EXHIBIT 4.a
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NATIONAL EQUITY TRUST
TRUST INDENTURE AND AGREEMENT
for all series formed on or subsequent to the
effective date specified below
Among
PRUDENTIAL SECURITIES INCORPORATED
As Depositor
THE BANK OF NEW YORK
As Trustee
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Dated: December 13, 2000
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TRUST INDENTURE AND AGREEMENT
National Equity Trust
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
Section 1.01. Definitions.....................................................2
ARTICLE II
DEPOSIT OF SECURITIES; ACCEPTANCE OF TRUST
Section 2.01. Deposit of Securities...........................................5
Section 2.02. Acceptance of Trust.............................................5
Section 2.03. Issue of Units..................................................6
Section 2.04. Uncertificated Units............................................6
Section 2.05. Creation of Additional Units....................................6
Section 2.06. Register of Units...............................................7
ARTICLE III
ADMINISTRATION OF TRUST
Section 3.01. Initial Cost....................................................7
Section 3.02. Income Account..................................................8
Section 3.03. Principal Account...............................................9
Section 3.04. Reserve Account.................................................9
Section 3.05. Distribution....................................................9
Section 3.06. Distribution Statements........................................12
Section 3.07. Sale of Securities.............................................14
Section 3.08. Purchase of Securities.........................................16
Section 3.09. Notice and Sale by Trustee.....................................18
Section 3.10. Exchange of Securities.........................................19
Section 3.11. Notice of Actions..............................................19
Section 3.12. Extraordinary Distributions....................................20
Section 3.13. Extraordinary Event-Security Retention and Voting..............20
Section 3.14. Deferred Sales Charge..........................................21
Section 3.15. Portfolio and Portfolio Deposit Adjustments....................21
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ARTICLE IV
EVALUATION OF SECURITIES
Section 4.01. Evaluation of Securities.......................................23
Section 4.02. Tax Reports....................................................24
Section 4.03. Liability of the Trustee.......................................24
ARTICLE V
TRUST EVALUATION, REDEMPTION,
TRANSFER OF UNITS
Section 5.01. Trust Evaluation...............................................25
Section 5.02. Redemptions by Trustee; Purchases by Depositor.................26
Section 5.03. Termination Distributions......................................28
Section 5.04. Transfer of Units..............................................31
ARTICLE VI
TRUSTEE
Section 6.01. General Definition of Trustee's Liabilities,
Rights and Duties............................................32
Section 6.02. Books, Records and Reports.....................................36
Section 6.03. Indenture and List of Securities on File.......................36
Section 6.04. Compensation of Trustee........................................36
Section 6.05. Removal and Resignation of Trustee; Successor..................37
Section 6.06. Qualifications of Trustee......................................39
ARTICLE VII
RIGHTS OF UNIT HOLDERS
Section 7.01. Beneficiaries of Trust.........................................40
Section 7.02. Rights, Terms and Conditions...................................40
ARTICLE VIII
DEPOSITOR
Section 8.01. Liabilities: Power of Attorney.................................41
Section 8.02. Discharge......................................................42
Section 8.03. Successors.....................................................42
Section 8.04. Resignation....................................................43
Section 8.05. Additional Depositors..........................................43
Section 8.06. Exclusions from Liability......................................44
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ARTICLE IX
ADDITIONAL COVENANTS; MISCELLANEOUS PROVISIONS
Section 9.01. Amendments without the Consent of Unit Holders.................45
Section 9.02. Amendments with Consent of Unit Holders........................46
Section 9.03. Notice of Amendment............................................46
Section 9.04. Termination....................................................46
Section 9.05. Construction...................................................47
Section 9.06. Written Notice.................................................48
Section 9.07. Severability...................................................48
Section 9.08. Dissolution of Depositor Not To Terminate......................48
Section 9.08. Dissolution of Depositor Not To Terminate......................48
Section 9.09. Name...........................................................48
Section 9.10. Separate and Distinct Series...................................48
EXECUTION.......................................................................
ACKNOWLEDGMENTS.................................................................
SECURITIES INITIALLY DEPOSITED..................................................
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This Table of Contents does not constitute part of the Indenture.
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TRUST INDENTURE AND AGREEMENT dated December 13, 2000, among
PRUDENTIAL SECURITIES INCORPORATED, as Depositor and THE BANK OF NEW YORK, as
Trustee.
WITNESSETH that:
WHEREAS Prudential Securities Incorporated and the Trustee are
entering into this Trust Indenture and Agreement for the purpose of establishing
certain of the terms, covenants and conditions of the National Equity Trust and
each subsequent Series which may be established from time to time hereafter,
incorporating by reference the terms hereof; and
WHEREAS, for each series of the National Equity Trust to which
this Trust Indenture and Agreement is applicable, the Depositor and the Trustee
shall execute a separate Reference Trust Agreement incorporating by reference
this Trust Indenture and Agreement and effecting any amendment, supplement or
variation from or to such Trust Indenture and Agreement with respect to the
related series, and specifying for that series: (i) the Securities deposited in
trust and the number of Units delivered by the Trustee in exchange for the
Securities pursuant to Section 2.03; (ii) the initial fractional undivided
interest represented by each Unit in each Trust; (iii) the Distribution Date(s);
(iv) the Record Date(s); (v) the name of the Depositor; and (vi) any other
change or addition contemplated or permitted by this Trust Indenture and
Agreement; and
WHEREAS the Depositor will acquire and, concurrently with the
execution and delivery of the appropriate Reference Trust Agreement, will
deposit in trust with the Trustee the Securities to be listed in the Schedule
thereto, all to be held by the Trustee in trust upon the terms and conditions
hereinafter set forth as amended, supplemented or varied by such Reference Trust
Agreement, for the use and benefit of all registered holders of units of
fractional undivided interest in the Trust to which such Reference Trust
Agreement relates; and
WHEREAS, concurrently with the receipt of the aforesaid
deposit, the Trustee will record on its books the ownership by the Depositor
thereof of units of fractional undivided interest in such Securities and in the
Income Account and the Principal Account maintained under this Indenture in the
manner hereinafter provided (which units of fractional undivided interest so
recorded respectively will represent in the aggregate 100% of the beneficial
interest established hereby in such Securities, Income Account and Principal
Account) and if the Sponsor so directs, will execute in the name of the
Depositor
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thereof a certificate or certificates representing the aggregate number of Units
specified in such Reference Trust Agreement and deliver same to such Depositor;
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements herein contained, the Depositor and the Trustee agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions: Whenever used in this Indenture,
the following words and phrases, unless the context clearly indicates otherwise,
shall have the following meanings:
(1) "Additional Securities" shall mean such Securities (as
defined herein) as are listed in Supplementary Schedules of the
Reference Trust Agreement and which have been deposited to effect an
increase over the number of Units initially specified in Part II of the
Reference Trust Agreement.
(2) "Additional Units" shall mean such units (as defined
herein) as are issued in respect of Additional Securities.
(3) "Basic Agreement" shall mean this Trust Indenture and
Agreement dated as indicated on the cover page hereof as originally
executed, or if amended as hereinafter provided, as so amended,
exclusive of the terms contained in any related Reference Trust
Agreement.
(4) "Business Day" shall mean any day other than a Saturday
or Sunday or other day on which the New York Stock Exchange is closed
for trading, a legal holiday in the City of New York, or a day on which
banking institutions are authorized by law to close.
(5) "Deferred Sales Charge" shall mean any deferred sales
charge payable in accordance with the provisions of Section 3.14
hereof, as set forth in the prospectus for a Trust.
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(6) "Depositor" of the Trust shall have the meaning assigned
to it in Part II of the Reference Trust Agreement.
(7) "Distribution Agency Agreement" shall mean the
Distribution Agency Agreement dated the date of this Indenture among
the Trustee, the Depositor and the Distribution Agent.
(8) "Distribution Agent" shall mean the Distribution Agent
appointed in the Distribution Agency Agreement, or its successor as
appointed pursuant to the Distribution Agency Agreement.
(9) "Distribution Date" shall have the meaning assigned to
it in Part II of the Reference Trust Agreement.
(10) "Evaluation Time" shall mean the close of trading on the
New York Stock Exchange, presently 4:00 p.m. or such other times as are
designated as the Evaluation Time in the prospectus for a Trust.
(11) "Indenture" shall mean the Basic Agreement, as further
amended, supplemented or varied by the Reference Trust Agreement.
(12) "Prospectus" shall mean the prospectus relating to a
Trust in the form first used to confirm sales of Units of such Trust.
(13) "Record Date" shall have the meaning assigned to it in
Part II of the Reference Trust Agreement.
(14) "Reference Trust Agreement" shall mean a supplement to
the Basic Agreement, the purpose of which shall be to amend, supplement
and/or vary certain of the terms contained in the Basic Agreement. The
Reference Trust Agreement, together with the Basic Agreement to the
extent that such Reference Trust Agreement incorporates it by
reference, defines all the terms, rights and duties relevant to the
series of National Equity Trust to which such Reference Trust Agreement
relates.
(15) "Securities" shall mean such common stock, preferred
stock and other securities (including for all purposes hereof
"when-issued" and/or "regular way" contracts if any, for the purchase
thereof evidenced by the purchasing broker's confirmation of, or list
of its confirmations
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of, such contracts and a certified check or checks and/or an
irrevocable letter or letters of credit in the amount required for such
purchase) as are (i) deposited in irrevocable trust and listed in the
Schedule or Supplementary Schedules to the Reference Trust Agreement
and (ii) received in exchange or substitution for any Securities
pursuant to Section 3.10 hereof, and/or (iii) purchased pursuant to
Section 3.08 hereof or acquired pursuant to Section 2.05 hereof as may
from time to time be acquired and continue to be held as a part of the
Trust to which such Reference Trust Agreement relates.
(16) "Termination Date" shall mean the date set forth in
Part II of the Reference Trust Agreement.
(17) "Trust" shall mean the trust created by this Indenture,
which shall be denominated as indicated in Part II of the Reference
Trust Agreement relating to such Trust, and which shall consist of the
Securities held pursuant and subject to this Indenture together with
all dividends thereon, received but undistributed, any undistributed
cash realized from the sale thereof or the merger or liquidation of the
issuer of any Securities, such amounts as may be on deposit in the
Reserve Account hereinafter established and all other property and
rights to which Unit Holders may be entitled under the provisions of
this Indenture.
(18) "Trustee" shall mean The Bank of New York, or any
successor trustee as hereinafter provided for.
(19) "Unit" shall mean the fractional undivided interest in
and ownership of the Trust which shall be initially equal to the
fraction specified for the Trust in Part II of the Reference Trust
Agreement, the denominator of which fraction shall be decreased by the
number of any such Units redeemed as provided in Sections 5.02 and 5.03
and increased by the number of any Additional Units as provided in
Section 2.05.
(20) "Unit Holder" shall mean the registered holder of any
Unit as recorded on the registration books of the Trustee, his legal
representatives and heirs and the successors of any corporation,
partnership or other legal entity which is a registered holder of any
Unit and as such shall be deemed a beneficiary of the Trust created by
this Indenture to the extent of his pro rata share thereof.
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(21) The words "herein," "hereby," "herewith," "hereof,"
"hereinafter," "hereunder," "hereinabove," "hereafter," "heretofore"
and similar words or phrases of reference and association shall refer
to this Indenture in its entirety.
(22) Words importing the singular number shall include the
plural number in each case and vice versa and words importing persons
shall include corporations and associations, as well as natural
persons.
ARTICLE II
DEPOSIT OF SECURITIES; ACCEPTANCE OF TRUST
Section 2.01. Deposit of Securities: The Depositor,
concurrently with the execution and delivery hereof, has deposited with the
Trustee in trust the Securities listed in the Schedule or Schedules attached to
the Reference Trust Agreement in bearer form or duly endorsed in blank or
accompanied by all necessary instruments of assignment and transfer in proper
form to be held, administered and applied by the Trustee as herein provided. In
the event that the purchase of Securities represented by "when-issued" and/or
"regular way" contracts shall not be consummated in accordance with said
contracts, the Trustee shall credit to the Principal Account pursuant to Section
3.03 hereof the cash or cash equivalents (including such portion of any letter
of credit applicable to such contracts) deposited by the Depositor for the
purpose of such purchase. Such monies, unless invested in substitute Securities
in accordance with Section 3.08 hereof, shall be distributed to Unit Holders
pursuant to Section 3.05 hereof on the Distribution Date following the failure
of consummation of such purchase or such earlier date as the Depositor and the
Trustee determine.
The Trustee is irrevocably authorized hereby to effect
registration of transfer of the Securities in fully registered form in the name
of the Trustee or its nominee.
Section 2.02. Acceptance of Trust: The Trustee hereby accepts
the Trust created by this Indenture for the use and benefit of the Unit Holders
in the Trust, subject to the terms and conditions of this Indenture.
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Section 2.03. Issue of Units: By executing the Reference Trust
Agreement and receipt for deposited property, the Trustee will thereby
acknowledge receipt of the deposit relating to the Trust to which such Reference
Trust Agreement relates, referred to in Section 2.01, and simultaneously with
the receipt of said deposit, will record on its books for the account of the
Depositor the aggregate number of Units of the Trust in exchange therefor as
specified in Part II of the Reference Trust Agreement. The number of Units may
be increased through a split of the Units or decreased through a reverse split
thereof, as directed by the Depositor, which revised number of Units shall be
recorded by the Trustee on its books.
