AGREEMENT AND DECLARATION OF TRUST
OF
XXXX XXXXXXX PREFERRED INCOME FUND II
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Dated September 12, 2002
AGREEMENT AND DECLARATION OF TRUST made this 12th day of September, 2002,
by the undersigned (together with all other persons from time to time duly
elected, qualified and serving as Trustees in accordance with the provisions of
Article II hereof, the "Trustees");
WHEREAS, the Trustees desire to establish a Massachusetts business trust
for the investment and reinvestment of funds contributed thereto;
WHEREAS, the Trustees desire that the beneficial interest in the trust
assets be divided into transferable shares of beneficial interest, as
hereinafter provided;
WHEREAS, the Trustees declare that all money and property contributed to
the trust established thereunder, together with the income therefrom and the
proceeds thereof, be held and managed in trust for the benefit of the holders,
from time to time, of the shares of beneficial interest issued or to be issued
thereunder and subject to the provisions thereof;
NOW, THEREFORE, in consideration of the foregoing premises and the
agreements contained herein, the undersigned, being all of the Trustees of the
Trust, declare as follows:
ARTICLE I
NAME AND DEFINITIONS
Section 1.1 Name. The name of the Trust created hereby is "Xxxx Xxxxxxx
Preferred Income Fund II" (the "Trust").
Section 1.2 Definitions. Wherever they are used herein, the following
terms have the following respective meanings:
(a) "Administrator" means the party, other than the Trust, to the contract
described in Section 3.3 hereof.
(b) "Adviser" or "Investment Adviser" means the party, other than the
Trust, to the contract described in Section 3.2 hereof.
(c) "By-Laws" means the By-Laws of the Trust referred to in Section 2.8
hereof, as amended from time to time.
(d) "Class" or "Class of Shares" means any division of Shares into two or
more Classes within a Series in accordance with the provisions of Article V.
(e) The terms "Commission" and "Interested Person" have the meanings given
them in the 1940 Act. Except as such term may be otherwise defined by the
Trustees in conjunction with the establishment of any Series, the term "vote of
a majority of the Outstanding Shares entitled to vote" shall have the same
meaning as is assigned to the term "vote of a majority of the outstanding voting
securities" in the 1940 Act.
(f) "Common Shares" means the Trust's common shares of beneficial
interest.
(g) "Custodian" means any Person other than the Trust who has custody of
any Trust Property as required by Section 17(f) of the 1940 Act, but does not
include a system for the central handling of securities described in said
Section 17(f).
(h) "Declaration" and "Declaration of Trust" means this Agreement and
Declaration of Trust, as amended from time to time. Reference in this
Declaration of Trust to "Declaration", "hereof", "herein", and "hereunder" shall
be deemed to refer to this Declaration rather than exclusively to the article or
section in which such words appear.
(i) "Fundamental Restrictions" means the investment restrictions set forth
in the Prospectus and Statement of Additional Information for any Series and
designated as fundamental restrictions therein with respect to such Series.
(j) "His" shall include the feminine and neuter, as well as the masculine,
genders.
(k) "Investment Adviser" means the party, other than the Trust, to the
contract described in Section 3.2 hereof.
(l) "Majority of the Trustees" means a majority of the Trustees in office
at the time in question. At any time at which there shall be only one Trustee in
office, such phrase shall mean such Trustee.
(m) "1940 Act" means the Investment Company Act of 1940.
(n) "Person" means and includes individuals, corporations, partnerships,
trusts, associations, joint ventures and other entities, whether or not legal
entities, and governments and agencies and political subdivisions thereof.
(o) "Preferred Shares" means the Trust's preferred shares or any Class
thereof. The provisions of this Declaration of Trust relating to the Preferred
Shares shall have no force and effect unless and until one or more Classes of
Preferred Shares are first duly authorized, issued and outstanding.
(p) "Prospectus" means the Prospectuses and Statements of Additional
Information included in the Registration Statement of the Trust under the
Securities Act of 1933 and 1940 Act, as amended, as such Prospectuses and
Statements of Additional Information may be amended or supplemented and filed
with the Commission from time to time.
-2-
(q) "Series" or "Series of Shares" individually or collectively means the
separately managed component(s) of the Trust (or, if the Trust shall have only
one such component, then that one) as may be established from time to time by
the Trustees pursuant to Section 5.11 hereof.
(r) "Shareholder" means a record owner of Outstanding Shares.
(s) "Shares" means the equal proportionate transferable units of interest
into which the beneficial interest in the Trust shall be divided from time to
time, including the Shares of any and all Series or of any Class within any
Series (as the context may require) which may be established by the Trustees,
and includes fractions of Shares as well as whole Shares.
"Outstanding" Shares means those Shares shown from time to time on the
books of the Trust or its Transfer Agent as then issued and outstanding, but
shall not include Shares which have been redeemed or repurchased by the Trust
and which are at the time held in the treasury of the Trust.
(t) "Transfer Agent" means the party, other than the Trust, to the
contract described in Section 3.5 hereof.
(u) "Trust" means Xxxx Xxxxxxx Preferred Income Fund II.
(v) "Trustees" means the persons who have signed this Declaration, so long
as they shall continue in office in accordance with the terms hereof, and all
other persons who now serve or may from time to time be duly appointed, elected,
qualified and serving as Trustees of the Trust in accordance with the provisions
of Article II hereof. Reference herein to a Trustee or the Trustees shall refer
to such person or persons in this capacity or their capacities as trustees
hereunder. At any time at which there shall be only one Trustee in office, such
term shall mean such single Trustee.
(w) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of the
Trust or the Trustees, including any and all assets of or allocated to any
Series or Class, as the context may require.
(x) "Underwriter" means the party, other than the Trust, to the contract
described in Section 3.1 hereof.
ARTICLE II
TRUSTEES
Section 2.1 General Powers. The Trustees shall have exclusive and absolute
control over the Trust Property and over the business of the Trust to the same
extent as if the Trustees were the sole owners of the Trust Property and
business in their own right, but with such powers of delegation as may be
permitted by this Declaration. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices both within and without The Commonwealth of Massachusetts,
in any and all states of the United States of America, in the District of
Columbia, and in any and all commonwealths, territories, dependencies, colonies,
possessions, agencies and instrumentalities of the United States of America and
of foreign governments, and to do all such other things and execute all
-3-
such instruments as they deem necessary, proper or desirable in order to promote
the interests of the Trust although such things are not herein specifically
mentioned. Any determination as to what is in the interests of the Trust made by
the Trustees in good faith shall be conclusive. In construing the provisions of
this Declaration, the presumption shall be in favor of a grant of power to the
Trustees.
The enumeration of any specific power herein shall not be construed as
limiting the aforesaid powers. Such powers of the Trustees may be exercised
without order of or resort to any court.
Section 2.2 Certain Specific Powers. The Trustees shall have the power:
(a) To operate as and carry on the business of an investment company, and
exercise all the powers necessary and appropriate to the conduct of such
operations.
(b) To invest in, hold for investment, or reinvest in, cash; securities,
including common, preferred and preference securities; warrants; subscription
rights; profit-sharing interests or participations and all other contracts for
or evidence of equity interests; bonds, debentures, bills, time notes and all
other evidences of indebtedness; negotiable or non-negotiable instruments;
government securities, including securities of any state, municipality or other
political subdivision thereof, or any governmental or quasi-governmental agency
or instrumentality; and money market instruments including bank certificates of
deposit, finance paper, commercial paper, bankers' acceptances and all kinds of
repurchase agreements, of any corporation, company, trust, association, firm or
other business organization however established, and of any country, state,
municipality or other political subdivision, or any governmental or
quasi-governmental agency or instrumentality; any other security, instrument or
contract the acquisition or execution of which is not prohibited by any
Fundamental Restriction; and the Trustees shall be deemed to have the foregoing
powers with respect to any additional securities in which the Trust may invest
should the Fundamental Restrictions be amended.
(c) To acquire (by purchase, subscription or otherwise), to hold, to trade
in and deal in, to acquire any rights or options to purchase or sell, to sell or
otherwise dispose of, to lend and to pledge any such securities, to enter into
repurchase agreements, reverse repurchase agreements, firm commitment
agreements, forward foreign currency exchange contracts, interest rate, mortgage
or currency swaps, and interest rate caps, floors and collars, to purchase and
sell options on securities, indices, currency, swaps or other financial assets,
futures contracts and options on futures contracts of all descriptions and to
engage in all types of hedging, risk management or income enhancement
transactions.
