-----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, AYqbyGYInVXPeMSA4E4wuWnfqHZ1k5qFKQDhWjfpneAgZiOdfFMnAVzaprCUtWSe mFUd0ZHMT2tVeIvd+2jxrw== 0000950130-01-000035.txt : 20010122 0000950130-01-000035.hdr.sgml : 20010122 ACCESSION NUMBER: 0000950130-01-000035 CONFORMED SUBMISSION TYPE: S-1/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20010105 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MERRILL LYNCH PIERCE FENNER & SMITH INC CENTRAL INDEX KEY: 0000728612 STANDARD INDUSTRIAL CLASSIFICATION: ASSET-BACKED SECURITIES [6189] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-1/A SEC ACT: SEC FILE NUMBER: 333-52022 FILM NUMBER: 1502330 BUSINESS ADDRESS: STREET 1: NORTH TOWER WORLD FINANCIAL CENTER STREET 2: NORTH TOWER WORLD FINANCIAL CENTER 5TH F CITY: NEW YORK STATE: NY ZIP: 10281-1323 BUSINESS PHONE: 2124496202 MAIL ADDRESS: STREET 1: WORLD FINANCIAL CENTER STREET 2: NORTH TOWER 23RD FL CITY: NEW YORK STATE: NY ZIP: 10281-1323 S-1/A 1 0001.txt AMENDMENT NO. 1 TO FORM S-1 As filed with the Securities and Exchange Commission on January 5, 2001 Registration No. 333-52022 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------- AMENDMENT NO. 1 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) --------------- Oil Service HOLDRS SM Trust yet-to-be formed [Issuer with respect to the receipts]
Delaware 6211 13-5674085 (State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer of incorporation or organization) Classification Code Number) Identification Number)
--------------- 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 Corporate Secretary Shearman & Sterling Merrill Lynch, Pierce, Fenner & Smith Incorporated 599 Lexington Avenue 250 Vesey Street New York, New York 10022 New York, New York 10281 (212) 848-4000 (212) 449-1000 (Name, address, including zip code, and telephone number, including area code, of agent for service)
Approximate date of commencement of proposed sale to public: As soon as practicable after this Registration Statement becomes effective. 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 effective 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. [_] CALCULATION OF REGISTRATION FEE - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
Title of Each Class of Proposed Maximum Proposed Maximum Securities to Be Amount to Be Offering Price Aggregate Offering Amount of Registered Registered Per Receipt(1) Price(1) Registration Fee(2)(3) - ------------------------------------------------------------------------------------------------------ Oil Service HOLDRS..... 1,000,000,000 $100 $349,750,000 $87,438 receipts
- ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- (1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457 under the Securities Act. 2,500,000 receipts are estimated to be offered in the initial offering at $100 per receipt and 997,500,000 receipts are estimated to be offered continuously after the initial offering at $0.10 per receipt. (2) This Registration Statement also registers, where required, an indeterminate amount of securities to be sold by Merrill Lynch, Pierce, Fenner & Smith Incorporated in market-making transactions. (3) Merrill Lynch, Pierce, Fenner & Smith Incorporated previously paid on December 15, 2000, $2,640 of the Registration Fee. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to such Section 8(a), may determine. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +The information in this prospectus is not complete and may be changed. We + +have filed a registration statement relating to these receipts with the + +Securities and Exchange Commission. We cannot sell these receipts until the + +registration statement becomes effective. This prospectus is not an offer to + +sell these receipts and we are not soliciting offers to buy these receipts in + +any state where such offer or sale is not permitted. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subject to Completion Preliminary Prospectus dated January 5, 2001 PROSPECTUS [LOGO OF HOLDRS] 1,000,000,000 Depositary Receipts Oil Service HOLDRS SM Trust The Oil Service HOLDRS SM Trust will issue Depositary Receipts called Oil Service HOLDRS SM representing your undivided beneficial ownership in the common stock of a group of specified companies that, among other things, provide drilling, well-site management and related products and services for the oil service industry. The Bank of New York will be the trustee. You only may acquire, hold or transfer Oil Service HOLDRS in a round-lot amount of 100 Oil Service HOLDRS or round-lot multiples. Oil Service HOLDRS are separate from the underlying common stock that are represented by the Oil Service HOLDRS. For a list of the names and the number of shares of the companies that make up a Oil Service HOLDR, see "Highlights of Oil Service HOLDRS--The Oil Service HOLDRS" starting on page 9. The trust will issue the additional Oil Service HOLDRS on a continuous basis. Investing in Oil Service HOLDRS involves significant risks. See "Risk Factors" starting on page 4. The initial public offering price for a round-lot of 100 Oil Service HOLDRS will equal the sum of the closing market price on the primary U.S. trading market on the pricing date for each deposited share multiplied by the share amount specified in this prospectus, plus an underwriting fee. Oil Service HOLDRS are neither interests in nor obligations of either the initial depositor, Merrill Lynch, Pierce, Fenner & Smith Incorporated, or The Bank of New York, as trustee. Before this issuance, there has been no public market for Oil Service HOLDRS. Application has been made to list the Oil Service HOLDRS on the American Stock Exchange under the symbol "OIH". ----------- 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.
Initial Price Underwriting to Public* Fee ------------- ------------ Per Oil Service HOLDR........................ 2%
----- * Includes underwriting fee. For purchases of Oil Service HOLDRS in excess of Oil Service HOLDRS, the underwriting fee will be %. ----------- Merrill Lynch & Co. Robert W. Baird & Co. First Union Securities, Inc. Legg Mason Wood Walker Morgan Keegan & Company, Inc. Incorporated
Raymond James & Associates, Inc. Sutro & Co. Incorporated Tucker Anthony Capital Markets The date of this prospectus is , 2001. "HOLDRS" and "HOLding Company Depositary ReceiptS" are service marks of Merrill Lynch & Co., Inc. TABLE OF CONTENTS
Page ---- Summary.................................................................... 3 Risk Factors............................................................... 4 Highlights of Oil Service HOLDRS........................................... 9 The Trust.................................................................. 16 Description of Oil Service HOLDRS.......................................... 16 Description of The Underlying Securities................................... 17 Description of The Depositary Trust Agreement.............................. 19 Federal Income Tax Consequences............................................ 23 Erisa Considerations....................................................... 26 Plan of Distribution....................................................... 26 Legal Matters.............................................................. 27 Where You Can Find More Information........................................ 27
--------------- This prospectus contains information you should consider when making your investment decision. With respect to information about Oil Service 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 Oil Service HOLDRS in any jurisdiction where the offer or sale is not permitted. The Oil Service HOLDRS are not registered for public sale outside of the United States. Non-U.S. receipt holders should refer to "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 Oil Service HOLDRS or of the underlying securities through an investment in the Oil Service HOLDRS. 2 SUMMARY The Oil Service HOLDRS Trust will be formed under the depositary trust agreement, dated as of , 2001 among The Bank of New York, as trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated, other depositors and the owners of the Oil Service HOLDRS. The trust is not a registered investment company under the Investment Company Act of 1940. The trust will hold shares of common stock issued by 20 specified companies that, among other things, provide drilling, well-site management and related products and services for oil service industry. The number of shares of each company's common stock held by the trust with respect to each round-lot of Oil Service HOLDRS is specified under "Highlights of Oil Service HOLDRS--The Oil Service HOLDRS." This group of common stocks is collectively referred to in this prospectus as the securities or the underlying securities. The trust will issue Oil Service HOLDRS that represent your undivided beneficial ownership interest in the securities held by the trust on your behalf. The Oil Service HOLDRS are separate from the underlying securities that are represented by the Oil Service HOLDRS. 3 RISK FACTORS An investment in Oil Service HOLDRS involves risks similar to investing in each of the underlying securities outside of the Oil Service HOLDRS. General Risk Factors . Loss of investment. Because the value of Oil Service HOLDRS directly relates to the value of the underlying securities, you may lose a substantial portion of your investment in the Oil Service HOLDRS if the underlying securities decline in value. . Discount trading price. Oil Service HOLDRS may trade at a discount to the aggregate value of the underlying securities. . Not necessarily representative of the oil service industry. While the underlying securities are securities of companies generally considered to be involved in various aspects of the oil service industry, the underlying securities and the Oil Service HOLDRS may not necessarily follow the price movements of the entire oil service industry generally. If the underlying securities decline in value, your investment in the Oil Service HOLDRS will decline in value even if the market prices of the securities of companies in the oil service industry generally increase in value. Furthermore, after the initial deposit, one or more of the issuers of the underlying securities may no longer be involved in the oil service industry. In this case, the Oil Service HOLDRS may no longer consist of securities issued only by companies involved in the oil service industry. . Not necessarily comprised only of oil service companies. As a result of distributions of securities by companies included in the Oil Service HOLDRS or other corporate events, such as mergers, securities of companies that are not currently included in the Oil Service HOLDRS and that are not involved in the oil service industry may be included in the Oil Service HOLDRS. The securities of a new company will only be distributed from the Oil Service HOLDRS if the securities have a different Standard & Poor's Corporation sector classification than any of the underlying issuers included in Oil Service 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 NMS. As there are only 11 broadly defined sector classifications, the use of Standard & Poor's sector classifications to determine whether a new company will be included in the Oil Service HOLDRS provides no assurance that each new company included in the Oil Service HOLDRS will be involved in the oil service industry. Currently, the underlying securities included in the Oil Service HOLDRS are represented in the Energy sector. As each Standard & Poor's sector classification is defined so broadly, the securities of a new company could have the same sector classification as a company currently included in the Oil Service HOLDRS yet not be involved in the oil service industry. In addition, the sector classifications of securities included in the Oil Service 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 sector classifications, or both. Therefore, additional sector classifications may be represented in the Oil Service HOLDRS which may also result in the inclusion in the Oil Service HOLDRS of the securities of a new company that is not involved in the oil service industry. . No investigation of underlying securities. The underlying securities included in the Oil Service 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 oil service industry, without regard for the value, price performance, volatility or investment merit of the underlying securities. Consequently, the Oil Service HOLDRS Trust, the trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated, and each of their respective affiliates, 4 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 respective affiliates. . Concentration of investment. As a result of market fluctuations and/or reconstitution events, an investment in Oil Service HOLDRS may represent a more concentrated investment in one or more of the underlying securities or one or more industries. A concentrated investment will reduce the diversification of the Oil Service HOLDRS and increase your exposure to the risks of concentrated investments. . Conflicting investment choices. In order to sell one or more of the underlying securities individually or to participate in a tender offer relating to one or more of the underlying securities, you will be required to cancel your Oil Service HOLDRS and receive delivery of each of the underlying securities. The cancellation of your Oil Service HOLDRS will allow you to sell individual underlying securities or to deliver individual underlying securities in a tender offer. The cancellation of Oil Service HOLDRS will involve payment of a cancellation fee to the trustee. . Trading halts. Trading in Oil Service HOLDRS on the American Stock Exchange may be halted if trading in one or more of the underlying securities is halted. Trading in Oil Service HOLDRS may be halted even if trading continues in some or all of the underlying securities. If trading is halted in the Oil Service HOLDRS, you will not be able to trade Oil Service HOLDRS and you will only be able to trade the underlying securities if you cancel your Oil Service HOLDRS and receive each of the underlying securities. . 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 Oil Service HOLDRS. If the Oil Service HOLDRS are delisted by the American Stock Exchange, a termination event will result unless the Oil Service HOLDRS are listed for trading on another U.S. national securities exchange or through Nasdaq NMS within five business days from the date the Oil Service HOLDRS are delisted. . Possible conflicts of interest. Merrill Lynch, Pierce, Fenner & Smith Incorporated, as initial depositor, has selected the underlying securities and may face possible conflicts of interest in connection with its activities. For example, Merrill Lynch, Pierce, Fenner & Smith Incorporated and its affiliates, collectively referred to as Merrill Lynch, may engage in investment banking and other activities, may provide services to issuers of the underlying securities in connection with its business, or may make purchases or sales, including establishing long or short positions, in the underlying securities for its own account. In addition, Merrill Lynch, Pierce, Fenner & Smith Incorporated, as initial depositor, will purchase, in the secondary market, the underlying securities that will be deposited into the trust. Merrill Lynch may make these purchases before the deposit into the trust, or it may borrow securities for the deposit and subsequently purchase the securities to repay to the lenders the securities previously borrowed. In either event, the purchases of the underlying securities will be made at various prices. As the initial offering price for the Oil Service HOLDRS will be based on the closing market price of each of the underlying securities on the pricing date, Merrill Lynch may recognize a gain on its purchases of the underlying securities. Specifically, if the closing market price for the underlying securities on the pricing date is higher than the price at which Merrill Lynch, Pierce, Fenner & Smith Incorporated, as initial depositor, purchases the underlying securities then it will recognize a gain in connection with such purchases. Merrill Lynch may recognize this gain on any of the underlying securities that comprise the Oil Service HOLDRS or on all of the underlying securities in the aggregate. The potential profit of Merrill Lynch also is affected by any 5 hedging activities that it may engage in while it purchases the underlying securities in the secondary market for deposit into the trust. All of these activities may result in conflicts of interest with respect to the financial interest of Merrill Lynch, on the one hand, and, on the other hand, the initial selection of the underlying securities included in the Oil Service HOLDRS, Merrill Lynch's activity in the secondary market in the underlying securities, and the creation and cancellation of Oil Service HOLDRS by Merrill Lynch. . Temporary price increases in the underlying securities. Purchasing activity in the secondary trading market associated with acquiring the underlying securities for deposit into the trust may temporarily increase the market price of the deposited shares, which will result in a higher initial offering price for the Oil Service HOLDRS. Large volumes of purchasing activity, which may occur in connection with the issuance of Oil Service HOLDRS, particularly in connection with the initial issuance of Oil Service HOLDRS, could temporarily increase the market price of the underlying securities, resulting in a higher price on that date. This purchasing activity could create a temporary imbalance between the supply and demand of the underlying securities, thereby limiting the liquidity of the underlying securities due to a temporary increased demand for underlying securities. Temporary increases in the market price of the underlying securities may also occur as a result of the purchasing activity of other market participants. Other market participants may attempt to benefit from increases in the market price of the underlying securities that may occur as a result of the increased purchasing activity in the underlying securities resulting from the issuance of the Oil Service HOLDRS. Consequently, prices for the underlying securities may decline immediately after the pricing date. If the trading prices for the underlying securities decline, the trading price of Oil Service HOLDRS will also decline. Risk Factors Specific to Companies Involved in the Oil Service HOLDRS . Downturns in the oil and gas industry have had, and may in the future have, a negative effect on the sales and profitability of oil service companies. Oil service companies depend upon the level of activity in oil and gas exploration and production for their revenues. Negative short-term and long-term trends in oil and gas prices affect the level of this activity. Factors that contribute to the volatility of oil and gas prices include the following: . the ability of the Organization of Petroleum Exporting Countries (OPEC) to set and maintain production levels and pricing; . the level of production in non-OPEC countries; . the demand for oil and gas, which is negatively impacted by economic downturns; . the policies of various governments