Exhibit 4
PPLUS TRUST CERTIFICATES SERIES VAL-1
SERIES SUPPLEMENT
between
XXXXXXX XXXXX DEPOSITOR, INC.,
as Depositor,
and
THE BANK OF NEW YORK,
as Trustee and Securities Intermediary
Dated as of February 7, 2003
SERIES SUPPLEMENT, dated as of February 7, 2003 (the
"Supplement"), by and between XXXXXXX XXXXX DEPOSITOR, INC., a Delaware
corporation, as Depositor, THE BANK OF NEW YORK, a New York corporation, as
Trustee and Securities Intermediary.
W I T N E S S E T H:
WHEREAS, the Depositor desires to create the Trust designated
herein (the "Trust") by executing and delivering this Supplement, which shall
incorporate the terms of the Standard Terms for Trust Agreements, dated as of
February 20, 1998 (the "Standard Terms" and, together with this Supplement, the
"Trust Agreement"), by and between the Depositor and the Trustee and Securities
Intermediary, as modified by this Supplement;
WHEREAS, the Depositor desires to deposit the Underlying
Securities set forth on Schedule I attached hereto into the Trust;
WHEREAS, in connection with the creation of the Trust and the
deposit therein of the Underlying Securities, it is desired to provide for the
issuance of (a) the Certificates evidencing undivided interests in the Trust and
(b) Call Rights;
WHEREAS, the Trustee has joined in the execution of the
Standard Terms and this Supplement to evidence the acceptance by the Trustee of
the Trust; and
WHEREAS, the Securities Intermediary has joined in the
execution of the Standard Terms and this Supplement to evidence the acceptance
by the Securities Intermediary of its obligations thereunder and hereunder;
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants expressed herein, it is hereby agreed by and between the
Depositor and the Trustee and Securities Intermediary as follows:
Section 1. Incorporation of Standard Terms. All of the
provisions of the Standard Terms, a copy of which is attached hereto as Exhibit
A, are hereby incorporated herein by reference in their entirety and this
Supplement and the Standard Terms shall form a single agreement among the
parties. In the event of any inconsistency between the provisions of this
Supplement and the provisions of the Standard Terms, the provisions of this
Supplement will control with respect to the transactions described herein.
Section 2. Definitions. Except as otherwise specified herein
or as the context may otherwise require, the following terms shall have the
respective meanings set forth below for all purposes under this Supplement
(Section 2(b) hereof sets forth terms listed in the Standard Terms that are not
applicable to this Series). Capitalized terms used but not defined herein shall
have the meanings assigned to them in the Standard Terms.
"Allocation Ratio": The ratio of the Class A Allocation to the
Class B Allocation. Voting Rights, Liquidation Proceeds, Realized Losses and
Extraordinary Trust Expenses shall be allocated between Class A
Certificateholders and Class B Certificateholders in accordance with the
Allocation Ratio and, within each Class, each of the foregoing rights and
obligations shall be allocated to Certificateholders in accordance with their
pro rata interests in such Class.
2
"Authorized Denomination": With respect to Certificates, an
aggregate stated and/or notional principal amount of $1,000, as applicable.
"Business Day": Any day that is not a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies in the
City of New York are authorized or obligated by law, regulation or executive
order to close and that also is specified as a Business Day with respect to the
Underlying Securities.
"Call Date": Any Business Day that (i) a Call Holder
designates as a Call Date on or after April 15, 2008; (ii) a Call Holder
designates as a Call Date before April 15, 2008 after the announcement of any
redemption of the Underlying Securities or other unscheduled payment of the
Underlying Securities or after receipt by the Call Holder of notice of the
termination of the Trust; provided that if a Call Right is to be exercised after
the announcement of any redemption of the Underlying Securities or other
unscheduled payment of the Underlying Securities and prior to such redemption or
other unscheduled payment, then the Call Date designated by the Call Holder must
be the second Business Day prior to such redemption or other unscheduled
payment; (iii) at any time is deemed a Call Date upon an acceleration of the
Underlying Securities and payment in full by the Underlying Securities Issuer of
all amounts when due; or (iv) at any time in the case of a tender offer for the
Underlying Securities, a Call Holder is deemed to designate as a Call Date
pursuant to Section 2.02(i)(iv) of the Warrant Agreement.
"Call Holder": The holder of a Class A Call Right or a Class B
Call Right.
"Call Price": The Class A Call Price and the Class B Call
Price.
"Call Right": The Class A Call Right and the Class B Call
Right.
"Certificates": All 1,000,000 Class A Certificates and all
1,000,000 Class B Certificates.
"Class A Allocation": The present value (discounted at the
rate of 7.50% per annum) of (i) the unpaid interest, except for the Class B
Payments, due or to become due on the Underlying Securities on or prior to the
Final Scheduled Distribution Date and (ii) the principal amount of the
Underlying Securities (in each case assuming that the Underlying Securities are
paid in full when due and are not accelerated or redeemed prior to their stated
maturity).
"Class A Call Price" means $25.00 per Class A Certificate
being called plus any accrued and unpaid interest on each Class A Certificate
being called to the Call Date. Any payments of interest on the Call Date by the
Trust to the applicable Class A Certificateholder shall be excluded.
"Class A Call Right": The right, but not the obligation,
pursuant to the Warrant Agreement and any related Warrant Certificates (as
defined in the Warrant Agreement) of one or more Call Holders to purchase from
the Class A Certificateholders on a Call Date some or all of the Class A
Certificates for the Class A Call Price.
3
"Class A Certificate Account": The Certificate Account
established for the Class A Certificateholders.
"Class A Certificates": The Certificates issued by the Trust
in a stated amount of $25 per trust certificate, entitled to receive on each
Distribution Date until and including the Final Scheduled Distribution Date,
distributions at a rate of 7.25% per annum on the stated amount of the Class A
Certificates and a cash distribution of the principal amount of the Underlying
Securities on the Final Scheduled Distribution Date and such other distributions
as described herein.
"Class B Allocation": The sum of the present values
(discounted at the rate of 7.50% per annum) of the Class B Payments (assuming,
for purposes hereof, that the Underlying Securities are paid in full on their
stated maturity date, and no portion thereof is accelerated or redeemed prior to
such date).
"Class B Call Price" means the sum of the present values,
discounted at a rate of 7.50% per annum, of the unpaid distributions due, or to
become due, in respect of the Class B Payments to be made on each Class B
Certificate being called on or after the Call Date (assuming, for purposes
hereof, that the Underlying Securities are paid in full on their stated maturity
date, and no portion thereof is accelerated or redeemed prior to such date). Any
payments of interest on the Call Date by the Trust to the applicable Class B
Certificateholder shall be excluded.
"Class B Call Right": The right, but not the obligation,
pursuant to the Warrant Agreement and any related Warrant Certificates (as
defined in the Warrant Agreement) of one or more Call Holders to purchase from
the Class B Certificateholders on a Call Date some or all of the Class B
Certificates for the Class B Call Price.
"Class B Certificate Account": The Certificate Account
established for the Class B Certificateholders.
"Class B Certificates": The Certificates issued by the Trust
with the right to receive, on each Distribution Date, commencing on April 15,
2003 and ending on the Final Scheduled Distribution Date, a distribution of
0.25% per annum of the aggregate notional principal amount of Class B
Certificates and such other distributions as described herein.
"Class B Payments" will have the meaning given to it in
Section 3(d).
"Closing Date": February 7, 2003.
"Collection Period": (i) With respect to each October 15
Distribution Date, the period beginning on the day after the April 15
Distribution Date of the current year and ending on such October 15 Distribution
Date, inclusive, and (ii) with respect to each April 15 Distribution Date, the
period beginning on the day after the October 15 Distribution Date of the prior
year and ending on such April 15 Distribution Date, inclusive, except for the
April 15, 2003 Distribution Date, as to which the Collection Period shall be the
period beginning on the Cut-off
4
Date and ending on such April 15, 2003 Distribution Date, inclusive; provided,
however, that clauses (i) and (ii) shall be subject to Section 9(c) hereof.
"Corporate Trust Office": The office of the Trustee located at
000 Xxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, XX 00000, Attention: Corporate Trust
Department; provided, however, that the office at which certificated securities
are delivered for registration of transfer, cancellation or exchange shall be
the office of the Trustee, located at 000 Xxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, XX
00000.
"Cut-off Date": February 7, 2003
"Delivery Certificates" has the meaning given to it in
Section 2.02 of the Warrant Agreement.
"Depository": The Depository Trust Company, its nominees and
their respective successors.