(d) To exercise all rights, powers and privileges of ownership or interest
in all securities and repurchase agreements included in the Trust Property,
including the right to vote thereon and otherwise act with respect thereto and
to do all acts for the preservation, protection, improvement and enhancement in
value of all such securities and repurchase agreements.
(e) To acquire (by purchase, lease or otherwise) and to hold, use,
maintain, develop and dispose of (by sale or otherwise) any property, real or
personal, including cash or foreign currency, and any interest therein.
-4-
(f) To borrow money and in this connection issue notes or other evidence
of indebtedness; to issue Preferred Shares; to secure borrowings by mortgaging,
pledging or otherwise subjecting as security the Trust Property; and to endorse,
guarantee, or undertake the performance of any obligation or engagement of any
other Person and to lend Trust Property.
(g) To aid by further investment any corporation, company, trust,
association or firm, any obligation of or interest in which is included in the
Trust Property or in the affairs of which the Trustees have any direct or
indirect interest; to do all acts and things designed to protect, preserve,
improve or enhance the value of such obligation or interest; and to guarantee or
become surety on any or all of the contracts, stocks, bonds, notes, debentures
and other obligations of any such corporation, company, trust, association or
firm.
(h) To enter into one or more underwriting or other agreements intended to
result in the distribution of Shares.
(i) To establish multiple Classes of Shares (as authorized herein at
Section 5.11), and to the extent necessary or appropriate to give effect to
preferences, special or relative rights and privileges of any Class or Series of
Shares, to allocate assets, liabilities, income and expenses of the Shares or to
apportion the same among two or more Classes or Series.
(j) To enter into, make and perform all such obligations, contracts,
agreements and undertakings of every kind and description, with any person or
persons, as the Trustees shall in their discretion deem expedient in the conduct
of the business of the Trust, for such terms as they shall see fit, whether or
not extending beyond the term of office of the Trustees, or beyond the possible
expiration of the Trust; and to amend, extend, release or cancel any such
obligations, contracts, agreements or understandings; and to execute,
acknowledge, deliver and record all written instruments which they may deem
necessary or expedient in the exercise of their powers.
(k) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary, suitable
or proper for the accomplishment of any purpose or the attainment of any object
or the furtherance of any power hereinbefore set forth, either alone or in
association with others, and to do every other act or thing incidental or
appurtenant to or arising out of or connected with the aforesaid business or
purposes, objects or powers.
The foregoing clauses shall be construed both as objects and powers, and
the foregoing enumeration of specific powers shall not be held to limit or
restrict in any manner the general powers of the Trustees.
Notwithstanding any other provision herein, the Trustees shall have full
power in their discretion as contemplated in Section 7.5, without any
requirement of approval by Shareholders, to invest part or all of the Trust
Property (or part or all of the assets of any Series), or to dispose of part or
all of the Trust Property (or part or all of the assets of any Series) and
invest the proceeds of such disposition, in securities issued by one or more
other investment companies registered under the 1940 Act. Any such other
investment company may (but need not) be a trust (formed under the laws of any
state) which is classified as a partnership or corporation for federal income
tax purposes.
-5-
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust, nor shall the Trustees be limited
by any law limiting the investments which may be made by fiduciaries.
Section 2.3 Legal Title. Legal title to all the Trust Property shall be
vested in the Trustees as joint tenants except that the Trustees shall have
power to cause legal title to any Trust Property to be held by or in the name of
one or more of the Trustees, or in the name of the Trust or any Series of the
Trust, or in the name of any other Person as nominee, on such terms as the
Trustees may determine, provided that the interest of the Trust therein is
deemed appropriately protected. The right, title and interest of the Trustees in
the Trust Property and the Property of each Series of the Trust shall vest
automatically in each Person who may hereafter become a Trustee. Upon the
termination of the term of office, resignation, removal or death of a Trustee he
shall automatically cease to have any right, title or interest in any of the
Trust Property, and the right, title and interest of such Trustee in the Trust
Property shall vest automatically in the remaining Trustees. Such vesting and
cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered.
Section 2.4 Issuance and Repurchase of Shares. The Trustees shall have the
power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold, resell,
reissue, dispose of, transfer, and otherwise deal in Shares and, subject to the
provisions set forth in Articles VI and Section 5.11 hereof, to apply to any
such repurchase, redemption, retirement, cancellation or acquisition of Shares
any funds or property of the Trust or of the particular Series with respect to
which such Shares are issued, whether capital or surplus or otherwise, to the
full extent now or hereafter permitted by the laws of The Commonwealth of
Massachusetts governing business corporations.
Section 2.5 Delegation; Committees. The Trustees shall have power,
consistent with their continuing exclusive authority over the management of the
Trust and the Trust Property, to delegate from time to time to such of their
number or to officers, employees or agents of the Trust the doing of such things
and the execution of such instruments either in the name of the Trust or any
Series of the Trust or the names of the Trustees or otherwise as the Trustees
may deem expedient, to the same extent as such delegation is permitted by the
1940 Act.
Section 2.6 Collection and Payment. The Trustees shall have power to
collect all property due to the Trust; to pay all claims, including taxes,
against the Trust Property; to prosecute, defend, compromise or abandon any
claims relating to the Trust Property; to foreclose any security interest
securing any obligations, by virtue of which any property is owed to the Trust;
and to enter into releases, agreements and other instruments.
Section 2.7 Expenses. The Trustees shall have the power to incur and pay
any expenses which in the opinion of the Trustees are necessary or incidental to
carry out any of the purposes of this Declaration, and to pay reasonable
compensation from the funds of the Trust to themselves as Trustees. The Trustees
shall fix the compensation of all officers, employees and Trustees.
Section 2.8 Manner of Acting; By-laws. Except as otherwise provided herein
or in the By-laws, any action to be taken by the Trustees may be taken by a
Majority of the Trustees
-6-
present at a meeting of Trustees, including any meeting held by means of a
conference telephone circuit or similar communications equipment by means of
which all persons participating in the meeting can hear each other, or by
written consents of a majority of Trustees then in office. The Trustees may
adopt By-laws not inconsistent with this Declaration to provide for the conduct
of the business of the Trust and may amend or repeal such By-laws to the extent
such power is not reserved to the Shareholders.
Notwithstanding the foregoing provisions of this Section 2.8 and in
addition to such provisions or any other provision of this Declaration or of the
By-laws, the Trustees may by resolution appoint a committee consisting of less
than the whole number of Trustees then in office, which committee may be
empowered to act for and bind the Trustees and the Trust, as if the acts of such
committee were the acts of all the Trustees then in office, with respect to the
institution, prosecution, dismissal, settlement, review or investigation of any
action, suit or proceeding which shall be pending or threatened to be brought
before any court, administrative agency or other adjudicatory body.
Section 2.9 Miscellaneous Powers. The Trustees shall have the power to:
(a) employ or contract with such Persons as the Trustees may deem desirable for
the transaction of the business of the Trust or any Series thereof; (b) enter
into joint ventures, partnerships and any other combinations or associations;
(c) subject to the provisions of this Article II, remove Trustees, fill
vacancies in, add to or subtract from their number, elect and remove such
officers and appoint and terminate such agents or employees as they consider
appropriate, and appoint from their own number, and terminate, any one or more
committees which may exercise some or all of the power and authority of the
Trustees as the Trustees may determine; (d) purchase, and pay for out of Trust
Property or the property of the appropriate Series of the Trust, insurance
policies insuring the Shareholders, Trustees, officers, employees, agents,
investment advisers, administrators, underwriters, selected dealers or
independent contractors of the Trust against all claims arising by reason of
holding any such position or by reason of any action taken or omitted by any
such Person in such capacity, whether or not constituting negligence, or whether
or not the Trust would have the power to indemnify such Person against such
liability; (e) establish pension, profit-sharing, share purchase, and other
retirement, incentive and benefit plans for any Trustees, officers, employees
and agents of the Trust; (f) to the extent permitted by law, indemnify any
person with whom the Trust or any Series thereof has dealings, including the
Investment Adviser, Administrator, Underwriter, Transfer Agent and selected
dealers, to such extent as the Trustees shall determine; (g) guarantee
indebtedness or contractual obligations of others; (h) determine and change the
fiscal year and taxable year of the Trust or any Series thereof and the method
by which its or their accounts shall be kept; and (i) adopt a seal for the
Trust, but the absence of such seal shall not impair the validity of any
instrument executed on behalf of the Trust.
