AFD EXCHANGE RESERVES
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AGREEMENT AND DECLARATION OF TRUST
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Dated: January 14, 1994
Principal Office:
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Address of Initial Trustee and
Massachusetts Office:
Xxxxxx X. Xxxxxxx, Esq.
Xxxxxxxx & Worcester
One Post Office Square
AFD EXCHANGE RESERVES
AGREEMENT AND DECLARATION OF TRUST
Index
Page
RECITALS 1
ARTICLE 1 THE TRUST 2
Section 1.1 Name 2
Section 1.2 Location 2
Section 1.3 Nature of Trust 2
Section 1.4 Definitions 2
Section 1.5 Real Property to be Converted into
Personal Property 7
ARTICLE 2 PURPOSE OF THE TRUST 8
ARTICLE 3 POWERS OF THE TRUSTEES 8
Section 3.1 Powers in General 8
(a) Investments 9
(b) Disposition of Assets 9
(c) Ownership Powers 10
(d) Form of Holding 10
(e) Reorganization, etc. 10
(f) Voting Trusts, etc. 10
(g) Contracts, etc. 10
(h) Guarantees, etc. 11
(i) Partnerships, etc. 11
(j) Insurance 11
(k) Pensions, etc. 11
(l) Power of Collection and
Litigation 11
(m) Issuance and Repurchase of
Shares 12
(n) Offices 12
(o) Expenses 12
(p) Agent's, etc. 12
(q) Accounts 12
(r) Valuation 12
(s) Indemnification 13
(t) General 13
i
Section 3.2 Borrowings; Financings; Issuance of
Securities 13
Section 3.3 Deposits 13
Section 3.4 Allocations 13
Section 3.5 Further Powers; Limitations 14
ARTICLE 4 TRUSTEES AND OFFICERS 14
Section 4.1 Number, Designation, Election, Term,
etc. 14
(a) Initial Trustee 14
(b) Number 14
(c) Election and Xxxx 00
(x) Resignation and Retirement 15
(e) Removal 15
(f) Vacancies 16
(g) Acceptance of Trusts 16
(h) Effect of Death, Resignation, etc. 16
(i) Conveyance 16
(j) No Accounting 17
Section 4.2 Trustees' Meetings; Participation by
Telephone, etc. 17
Section 4.3 Committees; Delegation 17
Section 4.4 Officers 18
Section 4.5 Compensation of Trustees and Officers 18
Section 4.6 Ownership of Shares and Securities of
the Trust 18
Section 4.7 Right of Trustees and Officers to Own
Property or to Engage in Business;
Authority of Trustees to Permit
Others to Do Likewise 18
Section 4.8 Reliance on Experts 19
Section 4.9 Surety Bonds 19
Section 4.10 Apparent Authority of Trustees and
Officers 19
Section 4.11 Other Relationships Not Prohibited 19
Section 4 12 Payment of Trust Expenses 20
Section 4.13 Ownership of the Trust Property 20
ARTICLE 5 DELEGATION OF MANAGERIAL RESPONSIBILITIES 21
Section 5.1 Appointment; Action by Less than All
Trustees 21
Section 5.2 Certain Contracts 21
(a) Advisory 22
(b) Administration 22
(c) Distribution 22
(d) Custodian 23
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(e) Transfer and Dividend Disbursing
Agency 23
(f) Shareholder Servicing 23
(g) Accounting 23
ARTICLE 6 PORTFOLIOS AND SHARES 24
Section 6.1 Description of Portfolios and Shares 24
(a) Shares; Portfolios; Series of Shares 24
(b) Establishment, etc. of Portfolios;
Authorization of Shares 24
(c) Character of Separate Portfolios and
Shares Thereof 25
(d) Consideration for Shares 25
Section 6.2 Establishment and Designation of the
AFD Exchange Reserves Portfolio;
Classes of Shares; General Provisions
for All Portfolios and Series of
Shares 25
(a) Assets Belonging to Portfolios 26
(b) Liabilities of Portfolios 27
(c) Dividends 27
(d) Liquidation 28
(e) Redemption by Shareholder 28
(f) Redemption at the Option of the Trust 29
(g) Net Asset Value 29
(h) Transfer 30
(i) Equality 30
(j) Rights of Fractional Shares 30
(k) Conversion Rights; Conversion of
Class B Shares 30
(l) Suspension of Automatic Conversion
of Class B Shares 32
Section 6.3 Ownership of Shares 33
Section 6.4 Investments in the Trust 33
Section 6.5 No Pre-emptive Rights 34
Section 6.6 Status of Shares 34
ARTICLE 7 SHAREHOLDERS' VOTING POWERS AND MEETINGS 34
Section 7.1 Voting Powers 34
Section 7.2 Number of Votes and Manner of Voting;
Proxies 35
Section 7.3 Meetings 35
Section 7.4 Record Dates 36
Section 7.5 Quorum and Required Vote 36
Section 7.6 Action by Written Consent 36
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Section 7.7 Inspection of Records 37
Section 7.8 Additional Provisions 37
ARTICLE 8 LIMITATION OF LIABILITY; INDEMNIFICATION 37
Section 8.1 Trustees, Shareholders, etc. Not
Personally Liable; Notice 37
Section 8.2 Trustees' Good Faith Action; Expert
Advice; No Bond or Surety 38
Section 8.3 Indemnification of Shareholders 38
Section 8.4 Indemnification of Trustees, Officers,
etc. 38
Section 8.5 Compromise Payment 40
Section 8.6 Indemnification Not Exclusive, etc. 40
Section 8.7 Liability of Third Persons Dealing with
Trustees 40
ARTICLE 9 DURATION; REORGANIZATION: AMENDMENTS 40
Section 9.1 Duration and Termination of Trust 40
Section 9.2 Reorganization 41
Section 9.3 Amendments; etc. 41
Section 9.4 Filing of Copies of Declaration and
Amendments 43
ARTICLE 10 MISCELLANEOUS 43
Section 10.1 Governing Law 43
Section 10.2 Counterparts 43
Section 10.3 Reliance by Third Parties 43
Section 10.4 References; Headings . 43
Section 10.5 Use of the Names "AFD" and "Alliance" 44
Signatures 44
Acknowledgments 45
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AGREEMENT AND DECLARATION OF TRUST
OF
AFD EXCHANGE RESERVES
This AGREEMENT AND DECLARATION OF TRUST, made at Boston,
Massachusetts this 14th day of January, 1994 by and between the
Settlor and the Trustee whose signature is set forth below (the
"Initial Trustee"),
W I T N E S S E T H T H A T:
WHEREAS, Xxxxxxxx X. Xxxxxxxxxx, an individual residing
in Brookline, Massachusetts (the "Settlor"), proposes to deliver
to the Initial Trustee the sum of one hundred dollars ($100.00)
lawful money of the United States of America in trust hereunder
and to authorize the Initial Trustee and all other Persons acting
as Trustees hereunder to employ such funds, and any other funds
coming into their hands or the hands of their successor or
successors as such Trustees, to carry on the business of an
investment company, and as such of buying, selling, investing in
or otherwise dealing in and with stocks, bonds, debentures,
warrants, options, futures contracts and other securities and
interests therein, or calls or puts with respect to any of the
same, or such other and further investment media and other
property as the Trustees may deem advisable, which are not
prohibited by law or the terms of this Declaration; and
WHEREAS, the Initial Trustee is willing to accept such
sum, together with any and all additions thereto and the income
or increments thereof, upon the terms, conditions and trusts
hereinafter set forth; and
WHEREAS, it is proposed that the assets held by the
Trustees shall initially be held in a single portfolio, and may
from time to time hereafter be divided into separate portfolios,
each with its own separate investment assets, investment
objectives, policies and purposes, and that the beneficial
