-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WrrR52jF0On0ZCxD4NZv4IqcH6EgqrDQ4vk+LEi+6InJnDTmHHO0/cVg/5AISqF9 N9RzMgl36XruEtJ0EgqUEw== 0000947871-03-001163.txt : 20030507 0000947871-03-001163.hdr.sgml : 20030507 20030507164852 ACCESSION NUMBER: 0000947871-03-001163 CONFORMED SUBMISSION TYPE: POS EX PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20030507 EFFECTIVENESS DATE: 20030507 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MERRILL LYNCH PIERCE FENNER & SMITH INC CENTRAL INDEX KEY: 0000728612 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: POS EX SEC ACT: 1933 Act SEC FILE NUMBER: 333-89355 FILM NUMBER: 03686626 BUSINESS ADDRESS: STREET 1: 4 WORLD FINANCIAL CENTER STREET 2: NORTH TOWER FL 12 CITY: NEW YORK STATE: NY ZIP: 10080 BUSINESS PHONE: 2124496202 MAIL ADDRESS: STREET 1: 4 WORLD FINANCIAL CENTER STREET 2: NORTH TOWER FL 12 CITY: NEW YORK STATE: NY ZIP: 10080 POS EX 1 posex_042403.txt AMENDMENT NO. 4 TO FORM S-1 As filed with the Securities and Exchange Commission on May 7, 2003 Registration Statement No. 333-89355 =============================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________ POST-EFFECTIVE AMENDMENT NO. 4 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 _____________ Merrill Lynch, Pierce, Fenner & Smith Incorporated Initial Depositor (Exact name of registrant as specified in charter) _____________ Biotech HOLDRS(SM) Trust (Issuer with respect to the receipts) Delaware 6211 (State or other (Primary Standard jurisdiction of Industrial 13-5674085 incorporation or Classification (I.R.S. Employer organization) Code Number) Identification No.) _____________ 250 Vesey Street New York, New York 10281 (212) 449-1000 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) _____________ Copies to: Andrea L. Dulberg, Esq. Andrew B. Janszky, Esq. Corporate Secretary Shearman & Sterling Merrill Lynch, Pierce, Fenner & Smith 599 Lexington Avenue Incorporated New York, New York 10022 250 Vesey Street (212) 848-4000 New York, New York 10281 (212) 449-1000 (Name, address, including zip code, and telephone number, including area code, of agent for service) 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, 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 this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, 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 expected to be made pursuant to Rule 434 under the Securities Act, please check the following box. [_] =============================================================================== PROSPECTUS [BIOTECH HOLDRS LOGO] 1,000,000,000 Depositary Receipts Biotech HOLDRS(SM) Trust The Biotech HOLDRS(SM) Trust issues Depositary Receipts called Biotech HOLDRS(SM) representing your undivided beneficial ownership in the common stock or American depositary shares of a group of specified companies that are involved in various segments of the biotechnology industry. The Bank of New York is the trustee. You only may acquire, hold or transfer Biotech HOLDRS in a round-lot amount of 100 Biotech HOLDRS or round-lot multiples. Biotech HOLDRS are separate from the underlying deposited common stocks or American depositary shares that are represented by the Biotech HOLDRS. For a list of the names and the number of shares of the companies that make up a Biotech HOLDR, see "Highlights of Biotech HOLDRS--The Biotech HOLDRS" starting on page 12. The Biotech HOLDRS trust will issue Biotech HOLDRS on a continuous basis. Investing in Biotech HOLDRS involves significant risks. See "Risk Factors" starting on page 5. Biotech HOLDRS are neither interests in nor obligations of Merrill Lynch, Pierce, Fenner & Smith Incorporated. Biotech HOLDRS are not interests in The Bank of New York, as trustee. Please see "Description of the Depositary Trust Agreement" in this prospectus for a more complete description of the duties and responsibilities of the trustee, including the obligation of the trustee to act without negligence or bad faith. The Biotech HOLDRS are listed on the American Stock Exchange under the symbol "BBH." On May 6, 2003, the last reported sale price of the Biotech HOLDRS on the American Stock Exchange was $102.05. ___________________ Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. ___________________ The date of this prospectus is . "HOLDRS" and "HOLding Company Depositary ReceiptS" are service marks of Merrill Lynch & Co., Inc. TABLE OF CONTENTS Page SUMMARY........................................................................4 RISK FACTORS...................................................................5 HIGHLIGHTS OF BIOTECH HOLDRS..................................................12 THE TRUST.....................................................................20 DESCRIPTION OF BIOTECH HOLDRS.................................................20 DESCRIPTION OF THE UNDERLYING SECURITIES......................................21 DESCRIPTION OF THE DEPOSITARY TRUST AGREEMENT.................................23 UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.................................28 ERISA CONSIDERATIONS..........................................................31 PLAN OF DISTRIBUTION..........................................................31 LEGAL MATTERS.................................................................31 WHERE YOU CAN FIND MORE INFORMATION...........................................32 _____________________ This prospectus contains information you should consider when making your investment decision. With respect to information about Biotech HOLDRS, you should rely only on the information contained in this prospectus. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer to sell Biotech HOLDRS in any jurisdiction where the offer or sale is not permitted. The Biotech HOLDRS are not registered for public sale outside of the United States. Non-U.S. receipt holders should refer to "United States Federal Income Tax Consequences--Non-U.S. receipt holders" and we recommend that non-U.S. receipt holders consult their tax advisors regarding U.S. withholding and other taxes which may apply to ownership of the Biotech HOLDRS or of the underlying securities through an investment in the Biotech HOLDRS. 3 SUMMARY The Biotech HOLDRS trust was formed under the depositary trust agreement, dated as of November 18, 1999 among The Bank of New York, as trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated, other depositors and the owners of the Biotech HOLDRS. The trust is not a registered investment company under the Investment Company Act of 1940. The trust currently holds shares of common stock or American depositary shares issued by a group of companies that were, at the time of the initial offering, generally considered to be involved in various segments of the biotechnology industry. The number of shares of each company's common stock or American depositary shares currently held by the trust with respect to each round-lot of Biotech HOLDRS is specified under "Highlights of Biotech HOLDRS--The Biotech HOLDRS." This group of common stocks or American depositary shares, and the securities of any company that may be added to the Biotech HOLDRS, are collectively referred to in this prospectus as the underlying securities. There are currently 19 companies included in the Biotech HOLDRS, which may change as a result of reconstitution events, distributions of securities by underlying issuers or other events. The Biotech HOLDRS are separate from the underlying securities that are represented by the Biotech HOLDRS. On May 5, 2003, there were 14,743,800 Biotech HOLDRS outstanding. 4 RISK FACTORS An investment in Biotech HOLDRS involves risks similar to investing directly in each of the underlying securities outside of the Biotech HOLDRS, including the risks associated with a concentrated investment in the biotechnology industry. General Risk Factors o Loss of investment. Because the value of Biotech HOLDRS directly relates to the value of the underlying securities, you may lose a substantial portion of your investment in the Biotech HOLDRS if the underlying securities decline in value. o Discount trading price. Biotech HOLDRS may trade at a discount to the aggregate value of the underlying securities. o Ownership of only fractional shares in the underlying securities. As a result of distributions of securities by companies included in the Biotech HOLDRS or other corporate events, such as mergers, a round-lot of Biotech HOLDRS may represent an interest in a fractional share of an underlying security. After , 2003, the date the amendment and restatement to the depositary trust agreement becomes effective, the depositary trust agreement will require the trustee to aggregate and sell such fractional shares represented by a round-lot of Biotech HOLDRS and distribute the net proceeds from the sale to the holders. However, until such time as the trustee sells such fractional shares in accordance with the depositary trust agreement, you will only be entitled to voting, distribution and other beneficial ownership rights in the underlying securities in which you own only fractional shares to the extent that the depositary aggregates your fractional shares with other fractional shares of such underlying securities included in the HOLDR and passes on beneficial ownership rights, including distribution and voting rights, to you based on your proportional, fractional share ownership in the underlying securities. In addition, if you surrender your Biotech HOLDRS to receive the underlying securities and other property represented by your Biotech HOLDRS you will receive cash in lieu of your fractional shares. You will not be entitled to any securities if your interest in an underlying security is only a fraction of a share. o Not necessarily representative of the biotechnology industry. At the time of the initial offering, the companies included in the Biotech HOLDRS were generally considered to be involved in various segments of the biotechnology industry. However, the market price of the underlying securities and the Biotech HOLDRS may not necessarily follow the price movements of the entire biotechnology industry. If the underlying securities decline in value, your investment in the Biotech HOLDRS will decline in value, even if securities prices of companies in the biotechnology industry generally increase in value. In addition, since the time of the initial offering, the companies included in the Biotech HOLDRS may not be involved in the biotechnology industry. In this case, the Biotech HOLDRS may not consist of securities issued only by companies involved in the biotechnology industry. o Not necessarily comprised of solely biotechnology companies. As a result of distributions of securities by companies included in the Biotech HOLDRS or other corporate events, such as mergers, securities of companies that are not currently included in the Biotech HOLDRS and that are not involved in the biotechnology industry may be included in the Biotech HOLDRS. The securities of a new company will only be distributed from the Biotech HOLDRS if the securities have a different Standard & Poor's Corporation sector classification than any of the underlying issuers included in Biotech HOLDRS at the time of the distribution or the corporate event or if the securities are not listed for trading on a U.S. national securities exchange or through Nasdaq National Market System. As of January 2, 2002, Standard & Poor's Corporation sector classifications are based upon the Standard & Poor's Global Industry Classification Standard ("GICS") sectors. As there are only 10 broadly defined GICS sectors, the use of GICS sectors to determine whether a new company will be included in the Biotech HOLDRS provides no assurance that each new company included in the Biotech HOLDRS will be involved in the biotech industry. Currently, the underlying securities included in the Biotech HOLDRS are represented in the Healthcare GICS sector. As each Standard & Poor's GICS sector is defined so broadly, the securities of a new company could have the same GICS sector classification as a company currently included in the 5 Biotech HOLDRS yet not be involved in the biotech industry. In addition, the GICS sector classifications of securities included in the Biotech HOLDRS may change over time if the companies that issued these securities change their focus of operations or if Standard & Poor's alters the criteria it uses to determine GICS sectors, or both. Therefore, additional GICS sectors may be represented in the Biotech HOLDRS, which may also result in the inclusion in the Biotech HOLDRS of the securities of a new company that is not involved in the biotechnology industry. o No investigation of underlying securities. The underlying securities initially included in the Biotech HOLDRS were selected by Merrill Lynch, Pierce, Fenner & Smith Incorporated based on the market capitalization of issuers and the market liquidity of securities in the biotechnology industry, without regard for the value, price performance, volatility or investment merit of the underlying securities. Consequently, the Biotech HOLDRS trust, the trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated, and their affiliates, have not performed any investigation or review of the selected companies, including the public filings by the companies. Investors and market participants should not conclude that the inclusion of a company is any form of investment recommendation by the trust, the trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated, or their affiliates. o Loss of diversification. As a result of industry developments, reorganizations or market fluctuations affecting issuers of the underlying securities, Biotech HOLDRS may not necessarily be a diversified investment in the biotechnology industry. In addition, reconstitution events, a distribution of securities by an underlying issuer or other events, which may result in the distribution of securities from, or the inclusion of additional securities in, the Biotech HOLDRS, may also reduce diversification. Biotech HOLDRS may represent a concentrated investment in one or more of the underlying securities, which would reduce investment diversification and increase your exposure to the risks of concentrated investments. o Conflicting investment choices. In order to sell one or more of the underlying securities individually, participate in any form of stock repurchase program by an issuer of an underlying security or participate in a tender offer relating to one or more of the underlying securities, you will be required to cancel your Biotech HOLDRS and receive delivery of each of the underlying securities. The cancellation of your Biotech HOLDRS will allow you to sell individual underlying securities or to deliver individual underlying securities in a tender offer or any form of stock repurchase program. The cancellation of Biotech HOLDRS will involve payment of a cancellation fee to the trustee. o Trading halts. Trading in Biotech HOLDRS on the American Stock Exchange may be halted if trading in one or more of the underlying securities is halted. Trading in Biotech HOLDRS may be halted even if trading continues in some or all of the underlying securities. If trading is halted in Biotech HOLDRS, you will not be able to trade Biotech HOLDRS and you will only be able to trade the underlying securities if you cancel your Biotech HOLDRS and receive each of the underlying securities. o Delisting from the American Stock Exchange. If the number of companies whose securities are held in the trust falls below nine, the American Stock Exchange may consider delisting the Biotech HOLDRS. If the Biotech HOLDRS are delisted by the American Stock Exchange, a termination event will result unless the Biotech HOLDRS are listed for trading on another U.S. national securities exchange or through the Nasdaq National Market System within five business days from the date the Biotech HOLDRS are delisted. There are currently 19 companies whose securities are included in the Biotech HOLDRS. o Possible conflicts of interest. Merrill Lynch, Pierce, Fenner & Smith Incorporated, as initial depositor, selected the underlying securities that were originally included in the Biotech HOLDRS and may face possible conflicts of interest as Merrill Lynch, Pierce, Fenner & Smith Incorporated and its affiliates may provide investment banking or other services for issuers of the underlying securities in connection with its business. o Delays in distributions. The depositary trust agreement provides that the trustee will use its reasonable efforts to distribute any cash or other distributions paid in respect of the underlying securities to you as soon as practicable after receipt of such distribution. However, you may receive such cash or other 6 distributions later than you would if you owned the underlying securities outside of the Biotech HOLDRS. In addition, you will not be entitled to any interest on any distribution by reason of any delay in distribution by the depositary. Risk Factors Specific to the Biotechnology Industry o The stock prices of companies involved in the biotechnology industry have been and will likely continue to be extremely volatile, which will directly affect the price volatility of the Biotech HOLDRS, and you could lose a substantial part of your investment. The trading prices of the stocks of biotechnology companies have been extremely volatile. These stock prices could be subject to wide fluctuations in response to a variety of factors, including the following: o general market fluctuations; o actual or anticipated variations in companies' quarterly operating results; o announcements of technological innovations by competitors of the companies included in the Biotech HOLDRS; o changes in financial estimates by securities analysts; o changes in the market valuations of biotechnology companies; o legal or regulatory developments affecting companies included in the Biotech HOLDRS or in the biotechnology industry; o announcements by biotechnology companies or their competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; o additions or departures of key personnel; o sales of biotechnology companies' securities in the open market; and o difficulty in obtaining additional financing. In addition, the trading prices of biotechnology stocks in general have experienced extreme price and volume fluctuations. These fluctuations may be unrelated or disproportionate to the operating performance of these companies. The valuations of many biotechnology stocks are high when measured by conventional valuation standards such as price to earnings and price to sales ratios. Some of the companies do not or in the future might not have earnings. As a result, these trading prices may decline substantially and valuations may not be sustained. Any negative change in the public's perception of the prospects of biotechnology companies, generally, could depress the stock prices of a biotechnology company regardless of biotechnology companies' results. Other broad market and industry factors may decrease the stock price of biotechnology stocks, regardless of their operating results. Market fluctuations, as well as general political and economic conditions such as recession, war or interest rate or currency rate fluctuations, also may decrease the market price of biotechnology stocks. As a result of fluctuations in the trading prices of the companies included in the Biotech HOLDRS, the trading price of Biotech HOLDRS has fluctuated significantly. The initial offering price of a Biotech HOLDR, on November 22, 1999, was $109.18 and during 2002 the price of a Biotech HOLDR reached a high of $130.55 and a low of $66.29. o Biotechnology companies face uncertainty with respect to pricing and third party reimbursement. Biotechnology companies will continue to be affected by the efforts of governments and third party payors, such as government health organizations, private health insurers and health maintenance organizations, to contain or reduce health care costs. For example, in certain foreign markets pricing or 7 profitability of biotechnology products and technologies is subject to control. In the United States, there has been, and there will likely to continue to be, a number of federal and state proposals to implement similar government control. Also, an increasing emphasis on managed health care in the United States will continue to put pressure on the pricing of the products and technologies of biotechnology companies. The announcement or adoption of such proposals could have a material adverse affect on a biotechnology companies' business and financial condition. Further, the sales of the products of many biotechnology companies are often dependent, in part, on the availability of reimbursement from third party payors. Third party payors are increasingly challenging the prices charged for health care products and technologies and denying or limiting coverage for new products. Even if a biotechnology company can bring a product or technology to market, there can be no assurance that these products or technologies will be considered cost-effective by third party payors and that sufficient reimbursement will be available to consumers to allow for the sale of the products and services on a profitable basis. o Protection of patent and proprietary rights of biotechnology companies is difficult and costly. The success of many biotechnology companies is highly dependent on a biotechnology company's ability to obtain patents on current and future products and technologies, to defend its existing patents and trade secrets and operate in a manner that does not infringe on the proprietary rights of other biotechnology companies. Patent disputes are frequent and can preclude the successful commercial introduction of products and technologies. As a result, there is significant litigation in the biotechnology industry regarding patent and other intellectual property rights. Litigation is costly and could subject a biotechnology company to significant liabilities to third parties. In addition, a biotechnology company could be forced to obtain costly third-party licenses or cease using the technology or product in dispute. o Biotechnology companies are subject to extensive government regulation. Products and technologies offered by biotechnology companies are subject to strict regulation by the Food and Drug Administration in the United States and similar agencies in other countries. Many of the products will require extensive pre- clinical testing, clinical trials, other testing, government review and final approval before any marketing of the product will be permitted. This procedure could take a number of years and involves the expenditure of substantial resources. The success of a biotechnology company's current or future product will depend, in part, upon obtaining and maintaining regulatory approval to market products and, once approved, complying with the continued review by regulatory agencies. The failure to obtain necessary government approvals, the restriction of existing approvals, loss of or changes to previously obtained approvals or the failure to comply with regulatory requirements could result in fines, unanticipated expenditures, product delays, non-approval or recall, interruption of production and even criminal prosecution. Even if regulatory approval is granted for a product, the approval may be limited to only specific applications for which the product or technology is useful, as demonstrated through clinical trials. o Biotechnology companies must keep pace with rapid technological change to remain competitive. The biotechnology industry is highly competitive and is subject to rapid and significant technological change. Biotechnology companies will face continued competition as new products enter the market and advanced technologies become available. The success of a biotechnology company will depend on its ability to develop products and technologies that are at least as clinically effective or cost-effective than its competitors' products and technologies or that would render its competitors' products and technologies obsolete or uncompetitive. o Results of research and development of new products and technologies are unpredictable. Successful product or technology development in the biotechnology industry is very uncertain and only a small number of research and development programs will result in the marketing and sale of a new product or technology. Many products and technologies that appear promising may fail to reach the market for many reasons, including results indicating lack of effectiveness or harmful side effects in clinical or pre- clinical testing, failure to receive necessary regulatory approvals, uneconomical manufacturing costs or competing proprietary rights. In addition, there is no certainty that any product or technology in development will achieve market acceptance from the medical community, third party payors or individual users. o Biotechnology companies may be exposed to extensive product liability costs. The testing, manufacturing, marketing and sale of many of the products and technologies developed by biotechnology companies inherently expose biotechnology companies to potential product liability risks. Many biotechnology 8 companies obtain limited product liability insurance; further, there can be no assurance that a biotechnology company will be able to maintain its product liability insurance, that it will continue to be able to obtain adequate product liability insurance on reasonable terms or that any product liability insurance obtained will provide adequate coverage against potential liabilities. o Biotechnology companies face challenges gaining governmental and consumer acceptance of genetically altered products. Biotechnology companies may be involved in the development of genetically engineered agricultural and food products. The commercial success of these products will depend, in part, on governmental and public acceptance of their cultivation, distribution and consumption. Public attitudes may be influenced by the media and by opponents who claim that genetically engineered products are unsafe for consumption, pose unknown health risks, risks to the environment or to social or economic practices. Biotechnology companies may continue to have to expend significant resources to foster governmental and consumer acceptance of genetically engineered agricultural and food products, particularly in Europe where securing governmental approvals for, and achieving consumer confidence in, these products continues to pose numerous challenges. The success of any genetically engineered agricultural and food products may be delayed or impaired in certain geographical areas due to the existing or future regulatory, legislative or public acceptance issues. Applera Corporation--Celera Genomics Group, one of the underlying securities of the Biotech HOLDRS, is involved in the development of genetically-based plant and animal breeding. Other companies representing underlying securities of the Biotech HOLDRS may become involved in the development of genetically engineered agricultural and food products. o Many companies included in the Biotech HOLDRS have a limited operating history which makes financial forecasting difficult. Many companies included in the Biotech HOLDRS are not able to forecast operating expenses based on their historical results. Accordingly, they base their forecast for expenses in part on future revenue projections. Most expenses are fixed in the short term and it may not be possible to quickly reduce spending if revenues are lower than projected. A biotechnology company's ability to forecast accurately its quarterly revenue is limited because its products have a long sales cycle that makes it difficult to predict the quarter in which it can recognize revenue, and because of the variability of client demand for its professional services. The business, operating results and financial condition of biotechnology companies may be materially adversely affected if their revenues do not meet their projections. o Many biotechnology companies are dependent on key personnel for success. The success of many biotechnology companies is highly dependent on the experience, abilities and continued services of key executive officers and key scientific personnel. If these companies lose the services of any of these officers or key scientific personnel, their future success could be undermined. The success of many biotechnology companies also depends upon their ability to attract and retain other highly qualified scientific, managerial sales and manufacturing personnel and their ability to develop and maintain relationships with qualified clinical researchers. Competition for such personnel and relationships is intense and many of these companies compete with each other and with universities and non-profit research organizations. There is no certainty that any of these biotechnology companies will be able to continue to attract and retain qualified personnel or develop and maintain relationships with clinical researchers. o It may be impossible to initiate legal proceedings or enforce judgments against some of the companies included in the Biotech HOLDRS. Some of the companies included in the Biotech HOLDRS are incorporated under the laws of a jurisdiction other than the United States and a substantial portion of their assets are located outside the United States. As a result, it may be impossible to effect service of process within the United States on some of the companies included in the Biotech HOLDRS or enforce judgments made against them in courts in the United States based on civil liability provisions of the securities laws of the United States. In addition, judgments obtained in the United States, especially those awarding punitive damages, may not be enforceable in foreign countries. o Potential voting impediments may exist with respect to the ownership of some of the underlying securities included in the Biotech HOLDRS. Holders of American depositary shares, including those included in the Biotech HOLDRS, may only exercise voting rights with respect to the securities represented by American 9 depositary shares in accordance with the provisions of deposit agreements entered into in connection with the issuance of the American depositary shares. These deposit agreements may not permit holders of American depositary shares to exercise voting rights that attach to the securities underlying the American depositary shares without the issuer first instructing the depositary to send voting information to the holder of the American depositary share. Also, holders of American depositary shares may not be able to exercise voting rights unless they take a variety of steps, which may include registration in the share registry of the company that has issued the securities underlying the American depositary shares. The cumulative effect of these steps may make it impractical for holders of American depositary shares to exercise the voting rights attached to the underlying securities. o Companies whose securities are included in the Biotech HOLDRS may need additional financing, which may be difficult to obtain. Failure to obtain necessary financing or doing so on unattractive terms could adversely affect development and marketing efforts and other operations of companies whose securities are included in the Biotech HOLDRS. Companies whose securities are included in Biotech HOLDRS may need to raise additional capital in order to fund the continued development and marketing of their products or to fund strategic acquisitions or investments. Their ability to obtain additional financing will depend on a number of factors, including market conditions, operating performance and investor interest. These factors may make the timing, amount, terms and conditions of any financing unattractive. If adequate funds are not available or are not available on acceptable terms, companies whose securities are included in the Biotech HOLDRS may have to forego strategic acquisitions or investments, reduce or defer their development activities, delay their introduction of new products and services, or, in certain circumstances, suspend or terminate their operations. Any of these actions may reduce the market price of stocks in the biotechnology industry. o Two securities currently included in the Biotech HOLDRS, Applera Corporation--Celera Genomics Group and Applera Corporation--Applied Biosystems Group, are tracking stocks and are therefore subject to additional risks relating to an investment in tracking stocks. The risks associated with tracking stocks include the following: o Stockholders of a tracking stock remain invested in the entire company issuing the tracking stock, even though the tracking stock is intended to reflect the operating performance of specific operations of a company's business. As a result, the performance and financial results of one of the tracked operations of Applera Corporation could also negatively affect the market price of Applera Corporation's other tracking stock and magnify the negative effect on the Biotech HOLDRS. This may also result in the market price of the tracking stock not solely reflecting the performance of the operations the tracking stock is intended to reflect. o A holder of tracking stock does not have any direct voting rights to elect the management of the operations represented by the tracking stock or to make fundamental decisions affecting the tracked operations. The holders of tracking stock have voting rights that are similar to that of common shareholders of the company that issued the tracking stock, and would, along with the other shareholders, be limited to electing the management of the entire company rather than the management of the tracked operations. In addition, all of the shareholders of the company may be entitled to vote on fundamental decisions affecting the tracked operations. Consequently, the management of the company may make operational, financial and other decisions that may not be in the best interests of the holders of one of Applera Corporation's tracking stocks or that favor one tracking stock to the detriment of the other tracking stock. For example, management of the company may decide to sell assets or discontinue operations relating to the tracked operations without the consent of the holders of the tracking stock and the consideration received on any sale of assets may be less than what would be received if the tracked operations were a separate company. In addition, management of the company could adversely change the terms of the tracking stock without seeking the approval of a majority of the holders of the tracking stock affected by the change. o Applera Corporation has the option to convert Celera Genomics Group and Applied Biosystems Group tracking stock into Applera Corporation common stock. It is possible that 10 the consideration received as a result of any conversion may be lower than the market price at the time of the deposit into the Biotech HOLDRS and that the security received in exchange may not reflect the economic performance of the tracked operations. o In the event of a dissolution of Applera Corporation, the holders of the tracking stocks will not have preferential rights to the respective assets of the tracked operations of Applera Corporation and these assets may become subject to liabilities attributable to the other group. In addition, any payment to the holders of the tracking stock as a result of a dissolution may be allocated between groups by a specified formula regardless of each group's relative contribution to the company as a whole. o On each additional issuance of any class of stock by Applera Corporation, the voting rights, rights on dissolution and rights to dividends on Applera Corporation tracking stocks will be diluted. In addition, any additional issuances of Celera Genomics Group or Applied Biosystems Group tracking stock by Applera Corporation could dilute the value of each of the tracking stocks and the proceeds received on any additional issuance may not be allocated to the operations represented by the tracking stock. Generally, the terms of a tracking stock differ from those of the common stock of the same company. Please see the public filings of Applera Corporation for more information on the Celera Genomics Group and Applied Biosystems Group tracking stocks. For information on where you can access Applera Corporation's public filings, please see "Where You Can Find More Information." 