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NATIONAL EQUITY TRUST
for all series formed on or subsequent to the effective date specified below to
which this Trust Indenture and Agreement is applicable
____________________
TRUST INDENTURE AND AGREEMENT
Among
PRUDENTIAL INVESTMENT MANAGEMENT SERVICES LLC
As Depositor
THE BANK OF NEW YORK
As Trustee
____________________
Dated: August , 2001
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Definitions..................................................................2
ARTICLE II
DEPOSIT OF SECURITIES; ACCEPTANCE OF TRUST
Section 2.01. Deposit of Securities........................................................6
Section 2.02. Acceptance of Trust..........................................................7
Section 2.03. Issue of Units...............................................................7
Section 2.04. Uncertificated Units.........................................................7
Section 2.05. Deposit of Additional Securities.............................................7
Section 2.06. Register of Units...........................................................10
ARTICLE III
ADMINISTRATION OF TRUST
Section 3.01. Initial Cost................................................................10
Section 3.02. Income Account..............................................................11
Section 3.03. Principal Account...........................................................11
Section 3.04. Reserve Account.............................................................11
Section 3.05. Distribution................................................................12
Section 3.06. Distribution Statements.....................................................15
Section 3.07. Replacement Securities......................................................17
Section 3.08. Sale of Securities..........................................................18
Section 3.09. Notice and Sale by Trustee..................................................19
Section 3.10. Refunding Securities........................................................19
Section 3.11. Notice of Actions...........................................................20
Section 3.12. Extraordinary Distributions.................................................20
Section 3.13. Extraordinary Event - Security Retention and Voting.........................21
Section 3.14. Deferred Sales Charge.......................................................21
ARTICLE IV
EVALUATION OF SECURITIES
Section 4.01. Evaluation of Securities....................................................23
Section 4.02. Tax Reports.................................................................23
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Section 4.03. Liability of the Trustee....................................................22
ARTICLE V
TRUST EVALUATION, REDEMPTION,
TRANSFER OF UNITS
Section 5.01. Trust Evaluation............................................................24
Section 5.02. Redemptions by Trustee; Purchases by Depositor..............................25
Section 5.03. Redemption Upon Termination.................................................38
Section 5.04. Transfer of Units...........................................................39
ARTICLE VI
TRUSTEE
Section 6.01. General Definition of Trustee's Liabilities, Rights and Duties..............30
Section 6.02. Books, Records and Reports..................................................34
Section 6.03. Indenture and List of Securities on File....................................35
Section 6.04. Compensation of Trustee.....................................................35
Section 6.05. Removal and Resignation of Trustee; Successor...............................36
Section 6.06. Qualification of Trustee....................................................38
Section 6.07. Trustee's Response to Inquiries.............................................38
Section 6.08. Waiver of Liens.............................................................39
ARTICLE VII
RIGHTS OF UNIT HOLDERS
Section 7.01. Beneficiaries of Trust......................................................39
Section 7.02. Rights, Terms and Conditions................................................39
ARTICLE VIII
DEPOSITOR
Section 8.01. Liabilities; Power of Attorney..............................................40
Section 8.02. Discharge...................................................................41
Section 8.03. Successors..................................................................42
Section 8.04. Resignation.................................................................42
Section 8.05. Additional Depositors.......................................................43
Section 8.06. Exclusions from Liability...................................................43
Section 8.07. Compensation................................................................44
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ARTICLE IX
ADDITIONAL COVENANTS; MISCELLANEOUS PROVISIONS
Section 9.01. Amendments without the Consent of Unit Holders..............................44
Section 9.02. Notice of Amendment.........................................................45
Section 9.03. Termination.................................................................45
Section 9.04. Construction................................................................47
Section 9.05. Written Notice..............................................................47
Section 9.06. Severability................................................................48
Section 9.07. Dissolution of Depositor Not To Terminate...................................48
Section 9.08. Name........................................................................48
EXECUTION......................................................................................................
ACKNOWLEDGMENTS................................................................................................
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This Table of Contents does not constitute part of the Indenture.
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TRUST INDENTURE AND AGREEMENT dated August , 2001 between PRUDENTIAL
INVESTMENT MANAGEMENT SERVICES LLC, as Depositor, and THE BANK OF NEW YORK, as
Trustee.
WITNESSETH that:
WHEREAS, the Depositor and the Trustee are entering into this Trust
Indenture and Agreement for the purpose of establishing certain of the terms,
covenants and conditions of the National Equity Trust series and each subsequent
Series which may be established from time to time hereafter, incorporating by
reference the terms hereof; and
WHEREAS, for the National Equity Trust, and each Series of the National
Equity Trust, to which this Trust Indenture and Agreement is applicable, the
Depositor and the Trustee shall execute a separate Reference Trust Agreement
incorporating by reference this Trust Indenture and Agreement and effecting any
amendment, supplement or variation from or to such incorporation by reference
with respect to the related series, and specifying for that series: (i) the
Securities deposited in trust and the number of Units delivered by the Trustee
in exchange for the Securities pursuant to Section 2.03; (ii) the initial
fractional undivided interest represented by each Unit in each Trust; (iii) the
first Settlement Date; (iv) the first Computation Day; (v) the first and
subsequent Distribution Date(s); (vi) the first and subsequent Record Date(s);
(vii) the name of the Depositor; (viii) the Termination Date; (ix) the Purchase
Rights and (x) any other change or addition contemplated or permitted by this
Trust Indenture and Agreement; and
WHEREAS, the Depositor will acquire and, concurrently with the execution
and delivery of the appropriate Reference Trust Agreement, will deposit in trust
with the Trustee the Securities to be listed in the Schedule thereto, all to be
held by the Trustee in trust upon the terms and conditions hereinafter set forth
as amended, supplemented or varied by such Reference Trust Agreement, for the
use and benefit of all registered holders of units of fractional undivided
interest in the Trust to which such Reference Trust Agreement relates; and
WHEREAS, the Depositor will enter into an agreement which will grant a
Purchase Right with regard to each Security and will deposit each Security,
subject to such Purchase Right, into the Trust; and
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WHEREAS, concurrently with the receipt of the aforesaid deposit, the
Trustee will record on its books the ownership by the Depositor thereof of units
of fractional undivided interest in such Securities and in the Income Account
and the Principal Account maintained under this Indenture in the manner
hereinafter provided (which units of fractional undivided interest so recorded
respectively will represent in the aggregate 100% of the beneficial interest
established hereby in such Securities, Income Account and Principal Account) and
if the Sponsor so directs, will execute in the name of the Depositor thereof a
certificate or certificates representing the aggregate number of Units specified
in such Reference Trust Agreement and deliver same to such Depositor.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the Depositor and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions: Whenever used in this Indenture, the following
words and phrases, unless the context clearly indicates otherwise, shall have
the following meanings:
(1) "Additional Purchase Rights" shall mean such Purchase Rights (as defined
herein) which Additional Securities shall be subject to as are listed in
Supplementary Schedules to the Reference Trust Agreement.
(2) "Additional Securities" shall mean such Securities (as defined herein) as
are listed in Supplementary Schedules of the Reference Trust Agreement and
which have been deposited to effect an increase over the number of Units
initially specified in Part II of the Reference Trust Agreement.
(3) "Additional Units" shall mean such Units (as defined herein) as are issued
in respect of Additional Securities.
(4) "Basic Agreement" shall mean this Trust Indenture and Agreement dated as
indicated on the cover page hereof as originally executed, or if amended as
hereinaf-
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ter provided, as so amended, exclusive of the terms contained in any related
Reference Trust Agreement.
(5) "Business Day" shall mean any day other than a Saturday or Sunday or other
day on which the New York Stock Exchange is closed for trading, a legal
holiday in the City of New York, or a day on which banking institutions are
authorized by law to close.
(6) "Computation Day" shall have the meaning assigned to it in Part II of the
Reference Trust Agreement.
(7) "Contract Securities" shall mean Securities which are to be acquired by the
Trust pursuant to contracts, including (i) Securities listed in the
Schedule to the Reference Trust Agreement and (ii) Securities which the
Depositor has contracted to purchase for the Trust pursuant to Sections
2.05 and 3.07.
(8) "Deferred Sales Charge' shall mean any deferred sales charge payable in
accordance with the provisions of Section 3.14 hereof, as set forth in the
prospectus for a Trust.
(9) "Depositor" of the Trust shall have the meaning assigned to it in Part II
of the Reference Trust Agreement.
(10) "Distribution Agency Agreement" shall mean the Distribution Agency
Agreement dated the date of this Indenture among the Trustee, the Depositor
and the Distribution Agent.
(11) "Distribution Agent" shall mean the Distribution Agent appointed in the
Distribution Agency Agreement, or its successor as appointed pursuant to
the Distribution Agency Agreement.
(12) "Distribution Date" shall have the meaning assigned to it in Part II of the
Reference Trust Agreement.
(13) "Evaluation Time" shall mean the close of trading on the New York Stock
Exchange, presently 4:00 p.m. or such other time as is designated as the
Evaluation Time in the prospectus for a Trust.
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(14) "Indenture" shall mean the Basic Agreement, as further amended,
supplemented or varied by the Reference Trust Agreement.
(15) "Purchase Right" shall mean the option of a holder of the right to acquire
a Security at a specified price and on a specified date each as set forth
in the Prospectus for a Trust.
(16) "Prospectus" shall mean the prospectus relating to a Trust in the form
first used to confirm sales of Units of such Trust.
(17) "Record Date" shall have the meaning assigned to it in Part II of the
Reference Trust Agreement.
(18) "Reference Trust Agreement" shall mean a supplement to the Basic Agreement,
the purpose of which shall be to amend, supplement and/or vary certain of
the terms contained in the Basic Agreement. The Reference Trust Agreement,
together with the Basic Agreement to the extent that such Reference Trust
Agreement incorporates it by reference, defines all the terms, rights and
duties relevant to the series of National Equity Trust series, to which
such Reference Trust Agreement relates.
(19) "Replacement Security" shall mean a Security purchased by the Trustee
pursuant to Section 3.07 hereof.
(20) "Securities" shall mean such common stock and other securities (including
for all purposes hereof "when-issued" and/or "regular way" contracts, if
any, for the purchase thereof evidenced by the purchasing broker's
confirmation of, or list of its confirmations of, such contracts and a
certified check or checks and/or an irrevocable letter or letters of credit
in the amount required for such purchase) as are (i) deposited in
irrevocable trust and listed in the Schedule or Supplementary Schedules to
the Reference Trust Agreement and (ii) received in exchange or substitution
for any Securities pursuant to Section 3.07 hereof or pursuant to Section
3.13 hereof or acquired pursuant to Section 2.05 hereof, as may from time
to time be acquired and continue to be held as a part of the Trust to which
such Reference Trust Agreement relates.
(21) "Special Security" shall have the meaning assigned to it in Section 3.07
hereof.
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(22) "Termination Date" shall mean the date set forth in Part II of the
Reference Trust Agreement.
(23) "Trust" shall mean the trust created by this Indenture in conjunction with
a Reference Trust Agreement, which shall be denominated as indicated in
Part II of the Reference Trust Agreement relating to such Trust, and which
shall consist of the Securities held pursuant and subject to this Indenture
together with all dividends thereon, received but undistributed, any
undistributed cash realized from the sale, redemption or liquidation
thereof, such amounts as may be on deposit in the Reserve Account
hereinafter established and all other property and rights to which Unit
Holders may be entitled under the provisions of this Indenture.
(24) "Trustee" shall mean The Bank of New York, or any successor trustee as
hereinafter provided.
(25) "Unit" shall mean the fractional undivided interest in and ownership for
the Trust which shall be initially equalto the fraction specified for the
Trust in Part II of the Reference Trust Agreement, the denominator of which
fraction shall be decreased by the number of any such Units redeemed as
provided in Sections 5.02 and 5.03 and increased by the number of any
Additional Units as provided in Section 2.06 or revised as provided in
Section 2.03.
