EXHIBIT 99.1.1.1
THE PINNACLE FAMILY OF TRUSTS
DOGS OF TECH TRUST SERIES I
and FINANCIAL TRUST SERIES II
for all series formed on or subsequent to the effective
date specified below
__________
TRUST INDENTURE AND AGREEMENT
Among
XXXXXXXXXX, PIVEN, XXXXX SECURITIES, INC.
and
INVESTEC ERNST & COMPANY
As Depositors
and
THE BANK OF NEW YORK
As Trustee
__________
Dated: May 22, 2001
THE PINNACLE FAMILY OF TRUSTS
DOGS OF TECH TRUST SERIES I and
FINANCIAL TRUST SERIES II
and Subsequent Series
TABLE OF CONTENTS
Page
INTRODUCTION......................................................................................................1
ARTICLE 1 DEFINITIONS; CERTIFICATES.......................................................................2
Section 1.1. Definitions................................................................................2
ARTICLE 2 DEPOSIT OF SECURITIES; DECLARATION OF TRUST;
FORM AND ISSUANCE OF CERTIFICATES...............................................................4
Section 2.1. Deposit of Securities......................................................................4
Section 2.2. Declaration of Trust.......................................................................5
Section 2.3. Issue of Units.............................................................................5
Section 2.4. Certain Contracts Satisfactory.............................................................5
Section 2.5. Deposit of Additional Securities...........................................................5
ARTICLE 3 ADMINISTRATION OF TRUST.........................................................................8
Section 3.1. Initial Cost...............................................................................8
Section 3.2. Income Account............................................................................ 9
Section 3.3. Principal Account......................................................................... 9
Section 3.4. Reserve Account...........................................................................10
Section 3.5. Payments and Distributions................................................................10
Section 3.6. Distribution Statements...................................................................12
Section 3.7. Substitute Securities.....................................................................14
Section 3.8. Sale of Securities........................................................................15
Section 3.9. Counsel...................................................................................15
Section 3.10. Notice and Sale by Trustee................................................................15
Section 3.11. Reorganization and Similar Events.........................................................16
Section 3.12. Notice of Actions.........................................................................16
Section 3.13. Notice of Change in Principal Account.....................................................16
Section 3.14. Extraordinary Distributions...............................................................16
Section 3.15. Grantor Trust Status......................................................................17
ARTICLE 4 EVALUATION OF SECURITIES.......................................................................17
Section 4.1. Evaluation of Securities...................................................................17
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Section 4.2. Tax Reports................................................................................17
Section 4.3. Liability of Trustee with respect to Evaluations...........................................18
ARTICLE 5 TRUST EVALUATION, REDEMPTION, PURCHASE, TRANSFER,
INTERCHANGE OR REPLACEMENT OF CERTIFICATES.....................................................18
Section 5.1. Trust Evaluation...........................................................................18
Section 5.2. Redemptions by Trustee; Purchases by Depositors............................................19
Section 5.3. Depositor Redemptions......................................................................21
Section 5.4. Units to be Held Only Through the Depository Trust Company or a
Successor Clearing Agency...............................................................................21
ARTICLE 6 TRUSTEE; REMOVAL OF DEPOSITORS.................................................................22
Section 6.1. General Definition of Trustee's Liabilities, Rights and Duties; Removal of
Depositors.....................................................................................22
Section 6.2. Books, Records and Reports.................................................................25
Section 6.3. Indenture and List of Securities on File...................................................25
Section 6.4. Compensation...............................................................................26
Section 6.5. Removal and Resignation of the Trustee; Successor..........................................26
Section 6.6. Qualifications of Trustee..................................................................27
ARTICLE 7 DEPOSITORS.....................................................................................28
Section 7.1. Succession.................................................................................28
Section 7.2. Resignation of a Depositor.................................................................28
Section 7.3. Liability of Depositors and Indemnification................................................28
Section 7.4. Compensation...............................................................................29
Section 7.5. Joint Position of Depositors; Power of Attorney............................................30
ARTICLE 8 RIGHTS OF UNITHOLDERS..........................................................................30
Section 8.1. Beneficiaries of Trust.....................................................................30
Section 8.2. Rights, Terms and Conditions...............................................................31
ARTICLE 9 ADDITIONAL COVENANTS; MISCELLANEOUS PROVISIONS.................................................31
Section 9.1. Amendments.................................................................................31
Section 9.2. Termination................................................................................32
Section 9.3. Construction...............................................................................35
Section 9.4. Registration of Units......................................................................35
Section 9.5. Written Notice.............................................................................35
Section 9.6. Severability...............................................................................35
Section 9.7. Dissolution of Depositors Not to Terminate.................................................35
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THE PINNACLE FAMILY OF TRUSTS,
DOGS OF TECH TRUST SERIES I
and FINANCIAL TRUST SERIES II
AND
SUBSEQUENT SERIES
TRUST INDENTURE AND AGREEMENT
DATED MAY 22, 2001
This Trust Indenture and Agreement ("Indenture") dated May 22, 2001,
among XxXxxxxxxx, Piven, Xxxxx Securities, Inc. and Investec Ernst & Company, as
Depositors and The Bank of New York, as Trustee.
WITNESSETH THAT
In consideration of the premises and of the mutual agreements herein
contained, the Depositors and the Trustee agree as follows:
INTRODUCTION
The Depositors concurrently with the execution and delivery hereof are
establishing The Pinnacle Family of Trusts, Dogs of Tech Trust Series I and
Financial Trust Series II (and subsequent Series), wherein certain securities
consisting of common stock and contracts and funds for the purchase of such
securities (collectively, the "Securities") will be deposited by the Depositors,
to be held by the Trustee in trust for the use and benefit of the registered
holders of certificates of ownership (the "Unitholders") to be issued as
hereinafter provided. The parties hereto are entering into this Indenture for
the purpose of establishing certain of the terms, covenants and conditions of
The Pinnacle Family of Trusts, Dogs of Tech Trust Series I and Financial Trust
Series II and of each additional series of The Pinnacle Family of Trusts which
may be established from time to time hereafter. For The Pinnacle Family of
Trusts, Dogs of Tech Trust Series I and Financial Trust Series II and each
subsequent series of The Pinnacle Family of Trusts (sometimes referred to herein
as the "Trust") (as to which this Indenture is to be applicable) the parties
hereto shall execute a separate Reference Trust Agreement incorporating by
reference this Indenture 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 (1) the Securities deposited in trust and the
number of Units delivered by the Trustee in exchange for the Securities pursuant
to Section 2.3; (2) the initial fractional undivided interest represented by
each Unit; (3) the first and subsequent Record Dates; (4) the first and
subsequent Distribution Dates; (5) the First Settlement Date; (6) the
liquidation amount for purposes of Section 6.1(g); (7) the Trustee's fee; (8)
the Depositors' fee, if any; (9) the Termination Date; and (10 any other change
or addition contemplated or permitted by this Indenture.
ARTICLE 1
DEFINITIONS; CERTIFICATES
Section 1.2. Definitions: Whenever used in this Indenture
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the following words and phrases, unless the context clearly indicates otherwise,
shall have the following meanings:
(1) "Addendum to the Reference Trust Agreement" shall mean the
addendum which evidences the Additional Securities deposited into the Trust and
the number of Additional Units created.
(2) "Additional Securities" shall mean such Securities as are
listed in Supplementary Schedules to Addendums to the Reference Trust Agreement
or a Deposit Certificate and which have been deposited to effect an increase
over the number of Units initially specified in the Reference Trust Agreement.
(3) "Additional Units" shall mean such Units as are issued in
respect of Additional Securities.
(4) "Business Day" shall mean any day other than a Saturday,
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) "Contract Securities" shall mean Securities which are to
be acquired by the Trust pursuant to contracts entered into by the Depositors,
including (i) Securities listed in Schedule A to the Reference Trust Agreement
and (ii) Securities which the Depositors have contracted to purchase for the
Trust pursuant to Sections 2.5 and 3.7.
(6) "Depositors" shall mean XxXxxxxxxx, Piven, Xxxxx
Securities, Inc.("MPV") or its successors in interest and Investec Ernst &
Company ("Investec") or its successors in interest, or any successor depositor
or depositors appointed as herein provided.
(7) "Distribution Date" shall have the meaning assigned to it
in Part II of the Reference Trust Agreement.
(8) "DTC" shall mean Depository Trust Company, or its
successors.
(9) "Failed Security" shall have the meaning assigned to it in
Section 3.7 hereof.
(10) "First Settlement Date" shall mean the date specified in
Part II of the Reference Trust Agreement.
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(11) "Indenture" shall mean this Trust Indenture and Agreement
as originally executed or, if amended as herein provided, as so amended.
(12) "Original Issue" shall mean an issue of Securities
deposited pursuant to Section 2.1 or any Substitute Securities purchased to
replace any Original Issue which have become Failed Securities.
(13) "Original Proportionate Relationship" shall mean the
proportionate relationship among the number of shares of each Security
established on the deposit made pursuant to Section 2.1. The Original
Proportionate Relationship shall be adjusted, if appropriate, to reflect (1) the
deposit of Substitute Securities and (2) the occurrence of any stock dividend,
stock splits, redemptions, or similar events.
(14) "Prospectus" shall mean the prospectus included in the
registration statement, as amended, on Form S-6 under the Securities Act of
1933, as amended, relating to the Trust on file with the Securities and Exchange
Commission at the time such registration statement, as amended, becomes
effective, except that if the prospectus filed pursuant to Rule 497(b) under the
Securities Act of 1933, as amended, differs from the prospectus on file at the
time such registration statement, as amended, becomes effective, the term
Prospectus shall refer to the Rule 497(b) prospectus from and after the time it
is mailed or otherwise delivered to the Securities and Exchange Commission for
filing.
(15) "Record Date" shall have the meaning assigned to it in
Part II of the Reference Trust Agreement.