regarding exploration and development of oil and gas reserves; . advances in exploration and development technology; and . the political environment of oil-producing regions. . The oil service industry is exposed to significant and numerous operating hazards. Oil service companies' operations are subject to hazards inherent in the oil and gas industry, such as fire, explosion, blowouts, loss of well control and oil spills. The occurrence of any of these events can cause personal injury or loss of life, damage to property, equipment, the environment and marine life, and delays to or suspension of operations. Operations also may be suspended because of machinery breakdowns, abnormal drilling conditions, failure of subcontractors to perform or supply goods or services and personnel shortages. In addition, oil service companies with offshore drilling operations are subject to perils peculiar to marine operations, including capsizing of drilling rigs or other equipment, grounding, collision and 6 loss or damage from severe weather; and insurance and indemnification agreements may not provide complete protection against these losses. . Oil service companies operate in a highly competitive and cyclical industry, with intense price competition. The oil service industry is highly competitive with numerous industry participants, none of which has a dominant market share at the present time. Drilling contracts are traditionally awarded on a competitive bid process. Intense price competition is often the primary factor in determining which qualified contractor is awarded a job. In addition, the oil service industry has historically been extremely cyclical. During periods of slower growth or depressed market conditions, oil service companies compete more aggressively for contracts that result in increased contractual liabilities and lower revenues. . The revenues of oil service companies may be negatively affected by contract termination and renegotiation. Many of the companies included in the Oil Service HOLDRS provide drilling services. In the oil service industry, it is customary for contracts to provide for either automatic termination or termination at the option of the customer if the drilling unit is destroyed or lost or if drilling operations are suspended for a specified period of time as a result of events beyond the control of either party or because of breakdown of equipment. In periods of depressed market conditions, the customers of oil service companies may not honor the terms of existing contracts and may terminate contracts or seek to renegotiate contract rates and terms to reduce their obligations. . The international operations of the companies included in the Oil Service HOLDRS expose them to risks associated with instability and changes in economic and political conditions, foreign currency fluctuations, changes in foreign regulations and other risks inherent to international business. The companies included in the Oil Service HOLDRS have international operations that are essential parts of their businesses. The risks of international business that these companies are exposed to include the following: . volatility in general economic, social and political conditions; . differing tax rates, tariffs, exchange controls or other similar restrictions; . inability to repatriate income or capital; . changes in, and compliance with, domestic and foreign laws and regulations which impose a range of restrictions on operations, trade practices, foreign trade and international investment decisions; . reduction in the number or capacity of personnel in international markets; and . seizure of equipment. . Oil service companies are subject to extensive federal, state, local and foreign regulatory laws, rules and regulations. Oil service companies are subject to extensive laws and regulations in various countries. The adoption of laws and regulations curtailing exploration and development drilling for oil and gas for economic, environmental and other policy reasons may adversely affect the operations of oil service companies' by limiting available drilling and other opportunities in the oil service industry. Oil service companies may also be required to make significant capital expenditures to comply with governmental laws and regulations. It is also possible that these laws and regulations may significantly add to operating costs. Failure to comply with these laws and regulations could subject oil service companies to substantial civil and criminal penalties as well as potential court injunctions. . Compliance with or breach of environmental laws can be costly for oil service companies. The operations of oil service companies are subject to regulations controlling the discharge of materials into the environment, requiring removal and cleanup of materials 7 that may harm the environment or otherwise relating to the protection of the environment. Laws and regulations protecting the environment have tended to become more stringent in recent years, and may in some cases render a company liable for environmental damage without regard to negligence of fault on the part of that company. These laws and regulations may expose oil service companies to liability for the conduct of or conditions caused by others or for acts that were in compliance with all applicable laws at the time they were performed. The application of these requirements or the adoption of new requirements could have a material adverse effect on the operating results and financial condition of oil service companies included in the Oil Service HOLDRS. 8 HIGHLIGHTS OF OIL SERVICE HOLDRS This discussion highlights information regarding Oil Service HOLDRS. We present certain information more fully in the rest of this prospectus. You should read the entire prospectus carefully before you purchase Oil Service HOLDRS. Issuer....................... Oil Service HOLDRS Trust. The trust.................... The Oil Service HOLDRS Trust will be formed under the depositary trust agreement, dated as of , 2001 among The Bank of New York, as trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated, other depositors and the owners of the Oil Service HOLDRS. 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, will be the trustee and receive compensation as set forth in the depositary trust agreement. Purpose of Oil Service Oil ServiceHOLDRS are designed to achieve the HOLDRS.................. following: Diversification. Oil Service HOLDRS are designed to allow you to diversify your investments in the oil service industry through a single, exchange-listed instrument representing your undivided beneficial ownership of the underlying securities. Flexibility. The beneficial owners of Oil Service HOLDRS have undivided beneficial ownership interests in each of the underlying securities represented by the Oil Service HOLDRS, and can cancel their Oil Service HOLDRS to receive each of the underlying securities represented by the Oil Service HOLDRS. Transaction costs. The expenses associated with buying and selling Oil Service 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 will hold securities issued by specified companies in the oil service industry. 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 Oil Service HOLDRS....... The trust will issue Oil Service HOLDRS that represent your undivided beneficial ownership interest in the shares of U.S.-traded securities held by the trust on your behalf. The Oil Service HOLDRS themselves are separate from the underlying securities that are represented by the Oil Service HOLDRS. The specific share amounts for each round-lot of 100 Oil Service HOLDRS will be determined on the pricing date so that the initial issue price will be approximately $90-$100 per Oil Service HOLDR and the initial weightings of each underlying security included in the Oil Service HOLDRS approximates the relative 9 market capitalizations of the specified companies (based on the market capitalizations of the underlying securities on the trading date immediately preceding the pricing date), subject to a maximum weight of 10%. For purposes of this preliminary prospectus the indicative share amounts and indicative weightings of each underlying security, based on market capitalizations as of January 3, 2001 are set forth in the table below. However, such share amounts and weightings may change during the period between January 3, 2001 and the pricing date. After the pricing date, the share amounts will not change, except for changes due to corporate events, such as stock splits or reverse stock splits on the underlying securities, or reconstitution events. However, the weightings are expected to change substantially over time because of price fluctuations. The following table provides: . the names of the 20 issuers of the underlying securities represented by the Oil Service HOLDRS, . stock ticker symbols, . indicative share amounts represented by a round-lot of 100 Oil Service HOLDRS as of January 3, 2001, . indicative weightings as of January 3, 2001, and . the principal U.S. market on which the underlying securities are traded.
Indicative Primary U.S. Share Indicative Trading Name of Company Ticker Amounts Weightings Market ----------------------- ------ ---------- ---------- ------------ Halliburton Company HAL 25 9.97% NYSE Baker Hughes Incorporated BHI 22 9.93% NYSE Schlumberger N.V. SLB 11 9.64% NYSE Transocean Sedco Forex Inc.* RIG 18 9.02% NYSE Nabors Industries, Inc. NBR 13 7.87% AMEX BJ Services Company BJS 7 5.15% NYSE Noble Drilling Corporation NE 11 4.87% NYSE Diamond Offshore Drilling, Inc. DO 11 4.57% NYSE Global Marine Inc. GLM 15 4.45% NYSE R&B Falcon Corporation* FLC 18 4.40% NYSE Weatherford International, Inc. WFT 9 4.39% NYSE ENSCO International Incorporated ESV 12 4.28% NYSE Santa Fe International Corporation SDC 10 3.47% NYSE Smith International, Inc. SII 4 3.18% NYSE National-Oilwell, Inc. NOI 7 2.82% NYSE Hanover Compressor Company HC 6 2.62% NYSE Cooper Cameron Corporation CAM 4 2.60% NYSE Tidewater Inc. TDW 5 2.36% NYSE Rowan Companies, Inc. RDC 8 2.31% NYSE Grant Prideco, Inc. GRP 9 2.11% NYSE
-------- * On August 19, 2000, Transocean Sedco Forex Inc. and R&B Falcon Corporation entered into a merger agreement. For further information, please see the business descriptions for Transocean and R&B Falcon in Annex A. If the merger is completed prior to the pricing date, the Oil Service HOLDRS will consist of the securities of only 19 companies. For further information, please see "-- Reconstitution Events". The actual share amounts and weightings will be determined on the pricing date and will appear in the final prospectus delivered in connection with sales of the Oil Service HOLDRS. These companies are generally considered to be 20 of the largest and most 10 liquid companies with U.S.-traded securities involved in the oil service industry, as measured by market capitalization and trading volume on December 12, 2000. The market capitalization of a company is determined by multiplying the market price of its common stock by the number of its outstanding shares of common stock. The trust only will issue and cancel, and you only may obtain, hold, trade or surrender Oil Service HOLDRS in a round-lot of 100 Oil Service HOLDRS and round-lot multiples. The trust will only issue Oil Service HOLDRS upon the deposit of the whole shares represented by a round-lot of 100 Oil Service HOLDRS. In the event that a fractional share comes to be represented by a round-lot of Oil Service HOLDRS, the trust may require a minimum of more than one round-lot of 100 Oil Service HOLDRS for an issuance so that the trust will always receive whole share amounts for issuance of Oil Service HOLDRS. The number of outstanding Oil Service 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 Oil Service HOLDRS on a continuous basis when an investor deposits the required securities with the trustee. Public offering price........ The initial public offering price for 100 Oil Service HOLDRS will equal the sum of the closing market price on the primary U.S. trading market on the pricing date for each underlying security multiplied by the share amount to be determined on the pricing date, plus an underwriting fee. It is expected that the initial public offering price will be approximately $90-$100 per Oil Service HOLDR. Purchases.................... After the initial offering, you may acquire Oil Service HOLDRS in two ways: . through an in-kind deposit of the required number of securities of the underlying issuers with the trustee, or . through a cash purchase in the secondary trading market. Underwriting fees............ If you purchase Oil Service HOLDRS in the initial public offering, you will pay an underwriting fee equal to: . For purchases of Oil Service HOLDRS or fewer, 2%. . For purchases in excess of Oil Service HOLDRS, %. You will not be charged any issuance fee or other sales commission in connection with purchases of Oil Service HOLDRS made in the initial public offering. Issuance and cancellation fees........................ After the initial offering, if you wish to create Oil Service HOLDRS by delivering to the trust the requisite securities represented by a round-lot of 100 Oil Service HOLDRS, The Bank of New York, as trustee, will charge you an issuance fee of up to 11 $10.00 for each round-lot of 100 Oil Service HOLDRS. If you wish to cancel your Oil Service 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 Oil Service HOLDRS. Commissions.................. If you choose to deposit underlying securities in order to receive Oil Service HOLDRS after the conclusion of the initial public offering, you will not be charged the underwriting fee. However, in addition to the issuance fee charged by the trustee described above, you will be responsible for paying any sales commission associated with your purchase of the underlying securities that is charged by your broker. 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 Oil Service HOLDRS, to be deducted from any cash dividend or other cash distributions on underlying securities received by the trust. With respect to the aggregate custody fee payable in any calendar year for each Oil Service 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. Rights relating to Oil You have the right to withdraw the underlying Service HOLDRS......... securities upon request by delivering a round- lot or integral multiple of a round-lot of Oil Service 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 Oil Service HOLDRS would otherwise require the delivery of a fractional share, the trustee will sell such share in the market and the trust, in turn, will deliver cash in lieu of such share. Except with respect to the right to vote for dissolution of the trust, the Oil Service HOLDRS themselves will not have voting rights. Rights relating to the underlying securities....... You have the right to: . Receive all shareholder disclosure materials, including annual and quarterly reports, distributed by the issuers of the underlying securities. . Receive all proxy materials distributed by the issuers of the underlying securities and to instruct the trustee to vote the underlying securities or attend shareholder meetings yourself. . Receive dividends and other distributions on the underlying securities, if any are declared and paid to the trustee by an issuer of the underlying securities, net of any applicable taxes or fees. However, any distribution of securities by an issuer of 12 underlying securities will be deposited into the trust and will become part of the Oil Service HOLDRS unless the distributed securities are not listed for trading on a U.S. national securities exchange or through Nasdaq NMS or the distributed securities have a different Standard & Poor's sector classification than any of the underlying securities represented in the Oil Service HOLDRS at the time of the distribution. In addition, if the issuer of underlying securities offers rights to acquire additional underlying securities or other securities, the rights may be made available to you, may be disposed of or may lapse. If you wish to participate in a tender offer for underlying securities, or any form of stock repurchase program by an issuer of an underlying security, you must obtain the underlying securities by surrendering your Oil Service HOLDRS and receiving all of your underlying securities. For specific information about obtaining your underlying securities, you should read the discussion under the caption "Description of the depositary trust agreement." Reconstitution events....... The depositary trust agreement provides for the automatic distribution of underlying securities from the Oil Service 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 Oil Service 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 the trustee will distribute the shares of that company to the owners of the Oil Service HOLDRS. C. If the underlying securities of an issuer cease to be outstanding as a result of a merger, consolidation or other corporate combination, 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 Oil Service HOLDRS only if the distributed securities have a different Standard & Poor's sector classification than any of the underlying securities represented in the Oil Service 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 Nasdaq NMS. In any other case, the additional securities received will be deposited into the trust. 13 D. If an issuer's underlying securities are delisted from trading on a U.S. national securities exchange or through Nasdaq NMS and are not listed for trading on another U.S. national securities exchange or through Nasdaq NMS within five business days from the date the securities are delisted. To the extent a distribution of underlying securities from the Oil Service 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 Oil Service 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 sector classification that is different from the sector classification of any other security then included in the Oil Service HOLDRS or are not listed for trading on a U.S. national securities exchange or through Nasdaq NMS. It is anticipated, as a result of the broadly defined Standard & Poor's sector classifications, that most distributions or exchanges of securities will result in the inclusion of new securities in Oil Service HOLDRS. The trustee will review the publicly available information that identifies the Standard & Poor's 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 Oil Service HOLDRS will be distributed from the Oil Service HOLDRS to you. Standard & Poor's sector Standard & Poor's Corporation is an classification......... independent source of market information that, among other things, classifies the securities of public companies into various sector classifications based on its own criteria. There are 11 Standard & Poor's sector classifications and each class of publicly traded securities of a company are given only one sector classification. The securities included in the Oil Service HOLDRS are currently represented in the Energy sector. The Standard & Poor's sector classifications of the securities included in the Oil Service 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 sector classifications, or both. Termination events........... A. The Oil Service HOLDRS are delisted from the American Stock Exchange and are not listed for trading on another U.S. national securities exchange or through Nasdaq NMS within five business days from the date the Oil Service HOLDRS are delisted. 