Section 2.10 Principal Transactions. Except for transactions not permitted
by the 1940 Act or rules and regulations adopted, or orders issued, by the
Commission thereunder, the Trustees may, on behalf of the Trust, buy any
securities from or sell any securities to, or lend any assets of the Trust or
any Series thereof to any Trustee or officer of the Trust or any firm of which
any such Trustee or officer is a member acting as principal, or have any such
dealings with the Investment Adviser, any Underwriter or Transfer Agent or with
any Interested Person of such Person; and the Trust or a Series thereof may
employ any such Person, or firm or company
-7-
in which such Person is an Interested Person, as broker, legal counsel,
registrar, Transfer Agent, dividend disbursing agent or Custodian upon customary
terms.
Section 2.11 Litigation. The Trustees shall have the power to engage in
and to prosecute, defend, compromise, abandon, or adjust by arbitration, or
otherwise, any actions, suits, proceedings, disputes, claims, and demands
relating to the Trust, and out of the assets of the Trust or any Series thereof
to pay or to satisfy any debts, claims or expenses incurred in connection
therewith, including those of litigation, and such power shall include without
limitation the power of the Trustees or any appropriate committee thereof, in
the exercise of their or its good faith business judgment, to dismiss any
action, suit, proceeding, dispute, claim, or demand, derivative or otherwise,
brought by any person, including a Shareholder in its own name or the name of
the Trust, whether or not the Trust or any of the Trustees may be named
individually therein or the subject matter arises by reason of business for or
on behalf of the Trust.
Section 2.12 Number of Trustees. The initial Trustee(s) shall be the
persons initially signing this Declaration. The number of Trustees (other than
the initial Trustees) shall be fixed from time to time by a majority of the
Trustees then in office; provided, that there shall be at least one (1) Trustee.
Section 2.13 Election and Term.
(a) Except for the Trustees named herein or appointed to fill vacancies
pursuant to Section 2.15 hereof and subject to voting rights established with
respect to a Class or Series, the Trustees may succeed themselves and shall be
elected by the Shareholders owning of record a plurality of the Shares voting at
a meeting of Shareholders on a date fixed by the Trustees. Except in the event
of resignations or removals pursuant to Section 2.14 hereof or prior to the
initial issuance of Shares, each Trustee shall hold office until such time as
less than a Majority of the Trustees holding office has been elected by
Shareholders. In such event the Trustees then in office shall call a
Shareholders' meeting for the election of Trustees. Except for the foregoing
circumstances, the Trustees shall continue to hold office and may appoint
successor Trustees.
(b) Subject to the voting rights established with respect to a particular
Series or Class, each Trustee shall hold office for life or until his successor
is elected or the Trust terminates. Notwithstanding the foregoing but subject to
the voting rights established with respect to a particular Series or Class, (1)
any Trustee may resign by delivering to the other Trustees or to any Trust
officer a written resignation effective upon such delivery or a later date
specified therein; (2) any Trustee may be removed with cause at any time by a
written instrument signed by at least three-quarters of the then Trustees,
specifying the effective date of removal; (3) any Trustee who requests to be
retired, or who is declared bankrupt or has become physically or mentally
incapacitated or is otherwise unable to serve, may be retired by a written
instrument signed by a Majority of the other Trustees, specifying the effective
date of retirement; and (4) any Trustee may be removed, are provided in Section
2.14 hereof.
(c) The Board of Trustees shall be divided into three classes, designated
Class I, Class II and Class III. Each class shall consist, as nearly as may be
possible, of one-third of the total number of Trustees constituting the entire
Board of Trustees. Within the limits above
-8-
specified, the number of the Trustees in each class shall be determined by
resolution of the Board of Trustees. The Trustees may also determine by
resolution those Trustees in each Class that shall be elected by Shareholders of
a particular Class of Shares (e.g., by a Class of Preferred Shares). The term of
office of the Class I shall expire on the date of the first annual meeting of
Shareholders following the effective date of the Registration Statement relating
to the Common Shares under the Securities Act of 1933. The term of the Class II
shall expire on the date of the second annual meeting of Shareholders following
the effective date of the Registration Statement relating to the Common Shares
under the Securities Act. The term of the Class III shall expire on the date of
the third annual meeting of Shareholders following the effective date of the
Registration Statement relating to the Common Shares under the Securities Act of
1933. Upon expiration of the term of office of each class as set forth above,
the number of Trustees in such class, as determined by the Board of Trustees,
shall be elected for a term expiring on the date of the third annual meeting of
Shareholders following such expiration to succeed the Trustees whose terms of
office expire. The Trustees shall be elected at an annual meeting of the
Shareholders or special meeting in lieu thereof called for that purpose.
Section 2.14 Resignation and Removal. Any Trustee may resign his trust or
retire as a Trustee, by a written instrument signed by him and delivered to the
other Trustees or to any officer of the Trust, and such resignation or
retirement shall take effect upon such delivery or upon such later date as is
specified in such instrument. At any meeting called for the purpose, a Trustee
elected solely by the holders of the Preferred Shares may be removed from his
office during his term, with or without cause, but only by action of the holders
of at least a majority of the outstanding Preferred Shares, voting separately as
a Class, and any other Trustee may be removed from his office during his term,
but only for cause and only by action of the holders of at least 75% of the
Outstanding Shares entitled to vote thereon; provided, however, that if
termination of a Trustee (other than a Trustee elected solely by the holders of
the Preferred Shares) is recommended by three quarters of the total number of
Trustees then in office, the voting of the holders of a majority of the
Outstanding Shares shall be sufficient to remove such Trustee. Upon the
resignation or removal of a Trustee, or his otherwise ceasing to be a Trustee,
he shall execute and deliver such documents as the remaining Trustees shall
require for the purpose of conveying to the Trust or the remaining Trustees any
trust property or property of any Series or Class of the Trust held in the name
of the resigning or removed Trustee. Upon the incapacity or death of any
Trustee, his legal representative shall execute and deliver on his behalf such
documents as the remaining Trustees shall require as provided in the preceding
sentence.
Section 2.15 Vacancies. Whenever a vacancy shall exist in the Board of
Trustees, regardless of the reason for such vacancy, the remaining Trustees
shall appoint any person as they determine in their sole discretion to fill that
vacancy, consistent with the limitations under the 1940 Act, provided, that if
the Shareholders of any Class or Series of Shares are entitled separately to
elect one or more Trustees, a majority of the remaining Trustees or the sole
remaining Trustee elected by that Class or Series may fill any vacancy among the
number of Trustees elected by that Class or Series. Such appointment shall be
made by a written instrument signed by a Majority of the Trustees or by a
resolution of the Trustees, duly adopted and recorded in the records of the
Trust, specifying the effective date of the appointment. The Trustees may
appoint a new Trustee as provided above in anticipation of a vacancy expected to
occur because of the retirement, resignation or removal of a Trustee, or an
increase in number of Trustees, provided that such appointment shall become
effective only at or after the expected
-9-
vacancy occurs. As soon as any such Trustee has accepted his appointment in
writing, the trust estate shall vest in the new Trustee, together with the
continuing Trustees, without any further act or conveyance, and he shall be
deemed a Trustee hereunder. The Trustees' power of appointment is subject to
Section 16(a) of the 1940 Act. Whenever a vacancy in the number of Trustees
shall occur, until such vacancy is filled as provided in this Article II, the
Trustees in office, regardless of their number, shall have all the powers
granted to the Trustees and shall discharge all the duties imposed upon the
Trustees by the Declaration. The death, declination to serve, resignation,
retirement, removal or incapacity of one or more Trustees, or all of them, shall
not operate to annul the Trust or to revoke any existing agency created pursuant
to the terms of this Declaration of Trust.
Section 2.16 Delegation of Power to Other Trustees. Any Trustee may, by
power of attorney, delegate his power for a period not exceeding six (6) months
at any one time to any other Trustee or Trustees; provided that in no case shall
fewer than two (2) Trustees personally exercise the powers granted to the
Trustees under this Declaration except as herein otherwise expressly provided.
ARTICLE III
CONTRACTS
Section 3.1 Underwriting Contract. The Trustees may in their discretion
from time to time enter into an exclusive or non-exclusive underwriting contract
or contracts providing for the sale of the Shares, whereby the Trustees may
either agree to sell the Shares to the other party to the contract or appoint
such other party as their sales agent for the Shares, and in either case on such
terms and conditions, if any, as may be prescribed in the By-laws, and such
further terms and conditions as the Trustees may in their discretion determine
not inconsistent with the provisions of this Article III or of the By-laws; and
such contract may also provide for the repurchase of the Shares by such other
party as agent of the Trustees.
