As filed with the Securities and Exchange Commission on October 31, 2006
Registration No. 333-134429
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
AMENDMENT NO. 2 TO
REGISTRATION STATEMENT
ON
FORM S-3
UNDER
THE SECURITIES ACT OF 1933
---------------
STRUCTURED OBLIGATIONS CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 13-3741177
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
c/o J.P. Morgan Securities, Inc.
270 Park Avenue
New York, New York 10017
(212)-834-6000
(Address, including zip code, and telephone number,
including area code, of Registrant's
principal executive offices)
Structured Obligations Corporation
Sponsor and Depositor
270 Park Avenue
New York, New York 10017
Attention: Chad S. Parson
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------------
Copy to:
Al B. Sawyers, Esq.
Orrick, Herrington & Sutcliffe LLP
666 Fifth Avenue
New York, New York 10103
(212) 506-5000
--------------------------
[Identify Issuing Entity on cover page.]
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 Registration Fee
(1) Price (1)
Trust Certificates $1,000,000 100% 100% $107
- ----------------------------------------------------------------------------------------------------------------------
(1) Estimated solely for purposes of calculating the registration fee on the
basis of the proposed maximum aggregate offering price.
The Certificates represent non-recourse obligations of the Issuing Entity
only and do not represent an interest in or obligation of Structured Obligations
Corporation, [the Sponsor, the Depositor] [The Underwriter[S] [The Trustee] [The
Underlying Securities Trustee] [The Fiscal Agent], or any of their affiliates.
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 NOTE
This Registration Statement includes a base prospectus and a form of prospectus
supplement for offering series of trust certificates representing the entire
beneficial ownership interest in various trusts to be created from time to time,
the assets of which will consist primarily of securities within one of the
following categories: (1) debt or asset-backed securities or a pool of debt or
asset-backed securities issued by certain domestic corporations, banking
organizations, insurance companies or special purpose vehicles (including
trusts, limited liability companies, partnerships or other special purpose
entities), (2) preferred securities issued by certain trusts or other special
purpose entities, (3) obligations issued by the United States of America, any
agency thereof for the payment of which the full faith and credit of the United
States of America is pledged, or a United States government sponsored
organization created pursuant to a federal statute, (4) obligations issued or
guaranteed by a foreign government or any political subdivision or agency or
instrumentality thereof, (5) debt securities or a pool of debt securities issued
by certain foreign private issuers or (6) asset-backed securities issued by
certain trusts or other special purpose entities. A trust may also hold cash
pending disbursement by the trustee and may have rights under credit support
agreements, swap agreements, puts, calls or derivative instruments, which rights
will be described in the prospectus supplement. The base prospectus and form of
prospectus supplement contain bracketed provisions appropriate for the various
categories of trust assets; each set of alternate language, when combined with
the base prospectus and form of prospectus supplement constitutes a separate
prospectus.
Prospectus Supplement
(To Prospectus Dated ________________, 20__)
Subject to Completion Dated ________________, 20__
[ ]
[Callable] Trust Certificates, Series [ ]
STRUCTURED OBLIGATIONS CORPORATION
Sponsor and Depositor
PRINCIPAL BALANCE CERTIFICATE PRICE TO UNDERWRITING DISCOUNT
RATE PUBLIC
[%] [Variable]
Pass Through
[Class ___ certificate] $___________ Rate 100.00% ___%
[%] [Variable]
Pass Through
[Class ___ certificate] $___________ Rate 100.00% ___%
THE CERTIFICATES Issuing Entity
REPRESENT NON-RECOURSE o is a [Delaware business][common law] trust
OBLIGATIONS OF THE formed by a trust agreement between
ISSUING ENTITY ONLY Structured Obligations Corporation and
AND DO NOT REPRESENT ________________.
AN INTEREST IN OR o will issue __________ classes of
OBLIGATION OF certificates, [all of which [except the
STRUCTURED OBLIGATIONS class [ ]] are offered by this Prospectus
CORPORATION, [THE Supplement.]
UNDERWRITER[S] [THE
TRUSTEE] [THE UNDERLYING The Certificates
SECURITIES TRUSTEE] [THE o are principally secured by the assets of the
FISCAL AGENT], OR ANY OF Issuing Entity, which consist [primarily] of
THEIR AFFILIATES. a [security] [pool of securities [category -
asset backed/debt securities]] that [is]
[are] described in this Prospectus
Supplement.
o currently have no trading market.
o [are not insured or guaranteed by any
governmental agency.]
o [Credit Enhancement. Identify each form of
credit enhancement that may be used in
connection with this prospectus supplement.]
YOU SHOULD REVIEW THE INFORMATION IN "RISK FACTORS" ON PAGE S-___ OF THIS
PROSPECTUS SUPPLEMENT AND ON PAGE ___ IN THE ACCOMPANYING PROSPECTUS.
For complete information about the offered certificates, read both this
Prospectus Supplement and the Prospectus. This Prospectus Supplement must be
accompanied by the Prospectus if it is being used to offer and sell the offered
certificates.
[Structured Obligations Corporation has made an application to list the
certificates on the [________] Exchange. If the application is approved, trading
of the certificates on the [__________] Exchange is expected to commence within
a [30-day] period after the initial delivery of the certificates. See "Method of
Distribution" in this Prospectus Supplement and "Plan of Distribution" in the
accompanying Prospectus.]
[[Interest will accrue on the certificates at rate equal to ____.][The first
expected distribution date for the certificates is [____], distributions will be
made [each] [___].] [The class ____ certificates will receive all scheduled
interest payments received by the Issuing Entity on or before ____ from the
securities held by the Issuing Entity. [The class ____ certificates will receive
a distribution of the securities in kind on _____.]]
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE CERTIFICATES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Subject to the satisfaction of certain conditions, the underwriter[s] named
below will purchase the offered certificates from the [Structured Obligations
Corporation]. See "Method of Distribution" in this Prospectus Supplement and
"Plan of Distribution" in the accompanying prospectus. The offered certificates
will be issued in book-entry form only on or about ________________.
-----------------
[Underwriter]
[The date of this Prospectus Supplement is __________.]
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
We provide information to you about the certificates in two separate documents
that progressively provide more detail: (a) the accompanying Prospectus, which
provides general information, some of which may not apply to your series of
certificates and (b) this Prospectus Supplement, which describes the specific
terms of your series of certificates.
Structured Obligations Corporation has filed with the Securities and Exchange
Commission a registration statement (of which this Prospectus Supplement and the
accompanying Prospectus form a part) under the Securities Act of 1933 with
respect to your series of certificates. This Prospectus Supplement and the
accompanying Prospectus do not contain all of the information contained in the
registration statement. For further information regarding the documents referred
to in this Prospectus Supplement and the accompanying Prospectus, you should
refer to the
S-ii
registration statement and its exhibits. The registration statement and its
exhibits can be inspected and copied at prescribed rates at the public reference
facilities maintained by the Securities and Exchange Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 (information on
the operation of the Public Reference Room may be obtained by calling the
Securities and Exchange Commission at 1-800-SEC-0330). Copies of such materials
can also be obtained electronically through the Securities and Exchange
Commission's internet web site (http://www.sec.gov).
We are incorporating by reference into the Prospectus and Prospectus Supplement
any future SEC reports filed by Structured Obligations Corporation on behalf of
the issuing entity under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act after the date of this Prospectus Supplement and before we
terminate our offering of the certificates. Such documents may include, without
limitation, Annual Reports on Form 10-K, Periodic Reports on Form 10-D and
Current Reports on Form 8-K. Information that we file later with the Securities
and Exchange Commission will automatically update the information in the
attached Prospectus and this Prospectus Supplement. In all cases, you should
rely on the later information included in the accompanying Prospectus or the
applicable Prospectus Supplement.
[As a recipient of the accompanying Prospectus and this Prospectus Supplement,
you may request a copy of any document we incorporated by reference, except
exhibits to the documents (unless the exhibits are specifically incorporate by
reference), at no cost, by writing or calling us at: Structured Obligations
Corporation, ________________.]
You should rely only on the information contained in this Prospectus Supplement
or the accompany Prospectus. Neither Structured Obligations Corporation nor the
Underwriters have 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. Neither Structured Obligations Corporation nor the
Underwriters are making an offer to sell these securities in any jurisdiction
where the offer or sale is not permitted. You should assume that the information
appearing in this Prospectus Supplement or the accompanying Prospectus is
accurate as of the dates stated on their respective front covers only.
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 following table of contents and the table of contents included
in the accompanying Prospectus provide the pages on which these captions are
located.
You can find a listing of the pages where terms are defined under the caption
"Index of Terms" beginning on page S-____ in this document and beginning on page
____ in the accompanying Prospectus.
We are not offering the certificates in any state where the offer or sale is not
permitted.
[THE UNDERWRITERS] MAY ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR
OTHERWISE AFFECT THE PRICE OF THE CERTIFICATES, INCLUDING OVER-ALLOTMENT,
STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH SECURITIES AND THE
IMPOSITION OF PENALTY BIDS, IN EACH CASE IN
S-iii
CONNECTION WITH THE OFFERING OF THE CERTIFICATES. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "METHOD OF DISTRIBUTION" IN THIS PROSPECTUS SUPPLEMENT.
S-iv
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 accompanying Prospectus in connection with the
offer made by this Prospectus Supplement and the accompanying Prospectus, and,
if given or made, such information or representations must not be relied upon as
having been authorized by [the Underwriters]. This Prospectus Supplement and the
accompanying 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 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 in this Prospectus Supplement and in
the accompanying Prospectus is correct as of any time subsequent to the date of
this Prospectus Supplement; 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.
S-v
TABLE OF CONTENTS
Page
PROSPECTUS SUPPLEMENT
EXPLANATORY NOTE...............................................................3
SUMMARY S-1
The Certificates....................................................S-1
The Deposited Assets................................................S-6
RISK FACTORS................................................................S-14
SPONSOR AND DEPOSITOR.......................................................S-14
FORMATION OF THE TRUST......................................................S-15
DESCRIPTION OF THE DEPOSITED ASSETS.........................................S-15
General ..........................................................S-15
Underlying Securities..............................................S-18
[The Federal National Mortgage Association.........................S-19
[The Federal Home Loan Mortgage Corporation........................S-19
[The Student Loan Marketing Association............................S-20
[The Resolution Funding Corporation................................S-20
[The Federal Home Loan Banks.......................................S-21
[Tennessee Valley Authority........................................S-22
[Federal Farm Credit Banks.........................................S-22
[Government Trust Certificates.....................................S-23
Pending Legal Proceedings..........................................S-25
Affiliations Among Transaction Parties.............................S-25
[DESCRIPTION OF CREDIT SUPPORT].............................................S-25
[The Letter of Credit..............................................S-25
[The Surety Bond...................................................S-26
[Reserve Account...................................................S-26
YIELD ON THE CERTIFICATES...................................................S-26
DESCRIPTION OF THE CERTIFICATES.............................................S-27
General ..........................................................S-27
Definitive Certificates............................................S-28
Distributions......................................................S-28
[Currency Matters].................................................S-30
[Exchange Rates and Exchange Controls].............................S-31
[Payment Currency].................................................S-32
S-vi
TABLE OF CONTENTS
(continued)
Page
[Foreign Currency Judgments].......................................S-32
[Additional Underlying Securities and Certificates.................S-32
[Redemption of [Class [__]] Certificates Upon Exercise of a
Call Warrant.............................................S-33
[Tender Right].....................................................S-33
[Optional Exchange]................................................S-33
Default on Underlying Securities...................................S-35
[Advances..........................................................S-35
Allocation of Losses; Subordination [specify if necessary].........S-36
[Restrictions on Transfer of the Class [ ] Certificates............S-36
DESCRIPTION OF THE TRUST AGREEMENT..........................................S-36
General ..........................................................S-36
The Trustee and the Servicer.......................................S-37
Events of Default..................................................S-37
Voting Rights......................................................S-38
Voting of Underlying Securities, [Modification of Indenture].......S-39
[Reports as to Compliance].........................................S-40
[Administrative Agent].............................................S-41
[Administrative Agent Termination Events; Rights Upon
Administrative Agent Termination Event]..................S-42
Termination........................................................S-43
Fees and Expenses..................................................S-43
FEDERAL INCOME TAX CONSEQUENCES.............................................S-44
Scope of Opinion...................................................S-44
General ..........................................................S-44
CERTAIN ERISA CONSIDERATIONS................................................S-45
METHOD OF DISTRIBUTION......................................................S-46
RATINGS.....................................................................S-47
LEGAL OPINIONS..............................................................S-47
INDEX OF TERMS FOR PROSPECTUS SUPPLEMENT....................................S-48
S-vii
TABLE OF CONTENTS
(continued)
PROSPECTUS
Page
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT.................2
RISK FACTORS...................................................................5
WHERE YOU CAN FIND MORE INFORMATION............................................9
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE................................9
REPORTS TO CERTIFICATEHOLDERS.................................................10
STRUCTURED OBLIGATIONS CORPORATION............................................10
USE OF PROCEEDS...............................................................10
FORMATION OF THE TRUSTS.......................................................10
MATURITY AND YIELD CONSIDERATIONS.............................................11
DESCRIPTION OF THE CERTIFICATES...............................................13
General ............................................................13
Distributions........................................................14
Interest on the Certificates.........................................15
Principal of the Certificates........................................18
Foreign Currency Certificates........................................18
Dual Currency Certificates...........................................18
Optional Exchange....................................................19
Default on Underlying Securities and Remedies........................19
Call Right...........................................................19
Global Securities....................................................19
Redemption of [Class [__]] Certificates Upon Exercise of a
Call Warrant...............................................22
[Tender Right].......................................................22
[Optional Exchange]..................................................22
DESCRIPTION OF DEPOSITED ASSETS AND CREDIT SUPPORT............................24
General ............................................................24
Underlying Securities................................................26
Principal Economic Terms of Concentrated Underlying Securities.......31
Publicly Available Information.......................................33
Other Deposited Assets...............................................33
Credit Support.......................................................33
Collections..........................................................35
S-viii
TABLE OF CONTENTS
(continued)
Page
DESCRIPTION OF THE TRUST AGREEMENT............................................36
Acquisition of Deposited Assets......................................36
Collection and Other Administrative Procedures.......................37
Retained Interest....................................................38
Trustee and Administrative Agent Compensation and
Payment of Expenses........................................38
Certain Matters Regarding the Trustee, the
Administrative Agent and SOC...............................38
Remedies of Certificateholders.......................................39
Modification and Waiver..............................................40
Reports to Certificateholders; Notices...............................41
Evidence as to Compliance............................................42
Replacement Certificates.............................................43
Termination..........................................................43
Call [Rights] [Warrants].............................................43
Duties of the Trustee................................................43
The Trustee..........................................................43
Removal and Replacement of Trustee...................................44
Bankruptcy Remoteness................................................45
Additional Underlying Securities; Issuance of
Additional Certificates....................................45
LIMITATIONS ON ISSUANCE OF BEARER CERTIFICATES................................45
FEDERAL INCOME TAX CONSEQUENCES...............................................46
Scope of Opinion.....................................................46
General ............................................................47
Tax Status of the Trust..............................................47
Income of Certificateholders.........................................48
Possible Recharacterization of the Issuing Entity as a Partnership...49
Withholding Taxes with Respect to Non-U.S. Persons...................49
State and Other Tax Consequences.....................................50
PLAN OF DISTRIBUTION..........................................................50
LEGAL OPINIONS................................................................51
INDEX OF TERMS................................................................52
S-ix
[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.
S-x
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 [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 [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 [ [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.]
S-xi
SUMMARY
This summary highlights the principal economic terms of the
certificates being issued by the Issuing Entity and of the Underlying Securities
and any other Deposited Assets. It does not contain all of the information that
you need to consider in making your investment decision. To understand all of
the terms of the offering of the certificates, you should read carefully this
Prospectus Supplement and the accompanying Prospectus carefully and in full.
The Certificates
Sponsor and Depositor.................. Structured Obligations Corporation
("SOC") an indirect wholly-owned
subsidiary of J.P. Morgan Securities
Holdings Inc. See "Structured
Obligations Corporation" in the
accompanying Prospectus.
[Administrative Agent.................. [ ]]
Issuing Entity......................... the Series [ ] Trust. We refer to the
[trust] as the "Issuing Entity."
Securities Offered..................... [Insert Name] [Callable] [Trust]
certificates, Series [ ], consisting of
class [ ] certificates[,] [and] class [
] certificates [and specify others].
Initial certificate
Principal Balance
[Notional Amount]...................... Class [ ]: [$] [ ].
Class [ ]: [$] [ ].
Final Scheduled
Distribution Date...................... Class [ ].
Class [ ].
Pass-Through
Rates.................................. [The Variable Pass-Through Rates
applicable to the calculation of the
interest distributable on any
Distribution Date on the certificates
[(other than the class [ ]
certificates)] are equal to [describe
method for determining variable rates].
The initial Variable Pass-Through Rates
for the class [ ] certificates [,]
[and] the class [ ] certificates [and
specify others] are approximately ___%
[,] [and] ___% [and ___%] per annum,
respectively.] [The Pass-Through Rate
applicable to the calculation of the
interest distributable on any
Distribution Date on the
S-1
[specify classes] certificates is fixed
at ___% [and ___%, respectively,] per
annum.]
[Certificate Principal Balance]
[Notional Amount]...................... [The Certificate Principal Balance of a
certificate outstanding at any time
represents the maximum amount that the
certificate holder is entitled to
receive as distributions allocable to
principal. The Certificate Principal
Balance of a certificate will decline
to the extent distributions allocable
to principal are made to holders.] [The
Notional Amount of the class [ ]
certificates as of any date of
determination is equal to [specify].
"Notional Amount" means the stated
amount on the face of the class [ ]
certificates and is solely for
convenience in determining the basis on
which distributions on the class [ ]
certificates are calculated [and
determining the relative voting rights
of certificateholders of class [ ]
certificates for purposes of voting on
a class-by-class basis or otherwise].
The Notional Amount does not represent
the right to receive any distributions
allocable to principal.]
[The class [ ] certificates, which are
not being offered by this Prospectus
Supplement, have in the aggregate an
initial Certificate Principal Balance
of [$] (approximate) and a [Variable]
Pass-Through Rate [of ___%]. The class
[ ] certificates represent the right to
receive distributions in respect of
their Certificate Principal Balance and
interest thereon at their applicable
Pass-Through Rate.] Shortfalls in
collections with respect to the
Deposited Assets will be allocated
solely to the class [ ] certificates to
the extent provided in this Prospectus
Supplement and, thereafter, will be
allocated among the certificates and
the class [ ] certificates, as provided
in this Prospectus Supplement. [The
class [ ] certificates will be
transferred by SOC to an affiliate on
or about [________, ____] (the "Closing
Date"), and may be sold at any time in
accordance with any restrictions in the
trust agreement.]]
Retained Interest...................... [None.]
Original Issue
Date................................... [ ].
S-2
Cut-off Date........................... [ ].
Distribution Dates..................... [ ], commencing [ ].
Record Dates........................... The [ ] day immediately preceding each
Distribution Date.
Denominations;
Specified
Currency............................... The class [ ] certificates [,] [and]
class [ ] certificates [and specify
others] will be denominated and payable
in [U.S. dollars] [ ] (the "Specified
Currency") and will be available for
purchase in minimum denominations of
[$][ ] and [multiples of [$] [ ]] .
Interest Accrual
Periods................................ [Monthly] [Quarterly] [Semi-annually]
(or, in the case of the first Interest
Accrual Period, from and including the
Original Issue Date to but excluding
the first Distribution Date).
Form of
Security............................... [Book-entry certificates with The
Depository Trust Company]. See
"Description of the Certificates -
Definitive Certificates." Distributions
will be settled in [immediately
available (same-day)] [clearinghouse
(next-day)] funds.
Distributions.......................... Holders of the certificates will be
entitled to receive on each
Distribution Date, to the extent of
available funds, [after payment of the
expenses of the Trustee and its
respective agents up to the Allowable
Expense Amount,]
o [in the case of each class of
certificates other than the class
[ ] certificates,] distributions
allocable to interest at the
applicable Pass-Through Rate on
the applicable Certificate
Principal Balance,
o [in the case of each class of
certificates other than the class
[ ] certificates,] distributions
allocable to principal, and
o [in the case of each class of
certificates other than the class
[ ] certificates,] distributions
allocable to premium (if any) in
an amount equal to all payments of
premium (if any)
S-3
received on the Underlying
Securities for the applicable
Collection Period.
o [[in the case of each class of
certificates other than the class
[ ] certificates,] distributions
as a result of prepayments on the
Underlying Securities for the
applicable Collection Period.]
Distributions will be made to
certificateholders only if, and to the
extent that, payments are made with
respect to the Deposited Assets or are
otherwise covered by any credit
support. [The holders of the class [ ]
certificates will be entitled to
receive on each Distribution Date
distributions allocable to interest in
an amount equal to [describe].] [The
holders of the class [ ] certificates
will not be entitled to receive any
distributions allocable to principal or
premium (if any).] See "Description of
the Certificates--Distributions."
[Describe events which may cause lower
principal distributions.]
Special Distribution Dates............. If a payment with respect to the
Underlying Securities is made to the
Trustee after the Underlying Securities
Payment Date on which payment was due,
then the Trustee will distribute any
such amounts received on the next
occurring Business Day or as soon as
possible, thereafter (a "Special
Distribution Date") as if the funds had
constituted Available Funds on the
Distribution Date immediately preceding
such Special Distribution Date;
provided, however, that the Record Date
for such Special Distribution Date
shall be [five Business Days (as such
term is defined in the Prospectus,
"Business Day") prior to the day on]
which the related payment was received
from the Underlying Securities Trustee.
[Subordination......................... [The rights of the holders of the class
[ ] certificates [and specify other
classes] to receive distributions of
principal, premium (if any), and
interest with respect to the Deposited
Assets will be subordinated to the
rights of the holders of the other
classes of certificates with respect to
losses attributable to principal,
premium (if any) and interest realized
on a Deposited Asset (such losses,
"Realized Losses"). [Losses not covered
by [credit enhancement or
S-4
support] will be allocated to the
Certificates [Name] [Certificates as
follows [describe]]. See "Description
of the Certificates--Allocation of
Losses; Subordination."]]
[Optional Termination.................. SOC may purchase at a price equal to
the [principal amount] [liquidation
preference amount] of the Underlying
Securities all the Deposited Assets in
the Issuing Entity on any Distribution
Date on which the aggregate [principal
amount] [liquidation preference amount]
of the Underlying Securities remaining
in the Issuing Entity is less than
[10%] of the aggregate [principal
amount] [liquidation preference amount]
of the Deposited Assets as of the
Cut-off Date. This would cause the
termination of the Issuing Entity and
early retirement of the certificates.
[Specify any other purchase or
repurchase option of SOC.] See
"Description of the trust
agreement-Termination" in this
Prospectus Supplement and "Description
of Trust Agreement-Termination" in the
Prospectus.]
[Call Warrants; Redemption
of Certificates........................ The Issuing Entity has issued call
warrants with respect to the Underlying
Securities. The Call Warrants entitle
the holder of the Call Warrants to
purchase the Underlying Securities [on
or after] [describe exercise
provisions]. The Call Warrants may be
exercised [describe exercise
provisions]. If the Call Warrants are
exercised, then the [Class ___]
Certificates will be redeemed at a
price equal to [the principal amount
of] the Certificates redeemed plus
accrued distributions to the date of
redemption. [Describe partial exercise
and partial redemption if applicable.]]
Trustee................................ [ ], as trustee.
Ratings................................ [ ] by [ ] [and [ ] by [ ]]. [Specify
specific ratings requirements for
particular classes, including the
extent to which the issuance of the
certificates of a given class is
conditioned upon satisfaction of the
ratings of each other class of
certificates.] See "Ratings".
S-5
Collection Period...................... With respect to a Distribution Date,
the period beginning on [ ] and ending
at the close of business on [ ].
The Deposited Assets
Deposited
Assets................................. The Deposited Assets will consist of
the Underlying Securities [and describe
any assets which relate to the
Underlying Securities]. See "--The
Underlying Securities" [, "--Other
Deposited Assets"] and "Description of
the Deposited Assets" below.
Underlying Securities.................. [A [ ]%] [A pool of] [floating rate]
[debt][asset-backed] [trust preferred]
[foreign] [foreign private] [United
States treasury securities] [United
States government sponsored
entit[y][ies] [or guaranteed by foreign
government[s], political subdivision[s]
or agenc[y][ies] or
instrumentalit[y][ies] thereof] [,
exclusive of the Retained Interest
[in/having] an aggregate principal
amount of [$][ ] [and scheduled to
mature on [___________]].
[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
available in the Underlying Securities
Guarantor's filings with the
Commission.]
Underlying Securities Issuer........... [Specify issuer] [Pool of various
[domestic] [foreign] corporations,
limited liability companies, banking
organizations and insurance companies.]
[A trust or other legal entity
organized under the laws of
________________ to issue trust
[certificates.][notes.][asset-backed]
[trust preferred] securities. [A[
]%]-[floating rate] [United States
Government Entities] [Foreign
government entities]
[GSE Issuer]........................... [Specify issuer] [Pool of various U.S.
government sponsored entity issuers].
S-6
[The [obligor] [guarantor] is subject
to the informational requirements of
the Exchange Act and which, in
accordance with the Exchange Act, files
reports and other information
(including financial information) with
the SEC]. [The obligor makes available
to the public upon request certain
annual financial and other
information.] See "Description of the
Deposited Assets".
[United States treasury securities/US.
Government Sponsored Entities]
[[Name such obligor] is a [U.S.
government-sponsored entity] [specify
other] whose principal executive
offices are located at [specify
address].]
[The [obligor] [guarantor] is subject
to the informational requirements of
the Exchange Act and which, in
accordance with the Exchange Act, files
reports and other information
(including financial information) with
the SEC]. [The obligor makes available
to the public upon request certain
annual financial and other
information.] See "Description of the
Deposited Assets."
[debt securities of one or more foreign
private issuers]
[[Name such obligor] is a [specify type
of entity and jurisdiction of
formation] whose principal executive
offices are located at [specify
address].]
[The [obligor] [guarantor] is subject
to the informational requirements of
the Exchange Act and which, in
accordance with the Exchange Act, files
reports and other information
(including financial information) with
the SEC]. [The obligor makes available
to the public upon request certain
annual financial and other
information.] See "Description of the
Deposited Assets".
