DLJ HIGH YIELD BOND FUND
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AGREEMENT AND DECLARATION OF TRUST
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April 24, 1998
TABLE OF CONTENTS
ARTICLE I
The Trust
1.1 Name ........................................................................................2
1.2 Definitions...................................................................................2
ARTICLE II
Trustees
2.1 Number and Qualification......................................................................4
2.2 Term and Election.............................................................................4
2.3 Resignation and Removal.......................................................................5
2.4 Vacancies.....................................................................................6
2.5 Meetings......................................................................................6
2.6 Officers......................................................................................7
ARTICLE III
Powers and Duties of Trustees
3.1 General.......................................................................................7
3.2 Investments...................................................................................8
3.3 Legal Title...................................................................................8
3.4 Issuance and Repurchase of Shares.............................................................9
3.5 Borrow Money or Utilize Leverage..............................................................9
3.6 Delegation; Committees........................................................................9
3.7 Collection and Payment.......................................................................10
3.8 Expenses.....................................................................................10
3.9 By-Laws......................................................................................11
3.10 Miscellaneous Powers.........................................................................11
3.11 Further Powers...............................................................................11
3.12 Trustee Action by Written Consent............................................................12
ARTICLE IV
Advisory, Management and Distribution Arrangements
4.1 Advisory and Management Arrangements..........................................................12
4.2 Distribution Arrangements.....................................................................13
4.3 Parties to Contract...........................................................................13
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ARTICLE V
Limitations of Liability
and Indemnification
5.1 No Personal Liability of Shareholders,
Trustees, etc..........................................................................14
5.2 Mandatory Indemnification.....................................................................14
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
5.6 Indemnification of Shareholders...............................................................18
ARTICLE VI
Shares of Beneficial Interest
6.1 Beneficial Interest...........................................................................18
6.2 Other Securities..............................................................................18
6.3 Rights of Shareholders........................................................................19
6.4 Trust Only....................................................................................19
6.5 Issuance of Shares............................................................................19
6.6 Register of Shares............................................................................20
6.7 Transfer Agent and Registrar..................................................................20
6.8 Transfer of Shares............................................................................20
6.9 Notices.......................................................................................21
ARTICLE VII
Custodians
7.1 Appointment and Duties........................................................................21
7.2 Central Certificate System....................................................................22
ARTICLE VIII
Redemption
8.1 Redemptions...................................................................................23
8.2 Disclosure of Holding.........................................................................23
8.3 [Reserved]....................................................................................23
ARTICLE IX
Determination of Net Asset Value
Net Income and Distributions
9.1 Net Asset Value...............................................................................23
9.2 Distributions to Shareholders.................................................................23
9.3 Power to Modify Foregoing Procedures..........................................................24
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ARTICLE X
Shareholders
10.1 Meetings of Shareholders.....................................................................25
10.2 Voting.......................................................................................25
10.3 Notice of Meeting and Record Date............................................................26
10.4 Quorum and Required Vote.....................................................................26
10.5 Proxies, etc.................................................................................27
10.6 Reports......................................................................................28
10.7 Inspection of Records........................................................................28
10.8 Shareholder Action by Written Consent........................................................28
ARTICLE XI
Duration: Termination of Trust;
Amendment; Mergers, Etc.
11.1 Duration.....................................................................................29
11.2 Termination..................................................................................29
11.3 Amendment Procedure..........................................................................30
11.4 Merger, Consolidation and Sale of Assets.....................................................31
11.5 Incorporation................................................................................31
11.6 Conversion...................................................................................32
11.7 Certain Transactions.........................................................................33
ARTICLE XII
Miscellaneous
12.1 Filing.......................................................................................35
12.2 Resident Agent...............................................................................35
12.3 Governing Law................................................................................35
12.4 Counterparts.................................................................................36
12.5 Reliance by Third Parties....................................................................36
12.6 Provisions in Conflict with Law or Regulation................................................36
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DLJ HIGH YIELD BOND FUND
AGREEMENT AND DECLARATION OF TRUST
AGREEMENT AND DECLARATION OF TRUST made as of the 24th day of
April, 1998, 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 business 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 April 24, 1998 shall constitute a business trust
under the Delaware Business Trust Statute and that this Declaration shall
constitute the governing instrument of such business 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.
