EXHIBIT 1.1
XXX XXXXXX FOCUS PORTFOLIOS
SERIES 226
TRUST AGREEMENT
Dated: May 9, 2000
This Trust Agreement among Xxx Xxxxxx Funds Inc., as Depositor,
American Portfolio Evaluation Services, a division of Xxx Xxxxxx Investment
Advisory Corp., as Evaluator, Xxx Xxxxxx Investment Advisory Corp., as
Supervisory Servicer, and The Bank of New York, as Trustee, sets forth certain
provisions in full and incorporates other provisions by reference to the
document entitled "Xxx Xxxxxx American Capital Equity Opportunity Trust, Series
87 and Subsequent Series, Standard Terms and Conditions of Trust, Effective
January 27, 1998" (herein called the "Standard Terms and Conditions of Trust")
and such provisions as are set forth in full and such provisions as are
incorporated by reference constitute a single instrument. All references herein
to Articles and Sections are to Articles and Sections of the Standard Terms and
Conditions of Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor, Evaluator, Supervisory Servicer and Trustee agree as
follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II hereof, all the provisions
contained in the Standard Terms and Conditions of Trust are herein incorporated
by reference in their entirety and shall be deemed to be a part of this
instrument as fully and to the same extent as though said provisions had been
set forth in full in this instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed to:
1. The Securities defined in Section 1.01(24), listed in the Schedule
hereto, have been deposited in trust under this Trust Agreement.
2. The fractional undivided interest in and ownership of each Trust
represented by each Unit is an amount the numerator of which is one and the
denominator of which is the amount set forth under "Summary of Essential
Financial Information - Initial Number of Units" in the Prospectus. Such
fractional undivided interest may be (a) increased by the number of any
additional Units issued pursuant to Section 2.03, (b) increased or decreased in
connection with an adjustment to the number of Units pursuant to Section 2.03,
or (c) decreased by the number of Units redeemed pursuant to Section 5.02.
3. The terms "Capital Account Record Date" and "Income Account Record
Date" shall mean the "Record Dates" set forth under "Summary of Essential
Financial Information" in the Prospectus.
4. The terms "Capital Account Distribution Date" and "Income Account
Distribution Date" shall mean the "Distribution Dates" set forth under "Summary
of Essential Financial Information" in the Prospectus.
5. The term "Mandatory Termination Date" shall mean the "Mandatory
Termination Date" set forth under "Summary of Essential Financial
Information" in the Prospectus.
6. The term "Rollover Notification Date" shall mean approximately one
month prior to the "Mandatory Termination Date" set forth under "Summary of
Essential Financial Information" in the Prospectus.
7. The term "Special Redemption Date" shall mean the "Mandatory
Termination Date" set forth under "Summary of Essential Financial Information"
in the Prospectus.
8. 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.
9. Section 1.01 (1), (3) and (4) shall be replaced in their entirety by
the following:
(1) "Depositor" shall mean Xxx Xxxxxx Funds Inc. and its
successors in interest, or any successor depositor appointed as
hereinafter provided.
(3) "Evaluator" shall mean American Portfolio Evaluation
Services (a division of an Xxx Xxxxxx Investment Advisory Corp.)
and its successors in interest, or any successor evaluator
appointed as hereinafter provided.
(4) "Supervisory Servicer" shall mean Xxx Xxxxxx Investment
Advisory Corp. and its successors in interest, or any successor
portfolio supervisor as hereinafter provided.
10. 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.
11. 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
September 10, 2000 and the 10th day of each month thereafter
through January 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.
12. 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."