[Foreign government debt securities]
[[Name such obligor] is [an entity
sponsored by the government of
[_______]] [specify other] whose
principal executive offices are located
at [specify address].]
S-7
[The [obligor] [guarantor] is subject
to the informational requirements of
the Exchange Act and in accordance
therewith files reports and other
information (including financial
information) with the SEC]. [The
obligor makes available to the public
upon request certain annual financial
and other information.] See
"Description of the Deposited Assets."
Additional Underlying Securities;
Issuance of Additional
Certificates........................... From time to time hereafter, additional
Underlying Securities may be [sold
to][deposited with] the Issuing Entity
without the consent of
Certificateholders, in which case
additional Certificates [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 Issuing Entity.
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]].
Additional Certificates [Name]
Certificates] will only be issued in
connection with the [deposit] [sale] of
additional
S-8
Underlying Securities [with] [to] the
Issuing Entity. [Or describe other
circumstances which may result in the
issuance of additional Certificates
[Name] Certificates.] Notice will be
given to existing Certificateholders of
the [deposit] [sale] of additional
Underlying Securities [with] [to] the
Issuing Entity not [less] [more] than
[___] days [prior to] [after] the date
on which such additional Underlying
Securities are [deposited with] [sold
to] the Issuing Entity. Any such
additional Certificates issued will
rank pari passu with the Certificates
issued on the Closing Date and such
additional Certificates together with
the Certificates issued on the Closing
Date will be backed by the expanded
asset pool consisting of the Underlying
Securities originally [sold to]
[deposited with] the Issuing Entity on
the Closing Date and any such
additional Underlying Securities which
are [sold to] [deposited with] the
Issuing Entity after the Closing Date
[and any such additional Underlying
Securities will be subject to
additional call [rights] [warrants]].
Additional Certificates will only be
issued in connection with the [deposit]
[sale] of additional Underlying
Securities [with] [to] the Issuing
Entity. [Or describe other
circumstances which may result in the
issuance of additional Certificates.
Notice will be given to existing
Certificateholders of the [deposit]
[sale] of additional Underlying
Securities [with] [to] the Issuing
Entity not [less] [more] than [___]
days [prior to] [after] the date on
which such additional Underlying
Securities are [deposited with] [sold
to] the Issuing Entity. Because
additional Underlying Securities may be
[sold to] [deposited with] the Issuing
Entity as described above, the trust is
a "master trust" within the meaning of
Item 1101(c)(3)(i) of Regulation AB.
Removal or Substitution of
Underlying Securities.................. [Underlying Securities may be removed
from the Issuing Entity upon [exercise
by an affiliate of the Depositor of its
right to exchange an aggregate
Certificate Principal Balance of the
Certificates for a principal amount of
Underlying Securities comprising the
same percentage of the Underlying
Securities held by the Issuing Entity.
See "Description of the Trust
Agreement--Affiliate Exchange Right"
herein.] [The Underlying Securities may
be purchased by the holder of the call
warrants on or after _______] at a
price equal to [describe]. [Describe
other events which may [allow][require]
the holder of the call [warrants] to
purchase the Underlying Securities.]
[Describe purchase of Underlying
Securities upon exercise of any put or
call entered into by the Issuing Entity
with respect to the Underlying Assets.]
[If any document relating to the
transfer of the Underlying Securities
to the Issuing Entity is found to be
missing or defective in any material
respect and the Depositor cannot cure
such omission or defect within 60 days
after receipt of notice of such
omission or defect, the Depositor will
be obligated, within 90 days of receipt
of such notice, to repurchase the
Underlying Securities from the Issuing
Entity at purchase price equal to
[describe] or provide a substitute for
the Underlying Securities.]
Underlying Securities Original
Issue Date............................. [ ].
S-9
Underlying Securities Final
Payment Date........................... [ ].
Amortization........................... [Describe amortization schedule, if
any].
Denominations; Underlying
Securities Currency.................... The Underlying Securities are
denominated and payable in [U.S.
dollars] [ ] and are available in
minimum denominations of [$][ ] and
[multiples thereof] [multiples of [$]
[]].
Underlying Securities Payment
Dates.................................. [ ], commencing [ ].
Underlying Securities Rate............. [__% per annum.] [A [Weighted Average]
rate per annum equal to [specify
interest rate formula for debt
security].]
Underlying Securities Interest
Accrual Periods........................ [Monthly] [Quarterly] [Semi-annually].
Priority............................... [Describe senior or subordinated status
or liquidation preference of any of
Underlying Securities].
Security............................... [Describe existence of any security for
obligations or state that Underlying
Securities are unsecured].
Redemption/Put/Call Other Features..... [Describe existence of any redemption,
put, call or other material features
applicable to the Underlying
Securities].
Form of Security....................... Book-entry debt securities with DTC.
[Listing].............................. [Describe stock exchange listings, if
any.]
[Underlying Securities Trustee]........ [ ]. The Underlying Securities have
been issued through an indenture
between ______________ and the issuer
of the Underlying Securities.
[Fiscal and Paying Agent].............. [ ] [The Underlying Securities have
been issued through a fiscal and paying
agency agreement, between ____________
and the issuer of the Underlying
Securities] [specify other agreement].
Ratings................................ It is a condition of the issuance of
the certificate that they are rated [ ]
by [ ] [and [ ] by [ ]]. A security
rating is not a recommendation to buy,
sell or hold securities and may be
subject to revision or
S-10
withdrawal at any time by the assigning
rating agency. A security rating does
not address the occurrence or frequency
of redemptions or prepayments on, or
extensions of the maturity of, the
Deposited Assets, the corresponding
effect on yield to investors [or
whether investors in the class [ ]
certificates may fail to recover fully
their initial investment].See
"Description of the Underlying
Securities-Ratings of Underlying
Securities."
[Other Deposited Assets and Credit
Support................................ The Deposited Assets will also include
[direct obligations of the United
States] [describe any assets that are
incidental or relate to the Underlying
Securities, including puts, calls,
interest rate swaps, currency swaps,
floors, caps and collars] (such assets,
together with the Underlying
Securities, the "Deposited Assets").
See "Description of the [Deposited
Assets] [Underlying Securities]."
[The certificateholders of the [specify
particular classes] certificates will
have the benefit of [describe credit
support] to support or ensure the
[servicing and] [timely] [ultimate]
distribution of amounts due with
respect to the Deposited Assets,
including providing certain coverage
with respect to losses.]]
[If the entity or group of affiliated
entities providing credit support is
liable or contingently liable to
provide payments representing 10% or
more of the cash flow supporting the
Certificates, identify the name,
organizational form, and general
character of the business of the credit
support provider and provide or
incorporate by reference financial
data.]
Trustee and Servicer................... [_______]. We refer to [______] as
"[_____]" or the "Trustee." On the
closing date, SOC 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 Issuing
Entity, including: performing
distribution calculations, remitting
distributions on the distribution dates
to Certificate holders and preparing
[monthly] [quarterly] [semi-
S-11
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. [Identify additional servicers
and sub-servicers if they represent 10%
or more of the pool assets.]
Trustee and Servicer
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
Issuing Entity from the interest [and
principal] payments received by the
Issuing Entity 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 Issuing Entity with
respect thereto][add source,
distribution and priority of fees.]
Federal Income Tax
Consequences........................... The Depositor will receive an opinion
that the Issuing Entity [should] [will]
be characterized as a grantor trust and
will not be characterized as an
association taxable as a corporation.
ERISA Considerations................... An employee benefit plan subject to the
Employee Retirement Income Security Act
of 1974 ("ERISA"), including an
individual retirement account (an
"IRA") or Keogh plan (a "Keogh") (each,
a "Plan") should consult its advisors
concerning the ability of such Plan to
purchase Certificates under ERISA or
the Code. See "Certain ERISA
Considerations."
S-12
[Revised diagram of flow of funds and payment priorities, as applicable]
S-13
RISK FACTORS
[Describe risk factors applicable to the specific Underlying
Securities, other Deposited Assets and the particular structure of the
certificates being offered, including factors relating to the yield on the
certificates and risks associated with the Deposited Assets (including any
material risks as a result of any repurchase option or put and the inclusion in
the Deposited Assets of GTCs) and the terms of the Deposited Assets, as
described in "Summary of Principal Economic Terms--Underlying Securities".] See
"Risk Factors" and "Maturity and Yield Considerations" in the Prospectus.
[The Underlying Securities are not guaranteed by the federal government or any
agency or instrumentally of the federal government, other than the issuer of the
Underlying Securities.]
SPONSOR AND DEPOSITOR
Structured Obligations Corporation, or the "Company", was incorporated
in the State of Delaware on October, 13, 1993, as an indirect, wholly-owned,
limited-purpose finance subsidiary of J.P. Morgan Securities Inc. The Company's
address is 270 Park Avenue, New York, NY 10017 and its telephone number is (212)
834-3040 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 four years ago.
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 limited activities of the Company are 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
S-14
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
The Issuing Entity will be formed through the trust agreement
(including the series supplement executed and delivered in connection with the
issuance of the certificates) between SOC and the Trustee. At the time of the
execution and delivery of the series supplement, SOC will deposit the Underlying
Securities in the Trust. The Trustee, on behalf of the Trust, will accept such
Underlying Securities and will deliver the certificates in accordance with the
instructions of SOC.
The Underlying Securities will be purchased in the secondary market.
[name of issuer] is [not] participating in this offering and will not receive
any of the proceeds of the issuance of the certificates. [Neither SOC nor any of
its affiliates participated in the initial public offering of the Underlying
Securities] [[The [underwriter]] [__________,] [an affiliate of SOC],
participated in the initial public offering of the Underlying Securities as a
[co-underwriter] [underwriter]].
DESCRIPTION OF THE DEPOSITED ASSETS
General
This Prospectus Supplement sets forth the relevant terms with respect
to the Underlying Securities, but does not provide detailed information with
respect to the Underlying Securities or the issuer of the Underlying Securities.
This Prospectus Supplement relates only to the Certificates and does not relate
to the Deposited Assets. All disclosure contained in this Prospectus Supplement
with respect to the Underlying Securities is derived from [publicly available
documents] [information set forth in the offering memorandum for the Underlying
Securities]. [Describe publicly available documents and sources.] [The] [Each]
issuer of the Underlying Securities is [not] subject to the information
reporting requirements of the Exchange Act. Although SOC has no reason to
believe the information concerning the Underlying Securities, [name of issuer]
[or each Underlying Securities prospectus related to the Underlying Securities]
and other [publicly available] information is not reliable, in connection with
the offering of the Certificates, neither SOC nor any of the underwriters has
participated in the preparation of such documents, or made any due diligence
inquiry with respect to the information provided in such documents. Events
affecting the Underlying Securities or [or name of issuer] may have occurred and
may have not yet been publicly disclosed. Such undisclosed events would affect
the accuracy or completeness of the documents described above.
The issuing entity will have no assets other than Underlying
Securities [and any other Deposited Assets] from which to make distributions of
amounts due in respect of the trust certificates. Consequently, the ability of
trust certificateholders to receive distributions in respect of the trust
certificates will depend entirely on the trust's receipt of payments on the
Underlying Securities [and any other Deposited Assets]. You should consider
carefully the financial condition of the issuer of the Underlying Securities and
its ability to make payments in respect of the Underlying Securities. This
Prospectus Supplement relates only to the trust certificates being
S-15
offered hereby and does not relate to the Underlying Securities or the issuer of
the Underlying Securities.
[Add disclosure indicating the significant percentage of a derivative pursuant
to 1115(a)(4) of Reg. AB. 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].]
[Use the following where the Underlying Securities consist of a pool of
obligations of multiple obligors.]
[The Deposited Assets will consist primarily of the Underlying
Securities, which are a pool of [publicly issued debt or asset-backed securities
of [domestic] [foreign] [corporations][,][limited liability companies][,]
[banking organizations] [and] [insurance companies] [U.S. treasury securities]
[U.S. government-sponsored entities ("GSEs")] [Government Trust Certificates
("GTCs")]] [foreign governments, political subdivision or agency thereof]
[foreign private issuers]. The Underlying Securities will be purchased in the
secondary market.
The composition of the Underlying Securities pool and the distribution
by ratings, remaining term to maturity and interest rate of the Underlying
Securities as of the Cut-off Date are as set forth below:
Composition of the Underlying Securities Pool
as of the Cut-off Date
Number of Underlying Securities:
Aggregate Principal Balance: [$]
Average Principal Balance: [$]
Largest Balance: [$]
Weighted Average Interest Rate: %
Weighted Average Original Term to Maturity: years
Weighted Average Remaining Term to Maturity: years
Longest Remaining Term to Maturity: years
Distribution by Industry Classification
of the Underlying Securities Pool as of the Cut-off Date
Percent of
Aggregate Aggregate
Industry Principal Principal
Classification Number Balance Balance
- ---------------------------------------------------------- ----------- ----------- -----------
----------- ----------- -----------
Total
----------- ----------- -----------
S-16
Distribution by Ratings of the
Underlying Securities Business Tool as of the Cut-Off Date
Percent of
Aggregate Aggregate
Principal Principal
Rating Number Balance Balance
- ---------------------------------------------------------- ----------- ----------- -----------
----------- ----------- -----------
Total
----------- ----------- -----------
Distribution by Remaining Term to Maturity
of the Underlying Securities Pool as of the Cut-off Date
Percent of
Aggregate Aggregate
Remaining Term Principal Principal
to Maturity Number Balance Balance
- ---------------------------------------------------------- ----------- ----------- -----------
----------- ----------- -----------
Total
----------- ----------- -----------
Distribution by Interest Rate of the
Underlying Securities Pool as of the Cut-off Date
Percent of
Aggregate Aggregate
Principal Principal
Interest Rate Range Number Balance Balance
- ---------------------------------------------------------- ----------- ----------- -----------
__% to __% [$] %
Greater than __% [$] 100%
----------- ----------- -----------
Total
----------- ----------- -----------
[As of the Cut-off Date, [all of] [approximately ___% of] the
Underlying Securities were rated [investment grade] [specify particular rating]
by at least one nationally recognized rating agency, and, based on publicly
available information, no obligor of any Underlying Security was in default in
the payment of any installments of principal, interest or premium (if any) with
respect to such Underlying Security. Any rating of any of the Underlying
Securities is not a recommendation to purchase, hold or sell such Underlying
Security or the certificates, and a rating may not remain for any given period
of time or may be lowered or withdrawn entirely by a rating agency in the
future. See "Ratings" in this Prospectus Supplement and "Risk Factors--Ratings
of the Certificates" in the accompanying Prospectus regarding considerations
applicable to the ratings of the certificates.]
S-17
Underlying Securities
The Underlying Securities have been issued by [an] agreement[s]
(specify other)) between the [various] [issuer[s] of the Underlying Securities
and Underlying Securities [trustee[s]] [fiscal agent[s]] [a certificate of
designation].
The [pool of] Underlying Securities, together with any other assets
described below and any credit support described under "Description of Credit
Support," represent the sole assets of the Issuing Entity that are available to
make distributions in respect of the certificates.]
[Use the following with respect to each obligor the Underlying
Securities of which represent more than 10% of the total Underlying Securities
available to make distributions in respect of the certificates-only a single
obligor is referred to for purposes of this section of the form of Prospectus
Supplement.]
[A significant portion of] [Virtually all of] [All of] the Deposited
Assets of the Issuing Entity will consist of the [___%] [floating rate] [specify
security] due _____________ of [specify issuer][, exclusive of the interest in
such Deposited Assets retained by [SOC] as described below (the "Retained
Interest")], having an [aggregate principal amount] [aggregate liquidation
preference amount] outstanding as of the Cut-off Date of approximately
[$][specify currency] (the "Underlying Securities"). The Underlying Securities
[(other than Underlying Securities which are issued by the United States of
America)] will be purchased in the secondary market (either directly or through
an affiliate of SOC) and will be deposited into the Trust. [Describe any put,
call or other conversion or redemption options applicable to the Underlying
Securities, as well as the nature of the obligation represented by such
Underlying Securities (i.e., senior, subordinate, secured)]. As of the Cut-off
Date, the foregoing security comprising [___%] of the Underlying Securities was
rated [specify investment grade rating] [investment grade] by [specify
nationally recognized rating agency or agencies], and, based on publicly
available information, the obligor thereon was not in default in the payment of
any installments of principal, interest or premium (if any) with respect to such
Underlying Security. Any such rating of such Underlying Securities is not a
recommendation to purchase, hold or sell such Underlying Securities or the
certificates, and a rating may not remain for any given period of time or may be
lowered or withdrawn entirely by a rating agency in the future. See "Ratings" in
this Prospectus Supplement and "Risk Factors-Ratings of the Certificates" in the
accompanying Prospectus regarding certain considerations applicable to the
ratings of the certificates.
[Describe material terms of Underlying Securities]
[According to [name such issuer]'s publicly available documents, [name
such issuer] is a [identify form of corporation, trust, banking organization or
insurance company] whose principal executive offices are located at [specify
address]. SOC is not an affiliate of [name such issuer]. [Name such obligor] is
subject to the informational requirements of the Exchange Act and in accordance
therewith files reports and other information (including financial information)
with the SEC [and makes available to the public upon request certain annual
reports containing financial and other information]. You can request copies of
these documents, upon payment of a duplicating fee, by writing to the SEC.
Please call the SEC at (800) SEC-0330 for further information on the operation
of the SEC's public reference rooms. In addition, such reports and
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other information [can be inspected at the offices of the [New York Stock
Exchange at 20 Broad Street, New York, New York 10005] [American Stock Exchange,
86 Trinity Place, New York, New York 10013]] [may be obtained from [name such
obligor], according to its most recent annual report, upon written or oral
request to [name such obligor]].] [Add disclosure, with respect to each
Underlying Issuer to include the financial information described in Item 1112(b)
of Regulation AB, to the extent required to be disclosed pursuant to such Item.]
[The Federal National Mortgage Association
The Federal National Mortgage Association ("Fannie Mae") is a federally
chartered and stockholder-owned corporation organized and existing under the
Federal National Mortgage Association Charter Act, 12 U.S.C. ss. 1716 et seq. It
is the largest investor in home mortgage loans in the United States. Fannie Mae
originally was established in 1938, as a United States government agency to
provide supplemental liquidity to the mortgage market and was transformed into a
stockholder-owned and privately managed corporation by legislation enacted in
1968. Fannie Mae provides funds to the mortgage market by purchasing mortgage
loans from lenders, which replenishes their funds for additional lending. Fannie
Mae acquires funds to purchase loans from many capital market investors that
ordinarily may not invest in mortgage loans, thereby expands the total amount of
funds available for housing. Operating nationwide, Fannie Mae helps to
redistribute mortgage funds from capital-surplus to capital-short areas. Fannie
Mae also issues mortgaged-backed securities. Fannie Mae receives guaranty fees
for its guaranty of timely payment of principal of and interest on
mortgaged-backed securities. Fannie Mae issues mortgaged-backed securities
primarily in exchange for pools of mortgage loans from lenders. The issuance of
mortgaged-backed securities enables Fannie Mae to further its statutory purpose
of increasing the liquidity of residential mortgage loans.
Fannie Mae prepares an information statement annually which describes
Fannie Mae, its business and operations and contains Fannie Mae's audited
financial statements. From time to time Fannie Mae prepares supplements to its
information statement which include certain unaudited financial data and other
information concerning the business and operations of Fannie Mae. These
documents can be obtained without charge from Paul Paquin, Senior Vice President
- - Investor Relations, Fannie Mae, 3900 Wisconsin Avenue, N.W., Washington, D.C.
20016. Fannie Mae is not subject to the periodic reporting requirements of the
Exchange Act.]
[The Federal Home Loan Mortgage Corporation
The Federal Home Loan Mortgage Corporation ("Freddie Mac") is a
publicly held government-sponsored enterprise created on July 24, 1970 by the
Federal Home Loan Mortgage Corporation Act, Title III of the Emergency Home
Finance Act of 1970. Freddie Mac's statutory mission is to provide stability in
the secondary market for home mortgages, to respond appropriately to the private
capital market and to provide ongoing assistance to the secondary market for
home mortgages (including mortgages secured by housing for low-and
moderate-income families involving a reasonable economic return to Freddie Mac)
by increasing the liquidity of mortgage investments and improving the
distribution of investment capital available for home mortgage financing. The
principal activity of Freddie Mac consists of the purchase of first lien,
conventional, residential mortgages and participation interests in such
mortgages from mortgage lending institutions and the resale of the mortgages so
purchased in the form of
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guaranteed mortgage securities. Freddie Mac generally matches and finances its
purchases or mortgages with sales of guaranteed securities. Mortgages retained
by Freddie Mac are financed with short-and long-term debt, cash temporarily held
pending disbursement to security holders, and equity capital.
Freddie Mac prepares an information statement annually which describes
Freddie Mac, its business and operations and contains Freddie Mac's audited
financial statements. From time to time Freddie Mac prepares supplements to its
information statement which include certain unaudited financial data and other
information concerning the business and operations of Freddie Mac. These
documents can be obtained from Freddie Mac by writing or calling Freddie Mac's
Investor Inquiry Department at 8200 Jones Branch Drive, McLean, Virginia 22102.
Freddie Mac is not subject to the periodic reporting requirements of the
Exchange Act.]
[The Student Loan Marketing Association
The Student Loan Marketing Association ("Sallie Mae") is a
stockholder-owned corporation established by the 1972 amendments to the Higher
Education Act of 1965 to provide liquidity, primarily through secondary market
and warehousing activities, for lenders participating in the Federal Family
Education Loan program and the Health Education Assistance Loan Program. Under
the Higher Education Act, Sallie Mae is authorized to purchase, warehouse, sell
and offer participations or pooled interests in, or otherwise deal in, student
loans, including, but not limited to, loans insured under the FEEL program, and
to make commitments for any of the foregoing. Sallie Mae is also authorized to
buy, sell, hold, underwrite and otherwise deal in obligations of eligible
lenders, if such obligations are issued by such eligible lender for the purpose
of making or purchasing federally guaranteed student loans under the Higher
Education Act. As a federally chartered corporation, Sallie Mae's structure and
operational authorities are subject to revision by amendments to the Higher
Education Act of other federal enactments.
Sallie Mae prepares an information statement annually which describes
Sallie Mae, its business and operations and contains Sallie Mae's audited
financial statements. From time to time Sallie Mae prepares supplements to its
information statement which include certain unaudited financial data and other
information concerning the business and operations of Sallie Mae. These
documents can be obtained without charge upon written request to the Corporate
and Investor Relations Division of Sallie Mae at 1050 Thomas Jefferson Street,
N.W., Washington, D.C. 20007. Sallie Mae is not subject to the periodic
reporting requirements of the Exchange Act.]
[The Resolution Funding Corporation
The Resolution Funding Corporation is a mixed-ownership government
corporation established by Title V of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (the "FIRRE Act"). The sole purpose of the
Resolution Funding Corporation is to provide financing for the Resolution Trust
Corporation. The Resolution Funding Corporation is to be dissolved, as soon as
practicable, after the maturity and full payment of all obligations issued by
it. The Resolution Funding Corporation is subject to the general oversight and
direction of the Oversight Board, which is comprised of the Secretary of the
Treasury, the Chairman of the
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Federal Reserve Board of Governors, the Secretary of Housing and Urban
Development and two independent members from different political parties to be
appointed by the President with the advice and consent of the Senate. The
day-to-day operations of the Resolution Funding Corporation are under the
management of a three-member Directorate comprised of the Director of the Office
of Finance of the Federal Home Loan Banks and two members selected by the
Oversight Board from among the presidents of twelve Federal Home Loan Banks.
[The Resolution Trust Corporation was established by the FIRRE Act to
manage and resolve cases involving failed savings and loan institutions in
accordance with policies established by the Oversight Board. The Resolution
Trust Corporation manages and resolves cases for which a receiver or conservator
was appointed between January 1, 1989 through August 9, 1992. The Resolution
Trust Corporation is authorized to issue nonvoting capital certificates to
Resolution Funding Corporation in exchange for the funds transferred from the
Resolution Funding Corporation to the Resolution Trust Corporation. The
Resolution Trust Corporation will terminate on or before December 31, 1996.] The
FIRRE Act limits the aggregate principal amount of interest bearing obligations
which may be issued by the Resolution Funding Corporation to $30 billion, which
amount of obligations was issued in 1989. The FIRRE Act requires that the net
proceeds of these obligations are used to purchase nonvoting capital
certificates issued by the Resolution Trust Corporation or to retire previously
issued Resolution Funding Corporation obligations.
Information concerning Resolution Funding Corporation may be obtained
from the Resolution Funding Corporation, Suite 850, 655 Fifteenth Street, N.W.,
Washington, D.C. 20005. Resolution Funding Corporation is not subject to the
periodic reporting requirements of the Exchange Act.]
[The Federal Home Loan Banks
The Federal Home Loan Banks constitute a system of twelve federally
chartered corporations. The mission of each Federal Home Loan Bank is to enhance
the availability of residential mortgage credit by providing a readily
available, low-cost source of funds to its member institutions. A primary source
of funds for the Federal Home Loan Banks is the proceeds from the sale to the
public of debt instruments issued by the Federal Housing Finance Board, which
are the joint and several obligations of all of the Federal Home Loan Banks. The
Federal Home Loan Banks are supervised and regulated by the Federal Housing
Finance Board, which is an independent federal agency in the executive branch of
the United States government, but obligations of the Federal Home Loan Banks are
not obligations of the United States government.
The Federal Home Loan Bank System produces annual and quarterly
financial reports in connection with the original offering and issuance by the
Federal Housing Finance Board of consolidated bonds and consolidated notes of
the Federal Home Loan Banks. Questions regarding the Federal Home Loan Banks
Combined Financial Statement should be directed to the Deputy Director,
Financial Reporting and Operations Divisions, Federal Housing Finance Board,
1.777 F Street, N.W., Washington, D.C. 20006. Copies of the Financial Reports
will be furnished upon request to the Capital Markets Divisions, Office of
Finance.]
