Exhibit 1.1
XXX XXXXXX UNIT TRUSTS, SERIES 663
TRUST AGREEMENT
Dated: April 12, 2007
This Trust Agreement among Xxx Xxxxxx Funds Inc., as Depositor, The
Bank of New York, as Trustee, Xxx Xxxxxx Asset Management and Xxxxx & Steers
Capital Management, Inc., each as a Supervisor, sets forth certain provisions in
full and incorporates other provisions by reference to the document entitled
"Standard Terms and Conditions of Trust For Xxx Xxxxxx Focus Portfolios,
Effective for Unit Investment Trusts Established On and After May 2, 2001
(Including Series 284 and Subsequent Series)" (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, Trustee and Supervisor 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 listed in the Schedule hereto have been deposited in
trust under this Trust Agreement.
2. The fractional undivided interest in and ownership of each Trust
represented by each Unit thereof referred to in Section 1.01(56) is initially an
amount the numerator of which is one and the denominator of which is the amount
set forth under "Units outstanding" for the Trust in the "Statements of
Condition" in the Prospectus.
3. The aggregate number of Units described in Section 2.03(a) for a
Trust is that number of Units set forth under "Units outstanding" for the Trust
in the "Statements of Condition" in the Prospectus.
4. Section 1.01(5) is replaced in its entirety by the following:
"(5) "Business Day" shall mean any day on which the New York Stock
exchange is open for regular trading."
5. The terms "Capital Account Distribution Date" and "Income Account
Distribution Date" shall mean the "Distribution Dates" set forth in the
"Essential Information" in the Prospectus.
6. The terms "Capital Account Record Date" and "Income Account Record
Date" shall mean the "Record Dates" set forth in the "Essential Information" in
the Prospectus.
7. The term "Deferred Sales Charge Payment Date" shall mean September
10, 2007 and the 10th day of each month thereafter through January 10, 2008.
8. The term "Mandatory Termination Date" shall mean the "Mandatory
Termination Date" for the Trust set forth in the "Essential Information" in the
Prospectus.
9. With respect to the Closed-End Strategy: Xxxxx & Steers Master
Equity and Income Portfolio, Series 5 Closed-End Strategy: Xxxxx & Steers Master
Income Portfolio, Series 11 and Closed-End Strategy: Xxxxx & Steers Master
Municipal Income Portfolio - National Series 8 only, the term "Supervisor" shall
mean Xxxxx & Steers Capital Management, Inc. and its successors in interest, or
any successor portfolio supervisor appointed as provided in the Standard Terms
and Conditions of Trust. With respect to the Closed-End Strategy: Senior Loan
and Limited Duration Portfolio, Series 12, the term "Supervisor" shall mean Xxx
Xxxxxx Asset Management and its successors in interest, or any successor
portfolio supervisor as provided in the Standard Terms and conditions of Trust.
10. Section 3.05 is amended by adding the following subsection
immediately after Section 3.05(a)(iv):
"(v) Notwithstanding any of the previous provisions, if a Trust has
elected to be taxed as a regulated investment company under the United
States Internal Revenue Code of 1986, as amended, the Trustee is
directed to make any distribution or take any action necessary in order
to maintain the qualification of the Trust as a regulated investment
company for federal income tax purposes or to provide funds to make any
distribution for a taxable year in order to avoid imposition of any
income or excise taxes on the Trust or on undistributed income in the
Trust."
11. With respect to the Closed-End Strategy: Xxxxx & Steers Master
Equity and Income Portfolio, Series 5 and Closed-End Strategy: Xxxxx & Steers
Master Income Portfolio, Series 11 only, Section 3.05(b)(ii) shall be replaced
in is entirety by the following:
"(ii) For purposes of this Section 3.05, the Unitholder's "Income
Distribution" shall be equal to such Unitholders pro rata share of the
balance in the Income Account calculated on the basis of one-twelfth of
the estimated annual income to the Trust for the ensuing twelve months
computed as of the close of business on the Income Account Record Date
immediately preceding such Income Distribution (or portion or multiple
thereof for the first Income Distribution), after deduction of (1) the
fees and expenses then deductible pursuant to Section 3.05(a) and (2)
the Trustee's estimate of other expenses properly chargeable to the
Income Account pursuant to this Indenture which have accrued, as of
such Income Account Record Date or are otherwise properly attributable
to the period to which such Income Distribution relates.