(26) "Unit Holder" shall mean the registered holder of any Unit as recorded on
the registration books of the Trustee, his legal representatives and heirs
and the successors of any corporation, partnership or other legal entity
which is a registered holder of any Unit and as such shall be deemed a
beneficiary of the Trust created by this Indenture to the extent of his pro
rata share thereof.
(27) The words "herein," "hereby," "herewith," "hereof," "hereinafter,"
"hereunder," "hereinabove," "hereafter," "heretofore" and similar words or
phrases of reference and association shall refer to this Indenture in its
entirety.
(28) Words importing the singular number shall include the plural number in each
case and vice versa and words importing persons shall include corporations
and associations, as well as natural persons.
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(29) "Portfolio Supervisor" of the Trust shall have the meaning assigned to it
in Part II of the Reference Trust Agreement
ARTICLE II
DEPOSIT OF SECURITIES; ACCEPTANCE OF TRUST
Section 2.01. Deposit of Securities: The Depositor, concurrently with the
execution and delivery of the applicable Reference Trust Agreement, has
deposited with the Trustee in trust the Securities listed in the Schedule or
Schedules attached to the Reference Trust Agreement in bearer form or duly
endorsed in blank or accompanied by all necessary instruments of assignment and
transfer in proper form to be held, administered and applied by the Trustee as
herein provided and/or cash (or a letter of credit in lieu of cash) with written
instructions to the Trustee to purchase one or more of such Securities which
cash (or cash in an amount equal to the face amount of the letter of credit), to
the extent not used by the Trustee to purchase such Securities within the 90-day
period following the first deposit of Securities in the Trust, shall be
distributed to Unit Holders on the Distribution Date next following such 90-day
period or such earlier date as the Depositor and the Trustee determine.
Concurrent with the deposit of Securities pursuant to this Section 2.01, the
Depositor has transferred its obligation under the Purchase Right to the Trustee
which Purchase Right will be reflected in an account to be established by the
Trustee. In the event that the purchase of Securities represented by
"when-issued" and/or "regular way" contracts shall not be consummated in
accordance with said contracts, the Trustee shall credit to the Principal
Account pursuant to Section 3.03 hereof the cash or cash equivalents (including
such portion of any letter of credit applicable to such contracts) deposited by
the Depositor for the purpose of such purchase. Such monies, unless invested in
substitute Securities in accordance with Section 3.07 hereof, shall be
distributed to Unit Holders pursuant to Section 3.05 hereof on the second
Distribution Date following the failure of consummation of such purchase or such
earlier date as the Depositor and the Trustee determine. The Depositor shall
deliver the Securities listed on said Schedule or Schedules to the Trustee which
were not actually delivered concurrently with the execution and delivery of the
Reference Trust Agreement within 90 days after said execution and delivery or,
if Section 3.07 applies, within such shorter period as is specified in Section
3.07.
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The Trustee is irrevocably authorized hereby to effect registration of
transfer of the Securities in fully registered form in the name of the Trustee
or its nominee.
Section 2.02. Acceptance of Trust: The Trustee hereby accepts the Trust
created by this Indenture for the use and benefit of the Unit Holders in the
Trust, subject to the terms and conditions of this Indenture.
Section 2.03. Issue of Units: By executing the Reference Trust Agreement
and receipt for deposited property, the Trustee will thereby acknowledge receipt
of the deposit relating to the Trust to which such Reference Trust Agreement
relates, referred to in Section 2.01, and simultaneously with the receipt of
said deposit, will record on its books for the account of the Depositor the
aggregate number of Units of the Trust in exchange therefor as specified in Part
II of the Reference Trust Agreement. The number of Units may be increased
through a split of the Units or decreased through a reverse split thereof, as
directed by the Depositor, which revised number of Units shall be recorded by
the Trustee on its books.
The Trusts created by this Indenture are separate and distinct trusts for
all purposes and the assets of one such trust may not be commingled with the
assets of any other, nor shall the expenses of any such trust be charged against
the other. The Units representing the ownership of a fractional undivided
interest in one Trust shall not be exchangeable for Units representing the
ownership of an undivided fractional interest in any other except as set forth
in the applicable Prospectus.
Section 2.04. Uncertificated Units: All Units shall be held in
uncertificated form, unless and as the Trustee may deem it appropriate to issue
certificates or if so directed by the Depositor. The Trustee may deem and treat
the person in whose name any Unit is registered upon the books of the Trustee as
the owner thereof for all purposes and the Trustee shall not be affected by any
notice to the contrary.
Section 2.05. Deposit of Additional Securities: From time to time and in
the discretion of the Depositor, the Depositor may make deposits of Additional
Securities duly endorsed in blank or accompanied by all necessary instruments of
assignment and transfer in proper form (or contracts to purchase Additional
Securities and cash or an irrevocable letter of credit in an amount necessary to
consummate the purchase of any Additional Securities pursuant to such contracts
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("Additional Contract Securities")) and/or cash (or a letter of credit in lieu
of cash) with instructions to the Trustee to purchase one or more Additional
Securities (which cash (or cash in an amount equal to the face amount of the
letter of credit), to the extent not used by the Trustee to purchase such
Additional Securities within the 90-day period following the first deposit of
Securities in the Trust, shall be distributed to Unit Holders on the
Distribution Date next following such 90-day period or such earlier date as the
Depositor and the Trustee determine) and Cash (as defined below), if Cash is an
asset of the Trust immediately prior to the supplemental deposit, provided that
each deposit during the 90-day period following the first deposit of Securities
in the Trust shall replicate, to the extent practicable as hereinafter provided,
the Securities (including Contract Securities) and shall exactly replicate Cash
(other than Cash to be distributed solely to persons other than persons
receiving the distribution as holders of Additional Units created by the
deposit) held in the Trust immediately prior to each such deposit; and, provided
further that each deposit of Additional Securities and Cash, if any, subsequent
to such 90-day period shall exactly replicate the Securities (including Contract
Securities) and Cash (other than Cash to be distributed solely to persons other
than persons receiving the distribution as holders of additional Units created
by the deposit) held in the Trust immediately prior to each such deposit. In
connection with the deposit of Additional Securities, the Depositor shall
transfer to the Trustee its obligations under Additional Purchase Rights which
shall each have the same terms as the Purchase Rights transferred pursuant to
Section 2.01 and be in the same proportions as the Securities and Purchase
Rights referred to in Section 2.01. For purposes of this paragraph, Cash means
cash on hand in the Trust and/or cash receivable by the Trust as of the date of
the supplemental deposit reduced by payables and accrued expenses.
Accordingly, (a) for a deposit subsequent to the 90-day period following
the first deposit of Securities:
1........Any Additional Securities included in a deposit shall be identical to
Securities held in the Trust immediately prior to the deposit and in
amounts such that (i) the number of shares of Additional Securities of a
particular issue included in a deposit divided by (ii) the aggregate of the
number of shares of all Additional Securities included in the deposit
results in a fraction which is the same as the fraction resulting from
division of (iii) the aggregate number of shares of the Securities of the
same issue held in the Trust immediately prior to the deposit divided by
(iv) the aggregate number of
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shares of all Securities held in the Trust immediately prior to the deposit;
2........Any deposit of Additional Securities shall be accompanied by Cash in an
amount bearing the same ratio to the aggregate number of shares of all
Additional Securities in the deposit as the Cash held in the Trust
immediately prior to the deposit bears to the aggregate number of shares of
all Securities held in the Trust immediately prior to the deposit,
exclusive of Cash held in the Trust and designated for distribution solely
to persons other than persons receiving the distribution as holders of
Additional Units created by the deposit; and (b) for a deposit during the
90-day period following the first deposit of Securities in the Trust, the
rules stated in subparagraphs (a)(1) and (a)(2) of this Section shall apply
except that any Additional Securities (including Additional Contract
Securities) need be only substantially similar (rather than identical to)
Securities held in the Trust immediately prior to the deposit and need meet
the proportionality requirements only to the extent practicable. Without
limiting the generality of the phrase "to the extent practicable", if the
Depositor specifies a minimum number of shares of a Security with respect
to a particular trust to be included in a deposit and such minimum
requirement cannot be met or if a Security identical to a Security held in
the Trust is not readily obtainable, substitution of other substantially
similar Securities (including Securities of an issue originally deposited)
in order to meet the foregoing proportionality requirements shall be
considered as a meeting of such requirements "to the extent practicable".
Each deposit of Additional Securities shall be listed in a Supplementary
Schedule to the Reference Trust Agreement stating the date of such deposit
and the number of Additional Units being issued therefor. The Trustee shall
acknowledge in such Supplementary Schedule receipt of the deposit, and
simultaneously with the receipt of said deposit, reflect the aggregate
number of Additional Units specified in such Supplementary Schedule by
recording such Additional Units on its books. Such Additional Securities
shall be held, administered and applied by the Trustee in the same manner
as herein provided for the Securities. The execution by the Depositor in
connection with the deposit of Additional Securities of a Supplementary
Schedule to the Reference Trust Agreement shall constitute the approval by
the Depositor as satisfactory in form and substance of the contracts to be
entered into or assumed by the Trustee with regard to any Additional
Securities listed on such Supplementary Schedule and authorization to the
Trustee on behalf of the Trust to enter into or assume such contracts and
otherwise to carry out the terms and provisions thereof or to take other
ap-
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propriate action in order to complete the deposit of the Additional Securities
covered thereby into the Trust. The parties hereto agree that a Supplementary
Schedule to the Reference Trust Agreement may be delivered by telecopier and
that such delivery shall have the same force and effect as the delivery of an
original executed document.
Section 2.06. Register of Units: A register shall be kept by the Trustee
containing the names and addresses of the Unit Holders and the number of Units
owned by each Unit Holder, and in which all issues, exchanges, transfers and
cancellations of Units shall be recorded.
ARTICLE III
ADMINISTRATION OF TRUST
Section 3.01. Initial Cost: The costs of organizing the Trust and sale of
the Trust Units shall, to the extent of the expenses reimbursable to the
Depositor provided below, be borne by the Unit Holders, provided, however, that,
to the extent all of such costs are not borne by Unit Holders, the amount of
such costs not borne by Unit Holders shall be borne by the Depositor and,
provided further, however, that the liability on the part of the Depositor under
this section shall not include any fees or other expenses incurred in connection
with the administration of the Trust subsequent to the deposit referred to in
Section 2.01. Upon notification from the Depositor that the primary offering
period is concluded, the Trustee shall withdraw from the Account or Accounts
specified in the Prospectus or, if no Account is therein specified, from the
Principal Account, and pay to the Depositor the Depositor's reimbursable
expenses of organizing the Trust and sale of the Trust Units in an amount
certified to the Trustee by the Depositor. If the balance of the Principal
Account is insufficient to make such withdrawal, the Trustee shall, as directed
by the Depositor, sell Securities identified by the Depositor, or distribute to
the Depositor Securities having a value, as determined under Section 4.01 as of
the date of distribution, sufficient for such reimbursement. The reimbursement
provided for in this section shall be for the account of the Unitholders of
record at the conclusion of the primary offering period and shall not be
reflected in the computation of the Unit Value prior thereto. As used herein,
the Depositor's reimbursable expenses of organizing the Trust and sale of the
Trust Units shall include the cost of the initial preparation and typeset-
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ting of the registration statement, prospectuses (including preliminary
prospectuses), the indenture, and other documents relating to the Trust, SEC and
state blue sky registration fees, the cost of the initial valuation of the
portfolio and audit of the Trust, the initial fees and expenses of the Trustee,
and legal and other out-of-pocket expenses related thereto, but not including
the expenses incurred in the printing of preliminary prospectuses and
prospectuses, expenses incurred in the preparation and printing of brochures and
other advertising materials and any other selling expenses. Any cash which the
Depositor has identified as to be used for reimbursement of expenses pursuant to
this Section shall be reserved by the Trustee for such purpose and shall not be
subject to distribution or, unless the Depositor otherwise directs, used for
payment of redemptions in excess of the per-Unit amount allocable to Units
tendered for redemption. As directed by the Depositor, the Trustee will advance
funds to the Trust in an amount necessary to reimburse the Depositor pursuant to
this Section and shall recover such advance from the sale or sales of Securities
at such time as the Depositor shall direct, but in no event later than the
termination of the Trust. Repayment of any such advance shall be secured by a
lien on the assets of the Trust prior to the interest of the Unit Holders as
provided in Section 6.04.