interest in each such portfolio shall be divided into
transferable Shares of Beneficial Interest, a separate Series o:E
Shares for each portfolio, all in accordance with the provisions
hereinafter set forth; and
WHEREAS, it is desired that the trust established hereby
(the "Trust") be managed and operated as a trust with
transferable shares under the laws of Massachusetts, of the type
commonly known as and referred to as a Massachusetts business
trust, in accordance with the provisions hereinafter set forth,
NOW, THEREFORE, the Initial Trustee, for himself and his
successors as Trustees, hereby declares, and agrees with the
Settlor, for herself and for all Persons who shall hereafter
become holders of Shares of Beneficial Interest of the Trust, of
any Series, that the Trustees will hold the sum delivered to them
upon the execution hereof, and all other and further cash,
securities and other property of every type and description which
they may in any way acquire in their capacity as such Trustees,
together with the income therefrom and the proceeds thereof, IN
TRUST NEVERTHELESS, to manage and dispose of the same for the
benefit of the holders from time to time of the Shares of
Beneficial Interest of the several Series being issued and to be
issued here- under and in the manner and subject to the
provisions hereof, to wit:
ARTICLE 1
THE TRUST
SECTION 1.1 Name. The name of the Trust shall be
"AFD EXCHANGE RESERVES"
and so far as may be practicable the Trustees shall conduct the
Trust's activities, execute all documents and xxx or be sued
under that name, which name (and the word "Trust" wherever used
in this Agreement and Declaration of Trust, except where the
context otherwise requires) shall refer to the Trustees in their
capacity as Trustees, and not individually or personally, and
shall not refer to the officers, agents or employees of the Trust
or of such Trustees, or to the holders of the Shares of
Beneficial Interest of the Trust, of any Series. If the Trustees
determine that the use of such name is not practicable, legal or
convenient at any time or in any jurisdiction, or if the Trust is
required to discontinue the use of such name pursuant to Section
10.5 hereof, then subject to that Section, the Trustees may use
such other designation, or they may adopt such other name for the
Trust as they deem proper, and the Trust may hold property and
conduct its activities under such designation or name.
SECTION 1.2 Location. The Trust shall have an office
in Boston, Massachusetts, unless changed by the Trustees to
another location in Massachusetts or elsewhere, but such office
need not be the sole or principal office of the Trust. The Trust
may have such other offices or places of business as the Trustees
may from time to time determine to be necessary or expedient.
SECTION 1.3 Nature of Trust. The Trust shall be a
trust with transferable shares under the laws of The Commonwealth
of Massachusetts, of the type referred to in Section 1 of
Chapter 182 of the Massachusetts General Laws and commonly termed
a Massachusetts business trust. The Trust is not intended to be,
shall not be deemed to be, and shall not be treated as, a general
partnership, limited partnership, joint venture, corporation or
2
joint stock company. The Shareholders shall be beneficiaries and
their relationship to the Trustees shall be solely in that
capacity in accordance with the rights conferred upon them
hereunder.
SECTION 1.4 Definitions. As used in this Agreement and
Declaration of Trust, the following terms shall have the meanings
set forth below unless the context thereof otherwise requires:
"Accounting Agent" shall have the meaning designated in
Section 5.2(q) hereof.
"Administrator" shall have the meaning designated in
Section 5.2(b) hereof.
"Affiliated Person" shall have the meaning assigned to
it in the 1940 Act.
"By-Laws" shall mean the By-Laws of the Trust, as
amended from time to time.
"Certificate of Designation" shall have the meaning
designated in Section 6.1(b) hereof.
"Certificate of Termination" shall have the meaning
designated in Section 6.1(b) hereof.
"Class" shall mean, with respect to the Series of Shares
representing the beneficial interests in any separate Portfolio
of the Trust, any distinct and separate category of Shares of
such Series which are specifically denominated as a separate
Class, and are subject to provisions (whether set forth in this
Declaration, the Certificate of Designation providing for such
Series, the Prospectus under which Shares of such category are
sold, and/or another instrument or document by which the Trust
and the holders of such Shares are bound) distinct and separate
from those applying to the other category or categories of Shares
of such Series, as to some or all of the matters which, under
Article 6 of this Declaration, may differ for different Classes.
"Class A Shares" shall mean, with respect to Shares of
any Portfolio established and designated by this Declaration,
that Class of Shares which is so designated by Section 6.2
hereof.
"Class B Shares" shall mean, with respect to Shares of
any Portfolio established and designated by this Declaration,
that Class of Shares which is so designated by Section 6.2
hereof.
3
"Class C Shares" shall mean, with respect to Shares of
any Portfolio established and designated by this Declaration,
that Class of Shares which is so designated by Section 6.2
hereof.
"Contingent Deferred Sales Charge", or "CDSC", shall
mean a charge which may, under the terms governing any Class of
Shares, be imposed upon the proceeds of the redemption of Shares
of such Class if the conditions specified by such terms are met.
"Commission" shall have the same meaning as in the 1940
Act.
"Contracting Party" shall have the meaning designated in
the preamble to Section 5.2 hereof.
"Conversion Date" shall have the meaning designated in
paragraph (ii) of Section 6.2(k) hereof.
"Covered Person" shall have the meaning designated in
Section 8.4 hereof.
"Custodian" shall have the meaning designated in Section
5.2(d) hereof.
"Declaration" and "Declaration of Trust" shall mean this
Agreement and Declaration of Trust and all amendments or
modifications thereof as from time to time in effect. References
in this Agreement and Declaration of Trust to "hereof", "herein"
and "thereunder" shall be deemed to refer to the Declaration of
Trust generally, and shall not be limited to the particular text,
Article or Section in which such words appear.
"Disabling Conduct" shall have the meaning designated in
Section 8.4 hereof.
"Distributor" shall have the meaning designated in
Section 5.2(c) hereof.
"Dividend Disbursing Agent" shall have the meaning
designated in Section 5.2(e) hereof.
"General Items" shall have the meaning defined in
Section 6.2(a) hereof.
