Exhibit 1.1
CLAYMORE SECURITIES DEFINED PORTFOLIOS,
SERIES 128
REFERENCE TRUST AGREEMENT
This Reference Trust Agreement dated as of August 13, 2002, between
Claymore Securities, Inc., as Depositor, and The Bank of New York, as Trustee,
sets forth certain provisions in full and incorporates other provisions by
reference to the document entitled "Standard Terms and Conditions of Trust For
Series Formed on or Subsequent to December 18, 2001" (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 and the Trustee agree as follows:
PART I.
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II hereof, all the provisions
contained in the 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 this instrument.
PART II.
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed to:
(1) The securities listed in the Schedule hereto have been
deposited in the Trust under this Reference Trust Agreement as
indicated on the attached Schedule A.
(2) For the purposes of the definition of the term "Unit" in
Article I, it is hereby specified that the fractional undivided
interest in and ownership of a Trust is the amount described in
Amendment No. 1 to the Trust's Registration Statement (Registration No.
333-90982) as filed with the Securities and Exchange Commission today.
The fractional undivided interest may (a) increase by the number of any
additional Units issued pursuant to Section 2.03, (b) increase or
decrease in connection with an adjustment to the
number of Units pursuant to Section 2.03, or (c) decrease by the number
of Units redeemed pursuant to Section 5.02.
(3) The term "Deferred Sales Charge" shall mean the "deferred
sales fee" as described in the Prospectus.
(4) The terms "Income Account Record Date" and "Capital
Account Record Date" shall mean the dates set forth under "Essential
Information--Record Dates" in the Prospectus.
(5) The terms "Income Account Distribution Date" and "Capital
Account Distribution Date" shall mean the dates set forth under
"Essential Information-- Distribution Dates" in the Prospectus.
(6) The term "Initial Date of Deposit" shall mean the date of
this Reference Trust Agreement as set forth above.
(7) The Introduction to Standard Terms and Conditions of Trust
is hereby amended as follows:
These Standard Terms and Conditions of Trust, effective
December 18, 2001, shall be applicable to certain Claymore Securities
Defined Portfolios established after the date of effectiveness hereof
containing Securities, as provided in this paragraph. For all Series
established after the date of effectiveness hereof to which these
Standard Terms and Conditions of Trust effective December 18, 2001, are
to be applicable, the Depositor, Evaluator and Supervisor and the
Trustee shall execute a Reference Trust Agreement incorporating by
reference these Standard Terms and Conditions of Trust effective
December 18, 2001, and designating any exclusions from or additions or
exceptions to such incorporation by reference for the purposes of that
Series or variation of the terms hereof for the purposes of that
Series.
(8) Article I of the Standard Terms and Conditions of Trust is
hereby amended to add the following definitions:
"ZERO COUPON OBLIGATIONS" Any zero coupon bonds, i.e.,
obligations which accrue but do not pay income currently, which are
sold at a discount from principal value and represent an obligation to
receive the principal value thereof at a future date, issued by the
U.S. government, which are deposited in a Trust. Only Zero Coupon
Obligations which if certificated, are or may be registered and held by
the Trustee in book entry form on the registration books of a bank or
clearing house which it is authorized to use as custodian of assets of
a unit investment trust pursuant to the Investment Company Act of 1940
shall be eligible for deposit in any Trust.
"ZERO COUPON OBLIGATION MATURITY DATE" The Treasury
Obligations Maturity Date shall be as set forth in the Prospectus under
"The Trust Portfolio."
(9) The definition of "SECURITIES" is amended to read as
follows:
(30) "SECURITIES" shall mean (a) Equity Securities and Zero
Coupon Obligations deposited in a Trust, which Securities are listed in
the various Schedules to the Reference Trust Agreement or are deposited
in the Trust pursuant to Section 2.01 hereof, (b) Replacement
Securities acquired pursuant to
Section 3.17 hereof, as may from time to time to be construed to be
held as part of the Trust and (c) if applicable, distributions of the
same securities.
