the more appropriate approach
for tax reporting purposes, the Trustee currently intends to treat the trust as
a grantor trust and, except as specifically indicated otherwise under "Possible
Recharacterization of the Trust as a Partnership" below, the balance of this
discussion assumes that the Trust will be so classified. (The applicable trust
agreement will prohibit the Trust from electing to be taxed as a corporation.)
Each Certificateholder will be treated, for United States federal income tax
purposes, as a holder of an equity interest in the Trust and, accordingly, (i)
as if it had purchased its pro rata interest of the Trust's underlying assets
and (ii) as if it were the obligor on its pro rata portion of the Trust's
obligations. Thus, for example, if the Certificates or the Underlying Securities
are subject to call warrants, each Certificateholder will be treated as if it
had sold call warrants with respect to the Underlying Securities in an amount
representing its pro rata interest in the Trust. Further, if the income of the
Trust is used (directly or indirectly) to pay expenses of the Trust, the holders
will be treated as if each had first earned its pro rata share of that income
and then paid its share of the expense. Prospective investors should be aware
that expenses of the Trust may be subject to limitations on deductibility, which
may depend on each particular investor's circumstances, but would include, in
the case of an individual (or entity treated as an individual) Section 67 of the
Code, which allows miscellaneous itemized deductions only to the extent that in
the aggregate they exceed 2 percent of adjusted gross income.
The Trust will indicate in the related prospectus supplement whether the
Underlying Securities and any call warrants will be identified as part of an
integrated transaction within the meaning of Treasury Regulation ss. 1.1275-6.
Among other consequences of such identification is the treatment generally of
each Certificate as a synthetic debt instrument issued on the date it is
acquired by the holder of the Certificate. Similar treatment will also generally
apply to Certificates representing "stripped coupons" and/or "stripped bonds,"
which generally will be the case when Certificates are issued in multiple
classes and the different classes represent the ownership of differing
percentage ownership interests of the right to interest and principal on the
Underlying Securities. It is also possible that each Certificate will be treated
as an actual debt instrument issued on the Closing Date. In that case, the
Certificates would be taxed like conventional debt instruments and the
discussion under "Income of Certificateholders" would not apply. If a series of
Certificates has more than one class and some but not all classes are treated as
actual debt instruments issued on the Closing Date, income on the classes not so
treated may be treated as unrelated business taxable income (and thus subject to
tax) in the hands of pension plans, individual retirement accounts and other
tax-exempt investors.
56
INCOME OF CERTIFICATEHOLDERS
Original Issue Discount. Each Certificateholder will be subject to the original
issue discount ("OID") rules of the Code and Treasury Regulations with respect
to such Certificates. Under those rules, the Certificateholder (whether on the
cash or accrual method of accounting) will be required to include in income the
OID on the Certificates as it accrues on a daily basis, under a constant yield
method, regardless of when cash payments are received. The amount of OID on a
Certificate generally will be equal to the excess of all amounts payable on the
Certificate over the amount paid to acquire the Certificate and the constant
yield used in accruing OID generally will be the yield to maturity of a
Certificate as determined by each holder based on that holder's purchase price
for the Certificate. It is unclear whether the holder of a Certificate should,
in calculating OID, assume that the Underlying Securities will, or will not, be
called under any Call Warrant. Further, it is not clear how actual and expected
future prepayments or losses on the Underlying Securities are to be taken into
account.
The Trustee intends for information reporting purposes to account for OID, if
any, reportable by Certificateholders by reference to the price paid for a
Certificate by an initial purchaser at an assumed issue price, although the
amount of OID will differ for other purchasers. Such purchasers should consult
their tax advisers regarding the proper calculation of OID.
The amount of OID that is reported in income in any particular year will not
necessarily bear any relationship to the amount of distributions, if any, paid
to a holder in that year.
Purchase and Sale of a Certificate. A Certificateholder's adjusted tax basis in
a Certificate generally will equal the cost of the Certificates, increased by
any amounts includible in income as OID, and reduced by any payments made on the
Certificates. If a Certificate is sold or redeemed, capital gain or loss will be
recognized equal to the difference between the proceeds of the sale or
redemption and the Certificateholder's adjusted tax basis in the Certificates.