11 HIGHLIGHTS OF BIOTECH HOLDRS This discussion highlights information regarding Biotech HOLDRS. We present certain information more fully in the rest of this prospectus. You should read the entire prospectus carefully before you purchase Biotech HOLDRS. Issuer.............................. Biotech HOLDRS Trust. The trust........................... The Biotech HOLDRS Trust was formed under the depositary trust agreement, dated as of November 18, 1999 among The Bank of New York, as trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated, other depositors and the owners of the Biotech HOLDRS and was amended and restated as of , 2003. The trust is not a registered investment company under the Investment Company Act of 1940. Initial depositor................... Merrill Lynch, Pierce, Fenner & Smith Incorporated. Trustee............................. The Bank of New York, a New York state-chartered banking organization, is the trustee and receives compensation as set forth in the depositary trust agreement. The trustee is responsible for receiving deposits of underlying securities and delivering Biotech HOLDRS representing the underlying securities issued by the trust. The trustee holds the underlying securities on behalf of the holders of Biotech HOLDRS. Purpose of Biotech HOLDRS........... Biotech HOLDRS are designed to achieve the following: Diversification. Biotech HOLDRS are designed to allow you to diversify your investment in the biotechnology industry through a single, exchange-listed instrument representing your undivided beneficial ownership of the underlying securities. Flexibility. The beneficial owners of Biotech HOLDRS have undivided beneficial ownership interests in each of the underlying securities represented by the Biotech HOLDRS, and can cancel their Biotech HOLDRS to receive each of the underlying securities represented by the Biotech HOLDRS. Transaction costs. The expenses associated with buying and selling Biotech HOLDRS in the secondary market are expected to be less than separately buying and selling each of the underlying securities in a traditional brokerage account with transaction-based charges. Trust assets........................ The trust holds securities traded on U.S. stock markets that, when initially selected, were issued by companies involved in the biotechnology industry. Except when a reconstitution event, distribution of securities by an underlying issuer or other event occurs, the group of companies will not change. Reconstitution events are described in this prospectus under the heading "Description of the Depositary Trust Agreement--Distributions" and "--Reconstitution Events." There are currently 19 companies included in the Biotech HOLDRS. The trust's assets may increase or decrease as a result of in-kind deposits and withdrawals of the underlying securities during the life of the trust. The Biotech HOLDRS.................. The trust has issued, and may continue to issue, Biotech HOLDRS that represent an undivided beneficial ownership interest in the shares of U.S.-traded securities that are held by the trust on your behalf. The Biotech 12 HOLDRS are separate from the underlying securities that are represented by Biotech HOLDRS. The following chart provides: o the names of the 19 issuers of the underlying securities currently represented by the Biotech HOLDRS, o the stock ticker symbols, o the share amounts currently represented by a round-lot of 100 Biotech HOLDRS, and o the principal U.S. market on which the underlying securities are traded. Primary U.S. Share Trading Name of Company Ticker Amounts Market --------------- ------ ------- ------ Affymetrix, Inc. AFFX 4 NASDAQ Alkermes, Inc. ALKS 4 NASDAQ Amgen Inc. AMGN 64.48 NASDAQ Applera Corporation--Applied Biosystems Group ABI 18 NYSE Applera Corporation--Celera Genomics Group CRA 4 NYSE Biogen, Inc. BGEN 13 NASDAQ Chiron Corporation CHIR 16 NASDAQ Enzon Pharmaceuticals, Inc. ENZN 3 NASDAQ Genentech, Inc. DNA 44 NYSE Genzyme Corporation GENZ 14 NASDAQ Gilead Sciences, Inc. GILD 16 NASDAQ Human Genome Sciences, Inc. HGSI 8 NASDAQ ICOS Corporation ICOS 4 NASDAQ IDEC Pharmaceuticals Corporation IDPH 12 NASDAQ MedImmune, Inc. MEDI 15 NASDAQ Millennium Pharmaceuticals, Inc. MLNM 12 NASDAQ QLT Inc. QLTI 5 NASDAQ Sepracor Inc. SEPR 6 NASDAQ Shire Pharmaceuticals Group p.l.c. SHPGY 6.8271 NASDAQ - ---------------------------------------- The companies whose securities were included in the Biotech HOLDRS at the time Biotech HOLDRS were originally issued were generally considered to be among the 20 largest and most liquid companies with U.S.-traded securities involved in the biotechnology industry, as measured by market capitalization and trading volume on October 27, 1999. The market capitalization of a company is determined by multiplying the market price of its securities by the number of its outstanding securities. The trust only will issue and cancel, and you only may obtain, hold, trade or surrender, Biotech HOLDRS in a round-lot of 100 Biotech HOLDRS and round-lot multiples. The trust will only issue Biotech HOLDRS upon the deposit of the whole shares represented by a round-lot of 100 Biotech HOLDRS. If you wish to create Biotech HOLDRS and a fractional share comes to be represented by a round lot of Biotech HOLDRS and before the trustee sells such fractions as described in "--Ownership rights in fractional shares in the underlying securities," the 13 trustee will require you to deposit the next largest whole share amount with respect to the underlying security then represented by a fraction and the trustee will return to you cash in lieu of the fractional remainder not then represented by a round lot of Biotech HOLDRS based on the closing price for the underlying security on the day prior to your deposit. After the trustee sells such fractions and before the record date for the distribution of the net proceeds of such sale to you, the trustee will require you to deposit cash in lieu of such fractions in an amount equal to the amount to be distributed to record holders of Biotech HOLDRS on the record date. The number of outstanding Biotech HOLDRS will increase and decrease as a result of in-kind deposits and withdrawals of the underlying securities. The trust will stand ready to issue additional Biotech HOLDRS on a continuous basis when an investor deposits the required securities with the trustee. Purchases........................... You may acquire Biotech HOLDRS in two ways: o through an in-kind deposit of the required number of securities of the underlying issuers with the trustee, or o through a cash purchase in the secondary trading market. Issuance and cancellation fees...... If you wish to create Biotech HOLDRS by delivering to the trust the requisite securities represented by a round-lot of 100 Biotech HOLDRS, The Bank of New York as trustee will charge you an issuance fee of up to $10.00 for each round-lot of 100 Biotech HOLDRS. If you wish to cancel your Biotech HOLDRS and withdraw your underlying securities, The Bank of New York as trustee will charge you a cancellation fee of up to $10.00 for each round-lot of 100 Biotech HOLDRS. Commissions......................... If you choose to deposit underlying securities in order to receive Biotech HOLDRS, you will be responsible for paying any sales commission associated with your purchase of the underlying securities that is charged by your broker in addition to the issuance fee charged by the trustee described above. Custody fees........................ The Bank of New York, as trustee and as custodian, will charge you a quarterly custody fee of $2.00 for each round-lot of 100 Biotech HOLDRS, to be deducted from any cash dividend or other cash distributions on underlying securities distributed by the trust. With respect to the aggregate custody fee payable in any calendar year for each Biotech HOLDR, the trustee will waive that portion of the fee which exceeds the total cash dividends and other cash distributions distributed by the trust, the record date for which falls in such calendar year. Rights relating to Biotech HOLDRS............................ You have the right to withdraw the underlying securities upon request by delivering a round- lot or integral multiple of a round-lot of Biotech HOLDRS to the trustee, during the trustee's business hours, and paying the cancellation fees, taxes and other charges. You should receive the underlying securities no later than the business day after the trustee receives a proper notice of cancellation. The trustee will not deliver fractional shares of underlying securities. To the extent that any cancellation of Biotech HOLDRS would otherwise require the delivery of a fractional share and before the trustee sells such fractions as described in "--Ownership rights in fractional shares in the underlying securities", the trustee will deliver cash in lieu of such fractional shares based on the closing price for the 14 underlying security to which such fraction relates on the day prior to your cancellation. In the event you elect to cancel your Biotech HOLDRS after the trustee has sold such fractional shares and before the record date for the distribution of the net proceeds of such sale to you, the trustee will deliver cash in lieu of such fractional shares to you in an amount equal to the amount to be distributed to record holders of Biotech HOLDRS on the record date. Except with respect to the right to vote for dissolution of the trust, the Biotech HOLDRS themselves will not have voting rights. Rights relating to the underlying securities............. Biotech HOLDRS represents your beneficial ownership of the underlying securities. Owners of Biotech HOLDRS have the same rights and privileges as if they owned the underlying securities beneficially in street name outside of Biotech HOLDRS. These include the right to instruct the trustee to vote the underlying securities or you may attend shareholder meetings yourself, the right to receive any dividends and other distributions on the underlying securities that are declared and paid to the trustee by an issuer of an underlying security, the right to pledge Biotech HOLDRS and the right to surrender Biotech HOLDRS to receive the underlying securities and other property then represented by the Biotech HOLDRS. Biotech HOLDRS does not change your beneficial ownership in the underlying securities under United States federal securities laws, including sections 13(d) and 16(a) of the Securities Exchange Act of 1934. As a result, you have the same obligations to file insider trading reports that you would have if you held the underlying securities outside of Biotech HOLDRS. However, due to the nature of Biotech HOLDRS, you will not be able to participate in any dividend reinvestment program of an issuer of underlying securities unless you cancel your Biotech HOLDRS (and pay the applicable fees) and receive all of the underlying securities. A holder of Biotech HOLDRS is not a registered owner of the underlying securities. In order to become a registered owner, a holder of Biotech HOLDRS would need to surrender their Biotech HOLDRS, pay the applicable fees and expenses, receive all of the underlying securities and follow the procedures established by the issuers of the underlying securities for registering their securities in the name of such holder. You retain the right to receive any reports and communications that the issuers of underlying securities are required to send to beneficial owners of their securities. As such, you will receive such reports and communications from the broker through which you hold your Biotech HOLDRS in the same manner as if you beneficially owned your underlying securities outside of Biotech HOLDRS in "street name" through a brokerage account. The trustee will not attempt to exercise the right to vote that attaches to, or give a proxy with respect to, the underlying securities other than in accordance with your instructions. The depositary trust agreement entitles you to receive, subject to certain limitations and net of any fees and expenses of the trustee, any distributions of cash (including dividends), securities or property made with respect to the underlying securities. However, any distribution of securities by an issuer of underlying securities will be deposited into the trust and will become part of the underlying securities unless the distributed securities are not listed for trading on a U.S. national securities exchange or through the Nasdaq National Market System or the distributed securities have a Standard & Poor's GICS sector classification that is different from the GICS sectors classifications represented in the Biotech HOLDRS at the time of 15 the distribution. In addition, if the issuer of underlying securities offers rights to acquire additional underlying securities or other securities, the rights may be distributed to you, may be disposed of for your benefit, or may lapse. There may be a delay between the time any cash or other distribution is received by the trustee with respect to the underlying securities and the time such cash or other distributions are distributed to you. In addition, you are not entitled to any interest on any distribution by reason of any delay in distribution by the trustee. If any tax or other governmental charge becomes due with respect to Biotech HOLDRS or any underlying securities, you will be responsible for paying that tax or governmental charge. If you wish to participate in a tender offer for any of the underlying securities, or any form of stock repurchase program by an issuer of an underlying security, you must surrender your Biotech HOLDRS (and pay the applicable fees and expenses) and receive all of your underlying securities in exchange for your Biotech HOLDRS. For specific information about obtaining your underlying securities, you should read the discussion under the caption "Description of the Depositary Trust Agreement--Withdrawal of underlying securities." Ownership rights in fractional shares in the underlying securities........ As a result of distributions of securities by companies included in the Biotech HOLDRS or other corporate events, such as mergers, a round-lot of Biotech HOLDRS may represent an interest in a fractional share of an underlying security. Pursuant to an amendment to the depositary trust agreement, effective as of , 2003, the depositary trust agreement requires the trustee to aggregate and initiate the sale of fractional shares of an underlying security through a registered broker-dealer in the primary market in which the underlying security trades within ten business days and to distribute the net proceeds to you in the same manner as a cash dividend on an underlying security would be distributed to you. We expect that the trustee will aggregate and sell all fractional shares currently represented in Biotech HOLDRS within 30 days of , 2003. The amendment also requires that in the future the trustee aggregate and initiate the sale of fractional shares within five business days of the receipt of those fractional shares. However, until such time as the trustee sells such fractional shares in accordance with the depositary trust agreement, you are entitled to receive distributions proportionate to your fractional shares. In addition, you are entitled to receive proxy materials and other shareholder communications and you are entitled to exercise voting rights proportionate to your fractional shares. The trustee will aggregate the votes of all of the share fractions represented by Biotech HOLDRS and will vote the largest possible number of whole shares. If, after aggregation, there is a fractional remainder, this fraction will be ignored, because the issuer will only recognize whole share votes. For example, if 100,001 round-lots of 100 Biotech HOLDRS are outstanding and each round-lot of 100 Biotech HOLDRS represents 1.75 shares of an underlying security, there will be 175,001.75 votes of the underlying security represented by Biotech HOLDRS. If holders of 50,000 round-lots of 100 Biotech HOLDRS vote their underlying securities "yes" and holders of 50,001 round-lots of 100 Biotech HOLDRS vote their underlying securities "no", there will be 87,500 affirmative votes and 87,501.75 negative votes. The trustee will ignore the .75 negative votes and will deliver to the issuer 87,500 16 affirmative votes and 87,501 negative votes. Reconstitution events............... The depositary trust agreement provides for the automatic distribution of underlying securities from the Biotech HOLDRS to you in the following four circumstances: A. If an issuer of underlying securities no longer has a class of securities registered under section 12 of the Securities Exchange Act of 1934, then the trustee will distribute the shares of that company to the owners of the Biotech HOLDRS. B. If the SEC finds that an issuer of underlying securities should be registered as an investment company under the Investment Company Act of 1940, and the trustee has actual knowledge of the SEC finding, then its securities will no longer be an underlying security and the trustee will distribute the shares of that company to the owners of the Biotech HOLDRS. C. If the underlying securities of an issuer cease to be outstanding as a result of a merger, consolidation or other corporate combination or other event, the trustee will distribute the consideration paid by and received from the acquiring company or the securities received in exchange for the securities of the underlying issuer whose securities cease to be outstanding to the beneficial owners of Biotech HOLDRS only if the distributed securities have a different Standard & Poor's GICS sector classification than any of the underlying securities represented in the Biotech HOLDRS at the time of the distribution or exchange or if the securities received are not listed for trading on a U.S. national securities exchange or through the Nasdaq National Market System. In any other case, the additional securities received will be deposited into the trust. D. If an issuer's underlying securities are delisted from trading on a U.S. national securities exchange or through the Nasdaq National Market System and are not listed for trading on another U.S. national securities exchange or through the Nasdaq National Market System within five business days from the date the securities are delisted. To the extent a distribution of underlying securities from the Biotech HOLDRS is required as a result of a reconstitution event, the trustee will deliver the underlying security to you as promptly as practicable after the date that the trustee has knowledge of the occurrence of a reconstitution event. In addition, securities of a new company will be added to the Biotech HOLDRS, as a result of a distribution of securities by an underlying issuer, where a corporate event occurs, or where the securities of an underlying issuer are exchanged for the securities of another company, unless the securities received have a Standard & Poor's GICS sector classification that is different from the GICS sector classification of any other security then included in the Biotech HOLDRS or are not listed for trading on a U.S. national securities exchange or through the Nasdaq National Market System. This will also apply if Applera Corporation converts either the Celera Genomics Group or Applied Biosystems Group tracking stock into another class of securities of Applera Corporation or one of its subsidiaries. For more information on the conversion rights of the Celera Genomics Group and Applied Biosystems Group tracking stocks, please see Annex A. 17 It is anticipated, as a result of the broadly defined Standard & Poor's GICS sectors, that most distributions or exchanges of securities will result in the inclusion of new securities in Biotech HOLDRS. The trustee will review the Standard & Poor's GICS sector classifications of securities to determine whether securities received as a result of a distribution by an underlying issuer or as consideration for securities included in the Biotech HOLDRS will be included in Biotech HOLDRS or distributed to you. Standard & Poor's sector classifications................... Standard & Poor's Corporation is an independent source of market information that, among other things, maintains the Global Industry Classification Standard, referred to herein as "GICS," which classifies the securities of public companies into various sector classifications based upon GICS sectors, which are derived from its own criteria. The GICS classification standards were exclusively effective as of January 2, 2002. There are 10 Standard & Poor's GICS sectors and each class of publicly traded securities of a company is given only one GICS sector classification. The securities included in the Biotech HOLDRS are currently represented in the Healthcare GICS sector. The Standard & Poor's GICS sector classifications of the securities included in the Biotech HOLDRS may change over time if the companies that issued these securities change their focus of operations or if Standard & Poor's alters the criteria it uses to determine GICS sectors, or both. Termination events.................. A. The Biotech HOLDRS are delisted from the American Stock Exchange and are not listed for trading on another U.S. national securities exchange or through the Nasdaq National Market System within five business days from the date the Biotech HOLDRS are delisted. B. The trustee resigns and no successor trustee is appointed within 60 days from the date the trustee provides notice to Merrill Lynch, Pierce, Fenner & Smith Incorporated, as initial depositor, of its intent to resign. C. Beneficial owners of at least 75% of outstanding Biotech HOLDRS vote to dissolve and liquidate the trust. If a termination event occurs, the trustee will distribute the underlying securities as promptly as practicable after the termination event. Upon termination of the depositary trust agreement and prior to distributing the trust property to you, the trustee will charge you a cancellation fee of up to $10.00 per round-lot of 100 Biotech HOLDRS surrendered, along with any taxes or other governmental charges, if any. United States federal income tax consequences..................... The United States federal income tax laws will treat a U.S. holder of Biotech HOLDRS as directly owning the underlying securities. The Biotech HOLDRS themselves will not result in any United States federal tax consequences separate from the tax consequences associated with ownership of the underlying securities. Listing............................. The Biotech HOLDRS are listed on the American Stock Exchange under the symbol "BBH." On May 6, 2003, the last reported sale price of the Biotech HOLDRS on the American Stock Exchange was $102.50. 18 Trading............................. Investors are only able to acquire, hold, transfer and surrender a round-lot of 100 Biotech HOLDRS. Bid and ask prices, however, are quoted per single Biotech HOLDR. Clearance and settlement............ Biotech HOLDRS have been issued only in book-entry form. Biotech HOLDRS are evidenced by one or more global certificates that the trustee has deposited with The Depository Trust Company, referred to as DTC. Transfers within DTC will be in accordance with DTC's usual rules and operating procedures. For further information see "Description of Biotech HOLDRS." 19 THE TRUST General. This discussion highlights information about the Biotech HOLDRS Trust. You should read this information, information about the depositary trust agreement, as well as the amended and restated depositary trust agreement, before you purchase Biotech HOLDRS. The material terms of the depositary trust agreement are described in this prospectus under the heading "Description of the Depositary Trust Agreement." The Biotech HOLDRS Trust. The trust was formed pursuant to the depositary trust agreement, dated as of November 18, 1999. The depositary trust agreement was amended and restated as of , 2003. The Bank of New York is the trustee. The Biotech HOLDRS Trust is not a registered investment company under the Investment Company Act of 1940. The Biotech HOLDRS Trust is intended to hold deposited shares for the benefit of owners of Biotech HOLDRS. The trustee will perform only administrative and ministerial acts. The property of the trust consists of the underlying securities and all monies or other property, if any, received by the trustee. The trust will terminate on December 31, 2039 or earlier if a termination event occurs. DESCRIPTION OF BIOTECH HOLDRS The trust has issued Biotech HOLDRS under the depositary trust agreement described in this prospectus under the heading "Description of the Depositary Trust Agreement." The trust may issue additional Biotech HOLDRS on a continuous basis when an investor deposits the requisite underlying securities with the trustee. You may only acquire, hold, trade and surrender Biotech HOLDRS in a round-lot of 100 Biotech HOLDRS and round-lot multiples. The trust will only issue Biotech HOLDRS upon the deposit of the whole shares of underlying securities that are represented by a round-lot of 100 Biotech HOLDRS. See "Description of the Depositary Trust Agreement--Issuance, transfer and surrender of Biotech HOLDRS." Biotech HOLDRS will represent your individual and undivided beneficial ownership interest in the specified underlying securities. The companies selected as part of this receipt program are listed above in the section entitled "Highlights of Biotech HOLDRS--The Biotech HOLDRS." Beneficial owners of Biotech HOLDRS will have the same rights and privileges as they would have if they beneficially owned the underlying securities in street name outside of the trust. These include the right of investors to instruct the trustee to vote the underlying securities, and to receive dividends and other distributions on the underlying securities, if any are declared and paid to the trustee by an issuer of an underlying security, as well as the right to cancel Biotech HOLDRS to receive the underlying securities. See "Description of the Depositary Trust Agreement." Biotech HOLDRS are not intended to change your beneficial ownership in the underlying securities under federal securities laws, including sections 13(d) and 16(a) of the Securities Exchange Act of 1934. The trust will not publish or otherwise calculate the aggregate value of the underlying securities represented by a receipt. Biotech HOLDRS may trade in the secondary market at prices that are lower than the aggregate value of the corresponding underlying securities. If, in such case, an owner of Biotech HOLDRS wishes to realize the dollar value of the underlying securities, that owner will have to cancel the Biotech HOLDRS. Such cancellation will require payment of fees and expenses as described in "Description of the Depositary Trust Agreement-- Withdrawal of underlying securities." Biotech HOLDRS are evidenced by one or more global certificates that the trustee has deposited with DTC and registered in the name of Cede & Co., as nominee for DTC. Biotech HOLDRS are available only in book-entry form. Owners of Biotech HOLDRS may hold their Biotech HOLDRS through DTC, if they are participants in DTC, or indirectly through entities that are participants in DTC. DESCRIPTION OF THE UNDERLYING SECURITIES Selection criteria. The underlying securities are the common stocks or American depositary shares of a group of specified companies that, at the time of selection, were involved in various segments of the biotechnology industry and whose securities are registered under section 12 of the Securities Exchange Act. The issuers of the underlying securities were, as of the time of selection, among the largest capitalized and most liquid companies involved in the biotechnology industry as measured by market capitalization and trading volume. The Biotech HOLDRS may no longer consist exclusively of securities issued by companies involved in the biotechnology industry. Merrill Lynch, Pierce, Fenner & Smith Incorporated will determine, in its sole discretion, whether the issuer of a particular underlying security remains in the biotechnology industry and will undertake to make adequate disclosure when necessary. Underlying securities. For a list of the underlying securities represented by Biotech HOLDRS, please refer to "Highlights of Biotech HOLDRS--The Biotech HOLDRS." If the underlying securities change because of a reconstitution event, a distribution of securities by an underlying issuer or other event, a revised list of underlying securities will be set forth in a prospectus supplement and filed with the SEC on a periodic basis. No investigation. The trust, the trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated and any affiliate of these entities, have not performed any investigation or review of the selected companies, including the public filings by the companies. Accordingly, before you acquire Biotech HOLDRS, you should consider publicly available financial and other information about the issuers of the underlying securities. See "Risk Factors" and "Where You Can Find More Information." Investors and market participants should not conclude that the inclusion of a company in the list is any form of investment recommendation of that company by the trust, the trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated, or any of their affiliates. General background and historical information. For a brief description of the business of each of the issuers of the underlying securities and monthly pricing information showing the historical performance of each underlying issuer's securities see "Annex A." The following table and graph set forth the composite performance of all of the 19 underlying securities currently represented by a single Biotech HOLDR, measured at the close of the business day on July 20, 1999, the first date when all of the underlying securities were publicly traded and thereafter as of the end of each month to April 30, 2003. The performance table and graph data are adjusted for any splits that may have occurred over the measurement period. Past movements of the underlying securities are not necessarily indicative of future values.
