THE FIRST TRUST GNMA, Series 85
TRUST AGREEMENT
Dated: October 24, 2002
This Trust Agreement among First Trust Portfolios, L.P., as
Depositor, JPMorgan Chase Bank, as Trustee, Securities Evaluation
Service, Inc., as Evaluator, and First Trust Advisors L.P., as
Portfolio Supervisor sets forth certain provisions in full and
incorporates other provisions by reference to the document
entitled "Standard Terms and Conditions of Trust for The First
Trust GNMA, Series 62 and subsequent Series, effective
December 19, 1991" (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. Effective June 27, 2002, Nike
Securities L.P., a party to the Standard Terms and Conditions of
Trust, changed its name to First Trust Portfolios, L.P. 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, the Trustee, the
Evaluator and the Portfolio 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
FOR THE FIRST TRUST GNMA, SERIES 85 ("SERIES 85")
The following special terms and conditions are hereby agreed
to:
(A) The Securities defined in Section 1.01(5) listed in
Schedule A hereto have been deposited in trust under this Trust
Agreement and shall include any securities deposited in the Fund
pursuant to Section 2.01 hereof.
(B) The number of Units in the Trust referred to in
Section 2.03 is set forth under "Summary of Essential
Information - Initial Number of Units" in the Prospectus.
(C) For the Trust the First General Record Date shall be
set forth under "Summary of Essential Information" in the
Prospectus.
(D) For the Trust the First Settlement Date shall be set
forth under "Summary of Essential Information - First Settlement
Date" in the Prospectus.
(E) For the Trust the Record Dates and the Distribution
Dates shall be set forth under "Summary of Essential Information"
in the Prospectus.
(F) First Trust Advisors L.P.'s compensation as referred to
in Section 3.14 of the Standard Terms and Conditions of Trust
shall be an annual fee in the amount of $0.48 per 100 Units.
(G) The first sentence of Section 4.03. shall be amended to
read as follows:
"As compensation for providing evaluation services under
this Indenture, the Evaluator shall receive, in arrears, against
a statement or statements therefor submitted to the Trustee
monthly or annually an aggregate annual fee in the amount of
$0.30 per 100 Units, calculated based on the largest number of
Units outstanding during the calendar year except during the
initial offering period as determined in Section 4.01 of this
Indenture, in which case the fee is calculated based on the
largest number of Units outstanding during the period for which
the compensation is paid (such annual fee to be pro rated for any
calendar year in which the Evaluator provides services during
less than the whole of such year), plus for each issue of
underlying Securities in excess of 50 issues (treating separate
maturities as separate issues), the Evaluator shall receive an
additional $0.25 per evaluation per issue. 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, 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 of Shelter" or similar index, if such index
should no longer be published. The consent or concurrence of any
Unit holder hereunder shall not be required for any such
adjustment or increase. Such compensation shall be paid by the
Trustee, upon receipt of invoice therefor from the Evaluator,
upon which, as to the cost incurred by the Evaluator of providing
services hereunder the Trustee may rely, and shall be charged
against the Interest and/or Principal Accounts, in accordance
with Section 3.05."
(H) The first two sentences of Section 6.04 shall be
deleted and the following shall be substituted therefor:
"For services performed under this Indenture the Trustee
shall be an annual fee in the amount of $0.97 per 100 Units,
accrued daily, calculated based on the largest number of Units
outstanding during the calendar year except during the initial
offering period as determined in Section 4.01 of this Indenture,
in which case the fee is calculated based on the largest number
of Units outstanding during the period for which the compensation
is paid (such annual fee to be prorated for any calendar year in
which the Trustee provides services during less than the whole of
such year). However, in no event, shall the Trustee receive
compensation in any one year from any Trust of less than $2,000
for such annual compensation."
PART III
(A) Any reference in the Standard Terms and Conditions of
Trust to "per 1,000 Units" shall be amended to read "per 100
Units," and any reference to "$1 per Unit" shall be amended to
read "$10 per Unit."
(B) Section 1.01(1) shall be amended to read as follows:
"(1) "Depositor" shall mean First Trust
Portfolios, L.P. and its successors in interest, or any successor
depositor appointed as hereinafter provided."