POSSIBLE RECHARACTERIZATION OF THE TRUST AS A PARTNERSHIP
As indicated above, it is possible that the IRS will seek to recharacterize the
Trust as a partnership. If the IRS were to successfully recharacterize the Trust
as a partnership, the Trust would not be subject to federal income tax. Under
Treasury Regulation ss. 1.761-2, certain partnerships may "elect out" of
subchapter K of the Code (partnership tax accounting). Although subject to
uncertainty, if the Trust is characterized as a partnership, it may be eligible
to make this election. Assuming that it is so eligible, each Certificateholder
will be required to report its respective share of the items of income,
deductions, and credits of the organization on their respective returns (making
such elections as to individual items as may be appropriate) in a manner
consistent with the exclusion of the Trust from partnership tax accounting. Such
reporting should be substantially similar to the income tax reporting that would
be required under the grantor trust rules. In mutual consideration for each
holder's purchase of a Certificate, each such holder is deemed to consent to the
Trust's making of a protective election out of subchapter K of the Code and is
deemed to agree not to delegate (for a period of more than one year) authority
to purchase, sell to exchange its Certificate to any person.
If the election to be excluded from the partnership tax accounting provisions of
the Code is not effective, among other consequences, (i) the Trust would be
required to account for its income
57
and deductions at the Trust level (not necessarily taking into account any
particular holder's circumstances, including any difference between the holder's
basis in its Certificates and the Trust's basis in its assets) and to utilize a
taxable year for reporting purposes and (ii) each holder would be required to
separately take into account such holder's distributive share of income and
deductions of the Trust. A holder would take into account its distributive share
of Trust income and deductions for each taxable year of the Trust in the
holder's taxable year which ends with or within the Trust's taxable year. A
holder's share of the income of the Trust computed at the Trust level would not
necessarily be the same as if computed under the OID rules described above under
"Income of Certificateholders" and, in particular, may not take account of any
difference in the yield on the Certificate to the holder based on the
Certificateholder's purchase price and the yield on the Underlying Securities
determined at the Trust level.
WITHHOLDING TAXES WITH RESPECT TO NON-U.S. PERSONS
Payments made on a Certificate to a person that is not a U.S. Person and has no
connection with the United States other than holding its Certificates generally
will be made free of United States federal withholding tax, provided that (i)
the holder is not related (directly or indirectly) to the obligor, guarantor, if
any, or sponsor of the Underlying Securities, the Company, the holder of any
other class of Certificates (if such Series provides for multiple classes of
Certificates), the holder of any Call Warrant or the counterparty on any notion
principal contract or other derivative contract of which the Trust is a party
and (ii) the holder complies with certain identification and certification
requirements imposed by the IRS.
STATE AND OTHER TAX CONSEQUENCES
In addition to the federal income tax consequences described above, potential
investors should consider the state, local and foreign tax consequences of the
acquisition, ownership and disposition of the Certificates. State, local and
foreign tax law may differ substantially from federal tax law, and this
discussion does not purport to describe any aspect of the tax law of a state or
other jurisdiction (including whether the Trust, if treated as a partnership for
federal income tax purposes, would be treated as a partnership under any state
or local jurisdiction). Therefore, it is strongly recommended that prospective
purchasers consult their own tax advisers with respect to such matters.
PLAN OF DISTRIBUTION
Certificates may be offered in any of three ways: (i) through underwriters or
dealers; (ii) directly to one or more purchasers; or (iii) through agents. The
applicable Prospectus Supplement will set forth the terms of the offering of any
Series of Certificates, which may include the names of any underwriters, or
initial purchasers, the purchase price of such Certificates and the proceeds to
the Company from such sale, any underwriting discounts and other items
constituting underwriters' compensation, any initial public offering price, any
discounts or concessions allowed or reallowed or paid to dealers, any securities
exchanges on which such Certificates may be listed, any restrictions on the sale
and delivery of Certificates in bearer form and the place and time of delivery
of the Certificates to be offered thereby.
If underwriters are used in the sale, Certificates will be acquired by the
underwriters for their own account and may be resold from time to time in one or
more transactions, including
58
negotiated transactions, at a fixed public offering price or at varying prices
determined at the time of sale. Such Certificates may be offered to the public
either through underwriting syndicates represented by managing underwriters or
by underwriters without a syndicate. Such managing underwriters or underwriters
in the United States will include Citigroup Global Markets Inc., an affiliate of
the Company [and the Term Asset Issuer]. The obligations of the underwriters to
purchase such Certificates will be subject to certain conditions precedent, and
the underwriters will be obligated to purchase all such Certificates if any of
such 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 Company from time
to time. Any agent involved in the offer or sale of Certificates will be named,
and any commissions payable by the Company to such agent will be set forth, in
the applicable Prospectus Supplement. Any such agent will act on a best efforts
basis for the period of its appointment.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize agents, underwriters or dealers to solicit offers by certain specified
institutions to purchase Certificates at the public offering price described in
such Prospectus Supplement pursuant to delayed delivery contracts providing for
payment and delivery on a future date specified in such Prospectus Supplement.