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ARTICLE I
The Trust
1.1 Name. This Trust shall be known as the "DLJ High Yield
Bond 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 determine.
1.2 Definitions. As used in this Declaration, the following
terms shall have the following meanings:
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 or amended and restated from time to time.
"Delaware Business Trust Statute" shall mean
the provisions of the Delaware Business Trust Act, 12
Del. C. ss.3801, et. seq., as such Act may be amended from
time to time.
"Fundamental Policies" shall mean the invest ment policies and
restrictions as set forth from time to time in any Prospectus or contained in
any current Regis tration Statement of the Trust filed with the Securities and
Exchange 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 in accordance with the
requirements of the 1940 Act.
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"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.
"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 currently effective Prospectus of
the Trust, if any, under the Securities Act of 1933, as amended.
"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.
"Trustees" shall mean the signatory to this Declaration, so
long as he 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.
"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.
The "1940 Act" refers to the Investment Company Act of 1940
and the rules and regulations promulgated
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thereunder and exemptions granted therefrom, as amended from time to time.
ARTICLE II
Trustees
2.1 Number and Qualification. Prior to a public offering of
Shares, there may be a sole Trustee and thereafter, the number of Trustees shall
be no less than three or more than fifteen, provided, however, that the number
of Trustees may be increased or decreased by a written instrument signed by a
majority of the Trustees then in office. 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 70 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 three classes. Within the limits above specified, the number of the
Trustees in each class shall be determined by resolution of the Board of Trust
ees. The term of office of all of the Trustees shall expire on the date of the
first annual or special meeting of Shareholders 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 first class shall expire on the date
of the second annual meeting of Shareholders or special meeting in lieu thereof.
The term of office of the second class shall expire on the date of the third
annual meeting of Share holders or special meeting in lieu thereof. The term of
office of the third class shall expire on the date of the fourth annual meeting
of Shareholders or special meeting in lieu thereof. 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 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; except (a) that any Trustee may resign his or her trust (without need
for prior or subsequent accounting) by an instrument in writing signed by him
or her and delivered to the other Trustees, which shall take effect upon such
delivery or upon such later date as is specified therein; (b) that any Trustee
may be removed (provided the aggregate number of Trustees after such removal
shall not be less than the number required by Section 2.1 hereof) for cause, at
any time by written instrument, signed by the remaining Trustees, specifying the
date when such removal shall become effective; and (c) that any Trustee who
requests in writing to be retired or who has become incapacitated by illness or
injury may be retired by written instrument signed by a majority of the other
Trustees, and he or she 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 the resigning or
removed Trustee. Upon the incapacity or death of any Trustee, his or her legal
representative shall execute and deliver on his or her behalf such document as
the remaining Trustees shall require as provided in the preceding sentence.
2.3 Resignation and Removal. Any Trustee may resign his trust
(without need for prior or subsequent accounting) by an instrument in writing
signed by him and delivered or mailed to 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) by the
action of two-thirds of the remaining Trustees or the holders of two thirds of
the Shares. Upon the resignation or removal of a Trustee, or such persons
otherwise ceasing to be a Trustee, such persons 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
the 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
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as the remaining Trustees shall require as provided in the preceding sentence.
2.4 Vacancies. The term of office of a Trustee shall terminate
and a vacancy shall occur in the event of the death, resignation, bankruptcy,
adjudicated incompetence or other incapacity to perform the duties of the
office, or removal, of a Trustee. 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 by election by
the Shareholders, 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). 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 or by
election by the Shareholders. 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, the President, the Secretary 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 resolution of the
Trustees. Notice of any other meeting shall be mailed not less than 48 hours
before the meeting or otherwise actually delivered orally or in writing not less
than 24 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 lawfully called or
convened. The Trustees may act with or without a meeting. A quorum for all
meetings of the Trustees shall be a majority of the Trustees. Unless provided
otherwise in this Declaration of Trust, 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 a majority 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 a majority 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.