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[Tennessee Valley Authority
TVA is a wholly owned corporate agency and instrumentality of the
United States of America established by the Tennessee Valley Authority Act of
1933. TVA's objective is to develop the resources of the Tennessee valley region
in order to strengthen the regional and national economy and the national
defense. The programs of TVA consist of power and nonpower programs. [For the
fiscal year ending September 30, 1994, TVA received $140 million in
congressional appropriations from the federal government for the nonpower
programs.] The power program is required to be self-supporting from revenues it.
produces. The TVA Act authorizes TVA to issue evidences of indebtedness that may
only be used to finance its power program.
TVA prepares an information statement annually which describes TVA, its
business and operations and contains TVA's audited financial statements. From
time to time TVA prepares supplements to its information statement which include
certain unaudited financial data and other information concerning the business
and operations of TVA. These documents can be obtained upon written request
directed to Tennessee Valley Authority, 400 West Summit Hill Drive, Knoxville,
Tennessee 37902, Attention: Vice President and Treasurer.]
[Federal Farm Credit Banks
The Farm Credit system is a nationwide system of lending institutions
and affiliated service and other entities. Through its banks and related
associations, the farm Credit System provides credit and related services to
farmers, ranchers, producers and harvesters of aquatic products, rural
homeowners, certain farm-related businesses, agricultural and aquatic
cooperatives and rural utilities. System institutions are federally chartered
under the Farm Credit Act of 1971 and are subject to regulation by a Federal
agency, the Farm Credit Administration. The Farm Credit Banks and associations
are not commonly owned or controlled. They are cooperatively owned, directly or
indirectly, by their respective borrowers. Unlike commercial banks and other
financial institutions that lead to the agricultural sector in addition to other
sectors of the economy, under the Farm Credit Act the Farm Credit System
institutions are restricted solely to making loans to qualified borrowers in the
agricultural sector and to certain related businesses. Moreover, the Farm Credit
System is required to make credit and other services available in all areas of
the nation. In order to fulfill its broad statutory mandate, the Farm Credit
System maintains lending units in all 50 states and the Commonwealth of Puerto
Rico.
The Farm Credit System obtains funds for its lending operations
primarily from the sale of debt securities issued under the Farm Credit Act
("Systemwide Debt Securities"). The Farm Credit Banks are jointly and severally
liable on all Systemwide Debt Securities. Systemwide Debt Securities are issued
by the Farm Credit Banks through the Federal Farm Credit Banks Funding
Corporation, as agent for the Farm Credit Banks. Each Farm Credit Bank
determines its participation in each issue of Systemwide Debt Securities based
on its funding and operating requirements, subject to the availability of
eligible collateral, to determinations by the Funding Corporation as to
conditions of participation and terms of each issuance, and to Farm Credit
Administration approval.
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Important information regarding the Farm Credit Banks and the Farm
Credit System, including combined financial information, is contained in
disclosure information made available by the Farm Credit Banks Funding
Corporation. This information consists of the most recent Farm Credit System
annual information statement and any quarterly information statements issued
subsequent to such annual information statement and certain press releases
issued from time to time by the Funding Corporation. Such information and the
Farm Credit System Annual Report to Investors for the current and two preceding
fiscal years are available for inspection at the Federal Farm Credit Banks
Funding Corporation, Investment Banking Services Department, 10 Exchange Place,
Suite 1401, Jersey City, New Jersey 07302. Upon request, the Farm Credit Banks
Funding Corporation will furnish, without charge, copies of the above
information.]
[Government Trust Certificates
Government Trust Certificates ("GTCs") consist of certificates
evidencing undivided fractional interests in a trust, the assets of which
consist of promissory notes (the "Notes"), payable in U.S. Dollars, of a certain
foreign government, backed by a full faith and credit guaranty issued by the
United States of America, acting through the Defense Security Assistance Agency
of the Department of Defense, of the due and punctual payment of 90% of all
payments of principal and interest due on the Notes and a security interest in
collateral, consisting of non-callable securities issued or guaranteed by the
United States government or agencies of the United States government, sufficient
to pay the remaining 10% of all payments of principal and interest due on the
Notes.
Many GTCs have been issued through Title III of the Foreign Operations,
Export Financing and Related Programs Appropriations Acts (the "Appropriations
Acts"), which permit borrowers to prepay certain eligible high-interest loans
made by the Federal Financing Bank under the Foreign Military Sales Credit
Program. The Appropriations Acts permit prepayment of the Foreign Military Sales
loans with the proceeds of new loans and authorize the issuance of a United
States government guaranty covering no more and no less than ninety percent
(90%) of the payments due on each such new loan, in accordance with the
requirements of the Arms Export Control Act. It is a condition to the issuance
of certificates under such program that the Defense Security Assistance Agency
approve the refinancing of any such Foreign Military Sales loan.
Although 90% of all payments of principal and interest on the Notes are
guaranteed by the United States government or agencies of the United States
government, and 10% of such payments are secured by securities of the United
States government or agencies of the United States government, the GTCs
themselves are not so guaranteed. In the event of a default on the Notes, the
Trustee of the Issuing Entity would be required by the operative documents to
make a claim against the United States government or an agency of the United
States government or would be required to liquidate the collateral securing the
Notes.
Payments Under the Guaranty. If the borrower under the Notes (the
"Borrower") fails to deposit with the related trustee all amounts due on the
Notes on any Note payment date (each, a "Note Payment Date"), the Trustee will
first notify the Borrower and, one business day thereafter, will send a notice
to the Director of the Defense Security Assistance Agency and to the related
depositary (the "Depositary") setting forth the amounts due on the Notes on such
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Note Payment Date and the amounts, if any, received from the Borrower. On the
[11th calendar day; following the Note Payment Date, if any amounts due on a
Note remain unpaid, the Trustee will demand payment from the Defense Security
Assistance Agency on the applicable Guaranty in accordance with its terms. On
the day the Trustee receives such payment, it will instruct the Depositary
immediately to deliver sufficient funds to pay the amounts remaining unpaid on
the Note.
On the occurrence of an event of default (as defined in the related
loan agreement), the Trustee in its discretion may proceed to protect and
enforce the rights of the GTC holders under the Declaration of Trust by a suit,
action or other proceeding. As provided in the loan agreement, the Guaranty and
the Depositary Agreement, the Trustee has the legal power to exercise all the
rights, powers and privileges of a holder of the Note.
The Trustee is required to take all necessary action, as permitted by
the Declaration of Trust and applicable law (i) to enforce payments due from the
Defense Security Assistance Agency under the Guaranty and (ii) to take
possession of collateral maturing or paying interest on or prior to the Note
payment date on which default occurred, and to apply such funds in accordance
with the Declaration of Trust for the benefit of holders of GTCs. The Trustee is
required to notify the Borrower upon taking the foregoing actions. Neither the
Trust: holding a Note nor the Defense Security Assistance Agency has the right
to accelerate payment of the Note, notwithstanding any failure of the Borrower
to make payment on the Note or other event of default with respect to the Note.
The Issuing Entity will have no other significant assets [other than
any credit support or those assets referred to below] from which to make
distributions of amounts due in respect of the certificates. Consequently, the
ability of certificateholders to receive distributions in respect of the
certificates will depend [almost] entirely on the Trust's receipt of payments on
the foregoing Underlying Securities from [name such obligor]. Prospective
purchasers of the certificates should consider carefully [name such obligor]'s
financial condition and its ability to make payments in respect of such
Underlying Securities. This Prospectus Supplement relates only to the
certificates being offered by this Prospectus Supplement and does not relate to
the Underlying Securities of [name such obligor]. All information contained in
this Prospectus Supplement regarding [name such obligor] is derived from
[describe publicly available documents]. Neither SOC nor [any of] the
underwriter[s] has participated in the preparation of such documents, or takes
any responsibility for the accuracy or completeness of the information provided
in such documents.
[The Deposited Assets will also include [direct obligations of the
United States of America][describe any assets which are ancillary or incidental
to the Underlying Securities, including puts, calls, interest rate swaps,
currency swaps, floors, caps and collars, and any cash. Credit enhancements are
limited to those described in the base prospectus] (such assets, together with
the Underlying Securities, the "Deposited Assets".)] [Add financial information
relating to the counterparty to the Swap Agreement required by Item 1115 of
Regulation AB if significant percentage thresholds are met or exceeded.]
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Pending Legal Proceedings
[There are no legal proceedings pending against the Sponsor, Seller,
Depositor, Trustees, Issuing Entity or other transaction parties which would be
material to investors.]
[Describe pending legal proceedings against the S-, S-, D-, T-, I-, E-
or transaction parties which are material to investors.]
Affiliations Among Transaction Parties
[Describe the relationships and affiliations of each of the Sponsor,
Seller, Depositor, Trustees, Issuing Entity and other relevant transaction
parties.]
[The Sponsor, which is also the Depositor, and the Advancing Agent are
wholly owned subsidiaries of J.P. Morgan Securities Holdings Inc. The Trustee is
not affiliated with the Sponsor or the Advancing Agent. The Issuing Entity is a
trust established pursuant to a trust agreement between the Trustee and the
Sponsor.]
[DESCRIPTION OF CREDIT SUPPORT]
For the benefit [solely] of the [Offered] [class [ ] certificates [and
the class [ ] certificates]], credit support will be obtained [and will
constitute part of the Issuing Entity to the extent provided below] to support
or ensure the [servicing and] [timely] [ultimate] distribution of amounts due
with respect to the Deposited Assets, in the form and amount described below.
[Provide financial and other information if an entity is liable or contingently
liable to provide payments representing 10% or more of the cash flow of any
offered class of the certificates pursuant to 1114(b) of Reg. AB.]
[The Letter of Credit
Simultaneously with the issuance of the certificates, SOC will obtain
the letter of credit from [ ] in favor of the Trustee on behalf of the
certificateholders. The letter of credit will be irrevocable and will [support
the [timely][ultimate] remittance of amounts due with respect to the Deposited
Assets]. [The maximum amount that the Trustee may draw under the letter of
credit will initially be equal to [$]. The initial amount of the letter of
credit will be [$] . Thereafter, the amount of the letter of credit with respect
to any Distribution Date will equal [the lesser of (i) ___% of the aggregate
certificate Principal Balance outstanding on the preceding Distribution Date
(after giving effect to any payment of principal made on such preceding
Distribution Date) but in any event not less than [$] , and (ii)] the amount of
the letter of credit on the preceding Distribution Date, plus [(a) reimbursement
of certain advances under the letter of credit and (b) recoveries on defaulted
Deposited Assets] [describe other methods]. The letter of credit expires on
_____________, 20__. The Trustee will be obligated, in the event of a drawing on
the letter of credit, to pursue appropriate remedies against the Deposited
Assets and other collateral, and any realization thereon shall be paid to the
letter of credit bank to the extent of any amounts owing, in the manner and
priority specified in "Description of the Certificates--Distributions" in this
Prospectus Supplement.]
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[Add language regarding the letter of credit bank with respect to its
debt ratings, activities it engages in, regulatory authorities having
jurisdiction over it and the nature of such regulation, a narrative description
of its assets, liabilities (including deposits) and equity, and include an
address for further information concerning the letter of credit bank. In
addition, to the extent that the letter of credit will cover payment of 20% or
more of the aggregate principal amount of the certificates covered by such
letter of credit, provide information of financial and other matters with
respect to the letter of credit bank, if necessary.]]
[The Surety Bond
Simultaneously with SOC's assignment of the Deposited Assets to the
Trust, SOC will obtain the surety bond from [ ] in favor of the Trustee on
behalf of the certificateholders. The surety bond will guaranty [timely]
[ultimate] distributions of the principal of and premium (if any) and interest
with respect to the [Offered][class[ ]] certificates. The surety bond expires on
___________, 20__. The Trustee will be obligated, in the event of a drawing on
the surety bond, to pursue appropriate remedies against the Deposited Assets and
other collateral, and any realization thereon shall be paid to the surety to the
extent of any amounts owing, in the manner and priority specified in
"Description of the Certificates--Distributions" in this Prospectus Supplement.
[Add language regarding the issuer of the surety bond with respect to
its debt ratings, activities it engages in, regulatory authorities having
jurisdiction over it and the nature of such regulation, a narrative description
of its assets, liabilities (including deposits) and equity, and include an
address for further information concerning the surety. In addition, to the
extent that the surety bond will cover payment of 20% or more of the aggregate
principal amount of the certificates covered by such letter of credit, provide
information of financial and other matters with respect to the issuer of the
surety bond, if necessary.]]
[Reserve Account
SOC will deposit with trustee on the Closing Date cash, letters of
credit and short-term investments acceptable to the Rating Agency initially
rating the certificates in the amount of [$] . [Collections with respect to the
Deposited Assets not distributed with respect to the certificates shall be
deposited in the Reserve Account.] Amounts deposited in the Reserve Account will
be used by the Trustee to make payments of principal of and premium (if any) and
interest on the certificates to the extent that funds are not otherwise
available. Immediately after any Distribution Date, amounts in the Reserve
Account in excess of [indicate formula] [may be paid to SOC].]
YIELD ON THE CERTIFICATES
[Describe factors relating to the Deposited Assets, the terms of the
Deposited Assets and the manner and priority in which collections thereon are
allocated to the certificateholders of each class of the certificates, as
described under "Summary of Principal Economic Terms--Distributions" in this
Prospectus Supplement.] See "Maturity and Yield Considerations" in the
Prospectus.
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DESCRIPTION OF THE CERTIFICATES
General
The certificates will consist of [ ] classes of certificates,
designated as class [ ] [, ] [and] class [ ] [and class [] certificates. The
certificates will be denominated and distributions with respect to the
Certificates will be payable in the Specified Currency. The certificates
represent in the aggregate 100% of the beneficial ownership interest in the
related trust. The class [ ] certificates have in the aggregate an initial
[Certificate Principal Balance] [Notional Amount] of [$] ________________
(approximate) and a [___%] [Variable] Pass-Through Rate. The class [ ]
certificates have in the aggregate an initial [Certificate Principal Balance]
[Notional Amount] of [$] ______________ (approximate) and a [____%] [Variable]
Pass-Through Rate. [The class [ ] certificates have in the aggregate an initial
[Certificate Principal Balance] [Notional Amount] of [$] ______________
(approximate) and a [___%] [Variable] Pass-Through Rate.] [The class [ ]
certificates, which are not being offered by this Prospectus Supplement, will be
transferred by SOC to an affiliate on the Closing Date and may be sold at any
time by SOC in accordance with the terms of the trust agreement.]
The certificates [(other than the class [ ] certificates [and specify
others] (the "Definitive Classes"))] will be issued, maintained and transferred
on the book-entry records of DTC and its Participants in minimum denominations
of [$ ] and [multiples of [$ ] in excess of [$ ]]. [The class [ ] certificates
[and specify any others] will be offered in registered, certificated form, in
minimum percentage interests corresponding to the initial Notional Amounts or
Certificate Principal Balances, as applicable, of [$ ] and integral multiples
thereof, except that one certificate of each such class may be issued with an
initial Notional Amount or Certificate Principal Balance, as applicable, equal
to an integral multiple of [$________] plus the excess of the initial aggregate
Notional Amount or Certificate Principal Balance, as applicable, of such class
over the greatest integral multiple of [$ ] that is not more than such initial
aggregate Notional Amount or Certificate Principal Balance, as applicable.]
The certificates [(other than the definitive classes of certificates)]
will each initially be represented by one or more global certificates registered
in the name of the nominee of DTC (together with any successor clearing agency
selected by SOC, the "Clearing Agency"), except as provided below. SOC has been
informed by DTC that DTC's nominee will be Cede & Co. No holder of any such
certificate will be entitled to receive a certificate representing such person's
interest, except as set forth below under "-Definitive Certificates." Unless and
until definitive certificates are issued under the limited circumstances
described below, all references to actions by certificateholders with respect to
any such certificates shall refer to actions taken by DTC upon instructions from
its Participants. See "-Definitive Certificates" below and "Description of
Certificates-Global Securities" in the accompanying Prospectus.
Under the rules, regulations and procedures creating and affecting DTC
and its operations, DTC will take action permitted to be taken by a
certificateholder under the trust agreement only at the direction of one or more
Participants to whose DTC account such certificates are credited. Additionally,
DTC will take such actions with respect to specified Voting Rights only at the
direction and on behalf of Participants whose holdings of such certificates
evidence such specified Voting Rights. DTC may take conflicting actions with
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respect to Voting Rights, to the extent that Participants whose holdings of
certificates evidence such Voting Rights, authorize conflicting action.
Definitive Certificates
Definitive certificates will be issued to you or your nominee,
respectively, rather than to DTC or its nominee, only if (i) SOC advises the
Trustee in writing that DTC is no longer willing or able to discharge properly
its responsibilities as Clearing Agency with respect to each class of
certificates [(other than the definitive classes)] and SOC is unable to locate a
qualified successor or (ii) SOC, at its option, elects to terminate the
book-entry system through DTC.
Upon the occurrence of any event described in the immediately preceding
paragraph, the Trustee is required to notify all Participants of the
availability through DTC of definitive certificates. Upon surrender by DTC of
the definitive certificates representing the certificates [(other than the
definitive classes of certificates)] and receipt of instructions for
re-registration, the Trustee will reissue such certificates as definitive
certificates issued in the respective principal amounts owned by the individual
owners of the certificates. Thereafter the Trustee will recognize the holders of
the definitive certificates as certificateholders under the trust agreement.
Distributions
Collections on the Deposited Assets that are received by the Trustee
for a given Collection Period and deposited from time to time into the
Certificate Account will be applied by the Trustee on each applicable
Distribution Date to the following distributions in the following order of
priority, solely to the extent of Available Funds (as defined below) on such
Distribution Date:
o [to the Trustee [and the Advance Agent], all unpaid fees and
expenses of [each of] the Trustee [and the Advance Agent] and
its respective agents, up to the Allowable Expense Amount (as
defined below) for the related Collection Period;]
o to the [providers of credit support ("Credit Support
Providers")] [swap or derivative counterparty], any amounts
required to be paid or reimbursed to, or deposited with, any
such person;]
o to the certificateholders of each class of such series, first,
to the payment of Required Interest [and on a pro rata basis
to the Credit Support Providers for the payment of any Credit
Support Payments], second, to the payment of Required
Principal and third, to the payment of Required Premium, in
each case applicable to such class, commencing with the most
highly ranked class and, to the extent Available Funds remain
available, to each other class in accordance with the ranking
specified under "-Allocation of Losses; Subordination";
o [to the Credit Support Providers, any credit support
payments;]
o [to the Trustee, all its remaining unpaid fees and expenses
and those of its respective agents not otherwise paid by
clause (i) above;]
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o [all remaining amounts, if any, to SOC].
Collections received from the Deposited Assets and any applicable
credit support relating to the certificates over a specified period may not be
sufficient, after payment of all Allowable Expense Amounts [and payment of all
amounts required to be paid to the Credit Support Providers] for such period, to
make all required distributions to the certificateholders of the certificates.
To the extent Available Funds are insufficient to make any such distributions
due to any such series or class, any shortfall will be carried over and will be
distributable on the next Distribution Date on which sufficient funds exist to
pay the shortfall.
For purposes of this Prospectus Supplement, the following terms have
the following meanings:
["Allowable Expense Amount" means, for any given Collection
Period, the sum of (x) [$] __________ and (y) amounts in respect of the
Allowable Expense Amount from the preceding Collection Period that have
not been applied on the Distribution Date for such preceding Collection
Period.]
"Available Funds" for any Distribution Date means the sum of
(a) all amounts received on or with respect to the Deposited Assets
(including investment income on Eligible Investments) received during
the preceding Collection Period[,] [and] (b) amounts available as of
such Distribution Date through the credit support described under
"Description of Credit Support" in this Prospectus Supplement [and (c)
any additional amount that SOC may remit to the Trustee from time to
time according to the terms of the trust agreement for application as
Available Funds].
"Call Premium Percentage" for any given Distribution Date
means [a fixed percentage] [a percentage that varies depending on
[describe basis for variable formula, such as the applicable date or
other factors or indices]].
"Eligible Investments" means, with respect to the
certificates, those investments acceptable to the Rating Agency as
being consistent with the rating of such certificates, as specified in
the trust agreement.
"Required Interest" for the certificates or any class of the
certificates on any given Distribution Date means the accrued and
unpaid interest on the outstanding Certificate Principal Balance [or
Notional Amount] of such certificates, computed at the applicable
Pass-Through Rate.
"Required Premium" for the certificates or any class of the
certificates for any Distribution Date means an amount equal to the
product of (a) the Required Principal for such certificates on such
Distribution Date and (b) the Call Premium Percentage for such
Distribution Date.
"Required Principal" for the certificates or any class of the
certificates for any Distribution Date means the amount received on the
Deposited Assets attributable to principal payments thereon during the
related Collection Period, to the extent allocable to such
certificates. The Certificate Principal Balance of a certificate
outstanding at any time
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represents the maximum amount that the holder of the Certificates is
entitled to receive as distributions allocable to principal from the
cash flow on the Underlying Securities, the other assets in the Issuing
Entity and any credit support obtained for the benefit of such holder.
The Certificate Principal Balance of any class of certificates [(other
than the class [ ] certificates)] as of any date of determination is
equal to the initial Certificate Principal Balance of the Certificates,
reduced by the aggregate of (a) all amounts allocable to principal
previously distributed with respect to such certificate and (b) any
reductions in the Certificate Principal Balance deemed to have occurred
in connection with allocations of (i) Realized Losses allocable to
principal on the Deposited Assets and (ii) Extraordinary Trust
Expenses, as described under "--Allocation of Losses; Subordination" in
this Prospectus Supplement. [The Notional Amount of the class [ ]
certificates as of any date of determination is equal to [specify
amount].] [Holders of the class [ ] certificates are not entitled to
receive any distributions allocable to principal.]
[Notwithstanding the priorities described above, holders of the class [
] certificates and the class [ ] certificates will be entitled to receive on any
Distribution Date 100% of all principal collections received in the related
Collection Period with respect to the Deposited Assets, to be distributed [on a
pro rata basis] in reduction of the Certificate Principal Balance of the class [
] certificates and the class [ ] certificates, if any of the following
conditions shall be satisfied: [describe conditions, if any, by which a certain
class is given 100% of the principal cash flow other than through subordination
that is in effect from the Closing Date].]
[Currency Matters]
[Distributions on the Deposited Assets are to be made in [identify
currency], and distributions on the Certificates are to be made in [identify
currency] (the "Specified Currency"). The [administrative agent][trustee] will
arrange to convert all payments in respect of [the Deposited Assets][each
certificate or class] to [identify currency] in the manner described in the
following paragraph. [The certificateholders may elect to receive all
distributions in respect of their certificates in [identify currency] by
delivery of a written notice to the Trustee [and administrative agent] not later
than fifteen calendar days prior to the applicable Distribution Date, except
under the circumstances described under "Currency Risks--Payment Currency"
below. An election will remain in effect until revoked by written notice to the
Trustee [and administrative agent] received by [it] [each of them] not later
than fifteen calendar days prior to the applicable Distribution Date.]]
[The amount of any U.S. dollar distribution in respect of a Certificate
will be determined by the Exchange Rate Agent based on the highest firm bid
quotation expressed in U.S. dollars received by the Exchange Rate Agent at
approximately 11:00 a.m., New York City time, on the second Business Day
preceding the applicable Distribution Date (or, if no such rate is quoted on
such date, the last date on which such rate was quoted), from three (or, if
three are not available, then two) recognized foreign exchange dealers in The
City of New York (one of which may be the Offering Agent and another of which
may be the Exchange Rate Agent) selected by the Exchange Rate Agent, for the
purchase by the quoting dealer, for settlement on such Distribution Date, of the
aggregate amount payable in such Specified Currency on such payment date in
respect of all registered certificates. All currency exchange costs will be
borne by the certificateholders of such registered certificates by deductions
from such distributions. If no
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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 SOC'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.]
[Exchange Rates and Exchange Controls]
[Revise the following and set forth under "Risk Factors," if
appropriate.][An investment in a certificate 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 the Specified Currency
and the possibility of the imposition or modification of foreign exchange
controls with respect to the Specified Currency. Such risks generally depend on
factors over which SOC 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 the 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 the Specified Currency. Even if there are no actual
exchange controls, it is possible that, on a Distribution Date, the Specified
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".
[The Underlying Securities are denominated in [ ]. Although payments in
respect of principal and interest on the certificates will be made in the
Specified Currency, such payments are based [in part] upon receipt by the
Issuing Entity of payments in [ ]. An investment in certificates supported by
Underlying Securities denominated in a currency other than the Specified
Currency entails significant risks not associated with an investment in
securities supported by obligations denominated in the same currency as the
currency of payment on such securities. Such risks include, without limitation,
the possibility of significant changes in rates of exchange between the
Specified Currency and [ ] and the possibility of the imposition or modification
of foreign exchange controls with respect to either the Specified Currency
or [ ].]
PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL
ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN CERTIFICATES DENOMINATED
IN A CURRENCY OTHER THAN U.S. DOLLARS. THE
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CERTIFICATES ARE NOT AN APPROPRIATE INVESTMENT FOR PERSONS WHO ARE
UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS.
[Information concerning historical exchange rates for the Specified
Currency against the U.S. dollar.]
[Describe exchange controls affecting the Specified Currency.]
[Other required information concerning the Specified Currency.]
[Payment Currency]
[Except as set forth below, if on any Distribution Date, the Specified
Currency is unavailable due to the imposition of exchange controls or other
circumstances beyond SOC's control or is no longer used by [the issuing
government] 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.]
[Foreign Currency Judgments]
[Revise the following and set forth under "Risk Factors," if
appropriate.] [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.]
[Additional Underlying Securities and Certificates
From time to time, additional Underlying Securities may be sold to the
Trust, in which case additional [Class [__]] Certificates will be issued in a
principal amount equal to [describe]. The additional [Class [__]] Certificates
will [rank on a parity with] the [Class [__]] Certificates previously issued by
the Trust. [The additional Underlying Securities will be subject to the Call
Warrants [or describe].]] Any such additional Certificates issued will rank pari
passu with the Certificates issued on the Closing Date and such additional
Certificates together with the Certificates issued on the Closing Date will be
backed by the expanded asset pool consisting of the Underlying Securities [sold
to] [deposited with] the Issuing Entity on the Closing Date and any such
additional Underlying Securities which are [sold to] [deposited with] the
Issuing Entity after the Closing Date [and any such additional Underlying
Securities will be subject to additional call [rights] [warrants]]. [Additional
Certificates will only be issued in connection with the [deposit] [sale] of
additional Underlying Securities [with] [to] the Trust.] [Or describe other
circumstances which may result in the issuance of additional Certificates.
