Exhibit 1.1
CLAYMORE SECURITIES DEFINED PORTFOLIOS,
SERIES 187
EQUITY DIVIDEND INCOME PORTFOLIO (5-YEAR), SERIES 9
SMALL-CAP CORE PORTFOLIO, SERIES 2
REFERENCE TRUST AGREEMENT
This Reference Trust Agreement dated as of August 27, 2004, 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. 333-117696) 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 August 27, 2004, in the event
that the aggregate value of Securities in the Trust has increased since the
evaluation on August 26, 2004, the Trustee shall issue such number of
additional Units to the Unitholder of outstanding Units as of the close of
business on August 26, 2004, that the price per Unit computed as of the
Evaluation Time on August 27, 2004, 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 August
26, 2004, 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 August
27, 2004, 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 listed
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, 0000 Xxxxxxxxx Xxxx Xxxxx, Xxxxx, 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 187
(Note: Incorporated herein and made a part hereof are the "Trust Portfolio(s)"
as set forth in the Prospectus.)