"Initial Portfolio" shall have the meaning assigned to
such term in the preamble to Section 6.2 hereof.
"Initial Trustee" shall have the meaning defined in the
preamble hereto.
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"Internal Revenue Code" shall mean the Internal Revenue
Code of 1986, as from time to time amended and in effect, or any
substituted statute dealing with the same general subject matter
as the Internal Revenue Code of 1986, as in effect on January 1,
1994, and in either case the rules and regulations thereunder, as
from time to time interpreted and applied by applicable case law
thereunder.
"Investment Adviser" shall have the meaning stated in
Section 5.2(a) hereof.
"Majority of the Trustees" shall mean a majority of the
Trustees in office at the time in question. At any time at which
there shall be only one (1) Trustee in office, such term shall
mean such Trustee.
"Majority Shareholder Vote," as used with respect to the
election of any Trustee at a meeting of Shareholders, shall mean
the vote for the election of such Trustee of a plurality of all
outstanding Shares of the Trust, without regard to Series or
Class, represented in person or by proxy at such meeting and
entitled to vote thereon, provided that a quorum (as determined
in accordance with the By-Laws) is present, and as used with
respect to any other action required or permitted to be taken by
Shareholders, shall mean the affirmative vote for such action of
the holders of that number of all outstanding Shares of the Trust
(or, where a separate vote of Shares of any particular Series or
Class is to be taken, the affirmative vote of that number of the
outstanding Shares of that Series or Class) which constitutes:
(i) a majority of all Shares (or of Shares of the particular
Series or Class) represented in person or by proxy and entitled
to vote on such action at the meeting of Shareholders at which
such action is to be taken, provided that a quorum (as determined
in accordance with the By-Laws) is present; or (ii) if such vote
is to be given or such action is to be taken by written consent
of Shareholders without a meeting, a majority of all Shares (or
of Shares of the particular Series or Class) issued and
outstanding and entitled to vote on such action; provided, that
(iii) as used with respect to any action requiring the
affirmative vote of "a majority of the outstanding voting
securities", as the quoted phrase is defined in the 1940 Act, of
the Trust or of any Series or Class, "Majority Shareholder Vote"
means the vote for such action at a meeting of Shareholders of
the smallest majority of all outstanding Shares of the Trust (or
of Shares of the particular Series or Class) entitled to vote on
such action which satisfies such 1940 Act voting requirement.
"1940 Act" shall mean the provisions of the Investment
Company Act of 1940 and the rules and regulations thereunder,
both as amended from time to time, and any order or orders
5
thereunder which may from time to time be applicable to the
Trust.
"Person" shall mean and include individuals, as well as
corporations, limited partnerships, general partnerships, joint
stock companies, joint ventures, associations, banks, trust
companies, land trusts, business trusts or other organizations
established under the laws of any jurisdiction, whether or not
considered to be legal entities, and governments and agencies and
political subdivisions thereof.
"Portfolio" or "Portfolios" shall mean one or more of
the separate components of the assets of the Trust which are now
or hereafter established and designated under or in accordance
with the provisions.of Article 6 hereof.
"Portfolio Assets" shall have the meaning defined in
Section 6.2(a) hereof.
"Principal Underwriter" shall have the meaning
designated in Section 5.2(c) hereof.
"Prospectus," as used with respect to any Portfolio or
Series of Shares, shall mean the prospectus relating to such
Portfolio or Series which constitutes part of the currently
effective Registration Statement of the Trust under the
Securities Act of 1933, as such prospectus may be amended or
supplemented from time to time.
"Security" or "Securities," shall mean any and all
bills, notes, bonds, debentures or other obligations or evidences
of indebtedness, certificates of deposit, bankers' acceptances,
commercial paper, repurchase agreements or other money market
instruments; stocks, shares or other equity ownership interests;
and warrants, options or other instruments representing rights to
subscribe for, purchase, receive or otherwise acquire or to sell,
transfer, assign or otherwise dispose of, and scrip,
certificates, receipts or other instruments evidencing any
ownership rights or interests in, any of the foregoing and "when
issued" and "delayed delivery" contracts for securities, issued,
guaranteed or sponsored by any governments, political
subdivisions or governmental authorities, agencies or
instrumentalities, by any individuals, firms, companies,
corporations, syndicates, associations or trusts, or by any other
organizations or entities whatsoever, irrespective of their forms
or the names by which they may be described, whether or not they
be organized and operated for profit, and whether they be
domestic or foreign with respect to The Commonwealth of
Massachusetts or the United States of America.
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"Securities of the Trust" shall mean any Securities
issued by the Trust.
"Series" shall mean one or more of the series of Shares
authorized by the Trustees to represent the beneficial interest
in one or more of the Portfolios.
"Settlor" shall have the meaning stated in the first
"Whereas" clause set forth above.
"Shareholder" shall mean as of any particular time any
Person shown of record at such time on the books of the Trust as
a holder of outstanding Shares of any Series, and shall include a
pledgee into whose name any such Shares are transferred in
pledge.
"Shareholder Servicing Agent" shall have the meaning
designated in Section 5.2(f) hereof.
"Shares" and "Shares of Beneficial Interest" shall mean
the transferable units into which the beneficial interest in the
Trust and each Portfolio of the Trust (as the context may
require) shall be divided from time to time, and includes
fractions of Shares as well as whole Shares. All references
herein to "Shares" which are not accompanied by a reference to
any particular Series or Portfolio shall be deemed to apply to
outstanding Shares without regard to Series.
"Single Class Voting," as used with respect to any
matter to be acted upon at a meeting or by written consent of
Shareholders, shall mean a style of voting in which each holder
of one or more Shares shall be entitled to one vote on the matter
in question for each Share standing in his name on the records of
the Trust, irrespective of Series, and all outstanding Shares of
all Series vote as a single class.
"Source Investment Company" shall have the meaning
defined in Section 6.1(d) hereof.
"Statement of Additional Information," as used with
respect to any Portfolio or Series of Shares, shall mean the
statement of additional information relating to such Portfolio or
Series, which constitutes part of the currently effective
Registration Statement of the Trust under the Securities Act of
1933, as such statement of additional information may be amended
or supplemented from time to time.
"Transfer Agent" shall have the meaning defined in
Section 5.2(e) hereof.
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"Trust" shall have the meaning stated in the fourth
"Whereas" clause set forth above.
"Trust Property" shall mean, as of any particular time,
any and all property which shall have been transferred, conveyed
or paid to the Trust or the Trustees, and all interest,
dividends, income, earnings, profits and gains therefrom, and
proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation thereof, and any funds or payments
derived from any reinvestment of such proceeds in whatever form
the same may be, and which at such time is owned or held by, or
for the account of, the Trust or the Trustees, without regard to
the Portfolio to which such property is allocated.