(C) Section 1.01(2) of the Standard Terms and Conditions of
Trust shall be amended to read as follows:
"(2) "Trustee" shall mean the JPMorgan Chase Bank, or
any successor trustee as hereinafter provided."
All references to United States Trust Company of New York in
the Standard Terms and Conditions of Trust shall be amended to
refer to JPMorgan Chase Bank.
(D) Section 1.01(4) of the Standard Terms and Conditions of
Trust shall be amended to read as follows:
"(4) "Portfolio Supervisor" shall mean First
Trust Advisors L.P. and its successors in interest, or
any successor portfolio supervisor appointed as
hereinafter provided."
(E) The first and second paragraphs of Section 2.01 are
hereby restated in their entirety as follows:
Section 2.01. Deposit of Securities. (a) The Depositor, on
the date of the Trust Agreement, has deposited with the Trustee
in trust the Securities listed in Schedule A to the Trust
Agreement in bearer form or duly endorsed in blank or accompanied
by all necessary instruments of assignment and transfer in proper
form or Contract Obligations relating to such Securities to be
held, managed and applied by the Trustee as herein provided. The
Depositor shall deliver the Securities listed on said Schedule A
which were not actually delivered concurrently with the execution
and delivery to the Trust Agreement and which were represented by
Contract Obligations to the Trustee within 10 calendar days after
said execution and delivery (the "Delivery Period"). If a
contract to buy such Securities between the Depositor and seller
is terminated by the seller thereof for any reason beyond the
control of the Depositor or if for any other reason the
Securities are not delivered to the Trust by the end of the
Delivery Period, the Trustee shall immediately draw on the letter
of credit, if any, apply the monies in accordance with Section
3.03(b), and the Depositor shall forthwith take the remedial
action specified in Section 3.13. If the Depositor does not take
the action specified in Section 3.13 within 10 calendar days of
the end of the Delivery Period, the Trustee shall forthwith take
the action specified in Section 3.13.
(b)(1)From time to time following the Initial Date of
Deposit, the Depositor is hereby authorized, in its
discretion, to assign, convey to and deposit with the
Trustee (i) additional Securities, duly endorsed in blank or
accompanied by all necessary instruments of assignment and
transfer in proper form, (ii) Contract Obligations relating
to such additional Securities, accompanied by cash and/or
letter(s) of credit as specified in paragraph (c) of this
Section 2.01, or (iii) cash (or a letter of credit in lieu
of cash) with instructions to purchase additional
Securities, in an amount equal to the portion of the Unit
Value of the Units created by such deposit attributable to
the Securities to be purchased pursuant to such
instructions. Except as provided in the following
subparagraphs (2), (3) and (4) the Depositor, in each case,
shall ensure that each deposit of additional Securities
pursuant to this Section shall maintain, as nearly as
practicable, the Percentage Ratio. Each such deposit of
additional Securities shall be made pursuant to a Notice of
Deposit of Additional Securities in the form attached hereto
as Schedule B delivered by the Depositor to the Trustee.
Instructions to purchase additional Securities shall be in
writing, and shall specify the name of the Security, CUSIP
number, if any, aggregate amount, price or price range and
date to be purchased. When requested by the Trustee, the
Depositor shall act as broker to execute purchases in
accordance with such instructions; the Depositor shall be
entitled to compensation therefor in accordance with
applicable law and regulations. The Trustee shall have no
liability for any loss or depreciation resulting from any
purchase made pursuant to the Depositor's instructions or
made by the Depositor as broker.
(2) Additional Securities (or Contract Obligations
therefor) may, at the Depositor's discretion, be 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 Percentage Ratio.
(3) If at the time of a deposit of additional
Securities, Securities of an issue deposited on the Initial
Date of Deposit (or of an issue of Replacement Securities
acquired to replace an issue deposited on the Initial Date
of Deposit) are unavailable, cannot be purchased at
reasonable prices or their purchase is prohibited or
restricted by applicable law, regulation or policies, the
Depositor may (i) deposit, or instruct the Trustee to
purchase, in lieu thereof, another issue of Securities or
Replacement Securities or (ii) deposit cash or a letter of
credit in an amount equal to the valuation of the issue of
Securities whose acquisition is not feasible with
instructions to acquire such Securities of such issue when
they become available.