The Trusts created by this Indenture are separate and distinct
trusts for all purposes and the assets of one such trust may not be commingled
with the assets of any other, nor shall the expenses of any such trust be
charged against the other. The Units representing the ownership of a fractional
undivided interest in one Trust shall not be exchangeable for Units representing
the ownership of an undivided fractional interest in any other except as set
forth in the Prospectus.
Section 2.04. Uncertificated Units: All Units shall be held in
uncertificated form, unless and as the Trustee may deem it appropriate to issue
certificates. The Trustee may deem and treat the person in whose name any Unit
is registered upon the books of the Trustee as the owner thereof for all
purposes and the Trustee shall not be affected by any notice to the contrary.
Section 2.05. Creation of Additional Units: From time to time
and in the discretion of the Depositor, the Depositor may make deposits of
Additional Securities and/or cash (or a letter of credit in lieu of cash) with
instructions to the Trustee to purchase one or more of such Additional
Securities, which cash (or cash in an amount equal to the face amount of the
letter of credit), to the extent not used by the Trustee to purchase such
Additional Securities, shall be distributed to Unit Holders on the Distribution
Date as the Depositor and the Trustee determine. Each Unit representing the
Additional Securities shall represent as closely as practicable the same number
and type of shares and cash as were represented by a Unit immediately prior to
the deposit of such Additional Shares. Each deposit of Additional Securities
shall be listed in a Supplementary Schedule to the Reference Trust Agreement
stating the date of such deposit and the number of Additional Units being issued
therefor. The Trustee shall
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acknowledge in such Supplementary Schedule receipt of the deposit, and
simultaneously with the receipt of said deposit, reflect the aggregate number of
Additional Units specified in such Supplementary Schedule by recording such
Units on its books. Such Additional Securities shall be held, administered and
applied by the Trustee in the same manner as herein provided for the Securities.
The execution by the Depositor in connection with the deposit of Additional
Securities of a Supplementary Schedule to the Reference Trust Agreement shall
constitute the approval by the Depositor as satisfactory in form and substance
of the contracts to be entered into or assumed by the Trustee with regard to any
Additional Securities listed on such Supplementary Schedule and authorization to
the Trustee on behalf of the Trust to enter into or assume such contracts and
otherwise to carry out the terms and provisions thereof or to take other
appropriate action in order to complete the deposit of the Additional Securities
covered thereby into the Trust. The parties hereto agree that a Supplementary
Schedule to the Reference Trust Agreement may be delivered by telecopier and
that such delivery shall have the same force and effect as the delivery of an
original executed document.
Section 2.06. Register of Units: A register shall be kept by
the Trustee containing the names and addresses of the Unit Holders and the
number of Units owned by each Unit Holder, and in which all issues, exchanges,
transfers and cancellations of Units shall be recorded.
ARTICLE III
ADMINISTRATION OF TRUST
Section 3.01. Initial Cost: The costs of organizing the Trust
and sale of the Trust Units shall, to the extent of the expenses reimbursable to
the Depositor provided below, be borne by the Unit Holders, provided, however,
that, to the extent all of such costs are not borne by Unit Holders, the amount
of such costs not borne by Unit Holders shall be borne by the Depositor and,
provided further, however, that the liability on the part of the Depositor under
this Section 3.01 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 2.01. Upon notification from the Depositor that the
primary offering period is concluded or such
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other period as the Depositor directs, 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 Depositor the Depositor's
reimbursable expenses of organizing the Trust and sale of the Trust Units in an
amount certified to the Trustee by the Depositor. If the balance of the
Principal Account is insufficient to make such withdrawal, the Trustee shall, as
directed by the Depositor, sell Securities identified by the Depositor, or
distribute to the Depositor Securities having a value, as determined under
Section 4.01 as of the date of distribution, sufficient for such reimbursement.
The reimbursement provided for in this Section 3.01 shall be for the account of
the Unitholders of record at the conclusion of the primary offering period and
shall not be reflected in the computation of the Unit Value prior thereto. As
used herein, the Depositor's 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. Any cash which the
Depositor has identified as to be used for reimbursement of expenses pursuant to
this Section 3.01 shall be reserved by the Trustee for such purpose and shall
not be subject to distribution or, unless the Depositor otherwise directs, used
for payment of redemptions in excess of the per-Unit amount allocable to Units
tendered for redemption. As directed by the Depositor, the Trustee will advance
funds to the Trust in an amount necessary to reimburse the Depositor pursuant to
this Section 3.01 and shall recover such advance from the sale or sales of
Securities at such time as the Depositor shall direct, but in no event later
than the termination of the Trust. Repayment of any such advance shall be
secured by a lien on the assets of the Trust prior to the interest of the Unit
Holders as provided in Section 6.04.
Section 3.02. Income Account: The Trustee shall collect the
dividends or other like cash distributions on the Securities in the Trust as
such are paid, and credit such amounts, as collected, to a separate account to
be known as the "Income Account."
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Section 3.03. Principal Account: The Securities in the Trust
and all cash and other assets, other than amounts credited to the Income
Account, received by the Trustee in respect of the Securities in the Trust shall
be credited to a separate account for the Trust to be known as the "Principal
Account"; provided, however, that funds deposited by the Depositor for purchase
of Securities or funds received from a sale of a Security or funds received from
the merger or liquidation of an issuer of a Security not representing capital
gains to the Trust shall be separately held in Trust by the Trustee for the
purposes of Section 2.03 or 3.08 unless directed otherwise by the Depositor, and
shall not be credited to the Principal Account for the purposes of computing
distributions to Unit Holders, unless and until the Depositor directs such funds
be so credited to the Principal Account. Once so credited, the funds shall be
held for distribution and shall not be available for purchases of securities.
Section 3.04. Reserve Account: From time to time the Trustee
shall withdraw from the cash on deposit in the Principal Account such amounts as
it, in its sole discretion, shall deem requisite to establish a reserve for any
applicable taxes or other governmental charges that may be payable out of the
Trust. Such amounts so withdrawn shall be credited to a separate account which
shall be known as the "Reserve Account." The Trustee shall not be required to
distribute to the Unit Holders any of the amounts in the Reserve Account;
provided, however, that if the Trustee shall, in its sole discretion, determine
that such amounts are no longer necessary for payment of any applicable taxes or
other governmental charges, then it shall promptly deposit such amounts in the
account from which previously withdrawn, or, if such Trust has been terminated
or is in the process of termination, the Trustee shall distribute. to each Unit
Holder such holder's interest in the Reserve Account in accordance with Section
9.04 hereof.
Section 3.05. Distribution: As of each Record Date for the
Trust, the Trustee shall:
(a) deduct from the Income Account, or, to the extent funds
are not available in such Account, from the Principal Account, and pay to itself
individually the amounts that it is at the time entitled to receive pursuant to
Section 6.04 or this Section 3.05;
(b) deduct from the Income Account, or, to the extent funds
are not available in such Account, from the Principal Account, an amount equal
to the unpaid fees and expenses,
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if any, including registration fees, Blue Sky fees, printing costs, attorneys'
fees, auditing costs and other miscellaneous out-of-pocket expenses, as
certified by the Depositor, incurred in keeping the registration of the Units
and the Trust on a current basis pursuant to Section 9.06, provided, however,
that no portion of such amount shall be deducted or paid unless the payment
thereof from the Trust is at that time lawful; and
(c) deduct from the Income Account or, to the extent funds are
not available in such account, from the Principal Account the estimated amount
that the Depositor is entitled to receive pursuant to Section 8.07 and hold such
amount without interest until such time as it is payable to the Depositor as set
forth below. The Trustee shall distribute to the Depositor from the amount so
held pursuant to the immediately preceding sentence the amounts that the
Depositor is entitled to receive pursuant to Section 8.07 on account of its
services theretofore performed and expenses theretofore incurred. With respect
to a Trust having monthly, quarterly or semiannual Distribution Dates, the
Trustee shall deduct from the Income Account one-twelfth, one-quarter or
one-half, as the case may be, of the estimated annual amount that the Depositor
is entitled to receive and shall distribute such amounts to the Depositor on the
monthly, quarterly or semiannual Distribution Dates, as the case may be.
(d) in the event of the appointment of a successor depositor
pursuant to Section 6.01(f)(1), deduct from the Income Account, or, to the
extent that funds are not available in such Account, from the Principal Account,
and pay to such successor depositor the amounts, if any, that it is at the time
lawful for it to receive under said Section 6.01(f)(1).
All amounts (i) permitted to be withdrawn from the Principal
Account under this Indenture in order to satisfy obligations which, pursuant to
the terms hereof, are first to be paid out of the Income Account to the extent
funds are available, or (ii) permitted to be withdrawn from the Principal
Account pursuant to Section 5.02 hereof, may be made only from the balance in
the Principal Account after excluding (x) capital gains being held for
distribution to Unit Holders of record on the Record Date for a prior
Distribution Date pursuant to the third following paragraph and (y) amounts
which may be used for purchases under Section 3.08 to the extent such amounts
relate to then existing contracts to purchase securities. The Principal Account
shall be reimbursed for any such amounts described in clause (i) of the
preceding sentence when sufficient funds are next available in the Income
Account after giving effect
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to the payment from the Income Account of all amounts otherwise required to be
deducted therefrom at that time.
On each Distribution Date or within a reasonable period of
time thereafter, the Trustee shall distribute by mail to each Unit Holder of
record at the close of business on the preceding Record Date at his address
appearing on the registration books of the Trustee such holder's pro rata share
of the balance of the Income Account computed as of the preceding Record Date.
On each Distribution Date or within a reasonable period of
time thereafter, the Trustee shall distribute by mail to each Unit Holder of
record at the close of business on the preceding Record Date at his address
appearing on the registration books of the Trustee such holder's pro rata share
of the distributable cash balance of the Principal Account, computed as of the
preceding Record Date, provided, however, that such proceeds will not be
distributed if such distribution will result in adverse tax consequences to the
Trust as determined by the Depositor in which event the Trustee shall hold such
proceeds until such time as the Depositor shall direct distribution of such
proceeds. The Trustee shall not be required to make a distribution from the
Principal Account unless the cash balance on deposit therein available for
distribution shall be sufficient to distribute at least $.01 per Unit.
No distribution of funds constituting long-term capital gains
shall be made in contravention of Section 19(b) of the Investment Company Act of
1940, as from time to time amended, or orders, rules or regulations thereunder.
Without limiting the generality of the foregoing, and notwithstanding any other
provision hereof to the contrary, the Trustee, unless permitted by the foregoing
to distribute long-term capital gains more frequently than once each year, shall
hold any funds representing long-term capital gains in the Principal Account,
for distribution only on the Distribution Date next following the last Record
Date of each calendar year. The amounts to be so distributed to each Unit Holder
of the Trust of record as of each Record Date shall be that pro rata share of
the cash balance as of such Record Date of the Income and Principal Accounts of
the Trust, as shall be represented by a notation on the registration or other
record books of the Trustee.
In the computation of each such share, fractions of less than
one cent per every ten (10) Units shall be omitted. After any such distribution
provided for above, any cash balance remaining in the Income Account or the
Principal Account
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shall be held in the same manner as other amounts subsequently deposited in each
of such Accounts, respectively.
On each Deferred Sales Charge payment date set forth in the
prospectus for a Trust, the Trustee shall pay the account created pursuant to
Section 3.14 the amount of the Deferred Sales Charge payable on each such date
as stated in the prospectus for a Trust. Such amount shall be withdrawn from the
Principal Account from the amounts therein designated for such purpose.
For the purpose of distribution as herein provided, the
holders of record on the registration books of the Trustee at the close of
business on each Record Date shall be conclusively entitled to such
distribution, and no liability shall attach to the Trustee by reason of payment
to any such registered Unit Holder of record. Nothing herein shall be construed
to prevent the payment of amounts from the Income Account and the Principal
Account to individual Unit Holders by means of one check, draft or other proper
instrument, provided that the appropriate statement of such distribution shall
be furnished therein as provided in Section 3.06 hereof.
Section 3.06. Distribution Statements: With each distribution
from the Income or Principal Accounts of the Trust, the Trustee shall furnish
Unit Holders a statement of the amount being distributed from each such account,
expressed in each case as a dollar amount per Unit.