(10) Section 2.03 is hereby amended by adding the following
sentence as the third sentence of Section 2.03:
"Effective as of the Evaluation Time on August 13, 2002, in the event
that the aggregate value of Securities in the Trust has increased since
the evaluation on August 12, 2002, the Trustee shall issue such number
of additional Units to the Unitholder of outstanding Units as of the
close of business on August 13, 2002, that the price per Unit computed
as of the Evaluation Time on August 12, 2002, plus the maximum
applicable sales charge shall equal approximately $9.474 per Unit
(based on the number of Units outstanding as of said Evaluation Time,
including the additional Units issued pursuant to this sentence); in
the event that the aggregate value of Securities in the Trust Fund has
decreased since the evaluation on August 12, 2002, there will be a
reverse split of the outstanding Units, and said Unitholder will
surrender to the Trustee for cancellation such number of Units, that
the price per Unit computed as of the Evaluation Time on August 13,
2002, plus the maximum applicable sales charge shall equal
approximately $9.474 per Unit (based on the number of Units outstanding
as of said Evaluation Time, reflecting cancellation of Units pursuant
to this sentence)."
(11) The number of Units of the Trust referred to in Section
2.03 shall be equal to the "Number of units" in the Statement of
Financial Condition in the Prospectus.
(12) Section 2.05(a) is amended by adding the following
subsection (8):
(8) Notwithstanding anything to the contrary in this
subsection (8), for the Value & Preservation Defined Portfolio Series
1, the Trustee shall not accept any deposit pursuant to this Section
2.05(a) unless the Depositor and Trustee have each determined that the
maturity value of the Zero Coupon Obligations included in the deposit,
divided by the number of Units created by reason of the deposit, shall
equal $10.00.
(13) Article III of the Standard Terms and Conditions of Trust
is hereby amended to add the following section:
SECTION 3.23. SALE OF ZERO COUPON OBLIGATIONS. (a) For the
Value & Preservation Defined Portfolio Series 1, notwithstanding
anything to the contrary in the Standard Terms and Conditions of Trust,
Zero Coupon Obligations held by the Trust may not be sold unless the
Depositor and the Trustee have determined that the maturity value of
the Zero Coupon Obligations remaining after such proposed sale, divided
by the number of Units outstanding after any tendered Units are
redeemed, shall equal or exceed $10.00. However, Zero Coupon
Obligations may be sold without limitation in the event of the Trust's
termination.
(b) In the event that (i) Zero Coupon Obligations may not be
sold to fund a redemption of Units pursuant to paragraph (a) of this
section 3.23, and (ii) no other Trust assets are available for
liquidation to fund such redemption, the Depositor agrees that it will
purchase such Units in accordance with Section 5.02, and will tender
such Units for redemption only at such time and in such manner that the
Zero Coupon Obligations remaining after the sale required to fund such
redemption will have a maturity
value of not less than $10.00 per Unit. However, if the Depositor fails
to meet this obligation, the Trustee will advance to the Trust such
amounts as may be necessary to pay the Redemption Value of the tendered
Units. The Trustee shall be reimbursed the amount of any such advance
from the Trust as soon as Zero Coupon Obligations may be sold in such
amount as will not reduce the maturity value of Zero Coupon Obligations
still held in the Trust below the amount required to distribute $10.00
per Unit from the proceeds of the sale or maturity of the Zero Coupon
Obligations upon the termination of the Trust on the Mandatory
Termination Date. The Trustee shall be deemed to be the beneficial
owner of the Zero Coupon Obligations held in the Trust to the extent of
all amounts advanced by it pursuant to this Section 3.23, and such
advances shall be secured by a lien on the Trust prior to the interest
of Unitholders, provided, however, that the Trustee's beneficial
interest in the Trust and the lien securing such interest shall not at
any time exceed such amount as would reduce the amount distributable
from the Trust upon maturity or sale of Zero Coupon Obligations upon
the termination of the Trust on the Mandatory Termination Date to less
than $10.00 per Unit. Nothing in this paragraph shall be deemed to
restrict the Trustee's authority to terminate the Trust pursuant to
Section 6.01(g) in the event the Depositor fails or ceases to act as
described in such section.
(c) In the event that (i) Zero Coupon Obligations may not be
sold to pay Trust expenses pursuant to paragraph (a) of this Section
3.23; and (ii) no other Trust assets are available for liquidation to
pay such expenses, the Depositor shall be liable for such expenses
required to be paid pursuant to the Standard Terms and Conditions of
Trust and this Trust Agreement or otherwise required for the
administration of the Trust.
(14) Section 3.10 is hereby amended by adding the following at
the conclusion thereof:
In the event that the Trust holds shares of an open-end investment
company and if so required by Section 12(d)(1)(E) of the Investment
Company Act of 1940, such shares will be voted by the Trustee of the
Trust, and the Trustee will vote all such shares held in the Trust in
the same proportion as all other shares of such open-end investment
company not held by the Trust are voted.
