EXHIBIT 1.1
XXX XXXXXX UNIT TRUSTS, SERIES 896
TRUST AGREEMENT
Dated: August 13, 2009
This Trust Agreement among Xxx Xxxxxx Funds Inc., as Depositor, The Bank of
New York Mellon, 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 Xxx Xxxxxx Focus Portfolios 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 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 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 January 10,
2010, and the tenth day of each month thereafter through May 10, 2010.
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 term "Trustee" shall mean The Bank of New York Mellon and its
successors in interest or any successor trustee appointed as provided in the
Standard Terms and Conditions of Trust.
11. The second sentence of section 2.01(b) is hereby deleted.
12. Section 3.05 is hereby amended by adding the following immediately
after Section 3.05(b)(v):
"(vi) Notwithstanding the foregoing, the Trustee shall not be required to
make a distribution from the Income Account or the Capital Account unless the
aggregate cash for distribution within the meaning of Treas. Reg 1.671-5(b)(5)
from the Income Account and the Capital Account is equal to or greater than 1%
of the net asset value of the Trust on the related Record Date. This provision
is intended to comply with Treas. Reg. 1.671-5(c)(2)(v)(C), and shall
interpreted consistent therewith and with any successor regulation."
13. Sections 5.01(b) and (c) are replaced in their entirety by the
following:
"(b) During the initial offering period of the 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 the 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."
14. Notwithstanding anything to the contrary in the Standard Terms and
Conditions of Trust and unless the Depositor instructs otherwise, if the Trustee
sells, redeems or otherwise liquidates Securities pursuant to Section 6.02 to
satisfy Unit redemptions, the Trustee shall do so, as nearly as practicable, on
a pro rata basis among all Securities held by the Trust.
15. 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 the 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 the 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.
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
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, no Unitholder may elect to have Units redeemed through an
In Kind Distribution within thirty (30) days of any Trust termination."
16. The second sentence of Section 7.01(e)(2)(E) shall be replaced in its
entirety by the following:
"Such Prospectus shall also contain disclosure concerning the Depositor's
responsibilities described in (D) above."
17. 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.
18. 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 to prevent the Trust from being deemed an
association taxable as a corporation for federal income tax purposes. This
Indenture may not be amended, however, without the consent of all Unitholders
then outstanding, so as (1) to permit, except in accordance with the terms and
conditions hereof, the acquisition hereunder of any 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 the 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 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 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) 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."
19. Section 9.02 of the Standard Terms and Conditions of Trust shall be
replaced in its entirety with the following:
"Section 9.02. Termination. This Indenture and the Trust created hereby
shall terminate upon the maturity, redemption, sale or other disposition as the
case may be of the last Security held in the 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 the 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 the Trust or, to the extent that
funds are not available in such Account of the Trust, from the Capital Account
of the 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 the Trust,
and (iii) any costs, expenses or indemnities in connection with the Trust as
provided herein;
(b) deduct from the Income Account of the Trust or, to the extent that
funds are not available in such Account, from the Capital Account of the Trust,
and pay accrued and unpaid fees of the Depositor, the Supervisor and counsel in
connection with the Trust, if any;
(c) deduct from the Income Account of the Trust or the Capital Account of
the 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 the Trust;
(d) make final distributions from the 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 MELLON
By: /s/ XXXXXXX XXXXXX
-------------------------------------------------
Vice President
SCHEDULE A TO TRUST AGREEMENT
SECURITIES INITIALLY DEPOSITED
IN
XXX XXXXXX UNIT TRUSTS, SERIES 896
[Incorporated herein by this reference and made a part hereof is the
"Portfolio" schedule as set forth in the Prospectus.]