(16) "Redemption Form" shall mean the form provided by the
Trustee at the request of holders of Units for the purposes of redeeming such
Units, as such form may be reasonably acceptable to the Depositors and the
Trustee from time to time.
(17) "Reference Trust Agreement" shall mean the indenture for
the particular series of The Pinnacle Family of Trusts into which the terms of
this Indenture are incorporated.
(18) "Securities" shall mean such common stock, preferred
stock, ADRs and contracts and funds for the purchase of such securities as are
(i) deposited in irrevocable trust and listed in the Schedule to the Reference
Trust Agreement and (ii) received in exchange or substitution for any Securities
pursuant to Section 3.7 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) "Substitute Security" shall mean a Security purchased by
the Trustee pursuant to Section 3.7 hereof.
(20) "Termination Date" shall have the meaning assigned to it
in Part II of the Reference Trust Agreement.
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(21) "Trust" shall mean the Trust created by this Indenture,
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, liquidation thereof, such
amounts as may be on deposit in the Reserve Accounts hereinafter established and
all other property and rights to which Unitholders may be entitled under the
provisions of this Indenture.
(22) "Trustee" shall mean The Bank of New York, or its
successor or any successor Trustee appointed as herein provided.
(23) "Unit" shall mean the fractional undivided interest in and
ownership of the Trust initially specified in Part II of the Reference Trust
Agreement, the denominator of which shall be decreased by the number of any such
Units redeemed as provided in Section 5.2 and increased by any Additional Units
which are specified in a Supplementary Schedule to an Addendum to the Reference
Trust Agreement or a Deposit Certificate as defined in Section 2.5.
(24) "Unitholder" shall mean the registered holder of units of
beneficial interest as recorded in book-entry form at DTC, such holder's legal
representatives and heirs and the successors of any corporation, partnership or
legal entity which is a registered holder of any Unit, and as such shall be
deemed a beneficiary of the trust created by the Indenture to the extent of such
xxxxxx's 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 singular number shall include the plural
number in each case and vice versa, and words importing person shall include
corporations and associations, as well as natural persons.
ARTICLE 2
DEPOSIT OF SECURITIES; DECLARATION OF TRUST;
FORM AND ISSUANCE OF CERTIFICATES
Section 2.1. Deposit of Securities: The Depositors,
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concurrently with the execution and delivery of a Reference Trust Agreement,
have deposited with the Trustee in trust the Securities and contracts for the
purchase of Contract Securities listed in Schedule A to the Reference Trust
Agreement in bearer form or registered in the name of the Trustee, or its
nominee, or duly endorsed in blank or accompanied by all necessary instruments
of assignment and transfer in proper form to be held, managed and applied by the
Trustee as herein provided. In the event that the purchase of Securities
represented by contracts shall not be consummated in accordance with said
contracts, the Trustee shall credit to the Principal Account pursuant to Section
3.3 hereof the cash or cash equivalents (including such portion of any letter of
credit applicable to such contracts) deposited by the Depositors, for the
purpose of such purchase. Such moneys, unless invested in Substitute
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Securities in accordance with Section 3.7 hereof, shall be distributed to
Unitholders pursuant to Section 3.5 hereof on the Distribution Date following
the failure of consummation of such purchase. The Depositors shall deliver the
Securities listed on said Schedule A 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
3.7 applies, within such shorter period as is specified in Section 3.7.
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 2.2. Declaration of Trust: The Trustee declares that it
---------------------
holds and will hold the Trust as Trustee in trust upon the terms herein set
forth for the use and benefit of all present and future Unitholders.
Section 2.3. Issue of Units: The Trustee hereby acknowledges
---------------
receipt of the deposit referred to in Section 2.1, and simultaneously with the
receipt of said deposit, pursuant to the Depositors' direction, has registered
on the registration books of the Trust the ownership by the Depositors of such
Units or, if requested by the Depositors, the ownership by DTC of all of such
Units and will cause such Units to be credited at DTC to the account of the
Depositors or, pursuant to the Depositors' direction and as hereafter provided,
the account of the issuer of the letter of credit referred to in Section 2.01.
The Depositors shall not sell, pledge, hypothecate or otherwise transfer such
Units, prior to the effectiveness of the registration statement covering the
Units filed with the Securities and Exchange Commission under the Securities Act
of 1933, except that the Depositors may place the Units as security for any
letter of credit provided in connection with the deposit of contracts described
in Section 2.1.
The number of Units may be increased through a split of the
Units or decreased through a reverse split thereof, as directed by the
Depositors, on any day on which the Depositors are the only Unitholders, which
revised number of Units shall be recorded by the Trustee on its books.
Section 2.4. Certain Contracts Satisfactory: The Depositors
-------------------------------
approve as satisfactory in form and substance the contracts to be assumed by the
Trustee with regard to any Securities listed in Schedule A to the Reference
Trust Agreement and authorizes the Trustee on behalf of the Trust to 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 Securities
covered thereby into the Trust.
Section 2.5. Deposit of Additional Securities.
--------------------------------
(a) Subject to the requirements set forth below in this
Section, the Depositor may, on any Business Day (the "Trade Date"), subscribe
for Additional Units as follows:
(1) Prior to the Evaluation Time defined in Section 5.1 on
the Trade Date, the Depositor shall provide notice (the
"Subscription Notice") to the Trustee, by
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telecopy or by written communication, of the Depositor's
intention to subscribe for Additional Units. The
Subscription Notice shall identify the Additional
Securities to be acquired (unless such Additional
Securities are a precise replication of the then existing
portfolio) and shall either (i) specify the quantity of
Additional Securities to be deposited by the Depositor on
the settlement date for such subscription or (ii) instruct
the Trustee to purchase Additional Securities with an
aggregate cost as specified in the Subscription Notice.
(2) Promptly following the Evaluation Time on such Business
Day, the Depositor shall verify with the Trustee, by
telecopy, the number of Additional Units to be created.
(3) Not later than the time on the settlement date for such
subscription when the Trustee is to deliver the Additional
Units created thereby (which time shall not be later than
the time by which the Trustee is required to settle any
contracts for the purchase of Additional Securities entered
into by the Trustee pursuant to the instruction of the
Depositor referred to in subparagraph (1) above), the
Depositor shall deposit with the Trustee (i) any Additional
Securities specified in the Subscription Notice (or
contracts to purchase such Additional Securities together
with cash or a letter of credit in the amount necessary to
settle such contracts) or (ii) cash or a letter of credit
in the amount equal to the aggregate cost of the Additional
Securities to be purchased by the Trustee, as specified in
the Subscription Notice, together with, in each case, Cash
as defined below. "Cash" means, as to the Principal
Account, cash or other property (other than Securities) on
hand in the Principal Account or receivable and to be
credited to the Principal Account as of the Evaluation Time
on the Business Day preceding the Trade Date (other than
amounts to be distributed solely to persons other than
persons receiving the distribution from the Principal
Account as holders of Additional Units created by the
deposit), and, as to the Income Account, cash or other
property (other than Securities) received by the Trust as
of the Evaluation Time on the Business Day preceding the
Trade Date or receivable by the Trust in respect of
dividends or other distributions declared but not received
as of the Evaluation Time on the Business Day preceding the
Trade Date, reduced by the amount of any cash or other
property received or receivable on any Security allocable
(in accordance with the Trustee's calculation of the
monthly distribution from the Income Account pursuant to
Section 3.5) to a distribution made or to be made in
respect of a Record Date occurring prior to the Trade Date.
Each deposit made pursuant to this Section 2.5 during the
90 days following the initial date of deposit shall
replicate, to the extent practicable, as specified in
subparagraph (b), the Original Proportionate Relationship,
adjusted, if appropriate, to reflect (1) the deposit of
Substitute Securities pursuant to Section 3.7, (2) the sale
of securities pursuant to Section 3.8, 3.10 or 5.2 and (3)
the occurrence of any stock dividends, stock splits,
redemptions, acquisition of shares through dividend
reinvestment plans or similar events. Each deposit made
pursuant to this Section 2.5 after the
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90 days following the initial date of deposit made pursuant
to Section 2.1 hereof (except for deposits made to replace
Failed Securities if such deposits occur within 20 days
from the date of a failure occurring within such initial 90
day period) shall maintain exactly the proportionate
relationship existing among the Securities as of the
expiration of such 90 day period. Each such deposit shall
exactly replicate Cash.
(4) On the settlement date for a subscription, the Trustee
shall, in exchange for the Securities and cash or letter of
credit described above, issue and deliver to or on the
order of the Depositor the number of Units verified by the
Depositor with the Trustee. No Unit to be issued pursuant
to this paragraph shall be issued or delivered unless and
until Securities, cash or a letter of credit is received in
exchange therefor and no person shall have any claim to any
Unit not so issued and delivered or any interest in the
Trust in respect thereof.
(5) Each deposit of Additional Securities, shall be listed
in a Supplementary Schedule to an Addendum to the Reference
Trust Agreement or a certificate (a "Deposit Certificate")
stating the date of such deposit and the number of
Additional Units being issued therefor. The Trustee shall
acknowledge in such Addendum or in such Deposit Certificate
the receipt of the deposit and the number of Additional
Units issued in respect thereof. The Additional Securities
shall be held, administered and applied by the Trustee in
the same manner as herein provided for the Securities.
(6) The acceptance of Additional Units by the Depositor in
accordance with the provisions of paragraph (a) of this
Section shall be deemed a certification by the Depositor
that the deposit or purchase of Additional Securities
associated therewith complies with the conditions of this
Section 2.5.
(7) Notwithstanding the preceding, in the event that the
Depositors' Subscription Notice shall instruct the Trustee
to purchase Additional Securities in an amount which, when
added to the purchase amount of all other unsettled
contracts entered into by the Trustee, exceeds 25% of the
value of the Securities then held (taking into account the
value of contracts to purchase Securities only to the
extent that there has been deposited with the Trustee cash
or an irrevocable letter of credit in an amount sufficient
to settle their purchase), the Depositors shall deposit
with the Trustee concurrently with the Subscription Notice
cash or a letter of credit in an amount such that, when
added to 25% of the value of the Securities then held
(determined as above) the aggregate value shall be not less
than the purchase amount of the securities to be purchased
pursuant to such Subscription Notice.
