Exhibit 1.1
CLAYMORE SECURITIES DEFINED PORTFOLIOS,
SERIES 197
REFERENCE TRUST AGREEMENT
This Reference Trust Agreement dated as of March 8, 2005, 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 February 6, 2002" (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 securities listed in the Schedule hereto have been
deposited in the Trust 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.
333-119534) 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 2.05, (b) increase or
decrease in connection with an adjustment to the number of Units
pursuant to Section 2.05, or (c) decrease by the number of Units
redeemed pursuant to Section 5.02.
(3) The term "Record Date" shall mean the first day of each
month for principal distributions and the dates set forth in the
Prospectus for interest distributions.
(4) The term "Distribution Date" shall mean the fifteenth day
of each month for principal distributions and the dates set forth in
the Prospectus for interest distributions.
(5) The term "Initial Date of Deposit" shall mean the date of
this Reference Trust Agreement as set forth above.
(6) The number of Units of the Trust referred to in Section
2.03 shall be equal to the "Number of Units" in the Statement of
Financial Condition in the Prospectus.
(7) For the purposes of Section 6.01(g)(i), the liquidation
amount shall be 40% of the total value of all Securities deposited in
the Trust at the end of the Trust's initial offering period.
(8) The first sentence of the Introduction is hereby modified
as follows:
These Standard Terms and Conditions of Trust, effective
February 6, 2002, shall be applicable to certain Claymore Securities
Defined Portfolios established after the date of effectiveness hereof
containing certain debt obligations, as provided in this paragraph.
(9) Article I is hereby amended to add the following
definitions in appropriate order:
"Book Entry Position" shall mean any position in Units of a
Trust which ownership is recorded on the books of the Trustee which
notation evidences ownership of an undivided fraction interest in a
Trust in book entry form.
"Certificate" shall mean any one of the Certificates manually
executed by the Trustee and the Depositor in substantially the
following form with the blanks appropriately filled in:
CERTIFICATE OF OWNERSHIP
No. ____ Units _____
Description of Trust Plan of Distribution :
CUSIP _________________
This is to certify that _______________________________________ is the
owner and registered holder of this Certificate evidencing the ownership of
________________ units of undivided interest in the above-named Trust created
pursuant to the Trust Indenture and Agreement between Claymore Securities, Inc.,
and The Bank of New York (the "Trustee"), a copy of which is available at the
office of the Trustee. This Certificate is issued under and is subject to the
terms, provisions and conditions of the Indenture to which the Holder of this
Certificate by virtue of the acceptance hereof assents and is bound, a summary
of which Indenture is contained in the Prospectus relating to the Trust. This
Certificate is transferable and interchangeable by the registered owner in
person or by his duly authorized attorney at the Trustee's office upon surrender
of this Certificate properly endorsed or accompanied by a written instrument of
transfer and any other documents that the Trustee may require for transfer, in
form satisfactory to the Trustee and payment of the fees and expense provided in
the Indenture.
IN WITNESS WHEREOF, Claymore Securities, Inc. has caused this
Certificate to be executed in facsimile by its Chairman of the Board and The
Bank of New York, as Trustee, has caused this Certificate to be executed in
facsimile in its corporate name by an authorized officer.
Date:
CLAYMORE SECURITIES, INC., Depositor
By
_____________________________________
THE BANK OF NEW YORK, Trustee
By
_____________________________________
FORM OF ASSIGNMENT
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
UNIF GIFT MIN ACT
TEN COM as tenants in common __________ Custodian
TEN ENT as tenants by the entireties (Cust) (Minor)
JT TEN as joint tenants with right of survivor-ship Under Uniform Gifts to Minors Act
and not as tenants in common _____________________________
State
Additional abbreviations may also be used though not in the above list.
For Value Received, ___________________________________ hereby sell,
assign and transfer ____________ Units represented by this Certificate unto
________________________________
SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE MUST BE PROVIDED
----------------------------------------------------------------
----------------------------------------------------------------
----------------------------------------------------------------
and does hereby irrevocably constitute and appoint ___________________ ,
attorney, to transfer said Units on the books of the Trustee, with full power
and substitution in the premises.
Dated:
NOTICE: The signature to this assignment must correspond with the name
as written upon the face of the Certificate in every particular, without
alteration or enlargement or any change whatever.
SIGNATURE(S) GUARANTEED BY
________________________________________________
Firm or Bank
Authorized Signature
--------------------------------------------------------------------------------
Signatures must be guaranteed by a participant in the Securities
Transfer Agents Medallion Program ("STAMP") or such other guarantee program in
addition to, or in substitution for, STAMP, as may be accepted by the Trustee.
