<PAGE>
As filed with the Securities and Exchange Commission on February 3, 2000
Registration No. 333-
===========================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
---------------------
A. Exact Name of Trust:
NATIONAL EQUITY TRUST
Low Five Portfolio Series 31
B. Name of depositor:
PRUDENTIAL SECURITIES INCORPORATED
C. Complete address of depositor's principal executive office:
One Seaport Plaza
199 Water Street
New York, New York 10292
D. Name and complete address of agent for service:
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Copy to:
LEE B. SPENCER, JR., ESQ. KENNETH W. ORCE, ESQ.
PRUDENTIAL SECURITIES INCORPORATED CAHILL GORDON & REINDEL
One Seaport Plaza 80 Pine Street
199 Water Street New York, New York 10005
New York, New York 10292
</TABLE>
E. Title and amount of securities being registered:
An indefinite number of Units of
NATIONAL EQUITY TRUST,
Low Five Portfolio Series 31
Pursuant to Rule 24f-2 promulgated under the
Investment Company Act of 1940 as amended
F. Proposed maximum aggregate offering price to the public of
the securities being registered:
Indefinite
G. Amount of filing fee:
N/A
H. Approximate date of proposed sale to public:
As soon as practicable after the effective date of
the registration statement.
===========================================================================
The registrant hereby amends this registration statement on
such date or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that this
registration statement shall hereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
<PAGE>
NATIONAL EQUITY TRUST
Low Five Portfolio Series 31
CROSS-REFERENCE SHEET
Pursuant to Rule 404(c) of Regulation C
under the Securities Act of 1933
(Form N-8B-2 Items required by Instruction as
to the Prospectus in Form S-6)
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<CAPTION>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
I. Organization and General Information
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1. (a) Name of Trust............................................... ) Prospectus front cover
(b) Title of securities issued ................................. )
2. Name and address of each depositor................................... Sponsor; Prospectus back cover
3. Name and address of trustee ......................................... Trustee
4. Name and address of each principal underwriter ......................
5. State of organization of trust ...................................... The Trust
6. Execution and termination of trust agreement ........................
7. Changes of Name ..................................................... ) *
8. Fiscal year ......................................................... ) *
9. Litigation .......................................................... ) *
II. General Description of the Trust and
Securities of the Trust
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* Inapplicable, answer negative or not required.
i
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10. (a) Registered or bearer securities ............................ ) *
(b) Cumulative or distributive securities ...................... *
(c) Redemption ................................................. Rights of Unit Holders -- Redemption
(d) Conversion, transfer, etc................................... Rights of Unit Holders -- Redemption
(e) Periodic payment plan ...................................... ) *
(f) Voting rights .............................................. *
(g) Notice to Certificateholders................................ The Trust; Rights of Unit Holders --
Reports and Records; Sponsor --
Responsibility; Sponsor --
Resignation; Trustee -- Resignation;
Amendment and Termination of the
Indenture
(h) Consents required .......................................... The Trust; Amendment and Termination of
the Indenture
(i) Other provisions ........................................... Tax Status
11. Type of securities comprising units.................................. Prospectus front cover; Objective:
Security Selection; The Trust
12. Certain information regarding periodic payment certificates ......... *
13. (a) Load, fees, expenses, etc. ................................. Summary of Essential Information; Public
Offering of Units -- Public Offering
Price; Public Offering of Units --
Sponsor's and Underwriter's Profits;
Public Offering of Units -- Volume
Discount; Public Offering of Units --
Employee Discount; Exchange Option;
Reinvestment Program; Expenses and
Charges; Sponsor -- Responsibility
</TABLE>
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* Inapplicable, answer negative or not required.
ii
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(b) Certain information regarding periodic
payment certificates..................................... *
(c) Certain percentages ........................................ Summary of Essential Information; Public
Offering of Units -- Public Offering
Price; Public Offering of Units --
Profit of Sponsor; Public Offering of
Units -- Volume Discount; Public
Offering of Units -- Employee
Discount; Exchange Option
(d) Price Differentials ........................................ Public Offering of Units -- Employee
Discount
(e) Certain other fees, etc. payable by holders ................ Rights of Unit Holders -- Certificates
(f) Certain other profits receivable by depositor, principal.... The Trust -- Objectives and Securities
Selection; Rights of Unit Holders --
Redemption -- Purchase by the Sponsor
of Units Tendered for Redemption
(g) Ratio of annual charges to income........................... *
14. Issuance of trust's securities ...................................... The Trust; Rights of Unit Holders --
15. Receipt and handling of payments from purchasers .................... *
16. Acquisition and disposition of underlying securities ................ The Trust -- Portfolio Summary; The Trust
-- Objectives and Securities
Selection; Rights of Unit Holders
</TABLE>
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* Inapplicable, answer negative or not required.
iii
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-- Redemption; Sponsor -
Responsibility
17. Withdrawal or redemption ............................................ Rights of Unit Holders -- Redemption
18. (a) Receipt, custody and disposition of income ................. Rights of Unit Holders --Distribution
of Interest and Principal; Rights
of Unit Holders - Reports and Records
(b) Reinvestment of distributions .............................. Reinvestment Programs
(c) Reserves or special funds .................................. Expenses and Charges; Rights of Unit
Holders -- Distribution of Interest
and Prinicipal
(d) Schedule of distributions .................................. *
19. Records, accounts and reports ....................................... Rights of Unit Holders -- Distributions of
Interest and Principal; Rights of
Unit Holders -- Reports and Records
20. Certain miscellaneous provisions of trust agreement ................. Sponsor -- Limitations on
(a) Amendment ................................................. ) Liability; Sponsor -- Resignation;
(b) Termination ................................................ ) Trustee -- Limitations on Liability
(c) and (d) Trustee, removal and successor ..................... Trustee - Resignation; Amendment and
(e) and (f) Depositor, removal and successor ................... the Indenture
21. Loans to security holders ........................................... *
22. Limitation on liability ............................................. The Trust -- Portfolio Summary; Sponsor --
Limitations on Liability; Trustee --
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* Inapplicable, answer negative or not required.
iv
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Limitations on Liability; Evaluator --
Limitations on Liability
23. Bonding arrangements ................................................ Additional Information -- Item A
24. Other material provisions of trust agreement ........................ *
III. Organization, Personnel and
Affiliated Persons of Depositor
25. Organization of depositor ........................................... Sponsor
26. Fees received by depositor .......................................... *
27. Business of depositor ............................................... Sponsor
28. Certain information as to officials and affiliated persons of........ *
29. Companies controlling depositor ..................................... Sponsor
30. Persons controlling depositor ....................................... *
31. Payments by depositor for certain services rendered to trust ........)
32. Payments by depositor for certain other services rendered to trust ..) *
33. Remuneration of employees of depositor for certain services rendered
to trust ..........................................................) *
34. Remuneration of other persons for certain services rendered to trust.)
35. Distribution of trust's securities in states ........................ Public Offering of Units -- Public
Distribution
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* Inapplicable, answer negative or not required.
v
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36. Suspension of sales of trust's
securities ...................................................... ) *
37. Revocation of authority to distribute................................ ) *
38. (a) Method of distribution ..................................... ) *
(b) Underwriting agreements .................................... Public Offering of Units
(c) Selling agreements ......................................... ) *
39. (a) Organization of principal underwriter....................... ) Sponsor
(b) N.A.S.D. membership of principal............................ ) Sponsor
40. Certain fees received by principal underwriter....................... *
41. (a) Business of principal underwriter........................... Sponsor
(b) Branch offices of principal underwriter..................... ) *
(c) Salesmen of principal underwriter........................... ) *
42. Ownership of trust's securities by certain persons .................. ) *
43. Certain brokerage commissions received by principal underwriter ..... ) *
44. (a) Method of valuation ........................................ Summary of Essential Information; Public
Offering of Units -- Public Offering
Price; Public Offering of Units --
Public Distribution; Public Offering
of Units -- Secondary Market
(b) Schedule as to offering price .............................. *
(c) Variation in offering price to certain persons ............. Public Offering of Units -- Public
Distribution; Public Offering of
Units -- Volume Discount; Public
Offering of Units -- Employee
</TABLE>
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* Inapplicable, answer negative or not required.
vi
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Discount; Exchange Option
45. Suspension of redemption rights ..................................... *
46. (a) Redemption Valuation ....................................... Summary of Essential Information; Rights
of Unit Holders -- Redemption --
Computation of Redemption Price
per Unit
(b) Schedule as to redemption price ............................ *
47. Maintenance of position in underlying securities .................... Public Offering of Units -- Secondary
Market; Rights of Unit Holders --
Redemption -- Computation of
Redemption Price per Unit; Rights of
Unit Holders -- Redemption --
Purchase by the Sponsor of Units
Tendered for Redemption
IV. Information Concerning the Trustee or Custodian
48. Organization and regulation of trustee............................... Trustee
49. Fees and expenses of trustee......................................... Expenses and Charges
50. Trustee's lien....................................................... Expenses and Charges -- Other Charges
V. Information Concerning Insurance of
Holders of Securities
51. Insurance of holders of trust's securities .......................... The Trust -- Insurance on the Securities
in the Portfolio of an Insured Trust
</TABLE>
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* Inapplicable, answer negative or not required.
vii
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VI. Policy of Registrant
52. (a) Provisions of trust agreement with respect to selection or
elimination of underlying securities ................... Prospectus front cover; The Trust --
Portfolio Summary; The Trust --
Insurance on the Securities in the
Portfolio of an Insured Trust; The
Trust -- Objectives and Securities
Selection; Sponsor -- Responsibility
(b) Transactions involving elimination of underlying
securities ............................................. *
(c) Policy regarding substitution or elimination of
underlying securities ...................................... Sponsor -- Responsibility
(d) Fundamental policy not otherwise covered ................... *
53. Tax status of trust ................................................. Prospectus front cover; Tax Status
VII. Financial and Statistical Information
54. Trust's securities during last ten
years............................................................ ) *
55. )
56. Certain information regarding periodic payment certificates ......... ) *
57. )
58. )
59. Financial statements (Instruction 1(c) to Form S-6) .................
Statement of Financial Condition of the
Trust
</TABLE>
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* Inapplicable, answer negative or not required.
viii
<PAGE>
Subject to Completion, Dated February 2, 2000
NATIONAL EQUITY TRUST
Low Five Portfolio Series 31
[LOGO]
The attached final prospectus for a prior Series of National Equity
Trust is hereby used as a preliminary prospectus for Low Five Portfolio Series
31. The narrative information relating to the operation of this Series and the
structure of the final prospectus for this Series will be substantially the same
as that set forth in the attached prospectus. Information with respect to
pricing, the number of Units, dates and summary information regarding the
characteristics of securities to be deposited in this Series is not now
available and will be different from that included in the attached final
prospectus since each Series has a unique Portfolio. Accordingly, the
information contained herein with regard to the previous Series should be
considered as being presented for informational purposes only. Investors should
contact account executives of the Sponsor who will be informed of the expected
effective date of this Series and who will be supplied with complete information
with respect to such Series on the day of effectiveness of the registration
statement relating to Units of this Series.
