Exhibit 1.1
XXX XXXXXX UNIT TRUSTS, SERIES 713
TRUST AGREEMENT
Dated: October 23, 2007
This Trust Agreement among Xxx Xxxxxx Funds Inc., as Depositor, The
Bank of New York, as Trustee, and Xxx Xxxxxx Asset Management, as Supervisor,
sets forth certain provisions in full and incorporates other provisions by
reference to the document entitled "Standard Terms and Conditions of Trust For
Xxx Xxxxxx Focus Portfolios, Effective for Unit Investment Trusts Established On
and After May 2, 2001 (Including Series 284 and Subsequent Series)" (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, Trustee and Supervisor 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 listed in the Schedules 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 thereof referred to in Section 1.01(56) is initially an
amount the numerator of which is one and the denominator of which is the amount
set forth under "Units outstanding" for the Trust in the "Statement of
Condition" in the Prospectus.
3. The aggregate number of Units described in Section 2.03(a) for the
Trust is that number of Units set forth under "Units outstanding" for the Trust
in the "Statement of Condition" in the Prospectus.
4. Section 1.01(5) is replaced in its entirety by the following:
"(5) "Business Day" shall mean any day on which the New York
Stock Exchange is open for regular trading."
5. The terms "Capital Account Distribution Date" and "Income Account
Distribution Date" shall mean the "Distribution Dates" set forth in the
"Essential Information" in the Prospectus.
6. The terms "Capital Account Record Date" and "Income Account Record
Date" shall mean the "Record Dates" set forth in the "Essential Information" in
the Prospectus.
7. The term "Deferred Sales Charge Payment Date" shall mean March 10,
2008 and the 10th day of each month thereafter through July 10, 2008 with
respect to the amount designated "Deferred sales charge in first year" in the
"Fee Table" in the Prospectus and March 10, 2009 and the 10th day of each month
thereafter through May 10, 2009 with respect to the amount designated "Deferred
sales charge in second year" in the "Fee Table" in the Prospectus.
8. The term "Mandatory Termination Date" shall mean the "Mandatory
Termination Date" for the Trust set forth in the "Essential Information" in the
Prospectus.
9. The term "Supervisor" shall mean Xxx Xxxxxx Asset Management and its
successors in interest, or any successor portfolio supervisor as provided in the
Standard Terms and Conditions of Trust.
10. The second sentence of section 2.01(b) is hereby deleted.
11. Section 3.05 is amended by adding the following subsection
immediately after Section 3.05(a)(iv):
"(v) Notwithstanding any of the previous provisions, if a Trust has
elected to be taxed as a regulated investment company under the United
States Internal Revenue Code of 1986, as amended, the Trustee is
directed to make any distribution or take any action necessary in order
to maintain the qualification of the Trust as a regulated investment
company for federal income tax purposes or to provide funds to make any
distribution for a taxable year in order to avoid imposition of any
income or excise taxes on the Trust or on undistributed income in the
Trust."
12. Section 3.05(b)(ii) shall be replaced in is entirety by the
following:
"(ii) For purposes of this Section 3.05, the Unitholder's "Income
Distribution" shall be equal to such Unitholders pro rata share of the
balance in the Income Account calculated on the basis of one-twelfth of
the estimated annual income to the Trust for the ensuing twelve months
computed as of the close of business on the Income Account Record Date
immediately preceding such Income Distribution (or portion or multiple
thereof for the first Income Distribution), after deduction of (1) the
fees and expenses then deductible pursuant to Section 3.05(a) and (2)
the Trustee's estimate of other expenses properly chargeable to the
Income Account pursuant to this Indenture which have accrued, as of
such Income Account Record Date or are otherwise properly attributable
to the period to which such Income Distribution relates.
In the event that the amount on deposit in the Income Account is not
sufficient for the payment of the amount intended to be distributed to
Unitholders on the basis of the aforesaid computation, the Trustee is authorized
to advance its own funds and cause to be deposited in and credited to the Income
Account such amounts as may be required to permit payment of the related
distribution to be made as aforesaid and shall be entitled to be reimbursed,
without interest, out of income payments received by the Trust subsequent to the
date of such advance. Any such advance shall be reflected in the Income Account
until repaid."
