SCHWAB TRUSTS,
SCHWAB TEN TRUST, 1998 SERIES B
REFERENCE TRUST AGREEMENT
This Reference Trust Agreement (the "Agreement") dated July 7, 1998
among Xxxxxxx Xxxxxx & Co., Inc., Xxxxx & Tang Distributors, Inc., as Depositors
and The Chase Manhattan Bank, as Trustee, sets forth certain provisions in full
and incorporates other provisions by reference to the document entitled "Schwab
Trusts, Schwab Ten Trust, 1997 Series A, and Subsequent Series, Trust Indenture
and Agreement" dated November 4, 1997 and as amended in part by this Agreement
(collectively, such documents hereinafter called the "Indenture and Agreement").
This Agreement and the Indenture, as incorporated by reference herein, will
constitute a single instrument.
WITNESSETH THAT:
WHEREAS, this Agreement is a Reference Trust Agreement as defined in
Sec tion 1.1 of the Indenture, and shall be amended and modified from time to
time by an Addendum as defined in Section 1.1 (1) of the Indenture, such
Addendum setting forth any Additional Securities as defined in Section 1.1 (2)
of the Indenture;
WHEREAS, the Depositors wish to deposit Securities, and any Additional
Securities as listed on any Addendums hereto, into the Trust and issue Units,
and Additional Units as the case maybe, in respect thereof pursuant to Section
2.5 of the Indenture; and
NOW THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the Depositors and the Trustee as follows:
Part I
STANDARD TERMS AND CONDITIONS OF TRUST
Section 1. Subject to the provisions of Part II hereof, all the
provisions contained in the Indenture are herein incorporated by reference in
their entirety and shall be deemed to be a part of this instrument as fully and
to the same extent as though said provisions had been set forth in full in this
instrument except that the following sections of the Indenture hereby are
amended as follows:
(a) All references to "Xxxxx & Xxxx Distributors, L.P." are replaced
with "Xxxxx & Tang Distributors, Inc."
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(b) Section 1.1 of the Agreement is amended to add the following
definitions:
"Distribution Agent" shall mean the Distribution Agent appointed in the
Distribution Agency Agreement, or its successor as appointed pursuant
to the Distribution Agency Agreement.
"Distribution Agency Agreement" shall mean the Distribution Agency
Agreement among the Depositors, Trustee and the Distribution Agent
dated as of July 7, 1998.
Definitions following these definitions shall be renumbered.
(c) Section 2.1 of the Agreement is amended by adding the following
paragraph after the second paragraph thereof:
"When and as directed by the Depositors, the Trustee or Distribution
Agent shall accept securities and cash to be deposited in a New Series
in exchange for Units of the New Series from persons other than
Unitholders participating in a rollover option. Notwithstanding the
fact that any Unitholder may acquire Units of the Trust by purchase or
by in-kind contribution, the Depositors will not deposit Securities
received by the Depositors on termination, or through a redemption of
Units, of a series of the Trust to a subsequent series of the Trust."
(d) Section 3.1 of the Agreement is amended in its entirety to read as
follows:
"Section 3.1. Initial Cost: Subject to reimbursement as hereinafter
provided, the cost of organizing the Trust and sale of the Trust Units
shall be borne by the Depositors, provided, however, that the
liability on the part of the Depositors under this section shall not
include any fees or other expenses incurred in connection with the
administration of the Trust subsequent to the deposit referred to in
Section 2.1. Upon notification from the Depositors that the primary
offering period is concluded, the Trustee shall withdraw from the
Account or Accounts specified in the Prospectus or, if no Account is
therein specified, from the Principal Account, and pay to the
Depositors the Depositors' reimbursable expenses of organizing the
Trust and sale of the Trust Units in an amount certified to the
Trustee by the Depositors but not in excess of the estimated per-Unit
amount set forth in the Prospectus multiplied by the number of Units
outstanding as of the conclusion of the primary offering period. If
the cash balance of the Principal Account is insufficient to make such
withdrawal, the Trustee shall, as directed by the Depositors, sell
Securities identified by the Depositors, or distribute to the
Depositors Securities having a value, as determined under Section 4.1
as of the date of distribution, sufficient for such
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reimbursement. The reimbursement provided for in this section shall be
for the account of the Unitholders of record at the conclusion of the
primary offering period. Any assets deposited with the Trustee in
respect of the expenses reimbursable under this section shall be held
and administered as assets of the Trust for all purposes hereunder.