Within a reasonable period of time after the last Business Day
of each calendar or fiscal year the Trustee shall furnish to each person who at
any time during such calendar or fiscal year was a Unit Holder a statement
setting forth, with respect to such calendar or fiscal year:
(A) as to the Income Account of the Trust:
(1) the amount of dividends received on the
Securities,
(2) the amounts paid from the Income Account for
purchases of Securities pursuant to Section 3.08 and
for redemptions of Units pursuant to Section 5.02,
(3) the deductions from the Income Account for
payment of applicable taxes or other governmental charges, if
any, compensation of the Depositor, fees and expenses of the
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Trustee, transfers to the Reserve Account, and any expenses
paid by the Trust pursuant to Section 3.05 hereof,
(4) the amount distributed from the Income
Account, identifying separately amounts distributed as
dividends and as other income,
(5) any other amount credited to or deducted from
the Income Account, and
(6) the balance remaining after such distributions
and deductions, expressed both as a total dollar amount and as
a dollar amount per Unit outstanding on the last Business Day
of such calendar or fiscal year;
(B) as to the Principal Account of the Trust:
(1) the dates of the sale of any of the Securities,
or the merger or liquidation of an issuer of a Security
resulting in the receipt of cash or a new Security by the
Trust, the identity of such Securities and the net proceeds
received therefrom, excluding any portion thereof credited to
the Income Account,
(2) the amount paid from the Principal Account for
purchases of Securities pursuant to Section 3.08 and for
redemption of Units pursuant to Section 5.02,
(3) the deductions for payment of applicable taxes
and other governmental charges, if any, fees and expenses of
the Trustee, transfers to the Reserve Account, and any
expenses paid by the Trust under Section 3.05 hereof and any
Deferred Sales Charge paid,
(4) the aggregate amount distributed from the
Principal Account for such period, pursuant to Section 3.05
hereof and the portion of such aggregate amount attributable
to capital gains,
(5) any other amount credited to or deducted from
the Principal Account, and
(6) the balance remaining after such distributions
and deductions, expressed both as a total dollar amount and as
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a dollar amount per Unit outstanding on the last Business Day
of such calendar or fiscal year;
(C) the following information:
(1) a list of the Securities held in the Trust as of
the last Business Day of such calendar or fiscal year and a
list that identifies all Securities purchased, sold or
otherwise disposed of during such calendar or fiscal year,
(2) the number of Units outstanding on the last
Business Day of such calendar or fiscal year,
(3) the Unit Value (as defined in Section 5.01)
based on the last evaluation of such Trust made during such
calendar or fiscal year, and
(4) the amounts actually distributed during such
calendar or fiscal year from the Income and Principal Accounts
of the Trust, separately stated, expressed both as total
dollar amounts and as dollar amounts per Unit outstanding on
the Record Dates for such distributions.
Section 3.07. Sale of Securities: In order to maintain the
sound investment character of the Trust and to maintain the qualification of the
Trust as a "regulated investment company" under the Internal Revenue Code, the
Depositor may and with respect to subsection (a) of this Section 3.07, shall,
direct the Trustee to sell or liquidate Securities at such price and time and in
such manner as shall be determined by the Depositor, provided that the Depositor
has determined that any one or more of the following conditions exist:
(a) that the numerical rating of any such Securities has
fallen below the minimum quality rating for the Portfolios of the Trust
set forth in the applicable prospectus, which rating is based upon the
rating system used by the Research Department of Prudential Securities
Incorporated, or any successor or substitute rating entity designated
by the Depositor;
(b) that there has been a failure by the issuer of such
Securities to declare or pay an anticipated dividend thereon;
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(c) that any action or proceeding has been instituted in law
or equity seeking to restrain or enjoin the payment of dividends on Any
such Securities, or that there exists any other legal question or
impediment affecting such Securities or the payment of dividends on the
same;
(d) that there has occurred any breach of covenant or warranty
in any resolution, ordinance, trust, indenture or other agreement or
document, which would adversely affect either immediately or
contingently the payment of dividends on such Securities;
(e) that the price of any such Securities has declined to such
an extent, or such other adverse market or credit factor exists, that
in the opinion of the Depositor the retention of such Securities would
be detrimental to the Trust and to the interest of the Unit Holders;
and
(f) that the sale of such Securities is necessary or advisable
in order to maintain the qualification of the Trust as a "regulated
investment company" under the Internal Revenue Code or to avoid the
payment of tax by the Trust.
In order to meet its responsibilities under this Section 3.07,
the Trustee shall review the Securities which form the portfolio of the Trust as
of the last Business Day of the third, sixth, ninth and twelfth months of the
Trust's taxable year until the Trust is terminated to determine if any of such
Securities should be sold pursuant to the conditions enumerated in this Section
3.07. If the Trustee concludes after a quarterly review of the portfolio of the
Trust, or at any other time, that certain of the Securities should be sold, then
it shall promptly notify the Depositor in writing of the action it proposes to
take. The Trustee shall take such action as the Depositor directs it to take,
provided however, that if the Depositor does not provide direction within five
business days to the Trustee, the Trustee shall take such action as it deems
advisable consistent with maintaining the status of the Trust as a "regulated
investment company" under the Internal Revenue Code ("RIC"). Such notice to the
Depositor shall contain statements describing the determinations made by the
Trustee pursuant to this Section, describing the Securities to be sold, and
certifying that compliance with such direction will not cause the Trust to be
disqualified as a RIC.
Notwithstanding the foregoing provisions of this Section 3.07,
if the Prospectus for a Trust states that the portfolio of the Trust will be
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maintained in a manner that seeks to match the weighting of securities in a
designated index of securities (the "Index"), the Depositor will not direct the
sale of Securities pursuant to Section 3.07(a) through (d) but will direct the
Trustee to sell Securities as set forth in Section 3.15 hereof.
Upon receipt of such direction from the Depositor, upon which
the Trustee shall rely, the Trustee shall proceed to sell the specified
Securities in accordance with such direction. The Trustee shall not be liable or
responsible in any way for depreciation or loss incurred by reason of any sale
made pursuant to any such direction or by reason of the failure of the Depositor
to give any such direction, and in the absence of such direction the Trustee
shall have no duty to sell any Securities under this Section 3.07.
In order to pay the Deferred Sales Charge, the Trustee shall
sell or liquidate an amount of Securities at such time and from time to time and
in such manner as the Depositor shall direct such that the proceeds of such sale
or liquidation shall equal the amount required to be paid to the Depositor
pursuant to the Deferred Sales Charge program as set forth in the prospectus for
a Trust.
Section 3.08. Purchase of Securities: The Depositor may in
writing from time to time direct the Trustee to purchase or to enter into
contracts (which the Depositor shall have approved as satisfactory in form and
substance) to purchase, securities to be held as Securities hereunder as a part
of the Trust with monies held in the Principal Account representing (i) the
amounts credited thereto upon the failure of consummation of a contract to
purchase Securities in accordance with Section 2.01; or (ii) the proceeds of
Securities sold pursuant to Section 3.07 (except for proceeds of Securities sold
pursuant to subsection (a) of Section 3.07 hereof, which proceeds may not be
used to purchase Securities pursuant to this Section 3.08 (unless the Depositor
directs reinvestment consistent with the Trust's status as a unit investment
trust), but which shall be distributed to the Unitholders pursuant to Section
3.05 hereof, provided, however, that such proceeds will not be distributed if
such distribution will result in adverse tax consequences to the Trust as
determined by the Depositor in which event the Trustee shall hold such proceeds
until such time as the Depositor shall direct distribution of such proceeds.) or
Section 3.09; or (iii) the cash proceeds, not representing capital gains to the
Trust unless otherwise directed by the Depositor, realized upon the merger or
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liquidation of an issuer of a Security or pursuant to Section 3.10 hereof; or
(iv) proceeds from the sale of Securities pursuant to Section 3.05, 5.02 or 6.04
to the extent that such proceeds are not required for the purposes of such
Sections. If any such contract for the purchase of securities to be held as
Securities made pursuant to the directions of the Depositor under this Section
fails, the Depositor may direct the Trustee to purchase, or to enter into
contracts to purchase, other securities to be held as Securities as a part of
the Trust. Each such purchase or contract to purchase shall be subject to the
following conditions:
(a) The new securities shall be equity securities that possess
characteristics, including a rating by the Research Department of
Prudential Securities Incorporated or any successor or substitute
rating entity designated by the Depositor, that are consistent with the
objectives of the Trust as set forth in the relevant Prospectus. Such
Securities may include or be limited to Securities previously included
in the portfolio of the Trust.
(b) The new Securities shall not be restricted under federal
securities law as regards the right of sale;
(c) The purchase of the new Securities shall not cause the
Trust to cease to qualify as a "regulated investment company" under the
Internal Revenue Code;
(d) The purchase of new Securities will not cause the Trust to
hold more than 10% of the outstanding voting securities of any one
issuer of securities;
(e) The purchase price of the new Securities shall not exceed
the balance in the Principal Account at the time of such direction
resulting (i) from the deposit of money therein as a result of any
failure of contracts to purchase Securities, (ii) from the proceeds of
any sale of Securities pursuant to Section 3.07, Section 3.09 and (iii)
from the proceeds of any sale of Securities pursuant to Sections 3.05,
5.02 and 6.04 to the extent that such proceeds are not required for the
purposes of said Sections, after making provisions satisfactory to the
Depositor for the distribution to Unitholders of amounts in respect of
income and capital gain so that the Trust shall not be subject to
Federal income tax; and
(f) The written instructions of the Depositor shall (1)
identify the new Securities to be purchased and approve any contracts
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for the purchase of new Securities proposed to be entered into by the
Trustee as satisfactory in form and substance to the Depositor and (2)
state that the foregoing conditions of clauses (a) through (e) have
been satisfied with respect to the new Securities.
Notwithstanding the foregoing provisions of this Section 3.08,
if a security is acquired pursuant to Section 3.15 hereof, the provisions of
Section 3.08(a) shall not apply.
Upon receipt of the foregoing instructions under clause (f) on
which the Trustee shall rely, the Trustee shall enter into the contract, if any,
to purchase such new Securities and take all steps reasonably necessary to
consummate the purchase thereof. Amounts in respect of the purchase price
thereof shall be paid out of and charged against the Principal Account. The
Trustee shall not be liable or responsible in any way for depreciation or loss
incurred by reason of any purchase made pursuant to any such directions and in
the absence of such directions the Trustee shall have no duty to purchase any
new Securities under this Indenture. The Depositor shall not be liable for any
failure to instruct the Trustee to purchase any new Securities or for errors of
judgment in respect of this Section 3.08, provided, however, that this provision
shall not protect the Depositor against any liability to which it would
otherwise be subject by reason of willful misconduct, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties hereunder.
Within five (5) business days from the date of the purchase of
any new Securities in accordance with this Section 3.08, the Trustee, both as
Trustee and as agent for the Depositor, shall mail to all Unitholders then of
record, at their addresses appearing on the registration books of the Trustee, a
written notice of such purchase, including an identification of the new
Securities purchased and the Securities eliminated from the Trust and replaced
by such Securities.
Section 3.09. Notice and Sale by Trustee: Except as set forth
in Section 3.15 hereof, if at any time there has been a failure by the issuer of
any Security to pay a dividend that is due and payable, the Trustee shall notify
the Depositor thereof. If within thirty days after such notification the Trustee
has not received any instruction from the Depositor to sell or to hold or to
take any other action in connection with such Security, the Trustee shall sell
such Security forthwith, and the Trustee shall not be liable or responsible in
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any way for depreciation or loss incurred by reason of such sale or by reason of
any action or inaction in accordance with such written instructions of the
Depositor. The Trustee shall promptly notify the Depositor of such action in
writing and shall set forth therein the Security sold and the proceeds received
therefrom.
Section 3.10. Exchange of Securities: In the event that an
offer by the issuer of any of the Securities or any other party shall be made to
exchange new securities for Trust Securities, the Trustee may, upon the
direction of the Depositor, accept or reject such offer. Should an exchange or
substitution of securities or other property for Trust Securities be effected
notwithstanding a rejection or without an initial offer, any securities, cash
and/or property so received in exchange or substitution shall be (i) distributed
to Unit Holders or (ii) sold and the proceeds of sale either (a) distributed to
Unit Holders or reinvested, or (iii) if qualifying as a Security, deposited in
the Trust, all as the Depositor may direct. If the Depositor gives no such
direction within ten (10) Business Days after notice by the Trustee to the
Depositor of the receipt of such securities or other property, such securities
or other property shall be sold and the proceeds of the sale distributed to Unit
Holders. Any securities purchased or deposited in the Trust pursuant to the
preceding sentence shall be subject to the terms and conditions of this
Indenture to the same extent as the Securities originally deposited hereunder.
Within five days after such deposit, notice of such exchange and deposit shall
be given by the Trustee to each Unitholder, including an identification of the
Securities eliminated and the Securities substituted therefor.
Section 3.11. Notice of Actions: In the event that the Trustee
shall have been notified at any time of any action to be taken or proposed to be
taken by holders of any Securities held by the Trust (including, but not limited
to, the making of any demand, direction, request, giving of any notice, consent
or waiver or the voting with respect to election of directors or any amendment
or supplement to any corporate resolution, agreement or other instrument under
or pursuant to which such Securities have been issued) the Trustee shall
promptly notify the Depositor and shall thereupon take such action or refrain
from taking any action as the Depositor shall in writing direct; provided,
however, that if the Depositor shall not within five business days of the giving
of such notice to the Depositor direct the Trustee to take or refrain from
taking any action, the Trustee shall take such action as it, in its sole
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discretion, shall deem advisable. Neither the Depositor nor the Trustee shall be
liable to any person for any action or failure to take action with respect to
this section.
Section 3.12. Extraordinary Distributions: Any property
received by the Trustee after the initial date of Deposit in a form other than
cash or additional shares (i) of the Securities listed on Schedule A or a
Security subsequently deposited pursuant to Section 2.05, (ii) of a Security
purchased pursuant to Section 3.08 or 3.10 hereof or (iii) a security received
in exchange for a Security shall be dealt with in the same manner as property
received in an exchange pursuant to Section 3.10 hereof. Provided, however, that
if such other property received is not readily marketable, the Trustee will
consult with the Depositor concerning the method of disposition of such other
property most likely to maximize cash yield and efficiency of time and
convenience. The Depositor's determination of such method of disposition shall
be final and binding and the Trustee shall be entitled to rely in good faith
upon such determination.