(b) Additional Securities deposited during the 90 days
following the initial deposit made pursuant to Section 2.1 hereof shall maintain
as closely as practicable the Original Proportionate Relationship, except as
provided in this Section 2.5. Additional Securities may be
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deposited or purchased in round lots; if the amount of the deposit is
insufficient to acquire round lots of each Security to be acquired, the
Additional Securities shall be deposited or purchased in the order of the
Security in the Trust most under represented immediately before the deposit with
respect to the Original Proportionate Relationship. Instructions to purchase
Additional Securities under this Section shall be in writing and shall direct
the Trustee to purchase, or enter into contracts to purchase, Additional
Securities; such instructions shall also specify the name, CUSIP number, if any,
aggregate amount of each such Additional Security and price or range of price.
If, at the time of a subsequent deposit under this Section, Securities of an
Original Issue are unavailable, cannot be purchased at reasonable prices or
their purchase is prohibited or restricted by applicable law, regulation or
policies, in lieu of the portion of the deposit that would otherwise be
represented by those Securities, the Depositors may (A) deposit (or instruct the
Trustee to purchase) Securities of another Original Issue or replacement
securities, or (B) deposit cash or a letter of credit with instructions to
acquire the Securities of such Original Issue when they become available.
(c) The Trustee shall have no responsibility for the selection
of Securities deposited hereunder or for maintaining the composition of the
Trust portfolio or for any loss or depreciation resulting from any purchase of
Additional Securities pursuant to the Depositors' direction or from the
Depositors' failure to settle any subscription for Units. The Trustee shall be
indemnified against any loss or liability arising from purchases contracted for
pursuant to this Section in accordance with Section 6.4.
ARTICLE 3
ADMINISTRATION OF TRUST
Section 3.1. Initial Cost: Subject to reimbursement as
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hereinafter provided, the cost of organizing the Trust and sale of the Trust
Units shall be borne by the Depositors, provided, however, that the liability on
the part of the Depositors 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 2.1. Upon notification from the
Depositors 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
Depositors the Depositors' reimbursable expenses of organizing the Trust and
sale of the Trust Units in an amount certified to the Trustee by the Depositors
but not in excess of the estimated per-Unit amount set forth in the Prospectus
multiplied by the number of Units outstanding as of the conclusion of the
primary offering period. If the cash balance of the Principal Account is
insufficient to make such withdrawal, the Trustee shall, as directed by the
Depositors, sell Securities identified by the Depositors, or distribute to the
Depositors Securities having a value, as determined under Section 4.1 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. Any assets deposited
with the Trustee in respect of the expenses reimbursable under this section
shall be held and administered as assets of the Trust for all purposes
hereunder. The Depositors shall deliver to the Trustee any cash identified in
the Statement of Net
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Assets of the Trust included in the Prospectus not later than the First
Settlement Date and the Depositors' obligation to make such delivery shall be
secured by the letter of credit deposited pursuant to sections 2.1 and 2.5. Any
cash which the Depositors have identified as to be used for reimbursement of
expenses pursuant to this Section shall be held by the Trustee, without
interest, and reserved for such purpose and, accordingly, prior to the
conclusion of the primary offering period, shall not be subject to distribution
or, unless the Depositors otherwise direct, used for payment of redemptions in
excess of the per-Unit amount payable pursuant to the next sentence. If a
Unitholder redeems Units prior to the conclusion of the primary offering period,
the Trustee shall pay to the Unitholder, in addition to the Redemption Price of
the tendered Units, an amount equal to the estimated per-Unit cost of organizing
the Trust and the sale Trust Units set forth in the Prospectus multiplied by the
number of Units tendered for redemption; to the extent the cash on hand in the
Trust is insufficient for such payment, the Trustee shall have the power to sell
Securities in accordance with Section 5.2. As used herein, the Depositors'
reimbursable 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.
Section 3.2. Income Account: The Trustee shall collect the
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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 3.3. Principal Account: (a) The Securities and all
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cash, other than amounts credited to the Income Account, received by the Trustee
in respect of the Securities shall be credited to a separate account to be known
as the "Principal Account".
(b) Moneys and/or irrevocable letters of credit required to
purchase Contract Securities or deposited to secure such purchases are hereby
declared to be held specially by the Trustee for such purchases and shall not be
deemed to be part of the Principal Account until (i) the Depositors fail to
timely purchase Contract Securities and have not given the Failed Contract
Notice (as defined in Section 3.7) at which time the moneys and/or letters of
credit attributable to the Contract Securities not purchased by the Depositors
shall be credited to the Principal Account; or (ii) the Depositors have given
the Trustee the Failed Contract Notice at which time the moneys and/or letters
of credit attributable to failed contracts referred to in such Notice shall be
credited to the Principal Account; provided, however, that if the Depositors
also notify the Trustee in the Failed Contract Notice that they have purchased
or entered into a contract to purchase Substitute Securities (as defined in
Section 3.7), the Trustee shall not credit such moneys and/or letters of credit
to the Principal Account unless the Substitute Securities shall also have failed
or are not delivered by the Depositors within two business days after the
settlement date of such Substitute Securities, in which event the Trustee shall
forthwith credit such moneys and/or letters of credit to the Principal Account.
To the extent of moneys, and/or moneys drawn under a letter of credit, deposited
by the Depositors
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and then held by the Trustee, the Trustee shall credit to the Principal Account,
and to the extent such moneys are insufficient the Depositors shall deposit in
the Principal Account, the difference, if any, between the purchase price of the
failed Contract Securities and the purchase price of the Substitute Securities,
together with any sales charge and accrued dividends applicable to such
difference and distribute such moneys to Unitholders pursuant to Section 3.5.
Cash held or receivable from the Depositors pursuant to Section 2.5 in respect
of contracts for purchase of Additional Securities entered into by the Trustee
shall be credited to the Principal Account upon the Trustee's entering into such
contracts.
Section 3.4. Reserve Account: From time to time the Trustee
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shall withdraw from the cash on deposit in the Income Account or 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 or by 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 Unitholders any of the
amounts in the Reserve Account; provided, however, that if it 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 appropriate account from which withdrawn or, if the
Trust has been terminated or is in the process of termination, the Trustee shall
distribute to each Unitholder such holder's interest in the Reserve Account in
accordance with Section 9.2.
Section 3.5. Payments and Distributions: Distributions to each
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Unitholder from the Income Account are computed as of the close of business on
each Record Date for the following Distribution Date. Distributions from the
Principal Account of the Trust (other than amounts representing failed
contracts, as discussed in Section 3.3.(b)) will be computed as of each Record
Date, and will be made to the Unitholders of the Trust on or shortly after the
next Distribution Date. Proceeds representing principal received from the
disposition of any of the Securities between a Record Date and a Distribution
Date which are not used for redemptions of Units will be held in the Principal
Account and not distributed until the second succeeding Distribution Date or
such later time as hereinafter provided. If a Unitholder is participating in a
Reinvestment Plan, distributions to such Unitholder shall be applied by the
Trustee to purchase Units from the Depositors at the applicable reinvestment
price on the Distribution Date. Persons who purchase Units between a Record Date
and a Distribution Date will receive their first distribution on the second
Distribution Date after such purchase.
As of each Record Date the Trustee shall:
(a) deduct from the Income Account of the Trust, and, to the
extent funds are not sufficient therein, from the Principal Account of the
Trust, amounts necessary to pay any unpaid expenses of the Trust, including
registration charges, Blue Sky fees, printing costs, attorneys' fees, auditing
costs and other miscellaneous out-of-pocket expenses, as certified by the
Depositors, incurred in keeping the registration of the Units and the Trust on a
current basis pursuant to Section 9.4, 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;
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(b) 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 6.4 or otherwise pursuant to the provisions hereof;
(c) deduct from the Income Account, or, to the extent funds are
not available in such Account, from the Principal Account, and pay an amount
equal to the unpaid fees and expenses, if any, of counsel pursuant to Section
3.9 as certified to it by the Depositors; and
(d) 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 Depositors are then entitled to receive pursuant to Section 7.4 and
hold such amount without interest until such time as it is payable to the
Depositors as set forth below.
On or before the first Distribution Date after the conclusion
of each calendar year, the Trustee shall, upon certification in satisfactory
form to the Trustee, upon which the Trustee may rely, distribute to the
Depositors from the amount so held pursuant to the immediately preceding
paragraph the amounts that the Depositors are at the time entitled to receive
pursuant to Section 7.4 on account of services theretofore performed and
expenses theretofore incurred.
The Trustee also may withdraw from said accounts such amounts,
if any, as it deems necessary to establish a reserve for any applicable taxes or
other governmental charges that may be payable out of the Trust. Amounts so
withdrawn shall not be considered a part of such Trust's assets until such time
as the Trustee shall return all or any part of such amounts to the appropriate
accounts. In addition, the Trustee may withdraw from the Income and Principal
Accounts such amounts as may be necessary to cover redemptions of Units by the
Trustee.