The Depositors shall deliver to the Trustee any cash identified in the
Statement of Net Assets of the Trust included in the Prospectus not
later than the First Settlement Date and the Depositors' obligation to
make such delivery shall be secured by the letter of credit deposited
pursuant to section 2.1. Any cash which the Depositors have identified
as to be used for reimbursement of expenses pursuant to this Section
shall be held by the Trustee, without interest, and reserved for such
purpose and, accordingly, prior to the conclusion of the primary
offering period, shall not be subject to distribution or, unless the
Depositors otherwise direct, used for payment of redemptions in excess
of the per-Unit amount payable pursuant to the next sentence. If a
Unitholder redeems Units prior to the conclusion of the primary
offering period, the Trustee shall pay to the Unitholder, in addition
to the Redemption Price of the tendered Units, an amount equal to the
estimated per-Unit cost of organizing the Trust and the sale Trust
Units set forth in the Prospectus multiplied by the number of Units
tendered for redemption; to the extent the cash on hand in the Trust
is insufficient for such payment, the Trustee shall have the power to
sell Securities in accordance with Section 5.2. As used herein, the
Depositors' reimbursable expenses of organizing the Trust and sale of
the Trust Units shall include the cost of the initial preparation and
typesetting of the registration statement, prospectuses (including
preliminary prospectuses), the indenture, and other documents relating
to the Trust, SEC and state blue sky registration fees, the cost of
the initial valuation of the portfolio and audit of the Trust, the
initial fees and expenses of the Trustee, and legal and other
out-of-pocket expenses related thereto but not including the expenses
incurred in the printing of preliminary prospectuses and prospectuses,
expenses incurred in the preparation and printing of brochures and
other advertising materials and any other selling expenses.
(e) Section 5.1 of the Agreement is amended as follows:
(1) In the second sentence of the first paragraph of such
Section, to add the word "and" immediately before the phrase
"(a)(3) all other assets of the Trust" and to delete all
language in such sentence subsequent to such phrase.
(2) In the third sentence of the first paragraph of such
Section, to delete the word 'and" before "(b)(3)" and to add
at the conclusion of such sentence "and (b)(4) unpaid
organizational and offering costs in the estimated amount
per Unit set forth in the Prospectus.
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(3) To delete the second paragraph of such Section.
(f) Section 5.2 of the Agreement is amended by adding the following
prior to the first paragraph thereof:
"In connection with each redemption of Units, the Depositors
shall direct the Trustee to redeem Units in accordance with the
procedures set forth in either (a) or (b) of this Section 5.2. (a)
Trustee."
(g) Section 5.2 of the Agreement is further amended by adding the
following three paragraphs after the ninth paragraph of such Section 5.2.:
"(b) Distribution Agent-On any Business Day on which any Unit or
Units are tendered for redemption (the "Redemption Day") by a
Unitholder or his duly authorized attorney to the Trustee at its unit
investment trust office in the City of New York not later than the
Evaluation Time, such Units shall be redeemed by the Trustee on that
Redemption Day. Units in uncertificated form shall be tendered by
means of an appropriate request for redemption in form approved by the
Trustee. Unitholders must sign exactly as their name appears on the
register with the signature guaranteed by a participant in a signature
guarantee program acceptable to the Trustee, or in such other manner
as may be acceptable to the Trustee. The Trustee may also require
additional documents such as, but not limited to, trust instruments,
certificates of death, appointments as executor or administrator or
certificates of corporate authority. Subject to payment by such
Unitholder of any tax or other governmental charges which may be
imposed thereon, such redemption is to be made by distribution to the
Distribution Agent on behalf of the redeeming Unitholder on the
Redemption Day of (i) the Unitholder's pro rata portion as of the
Redemption Day of the Securities in the Trust as designated by the
Depositor and (ii) the Unitholder's pro rata portion of the cash in
the Trust as of the Redemption Day (herein called the "Redemption
Distribution"). The Distribution Agent will dispose of such assets in
accordance with the provisions of the Distribution Agent Agreement.