The Securities and cash represented by a Unit shall be uniform
so that each Unit shall at all times represent property identical to that
represented by every other Unit. Securities identical to those represented by a
Unit and received as the result of a stock dividend or stock split may be
retained in the Trust and the number of shares of such a Security represented by
a Unit adjusted accordingly.
Section 3.13. Extraordinary Event-Security Retention and
Voting. In the event the Trustee is notified of any action to be taken or
proposed to be taken by holders of the securities held by the Trust in
connection with any proposed merger, reorganization, spin-off, split-off or
split-up by the issuer of stock or securities held in the Trust, the Trustee
shall take such action or refrain from taking any action, as appropriate, so as
to insure that the securities are voted as closely as possible in the same
manner and in the same general proportion as are the securities held by owners
other than the Trust. If stock or securities are received by the Trustee, with
or without cash, as a result of any merger, reorganization, spin-off, split-off
or split-up by the issuer of stock or securities held in the Trust, the Trustee
at the direction of the Depositor may retain such stock or securities in the
Trust. Neither the Depositor nor the Trustee shall be liable to any person for
any action or failure to take action with respect to this Section 3.13.
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Section 3.14. Deferred Sales Charge. If the prospectus for a
Trust specifies a Deferred Sales Charge, the Trustee shall, on the dates
specified in and as permitted by the prospectus, withdraw from the Income
Account if such account is designated in the prospectus as the source of the
payments of the Deferred Sales Charge, or to the extent funds are not available
in that account or if such account is not so designated, from the Principal
Account, an amount per Unit specified in the prospectus and credit such amount
to a special, non-Trust account maintained at the Trustee out of which the
Deferred Sales Charge will be distributed to the Depositor. If the Income
Account is not designated as the source of the Deferred Sales Charge payment or
if the balances in the Income and Principal Accounts are insufficient to make
any such withdrawal, the Trustee shall, as directed by the Depositor, either
advance funds, if so agreed to by the Trustee, in an amount equal to the
proposed withdrawal and be entitled to reimbursement of such advance upon the
deposit of additional monies in the Income Account or the Principal Account,
sell Securities and credit the proceeds thereof to such special non-Trust
account or credit Securities in kind to such special non-Trust account. Such
directions shall identify the Securities, if any, to be sold or distributed in
kind and shall contain, if the Trustee is directed by the Depositor to sell a
Security, instructions as to execution of such sales. If a Unit Holder redeems
Units prior to full payment of the Deferred Sales Charge, the Trustee shall, if
so provided in the prospectus, on the Redemption Date, withhold from the
Redemption Price payment to such Unit Holder an amount equal to the unpaid
portion of the Deferred Sales Charge and distribute such amount to such special
non-Trust account or, if the Depositor shall purchase such Unit pursuant to the
terms of Section 5.02 hereof, the Depositor shall pay the Redemption Price for
such Unit less the unpaid portion of the Deferred Sales Charge. The Depositor
may at any time instruct the Trustee to distribute to the Depositor cash or
Securities previously credited to the special non-Trust account. References to
Deferred Sales Charge in this Trust Indenture and Agreement shall include any
Creation and Development Fee indicated in the prospectus for a Trust. The
Creation and Development Fee shall be payable on each date so designated and in
an amount determined as specified in the prospectus for a Trust.
Section 3.15. Portfolio and Portfolio Deposit Adjustments. (a)
This Section 3.15 shall apply to a Trust the prospectus for which states that
the portfolio of the Trust will be maintained in a manner that seeks to match
the weighting of securities in an Index. The Trustee will adjust the composition
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of the portfolio from time to time to conform, to the extent practicable, to
changes in the composition and/or price weightings of the securities in the
Index. The Trustee will adjust the composition of the portfolio at any time that
there is a change in the identity of any security in the Index (i.e., a
substitution of one security in replacement of another), which adjustment shall
be made within three (3) Business Days before or after the day on which the
change in the identity of such security is scheduled to take effect at the close
of the market. In addition, the Trustee will be required to adjust, to the
extent practicable, the composition of the portfolio any time there is a
corporate action, such as a stock split in one of the securities in the Index,
which causes a change to the "divisor" in the computation of the Index. The
Trustee will be required to adjust the portfolio holdings to track the adjusted
Index, such adjustment to be made within three (3) Business Days before or after
the day on which the change in the Index divisor is scheduled to take effect.
(b) From time to time adjustments may be made to the
composition of the Index as a result of a merger, acquisition or other business
combination involving one or more of the issuers whose securities are included
in the Index. In such cases, the Trust, as shareholder of securities of an
issuer that is involved in such a transaction, may receive various offers from
would-be acquirors of the issuer. The Trustee will not be permitted to accept
any such offers until such time as it has been determined that the securities of
an issuer will be removed from the Index. In selling the securities of such
issuer the Trust may receive, to the extent that market prices do not provide a
more attractive alternative, whatever consideration is being offered to the
shareholders of such issuer that have not tendered their shares prior to such
time. Any cash received in such transactions will be reinvested in securities in
the Index in accordance with the criteria set forth in subparagraph (a) above.
Any securities received as a part of the consideration that are not securities
in the Index will be sold as soon as practicable and the cash proceeds of such
sale will be reinvested in securities in the Index in accordance with the
criteria set forth in subparagraph (a) above.
(c) Purchases and sales of securities resulting from the
adjustments described in this Section 3.15 will be made in the share amounts
dictated by the specifications set forth herein, whether round lot or odd lot.
All portfolio adjustments will be made as described herein unless such
adjustments would cause the Trust to lose its status as a regulated investment
company.
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(d) Pursuant to the guidelines set forth in this Section 3.15,
the Trustee will calculate the required adjustments and will purchase and sell
the appropriate securities. As a result of the purchase and sale of securities
in accordance with these requirements, the Trust may hold some amount of
residual cash which it shall use to purchase additional securities in the Index
or distribute to Unit Holders as the Depositor shall direct.
(e) All adjustments to the portfolio held by the Trustee will
be made by the Trustee pursuant to the provisions of this Section 3.15 and as
set forth in the Basic Agreement and will be non-discretionary. The adjustments
provided herein are intended to conform the composition and security weightings
of the securities in the Index. Such adjustments are based upon the Index as it
is determined by the entity maintaining the Index. To the extent that the method
of determining the Index is changed in a manner that would affect the
adjustments provided for herein, the Trustee and the Depositor shall have the
right to amend the Basic Agreement, without the consent of the Unit Holders, to
conform the adjustments provided herein and in the Basic Agreement to such
changes so that the objective of tracking the Index is maintained. In addition,
and notwithstanding the foregoing, the Trustee shall have the power and shall be
required to adjust the composition of the portfolio at any time if it determines
that such action is necessary to insure the continued qualification of the Trust
as a regulated investment company, even if such adjustment will cause the
composition of the portfolio to deviate from that of the Index or violates any
other requirement otherwise applicable in determining the composition of the
portfolio.
ARTICLE IV
EVALUATION OF SECURITIES
Section 4.01. Evaluation of Securities: The Trustee shall
determine separately and promptly furnish to the Depositor upon request the
value of each issue of the Securities in the Trust (determined as set forth
below) as of the Evaluation Time on each of the days on which the Trustee shall
make the Trust Evaluation required by Section 5.01. In making the evaluations
the Trustee may determine the value of each issue of the Securities in the Trust
by the following methods, or any combination thereof, which it deems
appropriate. If the Securities are listed on one or more national securities
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exchanges, such valuation shall be based on the closing sale price on such
exchange which is the principal market thereof, deemed to be the New York Stock
Exchange if the Securities are listed thereon, (unless the Trustee deems such
price inappropriate as a basis for valuation). If the Securities are not so
listed, or, if so listed and the principal market therefor is other than such
exchange or there is no closing sales price on such exchange, such valuation
shall be based on the closing sales price in the over-the-counter market (unless
the Trustee deems such price inappropriate as a basis for valuation) or if there
is no such closing sales price, by any of the following methods which the
Trustee deems appropriate: (i) on the basis of current bid prices of such
Securities as obtained from investment dealers or brokers (including the
Depositor) who customarily deal in securities comparable to those held by the
Trust, or (ii) if bid prices are not available for any of such Securities, on
the basis of bid prices for comparable securities, or (iii) by appraisal of the
value of the Securities on the bid side of the market or by such other appraisal
as is deemed appropriate, or (iv) by any combination of the above. The Trustee
shall also make an evaluation of the Securities deposited in the Trust as of the
time said Securities are deposited under this Indenture. Such evaluation shall
be made on the same basis as set forth above. The Trustee's determination of the
closing sales prices of the Securities on the date of deposit shall be included
in the Schedules attached to the Reference Trust Agreement.
Section 4.02. Tax Reports: For the purpose of permitting Unit
Holders to satisfy any reporting requirements of applicable Federal or State tax
law, the Trustee shall transmit to any Unit Holder upon written request any
determinations made by the Trustee pursuant to this Section 4.01.
Section 4.03. Liability of the Trustee: The Depositor and Unit
Holders may rely on any evaluation furnished by the Trustee and shall have no
responsibility for the accuracy thereof. The determinations made by the Trustee
hereunder shall be made in good faith upon the basis of the best information
available to it through its exercise of reasonable diligence. The Trustee shall
be under no liability to the Depositor or Unit Holders for errors in judgment,
provided, however, that this provision shall not protect the Trustee against any
liability to which it would otherwise be subject by reason of willful
misfeasance, bad faith or negligence in the performance of its duties or by
reason of its reckless disregard of its obligations and duties hereunder. The
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Trustee shall not be liable or responsible for depreciation or losses incurred
by reason of the purchase, sale or retention of any Securities.
ARTICLE V
TRUST EVALUATION, REDEMPTION,
TRANSFER OF UNITS
Section 5.01. Trust Evaluation: The Trustee shall make an
evaluation of the Trust as of the Evaluation Time (i) on the last Business Day
of each of the months of June and November, (ii) on the day on which any Unit of
the Trust is tendered for redemption (unless tender is made after the Evaluation
Time on such day, in which case tender shall be deemed to have been made on the
next day subsequent thereto on which the New York Stock Exchange is open for
trading) (a "Tender Day"), and (iii) on any other day desired by the Trustee or
requested by the Depositor. Such evaluations shall take into account and itemize
separately (a)(1) the cash on hand in the Trust (other than monies on deposit in
the Reserve Account, funds deposited on the date hereof by the Depositor for the
purchase of Securities and not theretofore credited to the Principal Account
pursuant to Section 3.03 and funds in the Principal Account with respect to
which contracts for the purchase of the Securities have been entered into
pursuant to Section 3.08 hereof), including dividends receivable on stocks
trading ex dividend, (a)(2) the value of each issue of the Securities in the
Trust as determined by the Trustee pursuant to Section 4.01, and (a)(3) all
other assets of the Trust. For each such evaluation there shall be deducted from
the sum of the above (b)(1) amounts representing any applicable taxes or other
governmental charges payable out of the Trust and for which no deductions shall
have previously been made for the purpose of addition to the Reserve Account,
(b)(2) amounts representing accrued and payable fees of the Trustee and expenses
or obligations of the Trust including but not limited to unpaid fees of the
Trustee and expenses of the Trust (including legal and auditing expenses),
accrued fees and expenses of the Depositor and its respective successors, if
any, and (b)(3) cash held for distribution to Unit Holders of record as of the
Record Date on or prior to the evaluation then being made. The value of the pro
rata share of each Unit of the Trust determined on the basis of any such
evaluation (i.e. the net asset value per Unit) shall be referred to herein as
the "Unit Value".
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The sum of (a)(1) and (a)(3) reduced by the sum of (b)(1) and
(b)(2) and (b)(3) shall be referred to herein as the "Unit Cash Value."
The Trustee shall promptly advise the Depositor of each
determination of Unit Value made by it as above provided, and, in addition, upon
each evaluation by the Trustee under Section 4.01 other than those involved in
such calculations of Unit Value, the Trustee shall promptly furnish to the
Depositor, for purposes of assisting it in maintaining a market in the Units,
with such information regarding the Principal, Income and Reserve Accounts as
the Depositor may reasonably request.
Section 5.02. Redemptions by Trustee; Purchases by Depositor:
On each Tender Day Units tendered for redemption by a Unit Holder or his duly
authorized attorney to the Trustee at its corporate trust office in the City of
New York, shall be redeemed by the Trustee on that Tender Day. Units in
uncertificated form shall be tendered by means of an appropriate request for
redemption in form approved by the Trustee. Unit Holders must sign exactly as
their names appear on the register with the signature guaranteed by an officer
of a national bank or trust company, or by a member firm of either the New York,
Midwest, or Pacific Coast Stock Exchanges, 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 Unit Holder 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 Unit Holder
on the Tender Day and subsequent distribution to such Unit Holder by the
Distribution Agent within seven calendar days following the Tender Day (such
seventh calendar day being hereinafter the "Redemption Date"). The amount of the
distribution to the Distribution Agent (the "Redemption Distribution") shall
equal the Unit Value as of the Tender Day of the Units held by such Unit Holder
and the distribution shall be in the form of (i) such Unit Holder's pro rata
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portion of each of the Securities in whole shares based upon the number of Units
owned as of the Tender Day (ii) plus the Unit Holder's pro rata share of the
distributable cash balances in the Income and Principal Accounts plus (iii) no
later than the seventh calendar day after the Tender Day, (or if such is not a
business day, then the first business day prior thereto), cash equal to the
value of any fractional shares included in such Unit Holder's pro rata portion
of the Securities as of the Tender Day, provided, however, that the fractional
shares shall be distributed in kind if the Depositor so directs if such in kind
distribution is advisable to maintain the status of the Trust as a regulated
investment company.