Section 3.2 Advisory or Management Contract. The Trustees may in their
discretion from time to time enter into one or more investment advisory or
management contracts or, if the Trustees establish multiple Series, separate
investment advisory or management contracts with respect to one or more Series
whereby the other party or parties to any such contracts shall undertake to
furnish the Trust or such Series management, investment advisory,
administration, accounting, legal, statistical and research facilities and
services, promotional or marketing activities, and such other facilities and
services, if any, as the Trustees shall from time to time consider desirable and
all upon such terms and conditions as the Trustees may in their discretion
determine. Notwithstanding any provisions of the Declaration, the Trustees may
authorize the Investment Advisers, or any of them, under any such contracts
(subject to such general or specific instructions as the Trustees may from time
to time adopt) to effect purchases, sales, loans or exchanges of portfolio
securities and other investments of the Trust on behalf of the Trustees or may
authorize any officer, employee or Trustee to effect such purchases, sales,
loans or exchanges pursuant to recommendations of such Investment Advisers, or
any of them (and all without further action by the Trustees). Any such
purchases, sales, loans and exchanges shall be deemed to have been authorized by
all of the Trustees. The Trustees may, in their sole discretion, call a meeting
of Shareholders in order to submit to a vote of Shareholders at such
-10-
meeting the approval or continuance of any such investment advisory or
management contract. If the Shareholders of any one or more of the Series of the
Trust should fail to approve any such investment advisory or management
contract, the Investment Adviser may nonetheless serve as Investment Adviser
with respect to any Series whose Shareholders approve such contract.
Section 3.3 Administration Agreement. The Trustees may in their discretion
from time to time enter into an administration agreement or, if the Trustees
establish multiple Series or Classes, separate administration agreements with
respect to each Series or Class, whereby the other party to such agreement shall
undertake to manage the business affairs of the Trust or of a Series or Class
thereof and furnish the Trust or a Series or a Class thereof with office
facilities, and shall be responsible for the ordinary clerical, bookkeeping and
recordkeeping services at such office facilities, and other facilities and
services, if any, and all upon such terms and conditions as the Trustees may in
their discretion determine.
Section 3.4 Service Agreement. The Trustees may in their discretion from
time to time enter into Service Agreements with respect to one or more Series or
Classes thereof whereby the other parties to such Service Agreements will
provide administration and/or support services pursuant to administration plans
and service plans, and all upon such terms and conditions as the Trustees in
their discretion may determine.
Section 3.5 Transfer Agent. The Trustees may in their discretion from time
to time enter into a transfer agency and shareholder service contract whereby
the other party to such contract shall undertake to furnish transfer agency and
shareholder services to the Trust. The contract shall have such terms and
conditions as the Trustees may in their discretion determine not inconsistent
with the Declaration. Such services may be provided by one or more Persons.
Section 3.6 Custodian. The Trustees may appoint or otherwise engage one or
more banks or trust companies, each having an aggregate capital, surplus and
undivided profits (as shown in its last published report) of at least two
million dollars ($2,000,000) to serve as Custodian with authority as its agent,
but subject to such restrictions, limitations and other requirements, if any, as
may be contained in the By-laws of the Trust. The Trustees may also authorize
the Custodian to employ one or more sub-custodians, including such foreign banks
and securities depositories as meet the requirements of applicable provisions of
the 1940 Act, and upon such terms and conditions as may be agreed upon between
the Custodian and such sub-custodian, to hold securities and other assets of the
Trust and to perform the acts and services of the Custodian, subject to
applicable provisions of law and resolutions adopted by the Trustees.
Section 3.7 Affiliations of Trustees or Officers, Etc. The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust or
any Series thereof is a shareholder, director, officer, partner, trustee,
employee, manager, adviser or distributor of or for any partnership,
corporation, trust, association or other organization or of or for any
parent or affiliate of any organization, with which a contract of the
character described in Sections 3.1, 3.2, 3.3 or 3.4 above or for services
as Custodian, Transfer Agent or disbursing agent or for providing
accounting, legal and printing services or for related services may have
been or may hereafter be made, or that any such
-11-
organization, or any parent or affiliate thereof, is a Shareholder of or
has an interest in the Trust, or that
(ii) any partnership, corporation, trust, association or other
organization with which a contract of the character described in Sections
3.1, 3.2, 3.3 or 3.4 above or for services as Custodian, Transfer Agent or
disbursing agent or for related services may have been or may hereafter be
made also has any one or more of such contracts with one or more other
partnerships, corporations, trusts, associations or other organizations,
or has other business or interests,
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same or create any liability or accountability to the Trust or its Shareholders.
Section 3.8 Compliance with 1940 Act. Any contract entered into pursuant
to Sections 3.1 or 3.2 shall be consistent with and subject to the requirements
of Section 15 of the 1940 Act (including any amendment thereof or other
applicable Act of Congress hereafter enacted), as modified by any applicable
order or orders of the Commission, with respect to its continuance in effect,
its termination and the method of authorization and approval of such contract or
renewal thereof.
ARTICLE IV
LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHERS
Section 4.1 No Personal Liability of Shareholders, Trustees, Etc. No
Shareholder shall be subject to any personal liability whatsoever to any Person
in connection with Trust Property or the acts, obligations or affairs of the
Trust or any Series thereof. No Trustee, officer, employee or agent of the Trust
or any Series thereof shall be subject to any personal liability whatsoever to
any Person, other than to the Trust or its Shareholders, in connection with
Trust Property or the affairs of the Trust, except to the extent arising from
bad faith, willful misfeasance, gross negligence or reckless disregard of his
duties with respect to such Person; and all such Persons shall look solely to
the Trust Property, or to the Property of one or more specific Series of the
Trust if the claim arises from the conduct of such Trustee, officer, employee or
agent with respect to only such Series, for satisfaction of claims of any nature
arising in connection with the affairs of the Trust. If any Shareholder,
Trustee, officer, employee, or agent, as such, of the Trust or any Series
thereof, is made a party to any suit or proceeding to enforce any such liability
of the Trust or any Series thereof, he shall not, on account thereof, be held to
any personal liability. The Trust shall indemnify and hold each Shareholder
harmless from and against all claims and liabilities, to which such Shareholder
may become subject by reason of his being or having been a Shareholder, and
shall reimburse such Shareholder or former Shareholder (or his or her heirs,
executors, administrators or other legal representatives or in the case of a
corporation or other entity, its corporate or other general successor) out of
the Trust Property for all legal and other expenses reasonably incurred by him
in connection with any such claim or liability. The indemnification and
reimbursement required by the preceding sentence shall be made only out of
assets of the one or more Series whose Shares were held by said Shareholder at
-12-
the time the act or event occurred which gave rise to the claim against or
liability of said Shareholder. The rights accruing to a Shareholder under this
Section 4.1 shall not impair any other right to which such Shareholder may be
lawfully entitled, nor shall anything herein contained restrict the right of the
Trust or any Series thereof to indemnify or reimburse a Shareholder in any
appropriate situation even though not specifically provided herein.
Section 4.2 Non-Liability of Trustees, Etc. No Trustee, officer, employee
or agent of the Trust or any Series thereof shall be liable to the Trust, its
Shareholders, or to any Shareholder, Trustee, officer, employee, or agent
thereof for any action or failure to act (including without limitation the
failure to compel in any way any former or acting Trustee to redress any breach
of trust) except for his own bad faith, willful misfeasance, gross negligence or
reckless disregard of the duties involved in the conduct of his office.
Section 4.3 Mandatory Indemnification. (a) Subject to the exceptions and
limitations contained in paragraph (b) below:
(i) every person who is, or has been, a Trustee, officer, employee
or agent of the Trust (including any individual who serves at its request
as director, officer, partner, trustee or the like of another organization
in which it has any interest as a shareholder, creditor or otherwise)
shall be indemnified by the Trust, or by one or more Series thereof if the
claim arises from his or her conduct with respect to only such Series, to
the fullest extent permitted by law against all liability and against all
expenses reasonably incurred or paid by him in connection with any claim,
action, suit or proceeding in which he becomes involved as a party or
otherwise by virtue of his being or having been a Trustee, officer,
employee or agent of the Trust and against amounts paid or incurred by him
in the settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil, criminal, or
other, including appeals), actual or threatened; and the words "liability"
and "expenses" shall include, without limitation, attorneys' fees, costs,
judgments, amounts paid in settlement, fines, penalties and other
liabilities.