Section 3.02. Income Account: The Trustee shall collect the dividends or
other like cash distributions on the Securities in the Trust as such are paid,
and credit such amounts, as collected, to a separate account to be known as the
"Income Account."
Section 3.03. Principal Account: The Securities in the Trust and all cash,
other than amounts credited to the Income Account, received by the Trustee in
respect of the Securities in the Trust shall be credited to a separate account
for the Trust to be known as the "Principal Account."
Section 3.04. Reserve Account: From time to time the Trustee shall withdraw
from the cash on deposit in the Principal Account such amounts as it, in its
sole discretion, shall deem requisite to establish a reserve for any applicable
taxes or other governmental charges that may be payable out of the Trust. Such
amounts so withdrawn shall be credited to a separate account which shall be
known as the "Reserve Account." The Trustee shall not be required to distribute
to the Unit Holders any of the amounts in the Reserve Account; provided,
however, that if the Trustee shall, in its sole discretion, determine that such
amounts are no longer necessary for payment
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of any applicable taxes or other governmental charges, then it shall promptly
deposit such amounts in the account from which previously withdrawn, or, if such
Trust has been terminated or is in the process of termination, the Trustee shall
distribute to each Unit Holder such holder's interest in the Reserve Account in
accordance with Section 9.04 hereof.
Section 3.05. Distribution: As of each Computation Day or Record Day for
the Trust, the Trustee shall:
(a) deduct from the Income Account, or, to the extent funds are not
available in such Account, from the Principal Account, and pay to itself
individually the amounts that it is at the time entitled to receive pursuant to
Section 6.04 or this Section 3.05;
(b) deduct from the Income Account, or, to the extent funds are not
available in such Account, from the Principal Account, an amount equal to the
unpaid fees and expenses, if any, including registration charges, Blue Sky fees,
printing costs, attorneys' fees, auditing costs and other miscellaneous
out-of-pocket expenses, as certified by the Depositor, incurred in keeping the
registration of the Units and the Trust on a current basis, provided, however,
that no portion of such amount shall be deducted or paid unless the payment
thereof from the Trust is at that time lawful; and
(c) deduct from the Income Account or, to the extent funds are not
available in such account, from the Principal Account the estimated amount that
the Depositor is entitled to receive pursuant to Section 8.07 and hold such
amount without interest until such time as it is payable to the Portfolio
Supervisor as set forth below. The Trustee shall distribute to the Portfolio
Supervisor from the amount so held pursuant to the immediately preceding
sentence the amounts that the Portfolio Supervisor is entitled to receive
pursuant to Section 8.07 on account of its services theretofore performed and
expenses theretofore incurred. With respect to Trusts having monthly, quarterly
or semiannual Distribution Dates, the Trustee shall deduct from the Income
Account one-twelfth, one-quarter or one-half, as the case may be, of the
estimated annual amount that the Portfolio Supervisor is entitled to receive and
shall distribute such amounts to the Portfolio Supervisor on the monthly,
quarterly or semiannual Distribution Dates, as the case may be. In the event of
the appointment of a successor portfolio supervisor pursuant to
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Section 6.01(f)(1), the Trustee shall deduct from the Income Account, or, to the
extent that funds are not available in such Account, from the Principal Account,
and pay to such successor portfolio supervisor the amounts, if any, that it is
at the time lawful for it to receive under said Section 6.01(f)(1).
All amounts (i) permitted to be withdrawn from the Principal Account under
this Indenture in order to satisfy obligations which, pursuant to the terms
hereof, are first to be paid out of the Income Account to the extent funds are
available, or (ii) permitted to be withdrawn from the Principal Account pursuant
to Section 5.02 hereof, may be made only from the balance in the Principal
Account after excluding capital amounts being held for distribution to Unit
Holders of record on the Record Date for a prior Distribution Date pursuant to
the second following paragraph. The Principal Account shall be reimbursed for
any such amounts described in clause (i) of the preceding sentence when
sufficient funds are next available in the Income Account after giving effect to
the payment from the Income Account of all amounts otherwise required to be
deducted therefrom at that time.
On each Distribution Date or within a reasonable period of time thereafter,
the Trustee shall distribute by mail to each Unit Holder of record at the close
of business on the preceding Record Date at his address appearing on the
registration books of the Trustee such holder's pro rata share of the balance of
the Income Account, plus such holder's pro rata share of the distributable cash
balance of the Principal Account, each computed as of the preceding Record Date
after deduction of all amounts specified in paragraphs (a), (b) and (c) of this
Section 3.05; provided, however, that funds credited to the Principal Account in
the event of the failure of consummation of a contract to purchase Securities
pursuant to Sectio 2.01 hereof, funds representing the proceeds of the sale of
Securities pursuant to Section 3.08 hereof, and funds representing the proceeds
of the sale of Securities under Section 5.02, 5.03, 6.04 or this Section 3.05 in
excess of the amounts needed for the purposes of said Sections shall not be
distributed until the second following Distribution Date or at such earlier date
as shall be determined by the Trustee or directed by the Depositor. The Trustee
shall make a special distribution of the cash balance in the Income and
Principal accounts available for such distribution to Unit Holders of record on
such dates as the Depositor shall direct. The Trustee shall not be required to
make a distribution from the Principal Account unless the cash balance on
deposit therein available for
-14-
distribution shall be sufficient to distribute at least $1.00 per 1,000 Units.
The amounts to be so distributed to each Unit Holder of the Trust of record
as of each Record Date shall be that pro rata share of the cash balance as of
such Record Date of the Income and Principal Accounts of the Trust, as shall be
represented by a notation on the registration or other record books of the
Trustee.
In the computation of each such share, fractions of less than one cent
shall be omitted. After any such distribution provided for above, any cash
balance remaining in the Income Account or the Principal Account shall be held
in the same manner as other amounts subsequently deposited in each of such
Accounts, respectively.
The Depositor may direct the Trustee to invest the proceeds of any sale of
Securities not required for the redemption of Units in eligible money market
instruments selected by the Depositor which will include only negotiable
certificates of deposit or time deposits of domestic banks which are members of
the Federal Deposit Insurance Corporation and which have, together with their
branches or subsidiaries, more than $2 billion in total assets, except that
certificates of deposit or time deposits of smaller domestic banks may be held
provided the deposit does not exceed the insurance coverage on the instrument
(which currently is $100,000), and provided further that the Trust's aggregate
holding of certificates of deposit or time deposits issued by the Trustee may
not exceed the insurance coverage of such obligations and U.S. Treasury notes or
bills (which shall be held until the maturity thereof) each of which matures
prior to the earlier of the next following Distribution Date or 90 days after
receipt, the principal thereof and interest thereon (to the extent such interest
is not used to pay Trust expenses) to be distributed on the earlier of the 90th
day after receipt or the next following Distribution Date.
For the purposes of distribution as herein provided, the holders of record
on the registration books of the Trustee at the close of business on each Record
Date shall be conclusively entitled to such distribution, and no liability shall
attach to the Trustee by reason of payment to any such registered Unit Holder of
record. Nothing herein shall be construed to prevent the payment of amounts from
the Income Account and the Principal Account to individual Unit Holders by means
of one check, draft or other proper instrument, provided that the
-15-
appropriate statement of such distribution shall be furnished therein as
provided in Section 3.06 hereof.
On each Deferred Sales Charge payment date set forth in the prospectus for
a Trust, the Trustee shall pay the account created pursuant to Section 3.14 the
amount of the Deferred Sales Charge payable on each such date as stated in the
prospectus for a Trust. Such amount shall be withdrawn from the Principal
Account from the amounts therein designated for such purpose or otherwise
deducted from such account.
Section 3.06. Distribution Statements: With each distribution from the
Income or Principal Accounts of the Trust, the Trustee shall furnish Unit
Holders a statement of the amount being distributed from each such account,
expressed in each case as a dollar amount per Unit.
Within a reasonable period of time after the last Business Day of each
calendar year or fiscal year, the Trustee shall furnish to each person who at
any time during such calendar year or fiscal year was a Unit Holder a statement
setting forth, with respect to such calendar year or fiscal year:
(A) as to the Income Account of the Trust:
(1) the amount of dividends received on the Securities,
(2) the amounts paid from the Income Account for redemptions pursuant to
Section 5.02,
(3) the deductions from the Income Account for payment of applicable taxes or
other governmental charges, if any, compensation of the Depositor, fees and
expenses of the Trustee, transfers to the Reserve Account, any expenses
paid by the Trust pursuant to Section 3.05 hereof and any Deferred Sales
Charge paid,
(4) the amount distributed from the Income Account, identifying separately
amounts distributed as dividends and as other income,
(5) any other amount credited to or deducted from the Income Account, and
(6) the balance remaining after such distributions and deductions, expressed
both as a total dollar amount and as a dol-
-16-
lar amount per Unit outstanding on the last Business Day of such calendar or
fiscal year;
(B) as to the Principal Account of the Trust:
(1) the dates of the sale, liquidation or redemption of any of the Securities,
the identity of such Securities and the net proceeds received therefrom,
excluding any portion thereof credited to the Income Account,
(2) the amount paid from the Principal Account for redemption pursuant to
Section 5.02,
(3) the deductions for payment of applicable taxes and other governmental
charges, if any, fees and expenses of the Trustee, transfers to the Reserve
Account, any expenses paid by the Trust under Section 3.05 hereof and any
Deferred Sales Charge paid,
(4) the amount distributed from the Principal Account for such period, pursuant
to Section 3.05 hereof,
(5) any other amount credited to or deducted from the Principal Account, and
(6) the balance remaining after such distributions and deductions, expressed
both as a total dollar amount and as a dollar amount per Unit outstanding
on the last Business Day of such calendar or fiscal year; and
(C) the following information:
(1) a list of the Securities held in the Trust as of the last Business Day of
such calendar or fiscal year,
(2) the number of Units outstanding on the last Business Day of such calendar
or fiscal year,
(3) the Unit Value (as defined in Section 5.01) based on the last evaluation of
such Trust made during such calendar or fiscal year, and
-17-
(4) the amounts actually distributed during such calendar or fiscal year from
the Income and Principal Accounts of the Trust, separately stated,
expressed both as total dollar amounts and as dollar amounts per Unit
outstanding on the Record Date for such distributions.
Section 3.07. Replacement Securities: In the event that any Contract
Security is not delivered due to any occurrence, act or event beyond the control
of the Depositor and of the Trustee (such a Contract Security being herein
called a 'Special Security'), the Depositor may instruct the Trustee to purchase
Replacement Securities which have been selected by the Depositor having a cost
not in excess of the cost of the Special Securities not so delivered. To be
eligible for inclusion in the Trust, the Replacement Securities which the
Depositor selects must: (i) be of the same type as that replaced (e.g., both
will be common stock or preferred stock); (ii) in the Depositor's judgment,
closely resemble the Special Security as respects the investment characteristics
which led the Depositor to select the Special Security for inclusion in the
Trust; and (iii) be purchased within twenty days after delivery of notice of the
failed contract to the Trustee or to the Depositor, whichever occurs first. Any
Replacement Securities received by the Trustee shall be deposited hereunder and
shall be subject to the terms and conditions of this Indenture to the same
extent as other Securities deposited hereunder. No such deposit of Replacement
Securities shall be made after the earlier of (i) 90 days after the date of
execution and delivery of the applicable Reference Trust Agreement or (ii) the
first Distribution Date to occur after the date of execution and delivery of the
applicable Reference Trust Agreement.
Whenever a Replacement Security is acquired by the Depositor pursuant to
the provisions of this Section 3.07, the Trustee shall, within five days
thereafter, mail to all Unit Holders notices of such acquisition, including an
identification of the Special Security and the Replacement Security acquired.
The purchase price of a Replacement Security shall be paid out of the funds in
the principal account attributable to the Special Security which it replaces.