The Depositor shall maintain with the Trustee a current list
of Securities held in the Trust designated to be sold for the purpose of
satisfying amounts for the payment of cash equivalent to the value of fractional
shares; provided that if the Depositor shall for any reason fail to maintain
such a list, the Trustee, in its sole discretion, may designate a current list
of Securities for such purposes. The net proceeds of any sales of Securities
from such list shall be credited to the Principal Account of the Trust and paid
therefrom, to the extent necessary in accordance with this Section and otherwise
distributed or reinvested pursuant to this Indenture. The Trustee shall not be
liable or responsible in any way for depreciation or loss incurred by reason of
any sale or sales made in accordance with this Section 5.02.
The portion of the Redemption Distribution which represents
the Unit Holder's interest in the Income Account shall be withdrawn from the
Income Account to the extent available. The balance paid on any redemption,
including such Unit Holder's interest in 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 Unit Holder 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 uncollectable 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.
Unit Holders requesting a cash distribution shall receive such
distribution in accordance with ss. 1.01(b) of the Distribution Agency
Agreement.
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The Trustee may in its discretion, and shall when so directed
by the Depositor, suspend the right of redemption or postpone the date of
payment of the Redemption Distribution for more than seven calendar days
following the day on which tender for redemption is made (1) for any period
during which the New York Stock Exchange is closed other than customary weekend
and holiday closings or during which trading on the New York Stock Exchange is
restricted; (2) for any period during which an emergency exists as a result of
which disposal by the Trust of the Securities is not reasonably practicable or
it is not reasonably practicable fairly to determine in accordance herewith the
value of the Securities; or (3) for such other period as the Securities and
Exchange Commission may by order permit. The Trustee shall not be liable to any
person or in any way for any loss or damage which may result from any such
suspension or postponement.
Not later than the close of business on the day any Unit is
tendered for redemption by a Unit Holder other than the Depositor, the Trustee
shall notify the Depositor of such tender. The Depositor shall have the right to
purchase such Unit by notifying the Trustee of its election to make such
purchase no later than the close of business on the Tender Day. Such purchase
shall be made by payment for such Unit by the Depositor to the Unit Holder not
later than the close of business on the Redemption Date of an amount not less
than the Redemption Distribution which would otherwise be payable by the Trustee
to such Unit Holder.
Any Unit so purchased by the Depositor may at the option of
the Depositor be tendered to the Trustee for redemption at the corporate trust
office of the Trustee in the manner provided in the first paragraph of this
Section 5.02.
The Trustee shall not be liable or responsible in any way for
depreciation or loss incurred by reason of any sale or redemption of Securities
made pursuant to Sections 5.02 and 5.03.
Section 5.03. Termination Distributions: At least twenty (20)
days prior to the Termination Date, each Unit Holder of record as of such date
shall be supplied a form of election (the "Election Notice"). The Election
Notice will permit the Unit Holder to elect to receive his interest in the in
the Trust in kind, and/or in cash and/or will also permit the Unit Holder to
direct that his cash distribution should be invested by the Trustee in Units of
a new series of National Equity Trust. The Trustee will duly honor instructions
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given in such properly completed Election Notice received by the Termination
Date. A Unit Holder who does not effectively elect distribution in kind or
reinvestment will receive a cash distribution as is hereinafter provided and
such cash distribution will not be invested by the Depositor on behalf of the
Unit Holder unless an election in proper form that such investment shall be made
is received by the Trustee prior to the Termination Date.
A Unit Holder whose interest in the Trust entitles him to
receive at least one whole share of each Security may elect to receive his
interest in the Trust in kind. A Unit Holder choosing in-kind distribution will
receive such distribution within one business day following the Termination Date
subject to payment by such Unit Holder of any tax or governmental charges which
may be imposed thereon. The amount of the distribution shall equal the Unit
Value as of the Termination Date of the Units held by such Unit Holder and the
distribution shall be in the form of (i) such Unit Holder's pro rata portion of
each of the Securities in whole shares based on the number of Units owned as of
the Termination Date (ii) plus the Unit Holder's pro rata share of the
distributable cash balances in the Income and Principal Accounts reduced by
accrued expenses and obligations of the Trust on the Termination Date plus (iii)
cash equal to the value of any fractional shares included in such Unit Holder's
pro rata portion of the Securities as of the Termination Date unless the
Depositor directs in kind distribution of such fractional shares.
The Depositor shall provide the Trustee with a list of
Securities held in the Trust designated to be sold for the purpose of satisfying
amounts for the payment of cash equal to the value of fractional shares;
provided that if the Depositor shall for any reason fail to provide such a list,
the Trustee, in its sole discretion, may designate a list of Securities for such
purposes. The excess proceeds of any sales of Securities from such list shall be
credited to the non-interest bearing account provided for in the paragraph next
following to be distributed pro rata within five business days of the settlement
of the last sale of Securities.
A Unit Holder who elects to receive the termination
distribution in cash or from whom the Trustee has not received a properly
completed Election Notice by the Termination Date will receive a distribution in
cash. The Trustee will sell non-cash assets of the Trust using its best
reasonable efforts to secure the best price obtainable for the Securities, over
a 10-Business-Day period beginning on the Termination Date. The Trustee will
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sell on each Business Day during such 10-Business-Day period at least the number
of shares of each underlying Security which then remains in the portfolio equal
to the number of shares in the portfolio at the beginning of such Business Day
multiplied by a fraction the numerator of which is one and the denominator of
which is the number of Business Days remaining in the 10-Business-Day period.
Neither the Trustee nor the Depositor shall be liable for or responsible in any
way for depreciation or loss incurred by reason of any sale or sales made in
accordance with this Section 5.03. The Trustee may suspend its sales of the
underlying Securities upon the occurrence of unusual or unforeseen
circumstances, including, but not limited to, a suspension in trading of a
Security, the closing or restriction of trading on a stock exchange, the
outbreak of hostilities or the collapse of the economy. Upon the sale of the
last Security, the Trustee shall deduct from the proceeds of these sales and pay
any tax or governmental charges in connection with the sales. Amounts received
by the Trustee over such 10-Business-Day period representing the proceeds from
the sale of the underlying Securities will be held by the Trustee in accounts
which are non-interest bearing to Unit Holders and which are available for use
by the Trustee pursuant to normal banking procedures.
Upon the settlement date of the last sale of Securities, the
Trustee shall make the deductions provided in Section 9.04 hereof and (i)
distribute to Unit Holders who have not elected distribution in kind or
reinvestment cash equal to the Unit Value of their interest in the Trust
computed as of such date and (ii) on behalf of Unit Holders electing
reinvestment, shall deliver the Unit Value of their interest in the Trust
computed as of such date in cash to the Depositor as agent for the Unit Holders
who, in accordance with the procedure set forth in the Prospectus for the next
series of National Equity Trust to be offered (the "New Series"), shall apply
the monies to the purchase of Units of the New Series, if any, and the Unit
holders' interests in the Trust will thereupon be cancelled.
At the direction of the Depositor, the Trustee shall, as soon
as reasonably possible after the Depositor has so applied the sales proceeds to
the purchase of New Series units, distribute to each Unit Holder registered on
the books of the Trustee all Units so purchased and held on his behalf and
provide a report to each Unit Holder showing the total number of New Series
units credited to him and the sales charge included in the price for New Series
units. The Depositor shall provide a similar report as soon as possible to each
beneficial owner of New Series units for which the Depositor is the Unit Holder
of record.
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Notwithstanding the election to invest the proceeds in the New
Series, the Depositor may, in its sole discretion at any time, decide not to
offer any Series of the Trust in the future. If the Depositor so decides, the
Depositor shall notify the Trustee of that decision, and the Trustee shall
notify the Unitholder before the Termination Date. Moreover, the Trustee may in
its discretion, and shall when so directed by the Depositor in writing, postpone
the Termination Date (1) for any period during which the New York Stock Exchange
is closed other than customary weekend and holiday closings; (2) for any period
during which (as determined by the Securities and Exchange Commission by rule,
regulation or order) (i) trading on the New York Stock Exchange is restricted or
(ii) an emergency exists as a result of which disposal by the Trust of the
Securities is not reasonably practicable or it is not reasonably practicable
fairly to determine in accordance herewith the value of the Securities for the
purposes of any Trust Evaluation; (3) for such other periods as the Securities
and Exchange Commission may by order permit or (4) for a period not to exceed 30
days.
Section 5.04. Transfer of Units: Units may be transferred by
the registered Unit Holder thereof by presentation of transfer instructions, at
the principal office of the Trustee accompanied by such documents executed by
the registered Unit Holder or his authorized attorney as the Trustee deems
necessary to evidence the authority of the person making such transfer. The
Trustee may deem and treat the person in whose name any Unit shall be registered
upon the books of the Trustee as the owner of such Unit for all purposes
hereunder and the Trustee shall not be affected by any notice to the contrary.
The transfer books maintained by the Trustee for the purposes of this Section
5.04 shall be closed in connection with the termination of the Trust pursuant to
Section 9.04 hereof.
A sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any such transfer shall be paid to the
Trustee. A Unit Holder may be required to pay such amount as may be specified by
the Trustee and approved by the Depositor as a transfer fee with respect to any
such transfer.
The Trustee may also adopt other reasonable rules and
regulations for the transfer, tender and redemption of Units.
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ARTICLE VI
TRUSTEE
Section 6.01. General Definition of Trustee's Liabilities,
Rights and Duties: In addition to and notwithstanding the other duties, rights,
privileges and liabilities of the Trustee as otherwise set forth, the
liabilities of the Trustee are further defined as follows:
(a) all monies deposited with or received by the Trustee
hereunder shall be held by it without interest in trust as part of the
Trust until required to be disbursed in accordance with the provisions
of this Indenture and such monies will be segregated by separate
recordation on the trust ledger of the Trustee so long as such practice
preserves a valid preference under applicable law, or if such
preference is not so preserved the Trustee shall handle such monies in
such other manner as shall constitute the segregation and holding
thereof in trust within the meaning of the Investment Company Act of
1940;
(b) the Trustee shall be under no liability for any action
taken in good faith on any appraisal, paper, order, list, demand,
request, consent, affidavit, notice, opinion, direction, evaluation,
endorsement, assignment, resolution, draft or other document whether or
not of the same kind prima facie properly executed, or for the
disposition of monies, Securities or Units pursuant to this Indenture,
or in respect of any evaluation which it is required to make or is
required or permitted to have made by others under this Indenture or
otherwise, except by reason of its own willful misfeasance, bad faith
or negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties hereunder. The Trustee
may construe any of the provisions of this Indenture, insofar as the
same may appear to be ambiguous or inconsistent with any other
provisions hereof, which construction shall be binding upon the Unit
Holders and the parties hereto. The Trustee shall be under no liability
for any construction of any such provisions hereof;
(c) the Trustee shall not be responsible for or in respect of
the recitals herein, the validity or sufficiency of this Indenture or
for the due execution hereof by the Depositor, or for the form,
character, genuineness, sufficiency, value or validity of any
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Securities, and the Trustee shall in no event assume or incur any
liability, duty or obligation to any Unit Holder or the Depositor other
than as expressly provided for herein. The Trustee shall not be
responsible for or in respect of the validity of any signatures by or
on behalf of the Depositor;
(d) the Trustee shall be under no obligation to appear in,
prosecute or defend any action which in its opinion may involve it in
expense or liability, unless as often as required by the Trustee, it
shall be furnished with reasonable security and indemnity against such
expense or liability, and any pecuniary cost to the Trustee from such
actions shall be deductible from and a charge against the Income and
Principal Accounts of the Trust. Subject to the foregoing, the Trustee
shall in its discretion undertake such action as it may deem necessary
at any and all times to protect the Trust and the rights and interests
of the Unit Holders pursuant to the terms of this Indenture, provided,
however, that the expenses and costs of such actions, undertakings or
proceedings shall be reimbursable to the Trustee from the Income and
Principal Accounts, and the payment of such costs and expenses shall be
secured by a lien on the Trust prior to the interests of the Unit
Holders;
(e) the Trustee may employ agents, attorneys, accountants and
auditors and shall not be answerable for the default or misconduct of
any such agents, attorneys, accountants or auditors if such agents,
attorneys, accountants or auditors shall have been selected with
reasonable care; provided, however, that if the Trustee chooses to
employ the Depository Trust Company in connection with the storage and
handling of, and the furnishing of administrative services in
connection with, the Securities, the Trustee will be answerable for any
default or misconduct of the Depository Trust Company and its employees
and agents as fully and to the same extent as if such default or
misconduct had been committed or occasioned by the Trustee. The Trustee
shall be fully protected in respect of any action under this Agreement
taken, or suffered, in good faith by the Trustee, in accordance with
the opinion of its counsel. The accounts of the Trust shall be audited
not less frequently than annually by independent certified public
accountants designated from time to time by the Depositor, and the
reports of such accountants shall be furnished by the Trustee to Unit
Holders upon request. The fees and expenses charged by such agents,
attorneys, accountants or auditors shall constitute an expense of the
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Trust reimburseable from the Interest and Principal Accounts as set
forth in Section 6.04 hereof;
(f) if the Depositor shall resign pursuant to Section 8.04
hereof or shall fail to undertake or perform any of the duties which by the
terms of this Indenture are required by it to be undertaken or performed or if
the Depositor shall be dissolved or become incapable of acting or shall be
adjudged a bankrupt or insolvent, or a receiver of the property of the Depositor
shall be appointed or any public officer shall take charge or control of the
Depositor or its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then in any such case, the Trustee may: (1) appoint
a successor depositor meeting the qualifications set forth in Section 8.03 who
shall act hereunder in all respects in place of the Depositor which successor
shall be satisfactory to the Trustee, and which may be compensated at rates
deemed by the Trustee to be reasonable under the circumstances, by deduction
from the Income Account of the Trust or, to the extent funds are not available
in such Account, from the Principal Account of the Trust but no such deduction
shall be made exceeding such reasonable amount as the Securities and Exchange
Commission may prescribe in accordance with Section 26(a)(2)(c) of the
Investment Company Act of 1940, or (2) terminate this Indenture and the trust
created hereby and liquidate the Trust in the manner provided in Section 9.04;
(g) (1)If the value of the Trust as shown by any Trust
Evaluation shall be less than the liquidation amount specified in clause (2) of
this subsection (g), the Trustee may in its discretion, and shall if so directed
by the Depositor, terminate this Indenture and the trust created hereby and
liquidate the Trust all in the manner provided in Section 9.04.