"Trustees" shall mean, collectively, the Initial
Trustee, so long as he shall continue in office, and all other
individuals who at the time in question have been duly elected or
appointed as Trustees of the Trust in accordance with the
provisions hereof and who have qualified and are then in office.
At any time at which there shall be only one (1) Trustee in
office, such term shall mean such single Trustee.
SECTION 1.5 Real Property to be Converted into Personal
Property. Notwithstanding any other provision hereof, any real
property at any time forming part of the Trust Property shall be
held in trust for sale and conversion into personal property at
such time or times and in such manner and upon such terms as the
Trustees shall approve, but the Trustees shall have power until
the termination of this Trust to postpone such conversion as long
as they in their uncontrolled discretion shall think fit, and for
the purpose of determining the nature of the interest of the
Shareholders therein, all such real property shall at all times
be considered as personal property.
ARTICLE 2
PURPOSE OF THE TRUST
The purpose of the Trust shall be to engage in the
business of being an investment company, and as such of
subscribing for, purchasing or otherwise acquiring, holding for
investment or trading in, borrowing, lending and selling short,
selling, assigning, negotiating or exchanging and otherwise
disposing of, and turning to account, realizing upon and
generally dealing in and with, in any manner, (a) Securities of
all kinds, (b) precious metals and other minerals, contracts to
purchase and sell, and other interests of every nature and kind
in, such metals or minerals, and (c) rare coins and other
numismatic items, and all as the Trustees in their discretion
shall determine to be necessary, desirable or appropriate, and to
exercise and perform any and every act, thing or power necessary,
8
suitable or desirable for the accomplishment of such purpose, the
attainment of any of the objects or the furtherance of any of the
powers given hereby which are lawful purposes, objects or powers
of a trust with transferable shares of the type commonly termed a
Massachusetts business trust; and to do every other act or acts
or thing or things incidental or appurtenant to or growing out of
or in connection with the aforesaid objects, purposes or powers,
or any of them, which a trust of the type commonly termed a
Massachusetts business trust is not now or hereafter prohibited
from doing, exercising or performing.
ARTICLE 3
POWERS OF THE TRUSTEES
SECTION 3.1 Powers in General. The Trustees shall
have, without other or further authorization, full, entire,
exclusive and absolute power, control and authority over, and
management of, the business of the Trust and over the Trust
Property, to the same extent as if the Trustees were the sole
owners of the business and property of the Trust in their own
right, and with such powers of delegation as may be permitted by
this Declaration, subject only to such limitations as may be
expressly imposed by this Declaration of Trust or by applicable
law. The enumeration of any specific power or authority herein
shall not be construed as limiting the aforesaid power or
authority or any specific power or authority. Without limiting
the foregoing, the Trustees may adopt By-Laws not inconsistent
with this Declaration of Trust providing for the conduct of the
business and affairs of the Trust and may amend and repeal them
to the extent that such By-Laws do not reserve that right to the
Shareholders; they may select, and from time to time change, the
fiscal year of the Trust; they may adopt and use a seal for the
Trust, provided, that unless otherwise required by the Trustees,
it shall not be necessary to place the seal upon, and its absence
shall not impair the validity of, any document, instrument or
other paper executed and delivered by or on behalf of the Trust;
they may from time to time in accordance with the provisions of
Section 6.1 hereof establish one or more Portfolios to which they
may allocate such of the Trust Property, subject to such
liabilities, as they shall deem appropriate, each such Portfolio
to be operated by the Trustees as a separate and distinct
investment medium and with separately defined investment
objectives and policies and distinct investment purposes, all as
established by the Trustees, or from time to time changed by
them; they may as they consider appropriate elect and remove
officers and appoint and terminate agents and consultants and
h.ire and terminate employees, any one or more of the foregoing
of whom may be a Trustee; they may appoint from their own number,
and terminate, any one or more committees consisting of one or
more Trustees, including without implied limitation an Executive
9
Committee, which may, when the Trustees are not in session and
subject to the 1940 Act, exercise some or all of the power and
authority of the Trustees as the Trustees may determine; in
accordance with Section 5.2 they may employ one or more
Investment Advisers, Administrators and Custodians and may
authorize any Custodian to employ subcustodians or agents and to
deposit all or any part of such assets in a system or systems for
the central handling of Securities, retain Transfer, Dividend
Disbursing, Accounting or Shareholder Servicing Agents or any of
the foregoing, provide for the distribution of Shares by the
Trust through one or more Distributors, Principal Underwriters or
otherwise, set record dates or times for the determination of
Shareholders entitled to participate in, benefit from or act with
respect to various matters; and in general they may delegate to
any officer of the Trust, to any Committee of the Trustees and to
any employee, Investment Adviser, Administrator, Distributor,
Custodian, Transfer Agent, Dividend Disbursing Agent, or any
other agent or consultant of the Trust, such authority, powers,
functions and duties as they consider desirable or appropriate
for the conduct of the business and affairs of the Trust,
including without imp:lied limitation the power and authority to
act in the name of the Trust and of the Trustees, to sign
documents and to act as attorney-in-fact for the Trustees.