(4) Any contrary authorization in the preceding
subparagraphs (1) through (3) notwithstanding, deposits of
additional Securities made after the 90-day period
immediately following the Initial Date of Deposit (except
for deposits made to replace Failed Contract Obligations if
such deposits occur with 20 days from the date of a failure
occurring within such initial 90-day period) shall maintain
exactly the Percentage Ratio existing immediately prior to
such deposit.
(5) In connection with and at the time of any deposit
of additional Securities pursuant to this Section 2.01(b),
the Depositor shall exactly replicate Cash (as defined
below) received or receivable by the Trust as of the date of
such deposit. For purposes of this paragraph, "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 date of the deposit (other than amounts to be
distributed solely to persons other than holders of 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 date of the deposit or receivable by the
Trust in respect of a record date for a payment on a
Security which has occurred or will occur before the Trust
will be the holder of record of a Security, reduced by the
amount of any cash or other property received or receivable
on any Security allocable (in accordance with the Trustee's
calculations of distributions from the Income Account
pursuant to Section 3.05) to a distribution made or to be
made in respect of a Record Date occurring prior to the
deposit. Such replication will be made on the basis of a
fraction, the numerator of which is the number of Units
created by the deposit and the denominator of which is the
number of Units which are outstanding immediately prior to
the deposit."
(F) Section 2.01 is hereby amended to include the following
subsection:
"(c) In connection with the deposits described in
Section 2.01 (a) and (b), the Depositor has, in the case of
Section 2.01(a) deposits, and, prior to the Trustee
accepting a Section 2.01(b) deposit, will, deposit cash
and/or letter(s) of credit (meeting the conditions set forth
in Section 2.07) in an amount sufficient to purchase the
Contract Obligations (the "Purchase Amount") relating to
Securities which are not actually delivered to the Trustee
at the time of such deposit, the terms of which
unconditionally allow the Trustee to draw on the full amount
of the available letter of credit. The Trustee may allow
the Depositor to substitute for any letter(s) of credit
deposited with the Trustee in connection with the deposits
described in Section 2.01(a) and (b) cash in an amount
sufficient to satisfy the obligations to which the letter(s)
of credit relates. Any substituted letter(s) of credit
shall be released by the Trustee. The Trustee may deposit
such cash or cash drawn on the letter of credit in a non-
interest bearing account for the Trust."
(G) The third paragraph of Section 2.01 is hereby amended
as subsection (d).
(H) The following Section 2.07 shall be added immediately
after Section 2.06.
"Section 2.07. Letter of Credit. The Trustee shall not
accept any letter of credit under this Indenture unless the
stated expiration date of the letter of credit is at least thirty
days from the respective date of deposit of Contract Obligations
pursuant to Section 2.01(a) or 2.01(b). The Trustee is
authorized to downpost the amount available under the letter of
credit, if any, deposited by the Depositor by an amount equal to
the purchase price of Contract Obligations representing
Securities delivered to the Trust on the date of delivery of such
Securities."
