EQUINOX TRUST, SERIES [l] TRUST AGREEMENT
Exhibit A(1)(a)
EQUINOX TRUST, SERIES [l]
TRUST AGREEMENT
Dated: October [l], 2013
This Trust Agreement (the “Trust Agreement”) among Equinox Group Distributors, LLC, as Depositor, Equinox Institutional Asset Management, LP, as Evaluator and Supervisor, and The Bank of New York Mellon, 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 Equinox Trust, Effective for Unit Investment Trusts Investing in Equity Securities, Debt Securities and/or Derivative Transactions Established On and After [l], 2013” (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.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein contained, the Depositor, Trustee, Evaluator 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. In the event of any inconsistency between the provisions of this Trust Agreement and the provisions of the Standard Terms and Conditions of Trust, the Trust Agreement will prevail. All capitalized terms not otherwise defined herein shall have the meaning ascribed in the Standard Terms and Conditions of Trust.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed to:
1. The Securities listed in Schedule A hereto have been deposited in trust under this Trust Agreement.
2. The Evaluation of each Security listed in Schedule A hereto on the Initial Date of Deposit has been determined by the Evaluator to be the value of the Security set forth under “Statement of Financial Condition—Trust Portfolio” in the Prospectus for the Trust.
3. The fractional undivided interest in and ownership of a Trust represented by each Unit thereof is a fractional amount, the numerator of which is one and the denominator of which is the amount set forth under “Statement of Financial Condition—Units” in the Prospectus for the Trust.
4. The aggregate number of Units described in Section 2.03(a) of the Standard Terms and Conditions of Trust for a Trust is that number of Units set forth under “Statement of Financial Condition—Units” in the Prospectus for the Trust.
5. For each Security, the Underlying Asset to Unit Ratio is:
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|
Security |
Underlying Asset to Unit Ratio* | |
| [l] | [l] |
*The number of shares of each issue of Securities attributable to each Unit on the Initial Date of Deposit.
6. The term “Business Day” shall mean any business day as set forth under “Purchase and Redemption of Units” in the Prospectus for the Trust.
7. The “Creation and Development Fee” shall be the amount set forth under “Fee Table” in the Prospectus.
8. [There shall be no “Deferred Sales Charge” or “Deferred Sales Charge Payment Dates.”] [The term “Deferred Sales Charge Payment Dates” shall mean the Deferred Sales Charge Payment Dates set forth under “Essential Information” in the Prospectus for the Trust.]
9. The Trust shall [not] elect to be a Regulated Investment Company.
10. The term “Distribution Date” shall mean the “Distribution Date” set forth under “Essential Information” in the Prospectus for the Trust.
11. The term “Initial Date of Deposit” shall be [l].
12. The terms “Initial Offering Period” and the “Organization Expense Period” shall each mean the period beginning with the Initial Date of Deposit and ending on [one month,] in the case of the Initial Offering Period, and the [earlier of the end of the Initial Offering Period and six months,] in the case of the Organization Expense Period.
13. The term “Mandatory Termination Date” shall mean the “Termination Date” set forth under “Essential Information” in the Prospectus for the Trust.
14. The term “Record Date” shall mean the “Record Date” set forth under “Essential Information” in the Prospectus for the Trust.
15. The Depositor’s annual compensation shall be the amount set forth under “Fee Table” in the Prospectus. [The Depositor shall not receive compensation for its services as such.]
16. The Evaluator’s annual compensation shall be the amount set forth under “Fee Table” in the Prospectus.
17. The Supervisor’s annual compensation shall be the amount set forth under “Fee Table” in the Prospectus.
18. The Trustee’s annual compensation shall be the amount set forth under “Fee Table” in the Prospectus, with a minimum of $10,000 per annum.
19. [The License Fees shall be $[l], which amount is incorporated in “Other Fees and Expenses” in the Prospectus for the Trust and such amounts are payable on [l] in the amount of $[l]]. [There shall be no “License Fee”.]
20. [The minimum number of Units a Unitholder must redeem in order to be eligible for an In-Kind Distribution of Securities pursuant to Section 6.02 of the Standard Terms and Conditions of Trust shall be [l].]
21. In the event the Trust is identified as a Derivatives Trust, the following sections will be applicable:
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| (i) | A form of the relevant Derivative Agreement (including the Credit Support Agreement) is attached hereto as Annex A. |
| (ii) | The Depositor, on behalf of the Trust, has entered into each Derivative Transaction listed in Schedule B hereto and has executed and delivered each related Derivative Agreement (including without limitation any related Credit Support Agreements) concurrently with the execution of this Trust Agreement. |
| (iii) | The Evaluation of each Derivative Transaction listed in Schedule B hereto on the Initial Date of Deposit has been determined by the Evaluator to be the value for the Derivative Transactions set forth under “Statement of Financial Condition—Trust Portfolio” in the Prospectus for the Trust. |
| (iv) | For each Derivative Transaction, the Underlying Asset to Unit Ratio is: |
|
Derivative Transaction |
Underlying Asset to Unit Ratio* | |
| [l] | [l] | |
| [l] | [l] |
*The [number of index units] of each Derivative Agreement attributable to each Unit, expressed as a percentage.
| (v) | The term “Derivative Counterparty” shall mean the counterparty identified in the Derivative Agreement. |
| (vi) | The following provisions shall modify and supplement the Standard Terms and Conditions of Trust: |
Section 3.05. Collateral Account. (a) In respect of a Derivatives Trust, there shall be two collateral accounts, a “Trust Collateral Account” and a “Counterparty Collateral Account” and collectively the “Collateral Accounts”.
