Exhibit 99(a)
CLAYMORE/XXXXXXX JAMES SB-1 EQUITY FUND
FIRST AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
DATED AS OF MAY 15, 2006
TABLE OF CONTENTS
ARTICLE I The Trust
1.1 Name 5
1.2 Definitions 5
ARTICLE II Trustees
2.1 Number and Qualification 7
2.2 Term and Election 7
2.3 Resignation and Removal 8
2.4 Vacancies 8
2.5 Meetings 9
2.6 Trustee Action by Written Consent 9
2.7 Officers and Chairman 10
ARTICLE III Powers and Duties of Trustees
3.1 General 10
3.2 Investments 10
3.3 Legal Title 10
3.4 Issuance and Repurchase of Shares 11
3.5 Borrow Money or Utilize Leverage 11
3.6 Delegation; Committees 11
3.7 Collection and Payment 12
3.8 Expenses 12
3.9 By-Laws 12
3.10 Miscellaneous Powers 12
3.11 Further Powers 13
ARTICLE IV Advisory, Management and Distribution Arrangements
4.1 Advisory and Management Arrangements 13
4.2 Distribution Arrangements 14
ARTICLE V Limitations of Liability and Indemnification
5.1 No Personal Liability of Shareholders, Trustees, etc 14
5.2 Mandatory Indemnification 15
5.3 No Bond Required of Trustees 16
5.4 No Duty of Investigation; Notice in Trust Instruments, etc 16
5.5 Reliance on Experts, etc 17
ARTICLE VI Shares of Beneficial Interest
6.1 Beneficial Interest 17
6.2 Other Securities 17
6.3 Rights of Shareholders 18
6.4 Trust Only 18
6.5 Issuance of Shares 18
6.6 Register of Shares 18
6.7 Transfer Agent and Xxxxxxxxx 00
6.8 Transfer of Shares 19
ARTICLE VII Custodians
7.1 Appointment and Duties 20
7.2 Central Certificate System 20
ARTICLE VIII Redemption
8.1 Redemptions 21
8.2 Disclosure of Holding 21
ARTICLE IX Determination of Net Asset Value; Net Income; Distributions
9.1 Net Asset Value 21
9.2 Distributions to Shareholders 21
9.3 Power to Modify Foregoing Procedures 22
ARTICLE X Shareholders
10.1 Meetings of Shareholders 22
10.2 Voting 23
10.3 Notice of Meeting and Record Date 23
10.4 Quorum and Required Vote 23
10.5 Proxies, etc 24
10.6 Reports 24
ARTICLE XI Duration; Termination of Trust; Amendment; Mergers, Etc.
11.1 Duration 25
11.2 Termination 25
11.3 Amendment Procedure 26
11.4 Merger, Consolidation and Sale of Assets 27
11.5 Subsidiaries 27
11.6 Automatic Conversion 27
3
11.7 Conversion by Affirmative Vote 29
11.8 Certain Transactions 29
ARTICLE XII Miscellaneous
12.1 Filing 30
12.2 Resident Agent 31
12.3 Governing Law 31
12.4 Counterparts 31
12.5 Reliance by Third Parties 31
12.6 Provisions in Conflict with Law or Regulation 32
4
CLAYMORE/XXXXXXX JAMES SB-1 EQUITY FUND
AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
AGREEMENT AND DECLARATION OF TRUST made as of the 7th day of March,
2006 and amended and restated as of the 15th day of May, 2006, by the Trustees
hereunder, and by the holders of shares of beneficial interest issued hereunder
as hereinafter provided.
WHEREAS, this Trust has been formed to carry on business as set forth
more particularly hereinafter;
WHEREAS, this Trust is authorized to issue an unlimited number of its
shares of beneficial interest all in accordance with the provisions hereinafter
set forth;
WHEREAS, the Trustees have agreed to manage all property coming into
their hands as Trustees of a Delaware statutory trust in accordance with the
provisions hereinafter set forth; and
WHEREAS, the parties hereto intend that the Trust created by this
Declaration and the Certificate of Trust filed with the Secretary of State of
the State of Delaware on March 7, 2006 shall constitute a statutory trust under
the Delaware Statutory Trust Act and that this Declaration shall constitute the
governing instrument of such statutory trust.
NOW, THEREFORE, the Trustees hereby declare that they will hold all
cash, securities, and other assets which they may from time to time acquire in
any manner as Trustees hereunder IN TRUST to manage and dispose of the same upon
the following terms and conditions for the benefit of the holders from time to
time of shares of beneficial interest in this Trust as hereinafter set forth.
ARTICLE I
The Trust
1.1 Name. This Trust shall be known as the "Claymore/Xxxxxxx James
SB-1 Equity Fund" and the Trustees shall conduct the business of the Trust under
that name or any other name or names as they may from time to time determined.
1.2 Definitions. As used in this Declaration, the following terms
shall have the following meanings:
5
The "1940 Act" refers to the Investment Company Act of 1940 and the
rules and regulations promulgated thereunder and exemptions granted therefrom,
as amended from time to time.
The terms "Affiliated Person", "Assignment", "Commission", "Interested
Person" and "Principal Underwriter" shall have the meanings given them in the
1940 Act.
"By-Laws" shall mean the By-Laws of the Trust as amended from time to
time by the Trustees.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder.
"Commission" shall mean the Securities and Exchange Commission.
"Declaration" shall mean this Agreement and Declaration of Trust, as
amended, supplemented or amended and restated from time to time.
"Delaware Statutory Trust Statute" shall mean the provisions of the
Delaware Statutory Trust Act, 12 Del. C.ss.3801, et. seq., as such Act may be
amended from time to time.
"Delaware General Corporation Law" means the Delaware General
Corporation Law, 8 Del. C.ss.100, et. seq., as amended from time to time.
"Fundamental Policies" shall mean the investment policies and
restrictions as set forth from time to time in any Prospectus or contained in
any current Registration Statement of the Trust filed with the Commission or as
otherwise adopted by the Trustees and the Shareholders in accordance with the
requirements of the 1940 Act and designated as fundamental policies therein as
they may be amended from time to time in accordance with the requirements of the
1940 Act.
"Majority Shareholder Vote" shall mean a vote of "a majority of the
outstanding voting securities" (as such term is defined in the 0000 Xxx) of the
Trust with each class and series of Shares voting together as a single class,
except to the extent otherwise required by the 1940 Act or this Declaration with
respect to any one or more classes or series of Shares, in which case the
applicable proportion of such classes or series of Shares voting as a separate
class or series, as case may be, also will be required.
"Person" shall mean and include individuals, corporations,
partnerships, trusts, limited liability companies, associations, joint ventures
and other entities, whether or not legal entities, and governments and agencies
and political subdivisions thereof.
"Prospectus" shall mean the Prospectus of the Trust, if any, as in
effect from time to time under the Securities Act of 1933, as amended.
6
"Shareholders" shall mean as of any particular time the holders of
record of outstanding Shares of the Trust, at such time.
"Shares" shall mean the transferable units of beneficial interest into
which the beneficial interest in the Trust shall be divided from time to time
and includes fractions of Shares as well as whole Shares. In addition, Shares
also means any preferred shares or preferred units of beneficial interest which
may be issued from time to time, as described herein. All references to Shares
shall be deemed to be Shares of any or all series or classes as the context may
require.
"Trust" shall mean the trust established by this Declaration, as
amended from time to time, inclusive of each such amendment.
"Trust Property" shall mean as of any particular time any and all
property, real or personal, tangible or intangible, which at such time is owned
or held by or for the account of the Trust or the Trustees in such capacity.
"Trustees" shall mean the signatories to this Declaration, so long as
they shall continue in office in accordance with the terms hereof, and all other
persons who at the time in question have been duly elected or appointed and have
qualified as trustees in accordance with the provisions hereof and are then in
office.
