SCHWAB TRUSTS,
SCHWAB TEN TRUST, 1997 SERIES A
for all series formed on or subsequent to the effective
date specified below
----------
TRUST INDENTURE AND AGREEMENT
Among
XXXXXXX XXXXXX & CO., INC.
and
XXXXX & XXXX DISTRIBUTORS L.P.
As Depositors
and
THE CHASE MANHATTAN BANK
As Trustee
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Dated: November 4, 1997
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SCHWAB TRUSTS
SCHWAB TEN TRUST, 1997 SERIES A
and Subsequent Series
TABLE OF CONTENTS
Page
INTRODUCTION.............................................................................................1
ARTICLE 1 DEFINITIONS; CERTIFICATES..........................................................2
Section 1.1. Definitions................................................................................2
ARTICLE 2 DEPOSIT OF SECURITIES; DECLARATION OF TRUST;
FORM AND ISSUANCE OF CERTIFICATES..................................................5
Section 2.1. Deposit of Securities......................................................................5
Section 2.2. Declaration of Trust.......................................................................6
Section 2.3. Issue of Units.............................................................................6
Section 2.4. Certain Contracts Satisfactory.............................................................6
Section 2.5. Deposit of Additional Securities...........................................................6
ARTICLE 3 ADMINISTRATION OF TRUST...........................................................10
Section 3.1. Initial Cost..............................................................................10
Section 3.2. Income Account............................................................................11
Section 3.3. Principal Account.........................................................................11
Section 3.4. Reserve Account...........................................................................12
Section 3.5. Payments and Distributions................................................................12
Section 3.6. Distribution Statements...................................................................16
Section 3.7. Substitute Securities.....................................................................17
Section 3.8. Sale of Securities........................................................................18
Section 3.9. Counsel...................................................................................19
Section 3.10. Notice and Sale by Trustee...............................................................19
Section 3.11. Reorganization and Similar Events........................................................19
Section 3.12. Notice of Actions........................................................................20
Section 3.13. Notice of Change in Principal Account....................................................20
Section 3.14. Extraordinary Distributions..............................................................21
Section 3.15. Deferred Sales Charge....................................................................21
ARTICLE 4 EVALUATION OF SECURITIES...........................................................22
Section 4.1. Evaluation of Securities..................................................................22
Section 4.2. Tax Reports...............................................................................23
Section 4.3. Liability of Trustee with respect to
Evaluations...............................................................................23
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ARTICLE 5 TRUST EVALUATION, REDEMPTION, PURCHASE,
TRANSFER,INTERCHANGE OR REPLACEMENT OF
CERTIFICATES.......................................................................24
Section 5.1. Trust Evaluation...................................................................24
Section 5.2. Redemptions by Trustee; Purchases by
Depositors.........................................................................25
Section 5.3. Depositor Redemptions..............................................................28
Section 5.4. Units to be Held Only Through the Depository
Trust Company or a Successor Clearing Agency.......................................29
ARTICLE 6 TRUSTEE; REMOVAL OF ...............................................................30
Section 6.1 General Definition of Trustee's Liabilities,
Rights and Duties; Removal of Depositors...........................................30
Section 6.2. Books, Records and Reports.........................................................34
Section 6.3. Indenture and List of Securities on File...........................................35
Section 6.4. Compensation.......................................................................35
Section 6.5. Removal and Resignation of the Trustee;
Successor..........................................................................36
Section 6.6. Qualifications of Trustee..........................................................38
ARTICLE 7 DEPOSITORS.........................................................................38
Section 7.1. Succession.........................................................................8
Section 7.2. Resignation of a Depositor.........................................................38
Section 7.3. Liability of Depositors and Indemnification........................................39
Section 7.4. Compensation.......................................................................40
Section 7.5. Joint Position of Depositors; Power of
Attorney...........................................................................40
ARTICLE 8 RIGHTS OF UNITHOLDERS..............................................................41
Section 8.1. Beneficiaries of Trust.............................................................41
Section 8.2. Rights, Terms and Conditions.......................................................42
ARTICLE 9 ADDITIONAL COVENANTS; MISCELLANEOUS
PROVISIONS.........................................................................42
Section 9.1. Amendments.........................................................................42
Section 9.2. Termination........................................................................43
Section 9.3. Construction.......................................................................46
Section 9.4. Registration of Units..............................................................46
Section 9.5. Written Notice.....................................................................46
Section 9.6. Severability.......................................................................47
Section 9.7. Dissolution of Depositors Not to Terminate.........................................47
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SCHWAB TRUSTS,
SCHWAB TEN TRUST, 1997 SERIES A
AND
SUBSEQUENT SERIES
TRUST INDENTURE AND AGREEMENT
DATED NOVEMBER 4, 1997
This Trust Indenture and Agreement ("Indenture") dated
November 4, 1997, among Xxxxxxx Xxxxxx & Co., Inc., Xxxxx & Xxxx Distributors
L.P., as Depositors and The Chase Manhattan Bank, as Trustee.
WITNESSETH THAT
In consideration of the premises and of the mutual agreements
herein contained, the Depositors and the Trustee agree as follows:
INTRODUCTION
The Depositors concurrently with the execution and delivery
hereof are establishing Schwab Trusts, Schwab Ten Trust, 1997 Series A (and
subsequent Series), wherein certain securities consisting of common stock and
contracts and funds for the purchase of such securities (collectively, the
"Securities") will be deposited by the Depositors, to be held by the Trustee in
trust for the use and benefit of the registered holders of certificates of
ownership (the "Unitholders") to be issued as hereinafter provided. The parties
hereto are entering into this Indenture for the purpose of establishing certain
of the terms, covenants and conditions of Schwab Trusts, Schwab Ten Trust, 1997
Series A and of each additional series of such Trust which may be established
from time to time hereafter. For Schwab Trusts, Schwab Ten Trust, 1997 Series A
and each subsequent series of the Schwab Trusts (sometimes referred to herein as
the "Trust") (as to which this Indenture is to be applicable) the parties hereto
shall execute a separate Reference Trust Agreement incorporating by reference
this Indenture and effecting any amendment, supplement or variation from or to
such incorporation by reference with respect to the related series and
specifying for that series (1) the Securities deposited in trust and the number
of Units delivered by the Trustee in exchange for the Securities pursuant to
Section 2.3; (2) the initial fractional undivided interest represented by each
Unit; (3) the first and subsequent Record Dates; (4) the first and subsequent
Distribution Dates;
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(5) the First Settlement Date; (6) the liquidation amount for purposes of
Section 6.1(g); (7) the Trustee's fee; (8) the Depositors' fee; (9) the
Termination Date; and (10) any other change or addition contemplated or
permitted by this Indenture.
ARTICLE 1
DEFINITIONS; CERTIFICATES
Section 1.1. Definitions: Whenever used in this
Indenture the following words and phrases, unless the context
clearly indicates otherwise, shall have the following meanings:
(1) "Addendum to the Reference Trust Agreement" shall mean the
addendum which evidences the Additional Securities deposited into the Trust and
the number of Additional Units created.
(2) "Additional Securities" shall mean such Securities as are
listed in Supplementary Schedules to Addendums to the Reference Trust Agreement
and which have been deposited to effect an increase over the number of Units
initially specified in the Reference Trust Agreement.
(3) "Additional Units" shall mean such Units as are issued in
respect of Additional Securities.
(4) "Business Day" shall mean any day other than a Saturday,
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) "Contract Securities" shall mean Securities which are to
be acquired by the Trust pursuant to contracts entered into by the Depositors,
including (i) Securities listed in Schedule A to the Reference Trust Agreement
and (ii) Securities which the Depositors have contracted to purchase for the
Trust
pursuant to Sections 2.6 and 3.7.
(6) "Depositors" shall mean Xxxxxxx Xxxxxx & Co., Inc.
("Schwab") or its successors in interest and Xxxxx & Xxxx Distributors L.P.
("Xxxxx & Xxxx") or its successors in interest, or any successor depositor or
depositors appointed as herein provided.
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(7) "Distribution Date" shall have the meaning assigned to it
in Part II of the Reference Trust Agreement.
(8) "DTC" shall mean Depository Trust Company, or its
successors.
(9) "Failed Security" shall have the meaning assigned to it in
Section 3.7 hereof.
(10) "First Settlement Date" shall mean the date specified in
Part II of the Reference Trust Agreement.
(11) "Indenture" shall mean this Trust Indenture and Agreement
as originally executed or, if amended as herein provided, as so amended.
(12) "Original Issue" shall mean an issue of Securities
deposited pursuant to Section 2.1 or any Substitute Securities purchased to
replace any Original Issue which have become Failed Securities.
(13) "Original Proportionate Relationship" shall mean the
proportionate relationship among the number of shares of each Security
established on the deposit made pursuant to Section 2.1. The Original
Proportionate Relationship shall be adjusted, if appropriate, to reflect (1) the
deposit of Substitute Securities and (2) the occurrence of any stock dividend,
stock splits, redemptions, or similar events.
(14) "Plan Units" shall mean fractional Units offered by the
Depositors pursuant to the reinvestment plans described in the final prospectus
of the Trust filed within the appropriate registration forms under the
Securities Act of 1933, and for which Plan Units the Trustee is acting as
Trustee.
(15) "Prospectus" shall mean the prospectus included in the
registration statement, as amended, on Form S-6 under the Securities Act of
1933, as amended, relating to the Trust on file with the Securities and Exchange
Commission at the time such registration statement, as amended, becomes
effective, except that if the prospectus filed pursuant to Rule 497(b) under the
Securities Act of 1933, as amended, differs from the prospectus on file at the
time such registration statement, as amended, becomes effective, the term
Prospectus shall refer to the Rule 497(b) prospectus from and after the time it
is mailed or otherwise delivered to the Securities and Exchange Commission for
filing.
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(16) "Record Date" shall have the meaning assigned to it in
Part II of the Reference Trust Agreement.
(17) "Redemption Form" shall mean the form provided by the
Trustee at the request of holders of Plan Units for the purposes of redeeming
such Units, as such form may be reasonably acceptable to the Depositors and the
Trustee from time to time.
(18) "Reference Trust Agreement" shall mean the indenture for
the particular series of Equity Securities Trust into which the terms of this
Indenture are incorporated.