Such contracts will be subject only to those conditions set forth in the
applicable Prospectus Supplement and such Prospectus Supplement will set forth
the commissions payable for solicitation of such contracts.
Any underwriters, dealers or agents participating in the distribution of
Certificates may be deemed to be underwriters and any discounts or commissions
received by them on the sale or resale of Certificates may be deemed to be
underwriting discounts and commissions under the Securities Act. Agents and
underwriters may be entitled under agreements entered into with the Company to
indemnification by the Company against certain civil liabilities, including
liabilities under the Securities Act, or to contribution with respect to
payments that the agents or underwriters may be required to make in respect
thereof. Agents and underwriters may be customers of, engage in transactions
with, or perform services for, the Company or its affiliates in the ordinary
course of business.
Citigroup Global Markets Inc. is an affiliate of the Company and is an indirect
wholly owned subsidiary of Citigroup Global Markets Holdings Inc., the indirect
parent corporation of the Company. Citigroup Global Markets Inc.'s participation
in the offer and sale of Certificates complies with the requirements of Rule
2720 of the National Association of Securities Dealers, Inc. regarding
underwriting securities of an affiliate.
As to each Series of Certificates, only those Classes rated in one of the
investment grade rating categories by a Rating Agency will be offered hereby.
Any unrated Classes or Classes rated below investment grade may be retained by
the Company or sold at any time to one or more purchasers.
59
LEGAL OPINIONS
Certain legal matters (including federal income tax matters) with respect to the
Certificates will be passed upon for the Company and the Underwriters by Orrick,
Herrington & Sutcliffe LLP, New York, New York or other counsel identified in
the applicable Prospectus Supplement.
60
INDEX OF TERMS
================================================================================
$ 2
Acceleration..................................................................23
Accounting Period.............................................................29
Administration Fee.............................................................9
Administrative Agent Termination Events.......................................44
AID...........................................................................28
Base Rate.....................................................................16
Bearer Certificates...........................................................12
Business Day..................................................................15
Calculation Agent.............................................................17
Calculation Date..................................................18, 19, 20, 22
CD Rate.......................................................................18
CD Rate Determination Date....................................................18
CD Reference Rate Certificate.................................................16
Cede...........................................................................2
Certificate...................................................................11
Certificate Account...........................................................38
Certificate of Non-U.S. Beneficial Ownership..................................51
Certificateholder..............................................................7
Certificateholders.............................................................3
Certificates...................................................................1
Citigroup.....................................................................14
Clearing Agency...............................................................20
Clearstream...................................................................51
Code..........................................................................54
Collection Period.............................................................22
Commercial Paper Rate.........................................................18
Commercial Paper Rate Determination Date......................................19
Commercial Paper Reference Rate Certificate...................................16
Company.................................................................1, 14, 8
Composite Quotations..........................................................16
Concentrated Underlying Securities....................................27, 28, 29
Coupons.......................................................................12
Credit Support Instruments....................................................41
Cut-off Date..................................................................39
Definitive Certificate........................................................25
Depositary....................................................................25
Deposited Asset Provider......................................................40
Deposited Assets...........................................................3, 36
depositor......................................................................1
Determination Date............................................................13
Distribution Date..............................................................3
DOL...........................................................................31
dollar.........................................................................2
DTC...........................................................................22
ERISA.........................................................................31
Euroclear.....................................................................51
Event of Default..............................................................19
Exchange......................................................................16
Exchange Rate Agent...........................................................13
Exchangeable Series...........................................................22
Fannie Mae....................................................................28
Federal Funds Rate............................................................19
Federal Funds Rate Determination Date.........................................19
Federal Funds Reference Rate Certificate......................................16
FFCB..........................................................................28
FHLB..........................................................................28
Final Scheduled Distribution Date..............................................3
Fiscal Agent..............................................................32, 34
Fixed Pass-Through Rate.......................................................12
Fixed Rate Certificates.......................................................15
Floating Rate Certificates....................................................16
Freddie Mac...................................................................28
Global Certificate............................................................12
GSE...........................................................................28
GSE Issuer....................................................................28
H.15(519).....................................................................16
Index Maturity................................................................16
Initial Certificate Principal Balance..........................................1
Insurer.......................................................................24
Interest Accrual Period.......................................................21
Interest Collections..........................................................22
Interest Rate..................................................................3
Interest Reset Date........................................................3, 17
Interest Reset Period.........................................................17
IRA...........................................................................31
IRS........................................................................4, 53
issuing entity.................................................................1