The Trustee shall not be liable or responsible in any way for depreciation or
loss incurred by reason of any purchase made pursuant to any such instructions
from the Depositor and in the absence of such instructions the Trustee shall
have no duty to purchase any Replacement Securities under this Indenture. The
Depositor shall not be liable for any failure to instruct the Trustee to
pur-
-18-
chase any Replacement Security or for errors of judgment in selecting any
Replacement Security.
Section 3.08. Sale of Securities: In order to maintain the sound investment
character of the Trust, the Depositor may direct the Trustee to sell or
liquidate Securities at such price and time and in such manner as shall be
determined by the Depositor, provided that the Depositor has determined that any
one or more of the following conditions exist:
(a) that there has been a failure by the issuer of such Securities to
declare or pay an anticipated dividend thereon;
(b) that any action or proceeding has been instituted in law or equity
seeking to restrain or enjoin the payment of dividends on any such Securities,
or that there exists any other legal question or impediment affecting such
Securities or the payment of dividends on the same;
(c) that there has occurred any breach of covenant or warranty in any
resolution, ordinance, trust, indenture or other agreement or document, which
would adversely affect either immediately or contingently the payment of
dividends on such Securities;
(d) that the price of any such Securities has declined to such an extent,
or such other market or credit factor exists, that in the opinion of the
Depositor the retention of such Securities would be detrimental to the Trust and
to the interest of the Unit Holders;
(e) that there has been a default in the payment of principal or par or
stated value of, premium, if any, or income on any other outstanding securities
of the issuer or the guarantor of such securities which might materially and
adversely, either immediately or contingently, affect the declaration or payment
of dividends on the Securities; and
(f) that the tax treatment of the Trust as a grantor trust would otherwise
be jeopardized.
In order to pay the Deferred Sales Charge, the Trustee shall sell or
liquidate such an amount of Securities and at such time and from time to time
and in such manner as the Depositor shall direct such that the proceeds of such
sale or liquidation shall be sufficient to pay the amount required to
-19-
be paid to the Depositor pursuant to the Deferred Sales Charge program as set
forth in the prospectus for a Trust.
Securities sold shall either be sold to a purchaser subject to the related
Purchase Rights or the Trustee shall acquire a purchase right with the same
terms as the Purchase Right in such a manner that the obligation under the
Purchase Right is canceled and then sell the Securities to which such Purchase
Right related.
Upon receipt of such direction from the Depositor, upon which the Trustee
shall rely, the Trustee shall proceed to sell the specified Securities in
accordance with such direction. The Trustee shall not be liable or responsible
in any way for depreciation or loss incurred by reason of any sale made pursuant
to any such direction or by reason of the failure of the Depositor to give any
such direction, and in the absence of such direction the Trustee shall have no
duty to sell any Securities under this Section 3.08. The Depositor shall not be
liable for errors of judgment in directing or failing to direct the Trustee
pursuant to this Section 3.08.
Section 3.09. Notice and Sale by Trustee: If at any time there has been a
failure by the issuer of any of the Securities to pay a dividend that is due and
payable, the Trustee shall notify the Depositor thereof. If within thirty days
after such notification the Trustee has not received any instruction from the
Depositor to sell or to hold or to take any other action in connection with such
Security, the Trustee shall sell such Security forthwith, and the Trustee shall
not be liable or responsible in any way for depreciation or loss incurred by
reason of such sale or by reason of any action or inaction in accordance with
such written instructions of the Depositor. The Trustee shall promptly notify
the Depositor of such action in writing and shall set forth therein the Security
sold and the proceeds received therefrom.
Section 3.10. Refunding Securities: Except as otherwise provided in Section
3.13, 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, the Trustee shall reject such
offer. However, should any exchange or substitution be effected notwithstanding
such rejection or without an initial offer, any Securities, cash and/or property
received in exchange shall be deposited hereunder and shall be promptly sold, if
securities or property, by the Trustee. The cash then remaining shall be
distributed to Unit Holders on the next Distribution Date in
-20-
the manner set forth in Section 3.05 regarding distributions from the Principal
Account.
Section 3.11. Notice of Actions: Except as otherwise provided in Section
3.13, in the event that the Trustee shall have been notified at any time of any
action to be taken or proposed to be taken by holders of any Securities held by
the Trust (including, but not limited to, the making of any demand, direction,
request, giving of any notice, consent or waiver or the voting with respect to
election of directors or any amendment or supplement to any corporate
resolution, agreement or other instrument under or pursuant to which such
Securities have been issued) the Trustee shall promptly notify the Depositor and
shall thereupon take such action or refrain from taking any action as the
Depositor shall in writing direct; provided, however, that if the Depositor
shall not within five business days of the giving of such notice to the
Depositor direct the Trustee to take or refrain from taking any action, the
Trustee shall take such action as it, in its sole discretion, shall deem
advisable. Neither the Depositor nor the Trustee shall be liable to any person
for any action or failure to take action with respect to this Section.
Section 3.12. Extraordinary Distributions: Except as otherwise provided in
Section 3.13, any property received by the Trustee after the initial date of
Deposit in a form other than cash or additional shares of the Securities listed
on Schedule A or of a Replacement Security, shall be either (i) dealt with under
the Distribution Agency Agreement as though such property were an asset of the
Trust other than cash remaining on hand at the termination of the Trust or (ii)
sold, and the proceeds of sale credited to the Principal Account of the Trust,
all as the Depositor may direct. In no event shall the Trustee hold as part of
the Trust, except temporarily pending sale or distribution as described in the
preceding sentence, any property other than cash (including a letter of credit)
and the Securities described on Schedule A or a Replacement Security.
The Securities, Purchase Rights and cash represented by a Unit shall be
uniform so that each Unit shall at all times represent property identical to
that represented by every other Unit. Securities identical to those represented
by a Unit and received as the result of a stock dividend or stock split may be
retained in the Trust and the number of shares of such a Security represented by
a Unit adjusted accordingly. All other non-cash distributions in respect of any
Securities held in the
-21-
Trust shall be sold or distributed to Unit Holders through the Distribution
Agent, as referred to above.
Section 3.13. Extraordinary Event - Security Retention and Voting. In the
event the Trustee is notified of any action to be taken or proposed to be taken
by holders of the securities held by the Trust in connection with any proposed
merger, reorganization, spin-off, split-off or split-up by the issuer of stock
or securities held in the Trust, the Trustee shall take such action or refrain
from taking any action, as appropriate, so as to insure that the securities are
voted as closely as possible in the same manner and in the same general
proportion as are the securities held by owners other than the Trust. If stock
or securities are received by the Trustee, with or without cash, as a result of
any merger, reorganization, spin-off, split-off or split-up by the issuer of
stock or securities held in the Trust, the Trustee at the direction of the
Depositor may retain such stock or securities in the Trust. Neither the
Depositor nor the Trustee shall be liable to any person for any action or
failure to take action with respect to this section.
Section 3.14. Deferred Sales Charge. If the Prospectus for a Trust
specifies a Deferred Sales Charge, the Trustee shall, on the dates specified in
and as permitted by the Prospectus, withdraw from the Income Account if such
account is designated in the Prospectus as the source of the payments of the
Deferred Sales Charge, or to the extent funds are not available in that account
or if such account is not so designated, from the Principal Account, an amount
per Unit specified in the Prospectus and credit such amount to a special,
non-Trust account maintained at the Trustee out of which the Deferred Sales
Charge will be distributed to the Depositor. If the Income Account is not
designated as the source of the Deferred Sales Charge payment or if the balances
in the Income and Principal Accounts are insufficient to make any such
withdrawal, the Trustee, shall, as directed by the Depositor, either advance
funds in an amount equal to the proposed withdrawal and be entitled to
reimbursement of such advance upon the deposit of additional monies in the
Income Account or the Principal Account, sell Securities and credit the proceeds
thereof to such special Depositor's account or credit Securities in kind to such
special Depositor's Account. Such directions shall identify the Securities, if
any, to be sold or distributed in kind and shall contain, if the Trustee is
directed by the Depositor to sell a Security, instructions as to execution of
such sales. If a Unit Holder redeems Units prior to full payment of the Deferred
Sales Charge, the Trustee shall,
-22-
if so provided in the Prospectus, on the Redemption Date, withhold from the
Redemption Price payment to such Unit Holder an amount equal to the unpaid
portion of the Deferred Sales Charge as such amount is certified by the
Depositor to the Trustee prior to the Redemption Date, upon which certification
the Trustee shall be entitled to rely, and distribute such amount to such
special Depositor's account or, if the Depositor shall purchase such Unit
pursuant to the terms of Section 5.02 hereof, the Depositor shall pay the
Redemption Price for such Unit less the unpaid portion of the Deferred Sales
Charge. The Depositor may at any time instruct the Trustee to distribute to the
Depositor cash or Securities previously credited to the special Depositor's
account. References to Defereed Sales Charge in this Trust Indenture and
Agreement shall include and Creation and Development Fee indicated in the
prospectus for a Trust. The Creation and Development Fee shall be payable on
each date so designated and in an amount determined as specified in the
prospectus for a Trust.
ARTICLE IV
EVALUATION OF SECURITIES
Section 4.01. Evaluation of Securities: The Trustee shall determine
separately and promptly furnish to the Depositor upon request the value of each
issue of the Purchase Rights and Securities in the Trust (determined as set
forth below) as of the Evaluation Time on each of the days on which the Trustee
shall make the Trust Evaluation required by Section 5.01. In making the
evaluations the Trustee shall determine the value of each issue of the
Securities in the Trust by the following methods: If the Securities are listed
on one or more national securities exchanges, such valuation shall be based on
the closing price on such exchange which is the principal market thereof, deemed
to be the New York Stock Exchange if the Securities are listed thereon (unless
the Trustee deems such price inappropriate as a basis for valuation). If the
Securities are not so listed, or, if so listed and the principal market therefor
is other than such exchange or there is no closing price on such exchange, such
valuation shall be based on the closing price in the over-the-counter market
(unless the Trustee deems such price inappropriate as a basis for valuation) or
if there is no such closing price, by any of the following methods which the
Trustee deems appropriate: (i) on the basis of current bid prices of such
Securities as obtained from investment dealers or brokers (including the
Depositor) who customarily deal in
-23-
securities comparable to those held by the Trust, or (ii) if bid prices are not
available for any of such Securities, on the basis of bid prices for comparable
securities, or (iii) by appraisal of the value of the Securities on the bid side
of the market or by such other appraisal as is deemed appropriate, or (iv) by
any combination of the above. The Trustee shall evaluate the Purchase Rights
following the same procedures as it follows in evaluating Securities pursuant to
this Section 4.01 except that references to securities exchanges shall be
replaced by references to options exchanges and references in the preceding
sentence to bid prices shall be replaced by reference to after prices. The
Trustee shall also make an evaluation of the Securities deposited in the Trust
as of the time said Securities are deposited under this Indenture. Such
evaluation shall be made on the same basis as set forth above. The Trustee's
determination of the closing prices of the Securities on the date of deposit
shall be included in the Schedules attached to the Reference Trust Agreement.
Section 4.02. Tax Reports: For the purpose of permitting Unit Holders to
satisfy any reporting requirements of applicable Federal or State tax law, the
Trustee shall transmit to any Unit Holder upon written request any
determinations made by the Trustee pursuant to Section 4.01.
Section 4.03. Liability of the Trustee: The Depositor and Unit Holders may
rely on any evaluation furnished by the Trustee and shall have no responsibility
for the accuracy thereof. The determinations made by the Trustee hereunder shall
be made in good faith upon the basis of the best information available to it.
The Trustee shall be under no liability to the Depositor or Unit Holders for
errors in judgment, provided, however, that this provision shall not protect the
Trustee against any liability to which it would otherwise be subject by reason
of willful misfeasance, bad faith or negligence in the performance of its duties
or by reason of its reckless disregard of its obligations and duties hereunder.
The Trustee shall not be liable or responsible for depreciation or losses
incurred by reason of the purchase, sale or retention of any Securities.