(19) "Securities" shall mean such common stock, preferred
stock, ADRs and contracts and funds for the purchase of such securities as are
(i) deposited in irrevocable trust and listed in the Schedule to the Reference
Trust Agreement and (ii) received in exchange or substitution for any Securities
pursuant to Section 3.7 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.
(20) "Substitute Security" shall mean a Security purchased by
the Trustee pursuant to Section 3.7 hereof.
(21) "Termination Date" shall have the meaning assigned to it
in Part II of the Reference Trust Agreement.
(22) "Trust" shall mean the Trust created by this Indenture,
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, redemption, liquidation thereof, such
amounts as may be on deposit in the Reserve Accounts hereinafter established and
all other property and rights to which Unitholders may be entitled under the
provisions of this Indenture.
(23) "Trustee" shall mean The Chase Manhattan Bank, or its
successor or any successor Trustee appointed as herein provided.
(24) "Unit" shall mean the fractional undivided interest in
and ownership of the Trust initially specified in Part II of the Reference Trust
Agreement, the denominator of which shall be decreased by the number of any such
Units redeemed as provided in Section 5.2 and increased by any additional Units
which are specified in a Supplemental Schedule to an Addendum to the Reference
Trust Agreement or a Deposit Certificate.
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(25) "Unitholder" shall mean the registered holder of units of
beneficial interest as recorded in book-entry form at DTC, his legal
representatives and heirs and the successors of any corporation, partnership or
legal entity which is a registered holder of any Unit, and as such shall be
deemed a beneficiary of the trust created by the Indenture to the extent of his
pro rata share thereof.
(26) 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.
(27) Words importing singular number shall include the plural
number in each case and vice versa, and words importing person shall include
corporations and associations, as well as natural persons.
ARTICLE 2
DEPOSIT OF SECURITIES; DECLARATION OF TRUST;
FORM AND ISSUANCE OF CERTIFICATES
Section 2.1. Deposit of Securities: The Depositors,
concurrently with the execution and delivery of a Reference Trust Agreement,
have deposited with the Trustee in trust the Securities listed in Schedule A to
the Reference Trust Agreement in bearer form or registered in the name of the
Trustee, or its nominee, or duly endorsed in blank or accompanied by all
necessary instruments of assignment and transfer in proper form to be held,
managed and applied by the Trustee as herein provided. In the event that the
purchase of Securities represented by contracts shall not be consummated in
accordance with said contracts, the Trustee shall credit to the Principal
Account pursuant to Section 3.3 hereof the cash or cash equivalents (including
such portion of any letter of credit applicable to such contracts) deposited by
the Depositors, for the purpose of such purchase. Such monies, unless invested
in substitute Securities in accordance with Section 3.7 hereof, shall be
distributed to Unitholders pursuant to Section 3.5 hereof on the Distribution
Date following the failure of consummation of such purchase. The Depositors
shall deliver the Securities listed on said Schedule or Schedules to the Trustee
which were not actually delivered concurrently with the execution and delivery
of the Reference Trust Agreement within 90 days after said execution and
delivery or, if Section 3.7 applies, within such shorter period as is specified
in Section 3.7.
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The Trustee is irrevocably authorized hereto to effect
registration of transfer of the Securities in fully registered form in the name
of the Trustee or its nominee.
Section 2.2. Declaration of Trust: The Trustee declares that
it holds and will hold the Trust as Trustee in trust upon the terms herein set
forth for the use and benefit of all present and future Unitholders.
Section 2.3. Issue of Units: The Trustee hereby acknowledges
receipt of the deposit referred to in Section 2.1, and simultaneously with the
receipt of said deposit, pursuant to the Depositors' direction, has registered
on the registration books of the Trust the ownership by the Depositors of such
Units or, if requested by the Depositors, the ownership by DTC of all of such
Units and will cause such Units to be credited at DTC to the account of the
Depositors or, pursuant to the Depositors' direction and as hereafter provided,
the account of the issuer of the letter of credit referred to in Section 2.01.
The Depositors shall not sell, pledge, hypothecate or otherwise transfer such
Units, prior to the effectiveness of the registration statement covering the
Units filed with the Securities and Exchange Commission under the Securities Act
of 1933, except that the Depositors may place the Units as security for any
letter of credit provided in connection with the deposit of contracts described
in Section 2.1.
The number of Units may be increased through a split of the
Units or decreased through a reverse split thereof, as directed by the
Depositors, on any day on which the Depositors are the only Unitholders, which
revised number of Units shall be recorded by the Trustee on its books.
Section 2.4. Certain Contracts Satisfactory: The Depositors
approve as satisfactory in form and substance the contracts to be assumed by the
Trustee with regard to any Securities listed in Schedule A to the Reference
Trust Agreement and authorizes the Trustee on behalf of the Trust to 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 Securities
covered thereby into the Trust.
Section 2.5. Deposit of Additional Securities.
(a) Subject to the requirements set forth below in this
Section, the Depositor may, on any Business Day (the "Trade Date"), subscribe
for Additional Units as follows:
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(1) Prior to the Evaluation Time on the Trade Date,
the Depositor shall provide notice (the "Subscription
Notice") to the Trustee, by telecopy or by written
communication, of the Depositor's intention to
subscribe for Additional Units. The Subscription
Notice shall identify the Additional Securities to be
acquired (unless such Additional Securities are a
precise replication of the then existing portfolio)
and shall either (i) specify the quantity of
Additional Securities to be deposited by the
Depositor on the settlement date for such
subscription or (ii) instruct the Trustee to purchase
Additional Securities with an aggregate value as
specified in the Subscription Notice.
(2) Promptly following the Evaluation Time on such
Business Day, the Depositor shall verify with the
Trustee, by telecopy, the number of Additional Units
to be created.
(3) Not later than the time on the settlement date
for such subscription when the Trustee is to deliver
the Additional Units created thereby (which time
shall not be later than the time by which the Trustee
is required to settle any contracts for the purchase
of Additional Securities entered into by the Trustee
pursuant to the instruction of the Depositor referred
to in subparagraph (1) above), the Depositor shall
deposit with the Trustee (i) any Additional
Securities specified in the Subscription Notice (or
contracts to purchase such Additional Securities
together with cash or a letter of credit in the
amount necessary to settle such contracts) or (ii)
cash or a letter of credit in the amount equal to the
aggregate value of the Additional Securities to be
purchased by the Trustee, as specified in the
Subscription Notice, together with, in each case,
Cash as defined below. "Cash" means, as to the
Principal Account, cash or other property (other than
Securities) on hand in the Principal Account or
receivable and to be credited to the Principal
Account as of the Evaluation Time on the Business Day
preceding the Trade Date (other than amounts to be
distributed solely to persons other than persons
receiving the distribution from the Principal Account
as holders
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of Additional Units created by the deposit), and, as
to the Income Account, cash or other property (other
than Securities) received by the Trust as of the
Evaluation Time on the Business Day preceding the
Trade Date or receivable by the Trust in respect of
dividends or other distributions declared but not
received as of the Evaluation Time on the Business
Day preceding the Trade Date, reduced by the amount
of any cash or other property received or receivable
on any Security allocable (in accordance with the
Trustee's calculation of the monthly distribution
from the Income Account pursuant to Section 3.5) to a
distribution made or to be made in respect of a
Record Date occurring prior to the Trade Date. Each
deposit made during the 90 days following the deposit
made pursuant to Section 2.1 hereof shall replicate,
to the extent practicable, as specified in
subparagraph (b), the Original Proportionate
Relationship. Each deposit made after the 90 days
following the deposit made pursuant to Section 2.1
hereof (except for deposits made to replace Failed
Securities if such deposits occur within 20 days from
the date of a failure occurring within such initial
90 day period) shall maintain exactly the
proportionate relationship existing among the
Securities as of the expiration of such 90 day
period. Each such deposit shall exactly replicate
Cash.
(4) On the settlement date for a subscription, the
Trustee shall, in exchange for the Securities and
cash or letter of credit described above, issue and
deliver to or on the order of the Depositor the
number of Units verified by the Depositor with the
Trustee. No Unit to be issued pursuant to this
paragraph shall be issued or delivered unless and
until Securities, cash or a letter of credit is
received in exchange therefor and no person shall
have any claim to any Unit not so issued and
delivered or any interest in the Trust in respect
thereof.
(5) Each deposit of Additional Securities, shall
be listed in a Supplementary Schedule to an
Addendum to the Reference Trust Agreement stating
the date of such deposit and the number of
Additional Units being issued therefor. The
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Trustee shall acknowledge in such Addendum the
receipt of the Deposit and the number of Additional
Units issued in respect thereof. The Additional
Securities shall be held, administered and applied by
the Trustee in the same manner as herein provided for
the Securities.
(6) The acceptance of Additional Units by the
Depositor in accordance with the provisions of
paragraph (a) of this Section shall be deemed a
certification by the Depositor that the deposit or
purchase of Additional Securities associated
therewith complies with the conditions of this
Section 2.06.
(7) Notwithstanding the preceding, in the event that
the Sponsors' Subscription Notice shall instruct the
Trustee to purchase Additional Securities in an
amount which, when added to the purchase amount of
all other unsettled contracts entered into by the
Trustee, exceeds 25% of the value of the Securities
then held (taking into account the value of contracts
to purchase Securities only to the extent that there
has been deposited with the Trustee cash or an
irrevocable letter of credit in an amount sufficient
to settle their purchase), the Sponsors shall deposit
with the Trustee concurrently with the Subscription
Notice such that, when added to 25% of the value of
the Securities then held (determined as above) the
aggregate value shall be not less than the purchase
amount of the securities to be purchased pursuant to
such Subscription Notice.
(b) Additional Securities deposited during the 90 days
following the deposit made pursuant to Section 2.1 hereof shall maintain as
closely as practicable the Original Proportionate Relationship, except as
provided in this Section. Additional Securities may be deposited or purchased in
round lots; if the amount of the deposit is insufficient to acquire round lots
of each Security to be acquired, the Additional Securities shall be deposited or
purchased in the order of the Security in the Trust most under represented
immediately before the deposit with respect to the Original Proportionate
Relationship. Instructions to purchase Additional Securities under this Section,
shall be in writing and shall direct the Trustee to purchase, or enter into
contracts to purchase, Additional Securities; such instructions shall also
specify the name, CUSIP number, if any, and aggregate
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amount of each such Additional Security. If, at the time of a subsequent deposit
under this Section, Securities of an Original Issue are unavailable, cannot be
purchased at reasonable prices or their purchase is prohibited or restricted by
applicable law, regulation or policies, in lieu of the portion of the deposit
that would otherwise be represented by those Securities, the Depositors may (A)
deposit (or instruct the Trustee to purchase) Securities of another Original
Issue or replacement securities, or (B) deposit cash or a letter of credit with
instructions to acquire the Securities of such original issue when they become
available.