--------------------------------------------------------------------------------
"Percentage Ratio" shall mean, with respect to any Trust which
will issue additional Units pursuant to Section 2.03, the original
percentage relationships established on the Initial Date of Deposit
between the principal amounts of Bonds or specified interest rates and
ranges of maturities as reflected in the portfolio of such Trust set
forth in the Prospectus on such Initial Date of Deposit.
(10) The following definitions are hereby amended as follows:
"Bonds" shall mean bonds, notes, other fixed income
securities, other evidences of indebtedness, certificates of
participation, mortgage-backed securities or other obligations issued
or guaranteed by the full faith and credit of the United States or by
any agency or instrumentality thereof, including delivery statements
relating to "when- issued" and/or "regular way" contracts, if any, for
the purchase of certain securities and certified or bank check or
checks or letter of credit or letters of credit sufficient in amount or
availability required for such purchase, deposited in irrevocable trust
and listed under the "Trust Portfolio" in the prospectus, any
additional obligations deposited pursuant to Section 2.01 and any
obligations received in exchange, substitution or replacement for such
obligations pursuant to Section 3.17 hereof, as may from time to time
continue to be held as a part of the Trusts.
"Unitholder" shall mean the registered holder of any Unit of
beneficial interest as recorded on the registration books of the
Trustee, or the registered holder of any Certificate, his legal
representative and heirs, or the successors of any corporation,
partnership or other legal entity which is a registered holder of any
Certificate and as such shall be deemed a beneficiary of the related
Trust created by this Indenture to the extent of his pro rata share
thereof.
(11) The definition of "Supplemental Indenture" is hereby
deleted in its entirety.
(12) Section 2.01 is hereby amended and replaced in its
entirety as follows:
Section 2.01. Deposit of Securities. The Depositor,
on the date of the Reference Trust Agreement, has deposited with the
Trustee in trust the Securities and contracts (or cash or a letter of
credit in the amount necessary to settle any contracts for the purchase
of securities entered into by the Trustee pursuant to the instructions
of the Depositor) for the purchase of Contract Securities listed under
"The Trust Portfolio" in the Prospectus in bearer form or duly endorsed
in blank or accompanied by all necessary instruments of assignment and
transfer in proper form or Contract Securities relating to such
Securities to be held, managed and applied by the Trustee as herein
provided. The Depositor shall deliver the Securities listed in said
Prospectus which were not actually delivered concurrently with the
execution and delivery of the Reference Trust Agreement and which were
represented by Contract Securities to the Trustee within 10 calendar
days after said execution and delivery (the "Delivery Period"). In the
event that the purchase of Contract Securities pursuant to any contract
shall not be consummated in accordance with said contract or if the
Securities represented by Contract Securities are not delivered to a
Trust in accordance with this Section 2.01 and the moneys, or, if
applicable, the moneys drawn on the Letter of Credit, deposited by the
Depositor are not utilized for Section 3.17 purchases of Replacement
Bonds, such funds, to the extent of the purchase price of failed
Contract Securities for which no Replacement Bonds were acquired
pursuant to Section 3.17, plus all amounts described in the next
succeeding sentence, shall be credited to the Principal Account and
distributed pursuant to Section 3.06 to Unitholders of record as of the
Record Date next following the failure of consummation of such
purchase. The Depositor shall cause to be refunded to each Unitholder
his pro rata portion of the sales charge levied on the sale of Units to
such Unitholder attributable to such failed Contract Security. Any
amounts remaining from moneys drawn on the Letter of Credit which are
not used to purchase Replacement Bonds or are not used to provide
refunds to Unitholders shall be paid to the Depositor. The Trustee is
hereby irrevocably authorized to effect registration or transfer of the
Securities in fully registered form to the name of the Trustee or to
the name of its nominee or to hold the Securities in a clearing agency
registered with the Securities and Exchange Commission or in a book
entry system operated by the Federal Reserve Board.