(b) Trust Collateral Account. In respect of a Derivatives Trust, the Trustee shall establish, with respect to each Derivative Counterparty, a collateral account in the name of the Trust into which, as instructed by the Depositor, the Trustee shall deposit Trust assets which shall be subject to a lien of the Derivative Counterparty to secure the performance of the Trust’s obligations to such Derivative Counterparty under the related Derivative Agreement. All assets in the Trust Collateral Account shall remain under the sole dominion of the Trustee and shall not be subject to transfer, use or rehypothecation except upon instruction of (i) the Depositor in accordance with the Credit Support Agreement and this Trust Agreement, or, (ii) upon an event of default under the Derivative Agreement when the Trust is the defaulting party, the Derivative Counterparty in accordance with the Credit Support Agreement. The Depositor shall cause the terms of the Credit Support Agreement to be consistent with the foregoing.
(c) Counterparty Collateral Account. In respect of a Derivatives Trust, the Depositor shall cause each Derivative Counterparty to establish, a collateral account in its name with [The Bank of New York Mellon], as custodian (the “Counterparty Collateral Custodian”) into which the Derivative Counterparty shall deposit Derivative Counterparty assets which shall be subject to a lien of the Trustee, on behalf of the Trust, to secure the performance of the Derivative Counterparty’s obligations to the Trust under the related Derivative Agreement. The Depositor shall cause the terms of the Credit Support Agreement to provide that (i) all assets in the Counterparty Collateral Account shall remain under the sole dominion of the Counterparty Collateral Custodian and shall not be subject to transfer, use or rehypothecation except upon instruction of: (A) the Derivative Counterparty in accordance with the Credit Support Agreement, or, (B) upon an event of default under the Derivative Agreement in which the Derivative Counterparty is the defaulting party, the Depositor, on behalf of the Trust and (ii) the Counterparty Collateral Custodian shall provide reporting concerning the assets of the Counterparty Collateral Account and all credits and debits
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thereto in form and substance satisfactory to the Depositor. Except for the security interest and related rights and remedies under the Derivative Agreement in favor of the Trust, the assets of the Counterparty Collateral Account are not otherwise Trust assets.
(d) Prior to an event of default under the Derivative Agreement, the Trustee shall, in the amount and at the time instructed by the Depositor, make the following deposits and withdrawals from the Trust Collateral Account:
| (i) | transfer to the Trust Collateral Account from the Capital Account, first, Securities and to the extent there are insufficient Securities, cash pursuant to the terms of the Credit Support Agreement; |
| (ii) | upon a redemption of a Unit in accordance with Section 6.02 of the Standard Terms and Conditions of Trust, transfer from the Trust Collateral Account to the Capital Account an amount equal to the Securities and/or cash released pursuant to the Credit Support Agreement; and |
| (iii) | upon a termination of the Trust in accordance with Section 9.02 of the Standard Terms and Conditions of Trust, transfer from the Collateral Account to the Capital Account an amount equal to the contents therein released under the Credit Support Agreement. |
(e) Prior to an event of default under the Derivative Agreement, the Trustee shall, in the amount and at the time instructed by the Depositor, make the following additional payments after making any (or reserving for) the payments provided in Section 3.06(i) of the Standard Terms and Conditions of Trust:
| (i) | transfer from the Capital Account to the Trust Collateral Account amounts specified in Section 3.05(d)(i) of this Trust Agreement; |
| (ii) | transfer from the Capital Account, first, cash and to the extent there is insufficient cash then Securities (and liquidate such Securities on instructions by the Depositor) to make payments to the Derivative Counterparty under the Derivative Agreement; |
| (iii) | credit to the Capital Account any amounts released from the Trust Collateral Account; |
| (iv) | credit to the Capital Account any amounts paid by the Derivative Counterparty under the Derivative Agreement; |
| (v) | upon a redemption of a Unit in accordance with Section 6.02 of the Standard Terms and Conditions of Trust, to (i) transfer to the Derivative Counterparty from the Capital Account, first, cash and to the extent there is insufficient cash then Securities (and liquidate such Securities on instructions by the Depositor) or (ii) deposit to the Capital Account for any amounts received from the Derivative Counterparty, in each case, on termination of the pro-rata portion of the Derivative Transactions; and |
| (vi) | upon a termination of the Trust in accordance with Section 9.02 of the Standard Terms and Conditions of Trust, (i) transfer to the Derivative Counterparty from the Capital Account, first, cash and to the extent there is insufficient cash then Securities (and liquidate on instructions by the Depositor) amounts equal to any payment to the Derivative Counterparty or (ii) deposit to the Capital Account |
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| amounts received from the Derivative Counterparty, in each case, arising from the termination of the Derivative Transaction. |
(f) (i) Following delivery of a notice of exclusive control by the Derivative Counterparty under the Credit Support Agreement after an event of default in respect of the Trust under the Derivative Agreement, the Trustee shall release the assets in the Trust Collateral Account to the Derivative Counterparty in accordance with the terms of the related Credit Support Agreement.
