EXHIBIT 1.1
XXX XXXXXX FOCUS PORTFOLIOS
SERIES 223
TRUST AGREEMENT
Dated: July 25, 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, Josephthal & Co., Inc., 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 the 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. Sections 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 successors 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 Josephthal & Co., Inc. and its successors
in interest, or any successor portfolio supervisor appointed as hereinafter
provided.
7. Section 1.01(25) shall be replaced in its entirety by the following:
(25) "Special Redemption Period" shall mean the "Mandatory Termination Date" set
forth under "Summary of Essential Financial Information" in the Prospectus.
8. The term "Rollover Notification Date" shall mean a date approximately
thirty days prior to the "Mandatory Termination Date" set forth under "Summary
of Essential Financial Information" in the Prospectus.
9. The first three paragraphs of Section 5.05 shall be replaced in their
entirety by the following:
"Section 5.05. Rollover of Units. (a) If the
Depositor shall offer a subsequent series of the Trusts (the "New
Series"), the Trustee shall, thirty days prior to the first day of the
Special Redemption Period, include a form of election (which may be
included in the notice sent to Unitholders specified in Section 8.02)
whereby Unitholders, whose redemption distribution would be in an
amount sufficient to purchase at least one Unit of the New Series, may
elect to have their Units redeemed in kind in the manner provided in
Section 5.02, the Securities included in the redemption distribution
sold, and the cash proceeds applied by the Distribution Agent to
purchase Units of the New Series, all as hereinafter provided. The
Trustee shall honor properly completed election forms returned to the
Trustee, accompanied by any Certificate evidencing Units tendered for
redemption or a properly completed redemption request with respect to
uncertificated Units, by its close of business on the Rollover
Notification Date.
All Units so tendered by a Unitholder (a "Rollover
Unitholder") shall be redeemed and canceled on the date during the
Special Redemption Period instructed by such Rollover Unitholder
provided that such Rollover Unitholder has properly tendered such Units
for redemption pursuant to Section 5.02. Subject to payment by such
Rollover Unitholder of any tax or other governmental charges which may
be imposed thereon, such redemption is to be made in kind pursuant to
Section 5.02 by distribution of cash and/or Securities to the
Distribution Agent on the date instructed by such Rollover Unitholder
of the net asset value (determined on the basis of the Trust Evaluation
as of such date in accordance with Section 4.01) multiplied by the
number of Units being redeemed (herein called the "Rollover
Distribution"). Any Securities that are made part of the Rollover
Distribution shall be valued for purposes of the redemption
distribution as of the date of the Rollover Distribution.
All Securities included in a Unitholder's Rollover
Distribution shall be sold by the Distribution Agent during the Special
Redemption Period pursuant to the Depositor's direction, and the
Distribution Agent may employ the Depositor as broker or agent in
connection with such sales. For such brokerage services, the Depositor
shall be entitled to compensation at its customary rates, provided
however, that its compensation shall not exceed the amount authorized
by applicable Securities laws and regulations. In the event the
Depositor does not direct the manner in which Securities are to be
sold, the Securities shall be sold in such manner as the Distribution
Agent, in its sole discretion, shall determine. The Distribution Agent
shall have no responsibility for any loss or depreciation incurred by
reason of any sale made pursuant to this Section."
10. 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.
11. 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.
12. 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.
13. 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."
14. 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 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
---------------------------------
President
JOSEPHTHAL & CO., INC.
By Xxxx Xxxxxxxxxx
--------------------------------------
President
THE BANK OF NEW YORK
By Xxxxxxx Xxxxx
-------------------------------------
Vice President
SCHEDULE A TO TRUST AGREEMENT
SECURITIES INITIALLY DEPOSITED
IN
XXX XXXXXX FOCUS PORTFOLIOS, SERIES 223
(Note: Incorporated herein and made a part hereof is the "Portfolio" as set
forth in the Prospectus.)