"Distribution Date": April 15 and October 15 of each year (or
if such date is not a Business Day, the next succeeding Business Day),
commencing on April 15, 2003 and ending on the Final Scheduled Distribution
Date.
"Distribution Election": (a) If there occurs an Event of
Default (as defined in the Underlying Securities Indenture) on the Underlying
Securities under clauses (1) or (2) of Section 5.01 of the Underlying Securities
Indenture, then the Trustee, upon receiving notice of such event, shall, on or
immediately after the 30th day after such event, direct the Market Agent to sell
the Underlying Securities and a pro rata portion of the Related Assets held by
the Trust, in accordance with the Sale Procedures, and the Liquidation Proceeds,
if any, shall be divided between the Classes in accordance with the Allocation
Ratio and each Class' portion shall be deposited into such Class' Certificate
Account and distributed to such Class' Certificateholders pro rata on the first
Business Day following such deposit into such Certificate Account.
(b) If, prior to the day on which the Market Agent sells the
Underlying Securities pursuant to paragraph (a) above, there occurs (and the
trustee receives notice of such occurrence) an acceleration of the date of
maturity of the Underlying Securities and the Underlying Securities are declared
to be immediately due and payable in accordance with the Underlying Securities
Indenture, and the Underlying Securities Issuer:
(i) makes full payment of all amounts when due, and such
payment exceeds the sum of (x) the aggregate stated amount of the Class
A Certificates plus any accrued and unpaid distributions to the date of
payment and (y) the sum of the present values, discounted at the rate
of 7.50% per year, of the unpaid payments due, or to become due, in
respect of the Class B Payments to be made on the Class B Certificates
on or after the date of payment (assuming, for purposes of such
calculation, that the Underlying Securities would have been paid in
full at their stated maturity, that such acceleration had not occurred,
and that no portion thereof would have been redeemed prior to such
maturity date) then all holders of outstanding Call Rights will be
deemed to have exercised their Call Rights automatically, and the
Trustee, upon receiving such acceleration proceeds from the Underlying
Securities Issuer, shall, on the first Business
5
Day following receipt of such acceleration proceeds, distribute from
such acceleration proceeds the following amounts:
(A) the Class A Call Price or the Class B Call Price
per Certificate, as applicable, shall be distributed from such
payment on account of each Certificate called from the holder
thereof (which holders, pursuant to Section 2.02(d) of the
Warrant Agreement, shall exclude Certificateholders to whom
Delivery Certificates (as defined in the Warrant Agreement)
were delivered in accordance with Section 2.02(d) of the
Warrant Agreement),
(B) for each Class A Certificate, $25.00 plus any
accrued and unpaid interest on such Class A Certificate to
that date of payment, or, for each Class B Certificate, the
sum of the present values, discounted at the rate of 7.50% per
annum, of the unpaid distributions that were due, or to become
due, in respect of the Class B Payments to be made on such
Class B Certificate on or after the date of payment (assuming,
for purposes of such calculation, that the Underlying
Securities would have been paid in full on their stated
maturity, and that such acceleration had not occurred, and
that no portion thereof would have been redeemed prior to such
stated maturity date), as applicable, shall be distributed
from such payment on account of each Certificate held by
Certificateholders to whom Delivery Certificates were
delivered in accordance with Section 2.02(d) of the Warrant
Agreement, and
(C) any amounts remaining shall be divided between
the Classes in accordance with the Allocation Ratio and each
Class' portion shall be distributed pro rata among the Call
Holders that are deemed to have exercised their Call Rights
automatically pursuant to this clause with respect to that
Class and the Certificateholders of that Class to whom
Delivery Certificates were delivered in accordance with
Section 2.02(d) of the Warrant Agreement;
If the payment to be made by the Underlying
Securities Issuer does not exceed the threshold set forth
above, the Trustee shall divide the amount of such payment
between the Trust Certificate Classes in accordance with the
Allocation Ratio and distribute each Class's portion of such
amounts pro rata to the Trust Certificateholders of that
Class.
(ii) makes a partial payment of all amounts when due, then the
Trustee, upon receiving such payment, shall:
(A) immediately divide such payment between the
Classes in accordance with the Allocation Ratio and deposit
each Class' portion of such payment into that Class'
Certificate Account for distribution to such Class'
Certificateholders pro rata on the first Business Day
following such deposit into such Certificate Account;
provided, that if the Underlying Securities Issuer places any
condition, restriction or obligation on the acceptance of such
partial payment including but not limited to a waiver of any
right granted to a holder of the Underlying
6
Securities, such partial payment will be rejected by the
Trustee and no deposit will be made into the Certificate
Account,
(B) divide a principal amount of the Underlying
Securities equal to the aggregate stated amount of the
outstanding Class A Certificates between the Classes in
accordance with the Allocation Ratio and distribute each
Class' portion of the Underlying Securities to such Class'
Certificateholders pro rata and divide a pro rata portion of
the Related Assets between the Classes in accordance with the
Allocation Ratio and distribute each Class' portion of such
Related Assets to such Class' Certificateholders pro rata to
each Certificateholder's last address as it appears in the
Certificate Register within three Business Days of receiving
said notice, and
(C) if any Underlying Securities are not distributed
pursuant to clause (B), immediately direct the Market Agent to
sell all Underlying Securities not so distributed and a pro
rata portion of the Related Assets held by the Trust, in
accordance with the Sale Procedures, and the Liquidation
Proceeds, if any, shall be divided between the Classes in
accordance with the Allocation Ratio and each Class' portion
shall be deposited into such Class' Certificate Account and
distributed to such Class' Certificateholders pro rata on the
first Business Day following such deposit into such
Certificate Account; or
(iii) fails to make such payment when due, then the Trustee,
upon receiving notice of such failure to make payment, shall:
(A) divide a principal amount of Underlying
Securities equal to the aggregate stated amount of the
outstanding Class A Certificates and a pro rata portion of the
Related Assets in accordance with the Allocation Ratio between
the Classes in accordance with the Allocation Ratio and
distribute each Class' portion to such Class'
Certificateholders pro rata to each Certificateholder's last
address as it appears in the Certificate Register within three
Business Days of receiving said notice, and
(B) if any Underlying Securities are not distributed
pursuant to clause (A), immediately direct the Market Agent to
sell all Underlying Securities not so distributed and a pro
rata portion of the Related Assets held by the Trust, in
accordance with the Sale Procedures, and the Liquidation
Proceeds, if any, shall be divided between the Classes in
accordance with the Allocation Ratio and each Class' portion
shall be deposited into such Class' Certificate Account and
distributed to such Class' Certificateholders pro rata on the
first Business Day following such deposit into such
Certificate Account.
(c) If the Underlying Securities Issuer of any Concentrated
Underlying Securities ceases to be a reporting company under the Exchange Act,
and no parent guarantor of such Underlying Securities Issuer, if any, includes
in its Exchange Act reports condensed consolidating financial statements setting
forth financial information for the Underlying Securities Issuer, then the
Trustee, upon receiving notice of such event shall (A) divide a
7
principal amount of Underlying Securities equal to the aggregate stated amount
of the outstanding Class A Certificates and a pro rata portion of the Related
Assets in accordance with the Allocation Ratio between the Classes in accordance
with the Allocation Ratio and distribute each Class' portion to such Class'
Certificateholders pro rata to each Certificateholder's last address as it
appears in the Certificate Register within three Business Days of receiving said
notice, and (B) if any Underlying Securities are not distributed pursuant to
clause (A), immediately direct the Market Agent to sell all Underlying
Securities not so distributed and a pro rata portion of the Related Assets held
by the Trust, in accordance with the Sale Procedures, and the Liquidation
Proceeds, if any, shall be divided between the Classes in accordance with the
Allocation Ratio and each Class' portion shall be deposited into such Class'
Certificate Account and distributed to such Class' Certificateholders pro rata
on the first Business Day following such deposit into such Certificate Account.