(b) No indemnification shall be provided hereunder to a Trustee, officer,
employee or agent of the Trust:
(i) against any liability to the Trust, a Series thereof or the
Shareholders by reason of willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of his office;
(ii) with respect to any matter as to which he shall have been
finally adjudicated not to have acted in good faith in the reasonable
belief that his action was in the best interest of the Trust or a Series
thereof;
(iii) in the event of a settlement or other disposition not
involving a final adjudication as provided in paragraph (b)(ii) resulting
in a payment by a Trustee or officer, unless there has been a
determination that such Trustee or officer did not engage
-13-
in willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office:
(A) by the court or other body approving the settlement or
other disposition;
(B) based upon a review of readily available facts (as opposed
to a full trial-type inquiry) by (x) vote of a majority of the
Non-interested Trustees acting on the matter (provided that a
majority of the Non-interested Trustees then in office act on the
matter) or (y) written opinion of independent legal counsel; or
(C) by a vote of a majority of the Outstanding Shares and
entitled to vote (excluding Shares owned of record or beneficially
by such individual).
(c) The rights of indemnification herein provided may be insured against
by policies maintained by the Trust, shall be severable, shall not affect any
other rights to which any Trustee, officer, employee or agent of the Trust may
now or hereafter be entitled, shall continue as to a Person who has ceased to be
such Trustee or officer and shall inure to the benefit of the heirs, executors,
administrators and assigns of such a Person. Nothing contained herein shall
affect any rights to indemnification to which personnel of the Trust or any
Series thereof other than Trustees and officers may be entitled by contract or
otherwise under law.
(d) Expenses of preparation and presentation of a defense to any claim,
action, suit or proceeding of the character described in paragraph (a) of this
Section 4.3 may be advanced by the Trust or a Series thereof prior to final
disposition thereof upon receipt of an undertaking by or on behalf of the
recipient to repay such amount if it is ultimately determined that he is not
entitled to indemnification under this Section 4.3, provided that either:
(i) such undertaking is secured by a surety bond or some other
appropriate security provided by the recipient, or the Trust or Series
thereof shall be insured against losses arising out of any such advances;
or
(ii) a majority of the Non-interested Trustees acting on the matter
(provided that a majority of the Non-interested Trustees act on the
matter) or an independent legal counsel in a written opinion shall
determine, based upon a review of readily available facts (as opposed to a
full trial-type inquiry), that there is reason to believe that the
recipient ultimately will be found entitled to indemnification.
As used in this Section 4.3, a "Non-interested Trustee" is one who (i) is
not an "Interested Person" of the Trust (including anyone who has been exempted
from being an "Interested Person" by any rule, regulation or order of the
Commission), and (ii) is not involved in the claim, action, suit or proceeding.
Section 4.4 No Bond Required of Trustees. No Trustee shall be obligated to
give any bond or other security for the performance of any of his duties
hereunder.
Section 4.5 No Duty of Investigation; Notice in Trust Instruments, Etc. No
purchaser, lender, Transfer Agent or other Person dealing with the Trustees or
any officer, employee or
-14-
agent of the Trust or a Series thereof shall be bound to make any inquiry
concerning the validity of any transaction purporting to be made by the Trustees
or by said officer, employee or agent or be liable for the application of money
or property paid, loaned, or delivered to or on the order of the Trustees or of
said officer, employee or agent. Every obligation, contract, instrument,
certificate, Share, other security of the Trust or a Series thereof or
undertaking, and every other act or thing whatsoever executed in connection with
the Trust shall be conclusively presumed to have been executed or done by the
executors thereof only in their capacity as Trustees under this Declaration or
in their capacity as officers, employees or agents of the Trust or a Series
thereof. Every written obligation, contract, instrument, certificate, Share,
other security of the Trust or a Series thereof or undertaking made or issued by
the Trustees may recite that the same is executed or made by them not
individually, but as Trustees under the Declaration, and that the obligations of
the Trust or a Series thereof under any such instrument are not binding upon any
of the Trustees or Shareholders individually, but bind only the Trust Property
or the Trust Property of the applicable Series, and may contain any further
recital which they may deem appropriate, but the omission of such recital shall
not operate to bind the Trustees individually. The Trustees shall at all times
maintain insurance for the protection of the Trust Property or the Trust
Property of the applicable Series, its Shareholders, Trustees, officers,
employees and agents in such amount as the Trustees shall deem adequate to cover
possible tort liability, and such other insurance as the Trustees in their sole
judgment shall deem advisable.
Section 4.6 Reliance on Experts, Etc. Each Trustee, officer or employee of
the Trust or a Series thereof shall, in the performance of his duties, be fully
and completely justified and protected with regard to any act or any failure to
act resulting from reliance in good faith upon the books of account or other
records of the Trust or a Series thereof, upon an opinion of counsel, or upon
reports made to the Trust or a Series thereof by any of its officers or
employees or by the Investment Adviser, the Administrator, the Underwriter,
Transfer Agent, selected dealers, accountants, appraisers or other experts or
consultants selected with reasonable care by the Trustees, officers or employees
of the Trust, regardless of whether such counsel or expert may also be a
Trustee.
ARTICLE V
SHARES OF BENEFICIAL INTEREST
Section 5.1 Beneficial Interest. The interest of the beneficiaries
hereunder shall be divided into transferable Shares of beneficial interest, with
or without par value, as determined by the Trustees. The number of such Shares
of beneficial interest authorized hereunder is unlimited. The Trustees shall
have the exclusive authority without the requirement of Shareholder approval to
establish and designate one or more Series of shares and one or more Classes
thereof as the Trustees deem necessary or desirable. Subject to the rights,
preferences and limitations applicable to a specific Class, each Share of any
Series shall represent an equal proportionate share in the assets of that Series
with each other Share in that Series. All Shares issued hereunder including,
without limitation, Shares issued in connection with a dividend in Shares or a
split in Shares, shall be fully paid and nonassessable.
Section 5.2 Rights of Shareholders. The ownership of the Trust Property of
every description and the right to conduct any business hereinbefore described
are vested exclusively
-15-
in the Trustees, and the Shareholders shall have no interest therein other than
the beneficial interest conferred by their Shares, and they shall have no right
to call for any partition or division of any property, profits, rights or
interests of the Trust nor can they be called upon to share or assume any losses
of the Trust or suffer an assessment of any kind by virtue of their ownership of
Shares. The Shares shall be personal property giving only the rights
specifically set forth in this Declaration. The Shares shall not entitle the
holder to preference, preemptive, appraisal, conversion or exchange rights,
except as the Trustees may determine with respect to any Series or Class of
Shares.
Section 5.3 Trust Only. It is the intention of the Trustees to create only
the relationship of Trustee and beneficiary between the Trustees and each
Shareholder from time to time. It is not the intention of the Trustees to create
a general partnership, limited partnership, joint stock association,
corporation, bailment or any form of legal relationship other than a trust.
Nothing in this Declaration of Trust shall be construed to make the
Shareholders, either by themselves or with the Trustees, partners or members of
a joint stock association.
Section 5.4 Issuance of Shares. The Trustees in their discretion may, from
time to time without a vote of the Shareholders, issue Shares, in addition to
the then issued and outstanding Shares and Shares held in the treasury, to such
party or parties and for such amount and type of consideration, including cash
or property, at such time or times and on such terms as the Trustees may deem
best, and may in such manner acquire other assets (including the acquisition of
assets subject to, and in connection with the assumption of, liabilities) and
businesses. In connection with any issuance of Shares, the Trustees may issue
fractional Shares and Shares held in the treasury. The Trustees may from time to
time divide or combine the Shares of the Trust or, if the Shares be divided into
Series or Classes, of any Series or any Class thereof of the Trust, into a
greater or lesser number without thereby changing the proportionate beneficial
interests in the Trust or in the Trust Property allocated or belonging to such
Series or Class. Subject to the rights, preferences and limitations as a Class,
contributions to the Trust or Series thereof may be accepted for, and Shares
shall be redeemed as, whole Shares and/or 1/1000ths of a Share or integral
multiples thereof.