-24-
ARTICLE V
TRUST EVALUATION, REDEMPTION,
TRANSFER OF UNITS
Section 5.01. Trust Evaluation: The Trustee shall make an evaluation of the
Trust as of the Evaluation Time (i) on the last Business Day of each of the
months of June and December, (ii) on the day on which any Unit of the Trust is
tendered for redemption (unless tender is made after the Evaluation Time on such
day, in which case tender shall be deemed to have been made on the next day
subsequent thereto on which the New York Stock Exchange is open for trading),
and (iii) on any other day desired by the Trustee or requested by the Depositor.
Such evaluations shall take into account and itemize separately (a)(1) the cash
on hand in the Trust (other than monies on deposit in the Reserve Account, funds
deposited on the date hereof by the Depositor for the purchase of Securities and
not theretofore credited to the Principal Account pursuant to Section 3.03 and
funds in the Principal Account with respect to which contracts for the purchase
of the Replacement Securities have been entered into pursuant to Section 3.07
hereof), including dividends receivable on stocks trading ex dividend, (a)(2)
the value of each issue of the Securities in the Trust reduced by the value of
each of the Purchase Rights as determined by the Trustee pursuant to
Section 4.01, and (a)(3) all other assets of the Trust. For each such evaluation
there shall be deducted from the sum of the above (b)(1) amounts representing
any applicable taxes or other governmental charges payable out of the Trust and
for which no deductions shall have previously been made for the purpose of
addition to the Reserve Account, (b)(2) amounts representing accrued fees of the
Trustee and expenses of the Trust including but not limited to unpaid fees of
the Trustee and expenses of the Trust (including legal and auditing expenses),
accrued fees and expenses of the Depositor and its respective successors, if
any, and (b)(3) cash held for distribution to Unit Holders of record as of a
date on or prior to the evaluation then being made. The value of the pro rata
share of each Unit of the Trust determined on the basis of any such evaluation
shall be referred to herein as the "Unit Value."
The sum of (a)(1) and (a)(3) reduced by the sum of (b)(1) and (b)(2) and
(b)(3) shall be referred to herein as the "Unit Cash Value."
-25-
The Trustee shall promptly advise the Depositor of each determination of
Unit Value made by it as above provided, and, in addition, upon each evaluation
by the Trustee under Section 4.01 other than those involved in such calculations
of Unit Value, the Trustee shall promptly furnish to the Depositor, for purposes
of assisting it in maintaining a market in the Units, with such information
regarding the Principal, Income and Reserve Accounts as the Depositor may
reasonably request.
Section 5.02. Redemptions by Trustee; Purchases by Depositor: On any
Business Day on which any Unit or Units are tendered for redemption (the "Tender
Day") by a Unit Holder or his duly authorized attorney to the Trustee at its
corporate trust office in the City of New York, such Units shall be redeemed by
the Trustee on that Tender Day. Units in uncertificated form shall be tendered
by means of an appropriate request for redemption in form approved by the
Trustee. Unit Holders must sign exactly as their name appears on the register
with the signature guaranteed by an officer of a national bank or trust company,
or by a member firm of either the New York, Midwest, or Pacific Coast Stock
Exchanges, or in such other manner as may be acceptable to the Trustee. The
Trustee may also require additional documents such as, but not limited to, trust
instruments, certificates of death, appointments as executor or administrator or
certificates of corporate authority. Subject to payment by such Unit Holder of
any tax or other governmental charges which may be imposed thereon, if the
Depositor directs a redemption in kind, such redemption is to be made by
distribution to the Distribution Agent on behalf of the redeeming Unit Holder on
the Tender Day and subsequent distribution to such Unit Holder by the
Distribution Agent no later than the next Business Day following the Tender Day
(such next Business Day being hereinafter the "Redemption Date") of (i) the Unit
Holder's pro rata portion as of the Tender Day of the Securities in the Trust,
in whole shares, as designated by the Sponsor and (ii) cash equal to the Unit
Cash Value multiplied by the number of Units being redeemed (herein called the
"Redemption Distribution"). In addition, the Trustee shall distribute to the
Distribution Agent no later than the seventh calendar day after the Tender Day
(or if such is not a Business Day, then the first Business Day prior thereto),
for distribution to a redeeming Unit Holder on such day, cash equal to the value
of any fractional shares included in such Unit Holder's pro rata portion of the
Securities as of the Tender Day.
If Units are tendered for redemption and not redeemed in kind, redemption
of such Units is to be made by payment
-26-
within seven calendar days of cash equivalent to the Unit Value, determined by
the Trustee as of the close of trading on the New York Stock Exchange, on the
date of tender (herein called the "Redemption Price"). Units received for
redemption by the Trustee on any day after the Evaluation Time will be held by
the Trustee until the next day on which the New York Stock Exchange is open for
trading and will be deemed to have been tendered on such day for redemption at
the Redemption Price computed on that day. The portion of the Redemption Price
which represents the Unit Holders' interest in the Income Account shall be
withdrawn from the Income Account of the Trust to the extent available. The
balance paid on any redemption shall be withdrawn from the Principal Account of
the Trust to the extent that funds are available for such purpose. If such
available balance shall be insufficient, the Trustee shall sell such of the
Securities held in the Trust as are currently designated for such purposes by
the Depositor as the Trustee in its sole discretion shall deem necessary. The
sale of Securities shall be effected in the manner set forth in Section 3.08.
The Depositor shall maintain with the Trustee a current list of Securities held
in the Trust designated to be sold for the purpose of redemption of Units of the
Trust, and for payment of expenses hereunder, provided that if the Depositor
shall for any reason fail to maintain such a list, the Trustee, in its sole
discretion, may designate a current list of Securities for such purposes. The
net proceeds of any sales of Securities from such list representing principal
shall be credited to the Principal Account of the Trust.
The Depositor shall maintain with the Trustee a current list of Securities
held in the Trust designated to be sold for the purpose of satisfying amounts
for the payment of cash equivalent to the value of fractional shares; provided
that if the Depositor shall for any reason fail to maintain such a list, the
Trustee, in its sole discretion, may designate a current list of Securities for
such purposes. The net proceeds of any sales of Securities from such list shall
be credited to the Principal Account of the Trust and paid therefrom, to the
extent necessary in accordance with this Section and otherwise distributed
pursuant to this Indenture. The Trustee shall not be liable or responsible in
any way for depreciation or loss incurred by reason of any sale or sales made in
accordance with this Section 5.02.
The portion of the Redemption Distribution which represents the Unit
Holder's interest in the Income Account shall be withdrawn from the Income
Account to the extent available. The balance paid on any redemption, including
dividends receiv-
-27-
able on stocks trading ex dividend, if any, shall be withdrawn from the
Principal Account to the extent that funds are available for such purpose. If
such available balance shall be insufficient, the Trustee shall advance funds
sufficient to pay such amount to the Unit Holder and shall be entitled to
reimbursement of such advance upon the deposit of additional monies in the
Income Account or Principal Account, whichever happens first. Should any amounts
so advanced with respect to declared but unreceived dividends prove
uncollectable because of default in payment of such dividends, the Trustee shall
have the right immediately to liquidate Securities in amount sufficient to
reimburse itself for such advances, without interest. In the event that funds
are withdrawn from the Principal Account for payment of any portion of the
Redemption Distribution representing dividends receivable on stocks trading ex
dividend, the Principal Account shall be reimbursed when sufficient funds are
next available in the Income Account for such funds so applied.
The Trustee may in its discretion, and shall when so directed by the
Depositor, suspend the right of redemption or postpone the date of payment of
the Redemption Distribution for more than seven calendar days following the day
on which tender for redemption is made (1) for any period during which the New
York Stock Exchange is closed other than customary weekend and holiday closings
or during which trading on the New York Stock Exchange is restricted; (2) for
any period during which an emergency exists as a result of which disposal by the
Trust of the Securities is not reasonably practicable or it is not reasonably
practicable fairly to determine in accordance herewith the value of the
Securities; or (3) for such other period as the Securities and Exchange
Commission may by order permit. The Trustee shall not be liable to any person or
in any way for any loss or damage which may result from any such suspension or
postponement.
Not later than the close of business on the day any Unit is tendered for
redemption by a Unit Holder other than the Depositor, the Trustee shall notify
the Depositor of such tender. The Depositor shall have the right to purchase
such Unit by notifying the Trustee of its election to make such purchase no
later than the close of business on the Tender Day. Such purchase shall be made
by payment for such Unit by the Depositor to the Unit Holder not later than the
close of business on the Redemption Date of an amount not less than the
Redemption Distribution which would otherwise be payable by the Trustee to such
Unit Holder.
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Any Unit so purchased by the Depositor may at the option of the Depositor
be tendered to the Trustee for redemption at the corporate trust office of the
Trustee in the manner provided in the first paragraph of this Section 5.02.
The Trustee shall not be liable or responsible in any way for depreciation
or loss incurred by reason of any sale or redemption of Securities made pursuant
to this Section 5.02.
Section 5.03. Redemption Upon Termination: Should the Trust terminate on
the Termination Date specified in the Reference Trust Agreement (the
"Termination Date"), Securities will be distributed to the Distribution Agent as
agent for the Unit Holders as provided in Section 9.03(b)(i). A Unit Holder may
notify the Distribution Agent in writing at least 3 days prior to the Evaluation
Time on the Termination Date as to whether such Unit Holder desires: 1) to
receive his pro rata share of the Securities in-kind; 2) to receive the cash
proceeds from the sale of his pro rata share of underlying Securities; or 3) to
participate in the reinvestment program by investing his interest in the Trust
including the proceeds from the sale of his pro rata share of underlying
securities in units of a new trust. Unit Holders who do not notify the
Distribution Agent of their election will receive cash from the sale of their
pro rata share of underlying securities (Option 2). Unit Holders who elect
Options 2 or 3 will have their securities sold and distributed or invested
pursuant to Section 1.02(b) of the Distribution Agency Agreement. Unit Holders
may elect to roll over Securities on a roll over date or Termination Date
pursuant to Section 1.02(c) of the Distribution Agency Agreement.
A Unit Holder choosing in-kind distribution will receive such distribution
on the first business day following the Termination Date subject to payment by
such Unit Holder of any tax or governmental charges which may be imposed
thereon. This distribution shall consist of such Unit Holder's pro rata portion
of each of the Securities in whole shares based on the number of Units owned as
of the Termination Date plus the Unit Holder's pro rata share of the balances in
the Income and Principal Accounts distributed to the Distribution Agent as
provided in Section 9.03 hereof (herein called the "Termination Distribution").
In addition, the Distribution Agent shall distribute no later than the seventh
calendar day after the Termination Date (or if such is not a Business Day, then
the first Business Day prior thereto), cash equal to the value of any fractional
shares included in such Unit Holder's pro rata portion of the Securities as of
the Termination Date.
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The Depositor shall provide the Distribution Agent with a list of
Securities held in the Trust designated to be sold for the purpose of satisfying
amounts for the payment of cash equal to the value of fractional shares;
provided that if the Depositor shall for any reason fail to provide such a list,
the Distribution Agent, in its sole discretion, may designate a list of
Securities for such purposes. The excess proceeds of any sales of Securities
from such list shall be credited to the cash account to be distributed pro rata
at the time of the settlement of the last sale pursuant to Section 1.02(b) of
the Distribution Agency Agreement.
Notwithstanding the option to reinvest the proceeds in the next National
Equity Trust series to be offered after the Termination Date (the "New Series"),
the Depositor may, in its sole discretion at any time, decide not to offer any
Series of the Trust in the future. If the Depositor so decides, the Depositor
shall notify the Trustee of that decision, and the Trustee shall notify Unit
Holders before the Termination Date. Moreover, the Trustee may in its
discretion, and shall when so directed by the Depositor in writing, postpone the
Termination Date (1) for any period during which the New York Stock Exchange is
closed other than customary weekend and holiday closings; (2) for any period
during which (as determined by the Securities and Exchange Commission by rule,
regulation or order) (i) trading on the New York Stock Exchange is restricted or
(ii) an emergency exists as a result of which disposal by the Trust of the
Securities is not reasonably practicable or it is not reasonably practicable
fairly to determine in accordance herewith the value of the Securities for the
purposes of any Trust Evaluation; or (3) for such other periods as the
Securities and Exchange Commission may by order permit.
