Exhibit 1.1
CLAYMORE SECURITIES DEFINED PORTFOLIOS,
SERIES 304
BNY BRAZIL, RUSSIA, INDIA AND CHINA (BRIC) PORTFOLIO, SERIES 1
REFERENCE TRUST AGREEMENT
This Reference Trust Agreement dated as of July 13, 2006, 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 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. 333-134970) 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) Sections 2.05(a) and 2.05(b) are hereby amended and replaced in their
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 shall replicate, to the extent
practicable, the portfolio immediately prior to such deposit.
(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.
(b) 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 recommended by the Depositor 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) other appropriate securities or (B) deposit cash or a letter
of credit with instructions to acquire the securities 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 July 13, 2006, in the event that the aggregate value of
Securities in the Trust has increased since the evaluation on July 12, 2006, the
Trustee shall issue such number of additional Units to the Unitholder of
outstanding Units as of the close of business on July 12, 2006, that the price
per Unit computed as of the Evaluation Time on July 13, 2006, 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 July 12,
2006, 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 July 13, 2006,
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 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.
(27) Section 3.07(a) is hereby amended by deleting (a)(viii) and (a)(ix) and
replaced with the following:
(viii) that the sale of Securities is necessary or
advisable: (i) in order to maintain the qualification of the
Trust 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;
(ix) that the Security has been removed from the applicable
index; or
(x) the Depositor or its designee determines that such sale
is appropriate.
(28) Notwithstanding anything to the contrary in Section 3.07(b), such
Section 3.07(b) is amended by adding the following:
Upon receipt of such direction from the Depositor, the Trustee shall
proceed to sell the specified Securities in such manner as the Depositor or its
designee shall direct. If the Trust's portfolio is based upon an index, the
Depositor or its designee may enter into contracts on behalf of the Trust to
reinvest the proceeds of the sale of any Security sold pursuant to this section,
Section 5.02 or otherwise pursuant to this Indenture into any Security included
in the applicable index. Without limiting the generality of the foregoing, in
determining whether such reinvestment is practicable, the Depositor may, but is
not obligated to, specifically consider the ability of the Trust to reinvest
such proceeds into round lots of a Security. Contracts for sale or purchase of
Securities shall be made by the Depositor on behalf of the Trust or by such
agent as the Depositor shall designate. The Depositor or its designee shall
provide the Trustee such information as the Trustee may require in order to
settle the transactions. The Trustee shall not be liable or responsible in any
way for depreciation or loss incurred by reason of any sale or purchase made
pursuant to any such direction or by reason of the failure of the Depositor to
give any such direction, and in the absence of such direction the Trustee shall
have no duty to sell or purchase any Securities under this Section 3.07 and
shall have no responsibility for the composition of each Trust portfolio. The
Depositor shall not be liable for errors of judgment in directing or failing to
direct the Trustee pursuant to this Section 3.07. This provision, however, shall
not protect the Depositor against any liability for 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.
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
(viii) of this section.
(29) The first two sentences in the first paragraph of Section 3.11 are
hereby deleted and replaced in their entirety with the following:
In the event that an offer by the issuer of any of the Securities or any
other party shall be made to issue new securities, or to exchange securities,
for Trust Securities, the Trustee will, at the direction of the Depositor,
accept or reject such offer or vote for or against any offer for new or
exchanged securities or property in exchange for a Trust Security. Should any
issuance, exchange or substitution be effected, any securities, cash and/or
property received shall be deposited hereunder and shall be promptly sold, if
securities or property, by the Trustee pursuant to the Depositor's direction,
unless the Depositor advises the Trustee to keep such securities or property.
(30) Section 3.05(b)(i) is hereby amended by adding the following after the
last sentence:
Notwithstanding anything to the contrary contained in this paragraph, if a
Trust has elected to be treated as a "regulated investment company" as defined
in the Internal Revenue Code and the Trust's portfolio is based upon an index,
the Depositor or its designee may, but is not obligated to, direct the
investment of any amounts held in the Capital Account that have not previously
been used to pay for the redemption of Units tendered to a Trust into any
Securities included in the applicable index.