Section 5.5 Register of Shares. A register shall be kept at the principal
office of the Trust or an office of the Transfer Agent which shall contain the
names and addresses of the Shareholders and the number of Shares held by them
respectively and a record of all transfers thereof. Such register shall be
conclusive as to who are the holders of the Shares and who shall be entitled to
receive dividends or distributions or otherwise to exercise or enjoy the rights
of Shareholders. No Shareholder shall be entitled to receive payment of any
dividend or distribution, nor to have notice given to him as provided herein or
in the By-laws, until he has given his address to the Transfer Agent or such
other officer or agent of the Trustees as shall keep the said register for entry
thereon. It is not contemplated that certificates will be issued for the Shares;
however, the Trustees, in their discretion, may authorize the issuance of share
certificates and promulgate appropriate rules and regulations as to their use.
Section 5.6 Transfer of Shares. Shares shall be transferable on the
records of the Trust only by the record holder thereof or by his agent thereunto
duly authorized in writing, upon delivery to the Trustees or the Transfer Agent
of a duly executed instrument of transfer, together with such evidence of the
genuineness of each such execution and authorization and of other
-16-
matters as may reasonably be required. Upon such delivery the transfer shall be
recorded on the register of the Trust. Until such record is made, the
Shareholder of record shall be deemed to be the holder of such Shares for all
purposes hereunder and neither the Trustees nor any transfer agent or registrar
nor any officer, employee or agent of the Trust shall be affected by any notice
of the proposed transfer.
Any person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded on the register of Shares as the holder of such Shares
upon production of the proper evidence thereof to the Trustees or the Transfer
Agent, but until such record is made, the Shareholder of record shall be deemed
to be the holder of such Shares for all purposes hereunder and neither the
Trustees nor any Transfer Agent or registrar nor any officer or agent of the
Trust shall be affected by any notice of such death, bankruptcy or incompetence,
or other operation of law.
Section 5.7 Notices. Any and all notices to which any Shareholder may be
entitled and any and all communications shall be deemed duly served or given if
mailed, postage prepaid, addressed to any Shareholder of record at his last
known address as recorded on the register of the Trust.
Section 5.8 Treasury Shares. Shares held in the treasury shall, until
resold pursuant to Section 5.4, not confer any voting rights on the Trustees,
nor shall such Shares be entitled to any dividends or other distributions
declared with respect to the Shares.
Section 5.9 Voting Powers. The Shareholders shall have power to vote only
(i) for the election of Trustees as provided in Section 2.13; (ii) with respect
to termination of the Trust or a Series or Class thereof as provided in Section
7.2; (iii) with respect to a merger, consolidation or sale of assets as provided
in Section 7.2; (iv) with respect to a conversion from a "closed-end fund" to an
"open-end fund" as provided in Section 7.4; (v) with respect to incorporation of
the Trust to the extent and as provided in Section 7.5; (vi) to the same extent
as the stockholders of a Massachusetts business corporation as to whether or not
a court action, proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the Trust or a Series
thereof or the Shareholders of either; and (vii) with respect to such additional
matters relating to the Trust as may be required by this Declaration, the
By-laws or any registration of the Trust as an investment company under the 1940
Act with the Commission (or any successor agency) or as the Trustees may
consider necessary or desirable. On any matter required or permitted to be voted
on by the Shareholders, all Shares then entitled to vote shall be voted in the
aggregate as a single class without regard to Class or Series, except (i) when
required by this Declaration of Trust, the By-Laws or by the 1940 Act, or when
the Trustees shall have determined that any matter to be submitted to a vote of
the Shareholders affects the rights or interests of the Shareholders of one or
more Classes or Series materially differently, Shares shall be voted by
individual Class or Series; and (ii) when the Trustees shall have determined
that the matter affects only the interests of one or more Classes or Series,
then only the Shareholders of such Class or Classes or Series shall be entitled
to vote thereon. Each Share shall be entitled to one vote as to any matter on
which it is entitled to vote and each fractional Share shall be entitled to a
proportionate fractional vote. The Trustees may, in conjunction with the
establishment of any further Series or any Classes of Shares, establish
conditions under which the several Series or Classes of Shares shall have
separate voting rights or no voting
-17-
rights. There shall be no cumulative voting in the election of Trustees. Until
Shares are issued, the Trustees may exercise all rights of Shareholders and may
take any action required by law, this Declaration or the By-laws to be taken by
Shareholders, including the approval of any amendment to the Declaration. The
By-laws may include further provisions for Shareholders' votes and meetings and
related matters.
Section 5.10 Meetings of Shareholders. Except as required with the listing
of the Common Shares, no annual or regular meetings of Shareholders are
required. Special meetings of the Shareholders, including meetings involving
only the holders of Shares of one or more but less than all Series or Classes
thereof, may be called at any time by the Chairman of the Board, President, or
any Vice-President of the Trust, and shall be called by the President or the
Secretary at the request, in writing or by resolution, of a Majority of the
Trustees, or at the written request of the holder or holders of twenty-five
percent (25%) or more of the total number of Outstanding Shares of the Trust
entitled to vote at such meeting. Meetings of the Shareholders of any Series
shall be called by the President or the Secretary at the written request of the
holder or holders of twenty-five percent (25%) or more of the total number of
Outstanding Shares of such Series of the Trust entitled to vote at such meeting.
Any such request shall state the purpose of the proposed meeting.
Section 5.11 Series or Class Designation. The Trust shall consist of one
or more Series. Without limiting the authority of the Trustees to establish and
designate any further Series or Classes, the Trustees hereby establish a single
Series, designated Xxxx Xxxxxxx Preferred Income Fund II, and one Class of
Shares, designated as the Common Shares. Each additional Series shall be
established and is effective upon the adoption of a resolution of a Majority of
the Trustees or any alternative date specified in such resolution. The Trustees
may designate the relative rights and preferences of the Shares of each Series.
The Trustees may divide the Shares of any Series into Classes. Any Shares of any
further Series and Classes that may from time to time be established and
designated by the Trustees shall be established and designated, and the
variations in the relative rights and preferences as between the different
Series shall be fixed and determined by the Trustees; provided, that all Shares
shall be identical except for such variations as shall be fixed and determined
between different Series or Classes by the Trustees in establishing and
designating such Class or Series. Unless otherwise designated by the Trustees in
the By-laws or resolutions establishing a Class, the purchase price, the method
of determining the net asset value, and the relative liquidation, voting,
dividend and other rights and preferences of holders of a Class shall be as set
forth in the Trust's Registration Statement on Form N-2 under the Securities Act
of 1933 and/or the 1940 Act relating to the issuance of Shares of such Class. To
the extent that the Trustees authorize and issue Preferred Shares of any Class
or Series, they are hereby authorized and empowered to amend or supplement this
Declaration, including an amendment or modification to the rights of any
Outstanding Shares at the time of such amendment or supplement, as they deem
necessary or appropriate, including to comply with the requirements of the 1940
Act or requirements imposed by the rating agencies or other Persons, all without
the approval of Shareholders. Any such supplement or amendment shall be filed as
is necessary. The Trustees are also authorized to take such actions and retain
such persons as they see fit to offer and sell such securities.
All references to Shares in this Declaration shall be deemed to be Shares
of any or all Series or Classes as the context may require. The Trust shall
maintain separate and distinct
-18-
records for each Series and hold and account for the assets thereof separately
from the other assets of the Trust or of any other Series. A Series may issue
any number of Shares or any Class thereof and need not issue Shares. Except as
otherwise provided with respect to a specific Class, each Share of a Series
shall represent an equal beneficial interest in the net assets of such Series.
Each holder of Shares of a Series or a Class thereof shall be entitled to
receive his pro rata share of all distributions made with respect to such Series
or Class. Upon redemption of his Shares, such Shareholder shall be paid solely
out of the funds and property of such Series. The Trustees may adopt and change
the name of any Series or Class.
Section 5.12 Record Dates. Except as otherwise provided in the By-Laws,
for the purpose of determining the Shareholders who are entitled to vote or act
at any meeting or any adjournment thereof, or who are entitled to participate in
any dividend or distribution, or for the purpose of any other action, the
Trustees may from time to time close the transfer books for such period, not
exceeding 30 days (except at or in connection with the termination of the
Trust), as the Trustees may determine; or without closing the transfer books the
Trustees may fix a reasonable date and time prior to the date of any meeting of
Shareholders or other action as the date and time of record for the
determination of Shareholders entitled to vote at such meeting or any
adjournment thereof or to be treated as Shareholders of record for purposes of
such other action, and any Shareholder who was a Shareholder at the date and
time so fixed shall be entitled to vote at such meeting or any adjournment
thereof or to be treated as a Shareholder of record for purposes of such other
action, even though he has since that date and time disposed of his Shares, and
no Shareholder becoming such after that date and time shall be so entitled to
vote at such meeting or any adjournment thereof or to be treated as a
Shareholder of record for purposes of such other action.
