EXHIBIT 1.1
XXX XXXXXX FOCUS PORTFOLIOS
SERIES 228
TRUST AGREEMENT
Dated: May 19, 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 each 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 affected 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 October 10, 2000 and continuing through February
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) 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 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.
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 228
(Note: Incorporated herein and made a part hereof is each "Portfolio" as set
forth in the Prospectus.)