(13) Section 2.03 is hereby amended and replaced in its
entirety as follows:
Section 2.03. Issue of Certificates and Establishment of Book
Entry Positions. By executing the Reference Trust Agreement and receipt
for deposited Securities (or cash or a letter of credit), the Trustee
will thereby acknowledge receipt of the deposit of the Securities
listed under "The Trust Portfolio" in the Prospectus and referred to in
Section 2.01 hereof, and simultaneously with the receipt of said
deposit, has recorded on its books, for each plan of distribution
provided for in the Prospectus, the ownership by the Depositor or such
other person or persons as may be indicated by the Depositor, of the
aggregate number of Units specified in the Prospectus and has
delivered, or on the order of the Depositor will deliver, in exchange
for such Securities (or cash or a letter of credit), documentation
evidencing the ownership of the number of Units specified or, if
requested by the Depositor, the ownership by DTC of all such Units and
will cause such Units to be credited at DTC to the account of the
Depositor or, pursuant to the Depositor's direction and as hereafter
provided, the account of the issuer of the Letter of Credit referred to
in Section 2.01. The number of Units in a Trust may be increased
through a split of the Units or decreased through a reverse split
thereof, as directed by the Depositor, on any day on which the
Depositor is the only Unitholder of such Trust, which revised number of
Units shall be recorded by the Trustee on its books. The Trustee hereby
agrees that on the date of any deposit of additional Securities
pursuant to Section 2.05 it shall acknowledge that the additional
Securities identified therein have been deposited with it by recording
on its books the ownership, by the Depositor or such other person or
persons as may be indicated by the Depositor, of the aggregate number
of Units to be issued in respect of such additional Securities so
deposited.
Effective as of the Evaluation Time on March 8, 2005, in the
event that the aggregate value of Securities in the Trust has increased
since the evaluation immediately prior to the deposit of the Trust on
March 8, 2005, the Trustee shall issue such number of additional Units
to the Unitholder of outstanding Units immediately prior to the deposit
of the Trust on March 8, 2005, that the principal amount per Unit
computed as of the Evaluation Time on March 8, 2005, shall equal
approximately $1 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 immediately prior
to the deposit of the Trust on March 8, 2005, 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 principal
amount per Unit computed as of the Evaluation Time on March 8, 2005,
shall equal approximately $1 per Unit (based on the number of Units
outstanding as of said Evaluation Time, reflecting cancellation of
Units pursuant to this sentence).
Upon the sale of Units to a purchaser, the Units will be
evidenced by a Book Entry Position unless, if so provided for in the
Prospectus, such purchaser expressly requests that the purchased Units
be evidenced in Certificate form. Upon sale of the Units to a purchaser
who requests Units in certificated form, the Trustee shall issue a
Certificate or Certificates in the name of the purchaser and note that
such Unitholder holds units in certificated form on the books of the
Trustee. The Trustee is entitled to specify the minimum denomination of
any Certificate issued. The rights set forth in this Indenture of any
holder of Units held in certificated form shall be the same as those of
any other Unitholder.
(14) Section 2.05(a) is hereby amended and replaced in its
entirety as follows:
Section 2.05. Deposit of Additional Securities. (a) Subject to the
requirements set forth below in this Section, the Depositor may, on any Business
Day (the "Trade Date"), subscribe for Additional Units as follows:
(1) Prior to the Evaluation Time defined in Section 4.01 on
the Trade Date, the Depositor shall provide notice (the "Subscription
Notice") to the Trustee, by telephone or by written communication, of
the Depositor'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 Depositor on
the settlement date for such subscription or (ii) instruct the Trustee
to purchase Additional Securities with an aggregate cost as specified
in the Subscription Notice.
(2) Promptly following the Evaluation Time on such Business
Day, the Depositor shall verify with the Trustee, the number of
Additional Units to be created.
(3) Not later than the time on the settlement date for such
subscription when the Trustee is to deliver or assign the Additional
Units created thereby, the Depositor 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 the amount equal to the aggregate
value of the Additional Securities to be purchased by the Trustee, as
specified in the Subscription Notice, together with, in each case, Cash
as defined below. "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
Evaluation Time on the Business Day preceding the Trade Date (other
than amounts to be distributed solely to persons other than persons
receiving the distribution from the Principal Account as holders of
Additional Units created by the deposit), and, as to the Interest
Account, interest received by the Trust as of the Evaluation Time on
the Business Day preceding the Trade Date or receivable by the Trust in
respect of interest or other distributions declared but not received as
of the Evaluation Time on the Business Day preceding the Trade Date,
reduced by the amount of any interest received or receivable on any
Security allocable (in accordance with the Trustee's calculation of the
monthly distribution from the Interest Account pursuant to Section
3.06) to a distribution made or to be made in respect of a Record Date
occurring prior to the Trade Date.
Each deposit made pursuant to this Section 2.05 shall be made,
as nearly as practicable, in accordance with the Percentage Ratios for
such Bonds. The Depositor in each case shall ensure that each deposit
of additional Bonds pursuant to this Section shall have the same ratio
of Bonds (based on principal amount) as existed on the Initial Date of
Deposit for each Trust. Any brokerage fees related to the purchase of
Bonds deposited in the Trust after the Initial Date of Deposit shall be
an expense of such Trust.
(4) On the settlement date for a subscription, the Trustee
shall, in exchange for the Securities and cash or Letter of Credit
described above, issue and deliver to or assign in the name of or on
the order of the Depositor the number of Units verified by the
Depositor with the Trustee.