(d) Upon receiving (A) notice of an acceleration of the date
of maturity of the Underlying Securities and the Underlying Securities Issuer's
partial payment of all amounts when due as described in subsection (ii) of
clause (b) above, or (B) notice of the events set forth in clause (c) above, the
Trustee shall, 10 days prior to the exercise of any remedy, provide written
notice of the termination of the Trust to the Call Holders. Notwithstanding
subsection (ii) of clause (b) and clause (c), the Trustee shall not distribute
any such partial payment, Underlying Securities or Related Assets to any
Certificateholders before the earlier of (i) the expiration of the 10-day notice
of termination period, and (ii) receipt by the Trust of notice of all Call
Holders' election to exercise their Class A Call Right or Class B Call Right, as
applicable. If less than all outstanding Class A Call Rights or Class B Call
Rights are exercised, upon receiving such notice of election, the Trustee shall
select by lot (or by such other reasonable procedure as may be established by
the Trustee) for purchase by such exercising Call Holders in the case of Class A
Certificates the stated amount of Class A Certificates equal to the stated
amount of Class A Call Rights being exercised multiplied by the aggregate stated
amount of the outstanding Class A Certificates not subject to Delivery
Certificates divided by the aggregate stated amount of the outstanding Class A
Call Rights or, in the case of Class B Certificates, the aggregate notional
principal amount of Class B Certificates equal to the aggregate notional
principal amount of Class B Call Rights being exercised multiplied by the
aggregate notional principal amount of the outstanding Class B Certificates not
subject to Delivery Certificates divided by the aggregate notional principal
amount of the outstanding Class B Call Rights. The Certificateholders of the
Trust Certificates to be purchased shall not be entitled to any right other than
the right to receive payment of an amount equal to the applicable Call Price on
the date the applicable Call Rights are exercised, and such Trust Certificates
shall be deemed to have been automatically surrendered by the Certificateholders
to the Trust for further transfer to the exercising Call Holders. The share of
the payment, Underlying Securities and Related Assets to be distributed with
respect to such called Trust Certificates shall be distributed to the exercising
Call Holders. In the case of a sale by the Market Agent of Underlying Securities
and Related Assets pursuant to clause (a) above, the Trustee shall deliver such
Underlying Securities and Related Assets to the purchaser of such Underlying
Securities and Related Assets only against payment in same day funds and the
Trustee shall deposit the same into the Certificate Account.
"Eligible Investments": As defined in the Standard Terms;
provided, however, that (i) the minimum required rating for long-term
instruments will be equal to the lower of the rating of the Underlying
Securities or the Trust Certificates, and (ii) the rating of any short-term
8
instruments will be A-1+ by S&P and P1 by Xxxxx'x; and provided, further, that
any such investment matures no later than the Business Day prior to the next
succeeding Distribution Date.
"Escrow Agent": As will be set forth in the Escrow Agreement.
"Escrow Agreement": The escrow agreement to be entered into on
the Exercise Date among a given Call Holder, the Trustee and the Escrow Agent
pursuant to Section 14(c)(iii)(2) hereof.
"Event of Default": (i) A default in the payment of any
interest on any Underlying Security after the same becomes due and payable
(subject to any applicable grace period), (ii) a default in the payment of the
principal of or any installment of principal of any Underlying Security when the
same becomes due and payable and (iii) any other event specified as an event of
default in the Underlying Securities Indenture. For a summary of certain events
of default in the Underlying Securities Indenture, please refer to the
Prospectus Supplement.
"Exercise Date": any date on which a Call Holder notifies the
Trustee of its intention to exercise its Call Right in accordance with the
provision of Section 14(c)(iii), any date a Call Holder is deemed to have
exercised its Call Right pursuant to Section 2.02(i)(iv) of the Warrant
Agreement, or any date following the acceleration of the Underlying Securities
and payment in full of all amounts when due by the Underlying Securities Issuer.
"Final Scheduled Distribution Date": April 15, 2032 (or if
such date is not a Business Day, the next succeeding Business Day).
"Fixed Pass-Through Rate": With respect to the Class A
Certificates, 7.25% per annum and with respect to the Class B Certificates,
0.25% per annum.
"Optional Exchange Date": Any Distribution Date or such date
as is designated pursuant to Section 7(b) hereof.
"Ordinary Expenses": The compensation due to the Trustee for
Ordinary Expenses as defined in the Standard Terms, which, with respect to
Ordinary Expenses other than those referred to in clause (iii) of such
definition and other than the costs of converting to XXXXX format the periodic
reports required for the Trust under the Exchange Act, shall be fixed at $2,000
per annum (payable in semi-annual installments of $1,000).
"Pass-Through Rate": For each Class of Certificates, the
associated Fixed Pass-Through Rate.
"Prepaid Ordinary Expenses": Zero (0).
"Prospectus Supplements": The Prospectus Supplement dated
February 4, 2003 relating to the Class A Certificates and the Prospectus
Supplement dated February 4, 2003 relating to the Class B Certificates.
"Rating Agency": Xxxxx'x and S&P.
9
"Record Date": The Business Day immediately preceding each
Distribution Date.
"Series": PPLUS Trust Series VAL-1.
"Underlying Securities": The $25,000,000 aggregate principal
amount of 7.50% Notes due April 15, 2032 issued by the Underlying Securities
Issuer, as described in Schedule I hereto.
"Underlying Securities Indenture": As set forth in Schedule I.
"Underlying Securities Issuer": Valero Energy Corporation, a
Delaware corporation.
"Warrant Agreement": The Warrant Agreement, dated as of
February 7, 2003, by and between the Trust and the Warrant Agent (as defined in
the Warrant Agreement).
(b) The terms listed below are not applicable to this Series.
"Accounting Date"
"Administration Account"
"Administrative Agent"
"Administration Agreement"
"Administrative Agent Termination Event"
"Advance"
"Calculation Agent"
"Eligible Expense"
"Exchange Rate Agent"
"Floating Pass-Through Rate"
"Letter of Credit"
"Limited Guarantor"
"Limited Guaranty"
"Notional Amount"
"Reserve Account"
"Requisite Reserve Amount"
10
"Retained Interest"
"Surety Bond"
"Swap Agreement"
"Swap Counterparty"
"Swap Distribution Amount"
"Swap Guarantee"
"Swap Guarantor"
"Swap Receipt Amount"
"Swap Termination Payment"
Section 3. Designation of Trust and Certificates. (a) The
Trust created hereby shall be known as the "PPLUS Trust Series VAL-1". The Class
A Certificates and Class B Certificates evidencing certain undivided ownership
interests therein shall be known as the "PPLUS Class A 7.25% Trust Certificates
Series VAL-1" and the "PPLUS Class B 0.25% Trust Certificates Series VAL-1,"
respectively.
(b) The Class A Certificates and Class B Certificates shall be
held through the Depository in book-entry form and shall be substantially in the
form attached hereto as Exhibits B and C, respectively. The Class A Certificates
shall be issued in authorized denominations of $25 and integral multiples
thereof and the Class B Certificates shall be issued with a notional principal
amount of $25 and integral multiples thereof. Except as provided in the Standard
Terms, the Trust shall not issue additional Certificates or incur any
indebtedness; provided, however, from time to time, upon obtaining prior written
confirmation by each Rating Agency that such action will not result in a
downgrading or withdrawal of its rating of the Certificates, the Depositor may,
without the consent of the Certificateholders, increase the amount of the
Underlying Securities in the Trust and the Trust may issue a corresponding
amount of additional Certificates in accordance with Section 5.12(a) of the
Standard Terms except that clauses (v), (vi) and (vii) of Section 5.12(a) shall
not apply to this Series and a corresponding number of additional Warrants in
accordance with Article I of the Warrant Agreement.
(c) The Class A Certificates will be entitled to receive (i)
on each Distribution Date, commencing on April 15, 2003 and ending on the Final
Scheduled Distribution Date, or such earlier date if the Underlying Securities
are redeemed prior to the Final Scheduled Distribution Date, distributions at a
rate of 7.25% per annum on the stated amount of the Class A Certificates and
(ii) on the Final Scheduled Distribution Date, a distribution of the aggregate
principal amount of the Underlying Securities.
(d) On each Distribution Date, the Class B Certificates will
be entitled to receive a distribution of 0.25% per annum multiplied by the
notional principal amount of the Class B Certificates (the "Class B Payments").
11
(e) Any reference to the principal amount of the Certificates
shall be construed as a reference to the stated amount of the Class A
Certificates and/or the notional principal amount of the Class B Certificates,
unless otherwise indicated.
Section 4. Satisfaction of Conditions to Initial Execution and
Delivery of Trust Certificates. The Trustee hereby acknowledges receipt, on or
prior to the Closing Date, of:
(i) the Underlying Securities set forth on Schedule I hereto;
and
(ii) all documents set forth in Section 5.12 of the Standard
Terms except that clauses (v), (vi) and (vii) of Section 5.12(a) shall
not apply to this Series.