1999 Price 2000 Price 2001 Price 2002 Price 2003 Price July 20 $80.40 January 31 $154.22 January 31 $153.09 January 31 $117.77 January 31 $ 88.54 July 30 $84.62 February 29 $202.66 February 28 $147.27 February 28 $116.46 February 28 $ 88.86 August 31 $95.41 March 31 $155.06 March 30 $120.18 March 28 $118.14 March 31 $ 93.16 September 30 $91.15 April 28 $132.98 April 30 $131.86 April 30 $98.45 April 30 $101.52 October 29 $90.83 May 31 $132.31 May 31 $136.89 May 31 $92.55 November 30 $102.07 June 30 $172.37 June 29 $136.36 June 28 $81.51 December 31 $138.89 July 31 $160.97 July 31 $125.24 July 31 $84.50 August 31 $196.86 August 31 $127.98 August 30 $82.62 September 29 $191.53 September 28 $114.29 September 30 $77.66 October 31 $172.77 October 31 $127.16 October 31 $86.08 November 30 $152.80 November 30 $138.91 November 29 $88.14 December 29 $165.24 December 31 $131.11 December 31 $84.72
[GRAPH] DESCRIPTION OF THE DEPOSITARY TRUST AGREEMENT General. The depositary trust agreement, dated as of November 18, 1999, among Merrill Lynch, Pierce, Fenner & Smith Incorporated, The Bank of New York, as trustee, other depositors and the owners of the Biotech HOLDRS, provides that Biotech HOLDRS will represent an owner's undivided beneficial ownership interest in the securities of the underlying companies. The shares of those securities held by the trust at any particular time, together with any other property that is held by the trust at that time, is referred to as the trust property. The depositary trust agreement was amended and restated as of , 2003 to incorporate earlier amendments to the depositary trust agreement and to provide for the mandatory sale of fractional shares, as described below. Pursuant to the terms of the depositary trust agreement, this amendment will be effective as of , 2003. The trustee. The Bank of New York serves as trustee for Biotech HOLDRS. The Bank of New York, which was founded in 1784, was New York's first bank and is the oldest bank in the country still operating under its original name. The Bank is a state-chartered New York banking corporation and a member of the Federal Reserve System. The Bank conducts a national and international wholesale banking business and a retail banking business in the New York City, New Jersey and Connecticut areas, and provides a comprehensive range of corporate and personal trust, securities processing and investment services. Issuance, transfer and surrender of Biotech HOLDRS. You may create and cancel Biotech HOLDRS only in round-lots of 100 Biotech HOLDRS. You may create Biotech HOLDRS by delivering to the trustee the requisite underlying securities. The trust will only issue Biotech HOLDRS upon the deposit of the whole shares represented by a round-lot of 100 Biotech HOLDRS. If you wish to create Biotech HOLDRS and a fractional share comes to be represented by a round-lot of Biotech HOLDRS and before the trustee sells such fractions as described under "-Distributions," the trustee will require you to deposit the next largest whole share amount with respect to the underlying security then represented by a fraction and the trustee will return to you cash in lieu of the fractional remainder not then represented by a round lot of Biotech HOLDRS based on the closing price for the underlying security on the day prior to your deposit. For example, if a round lot of Biotech HOLDRS represents 2.5 shares of an underlying security and you wish to create Biotech HOLDRS before the trustee sells such fractions, the trustee will require you to deposit three shares of the underlying security and will deliver to you cash, based on the closing price for the underlying security on the day prior to your deposit, for the .5 of a share then represented in the Biotech HOLDRS. If you wish to create Biotech HOLDRS after the trustee sells any fractional shares represented by Biotech HOLDRS and before the record date for the distribution of the net proceeds of such sale to you, the trustee will require you to deposit cash in lieu of such fractions in an amount equal to the amount to be distributed to record holders of Biotech HOLDRS on the record date. For example, if a round lot of Biotech HOLDRS represents 2.5 shares of an underlying security and you wish to create Biotech HOLDRS after the trustee has sold such fractions, the trustee will require you to deposit two shares of the underlying security and cash in lieu of the .5 of a share then represented in the Biotech HOLDRS in an amount equal to the amount that the trustee will distribute to record holders of the Biotech HOLDRS on the record date in lieu of that .5 of a share. Similarly, you must surrender Biotech HOLDRS in integral multiples of 100 Biotech HOLDRS to withdraw the amount of trust property represented by those Biotech HOLDRS from the trust. The trustee will not deliver fractional shares of underlying securities, and to the extent that any cancellation of Biotech HOLDRS would otherwise require the delivery of fractional shares and before the trustee sells such fractions as described under "--Distributions", the trustee will deliver cash in lieu of such fractional shares based on the closing price of the shares to which such fraction relates on the day prior to your cancellation. For example, if a round lot of Biotech HOLDRS represents 2.5 shares of an underlying security and you wish to cancel your Biotech HOLDRS before the trustee sells such fractions, the trustee will deliver to you two shares of the underlying security and cash in lieu, based on the closing price for the underlying security on the day prior to your cancellation, for the .5 of a share then represented in the Biotech HOLDRS. If you wish to cancel your Biotech HOLDRS after the trustee sells any fractional shares represented by Biotech HOLDRS and before the record date for the distribution of the net proceeds of such sale to you, the trustee will deliver cash in lieu of such fractional shares to you in an amount equal to the amount to be distributed to record holders of Biotech HOLDRS on the record date. For example, if a round lot of Biotech HOLDRS represents 2.5 shares of an underlying security and you wish to cancel your Biotech HOLDRS after the trustee has sold such fractions, the trustee 23 will deliver to you two shares of the underlying security and cash in lieu, in an amount equal to the amount to be distributed to record holders on the record date as the net proceeds of the sale of such fractional shares, for the .5 of a share then represented in the Biotech HOLDRS. You may request withdrawal of your deposited shares during the trustee's normal business hours. The trustee expects that in most cases it will deliver your deposited shares within one business day of your withdrawal request. Voting rights. You will receive proxy soliciting materials provided by issuers of the deposited shares so as to permit you to give the trustee instructions as to how to vote on matters to be considered at any annual or special meetings held by issuers of the underlying securities. Under the depositary trust agreement, any beneficial owner of Biotech HOLDRS, other than Merrill Lynch, Pierce, Fenner & Smith Incorporated owning Biotech HOLDRS for its own proprietary account as principal, will have the right to vote to dissolve and liquidate the trust. Distributions. You will be entitled to receive, net of the fees and expenses of the trustee charged to you to offset the costs of any such distributions, distributions of cash, including dividends, securities or property, if any, made with respect to the trust property. The trustee will use its reasonable efforts to ensure that it distributes these distributions as promptly as practicable after the date on which it receives the distribution. Therefore, you may receive your distributions substantially later than you would have had you held the underlying securities directly. Any distributions of securities by an issuer of underlying securities will be deposited into the trust and will become part of the Biotech HOLDRS unless such securities are not listed for trading on a U.S. national securities exchange or through the Nasdaq National Market System or such distributed securities have a different Standard & Poor's GICS sector classification than any of the underlying securities represented in the Biotech HOLDRS at the time of the distribution of such securities. In addition, if the issuer of underlying securities offers rights to acquire additional underlying securities or other securities, the rights will be distributed to you through the trustee, if practicable, and if the rights and the securities that those rights relate to are exempt from registration or are registered under the Securities Act of 1933. Otherwise, if practicable, the rights will be disposed of and the net proceeds distributed to you by the trustee. In all other cases, the rights will lapse. Pursuant to the amendment to the depositary trust agreement described above, if a round-lot of Biotech HOLDRS represents at any time any fraction of a share of a class of underlying securities, the trustee shall, to the extent lawful and practical, initiate the sale of the aggregate of those fractions through a registered broker-dealer in the primary market in which the underlying security trades and shall distribute the net proceeds (net of any accrued and unpaid custody fees and the expenses of the trustee incurred in such sale) to you in the same manner as you would receive a cash distribution with respect to the underlying securities. This amendment to the depositary trust agreement will become effective as of , 2003. We expect that the trustee will complete the process of selling all fractional shares currently represented in the Biotech HOLDRS within 30 days of , 2003. The amendment also requires that in the future the trustee aggregate and initiate the sale of fractional shares within five business days of the receipt of those fractional shares. You will be obligated to pay any tax or other charge that may become due with respect to Biotech HOLDRS or any of the trust property. The trustee may deduct the amount of any tax or other governmental charge from a distribution before making payment to you. In addition, the trustee will deduct its quarterly custody fee of $2.00 for each round-lot of 100 Biotech HOLDRS from quarterly dividends and other cash distributions, if any, distributed by the trust. With respect to the aggregate custody fee payable in any calendar year for each Biotech HOLDR, the trustee will waive that portion of the fee which exceeds the total cash dividends and other cash distributions the record date for which falls in such calendar year. Reconstitution events. The depositary trust agreement provides for the automatic distribution of underlying securities from the Biotech HOLDRS to you in the following four circumstances: A. If an issuer of underlying securities no longer has a class of securities registered under section 12 of the Securities Exchange Act of 1934, then its securities will no longer be an underlying security and the trustee will distribute the shares of that company to the owners of the Biotech HOLDRS. 24 B. If the SEC finds that an issuer of underlying securities should be registered as an investment company under the Investment Company Act of 1940, and the trustee has actual knowledge of the SEC finding, then the trustee will distribute the shares of that company to the owners of the Biotech HOLDRS. C. If the underlying securities of an issuer cease to be outstanding as a result of a merger, consolidation, corporate combination or other event, the trustee will distribute the consideration paid by and received from the acquiring company to the beneficial owners of Biotech HOLDRS only if the distributed securities have a different Standard & Poor's GICS sector classification than any of the underlying securities represented in the Biotech HOLDRS at the time of the distribution or exchange or if the securities received are not listed for trading on a U.S. national securities exchange or through the Nasdaq National Market System. In any other case, the additional securities received as consideration will be deposited into the trust. D. If an issuer's underlying securities are delisted from trading on a U.S. national securities exchange or through the Nasdaq National Market System and are not listed for trading on another U.S. national securities exchange or through the Nasdaq National Market System within five business days from the date such securities are delisted. To the extent a distribution of underlying securities is required as a result of a reconstitution event, the trustee will deliver the underlying security to you as promptly as practicable after the date that the trustee has knowledge of the occurrence of a reconstitution event. As provided in the depositary trust agreement, securities of a new company will be added to the Biotech HOLDRS, as a result of a distribution of securities by an underlying issuer or where an event occurs, such as a merger, where the securities of an underlying issuer are exchanged for the securities of another company, unless the securities received have a different Standard & Poor's GICS sector classification, than any of the underlying securities represented in the Biotech HOLDRS at the time of distribution or exchange or are not listed for trading on a U.S. national securities exchange or through the Nasdaq National Market System. This will also apply if Applera Corporation converts either Celera Genomics Group or Applied Biosystems Group tracking stock into another class of securities of Applera Corporation or one of its subsidiaries. For more information on the conversion rights of the Celera Genomics Group and the Applied Biosystems Group tracking stocks, please see Annex A. It is anticipated, as a result of the broadly defined GICS sectors, that most distributions or exchanges of securities will result in the inclusion of new securities in the Biotech HOLDRS. The trustee will review the Standard & Poor's GICS sector classifications of securities to determine whether securities received as a result of a distribution by an underlying issuer or as consideration for securities included in the Biotech HOLDRS will be distributed from the Biotech HOLDRS to you. Standard & Poor's sector classifications. Standard & Poor's Corporation is an independent source of market information that, among other things, maintains the Global Industry Classification Standard, which classifies the securities of public companies into various sector classifications based upon GICS sectors, which are derived from its own criteria. The GICS classification standards were exclusively effective on January 2, 2002. There are 10 Standard & Poor's GICS sectors and each class of publicly traded securities of a company are given only one GICS sector. The securities included in the Biotech HOLDRS are currently represented in the Healthcare GICS sector. The Standard & Poor's GICS sector classifications of the securities included in the Biotech HOLDRS may change over time if the companies that issued these securities change their focus of operations or if Standard & Poor's alters the criteria it uses to determine GICS sectors, or both. Record dates. With respect to dividend payments and voting instructions, the trustee expects to fix the trust's record dates as close as possible to the record date fixed by the issuer of the underlying securities. Shareholder communications. The trustee promptly will forward to you all shareholder communications that it receives from issuers of the underlying securities. Withdrawal of underlying securities. You may surrender your Biotech HOLDRS and receive the trust property during the trustee's normal business hours and upon the payment of applicable fees, taxes or governmental charges, if any. You should receive your underlying securities no later than the business day after the trustee receives your request. If you surrender Biotech HOLDRS in order to receive the trust property, you will pay to the trustee a cancellation fee of 25 up to $10.00 per round-lot of 100 Biotech HOLDRS. Upon surrender of your Biotech HOLDRS you will only receive whole shares of underlying securities and the trustee will deliver cash to you in lieu of any fractional interest in an underlying security represented in your Biotech HOLDRS at the time of surrender in the manner described under "--Issuance, trustee and surrender of Biotech HOLDRS." Further issuances of Biotech HOLDRS. The depositary trust agreement provides for further issuances of Biotech HOLDRS on a continuous basis without your consent. Termination of the trust. The trust will terminate if the trustee resigns and no successor trustee is appointed by Merrill Lynch, Pierce, Fenner & Smith Incorporated, as initial depositor, within 60 days from the date the trustee provides notice to the initial depositor of its intent to resign. Upon termination, the beneficial owners of Biotech HOLDRS will surrender their Biotech HOLDRS as provided in the depositary trust agreement, including payment of any fees of the trustee or applicable taxes or governmental charges due in connection with delivery to the owners of the underlying securities. The trust also will terminate if Biotech HOLDRS are delisted from the American Stock Exchange and are not listed for trading on another U.S. national securities exchange or through the Nasdaq National Market System within five business days from the date the Biotech HOLDRS are delisted. Finally, the trust will terminate if 75% of the owners of outstanding Biotech HOLDRS other than Merrill Lynch, Pierce, Fenner & Smith Incorporated vote to dissolve and liquidate the trust. If a termination event occurs, the trustee will distribute the underlying securities to you as promptly as practicable after the termination event occurs. Amendment of the depositary trust agreement. The trustee and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as initial depositor, may amend any provisions of the depositary trust agreement without the consent of any other depositor or any of the owners of the Biotech HOLDRS. Promptly after the execution of any amendment to the agreement, the trustee must furnish or cause to be furnished written notification of the substance of the amendment to each owner of Biotech HOLDRS. Any amendment that imposes or increases any fees or charges, subject to exceptions, or that otherwise prejudices any substantial existing right of the owners of Biotech HOLDRS will not become effective until 30 days after notice of the amendment is given to the owners of Biotech HOLDRS. Issuance and cancellation fees. If you wish to create Biotech HOLDRS by delivering to the trust the requisite underlying securities, the trustee will charge you an issuance fee of up to $10.00 for each round-lot of 100 Biotech HOLDRS. If you wish to cancel your Biotech HOLDRS and withdraw your underlying securities, the trustee will charge you a cancellation fee of up to $10.00 for each round-lot of 100 Biotech HOLDRS issued. The trustee may negotiate either of these fees depending on the volume, frequency and size of the issuance or cancellation transactions. Commissions. If you choose to create Biotech HOLDRS, you will be responsible for paying any sales commissions associated with your purchase of the underlying securities that are charged by your broker, whether it be Merrill Lynch, Pierce, Fenner & Smith Incorporated or another broker, in addition to the issuance fee described above. Custody fees. The Bank of New York, as trustee and as custodian, will charge you a quarterly custody fee of $2.00 for each round-lot of 100 Biotech HOLDRS to be deducted from any dividend payments or other cash distributions on underlying securities received by the trustee. With respect to the aggregate custody fee payable in any calendar year for each Biotech HOLDR, the Trustee will waive that portion of the fee which exceeds the total cash dividends and other cash distributions received, or to be received, and payable with respect to such calendar year. The trustee cannot recapture unpaid custody fees from prior years. Address of the trustee. The Bank of New York, ADR Department, 101 Barclay Street, New York, New York 10286. Governing law. The depositary trust agreement and the Biotech HOLDRS are governed by the laws of the State of New York. The trustee will provide the depositary trust agreement to any owner of the underlying securities free of charge upon written request. Duties and immunities of the trustee. The trustee assumes no responsibility or liability for, and makes no representations as to, the validity or sufficiency, or as to the accuracy of the recitals, if any, set forth in the Biotech HOLDRS. 26 The trustee has undertaken to perform only those duties as are specifically set forth in the depositary trust agreement. Subject to the preceding sentence, the trustee is liable for its own negligence or misconduct except for good faith errors in judgment so long as the trustee is not negligent in ascertaining the relevant facts. The trustee will use BNY Brokerage Inc., an affiliate of the trustee and a broker-dealer registered with the Commission pursuant to Section 15(a)(1) of the Securities Exchange Act of 1934 to execute any transactions in the underlying securities required by the depositary trust agreement. 27 UNITED STATES FEDERAL INCOME TAX CONSEQUENCES General The following is a summary of the U.S. federal income tax consequences relating to the Biotech HOLDRS for: o a citizen or resident of the United States; o a corporation or partnership created or organized in the United States or under the laws of the United States; o an estate, the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; o a trust, if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust (a "U.S. receipt holder"); and o any person other than a U.S. receipt holder (a "Non-U.S. receipt holder"). This summary is based upon laws, regulations, rulings and decisions currently in effect, all of which are subject to change, possibly on a retroactive basis. The discussion does not deal with all U.S. federal income tax consequences applicable to all categories of investors, some of which may be subject to special rules. In addition, this summary generally is limited to investors who will hold the Biotech HOLDRS as "capital assets" (generally, property held for investment) within the meaning of section 1221 of the Internal Revenue Code of 1986, as amended. Moreover, this summary does not address Biotech HOLDRS held by a foreign partnership or other foreign flow through entities. We recommend that you consult with your own tax advisor. Taxation of the trust The trust will provide for flow through tax consequences as it will be treated as a grantor trust or custodial arrangement for U.S. federal income tax purposes. Taxation of Biotech HOLDRS A receipt holder purchasing and owning Biotech HOLDRS will be treated, for U.S. federal income tax purposes, as directly owning a proportionate share of the underlying securities represented by Biotech HOLDRS. Consequently, if there is a taxable cash distribution on an underlying security, a holder will recognize income with respect to the distribution at the time the distribution is received by the trustee, not at the time that the holder receives the cash distribution from the trustee. A receipt holder will determine its initial tax basis in each of the underlying securities by allocating the purchase price for the Biotech HOLDRS among the underlying securities based on their relative fair market values at the time of purchase. Similarly, when a holder sells a receipt, it will determine the amount realized with respect to each security by allocating the sales price among the underlying securities based on their relative fair market values at the time of sale. A holder's gain or loss with respect to each security will be computed by subtracting its adjusted basis in the security from the amount realized on the security. With respect to purchases of Biotech HOLDRS for cash in the secondary market, a receipt holder's aggregate tax basis in each of the underlying securities will be equal to the purchase price of the Biotech HOLDRS. Similarly, with respect to sales of Biotech HOLDRS for cash in the secondary market, the amount realized with respect to a sale of Biotech HOLDRS will be equal to the aggregate amount realized with respect to each of the underlying securities. In the event that the trustee sells fractional shares of underlying securities represented by a round-lot of Biotech HOLDRS, holders will recognize any gain or loss realized on their pro-rata portion of such shares. The distribution of any securities by the trust upon the surrender of Biotech HOLDRS, the occurrence of a reconstitution event, or a termination event will not be a taxable event, except to the extent that cash is distributed in 28 lieu of fractional shares. The receipt holder's holding period with respect to the distributed securities will include the period that the holder held the securities through the trust. Brokerage fees and custodian fees The brokerage fee incurred in purchasing a receipt will be treated as part of the cost of the underlying securities. Accordingly, a holder includes this fee in its tax basis in the underlying securities. A holder will allocate the brokerage fee among the underlying securities using either a fair market value allocation or pro rata based on the number of shares of each underlying security. Similarly, the brokerage fee incurred in selling Biotech HOLDRS will reduce the amount realized with respect to the underlying securities. A holder will be required to include in its income the full amount of dividends paid on the underlying securities, even though the depositary trust agreement provides that the custodian fees will be deducted directly from any dividends paid. These custodian fees will be treated as an expense incurred in connection with a holder's investment in the underlying securities and may be deductible. If a holder is an individual, estate or trust, however, the deduction of its share of custodian fees will be a miscellaneous itemized deduction that may be disallowed in whole or in part. Special considerations with respect to underlying securities of foreign issuers With respect to underlying securities of foreign issuers, the gross amount of any taxable cash distribution will not be eligible for the dividends received deduction generally allowed to corporate U.S. receipt holders. If a foreign issuer pays a dividend in a currency other than in U.S. dollars, the amount of the dividend for U.S. federal income tax purposes will be the U.S. dollar value determined at the spot rate on the date of the payment regardless of whether the payment is later converted into U.S. dollars. In this case, the U.S. receipt holder may recognize ordinary income or loss as a result of currency fluctuations between the date on which the dividend is paid and the date the dividend amount is converted into U.S. dollars. Subject to certain conditions and limitations, any foreign tax withheld on dividends may be deducted from taxable income or credited against a U.S. receipt holder's U.S. federal income tax liability. The limitation on foreign taxes eligible for the U.S. foreign tax credit is calculated separately with respect to specific classes of income. For this purpose, dividends distributed by a foreign issuer generally will constitute passive income or, in the case of some U.S. holders, financial services income. For purposes of the U.S. foreign tax credit limitation, dividends received by a U.S. receipt holder with respect to an underlying security of a foreign issuer generally will be treated as foreign source income while any gain or loss recognized from the sale of such security generally will be treated as from sources within the United States. The rules relating to the determination of the foreign tax credit are complex and we recommend that U.S. receipt holders consult their own tax advisors to determine whether and to what extent a credit would be available. Dividends and distributions made by a foreign issuer may be subject to a withholding tax. Some foreign issuers have made arrangements through which holders of their American depositary shares can apply for a refund of withheld taxes. It is expected that holders of Biotech HOLDRS will be able to use these arrangements to apply for a refund of withheld taxes. Additionally, special U.S. federal income tax rules apply to U.S. persons owning shares of a "passive foreign investment company" (a "PFIC"). We do not believe that any of the foreign issuers of the underlying securities is currently a PFIC and do not anticipate that any issuer will become a PFIC in the future, although no assurances can be made that the applicable tax law or other relevant circumstances will not change in a manner which affects the PFIC determination. A foreign corporation generally will be classified as a PFIC for U.S. federal income tax purposes in any taxable year in which, after applying relevant look-through rules, either: o at least 75% of its gross income is "passive income"; or o on average at least 50% of the gross value of its assets is attributable to assets that produce "passive income" or are held for the production of passive income. Passive income for this purpose generally includes dividends, interest, royalties, rents, and gains from commodities and securities transactions. 29 If a corporation were classified as a PFIC, a U.S. receipt holder could be subject to increased tax liability, possibly including an interest charge, upon the sale or other disposition of the Biotech HOLDRS or of the underlying securities or upon the receipt of "excess distributions," unless the U.S. receipt holder elected to be taxed currently on its pro rata portion of the corporation's income, whether or not the income was distributed in the form of dividends or otherwise. Non-U.S. receipt holders A non-U.S. receipt holder generally will be subject to U.S. withholding tax at a rate of 30% or a lower rate as may be specified by an applicable tax treaty with respect to dividends received on underlying securities of U.S. issuers. However, if that income is effectively connected with a U.S. trade or business conducted by the holder or, where a tax treaty applies, it is attributable to a permanent establishment maintained in the United States by the holder, then those dividends will be exempt from withholding tax, provided the holder complies with applicable certification and disclosure requirements. A non-U.S. receipt holder generally will not be subject to U.S. federal income or withholding tax with respect to dividends received on underlying securities of foreign issuers, unless that income is effectively connected with a U.S. trade or business conducted by the holder or, where a tax treaty applies, is attributable to a permanent establishment maintained in the United States by the holder. With respect to dividends of both U.S. and foreign issuers, a non-U.S. receipt holder's dividends that are effectively connected with a U.S. trade or business or dividends attributable to a permanent establishment, net of relevant deductions and credits, will be subject to U.S. federal income taxation at the same graduated rates applicable to U.S. persons. In addition to this graduated tax, effectively connected dividends or dividends attributable to a permanent establishment received by a corporate non-U.S. receipt holder may also be subject to a branch profits tax at a rate of 30% or a lower rate as may be specified by an applicable tax treaty. Under some circumstances, a non- U.S. receipt holder whose dividends are so effectively connected or attributable shall be entitled to a dividends received deduction equal to 70% or 80% of the amount of the dividend. A non-U.S. receipt holder that is eligible for a reduced rate of withholding tax pursuant to a tax treaty may obtain a refund of any excess amounts withheld by filing an appropriate claim for refund with the Internal Revenue Service. A non-U.S. receipt holder generally will not be subject to U.S. federal income or withholding tax with respect to gain recognized upon the sale or other disposition of Biotech HOLDRS or of the underlying securities unless: o that gain is effectively connected with a U.S. trade or business conducted by the holder or, where a tax treaty applies, is attributable to a permanent establishment maintained in the United States by the holder, o in the case of any gain realized by an individual non-U.S. receipt holder, the holder is present in the United States for 183 days or more in the taxable year of the sale or other disposition and certain other conditions are met, or o the underlying securities issuer is or has been a U.S. real property holding corporation for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of the disposition or the period during which the non- U.S. receipt holder held the common stock of such issuer and (a) the common stock is not considered to be "regularly traded on an established securities market" or (b) the non-U.S. receipt holder owned, actually or constructively, at any time during the shorter of the periods described above, more than 5% of the common stock of such issuer. Effectively connected or attributable gains generally will be subject to U.S. federal income taxation at the same graduated rates applicable to U.S. persons, and may, in the case of a corporate non-U.S. receipt holder, also be subject to the branch profits tax. We recommend that non-U.S. receipt holders consult their own tax advisors to determine whether any applicable tax treaties provide for different rules. 30 Information returns will be filed with the Internal Revenue Service in connection with dividend payments made with respect to the underlying securities, or the proceeds of the sale or other disposition of the receipts (or the underlying securities). If you are a non-corporate U.S receipt holder, you will be subject to U.S. backup withholding tax at the applicable rate on these payments unless you provide your taxpayer identification number to the paying agent and comply with certain certification procedures. If you are a non-U.S. receipt holder, you may have to comply with certification procedures to establish that you are not a U.S. person in order to avoid the information reporting and backup withholding tax requirements. The amount of any backup withholding from a payment to you will be allowed as a credit against your U.S. federal income tax liability and may entitle you to a refund, provided that the required information is furnished to the Internal Revenue Service. The preceding discussion does not address all aspects of U.S. federal income taxation that may be relevant in light of a non-U.S. receipt holder's or an issuer's particular facts and circumstances. We recommend that investors consult their own tax advisors. ERISA CONSIDERATIONS Any plan fiduciary which proposes to have a plan acquire Biotech HOLDRS should consult with its counsel with respect to the potential applicability of ERISA and the Internal Revenue Code to this investment and whether any exemption would be applicable and determine on its own whether all conditions have been satisfied. Moreover, each plan fiduciary should determine whether, under the general fiduciary standards of investment prudence and diversification, an acquisition of Biotech HOLDRS is appropriate for the plan, taking into account the overall investment policy of the plan and the composition of the plan's investment portfolio. PLAN OF DISTRIBUTION In accordance with the depositary trust agreement, the trust issued Biotech HOLDRS to Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Merrill Lynch, Pierce, Fenner & Smith Incorporated has deposited the underlying securities to receive Biotech HOLDRS. The trust delivered the initial distribution of Biotech HOLDRS against deposit of the underlying securities in New York, New York on approximately November 26, 1999. Investors who purchase Biotech HOLDRS through a fee-based brokerage account will pay fees charged by the brokerage account. We recommend that investors review the terms of their brokerage accounts for details on applicable charges. Merrill Lynch, Pierce, Fenner & Smith Incorporated has from time to time provided investment banking and other financial services to certain of the issuers of the underlying securities and expects in the future to provide these services, for which it has received and will receive customary fees and commissions. Merrill Lynch, Pierce, Fenner & Smith Incorporated also may have served as counterparty in other transactions with certain of the issuers of the underlying securities. Merrill Lynch, Pierce, Fenner & Smith Incorporated has used, and may continue to use this prospectus, as updated from time to time, in connection with offers and sales related to market-making transactions in the Biotech HOLDRS. Merrill Lynch, Pierce, Fenner & Smith Incorporated may act as principal or agent in such transactions. Market-making sales will be made at prices related to prevailing market prices at the time of sale. Merrill Lynch, Pierce, Fenner & Smith Incorporated has agreed to indemnify the trustee against certain civil liabilities related to acts performed or not performed by the trustee in accordance with the depositary trust agreement or periodic reports filed or not filed with the SEC with respect to the Biotech HOLDRS. Should a court determine not to enforce the indemnification provision, Merrill Lynch, Pierce, Fenner & Smith Incorporated also has agreed to contribute to payments the trustee may be required to make with respect to such liabilities. LEGAL MATTERS Legal matters, including the validity of the Biotech HOLDRS, were passed upon for Merrill Lynch, Pierce, Fenner & Smith Incorporated, the initial depositor and the underwriter in connection with the initial offering of Biotech 31 HOLDRS, by Shearman & Sterling, New York, New York. Shearman & Sterling, as special U.S. tax counsel to the trust, also rendered an opinion regarding the material U.S. federal income tax consequences relating to the Biotech HOLDRS. WHERE YOU CAN FIND MORE INFORMATION Merrill Lynch, Pierce, Fenner & Smith Incorporated has filed a registration statement on Form S-1 with the SEC covering the Biotech HOLDRS. While this prospectus is a part of the registration statement, it does not contain all the exhibits filed as part of the registration statement. You should consider reviewing the full text of those exhibits. The registration statement is available over the Internet at the SEC's Web site at http://www.sec.gov. You also may read and copy the registration statement at the SEC's public reference rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for more information on the public reference rooms and their copy charges. Merrill Lynch, Pierce, Fenner & Smith Incorporated will not file any reports pursuant to the Securities Exchange Act of 1934. The trust will file modified reports pursuant to the Securities Exchange Act of 1934. Because the securities of the issuers of the underlying securities are registered under the Securities Exchange Act of 1934, the issuers of the underlying securities are required to file periodically financial and other information specified by the SEC. For more information about the issuers of the underlying securities, information provided to or filed with the SEC by the issuers of the underlying securities with respect to their registered securities can be inspected at the SEC's public reference facilities or accessed through the SEC's Web site referenced above. However, some of the issuers of the underlying securities are considered foreign issuers. The requirements for filing periodic financial and other information for foreign issuers differ from that of domestic issuers. In particular, foreign issuers are not required to file quarterly reports with the SEC and are not required to file periodic financial and other information on EDGAR. Therefore, this information may not be accessible through the SEC's Web site. Information regarding the issuers of the underlying securities may be obtained from other sources including, but not limited to, press releases, newspaper articles and other publicly disseminated information. The trust and Merrill Lynch, Pierce, Fenner & Smith Incorporated and its affiliates are not affiliated with the issuers of the underlying securities, and the issuers of the underlying securities have no obligations with respect to Biotech HOLDRS. This prospectus relates only to Biotech HOLDRS and does not relate to the other securities of the issuers of the underlying securities. The information in this prospectus regarding the issuers of the underlying securities has been derived from the publicly available documents described in the preceding paragraph. We have not participated in the preparation of these documents or made any due diligence inquiries with respect to the issuers of the underlying securities in connection with Biotech HOLDRS. We make no representation that these publicly available documents or any other publicly available information regarding the issuers of the underlying securities are accurate or complete. Furthermore, we cannot assure you that all events occurring prior to the date of this prospectus, including events that would affect the accuracy or completeness of the publicly available documents described in the preceding paragraph, that would affect the trading price of the securities of the issuers of the underlying securities, and therefore the offering and trading prices of the Biotech HOLDRS, have been publicly disclosed. 32 ANNEX A This annex forms an integral part of the prospectus. The following tables provide a brief description of the business of each of the issuers of the underlying securities and set forth the split-adjusted closing market prices, as reported on the applicable primary U.S. trading market, of each of the underlying securities in each month during 1999, 2000, 2001, 2002 and 2003. As a result of the conversion to decimal reporting of trading prices by the markets on which the underlying securities trade, all market prices beginning from January 2001 provided in the following tables are given in decimal form. All historical market prices provided in fractions in excess of one dollar are rounded to the nearest one sixty-fourth of a dollar. The primary foreign stock markets on which the securities of the foreign issuers included in the Biotech HOLDRS are listed are described below. An asterisk (*) denotes that no shares of the issuer were trading on a U.S. stock market during that month. The historical prices of the underlying securities should not be taken as an indication of future performance. AFFYMETRIX, INC. (AFFX) Affymetrix, Inc. develops, manufactures and sells DNA chip and related technologies that acquire, analyze, and manage genetic information for use in the life sciences. These technologies includes probe arrays, scanners, processing instruments and software. Affymetrix markets and sells its products to pharmaceutical, biotechnology, agrochemical, diagnostic and consumer products companies, academic research centers, government research laboratories, private foundations and reference laboratories.
Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price January 20 3/4 January 115 3/4 January 66.63 January 28.15 January 27.14 February 19 3/8 February 144 13/16 February 57.30 February 24.60 February 26.38 March 17 13/32 March 74 7/32 March 27.81 March 28.98 March 26.00 April 20 7/16 April 67 17/32 April 33.05 April 25.37 April 18.48 May 17 9/16 May 59 3/8 May 39.25 May 23.95 June 24 11/16 June 82 9/16 June 22.05 June 23.99 July 36 3/8 July 68 9/32 July 24.96 July 17.85 August 42 13/16 August 79 August 21.70 August 18.01 September 49 7/32 September 49 7/8 September 16.05 September 20.80 October 44 1/16 October 55 3/8 October 30.05 October 26.10 November 49 November 59 November 36.22 November 27.10 December 84 27/32 December 74 7/16 December 37.75 December 22.89
The closing price on May 6, 2003 was $20.16. A-1 ALKERMES, INC. (ALKS) Alkermes, Inc. is a pharmaceutical company that develops drug delivery technologies. Alkermes areas of focus include controlled, extended-release products. Alkermes products primarily aid delivery of injectable drugs and drugs entering through the lungs. Alkermes partners its proprietary delivery systems with other pharmaceutical companies, and also sells its products directly to its own customer base.
Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price January 15 9/16 January 33 5/32 January 26.50 January 26.81 January 7.68 February 14 1/32 February 95 15/16 February 31.00 February 24.97 February 7.94 March 13 5/8 March 46 1/4 March 21.94 March 26.06 March 9.07 April 13 3/8 April 26 5/8 April 30.64 April 20.14 April 9.96 May 12 3/8 May 36 5/8 May 30.27 May 19.44 June 11 9/16 June 47 1/8 June 35.10 June 16.01 July 13 1/16 July 33 1/8 July 28.50 July 4.56 August 18 9/16 August 46 1/4 August 25.60 August 8.21 September 14 13/32 September 38 5/8 September 19.58 September 7.88 October 17 21/32 October 37 1/16 October 25.65 October 9.22 November 21 1/4 November 29 7/8 November 24.38 November 8.91 December 24 9/16 December 31 3/8 December 26.36 December 6.27
The closing price on May 6, 2003 was $10.10. A-2 AMGEN INC. (AMGN) Amgen Inc. is a biotechnology company that discovers, develops, manufactures and markets human therapeutic products based on advanced cellular and molecular biology. Amgen focuses its research and development efforts on human therapeutics delivered in the form of proteins, monoclonal antibodies and small molecule therapeutics, with particular emphasis on discovering treatments for cancer as well as inflammation, nephrology, neurology and metabolism disorders. Amgen maintains a sales and marketing force in the United States, European Union, Canada, Australia and New Zealand to distribute to clinics, hospitals and pharmacies.
Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price January 31 61/64 January 63 11/16 January 70.31 January 55.50 January 50.96 February 31 7/32 February 68 3/16 February 72.06 February 57.98 February 54.64 March 37 7/16 March 61 3/8 March 60.19 March 59.68 March 57.55 April 30 23/32 April 56 April 61.14 April 52.88 April 61.30 May 31 5/8 May 63 5/8 May 66.38 May 47.63 June 30 7/16 June 70 1/4 June 60.68 June 41.88 July 38 7/16 July 64 15/16 July 62.71 July 45.64 August 41 19/32 August 75 13/16 August 64.30 August 45.03 September 40 3/4 September 69 53/64 September 58.77 September 41.70 October 39 7/8 October 57 15/16 October 56.82 October 46.56 November 45 9/16 November 63 5/8 November 66.43 November 47.20 December 60 1/16 December 63 15/16 December 56.44 December 48.34
The closing price on May 6, 2003 was $60.97. A-3 APPLERA CORPORATION-CELERA GENOMICS GROUP (CRA) Applera Corporation-Celera Genomics Group is engaged in basic and applied research and development programs designed to develop therapeutic products. Celera Genomics uses its proteomics, bioinformatics and genomics capabilities to identify and validate drug targets, diagnostic marker candidates and therapeutic candidates. Celera Genomics' online platform provides information based on the human genome and other biological and medical sources. Celera Genomics works with large pharmaceutical companies and internal resources to discover therapeutics for inflammatory diseases, including asthma, osteoporosis and rheumatoid arthritis. Celera Genomics also has programs focused on discovering therapeutics for the treatment of thrombosis and various types of cancer, including pancreatic and lung cancer. Celera Genomics is a business unit of Applera Corporation, a provider of technology and information solutions. Applera Corporation created the Celera Genomics Group tracking stock, which is intended to track the performance of the operations conducted by the Celera Genomics Group, and Applied Biosystems Group, which is intended to track the performance of Applera Corporation's operations involving the manufacturing or instrument systems and software for the pharmaceutical biotechnology and related industries. All of Applera Corporation's businesses are conducted through the operations represented by the Celera Genomics Group or the Applied Biosystems Group tracking stocks. Owning either stock does not represent a direct legal interest in the assets and liabilities of Celera Genomics Group or Applied Biosystems Group. Rather, stockholders remain invested in Applera Corporation. Some of the terms of Celera Genomics Group tracking stock include: Voting. Holders of Celera Genomics Group tracking stock do not have direct voting rights in Celera Genomics Group. The Celera Genomics Group tracking stock votes with the holders of the Applied Biosystems Group tracking stock. The number of votes attributed to each share of Celera Genomics Group tracking stock will be based on a ratio of the average trading prices of Celera Genomics Group tracking stock and Applied Biosystems tracking stock. Celera Genomics Group tracking stock and Applied Biosystems Group tracking stock are Applera Corporation's only outstanding voting stocks. Conversion. Applera Corporation may at any time convert each share of Celera Genomics Group tracking stock into Applied Biosystems tracking stock equal to 110% of the ratio of the market prices of Celera Genomics Group tracking stock to the Applied Biosystems tracking stock. Where specific tax events occur, a factor of 100% will be applied to the ratio of market prices. It may also, at any time, convert all the outstanding shares of Celera Genomics Group tracking stock into shares of the common stock of a wholly owned subsidiary of Applera Corporation that holds all of the assets of Celera Genomics Group. In addition, in many cases where Applera Corporation disposes of 80% or more of the assets attributed to Celera Genomics Group, based on asset value or revenue, Applera Corporation will be required to provide holders of Celera Genomics Group with compensation in the form of cash, securities or other property. This compensation may be by way of dividend, share redemption or conversion of Celera Genomics Group tracking stock into shares of Applied Biosystems Group tracking stock. The value of the compensation may be based on the fair value of the proceeds from the disposition or equal to 110% of the current trading price of Celera Genomics Group tracking stock. Where more than 80% of the assets attributed to the Celera Genomics Group are disposed, but not all of the assets, Applera Corporation may elect to redeem only that percentage of Celera Genomics Group tracking stock that has a market value equal to the proceeds received from the disposition of the assets of the Celera Genomics Group. Dividends. Applera Corporation is not required to pay dividends on the shares of Celera Genomics Group. Any dividends that are declared would be limited to an amount that is equivalent to what would legally be available for dividends if the Celera Genomics Group were a stand-alone corporation. In addition, Applera Corporation may at any time declare and pay dividends exclusively on Celera Genomics Group tracking stock, exclusively on Applied Biosystems Group tracking stock, or both in equal or unequal amounts, notwithstanding the relative amounts available for dividends with respect to either tracking stock. Dissolution. In the event of a dissolution of Applera Corporation, the holders of Celera Genomics Group tracking stock do not have a preferential right to the assets of Applera Corporation's genomics information and A-4 related software operations. Holders of Celera Genomics Group tracking stock and Applied Biosystems tracking stock will share in any assets of Applera Corporation remaining for distribution to common shareholders in proportion to the aggregate market capitalization of the outstanding shares of each class of stock. The historical stock prices listed below reflect the performance of Applera Corporation-Celera Genomics Group tracking stock.
Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price January * January 100 7/16 January 49.00 January 20.90 January 9.28 February * February 244 February 43.50 February 20.20 February 8.25 March * March 92 1/8 March 30.85 March 20.55 March 8.62 April 13 1/2 April 82 1/4 April 41.25 April 15.64 April 10.50 May 8 1/2 May 55 5/8 May 43.31 May 14.45 June 8 3/32 June 93 June 39.66 June 12.00 July 13 3/16 July 86 5/8 July 30.63 July 10.53 August 14 3/8 August 108 August 26.55 August 9.45 September 20 1/8 September 99 5/8 September 24.10 September 7.95 October 19 9/16 October 67 1/2 October 23.50 October 8.24 November 30 5/8 November 41 5/8 November 28.75 November 11.27 December 74 1/2 December 36 1/8 December 26.69 December 9.55
The closing price on May 6, 2003 was $10.67. APPLERA CORPORATION-APPLIED BIOSYSTEMS GROUP (ABI) Applera Corporation-Applied Biosystems Group principally develops, manufactures, supports and markets instrument systems reagents and software used in applications including synthesis, amplification, purification, isolation, analysis, and sequencing of nucleic acids, proteins, and other biological molecules. The markets for Applied Biosystems Group's products include human disease research, genetic analysis, pharmaceutical drug discovery, development and manufacturing, human identification, agriculture, and food and environmental testing. Universities, government agencies and other non-profit organizations engaged in research activities also use Applied Biosystems Group products. Applera Corporation created the Applied Biosystems Group tracking stock, which is intended to track the performance of the operations conducted by the Applied Biosystems Group, and Celera Genomics Group, which is intended to specifically track Applera Corporation's operations involving the development and marketing of genomics information and related software and the development of technology that regulates and controls gene expression and analyzes the interrelationships between genetic variability, disease and drug response. All of Applera Corporation's businesses are conducted through the operations represented by the Celera Genomics Group or the Applied Biosystems Group tracking stocks. Owning either stock does not represent a direct legal interest in the assets and liabilities of Applied Biosystems Group or the Celera Genomics Group. Rather, stockholders remain invested in Applera Corporation. Some of the terms of Applied Biosystems Group tracking stock include: Voting. Holders of the Applied Biosystems Group tracking stock do not have direct voting rights in the Applied Biosystems Group. The Applied Biosystems Group tracking stock votes with the holders of the Celera Genomics Group tracking stock. The number of votes attributed to each share of the Applied Biosystems tracking stock is equal to one vote. Celera Genomics Group tracking stock and Applied Biosystems Group tracking stock are PE Corporation's only outstanding voting stocks. Conversion. Applera Corporation may at any time convert each share of Applied Biosystems Group tracking stock into Celera Genomics Group tracking stock equal to 110% of the ratio of the market prices of Applied Biosystems Group tracking stock to Celera Genomics Group tracking stock. Where specific tax events occur, a factor of 100% will be applied to the ratio of the market prices. It may also, at any time, convert all the outstanding shares of Applied Biosystems Group tracking stock into shares of the common stock of a wholly owned subsidiary of Applera Corporation that holds all of the assets of Applied Biosystems Group. In addition, in many cases where A-5 Applera Corporation disposes of 80%, or more of the assets attributed to the Applied Biosystems Group, based on asset value or revenue, Applera Corporation will be required to provide holders of Applied Biosystems Group with compensation in the form of cash, securities or other property. This compensation may be by way of dividend, share redemption or conversion of Applied Biosystems Group tracking stock into shares of Celera Genomics Group tracking stock. The value of the compensation may be based on the fair value of the proceeds from the disposition or equal to 110% of the current trading price of Applied Biosystems Group tracking stock. Where more than 80% of the assets attributed to the Applied Biosystems Group are disposed, but not all of the assets, Applera Corporation may elect to redeem only that percentage of Applied Biosystems Group tracking stock that has a market value equal to the proceeds received from the disposition of the assets of Applied Biosystems Group. Dividends. Applera Corporation is not required to pay dividends on the shares of Applied Biosystems Group. Any dividends that are declared would be limited to an amount that is equivalent to what would legally be available for dividends if the Applied Biosystems Group were a stand-alone corporation. In addition, PE Corporation may at any time declare and pay dividends exclusively on Celera Genomics Group tracking stock, exclusively on Applied Biosystems Group tracking stock, or both in unequal amounts, notwithstanding the relative amounts available for dividends with respect to either tracking stock. Dissolution. In the event of a dissolution of Applera Corporation, the holders of Applied Biosystems Group tracking stock do not have a preferential right to the assets of Applera Corporation's instrument systems and related software operations. Holders of Applied Biosystems Group tracking stock and Celera Genomics Group tracking stock will share in any assets of Applera Corporation remaining for distribution to common shareholders in proportion to the aggregate market capitalization of the outstanding shares of each class of stock. The historical stock prices listed below reflect the performance of Applera Corporation-Applied Biosystems Group tracking stock.
Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price January 23 49/64 January 74 7/8 January 84.00 January 22.33 January 17.55 February 23 11/16 February 105 February 69.10 February 22.60 February 18.35 March 24 17/64 March 96 1/2 March 27.75 March 22.35 March 15.83 April 27 1/32 April 60 April 32.06 April 17.12 April 17.53 May 27 59/64 May 55 1/2 May 30.76 May 18.20 June 28 11/16 June 66 June 26.75 June 19.49 July 28 1/32 July 87 3/16 July 28.20 July 18.66 August 34 13/32 August 98 25/64 August 25.01 August 19.81 September 36 1/8 September 116 33/64 September 24.40 September 18.30 October 32 7/16 October 117 October 29.18 October 20.23 November 40 13/16 November 82 5/8 November 33.10 November 21.86 December 60 5/32 December 94 1/16 December 39.27 December 17.54
The closing price on May 6, 2003 was $17.91. A-6 BIOGEN, INC. (BGEN) Biogen, Inc. is a pharmaceutical company that develops, manufactures and markets drugs for human healthcare. Biogen products are used for the treatment of multiple sclerosis. Biogen also licenses a number of other products covered by patents controlled by Biogen. Biogen has applied for the regulatory approval of a new product for the treatment of psoriasis. Biogen also devotes significant resources to other ongoing development efforts.
Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price January 49 1/8 January 86 1/4 January 64.50 January 54.22 January 38.25 February 48 1/16 February 107 15/16 February 71.56 February 53.15 February 35.54 March 57 5/32 March 69 7/8 March 63.31 March 49.06 March 29.96 April 47 17/32 April 58 13/16 April 64.66 April 43.47 April 38.00 May 54 9/16 May 54 1/2 May 60.31 May 49.88 June 64 5/16 June 64 1/2 June 54.36 June 41.43 July 68 13/16 July 53 July 56.69 July 35.97 August 76 3/4 August 69 1/8 August 60.36 August 33.50 September 78 13/16 September 61 September 55.58 September 29.27 October 74 1/8 October 60 3/16 October 55.00 October 36.69 November 73 1/16 November 54 3/4 November 58.91 November 44.26 December 84 1/2 December 60 1/16 December 57.35 December 40.06
The closing price on May 6, 2003 was $39.58. CHIRON CORPORATION (CHIR) Chiron Corporation is a pharmaceutical company that develops biopharmaceuticals, vaccines and blood testing products for the prevention and treatment of cancer and infectious diseases. Chiron's products include treatments for carcinoma, melanoma and multiple sclerosis; vaccines for, among other things, diphtheria, tetanus, flu and measles; and tests used for screening and testing blood in blood banks. Chiron also focuses on development of products for hepatitis, HIV and infectious diseases.
Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price January 22 3/4 January 44 3/8 January 41.94 January 42.37 January 37.52 February 21 1/16 February 50 February 46.81 February 43.42 February 36.52 March 21 15/16 March 49 7/8 March 43.88 March 45.89 March 37.50 April 20 1/8 April 45 1/4 April 48.01 April 40.47 April 40.83 May 21 1/8 May 37 15/16 May 51.57 May 36.20 June 20 3/4 June 47 1/2 June 51.00 June 35.35 July 25 1/16 July 41 7/8 July 42.90 July 33.74 August 32 1/8 August 54 1/16 August 46.62 August 37.89 September 27 11/16 September 45 September 44.37 September 34.94 October 28 9/16 October 43 5/16 October 53.82 October 39.50 November 32 13/16 November 40 7/8 November 43.40 November 40.20 December 42 3/8 December 44 1/2 December 43.84 December 37.60
The closing price on May 6, 2003 was $42.39. A-7 ENZON PHARMACEUTICALS, INC. (ENZN) Enzon Pharmaceuticals, Inc., formerly known as Enzon, Inc., is a biopharmaceutical company that develops, manufactures and markets enhanced therapeutics for life-threatening diseases. Enzon's technologies are designed to improve the delivery, safety and effectiveness of proteins and small molecules, and to discover and produce antibody-like molecules which offer therapeutic benefits. Enzon's technologies are used in products to treat an enzyme deficiency disease, leukemia, and hepatitis C.
Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price January 14 3/8 January 50 9/16 January 62.75 January 52.68 January 17.49 February 13 7/8 February 58 February 63.56 February 43.90 February 12.55 March 14 3/4 March 37 11/16 March 47.50 March 44.29 March 11.35 April 13 April 37 1/4 April 59.62 April 37.24 April 13.74 May 14 3/8 May 29 1/4 May 70.00 May 28.17 June 20 11/16 June 42 1/2 June 62.50 June 25.12 July 24 1/8 July 44 3/4 July 64.25 July 22.60 August 33 3/4 August 60 7/8 August 63.84 August 22.00 September 30 1/2 September 66 September 51.00 September 19.24 October 29 5/16 October 71 1/4 October 61.85 October 19.40 November 33 3/4 November 55 13/16 November 58.61 November 18.48 December 43 3/8 December 62 1/16 December 56.28 December 16.72
The closing price on May 6, 2003 was $14.91. GENENTECH, INC. (DNA) Genentech, Inc. is a biotechnology company that uses human genetic information to discover, develop, manufacture and market pharmaceuticals. Genentech focuses on pharmaceuticals for cardiovascular disorders and oncology treatments. Genetech's products are used for, among other things, the treatment of certain forms of breast cancer, lymphoma, heart attacks and growth hormone deficiency. Genentech markets biotechnology products on its own and through licensing agreements.
Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price January * January 69 11/16 January 59.25 January 49.45 January 36.74 February * February 96 7/16 February 52.50 February 47.20 February 35.36 March * March 76 March 50.50 March 50.45 March 35.01 April * April 60 April 52.50 April 35.50 April 37.99 May * May 53 11/16 May 50.50 May 35.50 June * June 86 June 55.10 June 33.50 July 35 1/2 July 76 1/16 July 42.30 July 34.75 August 41 1/16 August 95 1/4 August 45.90 August 32.79 September 36 37/64 September 92 27/32 September 44.00 September 32.63 October 36 7/16 October 82 1/2 October 52.25 October 34.09 November 42 15/16 November 68 1/16 November 57.45 November 33.00 December 67 1/4 December 81 1/2 December 54.25 December 33.16
The closing price on May 6, 2003 was $37.72. GENZYME CORPORATION (GENZ) Genzyme Corporation us a biotechnology and healthcare company that develops and markets diagnostic and therapeutic products and services with a focus on genetic disorders and chronic debilitating diseases. Genzyme also develops and markets biological products and devices for the treatment of cancer, cartilage damage and severe burns. Genzyme markets many of its products directly to physicians, hospitals and treatment centers around the world through its own sales force.
Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price January 27 1/4 January 26 January 43.28 January 45.61 January 32.29 February 22 1/2 February 28 23/32 February 43.97 February 44.38 February 31.18 March 25 7/32 March 25 1/16 March 45.17 March 43.67 March 36.45 April 18 7/8 April 24 13/32 April 54.48 April 40.94 April 40.27 May 20 9/32 May 28 13/32 May 53.47 May 32.03 June 24 1/4 June 29 23/32 June 61.00 June 19.24 July 28 9/32 July 34 23/32 July 56.00 July 22.78 August 28 7/32 August 37 17/32 August 56.64 August 20.68 September 22 17/32 September 34 3/32 September 45.42 September 20.61 October 19 1/8 October 35 1/2 October 53.95 October 27.85 November 18 November 43 29/32 November 54.62 November 32.80 December 22 1/2 December 44 31/32 December 59.86 December 29.57
The closing price on May 6, 2003 was $40.18. - ------------------------------------------------------------------------------- GILEAD SCIENCES, INC. (GILD) Gilead Sciences, Inc. is a biopharmaceutical company that develops and markets drugs to treat infectious diseases, including viral diseases such as AIDS, influenza, bacterial diseases and cancer. Gilead also develops drug delivery technologies designed to make drugs easier for patients to tolerate and increase effectiveness.
Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price January 10 3/4 January 11 45/64 January 16.92 January 32.71 January 34.90 February 10 5/16 February 19 1/8 February 18.69 February 35.23 February 34.00 March 11 3/8 March 15 27/32 March 16.25 March 35.99 March 41.99 April 11 33/64 April 13 35/64 April 24.49 April 31.12 April 46.14 May 10 29/32 May 13 43/64 May 25.88 May 35.66 June 13 1/16 June 17 21/32 June 29.09 June 32.88 July 19 3/8 July 18 17/32 July 25.65 July 30.47 August 19 31/64 August 27 August 30.35 August 32.08 September 16 3/64 September 27 27/64 September 28.08 September 33.53 October 15 15/64 October 21 1/2 October 31.45 October 34.74 November 12 November 20 23/64 November 36.10 November 39.42 December 13 17/32 December 20 47/64 December 32.86 December 34.00
The closing price on May 6, 2003 was $45.59. A-9 HUMAN GENOME SCIENCES, INC. (HGSI) Human Genome Sciences, Inc. researches and develops therapeutic products based on the identification and discovery of the medical utility of genes. Human Genome Sciences researches and develops recombinant therapeutic proteins, which are proteins that can be produced on a large scale, fusion proteins, peptides and antibodies which can be used as drugs to treat diseases. Using gene sequencing technology, Human Genome Sciences also generates a collection of partial human gene sequences in database format.
Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price January 8 11/32 January 49 January 61.00 January 28.13 January 7.04 February 7 15/32 February 109 1/8 February 54.94 February 20.52 February 6.79 March 8 43/64 March 41 17/32 March 46.00 March 21.79 March 8.55 April 9 1/4 April 38 9/32 April 64.23 April 15.74 April 11.67 May 10 9/16 May 43 7/8 May 66.35 May 17.25 June 9 7/8 June 66 11/16 June 60.25 June 13.40 July 13 1/64 July 60 13/32 July 50.78 July 17.33 August 17 1/64 August 83 15/32 August 44.88 August 15.06 September 18 7/16 September 86 9/16 September 30.91 September 12.06 October 21 27/32 October 88 25/64 October 42.63 October 9.77 November 28 November 62 3/16 November 42.51 November 10.66 December 38 5/32 December 69 5/16 December 33.72 December 8.81
The closing price on May 6, 2003 was $12.11. ICOS CORPORATION (ICOS) ICOS Corporation develops protein-based and small molecule therapeutics for the treatment of various sexual dysfunctions, cardiovascular disease, inflammatory diseases and cancer. ICOS develops and markets several of its products through collaborations with other pharmaceutical and biotechnology companies.
Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price January 26 3/4 January 34 7/16 January 51.13 January 42.80 January 24.55 February 24 1/2 February 52 3/8 February 54.13 February 42.90 February 19.95 March 33 3/4 March 36 1/8 March 47.50 March 45.99 March 18.71 April 39 3/4 April 40 1/4 April 57.61 April 25.76 April 26.74 May 43 13/16 May 35 May 62.35 May 22.51 June 40 13/16 June 44 June 64.00 June 16.96 July 37 3/8 July 45 5/8 July 61.35 July 24.45 August 31 13/16 August 58 11/16 August 58.30 August 24.28 September 29 1/2 September 54 1/8 September 49.21 September 20.97 October 28 11/16 October 51 3/8 October 57.75 October 24.71 November 31 13/16 November 38 15/16 November 60.50 November 31.83 December 29 1/4 December 51 15/16 December 57.44 December 23.41
The closing price on May 6, 2003 was $25.55. A-10 IDEC PHARMACEUTICALS CORPORATION (IDPH) IDEC Pharmaceuticals Corporation is a biopharmaceutical company engaged primarily in research, development and marketing of therapies for the treatment of cancer and autoimmune and inflammatory diseases. IDEC's main products are used to treat non-Hodgkin's lymphomas, which is a type of cancer of the lymphatic system. IDEC is also developing products for the treatment of various autoimmune diseases characterized by overactive immune functions.
Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price January 8 27/64 January 42 1/16 January 58.81 January 59.46 January 32.08 February 7 7/32 February 46 61/64 February 56.38 February 62.82 February 28.75 March 8 9/16 March 32 3/4 March 40.00 March 64.30 March 34.22 April 8 29/64 April 21 21/64 April 49.20 April 54.95 April 32.75 May 8 13/32 May 21 17/64 May 61.60 May 42.89 June 12 27/32 June 39 7/64 June 67.69 June 35.45 July 16 33/64 July 40 15/16 July 53.98 July 44.59 August 21 11/64 August 46 35/64 August 59.27 August 40.18 September 15 43/64 September 58 29/64 September 49.57 September 41.52 October 19 23/64 October 65 3/8 October 59.98 October 46.02 November 21 1/8 November 58 1/64 November 70.30 November 32.81 December 32 3/4 December 63 3/16 December 68.93 December 33.17
The closing price on May 6, 2003 was $32.55. MEDIMMUNE, INC. (MEDI) MedImmune, Inc. is a biotechnology company that focuses on using advances in immunology and other biological sciences to develop products to treat infectious diseases and immune regulations. MedImmune also focuses on oncology products through its wholly-owned subsidiary, MedImmune Oncology, Inc. MedImmune's products include an antibody used to treat pediatric infectious diseases, such as certain viruses, and products to treat immune system disorders and cancer.
Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price January 16 1/2 January 48 43/64 January 39.75 January 42.37 January 29.79 February 18 21/64 February 66 11/64 February 43.69 February 41.23 February 30.01 March 19 47/64 March 58 3/64 March 35.88 March 39.33 March 32.83 April 18 3/8 April 53 5/16 April 39.15 April 33.40 April 35.45 May 21 13/64 May 51 51/64 May 39.87 May 32.52 June 22 37/64 June 74 June 47.20 June 26.40 July 26 5/8 July 59 1/2 July 38.52 July 29.74 August 34 25/64 August 84 1/8 August 40.15 August 25.67 September 33 7/32 September 77 1/4 September 35.63 September 20.92 October 37 21/64 October 65 3/8 October 39.24 October 25.55 November 40 1/16 November 53 3/16 November 44.10 November 26.38 December 55 19/64 December 47 11/16 December 46.35 December 27.17
The closing price on May 6, 2003 was $35.38. A-11 MILLENNIUM PHARMACEUTICALS, INC. (MLNM) Millennium Pharmaceuticals, Inc. is a biopharmaceutical company that uses genetics and genomics to identify the genes responsible for common, major diseases and to determine the gene's role in disease initiation and progression. Millenium uses this research to create a technology platform designed for drug discovery and development. Millenium's products include a cardiovascular product for the treatment of acute coronary syndromes and a monoclonal antibody for the treatment of leukemia.
Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price January 9 1/2 January 46 55/64 January 50.13 January 19.01 January 7.40 February 7 49/64 February 65 1/32 February 33.75 February 18.78 February 7.16 March 7 13/16 March 32 15/32 March 30.46 March 22.31 March 7.86 April 9 19/64 April 39 11/16 April 36.68 April 19.96 April 11.00 May 9 15/32 May 41 13/16 May 38.17 May 15.09 June 9 June 55 15/16 June 35.58 June 12.15 July 15 5/8 July 48 1/8 July 31.28 July 12.42 August 14 47/64 August 71 9/16 August 27.50 August 12.26 September 16 1/4 September 73 1/32 September 17.76 September 9.32 October 17 17/32 October 72 9/16 October 25.46 October 7.44 November 24 11/32 November 48 9/16 November 34.09 November 10.01 December 30 1/2 December 61 7/8 December 24.51 December 7.94
The closing price on May 6, 2003 was $12.00. QLT INC. (QLTI) QLT Inc. is a pharmaceutical company that develops and markets products for use in photodynamic therapy, which is a field of medicine that uses light-activated drugs in the treatment of disease. QLT has developed treatments for various cancers, eye diseases and immune disorders. QLT also conducts research in the areas of immune and cardiovascular disorders. Shares of QLT also trade on the Toronto Stock Exchange.
Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price January 20 5/32 January 69 1/16 January 26.88 January 21.29 January 8.08 February 19 1/2 February 71 3/8 February 29.19 February 17.78 February 9.09 March 20 3/8 March 55 1/4 March 20.25 March 17.05 March 10.16 April 22 27/32 April 55 9/16 April 26.78 April 13.67 April 11.61 May 21 7/8 May 48 15/16 May 21.20 May 12.57 June 27 1/2 June 77 5/16 June 19.58 June 13.35 July 32 July 65 7/8 July 21.08 July 9.46 August 40 15/16 August 74 1/16 August 19.44 August 8.33 September 38 7/32 September 70 7/8 September 15.43 September 7.69 October 42 3/8 October 49 47/64 October 22.94 October 8.20 November 44 5/8 November 43 15/16 November 21.42 November 9.94 December 58 3/4 December 28 December 25.41 December 8.53
The closing price on May 6, 2003 was $12.06. A-12 SEPRACOR INC. (SEPR) Sepracor Inc. is research-based pharmaceutical company that focuses on the development and marketing of versions of existing drugs that are designed to be safer, purer and more effective. Sepracor selects for genetic re-engineering drugs that have the potential for increased efficacy, reduced side effects, or both. Sepracor concentrates its development efforts on drugs for respiratory, urological, gastroenterolgy and central nervous system diseases.
Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price January 57 3/8 January 70 January 66.00 January 49.36 January 11.27 February 62 3/8 February 101 3/8 February 51.94 February 43.02 February 12.36 March 56 1/8 March 72 13/16 March 32.00 March 19.40 March 13.54 April 42 1/4 April 92 April 26.36 April 12.66 April 19.09 May 31 7/8 May 95 5/8 May 33.32 May 11.71 June 40 5/8 June 120 5/8 June 39.80 June 9.55 July 36 3/4 July 105 3/4 July 44.06 July 6.75 August 37 7/16 August 110 August 42.70 August 5.57 September 37 3/4 September 122 11/16 September 35.90 September 5.24 October 41 19/32 October 68 1/8 October 47.44 October 8.70 November 48 9/16 November 73 1/16 November 49.90 November 9.56 December 49 19/32 December 80 1/8 December 57.06 December 9.67
The closing price on May 6, 2003 was $19.17. SHIRE PHARMACEUTICALS GROUP P.L.C. (SHPGY) Shire Pharmaceuticals Group p.l.c. is a pharmaceutical company that focuses on central nervous system disorders, oncology and anti-infectives. Shire Pharmaceuticals' products include treatments for Attention Deficit Hyperactivity Disorder, epilepsy, Alzheimer's disease, infectious diseases, breast cancer, prostate cancer, osteoporosis, blood disorders, and ulcerative colitis. Shire Pharmaceuticals has direct marketing capability in the United States, Canada, the United Kingdom, the Republic of Ireland, France, Germany, Italy and Spain. American depositary receipts evidencing American depositary shares of Shire Pharmaceuticals shares are included in the Biotech HOLDRS and are traded through the Nasdaq National Market System. Shares of Shire Pharmaceuticals also trade on the London Stock Exchange.
Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price January 21 1/8 January 40 11/16 January 56.69 January 34.90 January 16.93 February 20 1/2 February 48 February 53.44 February 23.78 February 15.72 March 22 13/16 March 51 1/4 March 43.75 March 23.47 March 18.53 April 21 5/8 April 40 1/4 April 49.90 April 22.20 April 19.95 May 23 3/4 May 43 5/8 May 49.59 May 27.39 June 26 June 51 7/8 June 55.50 June 25.81 July 25 3/8 July 54 3/4 July 50.14 July 25.50 August 25 August 56 1/2 August 43.42 August 29.19 September 28 13/16 September 51 5/8 September 40.30 September 24.77 October 31 3/4 October 62 7/8 October 44.70 October 23.36 November 30 11/16 November 45 5/8 November 35.90 November 20.68 December 29 1/8 December 46 1/16 December 36.60 December 18.89
The closing price on May 6, 2003 was $22.05. A-13 ================================================================================ [LOGO] 1,000,000,000 Depositary Receipts Biotech HOLDRS SM Trust ____________________ P R O S P E C T U S ____________________ ================================================================================ PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Indemnification of Directors and Officers. Section 145 of the General Corporation Law of the State of Delaware, as amended, provides that under certain circumstances a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was a director, officer, employee or agent of the corporation or is or was serving at its request in such capacity in another corporation or business association, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful. Article XIV, Section 2 of the Restated Certificate of Incorporation of Merrill Lynch, Pierce, Fenner & Smith Incorporated provides in effect that, subject to certain limited exceptions, Merrill Lynch, Pierce, Fenner & Smith Incorporated shall indemnify its directors and officers to the full extent authorized or permitted by law. The directors and officers of Merrill Lynch, Pierce, Fenner & Smith Incorporated are insured under policies of insurance maintained by Merrill Lynch, Pierce, Fenner & Smith Incorporated, subject to the limits of the policies, against certain losses arising from any claim made against them by reason of being or having been such directors or officers. In addition, Merrill Lynch, Pierce, Fenner & Smith Incorporated has entered into contracts with all of its directors providing for indemnification of such persons by Merrill Lynch, Pierce, Fenner & Smith Incorporated to the full extent authorized or permitted by law, subject to certain limited exceptions. Item 16. Exhibits. See Exhibit Index. Item 17. Undertakings. The undersigned Registrant hereby undertakes: A. 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 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 the 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. ii-1 (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. B. 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. C. 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. D. For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed to be part of this registration statement as of the time it was declared effective. E. For purposes of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus 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. F. 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 Item 15 of this registration statement, 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 Act 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. II-2 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant hereby certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and has duly caused this Post-Effective Amendment No. 4 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, on May 7, 2003. MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By: * ----------------------------------- Name: John J. Fosina Title: Chief Financial Officer Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment No. 4 to the Registration Statement has been signed by the following persons in the capacities indicated on May 7, 2003. Signature Title --------- ----- Co-Chief Executive Officer, * Co-Chairman of the Board and Director - ------------------------------- James P. Gorman Co-Chief Executive Officer, * Co-Chairman of the Board and Director - ------------------------------- Arshad R. Zakaria * Director - ------------------------------- Carlos M. Morales * Director - ------------------------------- Thomas H. Patrick * Chief Financial Officer - ------------------------------- John J. Fosina * Controller - ------------------------------- Dominic A. Carone *By: /s/ Mitchell M. Cox Attorney-in-Fact ------------------------ Mitchell M. Cox II-3 INDEX TO EXHIBITS Exhibits *4.1 Standard Terms for Depositary Trust Agreements between Merrill Lynch, Pierce, Fenner & Smith Incorporated and The Bank of New York, as Trustee dated as of September 2, 1999, and included as exhibits thereto, form of Depositary Trust Agreement and form of HOLDRS, filed on October 28, 1999 as an exhibit to amendment no. 1 to the registration statement on Form S-1 for Biotech HOLDRS. *4.2 Form of Amendment No. 2 to the Standard Terms for Depositary Trust Agreements, dated as of November 22, 2000, filed on November 28, 2000 as an exhibit to post-effective amendment no. 1 to the registration statement on Form S-1 for Biotech HOLDRS. 4.3 Form of Amended and Restated Standard Terms for Depositary Trust Agreements, dated as of , 2003 between Merrill Lynch, Pierce, Fenner & Smith Incorporated and The Bank of New York. *5.1 Opinion of Shearman & Sterling regarding the validity of the Biotech HOLDRS, filed on October 28, 1999 as an exhibit to amendment no. 1 to the registration statement on Form S-1 for Biotech HOLDRS. *8.1 Opinion of Shearman & Sterling, as special U.S. tax counsel regarding the material federal income tax consequences, filed on October 28, 1999 as an exhibit to amendment no. 1 to the registration statement on Form S-1 for Biotech HOLDRS. *24.1 Power of Attorney (included in Part II of Registration Statement), filed on October 20, 1999 as an exhibit to the registration statement filed on Form S-1 for Biotech HOLDRS. *24.2 Power of Attorney of Dominic Carone, filed on November 28, 2000 as an exhibit to post-effective amendment no. 1 to the registration statement on Form S-1 for Biotech HOLDRS. *24.3 Power of Attorney of John J. Fosina, E. Stanley O'Neal, George A. Schieren, Thomas H. Patrick and Dominic A. Carone. 24.4 Power of Attorney of James P. Gorman, Arshad R. Zakaria and Carlos M. Morales. - ---------------------- * Previously filed. EX-4.3 3 ex4-3_042403.txt AMENDED AND RESTATED STANDARD TERMS AMENDED AND RESTATED STANDARD TERMS FOR DEPOSITARY TRUST AGREEMENTS between MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED and THE BANK OF NEW YORK, as Trustee Dated as of __________, 2003 TABLE OF CONTENTS Page ARTICLE 1 DEFINITIONS AND ASSUMPTIONS.........................................2 Section 1.1. Definitions...................................................2 Section 1.2. Rules of Construction.........................................6 ARTICLE 2 FORM OF RECEIPTS, DEPOSIT OF SECURITIES, DELIVERY, REGISTRATION OF TRANSFER AND SURRENDER OF RECEIPTS............................................................7 Section 2.1. Depositary Trust Agreements...................................7 Section 2.2. Creation and Declaration of Trusts; Deposit of Securities.....7 Section 2.3. Acceptance by Trustee.........................................8 Section 2.4. Form and Transferability of Receipts..........................9 Section 2.5. Delivery of Receipts.........................................11 Section 2.6. Registration; Registration of Transfer; Combination and Split-up of Certificates.....................................11 Section 2.7. Surrender of Receipts and Withdrawal of Trust Property.......12 Section 2.8. Limitations on Delivery, Registration of Transfer and Surrender of Receipts........................................13 Section 2.9. Lost Certificates, Etc.......................................14 Section 2.10. Cancellation and Destruction of Surrendered Certificates.....15 Section 2.11. Reconstitution Events........................................15 ARTICLE 3 CERTAIN OBLIGATIONS OF OWNERS OF RECEIPTS..........................16 Section 3.1. Filing Proofs, Certificates and Other Information............16 Section 3.2. Liability of Owner for Taxes and Other Charges...............16 Section 3.3. Warranties on Deposit of Shares..............................17 ARTICLE 4 THE TRUST PROPERTY.................................................17 Section 4.1. Cash Distributions...........................................17 Section 4.2. Distributions in Additional Securities.......................18 Section 4.3. Rights Offerings.............................................18 Section 4.4. Other Distributions..........................................19 Section 4.5. Fixing of Record Date........................................19 Section 4.6. Reports......................................................20 Section 4.7. Voting Instructions for Trust Property.......................20 Section 4.8. Changes Affecting Trust Property.............................21 Section 4.9. Withholding..................................................22 Section 4.10. Limitation on Distributions..................................22 Section 4.11. Elimination of Fractional Securities Represented by a Round Lot of Receipts........................................23 ARTICLE 5 THE TRUSTEE AND THE INITIAL DEPOSITOR..............................25 Section 5.1. Maintenance of Office and Transfer Books by the Trustee......25 Section 5.2. Prevention or Delay in Performance by the Initial Depositor or the Trustee.....................................25 Section 5.3. Obligations of the Initial Depositor and the Trustee.........26 Section 5.4. Resignation or Removal of the Trustee; Appointment of Successor Trustee............................................27 Section 5.5. Indemnification..............................................29 Section 5.6. Charges of Trustee...........................................31 Section 5.7. Retention of Trust Documents.................................31 Section 5.8. Federal Securities Law Filings...............................31 Section 5.9. Prospectus Delivery..........................................32 ARTICLE 6 AMENDMENT AND TERMINATION..........................................32 Section 6.1. Amendment....................................................32 Section 6.2. Early Termination............................................33 ARTICLE 7 MISCELLANEOUS......................................................35 Section 7.1. Counterparts.................................................35 Section 7.2. Third-Party Beneficiaries....................................35 Section 7.3. Severability.................................................35 Section 7.4. Owners, Beneficial Owners and Depositors as Parties; Binding Effect...............................................35 Section 7.5. Notices......................................................36 Section 7.6. Governing Law................................................36 EXHIBIT A FORM OF DEPOSITARY TRUST AGREEMENT...........................................A-1 EXHIBIT B FORM OF CERTIFICATE EVIDENCING RECEIPTS......................................B-1 ii AMENDED AND RESTATED STANDARD TERMS FOR DEPOSITARY TRUST AGREEMENTS agreed to as of ________, 2003 (these "Standard Terms"), between MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, a Delaware corporation (the "Initial Depositor") and THE BANK OF NEW YORK, a New York banking corporation, as trustee (the "Trustee"). W I T N E S S E T H : WHEREAS, the Initial Depositor and the Trustee agreed to Standard Terms for Depositary Trust Agreements as of September 2, 1999 (the "Original Standard Terms") for the purposes stated in that document; WHEREAS, the Initial Depositor and the Trustee amended the Original Standard Terms by Amendment No. 1 to the Standard Terms for Depositary Trust Agreements dated as of August 18, 2000, Amendment No. 2 to the Standard Terms for Depositary Trust Agreements dated as of November 22, 2000 and Amendment No. 3 to the Standard Terms for Depositary Trust Agreements dated as of January 4, 2001; WHEREAS, the Initial Depositor and the Trustee now wish to further amend and restate the Original Standard Terms to, among other things, provide for elimination, within a specified period of time, of fractions of Securities (as hereinafter defined) from the Securities that must be deposited for issuance of one Round Lot (as hereinafter defined) of Receipts (as hereinafter defined); WHEREAS, from time to time, the Initial Depositor and the Trustee may enter into one or more depositary trust agreements providing for the deposit with the Trustee of specified Securities, the creation of Depositary Trust Receipts representing the Securities so deposited and the execution and delivery of certificates evidencing the Depositary Trust Receipts; and WHEREAS, the Initial Depositor and the Trustee wish to establish the general terms and conditions of such depositary trust agreements and the form of the certificates evidencing Depositary Trust Receipts; NOW, THEREFORE, the parties hereby agree that the Original Standard Terms shall be amended and restated as follows: ARTICLE 1 DEFINITIONS AND ASSUMPTIONS Section 1.1. Definitions. Except as otherwise specified in these Standard Terms or in the applicable Depositary Trust Agreement or as the context may otherwise require, the following terms have the respective meanings set forth below for all purposes of these Standard Terms and the Depositary Trust Agreement. "Additional Securities" means securities received by the Trustee in respect or in conversion of or in exchange for any Trust Property if, but only if: (i) the issuer of those securities is classified by Standard & Poor's in the same Global Industrial Classification Standard ("GICS") sector in which a Securities Issuer was classified prior to that distribution, conversion or exchange; and (ii) those securities are listed on a national securities exchange in the United States or included in the National Market System of the Nasdaq Stock Market. "Beneficial Owner" means any Person owning a beneficial interest in any Receipt. 2 "Business Day" means any day other than (i) a Saturday or Sunday or (ii) a day on which commercial banks in The City of New York are authorized or required by law or executive order to be closed. "Closing Date" means the day on which the initial deposit of Securities is to be made, which date may be specified in the Depositary Trust Agreement. "Commission" means the Securities and Exchange Commission of the United States or any successor governmental agency in the United States. "Corporate Trust Office" means the office of the Trustee at which its depositary receipt business is administered which, at the date of these Standard Terms, is 101 Barclay Street, New York, New York 10286. "Deliver" means (a) when used with respect to Securities, either (i) one or more book-entry transfers of such Securities to an account at DTC designated by the Person entitled to such delivery for further credit as specified by such Person or (ii) in the case of Securities for which DTC book-entry settlement is not available, the delivery of certificates evidencing such Securities to the Person entitled to such delivery, duly endorsed for transfer or accompanied by proper instruments of transfer and (b) when used with respect to Receipts, either (i) one or more book-entry transfers of Receipts to an account at DTC designated by the Person entitled to such delivery for further credit as specified by such Person or (ii) in the event DTC ceases to make its book-entry settlement system available for the Receipts, execution and delivery at the Corporate Trust Office of the Trustee of one or more certificates evidencing such Receipts. "Depositary Trust Agreement" means each depositary trust agreement entered into by the Initial Depositor and the Trustee pursuant to these Standard Terms which incorporates by reference these Standard Terms. 3 "Depositor" means any Person who deposits Securities into the Trust, either for its own account or on behalf of another Person who is the owner or beneficial owner of such Securities. "Depositor Order" means a written order or request signed in the name of the Initial Depositor or any other Depositor, as applicable. "DTC" means The Depository Trust Company, its nominees and their respective successors. "Initial Depositor" means Merrill Lynch, Pierce, Fenner & Smith Incorporated, a Delaware corporation, or its successor. "Owner" means the Person in whose name a Receipt is registered in the books of the Trustee maintained for that purpose. "Person" means any individual, limited liability company, corporation, partnership, joint venture, association, joint stock company, trust (including any trust beneficiary), unincorporated organization or government or any agency or political subdivision thereof. "Receipt" means a depositary trust receipt which is issued under the Depositary Trust Agreement and which represents the Owner's right to receive the Securities which must be deposited into the Trust for issuance of a Receipt plus any other securities, cash or other property received by the Trustee with respect to such Securities and held by the Trustee under the Depositary Trust Agreement at such time. "Registered Broker-dealer" means a broker-dealer registered with the Commission pursuant to Section 15(a)(1) of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. 4 "Registrar" means any bank or trust company having an office in the Borough of Manhattan, The City of New York, which shall be appointed to register Receipts and transfers of Receipts as herein provided. "Restricted Securities" means Securities, or Receipts representing such Securities, which are acquired directly or indirectly from the issuer or its affiliates (as defined in Rule 144 under the Securities Act of 1933) in a transaction or chain of transactions not involving any public offering, or which are held by an officer or director (or person performing similar functions) or other affiliate of the issuer, or which would require registration under the Securities Act of 1933 in connection with the public offer and sale thereof in the United States, or which are subject to other restrictions on sale or deposit under the federal securities laws of the United States, a shareholder agreement or the corporate documents of the issuer. "Round Lot" means 100. "Securities" means any shares of a class of securities which must be deposited for issuance of Receipts. "Securities Issuer" means, as of any time, the issuer of a class of Securities. "Securities Registrar" means the entity that presently carries out the duties of registrar for any Securities or any successor as registrar for any Securities and any other appointed agent of a Securities Issuer for the transfer and registration of Securities. "Surrender" means, when used with respect to Receipts, (a) one or more book-entry transfers of Receipts to the DTC account of the Trustee or (b) surrender to the Trustee at its Corporate Trust Office of one or more certificates evidencing such Receipts, in each case in a Round Lot or an integral multiple thereof. "Trust" means the trust entity created by the Depositary Trust Agreement. 5 "Trust Property" means, as of any time, Securities of each of the classes and in the quantities required by the Depositary Trust Agreement to be deposited in the Trust for the issuance of Receipts and which are at such time deposited under the Depositary Trust Agreement and any other securities, property or cash received by the Trustee in respect thereof and at such time held under the Depositary Trust Agreement. "Trustee" means The Bank of New York, a New York banking corporation, in its capacity as Trustee under the Depositary Trust Agreement, or any successor as Trustee thereunder. Section 1.2. Rules of Construction. Unless the context otherwise requires: (i) a term has the meaning assigned to it; (ii) an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles as in effect in the United States; (iii) "or" is not exclusive; (iv) the words "herein", "hereof", "hereunder" and other words of similar import refer to these Standard Terms or the Depositary Trust Agreement as a whole and not to any particular Article, Section or other subdivision; (v) "including" means including without limitation; and (vi) words in the singular include the plural and words in the plural include the singular. 6 ARTICLE 2 FORM OF RECEIPTS, DEPOSIT OF SECURITIES, DELIVERY, REGISTRATION OF TRANSFER AND SURRENDER OF RECEIPTS Section 2.1. Depositary Trust Agreements. Each Depositary Trust Agreement entered into between the Initial Depositor and the Trustee for the purposes set forth herein shall be in substantially the form of Exhibit A to these Standard Terms and shall provide that these Standard Terms shall be incorporated by reference into, and form a part of, such Depositary Trust Agreement. Section 2.2. Creation and Declaration of Trusts; Deposit of Securities. (a) The Initial Depositor, concurrently with the execution and delivery of the Depositary Trust Agreement, does hereby agree to deposit with the Trustee under the Depositary Trust Agreement all the right, title and interest of the Initial Depositor in, to and under Securities, of each of the classes and in the quantities necessary to create an integral multiple of a Round Lot of Receipts in accordance with Section 2 of the Depositary Trust Agreement in effect at the time of deposit. Unless otherwise specified in the Depositary Trust Agreement, such deposit shall include all cash dividends and distributions in respect of such Securities. (b) From time to time after the date of the Depositary Trust Agreement, a Depositor may deposit with the Trustee, in the manner specified in subsection (a), Securities, of each of the classes and in the quantities necessary to create an integral multiple of a Round Lot of Receipts in accordance with Section 2 of the Depositary Trust Agreement in effect at the time of deposit by Delivery of such Securities to the Trustee. (c) If a Round Lot of Receipts represents any fraction of a share, a Depositor depositing Securities in accordance with Section 2.2(b) shall be required to 7 deliver to the Trustee the next largest whole share amount of the Security to which the fraction of a share is related and the Trustee shall return to that Depositor cash in lieu of the fraction of a share not represented by the Round Lot or Round Lots of Receipts issued in respect of that deposit based on the previous day's closing price for the Security related to such fraction of a share. However, if a deposit to which the previous sentence would otherwise apply occurs after a sale of fractions of a share in accordance with Section 4.11 but prior to the record date set by the Trustee for distribution of the proceeds of that sale, the Depositor shall not be required to deliver any shares on account of those fractions but, instead, shall be required to deposit cash in lieu of those fractions of a share in an amount equal to the distribution rate with respect to the proceeds of that sale set by the Trustee in accordance with Sections 4.11(a) and 5.6(1). (d) The Trust shall not engage in any business or activities other than those required or authorized by these Standard Terms or incidental and necessary to carry out the duties and responsibilities set forth in the Depositary Trust Agreement. Other than issuance of the Receipts, the Trust shall not issue or sell any certificates or other obligations or otherwise incur, assume or guarantee any indebtedness for money borrowed. (e) Anything herein to the contrary notwithstanding, the Trustee does not assume any of the duties, responsibilities, obligations or liabilities of the Initial Depositor or any other Depositor in respect of the Trust Property. (f) Trust Property shall be held by the Trustee at such place and in such manner as the Trustee shall determine. Section 2.3. Acceptance by Trustee. The Trustee will hold the Trust Property for the benefit of the Owners for the purposes, and subject to and limited by the terms and conditions, set forth in these Standard Terms and the Depositary Trust Agreement. 8 Section 2.4. Form and Transferability of Receipts. (a) The certificates evidencing Receipts shall be substantially in the form set forth in Exhibit B annexed to these Standard Terms, with appropriate insertions, modifications and omissions, as hereinafter provided or as may be provided in the Depositary Trust Agreement. No Receipt shall be entitled to any benefits under the Depositary Trust Agreement or be valid or obligatory for any purpose unless a certificate evidencing such Receipt shall have been executed by the Trustee by the manual or facsimile signature of a duly authorized signatory of the Trustee and, if a Registrar (other than the Trustee) for the Receipts shall have been appointed, countersigned by the manual or facsimile signature of a duly authorized officer of the Registrar. The Trustee shall maintain books on which the registered ownership of each Receipt and transfers, if any, of such registered ownership shall be recorded. Certificates evidencing Receipts bearing the manual or facsimile signature of a duly authorized signatory of the Trustee and Registrar, if applicable, who was at the time such certificates were executed a proper signatory of the Trustee or Registrar, if applicable, shall bind the Trustee, notwithstanding that such signatory has ceased to hold such office prior to the delivery of such certificates. (b) The certificates evidencing Receipts may be endorsed with or have incorporated in the text thereof such legends or recitals or modifications not inconsistent with the provisions of the Depositary Trust Agreement as may be required by the Trustee or required to comply with any applicable law or regulations thereunder or with the rules and regulations of any securities exchange upon which Receipts may be listed or to conform with any usage with respect thereto, or to indicate any special limitations or restrictions to which any particular Receipts are subject by reason of the date of issuance of any Trust Property or otherwise. (c) The Initial Depositor and the Trustee will apply to DTC for acceptance of the Receipts in its book-entry settlement system. Receipts deposited with 9 DTC shall be represented by one or more global certificates which shall be registered in the name of Cede & Co., as nominee for DTC, and shall bear the following legend: UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE AGENT AUTHORIZED BY THE ISSUER FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. (d) So long as the Receipts are eligible for book-entry settlement with DTC and such settlement is available, unless otherwise required by law, notwithstanding anything to the contrary in the Depositary Trust Agreement, all Receipts shall be evidenced by one or more global certificates registered in the name of a nominee of DTC and no person acquiring beneficial ownership of such Receipts shall receive or be entitled to receive physical delivery of Receipts. Ownership of beneficial interests in Receipts evidenced by such global certificate or certificates shall be shown on, and the transfer of such ownership shall be effected only through, records maintained by (i) DTC or (ii) institutions that have accounts with DTC. (e) If, at any time when Receipts are evidenced by a global certificate, DTC ceases to make its book-entry settlement system available for such Receipts, the Trustee shall issue separate certificates evidencing Receipts to the DTC book-entry settlement system participants entitled thereto, with such additions, deletions and modifications to the Depositary Trust Agreement and to the form of certificate evidencing Receipts as the Initial Depositor and the Trustee may agree. 