--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NUVEEN UNIT TRUST, SERIES 4
and certain subsequent Series
STANDARD TERMS AND CONDITIONS OF TRUST
DATED: May 29, 1997
BETWEEN
▇▇▇▇ NUVEEN & CO. INCORPORATED
Depositor,
and
THE CHASE MANHATTAN BANK,
Evaluator and Trustee
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
INDEX
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . 1
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Capital Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Capital Distribution Date. . . . . . . . . . . . . . . . . . . . . . . 2
Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Contract Securities. . . . . . . . . . . . . . . . . . . . . . . . . . 6
Deferred Sales Charge. . . . . . . . . . . . . . . . . . . . . . . . . 6
Depositor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Distribution Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Evaluation Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Evaluator. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
In Kind Distribution . . . . . . . . . . . . . . . . . . . . . . . . . 6
Income Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Income Distribution. . . . . . . . . . . . . . . . . . . . . . . . . . 7
Income Distribution Date . . . . . . . . . . . . . . . . . . . . . . . 7
Initial Date of Deposit. . . . . . . . . . . . . . . . . . . . . . . . 7
Mandatory Termination Date . . . . . . . . . . . . . . . . . . . . . . 7
Program Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Record Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Redemption Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Reserve Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Rollover Distribution. . . . . . . . . . . . . . . . . . . . . . . . . 7
Rollover Notification Date . . . . . . . . . . . . . . . . . . . . . . 8
Rollover Unitholder. . . . . . . . . . . . . . . . . . . . . . . . . . 8
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Special Redemption and Liquidation Period . . . . . . . . . . . . . . 8
Trust Indenture and Agreement or Trust Agreement . . . . . . . . . . . 8
Trust Fund or Trust. . . . . . . . . . . . . . . . . . . . . . . . . . 8
Trust Fund Evaluation. . . . . . . . . . . . . . . . . . . . . . . . . 8
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Unitholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Unit Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE II DEPOSIT OF SECURITIES, ACCEPTANCE OF TRUST, ISSUANCE
OF UNITS; FORM OF CERTIFICATES. . . . . . . . . . . 9
Section 2.01. Deposit of Securities . . . . . . . . . . . . . . 9
Section 2.02. Acceptance of Trust . . . . . . . . . . . . . . . 12
Section 2.03. Issuance of Units . . . . . . . . . . . . . . . . 12
Section 2.04. Form of Certificates. . . . . . . . . . . . . . . 13
-i-
ARTICLE III ADMINISTRATION OF FUND. . . . . . . . . . . . . . . 13
Section 3.01. Certain Moneys to be Credited to Income Account . . 13
Section 3.02. Certain Moneys to be Credited to Capital Account. . 13
Section 3.03. Establishment of Reserve Account. . . . . . . . . . 14
Section 3.04. Certain Deductions and Distributions. . . . . . . . 14
Section 3.05. Statements and Reports. . . . . . . . . . . . . . . 17
Section 3.06. Extraordinary Sale of Securities. . . . . . . . . . 19
Section 3.07. Counsel . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.08. Action by Trustee Regarding Securities. . . . . . . 19
Section 3.09. Notice of Change in Capital Account . . . . . . . . 20
Section 3.10. Limited Replacement of Special Securities . . . . . 20
Section 3.11. Compensation of Depositor for Supervisory Services 21
Section 3.12. Deferred Sales Charge . . . . . . . . . . . . . . . 22
Section 3.13. Bookkeeping and Administrative Expenses . . . . . . 23
ARTICLE IV EVALUATION OF SECURITIES; THE EVALUATOR . . . . . . 24
Section 4.01. Evaluation of Securities. . . . . . . . . . . . . . 24
Section 4.02. Certain Information to Be Made Available. . . . . . 25
Section 4.03. Compensation of the Evaluator . . . . . . . . . . . 25
Section 4.04. Liability of the Evaluator. . . . . . . . . . . . . 26
Section 4.05. Resignation, Removal and Other Matters Relating
to the Evaluator . . . . . . . . . . . . . . . . . 26
ARTICLE V TRUST FUND EVALUATION; REDEMPTION OF UNITS. . . . . 27
Section 5.01. Trust Fund Evaluation . . . . . . . . . . . . . . . 27
Section 5.02. Redemption of Units; Sale of Securities . . . . . . 28
Section 5.03. Rollover of Units . . . . . . . . . . . . . . . . . 30
ARTICLE VI ISSUANCE, TRANSFER, INTERCHANGE AND REPLACEMENT OF
CERTIFICATES. . . . . . . . . . . . . . . . . . . . 31
Section 6.01. Issuance of Certificates. . . . . . . . . . . . . . 31
Section 6.02. Transfer of Units; Interchange of Certificates. . . 31
Section 6.03. Replacement of Certificates . . . . . . . . . . . . 32
Section 6.04. Form of Certificate . . . . . . . . . . . . . . . . 33
ARTICLE VII DEPOSITOR . . . . . . . . . . . . . . . . . . . . . 33
Section 7.01. Certain Matters Regarding Succession. . . . . . . . 33
Section 7.02. Liability of Depositor and Indemnification. . . . . 33
ARTICLE VIII TRUSTEE . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.01. General Matters Relating to the Trustee . . . . . . 34
Section 8.02. Books, Records and Reports. . . . . . . . . . . . . 36
-ii-
Section 8.03. Reports to Securities and Exchange Commission and
Others. . . . . . . . . . . . . . . . . . . . . . . 37
Section 8.04. Agreement and List of Securities on File. . . . . . 37
Section 8.05. Compensation of Trustee . . . . . . . . . . . . . . 37
Section 8.06. Resignation, Discharge or Removal of the Trustee;
Successors. . . . . . . . . . . . . . . . . . . . . 38
Section 8.07. Qualification of Trustee. . . . . . . . . . . . . . 39
Section 8.08. Collateral. . . . . . . . . . . . . . . . . . . . . 39
ARTICLE IX TERMINATION . . . . . . . . . . . . . . . . . . . . 40
Section 9.01. Procedure Upon Termination. . . . . . . . . . . . . 40
Section 9.02. Notice to Unitholders . . . . . . . . . . . . . . . 41
Section 9.03. Moneys to be Held in Trust Without Interest . . . . 41
Section 9.04. Dissolution of Depositor Not to Terminate . . . . . 41
ARTICLE X MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . 42
Section 10.01. Amendment and Waiver. . . . . . . . . . . . . . . . 42
Section 10.02. Initial Costs . . . . . . . . . . . . . . . . . . . 42
Section 10.03. Registration (Initial and Current) of Units
and Fund . . . . . . . . . . . . . . . . . . . . . 43
Section 10.04. Certain Matters Relating to Unitholders . . . . . . 43
Section 10.05. New York Law to Govern. . . . . . . . . . . . . . . 44
Section 10.06. Notices . . . . . . . . . . . . . . . . . . . . . . 44
Section 10.07. Severability. . . . . . . . . . . . . . . . . . . . 44
Section 10.08. Separate and Distinct Series. . . . . . . . . . . . 45
Execution . . . . . . . . . . . . . . . . . . . . . . . . . . 46
-iii-
NUVEEN UNIT TRUST, SERIES 4
AND CERTAIN SUBSEQUENT SERIES
STANDARD TERMS AND CONDITIONS OF TRUST
EFFECTIVE MAY 29, 1997
These Standard Terms and Conditions of Trust, Effective May 29, 1997, are
executed between ▇▇▇▇ Nuveen & Co. Incorporated, as Depositor, and The Chase
Manhattan Bank, as Evaluator and Trustee.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor, Evaluator and the Trustee agree as follows:
INTRODUCTION
These Standard Terms and Conditions of Trust shall be applicable to each
Series created on or subsequent to the date hereof of Nuveen Unit Trust for
which The Chase Manhattan Bank acts as Trustee as provided in this paragraph.
For each such series of Nuveen Unit Trust to which these Standard Terms and
Conditions of Trust are to be applicable, the Depositor, Evaluator and the
Trustee shall execute a Trust Indenture and Agreement incorporating by reference
these Standard Terms and Conditions of Trust and designating any exclusion from
or exception to such incorporation by reference for the purposes of that series
or variation of the terms hereof for the purposes of that series and specifying
for that series (i) the name of each Trust Fund and (ii) the Securities
deposited in trust for each Trust Fund.
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
AGREEMENT
These Standard Terms and Conditions of Trust and all amendments and supplements
hereto and thereto.
BUSINESS DAY
Any day other than a Saturday, Sunday, a day on which the New York Stock
Exchange is closed or, with respect to payments or settlements, in the City of
New York, a day on which banking institutions are authorized by law to close.
CAPITAL ACCOUNT
The account created pursuant to Section 3.02.
CAPITAL DISTRIBUTION DATE
The meaning assigned to it in the Prospectus for each respective Trust
under the caption "Income and Capital Account Distribution Dates" appearing in
the "Summary of Essential Financial Information."
CERTIFICATE
Any one of the Certificates manually executed by the Trustee in
substantially the following form with the blanks appropriately filled in:
-2-
No. CERTIFICATE OF OWNERSHIP Units
---- -----
Description of Trust Plan of Distribution
------
CUSIP
-----------------
This is to certify that _______________________________________ is the
owner and registered holder of this Certificate evidencing the ownership of
________________ units of undivided interest in the above-named Trust created
pursuant to the Trust Indenture and Agreement between ▇▇▇▇ Nuveen & Co.
Incorporated and The Chase Manhattan Bank (the "TRUSTEE"), a copy of which is
available at the office of the Trustee. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Indenture to which the
Holder of this Certificate by virtue of the acceptance hereof assents and is
bound, a summary of which Indenture is contained in the Prospectus relating to
the Trust. This Certificate is transferable and interchangeable by the
registered owner in person or by his duly authorized attorney at the Trustee's
office upon surrender of this Certificate properly endorsed or accompanied by a
written instrument of transfer and any other documents that the Trustee may
require for transfer, in form satisfactory to the Trustee and payment of the
fees and expense provided in the Indenture.
-3-
IN WITNESS WHEREOF, ▇▇▇▇ Nuveen & Co. Incorporated has caused this
Certificate to be executed in facsimile by its Chairman of the Board and The
Chase Manhattan Bank, as Trustee, has caused this Certificate to be executed in
facsimile in its corporate name by an authorized officer.
Date:
▇▇▇▇ NUVEEN & CO. INCORPORATED,
Depositor
By
-------------------------------------
THE CHASE MANHATTAN BANK, Trustee
By
-------------------------------------
-4-
FORM OF ASSIGNMENT
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -as tenants in common UNIF GIFT MIN ACT - ____ Custodian _____
TEN ENT -as tenants by the entireties (Cust) (Minor)
JT TEN -as joint tenants with right Under Uniform Gifts to Minors Act
of survivorship and not
as tenants in common
------------------------------
State
Additional abbreviations may also be used though not in the above list.
For Value Received, ________________________________ hereby sell, assign and
transfer ____________ Units represented by this Certificate unto________________
SOCIAL SECURITY OR OTHER IDENTIFYING
NUMBER OF ASSIGNEE MUST BE PROVIDED
---------------------------------------
---------------------------------------
--------------------------------------------------------------------------------
and does hereby irrevocably constitute and appoint
_____________________________________________________, attorney, to transfer
said Units on the books of the Trustee, with full power and substitution in the
premises.
Dated:
------------------------------------------------------
NOTICE: The signature to this assignment must
correspond with the name as written upon the face of
the Certificate in every particular, without alteration
or enlargement or any change whatever.
SIGNATURE(S) GUARANTEED BY
--------------------------------
Firm or Bank
--------------------------------
Authorized Signature
Signatures must be guaranteed by a participant in the
Securities Transfer Agents Medallion Program ("STAMP")
or such other guarantee program in addition to, or in
substitution for, STAMP, as may be accepted by the Trustee.
-5-
CONTRACT SECURITIES
The Securities listed in Schedule A of the Trust Agreement which are to be
acquired by any Trust Fund pursuant to a contract or contracts for the purchase
of such securities which have been assigned to the Trustee along with the
amounts required for their purchase which have been delivered to the Trustee or
Securities which the Depositor has contracted to purchase for any Trust Fund
pursuant to Section 3.10 hereof.
DEFERRED SALES CHARGE
The meaning assigned to it in Section 3.12.
DEPOSITOR
▇▇▇▇ Nuveen & Co. Incorporated or its successors or any successor Depositor
appointed as herein provided.
DISTRIBUTION AGENT
The Chase Manhattan Bank acting in its capacity as distribution agent
pursuant to Section 5.03.
EVALUATION TIME
That time stated in the Prospectus for each respective Trust Fund.
EVALUATOR
The Chase Manhattan Bank or its successors or any successor Evaluator
appointed as herein provided.
FUND
All Trust Funds outstanding under this Agreement.
IN KIND DISTRIBUTION
The meaning assigned to it in Section 5.02.
INCOME ACCOUNT
The account created pursuant to Section 3.01.
-6-
INCOME DISTRIBUTION
The meaning assigned to it in Section 3.04.
INCOME DISTRIBUTION DATE
The meaning assigned to it in the Prospectus for each respective Trust
Fund.
INITIAL DATE OF DEPOSIT
The meaning assigned to it in the Prospectus for each respective Trust Fund
appearing in "Essential Information."
MANDATORY TERMINATION DATE
The meaning assigned to it in the Prospectus for each respective Trust Fund
under the caption "Mandatory Termination Date" appearing in the "Summary of
Essential Financial Information."
PROGRAM AGENT
Program Agent shall mean The Chase Manhattan Bank or its successors, unless
a different Program Agent shall be designated by the Trust Agreement for a
particular Trust Fund.