(5) Any Additional Securities shall be held, administered and
applied by the Trustee in the same manner as herein provided for the
Securities.
(6) In the event the Depositor fails to take such action
required by paragraph (3) above, the Trustee shall, on the settlement
date for such subscription, settle the securities transactions
specified in the Subscription Notice.
(7) Neither the Trust nor Unitholders of the Trust will be
responsible for any loss resulting from the failure of the Depositor to
take such action required by paragraph (3) above.
(8) The acceptance of Additional Units by the Depositor in
accordance with the provisions of paragraph (a) of this Section shall
be deemed a certification by the Depositor that the deposit or purchase
of Additional Securities associated therewith complies with the
conditions of this Section 2.05.
(15) The following Section 2.07 is hereby added to Article II:
Section 2.07. Form of Certificates. Each Certificate referred to in
Section 2.03 is, and each Certificate hereafter issued shall be, in
substantially the form hereinabove recited, numbered serially for
identification, in fully registered form, transferable only on the
books of the Trustee as herein provided, executed either manually or in
facsimile by an authorized officer of the Trustee and in facsimile by
the Chairman of the Board, President or one of the Vice Presidents of
the Depositor and dated the date of execution and delivery by the
Trustee. In case any authorized officer of the Trustee or the Depositor
who has signed or whose facsimile signature has been placed upon any
Certificate shall have ceased to be such officer before any such
Certificate is issued, it may be issued with the same effect as if he
were such officer at the date of issue.
(16) Section 3.01 is hereby amended as follows:
Section 3.01. Initial Costs. Subject to reimbursement as
hereinafter provided, the cost of organizing the Trust and 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. Upon notification from the Depositor that the primary
offering period is concluded, or after six months, at the discretion of
the Depositor, the Trustee shall withdraw from the Account or Accounts
specified in the Prospectus or, if no Account is therein specified,
from the Principal Account as further set forth in Section 3.04, and
pay to the Depositor the Depositor's reimbursable expenses of
organizing the Trust and sale of the Trust Units in an amount certified
to the Trustee by the Depositor but not in excess of the estimated
per-Unit amount set forth in the Prospectus multiplied by the number of
Units outstanding as of the conclusion of such 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. The
reimbursement provided for in this section shall be for the account of
the Unitholders of record at the conclusion of the period described
above. Any assets deposited with the Trustee in respect of the expenses
reimbursable under this section 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
Financial Condition" of the Trust included in the Prospectus not later
than the First Settlement Date and the Depositor's obligation to make
such delivery shall be secured by cash or 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 shall be held by the Trustee, without interest, and reserved
for such purpose and, accordingly, prior to the conclusion of the
primary offering period or after six months, at the discretion of the
Depositor, 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
Unitholder redeems Units prior to the conclusion of the primary
offering period or after six months, at the discretion of the
Depositor, the Trustee shall pay to the Unitholder, in addition to the
Redemption Price of the tendered Units, an amount equal to the
estimated per-Unit cost of organizing the Trust and the sale of Trust
Units set forth in the Prospectus multiplied by the number of Units
tendered for redemption; to the extent the cash on hand in the Trust is
insufficient for such payment, 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 and sale of
the Trust Units 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, printing of Certificates, Securities and Exchange
Commission 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.
(17) Sections 3.08(a)(x), 3.08(a)(xi) and 3.01(a)(xii) are hereby
deleted and replaced as follows:
(x) that as of any Record Date such Bonds are scheduled to be
redeemed and paid prior to the next succeeding monthly
Distribution Date; provided, however, that as the result of
such sale the Trustee will receive funds in an amount
sufficient to enable the Trustee to include in the
distribution from the Principal Account on such next
succeeding monthly Distribution Date at least $0.001 per
Unit; or
(xi) (i) to maintain the Trust status as a regulated investment
company, or (ii) to provide funds to make any distribution
for a taxable year in order to avoid imposition of any
income or excise taxes on undistributed income in the Trust
Fund; and
(xii) the Depositor or its designee determines that such sale is
appropriate.
The Depositor or its designated agent shall make such reviews of each
Trust portfolio as shall be necessary to maintain qualification of a particular
Trust as a regulated investment company and the Depositor shall be authorized to
rely conclusively upon such reviews in directing sales pursuant to paragraph
(xi) of this section.
(18) Section 3.15 is hereby deleted and replaced in its
entirety with the following:
Section 3.15. Regulated Investment Company Election. If so provided in the
Prospectus for a Trust Fund, such Trust Fund elects to be treated and to qualify
as a "regulated investment company" as defined in the Internal Revenue Code, and
the Trustee is hereby directed to make such elections, including any appropriate
election to be taxed as a corporation, as shall be necessary to effect such
qualification.