The information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. This prospectus is not
an offer to sell these securities and is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
<PAGE>
NATIONAL EQUITY TRUST
LOW FIVE PORTFOLIO SERIES 29
The prospectus dated December 23, 1999, File No. 333-90689 is hereby
incorporated by reference.
<PAGE>
PART II. ADDITIONAL INFORMATION NOT REQUIRED IN PROSPECTUS
CONTENTS OF REGISTRATION STATEMENT
Item A -- Bonding Arrangements
The employees of Prudential Securities Incorporated are
covered under Broker's Blanket Policies, Standard Form No. 14 in the aggregate
amount of $62,500,000.
Item B -- Contents of Registration Statement
This Registration Statement on Form S-6 comprises the
following papers and documents:
The cross-reference sheet.
The Prospectus.
Signatures.
Listed below is the name and registration number of a previous
series of National Equity Trust, the final prospectus of which, properly
supplemented, is used as a preliminary prospectus for National Equity Trust, Low
Five Portfolio Series 31. This prior final prospectus is incorporated herein by
reference.
National Equity Trust,
Low Five Portfolio Series 30
(Registration No. 333-94577)
Written consents of the following persons:
Cahill Gordon & Reindel (included in Exhibit 5).
(2) Deloitte & Touche LLP
The following Exhibits:
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(1) Ex-3.(i) - Certificate of Incorporation of Prudential Securities Incorporated dated
March 29, 1993.
(4) Ex-3.(ii) - Revised By-Laws of Prudential Securities Incorporated as amended through
September 28, 1998.
</TABLE>
II-1
<PAGE>
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(1) Ex-4.a - Trust Indenture and Agreement, dated April 25, 1995.
(1) Ex-4.b - Draft of Reference Trust Agreement.
(2) Ex-5 - Opinion of counsel as to the legality of the securities being registered.
(3) Ex-24 - Powers of Attorney executed by a majority of the Board of Directors
of Prudential Securities Incorporated.
(1) Ex-99.1 - Information as to Officers and Directors of Prudential Securities
Incorporated is incorporated by reference to Schedules A and D of
Form BD filed by Prudential Securities Incorporated, pursuant to Rules
15b-1 and 15b3-1 under the Securities Exchange Act of 1934 (1934 Act
File No. 8-27154).
(1) Ex-99.2 - Affiliations of Sponsor with other investment companies.
(1) Ex-99.3 - Broker's Blanket Policies, Standard Form No. 14 in the aggregate
amount of 62,500,000.
(1) Ex-99.4 - Distribution Agency Agreement among Prudential Securities Incorporated,
as Depositor, United States Trust Company of New York, as Trustee,
and United States Trust Company of New York, as Distribution Agent.
(5) Ex-99.5 - Amendment to Distribution Agency Agreement among Prudential Securities
Incorporated, as Depositor, The Chase Manhattan Bank, as Trustee, and
The Chase Manhattan Bank, as Distribution Agent.
(6) Ex-99.6 - Amendment to Distribution Agency Agreement dated September 23, 1996 among
Prudential Securities Incorporated, as Depositor, The Chase Manhattan
Bank, as Trustee, and The Chase Manhattan Bank, as Distribution Agent
included as part of the Reference Trust Agreement filed as Exhibit
4.b to National Equity Trust Top Ten Portfolio Series 1.
</TABLE>
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(1) Filed herewith.
(2) To be filed by amendment.
(3) Incorporated by reference to exhibit of same designation filed with the
Securities and Exchange Commission as an exhibit to the Registration
Statement under the Securities Act of 1933 of National Municipal Trust,
Series 172, Registration No. 33-54681 (filed October 13, 1994) National
Equity Trust, Top Ten Portfolio Series 3, Registration No. 333-15919
(filed January 31, 1997), and National Equity Trust, Low Five Portfolio
Series 17, Registration No. 333-44543 (filed January 1, 1998).
(4) Incorporated by reference to exhibit of same designation filed with the
Securities and Exchange Commission as an exhibit to the Registration
Statement under the Securities Act of 1933 of National Municipal Trust,
Series 186, Registration No. 33-54697 (filed August 9, 1996) and
National Equity Trust, S&P 500 Strategy Trust Series 2, Registration
No. 333-39521 (filed October 14, 1998).
(5) Incorporated by reference to exhibit of same designation filed with the
Securities and Exchange Commission as an exhibit to the Registration
Statement under the Securities Act of 1933 of National Equity Trust,
Low Five Portfolio Series 6, Registration No. 333-01889 (filed May 1,
1996).
(6) Incorporated by reference to exhibit of same designation filed with the
Securities and Exchange Commission as an exhibit to the Registration
Statement under the Securities Act of 1933 of National Equity Trust Top
Ten Portfolio Series 1, Registration No. 333-02753 (filed September 24,
1996).
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant, National Equity Trust, Low Five Portfolio Series 31, has duly
caused this Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized, in the City of New York, and State of New York on the
2nd day of February, 2000.
NATIONAL EQUITY TRUST
Low Five Portfolio Series 31
(Registrant)
By PRUDENTIAL SECURITIES INCORPORATED
(Depositor)
By the following persons*, who constitute
a majority of the Board of Directors of
Prudential Securities Incorporated
A. Laurence Norton, Jr.
Leland B. Paton
Martin Pfinsgraff
Vincent T. Pica II
James D. Price
Hardwick Simmons
Lee B. Spencer, Jr.
By /s/ Kenneth Swankie
(Kenneth Swankie,
Senior Vice President,
Manager - Unit Investment
Trust Department, as
authorized signatory for
Prudential Securities
Incorporated and
Attorney-in-Fact for the
persons listed above)
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* Pursuant to Powers of Attorney previously filed.
II-3
<PAGE>
CONSENT OF COUNSEL
The consent of Cahill Gordon & Reindel to the use of its name
in the Prospectus included in this Registration Statement will be contained in
its opinion to be filed as Exhibit 5 to this Registration Statement.
-----------------------
CONSENT OF INDEPENDENT AUDITORS
[to be filed by Amendment]
II-4
<PAGE>
EXHIBIT 1.3
RESTATED CERTIFICATE OF INCORPORATION
OF
PRUDENTIAL SECURITIES INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED, a corporation organized
and existing under the laws of the State of Delaware, hereby certifies as
follows:
1. The name of the Corporation is Prudential Securities
Incorporated and the name under which the Corporation was originally
incorporated is Pru Holdings Inc. The date of filing its original Certificate of
Incorporation with the Secretary of State was March 19, 1981.
2. This Restated Certificate of Incorporation restates
and integrates and further amends the Restated Certificate of Incorporation of
this Corporation by revising the dividend rights of the Common Stock.
3. The text of the Certificate of Incorporation as
amended or supplemented heretofore is further amended hereby to read as herein
set forth in full:
ARTICLE I
NAME
The name of the Corporation is Prudential Securities
Incorporated.
ARTICLE II
REGISTERED OFFICE AND REGISTERED AGENT
The address of the registered office of the Corporation in the
State of Delaware is Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of the Corporation's registered agent
at such registered office is The Corporation Trust Company.
ARTICLE III
CORPORATE PURPOSES AND POWERS
The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of Delaware.
ARTICLE IV
CAPITAL STOCK
SECTION 1. Shares, Class and Series Authorized. The number of
shares of capital stock which the Corporation shall have authority to issue is
2,000 shares of common stock of the par value of $1 each (hereinafter called
"Common Stock"), and 1,000 shares of preferred stock of the par value of $1 each
(hereinafter called "Preferred Stock").
SECTION 2. Preferences and Rights of the Classes of Capital
Stock. The preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions thereof, of the capital
stock are as follows:
(a) Except to the extent, if any, that a resolution of
the Board of Directors establishing a series of Preferred Stock gives voting
powers to the shares of such series, all voting powers shall be in the Common
Stock and the holders of Common Stock shall be entitled to one vote per share.
<PAGE>
(b) No shares of capital stock shall have any preemptive
or other rights to purchase additional shares of capital stock of any class or
series or of any securities convertible into any such shares.
(c) The Preferred Stock may be issued from time to time
in one or more series with such designation for each such series as shall be
stated and expressed in the resolution or resolutions, of the Board of Directors
providing for the issue of such series. The Board of Directors in any such
resolution or resolutions is expressly authorized to state and express for each
such series:
(i) The voting powers, if any, of the holders of
stock of such series;
(ii) The rate per annum and the times at and
conditions upon which the holders of stock of such series shall be entitled to
receive dividends, and whether such dividends shall be cumulative or
noncumulative and if cumulative the terms upon which such dividends shall be
cumulative;
(iii) The price or prices and the time or times at
and the manner in which the stock of such series shall be redeemable;
(iv) The rights to which the holders of stock of
such series shall be entitled upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation;
(v) The terms, if any, upon which the stock of such
series shall be convertible into, or exchangeable for, stock of any other class
or classes or of any other series of the same or any other class or classes,
including the price or prices or the rate or rates of conversion or exchange and
the terms of adjustment, if any; and
(vi) Any other preferences and relative,
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof, in so far as they are not inconsistent with the
provisions of the Certificate of Incorporation, as restated, and to the full
extent now or hereafter permitted by the laws of the State of Delaware.
(d) All shares of Preferred Stock of any one series shall
be identical to each other in all respects, except that shares of any one series
issued at different times may differ as to the dates from which dividends
thereon, if cumulative, shall be cumulative.