RECORD DATE
The meaning assigned to it in the Prospectus for each respective Trust
Fund.
REDEMPTION DATE
The meaning assigned to it in Section 5.02.
REDEMPTION PRICE
The meaning assigned to it in Section 5.02.
RESERVE ACCOUNT
The account created pursuant to Section 3.03.
ROLLOVER DISTRIBUTION
The meaning assigned to it in Section 5.03.
-7-
ROLLOVER NOTIFICATION DATE
The meaning assigned to it in the Prospectus for each respective Trust Fund
under the caption "Rollover Notification Date" appearing in "Essential
Information."
ROLLOVER UNITHOLDER
The meaning assigned to it in Section 5.03.
SECURITIES
The equity securities, including Contract Securities listed in Schedule A
to the Trust Agreement or other securities deposited in the Trust Fund pursuant
to Section 2.01(b) and any obligations received in exchange or substitution for
such securities pursuant to Sections 3.08 or 3.10 hereof, as may from time to
time continue to be held as a part of any Trust Fund.
SPECIAL REDEMPTION AND LIQUIDATION PERIOD
The meaning assigned to it in the Prospectus for each respective Trust Fund
under the caption "Special Redemption and Liquidation Period" appearing in
"Essential Information."
TRUST INDENTURE AND AGREEMENT OR TRUST AGREEMENT
The Trust Indenture and Agreement for the particular series of Nuveen Unit
Trust into which these Standard Terms and Conditions of Trust are incorporated.
TRUST FUND OR TRUST
Any one of the separate trusts created by this Agreement and a Trust
Agreement which shall consist of the Securities and all undistributed dividends
or other amounts received thereon and any undistributed cash held in the Capital
and Income Accounts or otherwise realized from the sale, liquidation or exchange
thereof, exclusive of any amounts which may be on deposit in the Reserve
Account.
TRUST FUND EVALUATION
The meaning assigned to it in Section 5.01.
TRUSTEE
The Chase Manhattan Bank or its successors or any successor Trustee
appointed as herein provided.
-8-
UNIT
The fractional undivided interest in and ownership of an individual Trust
Fund equal initially to the fraction specified in the Prospectus for each
respective Trust Fund under the caption "Fractional Undivided Interest per Unit"
appearing in "Essential Information," the denominator of which fraction shall
be (1) increased by the number of any additional Units issued pursuant to
Section 2.03 hereof and (2) decreased by the number of any such Units redeemed
as provided in Section 5.02. Whenever reference is made herein to the
"interest" of a Unitholder in the Trust Fund or in the Income or Capital
Accounts, it shall mean such fractional undivided interest represented by the
number of Units, whether or not evidenced by a Certificate or Certificates,
held of record by such Unitholder in such Trust Fund.
UNITHOLDER
The holder of any Unit as recorded on the books of the Trustee, his legal
representatives and heirs and the successors of any corporation, partnership or
other legal entity which is a holder of any Unit.
UNIT VALUE
The value of the fractional undivided interest in and ownership of any
individual Trust Fund represented by each Unit as determined by a Trust Fund
Evaluation.
Words importing a singular number shall include the plural number in each
case and vice versa, except as the context herein may clearly indicate
otherwise and words importing persons shall include corporations, partnerships
and associations, as well as natural persons. The words "herein," "hereby,"
"herewith," "heretofore," and other singular words or phrases or references and
associations shall refer to the Agreement in its entirety.
ARTICLE II
DEPOSIT OF SECURITIES, ACCEPTANCE OF TRUST, ISSUANCE OF UNITS; FORM
OF CERTIFICATES
SECTION 2.01. DEPOSIT OF SECURITIES. (a) The Depositor, concurrently
with the execution and delivery hereof, hereby grants and conveys all of its
right, title and interest in and to and hereby conveys to and deposits with the
Trustee in an irrevocable Trust the Securities and confirmations of contracts to
purchase Securities, including Contract Securities, listed in Schedule A to the
Trust Agreement 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 for the benefit of each Unitholder to
the extent of such Unitholder's interest in the Trust Fund. The Depositor
hereby also delivers to the Trustee a certified check or checks, cash or cash
equivalents or an irrevocable letter or letters of credit issued by a
commercial bank or banks in an amount necessary to consummate the purchase of
any Securities or Contract Securities. In the event
-9-
any Securities have not been delivered to the Trustee on or before the close of
business of the Trustee on the day before the date of expiration of any letter
or letters of credit, the Trustee is hereby directed to draw on such letter or
letters of credit unless the Depositor has either extended or replaced such
letter or letters on or before such close of business.
(b) (1) From time to time following the Initial Date of Deposit for a
Trust, the Depositor is hereby authorized, in its discretion, to assign, convey
to and deposit with the Trustee (i) additional Securities for such Trust, duly
endorsed in blank or accompanied by all necessary instruments of assignment and
transfer in proper form, or (ii) Contract Securities relating to such additional
Securities, accompanied by cash and/or Letter(s) of Credit as specified in
paragraph (c) of this Section 2.01. In lieu of additional Securities or
Contract Securities, the Depositor may deposit with the Trustee cash (or a
Letter of Credit) in an amount equal to the valuation made in accordance with
Section 4.01 for the date of such deposit of the additional Securities not
delivered or represented by Contract Securities together with instructions to
purchase such additional Securities specifying the purchase price or price
range and containing such information as the Trustee may require to settle said
transactions. Except as provided in the following subparagraphs (2), (3) and
(4), the Depositor in each case shall ensure that each deposit of additional
Securities pursuant to this Section shall be, as nearly as is practicable,
equal to the original percentage relationship among the number of shares of
each Security as is specified in the Prospectus for such Trust Fund, adjusted
as hereinafter provided (the "PERCENTAGE RATIO"). The Percentage Ratio shall
be adjusted, as directed by the Depositor, to reflect (1) the deposit of New
Securities, (2) the sale of Securities pursuant to Sections 3.06, 3.08, 3.12,
5.02 or otherwise as provided hereunder, and (3) the occurrence of any stock
dividend, stock splits, receipt of securities under Section 3.08, redemptions,
or similar events. Any brokerage fees related to the purchase of Securities
deposited in the Trust Fund after the Initial Date of Deposit shall be an
expense of such Trust Fund. The Depositor shall deliver the additional
Securities which were not delivered concurrently with the deposit of additional
Securities and which were represented by Contract Obligations within 10
calendar days after such deposit of additional Securities (the "ADDITIONAL
SECURITIES DELIVERY PERIOD"). If a contract to buy such Securities between the
Depositor and seller is terminated by the seller thereof for any reason beyond
the control of the Depositor or if for any other reason such Securities are not
delivered to the Trust by the end of the Additional Securities Delivery Period
for such deposit, the Trustee shall immediately draw on the Letter of Credit,
if any, in amounts sufficient to settle such contract, apply the monies in
accordance with Section 2.01(d), and the Depositor shall forthwith take the
remedial action specified in Section 3.10. If the Depositor does not take the
action specified in Section 3.10 within 10 calendar days of the end of the
Additional Securities Delivery Period, the Trustee shall forthwith take the
action specified in Section 3.10. When requested by the Trustee, the Depositor
shall arrange for the execution of purchases in accordance with such
instructions; the Depositor shall be entitled to compensation therefor in
accordance with applicable law and regulations. The Trustee shall have no
liability for any loss or depreciation resulting from any purchase made
pursuant to the Depositor's instructions or made by the Depositor as broker.
(2) Additional Securities (or Contract Securities therefor) may, at the
Depositor's discretion, be deposited or purchased in round lots. If the amount
of the deposit is
-10-
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 Percentage Ratio.
(3) If at the time of a deposit of additional Securities, Securities of an
issue deposited on the Initial Date of Deposit (or of an issue of Replacement
Securities acquired to replace an issue deposited on the Initial Date of
Deposit) are unavailable, cannot be purchased at reasonable prices or their
purchase is prohibited or restricted by applicable law, regulation or policies,
the Depositor may (i) deposit, or instruct the Trustee to purchase, in lieu
thereof, another issue of Securities or Replacement Securities or (ii) deposit
cash or a letter of credit in an amount equal to the valuation of the issue of
Securities whose acquisition is not feasible with instructions to acquire such
Securities of such issue when they become available.
(4) Any contrary authorization in the preceding subparagraphs (1) through
(3) notwithstanding, deposits of additional Securities made after the 90-day
period immediately following the Initial Date of Deposit (except for deposits
made to replace failed Contract Securities ("SPECIAL 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 Percentage Ratio existing
immediately prior to such deposit.
(5) In connection with and at the time of any deposit of additional
Securities pursuant to this Section 2.01(b), the Depositor shall exactly
replicate Cash (as defined below) received or receivable by the Trust as of the
date of such deposit. For purposes of this paragraph, "CASH" means, as to the
Capital Account, cash or other property (other than Securities) on hand in the
Capital Account or receivable and to be credited to the Capital Account as of
the date of the deposit (other than amounts to be distributed solely to persons
other than holders of 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 date of the deposit or receivable by the Trust in respect of a record
date for payment on a Security which has occurred or will occur before the
Trust will be the holder of record of a Security, reduced by (i) the amount of
any cash or other property received or receivable on any Security allocable (in
accordance with the Trustee's calculations of distributions from the Income
Account pursuant to Section 3.05) to a distribution made or to be made in
respect of a Record Date occurring prior to the deposit and (ii) unpaid fees
and expenses allocable to the period prior to the deposit. Such replication
will be made on the basis of a fraction, the numerator of which is the number
of Units created by the deposit and the denominator of which is the number of
Units which are outstanding immediately prior to the deposit.
(c) In connection with the deposits described in Section 2.01(a) and (b),
the Depositor has, in the case of Section 2.01(a) deposits, and, prior to the
Trustee accepting a Section 2.01(b) deposit, will, deposit cash and/or Letter(s)
of Credit in an amount sufficient to purchase the Contract Obligations (the
"PURCHASE AMOUNT") relating to Securities which are not actually delivered to
the Trustee at the time of such deposit, the terms of which unconditionally
allow the Trustee to draw on the full amount of the available Letter of Credit.
The Trustee may allow the Depositor to substitute any Letter(s) of Credit
deposited
-11-
with the Trustee in connection with the deposits described in Section 2.01(a)
and (b) with cash in an amount sufficient to satisfy the obligations to which
the Letter(s) of Credit relates. Any substituted Letter(s) of Credit shall be
released by the Trustee. The Trustee may deposit such cash or cash drawn on
the Letter of Credit in a non-interest bearing account for the Trust.
(d) In the event that the purchase of Securities or Contract Securities
pursuant to any contract shall not be consummated in accordance with said
contract or if the Securities represented by a Contract Obligation are not
delivered to the Trust in accordance with Section 2.01(a) or 2.01(b) and the
monies, or, if applicable, the monies drawn on the Letter of Credit, deposited
by the Depositor are not utilized, and the Depositor does not, on or before the
third Business Day prior to the next following Distribution Date, direct the
Trustee to utilize monies deposited for the purchase of Replacement Securities
or Replacement Contract Securities, the Trustee shall credit to the Capital
Account referred to in Section 3.02 the monies, or, if applicable, the monies
drawn on an irrevocable letter of credit, deposited by the Depositor for the
purpose of such purchase. Such funds shall be distributed pursuant to Section
3.04 to Unitholders of record as of the Record Date next following the failure
of consummation of such purchase. The Depositor shall cause to be refunded to
each Unitholder his pro rata portion of the sales charge levied on the sale of
Units to such Unitholder attributable to such Security or Contract Security.
(e) The Trustee is hereby irrevocably authorized to effect registration or
transfer of the Securities in fully registered form to the name of the Trustee
or to the name of its nominee.
(f) With respect to Units created by the deposit of additional
Securities, annual fees payable hereunder shall be calculated, and estimated
expenses (other than organizational expenses borne by the Trust Fund pursuant
to Section 10.02) shall be estimated, ratably on the basis of the period
during which such Units have been in existence. The Depositor shall from time
to time provide the Trustee estimates of the total number of additional
Securities to be deposited and total number of Units to be created, on which
the Trustee is authorized conclusively to rely for purposes of estimating
income, expenses and the accrual thereof. In the event the Trustee is
informed by the Depositor of a revision in its estimates and upon the
conclusion of the deposit of additional Securities, the Trustee shall base
calculations made thereafter on such revised estimates or actual expenses,
respectively, but any such revision shall not affect calculations made prior
thereto and no adjustment shall be made in respect thereof.
SECTION 2.02. ACCEPTANCE OF TRUST. The Trustee hereby accepts the
trusts herein created, and the Trustee declares that it holds and will hold the
Trust Fund as Trustee, in trust upon the trusts herein set forth, for the use
and benefit of the present and future Unitholders and subject to the terms and
conditions of the Trust Agreement and this Agreement.
SECTION 2.03. ISSUANCE OF UNITS. (a) The Trustee hereby acknowledges
receipt of the deposit of the Securities listed in Schedule A to the Trust
Agreement and referred to in Section 2.01 hereof and, simultaneously with the
receipt of said deposit, has recorded on its books the ownership, by the
Depositor or such other person or persons as may be indicated by the Depositor,
of the aggregate number of Units specified in the Trust Agreement. The number
of Units may be increased through a split of the Units or decreased through a
reverse split thereof, as directed in writing by the Depositor, at any time
when the Depositor is the only beneficial holder of Units, which revised number
of Units shall be recorded by the Trustee on its books. The Trustee shall be
entitled to rely on the Depositor's direction as certification that no person
other than the Depositor has a beneficial interest in the Units and
-12-
the Trustee shall have no liability to any person for action taken pursuant to
such direction. The Trustee hereby agrees that on the date of any deposit of
additional Securities, it shall acknowledge that the additional Securities have
been deposited with it by recording on its books the ownership, by the
Depositor or such other person or persons as may be indicated by the Depositor,
of the aggregate number of Units to be issued in respect of such additional
Securities so deposited.
