DISTRIBUTION AGENCY AGREEMENT
This Distribution Agency Agreement ("Agreement") dated as of
April 25, 1995, among Prudential Securities Incorporated, as the Depositor (the
"Depositor"), United States Trust Company of New York, as Trustee (the
"Trustee") pursuant to the Trust Indenture and Agreement and the Reference Trust
Agreement, each dated April 25, 1995 (collectively, the "Indenture"), relating
to National Equity Trust Low Five Portfolio Series 1 (the "Trust") and United
States Trust Company of New York, as Distribution Agent (the "Agent"), sets
forth procedures for the distribution of proceeds of redemptions of Units from
the Trust to the Unit Holders. All capitalized terms used but not defined herein
that are defined in the Indenture are used herein as defined therein.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements
herein contained, the Depositor, the Trustee and the Agent agree as follows:
ARTICLE I
Distributions Between Trustee and Agent
SECTION 1.01. Redemption of Units.
(a) In Kind Redemption: Units tendered as set forth in Section
5.02 of the Indenture for redemption shall be redeemed on the Tender Day.
Subject to payment by a tendering Unit Holder of any tax or other governmental
charges which may be imposed thereon, such redemption shall be made by the
distribution by the Trustee to the Agent on the Tender Day of the Redemption
Distribution which shall then be distributed to the tendering Unit Holder on the
Redemption Date plus cash equal to the value of fractional shares, in accordance
with Section 5.02 of the Indenture, provided, however, that the right of a Unit
Holder to receive a distribution in kind shall be conditioned on such Unit
Holder tendering Units with a value of in excess of $250,000.
(b) Cash Redemption of Units: Unit Holders may redeem such
Units and request payment of the Redemption Distribution in cash. Such request
shall be in writing and submitted to the Trustee at the time the Units are
tendered for redemption. Failure to so request shall result in distribution in
cash as set forth in this paragraph (b). Units tendered for redemption with such
a request for cash shall be tendered and redeemed in the manner and at the times
set forth in (a) above for in kind redemptions, except that on the Tender Date
related to such tender by a Unit Holder or as soon thereafter as possible, the
Agent shall sell the Securities which comprise the Redemption Distribution,
using its best reasonable efforts to secure the best price obtainable for such
Securities and shall distribute to the Unit Holder, subject to payment by the
Unit Holder of any tax or governmental charges that may be imposed thereon or
any brokerage commission charged on the sale, for each Unit tendered (i) an
amount in cash equal to the proceeds from the sale of the Securities which
comprise the Redemption Distribution; (ii) an amount in cash equal to the Unit
Cash value (determined as of the Evaluation Time on the date of tender) and
(iii) cash equal to the value of any fractional shares included in the Unit
Holder's pro rata portion of the Securities as of the Tender Day distributed to
the Agent by the Trustee. Such cash distribution shall be made within seven
calendar days of the Tender Day. Neither the Agent nor the Depositor shall be
liable or responsible in any way for depreciation or loss incurred by reason of
any sale or sales made in accordance with this Section 1.01(b).
With respect to either (a) or (b) above, if the Unit Cash Value is an amount
less than zero, the Agent shall remit to the Trustee (or the Trustee shall, in
the case of (x) or (y) below, withhold from distribution to the redeeming Unit
Holder) for each redeemed Unit the negative amount, obtained from the following
sources in the following order until such amount has been remitted to the
Trustee in full:
(x) amounts due the Unit Holder of such redeemed Units
from the sale of fractional shares of Securities
otherwise part of the Redemption Distribution;
(y) amounts otherwise due to the Unit Holder of such
redeemed Units in the form of an Income
Distribution;
(z) proceeds from the sale of other shares of Securities
otherwise part of the Redemption Distribution.
SECTION 1.02. Distribution of Securities, Liquidation,
and Investment in New Trust Upon Termination: (a) Securities to be distributed
in kind as set forth in Section 5.03 of the Indenture shall be distributed on
the first Business Day following the Termination Date in accordance with the
provisions of such Section.
(b) Each Unit Holder who elects either to receive cash or to
invest in a subsequent trust shall have his Termination Distribution held by the
Agent on his behalf for disposition in accordance with this Section 1.02(b).
On each Business Day during the 10 Business-Day period
following the Termination Date (the "Special Distribution Period"), the
Securities subject to disposition under this Section 1.02(b) shall be sold by
the Depositor as sub-agent for the Agent, using its best reasonable efforts to
secure the best price obtainable for the Securities or by such other sub-agent
as shall be designated by the Depositor or absent such designation such other
sub-agent as the Agent shall determine. The Depositor, as such sub-agent, will
open a customer account for the Agent and will sell, on each Business Day, at
least an amount of the then unsold Securities (based on the number of shares of
underlying Securities of each issuer) multiplied by a fraction the numerator of
which is one and the denominator of which is the number of days remaining in the
10 day period. Neither the Agent nor the Depositor shall be liable for or
responsible in any way for depreciation or loss incurred by reason of any sale
or sales made in accordance with this Section 1.02(b). Upon the Sale of the last
security the Depositor as such sub-agent for the Agent shall deduct from the
proceeds of these sales (the "Sales Proceeds") and pay any tax or governmental
charges and commissions in connection with the sale. The Agent shall hold each
day's proceeds in an account which is non-interest bearing to Unit Holders and
is available for use by the Agent pursuant to normal banking procedures.