(e) While any Preferred Stock is outstanding, no dividend
shall be paid or declared and no distributions shall be made on the Common
Stock, other than a dividend payable in Common Stock, unless (i) all dividends
on the Preferred Stock accrued for all past quarterly or longer specified
dividend periods and for the current quarterly or longer specified dividend
period shall have been paid or declared and provided for and (ii) all past
sinking fund payments, if any, due with respect to all series of the Preferred
Stock shall have been complied with. In addition, no dividend shall be declared
or paid which shall impair the capital of the Corporation nor shall any
distribution of assets be made to any stockholder unless the value of the assets
of the Corporation remaining after such payment or distribution is at least
equal to the aggregate of its debts and liabilities, including capital. The
Board of Directors may declare and pay dividends and make distributions on the
Common Stock from time to time as provided by law, subject to the foregoing.
(f) In the event of any liquidation, dissolution or
winding up of the Corporation, the holders of Preferred Stock shall be entitled
to receive out of the assets of the corporation, remaining after paying or
providing for all liabilities, before any distribution or payment shall be made
to the holders of Common Stock, the amount or amounts fixed for each outstanding
series of Preferred Stock in the resolution or resolutions of the Board of
Directors establishing such series, and all remaining assets shall be
distributed pro rata among the holders of Common Stock.
SECTION 3. Series A Preferred Stock.
-2-
<PAGE>
I. Designation and Amount. The first series of the
Preferred Stock of this Corporation authorized by its Restated Certificate of
Incorporation shall be designated as Series A Preferred Stock, par value $1 per
share (hereinafter referred to as the Series A Preferred Stock), and 100 shares
of the authorized but heretofore unissued shares of such Preferred Stock shall,
upon resolution of the Board of Directors, be issued as shares of the Series A
Preferred Stock.
II. Voting Rights. Except as otherwise expressly required
by law, the Series A Preferred Stock shall have no voting rights.
III. Dividend Rights. (a) The dividend rate on the Series
A Preferred Stock shall be $0.01 per share per annum, payable annually on the
thirty-first day of May in each year. Dividends on shares of Series A Preferred
Stock shall not be cumulative.
(b) The holders of the Series A Preferred Stock shall be
entitled to receive, when and as declared by the Board of Directors, out of the
assets of this Corporation legally available therefor, non-cumulative dividends
at the rate per annum set forth above, and no more, payable on the date set
forth above to holders of record on the date not exceeding 50 days preceding the
date of such payment, fixed for the purpose by the Board of Directors in advance
of such payment.
(c) No dividends shall be declared or paid or set apart
for payment on shares of any series of Preferred Stock ranking on a parity with
the Series A Preferred Stock as to dividends unless full dividends
contemporaneously are declared and paid or declared and a sum sufficient
therefor set apart for such payment on all of the outstanding Series A Preferred
Stock for the dividend period terminating on the date of payment of such
dividend. When dividends are not paid in full on the shares of Series A
Preferred Stock and on all series of Preferred Stock on a parity with the Series
A Preferred Stock, any dividend payments on such series shall be paid to holders
of shares of all such series ratably in proportion to the respective sums which
such holders would receive if all dividends thereon were declared and paid in
full.
IV. Redemption. (a) This Corporation shall have the right
to redeem the shares of Series A Preferred Stock at any time on and after the
date such shares shall have been issued (the "Redemption Date"), either in whole
or in part, at the price of $390,000 per share.
(b) In the event that less than all of the outstanding
shares of Series A Preferred Stock are to be redeemed, the number of shares to
be redeemed shall be determined by the Board of Directors and the shares to be
redeemed shall be determined by lot or pro rata as may be determined by the
Board of Directors or by such other method as may be approved by the Board of
Directors as fair and equitable.
(c) Notice of any redemption of shares of Series A
Preferred Stock, specifying the time and place of redemption, shall be mailed to
each holder of record of the shares to be redeemed, at his address of record,
not more than 10 days nor less than 2 days prior to the Redemption Date; if less
than all the shares owned by such stockholders are then to be redeemed, the
notice shall also specify the number of shares thereof which are to be redeemed.
(d) Unless default be made in the payment of the
redemption price, all rights of the holders of such shares as stockholders of
this Corporation by reason of the ownership of such shares, shall cease on the
Redemption Date, except the right to receive the amount payable upon redemption
of such shares, on presentation and surrender of the respective certificates
representing such shares, and such shares shall not after the Redemption Date be
deemed to be outstanding. In case less than all the shares represented by any
such certificates are redeemed, a new certificate shall be issued representing
the unredeemed shares without cost to the holder thereof.
V. Liquidation Rights. (a) Upon the dissolution,
liquidation or winding up (whether voluntary or involuntary) of this
Corporation, the holders of the shares of Series A Preferred Stock shall be
entitled to receive out of the assets of this Corporation, before any payment or
distribution shall be made on the Common Stock or on any other class or series
of stock ranking junior to the Series A Preferred Stock as to assets, in cash,
the amount of $390,000 per share.
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<PAGE>
(b) The sale, conveyance, exchange or transfer (for cash,
shares of stock, securities or other consideration) of all or substantially all
of the property and assets of this Corporation shall be deemed a voluntary
dissolution, liquidation or winding up of this Corporation for the purposes of
this Section IV, but the merger or consolidation of this Corporation into or
with any other corporation or merger or consolidation of any other corporation
into or with this Corporation, shall not be deemed to be a dissolution,
liquidation or winding up, whether voluntary or involuntary, for the purposes of
this Section IV.
(c) After the payment to the holders of the Series A
Preferred Stock of the full preferential amounts aforesaid, the holders of the
Series A Preferred Stock as such shall have no right or claim to any of the
remaining assets of this Corporation.
(d) If the assets distributable on such dissolution,
liquidation or winding up, whether voluntary or involuntary, which are available
for distribution to the holders of the Series A Preferred Stock, shall be
insufficient to permit the payment to such holders of the full preferential
amounts to which they are entitled, such assets or the proceeds thereof shall be
distributed among such holders ratably.
VI. Other Series of the Preferred Stock. So long as any
shares of the Series A Preferred Stock remain outstanding, this Corporation
shall have the right, without the consent of the holders of any of such
outstanding shares, to create any series of the Preferred Stock ranking senior,
as to the right to receive assets in liquidation or the right to receive
dividends, to the Series A Preferred Stock.
SECTION 4. Series B Preferred Stock.
I. Designation and Amount. The second series of the
Preferred Stock of this Corporation authorized by its Restated Certificate of
Incorporation shall be designated as Series B Preferred Stock, par value $1.00
per share (hereinafter referred to as the Series B Preferred Stock), and 100
shares of the authorized but heretofore unissued shares of such Preferred Stock
shall, upon resolution of the Board of Directors, be issued as shares of the
Series B Preferred Stock.
II. Voting Rights. Except as otherwise expressly required
by law, the Series B Preferred Stock shall have no voting rights.
III. Dividends Rights. (a) The dividend rate on the Series
B Preferred Stock shall be Prudential Funding Corporation's announced monthly
lending rate of interest charged for loans to finance equity investments in
affiliated companies, payable monthly on the sixth business day of each month.
Dividends on shares of Series B Preferred Stock shall be cumulative.
(b) The holders of the Series B Preferred shall be
entitled to receive, when and as declared by the Board of Directors, out of the
assets of this Corporation legally available therefor, cumulative dividends at
the rate per annum set forth above, and no more, payable on the date set forth
above to holders of record on the date not exceeding 50 days preceding the date
for such payment, fixed for the purpose by the Board of Directors in advance of
such payment.
(c) No dividends shall be declared or paid or set apart
for payment on shares of any series of Preferred Stock ranking on a parity with
the Series B Preferred Stock as to dividends unless full dividends
contemporaneously are declared and paid or declared and a sum sufficient
therefore set apart for such payment on all of the outstanding Series B
Preferred Stock for the dividend period terminating on the date of payment of
such dividend. When dividends are not paid in full on the shares of Series B
Preferred Stock and on all series of Preferred Stock on a parity with the Series
B Preferred Stock, any dividend payments on such series shall be paid to the
holders of shares of all such series ratably in proportion to the respective
sums which such holders would receive if all dividends thereon were declared and
paid in full.
IV. Liquidation Rights. (a) Upon the dissolution,
liquidation or winding up (whether voluntary or involuntary) of this
Corporation, the holders of the shares of Series B Preferred Stock shall be
entitled to receive out of the assets of this Corporation, before any payment or
distribution shall be made on the Common Stock or any other class or
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series of stock ranking junior to the Series B Preferred Stock as to assets, in
cash, the amount of $10 million per share plus dividends accrued or in arrears.
(b) The sale, conveyance, exchange or transfer (for cash,
shares of stock, securities or other consideration) of all or substantially all
of the property and assets of this Corporation shall be deemed a voluntary
dissolution, liquidation or winding up of this Corporation for the purposes of
this Section IV, but the merger or consolidation of this Corporation into or
with any other corporation or the merger or consolidation of any other
corporation into or with this Corporation, shall not be deemed to be a
dissolution, liquidation or winding up, whether voluntary or involuntary, for
the purposes of this Section IV.
(c) After the payment to the holders of the Series B
Preferred Stock of the full preferential amounts aforesaid, the holders of the
Series B Preferred Stock as such shall have no right or claim to any of the
remaining assets of this Corporation.
(d) If the assets distributable on such dissolution,
liquidation or winding up, whether voluntary or involuntary, which are available
for distribution to the holders of the Series B Preferred Stock, shall be
insufficient to permit the payment to such holders of the full preferential
amounts to which they are entitled, such assets or the proceeds thereof shall be
distributed among such holders ratably.
V. Other Series of the Preferred Stock. So long as any
shares of the Series B Preferred Stock remain outstanding, this Corporation
shall have the right, without the consent of the holders of any of such
outstanding shares, to create any series of the Preferred Stock ranking senior,
as to the right to receive assets in liquidation or the right to receive
dividends, to the Series B Preferred Stock. The Series B Preferred Stock shall
rank on a parity as to dividend and liquidation rights with the Series A
Preferred Stock.