The Principal Account shall be reimbursed for any amount
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 therein, when sufficient funds
are not available in the Income Account after giving effect to the payment from
the Income Account of all amounts otherwise required to be deducted therefor at
that time 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 Unitholder of record at
the close of business on the preceding Record Date, at the post office address
appearing on the registration books of the Trustee (or, if a Clearing Agency as
defined in Section 5.4 is the registered Unitholder, the Trustee shall make
distributions to such Clearing Agency in accordance with its applicable
procedures), such holder's pro rata share of the balance in the Income Account
calculated as set forth in the next paragraph, plus such holder's pro rata share
of the distributable cash balance of the Principal Account, as of the preceding
Record Date; provided, however, the Depositors are authorized to direct that
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funds credited to the Principal Account in the event of the failure of
consummation of a contract to purchase Securities pursuant to Section 2.1
hereof, funds representing the proceeds of the sale of Securities pursuant to
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Section 3.8 or 3.10 hereof, and funds representing the proceeds of the sale of
Securities under Section 5.2, 6.4 or this Section 3.5 in excess of the aggregate
of (i) the amounts needed for the purposes of said Sections and (ii) such amount
as the Depositors have informed the Trustee is to be used to purchase securities
pursuant to Section 3.7 hereof, shall not be distributed until the following
Distribution Date. The Trustee shall not be required to make a distribution from
the Principal or Income Account unless the cash balance on deposit therein
available for distribution shall be sufficient to distribute at least $1.00 per
Unit in the case of Units initially offered at approximately $1,000, or a
proportionately lower amount in the case of Units initially offered at less than
$1,000 (e.g., .001 per Unit in the case of Units initially offered at
approximately $1.00).
The Trustee shall compute the amount of the Distribution from
the Income Account (i) by subtracting from the cash balance of the Income
Account computed as of the close of business on such Record Date (a) any unpaid
fees and expenses then deductible pursuant to the foregoing provisions of
Section 3.5 and (b) the Trustee's estimate of other expenses chargeable to the
Income Account pursuant to the Indenture which have accrued as of such Record
Date, or are otherwise properly attributable to the period to which such Income
Distribution relates and (ii) by dividing the result of such calculation by the
number of Units outstanding on the applicable Record Date.
The amounts to be so distributed to each Unitholder 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, computed as set forth above, as shall be represented by a notation of the
Units owned by such Unitholder 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 purpose 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 Unitholder of record. Nothing herein shall be construed to prevent
the payment of amounts from the Income Account and the Principal Account to
individual Unitholders 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 3.6 hereof.
Section 3.6. Distribution Statements: With each distribution
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from the Income or Principal Accounts the Trustee shall set forth, either in the
instrument by means of which payment of such distribution is made or in any
accompanying statement the amount being distributed from each such account
expressed as a dollar amount per Unit.
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Within a reasonable period of time after the last business day
of each calendar year, the Trustee shall furnish to each person who at any time
during such calendar year was a Unitholder a statement setting forth, with
respect to such calendar year:
(A) as to the Income Account:
(1) the amount of dividends received on the Securities,
(2) the amounts paid from the Income Account for
redemptions pursuant to Section 5.2,
(3) the deductions for applicable taxes and fees and
expenses of the Trustee and counsel pursuant to Section 3.9, accrued
organization expenses, the annual audit fees referred to in Section
6.2, and the annual fees of the Depositors for portfolio supervisory
services pursuant to Section 7.4,
(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:
(1) The number of shares of each issue of Securities sold
or liquidated, and the aggregate net proceeds received with respect to
each issue, excluding any portion thereof credited to the Income
Account,
(2) the amounts paid from the Principal Account for
redemption pursuant to Section 5.2,
(3) the deductions for payment of applicable taxes and fees
and expenses of the Trustee and counsel pursuant to Section 3.9,
organizational expenses, the annual audit fees referred to in Section
6.2, and the annual fee of the Depositors for portfolio supervisory
services pursuant to Section 7.4, and
(4) 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:
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(1) a list of 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 based on the last trust evaluation
pursuant to Section 5.1 made during such calendar year, and
(4) the amounts actually distributed to Unitholders during
such calendar year from the Income and Principal Accounts, separately
stated, expressed both as total dollar amounts and as dollar amounts
per Unit outstanding on the Record Dates for such distributions and the
status of such distributions for Federal income tax purposes.
Section 3.7. Substitute Securities: In the event that any
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Contract Security or Security to be purchased pursuant to a contract entered
into by the Trustee in accordance with Section 2.5 is not delivered due to any
occurrence, act or event beyond the control of the Depositors and of the Trustee
(such a Contract Security being herein called a "Failed Security"), the
Depositors may instruct the Trustee to purchase Substitute Securities which have
been selected by the Depositors having a cost not in excess of the cost of the
Failed Securities. To be eligible for inclusion in the Trust, the Substitute
Securities which the Depositors select must: (a) be of the same type as that
replaced (e.g., both will be common stock or preferred stock); (b) in the
Depositors' judgment, be substantially similar to the Failed Security, as the
case may be, as respects the investment characteristics which led the Depositors
to select the Failed Security for inclusion in the Trust; and (c) be purchased
prior to, simultaneously with, or no more than twenty days after delivery of
written notice to the Trustee or Depositors, as appropriate, of the failed
contract (the "Failed Contract Notice").
Any Substitute 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 Substitute 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 Substitute Security is acquired by the Trust
pursuant to the provisions of this Section 3.7, the Trustee shall, within five
days thereafter, mail to all Unitholders notices of such acquisition, including
an identification of the Failed Security and the Substitute Security acquired.
The purchase price of a Substitute Security shall be paid out of the funds in
the Principal Account attributable to the Failed 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 Depositors and in the absence of such instructions the Trustee shall have no
duty to purchase any Substitute Securities under this Indenture. The Depositors
shall not be liable
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for any failure to instruct the Trustee to purchase any Substitute Security or
for errors of judgment in selecting any Substitute Security.
Section 3.8. Sale of Securities: In order to maintain the sound
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investment character of the Trust, the Depositors may direct the Trustee to sell
or liquidate Securities at such price and time and in such manner as shall be
determined by the Depositors, provided that the Depositors have determined that
any one or more of the following conditions exist:
(1) default in payment of amounts due on any of the Securities;
(2) institution of legal proceedings in law or equity seeking to
restrain or enjoin the payment of amounts due or declaration or payment of
regular dividends;
(3) default under certain documents materially and adversely
affecting future declaration or payment of amounts due or expected;
(4) determination of the Depositors that the tax treatment of the
Trust as a grantor trust would otherwise be jeopardized;
(5) decline in price that is a direct result of serious adverse
credit factors affecting the issuer of a Security which, in the opinion of the
Depositors, would make the retention of the security detrimental to the Trust or
the Unitholders; or
(6) that there has been a public tender offer made for a Security or
a merger or acquisition is announced affecting a Security, and that in the
opinion of the Depositors the sale or tender of the Security is in the best
interest of the Unitholders.
Upon receipt of such direction from the Depositors, upon which
the Trustee shall rely, the Trustee shall proceed to sell the specified Security
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
Depositors to give any such direction, and in the absence of such direction the
Trustee shall have no duty to sell any Securities under this Section 3.8.
Section 3.9. Counsel: The Depositors may employ from time to
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time as it may deem necessary a firm of attorneys for any legal services that
may be required in connection with the disposition of Securities pursuant to
Section 3.8. The fees and expenses of such counsel shall be paid by the Trustee
from the Interest and Principal Accounts as provided for in Section 3.5(c)
hereof.
Section 3.10. Notice and Sale by Trustee: If at any time there
--------------------------
has been a failure by the issuer to pay a dividend that is due and payable, the
Trustee shall notify the Depositors thereof. If within thirty days after such
notification the Trustee has not received any instruction from the Depositors to
sell or to hold or to take any other action in connection with such Securities,
the Trustee shall sell such Securities forthwith, and the Trustee shall not be
liable or responsible in any
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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
Depositors. The Trustee shall promptly notify the Depositors of such action in
writing and shall set forth therein the Securities sold and the proceeds
received therefrom.
Section 3.11. Reorganization and Similar Events: 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 pursuant to the Depositors' direction, unless the
Depositors advise the Trustee to retain such securities or property. The cash
received in such exchange and cash proceeds of any such sales shall be
distributed to Unitholders on the next Distribution Date in the manner set forth
in Section 3.5 regarding distributions from the Principal Account. This section
shall apply, but its application shall not be limited, to public tender offers,
mergers, acquisitions, reorganizations and recapitalizations. Unless the
Depositors direct that notice be otherwise provided, the Trustee shall include
notice of any Security so acquired in the annual statement provided to
Unitholders pursuant to Section 3.6. Neither the Depositors nor the Trustee
shall be liable to any person for action or failure to take action pursuant to
the terms of this Section 3.11.
Section 3.12. Notice of Actions: 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 Depositors and shall thereupon take such action or refrain
from taking any action as the Depositors shall in writing direct; provided,
--------
however, that if the Depositors shall not within five business days of the
-------
giving of such notice to the Depositors 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 Depositors nor the Trustee shall
be liable to any person for any action or failure to take action with respect to
this section.
Section 3.13. Notice of Change in Principal Account: The
--------------------------------------
Trustee shall give prompt written notice to the Depositors of all amounts
credited to or withdrawn from the Principal Account pursuant to any provisions
of this Article III, and the balance of such account after giving effect to such
credit or withdrawal.
Section 3.14. Extraordinary Distributions: 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 in the Reference Trust
Agreement or of a Substitute Security, which shall be retained by the Trust,
shall be dealt with in the manner described in Section 3.11 and shall be
retained or disposed by the Trustee according to those provisions, provided,
however, that no property shall be retained which
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the Trustee determines shall adversely affect its duties hereunder. The proceeds
of any disposition shall be credited to the Income or Principal Account of the
Trust, as the Depositors may direct.
Section 3.15. Grantor Trust Status: The Trust is intended
--------------------
to be treated as a fixed investment (i.e., grantor) trust for income tax
purposes, and its powers shall be limited in accordance with the restrictions
imposed on such trusts by Xxxxx. Reg. Section 301.7701-4.