14 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. 75% of beneficial owners of outstanding Oil Service HOLDRS 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. Federal income tax consequences................ The federal income tax laws will treat a U.S. holder of Oil Service HOLDRS as directly owning the underlying securities. The Oil Service HOLDRS themselves will not result in any federal tax consequences separate from the tax consequences associated with ownership of the underlying securities. Listing...................... Application has been made to list the Oil Service HOLDRS on the American Stock Exchange under the symbol "OIH." Trading will take place only in round-lots of 100 Oil Service HOLDRS and round-lot multiples. A minimum of 150,000 Oil Service HOLDRS will be required to be outstanding when trading begins. Trading...................... Investors only will be able to acquire, hold, transfer and surrender a round-lot of 100 Oil Service HOLDRS. Bid and ask prices, however, will be quoted per single Oil Service HOLDR. Clearance and settlement..... The trust will issue Oil Service HOLDRS in book-entry form. Oil Service HOLDRS will be evidenced by one or more global certificates that the trustee will deposit 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 Oil Service HOLDRS." 15 THE TRUST General. This discussion highlights information about the Oil Service HOLDRS trust. You should read this information, information about the depositary trust agreement as well as the depositary trust agreement before you purchase Oil Service HOLDRS. The material terms of the depositary trust agreement are described in this prospectus under the heading "Description of the depositary trust agreement." The Oil Service HOLDRS trust. The trust will be formed pursuant to the depositary trust agreement, dated as of , 2001. The Bank of New York will be the trustee. The Oil Service HOLDRS Trust is not a registered investment company under the Investment Company Act of 1940. The Oil Service HOLDRS trust is intended to hold deposited shares for the benefit of owners of Oil Service HOLDRS. The trustee will perform only administrative and ministerial acts. The property of the trust will consist of the underlying securities and all monies or other property, if any, received by the trustee. The trust will terminate on December 31, 2040, or earlier if a termination event occurs. DESCRIPTION OF OIL SERVICE HOLDRS The trust will issue Oil Service HOLDRS under the depositary trust agreement described in this prospectus under the heading "Description of the depositary trust agreement." After the initial offering, the trust may issue additional Oil Service HOLDRS on a continuous basis when an investor deposits the requisite underlying securities with the trustee. You may only acquire, hold, trade and surrender Oil Service HOLDRS in a round-lot of 100 Oil Service HOLDRS and round-lot multiples. The trust will only issue Oil Service HOLDRS upon the deposit of the whole shares of underlying securities that are represented by a round-lot of 100 Oil Service HOLDRS. In the event of a stock split, reverse stock split, or other distribution by the issuer of an underlying security that results in a fractional share becoming represented by a round-lot of Oil Service HOLDRS, the trust may require a minimum of more than one round-lot of 100 Oil Service HOLDRS for an issuance so that the trust will always receive whole share amounts for issuance of Oil Service HOLDRS. Oil Service HOLDRS will represent your individual and undivided beneficial ownership interest in the specified underlying securities. The 20 companies selected as part of this receipt program are listed above in the section entitled "Highlights of Oil Service HOLDRS--The Oil Service HOLDRS." Beneficial owners of Oil Service HOLDRS will have the same rights and privileges as they would have if they beneficially owned the underlying securities outside of the trust. These include the right of investors to instruct the trustee to vote the securities, 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, and the right to cancel Oil Service HOLDRS to receive the underlying securities. See "Description of The Depositary Trust Agreement." Oil Service 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, referred to herein as the Exchange Act. The trust will not publish or otherwise calculate the aggregate value of the underlying securities represented by a receipt. Oil Service 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 Oil Service HOLDRS wishes to realize the dollar value of the underlying securities, that owner will have to cancel the Oil Service HOLDRS. Such cancellation will require payment of fees and expenses as described in "Description of The Depositary Trust Agreement--Withdrawal of Underlying Securities." Oil Service HOLDRS will be evidenced by one or more global certificates that the trustee will deposit with DTC and register in the name of Cede & Co., as nominee for DTC. Oil Service HOLDRS will be available only in book-entry form. Owners of Oil Service HOLDRS may hold their Oil Service HOLDRS through DTC, if they are participants in DTC, or indirectly through entities that are participants in DTC. 16 DESCRIPTION OF THE UNDERLYING SECURITIES Selection criteria. The underlying securities of the Oil Service HOLDRS are the common stock of a group of 20 specified companies that, among other things, provide drilling, well-site management and related products and services for the oil service industry and whose securities are registered under section 12 of the Exchange Act. The issuers of the underlying securities are considered to be 20 of the largest, most liquid companies involved in the oil service industry as measured by market capitalization and trading volume. The companies included in the Oil Service HOLDRS also meet the following minimum selection criteria as of December 12, 2000: . Market capitalization equal to or greater than $500 million; . Average daily trading volume of at least 100,000 shares over the 60 trading days before December 12, 2000; . Average daily dollar volume (that is, the average daily trading volume multiplied by the average closing price over the 60 day period prior to December 12, 2000) of at least $5 million over the 60 trading days before December 12, 2000; and . A trading history of at least 90 calendar days. The market capitalization of a company is determined by multiplying the market price of its common stock by the number of its outstanding shares of common stock. In determining whether a company was to be considered for inclusion in the Oil Service HOLDRS, Merrill Lynch, Pierce, Fenner & Smith Incorporated examined available public information about the company, including analysts' reports and other independent market sources. The ultimate determination of the inclusion of the 20 specified companies, however, rested solely within the discretion of Merrill Lynch, Pierce, Fenner & Smith Incorporated. After the initial deposit, one or more of the issuers of the underlying securities may no longer be involved in various segments of the oil service industry. In addition, as a result of a reconstitution event or a distribution of securities, the securities of a non-oil service company may be included in the Oil Service HOLDRS. Merrill Lynch, Pierce, Fenner & Smith Incorporated will determine, in its sole discretion, whether the issuer of a particular underlying security continues to have a leading market capitalization and will undertake to make adequate disclosure when necessary. Underlying securities. For a list of the underlying securities represented by Oil Service HOLDRS, please refer to "Highlights of Oil Service HOLDRS--The Oil Service 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 will be available from the American Stock Exchange and through a widely used electronic information dissemination system such as Bloomberg or Reuters. No investigation. In selecting the underlying securities, 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, other than to the extent required to determine whether the companies satisfied the program's stated selection criteria. Accordingly, before you acquire Oil Service 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, the selling group or any of their respective 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." 17 The following table and graph set forth the composite performance of all of the underlying securities represented by a single Oil Service HOLDR based upon the indicative share amounts set forth in the table on page 10 of this preliminary prospectus, measured at the close of each business day from March 21, 2000, the first date when all of the underlying securities were publicly traded, through January 3, 2001. 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. The actual share amounts will be determined on the pricing date and may differ from the indicative share amounts.
2000 Value - ---- ----- March 21........ 80.23 March 22........ 85.03 March 23........ 84.69 March 24........ 86.66 March 27........ 86.73 March 28........ 85.05 March 29........ 90.04 March 30........ 88.57 March 31........ 89.69 April 3......... 92.41 April 4......... 87.04 April 5......... 82.56 April 6......... 84.05 April 7......... 83.89 April 10........ 78.80 April 11........ 83.73 April 12........ 85.99 April 13........ 82.60 April 14........ 80.90 April 17........ 77.20 April 18........ 82.30 April 19........ 81.97 April 20........ 83.92 April 24........ 83.45 April 25........ 82.44 April 26........ 84.48 April 27........ 87.36 April 28........ 87.12 May 1........... 87.60 May 2........... 90.97 May 3........... 87.27 May 4........... 90.29 May 5........... 91.58 May 8........... 92.99
2000 Value - ---- ----- May 9........... 93.95 May 10.......... 92.44 May 11.......... 94.27 May 12.......... 95.52 May 15.......... 98.34 May 16.......... 96.47 May 17.......... 98.40 May 18.......... 94.80 May 19.......... 94.24 May 22.......... 89.50 May 23.......... 92.31 May 24.......... 91.06 May 25.......... 90.56 May 26.......... 88.33 May 30.......... 89.17 May 31.......... 93.91 June 1.......... 92.41 June 2.......... 86.06 June 5.......... 82.62 June 6.......... 87.34 June 7.......... 87.39 June 8.......... 89.34 June 9.......... 87.15 June 12......... 91.55 June 13......... 92.17 June 14......... 91.54 June 15......... 90.14 June 16......... 93.93 June 19......... 92.07 June 20......... 91.07 June 21......... 95.30 June 22......... 92.74 June 23......... 92.65 June 26......... 91.46
2000 Value - ---- ------ June 27......... 92.22 June 28......... 89.54 June 29......... 91.96 June 30......... 91.29 July 3.......... 91.62 July 5.......... 86.06 July 6.......... 86.95 July 7.......... 86.35 July 10......... 84.71 July 11......... 92.52 July 12......... 91.51 July 13......... 91.01 July 14......... 91.28 July 17......... 88.45 July 18......... 92.10 July 19......... 91.69 July 20......... 91.42 July 21......... 87.92 July 24......... 84.07 July 25......... 82.65 July 26......... 84.68 July 27......... 87.94 July 28......... 88.78 July 31......... 88.85 August 1........ 91.39 August 2........ 92.92 August 3........ 91.50 August 4........ 93.62 August 7........ 94.32 August 8........ 96.01 August 9........ 99.42 August 10....... 97.96 August 11....... 97.07 August 14....... 100.52
2000 Value - ---- ------ August 15....... 99.35 August 16....... 102.66 August 17....... 103.67 August 18....... 102.01 August 21....... 101.62 August 22....... 101.78 August 23....... 104.90 August 24....... 103.21 August 25....... 102.80 August 28....... 105.04 August 29....... 104.26 August 30....... 102.76 August 31....... 102.73 September 1..... 103.79 September 5..... 104.12 September 6..... 108.19 September 7..... 105.96 September 8..... 103.51 September 11.... 108.17 September 12.... 108.11 September 13.... 105.18 September 14.... 105.52 September 15.... 107.20 September 18.... 102.80 September 19.... 100.77 September 20.... 98.14 September 21.... 96.25 September 22.... 94.74 September 25.... 95.24 September 26.... 97.54 September 27.... 99.57 September 28.... 99.36 September 29.... 100.70 October 2....... 102.64
2000 Value - ---- ------ October 3....... 101.56 October 4....... 96.77 October 5....... 95.93 October 6....... 95.08 October 9....... 95.71 October 10...... 99.16 October 11...... 100.86 October 12...... 103.11 October 13...... 99.15 October 16...... 95.97 October 17...... 96.77 October 18...... 96.55 October 19...... 96.44 October 20...... 99.39 October 23...... 95.96 October 24...... 93.16 October 25...... 88.52 October 26...... 89.32 October 27...... 85.60 October 30...... 86.87 October 31...... 87.80 November 1...... 92.72 November 2...... 90.47 November 3...... 91.19 November 6...... 90.05 November 7...... 91.10 November 8...... 93.40 November 9...... 91.31 November 10..... 88.88 November 13..... 85.74 November 14..... 87.84 November 15..... 92.16 November 16..... 91.95 November 17..... 88.91
2000 Value - ---- ----- November 20..... 87.12 November 21..... 87.92 November 22..... 84.77 November 24..... 87.43 November 27..... 86.32 November 28..... 84.98 November 29..... 79.16 November 30..... 74.09 December 1...... 76.50 December 4...... 77.06 December 5...... 76.84 December 6...... 76.41 December 7...... 77.99 December 8...... 80.25 December 11..... 84.52 December 12..... 85.23 December 13..... 83.75 December 14..... 81.54 December 15..... 83.59 December 18..... 90.62 December 19..... 92.90 December 20..... 89.34 December 21..... 89.42 December 22..... 89.42 December 26..... 94.22 December 27..... 93.47 December 28..... 95.94 December 29..... 94.26 2001 Value - ---- ----- January 2....... 94.58 January 3....... 91.02
[GRAPH] 18 DESCRIPTION OF THE DEPOSITARY TRUST AGREEMENT General. The depositary trust agreement, dated as of , 2001, among Merrill Lynch, Pierce, Fenner & Smith Incorporated, The Bank of New York, as trustee, other depositors and the owners of the Oil Service HOLDRS, provides that Oil Service HOLDRS will represent an owner's undivided beneficial ownership interest in the securities of the underlying companies. The trustee. The Bank of New York will serve as trustee. 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 Oil Service HOLDRS. You may create and cancel Oil Service HOLDRS only in round-lots of 100 Oil Service HOLDRS. You may create Oil Service HOLDRS by delivering to the trustee the requisite underlying securities. The trust will only issue Oil Service HOLDRS upon the deposit of the whole shares represented by a round-lot of 100 Oil Service HOLDRS. In the event that a fractional share comes to be represented by a round-lot of Oil Service HOLDRS, the trust may require a minimum of more than one round-lot of 100 Oil Service HOLDRS for an issuance so that the trust will always receive whole share amounts for issuance of Oil Service HOLDRS. Similarly, you must surrender Oil Service HOLDRS in integral multiples of 100 Oil Service HOLDRS to withdraw deposited shares from the trust. The trustee will not deliver fractional shares of underlying securities, and to the extent that any cancellation of Oil Service HOLDRS would otherwise require the delivery of fractional shares, the trust will deliver cash in lieu of such shares. 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. The trustee will deliver proxy solicitation materials provided by issuers of the underlying securities to you 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 Oil Service HOLDRS, other than Merrill Lynch, Pierce, Fenner & Smith Incorporated owning Oil Service 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 trustee fees, distributions of cash, including dividends, securities or property, if any, made with respect to the underlying securities. 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 Oil Service HOLDRS unless such securities are not listed for trading on a U.S. national securities exchange or through Nasdaq NMS or such distributed securities have a different Standard & Poor's sector classification than any of the underlying securities represented in the Oil Service 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 made available 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. Otherwise, if practicable, the rights will be disposed of and the proceeds provided to you by the trustee. In all other cases, the rights will lapse. You will be obligated to pay any tax or other charge that may become due with respect to Oil Service HOLDRS. 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 19 round-lot of 100 Oil Service HOLDRS from quarterly dividends, if any, paid to the trustee by the issuers of the underlying securities. With respect to the aggregate custody fee payable in any calendar year for each Oil Service 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. 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 Oil Service HOLDRS and receive underlying securities 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 Oil Service HOLDRS in order to receive underlying securities, you will pay to the trustee a cancellation fee of up to $10.00 per round-lot of 100 Oil Service HOLDRS. Further issuances of Oil Service HOLDRS. The depositary trust agreement provides for further issuances of Oil Service HOLDRS on a continuous basis without your consent. Reconstitution events. The depositary trust agreement provides for the automatic distribution of underlying securities 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 Exchange Act, 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 Oil Service 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 the trustee will distribute the shares of that company to the owners of the Oil Service 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 Oil Service HOLDRS only if the distributed securities have a different Standard & Poor's sector classification than any of the underlying securities represented in the Oil Service 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 Nasdaq NMS. 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 Nasdaq NMS and are not listed for trading on another U.S. national securities exchange or through Nasdaq NMS within 5 business days from the date the 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 Oil Service 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 20 company, unless the securities received (1) have a different Standard & Poor's sector classification than any of the underlying securities represented in the Oil Service HOLDRS at the time of distribution or exchange or (2) are not listed for trading on a U.S. national securities exchange or through Nasdaq NMS. It is anticipated, as a result of the broadly defined sector classifications, that most distributions or exchanges of securities will result in the inclusion of new securities in the Oil Service HOLDRS. The trustee will review the publicly available information that identifies the Standard & Poor's 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 Oil Service HOLDRS will be distributed from the Oil Service HOLDRS to you. Standard & Poor's sector classifications. Standard & Poor's Corporation is an independent source of market information that, among other things, classifies the securities of public companies into various sector classifications based on its own criteria. There are 11 Standard & Poor's sector classifications and each class of publicly traded securities of a company are given only one sector classification. The securities included in the Oil Service HOLDRS are currently represented in the Energy sector. The Standard & Poor's sector classifications of the securities included in the Oil Service 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 sector classifications, or both. 