Section 5.04. Transfer of Units: Units may be transferred by the registered
Unit Holder thereof by presentation of transfer instructions, at the principal
office of the Trustee accompanied by such documents executed by the registered
Unit Holder or his authorized attorney as the Trustee deems necessary to
evidence the authority of the person making such transfer. The Trustee may deem
and treat the person in whose name any Unit shall be registered upon the books
of the Trustee as the owner of such Unit for all purposes hereunder and the
Trustee shall not be affected by any notice to the contrary. The transfer books
maintained by the Trustee for the purposes of this Section 5.04 shall be closed
in connection with the termination of the Trust pursuant to Section 9.03 hereof.
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A sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any such transfer shall be paid to the Trustee. A
Unit Holder may be required to pay $2 (or such other amount as may be specified
by the Trustee and approved by the Depositor) on any such transfer.
The Trustee may also adopt other reasonable rules and regulations for the
transfer, tender and redemption of Units.
ARTICLE VI
TRUSTEE
Section 6.01. General Definition of Trustee's Liabilities, Rights and
Duties: In addition to and notwithstanding the other duties, rights, privileges
and liabilities of the Trustee as otherwise set forth, the liabilities of the
Trustee are further defined as follows:
(a) all monies deposited with or received by the Trustee hereunder shall be
held by it without interest in trust as part of the Trust until required to be
disbursed in accordance with the provisions of this Indenture and such monies
will be segregated by separate recordation on the trust ledger of the Trustee so
long as such practice preserves a valid preference under applicable law, or if
such preference is not so preserved the Trustee shall handle such monies in such
other manner as shall constitute the segregation and holding thereof in trust
within the meaning of the Investment Company Act of 1940;
(b) the Trustee shall be under no liability for any action taken in good
faith on any appraisal, paper, order, list, demand, request, consent, affidavit,
notice, opinion, direction, evaluation, endorsement, assignment, resolution,
draft or other document whether or not of the same kind prima facie properly
executed, or for the disposition of monies, Securities or Units pursuant to this
Indenture, or in respect of any evaluation which it is required to make or is
required or permitted to have made by others under this Indenture or otherwise,
except by reason of its own 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 parties hereto may construe any of the
provisions of this
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Indenture, insofar as the same may appear to be ambiguous or inconsistent with
any other provisions hereof which construction shall be binding upon the Unit
Holders and the parties hereto. The Trustee shall be under no liability for any
construction of any such provisions hereof;
(c) the Trustee shall not be responsible for or in respect of the recitals
herein, the validity or sufficiency of this Indenture or for the due execution
hereof by the Depositor or for the form, character, genuineness, sufficiency,
value or validity of any Securities, and the Trustee shall in no event assume or
incur any liability, duty or obligation to any Unit Holder or the Depositor
other than as expressly provided for herein. The Trustee shall not be
responsible for or in respect of the validity of any signatures by or on behalf
of the Depositor;
(d) the Trustee shall be under no obligation to appear in, prosecute or
defend any action which in its opinion may involve it in expense or liability,
unless as often as required by the Trustee, it shall be furnished with
reasonable security and indemnity against such expense or liability, and any
pecuniary cost to the Trustee from such action shall be deductible from and a
charge against the Income and Principal Accounts of the Trust. Subject to the
foregoing, the Trustee shall in its discretion undertake such action as it may
deem necessary at any and all times to protect the Trust and the rights and
interest of the Unit Holders pursuant to the terms of this Indenture, provided,
however, that the expenses and costs of such actions, undertakings or
proceedings shall be reimbursable to the Trustee from the Income and Principal
Accounts, and the payment of such costs and expenses shall be secured by a lien
on the Trust prior to the interests of the Unit Holders;
(e) the Trustee may employ agents, attorneys, accountants and auditors and
shall not be answerable for the default or misconduct of any such agents,
attorneys, accountants or auditors if such agents, attorneys, accountants or
auditors shall have been selected with reasonable care; provided, however, that
if the Trustee chooses to employ the Depository Trust Company in connection with
the storage and handling of, and the furnishing of administrative services in
connection with the Securities, the Trustee will be answerable for any default
or misconduct of the Depository Trust Company and its employees and agents as
fully and to the same extent as if such default or mis-
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conduct had been committed or occasioned by the Trustee. The Trustee shall be
fully protected in respect of any action under this Indenture taken, or
suffered, in good faith by the Trustee, in accordance with the opinion of its
counsel. The accounts of the Trust shall be audited not less frequently than
annually by independent certified public accountants designated from time to
time by the Depositor, and the reports of such accountants shall be furnished by
the Trustee to Unit Holders upon request. The fees and expenses charged by such
agents, attorneys, accountants or auditors shall constitute an expense of the
Trust reimbursable from the Interest and Principal Accounts as set forth in
Section 6.04 hereof;
(f) if the Depositor shall resign pursuant to Section 8.04 hereof or shall
fail to undertake or perform any of the duties which by the terms of this
Indenture are required by it to be undertaken or performed or if the Depositor
shall be dissolved or become incapable of acting or shall be adjudged a bankrupt
or insolvent, or a receiver of the property of the Depositor shall be appointed
or any public officer shall take charge or control of the Depositor or its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then in any such case, the Trustee may: (1) appoint a successor
depositor meeting the qualifications set forth in Section 8.03 who shall act
hereunder in all respects in place of the Depositor which successor shall be
satisfactory to the Trustee, and which may be compensated at rates deemed by the
Trustee to be reasonable under the circumstances, by deduction from the Income
Account of the Trust or, to the extent funds are not available in such Account,
from the Principal Account of the Trust but no such deduction shall be made
exceeding such reasonable amount as the Securities and Exchange Commission may
prescribe in accordance with Section 26(a)(2)(C) of the Investment Company Act
of 1940, or (2) terminate this Indenture and the trust created hereby and
liquidate the Trust in the manner provided in Section 9.03 or (3) act as
Depositor itself without terminating the Trust;
(g) if the value of the Trust as shown by any Trust Evaluation shall be
less than 40% of the value of the Securities in the Trust determined as of the
date on which the most recent deposit of Securities occurred, the Trustee may in
its discretion, and shall if so directed by the Depositor, terminate this
Indenture and the trust created
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hereby and liquidate the Trust all in the manner provided in Section 9.03;
(h) the Trustee is authorized and empowered, at the request and direction
of the Depositor, to execute and file on behalf of the Trust any and all
documents, in connection with consents to service of process, required to be
filed under the securities laws of the various States in order to permit the
sale of Units of the Trust in such States by the Depositor;
(i) in no event shall the Trustee be liable for any taxes or other
governmental charges imposed upon or in respect of the Securities or upon the
dividends thereon or upon it as Trustee hereunder or upon or in respect of the
Trust which it may be required to pay under any present or future law of the
United States of America or of any other taxing authority having jurisdiction in
the premises. For all such taxes and charges and for any expenses, including
counsel fees, which the Trustee may sustain or incur with respect to such taxes
or charges, the Trustee shall be reimbursed and indemnified out of the Reserve
Account and/or the Income and Principal Accounts of the Trust, and the payment
of such amounts so paid by the Trustee shall be secured by a lien on the Trust
prior to the interests of the Unit Holders.
The Depositor shall, upon request by the Trustee, provide the Trustee with
a current list of Securities designated to be sold for the purpose of payment of
expenses hereunder, provided that if the Depositor shall for any reason fail to
provide such a list, the Trustee, in its sole discretion, may designate a
current list of Securities for such purposes. The net proceeds of any such sales
of Securities from such list representing principal shall be credited to the
Principal Account.
(j) the trustee except by reason of its own negligence, bad faith or wilful
misconduct shall not be liable for any action taken, omitted or suffered to be
taken by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Indenture;
(k) so long as shall be required by Section 26(a)(2)(C) of the Investment
Company Act of 1940, no payment to the Depositor or to any principal underwriter
(as defined in such Act) for the Trust or to any affili-
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ated person (as so defined) or agent of the Depositor or such underwriter shall
be allowed the Trustee as an expense except for payment not in excess of such
reasonable amounts as compensation for performing bookkeeping and other
administrative services of a character normally performed by the Trustee itself;
(l) 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, common stock and
other securities issued by the same issuer (or an affiliate of such issuer) of
any of the Securities at any time held as part of the Trust and may deal with
such common stock or other securities in any manner with the same rights and
powers as if it were not the Trustee hereunder;
(m) 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 with the same rights and powers as if it were
not the Trustee hereunder; and
(n) the Trustee may grant a security interest in the Securities in
connection with the Purchase Rights and Additional Purchase Rights provided
however that the Unit Holders will have the benefits of the Securities and will
be prior in right with respect to the security interest.
Section 6.02. Books, Records and Reports: The Trustee shall keep proper
books of record and account of all the transactions under this Indenture and
keep a register described in Section 2.06 at its corporate trust office, and
such books, records and register shall be open to inspection by any Unit Holder
at all reasonable times during the usual business hours.
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 and such other tax and cost basis reports requested by the
Depositor and the Trustee shall, upon the request of a Unit Holder, provide such
Unit Holder and such Unit Holder's designated representative with the cost basis
of the Securities backing the Unit Holder's Units and a calculation of the gain
or loss on such Securities in the case of Unit Holders of record on the
Termination Date.
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Section 6.03. Indenture and List of Securities on File: The Trustee shall
keep a certified copy or duplicate original of this Indenture (including the
Reference Trust Agreement) on file at its corporate trust office available for
inspection at all reasonable times during the usual business hours by any Unit
Holder, together with a current list of the Securities.
Section 6.04. Compensation of Trustee: For services performed under this
Indenture the Trustee shall be paid an annual fee in an amount set forth in Part
II of the Reference Trust Agreement. Such compensation shall be payable
quarterly in an amount equal to one-fourth of the estimated annual compensation
of the Trustee and shall be computed on the basis of the greatest amount of
Units in the Trust at any time during the period with respect to which such
compensation is being computed. The Trustee may from time to time adjust its
compensation as set forth above; provided, however, that total adjustment upward
does not, at the time of such adjustment, exceed the percentage of the total
increase, after the date hereof, in consumer prices for services as measured by
the United States Department of Labor Consumer Price Index entitled "All
Services Less Rent" or, if such Index is no longer published, in a similar index
as determined by the Trustee and Depositor. Further provided, however, that the
right of the Trustee to increase its fees shall not be cumulative and, if not
exercised by the Trustee for any calendar year, shall be deemed waived for such
calendar year. No exercise of its right to such increase shall be effective
unless made by the Trustee by means of notification to the Depositor within 60
days following the publication of the annual consumer price information referred
to above. The consent or concurrence of any Unit Holder shall not be required
for any such adjustment or increase. Such compensation shall be deemed to
provide only for the usual normal and proper functions undertaken as Trustee
pursuant to this Indenture and, in addition, the Trustee may charge, to the
extent then lawful, the Income and Principal Accounts of the Trust for any and
all expenses including legal, auditing and printing expenses of maintaining
registration or qualification of the Units and/or the Trust under Federal or
state securities laws subsequent to initial registration so long as the
Depositor is maintaining a market for the Units and including the fees of
counsel which may be retained by the Trustee in connection with its activities
hereunder, and disbursements incurred hereunder and additional compensation for
any extraordinary services performed by the Trustee hereunder. In addition to
the foregoing compensation, as part of the Trustee's compensation for ordinary
services performed under this
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Indenture, the Trustee shall be entitled to the benefits to the Trustee that may
result from reasonable cash balances in the Income Account and the Principal
Account. The Trustee shall be indemnified and held harmless against any loss or
liability accruing to it without negligence, bad faith or wilful misconduct on
its part, arising out of or in connection with the acceptance or administration
of this Trust, including the costs and expenses (including counsel fees) of
defending itself against any claim of liability in the premises and including
any loss, liability or expense incurred in acting pursuant to directions to the
Trustee given by the Depositor from time to time in accordance with the
provisions of this Indenture or in undertaking actions from time to time which
the Trustee deems necessary in its discretion to protect the Trust and the
rights and interests of Unit Holders pursuant to the provisions of this
Indenture. If the cash balances in the Income and Principal Accounts shall be
insufficient to provide for amounts payable pursuant to this Section 6.04 the
Trustee shall have the power to sell (i) Securities from the current list of
Securities designated to be sold pursuant to Section 5.02 hereof, or (ii) if no
such Securities have been so designated, such Securities as the Trustee may see
fit to sell in its own discretion, and to apply the proceeds of any such sale in
payment of the amounts payable pursuant to this Section 6.04. The Trustee shall
promptly notify the Depositor of such action in writing and shall set forth
therein the Securities sold and the proceeds received therefrom. The Trustee
shall not be liable or responsible in any way for depreciation or loss incurred
by reason of any sale of Securities made pursuant to this Section 6.04. Any
monies payable to the Trustee pursuant to this Section shall be secured by lien
on the Trust prior to the interests of the Unit Holders.