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 Officers. The Trustees shall elect a President, a
Secretary and a Treasurer and may elect a Chairman who shall serve at the
pleasure of the Trustees or until their successors are elected. The Trustees may
elect or appoint or may authorize the Chairman, if any, or President to appoint
such other officers or agents with such powers as the Trustees may deem to be
advis able. A Chairman shall, and the President, Secretary and Treasurer may,
but need not, be a Trustee.
ARTICLE III
Powers and Duties of Trustees
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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 general corporation law of
the State of Delaware. 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
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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 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 by the laws of the State of Delaware governing business
corporations.
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
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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 a Delaware business
corporation 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 designate an executive committee
which shall have all authority of the entire Board of Trustees except such
committee cannot declare dividends and cannot authorize removal of a trustee or
any merger, consolidation or sale of substantially all of the assets of the
Trust.
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 Delaware business corporation, 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, syndicating and brokerage services, as they in good faith may
deem reasonable and reimbursement for expenses reasonably incurred by themselves
on behalf of the Trust. The
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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 may adopt and from time to time
amend or repeal the 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; and (i) adopt a seal for the Trust but the
absence of
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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 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.
3.12 Trustee Action by Written Consent. Any action which may
be taken by Trustees by vote may be taken without a meeting if the number of
Trustees re quired for approval of such action at a meeting of Trustees 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 Trustees.
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 whereby the other party to 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 and/or placement 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 Section 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
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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 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 general corporation law of the
State of Delaware. No Trustee or officer of the Trust shall be subject in such
capacity to any personal liability whatsoever to any Person, other than the
Trust or its Shareholders, in connection with Trust Property or the affairs of
the Trust, save only liability to the Trust or its Shareholders arising from bad
faith, willful misfeasance, gross negligence (negligence in the case of those
Trustees or officers who are directors, officers or employees of the Trust's
investment advisor ("Affiliated Indemnitees")) 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.
5.2 Mandatory Indemnification. a. The Trust hereby agrees to
indemnify the Trustees and offi cers of the Trust (each such person being an
"indemnitee") against any liabilities and expenses,
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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 above in this Section 5.2 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
(negligence in the case of Affiliated Indemnitees), 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 con duct"). 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 was authorized by a majority
of the Trustees.
b. Notwithstanding the foregoing, no indemnification
shall be made hereunder unless there has been a determination (1) 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, (2) in the absence of
such a decision, by (i) 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 (ii) if such
quorum is not obtain able or even if obtainable, if such majority so directs,
independent legal counsel in a written opinion conclude that the indemnitee
should be entitled to indemnification
12
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 he
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: (1) the indemnitee shall provide adequate security for his undertaking, (2)
the Trust shall be insured against losses arising by reason of any lawful
advances, or (3) 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 to which he 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 other Persons providing services to the Trust to the full extent
provided by law as if the Trust were a corporation organized under the Delaware
General Corporation Law 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.
13
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. Every written
obligation, contract, undertaking, instrument, certificate, Share, other
security of the Trust made or issued by the Trustees or by any officers,
employees or agents of the Trust in their capacity as such, shall contain an
appropriate recital to the effect that the Shareholders, Trustees, officers,
employees or agents of the Trust shall not personally be bound by or liable
thereunder, nor shall resort be had to their private property for the
satisfaction of any obligation or claim thereunder, and appropriate references
shall be made therein to this Declaration, and may contain any further recital
which they may deem appropriate, but the omission of such recital shall not
operate to impose personal liability on any of the Trustees, Shareholders,
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,
14
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.
5.6 Indemnification of Shareholders. If any Shareholder or
former Shareholder shall be held personally liable solely by reason of its
being or having been a Shareholder and not because of its acts or omissions or
for some other reason, the Shareholder or former Shareholder (or its heirs,
executors, administrators or other legal representatives or in the case of any
entity, its general successor) shall be entitled out of the assets belonging to
the Trust to be held harmless from and indemnified to the maximum extent
permitted by law against all loss and expense arising from such liability. The
Trust shall, upon request by such Shareholder, assume the defense of any claim
made against such Shareholder for any act or obligation of the Trust and satisfy
any judgment thereon from the assets of the Trust.