(I) Section 3.01 of the Standard Terms and Conditions of
Trust shall be replaced in its entirety with the following:
"Section 3.01. Initial Cost. Subject to reimbursement as
hereinafter provided, the cost of organizing the Trust and the
sale of the Trust Units shall be borne by the Depositor,
provided, however, that the liability on the part of the
Depositor 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 2.01. At
the earlier of six months after the Initial Date of Deposit or
the conclusion of the primary offering period (as certified by
the Depositor to the Trustee), 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 Depositor the Depositor's reimbursable expenses of
organizing the Trust in an amount certified to the Trustee by the
Depositor. In no event shall the amount paid by the Trustee to
the Depositor for the Depositor's reimbursable expenses of
organizing the Trust exceed the estimated per Unit amount of
organization costs set forth in the Prospectus for the Trust
multiplied by the number of Units of the Trust outstanding at the
earlier of six months after the Initial Date of Deposit or the
conclusion of the primary offering period; nor shall the
Depositor be entitled to or request reimbursement for expenses of
organizing the Trust incurred after the earlier of six months
after the Initial Date of Deposit or 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 Depositor, sell Securities identified
by the Depositor, or distribute to the Depositor Securities
having a value, as determined under Section 4.01 as of the date
of distribution, sufficient for such reimbursement. Securities
sold or distributed to the Depositor to reimburse the Depositor
pursuant to this Section shall be sold or distributed by the
Trustee, to the extent practicable, in the percentage ratio then
existing. The reimbursement provided for in this section shall
be for the account of Unit holders of record at the earlier of
six months after the Initial Date of Deposit or the conclusion of
the primary offering period. Any assets deposited with the
Trustee in respect of the expenses reimbursable under this
Section 3.01 shall be held and administered as assets of the
Trust for all purposes hereunder. The Depositor shall deliver to
the trustee any cash identified in the Statement of Net Assets of
the Trust included in the Prospectus not late than the expiration
of the Delivery Period and the Depositor's obligation to make
such delivery shall be secured by the letter of credit deposited
pursuant to Section 2.01. Any cash which the Depositor has
identified as to be used for reimbursement of expenses pursuant
to this Section 3.01 shall be held by the Trustee, without
interest, and reserved for such purpose and, accordingly, prior
to the earlier of six months after the Initial Date of Deposit or
the conclusion of the primary offering period, shall not be
subject to distribution or, unless the Depositor otherwise
directs, used for payment of redemptions in excess of the per
Unit amount payable pursuant to the next sentence. If a Unit
holder redeems Units prior to the earlier of six months after the
Initial Date of Deposit or the conclusion of the primary offering
period, the Trustee shall pay the Unit holder, in addition to the
Redemption Value of the tendered Units, unless otherwise directed
by the Depositor, an amount equal to the estimated per Unit cost
of organizing the Trust set forth in the Prospectus, or such
lower revision thereof most recently communicated to the Trustee
by the Depositor pursuant to Section 5.01, multiplied by the
number of Units tendered for redemption; to the extent the cash
on hand in the Trust is insufficient for such payments, the
Trustee shall have the power to sell Securities in accordance
with Section 5.02. As used herein, the Depositor's reimbursable
expenses of organizing the Trust 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."
(J) Section 3.05(d) of Article III of the Standard Terms
and Conditions of Trust is hereby replaced with the following:
"Section 3.05(d) deduct from the Interest
Account or, to the extent funds are not available in
such Account, from the Principal Account and pay to
First Trust Advisors L.P. the amount that it is
entitled to receive pursuant to Section 3.14."
(K) Section 3.06(B)(3) is amended in its entirety to read
as follows:
"(3) the amount paid for purchases of New
Securities, Replacement Securities or Reinvestment
Securities pursuant to Section 3.13 and for redemptions
pursuant to Section 5.02."
(L). Section 3.07 of the Standard Terms and Conditions of
Trust is amended to delete the word "or" at the end of Section
3.07(g) and add the following after Section 3.07(h):
";(i) that such sale is required due to Units tendered for
redemption; or
(j) that the sale of Securities is necessary or advisable
in order to maintain the qualification of the Trust as a
"regulated investment company" in the case of a Trust which has
elected to qualify as such."
(M) The title of Section 3.13 of Article III of the
Standard Terms and Conditions of Trust is hereby amended in its
entirety to read as follows:
"Section 3.13. Limited Replacement of Special
Securities; Replacement Securities; Reinvestment of
Principal."
(N) Section 3.13 of Article III of the Standard Terms and
Conditions of Trust is hereby amended by inserting the following
paragraphs immediately preceding the last paragraph of such
Section:
"If the Prospectus related to the Trust specifies
the reinvestment of principal, from the Initial Date of
Deposit until such time as the Depositor notifies the
Trustee in writing that such action is impractical (the
"Reinvestment Period"), the Trustee shall, as directed
by the Depositor, enter into contracts (which the
Depositor shall have approved as satisfactory in form
and substance) to purchase obligations to be held as
Securities hereunder as part of the Trust Fund (the
"Reinvestment Securities") and shall pay for the same
with the moneys held in the Principal Account
representing the payment or prepayment of principal on
the underlying Securities to the extent that such
proceeds are not required for the purpose of redemption
of Units or other charges to the Principal Account then
pending. In giving such direction, the Depositor shall
determine that the Reinvestment Securities to be
acquired pursuant to such contract are taxable,
mortgage-backed securities of the modified pass-through
type, fully guaranteed as to principal and interest by
the Government National Mortgage Association and are
substantially similar as to maturity and interest
rates as the Securities upon which the principal used
to purchase such Reinvestment Securities was received.