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 Merrill Lynch, Pierce, Fenner & Smith Incorporated, as initial depositor, of its intent to resign. Upon termination, the beneficial owners of Oil Service HOLDRS will surrender their Oil Service 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 Oil Service HOLDRS are delisted from the American Stock Exchange and are not listed for trading on another U.S. national securities exchange or through Nasdaq NMS within 5 business days from the date the Oil Service HOLDRS are delisted. Finally, the trust will terminate if 75% of the owners of outstanding Oil Service 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 Oil Service 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 Oil Service 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 Oil Service HOLDRS will not become effective until 30 days after notice of the amendment is given to the owners of Oil Service HOLDRS. Issuance and cancellation fees. After the initial public offering, the trust expects to issue more Oil Service HOLDRS. If you wish to create Oil Service 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 Oil Service HOLDRS. If you wish to cancel your Oil Service 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 Oil Service HOLDRS issued. The trustee may negotiate either of these fees depending on the volume, frequency and size of the issuance or cancellation transactions. 21 Commissions. If you choose to create or cancel Oil Service HOLDRS after the conclusion of the initial public offering, you will not be charged the underwriting fee. However, in addition to the issuance and cancellation fees described above, 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 any of the members of the selling group or another broker, in addition to the issuance or cancellation fee, as the case may be, 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 Oil Service 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 Oil Service 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 Oil Service HOLDRS will be 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 will assume 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 Oil Service HOLDRS. The trustee undertakes to perform only those duties as are specifically set forth in the depositary trust agreement. Subject to the preceding sentence, the trustee will be liable for its own negligence or misconduct except for good faith errors in judgment so long as the trustee was not negligent in ascertaining the relevant facts. 22 FEDERAL INCOME TAX CONSEQUENCES General The following is a summary of the U.S. federal income tax consequences relating to the Oil Service HOLDRS for: . a citizen or resident of the United States; . a corporation or partnership created or organized in the United States or under the laws of the United States; . an estate, the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; . 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 (each of the above, a "U.S. receipt holder"); and . 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 Oil Service HOLDRS as "capital assets" (generally, property held for investment) within the meaning of section 1221 of the Internal Revenue Code of 1986, as amended. 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 Oil Service HOLDRS A receipt holder purchasing and owning Oil Service HOLDRS will be treated, for U.S. federal income tax purposes, as directly owning a proportionate share of the underlying securities represented by Oil Service 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 Oil Service 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 Oil Service 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 Oil Service HOLDRS. Similarly, with respect to sales of Oil Service HOLDRS for cash in the secondary market, the amount realized with respect to a sale of Oil Service HOLDRS will be equal to the aggregate amount realized with respect to each of the underlying securities. The distribution of any securities by the trust upon the surrender of Oil Service HOLDRS, the occurrence of a reconstitution event, or a termination event will not be a taxable event, except to the extent that 23 cash is distributed in 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 Oil Service 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 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 Oil Service 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: 24 . at least 75% of its gross income is "passive income;" or . 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. 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 Oil Service 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, 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 Oil Service HOLDRS or of the underlying securities unless: . 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, . 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 . 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 25 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. 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. Backup withholding tax, withholding tax and information reporting requirements Final U.S. Treasury Regulations relating to backup withholding, withholding and information reporting have been issued that modify certain rules with respect to payments made after December 31, 2000. Investors are urged to consult their own tax advisors regarding the application of the backup withholding, withholding and information reporting requirements, including the new regulations, with respect to their particular circumstances. ERISA CONSIDERATIONS Any plan fiduciary which proposes to have a plan acquire Oil Service 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 Oil Service 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 will issue to Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Merrill Lynch, Pierce, Fenner & Smith Incorporated will deposit the underlying securities to receive Oil Service HOLDRS. Merrill Lynch, Pierce, Fenner & Smith Incorporated, Robert W. Baird & Co. Incorporated, First Union Securities, Inc., Legg Mason Wood Walker, Incorporated, Morgan Keegan & Company, Inc., Raymond James & Associates, Inc., Sutro & Co. Incorporated and Tucker Anthony Incorporated, the selling group, propose to offer the Oil Service HOLDRS to the public at the offering price set forth on the cover page of this prospectus, which includes an underwriting fee of 2%. Investors who purchase Oil Service HOLDRS through a fee-based brokerage account should consider that the underwriting fee is in addition to the fees charged in that account. We recommend that investors review the terms of their brokerage accounts for details on applicable charges. Merrill Lynch, Pierce, Fenner & Smith Incorporated will provide Oil Service HOLDRS to the other members of the selling group at the public offering price, as set forth on the cover page of this prospectus, less a concession that is not in excess of %. The selling group may allow to certain dealers, and the dealers may reallow, a discount on sales of Oil Service HOLDRS not in excess of % of the public offering price 26 as set forth on the cover page of this prospectus. We expect the trust to deliver the initial distribution of Oil Service HOLDRS against deposit of the underlying securities in New York, New York on , 2001. After the initial offering, the public offering price, concession and discount may be changed. The trust will continue to issue Oil Service HOLDRS in connection with deposits of underlying securities. This offering is being made in compliance with Conduct Rule 2810 of the National Association of Securities Dealers, Inc. Accordingly, sales will not be made to a discretionary account without the prior written approval of a purchaser of Oil Service HOLDRS. Members of the selling group and their affiliates have from time to time provided investment banking and other financial services to some of the issuers of the underlying securities and expect in the future to provide these services, for which they have received and will receive customary fees and commissions. They also may have served as counterparties in other transactions with some of the issuers of the underlying securities. Merrill Lynch, Pierce, Fenner & Smith Incorporated may use this prospectus, as updated from time to time, in connection with offers and sales related to market-making transactions in the Oil Service HOLDRS. Merrill Lynch, Pierce, Fenner & Smith Incorporated may act as principal or agent in these 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 some 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 Oil Service 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 these liabilities. LEGAL MATTERS Legal matters, including the validity of the Oil Service HOLDRS, will be passed upon for Merrill Lynch, Pierce, Fenner & Smith Incorporated, the initial depositor and the underwriters, by Shearman & Sterling, New York, New York. Shearman & Sterling, as special U.S. tax counsel to the trust, also will render an opinion regarding the material federal income tax consequences relating to the Oil Service 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 Oil Service 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 Exchange Act. The trust will file modified reports pursuant to the Exchange Act. Since the securities of the issuers of the underlying securities are registered under the Exchange Act, 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 27 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 may be 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 also be obtained from other sources including, but not limited to, press releases, newspaper articles and other publicly disseminated information. The trust and the selling group and their affiliates are not affiliated with the issuers of the underlying securities, and the issuers of the underlying securities have no obligations with respect to Oil Service HOLDRS. This prospectus relates only to Oil Service 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 Oil Service 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 Oil Service HOLDRS have been publicly disclosed. 28 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 1995, 1996, 1997, 1998, 1999 and 2000. A table outlining the primary U.S. stock market on which the securities of the issuers are listed can be found on page 10. The foreign stock market or markets on which the equity securities of the foreign issuers included in the Oil Service HOLDRS, if any, are listed is 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. BAKER HUGHES INCORPORATED (BHI) Baker Hughes Incorporated provides products and services for oil and gas exploration and for the drilling, completion and production of oil and gas wells. Baker Hughes also offers oil and gas well reservoir maintenance and evaluation. Baker Hughes' principal markets include all major oil and gas producing regions in the world. Customers of Baker Hughes include multi- national, independent and government-owned oil companies. On November 30, 2000 Baker Hughes announced, subject to regulatory approval, the completion of a joint venture with Schlumberger N.V. Baker Hughes will retain ownership of 30% of the joint venture and will contribute the technology to analyze the producing potential of seismic basins. Schlumberger will contribute $500 million in cash to Baker Hughes. In addition, in October 2000, the board of directors of Baker Hughes approved a plan to sell Baker Hughes' oil and gas exploration business.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- January 17.63 January 25.88 January 39.00 January 38.50 January 16.88 January 24.69 February 19.13 February 26.38 February 35.50 February 40.94 February 18.00 February 25.88 March 20.38 March 29.13 March 38.38 March 40.25 March 24.31 March 30.25 April 22.50 April 31.75 April 34.50 April 40.50 April 29.88 April 31.81 May 22.50 May 31.38 May 37.50 May 36.00 May 31.19 May 36.25 June 20.50 June 32.88 June 38.69 June 34.56 June 33.50 June 32.00 July 22.13 July 29.38 July 44.06 July 25.00 July 34.81 July 34.63 August 22.50 August 30.25 August 42.50 August 18.25 August 34.13 August 36.56 September 20.38 September 30.38 September 43.81 September 21.00 September 29.00 September 37.13 October 19.63 October 35.50 October 45.94 October 22.06 October 27.94 October 34.38 November 20.38 November 36.63 November 41.88 November 18.31 November 25.25 November 33.06 December 24.38 December 34.50 December 43.63 December 17.63 December 21.06 December 41.56
The closing price on January , 2001 was . A-1 BJ SERVICES COMPANY (BJS) BJ Services Company provides pressure pumping and other oilfield services to the petroleum industry. BJ Services pressure pumping services facilitate the completion of onshore and offshore oil and natural gas wells and in remedial work on existing wells. These services are designed to improve the strength and enhance the performance of oil and natural gas wells. BJ Services oilfield services also include product and equipment sales for pressure pumping services, tabular services provided to the oil and natural gas exploration and production industry, commissioning and inspection services to refineries, pipelines and offshore platforms and specialty chemical services.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- January 8.56 January 13.38 January 23.13 January 30.28 January 14.75 January 42.88 February 9.31 February 13.81 February 19.88 February 34.38 February 14.06 February 57.06 March 10.25 March 16.75 March 23.94 March 36.44 March 23.25 March 73.88 April 11.50 April 19.19 April 23.56 April 37.50 April 26.75 April 70.38 May 12.75 May 16.88 May 27.63 May 32.69 May 27.56 May 71.63 June 11.38 June 17.56 June 26.81 June 29.06 June 29.44 June 60.50 July 12.44 July 16.56 July 32.69 July 21.06 July 30.56 July 58.38 August 12.50 August 18.81 August 36.13 August 12.63 August 34.25 August 67.00 September 12.63 September 18.13 September 37.13 September 16.25 September 31.81 September 61.13 October 11.81 October 22.44 October 42.38 October 20.44 October 34.31 October 52.44 November 12.31 November 23.88 November 35.91 November 13.81 November 34.88 November 53.25 December 14.50 December 25.50 December 35.97 December 15.63 December 41.81 December 68.88
The closing price on January , 2001 was . COOPER CAMERON CORPORATION (CAM) Cooper Cameron Corporation manufactures oil and gas pressure control equipment and aftermarket products for the energy industry and industrial markets. Cooper Cameron's products include control equipment and systems used in onshore, offshore and subsea oil and gas drilling, production and transmission. Cooper Cameron also designs, manufactures, markets and services compression and power equipment including air compressors, engines and turbochargers. Cooper Cameron markets its products through its own sales and marketing employees and distributors and agents in various international locations.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- January * January 18.63 January 36.44 January 51.44 January 23.38 January 49.50 February * February 16.25 February 32.75 February 53.63 February 23.50 February 55.25 March * March 21.00 March 34.25 March 60.38 March 33.88 March 66.88 April * April 22.56 April 35.63 April 66.44 April 38.50 April 75.00 May * May 22.69 May 40.94 May 59.50 May 36.19 May 69.75 June 9.44 June 21.88 June 46.75 June 51.00 June 37.06 June 66.00 July 11.19 July 23.13 July 58.00 July 35.06 July 36.25 July 64.63 August 11.81 August 26.38 August 64.88 August 21.75 August 41.63 August 77.81 September 12.94 September 28.69 September 71.81 September 28.50 September 37.75 September 73.69 October 12.50 October 31.94 October 72.25 October 34.75 October 38.69 October 54.50 November 13.00 November 32.88 November 60.94 November 24.38 November 42.88 November 54.25 December 17.75 December 38.25 December 61.00 December 24.50 December 48.94 December 66.06
The closing price on January , 2001 was . A-2 DIAMOND OFFSHORE DRILLING, INC. (DO) Diamond Offshore Drilling, Inc. is principally engaged in the contract drilling of offshore oil and gas wells. Diamond provides offshore drilling services to both independent and government-owned oil and gas companies. Diamond also offers project management, extended well tests and drilling and completion operations.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- January * January 19.06 January 33.06 January 44.63 January 23.00 January 27.81 February * February 18.31 February 29.31 February 46.06 February 20.69 February 31.75 March * March 21.44 March 34.25 March 45.38 March 31.63 March 39.94 April * April 24.88 April 32.19 April 50.63 April 33.06 April 40.31 May * May 23.94 May 35.56 May 47.81 May 27.25 May 40.88 June * June 28.50 June 38.94 June 40.31 June 28.38 June 35.13 July * July 23.63 July 46.63 July 32.81 July 32.00 July 37.56 August * August 25.50 August 54.63 August 20.88 August 38.25 August 44.81 September * September 27.50 September 55.19 September 26.06 September 33.38 September 41.00 October 12.44 October 30.44 October 62.25 October 30.69 October 32.00 October 34.56 November 14.44 November 31.88 November 49.88 November 22.25 November 30.25 November 30.19 December 16.88 December 28.50 December 48.13 December 23.69 December 30.56 December 40.00
The closing price on January , 2001 was . ENSCO INTERNATIONAL INCORPORATED (ESV) Ensco International Incorporated is an international offshore contract drilling company that drills and completes oil and gas wells throughout the world. Ensco also provides marine transportation services in the Gulf of Mexico, including rig towing and other towing services and supply vessels to support general drilling and production activity by ferrying supplies from land to offshore drilling sites. Ensco's customer base includes major international, government-owned and independent oil and gas companies.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- January 6.06 January 11.94 January 27.56 January 27.13 January 9.50 January 22.88 February 5.88 February 12.06 February 21.69 February 29.00 February 8.88 February 30.06 March 7.06 March 13.94 March 24.63 March 27.88 March 13.31 March 36.13 April 8.38 April 15.00 April 23.75 April 28.38 April 18.56 April 33.00 May 8.31 May 15.19 May 24.94 May 25.25 May 17.75 May 34.94 June 8.06 June 16.25 June 26.38 June 17.50 June 19.94 June 35.81 July 8.00 July 13.50 July 33.06 July 13.56 July 20.44 July 33.75 August 9.00 August 14.63 August 31.75 August 10.50 August 21.31 August 39.88 September 8.63 September 16.25 September 39.44 September 10.88 September 18.06 September 38.25 October 8.44 October 21.63 October 42.06 October 13.19 October 19.38 October 33.25 November 8.44 November 21.94 November 35.94 November 9.69 November 20.06 November 24.31 December 11.50 December 24.25 December 33.50 December 10.69 December 22.88 December 34.06