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 $.001 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 authorize and issue
such other securities as they determine to be necessary, desirable or
appropriate including preferred interests, debt securities or other senior
securities subject to the Fundamental Policies and the requirements of the
1940 Act. To the extent that the Trustees authorize and issue preferred shares
they are hereby authorized and empowered to amend or supplement this Declaration
as is necessary or appropriate to comply with
15
the requirements of the 1940 Act relating to such securities or as required to
issue such securities by 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 giving 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
16
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 in such fractions thereof.
6.6 Register of Shares. A register shall be kept at 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.
Each such register shall be conclusive as to who are the holders of the Shares
of the applicable class 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 agent and 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
17
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
18
subject to such restrictions, 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. If so directed by a Majority Shareholder Vote, the custodian
shall deliver and pay over all property of the Trust held by it as specified in
such vote.
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
19
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 with out
physical delivery of such securities, provided that all such deposits shall be
subject to withdrawal only upon the order of the Trust.
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, or to comply with the requirements of any other taxing
or regulatory authority.
8.3 [Reserved].
ARTICLE IX
Determination of Net Asset Value
Net Income and 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.
20
(a) The Trustees shall from time to time distribute
ratably among the Shareholders such proportion of the net profits, surplus
(including paid-in surplus), capital, or assets held by the Trustees as they may
deem proper. Such distribution may be made in cash or property (including
without limitation any type of obligations of the Trust or any assets thereof)
or any combination thereof, and the Trustees may distribute ratably among the
Shareholders additional Shares in such manner, at such times, and on such terms
as the Trustees may deem proper.
(b) In the event the Trust has outstanding more than
one class of Shares, the Trustees shall from time to time distribute ratably
among each class of Shareholders of the Trust such proportion of the net
profits, surplus (including paid-in surplus), capital or assets attributable to
such class held by the Trustees as they may deem proper or as may otherwise be
determined in the instrument creating such class of Shares, and the Trustees may
distribute ratably among the Shareholders of each class of the Trust additional
Shares of such class in such manner, at such times, and on such terms as the
Trustees may deem proper. Such distributions to one class need not be ratable
with respect to distributions to Shares of any other class of the Trust.
(c) Distributions pursuant to this Section 9.2 may
be among the Shareholders of record at the time of declaring a distribution or
among the Shareholders of record at such later date as the Trustees shall
determine and specify at the time of declaration.
(d) 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.
(e) 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
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. A special meeting of Shareholders may be called
at any time by a majority of the Trustees 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
having voting rights, 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. Any matter required to be
submitted to Shareholders and affecting one or more classes shall require
separate approval by the required vote of Shareholders of each affected class;
provided, however, that to the extent required by the 1940 Act, there shall be
no separate class votes on the election or removal of Trustees, the selection of
auditors for the Trust, approval of any agreement or contract entered into
21
by the Trust or any action to liquidate or dissolve the Trust. Shareholders of a
particular class shall not be entitled to vote on any matter that affects only
one or more other classes. There shall be no cumulative voting in the election
or removal of Trustees. The Trustees shall cause each matter required or
permitted to be voted upon at a meeting or by written consent of Shareholders to
be submitted to a vote of all classes of outstanding Shares entitled to vote
thereon, unless the 1940 Act or other applicable law or regulations require that
the actions of the Shareholders be taken by a separate vote of one or more
classes, or the Trustees determine that any matter to be submitted to a vote of
Shareholders affects only the rights or interests of one or more (but not all)
classes of outstanding Shares, in which case only the Shareholders of the class
or classes so affected shall be entitled to vote thereon.
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 least 10 days before 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
130 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 100 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 outstanding Shares
of the Trust present in person or by proxy shall constitute a quorum at any
meeting of the Shareholders for purposes of conducting business on which a vote
of Shareholders of the Trust is being taken. The holders of a majority of
outstanding Shares of a class present in person or by proxy shall constitute a
quorum at any meeting of the Shareholders of such class for
22
purposes of conducting business on which a vote of Shareholders of such class
is being taken.