ARTICLE V
RIGHT OF CORPORATION TO PURCHASE SHARES
OF COMMON STOCK FROM HOLDERS THEREOF
SECTION 1. When Rights Arise. All shares of Common Stock shall
be held subject to the conditions and restrictions set forth in this Certificate
of Incorporation, the provisions of which shall apply equally to original
holders and to transferees, and each holder of Common Stock by acceptance of a
stock certificate therefor agrees with the Corporation and with each other
holder of Common Stock, in consideration of such agreement by each such other
holder, to such conditions and restrictions, including the following:
(a) In the event any holder who is required to be
approved by the constitution or rules of the New York Stock Exchange, Inc. or
any other securities exchange, board of trade, commodities exchange, clearing
corporation or association, or similar institution on which the Corporation has
membership privileges (collectively referred to as the "Exchange") fails or
ceases to be so approved, the Corporation shall have the right and option to
purchase or convert to a fixed income security such number of shares of Common
Stock from such holder as is necessary to reduce the number of shares of voting
stock owned by such holder to one share below the level requiring such approval,
such right of purchase or purchase or conversion to be for a period of 45 days
from the date on which the Corporation first becomes aware of the fact that such
holder has failed or ceased to be so approved.
(b) In the event that any parent of the Corporation
within the meaning of the constitution and rules of the Exchange fails or ceases
to satisfy the requirements of such constitution or rules with respect to a
parent, the Corporation shall have the right and option to purchase or convert
to a fixed income security such number of shares of Common Stock from such
parent as is necessary to reduce the number of shares of voting stock owned by
such parent below the level which enables such parent to exercise a controlling
influence over the management or policies of the Corporation, such right of
purchase or conversion to be for a period of 45 days from the date on which the
Corporation was advised that such parent ceased to satisfy such constitution or
rules.
(c) In the event that any holder required to be approved
by the constitution and rules of the Exchange proposes to sell or otherwise
dispose of his shares of Common
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<PAGE>
Stock, such holder shall notify the Corporation in writing to that effect,
stating the number of shares proposed to be sold or otherwise disposed of, the
name of the proposed purchaser or transferee, and the proposed sale price; and
the Corporation shall have the right and option for 10 days after such notice to
purchase all or any part of the shares so proposed to be sold, or if such holder
fails to give such notice, the Corporation shall have the same right of
purchases exercisable against the transferee for 10 days after it first is aware
of any such sale of shares by such beneficial owner.
SECTION 2. Consideration to be Paid and Method of Exercising
the Corporation's Right to Purchase. The consideration to be paid for shares of
Common Stock and the method of exercising any right or option to purchase such
shares pursuant to Article V shall be determined by the Board of Directors. Any
dispute concerning the consideration for the Common Stock or method of
exercising the right to purchase the Common Stock shall be submitted for
arbitration to the New York Stock Exchange, Inc.
ARTICLE VI
POWERS OF BOARD OF DIRECTORS
In furtherance and not in limitation of the powers conferred
by statute, the Board of Directors of the Corporation is expressly authorized:
(a) Except as otherwise provided in the bylaws of the
Corporation adopted by the incorporators, stockholders or Board of Directors, to
make, alter, amend or repeal the bylaws of the corporation. Any bylaw made by
the incorporators, stockholders or Board of Directors may be altered, amended or
repealed by the holders of Common Stock at any annual meeting or at any special
meeting called for the purpose, but only upon obtaining the vote provided for in
the bylaws.
(b) To authorize and cause to be executed mortgages and
liens upon the real and personal property of the Corporation.
(c) To determine the use and disposition of any surplus
and net profits of the Corporation, including the required amount of working
capital, and to set apart out of any funds of the Corporation, whether or not
available for dividends, such reserve or reserves as is deemed necessary for any
proper purpose and to reduce or abolish any such reserve.
(d) To designate, by resolution passed by a majority of
the whole Board of Directors, one or more committees consisting of two or more
directors, which, to the extent provided in the resolution designating the
committee or in the bylaws, shall have and may exercise the powers of the Board
in the management of the business and affairs of the Corporation and may
authorize the seal of the Corporation to be affixed to all papers which may
require it; and to designate, by resolution passed by a majority of the whole
Board, one or more committees consisting of one or more directors and one or
more persons who are not directors, which shall have such advisory functions as
the Board may determine. Such committee or committees shall have such name or
names as may be provided in the bylaws or as may be determined from time to time
by resolution of the Board of Directors.
(e) To adopt pension, profit sharing or retirement plans
or arrangements. No such plan, which is not at the time of adoption unreasonable
or unfair, shall be invalidated or in any way affected because any director
shall be a beneficiary thereunder or shall vote for any plan under which he may
benefit.
(f) To exercise, in addition to the powers and
authorities hereinbefore or by law conferred upon it, any such powers and
authorities and do all such acts and things as may be exercised or done by the
Corporation, subject, nevertheless, to the provisions of the laws of the State
of Delaware and of this Certificate of Incorporation and to the bylaws.
ARTICLE VII
ELECTION OF DIRECTORS
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Elections of directors need not be by written ballot unless
the bylaws of the Corporation shall so provide.
ARTICLE VIII
COMPROMISE OR ARRANGEMENT BETWEEN CORPORATION
AND ITS CREDITORS OR STOCKHOLDERS
Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provision of Section 279 of Title 8 of the
Delaware Code, order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors, or class of creditors and/or on all
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
4. This Restated Certificate of Incorporation was duly
adopted by written consent of the stockholders in accordance with the applicable
provisions of Sections 228, 242 and 245 of the General Corporation Law of the
State of Delaware and written notice of the adoption of this Restated
Certificate of Incorporation has been given as provided by Section 228 of the
General Corporation Law of the State of Delaware to every stockholder entitled
to such notice.
IN WITNESS WHEREOF, said Prudential Securities Incorporated
has caused this Certificate to be signed by Nathalie P. Maio, its Senior Vice
President, and attested to by Kathleen B. Maguire, its Assistant Secretary, this
25th day of March, 1993.
PRUDENTIAL SECURITIES INCORPORATED
By: /S/ Nathalie P. Maio
-------------------------
Nathalie P. Maio
Senior Vice President
ATTEST:
By: /S/ Kathleen B. Maguire
--------------------------
Kathleen B. Maguire
Assistant Secretary
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<PAGE>
State of Delaware
Office of the Secretary of State
---------------------------
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE
CERTIFICATE OF RESTATED CERTIFICATE OF INCORPORATION OF "PRUDENTIAL SECURITIES
INCORPORATED" FILED IN THIS OFFICE ON THE TWENTY-NINTH DAY OF MARCH, A.D. 1993,
AT 10 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO NEW
CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.
* * * * * * * * * *
/S/ William T. Quillen
----------------------
William T. Quillen, Secretary of State
AUTHENTICATION: *3838589
DATE: 03/29/1993
<PAGE>
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NATIONAL EQUITY TRUST
LOW FIVE PORTFOLIO SERIES
and for all other 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 SECURITIES INCORPORATED
As Depositor
UNITED STATES TRUST COMPANY
OF NEW YORK
As Trustee
--------------------
Dated: April 25, 1995
================================================================================
<PAGE>
TRUST INDENTURE AND AGREEMENT
National Equity Trust
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
Section 1.01. Definitions......................................................................................2
ARTICLE II
DEPOSIT OF SECURITIES; ACCEPTANCE OF TRUST
Section 2.01. Deposit of Securities............................................................................5
Section 2.02. Acceptance of Trust..............................................................................6
Section 2.03. Issue of Units...................................................................................6
Section 2.04. Uncertificated Units.............................................................................7
Section 2.05. Deposit of Additional Securities.................................................................7
Section 2.06. Register of Units................................................................................9
ARTICLE III
ADMINISTRATION OF TRUST
Section 3.01. Initial Cost.....................................................................................9
Section 3.02. Income Account...................................................................................9
Section 3.03. Principal Account................................................................................9
Section 3.04. Reserve Account..................................................................................9
Section 3.05. Distribution.....................................................................................9
Section 3.06. Distribution Statements.........................................................................11
Section 3.07. Replacement Securities..........................................................................13
Section 3.08. Sale of Securities..............................................................................13
Section 3.09. Notice and Sale by Trustee......................................................................15
Section 3.10. Refunding Securities............................................................................15
Section 3.11. Notice of Actions...............................................................................15
Section 3.12. Extraordinary Distributions.....................................................................15
Section 3.13. Extraordinary Event - Security Retention and Voting.............................................17
Section 3.14. Deferred Sales Charge...........................................................................17
ARTICLE IV
EVALUATION OF SECURITIES
Section 4.01. Evaluation of Securities........................................................................18
Section 4.02. Tax Reports.....................................................................................18
</TABLE>
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Section 4.03. Liability of the Trustee........................................................................18
ARTICLE V
TRUST EVALUATION, REDEMPTION,
TRANSFER OF UNITS
Section 5.01. Trust Evaluation................................................................................19
Section 5.02. Redemptions by Trustee; Purchases by Depositor..................................................20
Section 5.03. Redemption Upon Termination.....................................................................22
Section 5.04. Transfer of Units...............................................................................23
ARTICLE VI
TRUSTEE
Section 6.01. General Definition of Trustee's Liabilities, Rights and Duties..................................23
Section 6.02. Books, Records and Reports......................................................................26
Section 6.03. Indenture and List of Securities on File........................................................27
Section 6.04. Compensation of Trustee.........................................................................28
Section 6.05. Removal and Resignation of Trustee; Successor...................................................29
Section 6.06. Qualification of Trustee........................................................................31
Section 6.07. Trustee's Response to Inquiries.................................................................31
Section 6.08. Waiver of Liens.................................................................................31
ARTICLE VII
RIGHTS OF UNIT HOLDERS
Section 7.01. Beneficiaries of Trust..........................................................................31
Section 7.02. Rights, Terms and Conditions....................................................................31
ARTICLE VIII
DEPOSITOR
Section 8.01. Liabilities; Power of Attorney..................................................................32
Section 8.02. Discharge.......................................................................................32
Section 8.03. Successors......................................................................................33
Section 8.04. Resignation.....................................................................................34
Section 8.05. Additional Depositors...........................................................................34
Section 8.06. Exclusions from Liability.......................................................................34
Section 8.07. Compensation....................................................................................35
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ARTICLE IX
ADDITIONAL COVENANTS; MISCELLANEOUS PROVISIONS
Section 9.01. Amendments without the Consent of Unit Holders..................................................35
Section 9.02. Notice of Amendment.............................................................................36
Section 9.03. Termination.....................................................................................36
Section 9.04. Construction....................................................................................38
Section 9.05. Written Notice..................................................................................38
Section 9.06. Severability....................................................................................38
Section 9.07. Dissolution of Depositor Not To Terminate.......................................................38
Section 9.08. Name............................................................................................38
EXECUTION.......................................................................................................................