(31) Section 3.05 is hereby amended by adding the following as subsection
(c):
(c) Notwithstanding the foregoing, if a Trust has elected to be treated
as a "regulated investment company" as defined in the Internal Revenue Code, the
Trustee may make such additional distributions to Unitholders as shall be
determined by the Depositor or such agent as the Depositor shall designate to be
necessary or desirable to maintain the status of each Trust as a regulated
investment company or to avoid imposition of any income or excise taxes on
undistributed income of the Trust. The Trustee shall be authorized to rely
conclusively upon the direction, and shall have no duty to make any additional
distributions from a Trust in the absence of such direction. The Trustee shall
have no liability for any tax or other liability incurred by reason of action or
inaction resulting from such direction. The fees of such agent designated by the
Depositor shall be an expense of the Trust reimbursable to the Trustee in
accordance with Section 6.04.
(32) Section 3.11 is hereby amended by adding the following:
Notwithstanding the foregoing, if the Trust's portfolio is based upon
an index, and such securities are components of the applicable index, the
Depositor may advise the Trustee to keep such securities. The cash received in
such exchange and cash proceeds of any such sales shall, as the Depositor or its
designee shall direct, be (1) reinvested into any Securities included in the
applicable index, if the Trust's portfolio is based upon an index, or (2)
distributed to Unitholders on the next Capital Account Distribution Date in the
manner set forth in this indenture regarding distributions from the Capital
Account. Without limiting the generality of the foregoing, in determining
whether such reinvestment is practicable, the Depositor may, but is not
obligated to, specifically consider the ability of a Trust to reinvest such
proceeds into round lots of a Security. Except as provided in Article VI, the
Trustee shall not be liable or responsible in any way for depreciation or loss
incurred by reason of any such rejection or sale.
(33) Subsections (a) through (e) of Section 3.17 are hereby restated to read
as follows:
(a) The Replacement Securities shall be Equity Securities as originally
selected for deposit in that series of the Trust. Notwithstanding the foregoing,
if a Trust has elected to be treated as a "regulated investment company," as
defined in the Internal Revenue Code and the Trust's portfolio is based upon an
index, the Replacement Securities shall be a component of the applicable index.
(b) The purchase of the Replacement Securities shall not adversely affect
the federal income tax status of the Trust.
(c) The purchase price of the Replacement Securities shall not exceed the
total amount of cash deposited, or the amount available under the Letter of
Credit deposited, by the Depositor at the time of the deposit of the Failed
Contract Security.
(d) The written instructions of the Depositor shall (i) identify the
Replacement Securities to be purchased, (ii) state that the contract to
purchase, if any, to be entered into by the Trustee is satisfactory in form and
substance and (iii) state that the foregoing conditions of clauses (a) through
(d) have been satisfied with respect to the Replacement Securities.
(e) The Replacement Securities shall be purchased within 30 days after the
deposit of the Failed Contract Security.
(f) Notwithstanding the foregoing clauses (c) and (d), if a Trust has
elected to be treated as a "regulated investment company," as defined in the
Internal Revenue Code, the Depositor shall furnish a notice to the Trustee in
respect to the Replacement Security purchased or to be purchased that shall (1)
identify the Replacement Securities, (2) state that the contract to purchase, if
any, entered into by the Depositor is satisfactory in form and substance and (3)
state that the foregoing conditions of clause (a) have been satisfied with
respect to the Replacement Securities.
(34) Section 5.02 is hereby amended by adding the following after the last
sentence:
If a Trust has elected to be taxed as a "regulated investment company"
and such Trust's portfolio is based upon an index, and if Securities in the
Trust are sold for the payment of the Redemption Price and there are excess
proceeds remaining after meeting redemption requests, the Depositor or its
designee may, but is not obligated to, direct the investment of such excess
proceeds into any Securities included in the applicable index.