(19) Section 3.17 is hereby deleted and replaced with the
following:
Section 3.17. Limited Replacement of Bonds. (a) If any
contract in respect of Contract Bonds other than a contract to purchase
a New Bond (as defined below), including those purchased on a when, as
and if issued basis, shall have failed due to any occurrence, act or
event beyond the control of the Depositor or the Trustee (such failed
Contract Bonds being herein called the "Special Bonds"), the Depositor
shall notify the Trustee (such notice being herein called the "Failed
Contract Notice") of its inability to deliver the failed Special Bond
to the Trustee after it is notified in writing that the Special Bond
will not be delivered by the seller thereof to the Depositor. Prior to,
or simultaneously with, giving the Trustee the Failed Contract Notice,
or within a maximum of twenty days after giving such Notice (such
twenty day period being herein called the "Purchase Period"), the
Depositor shall, if possible, purchase or enter into the contract, if
any, to purchase an obligation to be held as a Bond hereunder (herein
called the "New Bond") as part of the Fund in replacement of the failed
Special Bond, subject to the satisfaction of all of the following
conditions in the case of each purchase or contract to purchase:
(1) The New Bonds (i) shall have a fixed maturity date
(whether or not entitled to the benefits of any sinking, redemption,
purchase of similar fund) substantially similar to, but not exceeding
the date of maturity of the Special Bonds they replace, (ii) must be
purchased at a price that results in a current return as of the Date of
Deposit at least equal to that of the Special Bonds they replace, (iii)
must be purchased at a price that results in a yield to maturity as of
the Initial Date of Deposit of the Trust at least equal to that of the
Special Bonds they replace, (iv) shall be payable as to principal and
interest in United States currency, (v) shall not be "when, as and if
issued" Bonds, (vi) shall be securities on which the payment of
principal and interest is backed by the full faith and credit of the
United States or by any agency or instrumentality thereof, (vii) in the
case of Trusts containing Bonds issued by the Government National
Mortgage Association, shall be taxable mortgage-backed securities of
the modified pass-through type which maintain as far as practicable the
original percentage relationship between the principal amounts of Bonds
of specified interest rates and ranges of maturity in the Trust, (viii)
shall not cause the Units of the Trust to cease to be rated AAA by
Standard & Poor's if the Units were so rated on the Initial Date of
Deposit and (ix) shall be issued after July 18, 1984.
(2) The purchase price of the New Bonds (exclusive of accrued
interest) shall not exceed the principal attributable to the Special
Bonds.
(3) The Depositor shall furnish a notice to the Trustee (which
may be part of the Failed Contract Notice) in respect of the New Bonds
purchased or to be purchased that shall (i) identify the New Bonds,
(ii) state that the contract to purchase, if any, entered into by the
Depositor is satisfactory in form and substance, and (iii) state that
the foregoing conditions of clauses (a) and (b) have been satisfied
with respect to the New Bonds.
Upon satisfaction of the foregoing conditions with respect to
any New Bond, the Depositor shall pay the purchase price for the New
Bond from its own resources or, if the Trustee has credited any moneys
and/or letters of credit attributable to the failed Special Bond to the
Principal Account, the Trustee shall pay the purchase price of the New
Bond upon directions from the Depositor from the moneys and/or letters
of credit so credited to the Principal Account. If the Depositor has
paid the purchase price, and, in addition, the Trustee has credited
moneys of the Depositor to the Principal Account, the Trustee shall
forthwith return to the Depositor the portion of such moneys that is
not properly distributable to Unitholders pursuant to Section 3.06.
Whenever a New Bond is acquired by the Depositor pursuant to the
provisions of this Section 3.17, the Trustee shall, within five days thereafter,
mail to all Unitholders notices of such acquisition, including an identification
of the failed Special Bonds and the New Bonds acquired. The purchase price of
the New Bonds shall be paid out of the principal attributable to the failed
Special Bonds. 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
such directions and in the absence of such directions the Trustee shall have no
duty to purchase any New Bonds under this Indenture. The Depositor shall not be
liable for any failure to instruct the Trustee to purchase any New Bonds or for
errors of judgment in respect of this Section 3.17; 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.