(c) The Trustee shall have no responsibility for the selection
of Securities deposited hereunder or for maintaining the composition of the
Trust portfolio or for any loss or depreciation resulting from the Depositors'
failure to settle any subscription for Units. The Trustee shall be indemnified
against any loss or liability arising from purchases contracted for pursuant to
this Section in accordance with Section 6.4.
ARTICLE 3
ADMINISTRATION OF TRUST
Section 3.1. Initial Cost: The cost of the initial
preparation, printing and execution of [the Certificates and] this Indenture,
the Registration Statement and other documents relating to the Trust, Federal
and State registration fees and costs, the initial fees and expenses of the
Trustee and evaluator, legal and auditing expenses and other out-of-pocket
expenses (excluding expenses incurred in the preparation and printing of
preliminary prospectuses and prospectuses, expenses incurred in the preparation
and printing of brochures and other advertising materials and any other selling
expenses), to the extent not borne by the Depositors, shall be paid by the
Trust. To the extent the funds in the Income and Principal Accounts of the Trust
shall be insufficient to pay the expenses borne by the Trust specified in this
Section 3.1, the Trustee shall advance out of its own funds and cause to be
deposited and credited to the Income Account such amount as may be required to
permit payment of such expenses. The Trustee shall be reimbursed for such
advance on each Record Date from funds on hand in the Income Account or, to the
extent funds are not available in such Account, from the Principal Account, in
the amount deemed to have accrued as of such Record Date as provided in the
following sentence (less prior payments on account of such advances, if any),
and the provisions of Section 6.4 with respect to the
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reimbursement of disbursements for Trust expenses, including, without
limitation, the lien in favor of the Trustee therefor, shall apply to the
payment of expenses made pursuant to this Section. For purposes of the preceding
sentence and the addition provided in clause (a)(4) of Section 5.1, the expenses
borne by the Trust pursuant to this Section shall be deemed to accrue at a daily
rate over the time period specified for their amortization by the Depositors
pursuant to Section 5.1 provided, however, that nothing herein shall be deemed
to prevent, and the Trustee shall be entitled to, full reimbursement for any
advances made pursuant to this Section no later than the termination of the
Trust. For purposes of this Section 3.1, the Trustee shall rely on the written
estimates of such expenses provided by the Depositors pursuant to Section 5.1.
Section 3.2. 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."
Section 3.3. Principal Account: (a) The Securities and all
cash, other than amounts credited to the Income Account, received by the Trustee
in respect of the Securities shall be credited to a separate account to be known
as the "Principal Account".
(b) Moneys and/or irrevocable letters of credit required to
purchase Contract Securities or deposited to secure such purchases are hereby
declared to be held specially by the Trustee for such purchases and shall not be
deemed to be part of the Principal Account until (i) the Depositors fail to
timely purchase Contract Securities and have not given the Failed Contract
Notice (as defined in Section 3.7) at which time the moneys and/or letters of
credit attributable to the Contract Securities not purchased by the Depositors
shall be credited to the Principal Account; or (ii) the Depositors have given
the Trustee the Failed Contract Notice at which time the moneys and/or letters
of credit attributable to failed contracts referred to in such Notice shall be
credited to the Principal Account; provided, however, that if the Depositors
also notify the Trustee in the Failed Contract Notice that it has purchased or
entered into a contract to purchase Securities (as defined in Section 3.14), the
Trustee shall not credit such moneys and/or letters of credit to the Principal
Account unless the Substitute Securities shall also have failed or are not
delivered by the Depositors within two business days after the settlement date
of such Substitute Securities, in which event the Trustee shall
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forthwith credit such moneys and/or letters of credit to the Principal Account.
To the extent of moneys, and/or moneys drawn under a letter of credit, deposited
by the Depositors and then held by the Trustee, the Trustee shall credit to the
Principal Account, and to the extent such moneys are insufficient the Depositors
shall deposit in the Principal Account, the difference, if any, between the
purchase price of the failed Contract Securities and the purchase price of the
Substitute Securities, together with any sales charge and accrued dividends
applicable to such difference and distribute such moneys to Unitholders pursuant
to Section 3.5. Cash held or receivable from the Depositors pursuant to Section
2.5 in respect of contracts for purchase of Additional Securities entered into
by the Trustee shall be credited to the Principal Account upon the Trustee's
entering into such contracts.
Section 3.4. Reserve Account: From time to time the Trustee
shall withdraw from the cash on deposit in the Income Account or 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 or by 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 Unitholders any of the
amounts in the Reserve Account; provided, however, that if it 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 appropriate account from which withdrawn or, if the
Trust has been terminated or is in the process of termination, the Trustee shall
distribute to each Unitholder such holder's interest in the Reserve Account in
accordance with Section 9.2.
Section 3.5. Payments and Distributions: Distributions to each
Unitholder from the Income Account are computed as of the close of business on
each Record Date for the following Distribution Date. Distributions from the
Principal Account of the Trust (other than amounts representing failed
contracts, as discussed in Section 3.3.(b) will be computed as of each Record
Date, and will be made to the Unitholders of the Trust on or shortly after the
next Distribution Date. Proceeds representing principal received from the
disposition of any of the Securities between a Record Date and a Distribution
Date which are not used for redemptions of Units will be held in the Principal
Account and not distributed until the second succeeding Distribution Date. If a
Unitholder is participating in a Reinvestment Plan, distributions to such
Unitholder shall be
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applied by the Trustee to purchase Units from the Depositors at the applicable
reinvestment price on the Distribution Date. Persons who purchase Units between
a Record Date and a Distribution Date will receive their first distribution on
the second Distribution Date after such purchase.
As of each Record Date the Trustee shall:
(a) deduct from the Income Account of the Trust, and, to the
extent funds are not sufficient therein, from the Principal Account of the
Trust, amounts necessary to pay any unpaid expenses of the Trust, including
registration charges, Blue Sky fees, printing costs, attorneys' fees, auditing
costs and other miscellaneous out-of-pocket expenses, as certified by the
Depositors, incurred in keeping the registration of the Units and the Trust on a
current basis pursuant to Section 9.4, 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;
(b) 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 6.4, Section 3.1 or otherwise pursuant to the provisions hereof;
(c) deduct from the Income Account, or, to the extent funds
are not available in such Account, from the Principal Account, and pay an amount
equal to the unpaid fees and expenses, if any, of counsel pursuant to Section
3.9 as certified to it by the Depositors; and
(d) 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 Depositors are then entitled to receive pursuant to Section 7.4
and hold such amount without interest until such time as it is payable to the
Depositors as set forth below.
On or before the first Distribution Date after the conclusion
of each calendar year, the Trustee shall, upon certification in satisfactory
form to the Trustee, upon which the Trustee may rely, distribute to the
Depositors from the amount so held pursuant to the immediately preceding
paragraph the amounts that the Depositors are at the time entitled to receive
pursuant to Section 7.4 on account of services theretofore performed and
expenses theretofore incurred.
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The Trustee also may withdraw from said accounts such amounts,
if any, as it deems necessary to establish a reserve for any applicable taxes or
other governmental charges that may be payable out of the Trust. Amounts so
withdrawn shall not be considered a part of such Trust's assets until such time
as the Trustee shall return all or any part of such amounts to the appropriate
accounts. In addition, the Trustee may withdraw from the Income and Principal
Accounts such amounts as may be necessary to cover redemptions of Units by the
Trustee.
The Principal Account shall be reimbursed for any amount
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 therein, when sufficient funds
are not available in the Income Account after giving effect to the payment from
the Income Account of all amounts otherwise required to be deducted therefor at
that time when sufficient funds are next available in the Income Account after
giving effect 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 Unitholder of
record at the close of business on the preceding Record Date, at the post office
address appearing on the registration books of the Trustee (or, if a Clearing
Agency is the registered Unitholder, the Trustee shall make distributions to
such Clearing Agency in accordance with its applicable procedures), such
holder's pro rata share of the balance in the Income Account calculated as set
forth in the next paragraph, plus such holder's pro rata share of the
distributable cash balance of the Principal Account, as of the preceding Record
Date; provided, however, that funds credited to the Principal Account in the
event of the failure of consummation of a contract to purchase Securities
pursuant to Section 2.1 hereof, funds representing the proceeds of the sale of
Securities pursuant to Section 3.8 hereof, and funds representing the proceeds
of the sale of Securities under Section 5.2, 6.4 or this Section 3.5 in excess
of the aggregate of (i) the amounts needed for the purposes of said Sections and
(ii) such amount as the Depositors have informed the Trustee is to be used to
purchase securities pursuant to Section 3.7 hereof, shall not be distributed
until the following Distribution Date or at such earlier date as shall be
determined by the Trustee. The Trustee shall not be required to make a
distribution from the Principal or Income Account unless the cash balance on
deposit therein available for distribution shall be sufficient to distribute at
least $1.00 per
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Unit in the case of Units initially offered at approximately $1,000, or a
proportionately lower amount in the case of Units initially offered at less than
$1,000 (e.g., .001 per Unit in the case of Units initially offered at
approximately $1.00).
The Trustee shall compute the amount of the Distribution from
the Income Account (i) by subtracting from the cash balance of the Income
Account computed as of the close of business on such Record Date (a) any unpaid
fees and expenses then deductible pursuant to the foregoing provisions of
Section 3.5 and (b) the Trustee's estimate of other expenses chargeable to the
Income Account pursuant to the Indenture which have accrued as of such Record
Date, or are otherwise properly attributable to the period to which such Income
Distribution relates and (ii) by dividing the result of such calculation by the
number of Units outstanding on the applicable Record Date.
The amounts to be so distributed to each Unitholder 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, computed as set forth above, as shall be represented by a notation of the
Units owned by such Unitholder on the registration or other record books of the
Trustee.
In the computation of each such share, fractions of less than
one cent shall be omitted. After any such distribution provided for above, any
cash balance remaining in the Income Account or the Principal Account shall be
held in the same manner as other amounts subsequently deposited in each of such
Accounts, respectively.