The closing price on January , 2001 was . A-3 GLOBAL MARINE INC. (GLM) Global Marine Inc. provides contract drilling services and offshore drilling management services. Global Marine also conducts oil and gas exploration, development and production activities, including participation in the development and operation of properties for oil and gas production.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- January 3.75 January 8.63 January 22.50 January 23.00 January 8.50 January 17.88 February 4.13 February 8.88 February 18.75 February 23.31 February 7.81 February 22.44 March 4.25 March 10.00 March 21.38 March 24.88 March 11.75 March 25.38 April 4.50 April 11.38 April 20.13 April 23.38 April 14.88 April 24.06 May 5.38 May 12.25 May 22.50 May 22.25 May 14.06 May 28.13 June 5.88 June 13.88 June 23.31 June 18.81 June 15.50 June 28.19 July 5.63 July 13.63 July 28.63 July 13.69 July 16.63 July 28.31 August 6.75 August 14.38 August 28.44 August 9.31 August 17.75 August 32.31 September 7.13 September 15.75 September 33.31 September 11.13 September 16.44 September 30.88 October 6.50 October 18.38 October 31.13 October 12.38 October 15.19 October 26.50 November 6.75 November 19.50 November 26.31 November 9.25 November 15.31 November 21.94 December 8.75 December 20.63 December 24.56 December 9.00 December 16.63 December 28.38
The closing price on January , 2001 was . GRANT PRIDECO, INC. (GRP) Grant Prideco, Inc. is a manufacturer and supplier of products used for the exploration and production of oil and gas. Grant Prideco provides drill stem products, such as drill pipe, tubes and engineered connections, used for casing and subsea structures. Grant Prideco has manufacturing facilities located in the United States, Mexico, Canada, Europe and Asia and has sales, service and repair locations throughout the world.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- January * January * January * January * January * January * February * February * February * February * February * February * March * March * March * March * March * March 18.88 April * April * April * April * April * April 19.25 May * May * May * May * May * May 23.25 June * June * June * June * June * June 25.00 July * July * July * July * July * July 20.13 August * August * August * August * August * August 23.50 September * September * September * September * September * September 21.94 October * October * October * October * October * October 18.56 November * November * November * November * November * November 14.13 December * December * December * December * December * December 21.94
The closing price on January , 2001 was . A-4 HALLIBURTON COMPANY (HAL) Halliburton Company offers engineering and construction services to the oil and gas industry throughout the world, including the provision and operation of the facilities that are needed for the production and transport of oil and gas. Halliburton also offers services ranging from initial evaluation of oil producing formations to drilling, production enhancement and well maintenance. Halliburton markets most of its products and services through internal servicing and sales organizations.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- January 18.13 January 25.81 January 36.19 January 44.94 January 29.69 January 36.13 February 18.63 February 27.44 February 32.31 February 46.56 February 28.50 February 38.19 March 18.19 March 28.44 March 33.88 March 50.13 March 38.50 March 41.13 April 19.19 April 28.69 April 35.31 April 54.75 April 42.63 April 44.19 May 19.50 May 27.81 May 38.69 May 47.50 May 41.38 May 50.94 June 17.88 June 27.75 June 39.63 June 44.44 June 45.25 June 47.19 July 20.31 July 26.06 July 46.00 July 36.25 July 46.13 July 46.13 August 21.19 August 26.31 August 47.75 August 26.56 August 46.38 August 53.00 September 20.88 September 25.81 September 52.00 September 28.75 September 41.00 September 48.94 October 20.75 October 28.31 October 59.63 October 36.00 October 37.69 October 37.06 November 21.69 November 30.13 November 53.94 November 29.38 November 38.63 November 33.38 December 25.31 December 30.13 December 51.88 December 29.63 December 40.25 December 36.25
The closing price on January , 2001 was . HANOVER COMPRESSOR COMPANY (HC) Hanover Compressor Company offers comprehensive natural gas compression services and provides natural gas handling service, fabrication and equipment. In addition, Hanover Compressor designs, fabricates, and sells or rents equipment designed to heat, separate, dehydrate and measure crude oil and natural gas. Hanover markets and sells its products and services though its own sales force to companies engaged in all aspects of the oil and gas industry.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- January * January * January * January 8.84 January 11.97 January 19.81 February * February * February * February 9.69 February 10.94 February 23.47 March * March * March * March 12.50 March 13.25 March 28.44 April * April * April * April 12.94 April 14.34 April 29.13 May * May * May * May 12.97 May 13.88 May 29.34 June * June * June * June 13.53 June 16.06 June 38.00 July * July * July 12.09 July 11.50 July 18.31 July 34.13 August * August * August 11.81 August 9.28 August 17.97 August 31.75 September * September * September 12.25 September 12.09 September 15.91 September 32.94 October * October * October 10.81 October 12.63 October 18.50 October 32.63 November * November * November 10.50 November 11.31 November 17.13 November 30.69 December * December * December 10.22 December 12.84 December 18.88 December 44.56
The closing price on January , 2001 was . A-5 NABORS INDUSTRIES, INC. (NBR) Nabors Industries, Inc. conducts oil, gas and geothermal land drilling operations in the United States, Canada, South and Central America and the Middle East. Nabors provides well servicing, and major well overhaul, redrilling and initial drilling services. Nabors provides ancillary well-site services, including oilfield management, engineering, transportation, maintenance and other support services.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- January 6.50 January 12.13 January 18.50 January 23.94 January 12.50 January 29.63 February 6.75 February 12.88 February 15.38 February 22.88 February 11.50 February 35.88 March 7.50 March 14.25 March 19.52 March 23.75 March 18.19 March 38.81 April 9.44 April 15.38 April 18.75 April 25.19 April 20.50 April 39.44 May 8.63 May 15.38 May 22.44 May 23.56 May 20.00 May 43.00 June 8.44 June 16.25 June 25.00 June 20.00 June 24.38 June 41.56 July 9.06 July 14.38 July 31.25 July 17.06 July 23.31 July 41.63 August 9.25 August 14.88 August 34.44 August 11.81 August 27.00 August 47.56 September 9.44 September 13.63 September 39.13 September 15.19 September 25.00 September 52.40 October 8.63 October 16.63 October 41.13 October 18.50 October 22.69 October 50.90 November 9.88 November 19.38 November 35.06 November 13.25 November 26.56 November 43.94 December 11.25 December 19.25 December 31.63 December 13.50 December 30.94 December 59.15
The closing price on January , 2001 was . NATIONAL-OILWELL, INC. (NOI) National-Oilwell, Inc. designs, manufactures and sells comprehensive systems and components used in oil and gas drilling and production and offers supply chain integration services to the oil and gas industry. National- Oilwell's drilling products include major drilling rig components, drilling motors and specialized drilling tools. National-Oilwell also offers supply chain integration services through its network of distribution service centers that provide procurement, inventory management and logistics services.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- January * January * January 16.00 January 26.50 January 9.75 January 18.75 February * February * February 15.38 February 28.00 February 8.88 February 24.25 March * March * March 16.00 March 32.94 March 11.56 March 30.88 April * April * April 19.44 April 37.94 April 13.00 April 23.94 May * May * May 24.19 May 34.94 May 12.06 May 26.00 June * June * June 28.75 June 26.81 June 14.00 June 32.88 July * July * July 31.03 July 21.06 July 15.94 July 33.00 August * August * August 30.78 August 7.75 August 17.00 August 34.69 September * September * September 37.41 September 12.38 September 16.44 September 31.25 October * October 11.63 October 38.28 October 15.88 October 13.56 October 29.25 November * November 14.13 November 31.69 November 9.88 November 14.25 November 31.88 December * December 15.38 December 34.19 December 11.19 December 15.69 December 38.68
The closing price on January , 2001 was . A-6 NOBLE DRILLING CORPORATION (NE) Noble Drilling Corporation is a provider of diversified services for the oil and gas industry. Noble performs contract drilling services through its offshore drilling units located in markets throughout the world. In addition, Noble also provides engineering services for the design of drilling equipment for offshore well development, production management services and fixed price contract drilling services.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- January 5.00 January 9.81 January 21.88 January 26.75 January 13.40 January 29.31 February 5.50 February 9.75 February 17.63 February 28.38 February 12.13 February 36.00 March 6.13 March 12.38 March 17.38 March 30.56 March 17.38 March 41.38 April 6.63 April 15.00 April 17.38 April 32.31 April 19.63 April 39.94 May 7.38 May 13.50 May 21.75 May 29.50 May 18.13 May 43.38 June 7.38 June 13.88 June 22.50 June 24.06 June 19.69 June 41.19 July 6.50 July 13.75 July 28.13 July 18.88 July 22.69 July 43.56 August 8.00 August 14.25 August 28.44 August 11.00 August 24.63 August 48.50 September 7.75 September 15.13 September 32.50 September 14.75 September 21.88 September 50.25 October 7.00 October 18.63 October 35.56 October 17.19 October 22.19 October 41.56 November 7.25 November 19.25 November 30.06 November 11.56 November 27.88 November 28.81 December 9.00 December 19.88 December 30.63 December 12.94 December 32.75 December 43.44
The closing price on January , 2001 was . R&B FALCON CORPORATION (FLC) R&B Falcon Corporation provides offshore contract drilling and ancillary services throughout the world. R&B Falcon provides the equipment and personnel for drilling wells, conducting well overhauls and redrilling of onshore and offshore wells. R&B Falcon also provides equipment for ocean transportation of materials in connection with offshore construction projects. On August 19, 2000, R&B Falcon entered into a definitive agreement and plan of merger with Transocean Sedco Forex Inc. The merger has been approved by the shareholders of R&B Falcon and Transocean, but the merger is subject to foreign regulatory approval and customary closing conditions.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- January * January * January * January 30.38 January 7.13 January 12.69 February * February * February * February 26.50 February 5.63 February 15.38 March * March * March * March 29.63 March 8.63 March 19.69 April * April * April * April 32.06 April 10.00 April 20.75 May * May * May * May 28.69 May 9.19 May 23.13 June * June * June * June 22.63 June 9.38 June 23.56 July * July * July * July 16.56 July 10.19 July 19.94 August * August * August * August 9.00 August 12.81 August 28.50 September * September * September * September 12.06 September 13.13 September 27.88 October * October * October * October 13.63 October 12.44 October 25.00 November * November * November * November 9.25 November 12.38 November 19.00 December * December * December * December 7.56 December 13.25 December 22.94
The closing price on January , 2001 was . A-7 ROWAN COMPANIES, INC. (RDC) Rowan Companies, Inc. provides international and domestic contract drilling and aviation services and operates mini-steel mill, manufacturing and marine construction divisions. Rowan provides its contract drilling services primarily in the Gulf of Mexico, the North Sea, Eastern Canada it uses its fleet of mobile offshore drilling platforms and land drilling rigs in Texas and Louisiana. Rowan also produces heavy equipment for the mining, timber and transportation industries through its manufacturing and mini-steel mill operations and designs and builds mobile offshore drilling rigs through its marine construction division. Rowan's aviation operations provide contract and charter aviation services principally in Alaska, Louisiana, Texas and the western United States.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- January 5.88 January 10.88 January 25.25 January 26.38 January 8.81 January 22.69 February 6.25 February 10.88 February 19.88 February 28.19 February 8.63 February 24.88 March 6.50 March 12.75 March 22.62 March 29.00 March 12.69 March 29.44 April 6.88 April 14.75 April 18.38 April 29.44 April 16.00 April 27.94 May 7.50 May 15.13 May 23.13 May 25.56 May 16.88 May 31.06 June 8.13 June 14.75 June 28.19 June 19.44 June 18.25 June 30.38 July 7.25 July 14.38 July 32.88 July 14.13 July 18.81 July 25.25 August 8.13 August 15.38 August 29.88 August 9.50 August 18.63 August 31.00 September 7.50 September 18.63 September 35.81 September 11.31 September 16.25 September 29.00 October 6.63 October 22.38 October 38.88 October 14.56 October 15.63 October 25.19 November 7.50 November 23.63 November 34.00 November 9.81 November 17.13 November 19.88 December 9.63 December 22.63 December 30.50 December 9.88 December 21.69 December 27.00
The closing price on January , 2001 was . SANTA FE INTERNATIONAL CORPORATION (SDC) Santa Fe International is an international offshore and land contract driller providing drilling related services to the petroleum industry throughout the world, including third party drilling rig operations, incentive drilling and engineering and project management services. Santa Fe's customers consist primarily of major, government-owned and independent oil companies.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- January * January * January * January 36.63 January 13.75 January 26.75 February * February * February * February 35.31 February 13.38 February 28.69 March * March * March * March 37.94 March 18.69 March 37.00 April * April * April * April 39.19 April 21.75 April 34.38 May * May * May * May 35.00 May 20.25 May 38.81 June * June * June 34.00 June 30.25 June 23.00 June 34.94 July * July * July 41.25 July 23.00 July 20.88 July 35.13 August * August * August 44.81 August 13.50 August 26.38 August 39.31 September * September * September 46.50 September 15.38 September 21.56 September 45.06 October * October * October 49.19 October 18.44 October 21.06 October 36.50 November * November * November 41.94 November 12.25 November 22.81 November 24.69 December * December * December 40.75 December 14.50 December 25.88 December 32.06
The closing price on January , 2001 was . A-8 SCHLUMBERGER N.V. (SLB) Schlumberger N.V. provides technical services to the oil and gas, utility, semiconductor, smart card, network and Internet solutions industries. Schlumberger provides virtually all exploration and production services required during the life of an oil and gas reservoir. In addition, Schlumberger assists utility companies throughout the world, help them manage resources and enhance transactions. Schlumberger also supplies productivity enhancing technology, products, services and systems to the semiconductor, banking, telecommunications and transportation industries.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- January 23.60 January 31.38 January 49.72 January 65.95 January 42.62 January 61.06 February 25.45 February 32.61 February 45.03 February 67.68 February 43.46 February 73.86 March 26.68 March 35.41 March 47.99 March 67.79 March 53.86 March 76.50 April 28.13 April 39.49 April 49.55 April 74.28 April 57.16 April 76.56 May 29.09 May 37.31 May 53.30 May 69.86 May 53.86 May 73.56 June 27.80 June 37.70 June 55.93 June 61.13 June 57.00 June 74.63 July 29.98 July 35.80 July 68.35 July 54.20 July 54.20 July 73.92 August 28.86 August 37.75 August 68.18 August 39.21 August 59.68 August 85.33 September 29.25 September 37.81 September 75.34 September 45.53 September 55.77 September 82.31 October 27.86 October 44.36 October 78.30 October 46.98 October 54.20 October 76.13 November 28.41 November 46.65 November 73.66 November 39.99 November 54.33 November 62.00 December 30.99 December 44.69 December 72.04 December 41.50 December 56.13 December 79.94
The closing price on January , 2001 was . SMITH INTERNATIONAL, INC. (SII) Smith International, Inc. supplies products and services to the oil and gas exploration and production industry, the petrochemical industry, and other industries throughout the world. Smith International's products include drilling and lubrication systems, waste-management services and the manufacture of diamond drill bits and drilling tools. Smith International also offers engineering services designed to optimize drilling operations and the use of its products. Smith International also operates a supply-chain network that provides well maintenance products.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- January 11.63 January 23.50 January 45.50 January 49.63 January 25.31 January 51.31 February 13.38 February 20.38 February 40.63 February 53.25 February 24.50 February 62.69 March 14.25 March 25.25 March 45.63 March 55.06 March 40.00 March 77.50 April 17.25 April 29.75 April 47.38 April 58.75 April 44.88 April 76.00 May 17.88 May 31.50 May 52.38 May 49.06 May 43.25 May 79.06 June 16.75 June 30.13 June 60.75 June 34.81 June 43.44 June 72.81 July 17.00 July 33.50 July 71.69 July 26.13 July 43.31 July 71.38 August 17.50 August 34.75 August 72.75 August 17.75 August 46.69 August 79.50 September 17.38 September 35.13 September 77.69 September 27.44 September 40.50 September 81.56 October 16.00 October 38.00 October 76.25 October 35.94 October 34.56 October 70.50 November 16.88 November 40.88 November 64.00 November 24.13 November 39.88 November 58.06 December 23.50 December 44.88 December 61.38 December 25.19 December 49.69 December 74.56
The closing price on January , 2001 was . A-9 TIDEWATER INC. (TDW) Tidewater Inc. provides services and equipment to the offshore energy industry through its offshore service vessels. Tidewater's vessels can be used to tow drilling rigs and act as supply vessels for use in transporting supplies and equipment from shore bases to offshore drilling rigs, platforms and other installations. Tidewater also has smaller classes of vessels that are used in transporting small quantities of supplies and personnel and for various other purposes. Tidewater's fleet is deployed in major offshore oil and gas areas throughout the world, including the Gulf of Mexico and Australia, Brazil and Egypt, the North Sea and the Persian Gulf.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- January 16.75 January 33.13 January 47.00 January 40.88 January 21.50 January 28.44 February 19.63 February 34.13 February 43.00 February 44.50 February 18.88 February 28.31 March 20.38 March 38.00 March 46.00 March 43.81 March 25.88 March 31.81 April 23.75 April 42.50 April 40.13 April 39.63 April 26.50 April 29.75 May 25.00 May 41.25 May 42.25 May 38.13 May 25.75 May 38.88 June 25.13 June 43.88 June 44.00 June 33.00 June 30.50 June 36.00 July 25.38 July 33.75 July 50.50 July 29.00 July 33.06 July 32.13 August 24.75 August 38.38 August 52.50 August 21.00 August 32.50 August 40.38 September 28.13 September 37.38 September 59.25 September 20.75 September 25.50 September 45.50 October 26.38 October 43.75 October 65.69 October 28.31 October 30.00 October 46.19 November 28.63 November 43.75 November 56.06 November 23.06 November 31.94 November 40.50 December 31.50 December 45.25 December 55.38 December 23.19 December 36.00 December 44.38