(15) The first sentence of Section 3.17(a) is hereby replaced
with the following:
(a) The Replacement Securities shall be Zero Coupon
Obligations or Equity Securities as originally selected for deposit in
that series of the Trust. Replacement Securities which are Zero Coupon
Obligations must have the same maturity value as the Failed Contract
Securities and, as close as is reasonably practical, the same maturity
date, which must be on or prior to the Mandatory Termination Date.
(16) Section 4.01(a) is amended by adding the following at the
end of the first paragraph:
If the asset valued is an open-end investment company, the Evaluation
is based upon the net asset value of the shares of such open-end
investment company. For Zero Coupon Obligations, an Evaluation as
described above shall be based (a) on the basis of the current bid
price on the over-the-counter market (unless the Evaluator deems such
price inappropriate as a basis for evaluation), (b) on the basis of
current bid prices for the Zero Coupon Obligations as obtained from
investment dealers or brokers who customarily deal in securities
comparable to those held by the Trust, (c) if bid prices are not
available for the Zero Coupon Obligations, on the basis of bid prices
for comparable securities, (d) by determining the valuation of the Zero
Coupon Obligations on the bid side of the market by appraisal, or (e)
by any combination of the above. However, if Zero Coupon Obligations
are sold on such day, then such Evaluation for the Zero Coupon
Obligations shall be the weighted average of the execution prices for
all Zero Coupon Obligations sold on such day.
Notwithstanding anything to the contrary contained in this
Section 4.01(a), except for Trust Fund Evaluations required by
Section 5.02 in determining Redemption Price, during the initial
offering period, the evaluations of the Securities shall generally
be made in the manner described in this section 4.01(a) based on
the closing offer prices of the Securities rather than the closing
bid prices.
(17) The first paragraph of Section 5.01 is hereby amended and
restated to read as follows:
SECTION 5.01. TRUST EVALUATION. As of the Evaluation Time (a)
on the last Business Day of each year, (b) on the day on which any Unit
is tendered for redemption and (c) on any other day desired by the
Trustee or requested by the Depositor, the Trustee shall: Add (i) all
moneys on deposit in a Trust (excluding (1) cash, cash equivalents or
Letters of Credit deposited pursuant to Section 2.01 hereof for the
purchase of Contract Securities, unless such cash or Letters of Credit
have been deposited in the Interest and Principal Accounts because of
failure to apply such moneys to the purchase of Contract Securities
pursuant to the provisions of Sections 2.01, 3.03 and 3.04 hereof and
(2) moneys credited to the Reserve Account pursuant to Section 3.05
hereof), plus (ii) the aggregate Evaluation of all Securities
(including Contract Securities and Reinvestment Securities) on deposit
in such Trust as is determined by the Evaluator (such evaluations shall
take into account and itemize separately (i) the cash on hand in the
Trust or moneys in the process of being collected from matured interest
coupons or bonds matured or called for redemption prior to maturity,
(ii) the value of each issue of the Securities in the Trust as
determined by the Evaluator pursuant to Section 4.01, and (iii)
interest accrued thereon not subject to collection and distribution.
For each such Evaluation there shall be deducted from the sum of the
above (i) amounts representing any applicable taxes or governmental
charges payable out of the respective Trust and for which no deductions
shall have previously been made for the purpose of addition to the
Reserve Account, (ii) amounts representing estimated accrued fees of
the Trust and expenses of such Trust including but not limited to
unpaid fees and expenses of the Trustee, the Evaluator, the Supervisor,
the Depositor and bond counsel, in each case as reported by the Trustee
to the Evaluator on or prior to the date of evaluation, (iii) any
moneys identified by the Trustee, as of the date of the Evaluation, as
held for distribution to Unitholders of record as of a Record Date or
for payment of the Redemption Value of Units tendered prior to such
date and (iv) unpaid organizational and offering costs in the estimated
amount per Unit set forth in the Prospectus. The resulting figure is
herein called a "TRUST FUND EVALUATION." The value of the pro rata
share of each Unit of the respective Trust determined on the basis of
any such evaluation shall be referred to herein as the "UNIT VALUE."
(18) For the purposes of Section 6.01(g)(i), the liquidation
amount shall be 20% of the total value of all Securities deposited in
the Trust during the Trust's initial offering period.