Section 6.05. Removal and Resignation of Trustee; Successor: The following
provisions shall provide for the removal and resignation of the Trustee and the
appointment of any successor trustee:
(a) the Trustee or any trustee or trustees hereafter appointed may resign
and be discharged of the trusts created by this Indenture, by executing an
instrument in writing resigning as Trustee of the Trust and filing the same with
the Depositor and mailing a copy of a notice of resignation to all Unit Holders
then of record, not less than sixty days before the date specified in such
instrument when, subject to Section 6.05(e), such resignation is to take effect.
Upon receiving such notice of resignation, the Depositor shall promptly appoint
a successor
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trustee as hereinafter provided, by written instrument, in duplicate, one copy
of which shall be delivered to the resigning Trustee and one copy to the
successor trustee. If at any time the Trustee shall become incapable of acting,
or shall have an order of relief entered with respect to it, or a receiver of
the Trustee or of its property shall be appointed, or any public officer shall
take charge or control of the Trustee or of its property or affairs for the
purposes of rehabilitation, conservation or liquidation, or, upon the
determination of the Depositor to remove the Trustee for any reason, either with
or without cause, including but not limited to a determination by the Depositor
that the Trustee has materially failed to perform its duties under this
Indenture and the interest of Unit Holders has been substantially impaired as a
result then in any such case the Depositor may remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, one copy of which shall
be delivered to the Trustee so removed and one copy to the successor trustee;
provided that a notice of such removal and appointment of a successor trustee
shall be mailed by the Depositor to each Unit Holder then of record;
(b) any successor trustee appointed hereunder shall execute, acknowledge
and deliver to the Depositor and to the retiring Trustee an instrument accepting
such appointment hereunder, and such successor trustee without any further act,
deed or conveyance shall become vested with all the rights, powers, duties and
obligations of its predecessor hereunder with the like effect as if originally
named Trustee herein and shall be bound by all the terms and conditions of this
Indenture. Upon the request of such successor trustee, the retiring Trustee
shall, upon payment of any amounts due the retiring Trustee, or provision
therefor to the satisfaction of such retiring Trustee, execute and deliver an
instrument acknowledged by it transferring to such successor trustee all the
rights and powers of the retiring Trustee; and the retiring Trustee shall
transfer, deliver and pay over to the successor trustee all Securities and
monies at the time held by it hereunder, together with all necessary instruments
of transfer and assignment or other documents properly executed necessary to
effect such transfer and such of the records or copies thereof maintained by the
retiring Trustee in the administration hereof as may be requested by the
successor trustee, and shall thereupon be discharged from all duties and
responsibilities under this Indenture. The retiring Trustee shall, nevertheless,
retain a lien
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upon all Securities and monies at the time held by it hereunder to secure any
amounts then due the retiring Trustee;
(c) in case at any time the Trustee shall resign and no successor trustee
shall have been appointed or, if appointed, shall not have accepted appointment
within thirty days after notice of resignation has been received by the
Depositor, the retiring Trustee may forthwith apply to a court of competent
jurisdiction for the appointment of a successor trustee. Such court may
thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor trustee;
(d) any corporation into which any Trustee hereunder may be merged or with
which it may be consolidated, or any corporation resulting from any merger or
consolidation to which any Trustee hereunder shall be a party, or any
corporation succeeding to all or substantially all of the business of the
Trustee shall be the successor trustee under this Indenture without the
execution or filing of any paper, instrument or further act to be done on the
part of the parties hereto; anything herein or in any agreement relating to such
merger or consolidation, by which any such trustee may seek to retain certain
powers, rights and privileges theretofore obtaining for any period of time
following such merger or consolidation, to the contrary notwithstanding; and
(e) any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to this Section shall become effective only upon
acceptance of appointment by the successor trustee as provided in subsection (b)
hereof.
Section 6.06. Qualification of Trustee: The Trustee shall be a corporation
organized and doing business under the laws of the United States or any state
thereof which is authorized under such laws to exercise corporate trust powers
and having at all times an aggregate capital, surplus, and undivided profits of
not less than $5,O0O,000.
Section 6.07. Trustee's Response to Inquiries: The Trustee shall deliver to
the Depositor a copy of any written response to any non-routine question or
request at least one day before sending the response.
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Section 6.08. Waiver of Liens: No lien, encumbrance or priority in favor of
the Trustee against the assets of the Trust will affect such assets or their
proceeds after such assets or proceeds have been distributed or paid to Unit
Holders or to the Distribution Agent on their behalf pursuant to the terms of
the Indenture and upon any such distribution any lien, encumbrance or priority
previously attaching to such assets or their proceeds shall without any further
action on the part of the Trustee be automatically thereupon released and
relinquished by the Trustee.
ARTICLE VII
RIGHTS OF UNIT HOLDERS
Section 7.01. Beneficiaries of Trust: By the purchase and acceptance or
other lawful delivery and acceptance of a Unit of the Trust the Unit Holder
shall be deemed to be a beneficiary of such Trust and vested with all rights,
title and interest in the Trust to the extent of the Unit or Units owned,
subject to the terms and conditions of this Indenture.
Section 7.02. Rights, Terms and Conditions: In addition to the other rights
and powers set forth in the other provisions and conditions of this Indenture
the Unit Holders shall have the following rights and powers and shall be subject
to the following terms and conditions:
(a) a Unit Holder may at any time on any Business Day redeem his Units in
accordance with Section 5.02;
(b) the death or incapacity of any Unit Holder shall not operate to
terminate this Indenture or the Trust, nor entitle his legal representatives or
heirs to claim an accounting or to take any action or proceeding in any court
for a partition or winding up of the Trust, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them. Each Unit
Holder expressly waives any right he may have under any rule of law, or the
provisions of any statute, or otherwise, to require the Trustee at any time to
account, in any manner other than as expressly provided in this Indenture, in
respect of the Securities or monies from time to time received, held and applied
by the Trustee hereunder; and
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(c) no Unit Holder shall have any right to vote or in any manner otherwise
control the operation and management of the Trust, or the obligations of the
parties hereto, nor shall anything herein set forth be construed so as to
constitute the Unit Holders from time to time as partners or members of any
association; nor shall any Unit Holder ever be under any liability to any third
persons by reason of any action taken by the parties to this Indenture, or any
other cause whatsoever.
ARTICLE VIII
DEPOSITOR
Section 8.01. Liabilities; Power of Attorney: The Depositor, or the
Depositors if there be more than one, shall be severally liable in accordance
herewith for the obligations imposed upon and undertaken by the Depositor
hereunder, provided, however, that, without in any way affecting or diminishing
such several liability, each Depositor of the Trust shall indemnify the other
Depositors thereof and hold such other Depositors harmless from and against any
and all costs, expenses and liabilities (including attorneys' fees) which such
other Depositors may suffer or incur as a result of or by reason of any act or
failure to act hereunder on the part of the indemnifying Depositor. At all times
prior to the termination of the Trust and while the Depositors thereof shall
continue to act jointly hereunder, there shall be maintained on file with the
Trustee a power of attorney executed in favor of one Depositor by the other
Depositors constituting and appointing the non-executing Depositor the true and
lawful agent and attorney-in-fact of the executing Depositors to execute and
deliver for and on behalf of the executing Depositors any and all notices,
opinions, certificates, lists, demands, directions, instruments, or other
documents provided or permitted to be executed or delivered by the Depositors
hereunder in connection with the Trust or to take any other action in respect
hereof. Such power of attorney shall continue in effect as to the executing
Depositors until written notice of revocation thereof has been given by such
executing Depositors to the Trustee. Prior to receipt of such notice of
revocation the Trustee shall be entitled to rely conclusively upon such power of
attorney as authorizing the non-executing Depositor to give any notice, opinion,
certificate, list, demand, direction, instrument or other document provided for
or permitted hereunder or to take
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any other action in respect hereof on behalf of the executing Depositors as to
which such power of attorney is in effect.
Section 8.02. Discharge: If there be more than one Depositor, the following
provisions shall provide for the discharge of a Depositor and the liability of
the Depositors in the event of the discharge of a Depositor:
(a) in the event that any Depositor shall fail to undertake or perform any
of the duties which by the terms of this Agreement are required by it to be
undertaken or performed and such failure shall continue for 30 days after notice
to the Depositors from the Trustee or if any Depositor shall become incapable of
acting or shall have an order of relief entered with respect to it, or a
receiver of the property of any Depositor shall be appointed or any public
officer shall take charge or control of any Depositor or its property or affairs
for the purpose of rehabilitation, conservation or liquidation, then such
Depositor shall forthwith be and shall be deemed to be discharged forever as a
Depositor hereunder and thereupon the remaining Depositors shall act hereunder
without the necessity of any other or further action on its part or on the part
of the Trustee;
(b) in the event that the power of attorney referred to in Section 8.01
shall be revoked by written notice given by an executing Depositor and it shall
not be replaced within one business day by another power of attorney conforming
with the requirements of said Section 8.01, the Depositors of the Trust shall be
deemed to have been unable to reach agreement with respect to action to be taken
jointly by them hereunder in connection with the Trust and thereupon the
Depositor which has revoked the power of attorney executed by it shall be
discharged hereunder upon the expiration of such one-day period and thereupon
the other Depositors shall act thereunder without the necessity of any other or
further action on their part or on the part of the Trustee; and
(c) notwithstanding the discharge of a Depositor of the Trust in accordance
with this Section 8.02, such Depositor shall continue to be fully liable in
accordance with the provisions hereof in respect of action taken or refrained
from under this Agreement by the Depositors before the date of such discharge or
by the undischarged Depositors before or after the date of such discharge, as
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fully and to the same extent as if no discharge has occurred.
Section 8.03. Successors: The covenants, provisions and agreements herein
contained shall in every case be binding upon any successor or successors to any
Depositor and shall be binding upon the General Partners of any Depositor which
may be a partnership and upon the capital interest of the limited partners of
any Depositor which may be a partnership. In the event of the death, resignation
or withdrawal of any partner of any Depositor which may be a partnership, the
partner so dying, resigning or withdrawing shall be relieved of all further
liability hereunder if at the time of such death, resignation or withdrawal such
Depositor maintains a net worth (determined in accordance with generally
accepted accounting principles) of at least $1,000,000. In the event of an
assignment by any Depositor to a successor corporation or partnership as
permitted by the next following sentence, such Depositor and, if such Depositor
is a partnership, its partners shall be relieved of all further liability under
this Indenture. 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 Indenture.