ACKNOWLEDGMENTS.................................................................................................................
SECURITIES INITIALLY DEPOSITED..................................................................................................
</TABLE>
--------------------
This Table of Contents does not constitute part of the Indenture.
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<PAGE>
TRUST INDENTURE AND AGREEMENT dated April 25, 1995, among
PRUDENTIAL SECURITIES INCORPORATED, as Depositor, and UNITED STATES TRUST
COMPANY 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 Low Five Portfolio
Series 1, and each subsequent 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 and (ix) any other change or addition contemplated
or permitted by this Trust Indenture and Agreement; and
WHEREAS, the Depositor will acquire and, concurrently with the
execution and delivery of the appropriate Reference Trust Agreement, will
deposit in trust with the Trustee the Securities to be listed in the Schedule
thereto, all to be held by the Trustee in trust upon the terms and conditions
hereinafter set forth as amended, supplemented or varied by such Reference Trust
Agreement, for the use and benefit of all registered holders of units of
fractional undivided interest in the Trust to which such Reference Trust
Agreement relates; and
WHEREAS, concurrently with the receipt of the aforesaid
deposit, the Trustee will record on its books the ownership by the Depositor
thereof of units of fractional undivided interest in such Securities and in the
Income Account and the Principal Account maintained under this Indenture in the
manner hereinafter provided (which units of fractional undivided interest so
recorded respectively will represent in the aggregate 100% of the beneficial
interest established hereby in such Securities, Income Account and Principal
Account) and if the Sponsor so directs, will execute in the name of the
Depositor thereof a certificate or certificates representing the aggregate
number of Units specified in such Reference Trust Agreement and deliver same to
such Depositor.
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements herein contained, the Depositor and the Trustee agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions: Whenever used in this
Indenture, the following words and phrases, unless the context clearly indicates
otherwise, shall have the following meanings:
(1) "Additional Securities" shall
mean such Securities (as defined herein) as are
listed in Supplementary Schedules of the Reference
Trust Agreement and which have been deposited to
effect an increase over the number of Units initially
specified in Part II of the Reference Trust
Agreement.
(2) "Additional Units" shall mean
such Units (as defined herein) as are issued in
respect of Additional Securities.
(3) "Basic Agreement" shall mean
this Trust Indenture and Agreement dated as indicated
on the cover page hereof as originally executed, or
if amended as hereinafter provided, as so amended,
<PAGE>
exclusive of the terms contained in any related
Reference Trust Agreement.
(4) "Business Day" shall mean any
day other than a Saturday or Sunday or other day on
which the New York Stock Exchange is closed for
trading, a legal holiday in the City of New York, or
a day on which banking institutions are authorized by
law to close.
(5) "Computation Day" shall have the
meaning assigned to it in Part II of the Reference
Trust Agreement.
(6) "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.
(7) "Deferred Sales Charge" shall
mean any deferred sales charge payable in accordance
with the provisions of Section 3.12 hereof, as set
forth in the prospectus for a Trust.
(8) "Depositor" of the Trust shall
have the meaning assigned to it in Part II of the
Reference Trust Agreement.
(9) "Distribution Agency Agreement"
shall mean the Distribution Agency Agreement dated
the date of this Indenture among the Trustee, the
Depositor and the Distribution Agent.
(10) "Distribution Agent" shall mean
the Distribution Agent appointed in the Distribution
Agency Agreement, or its successor as appointed
pursuant to the Distribution Agency Agreement.
(11) "Distribution Date" shall have
the meaning assigned to it in Part II of the
Reference Trust Agreement.
(12) "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.
(13) "Indenture" shall mean the
Basic Agreement, as further amended, supplemented or
varied by the Reference Trust Agreement.
(14) "Prospectus" shall mean the
prospectus relating to a Trust in the form first used
to confirm sales of Units of such Trust.
(15) "Record Date" shall have the
meaning assigned to it in Part II of the Reference
Trust Agreement.
(16) "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.
(17) "Replacement Security" shall
mean a Security purchased by the Trustee pursuant to
Section 3.07 hereof.
(18) "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
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<PAGE>
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, 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.
(19) "Special Security" shall have
the meaning assigned to it in Section 3.07 hereof.
(20) "Termination Date" shall mean
the date set forth in Part II of the Reference Trust
Agreement.
(21) "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.
(22) "Trustee" shall mean United
States Trust Company of New York, or any successor
trustee as hereinafter provided for.
(23) "Unit" shall mean the
fractional undivided interest in and ownership for
the Trust which shall be initially equal to the
fraction specified for the Trust in Part II of the
Reference Trust Agreement, the denominator of which
fraction shall be decreased by the number of any such
Units redeemed as provided in Sections 5.02 and 5.03
and increased by the number of any Additional Units
as provided in Section 2.06 or revised as provided in
Section 2.03.
(24) "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.
(25) 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.
(26) Words importing the singular
number shall include the plural number in each case
and vice versa and words importing persons shall
include corporations and associations, as well as
natural persons.
ARTICLE II
DEPOSIT OF SECURITIES; ACCEPTANCE OF TRUST
Section 2.01. Deposit of Securities: The Depositor,
concurrently with the execution and delivery 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
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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. 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.
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, on any day on which the Depositor is the
only Unit Holder, which revised number of Units shall be recorded by 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 ("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
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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. 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, 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
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 for deposit during the 90-day period following the
first deposit of Securities in the Trust, the rules stated in subparagraphs (1)
and (2) of this paragraph 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
appropriate action in order to complete the deposit of the Additional Securities
covered thereby into the Trust. The parties hereto agree that a Supplementary
Schedule to the Reference Trust Agreement may be delivered by telecopier and
that such delivery shall have the same force and effect as the delivery of an
original executed document.
Section 2.06. Register of Units: A register shall be kept
by the Trustee containing the names and addresses of the Unit Holders and the
number of Units owned by each Unit Holder, and in which all issues, exchanges,
transfers and cancellations of Units shall be recorded.
ARTICLE III
ADMINISTRATION OF TRUST
Section 3.01. Initial Cost: With respect to the Trust, the
cost of the initial preparation, printing and execution of this Indenture shall
be paid by the
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Depositor, provided, however, that the liability on the part of the Depositor
for such initial costs, fees and expenses shall not include any fees, costs or
other expenses incurred in connection herewith after the execution of this
Indenture, and the deposit relating to the Trust, referred to in Section 2.01.
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 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 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 Depositor as set forth below. The Trustee shall
distribute to the Depositor from the amount so held pursuant to the
immediately preceding sentence the amounts that the Depositor is
entitled to receive pursuant to Section 8.07 on account of its services
theretofore performed and expenses theretofore incurred. With respect
to 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 Depositor is entitled to receive and shall distribute
such amounts to the Depositor on the monthly, quarterly or semiannual
Distribution Dates, as the case may be. In the event of the appointment
of a successor depositor pursuant to Section 6.01(f)(1), deduct from
the Income Account, or, to the extent that funds are not available in
such Account, from the Principal Account, and pay to such successor
depositor the amounts, if any, that it is at the time lawful for it to
receive under said Section 6.01(f)(1).
All amounts (i) permitted to be withdrawn from the Principal
Account under this Indenture in order to satisfy obligations which, pursuant to
the terms hereof, are first to be paid out of the Income Account to the extent
funds are available, or (ii) permitted to be withdrawn from the Principal
Account pursuant to Section 5.02 hereof, may be made only
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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 Section 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 not be required to make a distribution from
the Principal Account unless the cash balance on deposit therein available for
distribution shall be sufficient to distribute at least $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.
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 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, but not later than February 28th, the Trustee shall
furnish to each person who at any time during such calendar year was a Unit
Holder a statement setting forth, with respect to such calendar 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,
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(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 dollar amount per Unit outstanding on the last
Business Day of such calendar 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 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 year,
(2) the number of Units outstanding on the last
Business Day of such calendar year,
(3) the Unit Value (as defined in Section 5.01)
based on the last evaluation of such Trust made during such
calendar year, and
(4) the amounts actually distributed
during such calendar 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
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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
purchase 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 equal the amount required to be paid to the
Depositor pursuant to the Deferred Sales Charge program as set forth in the
prospectus for a Trust.
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
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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 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 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 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 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
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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 Reference
Trust Agreement and 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, if
so provided in the Reference Trust Agreement and 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.
ARTICLE IV
EVALUATION OF SECURITIES
Section 4.01. Evaluation of Securities: The Trustee shall
determine separately and promptly furnish to the Depositor upon request the
value of each issue of the Securities in the Trust (determined as set forth
below) as of the Evaluation Time on each of the days on which the Trustee shall
make the Trust Evaluation required by Section 5.01. In making the evaluations
the Trustee 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 securities comparable
to those held by the Trust, or (ii) if bid prices are not available for any of
such Securities, on the basis of bid prices for comparable securities, or (iii)
by appraisal of the value of the Securities on the bid side of the market or by
such other appraisal as is deemed appropriate, or (iv) by any combination of
the above. The Trustee shall also make an evaluation of the Securities
deposited in the Trust as of the time said Securities are deposited under this
Indenture. Such evaluation shall be made on the same basis as set forth above.
The Trustee's determination of the closing 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.
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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.
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 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."
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, 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
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the next Business Day following the Tender Day (such next Business Day being
hereinafter the "Redemption Date") of (i) the 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 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.
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 receivable on stocks trading ex dividend, if any, shall be
withdrawn from the Principal Account to the extent that funds are available for
such purpose. If such available balance shall be insufficient, the Trustee
shall advance funds sufficient to pay such amount to the Unit Holder and shall
be entitled to reimbursement of such advance upon the deposit of additional
monies in the Income Account or Principal Account, whichever happens first.
Should any amounts so advanced with respect to declared but unreceived
dividends prove uncollectible because of default in payment of such dividends,
the Trustee shall have the right immediately to liquidate Securities in amount
sufficient to reimburse itself for such advances, without interest. In the
event that funds are withdrawn from the Principal Account for payment of any
portion of the Redemption Distribution representing dividends receivable on
stocks trading ex dividend, the Principal Account shall be reimbursed when
sufficient funds are next available in the Income Account for such funds so
applied.
