EXHIBIT 1.1
VAN KAMPEN FOCUS PORTFOLIOS
SERIES 261
TRUST AGREEMENT
Dated: October 18, 2000
This Trust Agreement among Van Kampen Funds Inc., as Depositor,
American Portfolio Evaluation Services, a division of Van Kampen Investment
Advisory Corp., as Evaluator, Van Kampen Investment Advisory Corp., as
Supervisory Servicer, and The Bank of New York, as Trustee, sets forth certain
provisions in full and incorporates other provisions by reference to the
document entitled "Van Kampen American Capital Equity Opportunity Trust, Series
87 and Subsequent Series, Standard Terms and Conditions of Trust, Effective
January 27, 1998" (herein called the "Standard Terms and Conditions of Trust")
and such provisions as are set forth in full and such provisions as are
incorporated by reference constitute a single instrument. All references herein
to Articles and Sections are to Articles and Sections of the Standard Terms and
Conditions of Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor, Evaluator, Supervisory Servicer and Trustee agree as
follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II hereof, all the provisions
contained in the Standard Terms and Conditions of Trust are herein incorporated
by reference in their entirety and shall be deemed to be a part of this
instrument as fully and to the same extent as though said provisions had been
set forth in full in this instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed to:
1. The Securities defined in Section 1.01(24), listed in the Schedule
hereto, have been deposited in trust under this Trust Agreement.
2. The fractional undivided interest in and ownership of the Trust
represented by each Unit is an amount the numerator of which is one and the
denominator of which is the amount set forth under "Summary of Essential
Financial Information - Initial Number of Units" in the Prospectus. Such
fractional undivided interest may be (a) increased by the number of any
additional Units issued pursuant to Section 2.03, (b) increased or
decreased in connection with an adjustment to the number of Units pursuant
to Section 2.03, or (c) decreased by the number of Units redeemed pursuant
to Section 5.02.
3. The terms "Capital Account Record Date" and "Income Account Record
Date" shall mean the "Record Dates" set forth under "Summary of Essential
Financial Information" in the Prospectus.
4. The terms "Capital Account Distribution Date" and "Income Account
Distribution Date" shall mean the "Distribution Dates" set forth under
"Summary of Essential Financial Information" in the Prospectus.
5. The term "Mandatory Termination Date" shall mean the "Mandatory
Termination Date" set forth under "Summary of Essential Financial
Information" in the Prospectus.
6. Section 6.01(e) is hereby replace with the following:
(e) (1) Subject to the provisions of subparagraph (2) of this
paragraph, the Trustee may employ agents, sub-custodians, attorneys,
accountants and auditors and shall not be answerable for the default or
misconduct of any such agents, sub-custodians, attorneys, accountants
or auditors if such agents, sub-custodians, attorneys, accountants or
auditors shall have been selected with reasonable care. The Trustee
shall be fully protected in respect of any action under this Indenture
taken or suffered in good faith by the Trustee in accordance with the
opinion of counsel, which may be counsel to the Depositor acceptable to
the Trustee, provided, however that this disclaimer of liability shall
not excuse the Trustee from the responsibilities specified in
subparagraph (2) below. The fees and expenses charged by such agents,
sub-custodians, attorneys, accountants or auditors shall constitute an
expense of the Trust reimbursable from the Income and Capital Accounts
of the affected Trust as set forth in section 6.04 hereof.
(2) The Trustee may place and maintain in the care of an
Eligible Foreign Custodian (which is employed by the Trustee as a
sub-custodian as contemplated by subparagraph (1) of the paragraph (e)
and which may be an affiliate or subsidiary of the Trustee or any other
entity in which the Trustee may have an ownership interest) any
investment (including foreign currencies) for which the primary market
is outside the United States, and such case and cash equivalents in
amounts reasonably necessary to effect the Trust's transactions in such
investments, provided that:
(a) The Trustee shall perform all duties assigned to the
Foreign Custody Manager by Rule 17f-5 under the Investment Company Act
of 1940 (17 CFR ss. 270,17f-5) ("Rule 17f-5"), as now in effect or as
such rule may be amended in the future. The Trustee shall not delegate
such duties.
(b) The Trustee shall exercise reasonable care, prudence and
diligence such as a person having responsibility for the safekeeping of
Trust assets would exercise, and shall be liable to the Trust for any
loss occurring as a result of its failure to do so.
(c) The Trustee shall indemnify the Trust and hold the Trust
harmless from and against any risk of loss of Trust assets held in
accordance with the foreign custody contract.
(d) The Trustee shall maintain and keep current written
records regarding the basis for the choice or continued use of a
particular Eligible Foreign Custodian pursuant to this subparagraph for
a period of not less than six years from the end of the fiscal year in
which the Trust was terminated, the first two years in an easily
accessible place. Such records shall be available for inspection by
Unitholders and the Securities and Exchange Commission at the Trustee's
offices at all reasonable times during it usual business hours.
(3) "Eligible Foreign Custodian" shall have the meaning
assigned to it in Rule 17f-5.
(4) "Foreign Custody Manager" shall have the meaning
assigned to it in Rule 17f-5.
7. Section 1.01 (1), (3) and (4) shall be replaced in their entirety
by the following:
(1) "Depositor" shall mean Van Kampen Funds Inc. and its successors
in interest, or any successor depositor appointed as hereinafter
provided.
