SCHWAB TRUSTS,
SCHWAB TEN TRUST, 1998 SERIES A
REFERENCE TRUST AGREEMENT
This Reference Trust Agreement (the "Agreement") dated March 3, 1998
among Xxxxxxx Xxxxxx & Co., Inc., Xxxxx & Tang Distributors, Inc., as Depositors
and The Chase Manhattan Bank, as Trustee, sets forth certain provisions in full
and incorporates other provisions by reference to the document entitled "Schwab
Trusts, Schwab Ten Trust, 1997 Series A, and Subsequent Series, Trust Indenture
and Agreement" dated November 4, 1997 and as amended in part by this Agreement
(collectively, such documents hereinafter called the "Indenture and Agreement").
This Agreement and the Indenture, as incorporated by reference herein, will
constitute a single instrument.
WITNESSETH THAT:
WHEREAS, this Agreement is a Reference Trust Agreement as defined in
Section 1.1 of the Indenture, and shall be amended and modified from time to
time by an Addendum as defined in Section 1.1 (1) of the Indenture, such
Addendum setting forth any Additional Securities as defined in Section 1.1 (2)
of the Indenture;
WHEREAS, the Depositors wish to deposit Securities, and any Additional
Securities as listed on any Addendums hereto, into the Trust and issue Units,
and Additional Units as the case maybe, in respect thereof pursuant to Section
2.5 of the Indenture; and
NOW THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the Depositors and the Trustee as follows:
Part I
STANDARD TERMS AND CONDITIONS OF TRUST
Section 1. Subject to the provisions of Part II hereof, all the
provisions contained in the Indenture 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 following sections of the Indenture hereby are
amended as follows:
(a) All references to "Xxxxx & Xxxx Distributors, L.P." are replaced
with "Xxxxx & Tang Distributors, Inc."
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(b) Section 1.1 of the Agreement is amended to add the following
definitions:
"Distribution Agent" shall mean the Distribution Agent appointed in the
Distribution Agency Agreement, or its successor as appointed pursuant
to the Distribution Agency Agreement.
"Distribution Agency Agreement" shall mean the Distribution Agency
Agreement among the Depositors, Trustee and the Distribution Agent
dated as of March 3, 1998.
Definitions following these definitions shall be renumbered.
(c) Section 2.1 of the Agreement is amended by adding the following
paragraph after the second paragraph thereof:
"When and as directed by the Depositors, the Trustee or
Distribution Agent shall accept securities and cash to be
deposited in a New Series in exchange for Units of the New Series
from persons other than Unitholders participating in a rollover
option. Notwithstanding the fact that any Unitholder may acquire
Units of the Trust by purchase or by in-kind contribution, the
Depositors will not deposit Securities received by the Depositors
on termination, or through a redemption of Units, of a series of
the Trust to a subsequent series of the Trust."
(d) Section 5.2 of the Agreement is amended by adding the following
prior to the first paragraph thereof:
"In connection with each redemption of Units, the Depositors
shall direct the Trustee to redeem Units in accordance with the
procedures set forth in either (a) or (b) of this Section 5.2.
(a) Trustee."
(e) Section 5.2 of the Agreement is further amended by adding the
following three paragraphs after the ninth paragraph of such Section 5.2.:
"(b) Distribution Agent-On any Business Day on which any
Unit or Units are tendered for redemption (the "Redemption Day")
by a Unitholder or his duly authorized attorney to the Trustee at
its unit investment trust office in the City of New York not
later than the Evaluation Time, such Units shall be redeemed by
the Trustee on that Redemption Day. Units in uncertificated form
shall be tendered by means of an appropriate request for
redemption in form approved by the Trustee. Unitholders must sign
exactly as their name appears on the register with the signature
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guaranteed by a participant in a signature guarantee program
acceptable to the Trustee, 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 Unitholder 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 Unitholder on the Redemption Day of (i) the
Unitholder's pro rata portion as of the Redemption Day of the
Securities in the Trust as designated by the Depositor and (ii)
the Unitholder's pro rata portion of the cash in the Trust as of
the Redemption Day (herein called the "Redemption Distribution").