Notice will be given to existing Certificateholders of the [deposit] [sale] of
additional Underlying Securities [with] [to] the Issuing Entity not [less]
[more] than [___] days [prior to] [after] the date on which
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such additional Underlying Securities are [deposited with] [sold to] the Trust.
Because additional Underlying Securities may be [sold to] [deposited with] the
Issuing Entity as described above, the Issuing Entity is a "master trust" within
the meaning of Item 1101(c)(3)(i) of Regulation AB.
[Redemption of [Class [__]] Certificates Upon Exercise of a Call Warrant
The Issuing Entity has issued Call Warrants which entitle the holder of
the Call Warrants to purchase the Underlying Securities [on or after] [describe
exercise provisions]. If the Call Warrants are exercised, then the [Class [__]]
Certificates will be redeemed at a price equal to [the principal amount of] the
Certificates redeemed plus accrued distributions to the date of redemption.
[Describe partial exercise and redemption of applicable.]]
[Tender Right]
Upon [__] Business Days prior notice, Certificateholders may tender
their Certificates to [__], the liquidity provider, for a price equal to the
[Notional Amount] [Certificate Principal Balance] of the Certificates tendered
plus accrued distributions thereon to the date of tender. The right of
Certificateholders to tender their Certificates will terminate immediately
without prior notice upon the occurrence of [describe termination events].
[Optional Exchange]
[The certificates are an Exchangeable Series, thus a holder may
exchange its certificates for a pro rata portion of the Deposited Assets. The
right of exchange shall be exercisable only to the extent that such exchange
would not be inconsistent with SOC'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.
Such terms include, but are not limited to, the following:
o a requirement that the exchanging holder tender its
certificates to the Trustee;
o a minimum [Stated Amount] [Notional Amount], with
respect to each certificate being tendered for exchange;
o a requirement that the [Stated Amount] [Notional Amount]
of each certificate tendered for exchange be an integral
multiple of $[ ];
o certificateholders may effect such an exchange only on [
] (each, an "Optional Exchange Date");
o [a limitation on the right of an exchanging holder to
receive any benefit upon exchange from [credit support
or other non-Underlying Securities deposited in the
Trust]]; and
o [an adjustment to the value of the proceeds of any
exchange based upon the prepayment of future expense
allocations and the establishment of the reserve for
anticipated Extraordinary Trust Expenses].
S-33
[In order for a certificate to be exchanged by the applicable
certificateholder, the Trustee 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 of the certificate 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 [Stated Amount]
[Notional Amount] of the registered certificate to be exchanged, the certificate
number or a description of the tenor and terms of the registration certificate,
a statement that the option to elect exchange is being exercised 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 the 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 Stated Amount of such
certificate provided that the Stated Amount 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 Stated Amount of the certificate shall be issued (which, in the case
of any registered certificate, shall be in the name of the holder of such
exchanged certificate).]
[Until definitive certificates are issued each certificate will be
represented by a global security, the Depositary's nominee will be the
certificateholder of such certificate and therefore will be the only entity that
can exercise a right of exchange. In order to ensure that the Depositary's
nominee will timely exercise a right of exchange with respect to a particular
certificate, the beneficial owner of such certificate must instruct the broker
or other direct or indirect participant through which it holds an interest in
such certificate to notify the Depositary of its desire to exercise a right of
exchange. Different firms have different cut-off times for accepting
instructions from their customers and, accordingly, each beneficial owner should
consult the broker or other direct or indirect participant through which it
holds an interest in a certificate in order to ascertain the cut-off time by
which such an instruction must be given in order for timely notice to be
delivered to the Depositary.]
[Upon the satisfaction of the foregoing conditions, certificateholders
will be entitled to receive a distribution of a pro rata share of the Deposited
Assets related to the certificate being exchanged or certificateholders, upon
satisfaction of such conditions, may direct the related trustee to sell, on
behalf of such certificateholders, such pro rata share of the Deposited Assets.
In such event the certificateholder will be entitled to receive the net proceeds
of such sale, less any costs and expenses incurred by the related trustee in
facilitating the sale, subject to adjustments.]
S-34
Default on Underlying Securities
[Describe provisions of trust agreement relating to actions to be taken
upon an occurrence of an event of default under the Underlying Securities or if
the issuer of the Underlying Securities ceases to file periodic reports under
the Exchange Act.] [If Underlying Securities are to be liquidated, then insert:
The Underlying Securities will be sold following a solicitation of bids for the
Underlying Securities, which bids may be solicited by JPMorgan Securities Inc.,
which is an affiliate of the Sponsor. The liquidation proceeds will be used
first to pay expenses of the sale, amounts owed to the Advance Agent, amounts
owed to the Trustee and any other amounts owed by the issuing entity which are
to be paid from the proceeds of the sale, and then will be distributed to
certificateholders. A special record date will be established by the Trustee,
and the distribution will be made to certificateholders as of the special record
date. The special record date will be a date on or about the date of liquidation
of the Underlying Securities or on or about the date of distribution of the
proceeds.]
[Advances
Subject to the following limitations, the [Administrative Agent,
Advance Agent or the] Trustee will be obligated to advance or cause to be
advanced on or before each Distribution Date its own funds, or funds in the
Certificate Account that are not included in the Available Funds for the
Distribution Date, in an amount equal to the aggregate of payments of principal,
premium (if any) and interest, net of that portion of the Available Funds
attributable to fees and expenses of the [Administrative Agent, the Advance
Agent or the] Trustee, that were due during the related Collection Period and
that were delinquent on the related Determination Date (any such advance, an
"Advance").
Advances are required to be made only to the extent they are deemed by
the [Administrative Agent, the Advance Agent or the] Trustee to be recoverable
from related late collections, insurance proceeds, if any, or Liquidation
Proceeds. The purpose of making such Advances is to maintain a regular cash flow
to the certificateholders, rather than to guarantee or insure against losses.
The [Administrative Agent, the Advance Agent or the] Trustee will not be
required to make any Advances with respect to reductions in the amount of the
payments on the Deposited Assets due to bankruptcy proceedings with respect to
the Deposited Assets.
All Advances will be reimbursable to the [Administrative Agent, the
Advance Agent or the] Trustee from late collections, insurance proceeds, if any,
and any proceeds from the liquidation of the Deposited Asset ("Liquidation
Proceeds") with respect to which such unreimbursed Advance was made. In
addition, any Advances previously made in respect of any Deposited Asset that
are deemed by the [Administrative Agent, the Advance Agent or the] Trustee to be
nonrecoverable from related late collections, insurance proceeds, if any, or
Liquidation Proceeds may be reimbursed to the [Administrative Agent, the Advance
Agent or the] Trustee out of any funds in the Certificate Account allocable to
any of the Deposited Assets prior to the distributions on the certificates.]
S-35
Allocation of Losses; Subordination [specify if necessary]
[The subordination described under "Summary of Principal Economic
Terms--Subordination" in this Prospectus Supplement provided by the class [ ]
certificates [and the class [ ] certificates] is designed to protect holders of
the remaining classes of certificates from certain losses and other shortfalls
with respect to the Deposited Assets. As a result, losses and other shortfalls
with respect to the Deposited Assets will be borne by the remaining classes of
certificates, to the extent described below, only if such losses and other
shortfalls are not so covered, or the coverage in respect of the Deposited
Assets has been exhausted.]
[Realized Losses and Extraordinary Trust Expenses will be allocated on
any Distribution Date as follows: [describe allocation among the various
classes].]
[An "Extraordinary Trust Expense" is an expense of a given issuing
entity in excess of the Allowable Expense Amount, including certain
reimbursements to SOC described in the Prospectus under "Description of
Certificates--[Certain Matters Regarding the Administrative Agent and SOC"] and
certain reimbursements to the Trustee described under "Description of the trust
agreement--The Trustee" in this Prospectus Supplement.]
[Restrictions on Transfer of the Class [ ] Certificates
Because the class [ ] certificates are subordinate to the class [ ]
certificates and the class [ ] certificates to the extent set forth herein, the
class [ ] certificates may not be purchased by or transferred to a Plan except
upon the delivery of an opinion of counsel as described herein. See "Certain
ERISA Considerations."]
DESCRIPTION OF THE TRUST AGREEMENT
General
The certificates will be issued through the trust agreement, a form of
which is filed as an exhibit to the registration statement. A Current Report on
Form 8-K relating to the certificates containing a copy of the trust agreement
as executed will be filed by SOC with the SEC following the issuance and sale of
the certificates. The Issuing Entity created under the trust agreement
(including the Series [ ] supplement) will consist of:
o the Deposited Assets (exclusive of any Retained Interest,
which is not part of the Trust);
o all payments on or collections in respect of the Deposited
Assets due after the Cut-off Date, together with any proceeds
of the Deposited Assets[,] [and];
o [any credit support in respect of any class or classes of
certificates.]
[In addition, the holders of the certificates may also have the benefit
of certain credit support discussed above. See "Description of Credit Support."]
Reference is made to the accompanying Prospectus for important information in
addition to that set forth in this prospectus supplement regarding the Trust,
the terms and conditions of the trust agreement and
S-36
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. Certificateholders should
review the form of trust agreement for a full description of its provisions.
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.]
[Insert Name] will act as trustee for the certificates and the Issuing
Entity as required by 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 of the Trustee will be indemnified by the Issuing
Entity and will be held harmless against any loss, liability or expense incurred
in connection with any legal action relating to the trust agreement or the
certificates or the performance of the Trustee's duties under the trust
agreement, other than any loss, liability or expense (i) that constitutes a
specific liability of the Trustee under the trust agreement or (ii) incurred by
reason of willful misfeasance, bad faith or negligence in the performance of the
Trustee's duties under the trust agreement or as a result of a breach, or by
reason of reckless disregard, of the Trustee's obligations and duties under the
trust agreement.
[Identify all affiliated and unaffiliated servicers (if they represent
10% or more of the pool assets) or any other material servicer pursuant to
1108(a)(2)(i)-(iv) of Reg. AB.]
Events of Default
[There are no events of default under the trust agreement; therefore, a
breach of a covenant under the trust agreement will not in and of itself result
in the acceleration of payments on the Certificates.]
[An event of default (an "event of default") with respect to any class
of certificates under the trust agreement will consist of:
o a default in the payment of any interest on any Underlying
Security after the same becomes due and payable (subject to
any applicable grace period);
o a default in the payment of the principal of or any
installment of principal of any Underlying Security when the
same becomes due and payable; and
S-37
o the occurrence and continuance of such other events specified
in the applicable series supplement.]
[Describe remedies available to certificateholders upon the occurrence
and continuance of an event of default, including, as applicable, directing the
Trustee to vote the Underlying Securities in favor of declaring the principal
balance of and any accrued interest on the Outstanding Debt Securities to be
immediately due and payable].
The trust agreement will provide that, within 30 days after the
occurrence of an event of default in respect of the certificates of any class,
the Trustee will give to the holders of such certificates notice, transmitted by
mail, of all such uncured or unwaived events of default known to it. However,
except in the case of an event of default relating to the payment of principal
of or premium, if any, or interest on any of the Underlying Securities, the
Trustee will be protected in withholding such notice if in good faith it
determines that the withholding of such notice is in the interest of the holders
of the certificates of such class.
No holder of any certificate will have the right to institute any
proceeding with respect to the trust agreement, unless:
o the holder previously has given to the Trustee written
notice of a continuing breach,
o the holders of certificates of such series evidencing
not less than the "Required Percentage--Remedies"
specified in the applicable series supplement of the
aggregate Voting Rights of such series have requested in
writing that the Trustee institute such proceeding in
its own name as trustee,
o the holder or holders have offered the Trustee
reasonable indemnity,
o the Trustee has for 15 days failed to institute such
proceeding and
o no direction inconsistent with such written request has
been given to the Trustee during such 15-day period by
the holders of certificates of such series evidencing
not less than the Required Percentage.
["Required Percentage-Remedies" shall mean [___%] of the Voting
Rights.]
Voting Rights
[At all times,] [Subject to the succeeding paragraph,] [ ]% of all
Voting Rights will be allocated among all holders of the class [ ]
certificates[,] [and] the class [ ] certificates [and specify other classes] in
proportion to the then outstanding Certificate Principal Balances [or Notional
Amounts] of their respective certificates and [ ]% of all Voting Rights will be
allocated among all holders of the class [ ] certificates in proportion to the
then outstanding [Certificate Principal Balances] [Notional Amounts] of their
respective certificates. [Specify whether and under what circumstances voting
will be class-by-class.]
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[Specify conditions, if any, under which allocation of Voting Rights
might change from the foregoing percentages.] ["Required Percentage-Amendment"
of Voting Rights necessary to consent to amendment or modification of the
Issuing Entity shall be [___%].] ["Required Percentage-Waiver" shall mean [___%]
[of the Voting Rights].]
Voting of Underlying Securities, [Modification of Indenture]
The Trustee, as holder of the Underlying Securities, has the right to
vote and give consents and waivers in respect of such Underlying Securities [as
permitted by [DTC] [Federal Reserve Bank]] and except as otherwise limited by
the trust agreement. In the event that the Trustee receives a request from
[[DTC] [Federal Reserve Bank]] the [Underlying Securities trustee] [the fiscal
agent] [or the issuer of the Underlying Securities] [or GSE issuer] for its
consent to any amendment, modification or waiver of the Underlying Securities,
[the indenture] or any other document thereunder or relating to the Underlying
Securities, or receives any other solicitation for any action with respect to
the Underlying Securities, the Trustee shall mail a notice of such proposed
amendment, modification, waiver or solicitation to each certificateholder of
record as of such date. The Trustee shall request instructions from the
certificateholders as to whether or not to consent to or vote to accept such
amendment, modification, waiver or solicitation. The Trustee shall consent or
vote, or refrain from consenting or voting, in the same proportion (based on the
relative Certificate Principal Balances and Notional Amounts of the
certificates, as applicable) as the certificates of the Issuing Entity were
actually voted or not voted by the certificateholders of the Issuing Entity as
of a date determined by the Trustee prior to the date on which such consent or
vote is required; provided, however, that, notwithstanding anything to the
contrary, the Trustee shall at no time vote or consent to any matter, (i) unless
the vote or consent would not, based on an opinion of counsel, alter the status
of the issuing entity for federal income tax purposes or cause the issuing
entity to be required to register as an investment company under the Investment
Company Act of 1940, (ii) that would alter the timing or amount of any payment
on the Underlying Securities, except in the event of an [underlying securities
event of default] [underlying securities early amortization event] [or an event
that with the passage of time or the giving of notice would become an
[underlying securities event of default][underlying security early amortization
event]] and with the unanimous consent of all outstanding certificates, or (iii)
that would result in the exchange or substitution of any of the outstanding
Underlying Securities pursuant to a plan for the refunding or refinancing of the
Underlying Securities, except with the consent of certificateholders
representing 100% of the aggregate voting rights of each outstanding class of
the certificates. The Trustee will not be liable for any failure to act
resulting from certificateholders' late return of, or failure to return,
directions requested by the Trustee from the certificateholders.
In the event that an offer is made by the [issuer of the Underlying
Securities] [or GSE issuer] to issue new obligations in exchange and
substitution for any of the Underlying Securities or any other offer is made for
the Underlying Securities, the Trustee will notify the certificateholders of
such offer as promptly as practicable. The Trustee must reject any such offer
unless an event of default under the indenture [Underlying Securities] has
occurred, the Trustee is directed by the affirmative vote of all of the
certificateholders to accept such offer [and the Trustee has received the tax
opinion and investment company act opinion described above].
S-39
[If an event of default under the [indenture] [Underlying Securities]
occurs and is continuing and if directed by all the holders of outstanding class
[ ] certificates and[, unless the class [ ] certificates are no longer
outstanding, by all the holders of outstanding class [ ] certificates,] the
Trustee will vote the Underlying Securities in favor of directing, or take such
other action as may be appropriate to direct, the Underlying Securities trustee
to declare the unpaid principal amount of the Underlying Securities and any
accrued and unpaid interest thereon to be due and payable. In connection with a
vote concerning whether to declare the acceleration of the Underlying
Securities, the certificateholders' interests of each class may differ and the
interests of either class may differ from holders of other outstanding debt
securities of the Underlying Securities issuer[s].]
[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;
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
S-40
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 Issuing Entity 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.]
[Administrative Agent]
[[___________,] has been appointed as the administrative agent for the
[Class [___]] certificates. The administrative agent is charged with the
following duties under the trust agreement: [describe duties of administrative
agent].
The administrative agent may resign from its obligations and duties
under the trust agreement only if such resignation, and the appointment of a
successor, will not result in a withdrawal or downgrading of the rating of the
[Class [___]] certificates, or upon a determination that its duties under the
trust agreement are no longer permissible under applicable law. No resignation
will become effective until the trustee or a successor has assumed the
administrative agent's obligations and duties under the trust agreement.
The trust agreement provides that neither the administrative agent nor
any director, officer, employee, or agent of the administrative agent will incur
any liability to the related issuing entity or certificateholders for any action
taken, or for refraining from taking any action, in good faith under the trust
agreement or for errors in judgment; provided, however, that neither the
administrative agent nor any such person will be protected against any liability
that would otherwise be imposed by reason of willful misfeasance, bad faith or
gross negligence in the performance of duties under the trust agreement or by
reason of reckless disregard of obligations and duties under the trust
agreement. The trust agreement further provides that, the administrative agent
and any director, officer, employee or agent of the administrative agent are
entitled to indemnification by the Issuing Entity and will be held harmless
against any loss, liability or expense incurred in connection with any legal
action relating to the trust agreement or the certificates, other than any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
gross negligence in the performance of duties under the trust agreement or by
reason of reckless disregard of obligations and duties under the trust
agreement. In addition, the trust agreement provides that the administrative
agent will not be under any obligation to appear in, prosecute or defend any
legal action which is not incidental to its responsibilities under the trust
agreement or which in its opinion may cause it to incur any expense or
liability. The administrative agent may, however, in its discretion undertake
any action which it may deem necessary or desirable with respect to the trust
agreement and the rights and duties of the parties to the trust agreement and
the interests of the certificateholders under the trust agreement. The legal
expenses and costs of such action and any liability resulting from such action
will be allocated [describe].
S-41
The administrative agent shall have no obligation with respect to the
Underlying Securities and is not authorized to proceed against the underlying
securities issuer in the event of a default.
Any person into which the administrative agent may be merged or
consolidated, or any person resulting from any merger or consolidation to which
the administrative agent is a part, or any person succeeding to the business of
the administrative agent, will be the successor of the administrative agent (as
the case may be) under the trust agreement with respect to the [Class
[___]]]certificates.]
[Administrative Agent Termination Events; Rights Upon Administrative Agent
Termination Event]
["Administrative Agent Termination Events" under the trust agreement
consist of the following:
o any failure by an administrative agent to remit to the
trustee any funds in respect of collections on the
Deposited Assets and credit support, if any, as required
under the trust agreement, that continues unremedied for
five days after the giving of written notice of such
failure to the administrative agent by the trustee or
SOC, or to the administrative agent, SOC and the trustee
by the holders of the [Class [_____]] certificates
evidencing not less than the Required Percentage of the
Voting Rights;
o any failure by an administrative agent to duly observe
or perform in any material respect any of its other
covenants or obligations under the trust agreement which
continues unremedied for thirty days after the giving of
written notice of such failure to the administrative
agent by the trustee or SOC, or to the administrative
agent, SOC and the trustee by the holders of the [Class
[_____]] certificates evidencing not less than the
Required Percentage of the Voting Rights[;] [, and]
o specified events of insolvency, readjustment of debt,
marshalling of assets and liabilities or similar
proceedings and certain actions by or on behalf of an
administrative agent indicating its insolvency or
inability to pay its obligations[.] [, and]
o [describe oadditional events.]]
[So long as an Administrative Agent Termination Event remains
unremedied, SOC or the trustee may, and at the direction of holders of the
[Class [___]] certificates evidencing not less than the Required Percentage of
the Voting Rights, the trustee will, terminate all the rights and obligations of
the administrative agent under the trust agreement and in and to the related
Deposited Assets (other than any Retained Interest of such administrative
agent). The trustee will then succeed to all the responsibilities, duties and
liabilities of the administrative agent (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
S-42
similar compensation arrangements. In the event that the trustee is
unwilling or unable to act, it may or, at the written request of the holders of
such certificates evidencing not less than the Required Percentage of the Voting
Rights, it will appoint, or petition a court of competent jurisdiction for the
appointment of an administrative agent acceptable to each rating agency rating
such certificates at such time with a net worth at the time of such appointment
of at least [$15,000,000] to act as successor to such administrative agent.
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.]
Termination
The Issuing Entity will terminate in respect of the certificates upon
any of the following events: [Describe termination provisions, including the
Deposited Assets being distributed, or sold and the proceeds thereof
distributed, to certificateholders and the Issuing Entity being terminated upon
an issuer of Concentrated Underlying Securities ceasing to file periodic
reports.] [SOC will have the right to purchase all remaining Deposited Assets in
the Issuing Entity and thus effect early retirement of the certificates on any
Distribution Date, [(a)] once the aggregate principal amount of the Deposited
Assets at the time of any such purchase is less than [10%] of the aggregate
principal amount of the Deposited Assets as of the Cut-off Date, [and (b) at the
option of SOC at [specify when and on what terms any such option may be
exercised]]; provided, however, that the right to exercise any such option is
contingent on such exercise being consistent with the continued satisfaction of
the applicable requirements for exemption under Rule 3a-7 under the Investment
Company Act of 1940 and all applicable rules, regulations and interpretations
thereunder. In the event SOC exercises any such option, the portion of the
purchase price allocable to the certificates of each class will be, to the
extent of available funds, [100% of their then aggregate outstanding certificate
Principal Balance or Notional Amount, as applicable, plus with respect to the
certificates [one month's] [three month's] [specify other period] interest
thereon at the Fixed Pass-Through Rate or the then applicable Variable
Pass-Through Rate, as the case may be, plus, with respect to each class of
certificates, any previously accrued but unpaid interest thereon.]] [Specify
alternative allocation method if different from above.] [In no event will the
Issuing Entity created by the trust agreement for the certificates continue
beyond the expiration of 21 years from the death of the survivor of the person
or persons named in the trust agreement.] See "Description of trust
agreement--Termination" in the Prospectus.
Fees and Expenses
As compensation for and in payment of trust expenses related to its
services under the trust agreement other than extraordinary trust expenses, the
trustee will receive [by the Issuing Entity from the interest [and principal]
payments received by the Issuing Entity 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 Issuing Entity with respect
thereto]. The following trustee fees as set out in the table below on each
distribution date in an amount equal to [amount]:
S-43
Party
Receiving
Fees and General Fee or Source of Distribution
Expenses Purpose Expense Funds Priority Amount
[insert fee or [insert [insert [insert [insert [insert $
expense title] description description description description amount]
TOTAL:
[insert total
amount]
FEDERAL INCOME TAX CONSEQUENCES
Scope of Opinion
In the opinion of Orrick, Herrington & Sutcliffe LLP, Special Tax
Counsel, the Issuing Entity 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 Issuing
Entity as a grantor trust and the balance of this discussion assumes that the
Issuing Entity will be so classified. However, for a discussion of the
consequences of recharacterization of the Issuing Entity as a partnership for
federal income tax purposes, see "--Possible Recharacterization of the Issuing
Entity as a Partnership" in "Federal Income Tax Consequences" 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
S-44
indirectly) to certain other specified persons and (ii) the holder complies with
certain identification and certification requirements imposed by the IRS.
See "Federal Income Tax Consequences" in the Prospectus.
CERTAIN ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974 ("ERISA"), and
Section 4975 of the Code impose certain requirements on (a) an employee benefit
plan (as defined in Section 3(3) of ERISA), (b) a plan described in Section
4975(e)(1) of the Code, including an individual retirement account ("IRA") or
Keogh plan or (c) any entity whose underlying assets include plan assets by
reason of a plan's investment in the entity (each, a "Plan").
ERISA and Section 4975 of the Code prohibit certain transactions
involving the assets of a Plan and persons who have specified relationships to
the Plan, i.e., "parties in interest" within the meaning of ERISA or
"disqualified persons" within the meaning of the Code (collectively, "Parties in
Interest"). Thus, a Plan fiduciary considering an investment in certificates
should consider whether such an investment might constitute or give rise to a
prohibited transaction under ERISA or Section 4975 of the Code. The issuer of
the Underlying Securities, the Underwriters, the Trustee and their respective
affiliates may be Parties in Interest with respect to many Plans. A violation of
these prohibited transaction rules may result in an excise tax or other
penalties and liabilities under ERISA and/or Section 4975 of the Code for such
persons.
If an investment in certificates by a Plan were to result in the assets
of the Issuing Entity being deemed to constitute "plan assets" of such Plan,
certain aspects of such investment, including the operations of the Issuing
Entity and the deemed extension of credit between the issuer of the Underlying
Securities and the holder of a certificate (as a result of the Underlying
Securities being deemed to be "plan assets"), as well as subsequent transactions
involving the Issuing Entity or its assets, might constitute or result in
prohibited transactions under Section 406 of ERISA and Section 4975 of the Code
unless exemptive relief were available under an applicable exemption issued by
the United States Department of Labor (the "DOL"). In addition, if the assets of
the Issuing Entity were deemed to be "plan assets" of any Plan investors,
Certificates sold to a Party in Interest with respect to such Plan could
constitute or result in a prohibited extension of credit transaction, possibly
subjecting the Certificateholder to excise taxes under Section 4975 of the Code.
Neither ERISA nor the Code defines the term "plan assets." Under Section
2510.3-101 of the DOL regulation (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 acquires a certificate, for certain purposes (including
the prohibited transaction provisions of Section 406 of ERISA and Section 4975
of the Code), the Plan would be considered to own an undivided interest in the
underlying assets of the Trust, unless an exception applies under the
Regulation.