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 Unitholder of record. Nothing herein shall be construed
to prevent the payment of amounts from the Income Account and the Principal
Account to individual Unitholders 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 3.6 hereof.
The Trustee shall withhold from a Unitholder's income
distribution any portion of the Deferred Sales Charge deductible therefrom
pursuant to Section 3.15.
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Section 3.6. Distribution Statements: With each distribution
from the Income or Principal Accounts the Trustee shall set forth, either in the
instrument by means of which payment of such distribution is made or in any
accompanying statement the amount being distributed from each such account
expressed as a dollar amount per Unit.
Within a reasonable period of time after the last business day
of each calendar year, the Trustee shall furnish to each person who at any time
during such calendar year was a Unitholder a statement setting forth, with
respect to such calendar year:
(A) as to the Income Account:
(1) the amount of dividends received on the
Securities,
(2) the amounts paid from the Income Account for
redemptions pursuant to Section 5.2,
(3) the deductions for applicable taxes and fees and
expenses of the Trustee and counsel pursuant to Section 3.8, accrued
organization expenses, the annual audit fees referred to in Section
6.2, and the annual fees of the Depositors for portfolio supervisory
services pursuant to Section 7.4,
(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
year;
(B) as to the Principal Account:
(1) The number of shares of each issue of Securities
sold or liquidated, and the aggregate net proceeds received with
respect to each issue, excluding any portion thereof credited to the
Income Account,
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(2) the amounts paid from the Principal Account for
redemption pursuant to Section 5.2,
(3) the deductions for payment of applicable taxes
and fees and expenses of the Trustee and counsel pursuant to Section
3.8, accrued organizational expenses, Deferred Sales Charge, the annual
audit fees referred to in Section 6.2, and the annual fee of the
Depositors for portfolio supervisory services pursuant to Section 7.4,
and
(4) 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
year; and
(C) the following information:
(1) a list of Securities held in the Trust as of the
last business day of such calendar year,
(2) the number of Units outstanding on the last
business day of such calendar year,
(3) the Net Asset Value per Unit based on the last
Trust Evaluation made during such calendar year, and
(4) the amounts actually distributed to Unitholders
during such calendar year from the Income and Principal Accounts,
separately stated, expressed both as total dollar amounts and as dollar
amounts per Unit outstanding on the Record Dates for such
distributions.
Section 3.7. Substitute Securities: In the event that any
Contract Security or Security to be purchased pursuant to a contract entered
into by the Trustee in accordance with Section 2.5 is not delivered due to any
occurrence, act or event beyond the control of the Depositors and of the Trustee
(such a Contract Security being herein called a "Failed Security"), the
Depositors may instruct the Trustee to purchase Substitute Securities which have
been selected by the Depositors having a cost not in excess of the cost of the
Failed Securities. To be eligible for inclusion in the Trust, the Substitute
Securities which the Depositors select must: (a) be of the same type as that
replaced (e.g., both will be common stock or preferred stock); (b) in the
Depositors' judgment, be substantially similar to the Failed Security, as the
case may be, as respects the investment characteristics which led the Depositors
to select the Failed Security for inclusion in the Trust; and (c) be purchased
prior
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to, simultaneously with, or no more than twenty days after delivery of written
notice to the Trustee or Depositors, as appropriate, of the failed contract (the
"Failed Contract Notice").
Any Substitute Securities received by the Trustee shall be
deposited hereunder and shall be subject to the terms and conditions of this
Indenture to the same extent as other Securities deposited hereunder. No such
deposit of Substitute Securities shall be made after the earlier of (i) 90 days
after the date of execution and delivery of the applicable Reference Trust
Agreement or (ii) the first Distribution Date to occur after the date of
execution and delivery of the applicable Reference Trust Agreement.
Whenever a Substitute Security is acquired by the Trust
pursuant to the provisions of this Section 3.7, the Trustee shall, within five
days thereafter, mail to all Unitholders notices of such acquisition, including
an identification of the Failed Security and the Substitute Security acquired.
The purchase price of a Substitute Security shall be paid out of the funds in
the principal account attributable to the Failed Security which it replaces. 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 instructions from
the Depositors and in the absence of such instructions the Trustee shall have no
duty to purchase any Substitute Securities under this Indenture. The Depositors
shall not be liable for any failure to instruct the Trustee to purchase any
Substitute Security or for errors of judgment in selecting any Substitute
Security.
Section 3.8. Sale of Securities: In order to maintain the
sound investment character of the Trust, the Depositors may direct the Trustee
to sell or liquidate Securities at such price and time and in such manner as
shall be determined by the Depositors, provided that the Depositors have
determined that any one or more of the following conditions exist:
(1) default in payment of amounts due on any of the
Securities;
(2) institution of legal proceedings in law or equity seeking to
restrain or enjoin the payment of amounts due or declaration or payment of
regular dividends;
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(3) default under certain documents materially and adversely
affecting future declaration or payment of amounts due or expected;
(4) determination of the Depositors that the tax treatment of the
Trust as a grantor trust would otherwise be jeopardized; or
(5) decline in price that is a direct result of serious adverse
credit factors affecting the issuer of a Security which, in the opinion of the
Depositors, would make the retention of the security detrimental to the Trust or
the Unitholders.
Upon receipt of such direction from the Depositors, upon which
the Trustee shall rely, the Trustee shall proceed to sell the specified Security
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
Depositors 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 3.8.
Section 3.9. Counsel: The Depositors may employ from time to
time as it may deem necessary a firm of attorneys for any legal services that
may be required in connection with the disposition of Securities pursuant to
Section 3.8. The fees and expenses of such counsel shall be paid by the Trustee
from the Interest and Principal Accounts as provided for in Section 3.5(c)
hereof.
Section 3.10. Notice and Sale by Trustee: If at any time there
has been a failure by the issuer to pay a dividend that is due and payable, the
Trustee shall notify the Depositors thereof. If within thirty days after such
notification the Trustee has not received any instruction from the Depositors to
sell or to hold or to take any other action in connection with such Securities,
the Trustee shall sell such Securities forthwith, and the Trustee shall not be
liable or responsible in 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 Depositors. The Trustee shall promptly notify the Depositors
of such action in writing and shall set forth therein the Securities sold and
the proceeds received therefrom.
Section 3.11. Reorganization and Similar Events: In
the event that an offer by the issuer of any of the Securities or
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any other party shall be made to issue new Securities, the Trustee shall reject
such offer. However, should any exchange or substitution be effected
notwithstanding such rejection or without an initial offer, any Securities, cash
and/or property received in exchange shall be deposited hereunder and shall be
promptly sold, if securities or property, by the Trustee pursuant to the
Depositors' direction, unless the Depositors advise the Trustee to retain such
securities or property. The cash received in such exchange and cash proceeds of
any such sales shall be distributed to Unitholders on the next Distribution Date
in the manner set forth in Section 3.5 regarding distributions from the
Principal Account. This section shall apply, but its application shall not be
limited, to public tender offers, mergers, acquisitions, reorganizations and
recapitalization. Whenever new securities or property is received and retained
by a Trust pursuant to this Section 3.11, the Trustee shall, within five days
thereafter, mail to all Unitholders of such Trust notices of such acquisition
unless legal counsel for such Trust determines that such notice is not required
by the Investment Company Act of 1940, as amended. Neither the Depositors nor
the Trustee shall be liable to any person for action or failure to take action
pursuant to the terms of this Section 3.11.
Section 3.12. 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 Depositors and shall thereupon take such action or refrain
from taking any action as the Depositors shall in writing direct; provided,
however, that if the Depositors shall not within five business days of the
giving of such notice to the Depositors direct the Trustee to take or refrain
from taking any action, the Trustee shall take such action as it, in its sole
discretion, shall deem advisable. Neither the Depositors nor the Trustee shall
be liable to any person for any action or failure to take action with respect to
this section.
Section 3.13. Notice of Change in Principal Account: The
Trustee shall give prompt written notice to the Depositors of all amounts
credited to or withdrawn from the Principal Account pursuant to any provisions
of this Article III, and the balance of such account after giving effect to such
credit or withdrawal.
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Section 3.14. Extraordinary Distributions: Any property
received by the Trustee after the initial date of Deposit in a form other than
cash or additional shares of the Securities listed on Schedule A including, but
not limited to, securities received as a result of a spin-off or of a Substitute
Security, which shall be retained by the Trust, shall be dealt with in the
manner described in Section 3.11 and shall be retained or disposed by the
Trustee according to those provisions, provided, however, that no property shall
be retained which the Trustee determines shall adversely affect its duties
hereunder. The proceeds of any disposition shall be credited to the Income or
Principal Account of the Trust, as the Depositors may direct.
The Trust is intended to be treated as a fixed investment
(i.e., grantor) trust for income tax purposes, and its powers shall be limited
in accordance with the restrictions imposed on such trusts by Xxxxx. Reg.
Section 301.7701-4.
Section 3.15. Deferred Sales Charge: If the Reference Trust
Agreement and Prospectus for a Trust specify a Deferred Sales Charge, the
Trustee shall, on the dates specified in and as permitted by the prospectus,
withdraw from the Income Account, the Principal Account and/or distributions to
be made therefrom, as such accounts or distributions are designated in the
Prospectus as the source of the payments of the Deferred Sales Charge, 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 Depositors. If the balances in the Income and
Principal Accounts are insufficient to make any withdrawal designated to be made
therefrom, the Trustee shall, as directed by the Depositors, either advance
funds 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 Depositors' account or credit Securities in kind to such
special Depositors' Account provided, however, that the Trustee shall not be
required to advance an aggregate amount in excess of $15,000 pursuant to this
Section. 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
Depositors to sell a Security, instructions as to execution of such sales. If a
Unitholder redeems Units prior to full payment of the Deferred Sales Charge, the
Trustee shall, if so provided in the Reference Trust Agreement and Prospectus,
on the Redemption Date, withhold from the Redemption Price payment to such
Unitholder an amount equal to the unpaid portion of the
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Deferred Sales Charge and distribute such amount to such special Depositors'
Account or, if the Depositors shall purchase such Unit pursuant to the terms of
Section 5.02 hereof, the Depositors shall pay the Redemption Price for such Unit
less the unpaid portion of the Deferred Sales Charge. If the Prospectus provides
for a waiver or refund of any portion of the Deferred Sales Charge under
specified circumstances (such as, for example, in connection with a redemption
or sale of Units following the death or disability of the Unitholder), the
Trustee shall deduct and pay to the Sponsors the full amount of the Deferred
Sales Charge chargeable upon the redemption in the absence of such waiver or
refund and the Sponsors shall pay to the affected Unitholder the amount of such
waiver or refund; the Trustee shall have no responsibility to the affected
Unitholder with respect to the amount to be so refunded. The Depositors may at
any time instruct the Trustee to distribute to the Depositors cash or Securities
previously credited to the special Depositors' Account.