(3) "Evaluator" shall mean American Portfolio Evaluation Services (a
division of a Van Kampen Investment Advisory Corp.) and its
successors in interest, or any successor evaluator appointed as
hereinafter provided.
(4) "Supervisory Servicer" shall mean Van Kampen Investment Advisory
Corp. and its successors in interest, or any successor portfolio
supervisor appointed as hereinafter provided.
8. Notwithstanding anything to the contrary in the Standard Terms and
Conditions of Trust and subject to the requirements set forth in this
paragraph, unless the Prospectus otherwise requires, the Sponsor may, on
any Business Day (the "Trade Date"), subscribe for additional Units as
follows:
(a) Prior to the Evaluation Time on such Business Day, the
Sponsor shall provide notice (the "Subscription Notice") to the
Trustee, by telephone or by written communication, of the Sponsor's
intention to subscribe for additional Units. The Subscription Notice
shall identify the additional Securities to be acquired (unless such
additional Securities are a precise replication of the then existing
portfolio) and shall either (i) specify the quantity of additional
Securities to be deposited by the Sponsor on the settlement date for
such subscription or (ii) instruct the Trustee to purchase additional
Securities with an aggregate value as specified in the Subscription
Notice.
(b) Promptly following the Evaluation Time on such Business Day,
the Sponsor shall verify with the Trustee the number of additional
Units to be created.
(c) Not later than the time on the settlement date for such
subscription when the Trustee is to deliver or assign the additional
Units created hereby, the Sponsor shall deposit with the Trustee (i)
any additional Securities specified in the Subscription Notice (or
contracts to purchase such additional Securities together with cash or
a letter of credit in the amount necessary to settle such contracts)
or (ii) cash or a letter of credit in an amount equal to the aggregate
value of the additional Securities specified in the Subscription
Notice, and adding and subtracting the amounts specified in the first
and second sentences of Section 5.01, computed as of the Evaluation
Time on the Business Day preceding the Trade Date divided by the
number of Units outstanding as of the Evaluation Time on the Business
Day preceding the Trade Date, times the number of additional Units to
be created.
(d) On the settlement date for such subscription, the Trustee
shall, in exchange for the Securities and cash or letter of credit
described above, deliver to, or assign in the name of or on the order
of, the Sponsor the number of Units verified by the Sponsor with the
Trustee.
9. Section 3.15 of the Standard Terms and Conditions of Trust is
hereby replaced in its entirety by the following:
Section 3.15. Deferred Sales Charge. If the Prospectus related to
the Trust specifies a deferred sale charge, the Trustee shall, on each
Deferred Sales Charge Payment Date and as permitted by such
Prospectus, withdraw from the Capital Account an amount per Unit equal
to the Deferred Sales Charge Payment and credit such amount to a
special non-Trust account maintained at the Trustee out of which the
deferred sales charge will be distributed to the Depositor. If the
balance in the Capital Account is insufficient to make any such
withdrawal, the Trustee shall, as directed by the Depositor, either
advance funds in an amount equal to the proposed withdrawal and be
entitled to reimbursement of such advance upon the deposit of
additional moneys in the Capital Account, sell Securities and credit
the proceeds thereof to such special Depositor's account or credit (if
permitted by law) Securities in kind to such special Depositor's
Account. If a Unitholder redeems Units prior to full payment of the
deferred sales charge, the Trustee shall, if so provided in the
related Prospectus, on the Redemption Date, withhold from the
Redemption Price payable to such Unitholder an amount equal to the
unpaid portion of the deferred sales charge and distribute such amount
to such special Depositor's Account. The Depositor may at any time
instruct the Trustee in writing to distribute to the Depositor cash or
Securities previously credited to the special Depositor's account.
Amounts to be credited to the special Depositor's account with respect
to each Deferred Sales Charge Payment are due and payable to the
Depositor on the related Deferred Sales Charge Payment Date.
The term "Deferred Sales Charge Payment Dates" shall mean the
10th day of each month beginning March 10, 2001 and continuing through
July 10, 2001. If any Deferred Sales Charge Payment Date is not a
Business Day, that Deferred Sales Charge Payment Date shall be deemed
to be the next business day. The term "Deferred Sales Charge Payment"
shall mean a fraction of the total maximum deferred sales charge
specified in the Prospectus, the numerator of which is one and the
denominator of which is equal to the total number of Deferred Sales
Charge Payment Dates.
IN WITNESS WHEREOF, the undersigned have caused this Trust Agreement to
be executed and their corporate seals to be hereto affixed and attested; all as
of the day, month and year first above written.
Van Kampen Funds Inc.
By James J. Boyne
-------------------------------------
Senior Vice President
American Portfolio Evaluation Services,
a division of Van Kampen Investment Advisory Corp.
By James J. Boyne
-------------------------------------
Senior Vice President
Van Kampen Investment Advisory Corp.
By James J. Boyne
-------------------------------------
Senior Vice President
The Bank of New York
By Linda Bommer
-------------------------------------
Vice President
SCHEDULE A TO TRUST AGREEMENT
SECURITIES INITIALLY DEPOSITED
IN
VAN KAMPEN FOCUS PORTFOLIOS, SERIES 261
(Note: Incorporated herein and made a part hereof is the "Portfolio" as
set forth in the Prospectus.)