The Underwriters expect that the certificates will satisfy the criteria
for treatment as publicly-offered securities under the Regulation. A
publicly-offered security is a security that is:
o freely transferable,
S-45
o part of a class of securities that is owned by 100 or
more investors independent of the issuer and of one
another at the conclusion of the initial offering, and
o either is (A) part of a class of securities registered
under Section 12(b) or 12(g) of the exchange Act, or (B)
sold to the Plan as part of an offering of securities to
the public through an effective registration statement
under the Securities Act and the class of securities of
which such security is a part is registered under the
Exchange Act within 120 days (or such later time as may
be allowed by the Commission) after the end of the
fiscal year of the issuer during which the offering of
such securities to the public occurred.
The Underwriters will verify that there will be at least 100 separate
purchasers (whom the Underwriters have no reason to believe are not independent
of the Company or of one another) at the conclusion of the initial offering.
There is no assurance that the 100 independent investor requirement of the
"public-offered security" exception will, in fact, be satisfied.
Nothing herein shall be construed as a representation that an
investment in the 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 as of [ ], ___________, SOC has agreed to sell and [insert
names of each of the underwriters] [,] has [severally] agreed to purchase, the
[certificates] [the principal amount of each class of certificates set forth
below opposite its name].
Class [ ] Class [ ] Class [ ]
[Name of Underwriter]......... $ $ $
Total......................... $ $ $
[The several underwriters have] agreed, subject to the terms and
conditions set forth in the underwriting agreement, to purchase all certificates
offered by this Prospectus Supplement if any of such certificates are purchased.
[In the event of default by any underwriter, the underwriting agreement provides
that, in certain circumstances, the purchase commitments of non-defaulting
underwriters may be increased or the underwriting agreement may be terminated.]
SOC has been advised by the underwriter[s] that [it][they] propose[s]
to offer the certificates from time to time in negotiated transactions or
otherwise at varying prices to be determined at the time of sale. The
underwriter[s] may effect such transactions by selling certificates to or
through dealers and such dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from the underwriter[s] and
any purchasers
S-46
of certificates for whom they may act as agents. The
underwriter[s] and any dealers that participate with the underwriter[s] in the
distribution of certificates may be deemed to be underwriters, and any profit on
the resale of certificates by them may be deemed to be underwriting discounts,
or commissions under the Securities Act.
[SOC intends to list the trust certificates on the [name applicable
national securities exchange]. If approved for listing, trading is expected to
commence within [30] days after the trust certificates are first issued. SOC
cannot assure you that the trust certificates, once listed, will continue to be
eligible for trading on the [name applicable national securities exchange.]
The underwriting agreement provides that SOC will indemnify the
underwriter[s] against certain civil liabilities, including liabilities under
the Securities Act, or will contribute to payments the underwriter[s] may be
required to make in respect of such civil liabilities.
RATINGS
It is a condition to the issuance of the certificates that the
certificates be rated not lower than [specify ratings applicable to each class]
by [Standard & Poor's Ratings Services, a division of the McGraw Hill Companies,
Inc. ("Standard & Poor's")][Moody's Investors Service, Inc. ("Moody's")] [and]
[Fitch Inc. ("Fitch")] (the "Rating[Agency][Agencies]"). The ratings address the
likelihood of the receipt by the certificateholders of payments required under
the trust agreement, and are based primarily on the credit quality of the
Deposited Assets and any providers of credit support, as well as on the relative
priorities of the certificateholders of each class of the certificates with
respect to collections and losses with respect to the Deposited Assets. The
rating on the certificates does not, however, constitute a statement regarding
the occurrence or frequency of redemptions or prepayments on, or extensions of
the maturity of, the Deposited Assets, the corresponding effect on yield to
investors, or whether investors in the class [ ] certificates [specify class
with Notional Amount] may fail to recover fully their initial investment.
A security rating is not a recommendation to buy, sell or hold
securities and may be subject to revision or withdrawal at any time by the
assigning Rating Agency. Each security rating should be evaluated independently
of any other security rating.
SOC has not requested a rating on the certificates by any rating agency
other than the Rating [Agency] [Agencies]. However, there can be no assurance as
to whether any other rating agency will rate the certificates, or, if it does,
what rating would be assigned by any such other rating agency. A rating on the
certificates by another rating agency, if assigned at all, may be lower than the
ratings assigned to the certificates by the Rating [Agency] [Agencies].
LEGAL OPINIONS
Certain legal matters relating to the certificates will be passed upon
for SOC by Orrick, Herrington & Sutcliffe LLP, New York, New York and for the
underwriters by [______].
S-47
INDEX OF TERMS FOR PROSPECTUS SUPPLEMENT
[_____].....................................................................S-11
Administrative Agent Termination Events.....................................S-42
Advance.....................................................................S-35
Allowable Expense Amount....................................................S-29
Appropriations Acts.........................................................S-23
Available Funds.............................................................S-29
Borrower....................................................................S-23
Call Premium Percentage.....................................................S-29
Clearing Agency.............................................................S-27
Closing Date.................................................................S-2
Company.....................................................................S-14
Credit Support Providers....................................................S-28
Definitive Classes..........................................................S-27
Depositary..................................................................S-23
Deposited Assets......................................................S-11, S-24
DOL.........................................................................S-45
Eligible Investments........................................................S-29
ERISA.................................................................S-12, S-45
event of default............................................................S-37
Extraordinary Trust Expense.................................................S-36
Fannie Mac..................................................................S-19
FIRRE Act...................................................................S-20
Fitch.......................................................................S-47
Freddie Mac.................................................................S-19
FSMA...................................................................S-x, S-xi
GSEs........................................................................S-16
GTCs..................................................................S-16, S-23
IRA ................................................................S-12, S-45
Issuing Entity...............................................................S-1
Keogh.......................................................................S-12
Liquidation Proceeds........................................................S-35
Moody's.....................................................................S-47
Note Payment Date...........................................................S-23
Notes.......................................................................S-23
Notional Amount..............................................................S-2
offer of notes to the public.................................................S-x
OID.........................................................................S-44
Optional Exchange Date......................................................S-33
Parties in Interest.........................................................S-45
Plan..................................................................S-12, S-45
prospectus Directive.........................................................S-x
Rating[Agency][Agencies]....................................................S-47
Realized Losses..............................................................S-4
Regulation..................................................................S-45
Relevant Implementation Date.................................................S-x
Relevant Persons............................................................S-xi
Required Interest...........................................................S-29
Required Percentage-Amendment...............................................S-39
Required Percentage-Remedies................................................S-38
Required Percentage-Waiver..................................................S-39
Required Premium............................................................S-29
Required Principal..........................................................S-29
Retained Interest...........................................................S-18
Sallie Mae..................................................................S-20
SOC..........................................................................S-1
Special Distribution Date....................................................S-4
Specified Currency.....................................................S-3, S-30
Standard & Poor's...........................................................S-47
Systemwide Debt Securities..................................................S-22
Trustee.....................................................................S-11
Underlying Securities.......................................................S-18
S-48
Structured Obligations Corporation
Depositor/Sponsor
Trust Certificates
(Issuable in series)
Each Trust
o may periodically issue asset-backed certificates in one or more series
with one or more classes; and
o will own
o a security or pool of securities, as described in the
accompanying prospectus supplement;
o payments due on those securities; and/or
o other assets described in both this Prospectus and in
the accompanying prospectus supplement.
The Certificates
o will represent beneficial ownership interests in the Issuing Entity
and will be paid only from the Issuing Entity assets;
o will be denominated and sold for U.S. dollars or for one or more
foreign currencies and any payments to certificateholders may be
payable in U.S. dollars or in one or more foreign currencies; and
o will be issued as part of a designated series which may include one or
more classes of certificates and enhancement.
The Certificateholders
o will receive interest, principal and other payments from the assets
deposited with the trust.
-------------------------------------------------
Consider carefully the risk factors beginning on
page 5 of this Prospectus.
-------------------------------------------------
The certificates are not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
The certificates will represent interests in the issuing entity only and will
not represent interests in or obligations of Structured Obligations Corporation
or of the administrative agent of the issuing entity or any of their affiliates.
This Prospectus may be used to offer and sell any series of certificates only if
accompanied by the prospectus supplement for that series.
-------------------------------------------------
Neither the SEC nor any state securities commission has approved these
certificates or determined that this Prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
[ ], 200[ ]
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT
We provide information to you about the certificates in two separate
documents that progressively provide more detail: (a) this Prospectus, which
provides general information, some of which may not apply to a particular series
of certificates, including your series, and (b) the accompanying prospectus
supplement, which will describe the specific terms of your series of
certificates, including:
o the series designation and aggregate principal amount,
o the number of classes in the series and, with respect to
each class, the designation, aggregate principal amount
or, if applicable, notional amount and authorized
denominations of certificates,
o information concerning the type, characteristics and
specifications of the securities deposited into the
issuing entity (the "Underlying Securities") and any
other assets deposited into the issuing entity (together
with the Underlying Securities, the "Deposited Assets")
and any credit support for the series or a class,
o the relative rights and priority of payments of each
class (including the method for allocating collections
from the Deposited Assets to the certificateholders of
each class and the relative ranking of the claims of the
certificateholders of each class to the Deposited
Assets),
o the identity of each issuer of the Underlying Securities
and each obligor with respect to any of the other
Deposited Assets,
o the name of the trustee and the administrative agent, if
any, for the series,
o whether the certificates of the series or each class
within that series are Fixed Rate Certificates or
Floating Rate Certificates (each as defined below) and
the applicable interest rate (the "Pass-Through Rate")
for each class including the applicable rate, if
fixed (a "Fixed Pass-Through Rate"), or the terms
relating to the particular method of calculation of the
interest rate applicable to the series or each class
within that series, if variable (a "Variable Pass-
Through Rate"); the date or dates from which interest
will accrue; the applicable Distribution Dates (as
defined below) on which interest, principal and premium,
in each case as applicable, on the series or class will
be distributable and the related Record Dates (as
defined in the related prospectus supplement), if any,
the time and place of distribution (a "Distribution
Date") of any interest, premium (if any) and/or principal
(if any),
o the date of issue,
o the final scheduled distribution date, if applicable,
o the offering price,
2
o the option, if any, of any specified third party (which
may include Structured Obligations Corporation or any of
its affiliates) to purchase the Underlying Securities or
the certificates held by a certificateholder and the
periods within which or the dates on which, and the terms
and conditions upon which any such option may be
exercised, in whole or in part,
o any exchange terms, whether mandatory or optional, and
any redemption terms of certificates of each series or
class,
o the rating of each series of certificates or each class
within that series of certificates,
o the denominations in which the series or class within
that series will be issuable,
o 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 of those
certificates,
o whether the certificates of the series or of any class
within that series are to be issued as registered
certificates or bearer certificates or both and, if
bearer certificates are to be issued, whether coupons
will be attached to such bearer certificates; whether
bearer certificates of that series or class may be
exchanged for registered certificates of that series or
class and the circumstances under which and the place or
places at which any exchanges, if permitted, may be made,
o whether the certificates of the series or of any class
within that series are to be issued in the form of one or
more global securities and, if so, the identity of the
Depositary, if other than The Depository Trust Company,
for such global security or securities,
o if other than U.S. dollars, the currency applicable to
the certificates of the series or class for purposes of
denominations and distributions on that series or each
class within that series (the "Specified Currency") and
the circumstances and conditions, if any, when such
currency may be changed, at the election of Structured
Obligations Corporation or a certificateholder, and the
currency or currencies in which any principal or interest
will be paid,
o all applicable Required Percentages and Voting Rights
(each as defined below) relating to the manner and
percentage of votes of certificateholders of the series
and each class within that series required with respect
to certain actions by Structured Obligations Corporation
or the applicable administrative agent, if any, or
trustee under the trust agreement or with respect to the
applicable trust,
3
o remedies upon, or consequences of, the occurrence of a
payment default on the Underlying Securities, an
acceleration of the Underlying Securities or the
cessation by the issuer of the Underlying Securities of
filing periodic reports under the Exchange Act, and
o any other terms of the series or class within that series
of certificates which are considered material by
Structured Obligations Corporation.
References in this Prospectus to "U.S. dollars," "U.S.$," "USD,"
"dollar" or "$" are to the lawful currency of the United States. Purchasers are
required to pay for each certificate in the currency in which the certificate is
denominated. Currently, there are limited facilities in the United States for
conversion of U.S. dollars into foreign currencies and vice versa, and banks do
not currently offer non-U.S. dollar checking or savings account facilities in
the United States.
You should rely only on the information provided in this Prospectus and
the accompanying prospectus supplement including the information incorporated by
reference. We have not authorized anyone to provide you with different
information. We are not offering the certificates in any state where the offer
is not permitted. We do not claim the accuracy of the information in this
Prospectus or the accompanying prospectus supplement as of any date other than
the dates stated on their respective covers.
We include cross-references in this Prospectus and in the accompanying
prospectus supplement to captions in these materials where you can find further
related discussions. The following table of contents and the table of contents
included in the accompanying prospectus supplement provide the pages on which
these captions are located.
4
RISK FACTORS
In connection with your investment in the certificates of any series,
you should consider, among other things, the following risk factors and all risk
factors set forth in the applicable prospectus supplement.
Risk of the Certificates having Limited Liquidity. Prior to the
issuance of any series (or class within such series) of certificates there will
not be a public market for those certificates. We cannot predict the extent to
which a trading market will develop or how liquid that market might become or
for how long it may continue. If an active public market for the certificates
does not develop or continue, the market prices and liquidity of the
certificates may be adversely affected.
Risk Associated with the Certificateholders having Limited Recourse
against SOC or its Affiliates. The certificates will not represent a recourse
obligation of or interest in SOC or any of its affiliates. The certificates of
each series will not be insured or guaranteed by any government agency or
instrumentality, SOC, any person affiliated with SOC or the trust, or any other
person. The issuing entity has no significant assets other than the Underlying
Securities and any other Deposited Assets. No other assets are available to make
payments or distributions with respect to your certificates. SOC does not have,
and is not expected in the future to have, any significant assets with which to
satisfy any claims arising from a breach of any representation or warranty.
Risk Associated with Certificateholders' Reliance for Payment on the
Limited Assets of the Issuing Entity and any Credit Support. The issuing entity
for any series (or class of that series) of certificates may include assets that
are designed to support the payment or ensure the servicing or distribution with
respect to the Deposited Assets. However, the certificates do not represent
obligations of SOC, the trustee, any administrative agent or any of their
affiliates and are not insured or guaranteed by any person or entity.
Accordingly, certificateholders' receipt of distributions will depend entirely
on the trust's receipt of payments with respect to the Deposited Assets and any
credit support identified in the related prospectus supplement. If the
Underlying Securities or any other Deposited Assets are insufficient to make
payments or distributions on the certificates, no other assets will be available
for payment of the deficiency. See "Description of Deposited Assets and Credit
Support."
Risk Associated with Payments on the Underlying Securities being
Subordinated 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.
Risk of Negative Performance of the Underlying Securities Affecting the
Value of Your Investment. Neither SOC, the trustee, any administrative agent nor
any of their affiliates is obligated to make any payments in respect of your
certificates. Consequently, if losses are experienced on the Underlying
Securities and any other Deposited Assets (including in connection with the
bankruptcy or similar event relating to the issuer of the Underlying
Securities), you may experience a loss on your investment. Accordingly, you are
strongly
5
encouraged to obtain as much information about the Underlying
Securities as you would if you were investing directly in the Underlying
Securities.
Risk of Extended Maturity or Early Redemption altering timing of
Distributions to Certificateholders. The timing of any distribution with respect
to any series (or of any class within that series) of certificates and the yield
that you realize on your investment in the certificates may be affected by a
number of factors, including:
o the purchase price of your certificates,
o the performance of the related Deposited Assets,
o the extent of any early redemption, repurchase, repayment
or extension of maturity of the related Underlying
Securities (including acceleration resulting from any
default or rescheduling resulting from the bankruptcy or
similar proceeding with respect to the issuer of the
Underlying Securities) or any early redemption,
repurchase or repayment of your certificates, and
o the manner and priority in which collections from the
Underlying Securities and any other Deposited Assets are
allocated to each class of that series.
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 or repurchase options, any extension
of maturity provisions and other terms applicable to the certificates and the
Underlying Securities and any other Deposited Assets. Neither SOC nor the
trustee can predict if or when a redemption, repurchase or other repayment of
the Underlying Securities will occur. If the certificates are prepaid, your
investment in the certificates and the Underlying Securities will have a shorter
average maturity. If the certificates are prepaid when prevailing market
interest rates are lower than the yield on your certificates, you may be unable
to realize a comparable yield when you reinvest the funds that you receive from
the prepayment of your certificates. See "Maturity and Yield Considerations."
Risk of Underlying Issuer Ceasing to Make Information About Its
Financial Condition and Business Publicly Available. In deciding whether to
invest in or to sell certificates, you should obtain and evaluate information
about each issuer of the Underlying Securities as if you were investing directly
in that issuer and its securities. The information that each underlying issuer
makes available to the public is important in considering whether to invest in
or sell certificates.
If provided in the applicable prospectus supplement, if the issuer of
Concentrated Underlying Securities (as defined below) ceases to file periodic
reports under the Exchange Act, the trust agreement may provide that the issuing
entity will sell or distribute the Underlying Securities notwithstanding market
conditions at the time, and the trustee will not have discretion to do
otherwise. This sale or distribution may result in greater losses than might
occur if the issuing entity continued to hold the Underlying Securities. SOC,
the trustee, the underwriters and their affiliates (a) have not verified, and
have not undertaken to verify, the accuracy, completeness or continued
availability of any information by any issuer of the Underlying Securities
(whether or not filed with the SEC), (b) have made no due diligence
investigation of the financial condition or creditworthiness of any issuer of
the Underlying Securities, and (c) assume no responsibility for any information
considered by any purchaser or potential purchaser
6
of the certificates that is not contained in this Prospectus or the applicable
prospectus supplement.
You should not construe the issuance of the certificates as an
endorsement of the financial condition or business prospects of any issuer of
the Underlying Securities by SOC, the trustee, the underwriters or any of their
affiliates.
Risk of the Trustee not Managing the Underlying Securities to Avoid
Adverse Events. The remedies available to a trustee of a relevant issuing entity
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. Except as described in this Prospectus and the
applicable prospectus supplement, the issuing entity will not dispose of any
Underlying Securities or any other Deposited Assets, regardless of adverse
events, financial or otherwise, that may affect the value of the Underlying
Securities or the issuer of the Underlying Securities. If there is a payment
default on any Underlying Security or any other default that may result in the
acceleration of the Underlying Security, the issuing entity will only dispose of
or otherwise deal with the defaulted Underlying Security in the manner provided
in the trust agreement. If provided in the applicable prospectus supplement, if
a payment default on or an acceleration of an Underlying Security occurs, or the
issuer of Concentrated Underlying Securities (as defined below) ceases to file
periodic reports under the Exchange Act, the trust agreement may provide that
the issuing entity will sell or distribute the Underlying Securities
notwithstanding market conditions at the time, and the trustee will not have
discretion to do otherwise. This sale or distribution may result in greater
losses than might occur if the issuing entity continued to hold the Underlying
Securities.
Risk of the Certificates having Adverse Tax Consequences to
Certificateholders. The United States federal income tax consequences of the
purchase, ownership and disposition of the certificates and the tax treatment of
the issuing entity will depend on the specific terms of the certificates, the
trust, any credit support and the Deposited Assets. See the description under
"Federal Income Tax Consequences" in the related prospectus supplement. If the
Deposited Assets include securities issued by one or more government agencies or
instrumentalities, purchasers of the certificates may also be affected by the
tax treatment of the Underlying Securities by the relevant issuing government.
Risk of the Company not Exempted from Registration Requirements of the
Investment Company Act of 1940. The Investment Company Act of 1940, as amended
("Investment Company Act") 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 considered
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.
7
Risk of Ratings of the Certificates being Downgraded or Withdrawn. At
the time of issuance, the certificates of any given series (or each class of
that series) will be rated in one of the investment grade categories recognized
by one or more nationally recognized rating agencies. 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. A rating does not comment as to market price or suitability for a
particular investor and is not a recommendation to purchase, hold or sell
certificates. We cannot be certain 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 in the future. A revision or withdrawal of such rating may
have an adverse effect on the market price of your certificates.
Risk of Loss of Rights Associated with Ownership of the Certificates in
Global Form and not in Definitive Physical Form. The certificates of each series
(or each class of that series) will initially be represented by one or more
global securities deposited with a Depositary (as defined below) and purchasers
will not receive individual certificates. Consequently, unless and until
individual definitive certificates of a particular series or class are issued,
purchasers will not be recognized as certificateholders under the applicable
trust agreement. Until such time, purchasers will only be able to exercise the
rights of certificateholders indirectly through the Depositary and its
respective participating organizations. The ability of any purchaser to pledge a
certificate to persons or entities that do not participate in the Depositary's
system, or to otherwise act with respect to a certificate, may be limited. See
"Description of Certificates--Global Securities" and "Limitations on Issuance of
Bearer Certificates" in this Prospectus and any further description contained in
the related prospectus supplement.
Risks Associated with Ownership of Certificates Secured by Underlying
Securities Issued by Foreign Issuers. The Underlying Securities may include
obligations of foreign issuers. Consequently, it may be difficult for the
applicable issuing entity as a holder of the Underlying Securities to obtain or
realize upon judgments in the United States against the obligor. Even if an
issuer is amenable to suit in the United States, the enforceability of any
judgment obtained may be limited by a lack of substantial assets that can be
levied upon in the United States or the inability to obtain recognition and
enforcement of the judgment in the issuer's country. Because the Underlying
Securities may represent direct or indirect obligations of foreign issuers,
certificateholders should consider the political, economic and other risks
related to holding the obligations of a foreign issuer, which are not typically
associated with an investment in securities of a domestic issuer. Such risks
include:
o future political and economic developments,
o moratorium on payment or rescheduling of external debts,
o confiscatory taxation,
o imposition of any withholding tax,
o exchange rate fluctuations,
o political or social instability or diplomatic developments, and
8
o the imposition of additional governmental laws or restrictions.
In addition, the prospectus supplement for each series of certificates
will set forth information regarding additional risk factors, applicable to that
series (and each class within that series).
WHERE YOU CAN FIND MORE 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 by 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 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 we incorporate by reference, except exhibits to the documents (unless
the exhibits are specifically
9
incorporated by reference), at no cost, by writing or calling: Chad S. Parson,
SOC, 270 Park Avenue, New York, New York 10017, (212) [_________].
REPORTS TO CERTIFICATEHOLDERS
Unless and until definitive certificates are issued, on each
Distribution Date unaudited reports containing information concerning each
issuing entity will be prepared by the trustee and sent on behalf of each
issuing entity only to Cede & Co., as nominee of The Depository Trust Company
and as the registered holder of the certificates. See "Description of the
Certificates--Global Securities" and "Description of the Trust
Agreement--Reports to Certificateholders; Notice." These 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 issuing entity 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 issuing entity and the Certificates related to such issuing
entity from time to time. The Prospectus Supplement for each issuing entity
shall specify the name and CIK number of the Issuing Entity 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 issuing entity 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].]
STRUCTURED OBLIGATIONS CORPORATION
Structured Obligations Corporation ("SOC") was incorporated in the
State of Delaware on October 13, 1993, as a wholly-owned, limited-purpose
subsidiary of J.P. Morgan Securities Holdings Inc. The principal office of SOC
is located at 270 Park Avenue, New York, New York 10017.
USE OF PROCEEDS
The net proceeds to be received from the sale of each series or class
of certificates will be used to purchase the related Deposited Assets and to
arrange for credit support including, if specified in the related prospectus
supplement, making required deposits into any reserve account or the applicable
certificate account for the benefit of the certificateholders of that series or
class. See "Plan of Distribution" in this Prospectus.
FORMATION OF THE TRUSTS
A separate issuing entity will be created to issue each series of trust
certificates. The trustee named in the applicable prospectus supplement, in its
capacity as trustee, will acquire the related Deposited Assets for the benefit
of the certificateholders of such series. See "Description
10
of the Trust Agreement--Acquisition of Deposited Assets." The trustee named
in the applicable prospectus supplement will hold the Deposited Assets pursuant
to the terms of the trust agreement and will receive a fee for these services.
The Trustee Fee shall be paid either by the Issuing Entity from the interest
[and principal] payments received by the Issuing Entity 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 the tasks as are specified in the prospectus supplement
pursuant to the terms of the trust agreement and will receive a fee for these
services. See "Description of the Trust Agreement--Collection and Other
Administrative Procedures."
If the Deposited Assets are acquired by the trustee from SOC, then the
acquisition will be without recourse to SOC.
The trust assets of each issuing entity will consist of:
o the Deposited Assets, or interests in the Deposited
Assets, exclusive of any interest in such assets (the
"Retained Interest") retained by SOC or any previous
owner of the Deposited Assets, as from time to time are
specified in the trust agreement;
o such assets as from time to time are identified as
deposited in the related certificate account;
o property, if any, acquired on behalf of
certificateholders by foreclosure or repossession
and any revenues received on the property; and
o those elements of credit support, if any, provided with
respect to any class within such series that are
specified as being part of the related issuing entity in
the applicable prospectus supplement, as described in the
applicable prospectus supplement and under "Description
of Deposited Assets and Credit Support---Credit Support".
MATURITY AND YIELD CONSIDERATIONS
Each prospectus supplement will contain any applicable information with
respect to the type and maturities of the related Underlying Securities and the
terms, if any, upon which the Underlying Securities or the related series of
certificates may be subject to early redemption (either by the applicable
obligor or by a third-party call option), repayment (at the option of the
holders of the Underlying Securities) or extension of maturity. The provisions
of the Underlying Securities with respect to redemption, repayment or extension
of maturity will in the applicable prospectus supplement, affect the weighted
average life of the related series of certificates.
The effective yield to holders of the certificates of any series (and
class within that series) may be affected by aspects of the Deposited Assets or
any credit support or the manner and priorities of allocations of collections
with respect to the Deposited Assets between the classes of a given series. With
respect to any series of certificates the Underlying Securities of which consist
of one or more redeemable securities, extendable securities (i.e. fixed income
securities which have a maturity date that may be extended to a later date by
the issuer of the security, such extendable security will set forth the maximum
length of extension) or securities subject to a
11
third-party call option, the yield to maturity of such series (or class
within such series) may be affected by any optional or mandatory redemption or
repayment or extension of the related Underlying Securities prior to the stated
maturity of the Underlying Securities. A variety of tax, accounting, economic,
and other factors will influence whether an issuer exercises any right of
redemption in respect of its securities. The rate of redemption may also be
influenced by prepayments on the obligations a government sponsored entity
issuer holds for its own account. All else remaining equal, if prevailing
interest rates fall significantly below the interest rates on the related
Underlying Securities, the likelihood of redemption would be expected
to increase. There can be no certainty as to whether any Underlying Security
redeemable at the option of its issuer will be repaid prior to its stated
maturity.