Section 5. Distributions. (a) On each Distribution Date, the
Trustee shall apply the funds in the Certificate Account, solely to the extent
of Available Funds in the Certificate Account, as follows:
(i) first, to the Trustee, reimbursement for any approved
Extraordinary Trust Expenses incurred by the Trustee in accordance with
Section 6(b) hereof and approved by not less than 100% of the
Certificateholders;
(ii) second, pro rata to the holders of the Class A
Certificates and Class B Certificates, distributions accrued during the
related Collection Period at the rate of 7.25% per annum on the stated
amount of the Class A Certificates to holders of the Class A
Certificates on such Distribution Date and 0.25% per annum multiplied
by the notional principal amount of Class B Certificates to holders of
the Class B Certificates on such Distribution Date, commencing on April
15, 2003 and ending on the Final Scheduled Distribution Date;
(iii) third, divided between the Classes in accordance with
the proportionate interest of each Class in any delayed interest
payments on the Underlying Securities (e.g., 7.25/7.50 to the Class A
Certificateholders and 0.25/7.50 to the Class B Certificateholders) and
each Class' portion distributed to the holders of each Class pro rata,
if available, any additional payments paid by the Underlying Securities
Issuer as a result of a delay in the receipt by the Trustee of any
interest payment on the Underlying Securities;
(iv) fourth, pro rata to the Class A Certificateholders, on
the Final Scheduled Distribution Date only, a distribution of the
aggregate principal amount of the Underlying Securities;
(v) fifth, to the extent there remain Available Funds in the
Certificate Account, to any creditors of the Trust in satisfaction of
liabilities thereto; and
(vi) sixth, to the extent there remain Available Funds in the
Certificate Account, to Xxxxxxx Xxxxx Capital Services, Inc. and if no
Available Funds remain in the Certificate Account then no distribution
will be made pursuant to this Section 5(a)(vi).
12
Subject to Section 9(c) hereof, to the extent Available Funds are insufficient
to make any required distributions due to the Certificates on any Distribution
Date, any shortfall will be carried over and will be distributed on the next
Distribution Date on which sufficient funds are available on the Available Funds
to pay such shortfall. Neither Xxxxxxx Xxxxx & Co. nor any of its Affiliates
will have any claim against the Trust pursuant to Section 5(a)(vi) if the Trust
fails to make a distribution on a Distribution Date to such person because no
Available Funds remain in the Certificate Account on such Distribution Date.
(b) On an Optional Exchange Date, the Trustee shall distribute
to Xxxxxxx Xxxxx & Co. or any of its Affiliates, other than the Depositor, or
any other Person exercising an optional exchange pursuant to Section 7 hereof,
as the case may be, Underlying Securities in accordance with Section 7 hereof.
Section 6. Trustee's Fees; Escrow Agent's Fees. (a) Payment to
the Trustee of Ordinary Expenses shall be as set forth in a separate agreement
between the Trustee and the Depositor. The Trustee agrees that in the event
Ordinary Expenses are not paid in accordance with such agreement, it shall (i)
not have any claim or recourse against the Trust or the property of the Trust
with respect thereto and (ii) continue to perform all of its services as set
forth herein unless it elects to resign as Trustee in accordance with Section
7.08 of the Standard Terms.
(b) Extraordinary Trust Expenses shall not be paid out of the
Deposited Assets unless (i) the Trustee is satisfied that it will have adequate
security or indemnity in respect of such costs, expenses and liabilities, and
(ii) all the Certificateholders of Certificates then outstanding have voted to
require the Trustee to incur such Extraordinary Trust Expenses. If Extraordinary
Trust Expenses are not approved unanimously as set forth in clause (ii), such
Extraordinary Trust Expenses shall not be an obligation of the Trust, and the
Trustee shall not file any claim against the Trust therefor notwithstanding
failure of Certificateholders to reimburse the Trustee. In addition, if the
conditions in (i) and (ii) are not both satisfied, the Trustee shall not be
obligated to incur any Extraordinary Trust Expense.
(c) In the event that one or more Call Holders is required to
deposit the applicable Call Price with the Escrow Agent on the Exercise Date
pursuant to Section 14(c)(iii)(2) hereof, the Depositor and the Escrow Agent
shall enter into an agreement reasonably acceptable to both parties thereto
whereby the Depositor shall pay to the Escrow Agent a fee in consideration for
its services under the Escrow Agreement or Escrow Agreements, as applicable.
Section 7. Optional Exchange. (a) Xxxxxxx Xxxxx & Co. or any
of its Affiliates (other than the Depositor), if it holds Certificates, or any
other (i) Person or (ii) group of Affiliated Persons (in each case other than
the Depositor) holding Class A Certificates with an aggregate stated amount of
$5 million or more and an equal aggregate notional principal amount of Class B
Certificates, all acquired pursuant to the exercise of Class A Call Rights or
Class B Call Rights held by it, (provided that, in the case of a group of
Affiliated Persons, no single Affiliated Person holds Class A Certificates with
an aggregate stated amount of less than $500,000 and Class B Certificates with a
notional principal amount of less than $500,000 acquired pursuant to the
exercise of Class A Call Rights or Class B Call Rights, as applicable,
13
held by it) may notify the Trustee, not less than 30 days but not more than 60
days prior to any Optional Exchange Date, that:
(iii) such Person intends or Affiliated Persons intend to
tender an Authorized Denomination of Class A Certificates and an equal
number of Class B Certificates that it holds or they hold to the
Trustee on such Optional Exchange Date in exchange for a proportional
amount of Underlying Securities;
(iv) such exchange will not cause the Trust or Depositor to
fail to satisfy the applicable requirements for exemption under Rule
3a-7 under the Investment Company Act of 1940, as amended;
(v) such exchange will not affect the characterization of the
Trust as a "grantor trust" under the Code;
(vi) in the case of an exchange of less than all outstanding
Certificates, such exchange will not cause a failure to satisfy the
minimum requirements for the Class A Certificates to remain listed on
the New York Stock Exchange, unless the Person or Affiliated Persons
tendering such Certificates will hold all remaining outstanding
Certificates upon completion of the exchange of such Certificates
pursuant to this Section 7;
(vii) such exchange will not be made with respect to
Certificates subject to outstanding Call Rights held by any Person or
Affiliated Persons other than the Person or Affiliated Persons
exercising such exchange; and
(viii) in the case of an exchange by a person other xxxx
Xxxxxxx Xxxxx & Co. or any of its Affiliates (other than the
Depositor), such exchange will be made with respect to an aggregate
stated amount of Class A Certificates equal to the aggregate stated
amount of Class A Certificates acquired by such Person or Affiliated
Persons pursuant to the exercise of the applicable Call Rights held by
it or them.
Upon tender of such Class A Certificates and Class B Certificates on such
Optional Exchange Date, the Trustee will deliver to the Person or Affiliated
Persons tendering such Certificates an amount of Underlying Securities having a
principal amount equal to the aggregate principal amount of Underlying
Securities then held by the Trust times the aggregate stated amount of Class A
Certificates being tendered divided by the aggregate stated amount of Class A
Certificates then outstanding, in the case of an exchange by Xxxxxxx Xxxxx & Co.
or any of its Affiliates, where such Person or Affiliated Person holds
unexercised Class A Call Rights respecting the exchanged Class A Certificates
and a corresponding number of unexercised Class B Call Rights respecting the
exchanged Class B Certificates, such unexercised Class A Call Rights and Class B
Call Rights held by such Person or Affiliated Person shall be cancelled. Any
Call Holder that has properly provided notice of exercise to the Warrant Agent
and has deposited the Call Price with the Escrow Agent may concurrently
designate an Optional Exchange Date, and such Optional Exchange Date shall be
specified in the notice of exercise, provided, however, that such Optional
Exchange Date shall not occur prior to the applicable Call Date.