13. Section 3.07(a)(xiii) of the Standard Terms and Conditions of Trust
shall be replaced in its entirety with the following:
"(xiii) if the Trust has elected to be taxed as a "regulated investment
company" as defined in the United States Internal Revenue Code of 1986, as
amended, that such sale is necessary or advisable (i) 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 the Trust or on undistributed income in the
Trust; or
(xiv) that as result of the ownership of the Security, the Trust or its
Unitholders would be a direct or indirect shareholder of a passive foreign
investment company as defined in section 1297 (a) of the United States Internal
Revenue Code of 1986, as amended."
14. If a Trust has elected to be treated as a "regulated investment
company" as defined in the United States Internal Revenue Code of 1986, as
amended, the first two sentences in the second paragraph of Section 3.11 of the
Standard Terms and Conditions of Trust shall be 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 shall at the direction of the
Depositor, vote for or against, or accept or reject, 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."
15. If the Trust has elected to be taxed as a "regulated investment
company" as defined in the United States Internal Revenue Code of 1986, as
amended, Section 3.12(a) of the Standard Terms and Conditions of Trust shall be
replaced in its entirety with the following:
"(a) The Replacement Securities shall be Zero Coupon Obligations or
Equity Securities as originally selected for deposit in the Trust or securities
which the Depositor determines to be similar in character as Securities
originally selected for deposit in the Trust, and any Replacement Securities
which are Zero Coupon Obligations must have the same maturity value as the
Failed Contract Security and, as close as is reasonably practical, the same
maturity date, which must be on or prior to the Mandatory Termination Date;"
16. The Standard Terms and Conditions of Trust shall be amended to
include the following section:
"Section 3.19. Regulated Investment Company Election. If the Prospectus
for a Trust states that such Trust intends to elect to be treated and to qualify
as a "regulated investment company" as defined in the United States Internal
Revenue Code of 1986, as amended, the Trustee is hereby directed to make such
elections and take all actions, including any appropriate election to be taxed
as a corporation, as shall be necessary to effect such qualification or to
provide funds to make any distribution for a taxable year in order to avoid
imposition of any income or excise tax on the Trust or on undistributed income
in the Trust. The Trustee shall make such reviews of each Trust portfolio as
shall be necessary to maintain qualification of a particular Trust as regulated
investment company and to avoid imposition of tax on a Trust or undistributed
income in a Trust, and the Depositor and Supervisor shall be authorized to rely
conclusively upon such reviews."
17. Sections 5.01(b) and (c) are replaced in their entirety by the
following:
"(b) During the initial offering period of a Trust (as
determined by the Depositor), the Evaluation for each Security shall be
made in the following manner: (i) with respect to Securities for which
market quotations are readily available, such Evaluation shall be made
on the basis of the market value of such Securities; and (ii) with
respect to other Securities, such Evaluation shall be made on the basis
of the fair value of such Securities as determined in good faith by the
Trustee. If the Securities are listed on a national or foreign
securities exchange or traded on the Nasdaq Stock Market, Inc. and
market quotations of such Securities are readily available, the market
value of such Securities shall generally be based on the last available
closing sale price on or immediately prior to the Evaluation Time on
the exchange or market which is the principal market therefor, which
shall be deemed to be the New York Stock Exchange if the Securities are
listed thereon. In the case of Zero Coupon Obligations, such Evaluation
shall be made on the basis of current offer side prices for the Zero
Coupon Obligations as obtained from investment dealers or brokers who
customarily deal in securities comparable to those held by the Trust
and, if offer side prices are not available for the Zero Coupon
Obligations, on the basis of offer side price for comparable
securities, by determining the valuation of the Zero Coupon Obligations
on the offer side of the market by appraisal or 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 Trustee deems such prices inappropriate as a basis for
valuation). For each Evaluation, the Trustee shall also confirm and
furnish to the Depositor the calculation of the Trust Evaluation to be
computed pursuant to Section 6.01.
(c) After the initial offering period of Units of a Trust (as
determined by the Depositor), Evaluation of the Securities shall be
made in the manner described in Section 5.01(b) on the basis of current
bid side prices for Zero Coupon Obligations and the bid side value of
any relevant currency exchange rate expressed in U.S. dollars."