The closing price on January , 2001 was . TRANSOCEAN SEDCO FOREX INC. (RIG) Transocean Sedco Forex Inc. is an international provider of offshore, contract drilling services for oil and gas exploration, development and production. Transocean's contracts these drilling units out on a daily rate basis to drill offshore wells. On August 19, 2000, Transocean entered into a definitive agreement and plan of merger with R&B Falcon Corporation. The merger has been approved by the shareholders of Transocean and R&B Falcon, but the merger is subject to foreign regulatory approval and customary closing conditions.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- January 10.13 January 23.06 January 32.75 January 39.75 January 25.56 January 31.81 February 10.44 February 21.75 February 27.94 February 43.38 February 20.63 February 39.44 March 11.63 March 25.50 March 28.06 March 51.44 March 28.81 March 51.31 April 13.50 April 27.44 April 30.31 April 55.88 April 29.69 April 47.00 May 14.25 May 26.50 May 34.50 May 49.31 May 24.63 May 49.19 June 14.38 June 25.25 June 36.31 June 44.50 June 26.25 June 53.44 July 16.75 July 24.50 July 40.84 July 39.44 July 30.69 July 49.50 August 17.13 August 27.31 August 47.53 August 24.56 August 33.84 August 59.75 September 16.31 September 30.63 September 47.94 September 34.69 September 30.63 September 58.63 October 15.88 October 31.63 October 54.00 October 36.94 October 27.25 October 53.00 November 17.25 November 30.13 November 47.44 November 24.69 November 28.19 November 39.88 December 22.38 December 31.31 December 48.19 December 26.81 December 33.69 December 46.00
The closing price on January , 2001 was . A-10 WEATHERFORD INTERNATIONAL, INC. (WFT) Weatherford International, Inc. provides equipment and services used for the drilling, completion and production of oil and natural gas wells and proprietary and patented technologies for maximizing such production throughout the world. Weatherford International also provides artificial lift systems for raising well reservoir pressure and various compression services, which are used to increase pressure in a well.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- January 4.25 January 8.05 January 20.01 January 26.93 January 11.80 January 25.05 February 4.71 February 8.63 February 17.01 February 32.73 February 11.34 February 28.78 March 4.38 March 8.88 March 20.55 March 30.89 March 17.43 March 39.02 April 5.13 April 10.00 April 22.30 April 35.52 April 22.60 April 40.63 May 6.09 May 11.13 May 25.02 May 33.73 May 22.01 May 43.06 June 6.00 June 10.84 June 28.02 June 24.68 June 24.43 June 40.00 July 7.00 July 9.80 July 32.60 July 17.18 July 26.14 July 40.06 August 6.67 August 10.96 August 35.06 August 10.17 August 23.76 August 46.94 September 7.75 September 13.51 September 42.69 September 14.43 September 21.34 September 43.00 October 6.34 October 14.68 October 42.82 October 18.14 October 22.60 October 36.50 November 7.00 November 16.38 November 34.31 November 12.17 November 23.30 November 33.31 December 8.42 December 16.97 December 34.52 December 12.93 December 26.64 December 47.25
The closing price on January , 2001 was . A-11 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- [LOGO OF HOLDRS] 1,000,000,000 Depositary Receipts Oil Service HOLDRS SM Trust --------------------- PROSPECTUS --------------------- Merrill Lynch & Co. Robert W. Baird & Co. First Union Securities, Inc. Legg Mason Wood Walker Incorporated Morgan Keegan & Company, Inc. Raymond James & Associates, Inc. Sutro & Co. Incorporated Tucker Anthony Capital Markets , 2001 Until , 2001 (25 days after the date of this prospectus), all dealers effecting transactions in the offered Oil Service HOLDRS, whether or not participating in this distribution, may be required to deliver a prospectus. This requirement is in addition to the obligations of dealers to deliver a prospectus when acting as underwriters and with respect to unsold allotments or subscriptions. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution. The expenses expected to be incurred in connection with the issuance and distribution of the securities being registered, other than underwriting compensation, are as set forth below. Except for the registration fee payable to the Securities and Exchange Commission, all such expenses are estimated: Securities and Exchange Commission registration fee............. $ 87,438 Printing and engraving expenses................................. 150,000 Legal fees and expenses......................................... 200,000 Miscellaneous................................................... 12,562 -------- Total......................................................... $450,000 ========
Item 15. 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: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933. II-1 (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. (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. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) 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 shall be deemed to be part of this registration statement as of the time it was declared effective. (5) 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. (6) 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 Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, on January 5, 2001. Merrill Lynch, Pierce, Fenner & Smith Incorporated By: * --------------------- Ahmass L. Fakahany Senior Vice President and Chief Financial Officer POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1 to the Registration Statement has been signed by the following persons in the capacities indicated on January 5, 2001.
Signature Title --------- ----- * Chief Executive Officer, ___________________________________________ Chairman of the Board and John L. Steffens Director * Director ___________________________________________ E. Stanley O'Neal * Director ___________________________________________ George A. Schieren * Director ___________________________________________ Thomas H. Patrick * Senior Vice President and ___________________________________________ Chief Financial Officer Ahmass L. Fakahany * First Vice President and ___________________________________________ Controller Dominic A. Carone By: /s/ Stephen G. Bodurtha Attorney-in-Fact ___________________________________________ Stephen G. Bodurtha
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 and Amendment No. 2 to the Standard Terms for Depositary Trust Agreements, dated as of November 22, 2000 5.1 Opinion of Shearman & Sterling regarding the validity of the Oil Service HOLDRS Receipts 8.1 Opinion of Shearman & Sterling, as special U.S. tax counsel regarding the material federal income tax consequences *24.1 Power of Attorney (included in Part II of Registration Statement)
- -------- * Previously filed. II-4 EX-4.1 2 0002.txt STANDARD TERMS FOR DEPOSITARY TRUST AGREEMENT S&C Draft of 8/31/99 Exhibit 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 ______________, 1999 TABLE OF CONTENTS
Page ---- ARTICLE 1 DEFINITIONS AND ASSUMPTIONS Section 1.1. Definitions................................................................................1 Section 1.2. Rules of Construction......................................................................5 ARTICLE 2 FORM OF RECEIPTS, DEPOSIT OF SECURITIES, DELIVERY, REGISTRATION OF TRANSFER AND SURRENDER OF RECEIPTS Section 2.1. Depositary Trust Agreements................................................................6 Section 2.2. Creation and Declaration of Trusts; Deposit of Securities..................................6 Section 2.3. Acceptance by Trustee......................................................................8 Section 2.4. Form and Transferability of Receipts.......................................................8 Section 2.5. Delivery of Receipts.....................................................................10 Section 2.6. Registration; Registration of Transfer; Combination and Split-up of Certificates..........11 Section 2.7. Surrender of Receipts and Withdrawal of Underlying Securities.............................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.................................14 Section 2.11. Reconstitution Events....................................................................14 ARTICLE 3 CERTAIN OBLIGATIONS OF OWNERS OF RECEIPTS Section 3.1. Filing Proofs, Certificates and Other Information.........................................16 Section 3.2. Liability of Owner for Taxes..............................................................16 Section 3.3. Warranties on Deposit of Shares...........................................................17 ARTICLE 4 THE UNDERLYING SECURITIES Section 4.1. Cash Distributions........................................................................17 Section 4.2. Distributions Other Than Cash or Securities...............................................17 Section 4.3. Distributions in Securities...............................................................18 Section 4.4. Rights Offerings..........................................................................19 Section 4.5. Fixing of Record Date.....................................................................19 Section 4.6. Reports...................................................................................20 Section 4.7. Voting Instructions for Underlying Securities.............................................20 Section 4.8. Changes Affecting Underlying Securities...................................................21 Section 4.9. Withholding...............................................................................22 Section 4.10. Limitation on Distributions..............................................................22
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ARTICLE 5 THE TRUSTEE AND THE INITIAL DEPOSITOR Section 5.1. Maintenance of Office and Transfer Books by the Trustee...................................22 Section 5.2. Prevention or Delay in Performance by the Initial Depositor or the Trustee................23 Section 5.3. Obligations of the Initial Depositor and the Trustee......................................24 Section 5.4. Resignation or Removal of the Trustee; Appointment of Successor Trustee...................26 Section 5.5. Indemnification...........................................................................27 Section 5.6. Charges of Trustee........................................................................29 Section 5.7. Retention of Trust Documents..............................................................30 Section 5.8. Federal Securities Law Filings............................................................30 Section 5.9. Prospectus Delivery.......................................................................30 ARTICLE 6 AMENDMENT AND TERMINATION Section 6.1. Amendment.................................................................................31 Section 6.2. Early Termination.........................................................................31 ARTICLE 7 MISCELLANEOUS Section 7.1. Counterparts.............................................................................33 Section 7.2. Third-Party Beneficiaries................................................................33 Section 7.3. Severability.............................................................................34 Section 7.4. Owners and Beneficial Owners as Parties; Binding Effect..................................34 Section 7.5. Notices..................................................................................34 Section 7.6. Governing Law............................................................................35
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Page ---- EXHIBIT A FORM OF DEPOSITARY TRUST AGREEMENT.....................................................................A-1 EXHIBIT B FORM OF CERTIFICATE EVIDENCING RECEIPTS................................................................B-1
-iii- STANDARD TERMS FOR DEPOSITARY TRUST AGREEMENTS agreed to as of _______________, 1999 (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, 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 (as hereinafter defined), 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, in consideration of the premises and the mutual covenants contained in these Standard Terms, the parties hereby agree 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 applicable Depositary Trust Agreement. "Beneficial Owner" means any Person owning a beneficial interest in any Receipt. "Closing Date" means the day on which the initial deposit of Securities is to be made, which date may be specified in the applicable 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. -2- "Depositary Trust Agreement" means a depositary trust agreement entered into by the Initial Depositor and the Trustee pursuant to these Standard Terms which incorporates by reference these Standard Terms. "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. "Issuance Denomination" is defined in Section 2.4, subject to increase as provided in Sections 4.3 and 4.8. "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. -3- "Receipt" means a depositary trust receipt which is issued under the Depositary Trust Agreement and which represents the Owner's right to receive the Underlying Securities which must be deposited into the Trust for issuance of a Receipt plus any other Underlying Securities received by the Trustee with respect to such Underlying Securities and held by the Trustee under the Depositary Trust Agreement at such time. The Trustee shall only accept for deposit whole Securities and shall not issue Receipts except to the extent such Receipts represent, in the aggregate, whole Underlying Securities. "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. -4- "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. "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. "Underlying Securities" 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 applicable Depositary Trust Agreement and any other securities, property or cash received by the Trustee in respect thereof and at such time held hereunder. -5- 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 from time to time; (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. 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 -6- 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 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. The Initial Depositor shall make such deposit on or prior to the Closing Date. (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 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) The Trustee shall only accept for deposit whole Securities and shall not issue Receipts except to the extent such Receipts represent, in the aggregate, whole Underlying Securities. (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 -7- 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 Underlying Securities. (f) Underlying Securities 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 --------------------- Underlying Securities 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 applicable Depositary Trust Agreement. 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. The Issuance Denominations of a certificate shall be any integral multiple of a Round Lot of Receipts, subject to increase or decrease as provided in Sections 4.3 and 4.8. 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 -8- 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 the Underlying Securities 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 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 -9- 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, from time to time, agree. (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 -10- 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 an Issuance Denomination, 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 Underlying 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 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 -11- 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 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 Underlying -------------------------------------------------- Securities. (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 Underlying Securities 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 the Underlying Securities, 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 Underlying Securities at the time represented by such Receipts. Delivery of such Underlying Securities may be made by (i) Delivery of Securities to such Owner or as ordered by such Owner and (ii) any -12- 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. (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 Underlying Securities 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 Underlying Securities 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 Underlying Securities, 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 -13- consistent with the provisions of the Depositary Trust Agreement, including, without limitation, this Section 2.8. (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 Underlying Securities 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 any applicable Depositary Trust Agreement or the Receipts, the Surrender of Receipts and withdrawal of Underlying Securities 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 Underlying Securities. 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) -14- 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 bona fide purchaser and (ii) a sufficient indemnity bond, and (b) satisfied any other reasonable requirements imposed by the Trustee. 