The Distribution Agent will dispose of such assets in accordance
with the provisions of the Distribution Agent Agreement.
Fractional interests in shares distributed to the Distribution
Agent, which are not included in the Redemption Distribution,
shall be held in trust by the Distribution Agent, which is hereby
designated a subcustodian of the Trustee with respect to such
fractional interests, and shall be subject to such disposition as
the Depositor shall direct. Units received for redemption by the
Trustee on any date after the Evaluation Time will be held by the
Trustee until the next Business Day on which the New York Stock
Exchange is open for trading and will be deemed to have been
tendered on such day for redemption at the Redemption Price
computed on that day. Units tendered for redemption by the
Depositors on any Business Day shall be deemed to have been
tendered before the Evaluation Time on such Business Day provided
that the Depositors advise the Trustee before the later of the
Trustee's close of business and 5:00 pm New York City time. By
such advice, the Depositors will be deemed to certify that all
Units so tendered were either (a) tendered to the Depositors or
to a retail dealer between the Evaluation Time on the preceding
Business Day and the Evaluation Time on such Business Day or (b)
acquired previously by the Depositors but which the Depositors
determined to redeem prior to the Evaluation Time on such
Business Day.
The portion of the Redemption Distribution which represents
the Unitholder'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
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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 Unitholder 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.
Unitholders requesting or required to receive a cash
distribution shall receive such distribution in accordance with
the applicable provisions of the Distribution Agency Agreement."
(f) Section 6.2 of the Agreement is amended by adding the following at
the end of the second paragraph thereof:
"The Trustee shall maintain and provide, upon the request of a
Unitholder or the Depositors, the Unitholders or the Unitholder's
designated representative with the cost basis of the Securities
represented by the Unitholder's Units."
(g) Section 9.2 of the Agreement is amended by deleting the fourth
paragraph thereof and by adding the following paragraph in its place:
"In the event that the Trust terminates on the Termination Date,
the Trustee shall, not less than 30 days prior to the Termination
Date, send a written notice to each Unitholder. Such notice shall
allow each Unitholder of record owning, as of such date, 2,500 Units,
to elect to redeem his Units at the net asset value on the Termination
Date and to receive, in partial payment of the Redemption Price per
Unit, an in-kind distribution of such Unitholder's pro rata share of
the Securities, to the extent of whole shares. The Trustee will honor
duly executed requests for such in-kind distribution received by the
close of business on the Termination Date. Redemption of the Units of
Unitholders electing such in-kind distribution shall be
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made on the third business day following the Termination Date and
shall consist of (1) such Unitholder's pro rata share of Securities
(valued as of the Termination Date) to the extent of whole shares and
(2) cash equal to the balance of such Unitholder's Redemption Price.
Unitholders who do not effectively request an in-kind distribution
shall receive their distribution upon termination in cash. The Trustee
shall distribute the Unitholder's Securities to the account of the
Unitholder's bank or broker-dealer at Depositary Trust Company. An
in-kind distribution shall be reduced by customary transfer and
registration charges incurred by the Trustee."