Section 5.13 Quorum and Required Vote. A majority of the Shares entitled
to vote shall be a quorum for the transaction of business at a Shareholders'
meeting, except that where the By-Laws so require or the Trustees provide that
holders of any Class or Classes or Series shall vote as a Class or Classes or
Series, then a majority of the aggregate number of Shares of that Class or
Classes or Series entitled to vote shall be necessary to constitute a quorum for
the transaction of business by that Class or Classes or Series. Any lesser
number shall be sufficient for adjournments. Any adjourned session or sessions
may be held within a reasonable time after the date set for the original meeting
without the necessity of further notice. Except when a different vote is
required by any provision of the By-Laws or this Declaration or, when such a
different vote is not specifically provided in this Declaration or the By-Laws,
the Trustees shall in their discretion require a different vote or the vote of a
majority of different percentage of the Shares of one or more particular Classes
or Series, a majority of the Shares voted shall decide any question and a
plurality shall elect a Trustee.
Section 5.14 Action by Written Consent. Any action may be taken by
Shareholders without a meeting if the holders of a majority of the Outstanding
Shares entitled to vote on the matter (or such different proportion thereof as
shall be required by any express of this Declaration or the By-Laws or as shall
be permitted by the Trustees) consent to the action in writing and such written
consents are filed with the records of the meetings of Shareholders. Such
consent shall be treated for all purposes as a vote taken at a meeting of
Shareholders.
-19-
Section 5.15 Inspection of Records. The records of the Trust shall be open
to inspection by Shareholders to the same extent as is permitted stockholders of
a Massachusetts business corporation under the Massachusetts Business
Corporation Law.
Section 5.16 Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters.
Section 5.17 Assent to Declaration of Trust. Every Shareholder, by virtue
of having become a Shareholder, shall be held to have expressly assented and
agreed to the terms hereof and to have become a party hereto.
ARTICLE VI
DETERMINATION OF NET ASSET VALUE,
NET INCOME AND DISTRIBUTIONS
Section 6.1 Net Asset Value. The net asset value of each Outstanding
Common Share of the Trust or of each Series or Class thereof shall be determined
on such days and at such time or times as the Trustees may determine. The value
of the assets of the Trust or any Series thereof and the net asset value of
Outstanding Shares may be determined in such manner as shall be approved by the
Trustees and consistent with the 1940 Act.
Section 6.2 Distributions to Shareholders.
(a) Subject to the rights, preferences and limitations of any Class or
Series of Shares, the Trustees shall from time to time distribute ratably among
the Shareholders of the Trust or of a Series or Class thereof such proportion of
the net profits, surplus (including paid-in surplus), capital, or assets of the
Trust or such Series held by the Trustees as they may deem proper. Such
distributions may be made in cash or property (including without limitation any
type of obligations of the Trust or Series or Class or any assets thereof), and
the Trustees may distribute ratably among the Shareholders of the Trust or
Series or Class thereof additional Shares of the Trust or Series or Class
thereof issuable hereunder in such manner, at such times, and on such terms as
the Trustees may deem proper. Subject to the rights, preferences, and
limitations of any Class or Series of Shares, such distributions may be among
the Shareholders of the Trust or Series or Class thereof at the time of
declaring a distribution or among the Shareholders of the Trust or Series or
Class thereof at such other date or time or dates or times as the Trustees shall
determine. The Trustees may always retain from the net profits such amount as
they may deem necessary to pay the debts or expenses of the Trust or a Series or
Class thereof or to meet obligations of the Trust or a Series or Class thereof,
or as they may deem desirable to use in the conduct of its affairs or to retain
for future requirements or extensions of the business. The Trustees may adopt
and offer to Shareholders such dividend reinvestment plans, cash dividend payout
plans or related plans as the Trustees shall deem appropriate. The Trustees may
in their discretion determine that an account administration fee or other
similar charge may be deducted directly from the income and other distributions
paid on Shares to a Shareholder's account in each Series or Class.
-20-
(b) Inasmuch as the computation of net income and gains for federal income
tax purposes may vary from the computation thereof on the books, the above
provisions shall be interpreted to give the Trustees the power in their
discretion to distribute for any fiscal year as ordinary dividends and as
capital gains distributions, respectively, additional amounts sufficient to
enable the Trust or a Series or Class thereof to avoid or reduce liability for
taxes.
Section 6.3 Redemptions. Except as provided with respect to a particular
Class in the By-laws or the resolutions establishing such Class, Shares of the
Trust will not be redeemed or repurchased by the Trust, except as the Trustees
shall determine from time to time, and the Trust shall be under no obligation to
redeem or repurchase Shares. The Trustees may specify conditions, prices, and
places of redemption, may specify binding requirements for the proper form or
forms of requests for redemption and may specify the amount of any deferred
sales charge to be withheld from redemption proceeds. Payment of the redemption
price may be wholly or partly in securities or other assets at the value of such
securities or as used in such determination of net asset value, or may be in
cash. Upon redemption, Shares may be reissued from time to time. The Trustees
may require Shareholders to redeem Shares for any reason under terms set by the
Trustees, including, but not limited to, the failure of a Shareholder to supply
a taxpayer identification number if required to do so, or to have the minimum
investment required, or to pay when due for the purchase of Shares issued to
him. To the extent permitted by law, the Trustees may retain the proceeds of any
redemption of Shares required by them for payment of amounts due and owing by a
Shareholder to the Trust or any Series or Class or any governmental authority.
Notwithstanding the foregoing, the Trustees may postpone payment of the
redemption price and may suspend the right of the Shareholders to require any
Series or Class to redeem Shares during any period of time when and to the
extent permissible under the 1940 Act.
Section 6.4 Power to Modify Foregoing Procedures. Notwithstanding any of
the foregoing provisions of Article VI, but subject to Section 5.11 hereof, the
Trustees may prescribe, in their absolute discretion, such other bases and times
for determining the per Share net asset value of the Shares of the Trust or a
Series or Class thereof or net income of the Trust or a Series or Class thereof,
or the declaration and payment of dividends and distributions as they may deem
necessary or desirable. Without limiting the generality of the foregoing, the
Trustees may establish several Series or Classes of Shares in accordance with
Section 5.11.
ARTICLE VII
DURATION; TERMINATION OF TRUST OR A SERIES OR CLASS;
AMENDMENT; MERGERS, ETC.
Section 7.1 Duration. The Trust shall continue without limitation of time
but subject to the provisions of this Article VII.
Section 7.2 Termination or merger of the Trust or a Series or a Class;
Sale of all or substantially all of the assets of the Trust.
(a) This Trust shall have perpetual existence. Subject to the affirmative
vote of not less than three-quarters of the Outstanding Shares and entitled to
vote of the Trust or of each
-21-
Series to be affected (with the Common Shares and Preferred Shares voting as a
single class), the Trustees may:
(i) sell and convey all or substantially all of the assets (other
than a sale in the ordinary course of the Trust's business, which shall
not require approval by Shareholders) of all Series or any affected Series
to another Series or to any other corporation, association, trust or other
organization, or a series thereof, for adequate consideration, which may
include the assumption of all outstanding obligations, taxes and other
liabilities, accrued or contingent, of the Trust or any affected Series,
and which may include Shares of or interests in such Series, entity, or
series thereof;
(ii) merge the Trust or any Series with or into, consolidate or
exchange Shares with any other entity; or
(iii) the terminate of the Trust or any Series thereof;
provided, however if at least three-quarters of the Trustees then in office have
approved the transactions in (i), (ii) or (iii) above, then such actions may be
approved by the affirmative vote of a majority of the Shares outstanding and
entitled to vote of the Trust or the affected Series; provided, further, that
Shareholder approval shall not be required for any transaction, whether deemed a
merger, consolidation, reorganization or otherwise whereby the Trust issues
Shares in connection with the acquisition of assets (including those subject to
liabilities) from any other investment company or similar entity.
Section 7.3 Amendment Procedure. All rights granted to the Shareholders
under this Declaration of are granted subject to the reservation of the right to
amend this Declaration as herein provided, except that no amendment shall repeal
or adversely affect the limitation on personal liability of any Shareholder or
Trustee, or the prohibition of assessment upon the Shareholders except as herein
provided, without the express consent of each Shareholder or Trustee involved.