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 as a result of a merger, consolidation or other corporate combination of the Securities Issuer and Section 4.8 does not apply, the Trustee shall, if it has actual knowledge of such event, to the extent lawful and feasible and subject to Section 4.10, distribute any securities which shall be received by the Trustee in exchange for or in conversion of or in respect of Underlying Securities which are not Securities issued by a Securities Issuer to the Owners in proportion to their ownership of Receipts. Effective on the date that such Securities cease to be outstanding, such class of Securities shall 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 Underlying Securities of such class to the Owners in proportion to their ownership of Receipts. Effective on the date of such distribution, -15- such class of Securities shall cease to be a part of the securities which must be deposited for issuance of Receipts. (c) In the event that 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 Underlying Securities of such Securities Issuer to the Owners in proportion to their ownership of Receipts. Effective on the date of such distribution, 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, distribute the Underlying Securities of such Securities Issuer to the Owners in proportion to their ownership of Receipts. Effective on the date of such distribution, such class of Securities shall cease to be part of the securities which must be deposited for issuance of Receipts. -16- 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 Underlying Securities 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. If any tax or other ---------------------------- charge shall become payable with respect to any Receipts or any Underlying Securities 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 Underlying Securities 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 Underlying Securities constituting any multiples of the securities which must be deposited for issuance of Receipts, 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 Receipt shall remain liable for any deficiency. Section 3.3. Warranties on Deposit of Shares. ------------------------------- -17- 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 UNDERLYING SECURITIES Section 4.1. Cash Distributions. Whenever the Trustee shall receive ------------------ any cash dividend or other cash distribution on any Underlying Securities, 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 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 Other Than Cash or Securities. Subject to ------------------------------------------- the provisions of Sections 4.8 and 5.6, whenever the Trustee shall receive any distribution other than a distribution described in Sections 4.1, 4.3 or 4.4 or any distribution -18- which would otherwise be distributed hereunder except that the Trustee deems such distribution not to be lawful and feasible, 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 4.3. Distributions in Securities. If any distribution upon --------------------------- any Underlying Securities consists of a dividend in, or free distribution of, Securities, the Trustee shall, to the extent lawful and feasible, retain such Securities under the Depositary Trust Agreement, and, in such case, the (i) the amount of such Securities so retained in respect of each Receipt shall be added to the classes and quantities of securities which must be deposited for issuance of Receipts and (ii) the number of Receipts in an Issuance Denomination may be increased or decreased by the Trustee to the lowest multiple of 100 Receipts such that no fractional shares are thereby represented in such Issuance Denomination. -19- Section 4.4. Rights Offerings. (a) If a Securities Issuer offers ---------------- or causes to be offered to the holders of any Underlying Securities any rights to subscribe for additional Securities or other securities, the Trustee shall have discretion in accordance with this Section 4.4 as to the procedure to be followed in making such rights available to any Owners or in disposing of such rights on behalf of Owners and making the net proceeds available to Owners or, 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 may not make such rights available to any Owners or dispose of such rights and make the net proceeds available to Owners, then the Trustee shall allow the rights to lapse. (b) The Trustee will not offer 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 or feasible to make such rights available to Owners in general or any Owner in particular. 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 receives notice of any meeting of or solicitation of proxies from holders of any Underlying Securities, 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 -20- 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 Underlying Securities 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 Underlying Securities. Upon --------------------------------------------- receipt by the Trustee or its appointed agent of notice of any meeting of, or solicitation of proxies from, holders of Underlying Securities, the Trustee shall, to 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 -21- 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 Underlying Securities 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 Underlying Securities 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, Underlying Securities other than in accordance with such instructions. Section 4.8. Changes Affecting Underlying Securities. (a) In --------------------------------------- circumstances where the provisions of Sections 2.11 and 4.3 do not apply, upon any change in nominal value, change in par value, split-up, consolidation or any other reclassification of any Underlying Securities, or upon any recapitalization, reorganization, merger or consolidation or sale of assets affecting the issuer of any Underlying Security, if the relevant Securities Issuer survives such event, the Trustee shall, to the extent lawful and feasible, retain such Securities under the Depositary Trust Agreement, and, in such case, the (A) the amount of such Securities so retained in respect of each Receipt shall be added to the classes and quantities of securities which must be deposited for issuance of Receipts and (B) the number of Receipts in an Issuance Denomination may be increased or decreased by the Trustee to the lowest multiple of 100 Receipts such that no fractional shares are thereby represented in such Issuance Denomination. -22- (b) Securities of any class which are surrendered by the Trustee in connection with any such conversion or exchange shall, effective on the date of such surrender, 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 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. 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 proceeds to the Owners entitled thereto as in the case of a distribution received in cash. -23- ARTICLE 5 THE TRUSTEE AND THE INITIAL DEPOSITOR Section 5.1. Maintenance of Office and Transfer Books by the Trustee. ------------------------------------------------------- (a) Until termination of this 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 applicable Depositary Trust Agreement. (b) 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. (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 of any Receipt, if by reason of any provision of any present or future -24- 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 issued or distributed by any Securities Issuer, or any offering or distribution thereof, or by reason of any act of God or war 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 these Standard Terms or the applicable 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 these Standard Terms or the applicable 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 these Standard Terms or the applicable Depositary Trust Agreement. Where, by the terms of an offering or distribution to which Sections 2.11, 4.2 or 4.4 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 they be subject to any liability under these Standard Terms or the applicable Depositary Trust Agreement to any Owner or Beneficial Owner of any Receipt (including, without limitation, liability with respect to the validity or worth of the Underlying Securities), -25- except that each agrees to perform its respective obligations specifically set forth in these Standard Terms and the applicable 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 Underlying Securities 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 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 Underlying Securities, 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 -26- 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 these Standard Terms or any applicable Depositary Trust Agreement. (h) The Trustee shall be a fiduciary under these Standard Terms and the applicable 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 applicable Depositary Trust Agreement. Section 5.4. Resignation or Removal of the Trustee; Appointment of ----------------------------------------------------- Successor Trustee. (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 -27- 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 Underlying Securities 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. (d) Any corporation into or with which the Trustee may be merged, consolidated or converted shall be the successor of such 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 -28- incurred by any of them and which arises out of acts performed or omitted pursuant to the provisions of these Standard Terms or any 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 such 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 or submissions to the Commission which are required to be made in connection with or with respect to such 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 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. -29- [(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 which 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 Underlying Securities assessed by third-party custodians, depositories, transfer agents, and other service providers in the ordinary course of their respective businesses (whether in connection with the deposit of Securities or withdrawal of Underlying Securities or otherwise), (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. -31- 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 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 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 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 Underlying Securities into the Trust for issuance of Receipts. ARTICLE 6 AMENDMENT AND TERMINATION -32- Section 6.1. Amendment. The Trustee and the Initial Depositor may --------- amend any provisions of the Depositary Trust Agreement 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 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 Underlying Securities 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; 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 -33- 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 Underlying Securities evidenced 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 these Standard Terms or the applicable Depositary Trust Agreement, except that the Trustee shall continue to collect dividends and other distributions pertaining to Underlying Securities and hold the same uninvested and without liability for interest, shall sell rights as provided in these Standard Terms or the applicable Depositary Trust Agreement, and shall continue to deliver Underlying Securities, 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 Underlying Securities 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 -34- general creditors of the Trustee with respect to such net proceeds. After making such sale, the Trustee shall be discharged from all obligations under these Standard Terms with respect to the Receipts and the applicable 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 applicable Depositary Trust Agreement, the Initial Depositor shall be discharged from all obligations under such Depositary Trust Agreement except for its obligations to the Trustee under Section 5.5. 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 applicable 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. These Standard Terms and -------------------------- each Depositary Trust Agreement are for the exclusive benefit of the respective parties hereto and thereto, and shall not be deemed to give any legal or equitable right, remedy or claim whatsoever to any other person. -35- Section 7.3. Severability. In case any one or more of the ------------ provisions contained in these Standard Terms or the applicable 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 and Beneficial Owners as Parties; Binding ------------------------------------------------ Effect. The Owners, Beneficial Owners and Depositors from time to time shall be parties to the applicable 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. 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. -36- (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. 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: -------------------------------- Steven G. Budurtha First Vice President THE BANK OF NEW YORK, as Trustee By: -------------------------------- Name: Title: -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 Standard Terms for ------------------------------- Depositary Trust Agreements agreed to as of ____________, 1999 (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. 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 Receipt and which shall be represented thereby shall be as follows: Quantity which must be deposited Issuer and Title of Security per Receipt ---------------------------- --------------------- [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, the definition of the securities that must be deposited for issuance of one Receipt 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, 2039]. Section 4. Closing. The "Closing Date" shall be [specify date]. ------- ------------ 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 UNDERLYING SECURITIES (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 UNDERLYING SECURITIES 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 Receipt represents the right to receive the following securities: Quantity Initially Issuer and Title Represented by of Security Each Receipt ------------------------------------------ ------------------------------------------ ------------------------------------------ ------------------------------------------ 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 Receipt 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. B-2 (1) THE DEPOSITARY TRUST AGREEMENT. ------------------------------ This Receipt is issued upon the terms and conditions set forth in the Depositary Trust Agreement, dated as of _________, 1999 (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 "Underlying Securities"). 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 OF SECURITIES. -------------------------------------------------- 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 Underlying Securities 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 Standard Terms and payment of all taxes and charges payable in connection with such Surrender and withdrawal of the Underlying Securities, and subject to the terms and conditions of the applicable Depositary Trust Agreement, including, without limitation, Section 4.10 thereof, the Owner of such Receipts shall be entitled to Delivery of the amount of Underlying Securities at the time represented by such Receipts. Delivery of such Underlying Securities 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 only deliver whole Underlying Securities upon Surrender of Receipts representing such Underlying Securities. (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, B-3 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 Underlying Securities, 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 of the Standard Terms. 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 Underlying Securities 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 any applicable Depositary Trust Agreement or the Receipts, the Surrender of Receipts and withdrawal of Underlying Securities 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 Underlying Securities. 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 --------------------- B-4 If any class of Securities ceases to be outstanding as a result of a merger, consolidation or other corporate combination of the Securities Issuer and Section 4.8 of the Standard Terms does not apply, 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 Standard Terms, distribute any securities which shall be received by the Trustee in exchange for or in conversion of or in respect of Underlying Securities which are not Securities issued by a Securities Issuer to the Owners in proportion to their ownership of Receipts. Effective on the date that such Securities cease to be outstanding, such class of Securities shall 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 Standard Terms, distribute the Underlying Securities of such class to the Owners in proportion to their ownership of Receipts. Effective on the date of such distribution, such class of Securities shall cease to be a part of the securities which must be deposited for issuance of Receipts. (c) In the event that 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 Standard Terms, distribute the Underlying Securities of such Securities Issuer to the Owners in proportion to their ownership of Receipts. Effective on the date of such distribution, 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 Standard Terms, distribute the Underlying Securities of such Securities Issuer to the Owners in proportion to their ownership of Receipts. Effective on the date of such distribution, 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. ---------------------------- If any tax or other governmental charge shall become payable with respect to any Receipts or any Underlying Securities represented thereby, such tax or other governmental charge shall be payable by the Owner hereof to the Trustee. The Trustee B-5 shall refuse to effect any registration of transfer of such Receipts or any withdrawal of Underlying Securities 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 hereof Underlying Securities constituting any multiples of the securities which must be deposited for issuance of Receipts, and may apply such dividends or other distributions of the proceeds of any such sale in payment of such tax or other charge and the Owner hereof shall remain liable for any deficiency. (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 Underlying Securities 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 Underlying Securities assessed by third-party custodians, depositories, transfer agents, and other service providers in the ordinary course of their respective businesses (whether in connection with the deposit of Securities or withdrawal of Underlying Securities or otherwise), (2) a fee of $10 or less per 100 Receipts for the execution and Delivery of Receipts pursuant to Section 2.5 of the Standard Terms, and the Surrender of Receipts pursuant to Section 2.7 Standard Terms, 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 B-6 record as of the date or dates set by the Trustee in accordance with Section 4.5 of the Standard Terms 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 Underlying Securities, unless such reports and communications have been forwarded directly to Owners by such Securities Issuer. B-7 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 Underlying Securities, 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. Subject to the provisions of Sections 4.8 and 5.6 of the Standard Terms, whenever the Trustee shall receive any distribution other than a distribution described in Sections 4.1, 4.3 or 4.4 of the Standard Terms 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 feasiable, the Trustee shall, subject to Section 4.10 of the Standard Terms, 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 Standard Terms) shall be distributed by the Trustee to the Owners entitled thereto as in the case of a distribution received in cash. If any distribution upon any Underlying Securities consists of a dividend in, or free distribution of, Securities, the Trustee shall, to the extent lawful and feasible, retain such Securities under the Depositary Trust Agreement, and, in such case, the (i) the amount of such Securities so retained in respect of each Receipt shall be added to the classes and quantities of securities which must be deposited for issuance of Receipts and (ii) the number of Receipts in an Issuance Denomination may be increased B-8 or decreased by the Trustee to the lowest multiple of 100 Receipts such that no fractional shares are thereby represented in such Issuance Denomination. 