14
(b) When a tender offer for the Underlying Securities is
pending, Xxxxxxx Xxxxx & Co. or any of its Affiliates (other than the
Depositor), if it holds Certificates, or any other Person or Affiliated Persons
(other than the Depositor, or an Affiliate of the Person making such tender
offer) holding Class A Certificates with an aggregate stated amount of $5
million or more and an equal aggregate notional principal amount of Class B
Certificates, all acquired pursuant to the exercise of the applicable Call
Rights held by it (provided that, in the case of a group of Affiliated Persons,
no single Affiliated Person holds Class A Certificates with an aggregate stated
amount of less than $500,000 and Class B Certificates with a notional principal
amount of less than $500,000 acquired pursuant to the exercise of Class A Call
Rights or Class B Call Rights, as applicable, held by it), may notify the
Trustee, not less than 5 days but not more than 60 days prior to any such
Optional Exchange Date as they may designate, that:
(i) such Person intends or such Affiliated Persons intend to
tender an Authorized Denomination of Class A Certificates with an
aggregate stated amount of $5 million or more and a corresponding
number of Class B Certificates that it holds or they hold to the
Trustee on such Optional Exchange Date in exchange for a proportional
amount of Underlying Securities;
(ii) such exchange will not cause the Trust or Depositor to
fail to satisfy the applicable requirements for exemption under Rule
3a-7 under the Investment Company Act of 1940, as amended;
(iii) such exchange will not affect the characterization of
the Trust as a "grantor trust" under the Code,
(iv) in the case of an exchange of less than all outstanding
Certificates, such exchange will not cause a failure to satisfy the
minimum requirements for the Certificates to remain listed on the New
York Stock Exchange, unless the Person or Affiliated Persons tendering
such Certificates will hold all remaining outstanding Certificates upon
completion of the exchange of such Certificates pursuant to this
Section 7;
(v) such exchange will not be made with respect to
Certificates subject to outstanding Call Rights held by any Person or
Affiliated Persons other than the Person or Affiliated Persons
exercising such exchange; and
(vi) in the case of an exchange by a person other xxxx Xxxxxxx
Xxxxx & Co. or any of its Affiliates (other than the Depositor), such
exchange will be made with respect to an aggregate stated amount of
Class A Certificates equal to the aggregate stated amount of Class A
Certificates acquired by such Person or Affiliated Persons pursuant to
the exercise of Call Rights held by it or them.
Upon tender of such Class A Certificates and Class B Certificates on such
Optional Exchange Date, the Trustee will deliver to the Person or Affiliated
Persons tendering such Certificates an amount of Underlying Securities having a
principal amount equal to the aggregate principal amount of Underlying
Securities then held by the Trust times the aggregate stated amount of Class A
Certificates being tendered divided by the aggregate stated amount of Class A
15
Certificates then outstanding, and in the case of an exchange by Xxxxxxx Xxxxx &
Co. or any of its Affiliates, where such Person or Affiliated Person holds
unexercised Class A Call Rights respecting the exchanged Class A Certificates
and a corresponding number of unexercised Class B Call Rights respecting the
exchanged Class B Certificates, such unexercised Class A Call Rights and Class B
Call Rights held by such Person or Affiliated Person shall be cancelled.
(c) The requirements set forth in paragraphs (a)(ii), (a)(v)
and (a)(vi) of Section 4.07 of the Standard Terms do not apply to an Optional
Exchange pursuant to this Section 7.
(d) Any costs associated with the exercise of the rights
granted under paragraphs (a) and (b) of this Section 7 will be borne by the
Person or Affiliated Persons exercising such rights and not by the Trust.
(e) In no event can an Optional Exchange be made unless an
equal number of Class A and Class B Certificates are tendered for exchange by
each Holder exercising this Optional Exchange right.
Section 8. Events of Default. Within 30 days of its receipt of
notice of the occurrence of an Event of Default, the Trustee will give notice to
the Certificateholders, transmitted by mail, of all such uncured or unwaived
Events of Default actually known to it. However, unless there is an Event of
Default relating to the payment of principal of or interest on any of the
Underlying Securities, the Trustee will be protected in withholding such notice
if in good faith it determines that the withholding of such notice is in the
interest of the Certificateholders; provided, however, that the Trustee shall
give notice of an Event of Default to the extent required under "Distribution
Election."
Section 9. Miscellaneous. (a) The provisions of Section 4.04,
Advances, of the Standard Terms shall not apply to the Certificates.
(b) The Certificateholders shall not be entitled to terminate
the Trust or cause the sale or other disposition of the Underlying Securities;
provided, however, that Certificateholders holding all, but not less than all,
of the outstanding Certificates may exercise their rights under Section 13(b)
with respect to all such Certificates.
(c) If the Trustee has not received payment with respect to a
Collection Period on the Underlying Securities on or prior to the related
Distribution Date, such distribution will be made promptly upon receipt of such
payment. No additional amounts shall accrue on the Certificates or be owed to
Certificateholders as a result of such delay; provided, however, that any
additional interest owed and paid by the Underlying Securities Issuer as a
result of such delay shall be paid to the Class A Certificateholders and Class B
Certificateholders, proportionately to the ratio of their respective
entitlements to interest payments.
(d) The outstanding principal balance of the Class A
Certificates and the aggregate notional principal amount of the Class B
Certificates shall not be reduced by the amount of any Realized Loss.
16
(e) The Trust may not engage in any business or activities
other than in connection with, or relating to, the holding, protecting and
preserving of the Deposited Assets and the issuance of the Certificates and Call
Rights, and other than those required or authorized by the Trust Agreement or
incidental and necessary to accomplish such activities. The Trust may not issue
or sell any certificates or other obligations other than the Certificates and
Call Rights, or otherwise incur, assume or guarantee any indebtedness for money
borrowed.
(f) The Trust may not consolidate, amalgamate, merge with or
into, or be replaced by or convey, transfer or lease its properties and assets
substantially as an entirety to, any another entity or permit any other entity
to consolidate, amalgamate, merge with or into, or replace the Trust.
(g) Except as expressly provided in the Trust Agreement, the
Trust may not sell the Underlying Securities.
(h) If the Trustee resigns or is removed as Trustee in
accordance with Section 7.08 of the Trust Agreement, in addition to providing
the Depositor with written notice, the Trustee shall also provide the Rating
Agencies with written notice.
(i) Xxxxxxx Xxxxx & Co. shall act as the Market Agent and
shall serve in such capacity in accordance with the terms of the Market Agent
Agreement attached hereto as Exhibit D.
(j) Notwithstanding anything in the Trust Agreement to the
contrary, the Trustee may be removed upon 60 days prior written notice delivered
by Certificateholders holding Certificates that represent the Required
Percentage-Removal, and such removal shall take effect upon the appointment of a
successor Trustee and its acceptance of such appointment as provided in the
Trust Agreement.
Section 10. Notices. (a) All directions, demands and notices
hereunder or under the Standard Terms shall be in writing and shall be delivered
as set forth below (unless written notice is otherwise provided to the Trustee).
If to the Depositor, to:
Xxxxxxx Xxxxx Depositor, Inc.
c/x Xxxxxxx Xxxxx & Co.
World Financial Center
New York, NY 10281
Attention: Xxxxx X. Xxxxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Trustee, to:
The Bank of New York
Corporate Trust Department
17
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: PPLUS Trust Series VAL-1
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Securities Intermediary, to:
The Bank of New York
Corporate Trust Department
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: PPLUS Trust Series VAL-1
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Warrant Agent, to
The Bank of New York
Corporate Trust Department
000 Xxxxxx Xxxxxx, 0xx Xxxxx,
Xxx Xxxx, XX 00000
Attention: PPLUS Trust Series VAL-1
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Rating Agencies, to:
Xxxxx'x Investors Service, Inc.
00 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: CBO/CLO Monitoring Department
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and to:
Standard & Poor's
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Structured Finance Surveillance Group
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
18
(b) Copies of any tender offer materials and all directions,
demands and notices required to be given to the Certificateholders hereunder or
under the Standard Terms will be given to the Warrant Agent by facsimile
transmission and by mail.
Section 11. Governing Law. This Supplement and the
transactions described herein shall be construed in accordance with and governed
by the laws of the State of New York.
Section 12. Counterparts. This Supplement may be executed in
any number of counterparts, each of which shall be deemed to be an original, and
all such counterparts shall constitute but one and the same instrument.
Section 13. Termination of the Trust. (a) The Trust shall
terminate upon the earlier of (i) the payment in full at maturity or sale by the
Trust after a payment default on the Underlying Securities and the distribution
in full of all amounts due to the Certificateholders, (ii) the distribution to
the Certificateholders of all Underlying Securities in accordance with the
Distribution Election, (iii) the exchange of all outstanding Certificates for
Underlying Securities pursuant to one or more Optional Exchanges, (iv) the Final
Scheduled Distribution Date and (v) the holders of all, but not less than all,
of the Certificates exercising their election in Section 13(b) below.
(b) Certificateholders who hold all, but not less than all, of
the outstanding Certificates may, upon prior written notice to the Rating
Agencies, elect to terminate the Trust at any time; provided that (i) the
exercise of such termination right would not cause the Trust or the Depositor to
fail to satisfy the applicable requirements for exemption under Rule 3a-7 under
the Investment Company Act of 1940, as amended and (ii) if and for so long as
the call warrants remain outstanding, all of the Call Holders have consented to
such termination.
(c) To the extent that the provisions of this Section 13
conflict with Section 10.01 of the Standard Terms, the latter shall control.
Section 14. Sale or Redemption of Underlying Securities; Call
Right
(a) In the case of Extraordinary Trust Expenses approved by
100% of the Certificateholders of each Class, pursuant to Section 6(b) hereof,
the Trustee may, upon prior written notice to the Rating Agencies, elect to sell
all or a portion of the Underlying Securities to pay such Extraordinary Trust
Expenses.