Unit Holders requesting a cash distribution shall receive
such distribution in accordance with ss. 1.01(b) of the Distribution Agency
Agreement.
The Trustee may in its discretion, and shall when so directed
by the Depositor, suspend the right of redemption or postpone the date of
payment of the Redemption Distribution for more than seven calendar days
following the day on which tender for redemption is made (1) for any period
during which the New York Stock Exchange is closed other than customary weekend
and holiday closings or during which trading on the New York Stock Exchange is
restricted; (2) for any period during which an emergency exists as a result of
which disposal by the Trust of the Securities is not reasonably practicable or
it is not reasonably practicable fairly to determine in accordance herewith the
value of the Securities; or (3) for such other period as the Securities and
Exchange Commission may by order permit. The Trustee shall not be liable to any
person or in any way for any loss or damage which may result from any such
suspension or postponement.
Not later than the close of business on the day any Unit is
tendered for redemption by a Unit Holder other than the Depositor, the Trustee
shall notify the Depositor of such tender. The Depositor shall have the right
to purchase such Unit by notifying the Trustee of its election to make such
purchase no later than the close of business on the Tender Day. Such purchase
shall be made by payment for such Unit by the Depositor to the Unit Holder not
later than the close of business on the Redemption Date of an amount not less
than the Redemption Distribution which would otherwise be payable by the
Trustee to such Unit Holder.
Any Unit so purchased by the Depositor may at the option of
the Depositor be tendered to the Trustee for redemption at the corporate trust
office of the Trustee in the manner provided in the first paragraph of this
Section 5.02.
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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 and one or more of the 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.
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.
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 Low Five Portfolio 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, as part of the Trustee's compensation the Trustee may benefit
from reasonable cash balances in the Income Account and the Principal
Account as provided in Section 6.04;
(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 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
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been selected with reasonable care; provided, however, that if the
Trustee chooses to employ the Depository Trust Company in connection
with the storage and handling of, and the furnishing of administrative
services in connection with the Securities, the Trustee will be
answerable for any default or misconduct of the Depository Trust
Company and its employees and agents as fully and to the same extent as
if such default or misconduct had been committed or occasioned by the
Trustee. The Trustee shall be fully protected in respect of any action
under this 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 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.
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(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 affiliated person (as so defined) or agent of the
Depositor or such underwriter shall be allowed the Trustee as an
expense except for payment not in excess of such reasonable amounts as
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; and
(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.
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 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.
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
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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 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 trustee as hereinafter provided, by written instrument, in
duplicate, one copy of which shall be delivered to the resigning
Trustee and one copy to the successor trustee. If at any time the
Trustee shall become incapable of acting, or shall be adjudged a
bankrupt or insolvent, or 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, if the Depositor shall
determine in good faith that there has occurred either (1) a material
deterioration in the creditworthiness of the Trustee or (2) one or more
negligent acts on the part of the Trustee having a material adverse
effect, either singly or in the aggregate, on the Trust or on one or
more Trusts, such that the replacement of the Trustee is in the best
interests of the Unit Holders, 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
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to such successor trustee all the rights and powers of the retiring
Trustee; and the retiring Trustee shall transfer, deliver and pay over
to the successor trustee all Securities and monies at the time held by
it hereunder, together with all necessary instruments of transfer and
assignment or other documents properly executed necessary to effect
such transfer and such of the records or copies thereof maintained by
the retiring Trustee in the administration hereof as may be requested
by the successor trustee, and shall thereupon be discharged from all
duties and responsibilities under this Indenture. The retiring Trustee
shall, nevertheless, retain a lien upon all Securities and monies at
the time held by it hereunder to secure any amounts then due the
retiring Trustee;
(c) in case at any time the Trustee shall resign and no
successor trustee shall have been appointed or, if appointed, shall not
have accepted appointment within thirty days after notice of
resignation has been received by the Depositor, the retiring Trustee
may forthwith apply to a court of competent jurisdiction for the
appointment of a successor trustee. Such court may thereupon, after
such notice, if any, as it may deem proper and prescribe, appoint a
successor trustee;
(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.
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:
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<PAGE>
(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
(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 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
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<PAGE>
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 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.
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
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<PAGE>
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 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 Depositor shall receive
at the times set forth in Section 3.05 as compensation for performing portfolio
supervisory services, such amounts, and for such periods, as are specified in
the Reference Trust Agreement. The computation of such compensation shall be
made on the basis of the greatest number of Units in the Trust at any time
during which such compensation is being computed. At no time, however, will the
total amount received by the Depositor for services rendered to all series of
the National Equity Trust in any calendar year exceed the aggregate cost to it
of supplying such services in such year except to the extent permitted by law.
Such rate may be increased from time to time, without the consent or approval
of any Unit Holder or the Trustee, by amounts not exceeding the proportionate
increase during the period from the date of such Reference Trust Agreement to
the date of any such increase, in consumer prices as published either under the
classification "All Services Less Rent" in the Consumer Price Index published
by the United States Department of Labor or, if such Index is no longer
published, a similar index.
ARTICLE IX
ADDITIONAL COVENANTS; MISCELLANEOUS PROVISIONS
Section 9.01. Amendments without the Consent of Unit
Holders: This Indenture may be amended from time to time by the parties hereto
or their respective successors, without the consent of any of the Unit Holders
(a) to cure any ambiguity or to correct or supplement any 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
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<PAGE>
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 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 interest 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.
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<PAGE>
(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 Securities Incorporated at One Seaport Plaza, New York, New York
10292 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 if mailed or delivered to the Trustee at its
office at 770 Broadway, New York, New York 10003-9598, 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 Securities Incorporated 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 United States Trust Company 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.
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<PAGE>
PRUDENTIAL SECURITIES INCORPORATED,
Depositor
By: /s/Kenneth Swankie
Kenneth Swankie
Senior Vice President
Manager - Unit Investment Trust Department
(SEAL)
ATTEST:
By: /s/ Kathleen B. Maguire
Kathleen B. Maguire
Assistant Secretary
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<PAGE>
UNITED STATES TRUST COMPANY OF NEW YORK,
TRUSTEE
By: /s/ Mary Patterson
Mary Patterson
Assistant Vice President
(SEAL)
ATTEST:
By: /s/ Linda Hayes
---------------
Linda Hayes
Assistant Secretary
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
I,Ada Iris Vega, a Notary Public in and for the said County in
the State aforesaid, do hereby certify that Mary Patterson and Linda Hayes
personally known to me to be the same persons whose names are subscribed to the
foregoing instrument and personally known to me to be an Assistant Vice
President and Assistant Secretary, respectively, of United States Trust Company
of New York, a corporation, appeared before me this day in person, and
acknowledged that they signed, sealed with the corporate seal of United States
Trust Company of New York, and delivered the said instrument as their free and
voluntary act as such Assistant Vice President and Assistant Secretary,
respectively, and as the free and voluntary act of said United States Trust
Company for the uses and purposes therein set forth.
GIVEN, under my hand and notarial seal this 21st day of April,
1995.
/s/Ada Iris Vega
Ada Iris Vega
Notary Public
(SEAL)
<PAGE>
Executed in 6 Parts
Counterpart No. ( )
NATIONAL EQUITY TRUST
LOW FIVE PORTFOLIO SERIES 31
REFERENCE TRUST AGREEMENT
This Reference Trust Agreement dated , 2000 among Prudential
Securities Incorporated, as Depositor and The Chase Manhattan Bank, as Trustee,
sets forth certain provisions in full and incorporates other provisions by
reference to the document entitled "National Equity Trust Low Five Portfolio
Series, Trust Indenture and Agreement" (the "Basic Agreement") dated April 25,
1995. Such provisions as are set forth in full herein and such provisions as are
incorporated by reference constitute a single instrument (the "Indenture").
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements
herein contained, the Depositor and the Trustee agree as follows:
Part I.
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II hereof, all the
provisions contained in the Basic Agreement are herein incorporated by reference
in their entirety and shall be deemed to be a part of this instrument as fully
and to the same extent as though said provisions had been set forth in full in
this instrument except that the Basic Agreement is hereby amended in the
following manner:
A. Article I, entitled "Definitions", paragraph 22, shall be amended as
follows:
"Trustee shall mean the Chase Manhattan Bank, or any
successor trustee appointed as hereinafter provided."
<PAGE>
-2-
B. Article II, entitled "Deposit of Securities; Acceptance of Trust",
shall be amended as follows:
The second sentence of Section 2.03 Issue of Units shall be amended by
deleting the words "on any day on which the Depositor is the only Unit
Holder".
C. Article III, entitled "Administration of Trust", shall be amended as
follows:
(i) Section 3.01 Initial Costs shall be amended to substitute the
following language:
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
<PAGE>
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expenses of organizing the Trust and sale of the Trust Units
shall include the cost of the initial preparation and
typesetting of the registration statement, prospectuses
(including preliminary prospectuses), the indenture, and other
documents relating to the Trust, SEC and state blue sky
registration fees, the cost of the initial valuation of the
portfolio and audit of the Trust, the initial fees and
expenses of the Trustee, and legal and other out-of-pocket
expenses related thereto, but not including the expenses
incurred in the printing of preliminary prospectuses and
prospectuses, expenses incurred in the preparation and
printing of brochures and other advertising materials and any
other selling expenses. Any cash which the Depositor has
identified as to be used for reimbursement of expenses
pursuant to this Section 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.
(ii) The third paragraph of Section 3.05 Distribution shall be
amended to add the following sentence at the end thereof:
"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, provided however, that no such
distribution shall be made if the assets of the Trust
subsequent to such distribution would not exceed any Deferred
Sales Charge payable and other trust expenses."
(iii) The second to the last paragraph of Section 3.08 Sale of
Securities shall be amended to replace the word "equal" with
the following phrase: "be sufficient to pay."
<PAGE>
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D. Reference to United States Trust Company of New York in its capacity as
Trustee is replaced by the Chase Manhattan Bank throughout the Basic
Agreement.
Part II.
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed to:
A. The Trust is denominated National Equity Trust, Low Five Portfolio
Series 31.
B. The Units of the Trust shall be subject to a deferred sales charge.
C. The contracts for the purchase of common stock listed in Schedule A
hereto are those which, subject to the terms of this Indenture, have been or are
to be deposited in Trust under this Indenture as of the date hereof.