(2) The liquidation amount referred to in clause (1) of this
subsection (g) shall be 40% of the value of the Securities in the Trust
determined as of the date on which the most recent deposit of
Securities occurred.
(h) the Trustee is authorized and empowered, at the request
and direction of the Depositor, to execute and file on behalf of the Trust any
and all documents, in connection with consents to service of process, required
to be filed under the securities laws of the various States in order to permit
the sale of Units of the Trust in such States by the Depositor;
(i) in no event shall the Trustee be liable for any taxes or
other governmental charges imposed upon or in respect of the Securities or upon
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the dividends thereon or upon it as Trustee hereunder or upon or in respect of
the Trust which it may be required to pay under any present or future law of the
United States of America or of any other taxing authority having jurisdiction in
the premises. For all such taxes and charges and for any expenses, including
counsel fees, which the Trustee may sustain or incur with respect to such taxes
or charges, the Trustee shall be reimbursed and indemnified out of the Reserve
Account and/or the Income and Principal Accounts of the Trust, and the payment
of such amounts so paid by the Trustee shall be secured by a lien on the Trust
prior to the interests of the Unit Holders;
The Depositor shall, upon request by the Trustee, provide the
Trustee with a current list of Securities designated to be sold for the purpose
of payment of expenses hereunder, provided that if the Depositor shall for any
reason fail to provide such a list, the Trustee, in its sole discretion, may
designate a current list of Securities for such purposes. The net proceeds of
any such sales of Securities from such list representing principal shall be
credited to the Principal Account.
(j) the Trustee except by reason of its own negligence, bad
faith or willful misconduct shall not be liable for any action taken, omitted or
suffered to be taken by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Indenture;
and
(k) so long as shall be required by Section 26(a)(2)(C) of the
Investment Company Act of 1940, no payment to the Depositor or to any principal
underwriter (as defined in such Act) for the Trust or to any affiliated person
(as so defined) or agent of the Depositor or such underwriter shall be allowed
the Trustee as an expense except for payment not in excess of such reasonable
amounts as the Securities and Exchange Commission may prescribe as compensation
for performing bookkeeping and other administrative services of a character
normally performed by the Trustee itself.
Section 6.02. Books, Records and Reports: The Trustee shall
keep proper books of record and account of all the transactions under this
Indenture and keep a register described in Section 2.06 at its corporate trust
office, and such books, records and register shall be open to inspection by any
Unit Holder at all reasonable times during the usual business hours.
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The Trustee shall make such annual or other reports as may
from time to time be required under any applicable state or federal statute or
rule or regulation thereunder.
Section 6.03. Indenture and List of Securities on File: The
Trustee shall keep a certified copy or duplicate original of this Indenture
(including the Reference Trust Agreement) on file at its corporate trust office
available for inspection at all reasonable times during the usual business hours
by any Unit Holder, together with a current list of the Securities.
Section 6.04. Compensation of Trustee: For services performed
under this Indenture the Trustee shall be paid an annual fee in an amount set
forth in Part II of the Reference Trust Agreement. Such compensation shall be
payable quarterly in an amount equal to one fourth of the estimated annual
compensation of the Trustee and shall be computed on the basis of the greatest
amount of Units in the Trust at any time during each quarter. The Trustee may
from time to time adjust its compensation as set forth above; provided, however,
that total adjustment upward does not, at the time of such adjustment, exceed
the percentage of the total increase, after the date hereof, in consumer prices
for services as measured by the United States Department of Labor Consumer Price
Index entitled "All Services Less Rent" or, if such Index is no longer
published, in a similar index as determined by the Trustee and Depositor. The
consent or concurrence of any Unit Holder shall not be required for any such
adjustment or increase. Such compensation shall be deemed to provide only for
the usual normal and proper functions undertaken as Trustee pursuant to this
Indenture and, in addition, the Trustee may charge, to the extent then lawful,
the Income and Principal Accounts of the Trust for any and all expenses
(including legal, auditing and printing expenses) of maintaining registration or
qualification of the Units and/or the Trust under Federal or state securities
laws subsequent to initial registration so long as the Sponsor is maintaining a
market for the Units and including the fees of counsel which may be retained by
the Trustee in connection with its activities hereunder, and disbursements
incurred by the Distribution Agent hereunder and additional compensation for any
extraordinary services performed by the Trustee hereunder. Any fee which may be
payable to the Agent for its services rendered pursuant to the Distribution
Agency Agreement as provided for in Section 3.01 thereof is not a trustee's fee
and may not be so charged. The Trustee shall be indemnified and held harmless
against any loss or liability accruing to it without negligence, bad faith or
willful misconduct on its part, arising out of or in connection with the
acceptance or administration of this Trust, including the costs and expenses
(including counsel fees) of defending itself against any claim of liability in
the premises. If the cash balances in the Income and Principal Accounts shall be
insufficient to provide for amounts payable pursuant to this Section 6.04 the
Trustee shall have the power to sell (i) Securities from the current list of
Securities designated to be sold pursuant to Section 5.02 hereof, or (ii) if no
such Securities have been so designated, such Securities as the Trustee may see
fit to sell in its own discretion, and to apply the proceeds of any such sale in
payment of the amounts payable pursuant to this Section 6.04. The Trustee shall
promptly notify the Depositor of such action in writing and shall set forth
therein the Securities sold and the proceeds received therefrom. The Trustee
shall not be liable or responsible in any way for depreciation or loss incurred
by reason of any sale of Securities made pursuant to this Section 6.04. Any
monies payable to the Trustee pursuant to this Section shall be secured by a
lien on the Trust prior to the interests of the Unit Holders.
Section 6.05. Removal and Resignation of Trustee; Successor:
The following provisions shall provide for the removal and resignation of the
Trustee and the appointment of any successor trustee:
(a) the Trustee or any trustee or trustees hereafter appointed
may resign and be discharged of the trusts created by this Indenture,
by executing an instrument in writing resigning as Trustee of the Trust
and filing the same with the Depositor and mailing a copy of a notice
of resignation to all Unit Holders then of record, not less than sixty
days before the date specified in such instrument when, subject to
Section 6.05(e), such resignation is to take effect. Upon receiving
such notice of resignation, the Depositor shall promptly appoint a
successor trustee as hereinafter provided, by written instrument, in
duplicate, one copy of which shall be delivered to the resigning
Trustee and one copy to the successor trustee. If at any time the
Trustee shall become incapable of acting, or shall be adjudged a
bankrupt or insolvent or have an order of relief entered with respect
to it, or a receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purposes of
rehabilitation, conservation or liquidation, or upon the determination
of the Depositor to remove the Trustee for any reason, either with or
without cause, then in any such case the Depositor may remove the
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Trustee and appoint a successor trustee by written instrument, in
duplicate, one copy of which shall be delivered to the Trustee so
removed and one copy to the successor trustee; provided that a notice
of such removal and appointment of a successor trustee shall be mailed
by the Depositor to each Unit Holder then of record;
(b) any successor trustee appointed hereunder shall execute,
acknowledge and deliver to the Depositor and to the retiring Trustee an
instrument accepting such appointment hereunder, and such successor
trustee without any further act, deed or conveyance shall become vested
with all the rights, powers, duties and obligations of its predecessor
hereunder with the like effect as if originally named Trustee herein
and shall be bound by all the terms and conditions of this Indenture.
Upon the request of such successor trustee, the retiring Trustee shall,
upon payment of any amounts due the retiring Trustee, or provision
therefor to the satisfaction of such retiring Trustee, execute and
deliver an instrument acknowledged by it transferring to such successor
trustee all the rights and powers of the retiring Trustee; and the
retiring Trustee shall transfer, deliver and pay over to the successor
trustee all Securities and monies at the time held by it hereunder,
together with all necessary instruments of transfer and assignment or
other documents properly executed necessary to effect such transfer and
such of the records or copies thereof maintained by the retiring
Trustee in the administration hereof as may be requested by the
successor trustee, and shall thereupon be discharged from all duties
and responsibilities under this Indenture. The retiring Trustee shall,
nevertheless, retain a lien upon all Securities and monies at the time
held by it hereunder to secure any amounts then due the retiring
Trustee;
(c) in case at any time the Trustee shall resign and no
successor trustee shall have been appointed or, if appointed, shall not
have accepted appointment within thirty days after notice of
resignation has been received by the Depositor, the retiring Trustee
may forthwith apply to a court of competent jurisdiction for the
appointment of a successor trustee. Such court may thereupon, after
such notice, if any, as it may deem proper and prescribe, appoint a
successor trustee;
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(d) any corporation into which any Trustee hereunder may be
merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which any Trustee
hereunder shall be a party, or any corporation succeeding to all or
substantially all of the business of the Trustee shall be the successor
trustee under this Indenture without the execution or filing of any
paper, instrument or further act to be done on the part of the parties
hereto; anything herein or in any agreement relating to such merger or
consolidation, by which any such trustee may seek to retain certain
powers, rights and privileges theretofore obtaining for any period of
time following such merger or consolidation, to the contrary
notwithstanding; and
(e) any resignation or removal of the Trustee and appointment
of a successor trustee pursuant to this Section shall become effective
only upon acceptance of appointment by the successor trustee as
provided in subsection (b) hereof.
Section 6.06. Qualifications of Trustee: The Trustee shall be
a corporation organized and doing business under the laws of the United States
or the State of New York which is authorized under such laws to exercise
corporate trust powers and having at all times an aggregate capital, surplus,
and undivided profits of not less than $5,000,000 and having its principal place
of business in the Borough of Manhattan, the City and State of New York.
Section 6.07. Trustee's Response to Inquiries: The Trustee
shall deliver to the Depositor a copy of any written response to any non-routine
question or request received by the Trustee at least one day before sending the
response.
Section 6.08. Waiver of Liens: No lien, encumbrance or
priority in favor of the Trustee against the assets of the Trust will affect
such assets or their proceeds after such assets or proceeds have been
distributed or paid to Unit Holders or to the Distribution Agent on their behalf
pursuant to the terms of the Indenture; and, upon any such distribution, any
lien, encumbrance or priority previously attaching to such assets or their
proceeds shall without any further action on the part of the Trustee be
automatically thereupon released and relinquished by the Trustee.
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ARTICLE VII
RIGHTS OF UNIT HOLDERS
Section 7.01. Beneficiaries of Trust: By the purchase and
acceptance or other lawful delivery and acceptance of a Unit of the Trust the
Unit Holder shall be deemed to be a beneficiary of such Trust and vested with
all rights, title and interest in the Trust to the extent of the Unit or Units
owned, subject to the terms and conditions of this Indenture.
Section 7.02. Rights, Terms and Conditions: In addition to the
other rights and powers set forth in the other provisions and conditions of this
Indenture the Unit Holders shall have the following rights and powers and shall
be subject to the following terms and conditions:
(a) a Unit Holder may at any time redeem his Units in
accordance with Section 5.02;
(b) the death or incapacity of any Unit Holder shall not
operate to terminate this Indenture or the Trust, nor entitle his legal
representatives or heirs to claim an accounting or to take any action
or proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them. Each Unit Holder expressly waives any
right he may have under any rule of law, or the provisions of any
statute, or otherwise, to require the Trustee at any time to account,
in any manner other than as expressly provided in this Indenture, in
respect of the Securities or monies from time to time received, held
and applied by the Trustee hereunder; and
(c) no Unit Holder shall have any right to vote or in any
manner otherwise control the operation and management of the Trust, or
the obligations of the parties hereto, nor shall anything herein set
forth be construed so as to constitute the Unit Holders from time to
time as partners or members of any association; nor shall any Unit
Holder ever be under any liability to any third persons by reason of
any action taken by the parties to this Indenture, or any other cause
whatsoever.
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ARTICLE VIII
DEPOSITOR
Section 8.01. Liabilities: Power of Attorney: The Depositor,
or the Depositors if there be more than one, shall be severally liable in
accordance herewith for the obligations imposed upon and undertaken by the
Depositor hereunder, provided, however, that, without in any way affecting or
diminishing such several liability, each Depositor of the Trust shall indemnify
the other Depositors thereof and hold such other Depositors harmless from and
against any and all costs, expenses and liabilities (including attorneys' fees)
which such other Depositors may suffer or incur as a result of or by reason of
any act or failure to act hereunder on the part of the indemnifying Depositor.