Underlying Securities may be subject to acceleration upon the
occurrence of specified Underlying Security Events of Default (as defined
below). The maturity and yield on the certificates will be affected by any early
repayment of the Underlying Securities as a result of an acceleration. See
"Description of the Deposited Assets--Underlying Securities Indenture." If an
issuer of Underlying Securities becomes subject to a bankruptcy proceeding, the
timing and amount of payments with respect to both interest and principal may be
materially and adversely affected. A variety of factors influence the ability of
an issuer of Underlying Securities to satisfy its obligations under the
Underlying Securities, including the issuer's operating and financial condition,
leverage, and social, geographic, legal and economic factors. In addition, if
the Underlying Securities are issued by a foreign government and the foreign
government issuer or guarantor repudiates or places any limitation or moratorium
on the payment of external indebtedness or imposes any confiscatory or
withholding tax, the timing and amount of payments on the certificates may be
materially and adversely affected. A variety of factors could influence a
foreign government's willingness or ability to satisfy its obligations under the
related Underlying Securities. We cannot predict the probability of a moratorium
or other action affecting any Underlying Security.
The extent to which the yield to maturity of such certificates may vary
from the anticipated yield due to the rate and timing of payments on the
Deposited Assets will depend upon the degree to which they are purchased at a
discount or premium and the degree to which the timing of payments on the
certificates 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 (as defined below) for such series (or class) is based on
variable or adjustable interest rates. With respect to any series of
certificates representing an interest in a pool of securities, disproportionate
principal payments (whether resulting from differences in amortization
schedules, payments due on scheduled maturity or upon early redemption) on the
related Underlying Securities having interest rates higher or lower than the
then applicable Pass-Through Rates applicable to such certificates may affect
the yield on the certificates.
A variety of economic, social, political, tax, accounting and other
factors may affect the degree to which any of the Underlying Securities are
redeemed or called (whether by the applicable obligor or by a third-party call
option) or the maturity of such Underlying Securities is extended, as specified
in the related prospectus supplement. There can be no assurance as to the rate
or likelihood of redemption, third-party call or extension of maturity of any
Underlying
12
Securities and, therefore, the likelihood of redemption or repayment
of the related series of certificates. The applicable prospectus supplement
will, to the extent available, provide further information with respect to any
such experience applicable to the related Underlying Securities. In addition,
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 that series) and the related Deposited
Assets, including the applicable Underlying Securities.
DESCRIPTION OF THE CERTIFICATES
General
SOC will arrange for the offering of the certificates by each trust,
and will either sell the trust assets to the issuing entity or will arrange for
the issuing entity to acquire the trust assets directly. 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 by this Prospectus.
An issuing entity may be the beneficiary of a guarantee, letter of
credit or other instrument that is intended to protect the holders of
certificates from some or all of any losses that may be experienced on the
Underlying Securities. An issuing entity may also enter into swaps, options or
other derivatives that result in the issuing entity paying or receiving a fixed
or floating interest rate, payments linked to changes in the value of different
types of securities, or other payments. SOC will arrange for the issuing entity
to enter into any of these contractual arrangements.
The certificates are not debt instruments. The issuing entity will pass
through to the holder of a certificate whatever portion of proceeds of the
Deposited Assets, including any credit support, that the holder is entitled to
receive under his or her certificate. If losses are experienced on the Deposited
Assets - for example, if the issuer of an Underlying Security does not pay what
it owes to the trust, or a provider of contractual credit support does not make
any payment it is required to make - then the issuing entity will not be able to
pass through the relevant payments to the holders.
Because the certificates represent equity ownership interests in the
trust, and not debt instruments that are obligations of the trust, they
technically do not have a principal amount or bear interest. However, because
the distributions on the certificates primarily represent distributions of
principal and interest on trust assets that are debt instruments, for
convenience, this Prospectus and the related prospectus supplement will refer to
distributions that represent a return of a certificateholder's initial
investment as "principal," and will refer to distributions that represent the
yield on a certificateholder's investment as "interest," in accordance with
customary market practice.
Each series (or, if more than one class exists, the classes within that
series) of certificates will be issued pursuant to the terms of a trust
agreement and a separate series supplement, which supplements such trust
agreement, among SOC, the administrative agent, if any, and the trustee named in
the related prospectus supplement, forms of which trust agreement and series
supplement are included as an exhibit to the registration statement of which
this Prospectus is a part. The provisions of the trust agreement (as so
supplemented with respect to a particular series of certificates) may vary
depending upon the nature of the certificates to be issued under the trust
agreement and the nature of the Deposited Assets and any credit support.
13
The following summaries describe certain provisions of the trust
agreement that may be applicable to each series of certificates. The applicable
prospectus supplement for a series of certificates will describe any provision
of the trust agreement that materially differs from the description of the trust
agreement contained in this Prospectus. The following summaries are not complete
and are subject to the detailed provisions of the form of trust agreement for a
full description of such provisions, including the definition of certain terms
used, and for other information regarding the certificates. As used in this
Prospectus with respect to any series, the term "certificate" refers to all the
certificates of that series, whether or not we are offering those certificates,
unless the context otherwise requires.
A copy of the applicable series supplement to the trust agreement
relating to each series of certificates issued from time to time will be filed
with the SEC by SOC as an exhibit to a Current Report on Form 8-K following the
issuance of the series.
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 that series) of certificates to be issued under the
trust agreement will represent beneficial ownership interests in the issuing
entity for the series created by the terms of the trust agreement and each 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."
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
the transfer. 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. SOC may at any time purchase certificates at any price
in the open market or otherwise. Certificates so purchased by SOC may, at the
discretion of SOC, 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 that series) will be made in
the Specified Currency for those certificates by or on behalf of the trustee on
each Distribution Date as specified in the 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 distributions on a series of on certificates are to be made in a
Specified Currency other than U.S. dollars, additional provisions concerning
these distributions will be provided in the applicable prospectus supplement.
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 in The City of New York or (in
the case of bearer certificates) at the principal London office of the
applicable Trustee or its designee; provided, however, that any
14
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 holder of the bearer certificate 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 securities, will be a nominee
of the Depositary); provided, however, that, in the case of a series or class of
registered certificates issued between a Record Date and the related
Distribution Date, 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 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.
"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 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 Stated
Amount, such distributions of interest will be in an amount (as to any
Distribution Date, "Stripped Interest") described in the related prospectus
supplement. For purposes of this Prospectus, "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
Stated Amount will be made on each Distribution Date. Reference to the Notional
Amount of a class of Strip Certificates in this Prospectus or in a prospectus
supplement does not indicate that such certificates represent the right to
receive any distribution in respect of principal in such amount, but rather the
term "Notional Amount" is used solely as a basis for calculating the amount of
required distributions and, in certain cases, 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 that series) of certificates with a Fixed Pass-Through
Rate ("Fixed Rate Certificates") will bear interest, on the outstanding Stated
Amount (as defined below) (or Notional Amount, if applicable), from its Original
Issue Date, or from the last date to which interest has been paid, at
15
the Fixed Pass-Through Rate set forth on the face of the Fixed Rate Certificate
and in the applicable prospectus supplement until the principal amount of the
certificate is distributed or made available for repayment (or in the case
of Fixed Rate Certificates with no or a nominal principal amount, until the
Notional Amount of the Fixed Rate Certificate 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 that series) of certificates with a Variable
Pass-Through Rate ("Floating Rate Certificates") will bear interest, on the
outstanding Stated Amount (or Notional Amount, if applicable), from its Original
Issue Date to the first Interest Reset Date (as defined below) for such series
or class at the initial Pass-Through Rate set forth on the face of the Floating
Rate Certificate and in the applicable prospectus supplement ("Initial
Pass-Through Rate"). Thereafter, the Pass-Through Rate on such series or class
for each Interest Reset Period (as defined below) will be determined by
reference to an interest rate basis (the "Base Rate"), plus or minus the Spread,
if any, or multiplied by the Spread Multiplier, if any. The "Spread" is the
number of basis points (one basis point equals one one-hundredth of a percentage
point) that may be specified in the applicable prospectus supplement as being
applicable to such series or class, and the "Spread Multiplier" is the
percentage that may be specified in the applicable prospectus supplement as
being applicable to such series or class, except that if so specified in the
applicable prospectus supplement, the Spread or Spread Multiplier on such series
or any such class or classes of Floating Rate Certificates may be subject to
adjustment from time to time in response to designated changes in the rating
assigned to such certificates by one or more rating agencies, in accordance with
a schedule or otherwise, all as described in such prospectus supplement. The
applicable prospectus supplement will designate one of the following Base Rates
as applicable to a Floating Rate Certificate, and will set forth additional
information concerning that Base Rate:
o LIBOR (a "LIBOR Certificate"),
o the Commercial Paper Rate (a "Commercial Paper Rate
Certificate"),
o the Treasury Rate (a "Treasury Rate Certificate"),
o the Federal Funds Rate (a "Federal Funds Rate
Certificate"),
o the CD Rate (a "CD Rate Certificate") or
o such other Base Rate (which may be based on, among other
things, one or more market indices or the interest and/or
other payments (whether scheduled or otherwise) paid,
accrued or available with respect to a designated asset,
16
pool of assets or type of asset) as is set forth in the
related prospectus supplement and in such certificate.
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.
SOC will appoint, and enter into agreements with, agents, including
J.P. Morgan Securities, Inc. (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 that 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 that series of Floating Rate Certificates, will be
specified in the applicable prospectus supplement. 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, as 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 Stated Amount of such certificate (or, in the case
of a Strip Certificate with no or a nominal Stated Amount, 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
Certificates, Commercial Paper Rate Certificates, Federal Funds Rate
Certificates and CD Rate Certificates or by the actual number of days in the
year, in the case of Treasury Rate Certificates. For purposes of making the
foregoing calculation, the variable Pass-Through Rate in effect on any Interest
Reset Date will be the applicable rate as reset on such date.
17
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 of 1% (.001), with five one-millionths of a percentage point rounded
upward, and all currency amounts used in or resulting from this 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 that 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.
Principal of the Certificates
Each certificate (other than certain classes of Strip Certificates)
will have a "Stated Amount" which, at any time, will equal the maximum amount
that the holder of the certificate 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 to interest (in
the manner and priority specified in such prospectus supplement) until the
aggregate Stated Amount of such class or classes has been reduced to zero. The
outstanding Stated Amount of a certificate will be reduced to the extent of
distributions of principal on the certificate, and, if applicable by the terms
of the related series, by the amount of any net losses realized on any Deposited
Asset ("Realized Losses") allocated to the certificate. The initial aggregate
Stated Amount of all classes of certificates of a series will equal the
outstanding aggregate principal balance of the related Deposited Assets as of
the applicable Cut-off Date. The initial aggregate Stated Amount of a series and
each class of the series 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
Stated Amount will not receive distributions of principal.
Foreign Currency Certificates
If the Specified Currency of any certificate is not U.S. dollars
("Foreign Currency Certificates"), certain provisions with respect to the
certificate will be set forth in the related prospectus supplement which will
specify the denominations, the currency or currencies in which the principal and
interest with respect to such certificate are to be paid and any other terms and
conditions relating to the non-U.S. dollar denominations or otherwise applicable
to the certificates.
Dual Currency Certificates
Certificates may be issued as dual currency certificates ("Dual
Currency Certificates"), in which case payments of principal and/or interest in
respect of Dual Currency Certificates will be made in such currencies, and rates
of exchange will be calculated upon such bases, as indicated in the certificates
and described in the related prospectus supplement. Other material terms and
conditions relating to Dual Currency Certificates will be set forth in the
certificates and the related prospectus supplement.
18
Optional Exchange
If a holder may exchange certificates of any given series for a pro
rata portion of the Deposited Assets (an "Exchangeable Series"), the terms upon
which a holder may exchange certificates of any Exchangeable Series for a pro
rata portion of the Deposited Assets of the related issuing entity will be
specified in the related prospectus supplement and the related trust agreement.
Default on Underlying Securities and Remedies
If so provided in the related prospectus supplement, if there is a
payment default on or acceleration of amounts due on the Underlying Securities,
or an issuer of Concentrated Underlying Securities ceases to file periodic
reports under the Exchange Act, then the trustee (i) will sell all of the
Underlying Securities and a pro rata portion of the other Deposited Assets and
distribute the proceeds from the sale to the certificateholders in accordance
with the provisions set forth in the related prospectus supplement (any sale may
result in a loss to the certificateholders of the relevant series if the sale
price is less than the purchase price for such Underlying Securities), or (ii)
will distribute the Underlying Securities and a pro rata portion of the other
Deposited Assets in kind to the certificateholders in accordance with the
provisions set forth in the related prospectus supplement. The choice of
remedies will be set forth for a given series in the applicable prospectus
supplement. Further, the prospectus supplement will provide that the proceeds
from the sale of the Underlying Assets or Deposited Assets be used to pay any
costs incurred in the liquidation, to repay amounts owed to the Advance Agent
and the Trustee and to pay any other expenses of the issuing entity prior to
making any distributions to certificateholders. If the Underlying Assets or
Deposited Assets are distributed in kind to certificateholders, then Underlying
Assets or Deposited Assets will be distributed (or sold and the proceeds
distributed) to pay the costs of the distribution, to repay amounts owed to the
Advance Agent and the Trustee and to pay other creditors of the issuing entity
prior to making any distributions to certificateholders.
Call Right
SOC, one or more of its affiliates or an unrelated third party investor
may hold the right to purchase all or some of the certificates of a given series
or class from the holders thereof (the "Call on Certificates") or all or some of
the Underlying Securities related to a given series of certificates from the
issuing entity (the "Call on Underlying Securities" and, together with the Call
on Certificates, the "Call Right"). The terms upon which any such specified
person or entity may exercise a Call Right, including the exercise dates and the
exercise price, will be specified in the applicable prospectus supplement.
Global Securities
All certificates of a given series (or, if more than one class exists,
any given class within that series) will, upon issuance, be represented by one
or more global securities. The global securities will be deposited with, or on
behalf of, The Depository Trust Company, 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 securities may be
issued in either registered or bearer form and in either temporary or permanent
form. See "Limitations on Issuance of Bearer Certificates" for provisions
applicable to certificates issued in bearer form. Unless and until it is
19
exchanged in whole or in part for individual certificates (each a "definitive
certificate"), a global security may not be transferred except as a whole by the
Depositary for such global security to a nominee of such Depositary or by a
nominee of such Depositary to such Depositary or another nominee of such
Depositary or by such Depositary or any such nominee to a successor of such
Depositary or a nominee of such successor.
The Depository Trust Company has advised SOC 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 under the provisions of Section 17A of the Exchange
Act. The Depository Trust Company was created to hold securities of its
participating organizations and to facilitate the clearance and settlement of
securities transactions among the institutions that have accounts with the
Depositary ("participants") in such securities through electronic book-entry
changes in the accounts of the Depositary participants, thereby eliminating the
need for physical movement of securities certificates. The Depositary's
participants include securities brokers and dealers, banks, trust companies,
clearing corporations, and certain other organizations, some of whom (and/or
their representatives) own the Depositary. Access to the Depositary's book-entry
system is also available to others, such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly. The Depository Trust Company has
confirmed to SOC that it intends to follow such procedures.
Upon the issuance of a global security, the Depositary for the global
security will credit, on its book-entry registration and transfer system, the
respective principal amounts or notional amounts, if applicable, of the
individual certificates represented by such global security to the accounts of
its participants. The accounts to be credited shall be designated by the
underwriters of such certificates, or, if such certificates are offered and sold
directly through one or more agents, by SOC or such agent or agents. Ownership
of beneficial interests in a Global Security will be limited to participants or
persons that may hold beneficial interests through participants. Ownership of
beneficial interests in a global security will be shown on, and the transfer of
that ownership will be effected only through, records maintained by the
Depositary for such global security or by participants or persons that hold
through participants. The laws of some states require that certain purchasers of
securities take physical delivery of such securities. Such limits and such laws
may limit the market for beneficial interests in a global security.
So long as the Depositary for a global security, or its nominee, is the
owner of the global security, the Depositary or the nominee, as the case may be,
will be considered the sole certificateholder of the individual certificates
represented by such global security for all purposes under the trust agreement
governing the certificates. Except as set forth below, owners of beneficial
interests in a global security will not be entitled to have any of the
individual certificates represented by the global security registered in their
names, will not receive or be entitled to receive physical delivery of any
certificates and will not be considered the certificateholder of the global
security under the trust agreement governing the certificates. Because the
Depositary can only act on behalf of its participants, the ability of a holder
of any certificate to pledge that certificate to persons or entities that do not
participate in the Depositary's system, or to otherwise act with respect to the
certificate, may be limited due to the lack of a physical certificate for the
certificate.
20
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 security
will be made to the Depositary or its nominee, as the case may be, as the
certificateholder of the global security. None of SOC, the administrative agent,
if any, the trustee for the certificates, any underwriters or agents, any paying
agent or the certificate registrar for the certificates will have responsibility
or liability for any aspect of the records relating to or payments made on
account of beneficial interests in a global security or for maintaining,
supervising or reviewing any records relating to such beneficial interests.
SOC expects that the Depositary for certificates of a given class and
series, upon receipt of any distribution of principal, premium or interest in
respect of a definitive global security representing any certificates, will
credit immediately participants' accounts with payments in amounts proportionate
to their respective beneficial interests in the principal amount of the global
security as shown on the records of such Depositary. SOC also expects that
payments by participants to owners of beneficial interests in a global security
held through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of such participants. Receipt by owners of beneficial interests
in a temporary global security of payments of principal, premium or interest in
respect of the global security will be subject to the restrictions discussed
below under "Limitations on Issuance of Bearer Certificates" below.
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 SOC within ninety days, SOC will issue individual
definitive certificates in exchange for the global security or securities
representing such certificates. In addition, SOC may at any time and in its sole
discretion determine not to have any certificates of a given class represented
by one or more global securities and, in such event, will issue individual
definitive certificates of such class in exchange for the global security or
securities representing such certificates. Further, if SOC so specifies with
respect to the certificates of a given class, an owner of a beneficial interest
in a global security representing certificates of such class may, on terms
acceptable to SOC and the Depositary of the global security, receive individual
definitive certificates in exchange for such beneficial interest. In any such
instance, an owner of a beneficial interest in a global security will be
entitled to physical delivery of individual definitive certificates of the class
represented by the global security equal in principal amount or notional amount,
if applicable, to such beneficial interest and to have definitive certificates
registered in its name (if the certificates of such class are issuable as
registered certificates). Individual definitive certificates of such class so
issued will be issued:
as registered certificates in denominations set forth in the
related prospectus supplement,
as bearer certificates in the denomination or denominations
specified by SOC or as specified in the related prospectus
supplement if the certificates of such class are issuable as
bearer certificates, or
as either registered or bearer certificates, if the certificates
of such class are issuable in either form.
21
See, however, "Limitations on Issuance of Bearer Certificates" below
for a description of certain restrictions on the issuance of individual bearer
certificates in exchange for beneficial interests in a global security.
The applicable prospectus supplement will set forth any specific terms
of the depositary arrangement with respect to any class or series of
certificates being offered by the applicable prospectus supplement to the extent
not set forth or different from the description set forth above.
Redemption of [Class [__]] Certificates Upon Exercise of a Call Warrant
The Issuing Entity has issued Call Warrants which entitle the holder of
the Call Warrants to purchase the Underlying Securities [on or after] [describe
exercise provisions]. If the Call Warrants are exercised, then the [Class [__]]
Certificates will be redeemed at a price equal to [the principal amount of] the
Certificates redeemed plus accrued distributions to the date of redemption.
[Describe partial exercise and redemption of applicable.]]
[Tender Right]
Upon [__] Business Days prior notice, Certificateholders may tender
their Certificates to [__], the liquidity provider, for a price equal to the
[Notional Amount] [Certificate Principal Balance] of the Certificates tendered
plus accrued distributions thereon to the date of tender. The right of
Certificateholders to tender their Certificates will terminate immediately
without prior notice upon the occurrence of [describe termination events].
[Optional Exchange]
[The certificates are an Exchangeable Series, thus a holder may
exchange its certificates for a pro rata portion of the Deposited Assets. The
right of exchange shall be exercisable only to the extent that such exchange
would not be inconsistent with SOC'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.
Such terms include, but are not limited to, the following:
o a requirement that the exchanging holder tender its
certificates to the Trustee;
o a minimum [Stated Amount] [Notional Amount], with
respect to each certificate being tendered for exchange;
o a requirement that the [Stated Amount] [Notional Amount]
of each certificate tendered for exchange be an integral
multiple of $[ ];
o certificateholders may effect such an exchange only on
[ ] (each, an "Optional Exchange Date");
o [a limitation on the right of an exchanging holder to
receive any benefit upon exchange from [credit support or
other non-Underlying Securities deposited in the Trust]];
and
22
o [an adjustment to the value of the proceeds of any
exchange based upon the prepayment of future expense
allocations and the establishment of the reserve for
anticipated Extraordinary Trust Expenses].
[In order for a certificate to be exchanged by the applicable
certificateholder, the Trustee 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 of the certificate 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 [Stated Amount]
[Notional Amount] of the registered certificate to be exchanged, the certificate
number or a description of the tenor and terms of the registration certificate,
a statement that the option to elect exchange is being exercised 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 the 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 Stated Amount of such
certificate provided that the Stated Amount 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 Stated Amount of the certificate shall be issued (which, in the case
of any registered certificate, shall be in the name of the holder of such
exchanged certificate).]
[Until definitive certificates are issued each certificate will be
represented by a global security, the Depositary's nominee will be the
certificateholder of such certificate and therefore will be the only entity that
can exercise a right of exchange. In order to ensure that the Depositary's
nominee will timely exercise a right of exchange with respect to a particular
certificate, the beneficial owner of such certificate must instruct the broker
or other direct or indirect participant through which it holds an interest in
such certificate to notify the Depositary of its desire to exercise a right of
exchange. Different firms have different cut-off times for accepting
instructions from their customers and, accordingly, each beneficial owner should
consult the broker or other direct or indirect participant through which it
holds an interest in a certificate in order to ascertain the cut-off time by
which such an instruction must be given in order for timely notice to be
delivered to the Depositary.]
[Upon the satisfaction of the foregoing conditions, certificateholders
will be entitled to receive a distribution of a pro rata share of the Deposited
Assets related to the certificate being exchanged or certificateholders, upon
satisfaction of such conditions, may direct the related trustee to sell, on
behalf of such certificateholders, such pro rata share of the Deposited Assets.
In such event the certificateholder will be entitled to receive the net proceeds
of such sale, less any costs and expenses incurred by the related trustee in
facilitating the sale, subject to adjustments.]
23
DESCRIPTION OF DEPOSITED ASSETS AND CREDIT SUPPORT
General
Each certificate of each series (or if more than one class exists, each
class within that series) will represent an ownership interest specified for
that series (or class) of certificates in a designated security ( i.e. certain
assets of the issuing entity which may be beneficially owned solely by or
deposited solely for the benefit of one class or a group of classes, and with
respect to which other classes will not possess any beneficial ownership
interest in, or be cross-collateralized by such "designated securities") or a
pool of securities (the "Underlying Securities") that are purchased by, or
otherwise deposited with, the issuing entity as described in the applicable
prospectus supplement. The Underlying Securities will represent one or more of
the following:
o debt or asset-backed securities or a pool of debt or
asset-backed securities issued by one or more
corporations, banking organizations, insurance
companies or special purpose vehicles (including trusts,
limited liability companies, partnerships or other
special purpose entities) organized under the laws of
the United States or any state, the District of
Columbia or the Commonwealth of Puerto Rico, which
in each case are subject to the informational
requirements of the Exchange Act and which, in accordance
with the Exchange Act, file reports and other
information with the SEC or (for certain depository
institutions) with a federal bank or thrift regulatory
agency (unless in the case of a security guaranteed by
a parent company, the parent guarantor files such
reports) ("Domestic Corporate Securities") and, if these
securities are Concentrated Underlying Securities, that
SOC reasonably believes (based on publicly available
information) meet the market capitalization and other
requirements for a primary offering of common stock on
Form S-3 at the time of offering of the trust
certificates (or, in the case of a guaranteed
security, SOC reasonably believes the parent
guarantor meets these requirements);
o preferred securities issued by one or more trusts or
other special purpose entities that hold obligations
of issuers that are subject, or are wholly-owned
subsidiaries of companies that are subject (in which
case such parent companies have fully and
unconditionally guaranteed such obligations on a
subordinate or non-subordinate basis), to the
informational requirements of the Exchange Act and which,
in accordance with the Exchange Act, file reports and
other information with the SEC ("Trust Preferred
Securities") and, if these securities are Concentrated
Underlying Securities, that SOC reasonably believes
(based on publicly available information) are eligible
for a primary offering of common stock on Form S-3 or
Form F-3 at the time of offering of the trust
certificates;
o asset-backed securities issued by one or more trusts or
other special purpose entities (having outstanding at
least $75,000,000 in securities held by non-affiliates)
which (unless the depositor is a GSE described below) are
subject at the time of issuance of the asset-backed
securities to the informational requirements of the
Exchange Act and which, in accordance with the
24
Exchange Act, file reports and other information with
the SEC ("Asset-Backed Securities" and, together with
Corporate Securities (as defined below) and Trust
Preferred Securities, "Private Sector Securities");
o obligations issued or guaranteed by the United States of
America or any agency of the United States of America for
the payment of which the full faith and credit of the
United States of America is pledged ("Treasury
Securities");
o obligations issued by one or more U.S. government
sponsored entities ("GSEs") described below under
"Underlying Securities-Government Securities-GSEs";
o Government Trust Certificates ("GTCs" and, together with
Treasury Securities and GSEs, "Domestic Government
Securities") described below;
o obligations issued or guaranteed by a foreign government
or any political subdivision or agency or instrumentality
thereof ("Foreign Government Securities" and, together
with Domestic Government Securities, "Government
Securities"); or
o debt securities or a pool of debt securities issued by
one or more foreign private issuers (as such term is
defined in rule 405 under the Securities Act) subject to
the informational requirements of the Exchange Act and
which, in accordance with the Exchange Act, file reports
and other information with the SEC (unless in the case of
a security guaranteed by a parent company, the parent
guarantor files such reports) ("Foreign Private
Securities" and, together with Domestic Corporate
Securities, "Corporate Securities") and, if these
securities are Concentrated Underlying Securities, that
SOC reasonably believes (based on publicly available
information) are eligible for a primary offering of
common stock on Form F-3 at the time of offering of the
trust certificates (or, in the case of a guaranteed
security, SOC reasonably believes the parent guarantor
meets these requirements).