ARTICLE II
Trustees
2.1 Number and Qualification. Prior to a public offering of Shares
there may be a sole Trustee. Thereafter, the number of Trustees shall be
determined by a written instrument signed by a majority of the Trustees then in
office, provided that the number of Trustees shall be no less than two or more
than eight. No reduction in the number of Trustees shall have the effect of
removing any Trustee from office prior to the expiration of his term. An
individual nominated as a Trustee shall be at least 21 years of age and not
older than 80 years of age at the time of nomination and not under legal
disability. Trustees need not own Shares and may succeed themselves in office.
2.2 Term and Election. The Board of Trustees shall be divided into
two classes, designated Class I and Class II. Each class shall consist, as
nearly as may be possible, of one-half of the total number of trustees
constituting the entire Board of Trustees. Within the limits above specified,
the number of the Trustees in each class shall be determined by resolution of
the Board of Trustees. The term of office of the first class shall expire on the
date of the first annual meeting of Shareholders or special meeting in lieu
thereof following the effective date of the Registration Statement relating to
the Shares under the Securities Act of 1933, as amended. The term of office of
the second class shall expire on the date of the second annual meeting of
Shareholders or special meeting in lieu thereof following the effective date of
the Registration Statement relating to the Shares under the Securities Act of
1933, as amended. 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
7
second annual meeting of Shareholders or special meeting in lieu thereof
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, except as provided in
Section 2.3 of this Article and each Trustee elected shall hold office until his
or her successor shall have been elected and shall have qualified. The term of
office of a Trustee shall terminate and a vacancy shall occur in the event of
the death, resignation, removal, bankruptcy, adjudicated incompetence or other
incapacity to perform the duties of the office, or removal, of a Trustee.
2.3 Resignation and Removal. Any of the Trustees may resign their
trust (without need for prior or subsequent accounting) by an instrument in
writing signed by such Trustee and delivered or mailed to the Trustees or the
Chairman, if any, the President or the Secretary and such resignation shall be
effective upon such delivery, or at a later date according to the terms of the
instrument. Any of the Trustees may be removed (provided the aggregate number of
Trustees after such removal shall not be less than the minimum number required
by Section 2.1 hereof) for cause only, and not without cause, and only by action
taken by a majority of the remaining Trustees followed by the holders of at
least seventy-five percent (75%) of the Shares then entitled to vote in an
election of such Trustee. Upon the resignation or removal of a Trustee, each
such resigning or removed Trustee 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 held in the name of such resigning
or removed Trustee. Upon the incapacity or death of any Trustee, such Trustee's
legal representative shall execute and deliver on such Trustee's behalf such
documents as the remaining Trustees shall require as provided in the preceding
sentence.
2.4 Vacancies. Whenever a vacancy in the Board of Trustees shall
occur, the remaining Trustees may fill such vacancy by appointing an individual
having the qualifications described in this Article by a written instrument
signed by a majority of the Trustees then in office or may leave such vacancy
unfilled or may reduce the number of Trustees; provided the aggregate number of
Trustees after such reduction shall not be less than the minimum number required
by Section 2.1 hereof; provided, further, 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. Any vacancy created by an increase in Trustees may be
filled by the appointment of an individual having the qualifications described
in this Article made by a written instrument signed by a majority of the
Trustees then in office. No vacancy shall operate to annul this Declaration or
to revoke any existing agency created pursuant to the terms of this Declaration.
Whenever a vacancy in the number of Trustees shall occur, until such vacancy is
filled as provided herein, 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 this Declaration.
2.5 Meetings. Meetings of the Trustees shall be held from time to
time upon the call of the Chairman, if any, or the President or any two
Trustees. Regular meetings of the Trustees may be held without call or notice at
a time and place fixed by the By-Laws or by
8
resolution of the Trustees. Notice of any other meeting shall be given by the
Secretary and shall be delivered to the Trustees orally not less than 24 hours,
or in writing not less than 72 hours, before the meeting, but may be waived in
writing by any Trustee either before or after such meeting. The attendance of a
Trustee at a meeting shall constitute a waiver of notice of such meeting except
where a Trustee attends a meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting has not been properly
called or convened. A quorum for all meetings of the Trustees shall be
one-third, but not less than two, of the Trustees. Unless provided otherwise in
this Declaration and except as required under the 1940 Act, any action of the
Trustees may be taken at a meeting by vote of a majority of the Trustees present
(a quorum being present) or without a meeting by written consent of a majority
of the Trustees.
Any committee of the Trustees, including an executive committee, if
any, may act with or without a meeting. A quorum for all meetings of any such
committee shall be one-third of the members thereof. Unless provided otherwise
in this Declaration, any action of any such committee may be taken at a meeting
by vote of a majority of the members present (a quorum being present) or without
a meeting by written consent of all of the members.
With respect to actions of the Trustees and any committee of the
Trustees, Trustees who are Interested Persons in any action to be taken may be
counted for quorum purposes under this Section and shall be entitled to vote to
the extent not prohibited by the 1940 Act. For any committee of the Trustees
comprised of one Trustee, a quorum shall be one.
All or any one or more Trustees may participate in a meeting of the
Trustees or any committee thereof by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other; participation in a meeting pursuant to any such
communications system shall constitute presence in person at such meeting.
2.6 Trustee Action by Written Consent. Any action which may be
taken by Trustees by vote may be taken without a meeting if that number of the
Trustees, or members of a committee, as the case may be, required for approval
of such action at a meeting of the Trustees or of such committee consent to the
action in writing and the written consents are filed with the records of the
meetings of Trustees. Such consent shall be treated for all purposes as a vote
taken at a meeting of Trustees.
2.7 Officers and Chairman. . The Trustees shall elect a President,
a Chief Financial Officer and a Secretary, who shall serve at the pleasure of
the Trustees or until their successors are elected. The President and Chief
Financial Officer may, but need not, be a Trustee. The Trustees may elect a
Chairman of the Board, who shall be a Trustee and who shall serve at the
pleasure of the Trustees or until a successor is elected. The Trustees may elect
or appoint or may authorize the Chairman of the Board, if any, or President to
appoint such other officers or agents with such powers as the Trustees may deem
to be advisable. The Chairman is not an officer of the Trust.
9
ARTICLE III
Powers and Duties of Trustees
3.1 General. The Trustees shall owe to the Trust and its
Shareholders the same fiduciary duties as owed by directors of corporations to
such corporations and their stockholders under the Delaware General Corporation
Law. 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 may perform such acts as in their sole discretion are
proper for conducting the business of the Trust. The enumeration of any specific
power herein shall not be construed as limiting the aforesaid power. Such powers
of the Trustees may be exercised without order of or resort to any court.
3.2 Investments. The Trustees shall have power, subject to the
Fundamental Policies in effect from time to time with respect to the Trust, to:
(a) manage, conduct, operate and carry on the business of an investment company;
(b) subscribe for, invest in, reinvest in, purchase or otherwise acquire, hold,
pledge, sell, assign, transfer, exchange, distribute or otherwise deal in or
dispose of any and all sorts of property, tangible or intangible, including but
not limited to securities of any type whatsoever, whether equity or non-equity,
of any issuer, evidences of indebtedness of any person and any other rights,
interests, instruments or property of any sort and to exercise any and all
rights, powers and privileges of ownership or interest in respect of any and all
such investments of every kind and description, including, without limitation,
the right to consent and otherwise act with respect thereto, with power to
designate one or more Persons to exercise any of said rights, powers and
privileges in respect of any of said investments. The Trustees shall not be
limited by any law limiting the investments which may be made by fiduciaries.