(19) Article III is hereby amended by adding the following
section:
SECTION 3.23. BOOKKEEPING AND ADMINISTRATIVE EXPENSES. If so
provided in the Prospectus, as compensation for providing bookkeeping
and other administrative services of a character described in Section
26(a)(2)(C) of the Investment Company Act of 1940 to the extent such
services are in addition to, and do not duplicate, the services to be
provided hereunder by the Trustee or the Depositor for providing
supervisory services, the Depositor shall receive at the times
specified in Section 3.05, against a statement or statements therefor
submitted to the Trustee an aggregate annual fee in an amount which
shall not exceed that amount set forth in the Prospectus, calculated as
specified in Section 3.05, but in no event shall such compensation,
when combined with all compensation received from other series of the
Trust or other unit investment trusts sponsored by the Depositor or its
affiliates for providing such bookkeeping and administrative services
in any calendar year exceed the aggregate cost to the Depositor for
providing such services to such unit investment trusts. Such
compensation may, from time to time, be adjusted provided
that the total adjustment upward does not, at the time of such
adjustment, exceed the percentage of the total increase, during the
period from the Trust Agreement to the date of any such increase, in
consumer prices for services as measured by the United States
Department of Labor Consumer Price Index entitled "All Services Less
Rent of Shelter" or similar index as described under Section 3.18. The
consent or concurrence of any Unitholder hereunder shall not be
required for any such adjustment or increase. Such compensations shall
be paid by the Trustee, upon receipt of invoice therefor from the
Depositor, upon which, as to the cost incurred by the Depositor of
providing services hereunder the Trustee may rely, and shall be charged
against the Income and Capital Accounts as specified in Section 3.05.
The Trustee shall have no liability to any Unitholder or other person
for any payment made in good faith pursuant to this Section.
If the cash balance in the Income and Capital Accounts shall
be insufficient to provide for amounts payable pursuant to this Section
3.23, the Trustee shall have the power to sell (1) Securities from the
current list of Securities designated to be sold pursuant to Section
5.02 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 3.23.
Any moneys payable to the Depositor pursuant to this Section
3.23 shall be secured by a prior lien on the Trust except that no such
lien shall be prior to any lien in favor of the Trustee under the
provisions of Section 6.04.
(20) The phrases "supervisory services," "supervisory
portfolio services" and "portfolio supervisory services" in Section
3.18 are hereby replaced with the phrase "portfolio supervisory
services and bookkeeping and administrative expenses."
(21) Section 7.05 is hereby amended and replaced in its
entirety with the following:
SECTION 7.05. COMPENSATION. The Depositor shall receive at the
times set forth in Sections 3.05, 3.18, 3.23 and 4.03 as compensation
for performing portfolio supervisory services, bookkeeping and
administrative expenses and evaluation services, such amount and for
such periods as specified the Prospectus and/or Reference Trust
Agreement. The compensation for providing portfolio supervisory
services, bookkeeping and administrative expenses and evaluation
services 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 Depositor for services rendered to all series of Claymore
Securities Defined Portfolios 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 Depositor, by amounts not exceeding
the proportionate increase during the period from the date of such
Prospectus and/or 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
Depositor pursuant to Sections 3.05, 3.18 and 3.23 and 4.03 is found to
be an improper charge against the Trust, the Depositor shall reimburse
the 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 Depositor and such judgment or order shall not be
effectively stayed or a final settlement is established in which the
Depositor agrees to reimburse the Trust for amounts paid to the
Depositor pursuant to this Section 7.05.
(22) The first two sentences of Section 3.22 are hereby
amended and replaced with the following:
SECTION 3.22. CREATION AND DEVELOPMENT FEE. If the Prospectus
related to the Trust specifies a creation and development fee, the
Trustee shall, on or immediately after the end of the initial offering
period, withdraw from the Capital Account, an amount equal to the
unpaid creation and development fee as of such date and credit such
amount to a special non-Trust account designated by the Depositor out
of which the creation and development fee will be distributed to the
Depositor (the "CREATION AND DEVELOPMENT ACCOUNT"). The creation and
development fee is the per unit amount specified in the Prospectus for
the Trust.
This Reference Trust Agreement shall be deemed effective when executed
and delivered by the Sponsor and the Trustee.
IN WITNESS WHEREOF, the parties hereto have caused this Reference Trust
Agreement to be duly executed.
CLAYMORE SECURITIES, INC., DEPOSITOR
By /s/ Xxxxxxxx X. Xxxxxx
--------------------------------------
President
THE BANK OF NEW YORK, TRUSTEE
By /s/ Xxxxxx Xxxxxxxx
--------------------------------------
Vice President
SCHEDULE A
SECURITIES INITIALLY DEPOSITED
CLAYMORE SECURITIES DEFINED PORTFOLIOS, SERIES 128
(Note: Incorporated herein and made a part hereof is the "Trust Portfolio"
as set forth in the Prospectus.)