10 (f) Title to a certificate evidencing Receipts (and to the Receipts evidenced thereby), when properly endorsed or accompanied by proper instruments of transfer, shall be transferable by delivery with the same effect as in the case of a negotiable instrument under the laws of New York; provided, however, that the Trustee, notwithstanding any notice to the contrary, may treat the Owner of Receipts as the absolute owner thereof for the purpose of determining the person entitled to distribution of dividends or other distributions or to any notice provided for in the Depositary Trust Agreement and for all other purposes. Section 2.5. Delivery of Receipts. Upon receipt by the Trustee of any deposit pursuant to Section 2.2, together with a Depositor Order and the other documents required as above specified, if any, the Trustee, subject to the terms and conditions of the applicable Depositary Trust Agreement, shall Deliver to or upon the written order of the Depositor the number of Receipts issuable in respect of such deposit, provided such number is an integral multiple of a Round Lot, but only upon payment to the Trustee of the fees and expenses of the Trustee as provided in Section 5.6 and of all taxes and governmental charges and fees payable in connection with such deposit and the transfer of the Securities. Section 2.6. Registration; Registration of Transfer; Combination and Split-up of Certificates. (a) The Trustee shall keep or cause to be kept a register of Owners of Receipts and shall provide for the registration of Receipts and the registration of transfers and exchanges of Receipts. (b) The Trustee, subject to the terms and conditions of these Standard Terms and the applicable Depositary Trust Agreement, shall register transfers of ownership of Receipts on its transfer books from time to time, upon any Surrender of a certificate evidencing such Receipts in any integral multiple of a Round Lot, by the Owner in person or by a duly authorized attorney, properly endorsed or accompanied by 11 proper instruments of transfer, and duly stamped as may be required by the laws of the State of New York and of the United States of America. Thereupon the Trustee shall execute a new certificate or certificates evidencing such Receipts in any integral multiple of a Round Lot requested, and deliver the same to or upon the order of the Person entitled thereto. (c) The Trustee, subject to the terms and conditions of these Standard Terms and the applicable Depositary Trust Agreement, shall, upon Surrender of a certificate evidencing Receipts for the purposes of effecting a split-up or combination of such certificate or certificates, execute and deliver one or more new certificate or certificates evidencing such Receipts in any integral multiple of a Round Lot requested. (d) The Trustee may appoint one or more co-transfer agents for the purpose of effecting registration of transfers, combinations and split-ups of Receipts at designated transfer offices on behalf of the Trustee. In carrying out its functions, a co-transfer agent may require evidence of authority and compliance with applicable laws and other requirements by Owners or Persons entitled to Receipts and will be entitled to protection and indemnity to the same extent as the Trustee. Section 2.7. Surrender of Receipts and Withdrawal of Trust Property. (a) Upon Surrender at the Corporate Trust Office of the Trustee of a Round Lot of Receipts or integral multiple thereof for the purpose of withdrawal of the amount of Trust Property represented thereby, and upon payment of the fee of the Trustee in connection with the Surrender of Receipts as provided in Section 5.6 and payment of all taxes and charges payable in connection with such Surrender and withdrawal of Trust Property, and subject to the terms and conditions of the applicable Depositary Trust Agreement, including, without limitation, Section 4.10, the Owner of such Receipts shall be entitled to Delivery of the amount of Trust Property at the time represented by such Receipts. Delivery of such Trust Property may be made by (i) Delivery of Securities to such Owner or as ordered by such Owner and (ii) any available form of delivery of any 12 other securities, property and cash to which such Owner is then entitled to such Owner or as ordered by such Owner. The Trustee shall make such delivery as promptly as practicable. (b) A certificate evidencing Receipts Surrendered for such purposes may be required by the Trustee to be properly endorsed in blank or accompanied by proper instruments of transfer in blank, and if the Trustee so requires, the Owner thereof shall execute and deliver to the Trustee a written order directing the Trustee to cause the Trust Property being withdrawn to be delivered to or upon the written order of a Person or Persons designated in such order. Thereupon the Trustee shall Deliver through the facilities of DTC or, if applicable, at its Corporate Trust office, subject to Sections 2.8, 3.1, 3.2 and 4.10 and to the other terms and conditions of the Depositary Trust Agreement, to or upon the written order of the Person or Persons designated in the order delivered to the Trustee as above provided, the amount of Trust Property represented by such Receipts. Section 2.8. Limitations on Delivery, Registration of Transfer and Surrender of Receipts. (a) As a condition precedent to the Delivery, registration of transfer, split-up, combination or Surrender (including, for the avoidance of doubt, any Surrender in connection with an exchange) of any Receipt or withdrawal of any Trust Property, the Trustee or Registrar may require payment from the Depositor of Securities or the presentor of the Receipts of a sum sufficient to reimburse it for any tax or other charge and any stock transfer or registration fee with respect thereto (including any such tax or charge and fee with respect to Securities being deposited or withdrawn) and payment of any applicable fees as herein provided, may require the production of proof satisfactory to it as to the identity and genuineness of any signature and may also require compliance with any regulations the Trustee may establish consistent with the provisions of the Depositary Trust Agreement, including, without limitation, this Section 2.8. 13 (b) The Delivery of Receipts against deposits of Securities, the registration of transfer of Receipts or the Surrender of Receipts for the purpose of withdrawal of Trust Property may be suspended, generally or in particular instances, during any period when the transfer books of the Trustee are closed or the transfer books of a Securities Issuer are closed or if any such action is deemed necessary or advisable by the Trustee at any time or from time to time, subject to the provisions of the following sentence. Notwithstanding any other provision of the Depositary Trust Agreement or the Receipts, the Surrender of Receipts and withdrawal of Trust Property may not be suspended except for (i) temporary delays caused by closing the transfer books of the Trustee or a Securities Issuer, (ii) the payment of fees, taxes and applicable charges, and (iii) compliance with any U.S. laws or governmental regulations relating to the Receipts or to the withdrawal of the Trust Property. Without limitation of the foregoing, the Trustee shall not knowingly accept for deposit under the Depositary Trust Agreement any Securities required to be registered under the provisions of the Securities Act of 1933, as amended, for the public offer and sale thereof in the United States unless a registration statement is in effect as to such Securities for such offer and sale. Section 2.9. Lost Certificates, Etc. In case any certificate evidencing Receipts shall be mutilated, destroyed, lost or stolen, the Trustee shall execute and deliver a new certificate of like tenor in exchange and substitution for such mutilated certificate upon cancellation thereof, or in lieu of and in substitution for such destroyed, lost or stolen certificate. Before the Trustee shall execute and deliver a new certificate in substitution for a destroyed, lost or stolen certificate, the Owner thereof shall have (a) filed with the Trustee (i) a request for such execution and delivery before the Trustee has notice that the Receipts have been acquired by a protected purchaser and (ii) a sufficient indemnity bond, and (b) satisfied any other reasonable requirements imposed by the Trustee. 14 Section 2.10. Cancellation and Destruction of Surrendered Certificates. All certificates evidencing Receipts Surrendered to the Trustee shall be canceled by the Trustee. The Trustee is authorized to destroy certificates so canceled. Section 2.11. Reconstitution Events. (a) If any class of Securities ceases to be outstanding, that class of Securities shall, effective at that time, cease to be part of the securities which must be deposited for issuance of Receipts. (b) If any class of Securities is delisted from trading on its primary exchange or market and is not listed for trading on another national securities exchange or through NASDAQ within five business days from the date of such delisting, the Trustee shall, if it has actual knowledge of such event, to the extent lawful and feasible and subject to Section 4.10, distribute the Trust Property that is Securities of such class to the Owners in proportion to their ownership of Receipts. Effective on the day after the record date for such distribution by the Trustee pursuant to this Section 2.11(b), such class of Securities shall cease to be a part of the securities which must be deposited for issuance of Receipts. (c) If any Securities Issuer no longer has a class of common stock registered under section 12 of the Securities Exchange Act of 1934, as amended, the Trustee shall, if it has actual knowledge of such event, to the extent lawful and feasible and subject to Section 4.10, distribute the Trust Property that is Securities of such Securities Issuer to the Owners in proportion to their ownership of Receipts. Effective on the day after the record date for such distribution by the Trustee pursuant to this Section 2.11(c), such class of Securities shall cease to be part of the securities which must be deposited for issuance of Receipts. (d) If the Commission determines that a Securities Issuer is an investment company under the Investment Company Act of 1940, and the Trustee has 15 actual knowledge of such Commission determination, then the Trustee shall, to the extent lawful and feasible and subject to Section 4.10, distribute the Trust Property that is Securities of such Securities Issuer to the Owners in proportion to their ownership of Receipts. Effective on the day after the record date for such distribution by the Trustee pursuant to this Section 2.11(d), such class of Securities shall cease to be part of the securities which must be deposited for issuance of Receipts. ARTICLE 3 CERTAIN OBLIGATIONS OF OWNERS OF RECEIPTS Section 3.1. Filing Proofs, Certificates and Other Information. Any Person presenting Securities for deposit or any Owner of Receipts may be required from time to time to file with the Trustee such proof of citizenship or residence, exchange control approval, or such information relating to the registration on the books of any Securities Issuer or Securities Registrar, if applicable, to execute such certificates and to make such representations and warranties, as the Trustee may require. The Trustee may withhold the Delivery or registration of transfer of any Receipts or the delivery of any Trust Property until such proof or other information is filed or such certificates are executed or such representations and warranties made. Section 3.2. Liability of Owner for Taxes and Other Charges. If any tax or other charge shall become payable by the Trustee with respect to any Receipts or any Trust Property represented thereby, such tax or other charge shall be payable by the Owner of such Receipts to the Trustee. The Trustee shall refuse to effect any registration of transfer of such Receipts or any withdrawal of Trust Property represented by such Receipt until such payment is made, and may withhold any dividends or other distributions, or may sell for the account of the Owner thereof Trust Property (which shall be of the same class of Trust Property with respect to which the tax or other charge became payable, if the amount of that class of Trust Property is sufficient to pay the tax or other charge), and may apply such dividends or other distributions or the 16 proceeds of any such sale in payment of such tax or other charge, and the Owner of such Receipts shall remain liable for any deficiency. The Trustee shall distribute any net proceeds of a sale made under the preceding sentence that remain, after payment of the tax or other charge, to the Owners entitled thereto as in the case of a distribution received in cash. If the Trustee sells Securities under this Section 3.2, the amount of Securities sold per Round Lot of Receipts shall cease to be part of the classes and amounts of Securities that must be deposited for issuance of one Round Lot of Receipts. Section 3.3. Warranties on Deposit of Shares. Every Person depositing Securities under the Depositary Trust Agreement shall be deemed thereby to represent and warrant that such Securities and each certificate therefor are validly issued and fully paid, that the person making such deposit is duly authorized to do so and that at the time of delivery, such Securities are free and clear of any lien, pledge, encumbrance, right, charge or claim (other than the rights created by the Depositary Trust Agreement). Every such person shall also be deemed to represent that such Securities are not, and Receipts representing such Securities would not be, Restricted Securities. Such representations and warranties shall survive the deposit of Securities, issuance of Receipts or termination of the Depositary Trust Agreement. ARTICLE 4 THE TRUST PROPERTY Section 4.1. Cash Distributions. Whenever the Trustee shall receive any cash dividend or other cash distribution on any Trust Property, the Trustee shall distribute the amount thus received (net of the fees of the Trustee as provided in Section 5.6, if applicable) to the Owners entitled thereto, in proportion to the number of Receipts held by them respectively; provided, however, that in the event that the respective Securities Issuer or the Trustee shall be required to withhold and does withhold from such cash dividend or such other cash distribution an amount on account of taxes, the amount distributed to the Owners 17 shall be reduced accordingly. The Trustee shall distribute only such amount, however, as can be distributed without attributing to any Owner a fraction of one cent. Any such fractional amounts shall be rounded to the nearest whole cent and so distributed to Owners entitled thereto. Section 4.2. Distributions in Additional Securities. If the Trustee receives any distribution in respect of the Trust Property that consists of a dividend in, or free distribution of, Additional Securities, the Trustee shall, to the extent lawful and feasible, retain such Additional Securities under the Depositary Trust Agreement, and the amount of such Additional Securities so retained in respect of a Round Lot of Receipts shall, as of the date the Trustee receives that distribution, be added to the classes and quantities of Securities which must be deposited for issuance of one Round Lot of Receipts. Section 4.3. Rights Offerings. (a) If a Securities Issuer grants or causes to be granted to the holders of any Trust Property any rights to subscribe for additional Securities or other securities and the Trustee determines that it is lawful and feasible to do so, the Trustee shall, in its discretion, and under procedures determined by it, either (i) distribute those rights to the Owners or (ii) dispose of those rights on behalf of Owners and distribute the net proceeds to the Owners. If, by the terms of such rights offering or for any other reason (including the absence of an effective registration statement covering the distribution of securities underlying the rights), the Trustee determines that it cannot either distribute rights to the Owners or dispose of those rights and distribute the net proceeds to the Owners, then the Trustee shall allow the rights to lapse. (b) The Trustee will not distribute rights to Owners unless both the rights and the securities to which such rights relate are either exempt from registration under the Securities Act of 1933 with respect to a distribution to all Owners or are registered under the provisions of such Act. 18 (c) The Trustee shall not be responsible for any failure to determine that it may be lawful and feasible to distribute rights to Owners in general or any Owner in particular. Section 4.4. Other Distributions. Subject to the provisions of Sections 4.9 and 5.6, whenever the Trustee shall receive any distribution in respect of Trust Property other than a distribution described in Section 4.1, 4.2 or 4.3 or any distribution which would otherwise be distributed hereunder except that the Trustee deems such distribution not to be lawful and feasible, or whenever the Trustee receives securities in circumstances where Section 4.8(a) applies that are not Additional Securities, the Trustee shall, subject to Section 4.10, cause the securities or property received by it to be distributed to the Owners entitled thereto, in proportion to the number of Receipts held by them respectively, in any manner that the Trustee may deem equitable and practicable for accomplishing such distribution; provided, however, that if in the opinion of the Trustee such distribution cannot be made proportionately among the Owners entitled thereto, or if for any other reason (including, but not limited to, any requirement that a Securities Issuer or the Trustee withhold an amount on account of taxes or other governmental charges or that such securities must be registered under the Securities Act of 1933 in order to be distributed to Owners) the Trustee deems such distribution not to be feasible, the Trustee shall adopt such method as it deems equitable and practicable for the purpose of effecting such distribution, including, but not limited to, the public or private sale of the securities or property thus received, or any part thereof, and the net proceeds of any such sale (net of the fees of the Trustee as provided in Section 5.6) shall be distributed by the Trustee to the Owners entitled thereto as in the case of a distribution received in cash. Section 4.5. Fixing of Record Date. Whenever any cash dividend or other cash distribution shall become payable or any distribution other than cash shall be made, or whenever the Trustee 19 receives notice of any meeting of or solicitation of proxies from holders of any Trust Property, or whenever a fee shall be charged by the Trustee under Section 5.6, or whenever for any reason there is a reconstitution or other event under the Depositary Trust Agreement that causes a change in the composition of the Securities which must be deposited for issuance of Receipts, or whenever the Trustee shall find it necessary or convenient in respect of any matter, the Trustee shall fix a record date (a) for the determination of the Owners who shall be (i) entitled to receive such dividend or distribution or the net proceeds of the sale thereof, (ii) entitled to give instructions to the Trustee for the exercise of voting rights at any such meeting or solicitation or (iii) required to pay such fee, or (b) on or after which each Receipt will represent such changed group of Securities. In the case of subsections (a)(i) and (a)(ii) of this Section 4.5, the Trustee shall use its reasonable efforts to ensure that, to the extent practicable, the record date set hereunder will be the same as the record date set by the Securities Issuer. Subject to the terms and conditions of the Depositary Trust Agreement, the Owners on such record date shall be entitled, as the case may be, to receive the amount distributable by the Trustee with respect to such dividend or other distribution or the net proceeds of sale thereof, or to give voting instructions, or to act in respect of any other such matter, or shall be obligated to pay such fee. Section 4.6. Reports. The Trustee shall, to the extent lawful, forward to Owners any reports and communications, including any proxy statement or other soliciting material, received from a Securities Issuer which are received by the Trustee as the holder of the Trust Property or its appointed agent, unless such reports and communications have been forwarded directly to Owners by such Securities Issuer or its appointed agent. Section 4.7. Voting Instructions for Trust Property. Upon receipt by the Trustee or its appointed agent of notice of any meeting of, or solicitation of proxies from, holders of Trust Property, the Trustee shall, to 20 the extent lawful, mail to the Owners a notice, the form of which notice shall be in the sole discretion of the Trustee, which shall contain (a) such information as is contained in such notice of meeting or solicitation, and (b) a statement that the Owners as of the close of business on a specified record date will be entitled, subject to applicable law and the provisions of the corporate documents of the Securities Issuer, to instruct the Trustee as to the exercise of the voting rights, if any, or giving of proxies, as applicable, in respect of the amount of Trust Property represented by their respective Receipts and (c) a statement as to the manner in which such instructions may be given. Upon the written request of an Owner of a Receipt on such record date, received on or before the date established by the Trustee for such purpose, the Trustee shall endeavor, insofar as practicable, to vote or cause to be voted, or to give a proxy, as applicable, in respect of the amount of Trust Property represented by such Receipt in accordance with the instructions set forth in such request. The Trustee shall not vote or attempt to exercise the right to vote that attaches to, or give a proxy with respect to, Trust Property other than in accordance with such instructions. Section 4.8. Changes Affecting Trust Property. (a) Upon any change in nominal value, change in par value, split-up, consolidation or any other reclassification of any Trust Property, or upon any recapitalization, reorganization, merger or consolidation or sale of assets affecting the issuer of any Trust Property, the Trustee shall, to the extent lawful and feasible, retain any Trust Property that is reclassified and any securities it receives in respect or conversion of or in exchange for any Trust Property under the Depositary Trust Agreement, except that the Trustee shall not retain any securities that are not Additional Securities. Any securities retained by the Trustee under this Section 4.8 in respect of a Round Lot of Receipts shall, as of the date the Trustee receives those securities, be added to the classes and quantities of Securities that must be deposited for issuance of one Round Lot of Receipts. 21 (b) Securities of any class that the Trustee surrenders or that otherwise cease to be outstanding in connection with any conversion or exchange to which Section 4.8(a) applies shall, effective on the date of such surrender or at the time those Securities otherwise cease to be outstanding, no longer be part of the Securities which must be deposited for issuance of Receipts. (c) If there occurs (i) a change in Trust Property to which Section 4.8(a) applies, (ii) a distribution of Securities to which Section 4.3 applies, (iii) a reconstitution event to which Section 2.11 applies or a sale of aggregate fractions under Section 4.11, the Trustee may call for the surrender of outstanding certificates evidencing Receipts to be exchanged for new certificates specifically describing any applicable change in the classes and quantities of Securities which must be deposited for issuance of Receipts. Section 4.9. Withholding. In the event that the Trustee determines that any distribution in property (including Securities and rights to subscribe therefor) is subject to any tax or other charge which the Trustee is obligated to withhold, notwithstanding anything to the contrary in these Standard Terms or the applicable Depositary Trust Agreement, the Trustee may by public or private sale dispose of all or a portion of such property (including Securities and rights to subscribe therefor) in such amounts and in such manner as the Trustee deems necessary and practicable to pay any such taxes or charges and the Trustee shall distribute the net proceeds of any such sale after deduction of such taxes or charges to the Owners entitled thereto in proportion to the number of Receipts held by them respectively. Section 4.10. Limitation on Distributions. Notwithstanding any provision of the Depositary Trust Agreement which requires or permits the Trustee to distribute or Deliver any securities to Owners, the Trustee shall not distribute to any Owner any fraction of a share. Instead, the Trustee shall, to the extent lawful, sell the aggregate of such fractions and distribute the net 22 proceeds to the Owners entitled thereto as in the case of a distribution received in cash. The Trustee may set the cash distribution rate under this Section 4.10 by reference to the closing price of that security on the trading day immediately preceding the day on which the distribution is made. For the avoidance of doubt, in the case of a distribution in accordance with this Section 4.10 resulting from a sale of fractions of a share pursuant to Section 4.11, the Trustee shall set the distribution rate for that cash distribution in accordance with Section 4.11(a). In all other cases, the distribution rate shall be determined by reference to the previous day's closing price for the Security related to that fraction of a share. Section 4.11. Elimination of Fractional Securities Represented by a Round Lot of Receipts. (a) If a Round Lot of Receipts represents any fraction of a share of a class of Securities, the Trustee shall, to the extent lawful and practical, sell the aggregate of those fractions and distribute the net proceeds (net of the fees of the Trustee as provided in Section 5.6(1) and the expenses of the Trustee incurred in such sale and fees of the Trustee assessed under Section 5.6(3), it being understood that those proceeds are a cash distribution for purposes of Section 5.6(3)) to the Owners entitled to them as in the case of a distribution received in cash. (b) Except as provided in Section 4.11(c), the Trustee shall (i) initiate a sale required under Section 4.11(a) as soon as practicable but in no event later than the fifth Business Day after a fraction of a share becomes part of the Trust Property represented by a Round Lot of Receipts by giving a Registered Broker-dealer an order to sell, in the primary market in which the Securities related to the fractional shares trade, all the shares constituting the aggregate of those fractions included in the Trust Property (rounding the number down to the nearest number of whole shares) and to notify the Depositary promptly when that sale has been completed and (ii) set a record date for distribution of the net proceeds of such sale as soon as practicable by announcing it not later than the fifth Business Day after the Trustee receives notice from the Registered 23 Broker-dealer who executed the sale that all the shares covered by that order have been sold, and the date announced shall be as soon after the date of the announcement as is permitted under the rules of the securities exchange on which the Receipts are listed for trading. (c) In the case of fractions of shares that are represented by a Round Lot of Receipts on the date that this Section 4.11 becomes effective as an amendment to the Depositary Trust Agreement, the Trustee shall, (i) as soon as practicable but in no event later than the tenth Business Day after this Section 4.11 becomes effective as an amendment to the Depositary Trust Agreement, initiate the sale, in the manner set forth in Section 4.11(b), of the fractions of shares at that time held under each Depositary Trust Agreement and (ii) set a record date for distribution of the net proceeds of the sales of those fractions of shares as soon as practicable by announcing it not later than the fifth Business Day after the Trustee receives notice from the Registered Broker-dealer who executed the sales that all the fractions of shares held under the Depositary Trust Agreement have been sold, and the date announced shall be as soon after the date of the announcement as it permitted under the rules of the securities exchange on which the Receipts are listed for trading. (d) Effective on the day after the record date for distributing the proceeds of a sale by the Trustee pursuant to this Section 4.11, the fraction of a share shall cease to be part of the Securities that must be deposited for issuance of Receipts. (e) The Trustee shall distribute the net proceeds of the sale of fractions of shares pursuant to this Section 4.11 as soon as practicable but in no event later than the second Business Day after the record date set for that distribution by the Trustee under this Section 4.11. 24 ARTICLE 5 THE TRUSTEE AND THE INITIAL DEPOSITOR Section 5.1. Maintenance of Office and Transfer Books by the Trustee. (a) Until termination of the Depositary Trust Agreement in accordance with its terms, the Trustee shall maintain in the Borough of Manhattan, The City of New York, facilities for the execution and Delivery, registration, registration of transfers and Surrender of Receipts in accordance with the provisions of these Standard Terms and the Depositary Trust Agreement. (b) The Trustee shall keep books for the registration of Receipts and registration of transfers of Receipts which at all reasonable times shall be open for inspection by the Owners. (c) The Trustee may close the transfer books at any time or from time to time. (d) If any Receipts evidenced thereby are listed on one or more stock exchanges in the United States, the Trustee shall act as Registrar or appoint a registrar or one or more co-registrars for registry of such receipts in accordance with any requirements of such exchange or exchanges. Section 5.2. Prevention or Delay in Performance by the Initial Depositor or the Trustee. Neither the Initial Depositor nor the Trustee nor any of their respective directors, employees, agents or affiliates shall incur any liability to any Owner or Beneficial Owner if, by reason of any provision of any present or future law or regulation of the United States or any other country, or of any governmental or regulatory authority or stock exchange, or by reason of any provision, present or future, of the corporate documents of any Securities Issuer, or by reason of any provisions of any securities 25 issued or distributed by any Securities Issuer, or any offering or distribution thereof, or by reason of any act of God or war or terrorism or other circumstances beyond its control, the Initial Depositor or the Trustee shall be prevented or forbidden from, or be subject to any civil or criminal penalty on account of, doing or performing any act or thing which by the terms of the Depositary Trust Agreement it is provided shall be done or performed; nor shall the Initial Depositor or the Trustee incur any liability to any Owner or Beneficial Owner by reason of any non-performance or delay, caused as aforesaid, in the performance of any act or thing which by the terms of the Depositary Trust Agreement it is provided shall or may be done or performed, or by reason of any exercise of, or failure to exercise, any discretion provided for in the Depositary Trust Agreement. Where, by the terms of an offering or distribution to which Section 2.11, 4.3, 4.4 or 4.11 applies, or for any other reason, it is not lawful and feasible to make such distribution or offering available to Owners, and the Trustee may not dispose of such distribution or offering on behalf of such Owners and make the net proceeds available to such Owners, then the Trustee shall not make such distribution or offering available to Owners and shall allow any rights, if applicable, to lapse. Section 5.3. Obligations of the Initial Depositor and the Trustee. (a) Neither the Initial Depositor nor the Trustee assumes any obligation nor shall it be subject to any liability under the Depositary Trust Agreement to any Owner or Beneficial Owner (including, without limitation, liability with respect to the validity or worth of the Trust Property), except that it agrees to perform its obligations specifically set forth in the Depositary Trust Agreement without negligence or bad faith. (b) Neither the Initial Depositor nor the Trustee shall be under any obligation to prosecute any action, suit or other proceeding in respect of any Trust Property or in respect of the Receipts. (c) Neither the Initial Depositor nor the Trustee shall be liable for any action or non-action by it in reliance upon the advice of or information from legal 26 counsel, accountants, any person presenting Securities for deposit, any Owner or any other person believed by it in good faith to be competent to give such advice or information. (d) The Trustee shall not be liable for any acts or omissions made by a successor Trustee whether in connection with a previous act or omission of the Trustee or in connection with any matter arising wholly after the resignation of the Trustee, provided that in connection with the issue out of which such potential liability arises the Trustee performed its obligations without negligence or bad faith while it acted as Trustee. (e) The Trustee shall not be responsible for any failure to carry out any instructions to vote any of the Trust Property, or for the manner in which any such vote is cast or the effect of any such vote, provided that any such action or non-action is without negligence or bad faith. (f) Except as specifically provided in Section 4.6, the Trustee shall have no obligation to monitor or to obtain any information concerning the business or affairs of any Securities Issuer or to advise Owners or Beneficial Owners of any event or condition affecting any Securities Issuer. (g) The Trustee shall have no obligation to comply with any direction or instruction from any Owner or Beneficial Owner regarding Receipts except to the extent specifically provided in the Depositary Trust Agreement. (h) The Trustee shall be a fiduciary under these Standard Terms and the Depositary Trust Agreement; provided, however, that the fiduciary duties and responsibilities and liabilities of the Trustee shall be limited by, and shall be only those specifically set forth in, these Standard Terms and the Depositary Trust Agreement. Section 5.4. Resignation or Removal of the Trustee; Appointment of Successor Trustee. 