At all times prior to the termination of the Trust and while the Depositors
thereof shall continue to act jointly hereunder, there shall be maintained on
file with the Trustee a power of attorney executed in favor of one Depositor by
the other Depositors constituting and appointing the nonexecuting Depositor the
true and lawful agent and attorney-in-fact of the executing Depositors to
execute and deliver for and on behalf of the executing Depositors any and all
notices, opinions, certificates, lists, demands, directions, instruments, or
other documents provided or permitted to be executed or delivered by the
Depositors hereunder in connection with the Trust or to take any other action in
respect hereof. Such power of attorney shall continue in effect as to the
executing Depositors until written notice of revocation thereof has been given
by such executing Depositors to the Trustee. Prior to receipt of such notice of
revocation the Trustee shall be entitled to rely conclusively upon such power of
attorney as authorizing the non-executing Depositor to give any notice, opinion,
certificate, list, demand, direction, instrument or other document provided for
or permitted hereunder or to take any other action in respect hereof on behalf
of the executing Depositors as to which such power of attorney is in effect.
Section 8.02. Discharge: If there be more than one Depositor,
the following provisions shall provide for the discharge of a Depositor and the
liability of the Depositors in the event of the discharge of a Depositor:
(a) in the event that any Depositor shall fail to undertake or
perform any of the duties which by the terms of this Agreement are required by
it to be undertaken or performed and such failure shall continue for 30 days
-42-
after notice to the Depositors from the Trustee or if any Depositor shall become
incapable of acting or shall have an order of relief entered with respect to it,
or a receiver of the property of any Depositor shall be appointed or any public
officer shall take charge or control of any Depositor or its property or affairs
for the purpose of rehabilitation, conservation or liquidation, then such
Depositor shall forthwith be and shall be deemed to be discharged forever as a
Depositor hereunder and thereupon the remaining Depositors shall act hereunder
without the necessity of any other or further action on its part or on the part
of the Trustee;
(b) in the event that the power of attorney referred to in
Section 8.01 shall be revoked by written notice given by an executing Depositor
and it shall not be replaced within one business day by another power of
attorney conforming with the requirements of said Section 8.01, the Depositors
of the Trust shall be deemed to have been unable to reach agreement with respect
to action to be taken jointly by them hereunder in connection with the Trust and
thereupon the Depositor which has revoked the power of attorney executed by it
shall be discharged hereunder upon the expiration of such one-day period and
thereupon the other Depositors shall act hereunder without the necessity of any
other or further action on their part or on the part of the Trustee; and
(c) notwithstanding the discharge of a Depositor of the Trust
in accordance with this Section 8.02, such Depositor shall continue to be fully
liable in accordance with the provisions hereof in respect of action taken or
refrained from under this Agreement by the Depositors before the date of such
discharge or by the undischarged Depositors before or after the date of such
discharge, as fully and to the same extent as if no discharge has occurred.
Section 8.03. Successors: The covenants, provisions and
agreements herein contained shall in every case be binding upon any successor or
successors to any Depositor and shall be binding upon the General Partners of
any Depositor which may be a partnership and upon the capital interest of the
limited partners of any Depositor which may be a partnership. In the event of
the death, resignation or withdrawal of any partner of any Depositor which may
be a partnership, the partner so dying, resigning or withdrawing shall be
relieved of all further liability hereunder if at the time of such death,
resignation or withdrawal such Depositor maintains a net worth (determined in
accordance with generally accepted accounting principles) of at least
-43-
$1,000,000. In the event of an assignment by any Depositor to a successor
corporation or partnership as permitted by the next following sentence, such
Depositor and, if such Depositor is a partnership, its partners shall be
relieved of all further liability under this Agreement. Any Depositor may
transfer all or substantially all of its assets to a corporation or partnership
which carries on the business of such Depositor, if at the time of such transfer
such successor duly assumes all the obligations of such Depositor under this
Agreement.
Section 8.04. Resignation: If at any time any Depositor of the
Trust shall desire to resign its position as such a Depositor hereunder and if
at such time the other Depositors of the Trust each maintains a net worth
(determined in accordance with generally accepted accounting principles) of at
least $1,000,000 and is agreeable to such resignation, the Depositor desiring to
resign may resign by delivering to the Trustee an instrument executed by such
resigning Depositor and consented to by the remaining Depositors and upon such
delivery, the resigning Depositor shall be discharged and shall no longer be
liable in any manner hereunder except as to acts or omissions occurring prior to
such delivery and the remaining Depositors shall thereupon perform all duties
and be entitled to all rights under this Agreement; provided, however, that
concurrently with or subsequent to such resignation the remaining Depositors and
the Trustee may appoint a new Depositor to act with the remaining Depositors and
to assume the duties of the resigning Depositor by an instrument executed by the
remaining Depositors, the Trustee and the new Depositor. Such new Depositor
shall not be under any liability hereunder for occurrences or omissions prior to
the effective time of execution of such instrument.
Section 8.05. Additional Depositors: The Depositor of the
Trust and the Trustee may at any time appoint one or more corporations or
partnerships to act as new Depositor of such Trust, in addition to those
currently serving, by an instrument executed by such Depositor, the Trustee, and
such corporations or partnerships; provided, however, that at the time of such
execution each new Depositor maintains a net worth (determined in accordance
with generally accepted accounting principles) of at least $1,000,000. Upon such
execution, a new Depositor shall be deemed to be a depositor for all purposes
under this Indenture, and the covenants, provisions and agreements herein
contained shall in every case be binding upon such new Depositor and shall be
binding upon the General Partner of any such new Depositor which may be a
-44-
partnership and upon the capital interest of the limited partners of any such
new Depositor which may be a partnership, but such new Depositor shall not be
liable hereunder for occurrences or omissions prior to the effective time of
execution of such instrument.
Section 8.06. Exclusions from Liability: The following
provisions provide for certain exclusions from the liability of the Depositor:
(a) no Depositor of the Trust shall be under any liability to
any other Depositor of the Trust, such Trust or the Unit Holders
thereof, for any action taken or for refraining from the taking of any
action in good faith pursuant to this Agreement, or for errors in
judgment or liable or responsible in any way for depreciation or loss
incurred by reason of the acquisition or sale of any Securities;
provided, however, that this provision shall not protect the Depositor
against any liability to which it would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties hereunder. The Depositor of the Trust may rely
in good faith on any paper, order, notice, list, affidavit, receipt,
evaluation, opinion, endorsement, assignment, draft or any other
document of any kind prima facie properly executed and submitted to
them, or any of them, by any other Depositor of the Trust, the Trustee,
counsel to an issuer of a Security, or any other person. The Depositor
shall in no event be deemed to have assumed or incurred any liability,
duty, or obligation to any Unit Holder or the Trustee other than as
expressly provided for herein;
(b) the Depositor shall not be under any obligation to appear
in, prosecute or defend any legal action which in its opinion may
involve it in any expense or liability; provided, however, that the
Depositor may in its discretion undertake any such action which it may
deem necessary or desirable in respect of this Agreement and the rights
and duties of the parties hereto and the interests of the Unit Holders
hereunder; and
(c) none of the provisions of this Agreement shall be deemed
to protect or purport to protect the Depositor of the Trust against any
liability to the Trust or to the Unit Holders thereof or to each other
(if there is more than one Depositor) to which the Depositor would
-45-
otherwise be subject by reason of willful misfeasance, bad faith or
gross negligence in the performance of the duties of the Depositor, or
by reason of the Depositor's reckless disregard of the obligations and
duties of the Depositor under this Agreement.
Section 8.07. Compensation: The Depositor shall receive at the
times set forth in Section 3.05 as compensation for performing portfolio
supervisory services, such amounts, and for such periods, as are specified in
the Reference Trust Agreement. The computation of such compensation shall be
made on the basis of the greatest number of Units in the Trust at any time
during the period with respect to which such compensation is being computed. At
no time, however, will the total amount received by the Depositor for services
rendered to all series of the National Equity Trust in any calendar year exceed
the aggregate cost to it of supplying such services in such year except to the
extent permitted by law. Such rate may be increased from time to time, without
the consent or approval of any Unit Holder or the Trustee, by amounts not
exceeding the proportionate increase during the period from the date of such
Reference Trust Agreement to the date of any such increase, in consumer prices
as published either under the classification "All Services Less Rent" in the
Consumer Price Index published by the United States Department of Labor or, if
such Index is no longer published, a similar index.
ARTICLE IX
ADDITIONAL COVENANTS; MISCELLANEOUS PROVISIONS
Section 9.01. Amendments without the Consent of Unit Holders:
This Indenture may be amended from time to time by the parties hereto or their
respective successors, without the consent of any of the Unit Holders (a) to
cure any ambiguity or to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provision contained
herein; (b) to change any provision hereof as may be required by the Securities
and Exchange Commission or any successor governmental agency exercising similar
authority; (c) to make such other provision in regard to matters or questions
arising hereunder as shall not adversely affect the interest of the Unit
Holders; (d) to add or change any provision as may be necessary or advisable for
the continuing qualification of the Trust as a regulated investment company
under the Internal Revenue Code; or (e) to change any provision of this
-46-
Indenture as may be necessary for the portfolio of the Trust to be adjusted to
conform with changes to the Index.
Section 9.02. Amendments with Consent of Unit Holders: This
Indenture may also be amended from time to time by the parties hereto (or the
performance of any of the provisions of this Indenture may be waived) with the
expressed written consent of Unit Holders evidencing Fifty-one per cent of the
Units at the time outstanding under the Indenture for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Unit Holders.
Section 9.03. Notice of Amendment: Promptly after the
execution of any amendment the Trustee shall furnish written notification of the
substance of such amendment to all Unit Holders then of record at their
addresses appearing on the registration books of the Trustee.
Section 9.04. Termination: This Indenture and the Trust
created hereby shall terminate upon the sale or other disposition as the case
may be of the last Security held in the Trust hereunder unless sooner terminated
as hereinbefore specified and may be terminated at any time by the written
consent of Unit Holders evidencing Fifty-one per cent of the Units at the time
outstanding under the Indenture; provided that in no event shall this Trust
continue beyond the Termination Date as set forth in Part II of the Reference
Trust Agreement. Written notice of any termination, shall be given by the
Trustee to each Unit Holder of record at his address appearing on the
registration books of the Trustee.
(a) Upon the settlement date of the last sale of Securities
pursuant to Section 5.03 hereof, the Trustee shall:
(i) deduct from the Income Account of the Trust or,
to the extent that funds are not available in such account, from the
Principal Account of the Trust and pay to itself individually an amount
equal to the sum of (1) its accrued compensation for its ordinary
recurring services in connection with the Trust, (2) any compensation
due it for its extraordinary services and (3) any costs, expenses or
indemnities in connection with the Trust as provided herein;
(ii) deduct from the Income Account or, to the extent
that funds are not available in such Account, from the Principal
-47-
Account and pay accrued and unpaid fees to the Depositor pursuant to
Section 3.05;
(iii) deduct from the Income Account of the Trust or,
to the extent that funds are not available in such Account, from the
Principal Account of the Trust, any amounts which may be required to be
deposited in the Reserve Account of the Trust to provide for payment of
any applicable taxes or other governmental charges and any other
amounts which may be required to meet expenses incurred under this
Indenture in connection with the Trust.
(b) Upon the settlement date of the last sale of Securities
pursuant to Section 5.03 hereof, the Trustee shall distribute to the Unit
Holders their respective pro rata shares of the net asset value of the Trust, as
set forth in Section 5.03 hereof.
(c) Together with such distribution to each Unit Holder as
provided for in (b) of this Section, the Trustee shall furnish to each such Unit
Holder a final distribution statement as of the date of computation of the
amount distributable to Unit Holders, setting forth the information in
substantially the form and manner provided for in Section 3.06 hereof.
(d) The Trustee shall distribute to each Unit Holder any
dividends, which on the Termination Date were declared, but not received, net of
any and all expenses not previously deducted, within a reasonable time of their
receipt.
The Trustee shall be under no liability with respect to monies
held by it in the Income, Reserve and Principal Accounts upon termination except
to hold the same in trust without interest until disposed of in accordance with
the terms of this Indenture.
Section 9.05. Construction: This Indenture is executed and
delivered in the State of New York and all laws or rules of construction of such
State shall govern the rights of the parties hereto and the Unit Holders and the
interpretation of the provisions hereof. Headings and titles herein are for
convenience only and should not influence such interpretation.
Section 9.06. Written Notice: Any notice, demand, direction or
instruction to be given to the Depositor hereunder shall be in writing and shall
be duly given if mailed or delivered to the Depositor c/o Prudential Securities
-48-
Incorporated at Xxx Xxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 or at such other
address as shall be specified by the Depositor to the other parties hereto in
writing. Any notice to be given to the Unit Holders shall be duly given if
mailed or delivered to each Unit Holder at the address of such holder appearing
on the registration books of the Trustee. Any notice, demand, direction or
instruction to be given to the Trustee hereunder shall be in writing and shall
be deemed given if mailed or delivered to the Trustee at its office at 000
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other address as shall
reasonably be specified by the Trustee in writing to the other parties hereto
prior to the giving of such notice, demand, direction or instruction.