The Trustee may purchase the Reinvestment
Securities for deposit in the Trust Fund directly from
market makers in such Securities or may retain the
Depositor or other brokers to purchase the Reinvestment
Securities and pay them usual and customary brokerage
commissions for such transactions. Funds remaining in
the Principal Account subsequent to a purchase of
Reinvestment Securities will remain in such Account
until such time as they can be invested into additional
Reinvestment Securities. During the Reinvestment
Period, amounts in the Principal Account which, the
Depositor determines and so notifies the Trustee in
writing or via facsimile, are (a) unable to be invested
into Reinvestment Securities or (b) are required to be
distributed for "regulated investment company" tax
purposes shall be distributed on the next semi-annual
distribution date, June 30 and December 31 of each
year, to Unit holders of record on June 1 and December
1, respectively.
At such time as the Depositor shall determine that
the reinvestment of cash from the Principal Account
into Reinvestment Securities shall no longer be
practical, the Depositor shall notify the Trustee, in
writing, that the Reinvestment Period is terminated.
Upon termination of the Reinvestment Period,
unreinvested amounts remaining in the Principal Account
and amounts subsequently credited to the Principal
Account shall be distributed in accordance with Section
3.05."
(O) The last paragraph of Section 3.13 of the Standard
Terms and Conditions of Trust is replaced as follows:
"Whenever a New Security is acquired by the
Depositor pursuant to the provisions of this Section
3.13, the Trustee shall, within five days thereafter,
mail to all Holders of Units of the respective Trust
Fund notice of such acquisition, including an
identification of the failed Special Security and the
New Security acquired.
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 direction of the
Depositor provided in this Section 3.13, and in the
absence of such direction the Trustee shall have no
duty to make any purchase. The Depositors shall not be
liable for errors of judgment in respect of this
Section 3.13; provided however, that this provision
shall not protect the Depositor 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."
(P) Section 3.14 of the Standard Terms and Conditions of
Trust shall be replaced with the following:
"As compensation for providing portfolio supervisory
services in its capacity as Portfolio Supervisor, and for
providing bookkeeping and other administrative services of a
character described in 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, First Trust Advisors L.P.
shall receive, in arrears, against a statement or statements
therefor submitted to the Trustee monthly or annually an
aggregate annual fee in the per Unit amount set forth in
Part II of the Trust Agreement for the Trust, calculated
based on the largest number of Units outstanding during the
calendar year, except during the initial offering period as
determined in Section 4.01 of this Indenture, in which case
the fee is calculated based on the largest number of Units
outstanding during the period for which the compensation is
paid (such annual fee to be pro rated for any calendar year
in which First Trust Advisors L.P. provides services
described herein during less than the whole of such year).
Such fee may exceed the actual cost of providing such
services for the Trust, but at no time will the total amount
received for such services rendered to unit investment
trusts of which the Depositor is the sponsor in any calendar
year exceed the aggregate cost to First Trust Advisors L.P.
of supplying such services in such year."
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,
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 of Shelter" or similar
index, if such index should no longer be published. The consent
or concurrence of any Unit holder hereunder shall not be required
for any such adjustment or increase. Such compensation shall be
paid by the Trustee, upon receipt of an invoice therefor from
First Trust Advisors L.P., which shall constitute the
representation by First Trust Advisors L.P. that the bookkeeping
and administrative services for which compensation is claimed are
properly compensable hereunder and that the aggregate cost
incurred by First Trust Advisors L.P. of providing portfolio
supervisory, and bookkeeping and administrative services
hereunder was not less than the compensation claimed, upon which
representation the Trustee may conclusively rely. Such
compensation shall be charged against the Interest and Principal
Accounts in accordance with Section 3.05.
If the cash balance in the Interest and Principal Accounts
shall be insufficient to provide for amounts payable pursuant to
this Section 3.14, the Trustee shall have the power to sell (i)
Securities from the current list of Securities designated to be
sold pursuant to Section 5.02 hereof, or (ii) 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 3.14.