Fractional interests in shares distributed to the Distribution Agent,
which are not included in the Redemption Distribution, shall be held
in trust by the Distribution Agent, which is hereby designated a
subcustodian of the Trustee with respect to such fractional interests,
and shall be subject to such disposition as the Depositor shall
direct. Units received for redemption by the Trustee on any date after
the Evaluation Time will be held by the Trustee until the next
Business Day on which the New York Stock Exchange is open for trading
and will be deemed to have been tendered on such day for redemption at
the Redemption Price computed on that day. Units tendered for
redemption by the Depositors on any Business Day shall be deemed to
have been tendered before the Evaluation Time on such Business Day
provided that the Depositors advise
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the Trustee before the later of the Trustee's close of business and
5:00 pm New York City time. By such advice, the Depositors will be
deemed to certify that all Units so tendered were either (a) tendered
to the Depositors or to a retail dealer between the Evaluation Time on
the preceding Business Day and the Evaluation Time on such Business
Day or (b) acquired previously by the Depositors but which the
Depositors determined to redeem prior to the Evaluation Time on such
Business Day.
The portion of the Redemption Distribution which represents the
Unitholder's interest in the Income Account shall be withdrawn from
the Income Account to the extent available. The balance paid on any
redemption, including dividends receivable on stocks trading ex
dividend, if any, shall be withdrawn from the Principal Account to the
extent that funds are available for such purpose. If such available
balance shall be insufficient, the Trustee shall advance funds
sufficient to pay such amount to the Unitholder and shall be entitled
to reimbursement of such advance upon the deposit of additional monies
in the Income Account or Principal Account, whichever happens first.
Should any amounts so advanced with respect to declared but unreceived
dividends prove uncollectible because of default in payment of such
dividends, the Trustee shall have the right immediately to liquidate
Securities in amount sufficient to reimburse itself for such advances,
without interest. In the event that funds are withdrawn from the
Principal Account for payment of any portion of the Redemption
Distribution representing dividends receivable on stocks trading ex
dividend, the Principal Account shall be reimbursed when sufficient
funds are next available in the Income Account for such funds so
applied.
Unitholders requesting or required to receive a cash distribution
shall receive such distribution in accordance with the applicable
provisions of the Distribution Agency Agreement."
(h) Section 6.2 of the Agreement is amended by adding the following at
the end of the second paragraph thereof:
"The Trustee shall maintain and provide, upon the request of a
Unitholder or the Depositors, the Unitholders or the Unitholder's
designated representative with the cost basis of the Securities
represented by the Unitholder's Units."
(i) Section 9.2 of the Agreement is amended by deleting the fourth
paragraph thereof and by adding the following paragraph in its place:
"In the event that the Trust terminates on the Termination Date,
the Trustee shall, not less than 30 days prior to the Termination
Date, send a written notice to each Unitholder. Such notice shall
allow each Unitholder of
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record, to elect to redeem his Units at the net asset value on the
Termination Date and to receive, in partial payment of the Redemption
Price per Unit, an in-kind distribution of such Unitholder's pro rata
share of the Securities, to the extent of whole shares. The Trustee
will honor duly executed requests for such in-kind distribution
received by the close of business on the Termination Date. Redemption
of the Units of Unitholders electing such in-kind distribution shall
be made on the third business day following the Termination Date and
shall consist of (1) such Unitholder's pro rata share of Securities
(valued as of the Termination Date) to the extent of whole shares and
(2) cash equal to the balance of such Unitholder's Redemption Price.
Unitholders who do not effectively request an in-kind distribution
shall receive their distribution upon termination in cash. The Trustee
shall distribute the Unitholder's Securities to the account of the
Unitholder's bank or broker-dealer at Depositary Trust Company. An
in-kind distribution shall be reduced by customary transfer and
registration charges incurred by the Trustee."