ARTICLE 4
EVALUATION OF SECURITIES
Section 4.1. Evaluation of Securities: The Trustee shall
-------------------------
determine separately and promptly furnish to the Depositors 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 5.1. The value of each issue of
Securities shall be determined in good faith by the Trustee in accordance with
the following procedures: If the Securities are listed on one or more national
securities exchanges, such valuation shall be based on the closing sale 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 sale price on such exchange, such valuation
shall be based on the closing sale 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 sale price, then the Trustee may utilize, at the Trust's
expense, an independent evaluation service or services approved by the
Depositors to ascertain the values of the Securities. The independent evaluation
service shall use any of the following methods, or a combination thereof, which
it deems appropriate: (a) on the basis of current bid prices of such Securities
as obtained from investment dealers or brokers (including the Depositors) who
customarily deal in securities comparable to those held by the Trust, or (b) if
bid prices are not available for any of such Securities, on the basis of bid
prices for comparable securities, or (c) 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 (d) by any combination of the above. As used herein, the closing
sale price is deemed to mean the most recent closing sale price on the relevant
securities exchange prior to the Evaluation Time. The Trustee shall be permitted
to rely on these evaluations when determining the Unit Value. The Trustee shall
have no responsibility or liability for the valuations supplied to it by the
independent evaluation service. 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 pursuant to Section 2.1. Such evaluation shall be made on
the same basis as set forth above and shall be included in the Schedules
attached to the Reference Trust Agreement.
Section 4.2. Tax Reports: For the purpose of permitting
-----------
Unitholders to satisfy any reporting requirements of applicable Federal or state
tax law, the Trustee shall transmit to any Unitholder upon written request any
determinations made by the Trustee pursuant to Section 4.1.
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Section 4.3. Liability of Trustee with respect to Evaluations:
-------------------------------------------------
The Depositors and the Unitholders 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, and shall have no liability for errors in, the information
reasonably available to it. The Trustee shall be under no liability to the
Depositors or the Unitholders for errors in information obtained from any
pricing service or similar source of information selected by the Trustee with
reasonable care, or for errors in judgment or any action taken in good faith,
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 gross negligence in the performance of its duties or
by reason of its reckless disregard of its obligations and duties hereunder.
ARTICLE 5
TRUST EVALUATION, REDEMPTION, PURCHASE, TRANSFER,
INTERCHANGE OR REPLACEMENT OF CERTIFICATES
Section 5.1. Trust Evaluation: The Trustee shall make an
-----------------
evaluation of the Trust as of the close of trading on the New York Stock
Exchange (sometimes referred to herein as the "Evaluation Time") (1) on the last
Business Day of each of the months of June and December, (2) 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 (3) on any other day desired by the Trustee
or requested by the Depositors. Such evaluations shall take into account and
itemize separately (a)(1) the cash on hand in the Trust (other than moneys on
deposit in the Reserve Account, funds deposited on the date thereof by the
Depositors for the purchase of Securities and not theretofore credited to the
Principal Account pursuant to Section 3.3 and funds in the Principal Account
with respect to which contracts for the purchase of the Substitute Securities
have been entered into pursuant to Section 3.7 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 4.1 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 Depositors and their successors, if any, (b)(3) cash held
for distribution to Unitholders of record as of a date on or prior to the
evaluation then being made and (b)(4) unpaid organizational and offering costs
in the estimated amount per Unit set forth in the Prospectus. 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."
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The sum of (a)(1) and (a)(3) reduced by the sum of (b)(1),
(b)(2), (b)(3) and (b)(4) shall be referred to herein as the "Unit Cash Value".
The Trustee shall promptly advise the Depositors of each
determination of Unit Value made by it as above provided, and, in addition, upon
each valuation by the Trustee under Section 4.1 other than those involved in
such calculations of Unit Value, the Trustee shall promptly furnish to the
Depositors, for purposes of assisting them in maintaining a market in the Units,
with such information regarding the Principal, Income and Reserve Accounts as
the Depositors may reasonably request.
Section 5.2. Redemptions by Trustee; Purchases by Depositors:
-----------------------------------------------
Any Unit tendered for redemption by a Unitholder or his duly authorized attorney
to the Trustee at its unit investment trust office by the registered holder
thereof pursuant to the Redemption Form, shall be redeemed by the Trustee on the
third Business Day following the day on which tender for redemption is made
(such third Business Day being herein called the "Redemption Date"). 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 payment on the Redemption Date
of cash equivalent to the Unit Value determined by the Trustee as of the
Evaluation Time on the date of tender, multiplied by the number of Units being
tendered for redemption (herein called the "Redemption Price"). Units received
for redemption by the Trustee on any day after the Evaluation Time will be held
by the Trustee until the next day on which the New York Stock Exchange is open
for trading and will be deemed to have been tendered on such day for redemption
at the Redemption Price computed on that day.
The Trustee may in its discretion, and shall when so directed
by the Depositors in writing, suspend the right of redemption or postpone the
date of payment of the Redemption Price for more than three Business Days
following the day on which tender for redemption is made:
(1) for any period during which the New York Stock Exchange 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 periods as the Securities and Exchange
Commission may by order permit,
and 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 of tender of a
Unit for redemption by a Unitholder other than the Depositors, the Trustee shall
notify the Depositors of such tender. The Depositors shall have the right to
purchase such Unit by notifying the Trustee of their election to
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make such purchase as soon as practicable thereafter, but in no event subsequent
to the close of business on the Business Day on which such Unit was tendered for
redemption. Such purchase shall be made by payment for such Unit by the
Depositors to the Unitholder not later than the close of business on the
Redemption Date of an amount equal to the Redemption Price which would otherwise
be payable by the Trustee to such Unitholder.
Any Unit so purchased by the Depositors may, at the option of
the Depositors, 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 5.2.
If the Depositors do not elect to purchase any Unit tendered
to the Trustee for redemption, or if a Unit is being tendered by the Depositors
for redemption, that portion of the Redemption Price which represents dividends
shall be withdrawn from the Income Account to the extent funds are available.
The balance paid on any redemption, including accrued dividends, 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 sell such Securities from among those designated on the current list for
such purpose as provided below and in the manner, in its discretion, as it shall
deem advisable or necessary in order to fund the Principal Account for purposes
of such redemption. Sales of Securities by the Trustee shall be made in such
manner as the Trustee shall determine, subject to any minimum amount limitations
on sale which shall have been specified by the Depositors and agreed to by the
Trustee. In the event that funds are withdrawn from the Principal Account or
Securities are sold for payment of any portion of the Redemption Price
representing accrued dividends, the Principal Account shall be reimbursed when
sufficient funds are next available in the Income Account for such funds so
applied.
The Depositors shall maintain with the Trustee a current list
of Securities designated to be sold for the purpose of redemption of Units
tendered for redemption and not purchased by the Depositors, and for payment of
expenses hereunder, provided that if the Depositors shall for any reason fail to
maintain such a list, the Trustee, in its sole discretion, may designate a
current list of Securities for such purposes. The net proceeds of any sales of
Securities from such list representing principal shall be credited to the
Principal Account and the proceeds of such sales representing accrued interest
shall be credited to the Income Account.
Neither the Trustee nor the Depositors shall be liable or
responsible in any way for depreciation or loss incurred by reason of any sale
of Securities made pursuant to this Section 5.2.
Units redeemed pursuant to this Section 5.2 shall be canceled
by the Trustee and the Units tendered by Redemption Forms shall be terminated by
such redemptions.
If the related Prospectus for the Trust so provides, a
Unitholder who tenders for redemption Units in an aggregate amount of at least
the amount specified in the Prospectus may request, at the time of tender, to
receive an "In Kind Distribution" in lieu of cash. Such In Kind Distribution
shall consist of (i) such Unitholder's pro rata portion of each of the
Securities, to the extent of whole shares, and (ii) cash equal to such
Unitholder's pro rata portion of the Income and
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Principal Accounts follows: (x) a pro rata portion of the net proceeds of sale
of the Securities representing any fractional shares included in such
Unitholder's pro rata share of the Securities and (y) such other cash as may
properly be included in such Unitholder's pro rata share of the sum of the cash
balances of the Income and Principal Accounts in an amount equal to the
Redemption Price on the date of tender less amounts specified in clauses (i) and
(ii)(x) of this sentence. The Trustee shall distribute the Unitholder's
Securities to the account of the Unitholder's bank or broker dealer at the DTC.
An In Kind Distribution shall be reduced by customary transfer and registration
charges incurred by the Trustee.
Notwithstanding the foregoing provisions of this Section 5.2,
the Trustee is hereby irrevocably authorized in its discretion, in the event
that the Depositors do not elect to purchase any Unit tendered to the Trustee
for redemption (other than Units as to which a valid request for In Kind
Redemption has been made), or in the event that a Unit is being tendered by the
Depositors for redemption, in lieu of redeeming Units tendered for redemption,
to sell such Units in the over-the- counter market or by private sale for the
account of tendering Unitholders at prices which will return to the Unitholders
amounts in cash, net after deducting brokerage commissions, transfer taxes and
other charges, equal to or in excess of the Redemption Prices which such
Unitholders would otherwise be entitled to receive on redemption pursuant to
this Section 5.2. The Trustee shall pay to the Unitholders the net proceeds of
any such sale on the day they would otherwise be entitled to receive payment of
the Redemption Price hereunder.
Section 5.3. Depositor Redemptions: 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
tendering Depositor advises the Trustee in writing (which may be electronic
transmission) of such tender before the later of 5:00 p.m. New York City time
and the Trustee's close of business on such Business day. By such advice, the
Depositor 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 but which the Depositor determined to redeem prior to the
Evaluation Time on such Business Day. On or before payment of the Redemption
Price, the Depositor shall assign or deliver to the Trustee such documents which
the Trustee shall reasonably require to effect the redemption of those Units.
Section 5.4. Units to be Held Only Through the Depository
--------------------------------------------
Trust Company or a Successor Clearing Agency: No Unit may be registered in the
---------------------------------------------
name of any person other than DTC or its nominee (or such other clearing agency
registered as such pursuant to Section 17A of the Exchange Act of 1934
designated as successor to DTC by the Depositors, or the Trustee or the nominee
thereof) (DTC and any such successor clearing agency are herein referred to as
the "Clearing Agency") unless the Clearing Agency advises the Trustee that it is
no longer willing or able properly to discharge its responsibilities with
respect to the Units and the Trustee is unable to locate a qualified successor
clearing agency, in which case the Trustee shall notify the Clearing Agency and
instruct it to provide the Trustee with the name and address of all persons who
are the beneficial owners of Units as registered on the books of the Clearing
Agency (the "Owners"). So long as a Clearing Agency is the registered holder of
the Units, it shall be the registered holder of
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the Units for all purposes under this Indenture and the Owners shall hold their
interest in the Units pursuant to such Clearing Agency's applicable procedures.