Without limiting the foregoing and to the extent not inconsistent
with the 1940 Act or other applicable law, the Trustees shall
have power and authority:
(a) Investments. To invest and reinvest cash and
other property; to buy, for cash or on margin, and
otherwise acquire and hold, Securities created or issued
by any Persons, including Securities maturing after the
possible termination of the Trust; to make payment
therefor in any lawful manner in exchange for any of the
Trust Property; and to hold cash or other property
uninvested without in any event being bound or limited
by any present or future law or custom in regard to
investments by trustees;
(b) Disposition of Assets. Upon such terms and
conditions as they deem best, to lend, sell, exchange,
mortgage, pledge, hypothecate, grant security interests
in, encumber, negotiate, convey, transfer or otherwise
dispose of, and to trade in, any and all of the Trust
Property, free and clear of all trusts, for cash or on
terms, with or without advertisement, and on such terms
as to payment, security or otherwise, all as they shall
deem necessary or expedient;
(c) Ownership Powers. To vote or give assent, or
exercise any and all other rights, powers and privileges
of ownership with respect to, and to perform any and all
10
duties and obligations as owners of, any Securities or
other property forming part of the Trust Property, the
same as any individual might do; to exercise powers and
rights of subscription or otherwise which in any manner
arise out of ownership of Securities, and to receive
powers of attorney from, and to execute and deliver
proxies or powers of attorney to, such Person or Persons
as the Trustees shall deem proper, receiving from or
granting to such Person or Persons such power and
discretion with relation to Securities or other property
of the Trust, all as the Trustees shall deem proper;
(d) Form of Holding. To hold any Security or
other property in a form not indicating any trust,
whether in bearer, unregistered or other negotiable
form, or in the name of the Trustees or of the Trust, or
of the Portfolio to which such Securities or property
belong, or in the name of a Custodian, subcustodian or
other depository or a nominee or nominees, or otherwise,
upon such terms, in such manner or with such powers, as
the Trustees may determine, and with or without
indicating any trust or the interest of the Trustees
therein;
(e) Reorganization, etc. To consent to or
participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer,
any Security of which is or was held in the Trust or any
Portfolio; to consent to any contract, lease, mortgage,
purchase or sale of property by such corporation or
issuer, and to pay calls or subscriptions with respect
to any Security forming part of the Trust Property;
(f) Voting Trusts, etc. To join with other
holders of any Securities in acting through a committee,
depository, voting trustee or otherwise, and in that
connection to deposit any Security with, or transfer any
Security to, any such committee, depository or trustee,
and to delegate to them such power and authority with
relation to any Security (whether or not so deposited or
transferred) as the Trustees shall deem proper, and to
agree to pay, and to pay, such portion of the expenses
and compensation of such committee, depository or
trustee as the Trustees shall deem proper;
(g) Contracts, etc. To enter into, make and
perform all such obligations, contracts, agreements and
undertakings of every kind and description, with any
Person or Persons, as the Trustees shall in their
discretion deem expedient in the conduct of the business
of the Trust, for such terms as they shall see fit,
11
whether or not extending beyond the term of office of
the Trustees, or beyond the possible expiration of the
Trust; to amend, extend, release or cancel any such
obligations, contracts, agreements or understandings;
and to execute, acknowledge, deliver and record all
written instruments which they may deem necessary or
expedient in the exercise of their powers;
(h) Guarantees etc. To endorse or guarantee the
payment of any notes or other obligations of any Person;
to make contracts of guaranty or suretyship, or
otherwise assume liability for payment thereof; and to
mortgage and pledge the Trust Property or any part
thereof to secure any or all such obligations;
(i) Partnerships, etc. To enter into joint
ventures, general or limited partnerships and any other
combinations or associations;
(j) Insurance. To purchase and pay for entirely
out of Trust Property such insurance as they may deem
necessary or appropriate for the conduct of the
business, including, without limitation, insurance
policies insuring the assets of the Trust and payment of
distributions and principal on its portfolio
investments, and insurance policies insuring the
Shareholders, Trustees, officers, employees, agents,
consultants, Investment Advisers, managers,
Administrators, Distributors, Principal Underwriters, or
other independent contractors, or any thereof (or any
Person connected therewith), of the Trust, individually,
against all claims and liabilities of every nature
arising by reason of holding, being or having held any
such office or position, or by reason of any action
alleged to have been taken or omitted by any such Person
in any such capacity, including any action taken or
omitted that may be determined to constitute negligence,
whether or not the Trust would have the power to
indemnify such Person against such liability;
(k) Pensions, etc. To pay pensions for faithful
service, as deemed appropriate by the Trustees, and to
adopt, establish and carry out pension, profit-sharing,
share bonus, share purchase, savings, thrift and other
retirement, incentive and benefit plans, trusts and
provisions, including the purchasing of life insurance
and annuity contracts as a means of providing such
retirement and other benefits, for any or all of the
Trustees, officers, employees and agents of the Trust;
12
(l) Power of Collection and Litigation. To
collect, xxx for and receive all sums of money coming
due to the Trust, to employ counsel, and to commence,
engage in, prosecute, intervene in, join, defend,
compound, compromise, adjust or abandon, in the name of
the Trust, any and all actions, suits, proceedings,
disputes, claims, controversies, demands or other
litigation or legal proceedings relating to the Trust,
the business of the Trust, the Trust Property, or the
Trustees, officers, employees, agents and other
independent contractors of the Trust, in their capacity
as such, at law or in equity, or before any other other
bodies or tribunals, and to compromise, arbitrate or
otherwise adjust any dispute to which the Trust may be a
party, whether or not any suit is commenced or any claim
shall have been made or asserted;
(m) Issuance and Repurchase of Shares. To issue,
sell, repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of, transfer, and otherwise
deal in Shares of any Series, and, subject to Article 6
hereof, to apply to any such repurchase, redemption,
retirement, cancellation or acquisition of Shares of any
Series, any of the Portfolio Assets belonging to the
Portfolio to which such Series relates, whether
constituting capital or surplus or otherwise, to the
full extent now or hereafter permitted by applicable
law; provided, that any Shares belonging to the Trust
shall not be voted, directly or indirectly;
(n) Offices. To have one or more offices, and to
carry on all or any of the operations and business of
the Trust, in any of the States, Districts or
Territories of the United States, and in any and all
foreign countries, subject to the laws of such State,
District, Territory or country;
(o) Expenses. To incur and pay any and all such
expenses and charges as they may deem advisable
(including without limitation appropriate fees to
themselves as Trustees), and to pay all such sums of
money for which they may be held liable by way of
damages, penalty, fine or otherwise;
(p) Agents, etc. To retain and employ any and all
such servants, agents, employees, attorneys, brokers,
in- vestment advisers, accountants, architects,
engineers, builders, escrow agents, depositories,
consultants, ancillary trustees, custodians, agents for
collection, insurers, banks and officers, as they think
best for the business of the Trust or any Portfolio, to
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supervise and direct the acts of any of the same, and to
fix and pay their compensation and define their duties;
(q) Accounts. To determine, and from time to time
change, the method or form in which the accounts of the
Trust shall be kept;
(r) Valuation. Subject to the requirements of the
1940 Act, to determine from time to time the value of
all or any part of the Trust Property and of any
services, Securities, property or other consideration to
be furnished to or acquired by the Trust, and from time
to time to revalue all or any part of the Trust Property
in accordance with such appraisals or other information
as is, in the Trustees' sole judgment, necessary and
satisfactory;
(s) Indemnification. In addition to the mandatory
indemnification provided for in Article 8 hereof and to
the extent permitted by law, to indemnify or enter into
agreements with respect to indemnification with any
Person with whom this Trust has dealings, including,
without limitation, any independent contractor, to such
extent as the Trustees shall determine; and
(t) General. To do all such other acts and things
and to conduct, operate, carry on and engage in such
other lawful businesses or business activities as they
shall in their sole and absolute discretion consider to
be incidental to the business of the Trust or any
Portfolio as an investment company, and to exercise all
powers which they shall in their discretion consider
necessary, useful or appropriate to carry on the
business of the Trust or any Portfolio, to promote any
of the purposes for which the Trust is formed, whether
or not such things are specifically mentioned herein, in
order to protect or promote the interests of the Trust
or any Portfolio, or otherwise to carry out the
provisions of this Declaration.
SECTION 3.2 Borrowings; Financings: Issuance of
Securities. The Trustees shall have power to borrow or in any
other manner raise such sum or sums of money, and to incur such
other indebtedness for goods or services, or for or in connection
with the purchase or other acquisition of property, as they shall
deem advisable for the purposes of the Trust, in any manner and
on any terms, and to evidence the same by negotiable or non-
negotiable Securities which may mature at any time or times, even
beyond the possible date of termination of the Trust; to issue
Securities of any type for such cash, property, services or other
considerations, and at such time or times and upon such terms, as
14
they may deem advisable; and to reacquire any such Securities.