In the event that the amount on deposit in the Income Account is not
sufficient for the payment of the amount intended to be distributed to
Unitholders on the basis of the aforesaid computation, the Trustee is
authorized to advance its own funds and cause to be deposited in and
credited to the Income Account such amounts as may be required to
permit payment of the related distribution to be made as aforesaid and
shall be entitled to be reimbursed, without interest, out of income
payments received by the Trust subsequent to the date of such advance.
Any such advance shall be reflected in the Income Account until
repaid."
12. With respect to Closed-End Strategy: Master Municipal Income
Portfolio - National Series 8 only Section 3.05 is hereby amended by adding the
following immediately after Section 3.05(b)(v):
"(vi) Notwithstanding the foregoing, the Trustee shall not be required
to make a distribution from the Income Account or the Capital Account unless the
aggregate cash for distribution within the meaning of Treas. Reg 1.671-5T(b)(5)
from the Income Account and the Capital Account is equal to or greater than .1%
of the net asset value of the Trust on the related Record Date. This provision
is intended to comply with Treas. Reg. 1.675-5T(c)(2)(v)(C), and shall
interpreted consistent therewith and with any successor regulation."
13. Section 3.07(a)(xiii) of the Standard Terms and Conditions of Trust
shall be replaced in its entirety with the following:
"(xiii) if the Trust has elected to be taxed as a "regulated investment
company" as defined in the United States Internal Revenue Code of 1986, as
amended, that such sale is necessary or advisable (i) to maintain the
qualification of the Trust as a regulated investment company or (ii) to provide
funds to make any distribution for a taxable year in order to avoid imposition
of any income or excise taxes on the Trust or on undistributed income in the
Trust."
14. Section 3.11 of the Standard Terms and Conditions of Trust shall be
revised by replacing the first paragraph of such Section with the following:
"Section 3.11. Notice to Depositor. In the event that the Trustee shall
have been notified at any time of any action to be taken or proposed to be taken
with respect to the Securities (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 any amendment or supplement to any indenture, resolution,
agreement or other instrument under or pursuant to which the Securities have
been issued) the Trustee shall promptly notify the Depositor and shall thereupon
take such action or refrain from taking any action, as appropriate, so as to
insure that such Securities are voted as closely as possible in the same manner
and the same general proportion, with respect to all issues, as are the shares
of such Securities held by owners other than the Trust."
15. If the Trust has elected to be taxed as a "regulated investment
company" as defined in the United States Internal Revenue Code of 1986, as
amended Section 3.12(a) of the Standard Terms and Conditions of Trust shall be
replaced in its entirety with the following:
"(a) The Replacement Securities shall be Zero Coupon Obligations or
Equity Securities as originally selected for deposit in the Trust or securities
which the Depositor determines to be similar in character as Securities
originally selected for deposit in the Trust, and any Replacement Securities
which are Zero Coupon Obligations must have the same maturity value as the
Failed Contract Security and, as close as is reasonably practical, the same
maturity date, which must be on or prior to the Mandatory Termination Date;"
16. The Standard Terms and Conditions of Trust shall be amended to
include the following section:
"Section 3.19. Regulated Investment Company Election. If the Prospectus
for a Trust states that such Trust intends to elect to be treated and to qualify
as a "regulated investment company" as defined in the United States Internal
Revenue Code of 1986, as amended, the Trustee is hereby directed to make such
elections and take all actions, including any appropriate election to be taxed
as a corporation, as shall be necessary to effect such qualification or to
provide funds to make any distribution for a taxable year in order to avoid
imposition of any income or excise tax on the Trust or on undistributed income
in the Trust. The Trustee shall make such reviews of each Trust portfolio as
shall be necessary to maintain qualification of a particular Trust as regulated
investment company and to avoid imposition of tax on a Trust or undistributed
income in a Trust, and the Depositor and Supervisor shall be authorized to rely
conclusively upon such reviews.