Any moneys payable to First Trust Advisors L.P. pursuant to
this Section 3.14 shall be secured by a lien on the Trust prior
to the interest of Unit holders, but no such lien shall be prior
to any lien in favor of the Trustee under the provisions of
Section 6.04 herein."
Except as the context otherwise requires, First Trust
Advisors L.P. shall be subject to the provisions of Section 4.05
herein in the same manner as it would if it were the Evaluator.
(Q) All provisions regarding the Distribution Date included
in Section 3.05 of Article III of the Standard Terms and
Conditions of Trust are hereby amended to change the Distribution
Date from the first day of the month following the Record Date to
the last day of the month in which the Record Date occurs.
(R) Article III of the Standard Terms and Conditions of
Trust is hereby amended by inserting the following paragraph
which shall be entitled Section 3.16:
"Section 3.16. Deferred Sales Charge. If the
prospectus related to the Trust specifies a deferred sales
charge, the Trustee shall, on the dates specified in and as
permitted by such Prospectus (the "Deferred Sales Charge
Payment Dates"), withdraw from the Principal Account, an
amount per Unit specified in such Prospectus and credit such
amount to a special non-Trust account designated by the
Depositor out of which the deferred sales charge will be
distributed to or on the order of the Depositor on such
Deferred Sales Charge Payment Dates (the "Deferred Sales
Charge Account"). If the balance in the Principal Account
is insufficient to make such withdrawal, the Trustee shall,
as directed by the Depositor, advance funds in an amount
required to fund the proposed withdrawal and be entitled to
reimbursement of such advance upon the deposit of additional
monies in the Principal Account, and/or sell Securities and
credit the proceeds thereof to the Deferred Sales Charge
Account, provided, however, that the aggregate amount
advanced by the Trustee at any time for payment of the
deferred sales charge shall not exceed $15,000. Such
direction shall, if the Trustee is directed to sell a
Security, identify the Security to be sold and include
instructions as to the execution of such sale. In the
absence of such direction by the Depositor, the Trustee
shall sell Securities sufficient to pay the deferred sales
charge (and any unreimbursed advance then outstanding) in
full, and shall select Securities to be sold in such manner
as will maintain (to the extent practicable) the relative
proportion of number of shares of each Security then held.
The proceeds of such sales, less any amounts paid to the
Trustee in reimbursement of its advances, shall be credited
to the Deferred Sales Charge Account. If a Unit holder
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 Unit holder an amount equal
to the unpaid portion of the deferred sales charge and
distribute such amount to the Deferred Sales Charge Account.
If the Trust is terminated for reasons other than that set
forth in Section 6.01(g), the Trustee shall, if so provided
in the related Prospectus, on the termination of the Trust,
withhold from the proceeds payable to Unit holders an amount
equal to the unpaid portion of the deferred sales charge and
distribute such amount to the Deferred Sales Charge Account.
If the Trust is terminated pursuant to Section 6.01(g)(ii),
the Trustee shall not withhold from the proceeds payable to
Unit holders any amounts of unpaid deferred sales charges.
If pursuant to Section 5.02 hereof, the Depositor shall
purchase a Unit tendered for redemption prior to the payment
in full of the deferred sales charge due on the tendered
Unit, the Depositor shall pay to the Unit holder the amount
specified under Section 5.02 less the unpaid portion of the
deferred sales charge. All advances made by the Trustee
pursuant to this Section shall be secured by a lien on the
Trust prior to the interest of the Unit holders."