(b) As a holder of the Underlying Securities, the Trust may
receive redemption proceeds (the "Redemption Amount") upon the redemption of the
Underlying Securities, in whole or in part, by the Underlying Securities Issuer
pursuant to the Underlying Securities Indenture. (i) Upon the redemption of the
Underlying Securities in whole, but not in part, (A) on the stated maturity date
of such Underlying Securities or (B) at the option of the Underlying Securities
Issuer, upon at least 30 days, but not more than 60 days, prior notice pursuant
to the Underlying Securities Indenture, the Redemption Amount will be
distributed pro rata to the holders of the Underlying Securities, including the
Trust. Upon receiving such Redemption Amount, the Trust shall distribute the
Redemption Amount first, pro rata to the Class A Certificateholders until each
shall have received the stated amount of each Class A Certificate it holds plus
accrued and unpaid distributions on the Class A Certificates to the
19
Redemption Date; second, pro rata to the Class B Certificateholders until each
shall have received the sum of the present values (discounted at the rate of
7.50% per annum) of the Class B Payments on or after the Redemption Date
(assuming, for purposes of such calculation, that the Underlying Securities
would have been paid in full on their stated maturity with no such redemption or
acceleration); and third, any remaining Redemption Amount will be divided
between the Classes of trust certificates in accordance with a percentage equal
to 7.25/7.50 of such amount to the Class A Certificateholders and 0.25/7.50 of
such amount to the Class B Certificateholders, and within each class the
Redemption Amount will be distributed pro rata to the Certificateholders of the
Class A or Class B Certificates entitled to such Redemption Amount upon the date
such Redemption Amount is received in immediately available funds by the Trust
if such Redemption Amount is received prior to 1:00 p.m. local time at the
office of the Trustee and otherwise on the next Business Day. (ii) Upon any
redemption of the Underlying Securities in part at the option of the Underlying
Securities Issuer upon at least 30 days, but not more than 60 days, prior notice
pursuant to the Underlying Securities Indenture, the Redemption Amount will be
distributed pro rata to the holders of the Underlying Securities, including the
Trust. Upon any such redemption in part, the Trustee shall select by lot (or by
such other reasonable procedure as may be established by the Trustee) a stated
amount of Class A Certificates and an equal notional principal amount of Class B
Certificates equal to the aggregate amount of each Class of Certificates then
outstanding multiplied by the aggregate principal amount of Underlying
Securities subject to redemption and then held by the Trust divided by the
aggregate principal amount of Underlying Securities then held by the Trust;
provided that the amount of each Class of Trust Certificates being selected by
lot may be reduced by the aggregate stated amount of Class A Certificates or
notional principal amount of Class B Certificates, as applicable, called
pursuant to the exercise of Call Rights prior to such redemption in accordance
with the terms of the Warrant Agreement. Upon receiving such Redemption Amount,
the Trust shall distribute the Redemption Amount, first, pro rata to the Class A
Certificateholders selected by lot pursuant to this subsection until each shall
have received the stated amount of each Class A Certificate it holds plus
accrued and unpaid distributions on the Class A Certificates to the Redemption
Date; second, pro rata to the Class B Certificateholders selected by lot
pursuant to this subsection until each shall have received the sum of the
present values (discounted at the rate of 7.50% per annum) of the Class B
Payments on or after the Redemption Date (assuming for purposes of such
calculation, that the Underlying Securities would have been paid in full on
their stated maturity with no such redemption or acceleration); and third, any
remaining Redemption Amount will be divided between the Classes of trust
certificates in accordance with a percentage equal to 7.25/7.50 of such amount
to the Class A Certificateholders and 0.25/7.50 of such amount to the Class B
Certificateholders, and within each class the Redemption Amount will be
distributed pro rata to the Certificateholders of the Class A or Class B
Certificates. Such Redemption Amount will be distributed to the Class A and
Class B Certificateholders entitled to such Redemption Amount upon the date such
Redemption Amount is received in immediately available funds by the Trust if
such Redemption Amount is received prior to 1:00 pm local time at the office of
the Trustee and otherwise on the next Business Day. Upon distribution of the
Redemption Amount by the Trustee, the Trust Certificates called pursuant to the
exercise of Call Rights and the Trust Certificates selected by lot pursuant to
this subsection (ii) shall be deemed to have been surrendered for cancellation
by the Trust, and the aggregate stated amount of the outstanding Class A
Certificates and the aggregate notional principal amount of the outstanding
Class B Certificates shall be reduced by the aggregate stated amount of such
Class A Certificates
20
and the aggregate notional principal amount of such Class B Certificates, as
applicable; provided that the right of a Certificateholder to receive the Call
Price will not be affected by any such deemed surrender. Payment of the
Redemption Amount with respect to the Certificates will be made to the Call
Holder exercising the Call Rights.
(c) The Call Terms are as follows:
(i) The initial holders of the Call Rights are as named in the
Call Warrants and such holders may transfer the Call Rights, in whole
or in part, to one or more third parties in privately negotiated
transactions;
(ii) A Call Holder that has met the exercise requirements set
forth in paragraph (c)(iii) of this Section 14 may, on the Call Date,
exercise its option to purchase, in whole or in part, a principal or
notional amount of Class A or Class B Certificates, as applicable,
proportionate to such Call Holder's exercised Call Warrants, in
Authorized Denominations of the Class A or Class B Certificates at the
Class A Call Price or Class B Call Price, as applicable;
(iii) In order to exercise its Call Right on a Call Date, a
Call Holder must, not less than 30 days (or not less than three days in
the case of an announcement of any redemption of the Underlying
Securities or other unscheduled payment of the Underlying Securities or
after receipt of notice of termination of the Trust or not less than
five Business Days prior to the expiration of a tender offer for the
Underlying Securities) but not more than 60 days prior to such Call
Date:
(1) notify the Trustee in writing of its intention to
exercise such Call Right (which notice is irrevocable, subject
to Section 2.02(i)(v) of the Warrant Agreement) and whether
such exercise is in connection with a tender offer for the
Underlying Securities. In the event that such notice is
provided in connection with a tender offer for the Underlying
Securities, if the exercising Holder did not receive from the
Warrant Agent notice of a Tender Offer, then such Holder shall
also provide the Warrant Agent with any information the Holder
may have from a third-party source indicating that such Tender
Offer is pending.
(2) deposit the applicable Call Price with the Escrow
Agent (the "Escrow Deposit") to be held in escrow pursuant to
an Escrow Agreement reasonably satisfactory to the Trustee and
substantially in the form attached hereto as Exhibit E (to be
entered into immediately preceding delivery of the applicable
Call Price by such Call Holder to the Escrow Agent) until such
Call Price is paid by the Trustee to the Certificateholders in
accordance with paragraph (d) of this Section 14 or returned
to the exercising Holders pursuant to subsection (i) of
Section 2.02 of the Warrant Agreement; provided, that if (a)
all of the outstanding Trust Certificates of a given Class are
to be purchased pursuant to the exercise of the Warrants on an
Exercise Date and the exercising Call Holder at such time
holds Class A Certificates or Class B Certificates that are
subject to Call Rights, the Call Holder may deposit such Class
A Certificates or Class B Certificates with the Escrow Agent
in lieu of the portion of the Call Price that would relate
thereto,
21
and (b) if less than all of the outstanding Class B Trust
Certificates are to be purchased pursuant to the exercise of
the Warrants on an Exercise Date and the exercising Call
Holder at such time holds Class B Certificates that are
subject to Call Rights, the Call Holder may deposit such Class
B Certificates with the Escrow Agent in lieu of the portion of
the Call Price that would relate thereto.
(3) provide the Trustee with any other documents
customary for a transaction of this nature, including a
certificate of the Call Holder certifying the solvency of such
Call Holder on such date; provided that the Call Holder need
not provide any such solvency certificate if the rating of the
senior, unsecured long-term debt of the Call Holder, or the
Call Holder's credit support provider, if applicable, by
Moody's and S&P is in one of the investment grade categories
of Xxxxx'x and S&P, respectively, on such date.
The provisions of this Section 14(c)(iii)(1) through (3) shall not apply if
Warrants are being exercised upon an acceleration of the Underlying Securities
and payment in full by the Underlying Securities Issuer of all amounts due upon
such acceleration.