17. With respect to Closed-End Strategy: Xxxxx & Steers Master Equity
and Income Portfolio, Series 5, Closed-End Strategy: Xxxxx & Steers Master
Income Portfolio, Series 11 and Closed-End Strategy: Xxxxx & Steers Master
Municipal Income Portfolio - National Series 8 only, the first paragraph of
Section 4.01 is hereby replaced with the following:
"Section 4.01. Compensation. As compensation for providing supervisory
portfolio services under this Indenture, the Trust will accrue daily and pay to
the Supervisor at the end of each calendar quarter an aggregate annual fee in an
amount equal to 0.25% of the average daily Trust Evaluation (described in
Section 6.01) for Closed-End Strategy: Xxxxx & Steers Master Equity and Income
Portfolio, Series 5, Closed-End Strategy: Xxxxx & Steers Master Income
Portfolio, Series 11 and Closed-End Strategy: Xxxxx & Steers Master Municipal
Income Portfolio - National Series 8."
18. Sections 5.01(b) and (c) are replaced in their entirety by the
following:
"(b) During the initial offering period of a Trust (as determined by
the Depositor), the Evaluation for each Security shall be made in the following
manner: (i) with respect to Securities for which market quotations are readily
available, such Evaluation shall be made on the basis of the market value of
such Securities; and (ii) with respect to other Securities' such Evaluation
shall be made on the basis of the fair value of such Securities as determined in
good faith by the Trustee. If the Securities are listed on a national or foreign
securities exchange or traded on the Nasdaq Stock Market, Inc. and market
quotations of such Securities are readily available, the market value of such
Securities 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. In the case of Zero Coupon
Obligations, such Evaluation shall be made on the basis of current offer side
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
and, if offer side prices are not available for the Zero Coupon Obligations, on
the basis of offer side price for comparable securities, by determining the
valuation of the Zero Coupon Obligations on the offer side of the market by
appraisal or 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 Trustee deems such prices inappropriate as a basis
for valuation). For each Evaluation, the Trustee shall also confirm and furnish
to the Depositor the calculation of the Trust Evaluation to be computed pursuant
to Section 6.01.
(c) After the initial offering period of Units of a Trust (as
determined by the Depositor), Evaluation of the Securities shall be made in the
manner described in Section 5.01(b) on the basis of current bid side prices for
Zero Coupon Obligations and the bid side value of any relevant currency exchange
rate expressed in U.S. dollars."
19. The second sentence of Section 7.01(e)(2)(E) shall be replaced in
its entirety by "Such Prospectus shall also contain disclosure concerning the
Depositor's responsibilities described in (D) above."
20. The Trustee's annual compensation rate described in Section 7.04
shall be that amount set forth under "Trustee's fee and operating expenses" in
the "Fee Table" in the Prospectus.
21. Notwithstanding anything to the contrary in the Standard Terms and
Conditions of Trust, the Trustee shall waive or offset fees otherwise payable by
the Trust pursuant to Section 3.05 in an amount equal to any compensation
(including, but not limited to, fees paid pursuant to a plan adopted by the
issuer of a Security under Rule 12b-1 under the Investment Company Act of 1940)
received by the Depositor, the Trustee or any Affiliated Person of the Depositor
or Trustee from the issuer of a Security in connection with the Trust's
investment in such Security. The term "Affiliated Person" shall mean "affiliated
person" as that term is defined in section 2 of the Investment Company Act of
1940 and rules promulgated thereunder.