3.3 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 in the name of any
other Person as nominee, custodian or pledgee, on such terms as the Trustees may
determine, provided that the interest of the Trust therein is appropriately
protected.
The right, title and interest of the Trustees in the Trust Property
shall vest automatically in each person who may hereafter become a Trustee upon
his due election and qualification. Upon the ceasing of any person to be a
Trustee for any reason, such person 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.
3.4 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, including Shares
in fractional denominations, and, subject to the
10
more detailed provisions set forth in Articles VIII and IX, to apply to any such
repurchase, redemption, retirement, cancellation or acquisition of Shares any
funds or property whether capital or surplus or otherwise, to the full extent
now or hereafter permitted corporations formed under the Delaware General
Corporation Law.
3.5 Borrow Money or Utilize Leverage. Subject to the Fundamental
Policies in effect from time to time with respect to the Trust, the Trustees
shall have the power to borrow money or otherwise obtain credit or utilize
leverage to the maximum extent permitted by law or regulation as such may be
needed from time to time and to secure the same by mortgaging, pledging or
otherwise subjecting as security the assets of the Trust, including the lending
of portfolio securities, and to endorse, guarantee, or undertake the performance
of any obligation, contract or engagement of any other person, firm, association
or corporation.
3.6 Delegation; Committees. The Trustees shall have the 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 the
names of the Trustees or otherwise as the Trustees may deem expedient, to at
least the same extent as such delegation is permitted to directors of
corporations formed under the Delaware General Corporation Law and is permitted
by the 1940 Act, as well as any further delegations the Trustees may determine
to be desirable, expedient or necessary in order to effect the purpose hereof.
The Trustees may, to the extent that they determine it necessary, desirable and
appropriate, designate committees with such powers as the Trustees deem
appropriate, each of which shall consist of at least one Trustee, which shall
have all or such lesser portion of the authority of the entire Board of Trustees
as the Trustees shall determine from time to time, except to the extent action
by the entire Board of Trustees or particular Trustees is required by the 0000
Xxx.
3.7 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 or the Trust, the Trustees or any officer, employee
or agent of the Trust; to prosecute, defend, compromise or abandon any claims
relating to the Trust Property or the Trust, or the Trustees or any officer,
employee or agent of the Trust; 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. Except to the extent required
for a corporation formed under the Delaware General Corporation Law, the
Shareholders shall have no power to vote as to whether or not a court action,
legal proceeding or claim should or should not be brought or maintained
derivatively or as a class action on behalf of the Trust or the Shareholders.
3.8 Expenses. The Trustees shall have power to incur and pay out
of the assets or income of the Trust any expenses which in the opinion of the
Trustees are necessary or incidental to carry out any of the purposes of this
Declaration, and the business of the Trust, 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. The Trustees may pay
themselves such compensation for special services, including legal,
underwriting,
11
syndicating and brokerage services, as they in good faith may deem reasonable
reimbursement for expenses reasonably incurred by themselves on behalf of the
Trust. The Trustees shall have the power, as frequently as they may determine,
to cause each Shareholder to pay directly, in advance or arrears, for charges of
distribution, of the custodian or transfer, Shareholder servicing or similar
agent, a pro rata amount as defined from time to time by the Trustees, by
setting off such charges due from such Shareholder from declared but unpaid
dividends or distributions owed such Shareholder and/or by reducing the number
of shares in the account of such Shareholder by that number of full and/or
fractional Shares which represents the outstanding amount of such charges due
from such Shareholder.
3.9 By-Laws. The Trustees shall have the exclusive authority to
adopt and from time to time amend or repeal By-Laws for the conduct of the
business of the Trust.
3.10 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; (b) enter into joint ventures,
partnerships and any other combinations or associations; (c) purchase, and pay
for out of Trust Property, insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, investment advisors, distributors,
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; (d) establish pension, profit-sharing, share
purchase, and other retirement, incentive and benefit plans for any Trustees,
officers, employees and agents of the Trust; (e) make donations, irrespective of
benefit to the Trust, for charitable, religious, educational, scientific, civic
or similar purposes; (f) to the extent permitted by law, indemnify any Person
with whom the Trust has dealings, including without limitation any advisor,
administrator, manager, transfer agent, custodian, distributor or selected
dealer, or any other person as the Trustees may see fit to such extent as the
Trustees shall determine; (g) guarantee indebtedness or contractual obligations
of others; (h) determine and change the fiscal year of the Trust and the method
in which its accounts shall be kept; (i) notwithstanding the Fundamental
Policies of the Trust, convert the Trust to a master- feeder structure;
provided, however, the Trust obtains the approval of shareholders holding at
least a majority of the Trust's Shares present at a meeting of Shareholders at
which a quorum is present and (j) 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.
3.11 Further Powers. The Trustees shall have the 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 State of Delaware, 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 or instrumentalities of the United States of America and
of foreign governments, and to do all such other things and execute all 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
12
the provisions of this Declaration, the presumption shall be in favor of a grant
of power to the Trustees. The Trustees will not be required to obtain any court
order to deal with the Trust Property.
ARTICLE IV
Advisory, Management and Distribution Arrangements
4.1 Advisory and Management Arrangements. Subject to the
requirements of applicable law as in effect from time to time, the Trustees may
in their discretion from time to time enter into advisory, administration or
management contracts (including, in each case, one or more sub-advisory,
sub-administration or sub-management contracts) whereby the other party to any
such contract shall undertake to furnish the Trustees such advisory,
administrative and management services, with respect to the Trust 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 this Declaration, the Trustees may authorize any advisor,
administrator or manager (subject to such general or specific instructions as
the Trustees may from time to time adopt) to effect investment transactions with
respect to the assets on behalf of the Trustees to the full extent of the power
of the Trustees to effect such transactions or may authorize any officer,
employee or Trustee to effect such transactions pursuant to recommendations of
any such advisor, administrator or manager (and all without further action by
the Trustees). Any such investment transaction shall be deemed to have been
authorized by all of the Trustees.
4.2 Distribution Arrangements. Subject to compliance with the 1940
Act, the Trustees may retain underwriters, placement agents and/or other
distribution agents to sell Trust Shares. The Trustees may in their discretion
from time to time enter into one or more contracts, providing for the sale of
the Shares of the Trust, whereby the Trust may either agree to sell such Shares
to the other party to the contract or appoint such other party its sales agent
for such Shares. In either case, the contract shall be on such terms and
conditions as the Trustees may in their discretion determine not inconsistent
with the provisions of this Article IV or the By-Laws; and such contract may
also provide for the repurchase or sale of Shares of the Trust by such other
party as principal or as agent of the Trust and may provide that such other
party may enter into selected dealer agreements with registered securities
dealers and brokers and servicing and similar agreements with persons who are
not registered securities dealers to further the purposes of the distribution or
repurchase of the Shares of the Trust. 4.3 Parties to Contract. Any contract of
the character described in Sections 4.1 and 4.2 of this Article IV or in Article
VII hereof may be entered into with any Person, although one or more of the
Trustees, officers or employees of the Trust may be an officer, director,
trustee, shareholder, or member of such other party to the contract, and no such
contract shall be invalidated or rendered voidable by reason of the existence of
any such relationship, nor shall any Person holding such relationship be liable
merely by reason of such relationship for any loss or expense to the Trust under
or by reason of said contract or accountable for any profit realized directly or
indirectly therefrom, provided that the contract when entered into was
reasonable and fair and not inconsistent with the provisions of this Article IV
or the By-Laws. The same Person may be the other party to contracts entered
13
into pursuant to Sections 4.1 and 4.2 above or Article VII, and any individual
may be financially interested or otherwise affiliated with Persons who are
parties to any or all of the contracts mentioned in this Section 4.3.