The Trustee shall be entitled to deal with any Clearing Agency for all purposes
of this Indenture (including the payment of distributions on the Units and
giving of instructions or directions by or to the Owners) as the sole Unitholder
of the Units and shall have no obligations to the Owners. The rights of the
Owners shall be exercised only through the Clearing Agency and shall be limited
to those established by law, the applicable procedures of the Clearing Agency
and the agreements between the Owners and the Clearing Agency and its
participants. None of the Depositors nor the Trustee shall have any liability in
respect of any transfers of Units effected by any Clearing Agency. All
provisions of this Indenture relating to the ownership and transfer of Units
shall be construed to effectuate the provisions of this Section.
ARTICLE 6
TRUSTEE; REMOVAL OF DEPOSITORS
Section 6.1. General Definition of Trustee's Liabilities,
--------------------------------------------
Rights and Duties; Removal of Depositors: In addition to and notwithstanding the
-----------------------------------------
other duties, rights, privileges and liabilities of the Trustee otherwise set
forth herein, the liabilities of the Trustee are further defined as follows:
(a) All moneys deposited with or received by the Trustee
hereunder shall be held by the Trustee without interest in trust as part of the
Trust or the Reserve Account until required to be disbursed in accordance with
the provisions of this Indenture and such moneys will be segregated by separate
recordation on the trust ledgers 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 moneys in such other manner as shall
constitute the segregation and holding thereof in trust within the meaning of
the Investment Company Act of 1940.
(b) The Trustee shall be under no liability for any action
taken in good faith on any appraisal, paper, order, list, demand, request,
consent, affidavit, notice, opinion, direction, evaluation, endorsement,
assignment, resolution, draft or other document, whether or not of the same
kind, prima facie properly executed, or for the disposition of moneys,
Securities or Units pursuant to this Indenture, or in respect of any evaluation
which the Trustee is required to make or is required or permitted to have made
by others under this Indenture or otherwise except by reason of its gross
negligence, lack of good faith or willful misconduct, provided that the Trustee
shall not in any event be liable or responsible for any evaluation made by any
independent evaluation service employed by it pursuant to Section 4.1. The
Trustee 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, and any construction of any such provisions hereof by the Trustee in
good faith shall be binding upon the parties hereto. The Trustee shall in no
event be deemed to have assumed or incurred any liability, duty or obligation to
any Unitholder or the Depositors, other than as expressly provided for herein.
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(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 Depositors, or for the form, character, genuineness,
sufficiency, value or validity of any letter of credit held hereunder or any
Securities or for or in respect of the validity or sufficiency of the Units or
of the due execution thereof by the Depositors, and the Trustee shall in no
event assume or incur any liability, duty or obligation to any Unitholder or the
Depositors other than as expressly provided for herein. The Trustee shall not be
responsible for or in respect of the validity of any signature by or on behalf
of the Depositors.
(d) The Trustee shall not be under any obligation to appear
in, prosecute or defend any action, which in its opinion may involve it in
expense or liability, unless as often as required, it shall be furnished with
reasonable security and indemnity against such expense or liability as it may
require, and any pecuniary cost of the Trustee from such actions shall be
deductible from and a charge against the Income and Principal Accounts. 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 interests of the
Unitholders 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 Unitholders.
(e) The Trustee may employ agents, attorneys, accountants and
auditors and shall not be answerable for the default or misconduct of any such
agents, attorneys, accountants or auditors if such agents, attorneys,
accountants or auditors shall have been selected with reasonable care; provided,
--------
however, that if the Trustee chooses to employ DTC 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 DTC 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 Agreement taken, or suffered, in good faith by the Trustee, in accordance
with the opinion of its counsel, which may be counsel to the Depositors
acceptable to the Trustee. The fees and expenses charged by such agents,
attorneys, accountants or auditors shall constitute an expense of the Trustee
reimbursable from the Income and Principal Accounts as set forth in Section 3.5
hereof.
(f) Other than as provided in Article 7 hereunder, if at any
time there is only one Depositor acting hereunder and said Depositor shall
resign or fail to undertake or perform or become incapable of undertaking or
performing any of the duties which by the terms of this Indenture are required
by it to be undertaken or performed and no express provision is made for action
to be taken by the Trustee in such event, or said Depositor shall be adjudged
bankrupt or insolvent, or a receiver of such Depositor or of its property shall
be appointed, or any public officer shall take charge or control of such
Depositor or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then in any such case, the Trustee may, in its sole
discretion, do any one or more of the following: (1) appoint a successor
Xxxxxxxxx who shall act hereunder in all respects in place of the Depositor, who
shall be compensated semi-annually, at rates deemed by the Trustee to be
reasonable under the circumstances, by deduction from the Income Account or from
the Principal
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Account, but no such deduction shall be made exceeding such reasonable amount as
the Securities and Exchange Commission may prescribe in accordance with Section
26(a)(2)(C) of the Investment Company Act of 1940; (2) terminate this Indenture
and the Trust created hereby and liquidate the Trust, all in the manner provided
in Section 9.2.; or (3) continue to act as Trustee hereunder without terminating
this Indenture, acting in its own absolute discretion without appointing any
successor Depositor and assuming such of the duties and responsibilities of the
Depositor hereunder as the Trustee determines, in its absolute discretion, are
necessary or desirable for the administration and preservation of the Trust, and
receiving additional compensation at rates determined as provided in clause (1).
If the Trustee continues so to act, it is authorized to employ one or more
agents to perform portfolio supervisory services and such other of the services
of the Depositors hereunder as the Trustee determines, in its sole discretion,
to be necessary or desirable. The fees and expenses of such agent or agents
shall be charged to the Trust in accordance with Section 6.4. All provisions of
this Indenture relating to the liability and indemnification of the Trustee,
including, without limitation, subparagraph (e) of this Section, shall apply to
any responsibility assumed or action taken by the Trustee pursuant to this
subparagraph.
(g) If the value of the Trust as shown by any evaluation by
the Trustee pursuant to Section 5.1 hereof shall be less than the liquidation
amount specified in Part II of the Reference Trust Agreement, the Trustee may in
its discretion, and shall, when so directed by the Depositors, terminate this
Indenture and the Trust created hereby and liquidate the Trust, all in the
manner provided in Section 9.2.
(h) 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 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 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 Unitholders.
(i) The Trustee, except by reason of its gross negligence,
lack of good faith, reckless disregard of its obligations hereunder or willful
misconduct, shall not be liable for any action taken 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.
(j) Notwithstanding anything in this Indenture to the
contrary, the Trustee is authorized and empowered to enter into any safekeeping
arrangement or arrangements it deems necessary or appropriate for holding the
Securities then owned by the Trust and the Trustee is authorized and empowered
in its sole right to amend, supplement or terminate any safekeeping arrangement
or arrangements made under this provision. In addition, the Trustee is
authorized and empowered, at the request and discretion of the Depositors, 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
-24-
the securities laws of the various States in order to permit the sale of Units
of the Trust in such States by the Depositors.
(k) The Trustee in its individual or any other capacity may
become owner or pledgee or, or be an underwriter or dealer in respect of, stock,
bonds or other obligations issued by the same issuer (or an affiliate of such
issuer) or any obligor of any Securities at any time held as part of the Trust
and may deal in any manner with the same or with the issuer (or an affiliate of
the issuer) with the same rights and powers as if it were not the Trustee
hereunder.
(l) The Trust may include a letter or letters of credit for
the purchase of Contract Securities or Additional Securities issued by the
Trustee in its individual capacity for the account of the Depositors, and the
Trustee may otherwise deal with the Depositors with the same rights and powers
as if it were not the Trustee hereunder.
Section 6.2. Books, Records and Reports: The Trustee shall
---------------------------
keep proper books of record and account of all the transactions under this
Indenture at its unit investment trust office including a record of the name and
address of, and the Units issued by the Trust and held by, every Unitholder, and
such books and records shall be open to inspection by any Unitholder at all
reasonable times during the usual business hours, and such books and records
shall be made available to the Depositors upon the request of the Depositors
including, but not limited to, a record of the name and address of every
Unitholder.
Unless the Depositors otherwise direct, the Trustee shall
cause audited statements as to the assets and income of the Trust to be prepared
on an annual basis by independent public accountants selected by the Depositors.
Such audited statement will be made available to Unitholders upon request.
To the extent permitted under the Investment Company Act of
1940 as evidenced by an opinion of counsel to the Depositors, reasonably
acceptable to the Trustee, the Trustee shall pay, or reimburse to the Depositors
or others, the costs of the preparation of documents and information with
respect to the Trust required by law or regulation in connection with the
maintenance of a secondary market in units of the Trust. Such costs may include
but are not limited to accounting and legal fees, blue sky registration and
filing fees, printing expenses and other reasonable expenses related to
documents required under Federal and state securities laws.
The Trustee shall make such annual or other reports as may
from time to time be required under any applicable state or federal statute or
rule or regulation thereunder.
Section 6.3. Indenture and List of Securities on File: The
-----------------------------------------
Trustee shall keep a certified copy or duplicate original of this Indenture on
file at its unit investment trust office available for inspection at all
reasonable times during the usual business hours by any Unitholder and the
Trustee shall keep and so make available for inspection a current list of the
Securities.