(S) Article III of the Standard Terms and Conditions of
Trust is hereby amended by adding the following new Section 3.17:
"Section 3.17. Creation and Development Fee. If the
Prospectus related to the Trust specifies a creation and
development fee, the Trustee shall, at the conclusion of the
primary offering period for a Trust, as certified by the
Depositor to the Trustee withdraw from the Capital Account, an
amount equal to the entire creation and development fee 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 payment provided for in this section shall be for
the account of Unit holders of record at the conclusion of the
primary offering period and shall have no effect on the net asset
value of Trust Units prior to such date. If the balance in the
Capital Account is insufficient to make such withdrawal, the
Trustee shall, as directed by the Depositor, advance funds in an
amount required to fund the proposed withdrawal and be entitled
to reimbursement of such advance upon the deposit of additional
monies in the Capital Account, and/or sell Securities and credit
the proceeds thereof to the Creation and Development Account,
provided, however, that the aggregate amount advanced by the
Trustee at any time for payment of the creation and development
fee shall not exceed $15,000. Such direction shall, if the
Trustee is directed to sell a Security, identify the Security to
be sold and include instructions as to the execution of such
sale. In the absence of such direction by the Depositor, the
Trustee shall sell Securities sufficient to pay the creation and
development fee (and any unreimbursed advance then outstanding)
in full, and shall select Securities to be sold in such manner as
will maintain (to the extent practicable) the relative proportion
of number of shares of each Security then held. The proceeds of
such sales, less any amounts paid to the Trustee in reimbursement
of its advances, shall be credited to the Creation and
Development Account. If the Trust is terminated pursuant to
Section 6.01(g), the Depositor agrees to reimburse Unitholders
for any amounts of the Creation and Development Fee collected by
the Depositor to which it is not entitled. All advances made by
the Trustee pursuant to this Section shall be secured by a lien
on the Trust prior to the interest of Unit holders. The
Depositor agrees to reimburse the Trust and any Unit holder any
amount of Creation and Development Fee it receives which exceeds
the amount which the Depositor may receive under applicable laws,
regulations and rules."
(T) Notwithstanding anything to the contrary in Sections
3.16 and 4.05 of the Standard Terms and Conditions of Trust, so
long as First Trust Portfolios, L.P. is acting as Depositor, the
Trustee shall have no power to remove the Portfolio Supervisor.
(U) Section 5.01 of the Standard Terms and Conditions of
Trust shall be amended as follows:
(i) The fourth sentence of the first paragraph of
Section 5.01 shall be amended by deleting the phrase "and
(iii)" and adding the following, "(iii) amounts representing
unpaid accrued organization costs, and (iv)"; and
(ii) The following text shall immediately precede
the last sentence of the first paragraph of Section 5.01:
"The resulting figure is herein called a "Trust
Fund Evaluation." Prior to the payment to the Depositor of
its reimbursable organization costs to be made at the
earlier of six months after the Initial Date of Deposit or
the conclusion of the primary offering period in accordance
with Section 3.01, for purposes of determining the Trust
Fund Evaluation under this Section 5.01, the Trustee shall
rely upon the amounts representing unpaid accrued
organization costs in the estimated amount per Unit set
forth in the Prospectus until such time as the Depositor
notifies the Trust in writing of a revised estimated amount
per Unit representing unpaid accrued organization costs.
Upon receipt of such notice, the Trustee shall use this
revised estimated amount per Unit representing unpaid
accrued organization costs in determining the Trust Fund
Evaluation but such revision of the estimated expenses shall
not effect calculations made prior thereto and no adjustment
shall be made in respect thereof."
(V) The first sentence of the first paragraph of Section
5.02 of the Standard Terms and Conditions of Trust shall be
replaced with the following:
"Any Unit evidenced by a Certificate tendered for redemption
by a Certificateholder or his duly authorized attorney or any
Unit held in uncertificated form tendered by a Holder of Units or
his duly authorized attorney by means of an appropriate request
for redemption in a form approved by the Trustee to the Trustee
at its unit investment trust office in the City of New York,
shall be paid by the Trustee on the third business day following
the day on which tender for redemption is made in proper form
(being herein called the "Redemption Date").
(W) The third paragraph of Section 6.02 of the Standard
Terms and Conditions of Trust shall be deleted in its entirety
and replaced with the following:
"The Trustee shall pay, or reimburse to the Depositor, the
expenses related to the updating of the Trust's registration
statement, to the extent of legal fees, typesetting fees,
electronic filing expenses and regulatory filing fees. Such
expenses shall be paid from the Interest Account, or to the
extent funds are not available in such Account, from the
Principal Account, against an invoice or invoices therefor
presented to the Trustee by the Depositor. By presenting such
invoice or invoices, the Depositor shall be deemed to certify,
upon which certification the Trustee is authorized conclusively
to rely, that the amounts claimed therein are properly payable
pursuant to this paragraph. The Depositor shall provide the
Trustee, from time to time as requested, an estimate of the
amount of such expenses, which the Trustee shall use for the
purpose of estimating the accrual of Trust expenses. The amount
paid by the Trust pursuant to this paragraph in each year shall
be separately identified in the annual statement provided to Unit
holders. The Depositor shall assure that the Prospectus for the
Trust contains such disclosure as shall be necessary to permit
payment by the Trust of the expenses contemplated by this
paragraph under applicable laws and regulations.