(b) Units will be held in uncertificated form unless the Trust Fund
Prospectus provides otherwise. Under the terms and conditions of the Trust
Agreement and this Agreement and at such times as are permitted by the Trustee,
Units may also be held in certificated form. Unitholders may elect to have
their Units held in certificated form by making a written request to the
Trustee requesting Units be held in certificated form. The Trustee is entitled
to specify the minimum denomination of any Certificate issued. The Trustee
shall, at the request of the holder of any Units held in uncertificated form,
issue a new Certificate to evidence such Units and at such time make an
appropriate notation in the registration books of the Trustee. The rights set
forth in this Agreement of any holder of Units held in certificated form shall
be the same as those of any other Unitholder. Certificates may be transferred
as provided in Article VI.
SECTION 2.04. FORM OF CERTIFICATES. Each Certificate referred to in
Section 2.03 is, and each Certificate hereafter issued shall be, in
substantially the form hereinabove recited, numbered serially for
identification, in fully registered form, transferable on the books of the
Trustee as herein provided, executed manually by an authorized signature of the
Trustee and by a facsimile signature of an Authorized Officer of the Depositor
and dated the date of execution and delivery by the Trustee.
ARTICLE III
ADMINISTRATION OF FUND
SECTION 3.01. CERTAIN MONEYS TO BE CREDITED TO INCOME ACCOUNT. The
Trustee shall collect any dividends or other like cash distributions on the
Securities in each Trust as such becomes payable (including all monies
representing penalties for the failure to make timely payments on the
Securities, or as liquidated damages for default or breach of any condition or
term of the Securities or of the underlying instrument relating to any
Securities and other income attributable to a Special Security for which no New
Security has been obtained pursuant to Section 3.10 hereof) and credit such
income to a separate account for each Trust to be known as the "INCOME ACCOUNT."
Any non-cash distributions (other than a non-taxable distribution of the
shares of the distributing corporations which shall be retained by a Trust)
received by a Trust shall be dealt with in the manner described at Section
3.08, herein, and shall be retained or disposed of by such Trust according to
those provisions. The proceeds of any disposition shall be credited to the
Income Account of a Trust. Neither the Trustee nor the Depositor shall be
liable or responsible in any way for depreciation or loss incurred by reason of
any such sale.
-13-
SECTION 3.02. CERTAIN MONEYS TO BE CREDITED TO CAPITAL ACCOUNT. (a) With
respect to each Trust Fund all moneys (except moneys held by the Trustee
pursuant to subsection (b) hereof) other than amounts credited to the Income
Account received by the Trustee in respect of the Securities under this
Agreement shall be credited to a separate account for each Trust Fund to be
known as the "CAPITAL ACCOUNT."
(b) Moneys and/or irrevocable letters of credit required to purchase
Contract Securities or to purchase Securities pursuant to the Depositor's
written instructions, 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 Capital Account until (i) the Depositor fails to timely
purchase a Contract Security and has not given the Failed Contract Notice (as
defined in Section 3.10) at which time the moneys and/or letters of credit
attributable to the Contract Security not purchased by the Depositor shall be
credited to the Capital Account; or (ii) the Depositor has 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 Capital Account; PROVIDED, HOWEVER, that if the Depositor also notifies the
Trustee in the Failed Contract Notice (or by separate notice delivered
concurrently with or prior to the Failed Contract Notice) that it has purchased
or entered into a contract to purchase a New Security (as defined in Section
3.10), the Trustee shall not credit such moneys and/or letters of credit to the
Capital Account unless the New Security shall also have failed or is not
delivered by the Depositor within two business days after the settlement date of
such New Security, in which event the Trustee shall forthwith credit such moneys
and/or letters of credit to the Capital Account. The Depositor shall in any
case forthwith pay to the Trustee and the Trustee shall credit to the Capital
Account the difference, if any, between the purchase price of the failed
Contract Security and the purchase price of the New Security, together with any
sales charge and distribute such moneys to Unitholders pursuant to Section 3.04.
SECTION 3.03. ESTABLISHMENT OF RESERVE ACCOUNT. From time to time the
Trustee may withdraw from the Income or Capital Accounts of each Trust Fund 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 such Trust Fund or for indemnification or extraordinary expenses
of the Depositor or Trustee pursuant to Section 7.02, 8.01 or 8.05. Such
amounts so withdrawn shall be credited to a separate account for such Trust Fund
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, in its sole discretion, determines that
such amounts are no longer necessary, then it shall promptly deposit such
amounts in the account from which withdrawn, or if such Trust Fund has been
terminated or shall be in the process of termination, the Trustee, upon such
determination, shall distribute to each Unitholder of such Trust Fund such
holder's interest in the Reserve Account in accordance with Section 9.01.
SECTION 3.04. CERTAIN DEDUCTIONS AND DISTRIBUTIONS. (a) On each Record
Date, or at such earlier time as may be specified in the Prospectus, the Trustee
shall separately with respect to each Trust Fund:
-14-
(1) deduct from the Income Account or, to the extent funds are not
available in such Account, from the Capital Account and pay to itself
individually the amounts that it is at the time entitled to receive pursuant
to Section 8.05 on account of its services theretofore performed and
expenses theretofore incurred;
(2) deduct from the Income Account, or, to the extent funds are not
available in such Account, from the Capital Account, and reimburse itself
for any other fees, advances and expenses arising from time to time out of
the Trust operations that the Trustee has paid;
(3) deduct from the Income Account or, to the extent funds are not
available in such Account, from the Capital Account and pay to the
Evaluator the amounts that the Evaluator is at the time entitled to receive
pursuant to Section 4.03 on account of its services theretofore performed
and expenses theretofore incurred;
(4) deduct from the Income Account or, to the extent funds are not
available in such Account, from the Capital Account and pay to counsel an
amount equal to unpaid fees and expenses, if any, of counsel pursuant to
Section 3.07 as certified by the Depositor;
(5) deduct from the Income Account, or, to the extent funds are not
available in such Account, from the Capital Account and pay to the
Depositor the amounts that the Depositor is at the time entitled to receive
pursuant to Section 3.11 on account of its services theretofore performed
and expenses theretofore incurred; and
(6) deduct from the Income Account or, to the extent funds are not
available in such Account, from the Capital Account and pay to the
Depositor the amount that it is entitled to receive pursuant to Section
3.13.
(b) The Trustee shall for each Trust Fund as of the close of business on
the applicable Record Date compute the amount of the income distribution per
Unit for the next Income Distribution Date (each such amount being herein called
the "INCOME DISTRIBUTION") (i) by deducting from the amount actually received
with respect to dividends on the Securities in the Trust Fund during the period
from the Record Date preceding such Record Date (or the Initial Date of Deposit
if such Record Date is the first Record Date) to and including such Record Date
the total of (x) the amounts to be deducted from the Income Account of such
Trust Fund as of such Record Date pursuant to the foregoing provisions of
Section 3.04(a) and (y) the Trustee's estimate of other expenses properly
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 the
calculation performed pursuant to the immediately preceding clause by the number
of Units outstanding on the applicable Record Date. On or shortly after each
Income Distribution Date, the Trustee shall distribute with respect to each
Unitholder of the Trust Fund of record at the close of business on the preceding
Record Date an amount substantially equal to the Income Distribution computed as
of such Record Date.
-15-
To the extent that moneys in the Capital Account have not been previously
used to pay for the redemption of Units tendered to a Trust Fund, on the Capital
Distribution Dates each Unitholder shall receive such holder's pro rata share of
the cash balance of the Capital Account of the Trust Fund computed as of the
close of business on the preceding Record Date for such Capital Distribution
Date by (i) deducting from such cash balance the total of (X) cash required to
cover contracts to purchase Securities, (Y) cash required for the redemption of
unredeemed tendered Units and (Z) the sum of the amounts to be deducted from the
Capital Account as of each such Record Date pursuant to the foregoing provisions
of Section 3.04(a) and (ii) dividing the amount so obtained by the number of
Units outstanding on the Record Date immediately preceding such Capital
Distribution Date.
In making the computation of any Unitholder's interest in the balance of
the Income and Capital Accounts, fractions of less than one cent per Unit shall
be omitted. In addition, the Trustee in its discretion may on any Distribution
Date determine that the amount to be distributed to Unitholders should be more
or less than the amount of the applicable Income or Capital Distribution per
Unit because of any unusual or extraordinary increase or decrease in the
expenses incurred or expected to be incurred by such Trust Fund. The Trustee
shall not be obligated to make a distribution from the Capital Account if the
amount available for such distribution is less than $1.00 per 100 Units. When
directed by the Depositor, the Trustee shall invest funds held in the Capital or
Income Accounts, pending distribution, in money market mutual funds or U.S.
Treasury obligations which mature on or before the next applicable distribution
date. Any obligations so acquired must be held until they mature and proceeds
therefrom may not be reinvested.
(c) If the Depositor fails to replace any failed Special Security (as
defined in Section 3.10), the Trustee shall distribute to all Unitholders the
moneys originally deposited with respect to such Special Security and, to the
extent supplied by the Depositor, the sales charge attributable to such Special
Security not more than 30 days after the expiration of the Purchase Period (as
defined in Section 3.10). If any contract for a New Security in replacement of
a Special Security shall fail, the Trustee shall distribute the moneys
originally deposited with respect to such Special Security and, to the extent
provided by the Depositor, the sales charge attributable to the Special Security
to the Unitholders not more than 30 days after the date on which the contract in
respect of such New Security failed. If at the end of the Purchase Period less
than all moneys attributable to a failed Special Security have been applied or
allocated by the Trustee pursuant to a contract to purchase New Securities, the
Trustee shall distribute the remaining moneys (i) to Unitholders not more than
30 days after the end of the Purchase Period to the extent the failed Special
Security has not been fully replaced by New Securities or (ii) to the Depositor
to the extent moneys remain after the purchase of the New Securities, if any,
and the distribution referred to in clause (i).
(d) Except as provided below, all distributions shall be made by first
class mail to each Unitholder of record at the close of business on the
preceding applicable Record Date at the address of such holder appearing on the
registration books of the Trustee PROVIDED, HOWEVER, that the Trustee shall if
so directed with respect to distributions from the Income and/or Capital Account
at the time of purchase of Units or thereafter in writing signed by the
Unitholder and timely received, make such distributions to the Program Agent. A
-16-
Unitholder's written notice must be received by the Program Agent at least ten
days prior to the Record Date for the next Income Distribution in order to be in
effect for such Income Distribution. All such notices shall remain in effect
until a subsequent notice is received by the Program Agent. Upon receipt of any
such distribution the Program Agent shall, if the respective Trust Prospectus so
provides, either (1) reinvest such Unitholder's distribution from the Income
and/or Capital Accounts in Units of the Trust, purchased from the Depositor, to
the extent the Depositor shall make Units available for such purchase, at the
Depositor's offering price as of the third business day prior to the following
Distribution Date, and at such reduced sales charge as may be described in the
Prospectus for the Trusts or (2) purchase shares (or fractions thereof) in the
applicable reinvestment fund as directed by the Unitholder. If, for any reason,
the Depositor does not have Units of the Trust available for purchase, the
Trustee shall distribute such Unitholder's distributions from the Income and/or
Capital Accounts in the manner provided in the first sentence of this Section
3.04(d). The Program Agent shall not be liable to any Unitholder for any action
taken with respect to its duties and responsibilities as Program Agent; or for
any failure to make such reinvestment in the event the Depositor does not make
Units available for purchase PROVIDED, HOWEVER, that this provision shall not
protect the Program Agent against liability to which it would otherwise be
subject by reason of wilful 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.
(e) Except as provided by the preceding paragraph, Unitholders of record
on the registration books of the Trustee at the close of business on the Record
Date prior to each Distribution Date, shall be entitled to the distribution in
respect of such Distribution Date, and, except as provided in Article VIII, no
liability shall attach to the Trustee by reason of payment to or on the order of
any such Unitholder of record. Nothing herein shall be construed to prevent the
payment of distributions from the Income and Capital Accounts to any such
Unitholder by means of one check, draft or other proper instrument.
SECTION 3.05. STATEMENTS AND REPORTS. With each distribution from the
Income or Capital Accounts of each Trust Fund the Trustee shall set forth,
either in the instrument by means of which payment of such distribution is made
or in an accompanying statement, the amount being distributed from each such
account expressed as a dollar amount per Unit of such Trust Fund. If the
distribution is an In Kind Distribution, the Trustee shall provide a list of the
Securities being distributed, the aggregate number of shares of each Security
being distributed and any cash representing fractional shares being
distributed.; 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 of any individual Trust Fund a
statement for such Trust Fund setting forth with respect to such calendar year:
(A) as to the Income Account:
(1) the amount of dividends received on the Securities;
-17-
(2) the amounts paid for purchases of New Securities pursuant to
Section 3.10 and for redemptions pursuant to Section 5.02;
(3) the deductions for applicable taxes and fees and expenses of
the Trust;
(4) the reservations made by the Trustee pursuant to Section
3.03, if any; and
(5) the balance remaining after such distributions, deductions
and reservations 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 Capital Account:
(1) the dates of sale or liquidation of any of the Securities
and the net proceeds received therefrom (excluding any portion thereof
credited to the Income Account);
(2) the results of In Kind Distributions in connection with
redemptions of Units, if any;
(3) the amounts paid for purchases of New Securities pursuant to
Section 3.10 and for redemptions pursuant to Section 5.02;
(4) the deductions for payment of applicable taxes and fees and
expenses of the Trust;
(5) the reservations made by the Trustee pursuant to Section
3.03, if any; and
(6) the balance remaining after such distributions, deductions
and reservations, 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 the Securities 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 Unit Value based on the Trust Fund Evaluations made on
the last day of December (or the last business day prior thereto) of
such calendar year; and
-18-
(4) the amounts actually distributed to Unitholders during such
calendar year from the Income and Capital Accounts, separately stated,
expressed both as total dollar amounts and as dollar amounts per Unit
outstanding on the Record Dates for such distributions.