Any such Securities of the Trust may, at the discretion of the
Trustees, be made convertible into Shares of any Series, or may
evidence the right to purchase, subscribe for or otherwise
acquire Shares of any Series, at such times and on such terms as
the Trustees may prescribe.
SECTION 3.3 Deposits. Subject to the requirements of
the 1940 Act, the Trustees shall have power to deposit any moneys
or Securities included in the Trust Property with any one or more
banks, trust companies or other banking institutions, whether or
not such deposits will draw interest. Such deposits are to be
subject to withdrawal in such manner as the Trustees may
determine, and the Trustees shall have no responsibility for any
loss which may occur by reason of the failure of the bank, trust
company or other banking institution with which any such moneys
or Securities have been deposited, other than liability based on
their gross negligence or willful fault.
SECTION 3.4 Allocations. The Trustees shall have power
to determine whether moneys or other assets received by the Trust
shall be charged or credited to income or capital, or allocated
between income and capital, including the power to amortize or
fail to amortize any part or all of any premium or discount, to
treat any part or all of the profit resulting from the maturity
or sale of any asset, whether purchased at a premium or at a
discount, as income or capital, or to apportion the same between
income and capital, to apportion the sale price of any asset
between income and capital, and to determine in what manner any
expenses or disbursements are to be borne as between income and
capital, whether or not in the absence of the power and authority
conferred by this Section 3.4 such assets would be regarded as
income or as capital or such expense or disbursement would be
charged to income or to capital; to treat any dividend or other
distribution on any investment as income or capital, or to
apportion the same between income and capital; to provide or fail
to provide reserves, including reserves for depreciation,
amortization or obsolescence in respect of any Trust Property in
such amounts and by such methods as they shall determine; to
allocate less than all of the consideration paid for Shares of
any Series to the shares of beneficial interest account of the
Portfolio to which such Shares relate and to allocate the balance
thereof to paid in capital of that Portfolio, and to reallocate
such amounts from time to time; all as the Trustees may
reasonably deem proper.
SECTION 3.5 Further Powers; Limitations. The Trustees
shall have power to do all such other matters and things, and to
execute all such instruments, as they deem necessary, proper or
desirable in order to carry out, promote or advance the interests
of the Trust, although such matters or things are not herein
15
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
of Trust, the presumption shall be in favor of a grant of power
to the Trustees. The Trustees shall not be required to obtain
any court order to deal with the Trust Property. The Trustees
may limit their right to exercise any of their powers through
express restrictive provisions in the instruments evidencing or
providing the terms for any Securities of the Trust or in other
contractual instruments adopted on behalf of the Trust.
ARTICLE 4
TRUSTEES AND OFFICERS
(a) Initial Trustee. Upon his execution of this
Declaration of Trust or a counterpart hereof or some
other writing in which he accepts such Trusteeship and
agrees to the provisions hereof, the individual whose
signature is affixed hereto as Initial Trustee shall
become the Initial Trustee hereof.
(b) Number. The Trustees serving as such, whether
named above or hereafter becoming Trustees, may increase
(to not more than twenty (20)) or decrease the number of
Trustees to a number other than the number theretofore
determined by a written instrument signed by a Majority
of the Trustees (or by an officer of the Trust pursuant
to the vote of a Majority of the Trustees). No decrease
in the number of Trustees shall have the effect of
removing any Trustee from office prior to the expiration
of his term, but the number of Trustees may be decreased
in conjunction with the removal of a Trustee pursuant to
subsection (e) of this Section 4.1.
(c) Election and Term. The Trustees shall be
elected by the Shareholders of the Trust at the first
meeting of Shareholders immediately prior to the initial
public offering of Shares of the Trust, and the term of
office of any Trustees in office before such election
shall terminate at the time of such election. Subject to
Section 16(a) of the 1940 Act and to the preceding
sentence of this subsection (c), the Trustees shall have
the power to set and alter the terms of office of the
Trustees, and at any time to lengthen or shorten their
own terms or make their terms of unlimited duration, to
elect their own successors and, pursuant to subsection
(f) of this Section 4.1, to appoint Trustees to fill
vacancies; provided, that Trustees shall be elected by a
Majority Shareholder Vote at any such time or times as
16
the Trustees shall determine that such action is required
under Section 16(a) of the 1990 Act or, if not so
required, that such action is advisable; and further
provided, that, after the initial election of Trustees by
the Shareholders, the term of office of any incumbent
Trustee shall continue until the termination of this
Trust or his earlier death, resignation, retirement,
bankruptcy, adjudicated incompetency or other incapacity
or removal, or if not so terminated, until the election
of such Trustee's successor in office has become
effective in accordance with this subsection (c).
(d) Resignation and Retirement. Any Trustee may
resign his trust or retire as a Trustee, by a written
instrument signed by him and delivered to the other
Trustees or to any officer of the Trust, and such
resignation or retirement shall take effect upon such
delivery or upon such later date as is specified in such
instrument.
(e) Removal. Any Trustee may be removed with or
without cause at any time: (i) by written instrument,
signed by at least two-thirds (2/3) of the number of
Trustees prior to such removal, specifying the date upon
which such removal shall become effective; or (ii) by
vote of Shareholders holding not less than two-thirds
(2/3) of the Shares of each Series then outstanding, cast
in person or by proxy at any meeting called for the
purpose; or (iii) by a written declaration signed by
Shareholders holding not less than two-thirds (2/3) of
the Shares of each Series then outstanding and filed with
the Trust's Custodian.
(f) Vacancies. Any vacancy or anticipated vacancy
resulting from any reason, including an increase in the
number of Trustees, may (but need not unless required by
the 0000 Xxx) be filled by a Majority of the Trustees,
subject to the provisions of Section 16(a) of the 1940
Act, through the appointment in writing of such other
individual as such remaining Trustees in their discretion
shall determine; provided, that if there shall be no
Trustees in office, such vacancy or vacancies shall be
filled by vote of the Shareholders. Any such appointment
or election shall be effective upon such individual's
written acceptance of his appointment as a Trustee and
his agreement to be bound by the provisions of this
Declaration of Trust, except that any such appointment in
anticipation of a vacancy to occur by reason of
retirement, resignation or increase in the number of
Trustees to be effective at a later date shall become
effective only at or after the effective date of said
17
retirement, resignation or increase in the number of
Trustees.
(g) Acceptance of Trusts. Any individual
appointed as a Trustee under subsection (f), and any
individual elected as a Trustee under subsection (c), of
this Section 4.1 who was not, immediately prior to such
election, acting as a Trustee, shall accept such
appointment or election in writing and agree in such
writing to be bound by the provisions hereof, and
whenever such individual shall have executed such writing
and any conditions to such appointment or election shall
have been satisfied, such individual shall become a
Trustee and the Trust Property shall vest in the new
Trustee, together with the continuing Trustees, without
any further act or conveyance.