(b) Subject to any provision of applicable law
requiring greater or lesser votes, this Declaration or resolution of the
Trustees specifying a greater or 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 any class is required on any
matter, the affirmative vote of a majority of the Shares of such class present
in person or represented by proxy at the meeting shall be the act of the
Shareholders of such class 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. 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
23
person appointed or having such control, and such vote may be given in person or
by proxy.
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 Delaware business corporation.
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 termina tion in accordance
with the provisions of Section 11.2
24
hereof, the Trust created hereby shall have perpetual
existence.
11.2 Termination.
(a) The Trust may be dissolved, after two thirds of
the Trustees have approved a resolution therefor, upon approval by a majority
of all the Shareholders voting as one class. 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, merger 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 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 lia bilities, 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
25
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) Other than Sections 11.2 and 11.6, 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 to divide the Shares of the Trust into one or
more classes or additional classes, to change the name of the Trust or any
class, to make any change that does not adversely affect the relative rights or
preferences of any Shareholder, as they may deem necessary, 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 under Section 11.3(a)
above, 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 with the
vote of the holders of two-thirds of the Shares of the Trust. Nothing contained
in this Declaration shall permit the amendment of this Declaration to impair the
exemption from personal liability of the Shareholders, Trustees, officers,
employees and agents of the Trust or to permit assessments upon Shareholders.
26
(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. 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 vote of the affected Shareholders 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 Incorporation. Upon approval by Shareholders, 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 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 the Trust Property to any such
corporation, trust, limited liability company, association or organization in
exchange for the shares or
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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. The Trustees may also cause a merger or consolidation between the
Trust or any successor thereto and any such corporation, trust, limited
liability company, 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, limited liability companies, partnerships, associations or other
organizations and selling, conveying or transferring a portion of the Trust
Property to such organizations or entities.
11.6 Conversion. The Trust may be converted at any time from a
"closed-end company" to an "open-end company" as those terms are defined by the
1940 Act, upon the approval of such a proposal, together with the necessary
amendments to this Declaration to permit such a conversion, by a majority of the
Trustees then in office and by the holders of not less than two-thirds (66-2/3%)
of the Trust's outstanding Shares entitled to vote, except that if such proposal
is recommended by two-thirds of the total number of Trustees then in office,
such proposal may be adopted by a Majority Shareholder Vote. From time to time,
the Trustees may consider recommending to the Shareholders a proposal to convert
the Trust from a "closed-end company" to an "open-end company." Upon the
recommendation and subsequent adoption of such a proposal and the necessary
amendments to this Declaration to permit such a conversion of the Trust's
outstanding Shares entitled to vote, the Trust shall, upon complying with any
requirements of the 1940 Act and state law, become an "open-end" investment
company. 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.
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11.7 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 the holders
of eighty percent (80%) of the Shares of each class outstanding and entitled to
vote, voting as a class, 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 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 "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:
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(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 Prin cipal 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
two-thirds of the Board of Trustees of the Trust shall by resolution have
approved a memorandum of understanding with such Principal Shareholder with
respect to and substantially consistent with such transaction, or (ii) any such
transaction with any corporation of which a majority of the outstanding shares
of all classes 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, (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
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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 hereto
shall be filed and in such places as may be required or as the Trustees deem
appropriate. Each amendment 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. A restated Declaration,
containing the original Declaration and all amendments 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
contained therein and may thereafter be referred to in lieu of the original
Declaration and the various amendments thereto.
(b) The trustee is hereby authorized and directed to
execute and file a Certificate of Trust (attached as Exhibit A hereto) with the
Delaware Secretary of State in accordance with the Delaware Business Trust
Statute.
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 business corporation
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law of the State of Delaware 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.
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 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
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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.
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IN WITNESS WHEREOF, the undersigned have caused these presents
to be executed as of the day and year first above written.
By: /s/ X. Xxxxxxx Xxxxxxx
-------------------------
Name: X. Xxxxxxx Xxxxxxx
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