Letter of Credit..........................................................23, 37
Letter of Credit Bank.........................................................37
LIBOR Determination Date......................................................20
LIBOR Reference Rate Certificate..............................................16
London Banking Day............................................................15
Market Exchange Rate..........................................................13
Maximum Pass-Through Rate.....................................................16
Minimum Pass-Through Rate.....................................................16
61
Money Market Yield............................................................19
Nonrecoverable Advance........................................................43
Notional Amount...............................................................15
Offering Agent.................................................................2
OID.......................................................................30, 55
Optional Exchange Date........................................................23
Original Issue Date...........................................................11
outstanding debt securities...................................................31
participants..................................................................25
Parties in Interest...........................................................31
Pass-Through Rate.............................................................12
Payment Default...............................................................23
Periodic Interest.............................................................21
Plan..........................................................................31
Policy........................................................................24
Prospectus Supplement..........................................................1
PTCE..........................................................................32
Purchase Price................................................................49
Rating Agency..................................................................4
Realized Losses...............................................................22
REFCORP.......................................................................28
Reference Entity..............................................................26
Registered Certificates.......................................................13
Regulation....................................................................31
Related Proceeds..............................................................43
Required Percentage...........................................................45
Reserve Account...............................................................38
Retained Interest..............................................................9
Reuters Screen LIBO Page......................................................20
Sallie Mae....................................................................28
Schedule B....................................................................29
Secured Underlying Securities.................................................32
Senior Underlying Securities..................................................31
Series.........................................................................1
Special Tax Counsel...........................................................53
sponsor........................................................................1
Spread........................................................................16
Spread Multiplier.............................................................16
Strip Certificates............................................................12
Stripped Interest.............................................................15
Sub-Administration Agreement..................................................41
Sub-Administrative Agent......................................................41
Subordinated Underlying Securities............................................31
Surety........................................................................37
Surety Bond...................................................................37
Term Asset Events of Default..........................................31, 33, 35
Treasury bills................................................................21
Treasury Rate Determination Date..............................................22
Treasury Reference Rate Certificate...........................................16
Treasury Securities...........................................................28
Trust...................................................................1, 15, 2
Trust Agreement................................................................9
Trust Indenture Act.......................................................15, 30
Trustee's Fee..................................................................9
TVA...........................................................................28
U.S. dollars...................................................................2
U.S. Person...................................................................51
U.S.$..........................................................................2
Underlying Securities...........................................1, 3, 27, 28, 29
Underlying Securities Currency................................................35
Underlying Securities Indenture...............................................30
Underlying Securities Interest Accrual Periods................................35
Underlying Securities Issuer...............................................7, 28
Underlying Securities Issuers.........................................27, 28, 29
Underlying Securities Offering Document...............................27, 28, 29
Underlying Securities Payment Date............................................17
Underlying Securities Payment Dates...........................................35
Underlying Securities Rate....................................................35
Underlying Securities Registration Statement..................................17
Underwriter[s]................................................................32
Underwriting Agreement........................................................32
United States.................................................................51
USD............................................................................2
Variable Pass-Through Rate....................................................12
Voting Rights.................................................................45
================================================================================
PART II
Item 14. Other Expenses of Issuance and Distribution
The following is an itemized list of the estimated expenses to be
incurred in connection with the offering of the securities being offered
hereunder other than underwriting discounts and commissions.
Registration Fee............................................ $107.00
Printing and Engraving Expenses............................. *
Trustee's Fees.............................................. *
Legal Fees and Expenses..................................... *
Blue Sky Fees and Expenses.................................. *
Accountants' Fees and Expenses.............................. *
Rating Agency Fees.......................................... *
Miscellaneous............................................... *
Total..................................................... $*
*To be provided by amendment.
Item 15. Indemnification of Directors and Officers
The Company's By-laws provide for indemnification of directors and
officers of the Company to the fullest extent permitted by Delaware law.
Section 145 of the Delaware General Corporation Law provides, in
substance, that Delaware corporations shall have the power, under specified
circumstances, to indemnify their directors, officers, employees and agents in
connection with actions, suits or proceedings brought against them by a third
party or in the right of the corporation, by reason of the fact that they were
or are such directors, officers, employees or agents, against expenses incurred
in any such action, suit or proceeding.