13. Sections 4.01(b) and (c) of the Standard Terms and Conditions of
Trust are hereby replaced in their entirety by the following:
(b) During the initial offering period such Evaluation shall
be made in the following manner: if the Securities are listed on
a national or foreign securities exchange or traded on the Nasdaq
Stock Market, Inc., such Evaluation shall generally be based on
the last available closing sale price on or immediately prior to
the Evaluation Time on the exchange or market which is the
principal market therefor, which shall be deemed to be the New
York Stock Exchange if the Securities are listed thereon (unless
the Evaluator deems such price inappropriate as a basis for
evaluation) or, if there is no such available closing sale price
on such exchange or market at the last available asked price of
the Equity Securities. If the Securities are not listed such an
exchange or traded on the Nasdaq Stock Market, Inc. or, if so
listed and the principal market therefor is other than on such
exchange or market, or there is no such available sale price on
such exchange or market, such Evaluation shall generally be based
on the following methods or any combination thereof whichever the
Evaluator deems appropriate: (i) in the case of Equity
Securities, on the basis of the current asked price on the
over-the-counter market (unless the Evaluator deems such price
inappropriate as a basis for evaluation), (ii) on the basis of
current offering prices for the Zero Coupon Obligations as
obtained from investment dealers or brokers who customarily deal
in securities comparable to those held by the Fund, (iii) if
offering prices are not available for the Zero Coupon Obligations
or the Equity Securities, on the basis of offering or asked price
for comparable securities, (iv) by determining the valuation of
the Zero Coupon Obligations or the Equity Securities on the
offering or asked side of the market by appraisal or (v) by any
combination of the above. If the Trust holds Securities
denominated in a currency other than U.S. dollars, the Evaluation
of such Security shall be converted to U.S. dollars based on
current offering side exchange rates (unless the Evaluator deems
such prices inappropriate as a basis for valuation). The
Evaluator may add to the Evaluation of each Security which is
principally traded outside of the United States the amount of any
commissions and relevant taxes associated with the acquisition of
the Security. As used herein, the closing sale price is deemed to
mean the most recent closing sale price on the relevant
securities exchange immediately prior to the Evaluation time. For
each Evaluation, the Evaluator shall also confirm and furnish to
the Trustee and the Depositor, on the basis of the information
furnished to the Evaluator by the Trustee as to the value of all
Trust assets other than Securities, the calculation of the Trust
Evaluation to be computed pursuant to Section 5.01.
(c) For purposes of the Trust Evaluations required by
Section 5.01 in determining Redemption Value and Unit Value,
Evaluation of the Securities shall be made in the manner
described in Section 4.01(b), on the basis of current bid prices
for the Zero Coupon Obligations, the bid side value of the
relevant currency exchange rate expressed in U.S. dollars and,
except in those cases in which the Equity Securities are listed
on a national or foreign securities exchange or traded on the
Nasdaq Stock Market, Inc. and the last available sale prices are
utilized, on the basis of the last available bid price of the
Equity Securities. In addition, the Evaluator (i) shall not make
the addition specified in the fourth sentence of Section 4.01(b)
and (ii) may reduce the Evaluation of each Security which is
principally traded outside of the United States by the amount of
any liquidation costs and any capital gains or other taxes which
would be incurred by the Trust upon the sale of such Security,
such taxes being computed as if the Security were sold on the
date of the Evaluation.
IN WITNESS WHEREOF, the undersigned have caused this Trust Agreement to
be executed and their corporate seals to be hereto affixed and attested; all as
of the day, month and year first above written.
Xxx Xxxxxx Funds Inc.
By Xxxxx X. Xxxxx
-------------------------------------
Senior Vice President
American Portfolio Evaluation Services,
a division of Xxx Xxxxxx Investment Advisory Corp.
By Xxxxx X. Xxxxx
-------------------------------------
Senior Vice President
Xxx Xxxxxx Investment Advisory Corp.
By Xxxxx X. Xxxxx
-------------------------------------
Senior Vice President
The Bank of New York
By Xxxxx Xxxxxx
---------------------------------
Vice President
SCHEDULE A TO TRUST AGREEMENT
SECURITIES INITIALLY DEPOSITED IN
XXX XXXXXX FOCUS PORTFOLIOS, SERIES 226
(Note: Incorporated herein and made a part hereof are the "Portfolios" as set
forth in the Prospectus.)