27 (a) The Trustee may at any time resign as Trustee hereunder by written notice of its election so to do, delivered to the Initial Depositor, and such resignation shall take effect upon the appointment of a successor Trustee and its acceptance of such appointment as hereinafter provided. (b) If at any time the Trustee is in material breach of its obligations under the Depositary Trust Agreement and the Trustee fails to cure such breach within 30 days after receipt by the Trustee of written notice from the Initial Depositor or Owners of 25% or more of the outstanding Receipts specifying such default and requiring the Trustee to cure such default, the Initial Depositor, acting on behalf of the Owners, may remove the Trustee by written notice delivered to the Trustee in the manner provided in Section 7.5, and such removal shall take effect upon the appointment of the successor Trustee and its acceptance of such appointment as hereinafter provided. (c) In case at any time the Trustee acting hereunder shall resign or be removed, the Initial Depositor, acting on behalf of the Owners, shall use its reasonable efforts to appoint a successor Trustee, which shall be a bank or trust company having an office in the Borough of Manhattan, The City of New York. Every successor Trustee shall execute and deliver to its predecessor and to the Initial Depositor, acting on behalf of the Owners, an instrument in writing accepting its appointment hereunder, and thereupon such successor Trustee, without any further act or deed, shall become fully vested with all the rights, powers, duties and obligations of its predecessor; but such predecessor, nevertheless, upon payment of all sums due it and on the written request of the Initial Depositor, acting on behalf of the Owners, shall execute and deliver an instrument transferring to such successor all rights and powers of such predecessor hereunder, shall duly assign, transfer and deliver all right, title and interest in the Trust Property to such successor, and shall deliver to such successor a list of the Owners of all outstanding Receipts. The Initial Depositor or any such successor Trustee shall promptly mail notice of the appointment of such successor Trustee to the Owners. 28 (d) Any corporation into or with which the Trustee may be merged, consolidated or converted shall be the successor of the Trustee without the execution or filing of any document or any further act. Section 5.5. Indemnification. (a) The Initial Depositor shall indemnify the Trustee, its directors, employees, agents and affiliates against, and hold each of them harmless from, any loss, liability, cost, expense or judgment (including, but not limited to, the fees and expenses of counsel) (collectively "Indemnified Amounts") which is incurred by any of them and which arises out of acts performed or omitted pursuant to the provisions of the Depositary Trust Agreement, as the same may be amended, modified or supplemented from time to time, or any filings with or submissions to the Commission in connection with or with respect to the Receipts (which by way of illustration and not by way of limitation, include any registration statement and any amendments or supplements thereto filed with the Commission or any periodic reports or updates that may be filed under the Securities Exchange Act of 1934, as amended, or any failure to make any filings with or submissions to the Commission which are required to be made in connection with or with respect to the Receipts), except that the Initial Depositor shall not have any obligations under this Section 5.5(a) to pay Indemnified Amounts incurred as a result of and attributable to (i) the negligence or bad faith of, or material breach of the terms of this Agreement by, the Trustee, (ii) written information regarding the name and address of the Trustee furnished in writing to the Initial Depositor (and not materially changed or altered) expressly for use in the registration statement filed with the Commission relating to the Receipts, or (iii) any misrepresentations or omissions made by a Depositor (other than Initial Depositor) in connection with such Depositor's offer and sale of Receipts. (b) The Trustee shall indemnify the Initial Depositor, its directors, employees, agents and affiliates against, and hold each of them harmless from, any Indemnified Amounts (i) caused by the negligence or bad faith of the Trustee or (ii) arising out of any written information regarding the name and address of the Trustee 29 furnished in writing to the Initial Depositor (and not materially changed or altered) expressly for use in the registration statement filed with the Commission relating to the Receipts. (c) If the indemnification provided for in this Section 5.5 is unavailable or insufficient to hold harmless the indemnified party under subsection (a) or (b) above, then the indemnifying party shall contribute to the Indemnified Amounts referred to in subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the Initial Depositor on the one hand and the Trustee on the other hand from the offering of the Receipts which are the subject of the action or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Initial Depositor on the one hand and the Trustee on the other hand in connection with the action, statement or omission which resulted in such Indemnified Amount as well as any other relevant equitable considerations. The relative benefits received by the Initial Depositor on the one hand and the Trustee on the other shall be deemed to be in the same proportions as the total commissions from the offering of the Receipts which are the subject of the action (before deducting expenses) received by the Initial Depositor bear to the total fees received by the Trustee from the offering of such Receipts. The relative fault shall be determined by reference to, among other things, whether any untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact from which the action arises relates to information supplied by the Initial Depositor or the Trustee and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission or the act or omission from which the action arises. The amount of Indemnified Amounts referred to in the first sentence of this subsection (c) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (c). 30 Section 5.6. Charges of Trustee. The following charges shall be incurred by any party depositing or withdrawing Securities or by any party Surrendering Receipts or to whom Receipts are Delivered or any Owner, as applicable: (1) taxes and charges and other fees payable in respect of the Trust Property assessed by third-party custodians, depositories, depositary banks or transfer agents in the ordinary course of their respective businesses, (2) a fee of $10 or less per 100 Receipts for the execution and Delivery of Receipts pursuant to Section 2.5, and the Surrender of Receipts pursuant to Section 2.7, and (3) a fee which shall accrue on the first day of each calendar quarter at a rate of $.02 or less per Receipt per quarter for the Trustee's services as such under the Depositary Trust Agreement (which fee shall be assessed against Owners of record as of the date or dates set by the Trustee in accordance with Section 4.5 and shall be collected at the Trustee's discretion by deducting such fee from one or more cash dividends or other cash distributions); provided, however, that with respect to the aggregate fee accrued in any calendar year under this clause (3) with respect to each Receipt, the Trustee will waive that portion which exceeds the total cash dividends and other cash distributions the record date for which falls in such calendar year and payable with respect to such Receipt. Section 5.7. Retention of Trust Documents. The Trustee is authorized to destroy those documents, records, bills and other data compiled during the term of the Depositary Trust Agreement at the times permitted by the laws or regulations governing the Trustee. Section 5.8. Federal Securities Law Filings. The Initial Depositor shall (i) prepare and file a registration statement with the Commission and take such action as is necessary from time to time to qualify the Receipts for offering and sale under the federal securities laws of the United States, including the preparation and filing of amendments and supplements to such registration statement, (ii) promptly notify the Trustee of any amendment or supplement to the 31 registration statement or prospectus, of any order preventing or suspending the use of any prospectus, of any request for the amending or supplementing of the registration statement or prospectus or if any event or circumstance occurs which is known to the Initial Depositor as a result of which the registration statement or prospectus, as then amended or supplemented, would include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, (iii) provide the Trustee from time to time with copies, including copies in electronic form, of the prospectus, as amended and supplemented, in such quantities as the Trustee may reasonably request and (iv) prepare and file any periodic reports or updates that may be required under the Securities Exchange Act of 1934, as amended. Section 5.9. Prospectus Delivery. The Trustee shall, if required by the federal securities laws of the United States, in any manner permitted by such laws, deliver at the time of issuance of Receipts, a copy of the relevant prospectus, as amended and supplemented at such time, to each Person depositing Securities into the Trust for issuance of Receipts. ARTICLE 6 AMENDMENT AND TERMINATION Section 6.1. Amendment. The Trustee and the Initial Depositor may amend any provisions of the Depositary Trust Agreement (including these Standard Terms) without the consent of any Owner. Any amendment that imposes or increases any fees or charges (other than taxes and other charges, registration fees or other such expenses), or that otherwise prejudices any substantial existing right of the Owners will not become effective as an amendment to the Depositary Trust Agreement until 30 days after notice of such amendment is given to the Owners. Every Owner and Beneficial Owner, at the time any amendment so becomes effective, shall be deemed, by continuing to hold any Receipt or an interest 32 therein, to consent and agree to such amendment and to be bound by the Depositary Trust Agreement as amended thereby. In no event shall any amendment impair the right of the Owner of any Receipt to Surrender such Receipt and receive therefor the amount of Trust Property represented thereby, except in order to comply with mandatory provisions of applicable law. Section 6.2. Early Termination. (a) The Trust shall terminate by the Trustee mailing notice of such termination to the Owners of all Receipts then outstanding at least 30 days prior to the date set for termination if any of the following occurs: (i) The Trustee is notified that the Receipts are delisted from a national securities exchange and are not approved for listing on another national securities exchange within 5 business days of their delisting; (ii) Owners of at least 75% of the outstanding Receipts notify the Trustee that they elect to terminate the Trust , except that for the purposes of this clause (ii), Receipts owned by the Initial Depositor shall not be considered to be outstanding; or (iii) 60 days shall have expired after the Trustee shall have delivered to the Initial Depositor and the Owners a written notice of its election to resign and a successor trustee shall not have been appointed and accepted its appointment as provided in Section 5.4. (b) On and after the date of termination, the Owner of a Receipt will, upon (i) Surrender of such Receipt at the Corporate Trust Office of the Trustee, (ii) payment of the fee of the Trustee for the Surrender of Receipts referred to in Section 2.7, and (iii) payment of any applicable taxes or charges, be entitled to Delivery, to him or upon his order, of the amount of Trust Property represented by such Receipt. If any Receipts shall remain outstanding after the date of termination, the Trustee thereafter shall discontinue the registration of transfers of Receipts, shall suspend the distribution of 33 dividends or other distribution to the Owners thereof, and shall not give any further notices or perform any further acts under the Depositary Trust Agreement, except that the Trustee shall continue to collect dividends and other distributions pertaining to Trust Property and hold the same uninvested and without liability for interest, shall sell rights as provided in the Depositary Trust Agreement, and shall continue to deliver Trust Property, together with any dividends or other distributions received with respect thereto and the net proceeds of the sale of any rights or other property, in exchange for Receipts Surrendered to the Trustee (after deducting or upon payment of, in each case, the fee of the Trustee set forth in 5.6 for the Surrender of Receipts, any expenses for the account of the Owner of such Receipts in accordance with the terms and conditions of the Depositary Trust Agreement, and any applicable taxes or charges). At any time after the expiration of one year following the date of termination, the Trustee may sell the Trust Property then held under the Depositary Trust Agreement and may thereafter hold uninvested the net proceeds of any such sale, together with any other cash then held by it under the Depositary Trust Agreement, unsegregated and without liability for interest, for the pro rata benefit of the Owners of Receipts which have not theretofore been Surrendered, such Owners thereupon becoming general creditors of the Trustee with respect to such net proceeds. After making such sale, the Trustee shall be discharged from all obligations under the Depositary Trust Agreement, except to account for such net proceeds and other cash (after deducting, in each case, the fee of the Trustee for the Surrender of Receipts, any fees of the Trustee due and owing from the Owner of such Receipts pursuant to Section 5.6, any expenses for the account of the Owner of such Receipts in accordance with the terms and conditions of the Depositary Trust Agreement, and any applicable taxes or governmental charges). Upon the termination of the Depositary Trust Agreement, the Initial Depositor shall be discharged from all obligations under the Depositary Trust Agreement except for its obligations to the Trustee under Section 5.5. 34 ARTICLE 7 MISCELLANEOUS Section 7.1. Counterparts. These Standard Terms and each Depositary Trust Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of such counterparts shall constitute one and the same instrument. Copies of these Standard Terms and the Depositary Trust Agreement shall be filed with the Trustee and shall be open to inspection by any Owner of a Receipt during business hours. Section 7.2. Third-Party Beneficiaries. The Depositary Trust Agreement is for the exclusive benefit of the parties thereto, and shall not be deemed to give any legal or equitable right, remedy or claim whatsoever to any other person. Section 7.3. Severability. In case any one or more of the provisions contained in these Standard Terms or the Depositary Trust Agreement or in the Receipts should be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein or therein shall in no way be affected, prejudiced or disturbed thereby. Section 7.4. Owners, Beneficial Owners and Depositors as Parties; Binding Effect. The Owners, Beneficial Owners and Depositors from time to time shall be parties to the Depositary Trust Agreement and shall be bound by all of the terms and conditions hereof and thereof and of the Receipts by their acceptance of Receipts or any interest therein or by their depositing Securities, as the case may be. 35 Section 7.5. Notices. (a) Any and all notices to be given to the Initial Depositor shall be deemed to have been duly given if personally delivered or sent by mail or cable, telex or facsimile transmission confirmed by letter, addressed to Merrill Lynch, Pierce, Fenner & Smith Incorporated, World Financial Center, New York, New York 10281, Attention: Director, Customized Investments, or any other place to which the Initial Depositor may have transferred its principal office with notice to the Trustee. (b) Any and all notices to be given to the Trustee shall be deemed to have been duly given if personally delivered or sent by mail or cable, telex or facsimile transmission confirmed by letter, addressed to The Bank of New York, 101 Barclay Street, 22-W, New York, New York 10286, Attention: ADR Administration, or any other place to which the Trustee may have transferred its Corporate Trust Office with notices to the Initial Depositor. (c) Any and all notices to be given to any Owner shall be deemed to have been duly given if personally delivered or sent by mail or cable, telex or facsimile transmission confirmed by letter, addressed to such Owner at the address of such Owner as it appears on the transfer books of the Trustee, or, if such Owner shall have filed with the Trustee a written request that notices intended for such Owner be mailed to some other address, at the address designated in such request. (d) Delivery of a notice sent by mail or cable, telex or facsimile transmission shall be deemed to be effected at the time when a duly addressed letter containing the same (or a confirmation thereof in the case of a cable, telex or facsimile transmission) is deposited, postage prepaid, in a post-office letter box. The Trustee may, however, act upon any cable, telex or facsimile transmission received by them, notwithstanding that such cable, telex or facsimile transmission shall not subsequently be confirmed by letter as aforesaid. Section 7.6. Governing Law. 36 This Depositary Trust Agreement and the Receipts shall be interpreted and all rights hereunder and thereunder and provisions hereof and thereof shall be governed by the substantive laws (but not the choice of law rules) of the State of New York. 37 IN WITNESS WHEREOF, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED and THE BANK OF NEW YORK have duly executed these Standard Terms as of the day and year first set forth above. MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By:_________________________________ Name: Title: THE BANK OF NEW YORK, as Trustee By:_________________________________ Name: Title: Vice President 38 EXHIBIT A [NAME OF TRUST] [FORM OF] DEPOSITARY TRUST AGREEMENT DEPOSITARY TRUST AGREEMENT dated as of __________ (this "Depositary Trust Agreement"), between MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, a Delaware corporation (the "Initial Depositor"), THE BANK OF NEW YORK, a New York banking corporation, as trustee (the "Trustee"), and all Holders and Beneficial Owners (each as hereinafter defined) from time to time of Depositary Trust Receipts issued hereunder and all Depositors (as hereinafter defined) from time to time. Section 1. Incorporation of Standard Terms. The Amended and Restated Standard Terms for Depositary Trust Agreements agreed to as of _________, 2003, as the same may be amended from time to time in accordance with this Depositary Trust Agreement (the "Standard Terms"), between the Initial Depositor and the Trustee are hereby incorporated by reference into and made a part of this Depositary Trust Agreement and the Sections and Articles of the Standard Terms may be referred to as Sections and Articles of this Depositary Trust Agreement. If there is any conflict between the provisions of this Depositary Trust Agreement and the Standard Terms, the provisions of this Depositary Trust Agreement shall control. Section 2. Securities to be Deposited. Initially, the securities which must be deposited for issuance of one Round Lot of Receipts and which shall be represented thereby shall be as follows: Quantity which must be deposited Issuer and Title of Security per Round Lot of Receipts ---------------------------- ------------------------- [Issuer and title of security] [Quantity] [Issuer and title of security] [Quantity] ; provided, however, that if an event to which Section 2.11 of the Standard Terms applies or an event described in Sections 4.3 or 4.8 of the Standard Terms occurs or the Trustee sells Securities pursuant to Section 3.2 of the Standard Terms, the definition of the securities that must be deposited for issuance of one Round Lot of Receipts shall be changed as provided in such Sections, if applicable. Section 3. Creation and Declaration of Trust; Termination Date. The trust created hereby shall be known as [Name of Trust], for which the Trustee, or the Initial Depositor to the extent provided herein, may conduct the business of the Trust, make and A-1 execute contracts, and sue and be sued. [The termination date of the Trust will be December 31, 2042]. IN WITNESS WHEREOF, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED and THE BANK OF NEW YORK have duly executed this agreement as of the day and year first set forth above. All Owners and Beneficial Owners shall become parties hereto upon acceptance by them of Receipts issued in accordance with the terms hereof or any interest therein, and all Depositors shall become parties hereto upon depositing any Securities hereunder. MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By:_________________________________ Name: Title: THE BANK OF NEW YORK, as Trustee By:_________________________________ Name: Title: A-2 EXHIBIT B [Form of Receipt] THE RECEIPTS EVIDENCED HEREBY REPRESENT RIGHTS WITH RESPECT TO TRUST PROPERTY (AS DEFINED IN THE DEPOSITARY TRUST AGREEMENT REFERRED TO HEREIN) HELD BY THE TRUST AND DO NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, AND ARE NOT GUARANTEED BY THE INITIAL DEPOSITOR OR THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THE RECEIPTS NOR THE TRUST PROPERTY ARE INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR ANY OTHER PERSON. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE AGENT AUTHORIZED BY THE ISSUER FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. B-1 DEPOSITARY TRUST RECEIPTS ISSUED BY [NAME OF TRUST] REPRESENTING [COMMON STOCK] OF [LIST COMPANIES HERE] THE BANK OF NEW YORK, as Trustee No. CUSIP NO. THE BANK OF NEW YORK, as Trustee (hereinafter called the "Trustee"), hereby certifies that CEDE & CO., as nominee of the Depositary Trust Company, or registered assigns, IS THE OWNER OF * Depositary Trust Receipts issued by [Name of Trust], each representing the securities described in the within-mentioned Depositary Trust Agreement. At the date hereof, each Round Lot of Receipts represents the right to receive the following securities: ------------------------------------------------- Quantity Initially Represented by Issuer and Title Each Round Lot of Security of Receipts ----------- ----------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- which are deposited under the Depositary Trust Agreement referred to herein at the Corporate Trust Office of the Trustee. The specification of the securities represented by each Round Lot of Receipts is subject to change as provided in the Depositary Trust Agreement. The Trustee's Corporate Trust Office is located at a different address than its principal executive office. Its Corporate Trust Office is located at 101 Barclay Street, New York, New York 10286, and its principal executive office is located at One Wall Street, New York, New York 10286. THE TRUSTEE'S CORPORATE TRUST OFFICE ADDRESS IS 101 BARCLAY STREET, NEW YORK, NEW YORK 10286 - ------------------------- * That number of Receipts held at The Depository Trust Company at any given point in time. (1) THE DEPOSITARY TRUST AGREEMENT. This Receipt is issued upon the terms and conditions set forth in the Depositary Trust Agreement, dated as of _________, 200_ (the "Depositary Trust Agreement"), agreed to by and among the Initial Depositor, the Trustee, all Owners and Beneficial Owners from time to time of Receipts issued thereunder and all Depositors. By becoming an Owner or Beneficial Owner, or by depositing Securities, such Person agrees to become a party to the Depositary Trust Agreement and become bound by all the terms and conditions thereof. The Depositary Trust Agreement sets forth the rights of Owners and the rights and duties of the Trustee in respect of the Securities deposited thereunder and any and all other securities, property and cash from time to time received in respect of such Securities and held thereunder (such Securities, other securities, property, and cash are herein called "Trust Property"). Copies of the Depositary Trust Agreement are on file at the Trustee's Corporate Trust Office in New York City. The statements made on the face and reverse of this Receipt are summaries of certain provisions of the Depositary Trust Agreement and are qualified by and subject to the detailed provisions of the Depositary Trust Agreement, to which reference is hereby made. Capitalized terms not defined herein shall have the meanings set forth in the Depositary Trust Agreement. (2) SURRENDER OF RECEIPTS AND WITHDRAWAL AMOUNT OF TRUST PROPERTY. Upon Surrender at the Corporate Trust Office of the Trustee of a Round Lot of Receipts or integral multiples thereof for the purpose of withdrawal of the amount of Trust Property represented thereby, and upon payment of the fee of the Trustee in connection with the Surrender of Receipts as provided in Section 5.6 of the Depositary Trust Agreement and payment of all taxes and charges payable in connection with such Surrender and withdrawal of Trust Property, and subject to the terms and conditions of the Depositary Trust Agreement, including, without limitation, Section 4.10 thereof, the Owner of such Receipts shall be entitled to Delivery of the amount of Trust Property at the time represented by such Receipts. Delivery of such Trust Property may be made by (i) Delivery of Securities to such Owner or as ordered by such Owner and (ii) any available form of delivery of any other securities, property and cash to which such Owner is then entitled to such Owner or as ordered by such Owner. The Trustee shall make such Delivery as promptly as practicable. (3) REGISTRATION OF TRANSFERS, SPLIT-UPS AND COMBINATIONS OF CERTIFICATES; LIMITATIONS. The transfer of ownership of Receipts evidenced by this certificate is registrable on the books of the Trustee at its Corporate Trust Office by the Owner hereof in person or by a duly authorized attorney, upon Surrender of this certificate evidencing Receipts, properly endorsed or accompanied by proper instruments of transfer, and duly stamped as may be required by the laws of the State of New York and of the United States of America. This certificate evidencing Receipts may be split up into other such certificates, each evidencing any integral multiple of a Round Lot of Receipts, or may be combined with other certificates evidencing Receipts into one such certificate, in each case evidencing the same aggregate number of Receipts as the certificate or certificates Surrendered. As a condition precedent to the Delivery, registration of transfer, split-up, combination or Surrender (including, for the avoidance of doubt, any Surrender in connection with an exchange) of any Receipt or withdrawal of any Trust Property, the Trustee or Registrar may require payment from the Depositor of Securities or the presentor of the Receipts of a sum sufficient to reimburse it for any tax or other charge and any stock transfer or registration fee with respect thereto (including any such tax or charge and fee with respect to Securities being deposited or withdrawn) and payment of any applicable fees as herein provided, may require the production of proof satisfactory to it as to the identity and genuineness of any signature and may also require compliance with any regulations the Trustee may establish consistent with the provisions of the Depositary Trust Agreement, including, without limitation, Section 2.8 thereof. The Delivery of Receipts against deposits of Securities, the registration of transfer of Receipts or the Surrender of Receipts for the purpose of withdrawal of Trust Property may be suspended, generally or in particular instances, during any period when the transfer books of the Trustee are closed or the transfer books of a Securities Issuer are closed or if any such action is deemed necessary or advisable by the Trustee at any time or from time to time for any reason, subject to the provisions of the following sentence. Notwithstanding any other provision of the Depositary Trust Agreement or the Receipts, the Surrender of Receipts and withdrawal of Trust Property may not be suspended subject to only (i) temporary delays caused by closing the transfer books of the Trustee or a Securities Issuer, (ii) the payment of fees, taxes and similar charges, and (iii) compliance with any U.S. laws or governmental regulations relating to the Receipts or to the withdrawal of the Trust Property. Without limitation of the foregoing, the Trustee shall not knowingly accept for deposit under the Depositary Trust Agreement any Securities required to be registered under the provisions of the Securities Act of 1933, as amended, for the public offer and sale thereof in the United States unless a registration statement is in effect as to such Securities for such offer and sale. (4) RECONSTITUTION EVENTS (a) If any class of Securities ceases to be outstanding, that class of Securities shall, effective at that time, cease to be part of the securities which must be deposited for issuance of Receipts. (b) If any class of Securities is delisted from trading on its primary exchange or market and is not listed for trading on another national securities exchange or through NASDAQ within five business days from the date of such delisting, the Trustee shall, if it has actual knowledge of such event, to the extent lawful and feasible and subject to Section 4.10 of the Depositary Trust Agreement, distribute the Trust Property that is Securities of such class to the Owners in proportion to their ownership of Receipts. Effective on the day after the record date for such distribution by the Trustee pursuant to Section 2.11(b) of the Depositary Trust Agreement, such class of Securities shall cease to be a part of the securities which must be deposited for issuance of Receipts. (c) If any Securities Issuer no longer has a class of common stock registered under section 12 of the Securities Exchange Act of 1934, as amended, the Trustee shall, if it has actual knowledge of such event, to the extent lawful and feasible and subject to Section 4.10 of the Depositary Trust Agreement, distribute the Trust Property that is Securities of such Securities Issuer to the Owners in proportion to their ownership of Receipts. Effective on the day after the record date for such distribution by the Trustee pursuant to Section 2.11(c) of the Depositary Trust Agreement, such class of Securities shall cease to be part of the securities which must be deposited for issuance of Receipts. (d) If the Commission determines that a Securities Issuer is an investment company under the Investment Company Act of 1940, and the Trustee has actual knowledge of such Commission determination, then the Trustee shall, to the extent lawful and feasible and subject to Section 4.10 of the Depositary Trust Agreement, distribute the Trust Property that is Securities of such Securities Issuer to the Owners in proportion to their ownership of Receipts. Effective on the day after the record date for such distribution by the Trustee pursuant to Section 2.11(d) of the Depositary Trust Agreement, such class of Securities shall cease to be part of the