Section 8.04. Resignation: If at any time any Depositor of the Trust shall
desire to resign its position as such a Depositor hereunder and if at such time
the other Depositors of the Trust each maintains a net worth (determined in
accordance with generally accepted accounting principles) of at least $1,000,000
and is agreeable to such resignation, the Depositor desiring to resign may
resign by delivering to the Trustee an instrument executed by such resigning
Depositor and consented to by the remaining Depositors and upon such delivery,
the resigning Depositor shall be discharged and shall no longer be liable in any
manner hereunder except as to acts or omissions occurring prior to such delivery
and the remaining Depositors shall thereupon perform all duties and be entitled
to all rights under the Agreement; provided, however, that concurrently with or
subsequent to such resignation the remaining Depositors and the Trustee may
appoint a new Depositor to act with the remaining Depositors and to assume the
duties of the resigning Depositor by an instrument executed by the remaining
Depositors, the Trustee and the new Depositor or proceed as provided in Section
6.01(f). Such new Depositor shall not be under any liability hereunder for
occurrences or omissions prior to the effective time of execution of such
instrument.
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Section 8.05. Additional Depositors: The Depositor may at any time appoint
one or more corporations or partnerships to act as new Depositor, in addition to
those currently serving, by an instrument executed by such Depositor, the
Trustee, and such corporations or partnerships; provided, however, that at the
time of such execution each new Depositor maintains a net worth (determined in
accordance with generally accepted accounting principles) of at least
$1,000,000. Upon such execution, a new Depositor shall be deemed to be a
depositor for all purposes under this Indenture, and the covenants, provisions
and agreements herein contained shall in every case be binding upon such new
Depositor and shall be binding upon the General Partner of any such new
Depositor which may be a partnership and upon the capital interest of the
limited partners of any such new Depositor which may be a partnership, but such
new Depositor shall not be liable hereunder for occurrences or omissions prior
to the effective time of execution of such instrument.
Section 8.06. Exclusions from Liability: The following provisions provide
for certain exclusions from the liability of the Depositor:
(a) no Depositor shall be under any liability to any other Depositor, the
Trust or the Unit Holders thereof, for any action taken or for refraining from
the taking of any action in good faith pursuant to this Agreement, or for errors
in judgment or liable or responsible in any way for depreciation or loss
incurred by reason of the acquisition or sale of any Securities; provided,
however, that this provision shall not protect the Depositor against any
liability to which it would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of its reckless disregard of its obligations and duties hereunder. The
Depositor may rely in good faith on any paper, order, notice, list, affidavit,
receipt, evaluation, opinion, endorsement, assignment, draft or any other
document of any kind prima facie properly executed and submitted to them, or any
of them, by any other Depositor, the Trustee, counsel to an issuer of a
Security, or any other person. The Depositor shall in no event be deemed to have
assumed or incurred any liability, duty, or obligation to any Unit Holder or the
Trustee other than as expressly provided for herein;
(b) the Depositor shall not be under any obligation to appear in, prosecute
or defend any legal action which
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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 Indenture and the rights and
duties of the parties hereto and the interests of the Unit Holders hereunder;
and
(c) none of the provisions of this Indenture shall be deemed to protect or
purport to protect the Depositor against any liability to the Trust or to the
Unit Holders thereof or to each other (if there is more than one Depositor) to
which the Depositor would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of the duties of the Depositor,
or by reason of the Depositor's reckless disregard of the obligations and duties
of the Depositor under this Indenture.
Section 8.07. Compensation: The Portfolio Supervisor shall receive at the
times set forth in Section 3.05 as compensation for performing portfolio
supervisory services, such amounts, and for such periods, as are specified in
the Reference Trust Agreement. The computation of such compensation shall be
made on the basis of the greatest number of Units in the Trust at any time
during which such compensation is being computed. At no time, however, will the
total amount received by the Portfolio Supervisor for services rendered to all
series of the National Equity Trust in any calendar year exceed the aggregate
cost to it of supplying such services in such year except to the extent
permitted by law. Such rate may be increased from time to time, without the
consent or approval of any Unit Holder or the Trustee, by amounts not exceeding
the proportionate increase during the period from the date of such Reference
Trust Agreement to the date of any such increase, in consumer prices as
published either under the classification "All Services Less Rent" in the
Consumer Price Index published by the United States Department of Labor or, if
such Index is no longer published, a similar index.
ARTICLE IX
ADDITIONAL COVENANTS; MISCELLANEOUS PROVISIONS
Section 9.01. Amendments without the Consent of Unit Holders: This
Indenture may be amended from time to time by the parties hereto or their
respective successors, without the
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consent of any of the Unit Holders (a) to cure any ambiguity or to correct or
supplement any provisions contained herein which may be defective or
inconsistent with any other provisions 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 provision in regard to matters or questions arising hereunder as
shall not adversely affect the interest of the Unit Holders; provided, that the
Indenture may also be amended from time to time by the parties hereto (or the
performance of any of the provisions of this Indenture may be waived) with the
consent of Unit Holders evidencing 51% of the Units at the time outstanding
under the Indenture for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Unit Holders; provided, further,
however, that this Indenture (including any Reference Trust Agreement) may not
be amended (nor may any provision thereof be waived) so as to (1) increase the
number of Units issuable in respect of the Trust above the aggregate number
specified in Part II of the Reference Trust Agreement or such lesser amount as
may be outstanding at any time during the term of this Indenture, except as the
result of the deposit of Additional Securities, as herein provided, or as
otherwise provided herein, or reduce the relative interest in the Trust of any
Unit Holder without his consent, (2) permit the deposit or acquisition hereunder
of securities or other property either in addition to or in substitution for any
of the Securities except in the manner permitted by the Trust Indenture as in
effect on the date of the first deposit of Securities under a particular
Indenture or permit the Trustee to engage in business or investment activities
not specifically authorized in this Indenture as originally executed or (3)
adversely affect the characterization of the Trust as a grantor trust for
federal income tax purposes.
Section 9.02. Notice of Amendment: Promptly after the execution of any
amendment the Trustee shall furnish written notification of the substance of
such amendment to all Unit Holders then of record at their addresses appearing
on the registration books of the Trustee.
Section 9.03. Termination: This Indenture and the Trust created hereby
shall terminate upon the redemption, sale or other disposition, as the case may
be, of the last Security held in the Trust hereunder unless sooner terminated as
hereinbefore specified and may be terminated at any time by the written consent
of the Holders of Fifty One percent of the Units of
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the Trust then outstanding; provided, that in no event shall this Trust continue
beyond the Termination Date as set forth in Part II of the Reference Trust
Agreement. Written notice of any termination shall be given by the Trustee to
each Unit Holder of record at his address appearing on the registration books of
the Trustee.
(a) Within a reasonable period of time after termination of the Trust the
Trustee shall liquidate such Securities as it shall deem necessary for payment
of Trust expenses and shall:
(i) deduct from the Income Account of the Trust or, to the extent that
funds are not available in such account, from the Principal Account of the Trust
and pay to itself individually an amount equal to the sum of (1) its accrued
compensation for its ordinary recurring services in connection with the Trust,
(2) any compensation due it for its extraordinary services and (3) any costs,
expenses or indemnities in connection with the Trust as provided herein;
(ii) deduct from the Income Account or, to the extent that funds are not
available in such Account, from the Principal Account and pay accrued and unpaid
fees to the Depositor pursuant to Section 3.05;
(iii) deduct from the Income Account of the Trust or, to the extent that
funds are not available in such Account, from the Principal Account of the
Trust, any amounts which may be required to be deposited in the Reserve Account
of the Trust to provide for payment of any applicable taxes or other
governmental charges and any other amounts which may be required to meet
expenses incurred under this Indenture in connection with the Trust;
(b) (i) If the Trust shall terminate on the Termination Date provided in
the Reference Trust Agreement, the Trustee shall distribute the remaining
Securities in the Principal Account plus the cash balances in the Principal and
Income Accounts to the Distribution Agent for distribution in accordance with
the Distribution Agency Agreement.
(ii) If the Trust shall terminate on a date other than the Termination
Date, the Trustee shall fully liquidate the remaining Securities in the
Principal Account and shall distribute to each Unit Holder such Unit Holder's
pro rata in-
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terest in the balance of the Income Account and Principal Account of the Trust.
The amounts to be so distributed to each Unit Holder shall be that pro rata
share of the balance of the total Income and Principal Accounts of the Trust as
shall be represented by the Units therein held by such Unit Holder.
(c) Together with such distribution to each Unit Holder as provided for in
(b) of this Section, the Trustee shall furnish to each such Unit Holder a final
distribution statement as of the date of computation of the amount distributable
to Unit Holders, setting forth the information in substantially the form and
manner provided for in Section 3.06 hereof, except that, with respect to
distribution made pursuant to such Paragraph b(i) of this Section, such
statement shall show the Securities delivered to the Distribution Agent.
(d) The Trustee shall distribute to each Unit Holder any dividends, which
on the Termination Date were declared, but not received, net of any and all
expenses not previously deducted, within a reasonable time of their receipt.
The Trustee shall be under no liability with respect to monies held by it
in the Income, Reserve and Principal Accounts upon termination except to hold
the same in trust without interest until disposed of in accordance with the
terms of this Indenture.
Section 9.04. Construction: This Indenture is executed and delivered in the
State of New York and all laws or rules of construction of such State shall
govern the rights of the parties hereto and the Unit Holders and the
interpretation of the provisions hereof. Headings and titles herein are for
convenience only and should not influence such interpretation.
Section 9.05. Written Notice: Any notice, demand, direction or instruction
to be given to the Depositor hereunder shall be in writing and shall be duly
given if mailed or delivered to the Depositor c/o Prudential Investment
Management Services LLC, at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Center Three, Newark,
New Jersey 07102 or at such other address as shall be specified by the Depositor
to the other parties hereto in writing. Any notice to be given to the Unit
Holders shall be duly given if mailed or delivered to each Unit Holder at the
address of such holder appearing on the registration books of the Trustee. Any
notice, demand, direction or instruction to be given to the Trustee hereunder
shall be in writing and shall be given
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if mailed or delivered to the Trustee at its office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such other address as shall reasonably be specified by
the Trustee in writing to the other parties hereto.
Section 9.06. Severability: If any one or more of the covenants,
agreements, provisions or terms of this Indenture shall be held contrary to any
express provision of law or contrary to policy of express law, though not
expressly prohibited, or against public policy, or shall for any reason
whatsoever be held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
or terms of this Indenture and shall in no way affect the validity or
enforceability of the other provisions of this Indenture or the rights of the
holders thereof.
Section 9.07. Dissolution of Depositor Not To Terminate: The dissolution of
one or all of the Depositors (if more than one) from or for any cause whatsoever
shall not operate to terminate this Indenture insofar as the duties and
obligations of the Trustee are concerned.
Section 9.08. Name: Depositor reserves the right to use the name "National
Equity Trust," with a distinguishing series number or name, without the consent
of the Trustee.
IN WITNESS WHEREOF, Prudential Investment Management Services LLC has
caused this Trust Indenture and Agreement to be executed by one of its
authorized officers and its corporate seal to be hereto affixed and attested by
its Secretary or Assistant Secretary and The Bank of New York has caused this
Trust Indenture and Agreement to be executed by one of its Vice Presidents or
Assistant Vice Presidents and its corporate seal to be hereto affixed and
attested by one of its Assistant Secretaries all as of the day, month and year
first above written.
PRUDENTIAL INVESTMENT MANAGEMENT SERVICES LLC
(Depositor)
By: _______________________________________________
Vice President
PRUDENTIAL SECURITIES INCORPORATED
(Portfolio Supervisor)
By: ________________________________________________
Vice President
BANK OF NEW YORK,
Trustee
By:
Assistant Vice President
(SEAL)
ATTEST:
By:
Assistant Secretary
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
I, a Notary Public in and for the said County in
the State aforesaid, do hereby certify that and
personally known to me to be the same persons whose
names are subscribed to the foregoing instrument and personally known to me to
be an Assistant Vice President and Assistant Secretary, respectively, of Bank of
New York, a corporation, appeared before me this day in person, and acknowledged
that they signed, sealed with the corporate seal of Bank of New York, and
delivered the said instrument as their free and voluntary act as such Assistant
Vice President and Assistant Secretary, respectively, and as the free and
voluntary act of said Bank of New York for the uses and purposes therein set
forth.
GIVEN, under my hand and notarial seal this day of , .
Notary Public
(SEAL)