ARTICLE 4
EVALUATION OF SECURITIES
Section 4.1. Evaluation of Securities: The Trustee shall
determine separately and promptly furnish to the Depositors 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 5.1. The value of each issue of
Securities shall be determined in good faith by the Trustee in accordance with
the following procedures: If the Securities are listed on one or more national
securities exchanges, such valuation shall be based on the closing purchase
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 purchase price on such exchange, such
valuation shall be based on the closing purchase 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 purchase price, then the Trustee may
utilize, at the Trust's expense, an independent evaluation service or services
to ascertain the values of the Securities. The independent evaluation service
shall use any of the following methods, or a combination thereof, which it deems
appropriate: (a) on the
641739.4
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basis of current bid prices of such Securities as obtained from investment
dealers or brokers (including the Depositors) who customarily deal in securities
comparable to those held by the Trust, or (b) if bid prices are not available
for any of such Securities, on the basis of bid prices for comparable
securities, or (c) 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 (d) by any
combination of the above. The Trustee shall be permitted to rely on these
evaluations when determining the Unit Price. The Trustee shall have no
responsibility or liability for the valuations supplied to it by the independent
evaluation service. 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 pursuant to Section 2.1. Such evaluation shall be made on the same
basis as set forth above and shall be included in the Schedules attached to the
Reference Trust Agreement.
Section 4.2. Tax Reports: For the purpose of permitting
Unitholders to satisfy any reporting requirements of applicable Federal or State
tax law, the Trustee shall transmit to any Unitholder upon written request any
determinations made by the Trustee pursuant to Section 4.1.
Section 4.3. Liability of Trustee with respect to Evaluations:
The Depositors and the Unitholders 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, and shall have no liability for errors in, the information
reasonably available to it. The Trustee shall be under no liability to the
Depositors or the Unitholders for errors in judgment or any action taken in good
faith, 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 gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and duties
hereunder.
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ARTICLE 5
TRUST EVALUATION, REDEMPTION, PURCHASE, TRANSFER,
INTERCHANGE OR REPLACEMENT OF CERTIFICATES
Section 5.1. Trust Evaluation: The Trustee shall make an
evaluation of the Trust as of the close of trading on the New York Stock
Exchange (sometimes referred to herein as the "Evaluation Time") (1) on the last
Business Day of each of the months of June and December, (2) 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), and (3) on any other day desired by the Trustee
or requested by the Depositors. 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
Depositors for the purchase of Securities and not theretofore credited to the
Principal Account pursuant to Section 3.3 and funds in the Principal Account
with respect to which contracts for the purchase of the Substitute Securities
have been entered into pursuant to Section 3.7 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 4.1,
(a)(3) all other assets of the Trust and (a)(4) amounts representing
organizational expenses paid less amounts representing accrued organizational
expenses 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 fees of the Trustee and expenses 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 Depositors and their successors, if any, and (b)(3) cash held for
distribution to Unitholders of record as of a 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 shall be referred to herein as
the "Unit Value."
Until the Depositors have informed the Trustee that there will
be no further deposits of Additional Securities pursuant to Section 2.6, the
Depositors shall provide the Trustee with written estimates of (i) the total
organizational expenses to be borne by the Trust pursuant to Section 3.1, (ii)
the total
641739.4
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number of Units to be issued in connection with the initial deposit and all
anticipated deposits of Additional Securities and (iii) the period or periods
over which such expenses are to be amortized, separately stated with respect to
each such amortization period. For purposes of calculating the Trust Evaluation
and Unit Value, the Trustee shall treat all such anticipated expenses as having
been paid and all liabilities therefor as having been incurred, and all Units as
having been issued, in each case on the date of the Trust Agreement, and, in
connection with each such calculation, shall take into account a pro rata
portion of such expense and liability based on the actual number of Units issued
as of the date of such calculation. In the event the Trustee is informed by the
Depositors of a revision in its estimate of total expenses, total Units or
period of amortization, and upon the conclusion of the deposit of Additional
Securities or initial offering period, the Trustee shall base calculations made
thereafter on such revised estimates or actual expenses or period of
amortization, respectively, but such adjustment shall not affect calculations
made prior thereto and no adjustment shall be made in respect thereof.
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 Depositors of each
determination of Unit Value made by it as above provided, and, in addition, upon
each valuation by the Trustee under Section 4.1 other than those involved in
such calculations of Unit Value, the Trustee shall promptly furnish to the
Depositors, for purposes of assisting them in maintaining a market in the Units,
with such information regarding the Principal, Income and Reserve Accounts as
the Depositors may reasonably request.
Section 5.2. Redemptions by Trustee; Purchases by Depositors:
Any Certificate tendered for redemption by a Unitholder or his duly authorized
attorney to the Trustee at its corporate trust office, or any Plan Unit tendered
to the Trustee for redemption by the registered holder thereof pursuant to the
Redemption Form, shall be redeemed by the Trustee on the third business day
following the day on which tender for redemption is made (such third business
day being herein called the "Redemption Date"). Subject to payment by such
Unitholder of any tax or other governmental charges which may be imposed
thereon, such redemption is to be made by payment on the Redemption Date of cash
equivalent to the Net Asset Value per Unit or Plan Unit determined by the
Trustee as of the Evaluation Time on the date of tender, multiplied by the
number of Units being tendered for
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redemption (herein called the "Redemption Price"). Units received for redemption
by the Trustee on any day after the Evaluation Time will be held by the Trustee
until the next day on which the New York Stock Exchange is open for trading and
will be deemed to have been tendered on such day for redemption at the
Redemption Price computed on that day.
The Trustee may in its discretion, and shall when so directed
by the Depositors in writing, suspend the right of redemption or postpone the
date of payment of the Redemption Price for more than three business 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 periods as the Securities and Exchange
Commission may by order permit,
and 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 of tender of a
Unit for redemption by a Unitholder other than the Depositors, the Trustee shall
notify the Depositors of such tender. The Depositors shall have the right to
purchase such Unit or Plan Unit tendered by such Redemption Form by notifying
the Trustee of their election to make such purchase as soon as practicable
thereafter, but in no event subsequent to the close of business on the business
day on which such Unit was tendered for redemption. Such purchase shall be made
by payment for such Unit or Plan Unit by the Depositors to the Unitholder or
Plan Unit holder not later than the close of business on the Redemption Date of
an amount equal to the Redemption Price which would otherwise be payable by the
Trustee to such Unitholder or Plan Unit holder.
Any Unit or Plan Unit so purchased by the Depositors
may, at the option of the Depositors, be tendered to the Trustee
641739.4
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for redemption at the corporate trust office of the Trustee in the manner
provided in the first paragraph of this Section 5.2.
If the Depositors do not elect to purchase any Unit or Plan
Unit tendered to the Trustee for redemption, or if a Unit or Plan Unit is being
tendered by the Depositors for redemption, that portion of the Redemption Price
which represents dividends shall be withdrawn from the Income Account to the
extent funds are available. The balance paid on any redemption, including
accrued dividends, 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 sell such Securities from among those
designated on the current list for such purpose as provided below and in the
manner, in its discretion, as it shall deem advisable or necessary in order to
fund the Principal Account for purposes of such redemption. Sales of Securities
by the Trustee shall be made in such manner as the Trustee shall determine,
subject to any minimum face amount limitations on sale which shall have been
specified by the Depositors and agreed to by the Trustee. In the event that
funds are withdrawn from the Principal Account or Securities are sold for
payment of any portion of the Redemption Price representing accrued dividends,
the Principal Account shall be reimbursed when sufficient funds are next
available in the Income Account for such funds so applied.
The Depositors shall maintain with the Trustee a current list
of Securities designated to be sold for the purpose of redemption of Units or
Plan Units tendered for redemption and not purchased by the Depositors, and for
payment of expenses hereunder, provided that if the Depositors 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 representing principal shall be credited
to the Principal Account and the proceeds of such sales representing accrued
interest shall be credited to the Income Account.
Neither the Trustee nor the Depositors shall be liable or
responsible in any way for depreciation or loss incurred by reason of any sale
of Securities made pursuant to this Section 5.2.
Units redeemed pursuant to this Section 5.2 shall be canceled
by the Trustee and the Units or Plan Units tendered by Redemption Forms shall be
terminated by such redemptions.
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If the related prospectus for the Trust so provides, a
Unitholder who tenders for redemption Units in an aggregate amount of at least
the amount specified in the prospectus may request, at the time of tender, to
receive an In Kind Distribution in lieu of cash. Such In Kind Distribution shall
consist of (i) such Unitholder's pro rata portion of each of the Securities, to
the extent of whole shares, and (ii) cash equal to such Unitholder's pro rata
portion of the Income and Principal Accounts follows: (x) a pro rata portion of
the net proceeds of sale of the Securities representing any fractional shares
included in such Unitholder's pro rata share of the Securities and (y) such
other cash as may properly be included in such Unitholder's pro rata share of
the sum of the cash balances of the Income and Principal Accounts in an amount
equal to the Redemption Price on the date of tender less amounts specified in
clauses (i) and (ii)(x) of this sentence. The Trustee shall distribute the
Unitholder's Securities to the account of the Unitholder's bank or broker dealer
at the DTC. An In Kind Distribution shall be reduced by customary transfer and
registration charges incurred by the Trustee.