(d) In connection with any exercise of the Call Rights to
purchase Class A Certificates, the Trustee shall select by lot (or by such other
reasonable procedure as may be established by the Trustee) a stated amount of
the outstanding Class A Certificates to be surrendered by the Class A
Certificateholders thereof to the Trustee upon any such exercise (other than
Class A Trust Certificates held by any Person to whom a Delivery Certificate was
delivered in accordance with Section 2.02(d) of the Warrant Agreement, as
evidenced by the registration of such Delivery Certificate in the Delivery
Register in accordance with Section 4.01 of the Warrant Agreement), deliver such
Class A Certificates to the exercising Call Holder and the proceeds of the Class
A Call Price shall be distributed pro rata among such Class A Certificateholders
on the Call Date in accordance with the provisions of the Warrant Agreement. In
connection with any exercise of the Call Rights to purchase Class B
Certificates, if the amount to be purchased exceeds the amount of Trust
Certificates of such Class held by the Call Holder and deposited with the Escrow
Agent, the Trustee shall select by lot (or by such other reasonable procedure as
may be established by the Trustee) an aggregate notional principal amount of the
outstanding Class B Certificates to be surrendered by the Class B
Certificateholders thereof to the Trustee upon any such exercise (other than
Class B Trust Certificates held by any Persons to whom a Delivery Certificate
was delivered in accordance with Section 2.02(d) of the Warrant Agreement, as
evidenced by the registration of such Delivery Certificate in the Delivery
Register in accordance with Section 4.01 of the Warrant Agreement), deliver such
Class B Certificates to the exercising Call Holder and the proceeds of the Class
B Call Price shall be distributed pro rata among such Certificateholders on the
Call Date in accordance with the provisions of the Warrant Agreement. Upon
distribution of the applicable Call Price, the Trust Certificates called
pursuant to the exercise of Call Rights shall be deemed to have been surrendered
and such Trust Certificates shall be transferred to the Call Holder; provided
that the right of a Certificateholder to receive the Call Price will not be
affected by any such deemed surrender.
(e) The rights of the Certificateholders under the Trust
Agreement and the Certificates are limited by the terms, provisions and
conditions of the Trust Agreement and the Warrant Agreement with respect to the
exercise of the applicable Call Rights by the Call Holder.
22
The Certificateholders, by their acceptance of Certificates, covenant and agree
to tender any and all Certificates to the Warrant Agent upon the Call Holder's
exercise of Call Rights and deposit of the applicable Call Price with the Escrow
Agent for such Certificates in accordance with the applicable procedures in the
Warrant Agreement.
(f) Upon receipt of a notice of a tender offer for the
Underlying Securities, the Trustee shall deliver notice of the tender offer to
the Warrant Agent and holders of Delivery Certificates (as defined in Section
2.02(d) of the Warrant Agreement) within two Business Days after receipt of
notice from the Tender Offeror (as defined in the Warrant Agreement). Within two
Business Days of the expiration of the period for validly delivering tender
offer exercise notices pursuant to Section 2.02(i)(i) of the Warrant Agreement,
the Trustee shall, after giving effect to the exercise of Call Rights with
respect to Trust Certificates already held by the Call Holder, as set forth in
the Warrant Agreement, (A) select by lot (or by such other reasonable procedure
as may be established by the Trustee), in the case of Class A Certificates, a
stated amount of Class A Certificates equal to the aggregate stated amount of
Class A Certificates not subject to Delivery Certificates then outstanding
multiplied by the aggregate principal amount of Class A Call Rights being
exercised divided by the aggregate principal amount of the outstanding Class A
Call Rights and, in the case of Class B Certificates an aggregate notional
principal amount of Class B Certificates equal to the aggregate notional
principal amount of Class B Certificates not subject to Delivery Certificates
then outstanding multiplied by the aggregate notional principal amount of Class
B Call Rights being exercised divided by the aggregate notional principal amount
of the outstanding Class B Call Rights and (B) notify the Certificateholders of
the selected Certificates that, subject to Section 2.02(i) of the Warrant
Agreement, such Certificates will be purchased on the Call Date. Upon the
Trustee's receipt of the tender offer proceeds, the applicable Call Price will
be distributed pursuant to Section 2.02(e) and Section 2.02(i)(vi) of the
Warrant Agreement pro rata to the Certificateholders whose Certificates have
been purchased and the tender offer proceeds will be distributed by the Trustee
pro rata to the exercising Call Holders pursuant to Section 2.02(i) of the
Warrant Agreement. Upon distribution of the applicable Call Price and tender
offer proceeds, the Trust Certificates called pursuant to the exercise of Call
Rights shall be deemed to have been surrendered for cancellation by the Trustee
and the aggregate stated amount of the outstanding Trust Certificates shall be
reduced by the aggregate stated amount of such Trust Certificates; provided that
the right of a Certificateholder to receive the Call Price will not be affected
by any such deemed surrender.
Section 15. Amendments. Notwithstanding anything in the Trust
Agreement to the contrary, in addition to the other restrictions on modification
and amendment contained herein, the Trustee shall not enter into any amendment
or modification of the Trust Agreement that would adversely affect in any
material respect the interests of the Certificateholders or the Call Holders
without the consent of 100% of such Certificateholders or Call Holders, as the
case may be; provided, however, that no such amendment or modification will be
permitted if the Trustee has been advised by the Depositor that such amendment
or modification would alter the status of the Trust as a "grantor trust" for
federal income tax purposes. Further, no amendment shall be permitted pursuant
to paragraphs (vi), (vii) and (x) of Section 11.01(a) of the Standard Terms
without prior written confirmation by each Rating Agency that such amendment
will not result in a downgrading or withdrawal of its rating of the
Certificates. The Trustee may consult
23
with counsel and shall be entitled to rely upon an Opinion of Counsel for
purposes of determining compliance with the provisions of this Section 15.
Section 16. Voting of Underlying Securities, Modification of
Indenture. The Trustee, as holder of the Underlying Securities, has the right to
vote and give consents and waivers in respect of the Underlying Securities as
permitted by the Depository and except as otherwise limited by the Trust
Agreement. In the event that the Trustee receives a request from the Depository,
the Underlying Securities trustee or the Underlying Securities Issuer for its
consent to any amendment, modification or waiver of the Underlying Securities,
the Underlying Securities Indenture or any other document thereunder or relating
thereto, or receives any other solicitation for any action with respect to the
Underlying Securities, the Trustee shall mail a notice of such proposed
amendment, modification, waiver or solicitation to each Certificateholder of
record as of such date. The Trustee shall request instructions from the
Certificateholders as to whether or not to consent to or vote to accept such
amendment, modification, waiver or solicitation. The Trustee shall consent or
vote, or refrain from consenting or voting, in the same proportion (based on the
relative outstanding principal balances of the Certificates) as the Certificates
of the Trust were actually voted or not voted by the Certificateholders thereof
as of a date determined by the Trustee prior to the date on which such consent
or vote is required after weighing the votes of the Class A Certificateholders
and the Class B Certificateholders in accordance with the Allocation Ratio;
provided, however, that, notwithstanding anything in the Trust Agreement to the
contrary, the Trustee shall at no time vote on or consent to any matter (i)
unless such vote or consent would not (based on an Opinion of Counsel) alter the
status of the Trust as a "grantor trust" for federal income tax purposes or
result in the imposition of tax upon the Certificateholders, or (ii) that would
alter the timing or amount of any payment on the Underlying Securities,
including, without limitation, any demand to accelerate the Underlying
Securities, except in the event of a default under the Underlying Securities or
an event that with the passage of time would become an event of default under
the Underlying Securities and with the consent of 100% of the Certificateholders
and 100% of the Call Holders, or (iii) except as provided in the following
paragraph, that would result in the exchange or substitution of any of the
outstanding Underlying Securities pursuant to a plan for the refunding or
refinancing of such Underlying Securities except in the event of a default under
the Underlying Securities Indenture and only with the consent of 100% of the
Certificateholders and 100% of the Call Holders. The Trustee shall have no
liability for any failure to act resulting from Certificateholders' or Call
Holders' late return of, or failure to return, directions requested by the
Trustee from the Certificateholders and Call Holders.
If an offer is made by the Underlying Securities Issuer to
issue new obligations in exchange and substitution for any of the Underlying
Securities, pursuant to a plan for the refunding or refinancing of the
outstanding Underlying Securities or any other offer is made for the Underlying
Securities, the Trustee shall notify the Certificateholders, the Call Holders
and the Rating Agencies of such offer promptly. Subject to Sections 7(b) and 14
in connection with a tender offer and the exercise of Call Rights or Optional
Exchange rights, the Trustee must reject any such offer unless the Trustee is
directed by the affirmative vote of 100% of the Certificateholders and 100% of
the Call Holders to accept such offer, the Trustee has received the tax opinion
described above and if the Trustee is so directed, the Trustee shall promptly
notify the Rating Agencies of such direction accompanied by evidence of the
affirmative vote of such Certificateholders and Call Holders.
