EXHIBIT 1.1
XXX XXXXXX FOCUS PORTFOLIOS
SERIES 256
TRUST AGREEMENT
Dated: December 5, 2000
This Trust Agreement among Xxx Xxxxxx Funds Inc., as Depositor,
American Portfolio Evaluation Services, a division of Xxx Xxxxxx Investment
Advisory Corp., as Evaluator, Xxx Xxxxxx Investment Advisory Corp., as
Supervisory Servicer, and The Bank of New York, as Trustee, sets forth certain
provisions in full and incorporates other provisions by reference to the
document entitled "Xxx Xxxxxx American Capital Equity Opportunity Trust, Series
87 and Subsequent Series, Standard Terms and Conditions of Trust, Effective
January 27, 1998" (herein called the "Standard Terms and Conditions of Trust")
and such provisions as are set forth in full and such provisions as are
incorporated by reference constitute a single instrument. All references herein
to Articles and Sections are to Articles and Sections of the Standard Terms and
Conditions of Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor, Evaluator, Supervisory Servicer and Trustee agree as
follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II hereof, all the provisions
contained in the Standard Terms and Conditions of Trust are herein incorporated
by reference in their entirety and shall be deemed to be a part of this
instrument as fully and to the same extent as though said provisions had been
set forth in full in this instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed to:
1. The Securities defined in Section 1.01(24), listed in the
Schedule hereto, have been deposited in trust under this Trust Agreement.
2. The fractional undivided interest in and ownership of the
Trust represented by each Unit is an amount the numerator of which is one and
the denominator of which is the amount set forth under "Summary of Essential
Financial Information - Initial Number of Units" in the Prospectus. Such
fractional undivided interest may be (a) increased by the number of any
additional Units issued pursuant to Section 2.03, (b) increased or decreased in
connection with an adjustment to the number of Units pursuant to Section 2.03,
or (c) decreased by the number of Units redeemed pursuant to Section 5.02.
3. The terms "Capital Account Record Date" and "Income Account Record
Date" shall mean the "Record Dates" set forth under "Summary of Essential
Financial Information" in the Prospectus.
4. The terms "Capital Account Distribution Date" and "Income Account
Distribution Date" shall mean the "Distribution Dates" set forth under "Summary
of Essential Financial Information" in the Prospectus.
5. The term "Mandatory Termination Date" shall mean the "Mandatory
Termination Date" set forth under "Summary of Essential Financial Information"
in the Prospectus.
6. Notwithstanding anything to the contrary in the Standard Terms and
Conditions of Trust and subject to the requirements set forth in this paragraph,
unless the Prospectus otherwise requires, the Sponsor may, on any Business Day
(the "Trade Date"), subscribe for additional Units as follows:
(a) Prior to the Evaluation Time on such Business Day, the
Sponsor shall provide notice (the "Subscription Notice") to the Trustee, by
telephone or by written communication, of the Sponsor'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 Sponsor on the
settlement date for such subscription or (ii) instruct the Trustee to purchase
additional Securities with an aggregate value as specified in the Subscription
Notice.
(b) Promptly following the Evaluation Time on such Business Day,
the Sponsor shall verify with the Trustee the number of additional Units to be
created.
(c) Not later than the time on the settlement date for such
subscription when the Trustee is to deliver or assign the additional Units
created hereby, the Sponsor 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 an
amount equal to the aggregate value of the additional Securities specified in
the Subscription Notice, and adding and subtracting the amounts specified in the
first and second sentences of Section 5.01, computed as of the Evaluation Time
on the Business Day preceding the Trade Date divided by the number of Units
outstanding as of the Evaluation Time on the Business Day preceding the Trade
Date, times the number of additional Units to be created.
(d) On the settlement date for such subscription, the Trustee
shall, in exchange for the Securities and cash or letter of credit described
above, deliver to, or assign in the name of or on the order of, the Sponsor the
number of Units verified by the Sponsor with the Trustee.