ARTICLE V
Limitations of Liability and Indemnification
5.1 No Personal Liability of Shareholders, Trustees, etc. No
Shareholder of the Trust shall be subject in such capacity to any personal
liability whatsoever to any Person in connection with Trust Property or the
acts, obligations or affairs of the Trust. Shareholders shall have the same
limitation of personal liability as is extended to stockholders of a private
corporation for profit incorporated under the Delaware General Corporation Law.
No Trustee or officer of the Trust shall be subject in such capacity to any
personal liability whatsoever to any Person, save only liability to the Trust or
its Shareholders arising from bad faith, willful misfeasance, gross negligence
or reckless disregard for his duty to such Person; and, subject to the foregoing
exception, all such Persons shall look solely to the Trust Property for
satisfaction of claims of any nature arising in connection with the affairs of
the Trust. If any Shareholder, Trustee or officer, as such, of the Trust, is
made a party to any suit or proceeding to enforce any such liability, subject to
the foregoing exception, he shall not, on account thereof, be held to any
personal liability. Any repeal or modification of this Section 5.1 shall not
adversely affect any right or protection of a Trustee or officer of the Trust
existing at the time of such repeal or modification with respect to acts or
omissions occurring prior to such repeal or modification.
5.2 Mandatory Indemnification. (a) The Trust hereby agrees to
indemnify each person who at any time serves as a Trustee or officer of the
Trust (each such person being an "indemnitee") against any liabilities and
expenses, including amounts paid in satisfaction of judgments, in compromise or
as fines and penalties, and reasonable counsel fees reasonably incurred by such
indemnitee in connection with the defense or disposition of any action, suit or
other proceeding, whether civil or criminal, before any court or administrative
or investigative body in which he may be or may have been involved as a party or
otherwise or with which he may be or may have been threatened, while acting in
any capacity set forth in this Article V by reason of his having acted in any
such capacity, except with respect to any matter as to which he shall not have
acted in good faith in the reasonable belief that his action was in the best
interest of the Trust or, in the case of any criminal proceeding, as to which he
shall have had reasonable cause to believe that the conduct was unlawful,
provided, however, that no indemnitee shall be indemnified hereunder against any
liability to any person or any expense of such indemnitee arising by reason of
(i) willful misfeasance, (ii) bad faith, (iii) gross negligence, or (iv)
reckless disregard of the duties involved in the conduct of his position (the
conduct referred to in such clauses (i) through (iv) being sometimes referred to
herein as "disabling conduct"). Notwithstanding the foregoing, with respect to
any action, suit or other proceeding voluntarily prosecuted by any indemnitee as
plaintiff, indemnification shall be mandatory only if the prosecution of such
action, suit or other proceeding by such indemnitee (1) was authorized by a
majority of the Trustees or (2) was instituted by the indemnitee to enforce his
or her rights to indemnification hereunder in a case in which the indemnitee is
found to be entitled to such
14
indemnification. The rights to indemnification set forth in this Declaration
shall continue as to a person who has ceased to be a Trustee or officer of the
Trust and shall inure to the benefit of his or her heirs, executors and personal
and legal representatives. No amendment or restatement of this Declaration or
repeal of any of its provisions shall limit or eliminate any of the benefits
provided to any person who at any time is or was a Trustee or officer of the
Trust or otherwise entitled to indemnification hereunder in respect of any act
or omission that occurred prior to such amendment, restatement or repeal.
(b) Notwithstanding the foregoing, no indemnification shall
be made hereunder unless there has been a determination (i) by a final decision
on the merits by a court or other body of competent jurisdiction before whom the
issue of entitlement to indemnification hereunder was brought that such
indemnitee is entitled to indemnification hereunder or, (ii) in the absence of
such a decision, by (1) a majority vote of a quorum of those Trustees who are
neither "interested persons" of the Trust (as defined in Section 2(a)(19) of the
0000 Xxx) nor parties to the proceeding ("Disinterested Non-Party Trustees"),
that the indemnitee is entitled to indemnification hereunder, or (2) if such
quorum is not obtainable or even if obtainable, if such majority so directs,
independent legal counsel in a written opinion concludes that the indemnitee
should be entitled to indemnification hereunder. All determinations to make
advance payments in connection with the expense of defending any proceeding
shall be authorized and made in accordance with the immediately succeeding
paragraph (c) below.
(c) The Trust shall make advance payments in connection
with the expenses of defending any action with respect to which indemnification
might be sought hereunder if the Trust receives a written affirmation by the
indemnitee of the indemnitee's good faith belief that the standards of conduct
necessary for indemnification have been met and a written undertaking to
reimburse the Trust unless it is subsequently determined that the indemnitee is
entitled to such indemnification and if a majority of the Trustees determine
that the applicable standards of conduct necessary for indemnification appear to
have been met. In addition, at least one of the following conditions must be
met: (i) the indemnitee shall provide adequate security for his undertaking,
(ii) the Trust shall be insured against losses arising by reason of any lawful
advances, or (iii) a majority of a quorum of the Disinterested Non-Party
Trustees, or if a majority vote of such quorum so direct, independent legal
counsel in a written opinion, shall conclude, based on a review of readily
available facts (as opposed to a full trial-type inquiry), that there is
substantial reason to believe that the indemnitee ultimately will be found
entitled to indemnification.
(d) The rights accruing to any indemnitee under these
provisions shall not exclude any other right which any person may have or
hereafter acquire under this Declaration, the By-Laws of the Trust, any statute,
agreement, vote of stockholders or Trustees who are "disinterested persons" (as
defined in Section 2(a)(19) of the 0000 Xxx) or any other right to which he or
she may be lawfully entitled.
(e) Subject to any limitations provided by the 1940 Act and
this Declaration, the Trust shall have the power and authority to indemnify and
provide for the advance payment of expenses to employees, agents and other
Persons providing services to the
15
Trust or serving in any capacity at the request of the Trust to the full extent
corporations organized under the Delaware General Corporation Law may indemnify
or provide for the advance payment of expenses for such Persons, provided that
such indemnification has been approved by a majority of the Trustees.
5.3 No Bond Required of Trustees. No Trustee shall, as such, be
obligated to give any bond or other security for the performance of any of his
duties hereunder.
5.4 No Duty of Investigation; Notice in Trust Instruments, etc. No
purchaser, lender, transfer agent or other person dealing with the Trustees or
with any officer, employee or agent of the Trust 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,
undertaking, instrument, certificate, Share, other security of the Trust, and
every other act or thing whatsoever executed in connection with the Trust shall
be conclusively taken 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. The Trustees may maintain
insurance for the protection of the Trust Property, 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 or is required by the 1940
Act.
5.5 Reliance on Experts, etc. Each Trustee and officer or employee
of the Trust shall, in the performance of its 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, upon an opinion of counsel, or upon reports made to the Trust by any of
the Trust's officers or employees or by any advisor, administrator, manager,
distributor, selected dealer, accountant, appraiser or other expert or
consultant 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 VI
Shares of Beneficial Interest
6.1 Beneficial Interest. The interest of the beneficiaries
hereunder shall be divided into an unlimited number of transferable shares of
beneficial interest, par value $.01 per share. All Shares issued in accordance
with the terms hereof, including, without limitation, Shares issued in
connection with a dividend in Shares or a split of Shares, shall be fully paid
and, except as provided in the last sentence of Section 3.8, nonassessable when
the consideration determined by the Trustees (if any) therefor shall have been
received by the Trust.
6.2 Other Securities. The Trustees may, subject to the Fundamental
Policies and the requirements of the 1940 Act, authorize and issue such other
securities of the Trust as they determine to be necessary, desirable or
appropriate, having such terms, rights, preferences, privileges, limitations and
restrictions as the Trustees see fit, including preferred interests, debt
16
securities or other senior securities. 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 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.