18. The seventh paragraph of Section 6.02 is hereby replaced in its
entirety with the following:
"Notwithstanding anything to the contrary in this Section 6.02, if the
Prospectus for a Trust provides for in kind distribution of Securities in
connection with Unit redemptions and a Unitholder tenders at least the minimum
number of Units stated in such Prospectus for redemption, a Unitholder may
request at the time of tender to receive from the Trustee in lieu of cash such
Unitholder's pro rata share of each Security then held by such Trust, provided
that the Security is principally traded in the United States if such limitation
is set forth in the Prospectus for the Trust. Such tendering Unitholder will
receive his pro rata number of whole shares of each of such Securities
comprising the portfolio of such Trust and cash from the Capital Account equal
to the value of the fractional shares and any Securities principally traded
outside the United States to which such tendering Unitholder is entitled and in
the case of an Equity and Treasury Trust such Unitholder's pro rata share of the
Zero Coupon Obligations held by such Trust. Such pro rata share of each Security
and the related cash to which such tendering Unitholder is entitled is referred
to herein as an "In Kind Distribution." An In Kind Distribution will be made by
the Trustee through the distribution of each of the Securities in book-entry
form to the account of the Unitholder's bank or broker-dealer at Depository
Trust Company. If funds in the Capital Account are insufficient to cover the
required cash distribution to the tendering Unitholder, the Trustee may sell
Securities according to the criteria discussed herein.
Notwithstanding the preceding paragraph, if a Unitholder electing an In
Kind Distribution is an Affiliated Redeeming Unitholder, as such term is defined
below, such In Kind Distribution shall be permitted subject to the following
conditions:
(a) The In Kind Distribution shall be consistent with the Trust's
redemption policies and undertakings, as set forth in the Trust's Prospectus;
(b) Neither the Affiliated Redeeming Unitholder, nor any other party
with the ability and the pecuniary incentive to influence the In Kind
Distribution, may select, or influence the selection of, the distributed
Securities;
(c) Upon an In Kind Distribution by the Affiliated Redeeming
Unitholder, the Trustee shall distribute to the Affiliated Redeeming Unitholder
its proportionate share of every Security in the Trust's portfolio, provided
that if the Trustee is not an affiliated person (as the term "affiliated person"
is defined in the Investment Company Act of 1940, as amended) of the Affiliated
Redeeming Unitholder, the Trustee may exclude Discretionary Assets (as defined
below) from the In Kind Distribution to the extent that the Trustee cannot
practicably distribute such Discretionary Assets without undue burden or adverse
impact to the Trust or its Unitholders. If the Trustee determines that it is
impracticable to distribute the Discretionary Assets in kind, the Trustee shall
sell or liquidate the Discretionary Assets to raise funds to satisfy the
redemption, provided that if the Trustee cannot sell or liquidate the
Discretionary Assets, the Trustee may sell or liquidate other Securities;
(d) The In Kind Distribution may not favor the Affiliated Redeeming
Unitholder to the detriment of any other Unitholder;
(e) The Trustee shall monitor each In Kind Distribution on a quarterly
basis for compliance with all provisions of this Section 6.02; and
(f) The Trustee shall maintain and preserve for a period of not less
than six years from the end of the fiscal year in which the In Kind Distribution
occurs, the first two years in an easily accessible place, records for each In
Kind Distribution setting forth the identity of the Affiliated Redeeming
Unitholder, a description of the composition of the Trust's portfolio (including
each asset's value) immediately prior to the In Kind Distribution, a description
of each Security distributed in-kind, the terms of the In Kind Distribution, the
information or materials upon which the asset valuations were made, and a
description of the composition of the Trust's portfolio (including each asset's
value) one month after the In Kind Distribution.
(g) The term "Affiliated Redeeming Unitholder" shall mean an affiliated
person or a promoter of or a principal underwriter for the Trust, or an
affiliated person of such a person, promoter or principal underwriter. The terms
"affiliated person," "promoter" and "principal underwriter" as used in the
preceding sentence shall have the meanings assigned to each such term in the
Investment Company Act of 1940, as amended.
(h) The term "Discretionary Assets" shall mean (i) securities that, if
distributed, would be required to be registered under the Securities Act of
1933, as amended; (ii) securities issued by entities in countries that (A)
restrict or prohibit the holding of securities by non-nationals other than
through qualified investment vehicles, or (B) permit transfers of ownership of
securities to be effected only by transactions conducted on a local stock
exchange; and (iii) any assets that, although they may be liquid and marketable,
must be traded through the marketplace or with the counterparty to the
transaction in order to effect a change in beneficial ownership.