The provisions of this paragraph shall not limit the
authority of the Trustee to pay, or reimburse to the Depositor or
others, such other or additional expenses as may be determined to
be payable from the Trust as provided in Section 6.02 of the
Standard Terms and Conditions of Trust."
(X) The third sentence of paragraph (a) of Section 6.05 of
the Standard Terms and Conditions of Trust shall be replaced in
its entirety by the following:
"The Depositor may remove the Trustee at any time with or
without cause and appoint a successor Trustee by written
instrument or instruments delivered not less than sixty days
prior to the effective date of such removal and appointment to
the Trustee so removed and to the successor Trustee."
(Y) The third sentence of the second paragraph of Section
8.02 shall be replaced with the following:
"Commencing no earlier than nine business days prior to the
termination of the Trust, the Trustee will liquidate the
Securities during such period and in such daily amounts as the
Depositor shall direct, and shall:"
IN WITNESS WHEREOF, First Trust Portfolios, L.P., JPMorgan
Chase Bank, Securities Evaluation Service, Inc. and First Trust
Advisors L.P. have each caused this Trust Agreement to be
executed and the respective corporate seal to be hereto affixed
and attested (if applicable) by authorized officers; all as of
the day, month and year first above written.
FIRST TRUST PORTFOLIOS, L.P.,
Depositor
By Xxxxxx X. Xxxxxxxxxx
Senior Vice President
JPMorgan Chase Bank, Trustee
By Xxxx X. Xxxxxx
Vice President
(SEAL)
Attest:
Xxxxxxx Xxxxxxxxx
Assistant Vice President
SECURITIES EVALUATION SERVICE,
INC., Evaluator
By Xxxxx Xxxxxxx
President
(SEAL)
Attest:
Xxxxx X. Xxxxxx
Vice President and
Assistant Secretary
FIRST TRUST ADVISORS L.P.,
Portfolio Supervisor
By Xxxxxx X. Xxxxxxxxxx
Senior Vice President
-3-
SCHEDULE A TO TRUST AGREEMENT
SECURITIES DEPOSITED
IN
THE FIRST TRUST GNMA, SERIES 85
(Note:Incorporated herein and made a part hereof is the
"Portfolio" for Series 85 as set forth in the
Prospectus and any other securities that may be
deposited subsequent to the Initial Date of Deposit
pursuant to this Trust Agreement.)
SCHEDULE B TO TRUST AGREEMENT
THE FIRST TRUST GNMA, SERIES 85
NOTICE OF DEPOSIT OF ADDITIONAL SECURITIES
Dated: October 24, 2002
Pursuant to Section 2.01 of the Trust Agreement dated
October 24, 2002 among First Trust Portfolios, L.P., as
Depositor, JPMorgan Chase Bank, as Trustee, Securities Evaluation
Service, Inc., as Evaluator, and First Trust Advisors L.P., as
Portfolio Supervisor (the "Trust Agreement"), the Depositor
hereby certifies to the Trustee as follows:
(a) The additional securities listed in Appendix A
hereto are hereby deposited in trust and have a
substantially equal percentage relationship between the
principal amounts of the Securities of specified interest
rates and years of maturity as specified in the Trust's
prospectus dated October 24, 2002.
(b) In accordance with Section 2.03 of the Trust
Agreement, an additional ______________ Units should be
issued as a result of the deposit referred to in (a) above.
Taking into account the above Units, the total number of
Units in the Trust issued as of the date of this notice
is_____________
(c) Taking into account that Units issued in (b)
above, the fractional undivided interest in and ownership of
the Trust represented by each Unit is _________
FIRST TRUST PORTFOLIOS, L.P.
By