SECTION 3.06. EXTRAORDINARY SALE OF SECURITIES. The Depositor by written
notice may direct the Trustee to sell Securities at such price and time and in
such manner as shall be deemed appropriate by the Depositor if the Depositor
shall have determined that any one or more of the following conditions exist:
(a) that there has been a default in the payment of principal of or
interest on any outstanding debt obligations of the issuer of such
Securities; or
(b) that the price of any such Security has declined to such an
extent, as a result of adverse issuer credit factors, so that in the
opinion of the Depositor the retention of such Securities would be
detrimental to the interest of the Unitholders.
Upon receipt of such direction from the Depositor, the Trustee shall
proceed to sell the specified Securities. The Trustee shall not be liable or
responsible in any way for depreciation or loss incurred by reason of any sale
made pursuant to any such direction or by reason of the failure of the Depositor
to give any such direction, and in the absence of such direction the Trustee
shall have no duty to sell any Securities under this Section 3.06. The
Depositor shall not be liable for errors of judgment in directing or failing to
direct the Trustee pursuant to this Section 3.06. This provision, however,
shall not protect the Trustee or Depositor against any liability for which they
would otherwise be subject, respectively, by reason of wilful 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.
SECTION 3.07. COUNSEL. The Depositor may employ from time to time counsel
to act on behalf of any Trust Fund for any legal services in connection with the
Securities, and any legal matters relating to the possible disposition of any
Securities pursuant to any provisions hereof. The fees and expenses of such
counsel shall be paid by the Trustee as provided in Section 3.04(a)(3) hereof.
SECTION 3.08. ACTION BY TRUSTEE REGARDING SECURITIES. 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 the Securities the Trustee shall promptly
notify the Depositor and shall thereupon take such action or refrain from taking
any action as the Depositor shall in writing direct; PROVIDED, HOWEVER, that if
the Depositor shall not within five business days of the giving of such notice
to the Depositor direct the Trustee to take or refrain from taking any action,
the Trustee shall take such action as it, in its sole discretion, shall deem
advisable. In connection with any solicitation of proxies by management of any
of the Securities in the Trust Fund, if the Depositor fails to instruct the
Trustee how to vote such proxy, the Trustee shall vote with the recommendation
of such management. Except as provided in Article VII and Article VIII, neither
the Depositor nor the Trustee shall be liable to any person for any action or
failure to take action with respect to this Section 3.08.
-19-
In the event that an offer by the issuer of any of the Securities or any
other party shall be made to issue new securities, or to exchange securities,
for Trust Securities, the Trustee shall reject such offer. However, should any
issuance, exchange or substitution be effected notwithstanding such rejection or
without an initial offer, any securities, cash and/or property received shall be
promptly sold, if securities or property, by the Trustee pursuant to the
Depositor's direction, unless the Depositor advises the Trustee to keep 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 3.04(b) regarding distributions from the
Capital Account. Except as provided in Article VIII, the Trustee shall not be
liable or responsible in any way for depreciation or loss incurred by reason of
any such sale.
Any non-cash distributions (other than a non-taxable distribution of the
shares of the distributing corporation which shall be retained by a Trust)
received by a Trust shall be dealt with in the manner described above and shall
be retained or disposed of according to such provisions.
Neither the Depositor nor the Trustee shall be liable to any person for any
action or failure to take action pursuant to the terms of this Section 3.08.
Whenever new securities or property is received and retained by a Trust
Fund pursuant to this Section 3.08, the Trustee shall, within a reasonable
amount of time thereafter, mail to all Unitholders of such Trust Fund notices of
such acquisition unless legal counsel for such Trust Fund determines that such
notice is not required by The Investment Company Act of 1940, as amended.
SECTION 3.09. NOTICE OF CHANGE IN CAPITAL ACCOUNT. The Trustee shall give
prompt written notice to the Depositor and the Evaluator of all amounts credited
to or withdrawn from the Capital Account of any Trust Fund pursuant to any of
the provisions of this Article III and the balance in such Account after giving
effect to the credit or withdrawal.
SECTION 3.10. LIMITED REPLACEMENT OF SPECIAL SECURITIES. If any contract
in respect of Contract Securities other than a contract to purchase a New
Security (as defined below), including those purchased on a delayed delivery
basis, shall have failed due to any occurrence, act or event beyond the control
of the Depositor or the Trustee (such failed Contract Securities being herein
called the "SPECIAL SECURITIES"), the Depositor shall notify the Trustee (such
notice being herein called the "FAILED CONTRACT NOTICE") of its inability to
deliver the failed Special Security to the Trustee after it is notified that the
Special Security will not be delivered by the seller thereof to the Depositor.
Prior to, or simultaneously with, giving the Trustee the Failed Contract Notice,
or within a maximum of 20 days after giving such Failed Contract Notice (such 20
day period being herein called the "PURCHASE PERIOD"), the Depositor shall, if
possible, purchase, or enter into a contract to purchase, an obligation to be
held as a Security hereunder (herein called the "NEW SECURITY") as part of the
Trust Fund in replacement of the failed Special Security, subject to the
satisfaction of all of the following conditions in the case of each purchase or
contract to purchase:
-20-
(a) The New Securities shall be equity securities and shall, in
the opinion of the Depositor, be of the same general quality as those
Securities originally deposited.
(b) The purchase price of the New Securities shall not exceed the
amount of funds reserved for the purchase of the Special Securities.
(c) The Depositor shall furnish a notice to the Trustee (which may be
part of the Failed Contract Notice) in respect of the New Security
purchased or to be purchased that shall (i) identify the New Securities,
(ii) state that the contract to purchase, if any, entered into by the
Depositor is satisfactory in form and substance and (iii) state that the
foregoing conditions of clauses (a) and (b) have been satisfied with
respect to the New Securities.
Upon satisfaction of the foregoing conditions with respect to any New
Security, the Trustee shall pay the purchase price for the New Security from the
amount of funds reserved for the purchase of the Special Securities or, if the
Trustee has credited any moneys and/or letters of credit attributable to the
failed Special Security to the Capital Account, the Trustee shall pay the
purchase price of the New Security upon directions from the Depositor from the
moneys and/or letters of credit so credited to the Capital Account. If the
Trustee has credited moneys of the Depositor to the Capital Account, the Trustee
shall forthwith return to the Depositor the portion of such moneys that is not
properly distributable to Unitholders pursuant to Section 3.04.
Whenever a New Security is acquired by the Depositor pursuant to the
provisions of this Section 3.10, the Trustee shall, within five days thereafter,
mail to all Unitholders notices of such acquisition, including an identification
of the failed Special Securities and the New Securities acquired. The purchase
price of the New Securities shall be paid out of the funds reserved for the
purchase of the failed Special Securities. Except as provided in Article VIII,
the Trustee shall not be liable or responsible in any way for depreciation or
loss incurred by reason of any purchase made pursuant to any such directions and
in the absence of such directions the Trustee shall have no duty to purchase any
New Securities under this Agreement. The Depositor shall not be liable for any
failure to instruct the Trustee to purchase any New Securities or for errors of
judgment in respect of this Section 3.10; PROVIDED, HOWEVER, that this provision
shall not protect the Depositor against any liability to which it would
otherwise be subject by reason of 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.
SECTION 3.11. COMPENSATION OF DEPOSITOR FOR SUPERVISORY SERVICES. As
compensation for providing supervisory portfolio services under this Agreement,
the Depositor shall receive at the time specified in Section 3.04, against a
statement or statements therefor submitted to the Trustee, an aggregate annual
fee if so provided and in the amount specified as compensation for the Depositor
in the Prospectus, calculated on the basis of the largest number of Units
outstanding during the period in respect of which such compensation is paid, but
in no event shall such compensation when combined with all compensation received
from other series of the Fund or other unit investment trusts sponsored by the
Depositor or
-21-
its affiliates for providing such supervisory services in any calendar year
exceed the aggregate cost to the Depositor for providing such services. The
rate of such compensation may be increased by the Depositor from time to time,
without the consent or approval of any Unitholder or the Trustee, by amounts not
exceeding the proportionate increase, during the period from the date of the
Trust Agreement to the date of any such increase, in consumer prices as last
published prior to each such date under the classification "All Services Less
Rent of Shelter" in the Consumer Price Index For All Urban Consumers (CPI-U)
U.S. City Average, not seasonally adjusted, base 1982 - 84 = 100, published by
the United States Department of Labor. In the event that such classification
ceases to incorporate a significant number of items, or if a substantial change
is made in the method of establishing such classification, then the
classification shall be adjusted in a fair and reasonable manner to the figure
that would have resulted had no substantial change occurred in the manner of
computing such classification. In the event that such classification (or a
successor or substitute index) is not available, such governmental or other
service or publication as shall evaluate the information in substantially the
same manner as the aforesaid classification, shall be used in lieu thereof.
Such compensation shall be charged by the Trustee, upon receipt of invoice
therefor from the Depositor, against the Income and Capital Accounts on or
before the Distribution Date on which such period terminates. If the cash
balance in the Income and Capital Accounts shall be insufficient to provide for
amounts payable pursuant to this Section 3.11, the Trustee shall have the power
to sell (i) Securities from the current list of Securities designated to be sold
pursuant to Section 5.02 hereof, or (ii) if no such Securities have been so
designated, such Securities as the Trustee may see fit to sell in its own
discretion, and to apply the proceeds of any such sale in payment of the amounts
payable pursuant to this Section 3.11. Any moneys payable to the Depositor
pursuant to this Section 3.11 shall be secured by a prior lien on the Trust Fund
except that such lien shall be junior and subordinate to any lien in favor of
the Trustee under the provisions of Section 8.08 and of the Evaluator under the
provisions of Section 4.03.
SECTION 3.12. DEFERRED SALES CHARGE. If the Prospectus related to the
Trust specifies a deferred sales charge, the Trustee shall, on the dates
specified in and as permitted by such Prospectus (the "DEFERRED SALES CHARGE
PAYMENT DATES"), withdraw from the Capital Account, an amount per Unit specified
in such Prospectus and credit such amount to a special non-Trust account
designated by the Depositor out of which the deferred sales charge will be
distributed to or on the order of the Depositor on such Deferred Sales Charge
Payment Dates (the "DEFERRED SALES CHARGE ACCOUNT"). If the balance in the
Capital Account is insufficient to make such withdrawal, the Trustee shall, as
directed by the Depositor, advance funds in an amount required to fund the
proposed withdrawal and be entitled to reimbursement of such advance upon the
deposit of additional monies in the Capital Account, and/or sell Securities and
credit the proceeds thereof to the Deferred Sales Charge Account, PROVIDED,
HOWEVER, that the aggregate amount advanced by the Trustee at any time for
payment of the deferred sales charge shall not exceed $15,000. Such direction
shall, if the Trustee is directed to sell a Security, identify the Security to
be sold and include instructions as to the execution of such sale. In the
absence of such direction by the Depositor, the Trustee shall sell Securities
sufficient to pay the deferred sales charge (and any unreimbursed advance then
outstanding) in full, and shall select Securities to be sold in such manner as
will maintain (to the extent practicable) the relative proportion of number of
-22-
shares of each Security then held. The proceeds of such sales, less any amounts
paid to the Trustee in reimbursement of its advances, shall be credited to the
Deferred Sales Charge Account. If a Unitholder redeems Units prior to full
payment of the deferred sales charge, the Trustee shall, if so provided in the
related Prospectus, on the Redemption Date, withhold from the Redemption Price
payable to such Unitholder an amount equal to the unpaid portion of the deferred
sales charge and distribute such amount to the Deferred Sales Charge Account.
If the Trust is terminated for reasons other than that set forth in Section
8.01(g)(ii), the Trustee shall, if so provided in the related Prospectus, on the
termination of the Trust, withhold from the proceeds payable to Unitholders an
amount equal to the unpaid portion of the deferred sales charge and distribute
such amount to the Deferred Sales Charge Account. If the Trust is terminated
pursuant to Section 8.01(g)(ii), the Trustee shall not withhold from the
proceeds payable to Unitholders any amounts of unpaid deferred sales charges.
If pursuant to Section 5.02 hereof, the Depositor shall purchase a Unit tendered
for redemption prior to the payment in full of the deferred sales charge due on
the tendered Unit, the Depositor shall pay to the Unitholder the amount
specified under Section 5.02 less the unpaid portion of the deferred sales
charge. All advances made by the Trustee pursuant to this Section shall be
secured by a lien on the Trust prior to the interest of the Unitholders.