22. Notwithstanding anything to the contrary in the Standard Terms and
Conditions of Trust, if the Trustee sells, redeems or otherwise liquidates
Securities pursuant to Section 6.02 to satisfy Unit redemptions or pursuant to
Section 7.04 to pay Trust expenses, the Trustee shall do so, as nearly as
practicable, on a pro rata basis among all Securities held by the Trust.
23. Section 9.01 of the Standard Terms and Conditions of Trust shall be
replaced in its entirety with the following:
"Section 9.01. Amendments. (a) This Indenture may be amended from
time to time by the Depositor and Trustee or their respective successors,
without the consent of any of the Unitholders, (i) 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, (ii) to make such other
provision in regard to matters or questions arising hereunder as shall not
materially adversely affect the interests of the Unitholders or (iii) to make
such amendments as may be necessary (a) for the Trust to continue to qualify as
a regulated investment company for federal income tax purposes if the Trust has
elected to be taxed as such under the United States Internal Revenue Code of
1986, as amended, or (b) to prevent the Trust from being deemed an association
taxable as a corporation for federal income tax purposes if the Trust has not
elected to be taxed as a regulated investment company under the United States
Internal Revenue Code of 1986, as amended. This Indenture may not be amended,
however, without the consent of all Unitholders then outstanding, so as (1) to
permit, except in accordance with the terms and conditions hereof, the
acquisition hereunder of any Securities other than those specified in the
Schedules to the Trust Agreement or (2) to reduce the aforesaid percentage of
Units the holders of which are required to consent to certain of such
amendments. This Indenture may not be amended so as to reduce the interest in a
Trust represented by Units (whether evidenced by Certificates or held in
uncertificated form) without the consent of all affected Unitholders.
(b) Except for the amendments, changes or modifications as provided in
Section 9.01(a) hereof, neither the parties hereto nor their respective
successors shall consent to any other amendment, change or modification of this
Indenture without the giving of notice and the obtaining of the approval or
consent of Unitholders representing at least 66 2/3% of the Units then
outstanding of the affected Trust. Nothing contained in this Section 9.01(b)
shall permit, or be construed as permitting, a reduction of the aggregate
percentage of Units the holders of which are required to consent to any
amendment, change or modification of this Indenture without the consent of the
Unitholders of all of the Units then outstanding of the affected Trust and in no
event may any amendment be made which would (1) alter the rights to the
Unitholders as against each other, (2) provide the Trustee with the power to
engage in business or investment activities other than as specifically provided
in this Indenture, (3) adversely affect the tax status of the Trust for federal
income tax purposes or result in the Units being deemed to be sold or exchanged
for federal income tax purposes or (4) unless the Trust has elected to be taxed
as a regulated investment company for federal income tax purposes, result in a
variation of the investment of Unitholders in the Trust.
(c) Unless the Depositor directs that other notice shall be provided,
the Trustee shall include in the annual report provided pursuant to Section 3.06
notification of the substance of such amendment."
24. Notwithstanding anything to the contrary in the Standard Terms and
Conditions of Trust, no Unitholder may elect to have Units redeemed through an
In Kind Distribution within thirty (30) days of any Trust termination pursuant
to Section 9.02
25 Section 9.02. Termination. This Indenture and each Trust created
hereby shall terminate upon the maturity, redemption, sale or other disposition
as the case may be of the last Security held in such Trust hereunder unless
sooner terminated as hereinbefore specified, and may be terminated at any time
by the written consent of Unitholders representing at least 66 2/3% of the Units
of the Trust then outstanding; provided that in no event shall any Trust
continue beyond the Mandatory Termination Date. Upon the date of termination the
registration books of the Trustee shall be closed.
In the event of a termination, the Trustee shall proceed to liquidate
the Securities then held and make the payments and distributions provided for
hereinafter in this Section 9.02 based on such Unitholder's pro rata interest in
the balance of the Capital and Income Accounts after the deductions herein
provided. Written notice shall be given by the Trustee in connection with any
termination to each Unitholder at his address appearing on the registration
books of the Trustee and in connection with a Mandatory Termination Date such
notice shall be given no later than 45 days before the Mandatory Termination
Date. Included with such notice shall be a form to enable Unitholders owning
that number of Units referred to in the Prospectus to request an In Kind
Distribution (as described in Section 6.02) during the period ending 31 days
prior to date of the related Trust's termination. No Unitholder shall be
permitted to have Units redeemed through an In Kind Distribution within 30 days
of any Trust termination.