The Company carries directors' and officers' liability insurance that
covers certain liabilities and expenses of the Company's directors and officers.
Item 16. Exhibits
1.1 Form of proposed Underwriting Agreement for Trust Certificates to
be distributed in the United States (Incorporated by reference to
Exhibit No. 1 to pre-effective Amendment No. 2 to the Registration
Statement on Form S-3 (File No. 33-55860), filed on March 24,
1994).
3.1 Certificate of Incorporation of Structured Products Corp.
(Incorporated by reference to Exhibit No. 4.1 to the Registration
Statement on Form S-3 (File No. 33-55860), filed on December 17,
1992).
3.2 By-laws of Structured Products Corp. (Incorporated by reference to
Exhibit No. 4.2 to the Registration Statement on Form S-3 (File No.
33-55860), filed on December 17, 1992).
4.1 Form of Trust Agreement, with forms of Trust Certificates attached
thereto (Incorporated by reference to Exhibit No. 4.3 to
pre-effective Amendment No. 2 to the Registration Statement on
Form S-3 (File No. 33-55860), filed on March 24, 1994).
4.2 Form of qualified Trust Agreement (Incorporated by reference to
Exhibit No. 4.2 to pre-effective Amendment No. 4 to the
Registration Statement on Form S-3 (File No. 33-55860), filed on
September 2, 1994).
4.3 Form of Indenture (Incorporated by reference to Exhibit No. 4.3 to
Post-Effective Amendment No. 2 to the Registration Statement on
Form S-3 (File No. 33-55860), filed on December 29, 1995).
5.1 Opinion of Orrick, Herrington & Sutcliffe LLP with respect to
legality.
8.1 Opinion of Orrick, Herrington & Sutcliffe LLP with respect to tax
matters.
23.1 Consents of Orrick, Herrington & Sutcliffe LLP (included in its
opinions filed as Exhibits 5.1 and 8.1).
25.1 Statement of eligibility of Trustee (U.S. Bank Trust National
Association).
Item 17. Undertakings
(a) Rule 415 Offering.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in the volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
Provided , however, that:
(A) Paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not
apply if the registration statement is on Form S-3 and the information required
to be included in a post-effective amendment by those paragraphs is contained in
reports filed with or furnished to the Commission by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement, or is contained in a
form of prospectus filed pursuant to Rule 424(b) that is part of this
registration statement; and
(B) Provided further, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if this Registration Statement is for an offering of asset-backed
securities on Form S-3 and the information required to be included in a
post-effective amendment is provided pursuant to Item 1100(c) of Regulation AB.
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(4) That for the purpose of determining liability under the Securities Act of
1933 to any purchaser:
If the registrant is relying on Rule 430B:
(A) Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be
deemed to be part of the registration statement as of the date the filed
prospectus was deemed part of and included in the registration statement; and
(B) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or
(b)(7) as part of a registration statement in reliance on Rule 430B relating to
an offering made pursuant to Rule 415(a)(1)(i), (vii) or (x) for the purpose of
providing the information required by section 10(a) of the Securities Act of
1933 shall be deemed to be part of and included in the registration statement as
of the earlier of the date such form of prospectus is first used after
effectiveness or the date of the first contract of sale of securities in the
offering described in the prospectus. As provided in Rule 430B, for liability
purposes of the issuer and any person that is at that date an underwriter, such
date shall be deemed to be a new effective date of the registration statement
relating to the securities in the registration statement to which that
prospectus relates, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof. Provided, however, that no
statement made in a registration statement or prospectus that is part of the
registration statement or made in a document incorporated or deemed incorporated
by reference into the registration statement or prospectus that is part of the
registration statement will, as to a purchaser with a time of contract of sale
prior to such effective date, supersede or modify any statement that was made in
the registration statement or prospectus that was part of the registration
statement or made in any such document immediately prior to such effective date.
(5) That, for the purpose of determining liability of the registrant under the
Securities Act of 1933 to any purchaser in the initial distribution of the
securities:
The undersigned registrant undertakes that in a primary offering of securities
of the undersigned registrant pursuant to this registration statement,
regardless of the underwriting method used to sell the securities to the
purchaser, if the securities are offered or sold to such purchaser by means of
any of the following communications, the undersigned registrant will be a seller
to the purchaser and will be considered to offer or sell such securities to such
purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant
relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on
behalf of the undersigned registrant or used or referred to by the undersigned
registrant;
(iii) The portion of any other free writing prospectus relating to the offering
containing material information about the undersigned registrant or its
securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the
undersigned registrant to the purchaser.