6.3 Rights of Shareholders. The Shares shall be personal property
given only the rights in this Declaration specifically set forth. The ownership
of the Trust Property of every description and the right to conduct any business
herein before described are vested exclusively 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,
subject to the right of the Trustees to charge certain expenses directly to
Shareholders, as provided in the last sentence of Section 3.8, suffer an
assessment of any kind by virtue of their ownership of Shares. The Shares shall
not entitle the holder to preference, preemptive, appraisal, conversion or
exchange rights (except as specified in this Section 6.3, in Section 11.4 or as
specified by the Trustees when creating the Shares, as in preferred shares).
6.4 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 shall be construed to make the Shareholders, either
by themselves or with the Trustees, partners or members of a joint stock
association.
6.5 Issuance of Shares. The Trustees, in their discretion, may
from time to time without vote of the Shareholders issue Shares including
preferred shares that may have been established pursuant to Section 6.2, 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 determine, 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. The Trustees may from time to time
divide or combine the Shares into a greater or lesser number without thereby
changing the proportionate beneficial interest in such Shares. Issuances and
redemptions of Shares may be made in whole Shares and/or l/l,000ths of a Share
or multiples thereof as the Trustees may determine.
6.6 Register of Shares. A register shall be kept at the offices of
the Trust or any transfer agent duly appointed by the Trustees under the
direction of the Trustees 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. Separate registers shall be established and maintained
for each class or series of Shares. Each such register shall be conclusive as to
who are
17
the holders of the Shares of the applicable class or series of 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
herein provided, until he has given his address to a transfer agent or such
other officer or agent of the Trustees as shall keep the 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 fees therefore and rules and regulations
as to their use.
6.7 Transfer Agent and Registrar. The Trustees shall have power to
employ a transfer agent or transfer agents, and a registrar or registrars, with
respect to the Shares. The transfer agent or transfer agents may keep the
applicable register and record therein, the original issues and transfers, if
any, of the said Shares. Any such transfer agents and/or registrars shall
perform the duties usually performed by transfer agents and registrars of
certificates of stock in a corporation, as modified by the Trustees.
6.8 Transfer of Shares. Shares shall be transferable on the
records of the Trust only by the record holder thereof or by its agent thereto
duly authorized in writing, upon delivery to the Trustees or a transfer agent of
the Trust of a duly executed instrument of transfer, together with such evidence
of the genuineness of each such execution and authorization and of other matters
as may reasonably be required. Upon such delivery the transfer shall be recorded
on the applicable 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 hereof 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 applicable register of Shares as the
holder of such Shares upon production of the proper evidence thereof to the
Trustees or a transfer agent of the Trust, but until such record is made, the
Shareholder of record shall be deemed to be the holder of such for all purposes
hereof, 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. 6.9 Notices. Any and all
notices to which any Shareholder hereunder 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 applicable register of the Trust.
ARTICLE VII
Custodians
7.1 Appointment and Duties. The Trustees shall at all times employ
a custodian or custodians, meeting the qualifications for custodians for
portfolio securities of investment companies contained in the 1940 Act, as
custodian with respect to the assets of the Trust. Any custodian shall have
authority as agent of the Trust with respect to which it is acting as determined
by the custodian agreement or agreements, but subject to such restrictions,
18
limitations and other requirements, if any, as may be contained in the By-Laws
of the Trust and the 1940 Act:
(1) to hold the securities owned by the Trust and
deliver the same upon written order;
(2) to receive any receipt for any moneys due to the
Trust and deposit the same in its own banking department (if a bank)
or elsewhere as the Trustees may direct;
(3) to disburse such funds upon orders or vouchers;
(4) if authorized by the Trustees, to keep the books
and accounts of the Trust and furnish clerical and accounting
services; and
(5) if authorized to do so by the Trustees, to
compute the net income or net asset value of the Trust;
all upon such basis of compensation as may be agreed upon between the Trustees
and the custodian.
The Trustees may also authorize each custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services of the
custodian and upon such terms and conditions, as may be agreed upon between the
custodian and such sub-custodian and approved by the Trustees, provided that in
every case such sub-custodian shall meet the qualifications for custodians
contained in the 1940 Act.
7.2 Central Certificate System. Subject to such rules, regulations
and orders as the Commission may adopt, the Trustees may direct the custodian to
deposit all or any part of the securities owned by the Trust in a system for the
central handling of securities established by a national securities exchange or
a national securities association registered with the Commission under the
Securities Exchange Act of 1934, or such other Person as may be permitted by the
Commission, or otherwise in accordance with the 1940 Act, pursuant to which
system all securities of any particular class of any issuer deposited within the
system are treated as fungible and may be transferred or pledged by bookkeeping
entry without physical delivery of such securities, provided that all such
deposits shall be subject to withdrawal only upon the order of the Trust.
19
ARTICLE VIII
Redemption
8.1 Redemptions. The Shares of the Trust are not redeemable by the
holders.
8.2 Disclosure of Holding. The holders of Shares or other
securities of the Trust shall upon demand disclose to the Trustees in writing
such information with respect to direct and indirect ownership of Shares or
other securities of the Trust as the Trustees deem necessary to comply with the
provisions of the Code, the 1940 Act or other applicable laws or regulations, or
to comply with the requirements of any other taxing or regulatory authority.
ARTICLE IX
Determination of Net Asset Value; Net Income; Distributions
9.1 Net Asset Value. The net asset value of each outstanding Share
of the Trust shall be determined at such time or times on such days as the
Trustees may determine, in accordance with the 1940 Act. The method of
determination of net asset value shall be determined by the Trustees and shall
be as set forth in the Prospectus or as may otherwise be determined by the
Trustees. The power and duty to make the net asset value calculations may be
delegated by the Trustees and shall be as generally set forth in the Prospectus
or as may otherwise be determined by the Trustees.
9.2 Distributions to Shareholders. (a) The Trustees shall from
time to time distribute ratably among the Shareholders of any class of Shares,
or any series of any such class, in accordance with the number of outstanding
full and fractional Shares of such class or any series of such class, such
proportion of the net profits, surplus (including paid-in surplus), capital, or
assets held by the Trustees as they may deem proper or as may otherwise be
determined in accordance with this Declaration. Any such distribution may be
made in cash or property (including without limitation any type of obligations
of the Trust or any assets thereof) or Shares of any class or series or any
combination thereof, and the Trustees may distribute ratably among the
Shareholders of any class of shares or series of any such class, in accordance
with the number of outstanding full and fractional Shares of such class or any
series of such class, additional Shares of any class or series in such manner,
at such times, and on such terms as the Trustees may deem proper or as may
otherwise be determined in accordance with this Declaration.
(b) Distributions pursuant to this Section 9.2 may be among
the Shareholders of record of the applicable class or series of Shares at the
time of declaring a distribution or among the Shareholders of record at such
later date as the Trustees shall determine and specify.
(c) 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 to meet obligations of the Trust, or as they otherwise may deem desirable to
use in the conduct of its affairs or to retain for future requirements or
extensions of the business.
20
(d) 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 to avoid or reduce liability for taxes.
9.3 Power to Modify Foregoing Procedures. Notwithstanding any of
the foregoing provisions of this Article IX, the Trustees may prescribe, in
their absolute discretion except as may be required by the 1940 Act, such other
bases and times for determining the per share asset value of the Trust's Shares
or net income, or the declaration and payment of dividends and distributions as
they may deem necessary or desirable for any reason, including to enable the
Trust to comply with any provision of the 1940 Act, or any securities exchange
or association registered under the Securities Exchange Act of 1934, or any
order of exemption issued by the Commission, all as in effect now or hereafter
amended or modified.