Notwithstanding the foregoing provisions of this Section 5.2,
the Trustee is hereby irrevocably authorized in its discretion, in the event
that the Depositors do not elect to purchase any Certificate or Plan Unit
tendered to the Trustee for redemption (other than Units as to which a valid
request for In Kind Redemption has been made), or in the event that a Unit or
Plan Unit is being tendered by the Depositors for redemption, in lieu of
redeeming Units or Plan Units tendered for redemption, to sell such Units or
Plan Units in the over-the-counter market or by private sale for the account of
tendering Unit or Plan Unit holders at prices which will return to the Unit or
Plan Unit holders amounts in cash, net after deducting brokerage commissions,
transfer taxes and other charges, equal to or in excess of the Redemption Prices
which such Unit or Plan Unit holders would otherwise be entitled to receive on
redemption pursuant to this Section 5.2. The Trustee shall pay to the Unit or
Plan Unit holders the net proceeds of any such sale on the day they would
otherwise be entitled to receive payment of the Redemption Price hereunder.
Section 5.3. Depositor Redemptions: Units tendered for
redemption by the Depositors on any Business Day shall be deemed to have been
tendered before the Evaluation Time on such Business Day provided that the
tendering Depositor advises the Trustee in writing (which may be electronic
transmission) of such tender before the later of 5:00 p.m. New York City time
and the Trustee's close of business on such Business day. By such
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advice, the Depositor will be deemed to certify that all Units so tendered were
either(a) tendered to the Depositors or to a retail dealer between the
Evaluation Time on the preceding Business Day and the Evaluation Time on such
Business Day or (b) acquired previously but which the Depositor determined to
redeem prior to the Evaluation Time on such Business Day. On or before payment
of the Redemption Price, the Depositor shall assign or deliver to the Trustee
such documents which the Trustee shall reasonably require to effect the
redemption of those Units.
Section 5.4. Units to be Held Only Through the Depository
Trust Company or a Successor Clearing Agency: No Unit may be registered in the
name of any person other than DTC or its nominee (or such other clearing agency
registered as such pursuant to Section 17A of the nominee thereof) (DTC and any
such successor clearing agency are herein referred to as the "Clearing Agency")
unless the Clearing Agency advises the Trustee that it is no longer willing or
able properly to discharge its responsibilities with respect to the Units and
the Trustee is unable to locate a qualified successor clearing agency, in which
case the Trustee shall notify the Clearing Agency and instruct it to provide the
Trustee with the name and address of all persons who are the beneficial owners
of Units as registered on the books of the Clearing Agency (the "Owners"). So
long as a Clearing Agency is the registered holder of the Units, it shall be the
registered holder of the Units for all purposes under this Indenture and the
Owners shall hold their interest in the Units pursuant to such Clearing Agency's
applicable procedures. The Trustee shall be entitled to deal with any Clearing
Agency for all purposes of this Indenture (including the payment of
distributions on the Units and giving of instructions or directions by or to the
Owners) as the sole Unitholder of the Units and shall have no obligations to the
Owners. The rights of the Owners shall be exercised only through the Clearing
Agency and shall be limited to those established by law, the applicable
procedures of the Clearing Agency and the agreements between the Owners and the
Clearing Agency and its participants. None of the Depositors nor the Trustee
shall have any liability in respect of any transfers of Units effected by any
Clearing Agency. All provisions of this Indenture relating to the ownership and
transfer of Units shall be construed to effectuate the provisions of this
Section.
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ARTICLE 6
TRUSTEE; REMOVAL OF DEPOSITORS
Section 6.1. General Definition of Trustee's
Liabilities, Rights and Duties; Removal of Depositors: In
addition to and notwithstanding the other duties, rights,
privileges and liabilities of the Trustee otherwise set forth
herein, the liabilities of the Trustee are further defined as
follows:
(a) All moneys deposited with or received by the Trustee
hereunder shall be held by the Trustee without interest in trust as part of the
Trust or the Reserve Account until required to be disbursed in accordance with
the provisions of this Indenture and such moneys will be segregated by separate
recordation on the trust ledgers 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 moneys 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 moneys,
Securities or Units pursuant to this Indenture, or in respect of any evaluation
which the Trustee is required to make or is required or permitted to have made
by others under this Indenture or otherwise except by reason of its gross
negligence, lack of good faith or willful misconduct, provided that the Trustee
shall not in any event be liable or responsible for any evaluation made by any
independent evaluation service employed by it pursuant to Section 4.1. The Trust
shall pay and hold the Trustee harmless from and against any loss, liability or
expense incurred in acting as Trustee of the Trust other than 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, including the costs and expenses of the defense against any claim or
liability in the premises. 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, and any construction of any such provisions
hereof by the Trustee in good faith shall be binding upon the parties hereto.
The Trustee shall in no event be deemed to have
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assumed or incurred any liability, duty or obligation to any Unitholder or the
Depositors, other than as expressly provided for herein.
(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 Depositors, or for the form, character, genuineness,
sufficiency, value or validity of any letter of credit held hereunder or any
Securities (except that the Trustee shall be responsible for the exercise of due
care in determining the genuineness of Securities delivered to it pursuant to
contracts for the purchase of such Securities) or for or in respect of the
validity or sufficiency of the Units or of the due execution thereof by the
Depositors, and the Trustee shall in no event assume or incur any liability,
duty or obligation to any Unitholder or the Depositors other than as expressly
provided for herein. The Trustee shall not be responsible for or in respect of
the validity of any signature by or on behalf of the Depositors.
(d) The Trustee shall not be under any 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, it shall be furnished with
reasonable security and indemnity against such expense or liability as it may
require, and any pecuniary cost of the Trustee from such actions shall be
deductible from and a charge against the Income and Principal Accounts. 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
Unitholders 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 Unitholders.
(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 DTC 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 DTC 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
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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, which may be counsel to the Depositors acceptable to the
Trustee. The fees and expenses charged by such agents, attorneys, accountants or
auditors shall constitute an expense of the Trustee reimbursable from the Income
and Principal Accounts as set forth in Section 3.5 hereof.
(f) Other than as provided in Article 7 hereunder, if at any
time there is only one Depositor acting hereunder and said Depositor shall
resign or fail to undertake or perform or become incapable of undertaking or
performing any of the duties which by the terms of this Indenture are required
by it to be undertaken or performed and no express provision is made for action
to be taken by the Trustee in such event, or said Depositor shall be adjudged
bankrupt or insolvent, or a receiver of such Depositor or of its property shall
be appointed, or any public officer shall take charge or control of such
Depositor or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then in any such case, the Trustee may, in its sole
discretion, do any one or more of the following: (1) appoint a successor
Xxxxxxxxx who shall act hereunder in all respects in place of the Depositor, who
shall be compensated semi-annually, at rates deemed by the Trustee to be
reasonable under the circumstances, by deduction from the Income Account or from
the Principal Account, 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, all in the manner provided in Section 9.2. or (3) continue to act as
Trustee hereunder without terminating this Indenture, acting in its own absolute
discretion without appointing any successor Xxxxxxxxx and assuming such of the
duties and responsibilities of the Depositor hereunder as the Trustee
determines, in its absolute discretion, are necessary or desirable for the
administration and preservation of the Trust and receiving additional
compensation at rates determined as provided in clause (1). If the Trustee
continues so to act, it is authorized to employ one or more agents to perform
portfolio supervisory services and such other of the services of the Depositors
hereunder as the Trustee determines, in its sole discretion, to be necessary or
desirable. The fees and expenses of such agent or agents shall be charged to the
Trust in accordance with Section 6.4. All provisions of this Indenture relating
to the liability and indemnification of the Trustee, including, without
limitation, subparagraph (e) of this Section, shall apply to any
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responsibility assumed or action taken by the Trustee pursuant to
this subparagraph.
(g) If the value of the Trust as shown by any evaluation by
the Trustee pursuant to Section 5.1 hereof shall be less than the liquidation
amount specified in Part II of the Reference Trust Agreement, the Trustee may in
its discretion, and shall, when so directed by the Depositors, terminate this
Indenture and the Trust created hereby and liquidate the Trust, all in the
manner provided in Section 9.2.
(h) 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
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 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 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 Unitholders.
(i) The Trustee, except by reason of its gross negligence,
lack of good faith, reckless disregard of its obligations hereunder or willful
misconduct, shall not be liable for any action taken 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.
(j) Notwithstanding anything in this Indenture to the
contrary, the Trustee is authorized and empowered to enter into any safekeeping
arrangement or arrangements it deems necessary or appropriate for holding the
Securities then owned by the Trust and the Trustee is authorized and empowered
in its sole right to amend, supplement or terminate any safekeeping arrangement
or arrangements made under this provision. In addition, the Trustee is
authorized and empowered, at the request and discretion of the Depositors, 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 Depositors.
(k) The Trustee in its individual or any other capacity may
become owner or pledgee or, or be an underwriter or
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dealer in respect of, stock, bonds or other obligations issued by the same
issuer (or an affiliate of such issuer) or any obligor of any Securities at any
time held as part of the Trust and may deal in any manner with the same or with
the issuer (or an affiliate of the issuer) with the same rights and powers as if
it were not the Trustee hereunder.
(l) The Trust may include a letter or letters of credit for
the purchase of Contract Securities issued by the Trustee in its individual
capacity for the account of the Depositors, and the Trustee may otherwise deal
with the Depositors with the same rights and powers as if it were not the
Trustee hereunder.
Section 6.2. Books, Records and Reports: The Trustee shall
keep proper books of record and account of all the transactions under this
Indenture at its unit investment trust office including a record of the name and
address of, and the Units issued by the Trust and held by, every Unitholder, and
such books and records shall be open to inspection by any Unitholder at all
reasonable times during the usual business hours, and such books and records
shall be made available to the Depositors upon the request of the Depositors
including, but not limited to, a record of the name and address of every
Unitholder.
Unless the Depositors otherwise direct, the Trustee shall
cause audited statements as to the assets and income of the Trust to be prepared
on an annual basis by independent public accountants selected by the Depositors,
provided, however, that if the Depositors are then making a market for units of
the Trust, the Depositors shall bear the cost of such audit to the extent that
it exceeds $.50/unit of approximately $1000 initial value (or such proportionate
amount in the case of units of greater or lesser initial value). Such audited
statement will be made available to Unitholders upon request.
To the extent permitted under the Investment Company Act of
1940 as evidenced by an opinion of counsel to the Depositors, reasonably
acceptable to the Trustee, the Trustee shall pay, or reimburse to the Depositors
or others, the costs of the preparation of documents and information with
respect to the Trust required by law or regulation in connection with the
maintenance of a secondary market in units of the Trust. Such costs may include
but are not limited to accounting and legal fees, blue sky registration and
filing fees, printing expenses and other reasonable expenses related to
documents required under Federal and state securities laws.