Section 9.07. Severability: If any one or more of the
covenants, agreements, provisions or terms of this Indenture shall be held
contrary to any express provision of law or contrary to policy of express law,
though not expressly prohibited, or against public policy, or shall for any
reason whatsoever be held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Indenture and shall in no way affect the validity or
enforceability of the other provisions of this Indenture or of the Certificates
or the rights of the holders thereof.
Section 9.08. Dissolution of Depositor Not To Terminate: The
dissolution of one or all of the Depositors (if more than one) from or for any
cause whatsoever shall not operate to terminate this Indenture insofar as the
duties and obligations of the Trustee and Evaluator are concerned.
Section 9.09. Name: Depositor reserves and retains the right
to use the name "National Equity Trust," with a distinguishing series number or
name, without the consent of the Trustee.
Section 9.10. Separate and Distinct Series: Each Trust
established as a Series of the National Equity Trust shall, for all financial
and administrative purposes, be considered separate and distinct from every
other Trust, and the assets of one Trust shall not be commingled with the assets
of another Trust nor shall the expenses of any one Trust be charged against any
other Trust.
-49-
IN WITNESS WHEREOF, Prudential Securities Incorporated has
caused this Trust Indenture and Agreement to be executed by one of its Senior
Vice Presidents and its corporate seal to be hereto affixed and attested by its
Secretary or Assistant Secretary and The Bank of New York has caused this Trust
Indenture and Agreement to be executed by one of its Vice Presidents or
Assistant Vice Presidents and its corporate seal to be hereto affixed and
attested by one of its Assistant Secretaries all as of the day, month and year
first above written.
PRUDENTIAL SECURITIES
INCORPORATED,
Depositor
By: /s/ Xxxxxxx Xxxxxxx
---------------------
Senior Vice President
(SEAL)
ATTEST:
By: /s/ Xxxxxxxx Xxxxxxx
---------------------
Assistant Secretary
THE BANK OF NEW YORK
Trustee
By: /s/ Xxxxx Xxxxxx
---------------------
Title: Vice President
(SEAL)
ATTEST:
By: /s/ Xxxxxxx Xxxxxxxxxx
-------------------------
Title: Assistant Vice President
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
I, Xxxxxxx X. Xxxxx, Xx., a Notary Public in and for the said County
in the state aforesaid, do hereby certify that Xxxxx Xxxxxx and Xxxxxxx
Xxxxxxxxxx personally known to me to be the same persons whose names are
subscribed to the foregoing instrument and personally known to me to be a Vice
President and Assistant Vice President, respectively of The Bank of New York,
appeared before me this day in person, and acknowledged that they signed, sealed
with a corporate seal of The Bank of New York, and delivered the said instrument
as their free and voluntary act as such Vice President and Assistant Vice
President, respectively, and as the free and voluntary act of The Bank of New
York, for the uses and purposes therein set forth.
GIVEN, under my hand and notarial seal this 12th day of December, 2000.
/s/ Xxxxxxx X. Xxxxx, Xx.
--------------------------
Notary Public
(SEAL)
DISTRIBUTION AGENCY AGREEMENT
This Distribution Agency Agreement dated as of December 13,
2000, among Prudential Securities Incorporated, as the Depositor (the
"Depositor"), The Bank of New York, as Trustee (the "Trustee") pursuant to the
Trust Indenture and Agreement and the Reference Trust Agreement, each dated
December 13, 2000 (collectively, the "Indenture"), relating to National Equity
Trust (the "Trust") and all subsequent series and The Bank of New York or its
successor, as Distribution Agent (the "Agent"), and each Unit Holder of the
Trust who designates the Agent as Distribution Agent with respect to
distributions from the Trust to which such Unit Holder is entitled, sets forth
procedures for the distribution of proceeds of redemptions of Units from the
Trust to the Unit Holders. All capitalized terms used but not defined herein
that are defined in the Indenture are used herein as defined therein.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
Distributions From Trustee To Agent
-----------------------------------
SECTION 1.01. Redemption of Units and Disposition of
Redemption Distribution. (a) Redemption. All Units tendered for redemption shall
be redeemed on the Tender Day. Subject to payment by a tendering Unit Holder of
any tax or other governmental charges which may be imposed thereon, such
redemption shall be made by the distribution by the Trustee to the Agent on the
Tender Day of the Redemption Distribution.
(b) Disposition of Redemption Distribution by Agent. Each Unit
Holder requesting redemption of Units shall file with the redemption request an
instruction to the Agent as to the disposition of the Redemption Distribution.
Such disposition may consist of (a) distribution to the Unit Holder of the
Redemption Distribution in the form in which received by the Agent or (b) sale
by the Agent for the account of the Unit Holder of the non-cash items included
in the Redemption Distribution and distribution to the Unit Holder of the net
-2-
proceeds of such sale plus any cash included in the Redemption Distribution. A
Unit Holder who files no such disposition request shall be deemed to have
requested disposition (b). The Depositor may act as sub-agent for the Agent in
selling any non-cash items included in a Redemption Distribution and shall use
its best reasonable efforts to secure the best price obtainable for such
Securities. Subject to payment by the Unit Holder of any tax or governmental
charges that may be imposed thereon or any brokerage commission charged on the
sale, the distributions to the Unit Holder by the Agent shall be made within
seven calendar days of the Tender Day. Neither the Agent nor the Depositor shall
be liable or responsible in any way for depreciation or loss incurred by reason
of any sale or sales made in accordance with this Section 1.01(b).
ARTICLE II
Distributions between Agent and Unit Holders
--------------------------------------------
SECTION 2.01. Cash Distributions. (a) Upon receipt of any cash
received as a result of the sale of Securities as provided in Section 1.01
hereof or delivered by the Trustee, the Agent shall deposit such cash in an
account entitled The Bank of New York, as Agent pursuant to the Distribution
Agency Agreement dated December 13, 2000 or other similar title (the "Agency
Account"). All cash distributions to be made pursuant to this Agreement shall be
made from such account.
(b) Cash to be distributed to Unit Holders shall be
distributed by the Agent to such Holders in the manner generally used by the
Trustee for cash Income Distributions made to Unit Holders.
SECTION 2.02. Statements and Reports. Any statement or report
required by Section 3.06 of the Indenture to be distributed to Unit Holders may
be distributed by the Agent in the manner provided in said Section 3.06.
ARTICLE III
Miscellaneous
-------------
SECTION 3.01. Fees and Expenses. The Agent shall receive no
fee for its services hereunder; provided, however, that the Trustee may pay the
-3-
Agent a fee equal to the costs of the Agent's services hereunder, which costs
shall be borne by the Trustee and the Trustee shall not be entitled to be
reimbursed by the Trust for any such fee paid to the Agent to the extent the
Trustee would thereby receive a fee greater than the Trustee's fee set forth in
the Indenture. Out-of-pocket expenses incurred by the Agent (e.g., mailing
costs) shall be reimbursed by the Trustee and shall be treated as expenses of
the Trust under the Indenture. The Agent shall be indemnified and held harmless
by the Trust against any loss or liability accruing to it without negligence,
bad faith or willful misconduct on its part, arising out of or in connection
with this Agreement, including the costs and expenses (including counsel fees)
of defending itself against any claim of liability in the premises.
SECTION 3.02. General Matters Relating to Agent. (a) All
moneys deposited with or received by the Agent hereunder shall be held by it
without interest until required to be disbursed in accordance with the
provisions of this Agreement.
(b) The Agent shall be under no liability for any action taken
in good faith in reliance on any appraisal, paper, order, list, demand, request,
consent, affidavit, notice, opinion, direction, evaluation, endorsement,
assignment, resolution, draft or other document provided by the Trustee or the
Depositor, whether or not of the same kind, prima facie properly executed, or
for the disposition of moneys or Securities pursuant to this Agreement; or in
respect of any evaluation which it is required to make or is required or
permitted to have made by others under this Agreement or otherwise, except by
reason of its own willful misfeasance, bad faith or negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties hereunder. The Agent may construe any of the provisions
of this Agreement, insofar as the same may appear to be ambiguous or
inconsistent with any other provisions hereof which construction shall be
binding upon the Unit Holders and the other parties hereto. The Agent shall be
under no liability for any construction of any such provisions hereof.
SECTION 3.03. Resignation, Discharge or Removal of Agent:
Successors. (a) The Agent may resign and be discharged from the duties created
by this Agreement by executing a written resignation as such Agent, and filing
the same with the Trustee and the Depositor. Upon receiving such notice of
resignation, the Depositor shall use its best efforts promptly to appoint a
successor agent meeting the qualifications hereinafter provided. In case at any
-4-
time the Agent shall not meet the requirements set forth in Section 3.04 hereof,
or shall become incapable of acting, or shall be adjudged a bankrupt or
insolvent, or a receiver of such Agent or of its property shall be appointed, or
any public officer shall take charge or control of such agent or of any of its
property or affairs for the purposes of rehabilitation, conservation or
liquidation, the Depositor may remove such Agent and appoint a successor agent
by written instrument or instruments delivered to the Trustee, the Agent so
removed and the successor.
(b) In case at any time the Agent shall resign and no
successor agent shall have been appointed within thirty days after notice of
resignation has been received by the Depositor, the Depositor shall perform the
duties of the Agent until a qualified successor Agent is appointed.
SECTION 3.04. Qualification of Agent. The Agent and any
successor agent shall be a banking or trust corporation meeting the requirements
of the Investment Company Act of 1940 for trustees, organized and doing business
under the laws of the United States or any state thereof, having at all times an
aggregate capital, surplus, and undivided profits of not less than $5,000,000.
SECTION 3.05. Procedure Upon Termination. This Agreement and
the duties created hereby shall terminate upon the Termination Date as defined
in the Indenture.
SECTION 3.06. Amendment and Waiver. This Agreement may be
amended from time to time by the Depositor, the Trustee and the Agent (a) to
cure any ambiguity or to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provision contained
herein, or (b) to make such other provisions in regard to matters or questions
arising hereunder, all as shall not materially adversely affect the interests of
the Unit Holders.
SECTION 3.07. New York Law to Govern. The internal laws of the
State of New York shall govern the rights of the parties hereto and the
interpretation of the provisions hereof.
SECTION 3.08. Notices. Any notice, demand, direction or
instruction to be given to the Depositor hereunder shall be in writing and shall
be duly given if mailed or delivered to One Seaport Plaza, New York, New York,
or at such other address as shall be specified by the Depositor to the other
parties hereto in writing. Any notice, demand, direction, or instruction to be
-5-
given to the Trustee or Agent shall be in writing and shall be duly given if
mailed or delivered to its office at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, or such other address as shall be specified to the other parties hereto
by the Trustee or Agent, as the case may be, in writing. Any notice, demand or
other communication to be given to a Unit Holder who becomes a party hereto by
designating the Agent to act on his behalf shall be duly given if mailed or
delivered to the Unit Holder at his last known address as shown on the records
of the Trustee, or such other address as shall be specified to the other parties
hereto by the Unit Holder, in writing.
SECTION 3.09. Severability. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first written above.
PRUDENTIAL SECURITIES
INCORPORATED,
Depositor
By: /s/ Xxxxxxx Xxxxxxx
-------------------
Senior Vice President
(SEAL)
ATTEST:
By: /s/ Xxxxxxxx Xxxxxxx
-----------------------
Assistant Secretary
THE BANK OF NEW YORK
Trustee
By: /s/ Xxxxx Xxxxxx
------------------------
Title: Vice President
(SEAL)
ATTEST:
By: /s/ Xxxxxxx Xxxxxxxxxx
-------------------------------
Title: Assistant Vice President
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
I, Xxxxxxx X. Xxxxx, Xx., a Notary Public in and for the
said County in the state aforesaid, do hereby certify that Xxxxx Xxxxxx and
Xxxxxxx Xxxxxxxxxx personally known to me to be the same persons whose names are
subscribed to the foregoing instrument and personally known to me to be a Vice
President and Assistant Vice President, respectively of The Bank of New York,
appeared before me this day in person, and acknowledged that they signed, sealed
with a corporate seal of The Bank of New York, and delivered the said instrument
as their free and voluntary act as such Vice President and Assistant Vice
President, respectively, and as the free and voluntary act of The Bank of New
York, for the uses and purposes therein set forth.
GIVEN, under my hand and notarial seal this 12th day of December, 2000.
/s/ Xxxxxxx X. Xxxxx, Xx.
-------------------------
Notary Public
(SEAL)
THE BANK OF NEW YORK
Distribution Agent
By: /s/ Xxxxx Xxxxxx
------------------------
Title: Vice President
(SEAL)
ATTEST:
By: /s/ Xxxxxxx Xxxxxxxxxx
---------------------------------
Title: Assistant Vice President
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
I, Xxxxxxx X. Xxxxx, Xx., a Notary Public in and for the
said County in the state aforesaid, do hereby certify that Xxxxx Xxxxxx and
Xxxxxxx Xxxxxxxxxx personally known to me to be the same persons whose names are
subscribed to the foregoing instrument and personally known to me to be a Vice
President and Assistant Vice President, respectively of The Bank of New York,
appeared before me this day in person, and acknowledged that they signed, sealed
with a corporate seal of The Bank of New York, and delivered the said instrument
as their free and voluntary act as such Vice President and Assistant Vice
President, respectively, and as the free and voluntary act of The Bank of New
York, for the uses and purposes therein set forth.
GIVEN, under my hand and notarial seal this 12th day of December, 2000.
/s/ Xxxxxxx X. Xxxxx, Xx.
-------------------------
Notary Public
(SEAL)