(j) Section 9.2 of the Agreement is further amended by adding the
following paragraph after the sixth paragraph of such Section 9.2:
"In the event that the Depositors direct the Trustee that certain
Securities will be sold to a new series of the Trust (a "New Series"),
the Depositors will certify to the Trustee, within five days of each
sale from a Trust to a New Series, (1) that the transaction is
consistent with the policy of both the Trust and the New Series, as
recited in their respective registration statements and reports filed
under the Act, (2) the date of such transaction and (3) the closing
sales price on the national securities exchange for the sale date of
the securities subject to such sale. The Trustee will then countersign
the certificate, unless the Trustee disagrees with the closing sales
price listed on the certificate, whereupon the Trustee will promptly
inform the Depositors orally of any such disagreement and return the
certificate within five days to the Depositors with corrections duly
noted. Upon the Depositors' receipt of a corrected certificate, if the
Depositors verify the corrected price by reference to an independently
published list of closing sales prices for the date of the
transactions, the Depositors will ensure that the price of Units of
the New Series, and distributions to holders of the Trust with regard
to redemption of their Units or termination of the Trust, accurately
reflect the corrected price. To the extent that the Depositors
disagree with the Trustee's corrected price, the Depositors and the
Trustee will jointly determine the correct sales price by reference to
a mutually agreeable, independently published list of closing sales
prices for the date of the transaction. The Depositors and Trustee
will periodically review the procedures for sales and make such
changes as they deem necessary, consistent with Rule 17a-7(e)(2).
Finally, records of the procedures and of each transaction will be
maintained as provided in Rule 17a-7(f)."
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(k) Section 9.2 of the Agreement is further amended by deleting the
last paragraph thereof and by adding the following paragraph in its place:
"Upon the Depositors' request, the Trustee will include in the
written notice to be sent to Unitholders referred to in the fourth
paragraph of this section a form of election whereby Unitholders may
express interest in investing their terminating distribution in units
of another series of the Schwab Trusts (the "New Series"). The Trustee
will inform the Depositors of all Unitholders who, within the time
period specified in such notice, express such interest. The Depositors
will provide to such Unitholders applicable sales material with
respect to the New Series and a form, acceptable to the Trustee,
whereby a Unitholder may appoint the Distribution Agent the
Unitholder's agent to apply the Unitholder's distribution for the
acquisition of a unit or units of the New Series (a "Rollover"). Such
form will specify, among other things, the time by which it must be
returned to the Trustee in order to be effective and the manner in
which such purchase shall be made. Redemption of the Units of the
Unitholders electing such Rollover shall be made by distribution to
the Distribution Agent on behalf of redeeming Unitholder on a date on
or prior to the Termination Date selected by the Depositors and
specified in the notice (the "Rollover Date") and shall consist of (1)
such Unitholder's pro rata share of Securities (valued as of the
Rollover Date) and (2) cash equal to the balance of the Unitholder's
Redemption Price. The Distribution Agent will dispose of such assets
in accordance with the provisions of the Distribution Agency
Agreement. In the event that the Depositors determine that an in-kind
deposit into the New Series pursuant to Section 1.02 of the
Distribution Agency Agreement will not be permitted, the Units owned
by the Unitholders electing investment in a New Series will be
redeemed pursuant to Section 5.2(a) and the above-described notice
will include a form, acceptable to the Trustee, whereby a Unitholder
may appoint the Trustee the Unitholder's agent to apply the
Unitholder's cash distribution for the purchase of a unit or units of
the New Series. This paragraph shall not obligate the Depositors to
create any New Series or to provide any such investment election."
Section 2. This Reference Trust Agreement may be amended and modified
by Addendums, attached hereto, evidencing the purchase of Additional Securities
which have been deposited to effect an increase over the number of Units
initially specified in Part II of this Reference Trust Agreement ("Additional
Closings"). The Depositors and Trustee hereby agree that their respective
representations, agreements and certifications contained in the Closing
Memorandum dated March 3, 1998, relating to the initial deposit of Securities
continue as if such representations, agreements and certifications were made on
the date of such Additional Closings and with respect to the deposits made
therewith, except as such representations, agreements and certifications relate
to their respective By-Laws and as to which they each
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represent that their has been no amendment affecting their respective abilities
to perform their respective obligations under the Indenture.