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Section 6.4. Compensation: For services performed under this
------------
Indenture the Trustee shall be paid at the rate per annum set forth in Part II
of the Reference Trust Agreement which shall be computed on the basis of the
greatest number of Units of the Trust outstanding 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 that the 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 shall cease to be
published, then as measured by the available index most nearly comparable to
such index. The consent or concurrence of any Unitholder hereunder shall not be
required for any such adjustment or increase, however, the consent of the
Depositors shall be required. Such compensation shall be charged by the Trustee
against the Income and Principal Accounts at the time provided in Section 3.5
provided, however, that such compensation shall be deemed to provide only for
the usual normal and recurring functions undertaken as Trustee pursuant to this
Indenture.
The Trustee shall charge the Income and Principal Accounts at
such times as shall be convenient in its administration of the Trust any and all
expenses, including the fees of counsel which may be retained by the Trustee in
connection with its activities hereunder, and disbursements incurred hereunder
and any extraordinary services performed by the Trustee hereunder. The Trustee
shall be indemnified and held harmless against any loss or liability accruing to
it without gross negligence, bad faith or willful 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. If the cash balances in
the Income and Principal Accounts shall be insufficient to provide for amounts
payable pursuant to this Section 6.4, the Trustee shall have the power to sell
(1) Securities from the current list of Securities designated to be sold
pursuant to Section 5.2 hereof, or (2) 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 6.4. 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 6.4. Any moneys payable to the
Trustee pursuant to this section shall be secured by a prior lien on the Trust.
Section 6.5. Removal and Resignation of the Trustee;
---------------------------------------
Successor: The following provisions shall provide for the removal and
---------
resignation of the Trustee and the appointment of any successor Trustee:
(a) any resignation or removal of the Trustee and appointment
of a successor pursuant to this section shall not become effective until
acceptance of appointment by the successor Trustee as provided in subsection (b)
hereof;
(b) the Trustee or any trustee hereafter appointed may resign
and be discharged of the trust created by this Indenture by executing an
instrument in writing resigning as such Trustee, filing the same with the
Depositors and mailing a copy of a notice of resignation to all Unitholders then
on record not less than sixty days before the date specified in such instrument
when, subject to
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Section 6.5(d), such resignation is to take effect. Upon receiving such notice
of resignation, the Depositors shall use their best efforts to 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. The Depositors may remove the Trustee at any time
with or without cause 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. Notice of such removal and appointment of a
successor shall be mailed by the successor Trustee, promptly after its
acceptance of such appointment, to each Unitholder then of record;
(c) any successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Depositors and the retiring Trustee an instrument
accepting such appointment hereunder, and such successor Trustee without any
further act, deed or conveyance shall become vested with all the rights, powers,
duties and obligations of its predecessor hereunder with like effect as if
originally named Trustee herein and shall be bound by all the terms and
conditions of this Indenture provided, however, that no successor trustee shall
be under any liability hereunder for occurrences or omissions prior to the
execution of such instrument. Upon the request of such successor Trustee, the
Depositors and the retiring Trustee shall, upon payment of any amounts due the
retiring Trustee or provision therefor to the satisfaction of such retiring
Trustee, execute and deliver an instrument acknowledged by it transferring to
such successor trustee all the rights and powers of the retiring Trustee; and
the retiring Trustee shall transfer, deliver and pay over to the successor
Trustee all Securities and moneys 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 moneys at the time
held by it hereunder to secure any amounts then due the retiring Trustee
hereunder;
(d) in case at any time the Trustee shall resign and no
successor Trustee shall have been appointed and have accepted appointment within
thirty days after notice of resignation has been received by the Depositors, 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; and
(e) any corporation into which any Trustee hereunder may be
merged or with which it may consolidate, or any corporation resulting from any
merger or consolidation to which any Trustee hereunder shall be a party, 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.
Section 6.6. Qualifications of Trustee: The Trustee, or any
-------------------------
successor thereof, shall be a corporation organized and doing business under the
laws of the United States or any state
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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 $2,500,000.
ARTICLE 7
DEPOSITORS
Section 7.1. Succession: The covenants, provisions and
-----------
agreements herein contained shall in every case be binding upon any successor to
the business of the Depositors. In the event of the death, resignation or
withdrawal of any partner of a Depositor or of any successor Depositor which may
be a partnership, the deceased, resigning or withdrawing partner shall be
relieved of all further liability hereunder if at the time of such death,
resignation or withdrawal such Xxxxxxxxx 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 a Depositor to a successor
corporation or partnership as permitted by the next following sentence, such
Depositors and, if such Depositor is a partnership, its partners, shall be
relieved of all further liability under this Indenture. The Depositors may
transfer all or substantially all of their assets to a corporation or
partnership which carries on the business of that Depositor, if at the time of
such transfer such successor duly assumes all the obligations of said Depositor
under this Indenture and if at such time such successor maintains a net worth of
at least $1,000,000 (determined in accordance with generally accepted accounting
principles).
Section 7.2. Resignation of a Depositor: If at any time any
---------------------------
Depositor desires to resign its position as Depositor hereunder, it may resign
by delivering to the Trustee an instrument of resignation executed by such
Depositor. Such resignation shall become effective upon the expiration of thirty
days from the date on which such instrument is delivered to the Trustee. Upon
effective resignation hereunder, 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 resignation and any successor Depositor appointed by the
Trustee pursuant to Section 6.1(f) shall thereupon perform all duties and be
entitled to all rights under this Indenture. The successor Depositor shall not
be under any liability hereunder for occurrences or omissions prior to the
execution of such instrument.
Section 7.3. Liability of Depositors and Indemnification: (a)
--------------------------------------------
No Depositor shall be under any liability to any other Depositor, the Trust or
the Unitholders for any action or for refraining from the taking of any action
in good faith pursuant to this Indenture, or for errors in judgment or for
depreciation or loss incurred by reason of the purchase or sale of any
Securities, provided, however, that this provision shall not protect the
Depositors against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the performance
of their duties or by reason of their reckless disregard of their obligations
and duties hereunder. The Depositors 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 by the Trustee, the Trustee's counsel or any other person for
any matters arising hereunder. The Depositors shall in no event be deemed to
have assumed or
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incurred any liability, duty, or obligation to any Unitholder or the Trustee
other than as expressly provided for herein.
(b) The Trust shall pay and hold the Depositors harmless from
and against any loss, liability or expense incurred in acting as Depositors of
the Trust other than by reason of willful misfeasance, bad faith or gross
negligence in the performance of their duties or by reason of their reckless
disregard of their obligations and duties hereunder, including the costs and
expenses of the defense against any claim or liability in the premises. The
Depositors shall not be under any obligation to appear in, prosecute or defend
any legal action which in their opinion may involve them in any expense or
liability, provided, however, that the Depositors may in their discretion
undertake any such action which they may deem necessary or desirable in respect
of this Indenture and the rights and duties of the parties hereto and the
interests of the Unitholders hereunder and, in such event, the legal expenses
and costs of any such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Trust and shall be paid directly by the
Trustee out of the Income and Principal Accounts as provided by Section 3.5.
(c) None of the provisions of this Indenture shall be deemed
to protect or purport to protect the Depositors against any liability to the
Trust or to the Unitholders to which the Depositors would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of their duties, or by reason of the Depositors' reckless disregard
of their obligations and duties under this Indenture.
(d) Notwithstanding the discharge of a Depositor of the Trust,
such Depositor shall continue to be fully liable in accordance with the
provisions hereof in respect of action taken or refrained from under the
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 7.4. Compensation: The Depositors shall receive at the
------------
times set forth in Section 3.5 as compensation for performing portfolio
supervisory services, such amount and for such periods as specified in Part II
of the Reference Trust Agreement. The computation of such compensation shall be
made on the basis of the largest number of units outstanding at any time during
the period for which such compensation is being computed. At no time, however,
will the total amount received by the Depositors for services rendered to all
series of The Pinnacle Family of Trusts in any calendar year exceed the
aggregate cost to them of supplying such services in such year. Such rate may be
increased by the Trustee from time to time, without the consent or approval of
any Unitholder or the Depositors, 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.
In the event that any amount of the compensation paid to the
Depositors pursuant to Section 3.5 is found to be an improper charge against the
Trust, the Depositors shall reimburse the
-29-
Trust in such amount. An improper charge shall be established if a final
judgment or order for reimbursement of the Trust shall be rendered against the
Depositors and such judgment or order shall not be effectively stayed or a final
settlement is established in which the Depositors agree to reimburse the Trust
for amounts paid to the Depositors pursuant to this Section 7.4.
Section 7.5. Joint Position of Depositors; Power of Attorney:
-----------------------------------------------
(a) The Depositors shall be jointly and severally liable for the obligations
imposed upon and undertaken by the Depositors hereunder. At all times prior to
the termination of the Trust and while more than one Depositor shall be acting
hereunder, there shall be maintained on file with the Trustee a power of
attorney (which, initially, constitutes part of the Closing Memorandum delivered
by the Trustee and the Depositor in connection with the deposit made pursuant to
Section 2.1) executed in favor of one Depositor by the other Depositor
constituting and appointing the non-executing Depositor the trust and lawful
agent and attorney-in-fact of the executing Depositor to execute and deliver for
and on behalf of the executing Depositor 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 or
to take any other action in respect hereof. Such power of attorney shall
continue in effect as to the executing Depositor until written notice of
revocation thereof has been given by such executing Depositor to the Trustee and
the non-executing Depositor. 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 Depositor as to which such power of attorney is in effect.
(b) In the event that the power of attorney referred to in
paragraph (a) shall be revoked by written notice given by an executing Depositor
and it shall not be replaced within one Business Day by another power of
attorney conforming with the requirements of said paragraph, the Depositors
shall be deemed to have been unable to reach agreement with respect to an action
to be taken jointly by them hereunder 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 Depositor shall
act hereunder without the necessity of any other or further action on the part
of the Depositors or of the Trustee.
ARTICLE 8
RIGHTS OF UNITHOLDERS
Section 8.1. Beneficiaries of Trust: By the purchase and
----------------------
acceptance or other lawful delivery and acceptance of any Unit the Unitholder
shall be deemed to be a beneficiary of the Trust created by this Indenture and
vested with all right, title and interest in the Trust to the extent of the Unit
or Units, subject to the terms and conditions of this Indenture.