7. Section 6.01(e) is hereby replaced with the following:
(e) (1) Subject to the provisions of subparagraph (2) of this
paragraph, the Trustee may employ agents, sub-custodians, attorneys,
accountants and auditors and shall not be answerable for the default or
misconduct of any such agents, sub-custodians, attorneys, accountants
or auditors if such agents, sub-custodians, attorneys, accountants or
auditors shall have been selected with reasonable care. The Trustee
shall be fully protected in respect of any action under this Indenture
taken or suffered in good faith by the Trustee in accordance with the
opinion of counsel, which may be counsel to the Depositor acceptable to
the Trustee, provided, however that this disclaimer of liability shall
not excuse the Trustee from the responsibilities specified in
subparagraph (2) below. The fees and expenses charged by such agents,
sub-custodians, attorneys, accountants or auditors shall constitute an
expense of the Trust reimbursable from the Income and Capital Accounts
of the Trust as set forth in section 6.04 hereof.
(2) The Trustee may place and maintain in the care of an
Eligible Foreign Custodian (which is employed by the Trustee as a
sub-custodian as contemplated by subparagraph (1) of this paragraph (e)
and which may be an affiliate or subsidiary of the Trustee or any other
entity in which the Trustee may have an ownership interest) any
investments (including foreign currencies) for which the primary market
is outside the United States, and such cash and cash equivalents in
amounts reasonably necessary to effect the Trust's transactions in such
investments, provided that:
(a) The Trustee shall perform all duties assigned to
the Foreign Custody Manager by Rule 17f-5 under the Investment
Company Act of 1940 (17 CFR ss. 270.17f-5) ("Rule 17f-5"), as
now in effect or as such rule may be amended in the future.
The Trustee shall not delegate such duties.
(b) The Trustee shall exercise reasonable care,
prudence and diligence such as a person having responsibility
for the safekeeping of Trust assets would exercise, and shall
be liable to the Trust for any loss occurring as a result of
its failure to do so.
(c) The Trustee shall indemnify the Trust and hold
the Trust harmless from and against any risk of loss of Trust
assets held in accordance with the foreign custody contract.
(d) The Trustee shall maintain and keep current
written records regarding the basis for the choice or
continued use of a particular Eligible Foreign Custodian
pursuant to this subparagraph for a period of not less than
six years from the end of the fiscal year in which the Trust
was terminated, the first two years in an easily accessible
place. Such records shall be available for inspection by
Unitholders and the Securities and Exchange Commission at the
Trustee's offices at all reasonable times during its usual
business hours.
(3) "Eligible Foreign Custodian" shall have the meaning
assigned to it in Rule 17f-5.
(4) "Foreign Custody Manager" shall have the meaning assigned
to it in Rule 17f-5.
8. Section 1.01 (1), (3) and (4) shall be replaced in their entirety
by the following:
(1) "Depositor" shall mean Xxx Xxxxxx Funds Inc. and its
succesors in interest, or any successor depositor appointed as hereinafter
provided.
(3) "Evaluator" shall mean American Portfolio Evaluation
Services (a division of a Xxx Xxxxxx Investment Advisory Corp.) and its
successors in interest, or any successor evaluator appointed as hereinafter
provided.
(4) "Supervisory Servicer" shall mean Xxx Xxxxxx Investment
Advisory Corp. and its successors in interest, or any successor portfolio
supervisor appointed as hereinafter provided.
9. Section 3.15 of the Standard Terms and Conditions of Trust is hereby
replaced in its entirety by the following:
Section 3.15. Deferred Sales Charge. If the Prospectus related to
the Trust specifies a deferred sale charge, the Trustee shall, on each
Deferred Sales Charge Payment Date and as permitted by such Prospectus,
withdraw from the Capital Account an amount per Unit equal to the Deferred
Sales Charge Payment and credit such amount to a special non-Trust account
maintained at the Trustee out of which the deferred sales charge will be
distributed to the Depositor. If the balance in the Capital Account is
insufficient to make any such withdrawal, the Trustee shall, as directed
by the Depositor, either advance funds in an amount equal to the proposed
withdrawal and be entitled to reimbursement of such advance upon the
deposit of additional moneys in the Capital Account, sell Securities and
credit the proceeds thereof to such special Depositor's account or credit
(if permitted by law) Securities in kind to such special Depositor's
Account. If a Unitholder redeems Units prior to full payment of the
deferred sales charge, the Trustee shall, if so provided in the related
Prospectus, on the Redemption Date, withhold from the Redemption Price
payable to such Unitholder an amount equal to the unpaid portion of the
deferred sales charge and distribute such amount to such special
Depositor's Account. The Depositor may at any time instruct the Trustee in
writing to distribute to the Depositor cash or Securities previously
credited to the special Depositor's account. Amounts to be credited to the
special Depositor's account with respect to each Deferred Sales Charge
Payment are due and payable to the Depositor on the related Deferred Sales
Charge Payment Date.