Upon the settlement of the last sale of securities, the
Distribution Agent shall distribute to Unit Holders electing distribution in
cash the Sales Proceeds plus their pro rata share of the cash balances in the
Principal and Income Accounts or on behalf of Unit Holders electing
reinvestment, shall apply the Sales Proceeds plus their pro rata share of the
cash balances in the Principal and Income Accounts towards the purchase of Units
of the next National Equity Trust, Low Five Portfolio Series to be offered (the
"New Series"), if any.
The Agent shall, as soon as reasonably possible after the
Sales Proceeds are so applied to the purchase of New Series units, distribute to
each Unit Holder all Units so purchased and held on his behalf and provide a
report to each Unit Holder showing the total number of New Series units credited
to him and the sales charge included in the price for New Series units.
ARTICLE II
Distribution between Agent and Unit Holders
SECTION 2.01. Cash Distributions: (a) Upon receipt of any cash
distributed from the Principal and Income Accounts or as a result of the sale of
Securities as provided in Section 1.01 and 1.02 hereof, the Agent shall deposit
such cash in an account entitled United States Trust Company of New York, as
Agent pursuant to the Distribution Agency Agreement dated April 25, 1995 or
other similar title (the "Agency Account"). All distributions to be made
pursuant to this Agreement shall be made from such account.
(b) Cash to be distributed to the Trustee for its own account
as provided in Section 1.01 hereof shall be distributed by means of interaccount
transfer or by such other method as the Trustee and Agent may approve.
(c) Cash to be distributed to Unit Holders shall be
distributed by the Agent to such Holders in the manner generally used by the
Trustee for cash Income Distributions made to Unit Holders.
SECTION 2.02. Extraordinary Distributions: If the Trustee
should at any time receive Securities or other property that it is required to
dispose of pursuant to the
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Indenture, such disposition shall be made in the same manner as provided in
Section 1.01(b) hereof for the conversion of Securities to cash; provided,
however, that if such other property received is not readily marketable, the
Agent shall consult with the Depositor concerning the method of disposition of
such other property most likely to maximize cash yield and efficiency of time
and convenience. The Depositor's determination of such method of disposition
shall be final and binding and the Agent shall be entitled to rely in good faith
upon such determination. Cash received upon such a disposition shall be
distributed by the Agent to the Unit Holders in the pro-rata portions and the
addresses provided by the Trustee.
SECTION 2.03. Statements and Reports: Any statement or
report required by Section 3.06 of the Indenture to be distributed to Unit
Holders may be distributed by the Agent as provided in said Section 3.06. After
the sale of the last Security as set forth in Section 1.02(b) herein the Agent
shall distribute to a Unit Holder upon the request of such Unit Holder or upon
the request of the Depositor a statement which shall set forth the Securities
received by the Distribution Agent from the Trustee and the proceeds of the
sale of such Securities.
ARTICLE III
Miscellaneous
SECTION 3.01. Fees and Expenses: The Agent shall receive no
fee for its services hereunder; provided, however, that the Trustee may pay the
Agent a fee equal to the costs of the Agent's services hereunder, which costs
shall be allowed the Trustee as a cost of its services as Trustee, but the
Trustee shall not be entitled to be reimbursed by the Trust for any such fee
paid to the Agent to the extent the Trustee would thereby receive a fee greater
than the Trustee's fee set forth in the Indenture. Out-of-pocket expenses
incurred by the Agent (e.g., mailing costs) shall be reimbursed by the Trustee
and shall be treated as expenses of the Trust under the Indenture. The Agent
shall be indemnified and held harmless against any loss or liability accruing
to it without negligence, bad faith or wilful misconduct on its part, arising
out of or in connection with the acceptance or administration of this
Agreement, including the costs and expenses (including counsel fees) of
defending itself against any claim of liability in the premises.
SECTION 3.02. General Matters Relating to Agent: (a) All
moneys deposited with or received by the Agent hereunder shall be held by it
without interest until required to be disbursed in accordance with the
provisions of this Agreement.
(b) The Agent shall be under no liability for any action taken
in good faith in reliance on any appraisal, paper, order, list, demand, request,
consent, affidavit, notice, opinion, direction, evaluation, endorsement,
assignment, resolution, draft or other document provided by the Trustee or the
Depositor, whether or not of the same kind, prima facie properly executed, or
for the disposition of moneys or Securities pursuant to this Agreement; or in
respect of any evaluation which it is required to make or is required or
permitted to have made by others under this Agreement or otherwise, except by
reason of its own wilful misfeasance, bad faith or negligence in the performance
of its duties or by reason of its reckless disregard of its obligations and
duties hereunder. The Agent may construe any of the provisions of this
Agreement, insofar as the same may appear to be ambiguous or inconsistent with
any other provisions hereof which construction shall be binding upon the Unit
Holders and the parties hereto. The Agent shall be under no liability for any
construction of any such provisions hereof.