The Trustee will liquidate the Securities then held, if any, in such
daily amounts as the Depositor shall direct. The Depositor shall direct the
liquidation of the Securities in such manner as to effectuate orderly sales and
a minimal market impact. In the event the Depositor does not so direct, the
Securities shall be sold within a reasonable period and in such manner as the
Trustee, in its sole discretion, shall determine. The Trustee shall not be
liable for or responsible in any way for depreciation or loss incurred by reason
of any sale or sales made in accordance with the Depositor's direction or, in
the absence of such direction, in the exercise of the discretion granted by this
Section 9.02. The Trustee shall deduct from the proceeds of these sales and pay
any tax or governmental charges and any brokerage commissions in connection with
such sales. Amounts received by the Trustee representing the proceeds from the
sales of Securities shall be credited to the related Capital Account.
Not later than the fifth Business Day following receipt of all proceeds
of sale of the Securities, the Trustee shall:
(a) deduct from the Income Account of such Trust or, to the
extent that funds are not available in such Account of such Trust, from
the Capital Account of such Trust, and pay to itself individually an
amount equal to the sum of (i) its accrued compensation for its
ordinary recurring services, (ii) any compensation due it for its
extraordinary services in connection with such Trust, and (iii) any
costs, expenses or indemnities in connection with such Trust as
provided herein;
(b) deduct from the Income Account of such Trust or, to the
extent that funds are not available in such Account, from the Capital
Account of such Trust, and pay accrued and unpaid fees of the
Depositor, the Supervisor and counsel in connection with such Trust, if
any;
(c) deduct from the Income Account of such Trust or the
Capital Account of such Trust any amounts which may be required to be
deposited in the Reserve Account and any other amounts which may be
required to meet expenses incurred under this Indenture in connection
with such Trust;
(d) make final distributions from such Trust, against
surrender for cancellation of all of each Unitholder's Certificate or
Certificates, if issued, as follows:
(i) to each Unitholder, such Unitholder's pro rata
share of the cash balances of the Income and Capital Accounts;
and
(ii) on the conditions set forth in Section 3.04
hereof, to each Unitholder such Unitholder's pro rata share of
the balance of the Reserve Account; and
(e) within 60 days after the distribution to each Unitholder
as provided for in (d), furnish to each such Unitholder a final
distribution statement, setting forth the data and information in
substantially the form and manner provided for in Section 3.06 hereof.
The Trustee shall be under no liability with respect to moneys held by
it in the Income, Reserve and Capital Accounts of a Trust upon termination
except to hold the same in trust within the meaning of the Investment Company
Act of 1940, without interest until disposed of in accordance with the terms of
this Indenture.
IN WITNESS WHEREOF, the undersigned have caused this Trust Agreement to
be executed; all as of the day, month and year first above written.
XXX XXXXXX FUNDS INC.
By /s/ XXXX X. XXXXXXX
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Executive Director
XXX XXXXXX ASSET MANAGEMENT
By /s/ XXXX X. XXXXXXX
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Executive Director
XXXXX & STEERS CAPITAL MANAGEMENT, INC.
By /s/ XXXXXXXX X. XXXXXXX
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Senior Vice President
THE BANK OF NEW YORK
By /s/ XXXXXXX X'XXXXX
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Vice President
SCHEDULE A TO TRUST AGREEMENT
SECURITIES INITIALLY DEPOSITED
IN
XXX XXXXXX UNIT TRUSTS, SERIES 663
[Incorporated herein by this reference and made a part
hereof is the "Portfolio" schedule as set forth
in the Prospectus.]