securities which must be deposited for issuance of Receipts. (5) LIABILITY OF OWNER FOR TAXES AND OTHER CHARGES. If any tax or other governmental charge shall become payable by the Trustee with respect to any Receipts or any Trust Property represented thereby, such tax or other governmental charge shall be payable by the Owner hereof to the Trustee. The Trustee shall refuse to effect any registration of transfer of such Receipts or any withdrawal of Trust Property represented by such Receipt until such payment is made, and may withhold any dividends or other distributions, or may sell for the account of the Owner thereof Trust Property (which shall be of the same class of Trust Property with respect to which the tax or other charge became payable, if the amount of that class of Trust Property is sufficient to pay the tax or other charge), and may apply such dividends or other distributions or the proceeds of any such sale in payment of such tax or other charge, and the Owner of such Receipts shall remain liable for any deficiency. The Trustee shall distribute any net proceeds of a sale made under the preceding sentence that remain, after payment of the tax or other charge, to the Owners entitled thereto as in the case of a distribution received in cash. If the Trustee sells Securities under Section 3.2 of the Depositary Trust Agreement, the amount of Securities sold per Round Lot of Receipts shall cease to be part of the classes and amounts of Securities that must be deposited for issuance of one Round Lot of Receipts. (6) WARRANTIES ON DEPOSIT OF SECURITIES. Every Person depositing Securities under the Depositary Trust Agreement shall be deemed thereby to represent and warrant that such Receipts and each certificate therefor are validly issued and fully paid, that the person making such deposit is duly authorized to do so and that at the time of delivery, such Securities are free and clear of any lien, pledge, encumbrance, right, charge or claim (other than the rights created by the Depositary Trust Agreement). Every such person shall also be deemed to represent that such Securities are not, and Receipts representing such Securities would not be, Restricted Securities. Such representations and warranties shall survive the deposit of Securities, issuance of Receipts or termination of the Depositary Trust Agreement. (7) FILING PROOFS, CERTIFICATES AND OTHER INFORMATION. Any person presenting Securities for deposit or any Owner of a Receipt may be required from time to time to file with the Trustee such proof of citizenship or residence, exchange control approval, or such information relating to the registration on the books of any Securities Issuer or Securities Registrar, if applicable, to execute such certificates and to make such representations and warranties, as the Trustee may require. The Trustee may withhold the Delivery or registration of transfer of any Receipts or the delivery of any Trust Property until such proof or other information is filed or such certificates are executed or such representations and warranties made. (8) CHARGES OF TRUSTEE. The following charges shall be incurred by any party depositing or withdrawing Securities or by any party Surrendering Receipts or to whom Receipts are Delivered or any Owner, as applicable: (1) taxes and charges and other fees payable in respect of the Trust Property assessed by third-party custodians, depositories, depositary banks or transfer agents in the ordinary course of their respective businesses, (2) a fee of $10 or less per 100 Receipts for the execution and Delivery of Receipts pursuant to Section 2.5 of the Depositary Trust Agreement, and the Surrender of Receipts pursuant to Section 2.7 of the Depositary Trust Agreement, and (3) a fee which shall accrue on the first day of each calendar quarter at a rate of $.02 or less per Receipt per quarter for the Trustee's services as such under the Depositary Trust Agreement (which fee shall be assessed against Owners of record as of the date or dates set by the Trustee in accordance with Section 4.5 of the Depositary Trust Agreement and shall be collected at the Trustee's discretion by deducting such fee from one or more cash dividends or other cash distributions); provided, however, that with respect to the aggregate fee accrued in any calendar year under this clause (3) with respect to each Receipt, the Trustee will waive that portion which exceeds the total cash dividends and other cash distributions the record date for which falls in such calendar year and payable with respect to such Receipt. (9) TITLE TO RECEIPTS. It is a condition of the Receipts and every successive Owner of the Receipts by accepting or holding a certificate for Receipts consents and agrees, that title to such certificate (and the Receipts evidenced thereby), when properly endorsed or accompanied by proper instruments of transfer, is transferable by delivery with the same effect as in the case of a negotiable instrument under the laws of New York; provided, however, that the Trustee, notwithstanding any notice to the contrary, may treat the person in whose name Receipts are registered on the books of the Trustee as the absolute owner thereof for the purpose of determining the person entitled to distribution or dividends or other distributions or to any notice provided for in the Depositary Trust Agreement and for all other purposes. (10) VALIDITY OF RECEIPTS. Receipts shall not be entitled to any benefits under the Depositary Trust Agreement or be valid or obligatory for any purpose, unless a certificate evidencing such Receipts shall have been executed by the Trustee by the manual or facsimile signature of a duly authorized signatory of the Trustee and, if a Registrar for the Receipts shall have been appointed, countersigned by the manual or facsimile signature of a duly authorized officer of the Registrar. (11) REPORTS; INSPECTION OF TRANSFER BOOKS. The issuer of each class of Securities is subject to the periodic reporting requirements of the Securities Exchange Act of 1934 and, accordingly, files certain reports with the Securities and Exchange Commission (herein called the "Commission"). Such reports will be available for inspection and copying at the public reference facilities maintained by the Commission located at 450 Fifth Street, NW, Washington, DC 20549. The Trustee shall, to the extent lawful, forward to Owners, any reports and communications, including any proxy statement or other soliciting material, received from a Securities Issuer which are received by the Trustee as the holder of the Trust Property, unless such reports and communications have been forwarded directly to Owners by such Securities Issuer or its appointed agent. The Trustee shall keep books for the registration of Receipts and transfers of Receipts which at all reasonable times shall be open for inspection by the Owners. (12) DIVIDENDS AND DISTRIBUTIONS. Whenever the Trustee shall receive any cash dividend or other cash distribution on any Trust Property, the Trustee shall, subject to the Depositary Trust Agreement, distribute the amount thus received (net of the fees of the Trustee as provided in the Depositary Trust Agreement, if applicable) to the Owners of Receipts entitled thereto; provided, however, that in the event that the respective Securities Issuer or the Trustee shall be required to withhold and does withhold from such cash dividend or such other cash distribution in respect of any Underlying Securities an amount on account of taxes, the amount distributed to the Owners of the Receipts representing such Underlying Securities shall be reduced accordingly. If any distribution upon any Trust Property consists of a dividend in, or free distribution of, Additional Securities, the Trustee shall, to the extent lawful and feasible, retain such Additional Securities under the Depositary Trust Agreement, and the amount of such Additional Securities so retained in respect of a Round Lot of Receipts shall, as of the date the Trustee receives the distribution, be added to the classes and quantities of Securities which must be deposited for issuance of one Round Lot of Receipts. Subject to the provisions of Sections 4.9 and 5.6 of the Depositary Trust Agreement, whenever the Trustee shall receive any distribution other than a distribution described in Section 4.1, 4.2 or 4.3 of the Depositary Trust Agreement or a distribution which would otherwise be distributed under the Depositary Trust Agreement except that the Trustee deems such distribution not to be lawful and feasible, or whenever the Trustee receives securities in circumstances where Section 4.8(a) applies that are not Additional Securities, the Trustee shall, subject to Section 4.10 of the Depositary Trust Agreement, cause the securities or property received by it to be distributed to the Owners of Receipts entitled thereto, in any manner that the Trustee may deem equitable and practicable for accomplishing such distribution; provided, however, that if in the opinion of the Trustee such distribution cannot be made proportionately among the Owners of Receipts entitled thereto, or if for any other reason (including, but not limited to, any requirement that a Securities Issuer or the Trustee withhold an amount on account of taxes or other governmental charges or that such securities must be registered under the Securities Act of 1933 in order to be distributed to Owners) the Trustee deems such distribution not to be feasible, the Trustee shall adopt such method as it deems equitable and practicable for the purpose of effecting such distribution, including, but not limited to, the public or private sale of the securities or property thus received, or any part thereof, and the net proceeds of such sale (net of the fees of the Trustee as provided in Section 5.6 of the Depositary Trust Agreement) shall be distributed by the Trustee to the Owners entitled thereto as in the case of a distribution received in cash. In the event that the Trustee determines that any distribution in property (including Securities and rights to subscribe therefor) is subject to any tax or other charge which the Trustee is obligated to withhold, notwithstanding anything to the contrary in the Standard Terms or the applicable Depositary Trust Agreement, the Trustee may by public or private sale dispose of all or a portion of such property (including Securities and rights to subscribe therefor) in such amounts and in such manner as the Trustee deems necessary and practicable to pay any such taxes or charges and the Trustee shall distribute the net proceeds or any such sale after deduction of such taxes or charges to the Owners entitled thereto. (13) RIGHTS OFFERINGS. (a) If a Securities Issuer grants or causes to be granted to the holders of any Trust Property any rights to subscribe for additional Securities or other securities and the Trustee determines that it is lawful and feasible to do so, the Trustee shall, in its discretion, and under procedures determined by it, either (i) distribute those rights to the Owners or (ii) dispose of those rights on behalf of Owners and distribute the net proceeds to the Owners. If, by the terms of such rights offering or for any other reason (including the absence of an effective registration statement covering the distribution of securities underlying the rights), the Trustee determines that it cannot either distribute the rights to the Owners or dispose of those rights and distribute the net proceeds to the Owners, then the Trustee shall allow the rights to lapse. (b) The Trustee will not distribute rights to Owners unless both the rights and the securities to which such rights relate are either exempt from registration under the Securities Act of 1933 with respect to a distribution to all Owners or are registered under the provisions of such Act. (c) The Trustee shall not be responsible for any failure to determine that it may be lawful and feasible to distribute rights to Owners in general or any Owner in particular. (14) RECORD DATES. Whenever any cash dividend or other cash distribution shall become payable or any distribution other than cash shall be made, or whenever the Trustee receives notice of a meeting of or solicitation of proxies from holders of any Trust Property, or whenever a fee shall be changed by the Trustee under Section 5.6 of the Depositary Trust Agreement, or whenever for any reason there is a reconstitution or other event under the Depositary Trust Agreement that causes a change in the composition of the Securities which must be deposited for issuance of Receipts, or whenever the Trustee shall find it necessary or convenient in respect of any matter, the Trustee shall fix a record date (a) for the determination of the Owners who shall be (i) entitled to receive such dividend, distribution or rights or the net proceeds of the sale thereof or (ii) entitled to give instructions for the exercise of voting rights at any such meeting or solicitation, or (iii) required to pay such fee, or (b) on or after which each Receipt will represent such changed group of Securities, subject to the provisions of the Depositary Trust Agreement. In the case of subsections (a)(i) and (a)(ii) of this Article (14), the Trustee shall use its reasonable efforts to ensure that, to the extent practicable, the record date set under the Depositary Trust Agreement will be the same as the record date set by the Securities Issuer. (15) VOTING OF UNDERLYING SECURITIES. Upon receipt by the Trustee or its appointed agent of notice of any meeting of, or solicitation of proxies from, holders of Trust Property, the Trustee shall, to the extent lawful, mail to the Owners a notice which shall contain (a) such information as is contained in such notice of meeting or solicitation, (b) a statement that the Owners of Receipts as of the close of business on a specified record date will be entitled, subject to applicable law and the provisions of the corporate documents of the Securities Issuer, to instruct the Trustee as to the exercise of the voting rights, if any, or giving of proxies, as applicable, in respect of the amount of Trust Property represented by their respective Receipts and (c) a statement as to the manner in which such instructions may be given. Upon the written request of an Owner of a Receipt on such record date, received on or before the date established by the Trustee, the Trustee shall endeavor, insofar as practicable, to vote or cause to be voted, or to give a proxy, as applicable, in respect of the amount of Trust Property represented by such Receipt in accordance with the instructions set forth in such request. The Trustee shall not vote or attempt to exercise the right to vote that attaches to, or give a proxy with respect to, Trust Property other than in accordance with such instructions. (16) CHANGES AFFECTING TRUST PROPERTY. (a) Upon any change in nominal value, change in par value, split-up, consolidation or any other reclassification of any Trust Property, or upon any recapitalization, reorganization, merger or consolidation or sale of assets affecting the issuer of any Trust Property, the Trustee shall, to the extent lawful and feasible and subject to Section 4.11 of the Depositary Trust Agreement, retain any Trust Property that is reclassified and any securities that it receives in respect or conversion of or in exchange for any Trust Property under the Depositary Trust Agreement, except that the Trustee shall not retain any securities that are not Additional Securities. The amount of any securities retained by the Trustee under Section 4.8 of the Depositary Trust Agreement with respect to one Round Lot of Receipts shall, as of the date the Trustee receives those securities, be added to the classes and quantities of Securities which must be deposited for issuance of one Round Lot of Receipts. (b) Securities of any class that the Trustee surrenders or that otherwise cease to be outstanding in connection with any such conversion or exchange to which Section 4.8(a) of the Depositary Trust Agreement applies shall, effective on the date of such surrender or at the time those Securities otherwise cease to be outstanding, no longer be part of the Securities which must be deposited for issuance of Receipts. In any such case, or in the case of an event to which Section 2.11 of the Depositary Trust Agreement applies, the Trustee may call for the Surrender of outstanding certificates evidencing Receipts to be exchanged for new certificates specifically describing any applicable change in the classes and quantities of Securities which must be deposited for issuance of Receipts. (c) If there occurs (i) a change in Trust Property to which Section 4.8(a) of the Depositary Trust Agreement applies, (ii) a distribution of Securities to which Section 4.3 of the Depositary Trust Agreement applies, (iii) a reconstitution event to which Section 2.11 of the Depositary Trust Agreement applies or a sale of aggregate fractions under Section 4.11 of the Depositary Trust Agreement, the Trustee may call for the surrender of outstanding certificates evidencing Receipts to be exchanged for new certificates specifically describing any applicable change in the classes and qualities of Securities which must be deposited for issuance of Receipts. (17) LIABILITY OF THE INITIAL DEPOSITOR AND THE TRUSTEE. Neither the Initial Depositor nor the Trustee nor any of their respective directors, employees, agents or affiliates shall incur any liability to any Owner or Beneficial Owner if by reason of any provision of any present or future law or regulation of the United States or any other country, or of any governmental or regulatory authority or stock exchange, or by reason of any act of God or war or terrorism or other circumstances beyond its control, the Initial Depositor or the Trustee shall be prevented or forbidden from, or be subject to any civil or criminal penalty on account of, doing or performing any act or thing which by the terms of the Depositary Trust Agreement it is provided shall be done or performed; nor shall the Initial Depositor or the Trustee incur any liability to any Owner or Beneficial Owner of any Receipt by reason of any non-performance or delay, caused as aforesaid, in the performance of any act or thing which by the terms of the Depositary Trust Agreement it is provided shall or may be done or performed, or by reason of any exercise of, or failure to exercise, any discretion provided for in the Depositary Trust Agreement. Where, by the terms of an offering or distribution to which Sections 2.11, 4.3, 4.4 or 4.11 of the Depositary Trust Agreement applies, or for any other reason, it is not lawful and feasible to make such distribution or offering available to Owners, and the Trustee may not dispose of such distribution or offering on behalf of such Owners and make the net proceeds available to such Owners, then the Trustee shall not make such distribution or offering available to Owners and shall allow any rights, if applicable, to lapse. Neither the Initial Depositor nor the Trustee assumes any obligation nor shall it be subject to any liability under the Depositary Trust Agreement to any Owner or Beneficial Owner (including, without limitation, liability with respect to the validity or worth of the Trust Property), except that it agrees to perform its obligations specifically set forth in the Depositary Trust Agreement without negligence or bad faith. Neither the Initial Depositor nor the Trustee shall be under any obligation to prosecute any action, suit or other proceeding in respect of any Trust Property or in respect of the Receipts. Neither the Initial Depositor nor the Trustee shall be liable for any action or non-action by it in reliance upon the advice of or information from legal counsel, accountants, any person presenting Securities for deposit, any Owner or Beneficial Owner, or any other person believed by it in good faith to be competent to give such advice or information. The Trustee shall not be liable for any acts or omissions made by a successor depositary whether in connection with a previous act or omission of the Trustee or in connection with any matter arising wholly after the resignation of the Trustee, provided that in connection with the issue out of which such potential liability arises the Trustee performed its obligations without negligence or bad faith while it acted as Trustee. The Trustee shall not be responsible for any failure to carry out any instructions to vote any of the Trust Property, or for the manner in which any such vote is cast or the effect of any such vote, provided that any such action or non-action is without negligence or bad faith. Except as specifically provided in Section 4.6 of the Depositary Trust Agreement, the Trustee shall have no obligation to monitor or to obtain any information concerning the business or affairs of any Securities Issuer or to advise Owners or Beneficial Owners of any event or condition affecting any Securities Issuer. The Trustee shall have no obligation to comply with any direction or instruction from any Owner or Beneficial Owner regarding Receipts except to the extent specifically provided in the Depositary Trust Agreement. The Trustee shall be a fiduciary under the Depositary Trust Agreement; provided, however, that the fiduciary duties and responsibilities and liabilities of the Trustee shall be limited by, and shall be only those specifically set forth in, the Depositary Trust Agreement. No disclaimer of liability under the Securities Act of 1933 is intended by any provision of the Depositary Trust Agreement. (18) RESIGNATION OR REMOVAL OF THE TRUSTEE. (a) The Trustee may at any time resign as Trustee under the Depositary Trust Agreement by written notice of its election so to do, delivered to the Initial Depositor, and such resignation shall take effect upon the appointment of a successor Trustee and its acceptance of such appointment. (b) If at any time the Trustee is in material breach of its obligations under the Depositary Trust Agreement and the Trustee fails to cure such breach within 30 days after receipt by the Trustee of written notice from the Initial Depositor or the Owners of 25% or more of the outstanding Receipts specifying such default and requiring the Trustee to cure such default, the Initial Depositor, acting on behalf of the Owners, may remove the Trustee by written notice delivered to the Trustee, and such removal shall take effect upon the appointment of the successor Trustee and its acceptance of such appointment. (c) In case at any time the Trustee acting hereunder shall resign or be removed, the Initial Depositor, acting on behalf of the Owners, shall use its reasonable efforts to appoint a successor Trustee, which shall be a bank or trust company having an office in the Borough of Manhattan, The City of New York. (19) AMENDMENT. The Trustee and the Initial Depositor may amend any provisions of the Depositary Trust Agreement (including the Standard Terms) without the consent of any Owner. Any amendment that imposes or increases any fees or charges (other than taxes and other charges, registration fees or other such expenses), or that otherwise prejudices any substantial existing right of the Owners will not become effective as an amendment to the Depositary Trust Agreement until 30 days after notice of such amendment is given to the Owners. Every Owner and Beneficial Owner, at the time any amendment so becomes effective, shall be deemed, by continuing to hold any Receipt or an interest therein, to consent and agree to such amendment and to be bound by the Depositary Trust Agreement as amended thereby. In no event shall any amendment impair the right of the Owner of any Receipt to Surrender such Receipt and receive therefor the amount of Trust Property represented thereby, except in order to comply with mandatory provisions of applicable law. (20) EARLY TERMINATION OF DEPOSITARY TRUST AGREEMENT. (a) The Trust shall terminate by the Trustee mailing notice of such termination to the Owners of all Receipts then outstanding at least 30 days prior to the date set for termination if any of the following occurs: (i) The Trustee is notified that the Receipts are delisted from a national securities exchange and are not approved for listing on another national securities exchange within 5 business days of their delisting; (ii) Owners of at least 75% of the outstanding Receipts notify the Trustee that they elect to terminate the Trust, except that for the purposes of this clause (ii), Receipts owned by the Initial Depositor shall not be considered to be outstanding; or (iii) 60 days shall have expired after the Trustee shall have delivered to the Initial Depositor and the Owners a written notice of its election to resign and a successor trustee shall not have been appointed and accepted its appointment. (b) On and after the date of termination, the Owner of a Receipt will, upon (a) Surrender of such Receipt at the Corporate Trust Office of the Trustee, (b) payment of the fee of the Trustee for the Surrender of Receipts referred to in Section 2.7 of the Depositary Trust Agreement, and (c) payment of any applicable taxes or charges, be entitled to Delivery, to him or upon his order, of the amount of Trust Property represented by such Receipt. If any Receipts shall remain outstanding after the date of termination, the Trustee thereafter shall discontinue the registration of transfers of Receipts, shall suspend the distribution of dividends or other distribution to the Owners thereof, and shall not give any further notices or perform any further acts under the Depositary Trust Agreement, except that the Trustee shall continue to collect dividends and other distributions pertaining to Trust Property and hold the same uninvested and without liability for interest, shall sell rights as provided in the Depositary Trust Agreement, and shall continue to deliver Trust Property, together with any dividends or other distributions received with respect thereto and the net proceeds of the sale of any rights or other property, in exchange for Receipts Surrendered to the Trustee (after deducting or upon payment of, in each case, the fee of the Trustee set forth in 5.6 of the Depositary Trust Agreement for the Surrender of Receipts, any expenses for the account of the Owner of such Receipts in accordance with the terms and conditions of the Depositary Trust Agreement, and any applicable taxes or charges). At any time after the expiration of one year following the date of termination, the Trustee may sell the Trust Property then held hereunder and may thereafter hold uninvested the net proceeds of any such sale, together with any other cash then held by it hereunder, unsegregated and without liability for interest, for the pro rata benefit of the Owners of Receipts which have not theretofore been Surrendered, such Owners thereupon becoming general creditors of the Trustee with respect to such net proceeds. After making such sale, the Trustee shall be discharged from all obligations under the Depositary Trust Agreement, except to account for such net proceeds and other cash (after deducting, in each case, the fee of the Trustee for the Surrender of Receipts, any fees of the Trustee due and owing from the Owner of such Receipts pursuant to Section 5.6 of the Depositary Trust Agreement, any expenses for the account of the Owner of such Receipts in accordance with the terms and conditions of the Depositary Trust Agreement, and any applicable taxes or charges). Upon the termination of the Depositary Trust Agreement, the Initial Depositor shall be discharged from all obligations under the Depositary Trust Agreement except for its obligations to the Trustee under Section 5.5 of the Depositary Trust Agreement. (21) LIMITATION ON DISTRIBUTIONS. Notwithstanding any provisions of the Depositary Trust Agreement which requires or permits the Trustee to distribute or Deliver any securities to Owners, the Trustee shall not distribute to any Owner any fraction of a share. Instead, the Trustee shall, to the extent lawful, sell the aggregate of such fractions and distribute the net proceeds to the Owners entitled thereto as in the case of a distribution received in cash. For the avoidance of doubt, in the case of a distribution in accordance with this Section 4.10 resulting from a sale of fractions of a share pursuant to Section 4.11, the Trustee shall set the distribution rate for that cash distribution in accordance with Section 4.11(a). In all other cases, the distribution rate shall be determined by reference to the previous day's closing price for the Security related to that fraction of a share. (22) ELIMINATION OF FRACTIONAL SECURITIES REPRESENTED BY A ROUND LOT OF RECEIPTS. (a) If a Round Lot of Receipts represents any fraction of a share of a class of Securities, the Trustee shall, to the extent lawful and practical, sell the aggregate of those fractions and distribute the net proceeds (net of the fees of the Trustee as provided in Section 5.6(1) of the Depositary Trust Agreement and the expenses of the Trustee incurred in such sale and fees of the Trustee assessed under Section 5.6(3) of the Depositary Trust Agreement, it being understood that those proceeds are a cash distribution for purposes of Section 5.6(3) of the Depositary Trust Agreement) to the Owners entitled to them as in the case of a distribution received in cash. (b) Except as provided in Section 4.11(c) of the Depositary Trust Agreement, the Trustee shall (i) initiate a sale required under Section 4.11(a) thereof as soon as practicable but in no event later than the fifth Business Day after a fraction of a share becomes part of the Trust Property represented by a Round Lot of Receipts by giving a Registered Broker-dealer an order to sell, in the primary market in which the Securities related to the fractional shares trade, all the shares constituting the aggregate of those fractions included in the Trust Property (rounding the number down to the nearest number of whole shares) and to notify the Depositary promptly when that sale has been completed and (ii) set a record date for distribution of the net proceeds of such sale as soon as practicable by announcing it not later than the fifth Business Day after the Trustee receives notice from the Registered Broker-dealer who executed the sale that all the shares covered by that order have been sold, and the date announced shall be as soon after the date of the announcement as is permitted under the rules of the securities exchange on which the Receipts are listed for trading. (c) In the case of fractions of shares that are represented by a Round Lot of Receipts on the date that Section 4.11 becomes effective as an amendment to the Depositary Trust Agreement, the Trustee shall, (i) as soon as practicable but in no event later than the tenth Business Day after Section 4.11 becomes effective as an amendment to the Depositary Trust Agreement, initiate the sale, in the manner set forth in Section 4.11(b) of the Depositary Trust Agreement, of the fractions of shares at that time held under each Depositary Trust Agreement and (ii) set a record date for distribution of the net proceeds of the sales of those fractions of shares as soon as practicable by announcing it not later than the fifth Business Day after the Trustee receives notice from the Registered Broker-dealer who executed the sales that all the fractions of shares held under the Depositary Trust Agreement have been sold, and the date announced shall be as soon after the date of the announcement as it permitted under the rules of the securities exchange on which the Receipts are listed for trading. (d) Effective on the day after the record date for distributing the proceeds of a sale by the Trustee pursuant to Section 4.11 of the Depositary Trust Agreement, the fraction of a share shall cease to be part of the Securities that must be deposited for issuance of Receipts. (e) The Trustee shall distribute the net proceeds of the sale of fractions of shares pursuant to Section 4.11 of the Depositary Trust Agreement as soon as practicable but in no event later than the second Business Day after the record date set for that distribution by the Trustee under Section 4.11 thereof. EX-24.4 4 ex24-4_042403.txt POWER OF ATTORNEY POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears below constitutes and appoints Mitchell M. Cox and Stephen G. Bodurtha and each of them, with full power to act without the other, his true and lawful attorneys-in-fact and agents with full and several power of substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments, including post-effective amendments, and supplements to the Registration Statements for each of the Biotech HOLDRS(SM) Trust, B2B Internet HOLDRS(SM) Trust, Broadband HOLDRS(SM) Trust, Europe 2001 HOLDRS(SM) Trust, Internet HOLDRS(SM) Trust, Internet Architecture HOLDRS(SM) Trust, Internet Infrastructure HOLDRS(SM) Trust, Market 2000+ HOLDRS(SM) Trust, Oil Service HOLDRS(SM) Trust, Pharmaceutical HOLDRS(SM) Trust, Regional Bank HOLDRS(SM) Trust, Semiconductor HOLDRS(SM) Trust, Software HOLDRS(SM) Trust, Telecom HOLDRS(SM) Trust, Wireless HOLDRS(SM) Trust, Utilities HOLDRS(SM) Trust and Retail HOLDRS(SM) Trust, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully and to all intents and purposes as he might or could do in person, hereby ratifying and conforming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ James P. Gorman Co-Chief Executive Officer, Co-Chairman - ---------------------------------- of the Board and Director James P. Gorman /s/ Arshad R. Zakaria Co-Chief Executive Officer, Co-Chairman - ---------------------------------- of the Board and Director Arshad R. Zakaria /s/ Carlos M. Morales Director - ---------------------------------- Carlos M. Morales -----END PRIVACY-ENHANCED MESSAGE-----