ARTICLE X
Shareholders
10.1 Meetings of Shareholders. The Trust shall hold annual meetings
of the Shareholders (provided that the Trust's initial annual meeting of
Shareholders may occur up to one year after the completion of its initial fiscal
year). A special meeting of Shareholders may be called at any time by a majority
of the Trustees or the President and shall be called by any Trustee for any
proper purpose upon written request of Shareholders of the Trust holding in the
aggregate not less than 51% of the outstanding Shares of the Trust or class or
series of Shares having voting rights on the matter, such request specifying the
purpose or purposes for which such meeting is to be called. Any shareholder
meeting, including a Special Meeting, shall be held within or without the State
of Delaware on such day and at such time as the Trustees shall designate.
10.2 Voting. Shareholders shall have no power to vote on any matter
except matters on which a vote of Shareholders is required by applicable law,
this Declaration or resolution of the Trustees. Except as otherwise provided
herein, any matter required to be submitted to Shareholders and affecting one or
more classes or series of Shares shall require approval by the required vote of
all the affected classes and series of Shares voting together as a single class;
provided, however, that as to any matter with respect to which a separate vote
of any class or series of Shares is required by the 1940 Act, such requirement
as to a separate vote by that class or series of Shares shall apply in addition
to a vote of all the affected classes and series voting together as a single
class. Shareholders of a particular class or series of Shares shall not be
entitled to vote on any matter that affects only one or more other classes or
series of Shares. There shall be no cumulative voting in the election or removal
of Trustees.
10.3 Notice of Meeting and Record Date. Notice of all meetings of
Shareholders, stating the time, place and purposes of the meeting, shall be
given by the Trustees by mail to each Shareholder of record entitled to vote
thereat at its registered address, mailed at
21
least 10 days and not more than 120 days before the commencement of the meeting
or otherwise in compliance with applicable law. Only the business stated in the
notice of the meeting shall be considered at such meeting. Any adjourned meeting
may be held as adjourned one or more times without further notice not later than
180 days after the record date. For the purposes of determining the Shareholders
who are entitled to notice of and to vote at any meeting the Trustees may,
without closing the transfer books, fix a date not more than 120 nor less than
10 days prior to the date of such meeting of Shareholders as a record date for
the determination of the Persons to be treated as Shareholders of record for
such purposes.
10.4 Quorum and Required Vote. (a) The holders of a majority of the
Shares entitled to vote on any matter at a meeting present in person or by proxy
shall constitute a quorum at such meeting of the Shareholders for purposes of
conducting business on such matter. The absence from any meeting, in person or
by proxy, of a quorum of Shareholders for action upon any given matter shall not
prevent action at such meeting upon any other matter or matters which may
properly come before the meeting, if there shall be present thereat, in person
or by proxy, a quorum of Shareholders in respect of such other matters.
(b) Subject to any provision of applicable law, this Declaration
or a resolution of the Trustees specifying a greater or a lesser vote
requirement for the transaction of any item of business at any meeting of
Shareholders, (i) the affirmative vote of a majority of the Shares present in
person or represented by proxy and entitled to vote on the subject matter shall
be the act of the Shareholders with respect to such matter, and (ii) where a
separate vote of one or more classes or series of Shares is required on any
matter, the affirmative vote of a majority of the Shares of such class or series
of Shares present in person or represented by proxy at the meeting shall be the
act of the Shareholders of such class or series with respect to such matter.
10.5 Proxies, etc. At any meeting of Shareholders, any holder of
Shares entitled to vote thereat may vote by properly executed proxy, provided
that no proxy shall be voted at any meeting unless it shall have been placed on
file with the Secretary, or with such other officer or agent of the Trust as the
Secretary may direct, for verification prior to the time at which such vote
shall be taken. Pursuant to a resolution of a majority of the Trustees, proxies
may be solicited in the name of one or more Trustees or one or more of the
officers or employees of the Trust. No proxy shall be valid after the expiration
of 11 months from the date thereof, unless otherwise provided in the proxy. Only
Shareholders of record shall be entitled to vote. Each full Share shall be
entitled to one vote and fractional Shares shall be entitled to a vote of such
fraction. When any Share is held jointly by several persons, any one of them may
vote at any meeting in person or by proxy in respect of such Share, but if more
than one of them shall be present at such meeting in person or by proxy, and
such joint owners or their proxies so present disagree as to any vote to be
cast, such vote shall not be received in respect of such Share. A proxy
purporting to be executed by or on behalf of a Shareholder shall be deemed valid
unless challenged at or prior to its exercise, and the burden of proving
invalidity shall rest on the challenger. If the holder of any such Share is a
minor or a person of unsound mind, and subject to guardianship or to the legal
control of any other person as regards the charge or management of such Share,
he may vote by his guardian or such other person appointed or having such
control, and such vote may be given in person or by proxy.
22
10.6 Reports. The Trustees shall cause to be prepared at least
annually and more frequently to the extent and in the form required by law,
regulation or any exchange on which Trust Shares are listed a report of
operations containing a balance sheet and statement of income and undistributed
income of the Trust prepared in conformity with generally accepted accounting
principles and an opinion of an independent public accountant on such financial
statements. Copies of such reports shall be mailed to all Shareholders of record
within the time required by the 1940 Act, and in any event within a reasonable
period preceding the meeting of Shareholders. The Trustees shall, in addition,
furnish to the Shareholders at least semi-annually to the extent required by
law, interim reports containing an unaudited balance sheet of the Trust as of
the end of such period and an unaudited statement of income and surplus for the
period from the beginning of the current fiscal year to the end of such period.
10.7 Inspection of Records. The records of the Trust shall be open to inspection
by Shareholders to the same extent as is permitted shareholders of a corporation
formed under the Delaware General Corporation Law. 10.8 Shareholder Action by
Written Consent. Any action which may be taken by Shareholders by vote may be
taken without a meeting if the holders entitled to vote thereon of the
proportion of Shares required for approval of such action at a meeting of
Shareholders pursuant to Section 10.4 consent to the action in writing and the
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.
ARTICLE XI
Duration; Termination of Trust; Amendment; Mergers, Etc.
11.1 Duration. Subject to possible termination in accordance with
the provisions of Section 11.2 hereof, the Trust created hereby shall have
perpetual existence.
11.2 Termination. (a) The Trust may be dissolved, after a majority
of the Trustees have approved a resolution therefor, upon approval by not less
than 75% of the Shares of each class or series outstanding and entitled to vote,
voting as separate classes or series, unless such resolution has been approved
by 80% of the Trustees, in which case approval by a Majority Shareholder Vote
shall be required. Upon the dissolution of the Trust:
(i) The Trust shall carry on no business except for
the purpose of winding up its affairs.
(ii) The Trustees shall proceed to wind up the
affairs of the Trust and all of the powers of the Trustees under this
Declaration shall continue until the affairs of the Trust shall have been
wound up, including the power to fulfill or discharge the contracts of the
Trust, collect its assets, sell, convey, assign, exchange, merge where the
Trust is not the survivor, transfer or otherwise dispose of all or any part
of the remaining Trust Property to one or more Persons at public or private
sale for consideration which may consist in whole or in part in cash,
securities or other property of any kind, discharge or pay its liabilities,
and do all other acts appropriate to liquidate its business; provided
23
that any sale, conveyance, assignment, exchange, merger in which the Trust
is not the survivor, transfer or other disposition of all or substantially
all the Trust Property of the Trust shall require approval of the principal
terms of the transaction and the nature and amount of the consideration by
Shareholders with the same vote as required to open-end the Trust.
(iii) After paying or adequately providing for the
payment of all liabilities, and upon receipt of such releases, indemnities
and refunding agreements, as they deem necessary for their protection, the
Trustees may distribute the remaining Trust Property, in cash or in kind or
partly each, among the Shareholders according to their respective rights.