The term "Deferred Sales Charge Payment Dates" shall mean the
10th day of each month beginning August 10, 2001 and continuing through
December 10, 2001. If any Deferred Sales Charge Payment Date is not a
Business Day, that Deferred Sales Charge Payment Date shall be deemed to
be the next business day. The term "Deferred Sales Charge Payment" shall
mean a fraction of the total maximum deferred sales charge specified in
the Prospectus, the numerator of which is one and the denominator of which
is equal to the total number of Deferred Sales Charge Payment Dates.
10. Section 3.07(a) of the Standard Terms and Conditions of Trust is
hereby amended by adding the following Section 3.07(a)(x) immediately after
Section 3.07(a)(ix):
"(x) and 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 Supervisory Servicer the sale or tender of the
Security is in the best interest of the Unitholders."
11. Sections 4.01(b) and (c) of the Standard Terms and Conditions of
Trust are hereby replaced in their entirety by the following:
(b) During the initial offering period such Evaluation shall be made in
the following manner: if the Securities are listed on a national or foreign
securities exchange or traded on the Nasdaq Stock Market, Inc., such Evaluation
shall generally be based on the last available closing sale price on or
immediately prior to the Evaluation Time on the exchange or market which is the
principal market therefor, which shall be deemed to be the New York Stock
Exchange if the Securities are listed thereon (unless the Evaluator deems such
price inappropriate as a basis for evaluation) or, if there is no such available
closing sale price on such exchange or market at the last available asked price
of the Equity Securities. If the Securities are not listed on such an exchange
or traded on the Nasdaq Stock Market, Inc. or, if so listed and the principal
market therefor is other than on such exchange or market, or there is no such
available sale price on such exchange or market, such Evaluation shall generally
be based on the following methods or any combination thereof whichever the
Evaluator deems appropriate: (i) in the case of Equity Securities, on the basis
of the current asked price on the over-the-counter market (unless the Evaluator
deems such price inappropriate as a basis for evaluation), (ii) on the basis of
current offering prices for the Zero Coupon Obligations as obtained from
investment dealers or brokers who customarily deal in securities comparable to
those held by the Fund, (iii) if offering prices are not available for the Zero
Coupon Obligations or the Equity Securities, on the basis of offering or asked
price for comparable securities, (iv) by determining the valuation of the Zero
Coupon Obligations or the Equity Securities on the offering or asked side of the
market by appraisal or (v) by any combination of the above. If the Trust holds
Securities denominated in a currency other than U.S. dollars, the Evaluation of
such Security shall be converted to U.S. dollars based on current offering side
exchange rates (unless the Evaluator deems such prices inappropriate as a basis
for valuation). The Evaluator may add to the Evaluation of each Security which
is principally traded outside of the United States the amount of any commissions
and relevant taxes associated with the acquisition of the Security. As used
herein, the closing sale price is deemed to mean the most recent closing sale
price on the relevant securities exchange immediately prior to the Evaluation
time. For each Evaluation, the Evaluator shall also confirm and furnish to the
Trustee and the Depositor, on the basis of the information furnished to the
Evaluator by the Trustee as to the value of all Trust assets other than
Securities, the calculation of the Trust Evaluation to be computed pursuant to
Section 5.01.
(c) For purposes of the Trust Evaluations required by Section
5.01 in determining Redemption Value and Unit Value, Evaluation of the
Securities shall be made in the manner described in Section 4.01(b), on
the basis of current bid prices for the Zero Coupon Obligations, the bid
side value of the relevant currency exchange rate expressed in U.S.
dollars and, except in those cases in which the Equity Securities are
listed on a national or foreign securities exchange or traded on the
Nasdaq Stock Market, Inc. and the last available sale prices are utilized,
on the basis of the last available bid price of the Equity Securities. In
addition, the Evaluator (i) shall not make the addition specified in the
fourth sentence of Section 4.01(b) and (ii) may reduce the Evaluation of
each Security which is principally traded outside of the United States by
the amount of any liquidation costs and any capital gains or other taxes
which would be incurred by the Trust upon the sale of such Security, such
taxes being computed as if the Security were sold on the date of the
Evaluation.