(20) Section 4.01(b) is hereby amended and replaced in its
entirety as follows:
(b) In making the evaluations the Evaluator may determine the
value of each issue of the Securities in each Trust by the following
methods or any combination thereof which it deems appropriate: (i) on
the basis of current bid or offering prices of such Securities as
obtained from investment dealers or brokers (including the Depositor)
who customarily deal in public bonds comparable to those held by the
Trust, or (ii) if bid or offering prices are not available for any of
such Securities, on the basis of bid or offering prices for comparable
Securities, or (iii) by appraisal. The Evaluator may utilize a
securities pricing service to help determine the value of each issue so
long as such service uses a similar methodology to determine securities
prices. Securities prices for primary market purchases shall be based
upon institutional offering prices of said Securities. Securities
prices for redemptions shall be based on institutional bid prices of
said Securities. In addition to the methods of determining the value of
the Securities described above, the Evaluator may make the initial
evaluation of Securities in whole or in part by reference to the Blue
List of Current Municipal Offerings (a daily publication containing the
current public offering prices of public bonds of all grades currently
being offered by dealers and banks).
(21) 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 organizational and offering 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."
(22) The first paragraph of Section 5.02 is hereby amended
as follows:
Section 5.02. Redemptions by Trustee; Purchases by Depositor.
Any Unit tendered for redemption by a Unitholder or his duly authorized
attorney to the Trustee at its unit investment trust division office
shall be redeemed by the Trustee no later than the third calendar day
following the day on which tender for redemption is made in proper
form, provided that if such day of payment is not a Business Day, then
such payment shall be made no later than the first Business Day prior
thereto (herein referred to as the "Settlement Date"). Unitholders must
sign the request or transfer instrument, exactly as their name appears
on the tendered Certificate or on the records of the Trustee. If the
amount of redemption is $500 or less and the proceeds are payable to
the Unitholders of record at the address of record, no signature
guarantee is necessary for redemptions by individual account owners
(including joint owners). Additional documentation may be requested,
and a signature guarantee is always required, from corporations,
executors, administrators, trustees, guardians and associations. The
signatures must be guaranteed by a participant in the Securities
Transfer Agents Medallion Program (STAMP) or such other signature
guarantee program in addition to, or in substitution for, STAMP, as may
be accepted by the Trustee. Subject payment by such Unitholder of any
tax or other governmental charges which may be imposed thereon, such
redemption is to be made by payment of cash equivalent to the Unit
Value determined on the basis of a Trust Fund Evaluation made in
accordance with Section 5.01 determined by the Trustee as of the
Evaluation Time on the Redemption Date, multiplied by the number of
Units tendered for redemption (herein called the "Redemption Value"),
or if the Unitholder wishes to redeem a number of Units less than all
those so tendered, multiplied by the number of Units so designated by
such Unitholder for redemption. Units received for redemption by the
Trustee on any day after the Evaluation Time will be held by the
Trustee until the next day on which the New York Stock Exchange is open
for trading and will be deemed to have been tendered on such day for
redemption at the Redemption Value computed on that day.
If applicable, any Certificates evidencing Units redeemed
pursuant to this Section 5.02 shall be cancelled by the Trustee and the
Unit or Units evidenced by such Certificates shall be extinguished by
such redemptions.
(23) The heading and the first sentence of Section 5.04 are
hereby amended as follows:
Section 5.04. Units Held Through the Depository Trust Company
or a Successor Clearing Agency. With the exception of Units held in
certificated form, if applicable, no Unit may be registered in the name
of any person other than DTC or its nominee (or such other clearing
agency registered as such pursuant to Section 17A of the Exchange Act
of 1934 designated as successor to DTC by the Depositors, or the
Trustee or the nominee thereof) (DTC and any such successor clearing
agency are herein referred to as the "Clearing Agency") unless the
Clearing Agency advises the Trustee that it is no longer willing or
able properly to discharge its responsibilities with respect to the
Units and the Trustee is unable to locate a qualified successor
clearing agency, in which case the Trustee shall notify the Clearing
Agency and instruct it to provide the Trustee with the name and address
of all persons who are the beneficial owners of Units as registered on
the books of the Clearing Agency (the "Owners").