SECTION 3.13. BOOKKEEPING AND ADMINISTRATIVE EXPENSES;. If so provided in
the Prospectus, as compensation for providing bookkeeping and other
administrative services of a character described in Section 26(a)(2)(C) of the
Investment Company Act of 1940 to the extent such services are in addition to,
and do not duplicate, the services to be provided hereunder by the Trustee or
the Depositor for providing supervisory services, the Depositor shall receive at
the times specified in Section 3.04, against a statement or statements therefor
submitted to the Trustee an aggregate annual fee in an amount which shall not
exceed that amount set forth in the Prospectus times the largest number of Units
outstanding during the period in respect of which the compensation is paid (such
annual fee to be pro rated for any calendar year in which the Depositor provides
service during less than the whole of such year), but in no event shall such
compensation, when combined with all compensation received from other series of
the Fund or other unit investment trusts sponsored by the Depositor or its
affiliates for providing such bookkeeping and administrative services in any
calendar year exceed the aggregate cost to the Depositor for providing such
services to such unit investment trusts. Such compensation may, from time to
time, be adjusted provided that the total adjustment upward does not, at the
time of such adjustment, exceed the percentage of the total increase, during the
period from the Trust Agreement to the date of any such increase, in consumer
prices for services as measured by the United States Department of Labor
Consumer Price Index entitled "All Services Less Rent of Shelter" or similar
index as described under Section 3.11. The consent or concurrence of any
Unitholder hereunder shall not be required for any such adjustment or increase.
Such compensations shall be paid by the Trustee, upon receipt of invoice
therefor from the Depositor, upon which, as to the cost incurred by the
Depositor of providing services hereunder the Trustee may rely, and shall be
charged against the Income and Capital Accounts on or before the Distribution
Date following the Record Date on which such period terminates. The Trustee
shall have no liability to any Unitholder or other person for any payment made
in good faith pursuant to this Section.
-23-
If the cash balance in the Income and Capital Accounts shall be
insufficient to provide for amounts payable pursuant to this Section 3.13, the
Trustee shall have the power to sell (i) Securities from the current list of
Securities designated to be sold pursuant to Section 5.02 hereof, or (ii) if no
such Securities have been so designated, such Securities as the Trustee may see
fit to sell in its own discretion, and to apply the proceeds of any such sale in
payment of the amounts payable pursuant to this Section 3.13.
Any moneys payable to the Depositor pursuant to this Section 3.13 shall be
secured by a prior lien on the Trust except that no such lien shall be prior to
any lien in favor of the Trustee under the provisions of Section 8.08 and of the
Evaluator under the provisions of Section 4.03.
ARTICLE IV
EVALUATION OF SECURITIES; THE EVALUATOR
SECTION 4.01. EVALUATION OF SECURITIES. The Evaluator shall determine
separately and promptly furnish to the Trustee and the Depositor upon request
the value of each issue of Securities as of the Evaluation Time as provided in
the following manner:
The Evaluator will prepare each evaluation for which market quotations for
the Securities are available by the use of outside services normally used and
contracted with for this purpose. If the Securities are listed on a national
securities exchange or the NASDAQ National Market System, the evaluation will be
based on the closing sale price on the exchange or system or, if there is no
closing sale price on the exchange or system, at the closing bid price on the
exchange or system. If such market quotations are not available, the Evaluator
shall determine the value of the Securities. Such evaluation shall generally be
based on the current bid prices on the over-the-counter market (unless it is
determined that these prices are inappropriate as a basis for evaluation). If
such prices are not available on the over-the-counter market, the evaluation
will generally be made by the Evaluator in good faith (1) on the basis of the
current bid prices for comparable securities, (2) by the Evaluator's appraising
the value of the Securities in good faith at the bid side of the market or (3)
by any combination thereof. For each evaluation, the Evaluator shall also
determine and furnish to the Trustee and the Depositor the aggregate of (a) the
value of all Securities on the basis of such evaluation and (b) on the basis of
the information furnished to the Evaluator by the Trustee pursuant to Section
3.02, the amount of cash then held in the Capital Account which was received by
the Trustee after the Record Date preceding such determination less any amounts
held in the Capital Account for distribution to Unitholders on a subsequent
Distribution Date when a Record Date occurs four business days or less after
such determination. For the purposes of the foregoing, the Evaluator may obtain
current prices for the Securities from investment dealers or brokers (including
the Depositor) that customarily deal in similar securities. With respect to any
Security which is not listed on a national exchange or the Nasdaq National
Market System, upon the Evaluator's request, the Depositor shall, from time to
time, designate one or more reporting services or other sources of information
on which the Evaluator shall be authorized conclusively to rely in evaluating
such Security, and the Evaluator shall have no liability for any errors in the
-24-
information so received. The cost thereof shall be an expense reimbursable to
the Evaluator from the Income and Capital Accounts.
SECTION 4.02. CERTAIN INFORMATION TO BE MADE AVAILABLE. For the purpose
of permitting Unitholders to satisfy any reporting requirements of applicable
federal or state tax law, the Evaluator shall make available to the Trustee and
the Trustee shall transmit to any Unitholder upon request any evaluations
pursuant to Section 4.01 which concern the Trust Fund in which such Unitholder
holds Units.
SECTION 4.03. COMPENSATION OF THE EVALUATOR. As compensation for its
services hereunder, the Evaluator shall receive at the times specified in
Section 3.04 against a statement therefor submitted to the Trustee on or before
each Distribution Date the amount specified as compensation for the Evaluator in
the Prospectus but, if the Depositor is acting as Evaluator, in no event shall
such compensation, when combined with all compensation received from other
series of the Fund or other unit investment trusts sponsored by the Depositor or
its affiliates for services as Evaluator, in any calendar year exceed the
aggregate cost to the Depositor of providing such services. The rate of such
compensation may be increased from time to time, without the consent or approval
of any Unitholder or the Trustee, by amounts not exceeding the proportionate
increase, during the period from the date of the Trust Agreement to the date of
any such increase, in consumer prices as last published prior to each such date
under the classification "All Services Less Rent of Shelter" in the Consumer
Price Index For All Urban Consumers (CPI-U) U.S. City Average, not seasonally
adjusted, base 1982 - 84 = 100, published by the United States Department of
Labor. In the event that such classification ceases to incorporate a
significant number of items, or if a substantial change is made in the method of
establishing such classification, then the classification shall be adjusted in a
fair and reasonable manner to the figure that would have resulted had no
substantial change occurred in the manner of computing such classification. In
the event that such classification (or a successor or substitute index) is not
available, such governmental or other service or publication as shall evaluate
the information in substantially the same manner as the aforesaid
classification, shall be used in lieu thereof. Such compensation shall be
charged by the Trustee, upon receipt of invoice therefor from the Evaluator,
against the Income and Capital Accounts on or before the Distribution Date. If
the cash balances in the Income and Capital Accounts shall be insufficient to
provide for amounts payable pursuant to this Section 4.03, the Trustee shall
have the power to sell (i) Securities designated to be sold pursuant to Section
5.02 hereof or (ii) if no such Securities have been so designated, such
Securities as the Trustee may see fit to sell in its own discretion, and to
apply the proceeds of any such sale in payment of the amounts payable pursuant
to this Section 4.03. Any moneys payable to the Evaluator pursuant to this
Section 4.03 shall be secured by a prior lien on the Trust Fund except that such
lien shall be junior and subordinate to any lien in favor of the Trustee under
the provisions of Section 8.08.
SECTION 4.04. LIABILITY OF THE EVALUATOR. The Trustee, the Depositor and
the Unitholders may rely on any evaluation furnished by the Evaluator and shall
have no responsibility for the accuracy thereof. The determinations made by the
Evaluator hereunder shall be made in good faith. The Evaluator shall be under
no liability to the
-25-
Trustee, the Depositor or the Unitholders except for any liability to which it
would be subject by reason of 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.
SECTION 4.05. RESIGNATION, REMOVAL AND OTHER MATTERS RELATING TO THE
EVALUATOR. (a) The Evaluator may resign and be discharged hereunder, by
executing an instrument in writing resigning as the Evaluator and filing the
same with the Depositor (if separate from the Evaluator) and the Trustee not
less than 60 days before the date specified in such instrument when, subject to
Section 4.05(c), such resignation is to take effect. Upon receiving such notice
of resignation, the Depositor shall use its best efforts to appoint a successor
Evaluator having qualifications and at a rate of compensation satisfactory to
the Depositor. Such appointment shall be made by written instrument executed by
the Depositor and the Trustee in duplicate, one copy of which shall be delivered
to the resigning Evaluator and one copy to the successor evaluator. The
Depositor or the Trustee may remove the Evaluator at any time upon thirty days'
written notice and appoint a successor evaluator having qualifications and at a
rate of compensation satisfactory to the Depositor and the Trustee. Such
appointment shall be made by written instrument executed by the Depositor and
the Trustee in duplicate, one copy of which shall be delivered to the Evaluator
so removed and one copy to the successor evaluator. Notice of such resignation
or removal and appointment of a successor evaluator shall be mailed by the
Trustee to each Unitholder.
(b) If the Evaluator resigns and no successor evaluator shall have been
appointed and have accepted appointment within 30 days after receipt of the
notice of resignation by the Depositor and the Trustee, the Evaluator may
forthwith apply to a court of competent jurisdiction for the appointment of a
successor evaluator. Such court may thereupon, after such notice, if any, as it
may deem proper, appoint a successor evaluator.
(c) Any successor evaluator appointed hereunder shall execute, acknowledge
and deliver to the Depositor and the Trustee an instrument accepting such
appointment hereunder, and such successor evaluator 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
the Evaluator herein and shall be bound by all the terms and conditions of this
Agreement. Any resignation or removal of the Evaluator and appointment of a
successor evaluator pursuant to this Section 4.05 shall become effective upon
such acceptance of appointment.
(d) Any corporation into which the Evaluator hereunder may be merged or
with which it may be consolidated, or any corporation resulting from any merger
or consolidation to which the Evaluator hereunder shall be a party, shall be the
successor evaluator under this Agreement without the execution or filing of any
paper, instrument or further act to be done on the part of the parties hereto,
anything herein, or in any agreement relating to such merger or consolidation,
by which the Evaluator 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.
-26-
ARTICLE V
TRUST FUND EVALUATION; REDEMPTION OF UNITS
SECTION 5.01. TRUST FUND EVALUATION. As of the Evaluation Time next
following any tender by a Unitholder for redemption and on any other business
day desired by it or as may be required hereunder, the Trustee shall as to each
Trust Fund:
Add
(1) cash on hand in the Trust Fund (other than cash held especially
for the purchase of Contract Securities) and moneys in the process of being
collected from declared dividends,
(2) the aggregate value of each issue of the Securities in the Trust
Fund (including Contract Securities) as determined by the Evaluator
pursuant to Section 4.01,
(3) amounts representing organizational expenses paid from the Trust
less amounts representing accrued organizational expenses of the Trust, and
(4) all other assets of the Trust;
Deduct
(1) amounts representing any applicable taxes, governmental charges
or other charges pursuant to Section 3.03 payable out of the Trust Fund and
for which no deductions shall have previously been made for the purpose of
addition to the Reserve Account,
(2) amounts representing estimated accrued fees and expenses of the
Trust Fund including but not limited to unpaid fees and expenses of the
Trustee (including legal and auditing expenses), the Evaluator, the
Depositor and counsel, and
(3) cash allocated for distribution to Unitholders of the Trust Fund
of record as of the business day prior to the evaluation then being made.
The resulting figure is herein called a "TRUST FUND EVALUATION."
Until the Depositor has informed the Trustee that there will be no further
deposits of Additional Securities pursuant to Section 2.01(b), the Depositor
shall provide the Trustee with written estimates of (i) the total organizational
expenses to be borne by the Trust pursuant to Section 10.02 and (ii) the total
number of Units to be issued in connection with the initial deposit and all
anticipated deposits of additional Securities. For purposes of calculating the
Trust Fund Evaluation and Unit Value, the Trustee shall treat all such
anticipated expenses as having been paid and all liabilities therefor as having
been incurred,
-27-
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 Depositor of a revision in its estimate of total
expenses or total Units and upon the conclusion of the deposit of additional
Securities, the Trustee shall base calculations made thereafter on such revised
estimates or actual expenses, respectively, but such adjustment shall not affect
calculations made prior thereto and no adjustment shall be made in respect
thereof.
SECTION 5.02. REDEMPTION OF UNITS; SALE OF SECURITIES. Any Unitholder may
cause any of his Units to be redeemed by the Trustee, subject to the terms of
this Section 5.02, by making a written request to the Trustee at its principal
trust office, and, in the case of Units evidenced by a Certificate, by tendering
such Certificate to the Trustee at such office, properly endorsed or accompanied
by a written instrument or instruments of transfer in form satisfactory to the
Trustee. Unitholders must sign such written request, and such Certificate or
transfer instrument, exactly as their name appears on the records of the Trustee
and on any Certificate representing the Units to be redeemed. Such signature
must be guaranteed by a participant in the Securities Transfer Agents Medallion
Program ("STAMP") or such other signature guarantee program in addition to, or
in substitution for, STAMP, as may be accepted by the Trustee. Such redemption
shall be made by the Trustee on the third business day following the day on
which request for redemption is received by the Trustee, (such date being herein
called the "REDEMPTION DATE"). Subject to payment by such Unitholder of any tax
or other governmental charges which may be imposed thereon and subject to
payments in the form of In Kind Distributions (as defined below), such
redemption is to be made by payment on the Redemption Date of cash equal to the
Unit Value (determined on the basis of the Trust Fund Evaluation made in
accordance with Section 5.01) multiplied by the number of Units being redeemed
(herein called the "REDEMPTION PRICE"). The portion of the Redemption Price
which represents dividends shall be withdrawn from the Income Account of the
affected Trust Fund to the extent available. The balance paid on any redemption
shall be withdrawn from the Capital Account of the affected Trust to the extent
that funds are available for such purpose. If such available balance shall be
insufficient, the Trustee shall sell from such Trust Fund such Securities from
among those designated for such purpose by the Depositor as the Trustee in its
discretion, shall deem advisable or necessary. In the event that funds are
withdrawn from the Capital Account or Securities are sold for payment of any
portion of the Redemption Price representing declared but unpaid dividends, the
Capital Account shall be reimbursed when sufficient funds are next available in
the Income Account for such funds so applied.