| (ii) | As provided in Section 2.01(g) of the Standard Terms and Conditions of Trust, the Depositor shall exercise all rights and remedies of the Trust under the Derivative Agreement, including delivery of a notice of exclusive control by the Depositor on behalf of the Trust to the Counterparty Collateral Custodian under the Credit Support Agreement following an event of default in respect of the Derivative Counterparty under the Derivative Agreement. The Depositor shall liquidate the assets in the Counterparty Collateral Account and make payments in accordance with the terms of the related Derivative Agreement. |
(g) To the extent any Securities held in the Trust Collateral Account shall make any form of cash distribution in respect of interest, dividends or otherwise, the Depositor shall (i) cause the release of such cash under the related Credit Support Agreement by substituting Securities or other Trust assets therefor, and (ii) issue instructions to the Trustee for deposit of such amounts into the Income Account
(h) The Trustee shall rely conclusively upon any instruction given by the Depositor with respect to the Collateral Accounts and shall take no action with respect to the Collateral Accounts or the assets therein in the absence of such instruction. The Trustee shall have no liability to any Unitholder, Derivative Counterparty or other person for any action taken pursuant to the Depositor’s, or in the case of Section 3.05(e)(i) herein, the Derivative Counterparty’s, instruction or for any failure to act in the absence of such instruction.
Section 5.01 Evaluation of Securities. (a) In respect of Derivative Transactions, the Evaluator shall determine the Evaluation in the following manner: (i) if options or futures positions held by the Trust are exchange traded, those options and futures positions will be valued based on the last official closing price on or prior to the Evaluation Time on the primary exchange for such position provided that there is an operating market-clearing mechanism at the relevant time of determination, or if none, on the last available price prior to the Evaluation Time; (ii) if the Derivative Transaction is not traded on an exchange, the Evaluator will determine the value of based on its good faith determination of the fair value of such Derivative Transaction in its reasonable discretion taking into consideration factors, including, but not limited to, (a) the net amount to be paid to or received by the Trust in connection with an early termination of such Derivative Transaction as determined pursuant to the Derivative Agreement on the valuation date by the related Derivative Counterparty or any third party pricing service retained by the Evaluator, (b) current prices for the Derivative Transaction as obtained from investment dealers or brokers who customarily deal in financials instruments comparable to the Derivative Transaction and/or (c) prices for comparable futures contracts, options or securities.
Except as provided in Section 5.01 of the Standard Terms and Conditions of Trust (“Offering Period Evaluations”), the Evaluation shall be made (i) when the Trust is “long” the relevant Derivative Transactions, on the basis of the bid side of the market and the bid side value of any relevant currency exchange rate expressed in U.S. dollars and (ii) when the Trust is “short” the relevant Derivative Transactions, on the basis of the ask side of the market and the ask side value of any relevant currency exchange rate expressed in U.S. dollars. Whether the Trust is “long” or “short” and/or whether the Derivative Transaction should be bifurcated for such purposes in such Evaluation will be determined by the Evaluator.
This Trust Agreement shall be deemed effective when executed and delivered by the Sponsor and the Trustee.
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In Witness Whereof, the undersigned have caused this Trust Agreement to be executed; all as of the day, month and year first above written.
| EQUINOX GROUP DISTRIBUTORS, LLC,
as Depositor | ||
| By | ||
| Name: | ||
| Title: | ||
| EQUINOX INSTITUTIONAL ASSET MANAGEMENT, LP
as Evaluator and Supervisor | ||
| By | ||
| Name: | ||
| Title: | ||
| THE BANK OF NEW YORK MELLON
as Trustee | ||
| By | ||
| Name: | ||
| Title: | ||
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SCHEDULE A TO TRUST AGREEMENT
SECURITIES INITIALLY DEPOSITED
IN
EQUINOX TRUST, SERIES [l]
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SCHEDULE B TO TRUST AGREEMENT
DERIVATIVE TRANSACTIONS
ENTERED INTO BY
EQUINOX TRUST, SERIES [l]
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ANNEX A TO TRUST AGREEMENT
FORM OF DERIVATIVE AGREEMENT AND CREDIT SUPPORT AGREEMENT
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