Notwithstanding anything to the contrary in the Standard Terms and
Conditions of Trust, if a Trust has not elected to be treated as a "regulated
investment company" as defined in the United States Internal Revenue Code of
1986, as amended, no Unitholder may elect to have Units redeemed through an In
Kind Distribution within thirty (30) days of any Trust termination."
19. Section 6.02 of the Standard Terms and Conditions of Trust shall be
amended by adding the following to the end of such Section:
"Notwithstanding anything to he contrary herein, each Unitholder
who holds Units designated with a "Classic CUSIP" number will be deemed to have
tendered all Units then owned for redemption to the Trustee on the Special
Redemption Date set forth under "Essential Information" in the Prospectus and
shall have such Units redeemed on such date as provided herein."
20. The second sentence of Section 7.01(e)(2)(E) shall be replaced in
its entirety by "Such Prospectus shall also contain disclosure concerning the
Depositor's responsibilities described in (D) above."
21. The Trustee's annual compensation rate described in Section 7.04
shall be that amount set forth under "Trustee's fee and operating expenses" in
the "Fee Table" in the Prospectus.
22. Section 9.01 of the Standard Terms and Conditions of Trust shall be
replaced in its entirety with the following:
"Section 9.01. Amendments. (a) This Indenture may be amended from
time to time by the Depositor and Trustee or their respective successors,
without the consent of any of the Unitholders, (i) to cure any ambiguity or to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provision contained herein, (ii) to make such other
provision in regard to matters or questions arising hereunder as shall not
materially adversely affect the interests of the Unitholders or (iii) to make
such amendments as may be necessary (a) for the Trust to continue to qualify as
a regulated investment company for federal income tax purposes if the Trust has
elected to be taxed as such under the United States Internal Revenue Code of
1986, as amended, or (b) to prevent the Trust from being deemed an association
taxable as a corporation for federal income tax purposes if the Trust has not
elected to be taxed as a regulated investment company under the United States
Internal Revenue Code of 1986, as amended. This Indenture may not be amended,
however, without the consent of all Unitholders then outstanding, so as (1) to
permit, except in accordance with the terms and conditions hereof, the
acquisition hereunder of any Securities other than those specified in the
Schedules to the Trust Agreement or (2) to reduce the aforesaid percentage of
Units the holders of which are required to consent to certain of such
amendments. This Indenture may not be amended so as to reduce the interest in a
Trust represented by Units (whether evidenced by Certificates or held in
uncertificated form) without the consent of all affected Unitholders.
(b) Except for the amendments, changes or modifications as provided in
Section 9.01(a) hereof, neither the parties hereto nor their respective
successors shall consent to any other amendment, change or modification of this
Indenture without the giving of notice and the obtaining of the approval or
consent of Unitholders representing at least 66 2/3% of the Units then
outstanding of the affected Trust. Nothing contained in this Section 9.01(b)
shall permit, or be construed as permitting, a reduction of the aggregate
percentage of Units the holders of which are required to consent to any
amendment, change or modification of this Indenture without the consent of the
Unitholders of all of the Units then outstanding of the affected Trust and in no
event may any amendment be made which would (1) alter the rights to the
Unitholders as against each other, (2) provide the Trustee with the power to
engage in business or investment activities other than as specifically provided
in this Indenture, (3) adversely affect the tax status of the Trust for federal
income tax purposes or result in the Units being deemed to be sold or exchanged
for federal income tax purposes or (4) unless the Trust has elected to be taxed
as a regulated investment company for federal income tax purposes, result in a
variation of the investment of Unitholders in the Trust.
(c) Unless the Depositor directs that other notice shall be provided,
the Trustee shall include in the annual report provided pursuant to Section 3.06
notification of the substance of such amendment."
23. Section 9.02. Termination. This Indenture and each Trust created
hereby shall terminate upon the maturity, redemption, sale or other disposition
as the case may be of the last Security held in such Trust hereunder unless
sooner terminated as hereinbefore specified, and may be terminated at any time
by the written consent of Unitholders representing at least 66 2/3% of the Units
of the Trust then outstanding; provided that in no event shall any Trust
continue beyond the Mandatory Termination Date. Upon the date of termination the
registration books of the Trustee shall be closed.