Notwithstanding any requirement stated or incorporated in this
Prospectus relating to reporting under the Exchange Act, it should be noted that
the issuers of the Underlying Securities will not be participating in any
offering of trust certificates and that neither SOC, nor any underwriters or
agents with respect to the trust certificates, will perform the analysis and
review of such issuers that an underwriter of the Underlying Securities would
customarily perform.
This Prospectus relates only to the certificates offered by this
Prospectus and does not relate to the Underlying Securities. The following
description of the Underlying Securities is intended only to summarize certain
characteristics of the Underlying Securities SOC is permitted to deposit in an
issuing entity and is not a complete description of any prospectus relating to
any Underlying Security, and, if applicable, any Underlying Securities Indenture
(as defined below) and as qualified by the applicable prospectus supplement,
prospectus relating to any Underlying Security, if any, and to the extent
applicable, the statement of terms or similar document with respect to any
Underlying Security, and if applicable, the Underlying Securities Indenture.
25
If the offering of the Underlying Securities is not registered as a
primary offering of the Underlying Securities which meets all of the conditions
set forth in paragraph (b) of Rule 190 under the Securities Act, all of the
following conditions will be met: (i) neither the Underlying Securities Issuer
nor any of its affiliates will have a direct or indirect agreement, arrangement,
relationship or understanding, written or otherwise, relating to the Underlying
Securities and certificates, (ii) neither the Underlying Securities Issuer nor
any of its affiliates will be an affiliate of the Depositor or the Trust, and
(iii) the Depositor would be free to publicly resell the Underlying Securities
without registration under the Securities Act.
[Add disclosure relating to foreign private issuers as required by 1100
(e) of Reg. AB.]
Underlying Securities
Private Sector Securities
Private Sector Securities will be either:
o Corporate Securities,
o Trust Preferred Securities, or
o Asset-Backed Securities.
Corporate Securities. Corporate Securities may consist of senior or
subordinated debt obligations issued by domestic or foreign issuers, as
described above. With respect to senior or subordinated debt obligations, the
related prospectus supplement will specify whether each Corporate Security will
have been issued pursuant to an indenture between the issuer of the Underlying
Securities and a trustee. If so specified in the related prospectus supplement,
the indenture, if any, and the trustee, if any, will be qualified under the
Trust Indenture Act of 1939 (the "Trust Indenture Act") and the indenture will
contain certain provisions required by the Trust Indenture Act.
Trust Preferred Securities. As specified in the related prospectus
supplement, an issuing entity may include Trust Preferred Securities. Trust
Preferred Securities are preferred equity securities issued by a trust, such as
a Delaware statutory business trust, established for the purpose of issuing
common and preferred equity securities and investing the proceeds in certain
subordinated debt obligations. Trust Preferred Securities generally have
economic characteristics that mirror those of the subordinated debt obligations
that are the trusts' principal assets. Specifically, the Trust Preferred
Securities generally have a liquidation preference equal to the principal
balance of the subordinated debt obligations and are subject to mandatory
redemption on the maturity date of the subordinated debt obligations, or such
earlier date as the issuer optionally prepays the subordinated debt. The Trust
Preferred Securities generally pay distributions at a rate approximately equal
to the interest rate on the subordinated debt obligations, and these and
interest payments generally are due on or about the same date.
The trusts that issue Trust Preferred Securities generally have no
assets other than the subordinated debt obligations issued by the trusts'
affiliates. Such subordinated debt obligations are subordinated to all other
unsubordinated debt of the affiliates, including debt issued subsequent to
issuance of the subordinated debt obligations.
26
Asset-Backed Securities. As specified in the related prospectus
supplement, an issuing entity may include one or more Asset-Backed Securities.
Asset-Backed Securities may be asset-backed notes or pass-through certificates,
in each case issued by a trust or other special-purpose entity. Asset-backed
notes are secured by, and pass-through certificates represent an interest in, a
fixed or revolving pool of financial assets. Such financial assets may consist
of secured or unsecured consumer or other receivables, such as automobile loans
or contracts, automobile leases, credit card receivables, home equity or other
mortgage loans, trade receivables, floor plan (inventory) loans, automobile
leases and equipment leases. Asset-backed notes generally are issued pursuant to
indentures and pass-through certificates generally are issued pursuant to
pooling and servicing agreements. A separate servicing agreement typically is
executed in connection with asset-backed notes (such servicing agreements,
indentures and pooling and servicing agreements, the "Asset-Backed Agreements").
The Asset-Backed Agreements provide for the appointment of a trustee
and the segregation of the transferred pool of assets from the other assets of
the transferor. Such segregation generally is only required to the extent
necessary to perfect the interest of the trustee in the assets against claims of
unsecured creditors of the transferor of the assets. Where so required by the
Uniform Commercial Code (the "UCC") (for instance, home equity loan notes)
certain of the documents evidencing the underlying receivables are delivered to
the possession of the trustee or other custodian for the holders of the
Asset-Backed Securities. In the case of most assets, either no documents
evidence the receivables (for instance, credit card receivables) or documents
exist, but the UCC does not require their possession to perfect a transfer (for
instance, automobile installment sales contracts). In these cases, the
transferor segregates the assets only on its own books and records, such as by
marking its computer files, and perfects the trustee's interest by filing a
financing statement under the UCC. This method of segregation and perfection
presents the risk that the trustee's interest in the assets could be lost as a
result of negligence or fraud, such that the trustee and the Asset-Backed
Security holders become unsecured creditors of the transferor of the assets.
[Add 1104-1115 and 1117 and 1119 of Reg. AB disclosure for any
asset-backed issuer representing 10% or more of the asset pool pursuant to 1112
of Reg. AB and Section III.B.7 of the Adopting Release for Reg. AB.]
Government Securities
Government Securities will be either:
o Treasury Securities,
o GSEs,
o GTCs, or
o Foreign Government Securities.
Treasury Securities. Treasury Securities are securities issued or
guaranteed by the United States of America or by any of its agencies if the full
faith and credit of the United States of America is pledged for their payment.
27
GSEs. General. As specified in the applicable prospectus supplement,
the obligations of GSEs may be included in a trust. GSEs include, but are not
limited to, the following: Federal National Mortgage Association, Federal Home
Loan Mortgage Corporation, Student Loan Marketing Association, Resolution
Funding Corporation, Federal Home Loan Banks (to the extent such obligations
represent the joint and several obligations of the twelve Federal Home Loan
Banks), Tennessee Valley Authority and Federal Farm Credit Banks. GSE debt
securities generally are exempt from registration under Section 3(a)(2) of the
Securities Act (or are deemed by statute to be so exempt) and are not required
to be registered under the Exchange Act. The securities of any GSE will be
included in a trust only to the extent the organization makes publicly available
its annual report, which shall include financial statements or similar financial
information with respect to the organization. Based on information contained in
the offering document by which any GSE issuer's securities were originally
offered, the applicable prospectus supplement will set forth information with
respect to the public availability of information with respect to any GSE issuer
the debt securities of which constitute more than ten percent (10%) of the
Underlying Securities for any series of certificates as of the date of the
prospectus supplement. The specific terms and conditions of the Underlying
Securities will be set forth in the related prospectus supplement.
In the case of a GSE issuer, there will generally be a fiscal agent
with respect to any related Underlying Security whose actions will be governed
by a fiscal agency agreement. A fiscal agent is not a trustee for the holders of
the Underlying Securities and does not have the same responsibilities or duties
to act for the holders of a GSE's securities as would a trustee. The Underlying
Securities with respect to any GSE issuer will not be guaranteed by the United
States and do not constitute a debt or obligation of the United States or of any
agency or instrumentality of the United States other than the related GSE.
Contractual and Statutory Restrictions. A GSE issuer and the related
Underlying Securities may be subject to contractual and statutory restrictions
which may provide some protection to securityholders against the occurrence or
effects of specified events. Each GSE is limited to the activities as will
promote its statutory purposes as set forth in the publicly available
information with respect to the issuer. A GSE's promotion of its statutory
purposes, as well as its statutory, structural and regulatory relationships with
the federal government may cause or require the GSE to conduct its business in a
manner that differs from the manner that an enterprise which is not a GSE might
employ.
Neither the United States nor any agency of the United States 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.
GTCs. As specified in the related prospectus supplement, a trust may
include one or more GTCs. GTCs are certificates evidencing undivided fractional
interests in a trust, the assets of which consist of promissory notes (the "GTC
Notes"), payable in U.S. dollars, of a certain foreign government, backed by a
full faith and credit guaranty issued by the United States of America, acting
through the Defense Security Assistance Agency of the Department of Defense, of
the due and punctual payment of 90% of all payments of principal and interest
due on the GTC Notes and a security interest in collateral, consisting of
non-callable securities issued or guaranteed by the United States government,
sufficient to pay the remaining 10% of all payments of principal and interest
due on the GTC Notes.
28
Foreign Government Securities. As specified in the applicable
prospectus supplement, Foreign Government Securities are obligations guaranteed
or issued by one or more foreign governments or any political subdivision or
agency or instrumentality thereof.
General Terms of the Underlying Securities
Covenants. If specified in the related prospectus supplement, the
Underlying Securities that consist of senior or subordinated debt obligations
will be issued pursuant to an indenture (the "Underlying Securities Indenture").
Underlying Securities Indentures generally contain covenants intended to protect
security holders against the occurrence or effects of certain specified events,
including restrictions limiting the issuer's, and in some cases any of its
subsidiary's, ability to:
o consolidate, merge, or transfer or lease assets;
o incur or permit to exist any lien, charge, or encumbrance
upon any of its property or assets;
o incur, assume, guarantee or permit to exist any
indebtedness for borrowed money if the payment of such
indebtedness is secured by the grant of such a lien; or
o declare or pay any cash dividends, or make any
distributions on or in respect of, or purchase, redeem,
exchange or otherwise acquire or retire for value any
capital stock or subordinated indebtedness of the issuer
or its subsidiaries, if any.
An indenture may also contain financial covenants which, among other
things, require the maintenance of certain financial ratios or the creation or
maintenance of reserves. Subject to specified exceptions, indentures typically
may be amended or supplemented and past defaults may be waived with the consent
of the indenture trustee, the consent of the holders of not less than a
specified percentage of the outstanding securities, or both.
The Underlying Securities Indenture related to one or more Underlying
Securities included in a trust may include some, all or none of the foregoing
provisions or variations thereof or additional covenants not discussed herein.
There can be no assurance that any of these provisions will protect the issuing
entity 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 Underlying Securities that
represents ten percent or more of the total Underlying Securities with respect
to any series of certificates (a "Concentrated Underlying Security") and, as
applicable, will describe material covenants which are common to any pool of
Underlying Securities.
Events of Default. Indentures for the Underlying Securities will
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:
29
o failure by the issuer to pay an installment of interest
or principal on the securities at the time required
(subject to any specified grace period) or to redeem any
of the securities when required (subject to any
specified grace period);
o failure by the issuer to observe or perform any
covenant, agreement or condition contained in the
securities or the indenture, as the case may be, which
failure is materially adverse to security holders and
continues for a specified period after notice thereof is
given to the issuer by the indenture trustee or the
holders of not less than a specified percentage of the
outstanding securities; or
o failure by the issuer to make any required payment of
principal (and premium, if any) or interest with respect
to certain of the other outstanding debt obligations of
the issuer or the acceleration by or on behalf of the
holders thereof of such securities.
Remedies. Indentures for Underlying Securities generally provide that
upon the occurrence of an event of default, the indenture trustee may, and upon
the written request of the holders of not less than a specified percentage of
the outstanding securities must, take such action as it may deem appropriate to
protect and enforce the rights of the security holders. Certain indentures
provide that the indenture trustee or a specified percentage of the holders of
the outstanding securities have the right to declare all or a portion of the
principal and accrued interest on the outstanding securities immediately due and
payable upon the occurrence of certain events of default, subject to the
issuer's right to cure, if applicable. Generally, an indenture will contain a
provision entitling the indenture trustee thereunder to be indemnified by the
security holders prior to proceeding to exercise any right or power under such
indenture with respect to such securities at the request of such security
holders. An indenture is also likely to limit a security holder's right to
institute certain actions or proceedings to pursue any remedy under the
indenture unless certain conditions are satisfied, including consent of the
indenture trustee, that the proceeding be brought for the ratable benefit of all
holders of the security, and/or the indenture trustee, after being requested to
institute a proceeding by the owners of at least a specified minimum percentage
of the securities, shall have refused or neglected to comply with such request
within a reasonable time.
Each Underlying Securities Indenture or Underlying Security may include
some, all or none of the foregoing provisions or variations thereof or
additional events of default not discussed herein. There can be no assurance
that any of these provisions will protect the trust, as a holder of the
Underlying Securities, against losses. If an event of default occurs and the
indenture trustee as a holder of the Underlying Securities is entitled to vote
or take such other action to declare the principal amount of an Underlying
Security and any accrued and unpaid interest thereon to be due and payable, the
certificateholders' objectives may differ from those of holders of other
securities of the same series and class as any Underlying Security ("Outstanding
Debt Securities") in determining whether to declare the acceleration of the
Underlying Securities.
Subordination. As 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 issuer of the Underlying Securities. With respect to
30
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 issuing entity as a holder of
subordinated debt may suffer a greater loss than if it held unsubordinated debt
of the issuer of the Underlying Securities. There can be no assurance, however,
that in the event of a bankruptcy or similar proceeding the issuing entity as a
holder of Senior Underlying Securities would receive all payments in respect of
such securities even if holders of subordinated securities receive amounts in
respect of such securities. Reference is made to the prospectus supplement used
to offer any series of certificates for a description of any subordination
provisions with respect to any Concentrated Underlying Securities and the
percentage of Senior Underlying Securities and Subordinated Underlying
Securities, if any, in a trust comprised of a pool of securities.
Secured Obligations. Certain of the Underlying Securities with respect
to any trust may represent secured obligations of the issuer of the Underlying
Securities ("Secured Underlying Securities"). Generally, unless an event of
default shall have occurred and is continuing, or with respect to certain
collateral or as otherwise set forth in the indenture pursuant to which such
securities were offered and sold, an issuer of secured obligations has the right
to remain in possession and retain exclusive control of the collateral securing
a security and to collect, invest and dispose of any income related to the
collateral. The indenture pursuant to which any secured indebtedness is issued
may also contain provisions for release, substitution or disposition of
collateral under specified circumstances with or without the consent of the
indenture trustee or upon the direction of not less than a specified percentage
of the security holders. The indenture pursuant to which any secured
indebtedness is issued will also provide for the disposition of the collateral
upon the occurrence of specified events of default with respect thereto. In the
event of a default in respect of any secured obligation, security holders may
experience a delay in payments on account of principal (and premium, if any) or
any interest on such securities pending the sale of any collateral and prior to
or during such period the related collateral may decline in value. If proceeds
of the sale of collateral following an indenture event of default are
insufficient to repay all amounts due in respect of any secured obligations, the
holders of such securities (to the extent not repaid from the proceeds of the
sale of the collateral) would have only an unsecured claim ranking pari passu
with the claims of all other general unsecured creditors.
The Underlying Securities Indenture with respect to any Secured
Underlying Security may include, some, all or none of the foregoing provisions
or variations thereof. The prospectus supplement used to offer any series of
certificates which includes Concentrated Underlying Securities which are Secured
Underlying Securities, will describe the security provisions of the Underlying
Securities and the related collateral. With respect to any trust comprised of a
pool of securities, a substantial portion of which are Secured Underlying
Securities, the applicable prospectus supplement will disclose general
information with respect to such security provisions and the collateral.
Principal Economic Terms of Concentrated Underlying Securities
The applicable prospectus supplement will include a description of the
following terms, as applicable, of any Concentrated Underlying Securities:
31
o the identity of the issuer of the Underlying Securities;
o the title and series of the Underlying Securities and
their aggregate principal amount, denomination and form;
o whether the Underlying Securities are senior or
subordinated to any other obligations of the issuer of
the Underlying Securities;
o whether any of the obligations are secured or unsecured
and, if secured, the nature of any collateral;
o the limit, if any, upon the aggregate principal amount of
the Underlying Securities;
o the dates on which, or the range of dates within which,
the principal of (and premium, if any, on) the
Underlying Securities will be payable;
o the rate or rates or the method of determination of the
rates, at which the Underlying Securities will bear
interest, if any ("Underlying Securities Rate"); the date
or dates from which interest will accrue ("Underlying
Securities Interest Accrual Periods"); and the dates on
which interest will be payable ("Underlying Securities
Payment Dates"); [provided that under no circumstance will
the rate at which the Underlying Securities bear interest
be an index which is not an index of interest rates for
debt];
o the obligation, if any, of the issuer of the Underlying
Securities to redeem the Underlying Securities as required
by any sinking fund or analogous provisions, or at the
option of a holder, and the periods within which or the
dates on which, the prices at which and the terms and
conditions upon which the Underlying Securities may be
redeemed or repurchased, in whole or in part;
o the periods within which (or the dates on which), the
prices at which and the terms and conditions upon which
the Underlying Securities may be redeemed, if any, in
whole or in part, at the option of the issuer of the
Underlying Securities;
o whether the Underlying Securities were issued at a price
lower than their principal amount;
o if other than United States dollars, the foreign currency
in which the Underlying Securities are denominated, or in
which payment of the principal of (and premium, if any) or
any interest on the Underlying Securities will be made
(the "Underlying Securities Currency"), and the
circumstances, if any, when such currency of payment may
be changed;
o material events of default or restrictive covenants
provided for with respect to the Underlying Securities;
and
32
o the rating of the Underlying Securities, if any.
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 that is
specified in the applicable prospectus supplement, certain material events of
default or restrictive covenants common to the Underlying Securities, and, on an
aggregate, percentage or weighted average basis, as applicable, the
characteristics of the pool with respect to the applicable terms set forth above
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.
Other Deposited Assets
In addition to the Underlying Securities, SOC 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 including 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 to the Underlying Securities) (all as described below under the caption
"Credit Support") and direct obligations of the United States (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 undivided ownership interest in such Deposited
Assets. The applicable prospectus supplement may, however, specify that certain
assets constituting a part of the Deposited Assets relating to any given series
may be beneficially owned solely by or deposited solely for the benefit of one
class or a group of classes within such series. In such event, the other classes
of such series will not possess any beneficial ownership interest in those
specified assets constituting a part of the Deposited Assets.
Credit Support
As specified in the applicable prospectus supplement for a given series
of certificates, the issuing entity for any series of certificates may include,
or the certificateholders of such series (or any class or group of classes
within such series) may have the benefit of, credit support for any class or
group of classes within such series. Credit support may be provided by any
combination of the following means described below. The applicable prospectus
supplement will set forth whether the issuing entity 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
33
classes and certain information with respect to the obligors of each such
element, including financial information with respect to any obligor providing
credit support for 20% or more of the aggregate principal amount of such class
or classes unless such obligor is subject to the informational requirements of
the Exchange Act.
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 by such credit support out of amounts
otherwise payable to one or more of the classes of the certificates of such
series.
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 Issuing Entity 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, if losses are realized during a given period on the
Deposited Assets relating to a series of certificates such that the collections
received on the Deposited Assets are insufficient to make all distributions on
the certificates of such series, those realized losses would be allocated to the
certificateholders of any class of any such series that is subordinated to
another class, to the extent and in the manner provided in the related
prospectus supplement. In addition, if so provided in the applicable prospectus
supplement, certain amounts otherwise payable to certificateholders of any class
that is subordinated to another class may be required to be deposited into a
reserve account. Amounts held in any reserve account may be applied as described
below under "--Reserve Accounts" and in the related prospectus supplement.
Letter of Credit; Surety Bond. The certificateholders of any series (or
class or group of classes of certificates within such series) may, if specified
in the applicable prospectus supplement, have the benefit of a letter or letters
of credit issued by a bank or a surety bond or bonds issued by a surety company.
In either case, the trustee or such other person specified in the applicable
prospectus supplement will use its reasonable efforts to cause the letter of
credit or the surety bond, as the case may be, to be obtained, to be kept in
full force and effect (unless coverage under the letter of credit or surety bond
has been exhausted through payment of claims) and to pay timely the fees or
premiums for the letter of credit or surety bond 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 under the letter of credit
or surety bond. The applicable prospectus supplement will provide the manner,
priority and source of funds by which any such draws are to be repaid.
34
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, 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 deposited in such
reserve account may be distributed to certificateholders of such class or group
of classes within such series, or may be used for other purposes, in the manner
and to the extent 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, SOC or such other person
named in the related prospectus supplement.
[Other Credit Support. The issuing entity 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,
interest rate swaps, caps, floors, collars puts or calls. Any put or call will
be designed to assure the servicing or timely distribution of proceeds to
Certificateholders and will thus be an "eligible asset" within the meaning of
Rule 3a-7(b)(1) under the Investment Company Act. 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 to
administer the related Deposited Assets.
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This will include making collections of all payments made on the Deposited
Assets and depositing the collections from time to time prior to
any applicable Distribution Date into a segregated account
maintained or controlled by the trustee for the benefit of such series (each a
"certificate account"). The trustee (or an administrative agent, if provided for
in the related prospectus supplement) will make all determinations, as to the
appropriate application of such collections and other amounts available for
distribution to the payment of any administrative or collection expenses (such
as the administrative fee) and credit support-related ongoing fees (such as
insurance premiums, letter of credit fees or any required account deposits) and
to the payment of amounts then due and owing on the certificates of such series
(and classes within such series), all in the manner and priorities described in
the 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. Amounts
received from the Deposited Assets and any credit support obtained for the
benefit of certificateholders for a particular series or class of certificates
over a specified period may not be sufficient, after payment of all prior
expenses and fees for such period, to pay amounts then due and owing to holders
of such certificates. The applicable prospectus supplement will also set forth
the manner and priority by which any Realized Losses will be allocated among the
classes of any series of certificates, if applicable.
The relative priorities of distributions with respect to collections
from the assets of the issuing entity assigned to classes of a given series of
certificates may permanently or temporarily change over time upon the occurrence
of certain circumstances specified in the applicable prospectus supplement.
Moreover, the applicable prospectus supplement may specify that the relative
distribution priority assigned to each class of a given series for purposes of
payments of certain amounts, such as principal, may be different from the
relative distribution priority assigned to each such class for payments of other
amounts, such as interest or premium.
DESCRIPTION OF THE TRUST AGREEMENT
The following summary of certain provisions of the trust agreement and
the certificates is not complete and 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 material provision of the trust agreement or the
certificates that is not described in this Prospectus.
Acquisition of Deposited Assets
At the time of issuance of any series of certificates SOC will cause
the Underlying Securities and any other Deposited Assets to be included in the
related trust, and any other Deposited Asset specified in the prospectus
supplement, to be acquired by the related trustee or otherwise included in the
trust, together with all principal, premium (if any) and interest received by or
on behalf of SOC 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. Information concerning each Deposited Asset
will be set forth in the trust agreement and in the applicable prospectus
supplement.
In addition, SOC will, with respect to each Deposited Asset, deliver or
cause to be delivered to the trustee (or to the custodian) all documents
necessary to transfer ownership of
36
such Deposited Asset to the trustee. The trustee (or such custodian) will hold
these documents in trust for the benefit of the certificateholders.
Collection and Other Administrative Procedures
General. With respect to any series of certificates the trustee,
administrative agent, if any, or such other person specified in the applicable
prospectus supplement directly or through sub-administrative agents, will make
reasonable efforts to collect all scheduled payments under the Deposited Assets.
The trustee or administrative agent will follow the collection procedures, as it
would follow with respect to comparable financial assets that it held for its
own account, provided that such procedures are consistent with the trust
agreement and any related instrument governing any credit support (collectively,
the "credit support instruments") and provided that, it shall not be required to
expend or risk its own funds or otherwise incur personal financial liability.
The administrative agent or the trustee will have no obligation to make any
advances with respect to collections on the Deposited Assets or in favor of the
certificateholders of the related series of certificates.
Sub-Administration. Any trustee or administrative agent may delegate
its obligations in respect of the Deposited Assets to third parties they deem
qualified to perform such obligations (each, a "sub-administrative agent").
However, the trustee or administrative agent will remain obligated with respect
to such obligations under the trust agreement. Information concerning any
sub-administrative agent will be set forth in the related prospectus supplement.
The administrative agent or trustee may require any sub-administrative agent to
agree to indemnify the administrative agent or trustee, as applicable, for any
liability or obligation sustained in connection with any act or failure to act
by the sub-administrative agent.
Realization upon Defaulted Deposited Assets. The trustee, on behalf of
the certificateholders of a given series (or any class or classes within such
series), will present claims under each applicable credit support instrument,
and will take reasonable steps as are necessary to receive payment or to permit
recovery with respect to defaulted Deposited Assets. As set forth above, all
collections by or on behalf of the trustee or administrative agent under any
credit support instrument are to be deposited in the certificate account for the
related trust, subject to withdrawal as described above.
If recovery on a defaulted Deposited Asset under any related credit
support instrument is not available, the trustee will be obligated to follow or
cause to be followed normal practices and procedures as it deems necessary or
advisable to recover upon the defaulted Deposited Asset. However, 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 but unpaid on the
Deposited Assets at the applicable interest rate and (iii) the aggregate amount
of expenses incurred by the administrative agent and the trustee in connection
with such proceedings to the extent reimbursable from the assets of the issuing
entity under the trust agreement, the issuing entity 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
37
incurred with respect to the Deposited Asset and any unreimbursed advances of
delinquent payments made with respect to the Deposited Asset.
Retained Interest
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 is represented by the ownership of an interest in the issuing entity which
entitles the holder thereof to any residual or excess cash flow generated by the
issuing entity to the extent available for distribution after all other required
payments and distributions have been made by the Trust.
