Cash Reserves and Cash Held Pending Distribution Date. The Trustee shall establish a cash reserve for the payment of material liabilities of the Trust which may become due, but only under the following conditions: (a) the Trustee shall have determined that it is not practical to pay such liabilities on subsequent Quarterly Record Dates out of funds anticipated to be available on such dates and that, in the absence of such reserve, the Trust Estate is subject to the risk of loss or diminution in value or The Bank of New York is subject to the risk of personal liability for such liabilities and (b) the Trustee shall have received an unqualified written opinion of counsel to the Trust to the effect that the establishment and maintenance of such reserve will not adversely affect the classification of the Trust as a "grantor trust" for federal income tax purposes or cause the income from the Trust to be treated as unrelated business taxable income for federal income tax purposes; provided however, that if the Trustee is unable to obtain such opinion the Trustee shall nevertheless establish such reserve if the Trustee determines that the failure to establish such reserve will be materially detrimental to the Unit Holders considered as a whole or will subject The Bank of New York to the risk of personal liability for such liabilities. Collected cash balances being held by the Trustee as a reserve for liabilities shall be invested (i) in obligations issued by (or unconditionally guaranteed by) the United States or any agency or instrumentality thereof (provided such obligations are secured by the full faith and credit of the United States) or (ii) if such obligations maturing as required in the last sentence of this paragraph are not available, in repurchase agreements (1) with any bank, having capital, surplus and undivided profits of $100,000,000 or more; (2) which are secured by collateral of the type specified in (i) above which collateral (a) is in the possession of the Trustee either directly or through the Federal Reserve book-entry account of the-Trustee individually or a third party acting solely as agent for the Trustee, (b) is not subject to any third party claims, (c) has a market value (determined at the execution date of the relevant repurchase agreement) at least equal to the principal amount invested in the repurchase agreement; and (3) which have a fixed rate of return. Any such obligation or repurchase agreement must mature (x) on the next succeeding Quarterly Record Date or, if the due date of the l...
Cash Reserves and Cash Held Pending Distribution Date. With respect to any liability that is contingent or uncertain in amount or that otherwise is not currently due and payable, the Trustee in its sole discretion may, but is not obligated to, establish a cash reserve for the payment of such liability. In no event shall the Trustee establish any reserve for the payment of ad valorem taxes in respect of the Royalties. Collected cash balances being held by the Trustee as a reserve for liabilities or for distribution at the next Distribution Date shall be placed in one or more of the following investments, and no others:
Cash Reserves and Cash Held Pending Distribution Date. With respect to any liability that is contingent or uncertain in amount or that otherwise is not currently due and payable, the Trustee in its sole discretion may, but is not obligated to, establish a cash reserve for the payment of such liability. In no event shall the Trustee establish any reserve for the payment of ad valorem taxes in respect of the Royalties. Collected cash balances being held by the Trustee as a reserve for liabilities or for distribution at the next Distribution Date shall be placed in one or more of the following investments, and no others:
(a) obligations issued by (or unconditionally guaranteed by) the United States or any agency or instrumentality thereof (provided such obligations are secured by the full faith and credit of the United States);
(b) repurchase agreements secured by obligations qualifying under subsection (a) above;
(c) certificates of deposit of any bank having a capital, surplus and undivided profits of at least $50,000,000; or
(d) other interest bearing accounts in FDIC-insured state or national banks, including the Trustee, so long as the entire amount in such accounts is at all times fully insured by the Federal Deposit Insurance Corporation. Any such obligation, repurchase agreement, certificate of deposit or account must mature on or before the next succeeding Distribution Date, must be held to maturity and, to the extent not prohibited by the Texas Trust Code or the rules and regulations of the Comptroller of the Currency, may be purchased from the Bank or any successor bank serving as Trustee. In investing collected cash balances between any monthly Record Date and the next following Distribution Date, the Trustee is expressly authorized to acquire repurchase agreements of the type referred to in subsection (b) above which provide for (1) the payment of principal no later than nine (9) business days after such Monthly Record Date and (2) the payment of interest on the next following Monthly Record Date.