The Trustee may in its discretion, and shall when so directed by the
Depositor 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, Inc. is closed other than customary weekend and holiday
closings; (2) for any period during which (i) trading on the New York Stock
Exchange, Inc. is restricted or (ii) an emergency exists as a result of which
disposal by the Trust Fund of the Securities is not reasonably practicable or it
is not reasonably practicable fairly to determine in accordance herewith the
value of the Securities
-28-
for the purposes of any Trust Fund Evaluation; or (3) for such other period as
the Securities and Exchange Commission may by order permit.
No later than the close of business on the day of tender of any Unit for
redemption by a Unitholder other than the Depositor, the Trustee shall notify
the Depositor of such tender. The Depositor shall have the right to purchase
such Units by notifying the Trustee of its election to make such purchase as
soon as practicable thereafter but in no event subsequent to the close of
business on the second business day after the day on which such Units were
tendered for redemption. Such purchase shall be made by payment for such Units
by the Depositor to the Unitholder not later than the close of business on the
Redemption Date of any amount not less than the Redemption Price which would
otherwise be payable by the Trustee to such Unitholder.
Any Unit so purchased by the Depositor may at the option of the Depositor
be tendered to the Trustee for redemption in the manner provided in the first
paragraph of this Section 5.02.
Notwithstanding anything to the contrary in this Section 5.02, if offered
by the terms of the Prospectus, any Unitholder may, if such Unitholder tenders
at least that number of Units set forth in the Prospectus for redemption and
makes such tender on or prior to the date provided in the Prospectus, request at
the time of tender to receive from the Trustee in lieu of cash such Unitholder's
pro rata share of each Security then held by the Trust Fund. Such tendering
Unitholder will receive his pro rata number of whole shares of each of the
Securities comprising the portfolio of the Trust Fund and cash from the Capital
Account equal to the value of the fractional shares to which such tendering
Unitholder is entitled. Such pro rata share of each Security and the related
cash equal to the value of the fractional shares to which such tendering
Unitholder is entitled is referred to herein as an "IN KIND DISTRIBUTION." An
In Kind Distribution will be made by the Trustee through the distribution of
each of the Securities in book-entry form to the account of the Unitholder's
bank or broker-dealer at Depository Trust Company. If funds in the Capital
Account are insufficient to cover the required cash distribution to the
tendering Unitholder, the Trustee may sell Securities according to the criteria
discussed above.
The Depositor shall deliver a current list of Securities in each Trust Fund
to be sold for the purpose of redemption of Units tendered for redemption and
for payment of expenses hereunder. If at any such time the Depositor shall for
any reason fail to deliver such a list, the Trustee, in its sole discretion, may
designate a current list of Securities in each Trust Fund for such purposes.
The net proceeds of any sale of Securities shall be credited to the Capital
Account of such Trust Fund.
Except as provided in Article VII and Article VIII, neither the Depositor
nor the Trustee shall be liable or responsible in any way for depreciation or
loss incurred by reason of any sale or designation of Securities made pursuant
to this Section 5.02.
-29-
Any Certificates evidencing Units redeemed pursuant to this Section 5.02
shall be cancelled by the Trustee and the Unit or Units evidenced by such
Certificates shall be extinguished by such redemptions.
SECTION 5.03. ROLLOVER OF UNITS. (a) If the Depositor shall offer a
subsequent series of the Nuveen Unit Trust (the "NEW SERIES"), the Trustee
shall, at the Depositor's direction and at the Depositor's sole cost and
expense, include in the notice sent to Unitholders a form of election whereby
Unitholders, whose redemption distribution would be in an amount sufficient to
purchase at least one Unit of the New Series, may elect to have their Units(s)
redeemed in kind in the manner provided in Section 5.02, the Securities included
in the redemption distribution sold, and the cash proceeds applied by the
Distribution Agent to purchase Units of the New Series, all as hereinafter
provided. The Trustee shall honor properly completed election forms returned to
the Trustee, accompanied by any Certificate evidencing Units tendered for
redemption or a properly completed redemption request with respect to
uncertificated Units, by its close of business on the Rollover Notification
Date.
All Units so tendered by a Unitholder (a "ROLLOVER UNITHOLDER") shall be
redeemed and cancelled on the first day of the Special Redemption and
Liquidation Period. Subject to payment by such Rollover Unitholder of any tax
or other governmental charges which may be imposed thereon, such redemption is
to be made in kind pursuant to Section 5.02 by distribution of cash and/or
Securities to the Distribution Agent based on the net asset value as of the
first day of the Special Redemption and Liquidation Period multiplied by the
number of Units being redeemed (herein called the "Rollover Distribution").
All Securities included in a Unitholder's Rollover Distribution shall be
sold by the Distribution Agent during the Special Redemption and Liquidation
Period pursuant to the Depositor's direction, and the Distribution Agent shall,
when directed by the Depositor, employ the Depositor or one of its affiliates as
broker in connection with such sales. All such sales shall be effected through
the Depository Trust Company. For such brokerage services, the Depositor or
such affiliate shall be entitled to compensation at its customary rates,
PROVIDED HOWEVER, that its compensation shall not exceed the amount authorized
by applicable securities laws and regulations. The Depositor or such affiliate
shall direct that sales be made in accordance with the guidelines set forth in
the related Prospectus. The Distribution Agent shall have no responsibility for
any loss or depreciation incurred by reason of any sale made pursuant to this
Section.
Upon each trade date for sales of Securities included in the Rollover
Unitholder's Rollover Distribution, the Distribution Agent shall, as agent for
such Rollover Unitholder, enter into a contract with the Depositor to purchase
from the Depositor Units of the New Series (if any), at the Depositor's public
offering price for such Units on such day, and at such reduced sales charge as
shall be described in the Prospectus for the Trust. Such contract shall provide
for purchase of the maximum number of Units of the New Series whose purchase
price is equal to or less than the cash proceeds held by the Distribution Agent
for the Unitholder on such day (including therein the proceeds anticipated to be
received in respect of Securities traded on such day net of all brokerage fees,
governmental charges and any other expenses incurred in connection with such
sale), to the extent Units
-30-
are available for purchase from the Depositor. In the event a sale of
Securities included in the Rollover Unitholder's redemption distribution shall
not be consummated in accordance with its terms, the Distribution Agent shall
apply the cash proceeds held for such Unitholder as of the settlement date for
the purchase of Units of the New Series to purchase the maximum number of units
which such cash balance will permit, and the Depositor agrees that the
settlement date for Units whose purchase was not consummated as a result of
insufficient funds will be extended until cash proceeds from the Rollover
Distribution are available in a sufficient amount to settle such purchase. If
the Unitholder's Rollover Distribution will produce insufficient cash proceeds
to purchase all of the Units of the New Series contracted for, the Depositor
agrees that the contract shall be rescinded with respect to the Units as to
which there was a cash shortfall without any liability to the Rollover
Unitholder or the Distribution Agent. Any cash balance remaining after such
purchase shall be distributed within a reasonable time to the Rollover
Unitholder by check mailed to the address of such Unitholder on the registration
books of the Trustee. Any cash held by the Distribution Agent shall be held in
a non-interest bearing account which will be of benefit to the Distribution
Agent. Except as provided in Article VIII, neither the Trustee nor the
Distribution Agent shall have any responsibility or liability for loss or
depreciation resulting from any reinvestment made in accordance with this
paragraph, or for any failure to make such reinvestment in the event the
Depositor does not make Units available for purchase.
(b) Notwithstanding the foregoing, the Depositor may, in their discretion
at any time, decide not to offer Trust Series in the future, and if so, this
Section 5.03 concerning the Rollover of Units shall be inoperative.
(c) The Distribution Agent shall receive no fees for performing its duties
hereunder. The Distribution Agent shall, however, be entitled to receive
reimbursement from the Trust for any and all expenses and disbursements to the
same extent as the Trustee is permitted reimbursement hereunder.
ARTICLE VI
ISSUANCE, TRANSFER, INTERCHANGE AND REPLACEMENT OF CERTIFICATES
SECTION 6.01. ISSUANCE OF CERTIFICATES. Unless otherwise provided in the
Prospectus, Certificates representing Units held by a Unitholder will not be
issued except upon written request by a Unitholder, or his or her registered
broker/dealer, to the Trustee at its unit investment trust office that such
Units be held in certified form. Certificates that have been issued may be
returned to the Trustee at any time and cancelled, without affecting the
Unitholder's interest in the Trust Fund, when accompanied by proper written
instructions from the Unitholder.
SECTION 6.02. TRANSFER OF UNITS; INTERCHANGE OF CERTIFICATES. A
Unitholder may transfer any of his Units by making a written request to the
Trustee at its unit investment trust office and, in the case of Units evidenced
by a Certificate, by presenting and surrendering such Certificate at such office
properly endorsed or accompanied by a written instrument or instruments of
transfer in form satisfactory to the Trustee. Unitholders must
-31-
sign such written request, and such Certificate of transfer instrument, exactly
as their name appears on the records of the Trustee and on any Certificate
representing the Units to be transferred. Such signature must be guaranteed by
a participant in the Securities Transfer Agents Medallion Program ("STAMP") or
such other signature guarantee program in addition to, or in substitution for,
STAMP, as may be accepted by the Trustee. Such transfer shall thereupon be made
on the records of the Trustee and, if appropriate, a new registered Certificate
or Certificates for the same number of Units of the same Trust Fund shall be
issued in exchange and substitution therefor. Certificates issued pursuant to
this Agreement are interchangeable for one or more other Certificates of the
same Trust Fund in an equal aggregate number of Units and all Certificates
issued shall be issued in denominations of one Unit or any whole multiple
thereof as may be requested by the Unitholder. The Trustee may deem and treat
the person in whose name any Unit or Certificate shall be registered upon the
books of the Trustee as the owner of such Unit or Certificate for all purposes
hereunder and the Trustee shall not be affected by any notice to the contrary.
The transfer books maintained by the Trustee for each Trust Fund for the purpose
of this Section 6.02 shall be closed for an individual Trust Fund as such Trust
Fund is terminated pursuant to Article IX hereof.
A sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any such transfer or interchange shall be paid to the
Trustee. A Unitholder may be required to pay $2 (or such other amount as may be
specified by the Trustee and approved by the Depositor) for each new Certificate
issued on any such transfer or interchange.
All Certificates cancelled pursuant to this Agreement, other than those
endorsed for transfer, may be cremated or otherwise destroyed by the Trustee.
SECTION 6.03. REPLACEMENT OF CERTIFICATES. In case any Certificate shall
become mutilated or be destroyed, stolen or lost, the Trustee shall execute and
deliver a new Certificate in exchange and substitution therefor upon the
Unitholder's furnishing the Trustee with proper identification and satisfactory
indemnity, complying with such other reasonable regulations and conditions as
the Trustee may prescribe and paying such expenses as the Trustee may incur,
PROVIDED, HOWEVER, that if the particular Trust Fund has terminated or is in the
process of termination, the Trustee, in lieu of issuing such new Certificate,
may, upon the terms and conditions set forth herein, make the distributions set
forth in Section 9.01 hereof. Any mutilated Certificate shall be duly
surrendered and cancelled before any duplicate Certificate shall be issued in
exchange and substitution therefor. Any duplicate Certificate issued pursuant
to this Section 6.03 shall constitute complete and indefeasible evidence of
ownership in the Trust Fund, as if originally issued, whether or not the lost,
stolen or destroyed Certificate shall be found at any time. Upon issuance of
any duplicate Certificate pursuant to this Section 6.03, the Certificate claimed
to have been lost, stolen or destroyed shall become null and void and of no
effect, and any bona fide purchaser thereof shall have only such rights as are
afforded under Article 8 of the Uniform Commercial Code to a holder presenting a
Certificate for transfer in the case of an overissue.
-32-
SECTION 6.04. FORM OF CERTIFICATE. Each Certificate shall be in fully
registered form, shall be numbered serially for identification, shall be
executed in facsimile by the original Depositor of the Trust Fund in question
and manually by an authorized signatory of the Trustee, shall be dated the date
of execution and delivery by the Trustee and shall represent a fractional
undivided interest in the specified Trust Fund, the numerator of which fraction
shall be the number of Units set forth on the face of such Certificate and the
denominator of which shall be the total number of Units of undivided interest of
such Trust Fund outstanding at any such time.
ARTICLE VII
DEPOSITOR
SECTION 7.01. CERTAIN MATTERS REGARDING SUCCESSION. The covenants,
provisions and agreements herein contained shall in every case be binding upon
any successor to the business of any Depositor. In the event of an assignment
by any Depositor to a successor corporation or partnership as permitted by the
next following sentence, such Depositor and, if such Depositor is a partnership,
its partners shall be relieved of all further liability under this Agreement.
Any Depositor may transfer all or substantially all of its assets to a
corporation or partnership which carries on the business of such Depositor, if
at the time of such transfer such successor duly assumes all the obligations of
such Depositor under this Agreement.
SECTION 7.02. LIABILITY OF DEPOSITOR AND INDEMNIFICATION. (a) The
Depositor shall not be under any liability to any Trust Fund or the Unitholders
for any action taken or for refraining from the taking of any action in good
faith pursuant to this Agreement, or for errors in judgment or for depreciation
or loss incurred by reason of the purchase or sale of any Securities, provided,
however, that this provision shall not protect the Depositor against any
liability to which it would otherwise be subject by reason of 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
Depositor 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, the Evaluator or any other person for any
matters arising hereunder. The Depositor shall in no event be deemed to have
assumed or incurred any liability, duty or obligation to any Unitholder, the
Evaluator or the Trustee other than as expressly provided for herein.