24
If an event of default under the Underlying Securities
Indenture occurs and is continuing, and if directed by 100% of the
Certificateholders, the Trustee shall vote the Underlying Securities in favor of
directing, or take such other action as may be appropriate to direct, the
Underlying Securities trustee to declare the unpaid principal amount of the
Underlying Securities and any accrued and unpaid interest thereon to be due and
payable.
Section 17. Call Right Documentation. Simultaneously with the
execution hereof, the Depositor hereby directs the Trustee, in the name of and
on behalf of the Trust, to enter into a Warrant Agreement and any related
Warrant Certificates (as defined in the Warrant Agreement) evidencing the Call
Rights and to make representations contained therein on behalf of the Trust. At
the direction of the Depositor, the Trustee shall execute such further documents
as may be required to evidence any transfer of any or all of the rights,
interests or obligations under the Warrant Agreement and any related Warrant
Certificates.
Section 18. Third Party Beneficiary. The Escrow Agent and each
Call Holder shall be third party beneficiaries of this Trust Agreement.
Section 19. Nonpetition Covenant. Solely with respect to the
Trust and the Series and for no other purpose, Section 11.07 of the Standard
terms is hereby deleted and replaced with the following:
"Section 11.07. Nonpetition Covenant. Notwithstanding any
prior termination of this Trust Agreement, each of the Trustee (including any
Administrative Agent, Authenticating Agent and Paying Agent) and the Depositor
agrees that it shall not, until the date which is one year and one day after the
termination of the PPLUS Trust Series VAL-1, acquiesce, petition or otherwise
invoke or cause the Trust to invoke the process of the United States, any State
or other political subdivision thereof or any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government for the purpose of commencing or sustaining a case by or against
the Trust under a Federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of such Trust or all or any part of the property or
assets of such Trust or ordering the winding up or liquidation of the affairs of
such Trust.
Section 20. Amendments to Standard Terms. Solely with respect
to the Trust and the Series and for no other purpose, the Standard Terms are
hereby amended as follows:
(a) Clause (iii) of Subsection (c) of Section 2.01 of the
Standard Terms shall be deleted and replaced with the following:
"at the time of delivery of the Underlying Securities,
Depositor owns such Underlying Securities, has the right to transfer its
interest in such Underlying Securities and such Underlying Securities are free
and clear of any lien, pledge, encumbrance, right, charge, claim or other
security interest (other than the lien created by this Trust Agreement); and"
(b) Subsection (e) of Section 2.01 of the Standard Terms shall
be deleted and replaced with the following:
25
"Any Trust created hereunder shall not engage in any business
or activities other than in connection with, or relating to, the
holding, protecting and preserving of the Deposited Assets and the
issuance of the Certificates and, if applicable, Call Rights, and other
than those required or authorized by this Trust Agreement or incidental
to and necessary to accomplish such activities. Any Trust created
hereunder shall not issue or sell any certificates or other obligations
other than the Certificates or, if applicable, Call Rights or otherwise
incur, assume or guarantee any indebtedness for money borrowed."
(c) Clause (v) of Subsection (b) of Section 4.08 of the
Standard Terms shall be deleted and replaced with the following:
"that Holders of Certificates receiving notice of Call Rights
being exercised with respect to the Certificates held by them shall not
be entitled to any interest on the Certificates for any period on and
after the Call Date, and the only remaining right of Holders of such
Certificates is to receive payment of the Call Price upon surrender of
the Certificates to the Warrant Agent; and"
(d) The first sentence of subsection (d) of Section 4.08 of
the Standard Terms shall be deleted and replaced with the following:
"Once such notice is mailed to a Holder, such Holder shall not
be entitled to any right as a Holder other than the right to receive
payment of the Call Price on the Call Date and the Certificates subject
to the Call Right shall be deemed to have been automatically
surrendered to the Trust for further transfer to the holder exercising
its Call Right."
(e) Subsection (e) of Section 4.08 of the Standard Terms shall
be deleted and replaced with the following:
"Subject to Section 2.02(a)(i) of the Warrant Agreement, at or
prior to 12:00 noon on the Call Date, the holder of the Call Right to
be exercised shall deposit with the Escrow Agent by wire transfer in
same-day funds money sufficient to pay the Call Price of the
Certificates to be purchased on that date."
(f) Subsection (f) of Section 4.08 of the Standard Terms shall
be deleted and replaced with the following:
"This subsection has been intentionally left blank."
(g) Subsection (g) of Section 4.08 shall be deleted and
replaced with the following:
"Upon surrender of any Certificate that is purchased in part,
the Depositor shall execute and the Trustee shall authenticate and
deliver to the Holder a new Certificate equal in principal amount to
the portion of such surrendered Certificate not purchased."
26
IN WITNESS WHEREOF, the parties hereto have caused this
Supplement to be duly executed by their respective authorized officers as of the
date first written above.
Xxxxxxx Xxxxx Depositor, Inc.,
as Depositor
By:
---------------------------
Name: Xxxxx X. Xxxxxxxxxxx
Title: President
The Bank of New York,
not in its individual capacity
but as Trustee
By:
---------------------------
Name: Xxxxxxxx Xxxxxxx
Title: Authorized Signatory
The Bank of New York,
as Securities Intermediary
By:
---------------------------
Name: Xxxxxxxx Xxxxxxx
Title: Authorized Signatory
27
SCHEDULE I
PPLUS TRUST CERTIFICATES, SERIES VAL-1
UNDERLYING SECURITIES SCHEDULE
Underlying Securities: $25,000,000 7.50% Notes (principal
amount $1,000 per security) due April
15, 2032 of the Underlying Securities
Issuer.
Underlying Securities Indenture: Indenture dated as of December 12, 1997
between the Underlying Securities
Issuer and the Trustee.
Underlying Securities Issuer: Valero Energy Corporation, a Delaware
corporation.
Underlying Securities Trustee: The Bank of New York
Underlying Securities 00000XXX0
CUSIP Number:
Underlying Securities April 15, 2002
Original Issue Date:
Underlying Securities $750,000,000 7.50% Notes due 2032
Original Amount Issued: (principal amount $1,000 per security)
Underlying Securities 333-84820
Commission Filing Number:
Underlying Securities April 15, 2032
Maturity Date:
Underlying Securities April 15, 2032
Principal Payment Date:
Underlying Securities April 15 and October15, or if any such
Interest Payment Dates: date is not a business day, then the
next succeeding business day to the
persons in whose names the Underlying
Securities are registered at the close
of business on the date fifteen days
prior to the relevant interest payment
date, subject to certain exceptions.
Underlying Securities 7.50 % per annum.
Interest Rate:
Underlying Securities March 31 and August 31.
Record Dates:
Underlying Securities In certain circumstances summarized in
Redemption: the Prospectus Supplement, the
Underlying Securities will be
redeemable at the option of the
Underlying Securities Issuer, in whole
or in part, at any time, at a
"make-whole" redemption price equal to
the greater of (i) the principal amount
of the underlying securities to be
redeemed or (ii) the sum of the present
values of the remaining scheduled
payments of the principal and interest
(other than accrued interest) on the
underlying securities being redeemed,
discounted to the redemption date on a
semiannual basis (assuming a 360-day
year consisting of twelve 30-day
months) at the treasury rate, plus 20
basis points, plus in either case
accrued and unpaid interest on the
principal amount being redeemed to the
date of redemption. Holders of the
underlying securities to be redeemed
will receive at least 30 days but not
more than 60 days notice of that
redemption.
Underlying Securities None.
Collateral:
Underlying Securities None.
Amortization:
Underlying Securities Semi-annual.
Accrual Periods:
Underlying Securities The Underlying Securities are
Authorized Denomination denominated and payable in U.S. dollars
and Specified Currency: and are available in minimum
denominations of $1,000 and integral
multiples thereof.
Underlying Securities "Baa2" by Xxxxx'x and "BBB" by S&P.
Rating as of Closing:
Underlying Securities Form: Book-entry security with DTC.
EXHIBIT A
Standard Terms for Trust Agreements
(begins on next page)
EXHIBIT B
Form of Class A Certificate
(begins on next page)
EXHIBIT C
Form of Class B Certificate
(begins on next page)
EXHIBIT D
Market Agent Agreement
(begins on next page)
EXHIBIT E
Form of Escrow Agreement
(begins on next page)