In the event of a termination, the Trustee shall proceed to liquidate
the Securities then held and make the payments and distributions provided for
hereinafter in this Section 9.02 based on such Unitholder's pro rata interest in
the balance of the Capital and Income Accounts after the deductions herein
provided. Written notice shall be given by the Trustee in connection with any
termination to each Unitholder at his address appearing on the registration
books of the Trustee and in connection with a Mandatory Termination Date such
notice shall be given no later than 45 days before the Mandatory Termination
Date. Included with such notice shall be a form to enable Unitholders owning
that number of Units referred to in the Prospectus to request an In Kind
Distribution (as described in Section 6.02) during the period ending 31 days
prior to date of the related Trust's termination. No Unitholder shall be
permitted to have Units redeemed through an In Kind Distribution within 30 days
of any Trust termination.
The Trustee will liquidate the Securities then held, if any, in such
daily amounts as the Depositor shall direct. The Depositor shall direct the
liquidation of the Securities in such manner as to effectuate orderly sales and
a minimal market impact. In the event the Depositor does not so direct, the
Securities shall be sold within a reasonable period and in such manner as the
Trustee, in its sole discretion, shall determine. The Trustee shall not be
liable for or responsible in any way for depreciation or loss incurred by reason
of any sale or sales made in accordance with the Depositor's direction or, in
the absence of such direction, in the exercise of the discretion granted by this
Section 9.02. The Trustee shall deduct from the proceeds of these sales and pay
any tax or governmental charges and any brokerage commissions in connection with
such sales. Amounts received by the Trustee representing the proceeds from the
sales of Securities shall be credited to the related Capital Account.
Not later than the fifth Business Day following receipt of all proceeds
of sale of the Securities, the Trustee shall:
(a) deduct from the Income Account of such Trust or, to the
extent that funds are not available in such Account of such Trust, from
the Capital Account of such Trust, and pay to itself individually an
amount equal to the sum of (i) its accrued compensation for its
ordinary recurring services, (ii) any compensation due it for its
extraordinary services in connection with such Trust, and (iii) any
costs, expenses or indemnities in connection with such Trust as
provided herein;
(b) deduct from the Income Account of such Trust or, to the
extent that funds are not available in such Account, from the Capital
Account of such Trust, and pay accrued and unpaid fees of the
Depositor, the Supervisor and counsel in connection with such Trust, if
any;
(c) deduct from the Income Account of such Trust or the
Capital Account of such Trust any amounts which may be required to be
deposited in the Reserve Account and any other amounts which may be
required to meet expenses incurred under this Indenture in connection
with such Trust;
(d) make final distributions from such Trust, against
surrender for cancellation of all of each Unitholder's Certificate or
Certificates, if issued, as follows:
(i) to each Unitholder, such Unitholder's pro rata
share of the cash balances of the Income and Capital Accounts;
and
(ii) on the conditions set forth in Section 3.04
hereof, to each Unitholder such Unitholder's pro rata share of
the balance of the Reserve Account; and
(e) within 60 days after the distribution to each Unitholder
as provided for in (d), furnish to each such Unitholder a final
distribution statement, setting forth the data and information in
substantially the form and manner provided for in Section 3.06 hereof.
The Trustee shall be under no liability with respect to moneys held by
it in the Income, Reserve and Capital Accounts of a Trust upon termination
except to hold the same in trust within the meaning of the Investment Company
Act of 1940, without interest until disposed of in accordance with the terms of
this Indenture.
IN WITNESS WHEREOF, the undersigned have caused this Trust Agreement to
be executed; all as of the day, month and year first above written.
XXX XXXXXX FUNDS INC.
By /s/ XXXX X. XXXXXXX
-------------------------------------
Executive Director
XXX XXXXXX ASSET MANAGEMENT
By /s/ XXXX X. XXXXXXX
-------------------------------------
Executive Director
THE BANK OF NEW YORK
By /s/ XXXXXXX XXXXXX
---------------------------------------
Assistant Vice President
SCHEDULE A TO TRUST AGREEMENT
SECURITIES INITIALLY DEPOSITED
IN
XXX XXXXXX UNIT TRUSTS, SERIES 713
[Incorporated herein by this reference and made a part hereof is the
"Portfolio" schedule as set forth in the Prospectus.]