Exhibit 1.1
CLAYMORE SECURITIES DEFINED PORTFOLIOS,
SERIES 198
CLOSED-END EQUITY AND INCOME PORTFOLIO, SERIES 1
REFERENCE TRUST AGREEMENT
This Reference Trust Agreement dated as of October 20, 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. 333-119743) 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) The definition of "Supplemental Indenture" is hereby deleted in
its entirety.
(8) The definition of "Addendum to the Reference Trust Agreement" is
hereby deleted in its entirety.
(9) The term "Additional Securities" shall mean such Securities
which have been deposited pursuant to Section 2.05 to effect an increase
over the number of Units initially specified in the Reference Trust
Agreement.
(10) 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.
(11) 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."
(12) 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.
(13) 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.
(14) 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."
(15) 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.
(16) 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.
(17) 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.
(18) 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.
(19) 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.
(20) 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.
(21) 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.
(22) 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.
(23) 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.
(24) Section 2.03 is hereby amended and replaced in its entirety
with the following:
SECTION 2.03. ISSUANCE OF UNITS. By executing the Reference Trust
Agreement and receipt for deposited Securities, the Trustee will thereby
acknowledge receipt of the deposit of the Securities listed in the Schedules to
the Reference Trust Agreement and referred to in Section 2.01 hereof, and
simultaneously with the receipt of said deposit, has recorded 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 specified in the Reference
Trust Agreement and has delivered, or on the order of the Depositor will
deliver, in exchange for such Securities, 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. Effective as of the
Evaluation Time on October 20, 2004, in the event that the aggregate value of
Securities in the Trust has increased since the evaluation on October 19, 2004,
the Trustee shall issue such number of additional Units to the Unitholder of
outstanding Units as of the close of business on October 19, 2004, that the
price per Unit computed as of the Evaluation Time on October 20, 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 October 19, 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
October 20, 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).
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.
(25) Section 2.01 is hereby amended and replaced in its entirety
with the following:
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 in the Schedules to the Reference Trust Agreement 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 on said
Schedules 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 Securities, such
funds, to the extent of the purchase price of Failed Contract Securities for
which no Replacement Security were acquired pursuant to Section 3.17, plus all
amounts described in the next succeeding sentence, shall be credited to the
Capital Account and distributed pursuant to Section 3.05 to Unitholders of
record as of the Income Account 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 Securities 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.
(26) Section 2.05(a) is hereby amended and replaced in its entirety
with the following:
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 5.01 on the
Trade Date, the Depositor shall provide notice (the "SUBSCRIPTION
NOTICE") to the Trustee 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 the Additional Units created
thereby (which time shall not be later than the time by which the Trustee
is required to settle any contracts for the purchase of Additional
Securities entered into by the Trustee pursuant to the instruction of the
Depositor referred to in subparagraph (1) above), 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 cost of the Additional Securities to be purchased
by the Trustee, as specified in the Subscription Notice, together with,
in each case, Cash defined below. "Cash" means, as to the Capital
Account, cash or other property (other than Securities) on hand in the
Capital Account or receivable and to be credited to the Capital 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 Capital Account as holders of
Additional Units created by the deposit), and, as to the Income Account,
cash or other property (other than Securities) 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 dividends 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 cash or other
property received or receivable on any Security allocable (in accordance
with the Trustee's calculation of the monthly distribution from the
Income Account pursuant to Section 3.05) 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 during the 90 days following
the initial date of deposit shall replicate, to the extent practicable,
as specified in subparagraph (b), the Original Proportionate
Relationship, as defined hereinabove. Each deposit made pursuant to this
Section 2.05 after the 90 days following the initial date of deposit made
pursuant to Section 2.01 hereof (except for deposits made to replace
Failed Contract Securities if such deposits occur within 20 days from the
date of a failure occurring within such initial 90 day
period) shall maintain exactly the proportionate relationship existing
among the Securities as of the expiration of such 90 day period.
(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 on the order of the Depositor the number of Units
verified by the Depositor with the Trustee. No Unit to be issued pursuant
to this paragraph shall be issued or delivered unless and until
Securities, cash or a Letter of Credit is received in exchange therefor
and no person shall have any claim to any Unit not so issued and
delivered or any interest in the Trust in respect thereof.
(5) Any Additional Securities shall be held, administered and
applied by the Trustee in the same manner as herein provided for the
Securities.
(6) 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.
(7) Notwithstanding the preceding, in the event that the Depositor's
Subscription Notice shall instruct the Trustee to purchase Additional
Securities in an amount which, when added to the purchase amount of all
other unsettled contracts entered into by the Trustee, exceeds 25% of the
value of the Securities then held (taking into account the value of
contracts to purchase Securities only to the extent that there has been
deposited with the Trustee cash or an irrevocable letter of credit in an
amount sufficient to settle their purchase), the Depositors shall deposit
with the Trustee concurrently with the Subscription Notice cash or a
letter of credit in an amount such that, when added to 25% of the value
of the Securities then held (determined as above) the aggregate value
shall be not less than the purchase amount of the securities to be
purchased pursuant to such Subscription Notice.
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
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Vice President
SCHEDULE A
SECURITIES INITIALLY DEPOSITED
CLAYMORE SECURITIES DEFINED PORTFOLIOS, SERIES 198
(Note: Incorporated herein and made a part hereof are the "Trust
Portfolio(s)" as set forth in the Prospectus.)