(b) After the winding up and termination of the Trust and
distribution to the Shareholders as herein provided, a majority of the Trustees
shall execute and lodge among the records of the Trust an instrument in writing
setting forth the fact of such termination and shall execute and file a
certificate of cancellation with the Secretary of State of the State of
Delaware. Upon termination of the Trust, the Trustees shall thereupon be
discharged from all further liabilities and duties hereunder, and the rights and
interests of all Shareholders shall thereupon cease.
11.3 Amendment Procedure. (a) Except as provided in subsection (b)
of this Section 11.3, this Declaration may be amended, after a majority of the
Trustees have approved a resolution therefor, by the affirmative vote of the
holders of not less than a majority of the affected Shares. The Trustees also
may amend this Declaration without any vote of Shareholders of any class of
series to divide the Shares of the Trust into one or more classes or additional
classes, or one or more series of any such class or classes, to change the name
of the Trust or any class or series of Shares, to make any change that does not
adversely affect the relative rights or preferences of any Shareholder, as they
may deem necessary, or to conform this Declaration to the requirements of the
1940 Act or any other applicable federal laws or regulations including pursuant
to Section 6.2 or the requirements of the regulated investment company
provisions of the Code, but the Trustees shall not be liable for failing to do
so.
(b) No amendment may be made to Section 2.1, Section 2.2,
Section 2.3, Section 3.9, Section 5.1, Section 5.2, Section 11.2(a), this
Section 11.3, Section 11.4, Section 11.6, Section 11.7 or Section 11.8 of this
Declaration and no amendment may be made to this Declaration which would change
any rights with respect to any Shares of the Trust by reducing the amount
payable thereon upon liquidation of the Trust or by diminishing or eliminating
any voting rights pertaining thereto (except that this provision shall not limit
the ability of the Trustees to authorize, and to cause the Trust to issue, other
securities pursuant to Section 6.2), except after a majority of the Trustees
have approved a resolution therefor, and such proposed amendment has been
approved by the affirmative vote of the holders of not less than seventy-five
percent (75%) of the Shares of each affected class or series outstanding, voting
as separate classes or series, or unless such amendment has been approved by 80%
of the Trustees, in which case approval by a Majority Shareholder Vote shall be
required. Nothing contained in this Declaration shall permit the amendment of
this Declaration to impair the exemption from
24
personal liability of the Shareholders, Trustees, officers, employees and agents
of the Trust or to permit assessments upon Shareholders.
(c) An amendment duly adopted by the requisite vote of the Board
of Trustees and, if required, the Shareholders as aforesaid, shall become
effective at the time of such adoption or at such other time as may be
designated by the Board of Trustees or Shareholders, as the case may be. A
certification in recordable form signed by a majority of the Trustees setting
forth an amendment and reciting that it was duly adopted by the Trustees and, if
required, the Shareholders as aforesaid, or a copy of the Declaration, as
amended, in recordable form, and executed by a majority of the Trustees, shall
be conclusive evidence of such amendment when lodged among the records of the
Trust or at such other time designated by the Board.
Notwithstanding any other provision hereof, until such time as a
Registration Statement under the Securities Act of 1933, as amended, covering
the first public offering of Shares of the Trust shall have become effective,
this Declaration may be terminated or amended in any respect by the affirmative
vote of a majority of the Trustees or by an instrument signed by a majority of
the Trustees.
11.4 Merger, Consolidation and Sale of Assets. Except as provided
in Section 11.7, the Trust may merge or consolidate with any other corporation,
association, trust or other organization or may sell, lease or exchange all or
substantially all of the Trust Property or the property, including its good
will, upon such terms and conditions and for such consideration when and as
authorized by two- thirds of the Trustees and approved by a Majority Shareholder
Vote and any such merger, consolidation, sale, lease or exchange shall be
determined for all purposes to have been accomplished under and pursuant to the
statutes of the State of Delaware.
11.5 Subsidiaries. Without approval by Shareholders, the Trustees
may cause to be organized or assist in organizing one or more corporations,
trusts, partnerships, associations or other organizations to take over all of
the Trust Property 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 a
portion of the Trust Property to any such corporation, trust, limited liability
company, association or organization in exchange for the shares or securities
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,
limited liability company, partnership, association or organization, or any
corporation, partnership, trust, limited liability company, association or
organization in which the Trust holds or is about to acquire shares or any other
interests.
11.6 Automatic Conversion. (a) Upon the first occurrence, if any,
of an Automatic Conversion Event, the Trust will convene a special meeting of
Shareholders (the "Conversion Special Meeting") for the purpose of voting on a
proposal that the Trust remain a "closed-end investment company," as such term
is defined in the 1940 Act (the "Closed-End Proposal"). If at the Conversion
Special Meeting the Closed-End Proposal is approved by a Majority Shareholder
Vote, the Trust shall continue to operate as a closed-end investment
25
company. If at the Conversion Special Meeting the Closed-End Proposal is not
approved by a Majority Shareholder Vote, the Trust will automatically convert
from a closed-end investment company to an "open-end investment company," as
such term is defined in the 1940 Act. In such event, the Trust shall promptly
take such actions as necessary to convert the Trust to an open-end investment
company, including amending this Declaration to make the Shares a "redeemable
security" as that term is defined in the 1940 Act (which such amendments shall
be made as approved by the Board of Trustees, without any requirement of
approval of Shareholders), and the Trust shall, upon complying with any
requirements of the 1940 Act and state law, become an open-end investment
company.
(b) Notwithstanding any other provisions of this Declaration or
the By-Laws of the Trust, the Trustees shall fix a date not more than [45] days
following the first occurrence, if any, of an Automatic Conversion Event as the
record date for the determination of the Persons to be treated as Shareholders
of record for purposes of the Conversion Special Meeting and the Conversion
Special Meeting and any adjournments thereof shall be held within [90] days of
such record date; provided, however, that in the event that the date, as so
determined, of the Conversion Special Meeting would be within 60 days of the
anniversary of the annual meeting of Shareholders last held, then the matters to
be voted on pursuant to paragraph (b) above may, in the discretion of the Board
of Trustees, be voted on at the next convened annual meeting of Shareholders and
such annual meeting of Shareholders shall be considered, for purposes of this
Section 11.6, to be the Conversion Special Meeting.
(c) Upon the first occurrence, if any, of a Subsequent Automatic
Conversion Event, the Trust will submit a Closed-End Proposal to Shareholders at
the Trust's annual meeting of Shareholders next succeeding the occurrence of
such Subsequent Automatic Conversion Event. If at such annual meeting of
Shareholders, the Closed-End Proposal is approved by a Majority Shareholder
Vote, the Trust shall continue to operate as a closed-end investment company. If
at such annual meeting of Shareholders, the Closed-End Proposal is not approved
by a Majority Shareholder Vote, the Trust will automatically convert from a
closed-end investment company to an open-end investment company (in the manner
described in paragraph (a) of this Section).
(d) As used in this Section 11.6, the following terms shall have
the meanings as set forth below:
(i) "Automatic Conversion EvenT" shall mean the
occurrence for any period of seventy-five (75) consecutive Trading Days,
from and after a period commencing eighteen months from the closing date of
the initial public offering of the Shares of the Trust, of the Closing
Price of the Shares on each such Trading Day being at least ten-percent
(10%) less than the Net Asset Value of the Shares on such Trading Day.
(ii) "Closing Price" shall mean the consolidated
closing price on a Trading Day as reported by the Exchange.
(iii) "Exchange" shall mean the New York Stock
Exchange or such other principal stock exchange on which the Shares are
listed and traded.
26
(iv) "Net Asset Value" shall mean the net asset value
per Share as determined by the Trust pursuant to its policies and
procedures then in effect.