(b) Each Trust Fund shall pay and hold the Depositor harmless from and
against any loss, liability or expense incurred in acting as Depositor of such
Trust Fund other than by reason of wilful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties hereunder. The Depositor shall not be
under any obligation to appear in, prosecute or defend any legal action which in
its opinion may involve it in any expense or liability, PROVIDED, HOWEVER, that
the Depositor may in its discretion undertake any such action which it may deem
necessary or desirable in respect of this Agreement and the rights and duties of
the parties
-33-
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 Fund
concerned and shall be paid directly by the Trustee out of the Income and
Capital Accounts of such Trust Fund.
(c) None of the provisions of this Agreement shall be deemed to protect or
purport to protect the Depositor against any liability to the Trust Fund or to
the Unitholders to which the Depositor would otherwise be subject by reason of
wilful misfeasance, bad faith or negligence in the performance of its duties, or
by reason of the Depositor's reckless disregard of its obligations and duties
under this Agreement.
ARTICLE VIII
TRUSTEE
SECTION 8.01. GENERAL MATTERS RELATING TO THE TRUSTEE. (a) All
moneys deposited with or received by the Trustee hereunder shall be held by it
without interest in trust as part of the appropriate Trust Fund or Reserve
Account until required to be disbursed in accordance with the provisions of this
Agreement and such moneys will be segregated in such 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 evaluation, paper, order, list, demand, request, consent,
affidavit, notice, opinion, direction, endorsement, assignment, resolution,
draft or other document whether or not of the same kind, prima facie properly
executed, or the disposition of moneys or Securities pursuant to this Agreement;
PROVIDED, HOWEVER, that this provision shall not protect the Trustee against any
liability to which it would otherwise be subject by reason of wilful
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, and
the Trustee 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, and any construction of any such provisions hereof by the Trustee in
good faith shall be binding upon the parties hereto and the Unitholders.
(c) The Trustee shall not be responsible for or in respect of the recitals
herein, the validity or sufficiency of this Agreement or for the due execution
hereof by the Depositor, or for the form, character, genuineness, sufficiency,
value or validity of any Securities or for or in respect of the validity or
sufficiency of any Certificates (except for the due execution thereof by the
Trustee) or for the due execution thereof by the Depositor and the Trustee shall
in no event assume or incur any liability, duty or obligation to any Unitholder
or to the Depositor or Evaluator, 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 Depositor.
(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 it shall be
-34-
furnished with such reasonable security and indemnity against such expense or
liability as it may be required, and any pecuniary cost of the Trustee from
such actions shall be deductible ratably from and a ratable charge against
the Trust Funds concerned. The Trustee shall in its discretion undertake
such action as it may deem necessary at any and all times to protect the
Trust Funds and the rights and interests of the Unitholders pursuant to the
terms of this Agreement, PROVIDED, HOWEVER, that the expenses and costs of
such actions, undertakings or proceedings shall be reimbursable to the
Trustee ratably from the Trust Funds concerned.
(e) The Trustee may employ agents, attorneys, accountants and auditors,
including an agent or agents for the purpose of custody and safeguarding
Securities, 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. The
Trustee shall not be liable in respect of any action taken or suffered under
this Agreement in good faith, in accordance with an opinion of counsel. The
fees and expenses charged by such agents, attorneys, accountants or auditors,
except for the fees and expenses charged by any agent or agents for custody and
safeguarding of United States domestic Securities of the sort customarily
provided by the Trustee, shall constitute an expense of the Trustee reimbursable
from the Income and Capital Accounts as set forth in Section 3.04 hereof.
(f) If at any time the Depositor shall fail to undertake or perform any of
the duties which by the terms of this Agreement are affirmatively required by it
to be undertaken or performed, or the Depositor shall be incapable of acting, or
shall be adjudged a bankrupt or insolvent, or a receiver of the Depositor or of
its property shall be appointed, or any public officer shall take charge or
control of the Depositor or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then in any such case, the Trustee
may do any one or more of the following: (1) appoint a successor Depositor who
shall act hereunder in all respects in place of such Depositor and which may be
compensated, at rates deemed by the Trustee to be reasonable under the
circumstances, by deduction ratably from the Income Account or, to the extent
funds are not available in such Account, from the Capital Account of the Trust
Funds 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; (2) continue to act as
Trustee hereunder without terminating this Agreement; or (3) terminate this
Agreement and the trust created hereby and liquidate the Trust Funds in the
manner provided in Section 9.01.
(g) (i) The Trustee may in its discretion, and shall if so directed by the
Depositor, terminate this Agreement and any Trust created hereby (but only
insofar as the Agreement relates to such Trust) and liquidate such Trust, all in
the manner provided in Section 9.01 if the value of such Trust as shown by any
Trust Fund Evaluation shall be less than the liquidation amount specified in the
Prospectus; and (ii) the Trustee shall terminate this Agreement and any Trust
created hereby (but only insofar as the Agreement relates to such Trust) and
liquidate such Trust all in the manner provided in Section 9.01 if by reason of
the aggregate redemption of Units not theretofore sold by the Depositor and/or
one or more
-35-
of the underwriters the net worth of such Trust Fund is reduced to less than
40% of the aggregate original value of the Securities initially deposited
therein.
(h) In no event shall the Trustee be personally liable for any taxes or
other governmental charges imposed upon or in respect of the Securities or upon
any dividends or interest thereon. The Trustee shall be reimbursed and
indemnified out of the Income and Capital Accounts of the appropriate Trust Fund
for all such taxes and charges, for any tax or charge imposed against the
Trustee as Trustee of such Trust Fund and for any expenses, including counsel
fees, which the Trustee may sustain or incur with respect to such taxes or
charges.
(i) Notwithstanding any provisions of this Agreement to the contrary, no
payment to a Depositor or to any principal underwriter (as defined in the
Investment Company Act of 1940) for the Trust Fund or to any affiliated person
(as so defined) or agent of a Depositor or such underwriter shall be allowed the
Trustee as an expense except for payment of such reasonable amounts as the
Securities and Exchange Commission may prescribe as compensation for performing
bookkeeping and other administrative services, as set forth in Section 3.13, of
a character normally performed by the Trustee.
(j) The Trustee in its individual or any other capacity may become an
owner or pledgee of, or be an underwriter or dealer in respect of, obligations
issued by the same issuer (or an affiliate of such issuer) or 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 rights and powers as if
it were not the Trustee hereunder.
(k) The Trust may include a letter or letters of credit for the purchase
of Securities or Contract Securities issued by the Trustee in its individual
capacity for the account of the Depositor and the Trustee may otherwise deal
with the Depositor and the Trust within the same rights and powers as if it were
not the Trustee hereunder.
The provisions of this section and the indemnification provided the Trustee
under Section 8.05 and collateral security provided the Trustee under Section
8.08 shall apply as fully to the Trustee in its capacity as Evaluator, Program
Agent and Distribution Agent.
SECTION 8.02. BOOKS, RECORDS AND REPORTS. The Trustee shall keep
proper books of record and account of all the transactions of each Trust under
this Indenture at its unit investment trust office including a record of the
name and address of, and the Certificates issued by each Trust and held by,
every Unitholder, and such books and records of each Trust shall be open to
inspection by any Unitholder of such Trust at all reasonable times during the
usual business hours.
Unless the Depositor determines that such an audit is not required, the
account of each Trust shall be audited not less than annually by independent
public accountants designated from time to time by the Depositor and reports
of such accountants shall be furnished by the Trustee, upon request, to
Unitholders. The Trustee, however, in connection with
-36-
any such audits shall not be obligated to use Trust assets to pay for such
audits in excess of the amounts indicated in the Prospectus relating to such
Trust.
To the extent permitted under the Investment Company Act of 1940 as
evidenced by an opinion of independent counsel to the Depositor, the Trustee
shall pay, or reimburse to the Depositor or others, the costs of the
preparation of documents and information with respect to a Trust required by
law or regulation in connection with the maintenance of a secondary market in
Units of such 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. Such costs shall be a Trust expense and
the Trustee shall not be obligated to advance any of its own funds to make
such payments.
SECTION 8.03. REPORTS TO SECURITIES AND EXCHANGE COMMISSION AND
OTHERS. 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 8.04. AGREEMENT AND LIST OF SECURITIES ON FILE. The Trustee
shall keep a certified copy or duplicate original of this Agreement on file at
its unit investment trust office available for inspection by any Unitholder at
all reasonable times during its usual business hours, and the Trustee shall keep
and so make available for inspection a current list of the Securities in each
Trust Fund.
SECTION 8.05. COMPENSATION OF TRUSTEE. The Trustee shall receive at
the times and in the manner set forth in Section 3.04 as compensation for
performing the usual, ordinary, normal and recurring services under this
Agreement during the preceding month an amount equal to the amount specified as
compensation for the Trustee in the Prospectus. Such fee shall accrue daily and
be computed on the basis of the largest member of Units outstanding during the
period with respect to which such compensation is paid. The Trustee may
periodically adjust the compensation provided for pursuant to this paragraph (i)
in response to fluctuations in short-term interest rates and average cash
balances of the Trust accounts (reflecting the cost to the Trustee of advancing
funds to a Trust and changes in anticipated earnings on cash balances) and (ii)
in addition, may from time to time, without the consent or approval of any
Unitholder or the Depositor, adjust such portion of its fee as is not computed
by reference to the cash balance in the Trust accounts by amounts not exceeding
the proportionate increase, during the period from the date of such Trust
Agreement to the date of any such increase, in consumer prices as last published
prior to each such date under the classification "All Services Less Rent of
Shelter" in the Consumer Price Index For All Urban Consumers (CPI-U) U.S. City
Average, not seasonally adjusted, base 1982 - 84 = 100, published by the United
States Department of Labor. In the event that such classification ceases to
incorporate a significant number of items, or if a substantial change is made in
the method of establishing such classification, then the classification shall be
adjusted in a fair and reasonable manner to the figure that would have resulted
had no substantial change occurred in the manner of computing such
classification. In the event that such classification (or a successor or
substitute index) is not available, such governmental or other service or
publication as shall evaluate the information in substantially the same
-37-
manner as the aforesaid classification, shall be used in lieu thereof. The
Trustee shall also receive, at the times and in the manner set forth in
Section 3.04, reimbursement for any and all expenses, disbursements and
advances incurred hereunder (except as set forth in Section 8.01(e)),
including legal and auditing expenses and additional compensation for any
extraordinary services performed hereunder, which extraordinary services
shall include, but not be limited to, all costs and expenses incurred by the
Trustee in making any annual or other reports pursuant to Section 8.03, or in
making any distribution of cash attributable to failed contracts covering
Contract Securities in accordance with Section 3.04; PROVIDED, HOWEVER, that
the amount of any such charge which has not been finally determined as of any
Distribution Date may be estimated and any necessary adjustments shall be
made in any succeeding period.
The Trustee shall be indemnified ratably from the Trust Funds and held
harmless against any loss, liability or expense incurred without gross
negligence, bad faith, wilful misconduct or reckless disregard of its duties
on the part of the Trustee arising out of or in connection with the
acceptance or administration of this trust, including the costs and expenses
of defending itself against any claim or liability in the premises.
The Trustee's normal and extraordinary compensation and reimbursement of
the above-mentioned expenses and losses shall be charged by the Trustee
against the Income and Capital Accounts of the appropriate Trust Funds in
accordance with Section 3.04 on or before each Distribution Date. If the
balances in the Income and Capital Accounts shall be insufficient to provide
for amounts payable pursuant to this Section 8.05, the Trustee shall have the
power to sell Securities in the manner provided in Section 5.02 hereof. 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 8.05.
SECTION 8.06. RESIGNATION, DISCHARGE OR REMOVAL OF THE TRUSTEE;
SUCCESSORS. (a) The Trustee may resign and be discharged of the trust created
by this Agreement by executing an instrument in writing resigning as Trustee of
such trust, filing the same with the Depositor and mailing a copy of a notice of
resignation to all Unitholders then of record, not less than sixty days before
the date specified in such instrument when, subject to Section 8.06(c), such
resignation is to take effect. Upon receiving such notice of resignation, the
Depositor shall use its best efforts promptly to appoint a successor trustee in
the manner and meeting the qualifications hereinafter provided, by written
instrument or instruments delivered to the resigning Trustee and the successor
trustee. In case at any time the Trustee shall not meet the requirements set
forth in Section 8.06 hereof, or shall become incapable of acting, or if a court
having jurisdiction in the premises shall enter a decree or order for relief in
respect of the Trustee in an involuntary case, or the Trustee shall commence a
voluntary case, under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, or any receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) for the Trustee or for any
substantial part of its property shall be appointed, or the Trustee shall
generally fail to pay its debts as they become due, the Depositor, upon 60 days'
prior written notice, may remove the Trustee and appoint a successor trustee
having qualifications and at a rate of compensation satisfactory to the
Depositor by written instrument, in duplicate, one copy of which shall be
delivered to the Trustee so removed and one copy to the successor
-38-
trustee. Notice of such appointment of a successor trustee shall be mailed
promptly after acceptance of such appointment by the successor trustee to
each Unitholder then of record.
(b) In case at any time the Trustee shall resign and no successor trustee
shall have been appointed within thirty days after notice of resignation has
been received by the Depositor, the retiring Trustee may forthwith apply to a
court of competent jurisdiction for the appointment of a successor trustee.
Such court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor trustee.
(c) Any successor trustee appointed hereunder shall execute and
acknowledge to the Depositor 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 rights, powers, duties and
obligations of its predecessor hereunder with like effect as if originally named
a Trustee herein and shall be bound by all the terms and conditions of this
Agreement 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 retiring Trustee
shall, upon payment of all amounts due the 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, if any, 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 Agreement. Any resignation or removal of
a Trustee and appointment of a successor trustee pursuant to this Section 8.06
shall become effective upon such acceptance of appointment by the successor
trustee.