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 offers or cause to be offered to the holders of any Underlying Securities any rights to subscribe for additional Securities or other securities, the Trustee shall have discretion in accordance with Section 4.4 of the Standard Terms as to the procedure to be followed in making such rights available to any Owners or in disposing of such rights on behalf of Owners and making the net proceeds available to Owners or, 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 Depositary may not make such rights available to any Owners or dispose of such rights and make the net proceeds available to Owners, then the Trustee shall allow the rights to lapse. (b) The Trustee will not offer 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 or feasible to make such rights available 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 Underlying Securities, or whenever a fee shall be changed by the Trustee under Section 5.6 of the Standard Terms, 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 B-9 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 (13), 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 Underlying Securities, 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 Underlying Securities 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 Underlying Securities 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, Underlying Securities other than in accordance with such instructions. (16) CHANGES AFFECTING UNDERLYING SECURITIES. --------------------------------------- (a) In circumstances where the provisions of Sections 2.11 and 4.3 of the Standard Terms do not apply, upon any change in nominal value, change in par value, split-up, consolidation or any other reclassification of any Underlying Securities, or upon any recapitalization, reorganization, merger or consolidation or sale of assets affecting the issuer of any Underlying Security, if the relevant Securities Issuer survives such event, the Trustee shall, to the extent lawful and feasible, retain such Securities under the Depositary Trust Agreement, and, in such case, the (A) the amount of such Securities so retained in respect of each Receipt shall be added to the classes and quantities of Securities which must be deposited for issuance of Receipts and (B) the number of Receipts in an Issuance Denomination may be increased or decreased B-10 by the Trustee to the lowest multiple of 100 Receipts such that no fractional shares are thereby represented in such Issuance Denomination. (b) Securities of any class which are surrendered by the Trustee in connection with any such conversion or exchange shall, effective on the date of such surrender, 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 Standard Terms 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. (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 of any Receipt, 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 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 Standard Terms or the applicable 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 Standard Terms or the applicable 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 Standard Terms or the applicable Depositary Trust Agreement. Where, by the terms of an offering or distribution to which Sections 2.11, 4.2 or 4.4 of the Standard Terms 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. The Trustee shall not be subject to any liability with respect to the validity or worth of the Underlying Securities. Neither the Initial Depositor nor the Trustee shall be under any obligation to prosecute any action, suit or other proceeding in respect of any Underlying Securities 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. B-11 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 Underlying Securities, 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 Standard Terms, 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 Standard Terms or any applicable Depositary Trust Agreement. The Trustee shall be a fiduciary under the Standard Terms and the applicable 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 Standard Terms and the applicable 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. B-12 (19) AMENDMENT. --------- The Trustee and the Initial Depositor may amend any provisions of the Depositary Trust Agreement 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 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 Underlying Securities represented thereby, except in order to comply with mandatory provisions of applicable law. B-13 (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; 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 Standard Terms, and (c) payment of any applicable taxes or charges, be entitled to Delivery, to him or upon his order, of the amount of Underlying Securities evidenced 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 these Standard Terms or the applicable Depositary Trust Agreement, except that the Trustee shall continue to collect dividends and other distributions pertaining to Underlying Securities and hold the same uninvested and without liability for interest, shall sell rights as provided in these Standard Terms or the applicable Depositary Trust Agreement, and shall continue to deliver Underlying Securities, 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 Standard Terms 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 Underlying Securities 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. B-14 After making such sale, the Trustee shall be discharged from all obligations under these Standard Terms with respect to the Receipts and the applicable 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 Standard Terms, 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 applicable Depositary Trust Agreement, the Initial Depositor shall be discharged from all obligations under such Depositary Trust Agreement except for its obligations to the Trustee under Section 5.5 of the Standard Terms. B-15 AMENDMENT NO. 2 TO THE STANDARD TERMS FOR DEPOSITARY TRUST AGREEMENTS AMENDMENT NO. 2 TO THE STANDARD TERMS FOR DEPOSITARY TRUST AGREEMENTS (the "Amendment") dated as of November 22, between Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Initial Depositor, and The Bank of New York, as Trustee. W I T N E S S E T H: WHEREAS, the Initial Depositor wishes to amend the Standard Terms for Depositary Trust Agreements, dated September 2, 1999, between the Initial Depositor and the Trustee (the `Standard Terms") to allow for the inclusion in all future and existing HOLDRS trusts the securities received as a result of distribution of securities from a Securities Issuer or the securities received as consideration in connection with a merger, acquisition or other corporate combination involving a Securities Issuer. However, the Amendment does not apply to the Market 2000+ HOLDRS or a future HOLDRS Trust agreed upon by the Initial Depositor and the Trustee. NOW, THEREFORE, in consideration of the premises and the mutual covenants contained in this Amendment, the parties hereby agree as follows: Article I DEFINITIONS Section 1.1 Definitions. The following definition is hereby deleted in ----------- its entirety and restated as follows: (a) "Securities" means any shares of a class of securities, including American depositary shares and American depositary receipts, and Additional Securities which must be deposited for issuance of Receipts. (b) The following definitions are hereby added to the Standard Terms: "Additional Securities" means any securities which are issued to the holders of the Underlying Securities as a dividend, distribution or in exchange for Securities, unless such securities (1) are not listed for trading on a U.S. national securities exchange or through Nasdaq NMS or (2) have a Standard & Poor's Corporation Sector Classification that is different from any Underlying Security in the respective HOLDRS trust at the time of the dividend, distribution or exchange. "Standard & Poor's Corporation Sector Classification" means the sector classification given to each class of publicly traded securities of a company, from time to time, by Standard & Poor's Corporation. ARTICLE II AMENDMENT Section 2.1 Reconstitution Events. Section 2.11(a) is hereby deleted in its --------------------- entirety and replaced with the following: (a) If any class of Securities ceases to be outstanding as a result of a merger, consolidation, corporate combination or other event, and, as a result, securities which are not Underlying Securities or Additional Securities are received by the Trustee, the Trustee shall, if it has actual knowledge of such event, to the extent lawful and feasible and subject to Section 4.10, distribute any such securities which shall be received by the Trustee to the Owners in proportion to their ownership of Receipts. Effective on the date that such Securities cease to be outstanding, such class of Securities shall cease to be either Securities or Underlying Securities. Section 2.2 Distributions in Securities. Section 4.3 is hereby deleted in --------------------------- its entirety and replaced with the following: If any distribution by a Securities Issuer consists of a dividend in, or free distribution of, Securities or Additional Securities, the Trustee shall, to the extent lawful and feasible, retain such Securities or Additional Securities under the Depositary Trust Agreement, and, in such case, (i) the amount of such Securities or Additional Securities so retained in respect of each Receipt shall be added to the classes and quantities of securities which must be deposited for issuance of one Receipt and (ii) the number of Receipts in an Issuance Denomination may be increased or decreased by the Trustee to the lowest multiple of 100 Receipts such that no fractional shares are thereby represented in such Issuance Denomination. Section 2.3 Changes Affecting Underlying Securities. Section 4.8(a) is --------------------------------------- hereby deleted in its entirety and replaced with the following: In circumstances where the provisions of Section 2.11, 4.2 and 4.3 do not apply, upon any change in nominal value, change in par value, split-up, consolidation or any other reclassification of any Underlying Securities, or upon any recapitalization, reorganization, merger or consolidation or sale of assets affecting the issuer of any Underlying Security, regardless of whether the Securities Issuer survives, the Trustee shall, to the extent lawful and feasible, retain any Securities or Additional Securities under the Depository Trust Agreement, and, in such case, (i) the amount of such Securities or Additional Securities so retained in respect of each Receipt shall be added to the classes and quantities of securities which must be deposited for issuance of one Receipt and (ii) the number of Receipts in an Issuance Denomination may be increased or decreased by the Trustee to the lowest multiple of 100 Receipts such that no fractional shares are thereby represented in such Issuance Denomination. ARTICLE III MISCELLANEOUS Section 3.1 Counterparts. This Amendment 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 this Amendment, the Standard Terms and the applicable 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 3.2 Governing Law. This Amendment shall be interpreted and all ------------- rights hereunder and provisions hereof shall be governed by the substantive laws (but not the choice of law rules) of the State of New York. IN WITNESS WHEREOF, Merrill Lynch, Pierce, Fenner & Smith Incorporated and The Bank of New York have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first set forth above. MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By: /s/ Stephen G. Bodurtha ---------------------------- Stephen G. Bodurtha Attorney-in-Fact and First Vice President THE BANK OF NEW YORK, as Trustee By: /s/ Joanne DiGiovanni ---------------------------- Joanne DiGiovanni Vice President EX-5.1 3 0003.txt OPINION OF SHEARMAN & STERLING RE: VALIDITY EXHIBIT 5.1 January 5, 2001 Merrill Lynch, Pierce, Fenner & Smith Incorporated 250 Vesey Street New York, New York 10281 Merrill Lynch, Pierce, Fenner & Smith Incorporated Oil Service HOLDRS Trust Registration Statement on Form S-1 ---------------------------------- Ladies and Gentlemen: We are acting as counsel to Merrill Lynch, Pierce, Fenner & Smith Incorporated, a Delaware corporation (the "Initial Depositor"), and as special counsel to the Oil Service HOLDRS Trust (the "Trust") in connection with the preparation and filing with the Securities and Exchange Commission (the "Commission") of the Registration Statement on Form S-1, as amended from time to time and filed by the Initial Depositor (the "Registration Statement"), of which the prospectus forms a part (the "Prospectus"), for the registration under the Securities Act of 1933, as amended (the "Securities Act"), of 1,000,000,000 Oil Service HOLDRS (the "HOLDRS") to be issued by the Trust. In this capacity, we have examined (a) a signed copy of the Registration Statement and (b) a copy of the depositary trust agreement between The Bank of New York, as trustee (the "Trustee"), and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as initial depositor (the "Depositary Trust Agreement"). We have also examined originals, or copies certified or otherwise identified to our satisfaction, of such other corporate records of the Initial Depositor, such other certificates and advice of public officials and of officers of the Initial Depositor, and such other agreements, instruments and documents as we have deemed necessary as a basis for the opinions expressed below. In such examination we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, and the conformity with the originals of all documents submitted to us as copies. As to questions of fact material to such opinions, we have relied upon such certificates and advice. The opinions set forth below are also based upon the assumptions that: (i) the Registration Statement, as finally amended (including any post-effective amendments), has become effective under the Securities Act; (ii) the amount, price, and other principal terms of the HOLDRS have been approved by the Board of Directors of the Initial Depositor or an authorized designee thereof; (iii) the Depositary Trust Agreement will be duly authorized, executed and delivered by the parties thereto substantially in the form filed as an exhibit to the Registration Statement; and (iv) the HOLDRS will be duly authenticated by the Trustee in accordance with the Depositary Trust Agreement and sold and delivered by the Initial Depositor against payment therefor. Our opinions expressed herein are limited to the laws of the State of New York and the Federal law of the United States, and we do not express any opinion herein concerning any other law. Based upon and subject to the foregoing, and having regard for such legal considerations as we have deemed relevant, we are of the opinion that the HOLDRS will be legally issued, fully paid and nonassessable, will be legal, valid and binding obligations of the Trust, enforceable against the Trust in accordance with their terms, except as enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and except as enforcement thereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding at law or in equity). We hereby consent to the use of this opinion as an exhibit to the Registration Statement and to the use of our name under the heading "Legal Matters" in the Prospectus. In giving this consent, we do not thereby concede that we come within the category of persons whose consent is required by the Securities Act or the General Rules and Regulations promulgated thereunder. Very truly yours, /s/ Shearman & Sterling ABJ/LLJ/AA/LSN JFS/ASG EX-8.1 4 0004.txt OPINION OF SHEARMAN & STERLING RE:TAX CONSEQUENCES EXHIBIT 8.1 January 5, 2001 Merrill Lynch, Pierce, Fenner & Smith Incorporated World Financial Center North Tower - 4th Floor New York, New York 10281 Merrill Lynch, Pierce, Fenner & Smith Incorporated Oil Service HOLDRS Trust Registration Statement on Form S-1 ---------------------------------- Ladies and Gentlemen: We have acted as special Tax Counsel to Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), as Initial Depositor, and the Oil Service HOLDRS Trust in connection with the preparation and filing of a Prospectus and Registration Statement on Form S-1, as amended from time to time and filed by the Initial Depositor (the "Registration Statement"), of which the prospectus forms a part (the "Prospectus"), for the registration under the Securities Act of 1933, as amended (the "Securities Act"), of 1,000,000,000 Oil Service HOLDRS (the "HOLDRS") to be issued by the Trust. Capitalized terms used herein have the meaning ascribed to them in the Prospectus. The HOLDRS are being issued pursuant to the Depositary Trust Agreement between the Initial Depositor, The Bank of New York, as trustee (in such capacity, the "Trustee"), other depositors and owners of HOLDRS (the "Trust Agreement"). In connection with the preparation of this opinion, we have examined and relied on such documents as we have deemed appropriate, including, inter alia, (i) the Trust Agreement and (ii) the Prospectus. We have made such investigations of law as we have deemed appropriate as a basis for the opinion expressed below. Based on the foregoing, it is our opinion that the Trust will provide for flow through tax consequences since it will be treated as a grantor trust or custodial arrangement for United States Federal income tax purposes. Moreover, the discussion set forth under the caption "Federal Income Tax Consequences" in the Prospectus represents our opinion of and, subject to the limitations contained therein, accurately describes, the principal United States Federal income tax consequences to a holder of HOLDRS receipts. The foregoing opinion is based upon provisions of the Internal Revenue Code of 1986, as amended, Treasury regulations and administrative and judicial interpretations as of the date hereof (all of which are subject to change, possibly with retroactive effect, or different interpretations). We consent to the use of this opinion as an exhibit to the Registration Statement and to the reference to our firm under the caption "Legal Matters" in the Prospectus. Very truly yours, /s/ Shearman & Sterling FRS/SM/ABJ/AA/ LLJ/LSN/JFS/ASG -----END PRIVACY-ENHANCED MESSAGE-----