SECTION 3.03. Resignation, Discharge or Removal of Agent;
Successors: (a) The Agent may resign and be discharged from the duties
created by this Agreement by executing a written resignation as such Agent, and
filing the same with the Trustee and the Depositor. Upon receiving such notice
of resignation, the Depositor shall use its best efforts promptly to appoint a
successor Agent in the manner and meeting the qualifications hereinafter
provided. In case at any time the Agent shall not meet the requirements set
forth in Section 3.04 hereof, or shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or a receiver of such Agent or of its
property shall be appointed, or any public officer shall take charge or control
of such Agent or of any of its property or affairs for the purposes of
rehabilitation, conservation or liquidation or if the Depositor shall determine
in good faith that there has occurred either (1) a material deterioration in
the creditworthiness of the Agent or (2) one or more negligent acts on the part
of the Agent having a materially adverse effect, either singly or in the
aggregate, on
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the Securities and proceeds thereof and interests of the Unit Holders, such that
the replacement of the Agent is in the best interests of the Unit Holders, the
Depositor may remove such Agent and appoint a successor Agent by written
instrument or instruments delivered to the Trustee, the Agent so removed and the
successor.
(b) In case at any time the Agent shall resign and no
successor Agent shall have been appointed within thirty days after notice of
resignation has been received by the Depositor, the Depositor shall serve as
Agent until a qualified successor Agent is appointed.
SECTION 3.04. Qualification of Agent: The Agent and any
successor Agent shall be a banking or trust corporation meeting the
requirements of the Investment Company Act of 1940 for trustees, organized and
doing business under the laws of the United States or any state thereof, having
at all times an aggregate capital, surplus, and undivided profits of not less
than $5,000,000.
SECTION 3.05. Procedure Upon Termination: This Agreement
and the duties created hereby shall terminate upon the disposition of the last
Security and the proceeds of such Security held under the Indenture and this
Distribution Agency Agreement.
SECTION 3.06. Amendment and Waiver: This Agreement may be
amended from time to time by the Depositor, the Trustee and the Agent (a) to
cure any ambiguity or to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provision contained
herein; or (b) to make such other provisions in regard to matters or questions
arising hereunder as shall not materially adversely affect the interests of the
Unit Holders.
SECTION 3.07. New York Law to Govern: The internal laws
of the State of New York shall govern the rights of the parties hereto and the
interpretation of the provisions hereof.
SECTION 3.08. Notices: Any notice, demand, direction or
instruction to be given to the Depositor hereunder shall be in writing and
shall be duly given if mailed or delivered to Prudential Securities
Incorporated, Xxx Xxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other
address as shall be specified by the Depositor to the other parties hereto in
writing. Any notice, demand, direction, or instruction to be given to the
Trustee or Agent shall be in writing and shall be duly given if mailed or
delivered to its office at 000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such
other address as shall be specified to the other parties hereto by the Trustee
or Agent, as the case may be, in writing.
SECTION 3.09. Severability: If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement.
SECTION 3.10. Separate and Distinct Series: Each Trust
established as a Series of the National Equity Trust shall, for all financial
and administrative purposes, be considered separate and distinct from every
other Trust, and the assets of one Trust shall not be commingled with the
assets of another Trust nor shall the expenses of any one Trust be charged
against any other Trust.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first written above.
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PRUDENTIAL SECURITIES INCORPORATED,
Depositor
By: /s/ Xxxxxxx Xxxxxxx
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Xxxxxxx Xxxxxxx
Senior Vice President
Manager - Unit Investment
Trust Department
(SEAL)
ATTEST:
By: /s/ Xxxxxxxx Xxxxxxx
--------------------
Xxxxxxxx Xxxxxxx
Assistant Secretary
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UNITED STATES TRUST COMPANY OF NEW YORK,
TRUSTEE
By: /s/ Xxxx Xxxxxxxxx
------------------
Xxxx Xxxxxxxxx
Assistant Vice President
(SEAL)
ATTEST:
By: /s/ Xxxxx Xxxxx
---------------
Xxxxx Xxxxx
Assistant Secretary
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
I,Ada Xxxx Xxxx, a Notary Public in and for the said County in
the State aforesaid, do hereby certify that Xxxx Xxxxxxxxx and Xxxxx Xxxxx
personally known to me to be the same persons whose names are subscribed to the
foregoing instrument and personally known to me to be an Assistant Vice
President and Assistant Secretary, respectively, of United States Trust Company
of New York, a corporation, appeared before me this day in person, and
acknowledged that they signed, sealed with the corporate seal of United States
Trust Company of New York, and delivered the said instrument as their free and
voluntary act as such Assistant Vice President and Assistant Secretary,
respectively, and as the free and voluntary act of said United States Trust
Company for the uses and purposes therein set forth.
GIVEN, under my hand and notarial seal this 21st day of April,
1995.
/s/ Ada Xxxx Xxxx
Ada Xxxx Xxxx
Notary Public
(SEAL)