(h) Section 9.2 of the Agreement is further amended by adding the
following paragraph after the sixth paragraph of such Section 9.2:
"In the event that the Depositors direct the Trustee that certain
Securities will be sold to a new series of the Trust (a "New Series"),
the Depositors will certify to the Trustee, within five days of each
sale from a Trust to a New Series, (1) that the transaction is
consistent with the policy of both the Trust and the New Series, as
recited in their respective registration statements and reports filed
under the Act, (2) the date of such transaction and (3) the closing
sales price on the national securities exchange for the sale date of
the securities subject to such sale. The Trustee will then countersign
the certificate, unless the Trustee disagrees with the closing sales
price listed on the certificate, whereupon the Trustee will promptly
inform the Depositors orally of any such disagreement and return the
certificate within five days to the Depositors with corrections duly
noted. Upon the Depositors' receipt of a corrected certificate, if the
Depositors verify the corrected price by reference to an independently
published list of closing sales prices for the date of the
transactions, the Depositors will ensure that the price of Units of
the New Series, and distributions to holders of the Trust with regard
to redemption of their Units or termination of the Trust, accurately
reflect the corrected price. To the extent that the Depositors
disagree with the Trustee's corrected price, the Depositors and the
Trustee will jointly determine the correct sales price by reference to
a mutually agreeable, independently published list of closing sales
prices for the date of the transaction. The Depositors and Trustee
will periodically review the procedures for sales and make such
changes as they deem necessary, consistent with Rule 17a-7(e)(2).
Finally,
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records of the procedures and of each transaction will be maintained
as provided in Rule 17a-7(f)."
(i) Section 9.2 of the Agreement is further amended by deleting the
last paragraph thereof and by adding the following paragraph in its place:
"Upon the Depositors' request, the Trustee will include in the
written notice to be sent to Unitholders referred to in the fourth
paragraph of this section a form of election whereby Unitholders may
express interest in investing their terminating distribution in units
of another series of the Schwab Trusts (the "New Series"). The Trustee
will inform the Depositors of all Unitholders who, within the time
period specified in such notice, express such interest. The Depositors
will provide to such Unitholders applicable sales material with
respect to the New Series and a form, acceptable to the Trustee,
whereby a Unitholder may appoint the Distribution Agent the
Unitholder's agent to apply the Unitholder's distribution for the
acquisition of a unit or units of the New Series (a "Rollover"). Such
form will specify, among other things, the time by which it must be
returned to the Trustee in order to be effective and the manner in
which such purchase shall be made. Redemption of the Units of the
Unitholders electing such Rollover shall be made by distribution to
the Distribution Agent on behalf of redeeming Unitholder on a date on
or prior to the Termination Date selected by the Depositors and
specified in the notice (the "Rollover Date") and shall consist of (1)
such Unitholder's pro rata share of Securities (valued as of the
Rollover Date) and (2) cash equal to the balance of the Unitholder's
Redemption Price. The Distribution Agent will dispose of such assets
in accordance with the provisions of the Distribution Agency
Agreement. In the event that the Depositors determine that an in-kind
deposit into the New Series pursuant to Section 1.02 of the
Distribution Agency Agreement will not be permitted, the Units owned
by the Unitholders electing investment in a New Series will be
redeemed pursuant to Section 5.2(a) and the above-described notice
will include a form, acceptable to the Trustee, whereby a Unitholder
may appoint the Trustee the Unitholder's agent to apply the
Unitholder's cash distribution for the purchase of a unit or units of
the New Series. This paragraph shall not obligate the Depositors to
create any New Series or to provide any such investment election."
Section 2. This Reference Trust Agreement may be amended and modified
by Addendums, attached hereto, evidencing
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the purchase of Additional Securities which have been deposited to effect an
increase over the number of Units initially specified in Part II of this
Reference Trust Agreement ("Additional Closings"). The Depositors and Trustee
hereby agree that their respective representations, agreements and
certifications contained in the Closing Memorandum dated March 3, 1998, relating
to the initial deposit of Securities continue as if such representations,
agreements and certifications were made on the date of such Additional Closings
and with respect to the deposits made therewith, except as such representations,
agreements and certifications relate to their respective By-Laws and as to which
they each represent that their has been no amendment affecting their respective
abilities to perform their respective obligations under the Indenture.
Part II
SPECIAL TERMS AND CONDITIONS OF TRUST
Section 1. The following special terms and conditions are hereby
agreed to:
(a) The Securities (including Contract Securities) listed in the
Prospectus relating to this series of Equity Securities Trust (the "Prospectus")
have been deposited in the Trust under this Agreement (see "Portfolio" in Part A
of the Prospectus which for purposes of this Indenture and Agreement is the
Schedule of Securities or Schedule A).