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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 6.3. Indenture and List of Securities on File: The
Trustee shall keep a certified copy or duplicate original of this Indenture on
file at its unit investment trust office available for inspection at all
reasonable times during the usual business hours by any Unitholder and the
Trustee shall keep and so make available for inspection a current list of the
Securities.
Section 6.4. Compensation: For services performed under this
Indenture the Trustee shall be paid at the rate per annum set forth in Part II
of the Reference Trust Agreement which shall be computed on the basis of the
greatest number of Units of the Trust outstanding at any time during the period
with respect to which such compensation is being computed. The Trustee may from
time to time adjust its compensation as set forth above provided that the 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 shall cease to be
published, then as measured by the available index most nearly comparable to
such index. The consent or concurrence of any Unitholder hereunder shall not be
required for any such adjustment or increase, however, the consent of the
Depositors shall be required. Such compensation shall be charged by the Trustee
against the Income and Principal Accounts at the time provided in Section 3.5
provided, however, that such compensation shall be deemed to provide only for
the usual normal and recurring functions undertaken as Trustee pursuant to this
Indenture.
The Trustee shall charge the Income and Principal Accounts at
such times as shall be convenient in its administration of the Trust any and all
expenses, including the fees of counsel which may be retained by the Trustee in
connection with its activities hereunder, and disbursements incurred hereunder
and any extraordinary services performed by the Trustee hereunder. The Trustee
shall be indemnified and held harmless against any loss or liability accruing to
it without gross 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
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and Principal Accounts shall be insufficient to provide for amounts payable
pursuant to this Section 6.4, the Trustee shall have the power to sell (1)
Securities from the current list of Securities designated to be sold pursuant to
Section 5.2 hereof, or (2) 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 6.4. 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 6.4. Any moneys payable to the Trustee pursuant to this
section shall be secured by a prior lien on the Trust.
Section 6.5. Removal and Resignation of the Trustee;
Successor: The following provisions shall provide for the
removal and resignation of the Trustee and the appointment of any
successor Trustee:
(a) any resignation or removal of the Trustee and appointment
of a successor pursuant to this section shall not become effective until
acceptance of appointment by the successor Trustee as provided in subsection (b)
hereof;
(b) the Trustee or any trustee hereafter appointed may resign
and be discharged of the trust created by this Indenture by executing an
instrument in writing resigning as such Trustee, filing the same with the
Depositors and mailing a copy of a notice of resignation to all Unitholders then
on record not less than sixty days before the date specified in such instrument
when, subject to Section 6.5(d), such resignation is to take effect. Upon
receiving such notice of resignation, the Depositors shall use their best
efforts to 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. In case at any time the
Trustee shall become incapable of acting or shall be deemed incapable of acting
by the written consent of holders owning beneficially 66 2/3% of the outstanding
Units comprising a particular series, or shall be adjudged a bankrupt or
insolvent, 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, then in any such case the Depositors may remove the 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 notice of such
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removal and appointment of a successor shall be given to each Unitholder then of
record;
(c) any successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Depositors and 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 like effect as if
originally named Trustee herein and shall be bound by all the terms and
conditions of this Indenture provided, however, that no successor trustee shall
be under any liability hereunder for occurrences or omissions prior to the
execution of such instrument. Upon the request of such successor Trustee, the
Depositors and 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 moneys 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 moneys at the time
held by it hereunder to secure any amounts then due the retiring Trustee
hereunder;
(d) in case at any time the Trustee shall resign and no
successor Trustee shall have been appointed and have accepted appointment within
thirty days after notice of resignation has been received by the Depositors, 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; and
(e) any corporation into which any Trustee hereunder may be
merged or with which it may consolidate, or any corporation resulting from any
merger or consolidation to which any Trustee hereunder shall be a party, 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
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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.
Section 6.6. Qualifications of Trustee: The Trustee, or any
successor thereof, shall be a corporation organized and doing business under the
laws of the United States or any state thereof, 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 $2,500,000.
ARTICLE 7
DEPOSITORS
Section 7.1. Succession: The covenants, provisions and
agreements herein contained shall in every case be binding upon any successor to
the business of the Depositors. In the event of the death, resignation or
withdrawal of any partner of Xxxxx & Xxxx or of any successor Depositor which
may be a partnership, the deceased, resigning or withdrawing partner shall be
relieved of all further liability hereunder if at the time of such death,
resignation or withdrawal such Xxxxxxxxx maintains a net worth (determined in
accordance with generally accepted accounting principles) of at least
$1,000,000. In the event of an assignment by a Depositor to a successor
corporation or partnership as permitted by the next following sentence, such
Depositors and, if such Depositor is a partnership, its partners, shall be
relieved of all further liability under this Indenture. The Depositors may
transfer all or substantially all of their assets to a corporation or
partnership which carries on the business of that Depositor, if at the time of
such transfer such successor duly assumes all the obligations of said Depositor
under this Indenture and if at such time such successor maintains a net worth of
at least $1,000,000 (determined in accordance with generally accepted accounting
principles).
Section 7.2. Resignation of a Depositor: If at any time any
Depositor desires to resign its position as Depositors hereunder, it may resign
by delivering to the Trustee an instrument of resignation executed by such
Depositor. Such resignation shall become effective upon the expiration of thirty
days from the date on which such instrument is delivered to the Trustee. Upon
effective resignation hereunder, the resigning Depositor shall be discharged and
shall no longer be liable in
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any manner hereunder except as to acts or omissions occurring prior to such
resignation and any successor Depositor appointed by the Trustee pursuant to
Section 6.1(f) shall thereupon perform all duties and be entitled to all rights
under this Indenture. The successor Depositor shall not be under any liability
hereunder for occurrences or omissions prior to the execution of such
instrument.
Section 7.3. Liability of Depositors and Indemnification: (a)
No Depositor shall be under any liability to any other Depositor, the Trust or
the Unitholders for any action or for refraining from the taking of any action
in good faith pursuant to this Indenture, or for errors in judgment or for
depreciation or loss incurred by reason of the purchase or sale of any
Securities, provided, however, that this provision shall not protect the
Depositors 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 Depositors 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 it by the Trustee, the Trustee's counsel or any other person for
any matters arising hereunder. The Depositors shall in no event be deemed to
have assumed or incurred any liability, duty, or obligation to any Unitholder or
the Trustee other than as expressly provided for herein.
(b) The Trust shall pay and hold the Depositors harmless from
and against any loss, liability or expense incurred in acting as Depositors of
the Trust other than by reason of willful misfeasance, bad faith or gross
negligence in the performance of their duties or by reason of their reckless
disregard of their obligations and duties hereunder, including the costs and
expenses of the defense against any claim or liability in the premises. The
Depositors shall not be under any obligation to appear in, prosecute or defend
any legal action which in their opinion may involve them in any expense or
liability, provided, however, that the Depositors may in their discretion
undertake any such action which they may deem necessary or desirable in respect
of this Indenture and the rights and duties of the parties hereto and the
interests of the Unitholders hereunder and, in such event, the legal expenses
and costs of any such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Trust and shall be paid directly by the
Trustee out of the Income and Principal Accounts as provided by Section 3.5.
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(c) None of the provisions of this Indenture shall be deemed
to protect or purport to protect the Depositors against any liability to the
Trust or to the Unitholders to which the Depositors would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of their duties, or by reason of the Depositors' reckless disregard
of their obligations and duties under this Indenture.
(d) Notwithstanding the discharge of a Depositor of the Trust,
such Depositor shall continue to be fully liable in accordance with the
provisions hereof in respect of action taken or refrained from under the
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 7.4. Compensation: The Depositors shall receive at the
times set forth in Section 3.5 as compensation for performing portfolio
supervisory services, such amount and for such periods as specified in Part II
of the Reference Trust Agreement. The computation of such compensation shall be
made on the basis of the largest number of units outstanding at any time during
the period for which such compensation is being computed. At no time, however,
will the total amount received by the Depositors for services rendered to all
series of the Schwab Trusts in any calendar year exceed the aggregate cost to
them of supplying such services in such year. Such rate may be increased by the
Trustee from time to time, without the consent or approval of any Unitholder or
the Depositors, 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.
In the event that any amount of the compensation paid to the
Depositors pursuant to Section 3.5 is found to be an improper charge against the
Trust, the Depositors shall reimburse the Trust in such amount. An improper
charge shall be established if a final judgment or order for reimbursement of
the Trust shall be rendered against the Depositors and such judgment or order
shall not be effectively stayed or a final settlement is established in which
the Depositors agree to reimburse the Trust for amounts paid to the Depositors
pursuant to this Section 7.4.
Section 7.5. Joint Position of Depositors; Power of
Attorney: (a) The Depositors shall be jointly and severally
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liable for the obligations imposed upon and undertaken by the Depositors
hereunder. At all times prior to the termination of the Trust and while more
than one Depositor shall be acting hereunder, there shall be maintained on file
with the Trustee a power of attorney (which, initially, constitutes part of the
Closing Memorandum delivered by the Trustee and the Depositor in connection with
the deposit made pursuant to Section 2.1) executed in favor of one Depositor by
the other Depositor constituting and appointing the non-executing Depositor the
trust and lawful agent and attorney-in-fact of the executing Depositor to
execute and deliver for and on behalf of the executing Depositor 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 or to take any other action in respect hereof. Such power
of attorney shall continue in effect as to the executing Depositor until written
notice of revocation thereof has been given by such executing Depositor to the
Trustee and the non-executing Depositor. 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 Depositor as to which such power of attorney
is in effect.
(b) In the event that the power of attorney referred to in
paragraph (a) 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 paragraph, the Depositors
shall be deemed to have been unable to reach agreement with respect to an action
to be taken jointly by them hereunder 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 Depositor shall
act hereunder without the necessity of any other or further action on the part
of the Depositors or of the Trustee.
ARTICLE 8
RIGHTS OF UNITHOLDERS
Section 8.1. Beneficiaries of Trust: By the purchase and
acceptance or other lawful delivery and acceptance of any Unit the Unitholder
shall be deemed to be a beneficiary of the Trust created by this Indenture and
vested with all right, title
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and interest in the Trust to the extent of the Unit or Units, subject to the
terms and conditions of this Indenture.