(12) Section 3.07(a) is hereby amended by adding the following
subsections immediately after Section 3.07(a)( x):
"(xi) that the Security has been removed from the
Dow Xxxxx Industrial Average; or
(xii) that the Security is over-represented in the
Trust's portfolio in comparison to the number of shares of all
other Securities in the Trust Portfolio."
(13) Section 3.07 is hereby amended by changing the current
subsection (c) to subsection (d) and adding the following as a new subsection
(c):
"(c) In the event a Security is sold pursuant to
Section 3.07(a)(xi), the Depositor may direct the reinvestment
of the proceeds of the sale of such Security, to the extent
practicable, into any security which replaces such Security as
a component of the Dow Xxxxx Industrial Average or, if no
security so replaces such Security, into any other Securities
which are under-represented in the Trust's portfolio in
comparison to the number of shares of all other Secruities in
the Trust Portfolio. In the event a Security is sold pursuant
to Section 3.07(a)(xii), the Depositor may direct the
reinvestment of the proceeds of the sale of such Security, to
the extent practicable, into any other Securities which are
under-represented in the Trust's portfolio in comparison to
the number of shares of all other Securities in the Trust
Portfolio. Without limiting the generality of the foregoing,
in determining whether such reinvestment is practicable, the
Depositor may, but is not obligated to, specifically consider
the ability of the Trust to reinvest such proceeds into round
lots of a Security."
(14) The second paragraph of Section 3.11 is hereby stricken and
replaced with the following:
"In the event that an offer by the issuer of any of
the Securities or any other party shall be made to issue new
securities, or to exchange securities, for Trust Securities,
the Trustee shall reject such offer. However, should any
issuance, exchange or substitution be effected notwithstanding
such rejection or without an initial offer, any securities,
cash and/or property received shall be deposited hereunder and
shall be promptly sold, if securities or property, by the
Trustee; provided, however, if such securities are components
of the Dow Xxxxx Industrial Average, the Depositor may advise
the Trustee to keep such securities. The cash received in such
exchange and cash proceeds of any such sales shall, in the
following priority, be (1) reinvested, to the extent
practicable, into any Securities which are under-represented
in the Trust's portfolio in comparison to the number of shares
of all other Securities in the Trust portfolio or (2)
distributed to Unitholders on the next Distribution Date in
the manner set forth in Section 3.05 regarding distributions
from the Capital Account. Without limiting the generality of
the foregoing, in determining whether such reinvestment is
practicable, the Depositor may, but is not obligated to,
specifically consider the ability of the Trust to reinvest
such proceeds into round lots of a Security. The Trustee shall
not be liable or responsible in any way for depreciation or
loss incurred by reason of any such rejection or sale."
(15) Notwithstanding anything to the contrary herein, if at any
time the Dow Xxxxx Industrial Average shall no longer be compiled, maintained or
made available, the Depositor may direct that the Trust created hereby continue
to be operated hereunder utilizing the components of the Dow Xxxxx Industrial
Average as existed on the last date on which the Dow Xxxxx Industrial Average
components were available to the Trust.
IN WITNESS WHEREOF, the undersigned have caused this Trust Agreement to
be executed and their corporate seals to be hereto affixed and attested; all as
of the day, month and year first above written.
Xxx Xxxxxx Funds Inc.
By Xxxxx X. Xxxxx
-----------------------------------------
Senior Vice President
American Portfolio Evaluation Services, a division of Xxx Xxxxxx
Investment Advisory Corp.
By Xxxxx X. Xxxxx
-------------------------------------
Senior Vice President
Xxx Xxxxxx Investment Advisory Corp.
By Xxxxx X. Xxxxx
---------------------------------------
Senior Vice President
The Bank of New York
By Xxxxx Xxxxxx
----------------------------
Vice President
SCHEDULE A TO TRUST AGREEMENT
SECURITIES INITIALLY DEPOSITED
IN
XXX XXXXXX FOCUS PORTFOLIOS, SERIES 256
(Note: Incorporated herein and made a part hereof is each "Portfolio" as set
forth in the Prospectus.)