(b) The number of Units delivered by the Trustee in exchange for the
Securities referred to in Section 2.3 is 14,966.
(c) For the purposes of the definition of Unit in item (24) of Section
1.1, the fractional undivided interest in and ownership of the Trust initially
is 1/14966 as of the date hereof.
(d) The term Record Date shall mean the fifteenth day of June and
December commencing on June 15, 1998.
(e) The term Distribution Date shall mean the last business day of
June and December commencing on June 30, 1998.
(f) The First Settlement Date shall mean March 6, 1998.
(g) For purposes of Section 6.1(g), the liquidation amount is hereby
specified to be 40% of the aggregate value of the Securities at the completion
of the Deposit Period.
(h) For purposes of Section 6.4, the Trustee shall be paid per annum
an amount computed according to the following
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schedule, determined on the basis of the number of Units outstanding as of the
Record Date preceding the Record Date on which the compensation is to be paid,
provided, however, that with respect to the period prior to the first Record
Date, the Trustee's compensation shall be computed at $.92 per 100 Units:
rate per 100 units number of Units outstanding
$0.92 5,000,000 or less
$0.86 5,000,001 - 10,000,000
$0.80 10,000,001 - 20,000,000
$0.68 20,000,001 or more
(i) For purposes of Section 7.4, the Depositors' maximum annual
supervisory fee is hereby specified to be $.25 per 100 Units outstanding.
(j) The Termination Date shall be April 8, 1999 or the earlier
disposition of the last Security in the Trust.
(k) The fiscal year for the Trust shall end on December 31 of each
year.
(l) For purposes of Section 3.15, the Trust will have a Deferred Sales
Charge as specified in and as permitted by the Prospectus.
IN WITNESS WHEREOF, the parties hereto have caused this Reference
Trust Agreement to be duly executed on the date first above written.
[Signatures on separate pages]
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XXXXXXX XXXXXX & CO, INC.
Depositor
By: /s/ Xxx Xxxxx
Authorized Signator
STATE OF HAWAII )
: ss:
COUNTY OF MAUI )
On this 26th day of February, 1998, before me personally appeared
Xxxxx X. Xxxxx, to me known, who being by me duly sworn, said that he is an
Authorized Signator of Xxxxxxx Xxxxxx & Co., Inc. the Depositor, one of the
corporations described in and which executed the foregoing instrument, and that
he signed his name thereto by authority of the Board of Directors of said
corporation.
Xxxxxxx X. Xxxxxxxxxx
Notary Public
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XXXXX & XXXX DISTRIBUTORS, INC.
Depositor
By: /s/ Xxxxx XxXxxxx
Authorized Signator
STATE OF NEW YORK )
: ss:
COUNTY OF NEW YORK )
On this 3rd day of March, 1998, before me personally appeared Xxxxx
XxXxxxx, to me known, who being by me duly sworn, said that he is an Authorized
Signator of Xxxxx & Tang Asset Management, Inc. as General Partner of the
Depositors, one of the corporations described in and which executed the
foregoing instrument, and that he signed his name thereto by authority of the
Board of Directors of said corporation.
/s/ Xxxxxx Xxxxxx
Notary Public
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XXX XXXXX XXXXXXXXX BANK
Trustee
By: /s/ Xxxxxxx Xxxxxxx
Vice President
STATE OF NEW YORK )
:ss.:
COUNTY OF NEW YORK )
On this 3rd day of March, 1998, before me personally appeared Xxxxxxx
Xxxxxxx, to me known, who being by me duly sworn, said that he is an Authorized
Signator of The Chase Manhattan Bank, one of the corporations described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation and that he signed his name thereto by like authority.
Ada Xxxx Xxxx
Notary Public
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