Section 8.2. Rights, Terms and Conditions: In addition to the
other rights and powers set forth in the other provisions and conditions of this
Indenture the Unitholders shall have the following rights and powers and shall
be subject to the following terms and conditions:
(a) A Unitholder may at any time prior to the Evaluation Time
on the date the Trust is terminated tender his Unit or Units to the Trustee for
redemption in accordance with Section 5.2.
(b) The death or incapacity of any Unitholder 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 of competent jurisdiction 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 Unitholder 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 moneys
from time to time received, held and applied by the Trustee hereunder.
(c) No Unitholder 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 Unitholders from time to time as partners; nor
shall any Unitholder ever be under any liability to any third persons by reason
of any action taken by the parties to this Indenture for any other cause
whatsoever.
ARTICLE 9
ADDITIONAL COVENANTS; MISCELLANEOUS PROVISIONS
Section 9.1. Amendments: This Indenture may be amended from
time to time by the parties hereto or their respective successors, without the
consent of any of the Unitholders (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 required
by Securities and Exchange
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Commission or any successor governmental agency to be changed; or (c) to make
such other provision in regard to matters or questions arising hereunder as
shall not adversely affect the interests of the Unitholders; provided, however,
that the parties hereto may not amend this Indenture so as to (1) increase the
number of Units above the number set forth in Part II of the Reference Trust
Agreement or such lesser amount as may be outstanding at any time during the
term of this Indenture, except as the result of the deposit of Additional
Securities as herein provided, or (2) except in the manner permitted by the
Indenture as in effect on the date of the first deposit of Securities under a
particular Indenture, permit the deposit or acquisition hereunder of securities
either in addition to or in replacement of any of the Securities.
This Indenture may also be amended from time to time by the
Depositors and the Trustee (or the performance of any of the provisions or this
Agreement may be waived) with the expressed written consent of Unitholders
evidencing 66-2/3% 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 Unitholders; provided, however, that no such amendment or waiver shall
(i) reduce the interest in the Trust represented by such Units without the
consent of the Unitholder, (ii) reduce the aforesaid percentage of Units, the
holders of which are required to consent to any such amendment, without the
consent of the holders of all Units then outstanding or (iii) affect the duties,
obligations and responsibilities of the Trustee without its consent.
Promptly after the execution of any such amendment the Trustee
shall furnish written notification to all then out standing Unitholders of the
substance of such amendment.
Section 9.2. Termination: This Indenture and the Trust created
hereby shall terminate as of the Evaluation on the Termination Date or upon the
date of the earlier maturity, redemption, sale or other disposition as the case
may be of the last Security held hereunder; provided that in no event shall the
Trust continue beyond the end of the Mandatory Termination Date specified in the
Prospectus for the Trust.
Written notice of any termination, specifying the time or
times at which the Unitholders may surrender their Units for cancellation shall
be given by the Trustee to each Unitholder at his address appearing on the
registration books of the Trustee.
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In the event of any termination of the Trust prior to the
Termination Date, the Trustee shall proceed to liquidate the Securities then
held and make the payments and distributions provided for hereinafter in this
Section 9.2 except that in such event, the distribution to each Unitholder shall
be made in cash and shall be such Unitholder's pro rata interest in the balance
of the Principal and Income Account after the deductions herein provided.
In the event that the Trust terminates on the Termination
Date, the Trustee shall, not less than 20 days prior to the Termination Date,
send a written notice to each Unitholder of record owning, as of such date,
2,500 Units and whose interest in the Trust would entitle him to receive at
least one share of each Security. Such notice shall allow such Unitholder to
elect to redeem his Units at the net asset value on the Termination Date and to
receive, in partial payment of the Redemption Price per Unit, an in-kind
distribution of such Unitholder's pro rata share of the Securities, to the
extent of whole shares. The Trustee will honor duly executed requests for such
in-kind distribution received by the close of business on the Termination Date.
Unitholders who do not effectively request an in-kind distribution shall receive
their distribution upon termination in cash. Redemption of the Units of
Unitholders electing such in-kind distribution shall be made on the third
business day following the first business day after the Termination Date and
shall consist of (1) such Unitholder's pro rata share of Securities (valued as
of the Termination Date) to the extent of whole shares and (2) cash equal to the
balance of such Unitholder's Redemption Price.
On the Termination Date, this Indenture and the Trust created
hereby shall terminate. In connection with such Termination, the Trustee shall
segregate such number of shares of Securities as shall be necessary to satisfy
in-kind distributions to Unitholders electing such distribution.
The balance of the Securities shall be sold over a period
described in the Prospectus of the Trust. The Depositors shall direct the
Trustee to sell the Securities in such manner as the Depositors determine will
produce the best price for the Trust. If so directed, the Trustee shall use the
services of the Depositors to effect such sales.
Within a reasonable period of time after such termination and
liquidation of Securities, the Trustee shall:
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(a) deduct from the Income Account or, to the extent that
funds are not available in such account, from the Principal Account and pay to
itself individually an amount equal to the sum of
(1) its accrued compensation for its ordinary
recurring services,
(2) any compensation due it for its extraordinary
services, and
(3) any other costs, expenses, advances or indemnities as
provided herein.
(b) deduct from the Income Account or, to the extent that
funds are not available in such account, from the Principal Account and pay
accrued and unpaid fees of counsel pursuant to Section 3.8;
(c) deduct from the Income Account or the Principal Account
any amounts which may be required to be deposited in the Reserve Account 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;
(d) make a final distribution from the Trust of such
Unitholder's pro rata share of the cash balances of the Income and Principal
Accounts and, on the conditions set forth in Section 3.04 hereof, the balance of
the Reserve Account, if any;
(e) together with such distribution to each Unitholder as
provided for in (d), furnish to each such Unitholder a final distribution
statement as of the date of the computation of the amount distributable to
Unitholders, setting forth the data and information in substantially the form
and manner provided for in Section 3.6 hereof; and
(f) distribute to each Unitholder receiving the distribution
provided in paragraph (d) 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 amounts to be so distributed to each Unitholder shall be
that pro rata share of the balance of the total Income and Principal Accounts as
shall be represented by the Units held of record by such Unitholder.
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The Trustee shall be under no liability with respect to moneys
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.
Upon the Depositors' request, the Trustee will include in the
written notice to be sent to Unitholders referred to in the fourth paragraph of
this section a form of election whereby Unitholders electing a cash distribution
may express interest in investing such cash distribution in units of another
series of the Schwab Trusts (the "New Series"). The Trustee will inform the
Depositors of all Unitholders who, within the time period specified in such
notice, express such interest. The Depositors will provide to such Unitholders
any applicable sales material with respect to the New Series and a form,
acceptable to the Trustee, whereby a Unitholder may appoint the Trustee the
Unitholder's agent to apply the Unitholder's cash distribution for the purchase
of a unit or units of the New Series. Such form will specify, among other
things, the time by which it must be returned to the Trustee in order to be
effective and the manner in which such purchase shall be made. This paragraph
shall not obligate the Depositors to create any New Series or to provide any
such investment election.
Section 9.3. Construction: This Indenture is executed and
delivered in the State of New York, and all local laws or rules of construction
of such State shall govern the rights of the parties hereto and the Unitholders
and the interpretation of the provisions hereof.
Section 9.4. Registration of Units: The Depositors agree and
undertake to register the Units with the Securities and Exchange Commission or
other applicable governmental agency pursuant to applicable Federal or State
statutes, if such registration shall be required, and to do all things that may
be necessary or required to comply with this provision during the term of the
Trust created hereunder, and the Trustee shall incur no liability or be under
any obligation or expense in connection therewith.
Section 9.5. Written Notice: Any notice, demand, direction or
instruction to be given to the Depositors hereunder shall be in writing and
shall be duly given if mailed or delivered to the Depositors as follows: Xxxxxxx
Xxxxxx & Co., Inc., 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000,
Xxxxx & Xxxx Distributors L.P., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or at
such other address as shall be specified by the
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Depositors to the Trustee in writing. Any notice, demand, direction or
instruction to be given to the Trustee shall be in writing and shall be duly
given if mailed or delivered to the Trustee at 0 Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000, or such other address as shall be specified to the Depositors by the
Trustee in writing. Any notice to be given to the Unitholders shall be duly
given if mailed or delivered to each Unitholder at the address of such holder
appearing on the registration books of the Trustee.
Section 9.6. 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 or 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 Units or the
rights of the holders thereof.
Section 9.7. Dissolution of Depositors Not to
Terminate: The dissolution of one or all of the Depositors from
or for any cause whatsoever shall not operate to terminate this
Indenture or the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the date first above written.
[Signatures and acknowledgments on separate pages.]
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THE CHASE MANHATTAN BANK
Trustee
By:
-------------------------------
Vice President
STATE OF NEW YORK )
:ss.:
COUNTY OF NEW YORK )
On this day of November, 1997, before me personally appeared ,
to me known, who being by me duly sworn, said that he is an Authorized Signator
of The Chase Manhattan Bank, one of the corporations described in and which
executed the foregoing instrument; that he knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation and that he
signed his name thereto by like authority.
---------------------------------
Notary Public
641739.4
XXXXX & XXXX DISTRIBUTORS L.P.
Depositors
By: Xxxxx & Xxxx Asset Management, Inc.,
as General Partner of Depositors
By:
------------------------------
Authorized Signator
STATE OF NEW YORK )
: ss:
COUNTY OF NEW YORK )
On this day of November, 1997, before me personally
appeared , to me known, who being by me duly sworn, said that he
is an Authorized Signator of Xxxxx & Xxxx Asset Management, Inc. as General
Partner of the Depositors, one of the corporations described in and which
executed the foregoing instrument, and that he signed his name thereto by
authority of the Board of Directors of said corporation.
-------------------------
Notary Public
641739.4
XXXXXXX XXXXXX & CO, INC.
Depositor
By:
---------------------------
Authorized Signator
STATE OF CALIFORNIA )
: ss:
COUNTY OF SAN FRANCISCO )
On this day of November, 1997, before me personally
appeared , to me known, who being by me duly sworn, said that he
is an Authorized Signator of Xxxxxxx Xxxxxx & Co., Inc. the Depositor, one of
the corporations described in and which executed the foregoing instrument, and
that he signed his name thereto by authority of the Board of Directors of said
corporation.
------------------------------
Notary Public
641739.4