Trustee and Administrative Agent Compensation and Payment of Expenses
If compensation of the trustee or an administrative agent, if any, is
payable from assets of the related trust, then the applicable prospectus
supplement will specify the trustee's and the administrative agent's
compensation, and the source, manner and priority of payment of the
compensation, 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 the trustee or the administrative agent, if
any, the trustee or an administrative agent, if any, may be permitted to pay
from its compensation certain expenses incurred in connection with its carrying
out its duties and obligations with respect to a given series of certificates,
including, without limitation, payment of the expenses incurred by the trustee,
the administrative agent or any 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.
Certain Matters Regarding the Trustee, the Administrative Agent and SOC
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,
SOC, an affiliate of either or any third party and may have other normal
business relationships with the trustee, SOC, or their respective affiliates.
The trust agreement will provide that an administrative agent may
resign from its obligations and duties under the trust agreement with respect to
any series of certificates only if such resignation, and the appointment of a
successor, will not result in a withdrawal or downgrading of the rating of any
class of certificates of such series, or upon a determination that its duties
under the trust agreement with respect to such series are no longer permissible
under applicable law. No resignation will become effective until the trustee or
a successor has assumed the administrative agent's obligations and duties under
the trust agreement with respect to such series.
The trust agreement may also provide for the termination of the
administrative agent upon the occurrence of certain administrative agent
termination events, which events will be set forth in the related prospectus
supplement as applicable.
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The trust agreement will further provide that neither an administrative
agent, SOC, the trustee nor any director, officer, employee, or agent of the
administrative agent, the trustee or SOC will incur any liability to the related
trust or certificateholders for any action taken, or for refraining from taking
any action, in good faith under the trust agreement or for errors in judgment;
provided, however, that none of the trustee, the administrative agent, SOC nor
any such person will be protected against any liability that would otherwise be
imposed by reason of willful misfeasance, bad faith or gross negligence in the
performance of duties under the trust agreement or by reason of reckless
disregard of obligations and duties under the trust agreement. The trust
agreement will further provide that the trustee, an administrative agent, SOC
and any director, officer, employee or agent of the trustee, the administrative
agent or SOC will be entitled to indemnification by the related trust and will
be held harmless against any loss, liability or expense incurred in connection
with any legal action relating to the trust agreement or the certificates, other
than any loss, liability or expense incurred by reason of willful misfeasance,
bad faith or gross negligence in the performance of duties under the trust
agreement or by reason of reckless disregard of obligations and duties under the
trust agreement. In addition, the trust agreement will provide that neither the
trustee, an administrative agent nor SOC will be under any obligation to appear
in, prosecute or defend any legal action which is not incidental to their
respective responsibilities under the trust agreement or which in its opinion
may cause it to incur any expense or liability. Each of the trustee, the
administrative agent or SOC may, however, in its discretion undertake any action
which it may deem necessary or desirable with respect to the trust agreement and
the rights and duties of the parties to the trust agreement and the interests of
the certificateholders under the trust agreement. The applicable prospectus
supplement will describe how the legal expenses and costs of such action and any
liability resulting from such action will be allocated.
The trustee, SOC and any administrative agent shall have no obligation
with respect to the Underlying Securities. SOC is not authorized to proceed
against the issuer of the Underlying Securities in the event of a default.
Except as expressly provided in the trust agreement, the trustee is not
authorized to proceed against the issuer of the Underlying Securities or to
assert the rights and privileges of certificateholders.
Any person into which the trustee or an administrative agent may be
merged or consolidated, or any person resulting from any merger or consolidation
to which the trustee or an administrative agent is a part, or any person
succeeding to the business of the trustee or an administrative agent, will be
the successor of the trustee or the administrative agent (as the case may be)
under the trust agreement with respect to the certificates of any given series.
Remedies of Certificateholders
No certificateholder will have the right under the trust agreement to
institute any proceeding with respect to the trust agreement unless the holder
previously has given to the trustee written notice of breach and unless the
holders of certificates evidencing not less than the Required Percentage of the
Voting Rights have made written request upon the trustee to institute such
proceeding in its own name as trustee under the trust agreement and have offered
to the trustee reasonable indemnity, and the trustee for fifteen days has
neglected or refused to institute any such proceeding. The trustee, however, is
under no obligation to exercise any of the trusts or powers vested in it by the
trust agreement or to make any investigation of matters arising under the trust
agreement or to institute, conduct or defend any litigation under the trust
agreement or in relation to the trust agreement at the request, order or
direction of any of the holders of
39
certificates covered by the trust agreement, unless the certificateholders have
offered to the trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred by the trustee.
Modification and Waiver
The trust agreement for each series of certificates may be amended by
SOC and the trustee with respect to such series, without notice to or consent of
the certificateholders, for specified purposes including:
o to cure any ambiguity,
o to correct or supplement any provision of the trust
agreement that may be inconsistent with any other
provision of the trust agreement or in the applicable
prospectus supplement,
o to add or supplement any credit support for the benefit
of any certificateholders (provided that if any such
addition affects any series or class of
certificateholders differently than any other series or
class of certificateholders, then such addition will not,
as evidenced by an opinion of counsel, have a material
adverse effect on the interests of any affected series or
class of certificateholders),
o to add to the covenants, restrictions or obligations of
SOC, the administrative agent, if any, or the trustee
for the benefit of the certificateholders,
o to add, change or eliminate any other provisions with
respect to matters or questions arising under such trust
agreement so long as (x) any such addition, change or
elimination will not, as evidenced by an opinion of
counsel, affect the tax status of the trust or result in
a sale or exchange of any certificate for tax purposes
and (y) the trustee has received written confirmation
from each rating agency rating such certificates that
such amendment will not cause such rating agency to
qualify, reduce or withdraw the then current rating of
the certificates, or
o to comply with any requirements imposed by the Internal
Revenue Code.
Without limiting the generality of the foregoing the trust agreement
may also be modified or amended from time to time by SOC and the trustee, with
the consent of the holders of certificates evidencing not less than the Required
Percentage 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 or eliminating any provision of the trust agreement
or of modifying in any manner the rights of such certificateholders; provided,
however, that in the event modification or amendment would materially adversely
affect the rating of any series or class by each rating agency rating the
certificates, the Required Percentage 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
40
certificate without the consent of the holder of such certificate or (ii)
reduce the aforesaid Required Percentage of Voting Rights required for the
consent to any amendment without the consent of the holders of all related
certificates then outstanding.
Holders of certificates evidencing not less than the Required
Percentage 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 SOC, the trustee or the administrative agent, if any,
with certain restrictive provisions, if any, of the trust agreement before the
time for such compliance and (ii) waive any past default under the trust
agreement with respect to certificates of that series, except a default in the
failure to distribute amounts received as principal of (and premium, if any) or
any interest on any such certificate and except a default in respect of a
covenant or provision the modification or amendment of which would require the
consent of the holder of each outstanding certificate affected by the
modification or amendment.
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, as provided in the related prospectus
supplement, will forward or cause to be forwarded to each such
certificateholder, to SOC and to such other parties as may be specified in the
trust agreement, a statement setting forth:
o 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;
o 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 in this Prospectus and in the related
prospectus supplement;
o 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;
o 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;
o the aggregate Stated Amount or, if applicable, Notional
Amount of the Deposited Assets and the current interest
rate on the Deposited Assets at the close of business on
such Distribution Date;
o the aggregate Stated Amount or aggregate Notional Amount,
if applicable, of each class of certificates at the close
of business on such Distribution Date, separately
identifying any reduction in such aggregate Stated Amount
or aggregate Notional Amount due to the allocation of any
Realized Losses or otherwise; and
41
o 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 in the series
(or class within such series) as of the close of business
on such Distribution Date.
In the case of information furnished with respect to the amounts of
distributions or the amounts of compensation of the administrative agent and the
trustee, the amounts shall be expressed as a U.S. dollar amount (or equivalent
U.S. dollar amount in any other Specified Currency) per minimum denomination of
certificates or for such other specified portion of the certificates. Within a
reasonable period of time after the end of each calendar year, the
administrative agent or the trustee, as provided in the related prospectus
supplement, shall furnish to each person who at any time during the calendar
year was a certificateholder a statement containing the information set forth
above with respect to the amounts of distributions or the amounts of
compensation of the administrative agent and the trustee, aggregated for such
calendar year or the applicable portion of the calendar year during which such
person was a certificateholder. Such obligation of the administrative agent or
the trustee, as applicable, will be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the
administrative agent or the trustee, as applicable, under any requirements of
the Internal Revenue Code as are from time to time in effect.
In addition, the trustee shall after the close of each calendar year,
deliver to each Certificateholder, as may be required by the Code or otherwise,
such information for such year as may be required to enable each
Certificateholder to prepare its federal income taxes.
Notices. Any notice required to be given to a holder of a registered
certificate will be mailed to the last address of such holder set forth in the
applicable certificate register. Any notice required to be given to a holder of
a bearer certificate will be published in a daily morning 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 issuing entity 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
42
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 its designee, or such other location as may be specified in the
applicable prospectus supplement, upon payment by the holder of such expenses as
may be incurred by the applicable trustee in connection with the replacement of
the certificate 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 events described in the related prospectus
supplement.
Call [Rights] [Warrants]
If specified in the applicable Prospectus Supplement, the Issuing
Entity 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].
Duties of the Trustee
The trustee makes no representations as to the validity or sufficiency
of the trust agreement, the certificates of any series or any Deposited Asset or
related document. The trustee is not accountable for the use or application by
or on behalf of any administrative agent of any funds paid to the administrative
agent or its designee in respect of such certificates or the Deposited Assets,
or deposited into or withdrawn from the related certificate account or any other
account by or on behalf of the administrative agent. The trustee is required to
perform only those duties specifically required under the trust agreement with
respect to such series.
The Trustee
The trustee for any given series of certificates under the 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, SOC, any
administrative agent and their respective affiliates.
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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 Issuing Entity 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]
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
44
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 Issuing Entity from the interest [and principal] payments
received by the Issuing Entity 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 Issuing Entity can occur.
Additional Underlying Securities; Issuance of Additional Certificates
If so provided in a Prospectus Supplement, from time to time after the
closing date for the related Series of Certificates, additional Underlying
Securities may be sold to or deposited with the Issuing Entity without the
consent of Certificateholders, in which case additional Certificates will be
issued in a principal amount equal to such percentage of the principal amount of
Underlying Securities so sold to or deposited with the Issuing Entity as is
specified in the Prospectus Supplement. Any such additional Certificates issued
will rank pari passu with the Certificates issued on the closing date and such
additional Certificates together with the Certificates issued on the Closing
Date shall be backed by the expanded asset pool consisting of the Underlying
Securities which are sold to or deposited with the Issuing Entity on the Closing
Date and any such additional Underlying Securities which are sold to or
deposited with the Issuing Entity after the Closing Date and, to the extent
provided in the Prospectus Supplement, any such additional Underlying Securities
will be subject to additional call rights or warrants. Notice shall be given to
existing Certificateholders of the deposit or sale of additional Underlying
Securities with or to the Issuing Entity at the time specified in the Prospectus
Supplement.
Because additional Underlying Securities may be sold to or deposited
with the Issuing Entity as described above, the Issuing Entity is a "master
trust" within the meaning of Item 1101(c)(3)(i) of Regulation AB.
LIMITATIONS ON ISSUANCE OF BEARER CERTIFICATES
In compliance with United States federal income tax laws and
regulations, SOC 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 of such bearer certificate, they will not offer, sell or
deliver such bearer certificate, directly or indirectly, to a U.S. Person (as
defined below) 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,
45
including the limitations provided in Sections 165(j) and 1287(a) of the
Internal Revenue Code." The sections referred to in the legend provide that,
with certain exceptions, a United States person that 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 in this Prospectus, "United States" means the United States of
America and its possessions, and "U.S. Person" means a citizen or resident of
the United States, a corporation, partnership or other entity created or
organized in or under the laws of the United States, or an estate or trust the
income of which is subject to United States Federal income taxation regardless
of its source.
Pending the availability of a definitive global security or individual
bearer certificates, as the case may be, certificates that are issuable as
bearer certificates may initially be represented by a single temporary global
security, without interest coupons, to be deposited with a common depositary in
London for Morgan Guaranty Trust Company of New York, Brussels Office, as
operator of the Euroclear System ("Euroclear"), and Clearstream Banking,
Luxembourg, societe anonyme ("Clearstream") for credit to the accounts
designated by or on behalf of the purchasers of such certificates. Following the
availability of a definitive global security in bearer form, without coupons
attached, or individual bearer certificates and subject to any further
limitations described in the applicable prospectus supplement, the temporary
global security will be exchangeable for interests in such definitive global
security or for such individual bearer certificates, respectively, only upon
receipt of a "Certificate of Non-U.S. Beneficial Ownership." A "Certificate of
Non-U.S. Beneficial Ownership" is a certificate to the effect that a beneficial
interest in a temporary global security is owned by a person that is not a U.S.
Person or is owned by or through a financial institution in compliance with
applicable U.S. Treasury regulations. No bearer certificate will be delivered in
or to the United States. If so specified in the applicable prospectus
supplement, interest on a temporary global security will be distributed to each
of Euroclear and Clearstream with respect to that portion of such temporary
global security held for its account, but only upon receipt as of the relevant
Distribution Date of a Certificate of Non-U.S. Beneficial Ownership.
FEDERAL INCOME TAX CONSEQUENCES
Scope of Opinion
In the opinion of Orrick, Herrington & Sutcliffe LLP, special tax
counsel ("Special Tax Counsel") (i) the Issuing Entity will be a grantor trust
or partnership for federal income tax purposes and not an association taxable as
a corporation (or publicly traded partnership treated as an association) 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
Issuing Entity 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 Issuing Entity that is materially different from the
opinion contained in clause (i) above, such opinion will be filed with the
Commission in a Current Report on Form 8-K.
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 Issuing Entity is characterized
or treated as a corporation for United States federal income tax purposes, among
other consequences, the Issuing Entity 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
46
Counsel's opinion, however, the balance of this discussion assumes that the
Issuing Entity 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," 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, SOC and Special Tax Counsel have
assumed, without inquiry, that the Underlying Securities will be characterized
as indebtedness for United States federal income tax purposes. The related
prospectus supplement may contain additional information about the United States
federal income tax characterization of the Deposited Assets.
Tax Status of the Trust
The Issuing Entity shall be treated as a grantor trust for tax
reporting purposes. 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 Issuing Entity
may be viewed by the IRS as a partnership for federal income tax purposes.
Nonetheless, because treating the Issuing Entity 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 Issuing Entity as a
Partnership" below, the balance of this discussion assumes that the Issuing
Entity will be so
47
classified. (The applicable trust agreement will prohibit the Issuing Entity
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 Issuing Entity
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 Issuing Entity 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 Issuing Entity 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 Issuing Entity will identify the Underlying Securities and any call
warrants as part of an integrated transaction within the meaning of Treasury
Regulation ss. 1.1275-6. Among other consequences of such identification is the
treatment generally of each 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.
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.
48
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 Issuing Entity as a Partnership
As indicated above, it is possible that the IRS will seek to
recharacterize the Issuing Entity as a partnership. If the IRS were to
successfully recharacterize the Issuing Entity as a partnership, the Issuing
Entity 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 Issuing
Entity is characterized as a partnership, it is likely to 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 Issuing Entity 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.
If the election to be excluded from the partnership tax accounting
provisions of the Code is not effective, among other consequences, (i) the
Issuing Entity would be required to account for its income and deductions at the
Issuing Entity 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 Issuing
Entity income and deductions for each taxable year of the Issuing Entity 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 Issuing Entity computed at the Issuing
Entity 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 Issuing Entity 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
49
indirectly) to the obligor, guarantor, if any, or sponsor of the Underlying
Securities, SOC, 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 Issuing Entity 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:
o through underwriters or dealers;
o directly to one or more purchasers; or
o through agents.
The applicable prospectus supplement will set forth the terms of the
offering of any series of certificates, which may include the names of any
underwriters or initial purchasers, the purchase price of the certificates and
the proceeds to SOC from the sale, any underwriting discounts and other items
constituting underwriters' compensation, any initial public offering price, any
discounts or concessions allowed or reallowed or paid to dealers, any securities
exchanges on which the certificates may be listed, 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 by the applicable prospectus supplement.
If underwriters are used in the sale, certificates will be acquired by
the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. Certificates
may be offered to the public either through underwriting syndicates represented
by managing underwriters or by underwriters without a syndicate. The managing
underwriters or underwriters in the United States may include an affiliate of
SOC. The obligations of the underwriters to purchase the certificates will be
subject to certain conditions precedent, and the underwriters will be obligated
to purchase all of the certificates if any certificates are purchased. Any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
Certificates may also be sold through agents designated by SOC from
time to time. Any agent involved in the offer or sale of certificates will be
named, and any commissions payable by
50
SOC to such agent will be set forth, in the applicable prospectus supplement.
Any agent will act on a best efforts basis for the period of its appointment.
If so indicated in the applicable prospectus supplement, SOC 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 as required by 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 SOC to
indemnification by SOC 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 of those liabilities.
Agents and underwriters may be customers of, engage in transactions with, or
perform services for, SOC or its affiliates in the ordinary course of business.
The underwriters involved in the offering of any series of
certificates may include J.P. Morgan Securities Inc., an affiliate of SOC,
and may include other affiliates of SOC, J.P. Morgan Securities Inc. or
other affiliates may be involved in any series as an underwriter or an agent.
LEGAL OPINIONS
Certain legal matters with respect to the certificates will be passed
upon by Orrick, Herrington & Sutcliffe LLP, New York, New York, or other counsel
identified in the applicable prospectus supplement.
51
INDEX OF TERMS
$ .........................................................................4
Asset-Backed Agreements.......................................................27
Asset-Backed Securities.......................................................25
Base Rate.....................................................................16
Business Day..................................................................15
Calculation Agent.............................................................17
Call on Certificates..........................................................19
Call on Underlying Securities.................................................19
Call Right....................................................................19
certificate...................................................................14
certificate account...........................................................36
Certificate of Non-U.S. Beneficial Ownership..................................46
Clearstream...................................................................46
Code..........................................................................47
Commercial Paper Rate Certificate.............................................16
Concentrated Underlying Security..............................................29
Corporate Securities..........................................................25
credit support instruments....................................................37
Cut-off Date..................................................................36
definitive certificate........................................................20
Depositary....................................................................19
Deposited Assets...........................................................2, 33
Determination Date............................................................14
Distribution Date..............................................................2
dollar.........................................................................4
Domestic Corporate Securities.................................................24
Domestic Government Securities................................................25
Dual Currency Certificates....................................................18
Euroclear.....................................................................46
Exchangeable Series...........................................................19
Federal Funds Rate Certificate................................................16
Fixed Pass-Through Rate........................................................2
Fixed Rate Certificates.......................................................15
Floating Rate Certificates....................................................16
Foreign Currency Certificates.................................................18
Foreign Government Securities.................................................25
Foreign Private Securities....................................................25
Government Securities.........................................................25
GSEs..........................................................................25
GTC Notes.....................................................................28
GTCs..........................................................................25
Initial Pass-Through Rate.....................................................16
Interest Reset Date...........................................................17
Interest Reset Period.........................................................17
Investment Company Act.........................................................7
IRS ........................................................................46
LIBOR Certificate.............................................................16
London Banking Day............................................................15
Maximum Pass-Through Rate.....................................................17
Minimum Pass-Through Rate.....................................................17
Notional Amount...............................................................15
OID ........................................................................48
Outstanding Debt Securities...................................................30
participants..................................................................20
Pass-Through Rate..............................................................2
Private Sector Securities.....................................................25
Realized Losses...............................................................18
reserve account...............................................................35
Retained Interest.............................................................11
Secured Underlying Securities.................................................31
Senior Underlying Securities..................................................30
SOC ........................................................................10
Special Tax Counsel...........................................................46
Specified Currency.............................................................3
Spread........................................................................16
Spread Multiplier.............................................................16
Stated Amount.................................................................18
Strip Certificates.............................................................3
Stripped Interest.............................................................15
sub-administrative agent......................................................37
Subordinated Underlying Securities............................................30
Treasury Rate Certificate.....................................................16
Treasury Securities...........................................................25
Trust Indenture Act...........................................................26
Trust Preferred Securities....................................................24
U.S. dollars...................................................................4
U.S. Person...................................................................46
U.S.$..........................................................................4
UCC...........................................................................27
Underlying Securities......................................................2, 24
Underlying Securities Currency................................................32
Underlying Securities Indenture...............................................29
Underlying Securities Interest Accrual Periods................................32
Underlying Securities Payment Dates...........................................32
Underlying Securities Rate....................................................32
United States.................................................................46
USD............................................................................4
Variable Pass-Through Rate.....................................................2
52
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............................................. *
Printing and Engraving Expenses.............................. *
Trustee's Fees............................................... *
Legal Fees and Expenses...................................... *
Securities Exchange Listing Fees, Blue Sky Fees and Expenses. *
Accountants' Fees and Expenses............................... *
Rating Agency Fees........................................... *
Miscellaneous................................................ *
Total.............................................. *
* To Be Filed By Amendment
Item 15. Indemnification of Directors and Officers
Pursuant to the Delaware General Corporation Law (the "DGCL"), a
corporation may indemnify any person in connection with any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than a derivative action by or in the right of such
corporation) who is or was a director, officer, employee or agent of such
corporation, or serving at the request of such corporation in such capacity for
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred in connection with such action,
suit or proceeding if such person acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of such
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful.
The DGCL also permits indemnification by a corporation under similar
circumstances for expenses (including attorneys' fees) actually and reasonably
incurred by such persons in connection with the defense or settlement of a
derivative action, except that no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have been adjudged to
be liable to such corporation unless the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that such
person is fairly and reasonably entitled to indemnity for such expenses which
such court shall deem proper.
The DGCL provides that the indemnification described above shall not be
deemed exclusive of other indemnification that may be granted by a corporation
pursuant to its By-laws, disinterested directors' vote, stockholders' vote,
agreement or otherwise.
The DGCL also provides that corporations with the power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the
corporation, or is or was serving at the request of the
corporation in a similar capacity for another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him or
her in any such capacity, or arising out of his or her status as such, whether
or not the corporation would have the power to indemnify him or her against such
liability as described above.
The Certificate of Incorporation of Structured Obligations Corporation
(the "Registrant") the Registrant provides that, to the fullest extent that the
DGCL as from time to time in effect permits the limitation or elimination of the
liability of directors, no director of the Registrant shall be personally liable
to the Registrant or its stockholders for monetary damages for breach of
fiduciary duty as a director.
The Registrant's Certificate of Incorporation provides for
indemnification of directors and officers of the Registrant to the fullest
extent permitted by Delaware law.
Reference is made to the Underwriting Agreement, the form of which is
filed as Exhibit 1.1 to this Registration Statement.
Under the Trust Agreement, the Registrant will agree to indemnify each
of the Trustees of the issuer or any predecessor Trustee for the issuer, and to
hold the Trustees harmless against, any loss, damage, claims, liability or
expense incurred without negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration of the Trust Agreement,
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers or
duties under the Trust Agreement.
Item 16. Exhibits
1.1 Form of proposed Underwriting Agreement for Trust Certificates.*
3.1 Certificate of Incorporation of Structured Obligations
Corporation (formerly J.P. Morgan Structured Obligations
Corporation).*
3.2 By-laws of Structured Obligations Corporation (formerly J.P.
Morgan Structured Obligations Corporation).*
4.1 Form of Trust Agreement, with form of Trust Certificate attached
thereto.*
4.2 Form of Series Supplement to the Trust Agreement.*
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).
* Incorporated by reference from the Registration Statement on Form S-3 (File
No. 333-67188)
II-2
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.
II-3
(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.
II-4
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.
II-5
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 Amendment No. 2 to the 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 31st day of October, 2006.
STRUCTURED OBLIGATIONS CORPORATION
By: /s/ Kelly Absher
-------------------------------------
Name: Kelly Absher
Title: Vice President and Controller
Pursuant to the requirements of the Securities Act of 1933,
this Amendment No. 2 to the registration statement has been signed by the
following persons in the capacities and on the dates indicated.
October 31, 2006 By: *
-----------------------------------------
Date Name: Patrick T. O'Brien
Title: Chief Finance Officer, Treasurer
and Director
October 31, 2006 By: *
-----------------------------------------
Date Name: Kelly Absher
Title: Vice President, Controller
and Director
October 31, 2006 By: *
----------------------------------------
Date Name: Thomas J. Benison
Title: Vice President and Director
October 31, 2006 By: *
-----------------------------------------
Date Name: Michael A. Magaldi
Title: Vice President and Director
October 31, 2006 By: *
-----------------------------------------
Date Name: Alan S. Trager
Title: Secretary and Director
II-6
October 31, 2006 By: *
-----------------------------------------
Date Name: James C.P. Berry
Title: Assistant Secretary and Director
October 31, 2006 By: *
-----------------------------------------
Date Name: Timothy H. Samson
Title: Assistant Secretary and Director
October 31, 2006 By: *
----------------------------------------
Date Name: Euisun Lisa Lee
Title: Assistant Secretary and Director
October 31, 2006 By: *
----------------------------------------
Date Name: Chad S. Parson
Title: President and Director
(Principal Executive Officer)
* The undersigned, by signing his name hereto, does hereby sign this Amendment
No. 2 on behalf of each of the persons indicated above pursuant to the power of
attorney filed with the Registration Statement on Form S-3 (File No. 333-134429)
on May 24, 2006.
By: /s/ Kelly Absher
October 31, 2006 --------------------------------
Date Name: Kelly Absher
Title: Attorney in Fact
II-7
EXHIBIT INDEX
Exhibit Description of Exhibit
No.
1.1 Form of proposed Underwriting Agreement for
Trust Certificates.*
3.1 Certificate of Incorporation of Structured
Obligations Corporation (formerly J.P.
Morgan Structured Obligations Corporation).*
3.2 By-laws of Structured Obligations
Corporation formerly J.P. Morgan Structured
Obligations Corporation).*
4.1 Form of Trust Agreement, with form of Trust
Certificates attached thereto.*
4.2 Form of Series Supplement to the Trust
Agreement.*
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).
- ----------------------
* Incorporated by reference from the Registration Statement on Form S-3
(File No. 333-67188)
II-8