(d) Any corporation into which a Trustee hereunder may be merged or with
which it may be consolidated, or any corporation resulting from any merger or
consolidation to which such Trustee hereunder shall be a party, shall be the
successor trustee under this Agreement without the execution or filing of any
paper, instrument or further act to be done on the part of the parties hereto,
anything herein, or in any agreement relating to such merger or consolidation,
by which any such Trustee may seek to retain certain powers, rights and
privileges theretofore obtaining for any period of time following such merger or
consolidation, to the contrary notwithstanding.
SECTION 8.07. QUALIFICATION OF TRUSTEE. The Trustee and any
successor trustee shall be a corporation organized under laws of the United
States, or any state thereof, which is authorized under such laws to exercise
trust powers and has at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
SECTION 8.08. COLLATERAL. As collateral security for the prompt
payment to the Trustee of all reimbursement to which the Trustee is entitled
hereunder and of all sums at any time owed to or payable to the Trustee
hereunder (including, without limitation, the prompt reimbursement of the
Trustee for any sums that it may from time to time in its discretion
-39-
advance to the account of the Trust Fund), the Trustee is hereby granted a
first and prior lien and security interest in and to the Trust Fund and all
Securities now or hereafter included therein, including (without limitation)
those Securities listed in the Trust Agreement, together with all Securities,
obligations, Contract Securities and instruments received in exchange or
substitution therefor and all proceeds thereof and all additions and
substitutions.
ARTICLE IX
TERMINATION
SECTION 9.01. PROCEDURE UPON TERMINATION. This Agreement and the
trust created hereby shall terminate as to an individual Trust Fund upon the
maturity, redemption, sale or other disposition, as the case may be, of the last
Security held hereunder in such Trust Fund, unless sooner terminated as
hereinbefore specified, and may be terminated at any time by written instrument
executed by the Depositor and consented to by holders of Units representing
66-2/3% of the Units of such Trust Fund then outstanding under this Agreement;
PROVIDED, that in no event shall any individual Trust Fund continue beyond the
Mandatory Termination Date for such Trust Fund.
Written notice of any termination, specifying the time or times at which
any Unitholder holding Certificates may surrender such Certificates for
cancellation and the date, determined by the Trustee, upon which the transfer
books of the Trustee, maintained pursuant to Section 8.02, shall be closed
with respect to the terminated Trust Fund or the entire Fund, as the case may
be, shall be given by the Trustee to Unitholders of such terminated Trust
Fund or all Unitholders, as the case may be.
Within a reasonable period of time after the termination of a Trust Fund
or the entire Fund, the Trustee shall sell all of the Securities then held,
if any, and shall:
(a) deduct from the Income Account or to the extent that funds are
not available in such Account, from the Capital Account of every Trust
Fund separately and pay to itself individually an amount equal to the
sum of (1) its accrued compensation for its ordinary services in
connection with such Trust Fund, (2) any compensation due it for its
extraordinary services in connection with such Trust Fund and (3) any
other expenses, disbursements and advances in connection with such Trust
Fund as provided herein;
(b) deduct from the Income Account or to the extent that funds are
not available in such account, from the Capital Account of every Trust
Fund separately and pay accrued and unpaid fees in connection with such
Trust Fund of the Evaluator, the Depositor and counsel, if any;
(c) deduct from the Income Account, or to the extent that funds
are not available from such Account, from the Capital Account of every
Trust Fund separately any amounts which it in its sole discretion shall
deem requisite to be
-40-
deposited in the Reserve Account to provide for any applicable taxes or
other governmental charges that may be payable out of such Trust Fund;
(d) distribute to each Unitholder (upon surrender for cancellation
of his Certificate or Certificates, if issued) such Unitholder's
interest in the balances of the Income and, on the conditions set forth
in Section 3.03 hereof, the Reserve Accounts of the Trust Fund in which
he holds Units;
(e) either distribute in cash to each Unitholder (upon surrender
for cancellation of his Certificate or Certificates, if issued) such
Unitholder's pro rata share of the balance of the Capital Account, or,
in the alternative, if offered by the terms of the Prospectus,
distribute to each Unitholder who then owns at least that number of
Units set forth in the Prospectus and who has requested an In Kind
Distribution under the conditions set forth in Section 5.02, such
holder's In Kind Distribution as set forth in Section 5.02; and
(f) together with such distribution to each Unitholder as provided
for in paragraph (d) and (e), furnish to each such Unitholder a final
statement as of the date of the computation of the amount distributable
to Unitholders of the same Trust Fund, setting forth the data and
information in substantially the form and manner provided for in Section
3.05 hereof.
Any Unitholder who receives an In Kind Distribution, if offered by the
terms of the Prospectus, shall receive such Distribution in the same manner
as is provided in connection with redemptions in Section 5.02.
SECTION 9.02. NOTICE TO UNITHOLDERS. In the event that all of the
Unitholders holding Certificates shall not surrender their Certificates for
cancellation within six months after the time specified in the applicable,
above-mentioned notice, the Trustee shall give a second written notice to the
remaining Unitholders to surrender their Certificates for cancellation and
receive the liquidating distribution with respect thereto. If within one year
after the second notice all the Certificates issued shall not have been
surrendered for cancellation, the Trustee may take appropriate steps or may
appoint an agent to take appropriate steps, to contact the remaining Unitholders
concerning surrender of their Certificates and the cost thereof shall be paid
out of the moneys and other assets which remain in the affected Trust Fund.
SECTION 9.03. MONEYS TO BE HELD IN TRUST WITHOUT INTEREST. The
Trustee shall be under no liability with respect to moneys in the Income,
Capital and Reserve Accounts upon termination, except to hold the same in trust
without interest.
SECTION 9.04. DISSOLUTION OF DEPOSITOR NOT TO TERMINATE. The
dissolution of the Depositor shall not, subject to Section 8.01(f), operate to
terminate this Agreement or the Fund or any individual Trust Fund.
-41-
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. AMENDMENT AND WAIVER. This Agreement may be amended
from time to time by the Depositor and the Trustee without the consent of any of
the Unitholders (a) to cure any ambiguity or to correct or supplement any
provisions contained herein which may be defective or inconsistent with any
other provision contained herein; (b) to change any provision hereof as may be
required by the Securities and Exchange Commission or any successor governmental
agency exercising similar authority; or (c) to make such other provisions in
regard to matters or questions arising hereunder as shall not adversely affect
the interest of the Unitholders (as determined in good faith by the Depositor
and the Trustee). This Agreement may also be amended from time to time by the
Depositor and the Trustee (or the performance of any of the provisions of this
Agreement may be waived) with the consent of holders of Units representing
66-2/3% of the Units at the time outstanding under the Trust Agreement of the
individual Trust Fund or Trust Funds affected for the purpose of adding any
provisions of this Agreement or of modifying in any manner the rights of the
holders of Units of such Trust Fund or Trust Funds; PROVIDED, HOWEVER, that in
no event may any amendment be made which would (a) alter the rights to the
Unitholders as against each other, (b) provide the Trustee with the power to
engage in business or investment activities other than as specifically provided
in this Agreement or (c) adversely affect the characterization of the Trust as a
grantor trust for federal income tax purposes; PROVIDED, FURTHER, that the
consent of 100% of the Unitholders of any individual Trust Fund is required to
amend this Agreement (a) to increase the number of Units of such Trust Fund
issuable hereunder above the number of Units specified in the Prospectus or such
lesser amount as may be outstanding at any time during the term of this
Agreement, (b) to permit, in addition to acquisitions permitted under Section
3.10 hereof, the acquisition hereunder of any Securities for such Trust Fund
different from those specified in Schedule A to the Trust Agreement, (c) to
reduce the aforesaid percentage of Units the holders of which are required to
consent to certain amendments and (d) to reduce the interest in such Trust Fund
represented by any Units of such Trust Fund.
Promptly after the execution of any amendment requiring the consent of
the Unitholders or any of any other amendment if directed by the Depositor,
the Trustee shall furnish written notification of the substance of such
amendment to each Unitholder then of record affected thereby.
It shall not be necessary for the consent of Unitholders under this
Section 10.01 or under Section 9.01 to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of
evidencing the authorization of the execution thereof by Unitholders shall be
subject to such reasonable regulations as the Trustee may prescribe.
Section 10.02. INITIAL COSTS;. Unless otherwise provided in the
Trust's prospectus, the expenses incurred in establishing the Trust, including
the cost of the preparation and typesetting of the registration statement,
prospectuses (including preliminary prospectuses),
-42-
the indenture and other documents relating to the Trust, printing of
Certificates, Securities and Exchange Commission and state blue sky
registration fees, the costs of the initial valuation of the portfolio and
audit of the Trust, the initial fees and expenses of the Trustee, and legal
and other out-of-pocket expenses related thereto, but not including the
expenses incurred in the printing of preliminary prospectuses and
prospectuses, expenses incurred in the preparation and printing of brochures
and other advertising materials and any other selling expenses, to the extent
not borne by the Depositor, shall be borne by the Trust. To the extent the
funds in the Income and Capital Accounts of the Trust shall be insufficient
to pay the expenses borne by the Trust specified in this Section 10.02, 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 (or such earlier date on which the expenses have been
fully accrued) from funds on hand in the Income Account or, to the extent
funds are not available in such Account, from the Capital 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 8.05 with respect to the reimbursement of
disbursements for Trust expenses, including, without limitation, the lien in
favor of the Trustee therefor and the authority to sell Securities as needed
to fund such reimbursement, shall apply to the payment of expenses and the
amounts advanced pursuant to this Section. For the purposes of the preceding
sentence and the addition provided in clause (3) of the first sentence of
Section 5.01, the expenses borne by the Trust pursuant to this Section shall
be deemed to have been paid on the date of the Trust Agreement and to accrue
at a daily rate over the time period specified for their amortization
provided in the Prospectus; 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 calculating the accrual of organizational
expenses under this Section 10.02, the Trustee shall rely on the written
estimates of such expenses provided by the Depositor pursuant to Section 5.01.
SECTION 10.03. REGISTRATION (INITIAL AND CURRENT) OF UNITS AND FUND.
The Depositor agrees and undertakes on its own part to register the Units, each
Trust Fund and the Fund with the Securities and Exchange Commission and under
the Blue Sky laws of such states as the Depositor may select.
SECTION 10.04. CERTAIN MATTERS RELATING TO UNITHOLDERS. (a) The
death or incapacity of any Unitholder shall not operate to terminate this
Agreement, the Fund or the Trust Fund in which he holds Units nor entitle his
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Fund or such Trust
Fund, 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 Agreement, in respect of the Securities or moneys
from time to time received, held and applied by the Trustee hereunder.
-43-
(b) No Unitholder shall have any right to vote except as provided in
Sections 9.01 and 10.01 or in any manner otherwise to control the operation of
the Fund or the obligations of the parties hereto, nor shall anything set forth
in this Agreement or the Trust Agreement or contained in the terms of any
Certificates which may have been issued be construed so as to constitute the
Unitholders from time to time as partners or members of an association; nor
shall any Unitholder ever be under any liability to any third persons by reason
of any action taken by the parties to this Agreement, or for any other cause
whatsoever.
(c) By the purchase and acceptance or other lawful delivery and acceptance
of any Unit, whether certificated or not, the Unitholder shall be deemed to be a
beneficiary of the Trust created by this Agreement and the Trust Agreement and
vested with all right, title and interest in the Trust Fund therein created to
the extent of the Unit or Units set forth whether evidenced by such Certificate
or held in uncertificated form, subject to the terms and conditions of this
Agreement and the Trust Agreement.
(d) A Unitholder may at any time prior to the Evaluation Time on the date
the Trust is terminated tender his Units or his Certificate(s) if held in
certificated form (including any temporary Certificate or other evidence of
ownership of Units of the Trust Fund, issued by the Trustee or the Depositor) to
the Trustee for redemption, subject to and in accordance with Section 5.02.
SECTION 10.05. NEW YORK LAW TO GOVERN. This Agreement is executed
and delivered in the State of New York, and all laws or rules of construction of
such State, except for provisions with respect to choice of law, shall govern
the rights of the parties hereto and the Unitholders and the interpretation of
the provisions hereof.
SECTION 10.06. 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, first class with proper postage prepaid, or delivered to the
Depositor at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other
address as shall be specified in the Prospectus or by the Depositor to the other
parties hereto 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,
first class with proper postage prepaid, or delivered to the Trustee at ▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, or such other address as shall be
specified to the other parties hereto in writing. Any notice to be given to a
Unitholder shall be duly given if mailed, first class with proper postage
prepaid, or delivered to each Unitholder at the address of such holder appearing
on the registration books of the Trustee.
SECTION 10.07. SEVERABILITY. If any one or more of the covenants,
agreements, provisions or terms 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 or of any Certificates or the rights of the holders
thereof.
-44-
SECTION 10.08. SEPARATE AND DISTINCT SERIES. Each series of Nuveen
Unit Trust to which these Standard Terms and Conditions of Trust shall be
applicable shall, for all financial and administrative purposes, be considered
separate and distinct from every other series, and neither the assets of nor the
expenses of any one series shall be applied or charged against any other series.
-45-
IN WITNESS WHEREOF, the parties hereto have caused these Standard Terms and
Conditions of Trust, Dated May 29, 1997 to be duly executed.
▇▇▇▇ NUVEEN & CO. INCORPORATED,
Depositor
By
-----------------------------------
THE CHASE MANHATTAN BANK,
Evaluator and Trustee
By
-----------------------------------
-46-