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Section 8.2. Rights, Terms and Conditions: In addition to the
----------------------------
other rights and powers set forth in the other provisions and conditions of this
Indenture the Unitholders shall have the following rights and powers and shall
be subject to the following terms and conditions:
(a) A Unitholder may at any time prior to the Evaluation Time
on the date the Trust is terminated tender his or her Unit or Units to the
Trustee for redemption in accordance with Section 5.2.
(b) The death or incapacity of any Unitholder shall not
operate to terminate this Indenture or the Trust, nor entitle his or her legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court of competent jurisdiction 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 Unitholder expressly waives any right he
or she 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
moneys from time to time received, held and applied by the Trustee hereunder.
(c) No Unitholder 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 Unitholders from time to time as partners; nor
shall any Unitholder ever be under any liability to any third persons by reason
of any action taken by the parties to this Indenture for any other cause
whatsoever.
ARTICLE 9
ADDITIONAL COVENANTS; MISCELLANEOUS PROVISIONS
Section 9.1. Amendments: This Indenture may be amended from
----------
time to time by the parties hereto or their respective successors, without the
consent of any of the Unitholders (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; (b) to change any provision required
by Securities and Exchange Commission or any successor governmental agency to be
changed; or (c) to make such other provision in regard to matters or questions
arising hereunder as shall not adversely affect the interests of the
Unitholders; provided, however, that the parties hereto may not amend this
Indenture so as to (1) increase the number of Units above the number set forth
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 (2) except in the
manner permitted by the Indenture as in effect on the date of the first deposit
of Securities under a particular Indenture, permit the deposit or acquisition
hereunder of securities either in addition to or in replacement of any of the
Securities.
This Indenture may also be amended from time to time by the
Depositors and the Trustee (or the performance of any of the provisions or this
Agreement may be waived) with the
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expressed written consent of Unitholders evidencing 66-2/3% 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 Unitholders; provided, however,
that no such amendment or waiver shall (i) reduce the interest in the Trust
represented by such Units without the consent of the Unitholder, (ii) reduce the
aforesaid percentage of Units, the holders of which are required to consent to
any such amendment, without the consent of the holders of all Units then
outstanding, (iii) affect the duties, obligations and responsibilities of the
Trustee without its consent or (iv) affect the Trust's status as a grantor trust
as set forth in Section 3.15.
Unless the Depositors otherwise direct, notice of any such
amendment shall be included in the annual statement provided pursuant to Section
3.07.
Section 9.2. Termination: Unless previously terminated
-----------
pursuant to the provisions hereof, this Indenture and the Trust created hereby
shall terminate as of the Evaluation Time on the Termination Date or upon the
date of the earlier maturity, redemption, sale or other disposition as the case
may be of the last Security held hereunder; provided that in no event shall the
Trust continue beyond the "Mandatory Termination Date" specified in the
Prospectus for the Trust.
Written notice of any termination shall be given by the
Trustee to each Unitholder at his or her address appearing on the registration
books of the Trustee.
In the event of any termination of the Trust prior to the
Termination Date, the Trustee shall proceed to liquidate the Securities then
held and make the payments and distributions provided for hereinafter in this
Section 9.2 except that in such event, the distribution to each Unitholder shall
be made in cash and shall be such Unitholder's pro rata interest in the balance
of the Principal and Income Account after the deductions herein provided.
In the event that the Trust terminates on the Termination
Date, the Trustee shall, not less than 20 days prior to the Termination Date,
send a written notice to each Unitholder of record owning, as of such date,
2,500 Units and whose interest in the Trust would entitle him to receive at
least one share of each Security. Such notice shall allow such Unitholder 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.
Unitholders who do not effectively request an in-kind distribution shall receive
their distribution upon termination in cash. Redemption of the Units of
Unitholders electing such in-kind distribution shall be 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.
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On the Termination Date, this Indenture and the Trust created
hereby shall terminate. In connection with such Termination, the Trustee shall
segregate such number of shares of Securities as shall be necessary to satisfy
in-kind distributions to Unitholders electing such distribution.
The balance of the Securities shall be sold over a period
described in the Prospectus of the Trust. The Depositors shall direct the
Trustee to sell the Securities in such manner as the Depositors determine will
produce the best price for the Trust. If so directed, the Trustee shall use the
services of the Depositors to effect such sales.
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 Investment Company Act of 1940, (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 correct 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). The Depositors will maintain records of the procedures and of each
transaction will be maintained as provided in Rule 17a-7(f). The Trustee shall
bear no responsibility for any sale made pursuant to the Depositors' instruction
as provided in this paragraph.
Within a reasonable period of time after such termination and
liquidation of Securities, the Trustee shall:
(a) deduct from the Income Account or, to the extent that
funds are not available in such account, from the Principal Account and pay to
itself individually an amount equal to the sum of
(1) its accrued compensation for its ordinary recurring
services,
(2) any compensation due it for its extraordinary services,
and
(3) any other costs, expenses, advances or indemnities as
provided herein.
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(b) 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 of counsel pursuant to Section 3.9;
(c) deduct from the Income Account or the Principal Account
any amounts which may be required to be deposited in the Reserve Account 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;
(d) make a final distribution from the Trust of such
Unitholder's pro rata share of the cash balances of the Income and Principal
Accounts and, on the conditions set forth in Section 3.4 hereof, the balance of
the Reserve Account, if any;
(e) together with such distribution to each Unitholder as
provided for in (d), furnish to each such Unitholder a final distribution
statement as of the date of the computation of the amount distributable to
Unitholders, setting forth the data and information in substantially the form
and manner provided for in Section 3.6 hereof; and
(f) distribute to each Unitholder receiving the distribution
provided in paragraph (d) 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 amounts to be so distributed to each Unitholder shall be
that pro rata share of the balance of the total Income and Principal Accounts as
shall be represented by the Units held of record by such Unitholder.
The Trustee shall be under no liability with respect to moneys
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.
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 electing a cash distribution
may express interest in investing such cash distribution in units of a New
Series of The Pinnacle Family of Trusts. 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 any applicable
sales material with respect to the New Series and 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. 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. This paragraph shall not obligate the Depositors to
create any New Series or to provide any such investment election.
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Section 9.3. Construction: This Indenture is executed and
------------
delivered in the State of New York, and all local laws or rules of construction
of such State shall govern the rights of the parties hereto and the Unitholders
and the interpretation of the provisions hereof.
Section 9.4. Registration of Units: The Depositors agree and
----------------------
undertake to register the Units with the Securities and Exchange Commission or
other applicable governmental agency pursuant to applicable Federal or state
statutes, if such registration shall be required, and to do all things that may
be necessary or required to comply with this provision during the term of the
Trust created hereunder, and the Trustee shall incur no liability or be under
any obligation or expense in connection therewith.
Section 9.5. Written Notice: Any notice, demand, direction or
---------------
instruction to be given to the Depositors hereunder shall be in writing and
shall be duly given if mailed or delivered to the agent for the Depositors
designated pursuant to Section 7.5 as follows: if to XxXxxxxxxx, Piven, Xxxxx
Securities, Inc., 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; if to Investec Ernst
& Company, Xxx Xxxxxxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 or at such other
address as shall be specified by the Depositors to the Trustee in writing. Any
notice, demand, direction or instruction to be given to the Trustee shall be in
writing and shall be duly given if mailed or delivered to the Trustee at 000
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other address as shall be
specified to the Depositors by the Trustee in writing. Any notice to be given to
the Unitholders shall be duly given if mailed or delivered to each Unitholder at
the address of such holder appearing on the registration books of the Trustee.
Section 9.6. 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 or 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 of the Units or the
rights of the holders thereof.
Section 9.7. Dissolution of Depositors Not to Terminate: The
------------------------------------------
dissolution of one or all of the Depositors from or for any cause whatsoever
shall not operate to terminate this Indenture or the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the date first above written.
[Signatures and acknowledgments on separate pages.]
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THE BANK OF NEW YORK
Trustee
By: /s/ XXXXXX XXXXXXXX
------------------------------
Vice President
STATE OF NEW YORK )
:ss.:
COUNTY OF NEW YORK )
On this 21st day of May, 2001, before me personally appeared
Xxxxxx Xxxxxxxx, to me known, who being by me duly sworn, said that he is an
Authorized Signator of The Bank of New York, 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.
/s/ XXXXXX X. XXXXXXXX
--------------------------------
Notary Public
XXXXXX X. XXXXXXXX
Notary Public, State of New York
No. 01RE5086077
Qualified in Queens County
Commission Expires 10/06/2001
INVESTEC ERNST & COMPANY
Depositor
By: /s/ XXXXX X. XXXXXXX
-------------------------------
Authorized Signator
STATE OF NEW YORK )
: ss:
COUNTY OF NEW YORK )
On this 21st day of May, 2001, before me personally appeared
Xxxxx XxXxxxx, to me known, who being by me duly sworn, said that he is an
Authorized Signator of Investec Ernst & Company, 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.
/s/ XXXXXXX X. XXXXXXX
--------------------------------
Notary Public
XXXXXXX X. XXXXXXX
Notary Public, State of New York
No. 315016879
Qualified in New York County
Commission Expires 9/26/01
XXXXXXXXXX, PIVEN, XXXXX SECURITIES, INC.
Depositor
By: /s/ XXXXX X. XXXXX
----------------------------------
Authorized Signator
STATE OF NEW YORK )
: ss:
COUNTY OF NEW YORK )
On this 21st day of May, 2001, before me personally appeared
Xxxxx X. Xxxxx, to me known, who being by me duly sworn, said that he is an
Authorized Signator of XxXxxxxxxx, Xxxxx, Xxxxx Securities, 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.
/s/ XXXXXXX X. XXXXXXX
----------------------------------------
Notary Public
XXXXXXX X. XXXXXXX
Notary Public, State of New York
No. 315016879
Qualified in New York County
Commission Expires 9/26/01