(h) Effect of Death, Resignation, etc. No
vacancy, whether resulting from the death, resignation,
retirement, removal or incapacity of any Trustee, an
increase in the number of Trustees or otherwise, shall
operate to annul or terminate the Trust hereunder or to
revoke or terminate any existing agency or contract
created or entered into pursuant to the terms of this
Declaration of Trust. Until such vacancy is filled as
provided in this Section 4.1, the Trustees in office (if
any), 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.
A written instrument certifying the existence of such
vacancy signed by a Majority of the Trustees (or by an
officer of the Trust pursuant to the vote or direction of
a Majority of the Trustees) shall be conclusive evidence
of the existence of such vacancy.
(i) Conveyance. In the event of the resignation
or removal of a Trustee or his otherwise ceasing to be a
Trustee, such former Trustee or his legal representative
shall, upon request of the continuing Trustees, execute
and deliver such documents as may be required for the
purpose of consummating or evidencing the conveyance to
the Trust or the remaining Trustees of any Trust Property
held in such former Trustee's name, but the execution and
delivery of such documents shall not be requisite to the
vesting of title to the Trust Property in the remaining
Trustees, as provided in subsection (q) of this Section
4.1 and in Section 4.13 hereof.
(j) No Accounting. Except to the extent required
by the 1940 Act or under circumstances which would
justify his removal for cause, no Person ceasing to be a
18
Trustee (nor the estate of any such Person) shall be
required to make an accounting to the Shareholders or
remaining Trustees upon such cessation.
SECTION 4.2 Trustees' Meetings; Participation by
Telephone, etc. An annual meeting of Trustees shall be held not
later than the last day of the fourth month after the end of each
fiscal year of the Trust and special meetings may be held from
time to time, in each case, upon the call of such officers as may
be "hereunto authorized by the By-Laws or vote of the Trustees,
or by any two (2) Trustees, or pursuant to a vote of the Trustees
adopted at a duly constituted meeting of the Trustees, and upon
such notice as shall be provided in the By-Laws. The Trustees
may act with or without a meeting, and a written consent to any
matter, signed by a Majority of the Trustees, shall be equivalent
to action duly taken at a meeting of the Trustees, duly called
and held. Except as otherwise provided by the 1940 Act or other
applicable law, or by this Declaration of Trust or the By-Laws,
any action to be taken by the Trustees may be taken by a majority
of the Trustees present at a meeting of Trustees (a quorum,
consisting of at least a Majority of the Trustees, being
present), within or without Massachusetts. If authorized by the
By-Laws, all or any one or more Trustees may participate in a
meeting of the Trustees or any Committee thereof by means of
conference telephone or similar means of communication by means
of which all Persons participating in the meeting can hear each
other, and participation in a meeting pursuant to such means of
communication shall constitute presence in person at such
meeting. The minutes of any meeting thus held shall be prepared
in the same manner as a meeting at which all participants were
present in person.
SECTION 4.3 Committees; Delegation. The Trustees shall
have power, consistent with their ultimate responsibility to
supervise the affairs of the Trust, to delegate from time to time
to an Executive Committee, and to one or more other Committees,
or to any single Trustee, the doing of such things and the
execution of such deeds or other instruments, either in the name
of the Trust or the names of the Trustees or as their attorney or
attorneys in fact, or otherwise as the Trustees may from time to
time deem expedient, and any agreement, deed, mortgage, lease or
other instrument or writing executed by the Trustee or Trustees
or other Person to whom such delegation was made shall be valid
and binding upon the Trustees and upon the Trust.
SECTION 4.4 Officers. The Trustees shall annually
elect such officers or agents, who shall have such powers, duties
and responsibilities as the Trustees may deem to be advisable,
and as they shall specify by resolution or in the By-Laws.
Except as may be provided in the By-Laws, any officer elected by
19
the Trustees may be removed at any time with or without cause.
Any two (2) or more offices may be held by the same individual.
SECTION 4.5 Compensation of Trustees and Officers. The
Trustees shall fix the compensation of all officers and Trustees.
Without limiting the generality of any of the provisions hereof,
the Trustees shall be entitled to receive reasonable compensation
for their general services as such, and to fix the amount of such
compensation, and to pay themselves or any one or more of
themselves such compensation for special services, including
legal, accounting, or other professional services, as they in
good faith may deem reasonable. No Trustee or officer resigning
and (except where a right to receive compensation for a definite
future period shall be expressly provided in a written agreement
with the Trust, duly approved by the Trustees) no Trustee or
officer removed shall have any right to any compensation as such
Trustee or officer for any period following his resignation or
removal, or any right to damages on account of his removal,
whether his compensation be by the month, by the year or
otherwise.
SECTION 4.6 Ownership of Shares and Securities of the
Trust. Any Trustee, and any officer, employee or agent of the
Trust, and any organization in which any such Person is
interested, may acquire, own, hold and dispose of Shares of any
Series and other Securities of the Trust for his or its
individual account, and may exercise all rights of a holder of
such Shares or Securities to the same extent and in the same
manner as if such Person were not such a Trustee, officer,
employee or agent of the Trust; subject, in the case of Trustees
and officers, to the same limitations as directors or officers
(as the case may be) of a Massachusetts business corporation; and
the Trust may issue and sell or cause to be issued and sold and
may purchase any such Shares or other Securities from any such
Person or any such organization, subject only to the general
limitations, restrictions or other provisions applicable to the
sale or purchase of Shares of such Series or other Securities of
the Trust generally.
SECTION 4.7 Right of Trustees and Officers to Own
Property or to Engage in Business; Authority of Trustees to
Permit Others to Do Likewise. The Trustees, in their capacity as
Trustees, and (unless otherwise specifically directed by vote of
the Trustees) the officers of the Trust in their capacity as
such, shall not be required to devote their entire time to the
business and affairs of the Trust. Except as otherwise
specifically provided by vote of the Trustees, or by agreement in
any particular case, any Trustee or officer of the Trust may
acquire, own, hold and dispose of, for his own individual
account, any property, and acquire, own, hold, carry on and
dispose of, for his own individual account, any business entity
20
or business activity, whether similar or dissimilar to any
property or business entity or business activity invested in or
carried on by the Trust, and without first offering the same as
an investment opportunity to the Trust, and may exercise all
rights in respect thereof as if he were not a Trustee or officer
of the Trust. The Trustees shall also have power, generally or
in specific cases, to permit employees or agents of the Trust to
have the same rights (or lesser rights) to acquire, hold, own and
dispose of property and businesses, to carry on businesses, and
to accept investment opportunities without offering them to the
Trust, as the Trustees have by virtue of this Section 4.7.