Subject to the foregoing, this Declaration may be amended at any time by the
Trustees, except that the Trustees may not amend this Declaration to eliminate
the rights of Shareholders of any Class or Series to vote on any amendment of
this Declaration or the By-Laws or alter or amend the percentage of voting
shares required to approve any amendment or action which requires a Shareholder
vote under this Declaration or the By-Laws unless an equivalent vote has
authorized such an amendment of the Declaration or By-Laws. To the extent that
the Trustees authorize and issue Preferred Shares of any Class or Series, they
are hereby authorized and empowered to amend or supplement this Declaration,
including an amendment or modification to the rights of any Outstanding Shares
at the time of such amendment or supplement, as they deem necessary or
appropriate, including to comply with the requirements of the 1940 Act or
requirements imposed by the rating agencies or other Persons, all without the
approval of Shareholders. Except for any amendment in connection with the
establishment of the rights, preference and limitation of a new Class or Series
of Shares, any amendment which adversely affects the holders of one or more
Classes or Series of Shares shall require a vote of the Shareholders holding a
majority of the Shares of each Class or Series so adversely affected and
entitled to vote thereon and no vote of Shareholders of any Class or Series not
so adversely affected shall be required, except that any amendment of any
provision of
-22-
(i) Section 7.1, 7.2 or this subclause (i) of Section 7.3 of Article
VII shall require a vote of the Shareholders holding 75%, regardless of
the percentage of Trustees recommending such amendment, or
(ii) Sections 2.13 and 2.14 of Article II, Section 5.13 of Article V
or this subclause (ii) of Section 7.3 of Article VII shall require the
vote of the Shareholders holding 75%, regardless of the percentage of
Trustees recommending such amendment of the shares of each Class and
Series entitled to vote thereon.
Any amendment of any provision of Section 7.3 of Article VII shall require
(x) the vote of a majority of the total number of Trustees then in office if
such amendment is approved by a vote of at least 75% of the Preferred Shares
then outstanding and the Common Shares then outstanding, voting together as a
Class or (y) the vote of at least two-thirds of the total number of Trustees
then in office, if such amendment is approved by a vote of a majority of the
Preferred Shares then outstanding and the Common Shares then outstanding, voting
together as a Class. Amendments having the purpose of changing the name of the
Trust or of supplying any omission, curing any ambiguity or curing, correcting
or supplementing any defective or inconsistent provision contained herein shall
not require authorization by Shareholder vote. A certificate signed by a
majority of the Trustees setting forth an amendment and reciting that it was
duly adopted by the Shareholders or by the Trustees as aforesaid or a copy of
the Declaration, as amended, and executed by a majority of the Trustees, shall
be conclusive evidence of such amendment when lodged among the records of the
Trust.
Section 7.4 Conversion. Subject to the rights of any Series or Class of
Shares the Trust may not be converted from a "closed-end company" to an
"open-end company" as those terms are defined in the 1940 Act unless authorized
by the vote of the holders of at least a majority of the Outstanding Shares at a
meeting of Shareholders called by the Trustees for such purpose; provided that
such conversion has been approved by the vote of at least three quarters of the
total number of Trustees then in office. Subject to the rights of any Series or
Class of Shares the conversion from a closed-end company to an open-end company
is not approved by a vote of at least three quarters of the total number of
Trustees then in office, such conversion may be authorized by (i) the vote of at
least a majority of the total number of Trustees then in office and (ii) the
vote of at least 75% of the Outstanding Shares at a meeting of Shareholders
called for such purpose. Upon the adoption of such proposal and related
amendments by the Trust's Shareholders and Trustees as provided above, the Trust
shall, upon complying with any requirements of the 1940 Act and state law,
become and "open-end" investment company. Such affirmative vote or consent shall
be in addition to the vote or consent of the holder of the Shares otherwise
required by law or any agreement between the Trust and any national securities
exchange.
Section 7.5 Incorporation. The Trustees may cause to be organized or
assist in organizing a corporation or corporations under the laws of any
jurisdiction or any other trust, partnership, association or other organization
to take over all or any portion of the Trust Property or the Trust Property
allocated or belonging to such Series or to carry on any business in which the
Trust shall directly or indirectly have any interest, and to sell, convey and
transfer all or any portion of the Trust Property or the Trust Property
allocated or belonging to such Series to any such corporation, trust,
association or organization in exchange for the shares or securities
-23-
thereof or otherwise, and to lend money to, subscribe for the shares or
securities of, and enter into any contracts with any such corporation, trust,
partnership, association or organization, or any corporation, partnership,
trust, association or organization in which the Trust or such Series holds or is
about to acquire shares or any other interest. The Trustees may also cause a
merger or consolidation between the Trust or any successor thereto and any such
corporation, trust, partnership, association or other organization if and to the
extent permitted by law, as provided under the law then in effect. Nothing
contained herein shall be construed as requiring approval of Shareholders for
the Trustees to organize or assist in organizing one or more corporations,
trusts, partnerships, associations or other organizations and selling, conveying
or transferring all or a portion of the Trust Property to such organization or
entities.
ARTICLE VIII
REPORTS TO SHAREHOLDERS
The Trustees shall submit to the Shareholders of each Series such written
financial reports of the transactions of the Trust and Series thereof, including
financial statements which shall at least annually be certified by independent
public accountants, as necessary, or shall be required by the 1940 Act.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Execution and Filing. This Declaration and any amendment
hereto shall be filed in the office of the Secretary of State of The
Commonwealth of Massachusetts and in such other places as may be required under
the laws of Massachusetts and may also be filed or recorded in such other places
as the Trustees deem appropriate. Each amendment so filed shall be accompanied
by a certificate signed and acknowledged by a Trustee stating that such action
was duly taken in a manner provided herein, and unless such amendment or such
certificate sets forth some later time for the effectiveness of such amendment,
such amendment shall be effective upon its execution. A restated Declaration,
integrating into a single instrument all of the provisions of the Declaration
which are then in effect and operative, may be executed from time to time by a
Majority of the Trustees and filed with the Secretary of State of The
Commonwealth of Massachusetts. A restated Declaration shall, upon execution, be
conclusive evidence of all amendments contained therein and may thereafter be
referred to in lieu of the original Declaration and the various amendments
thereto.
Section 9.2 Governing Law. This Declaration is executed by the Trustees
and delivered in The Commonwealth of Massachusetts and with reference to the
laws thereof, and the rights of all parties and the validity and construction of
every provision hereof shall be subject to and construed according to the laws
of said Commonwealth.
Section 9.3 Counterparts. This Declaration may be simultaneously executed
in several counterparts, each of which shall be deemed to be an original, and
such counterparts, together, shall constitute one and the same instrument, which
shall be sufficiently evidenced by any such original counterpart.
-24-
Section 9.4 Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust appears to be a Trustee
hereunder, certifying (a) the number or identity of Trustees or Shareholders,
(b) the due authorization of the execution of any instrument or writing, (c) the
form of any vote passed at a meeting of Trustees or Shareholders, (d) the fact
that the number of Trustees or Shareholders present at any meeting or executing
any written instrument satisfies the requirements of this Declaration, (e) the
form of any By-laws adopted by or the identity of any officers elected by the
Trustees, or (f) the existence of any fact or facts which in any manner relate
to the affairs of the Trust, shall be conclusive evidence as to the matters so
certified in favor of any Person dealing with the Trustees and their successors.
Section 9.5 Provisions in Conflict with Law or Regulations. (a) The
provisions of this Declaration are severable, and if the Trustees shall
determine, with the advice of counsel, that any of such provisions is in
conflict with the 1940 Act, the regulated investment company provisions of the
Internal Revenue Code of 1986 or with other applicable laws and regulations, the
conflicting provision shall be deemed never to have constituted a part of this
Declaration; provided, however, that such determination shall not affect any of
the remaining provisions of this Declaration or render invalid or improper any
action taken or omitted prior to such determination.
(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Declaration in any jurisdiction.
IN WITNESS WHEREOF, the undersigned have executed this instrument as of
the 12th day of September, 2002.
/s/Xxxxxxx X. Xxxx
---------------------------------
Xxxxxxx X. Xxxx
as Trustee and not individually,
000 Xxxxxx Xxxxxx, #0
Xxxxxx, Xxxxxxxxxxxxx 00000
-25-