(24) Article V is hereby amended by adding the following
sections:
Section 5.06. Transfer of Units; Interchange of Certificates. A
Unitholder may transfer any of his Units by making a written request to
the Trustee at its unit investment trust office and, in the case of
Units evidenced by a Certificate, if applicable, by presenting and
surrendering such Certificate at such office properly endorsed or
accompanied by a written instrument or instruments of transfer in form
satisfactory to the Trustee. Unitholders must sign such written
request, and such Certificate of transfer instrument, if applicable,
exactly as their name appears on the records of the Trustee and on any
Certificate representing the Units to be transferred. Such signature
must be guaranteed by a participant in the Securities Transfer Agents
Medallion Program ("STAMP") or such other signature guarantee program
in addition to, or in substitution for, STAMP, as may be accepted by
the Trustee. Such transfer shall thereupon be made on the records of
the Trustee and, if appropriate, a new registered Certificate or
Certificates for the same number of Units of the same Trust shall be
issued in exchange and substitution therefor. Certificates issued
pursuant to this Agreement are interchangeable for one or more other
Certificates of the same Trust in an equal aggregate number of Units
and all Certificates issued shall be issued in denominations of one
Unit or any whole multiple thereof as may be requested by the
Unitholder. The Trustee may deem and treat the person in whose name any
Unit or Certificate shall be registered upon the books of the Trustee
as the owner of such Unit or Certificate for all purposes hereunder and
the Trustee shall not be affected by any notice to the contrary. The
transfer books maintained by the Trustee for each Trust for the purpose
of this Section 5.06 shall be closed for an individual Trust as such
Trust is terminated pursuant to Article IX hereof.
A sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any such transfer or interchange
shall be paid to the Trustee. A Unitholder may be required to pay $2
(or such other amount as may be specified by the Trustee and approved
by the Depositor) for each new Certificate issued on any such transfer
or interchange.
All Certificates cancelled pursuant to this Agreement, other
than those endorsed for transfer, may be cremated or otherwise
destroyed by the Trustee.
Section 5.07. Replacement of Certificates. In case any Certificate shall
become mutilated or be destroyed, stolen or lost, the Trustee shall
execute and deliver a new Certificate in exchange and substitution
therefor upon the Unitholder's furnishing the Trustee with proper
identification and satisfactory indemnity, complying with such other
reasonable regulations and conditions as the Trustee may prescribe and
paying such expenses as the Trustee may incur, provided, however, that
if the particular Trust has terminated or is in the process of
termination, the Trustee, in lieu of issuing such new Certificate, may,
upon the terms and conditions set forth herein, make the distributions
set forth in Section 9.02 hereof. Any mutilated Certificate shall be
duly surrendered and cancelled before any duplicate Certificate shall
be issued in exchange and substitution therefor. Any duplicate
Certificate issued pursuant to this Section 5.07 shall constitute
complete and indefeasible evidence of ownership in the Trust, as if
originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time. Upon issuance of any duplicate
Certificate pursuant to this Section 5.07, the Certificate claimed to
have been lost, stolen or destroyed shall become null and void and of
no effect, and any bona fide purchaser thereof shall have only such
rights as are afforded under Article 8 of the Uniform Commercial Code
to a holder presenting a Certificate for transfer in the case of an
over issue.
(25) Subsections (a) and (b) of Section 9.01 are hereby
deleted and replaced with the following:
Section 9.01. Amendments. (a) This Indenture may be amended from time
to time by the Depositor and Trustee hereto or their respective successors,
without the consent of any of the Unitholders (i) to cure any ambiguity or to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provision contained herein, (ii) to change any
provision required by the Securities and Exchange Commission or any successor
governmental agency, (iii) to make such amendments as may be necessary for the
Trust to continue to qualify as a regulated investment company for federal
income tax purposes or (iv) to make such other provision regarding matters or
questions arising hereunder as shall not adversely affect the interests of the
Unitholders; provided, however, that in no event may any amendment be made which
would adversely affect the status of a Trust for federal income tax purposes.
This Indenture may not be amended, however, without the consent of all
Unitholders then outstanding, so as (1) to permit, except in accordance with the
terms and conditions hereof, the acquisition hereunder of any Bonds other than
those specified under "The Trust Portfolio" in the Prospectus or (2) to reduce
the aforesaid percentage of units the holders of which are required to consent
to certain of such amendments. This Indenture may not be amended so as to reduce
the interest in a Trust represented by Units without the consent of all affected
Unitholders.
(b) Except for the amendments, changes or modification as provided in
Section 9.01(a) hereof, neither the parties hereto nor their respective
successors shall consent to any other amendment, change, modification or waiver
of a provision of this Indenture without the giving of notice and the obtaining
of the approval or consent of Unitholders representing at least 66-2/3% of the
Units then outstanding of the affected Trust. Nothing contained in this Section
9.01(b) shall permit, or be construed as permitting, a reduction of the
aggregate percentage of Units the holders of which are required to consent to
any amendment, change or modification of this Indenture without the consent of
the Unitholders of all of the Units then outstanding of the affected Trust and
in no event may any amendment be made which would (1) alter the rights to the
Unitholders as against each other, (2) provide the Trustee with the power to
engage in business or investment activities other than as specifically provided
in this Indenture or (3) adversely affect the status of the Trust as a regulated
investment company for federal income tax purposes.