Part II
SPECIAL TERMS AND CONDITIONS OF TRUST
Section 1. The following special terms and conditions are hereby
agreed to:
(a) The Securities (including Contract Securities) listed in the
Prospectus relating to this series of Equity Securities Trust (the "Prospectus")
have been deposited in the Trust under this Agreement (see "Portfolio" in Part A
of the Prospectus which for purposes of this Indenture and Agreement is the
Schedule of Securities or Schedule A).
(b) The number of Units delivered by the Trustee in exchange for the
Securities referred to in Section 2.3 is 15,014.
(c) For the purposes of the definition of Unit in item (24) of Section
1.1, the fractional undivided interest in and ownership of the Trust initially
is 1/15,014 as of the date hereof.
(d) The term Record Date shall mean the fifteenth day of December and
June commencing on December 15, 1998.
(e) The term Distribution Date shall mean the last business day of
December and June commencing on December 30, 1998.
(f) The First Settlement Date shall mean July 10, 1998.
(g) For purposes of Section 6.1(g), the liquidation amount is hereby
specified to be 40% of the aggregate value of the Securities at the completion
of the Deposit Period.
(h) For purposes of Section 6.4, the Trustee shall be paid per annum
an amount computed according to the following schedule, determined on the basis
of the number of Units outstanding as of the Record Date preceding the Record
Date on which the compensation is to be paid, provided, however, that with
respect to the period prior to the first Record Date, the Trustee's compensation
shall be computed at $.92 per 100 Units:
rate per 100 units number of Units outstanding
$0.92 5,000,000 or less
$0.86 5,000,001 - 10,000,000
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$0.80 10,000,001 - 20,000,000
$0.68 20,000,001 or more
(i) For purposes of Section 7.4, the Depositors' maximum annual
supervisory fee is hereby specified to be $.25 per 100 Units outstanding.
(j) The Termination Date shall be August 20, 1999 or the earlier
disposition of the last Security in the Trust.
(k) The fiscal year for the Trust shall end on June 30 of each year.
(l) For purposes of Section 3.15, the Trust will have a Deferred Sales
Charge as specified in and as permitted by the Prospectus.
IN WITNESS WHEREOF, the parties hereto have caused this Reference
Trust Agreement to be duly executed on the date first above written.
[Signatures on separate pages]
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XXXXXXX XXXXXX & CO, INC.
Depositor
By: /s/ Xxx Xxxxx
Authorized Signator
STATE OF CALIFORNIA )
: ss:
COUNTY OF SAN FRANCISCO )
On this 26th day of June, 1998, before me personally appeared Xxxxx X.
Xxxxx, to me known, who being by me duly sworn, said that he is an Authorized
Signator of Xxxxxxx Xxxxxx & Co., Inc. the Depositor, one of the corporations
described in and which executed the foregoing instrument, and that he signed his
name thereto by authority of the Board of Directors of said corporation.
Xxxx Xxxx Xxxxxx
Notary Public
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XXXXX & XXXX DISTRIBUTORS, INC.
Depositor
By: /s/ Xxxxx XxXxxxx
Authorized Signator
STATE OF NEW YORK )
: ss:
COUNTY OF NEW YORK )
On this 6th day of July, 1998, before me personally appeared Xxxxx
XxXxxxx, to me known, who being by me duly sworn, said that he is an Authorized
Signator of the Depositors, one of the corporations described in and which
executed the foregoing instrument, and that he signed his name thereto by
authority of the Board of Directors of said corporation.
/s/ Xxxxxx Xxxxxx
Notary Public
688576.1
THE CHASE MANHATTAN BANK
Trustee
By: /s/ Xxxxxxx Xxxxxxx
Vice President
STATE OF NEW YORK )
:ss.:
COUNTY OF NEW YORK )
On this 3rd day of July, 1998, before me personally appeared Xxxxxxx
Xxxxxxx, to me known, who being by me duly sworn, said that he is an Authorized
Signator of The Chase Manhattan Bank, one of the corporations described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation and that he signed his name thereto by like authority.
Ada Xxxx Xxxx
Notary Public
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