Exhibit 1.1
CLAYMORE SECURITIES DEFINED PORTFOLIOS,
SERIES 166
CLOSED-END CONVERTIBLE AND INCOME PORTFOLIO, SERIES 2
PREFERRED TAX-ADVANTAGED DIVIDEND PORTFOLIO, SERIES 1
REFERENCE TRUST AGREEMENT
This Reference Trust Agreement dated as of December 18, 2003, 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 equity securities listed in the Schedule hereto have been
deposited in the Trust(s) 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. 333-111238) 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) 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 December 18, 2003, in the
event that the aggregate value of Securities in the Trust has increased
since the evaluation on December 17, 2003, the Trustee shall issue such
number of additional Units to the Unitholder of outstanding Units as of the
close of business on December 17, 2003, that the price per Unit computed as
of the Evaluation Time on December 18, 2003, plus the maximum applicable
sales charge shall equal approximately $10 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
December 17, 2003, 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 December 18, 2003, plus the maximum applicable sales charge shall equal
approximately $10 per Unit (based on the number of Units outstanding as of
said Evaluation Time, reflecting cancellation of Units pursuant to this
sentence)."
(8) The number of Units of the Trust(s) referred to in Section 2.03
shall be equal to the "Number of Units" in the Statement(s) of Financial
Condition in the Prospectus.
(9) 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 on the bid side of the market 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 organization 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."
(10) 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(s)
during a Trust's initial offering period at the time of each such deposit.
(11) 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.
(12) The phrases "supervisory services," "supervisory portfolio
services" and "portfolio supervisory services" in Sections 3.18 are hereby
replaced with the phrase "portfolio supervisory services and bookkeeping
and administrative
expenses."
(13) 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 a 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.
(14) 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 a 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.
(15) Article III is hereby amended by adding the following section:
SECTION 3.24. LICENSE FEES. If so provided in the Prospectus, the
Depositor may enter into a Licensing Agreement (the "AGREEMENT") with a
licensor (the "LICENSOR") described in the Prospectus in which the
Trust(s), as consideration for the licenses granted by the Licensor for the
right to use its trademarks and trade names, intellectual property rights
or for the use of databases and research owned by the Licensor, will pay a
fee set forth in the Agreement to the applicable Licensor or the Depositor
to reimburse the Depositor for payment of the expenses.
If the Agreement provides for an annual license fee computed in whole
or part by reference to the average daily net asset value of the Trust
assets, for purpose of calculating the accrual of estimated expenses such
annual fee shall accrue at a daily rate and the Trustee is authorized to
compute an estimated license fee payment (i) until the Depositor has
informed the Trustee that there will be no further deposits of additional
Securities, by reference to an estimate of the average daily net asset
value of the Trust assets which the Depositor shall provide the Trustee,
(ii) thereafter and during the calendar quarter in which the last business
day of the period described in clause (i) occurs, by reference to the net
asset value of the Trust assets as of such last business day, and (iii)
during each subsequent calendar quarter, by reference to the net asset
value of the Trust assets as of the last business day of the preceding
calendar quarter. The Trustee shall adjust the net asset value (Trust Fund
Evaluation) as of the dates specified in the preceding sentence to account
for any variation between accrual of estimated license fee and the license
fee payable pursuant to the Agreement, but such adjustment shall not affect
calculations made prior thereto and no adjustment shall be made in respect
thereof.
(16) Section 2.05 (b) is replaced in its entirety with the following:
(b) Additional Securities deposited during the 90 days following the
initial deposit made pursuant to Section 2.01 hereof shall maintain as
closely as practicable the Original Proportionate Relationship, except as
provided in this Section 2.05(b). Additional Securities may 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 Original Proportionate Relationship. Instructions to
purchase Additional Securities under this Section shall be in writing and
shall direct the Trustee to purchase, or enter into contracts to purchase,
Additional Securities; such instructions shall also specify the name, CUSIP
number, if any, aggregate amount of each such Additional Security and price
or range of price. If, at the time of a subsequent deposit under this
Section, Securities of an Original Issue are unavailable, cannot be
purchased at reasonable prices or their purchase is prohibited or
restricted by applicable law, regulation or policies, in lieu of the
portion of the deposit that
would otherwise be represented by those Securities, the Depositor may (A)
deposit (or instruct the Trustee to purchase) Securities of another
Original Issue or (B) deposit cash or a letter of credit with instructions
to acquire the Securities of such Original Issue when they become
available.