(26) The second paragraph of Section 9.02 is hereby amended
as follows:
In the event of a termination, the Trustee shall proceed to
liquidate the Securities then held and make the payments and
distributions provided for hereinafter in this Section 9.02 based on
such Unitholder's pro rata interest in the balance of the Principal and
Interest Accounts after the deductions herein provided. Written notice
shall be given by the Trustee in connection with any termination to
each Unitholder at his address appearing on the registration books of
the Trustee and in connection with a Mandatory Termination Date such
notice shall be given no later than 30 days before the Mandatory
Termination Date. For Unitholders holding units in certificated form,
written notice of any termination specifying the time or times at which
such Unitholders may surrender their Certificates for cancellation
shall be given to each such Unitholder.
(27) Subsection (d) of Section 9.02 is hereby amended as
follows:
(d) make final distributions from such Trust, as follows:
(i) to each Unitholder receiving distribution in cash,
upon surrender for cancellation of his Certificate or
Certificates, if applicable, such holder's pro rata share of
the cash balances of the Interest and Principal Accounts;
and
(ii) on the conditions set forth in Section 3.05
hereof, to all Unitholders, upon surrender for cancellation
of their respective Certificate or Certificates, if
applicable, their pro rata share of the balance of the
Reserve Account.
(28) Section 9.03 is amended by adding the following at the
end of the final paragraph:
If applicable, in the event that all of the Unitholders
holding Certificates of such Trust shall not surrender their
Certificates for cancellation within six months after the time
specified in the above-mentioned written notice, the Trustee shall give
a second written notice to such remaining Unitholders to surrender
their written Certificates for cancellation and receive the liquidation
distribution with respect thereto. If within one year after the second
notice all the Certificates of such Trust shall not have been
surrendered for cancellation, the Trustee may take steps, or may
appoint an agent to take appropriate steps, to contact such remaining
Unitholders concerning surrender of their Certificates and the cost
thereof shall be paid out of the moneys and other assets which remain
in such Trust hereunder.
(29) 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.
(30) Article III is hereby amended by adding the following
Section 3.19:
Section 3.19. 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 3.06, 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 3.06, 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
Interest and Principal Accounts as specified in Section 3.06. 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 Interest and Principal Accounts
shall be insufficient to provide for amounts payable pursuant to this
Section 3.19, 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 3.19.
Any moneys payable to the Depositor pursuant to this Section
3.19 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.
(31) Section 7.05 is hereby amended in its entirety as
follows:
Section 7.05. Compensation. The Depositor shall receive at the
times set forth in Sections 3.06 and 3.18 as compensation for
performing portfolio supervisory services, 3.06 and 3.19 as
compensation for performing bookkeeping and administrative services and
Sections 3.06 and 4.03 as compensation for performing evaluation
services, such amount and for such periods as specified in the
Prospectus and/or Reference Trust Agreement. The computation of such
compensation for performing portfolio supervisory services and
bookkeeping and administrative 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. The compensation for
performing evaluation services shall be made on the basis of the
principal amount of Bonds in such Trust on a monthly basis. 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 3.06, 3.18 and 3.19 is found to be an
improper charge against the 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.
The Depositor may employ agents in connection with its duties
referenced in Section 7.05 and shall not be answerable for the default
or misconduct of such agents if they shall have been selected with
reasonable care. The fees of such agents shall be reimbursable to the
Depositor from the Trust, provided, however, that the amount of such
reimbursement in any year (i) shall reduce the amount payable to the
Depositor for such year with respect to the service in question and
shall not exceed the maximum amount payable to the Depositor for such
service for such year and (ii) if such agent is an affiliate of the
Depositor, the amount of the reimbursement, when combined with (a) all
compensation received by such agent from other series of the Trust or
other unit investment trusts sponsored by the Depositor or its
affiliates and (b) the amount payable to the Depositor from the Trust
and from other series of the Trust or other unit investment trusts
sponsored by the Depositor or its affiliates in respect of the service
in question, shall not exceed the aggregate cost of such agent and the
Depositor of providing such service. The Trustee shall pay such
reimbursement against the Depositor's invoice therefor upon which the
Trustee may rely as the Depositor's certification that the amount
claimed complies with the provisions of this paragraph.
(32) 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 costs basis of the Securities represented by
the Unitholder's Units.
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
Title: Chief Operations Officer and
General Counsel
THE BANK OF NEW YORK, Trustee
By /s/ Xxxxxx Xxxxxxxx
Title: Vice President
SCHEDULE A
SECURITIES INITIALLY DEPOSITED
CLAYMORE SECURITIES DEFINED PORTFOLIOS, SERIES 197
(Note: Incorporated herein and made a part hereof is the "Trust Portfolio"
as set forth in the Prospectus.)