D. The term "Depositor" shall mean Prudential Securities Incorporated.
E. The aggregate number of Units referred to in Sections 2.03 and 9.01
of the Basic Agreement is as of the date hereof.
F. A Unit of the Trust is hereby declared initially equal to 1/ th of
the Trust.
G. The term "First Settlement Date" shall mean , 2000.
H. The terms "Computation Day" and "Record Date" shall mean 10, 10, 10,
and 10.
I. The term "Distribution Date" shall mean 25, 25, 25, and 25.
J. The term "Termination Date" shall mean , 2001.
K. The Trustee's Annual Fee shall be $ (per 1,000 Units) for
100,000,000 and above units outstanding; $0.80 (per 1,000 Units) for 50,000,000
- - 99,999,999 units outstanding; $0.86 (per 1,000 Units) for 49,999,999 and below
units outstanding. In calculating the Trustee's annual fee, the fee applicable
to the number of units outstanding shall apply to all units outstanding.
L. The Depositor's Portfolio supervisory service fee shall be $0.25 per
1,000 Units.
[Signatures and acknowledgments on separate pages]
<PAGE>
Exhibit 99.1
Information concerning the officers and directors of Prudential Securities
Incorporated is set forth below.
<TABLE>
<CAPTION>
Full Legal Name Title or Status
<S> <C>
Farley, Thomas M. Executive Vice President
Horan, William John Chief Financial Office Executive Vice President
Horowitz, Andrea Marlene Compliance Director Senior Vice President
McCormick, William Graf Executive Vice President
Norton, Arthur Laurence Director Executive Vice President
Odenath, David Roehner Jr. Director
Owens, Thomas J. Executive Vice President
Paton, Leland Bartlett Director Executive Vice President
Pfinsgraff, Martin Director Executive Vice President Chief Operating Officer
Pica, Vincent Thaddeus Director Executive Vice President
Pierce, David Munro Executive Vice President
Price, James Dale Director Executive Vice President
Simmons, Hardwick President Chief Executive Office Director
Spencer, Lee Bowen Director Executive Vice President Secretary [PSI] General
</TABLE>
Counsel [PSGI]
<PAGE>
Exhibit 99.2
Affiliations of Sponsor with other investment companies
The depositor is a member of Prudential Investment Management Services LLC
(PIMS), which manages various registered investment companies.
Prudential Securities is also a depositor for the following unit investment
trusts:
Corporate Investment Trust Fund
Prudential Equity Trust Shares
National Equity Trust
Prudential Unit Trusts
Government Securities Equity Trust
National Municipal Trust
<PAGE>
ACCORD CERTIFICATE OF LIABILITY INSURANCE
<TABLE>
<S> <C>
PRODUCER
Aon Risk Services of New York, Inc. THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION
2 World Trade Center, 100th Floor ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE
New York, NY 10048 HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR
ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW.
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COMPANIES AFFORDING COVERAGE
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INSURED Prudential Insurance Company of America COMPANY Federal Insurance Company and Other Insurers
A
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COMPANY
B
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COMPANY
C
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COMPANY
D
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COMPANY
E
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</TABLE>
THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED
TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY
REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO
WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY
THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND
CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS.
<TABLE>
<CAPTION>
- ------- -------------------------------- ----------- ------------- -------------- ----------------------------------------
POLICY POLICY
CO EFFECTIVE EXPIRATION
LT TYPE OF INSURANCE POLICY DATE DATE
NUMBER (M/D/Y) (M/D/Y) LIMIT
- ------- -------------------------------- ----------- ------------- -------------- ----------------------------------------
<S> <C> <C> <C> <C> <C>
GENERAL LIABILITY
COMMERCIAL GENERAL GENERAL AGGREGATE $_______
LIABILITY PRODUCTS COMPLAINT ACTS $_______
CLAIMS MADE OCCUR PERSONAL AND ADV. INJURY $_______
OWNERS AND EACH OCCURRENCE $_______
CONTRACTOR'S PROD FIRE DAMAGE $_______
____________________
____________________
_________________________ ____________________
- ------- -------------------------------- ----------- ------------- -------------- ----------------------------- ----------
AUTOMOBILE LIABILITY
- ------- -------------------------------- ----------- ------------- -------------- ----------------------------- ----------
GARAGE LIABILITY AUTO ONLY EACH ACCIDENT
- ------- -------------------------------- ----------- ------------- -------------- ----------------------------- ----------
EXCESS LIABILITY
- ------- -------------------------------- ----------- ------------- -------------- ----------------------------- ----------
WORKERS COMPENSATION AND
- ------- -------------------------------- ----------- ------------- -------------- ----------------------------- ----------
OTHER COMPREHENSIVE CRIME
INSURANCE (Brokers Blanket
Bond Standard Form 14) 70229415 6\31\97 8\31\00 $62,500,000
- --------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES/SPECIAL ITEMS
Coverage is inclusive of the following: Fidelity, Premises, Transit, Forgery and Alteration, securities Forgery,
Counterfeit Currency, and the Electronic Computer Crime Policy.
- ---------------------------------------------------- ---------------------------------------------------------------------
Prudential Securities SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE
199 Water Street EXPIRATION DATE THEREOF, THE ISSUING COMPANY WILL ENDEAVOR TO MAIL
New York, NY 10282 ___ DAYS WITHIN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LEFT
BUT FAILURE TO MAIL SUCH NOTICE SHALL IMPOSE NO OBLIGATION OR
LIABILITY OF ANY KIND UPON THE COMPANY. ITS AGENTS OR
REPRESENTATIVES.
- ---------------------------------------------------- ---------------------------------------------------------------------
AUTHORIZED REPRESENTATIVE
_____________________________________________________________
- ---------------------------------------------------- ---------------------------------------------------------------------
</TABLE>
<PAGE>
DISTRIBUTION AGENCY AGREEMENT
This Distribution Agency Agreement ("Agreement") dated as of
April 25, 1995, among Prudential Securities Incorporated, as the Depositor (the
"Depositor"), United States Trust Company of New York, as Trustee (the
"Trustee") pursuant to the Trust Indenture and Agreement and the Reference Trust
Agreement, each dated April 25, 1995 (collectively, the "Indenture"), relating
to National Equity Trust Low Five Portfolio Series 1 (the "Trust") and United
States Trust Company of New York, as Distribution Agent (the "Agent"), sets
forth procedures for the distribution of proceeds of redemptions of Units from
the Trust to the Unit Holders. All capitalized terms used but not defined herein
that are defined in the Indenture are used herein as defined therein.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements
herein contained, the Depositor, the Trustee and the Agent agree as follows:
ARTICLE I
Distributions Between Trustee and Agent
SECTION 1.01. Redemption of Units.
(a) In Kind Redemption: Units tendered as set forth in Section
5.02 of the Indenture for redemption shall be redeemed on the Tender Day.
Subject to payment by a tendering Unit Holder of any tax or other governmental
charges which may be imposed thereon, such redemption shall be made by the
distribution by the Trustee to the Agent on the Tender Day of the Redemption
Distribution which shall then be distributed to the tendering Unit Holder on the
Redemption Date plus cash equal to the value of fractional shares, in accordance
with Section 5.02 of the Indenture, provided, however, that the right of a Unit
Holder to receive a distribution in kind shall be conditioned on such Unit
Holder tendering Units with a value of in excess of $250,000.
(b) Cash Redemption of Units: Unit Holders may redeem such
Units and request payment of the Redemption Distribution in cash. Such request
shall be in writing and submitted to the Trustee at the time the Units are
tendered for redemption. Failure to so request shall result in distribution in
cash as set forth in this paragraph (b). Units tendered for redemption with such
a request for cash shall be tendered and redeemed in the manner and at the times
set forth in (a) above for in kind redemptions, except that on the Tender Date
related to such tender by a Unit Holder or as soon thereafter as possible, the
Agent shall sell the Securities which comprise the Redemption Distribution,
using its best reasonable efforts to secure the best price obtainable for such
Securities and shall distribute to the Unit Holder, subject to payment by the
Unit Holder of any tax or governmental charges that may be imposed thereon or
any brokerage commission charged on the sale, for each Unit tendered (i) an
amount in cash equal to the proceeds from the sale of the Securities which
comprise the Redemption Distribution; (ii) an amount in cash equal to the Unit
Cash value (determined as of the Evaluation Time on the date of tender) and
(iii) cash equal to the value of any fractional shares included in the Unit
Holder's pro rata portion of the Securities as of the Tender Day distributed to
the Agent by the Trustee. Such cash distribution shall be made within seven
calendar days of the Tender Day. Neither the Agent nor the Depositor shall be
liable or responsible in any way for depreciation or loss incurred by reason of
any sale or sales made in accordance with this Section 1.01(b).
With respect to either (a) or (b) above, if the Unit Cash Value is an amount
less than zero, the Agent shall remit to the Trustee (or the Trustee shall, in
the case of (x) or (y) below, withhold from distribution to the redeeming Unit
Holder) for each redeemed Unit the negative amount, obtained from the following
sources in the following order until such amount has been remitted to the
Trustee in full:
(x) amounts due the Unit Holder of such redeemed Units
from the sale of fractional shares of Securities
otherwise part of the Redemption Distribution;
(y) amounts otherwise due to the Unit Holder of such
redeemed Units in the form of an Income
Distribution;
<PAGE>
(z) proceeds from the sale of other shares of Securities
otherwise part of the Redemption Distribution.
SECTION 1.02. Distribution of Securities, Liquidation,
and Investment in New Trust Upon Termination: (a) Securities to be distributed
in kind as set forth in Section 5.03 of the Indenture shall be distributed on
the first Business Day following the Termination Date in accordance with the
provisions of such Section.
(b) Each Unit Holder who elects either to receive cash or to
invest in a subsequent trust shall have his Termination Distribution held by the
Agent on his behalf for disposition in accordance with this Section 1.02(b).