(b) Filings Incorporating Subsequent Exchange Act Documents by Reference.
The undersigned registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Request for Acceleration of Effective Date.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(d) Filings Regarding Asset-Backed Securities Incorporating by Reference
Subsequent Exchange Act Documents by Third Parties
The undersigned registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 of a third party that is incorporated by reference in the registration
statement in accordance with Item 1100(c)(1) of Regulation AB shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(e) Filings Regarding Asset-Backed Securities That Provide Certain Information
Through an Internet Web Site
The undersigned registrant hereby undertakes that, except as otherwise provided
by Item 1105 of Regulation AB, information provided in response to that Item
pursuant to Rule 312 of Regulation S-T through the specified Internet address in
the prospectus is deemed to be a part of the prospectus included in the
registration statement. In addition, the undersigned registrant hereby
undertakes to provide to any person without charge, upon request, a copy of the
information provided in response to Item 1105 of Regulation AB pursuant to Rule
312 of Regulation S-T through the specified Internet address as of the date of
the prospectus included in the registration statement if a subsequent update or
change is made to the information.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
the requirements for filing on Form S-3, reasonably believes that the security
rating requirement contained in Transaction Requirement B.5. of Form S-3 will be
met by the time of the sale of the securities registered hereunder and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on this 10th day of May, 2006.
STRUCTURED PRODUCTS CORP.,
By: /s/ Mark G. Graham
---------------------------------
Name: Mark G. Graham
Title: Assistant Vice President &
Finance Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Nazareth A. Festekjian, Marwan A. Marshi, Philip U.
Tremmel, John Dickey, Timothy Beaulac and Mark C. Graham his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities (including
his capacity as director and/or officer of Structured Products Corp. (the
"Company")) to sign the Registration Statement on Form S-3, as filed by the
Company on or about May [__], 2006, any or all amendments (including
pre-effective and post-effective amendments) thereto, any registration statement
for the same officer that is to be effective upon filing per Rule 462(b) under
the Securities Act of 1933 and other documents in connection therewith, and to
file the same, with all exhibits thereto, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in person, hereby ratifying and confirming said attorney-in-fact and
agent, or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
May 10, 2006 By: /s/ Scott L. Flood
- ------------ --------------------------
Date Name: Scott L. Flood
Title: Director
May 10, 2006 By: /s/ Orlando Figueroa
- ------------ --------------------------
Date Name: Orlando Figueroa
Title: Director
May 10, 2006 By: /s/ Marc C. Graham
- ------------ --------------------------
Date Name: Marc C. Graham
Title: Director
May 10, 2006 By: /s/ Timothy Beaulac
- ------------ --------------------------
Date Name: Timothy Beaulac
Title: President (Principal
Executive Officer)
May 10, 2006 By: /s/ Cliff Verron
- ------------ --------------------------
Date Name: Cliff Verron
Title: Vice President
(Principal Accounting
Officer and Principal
Finance Officer)
EXHIBIT INDEX
Description of Exhibit
Exhibit
No.
1.1 Form of proposed Underwriting Agreement for Trust Certificates to
be distributed in the United States (Incorporated by reference to
Exhibit No. 1 to pre-effective Amendment No. 2 to the Registration
Statement on Form S-3 (File No. 33-55860), filed on March 24,
1994).
3.1 Certificate of Incorporation of Structured Products Corp.
(Incorporated by reference to Exhibit No. 4.1 to the Registration
Statement on Form S-3 (File No. 33-55860), filed on December 17,
1992).
3.2 By-laws of Structured Products Corp. (Incorporated by reference to
Exhibit No. 4.2 to the Registration Statement on Form S-3 (File No.
33-55860), filed on December 17, 1992).
4.2 Form of qualified Trust Agreement (Incorporated by reference to
Exhibit No. 4.2 to pre-effective Amendment No. 4 to the
Registration Statement on Form S-3 (File No. 33-55860), filed on
September 2, 1994).
5.1 Opinion of Orrick, Herrington & Sutcliffe LLP with respect to
legality.
8.1 Opinion of Orrick, Herrington & Sutcliffe LLP with respect to tax
matters.
23.1 Consents of Orrick, Herrington & Sutcliffe LLP (included in its
opinion filed as Exhibits 5.1 and 8.1).
25.1 Statement of eligibility of Trustee (U.S. Bank Trust National
Association).