(35) Section 9.02 is hereby amended by adding the following after the last
sentence:
If a Trust has elected to be treated as a "regulated investment
company" as defined in the Internal Revenue Code, and if the Trust involved
seeks to consist of securities included in a securities index, then
notwithstanding anything to the contrary herein, if at any time the index shall
no longer be compiled, maintained or made available, the Depositor may (i)
direct that the Trust created hereby continue to be operated hereunder utilizing
the components of the index as existed on the last date on which the index
components were available to a Trust or (ii) direct the Trustee to terminate
this Indenture and the Trust created hereby and liquidate the Trust in such
manner as the Depositor shall direct.
(36) Section 9.01 is hereby amended by adding the following as subsection
(d):
(d) If a Trust has elected to be treated as a "regulated investment
company" as defined in the Internal Revenue Code and notwithstanding Section
9.01(a), this Indenture may be amended from time to time by the Depositor and
the Trustee without the consent of any of the Unitholders (1) to cure any
ambiguity or to correct or supplement any provisions contained herein which may
be defective or inconsistent with any other provision contained herein; (2) to
change any provision hereof as may be required by the Securities and Exchange
Commission or any successor governmental agency exercising similar authority;
(3) to make such amendments as may be necessary for each Trust to continue to
qualify as a regulated investment company for federal income tax purposes; or
(4) to make such other provisions in regard to matters or questions arising
hereunder as shall not adversely affect the interest of the Unitholders (as
determined in good faith by the Depositor and the Trustee). This Indenture may
also be amended from time to time by the Depositor and the Trustee (or the
performance of any of the provisions of this Indenture may be waived) with the
consent of holders of Units representing 66-2/3% of the Units at the time
outstanding under the Trust Indenture of the individual Trust or Trusts affected
for the purpose of adding any provisions of this Indenture or of materially
modifying in any manner the rights of the holders of Units of such Trust or
Trusts; provided, however, that 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
characterization of a Trust as a regulated investment company for federal income
tax purposes; provided, further, that the consent of 100% of the Unitholders of
any individual Trust is required to amend this Indenture (1) to reduce the
aforesaid percentage of Units the holders of which are required to consent to
certain amendments and (2) to reduce the interest in such Trust represented by
any Units of such Trust.
Promptly after the execution of any amendment requiring the consent of
the Unitholders or any of any other amendment if directed by the Depositor, the
Trustee shall furnish written notification of the substance of such amendment to
each Unitholder then of record affected thereby.
It shall not be necessary for the consent of Unitholders under this
Section 9.01 or under Section 9.02 to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Unitholders shall be subject to such
reasonable regulations as the Trustee may prescribe.
(37) Section 3.01 is hereby amended by 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
Capital Account as further set forth in Section 3.03, 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 the primary offering
period. If the cash balance of the Capital 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. Securities sold or distributed to the
Depositor to reimburse the Depositor pursuant to this Section shall be sold or
distributed by the Trustee to the extent practicable, in the percentage ratio
then existing (unless the Trust elects to be treated as a "regulated investment
company" as defined in the United States Internal Revenue Code (the "Internal
Revenue Code"), in which case sales or distributions by the Trustee shall be
made in accordance with the instructions of the Depositor or its designees). The
reimbursement provided for in this Section shall be for the account of the
Unitholders of record at the conclusion of the primary offering period. 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 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, 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, 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, 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.
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
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Senior Managing Director and
General Counsel
THE BANK OF NEW YORK, TRUSTEE
By /s/ Xxxx Xxxxxxx
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Vice President
SCHEDULE A
SECURITIES INITIALLY DEPOSITED
CLAYMORE SECURITIES DEFINED PORTFOLIOS, SERIES 304
(Note: Incorporated herein and made a part hereof are the "Trust
Portfolio(s)" as set forth in the Prospectus.)