On each Business Day during the 10 Business-Day period
following the Termination Date (the "Special Distribution Period"), the
Securities subject to disposition under this Section 1.02(b) shall be sold by
the Depositor as sub-agent for the Agent, using its best reasonable efforts to
secure the best price obtainable for the Securities or by such other sub-agent
as shall be designated by the Depositor or absent such designation such other
sub-agent as the Agent shall determine. The Depositor, as such sub-agent, will
open a customer account for the Agent and will sell, on each Business Day, at
least an amount of the then unsold Securities (based on the number of shares of
underlying Securities of each issuer) multiplied by a fraction the numerator of
which is one and the denominator of which is the number of days remaining in the
10 day period. Neither the Agent nor the Depositor shall be liable for or
responsible in any way for depreciation or loss incurred by reason of any sale
or sales made in accordance with this Section 1.02(b). Upon the Sale of the last
security the Depositor as such sub-agent for the Agent shall deduct from the
proceeds of these sales (the "Sales Proceeds") and pay any tax or governmental
charges and commissions in connection with the sale. The Agent shall hold each
day's proceeds in an account which is non-interest bearing to Unit Holders and
is available for use by the Agent pursuant to normal banking procedures.
Upon the settlement of the last sale of securities, the
Distribution Agent shall distribute to Unit Holders electing distribution in
cash the Sales Proceeds plus their pro rata share of the cash balances in the
Principal and Income Accounts or on behalf of Unit Holders electing
reinvestment, shall apply the Sales Proceeds plus their pro rata share of the
cash balances in the Principal and Income Accounts towards the purchase of Units
of the next National Equity Trust, Low Five Portfolio Series to be offered (the
"New Series"), if any.
The Agent shall, as soon as reasonably possible after the
Sales Proceeds are so applied to the purchase of New Series units, distribute to
each Unit Holder all Units so purchased and held on his behalf and provide a
report to each Unit Holder showing the total number of New Series units credited
to him and the sales charge included in the price for New Series units.
ARTICLE II
Distribution between Agent and Unit Holders
SECTION 2.01. Cash Distributions: (a) Upon receipt of any cash
distributed from the Principal and Income Accounts or as a result of the sale of
Securities as provided in Section 1.01 and 1.02 hereof, the Agent shall deposit
such cash in an account entitled United States Trust Company of New York, as
Agent pursuant to the Distribution Agency Agreement dated April 25, 1995 or
other similar title (the "Agency Account"). All distributions to be made
pursuant to this Agreement shall be made from such account.
(b) Cash to be distributed to the Trustee for its own account
as provided in Section 1.01 hereof shall be distributed by means of interaccount
transfer or by such other method as the Trustee and Agent may approve.
(c) Cash to be distributed to Unit Holders shall be
distributed by the Agent to such Holders in the manner generally used by the
Trustee for cash Income Distributions made to Unit Holders.
SECTION 2.02. Extraordinary Distributions: If the Trustee
should at any time receive Securities or other property that it is required to
dispose of pursuant to the
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<PAGE>
Indenture, such disposition shall be made in the same manner as provided in
Section 1.01(b) hereof for the conversion of Securities to cash; provided,
however, that if such other property received is not readily marketable, the
Agent shall consult with the Depositor concerning the method of disposition of
such other property most likely to maximize cash yield and efficiency of time
and convenience. The Depositor's determination of such method of disposition
shall be final and binding and the Agent shall be entitled to rely in good faith
upon such determination. Cash received upon such a disposition shall be
distributed by the Agent to the Unit Holders in the pro-rata portions and the
addresses provided by the Trustee.
SECTION 2.03. Statements and Reports: Any statement or
report required by Section 3.06 of the Indenture to be distributed to Unit
Holders may be distributed by the Agent as provided in said Section 3.06. After
the sale of the last Security as set forth in Section 1.02(b) herein the Agent
shall distribute to a Unit Holder upon the request of such Unit Holder or upon
the request of the Depositor a statement which shall set forth the Securities
received by the Distribution Agent from the Trustee and the proceeds of the
sale of such Securities.
ARTICLE III
Miscellaneous
SECTION 3.01. Fees and Expenses: The Agent shall receive no
fee for its services hereunder; provided, however, that the Trustee may pay the
Agent a fee equal to the costs of the Agent's services hereunder, which costs
shall be allowed the Trustee as a cost of its services as Trustee, but the
Trustee shall not be entitled to be reimbursed by the Trust for any such fee
paid to the Agent to the extent the Trustee would thereby receive a fee greater
than the Trustee's fee set forth in the Indenture. Out-of-pocket expenses
incurred by the Agent (e.g., mailing costs) shall be reimbursed by the Trustee
and shall be treated as expenses of the Trust under the Indenture. The Agent
shall be indemnified and held harmless against any loss or liability accruing
to it without negligence, bad faith or wilful misconduct on its part, arising
out of or in connection with the acceptance or administration of this
Agreement, including the costs and expenses (including counsel fees) of
defending itself against any claim of liability in the premises.
SECTION 3.02. General Matters Relating to Agent: (a) All
moneys deposited with or received by the Agent hereunder shall be held by it
without interest until required to be disbursed in accordance with the
provisions of this Agreement.
(b) The Agent shall be under no liability for any action taken
in good faith in reliance on any appraisal, paper, order, list, demand, request,
consent, affidavit, notice, opinion, direction, evaluation, endorsement,
assignment, resolution, draft or other document provided by the Trustee or the
Depositor, whether or not of the same kind, prima facie properly executed, or
for the disposition of moneys or Securities pursuant to this Agreement; or in
respect of any evaluation which it is required to make or is required or
permitted to have made by others under this Agreement or otherwise, except by
reason of its own wilful misfeasance, bad faith or negligence in the performance
of its duties or by reason of its reckless disregard of its obligations and
duties hereunder. The Agent may construe any of the provisions of this
Agreement, insofar as the same may appear to be ambiguous or inconsistent with
any other provisions hereof which construction shall be binding upon the Unit
Holders and the parties hereto. The Agent shall be under no liability for any
construction of any such provisions hereof.
SECTION 3.03. Resignation, Discharge or Removal of Agent;
Successors: (a) The Agent may resign and be discharged from the duties
created by this Agreement by executing a written resignation as such Agent, and
filing the same with the Trustee and the Depositor. Upon receiving such notice
of resignation, the Depositor shall use its best efforts promptly to appoint a
successor Agent in the manner and meeting the qualifications hereinafter
provided. In case at any time the Agent shall not meet the requirements set
forth in Section 3.04 hereof, or shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or a receiver of such Agent or of its
property shall be appointed, or any public officer shall take charge or control
of such Agent or of any of its property or affairs for the purposes of
rehabilitation, conservation or liquidation or if the Depositor shall determine
in good faith that there has occurred either (1) a material deterioration in
the creditworthiness of the Agent or (2) one or more negligent acts on the part
of the Agent having a materially adverse effect, either singly or in the
aggregate, on
-3-
<PAGE>
the Securities and proceeds thereof and interests of the Unit Holders, such that
the replacement of the Agent is in the best interests of the Unit Holders, the
Depositor may remove such Agent and appoint a successor Agent by written
instrument or instruments delivered to the Trustee, the Agent so removed and the
successor.
(b) In case at any time the Agent shall resign and no
successor Agent shall have been appointed within thirty days after notice of
resignation has been received by the Depositor, the Depositor shall serve as
Agent until a qualified successor Agent is appointed.
SECTION 3.04. Qualification of Agent: The Agent and any
successor Agent shall be a banking or trust corporation meeting the
requirements of the Investment Company Act of 1940 for trustees, organized and
doing business under the laws of the United States or any state thereof, having
at all times an aggregate capital, surplus, and undivided profits of not less
than $5,000,000.
SECTION 3.05. Procedure Upon Termination: This Agreement
and the duties created hereby shall terminate upon the disposition of the last
Security and the proceeds of such Security held under the Indenture and this
Distribution Agency Agreement.
SECTION 3.06. Amendment and Waiver: This Agreement may be
amended from time to time by the Depositor, the Trustee and the Agent (a) to
cure any ambiguity or to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provision contained
herein; or (b) to make such other provisions in regard to matters or questions
arising hereunder as shall not materially adversely affect the interests of the
Unit Holders.
SECTION 3.07. New York Law to Govern: The internal laws
of the State of New York shall govern the rights of the parties hereto and the
interpretation of the provisions hereof.
SECTION 3.08. Notices: Any notice, demand, direction or
instruction to be given to the Depositor hereunder shall be in writing and
shall be duly given if mailed or delivered to Prudential Securities
Incorporated, One Seaport Plaza, New York, New York 10292, or at such other
address as shall be specified by the Depositor to the other parties hereto in
writing. Any notice, demand, direction, or instruction to be given to the
Trustee or Agent shall be in writing and shall be duly given if mailed or
delivered to its office at 770 Broadway, New York, New York 10003, or such
other address as shall be specified to the other parties hereto by the Trustee
or Agent, as the case may be, in writing.
SECTION 3.09. Severability: If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement.
SECTION 3.10. Separate and Distinct Series: Each Trust
established as a Series of the National Equity Trust shall, for all financial
and administrative purposes, be considered separate and distinct from every
other Trust, and the assets of one Trust shall not be commingled with the
assets of another Trust nor shall the expenses of any one Trust be charged
against any other Trust.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first written above.
-4-
<PAGE>
PRUDENTIAL SECURITIES INCORPORATED,
Depositor
By: /s/ Kenneth Swankie
-------------------
Kenneth Swankie
Senior Vice President
Manager - Unit Investment
Trust Department
(SEAL)
ATTEST:
By: /s/ Kathleen Maguire
--------------------
Kathleen Maguire
Assistant Secretary
-5-
<PAGE>
UNITED STATES TRUST COMPANY OF NEW YORK,
TRUSTEE
By: /s/ Mary Patterson
------------------
Mary Patterson
Assistant Vice President
(SEAL)
ATTEST:
By: /s/ Linda Hayes
---------------
Linda Hayes
Assistant Secretary
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
I,Ada Iris Vega, a Notary Public in and for the said County in
the State aforesaid, do hereby certify that Mary Patterson and Linda Hayes
personally known to me to be the same persons whose names are subscribed to the
foregoing instrument and personally known to me to be an Assistant Vice
President and Assistant Secretary, respectively, of United States Trust Company
of New York, a corporation, appeared before me this day in person, and
acknowledged that they signed, sealed with the corporate seal of United States
Trust Company of New York, and delivered the said instrument as their free and
voluntary act as such Assistant Vice President and Assistant Secretary,
respectively, and as the free and voluntary act of said United States Trust
Company for the uses and purposes therein set forth.
GIVEN, under my hand and notarial seal this 21st day of April,
1995.
/s/ Ada Iris Vega
Ada Iris Vega
Notary Public
(SEAL)