(17) Section 4.01(b) is replaced in its 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
securities exchange or foreign securities exchange, such Evaluation shall
generally be based on the last available sale price on or immediately prior
to the Evaluation Time on the exchange 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
sale price on such exchange, at the last available offer prices of the
Securities. Securities not traded on the New York Stock Exchange but
principally traded on the Nasdaq National Market System will be valued at
Nasdaq's official close price. If the Securities are not so listed or, if
so listed, the principal market therefor is other than on such exchange or
there is no such available sale price on such exchange, such Evaluation
shall generally be based on the following methods or any combination
thereof whichever the Evaluator deems appropriate: (i) on the basis of the
current offer price for comparable securities (unless the Evaluator deems
such price inappropriate as a basis for evaluation), (ii) by determining
the valuation of the Securities on the offer side of the market by
appraisal or (iii) 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 shall add to
the Evaluation of each Security which is traded principally on a foreign
securities exchange 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 Fund Evaluation to be computed
pursuant to Section 5.01.
(18) Section 4.01(c) is replaced in its entirety by the following:
(c) For purposes of the Trust Fund Evaluations required by Section
5.01 in determining Redemption Value and Unit Value and for secondary
market purchases, Evaluation of the Securities shall be made in the manner
described in 4.01(b), on the basis of the last available bid prices of the
Securities (rather than offer prices), except in those cases in which the
Securities are listed
on a national securities exchange or a foreign securities exchange and the
last available sale prices are utilized. In addition, with respect to each
Security which is traded principally on a foreign securities exchange, the
Evaluator shall (i) not make the addition specified in the fourth sentence
of Section 4.01(b) and (ii) shall reduce the Evaluation of each Security by
the amount of any liquidation costs (other than brokerage costs incurred on
any national securities exchange) 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.
(19) Section 9.05 is hereby revised to read as follows:
SECTION 9.05. WRITTEN NOTICE. Any notice, demand, direction or
instruction to be given to the Depositor, Evaluator or Supervisor hereunder
shall be in writing and shall be duly given if mailed or delivered to the
Depositor, 000 Xxxxx Xxxx Xxxx, Xxxxxxx, Xxxxxxxx 00000, or at such other
address as shall be specified by the Depositor to the other parties hereto
in writing.
(20) The second paragraph of Section 6.02 is replaced in its entirety
as follows:
An audit of the accounts of each Trust shall not be conducted unless
the Depositor determines that such an audit is required. In the event that
the Depositor determines that an audit is required, the accounts of each
Trust shall be audited not less than annually by independent public
accountants designated from time to time by the Depositor and reports of
such accountants shall be furnished by the Trustee, upon request, to
Unitholders. The Trustee, however, in connection with any such audits shall
not be obligated to use Trust assets to pay for such audits in excess of
the amounts, if any, indicated in the Prospectus relating to such Trust.
The Trustee shall maintain and provide, upon the request of a Unitholder or
the Depositor, the Unitholders' or the Unitholder's designated
representative with the cost basis of the Securities represented by the
Unitholder's Units.
(21) The first paragraph of Section 6.04 is replaced in its entirety as
follows:
SECTION 6.04. COMPENSATION. Subject to the provisions of Section 3.14
hereof, the Trustee shall receive at the times set forth in Section 3.05,
as compensation for performing ordinary normal recurring services under
this Indenture, an amount calculated at the annual compensation rate stated
in the Prospectus. The Trustee shall charge a pro rated portion of its
annual fee at the times specified in Section 3.05, which pro rated portion
shall be calculated on the basis of the largest number of Units in such
Trust at any time during the primary offering period. After the primary
offering period has terminated, the fee shall accrue daily and be based on
the number of Units outstanding on the first business day of each calendar
year in which the fee is calculated or the number
of Units outstanding at the end of the primary offering period, as
appropriate. The Trustee may from time to time adjust its compensation as
set forth above, PROVIDED that 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," or, if such index shall cease to be published, then as measured by
the available index most nearly comparable to such index. The consent or
concurrence of any Unitholder hereunder shall not be required for any such
adjustment or increase, however, the consent of the Depositor shall be
required. Such compensation shall be charged by the Trustee against the
Income and Capital Accounts of each Trust; PROVIDED, HOWEVER, that such
compensation shall be deemed to provide only for the usual, normal and
proper functions undertaken as Trustee pursuant to this Indenture.
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 Xxxxxxx
---------------------
Senior Managing Director and General
Counsel
The Bank of New York, Trustee
By /s/ Xxxxxx Xxxxxxxx
--------------------
Vice President
SCHEDULE A
SECURITIES INITIALLY DEPOSITED
CLAYMORE SECURITIES DEFINED PORTFOLIOS, SERIES 166
(Note: Incorporated herein and made a part hereof are the "Trust
Portfolio(s)" as set forth in the Prospectus.)