(v) "Subsequent Automatic Conversion Event" shall
mean any Automatic Conversion Event which occurs at any time following the
approval of a Closed-End Proposal by Majority Shareholder Vote.
(vi) "Trading Day" shall mean any day on which the
Exchange is open and on which there is trading in the Shares.
11.7 Conversion by Affirmative Vote. Notwithstanding any other
provisions of this Declaration or the By-Laws of the Trust and except as
provided for by Section 11.6, a favorable vote of a majority of the Trustees
then in office followed by the favorable vote of the holders of not less than
seventy-five percent (75%) of the Shares of each affected class or series
outstanding, voting as separate classes or series, shall be required to approve,
adopt or authorize an amendment to this Declaration that makes the Shares a
"redeemable security" as that term is defined in the 1940 Act, unless such
amendment has been approved by 80% of the Trustees, in which case approval by a
Majority Shareholder Vote shall be required. Such affirmative vote or consent
shall be in addition to the vote or consent of the holders of the Shares
otherwise required by law, or any agreement between the Trust and any national
securities exchange.
11.8 Certain Transactions. (a) Notwithstanding any other provision
of this Declaration and subject to the exceptions provided in paragraph (d) of
this Section, the types of transactions described in paragraph (c) of this
Section shall require the affirmative vote or consent of a majority of the
Trustees then in office followed by the affirmative vote of the holders of not
less than seventy-five percent (75%) of the Shares of each affected class or
series outstanding, voting as separate classes or series, when a Principal
Shareholder (as defined in paragraph (b) of this Section) is a party to the
transaction. Such affirmative vote or consent shall be in addition to the vote
or consent of the holders of Shares otherwise required by law or by the terms of
any class or series of preferred stock, whether now or hereafter authorized, or
any agreement between the Trust and any national securities exchange.
(b) The term "Principal Shareholder" shall mean any corporation,
Person or other entity which is the beneficial owner, directly or indirectly, of
five percent (5%) or more of the outstanding Shares of any class or series and
shall include any affiliate or associate, as such terms are defined in clause
(ii) below, of a Principal Shareholder. For the purposes of this Section, in
addition to the Shares which a corporation, Person or other entity beneficially
owns directly, (a) any corporation, Person or other entity shall be deemed to be
the beneficial owner of any Shares (i) which it has the right to acquire
pursuant to any agreement or upon exercise of conversion rights or warrants, or
otherwise (but excluding share options granted by the Trust) or (ii) which are
beneficially owned, directly or indirectly (including Shares deemed owned
through application of clause (i) above), by any other corporation, Person or
entity with which its "affiliate" or
27
"associate" (as defined below) has any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of Shares, or which
is its "affiliate" or "associate" as those terms are defined in Rule 12b-2 of
the General Rules and Regulations under the Securities Exchange Act of 1934, and
(b) the outstanding Shares shall include Shares deemed owned through application
of clauses (i) and (ii) above but shall not include any other Shares which may
be issuable pursuant to any agreement, or upon exercise of conversion rights or
warrants, or otherwise.
(c) This Section shall apply to the following transactions: (i)
The merger or consolidation of the Trust or any subsidiary of the Trust with or
into any Principal Shareholder (ii) The issuance of any securities of the Trust
to any Principal Shareholder for cash (other than pursuant to any automatic
dividend reinvestment plan). (iii) The sale, lease or exchange of all or any
substantial part of the assets of the Trust to any Principal Shareholder (except
assets having an aggregate fair market value of less than $1,000,000,
aggregating for the purpose of such computation all assets sold, leased or
exchanged in any series of similar transactions within a twelve-month period.)
(iv) The sale, lease or exchange to the Trust or any subsidiary thereof, in
exchange for securities of the Trust, of any assets of any Principal Shareholder
(except assets having an aggregate fair market value of less than $1,000,000,
aggregating for the purposes of such computation all assets sold, leased or
exchanged in any series of similar transactions within a twelve-month period).
(d) The provisions of this Section shall not be applicable to (i)
any of the transactions described in paragraph (c) of this Section if 80% of the
Trustees shall by resolution have approved a memorandum of understanding with
such Principal Shareholder with respect to and substantially consistent with
such transaction, in which case approval by a Majority Shareholder Vote shall be
the only vote of Shareholders required by this Section, or (ii) any such
transaction with any entity of which a majority of the outstanding shares of all
classes and series of a stock normally entitled to vote in elections of
directors is owned of record or beneficially by the Trust and its subsidiaries.
(e) The Board of Trustees shall have the power and duty to determine for the
purposes of this Section on the basis of information known to the Trust whether
(i) a corporation, person or entity beneficially owns five percent (5%) or more
of the outstanding Shares of any class or series, (ii) a corporation, person or
entity is an "affiliate" or "associate" (as defined above) of another, (iii) the
assets being acquired or leased to or by the Trust or any subsidiary thereof
constitute a substantial part of the assets of the Trust and have an aggregate
fair market value of less than $1,000,000, and (iv) the memorandum of
understanding referred to in paragraph (d) hereof is substantially consistent
with the transaction covered thereby. Any such determination shall be conclusive
and binding for all purposes of this Section.
ARTICLE XII
Miscellaneous
12.1 Filing. (a) This Declaration and any amendment or supplement
hereto shall be filed in such places as may be required or as the Trustees deem
appropriate. Each amendment or supplement 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 shall, upon insertion in the Trust's minute book,
be conclusive evidence of all amendments contained therein.
28
A restated Declaration, containing the original Declaration and all amendments
and supplements theretofore made, may be executed from time to time by a
majority of the Trustees and shall, upon insertion in the Trust's minute book,
be conclusive evidence of all amendments and supplements contained therein and
may thereafter be referred to in lieu of the original Declaration and the
various amendments and supplements thereto.
(b) The Trustees hereby authorize and direct a Certificate of
Trust, in the form attached hereto as Exhibit A, to be executed and filed with
the Office of the Secretary of State of the State of Delaware in accordance with
the Delaware Statutory Trust Act.
12.2 Resident Agent. The Trust shall maintain a resident agent in
the State of Delaware, which agent shall initially be The Corporation Trust
Company, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000. The Trustees may
designate a successor resident agent, provided, however, that such appointment
shall not become effective until written notice thereof is delivered to the
office of the Secretary of the State.
12.3 Governing Law. This Declaration is executed by the Trustees
and delivered in the State of Delaware 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 laws of said
State and reference shall be specifically made to the Delaware General
Corporation Law as to the construction of matters not specifically covered
herein or as to which an ambiguity exists, although such law shall not be viewed
as limiting the powers otherwise granted to the Trustees hereunder and any
ambiguity shall be viewed in favor of such powers. All disputes arising under
this Declaration shall be brought in the Delaware Court of Chancery unless
otherwise required by the 1940 Act.
12.4 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.
12.5 Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust, or of any recording
office in which this Declaration may be recorded, appears to be a Trustee
hereunder, certifying to: (a) the number or identity of Trustees or
Shareholders, (b) the name of the Trust, (c) the due authorization of the
execution of any instrument or writing, (d) the form of any vote passed at a
meeting of Trustees or Shareholders, (e) the fact that the number of Trustees or
Shareholders present at any meeting or executing any written instrument
satisfies the requirements of this Declaration, (f) the form of any By Laws
adopted by or the identity of any officers elected by the Trustees, or (g) 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.
12.6 Provisions in Conflict with Law or Regulation. (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 or with other applicable laws and regulations, the
29
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.
30
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.
By:
--------------------------
Xxxxxxx X. Xxxxxx
Trustee
--------------------------
Xxxxxxxx Xxxxxxx
Trustee
--------------------------
Xxxxxx X. Xxxxxx
Trustee
--------------------------
Xxxxxx X. Xxxxxx Xx.
Trustee
31