SECTION 4.8 Reliance on Experts. The Trustees and
officers may consult with counsel, engineers, brokers,
appraisers, auctioneers, accountants, investment bankers,
securities analysts or other Persons (any of which may be a firm
in which one or more of the Trustees or officers is or are
members or otherwise interested) whose profession gives authority
to a statement made by them on the subject in question, and who
are reasonably deemed by the Trustees or officers in question to
be competent, and the advice or opinion of such Persons shall be
full and complete personal protection to all of the Trustees and
officers in respect of any action taken or suffered by them in
good faith and in reliance on or in accordance with such advice
or opinion. In discharging their duties, Trustees and officers,
when acting in good faith, may rely upon financial statements of
the Trust represented to them to be correct by any officer of the
Trust having charge of its books of account, or stated in a
written report by an independent certified public accountant
fairly to present the financial position of the Trust. The
Trustees and officers may rely, and shall be personally protected
in acting, upon any instrument or other document believed by them
to be genuine.
SECTION 4.9 Surety Bonds. No Trustee, officer,
employee or agent of the Trust shall, as such, be obligated to
give any bond or surety or other security for the performance of
any of his duties, unless required by applicable law or
regulation, or unless the Trustees shall otherwise determine in
any particular case.
SECTION 4.10 Apparent Authority of Trustees and
Officers. No purchaser, lender, transfer agent or other Person
dealing with the Trustees or any officer 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 such
officer, or to make inquiry concerning or be liable for the
application of money or property paid, loaned or delivered to or
on the order of the Trustees or of such officer.
21
SECTION 4.11 Other Relationships Not Prohibited. The
fact that:
(i) any of the Shareholders, Trustees or officers
of the Trust is a shareholder, director, officer,
partner, trustee, employee, manager, adviser, principal
underwriter or distributor or agent of or for any
Contracting Party (as defined in Section 5.2 hereof), or
of or for any parent or affiliate of any Contracting
Party, or that the Contracting Party or any parent or
affiliate thereof is a Shareholder or has an interest in
the Trust or any Portfolio, or that
(ii) any Contracting Party may have a contract
providing for the rendering of any similar services to
one or more other corporations, trusts, associations,
partnerships, limited partnerships or other
organizations, or have other business or interests,
shall not affect the validity of any contract for the performance
and assumption of services, duties and responsibilities to, for
or of the Trust and/or the Trustees or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or
executing the same or create any liability or accountability to
the Trust or to the holders of Shares of any Series; provided,
that, in the case of any relationship or interest referred to in
the preceding clause (i) on the part of any Trustee or officer of
the Trust, either (x) the material facts as to such relationship
or interest have been disclosed to or are known by the Trustees
not having any such relationship or interest and the contract
involved is approved in good faith by a majority of such Trustees
not having any such relationship or interest (even though such
unrelated or disinterested Trustees are less than a quorum of all
of the Trustees), (y) the material facts as to such relationship
or interest and as to the contract have been disclosed to or are
known by the Shareholders entitled to vote thereon and the
contract involved is specifically approved in good faith by vote
of the Shareholders, or (z) the specific contract involved is
fair to the Trust as of the time it is authorized, approved or
ratified by the Trustees or by the Shareholders.
SECTION 4.12 Payment of Trust Expenses. The Trustees
are authorized to pay or to cause to be paid out of the principal
or income of the Trust, or partly out of principal and partly out
of income, and according to any allocation to particular
Portfolios made by them pursuant to Section 6.2 (b) hereof, all
expenses, fees, charges, taxes and liabilities incurred or
arising in connection with the business and affairs of the Trust
or in connection with the management thereof, including, but not
limited to, the Trustees' compensation and such expenses and
charges for the servicer of the Trust's officers, employees,
22
Investment Adviser, Administrator, Distributor, Principal
Underwriter, auditor, counsel, Custodian, Transfer Agent,
Dividend Disbursing Agent, Accounting Agent, Shareholder
Servicing Agent, and such other agents, consultants, and
independent contractors and such other expenses and charges as
the Trustees may deem necessary or proper to incur.
SECTION 4.13 Ownership of the Trust Property. 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 of any particular Portfolio, or in the name of any other
Person as nominee, on such terms as the Trustees may determine;
provided, that the interest of the Trust and of the respective
Portfolio 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 the termination of the term of office of a Trustee as
provided in Section 4.1(c), (d) or (e) hereof, such Trustee 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 pursuant to Section 4.1(i) hereof.
ARTICLE 5
DELEGATION OF MANAGERIAL RESPONSIBILITIES
SECTION 5.1 Appointment; Action by Less than All
Trustees. The Trustees shall be responsible for the general
operating policy of the Trust and for the general supervision of
the business of the Trust conducted by officers, agents,
employees or advisers of the Trust or by independent contractors,
but the Trustees shall not be required personally to conduct all
the business of the Trust and, consistent with their ultimate
responsibility as stated herein, the Trustees may appoint, employ
or contract with one or more officers, employees and agents to
conduct, manage and/or supervise the operations of the Trust, and
may grant or delegate such authority to such officers, employees
and/or agents as the Trustees may, in their sole discretion, deem
to be necessary or desirable, without regard to whether such
authority is normally granted or delegated by trustees. With
respect to those matters of the operation and business of the
Trust which they shall elect to conduct themselves, except as
otherwise provided by this Declaration or the By-Laws, if any,
the Trustees may authorize any single Trustee or defined group of
Trustees, or any committee consisting of a number of Trustees
less than the whole number of Trustees then in office without
23
specification of the particular Trustees required to be included
therein, to act for and to bind the Trust, to the same extent as
the whole number of Trustees could do, either with respect to one
or more particular matters or classes of matters, or generally.
SECTION 5.2 Certain Contracts. Subject to compliance
with the provisions of the 1940 Act, but notwithstanding any
limitations of present and future law or custom in regard to
delegation of powers by trustees generally, the Trustees may, at
any time and from time to time in their discretion and without
limiting the generality of their powers and authority otherwise
set forth herein, enter into one or more contracts with any one
or more corporations, trusts, associations, partnerships, limited
partnerships or other types of organizations, or individuals
("Contracting Party"), to provide for the performance and
assumption of some or all of the following services, duties and
responsibilities to, for or on behalf of the Trust and/or any
Portfolio, and/or the Trustees, and to provide for the
performance and assumption of such other services, duties and
responsibilities in addition to those set forth below, as the
Trustees may deem appropriate:
(a) Advisory. An investment advisory or
management agreement whereby an investment adviser or
investment manager (each such Person being referred to
herein as an "Investment Adviser") shall undertake to
furnish the Trust such management, investment advisory
or supervisory, administrative, accounting, legal,
statistical and research facilities and services, and
such other facilities and services, if any, as the
Trustees shall from time to time consider desirable, all
upon such terms and conditions as the Trustees may in
their discretion determine to be not inconsistent with
this Declaration, the applicable provisions of the 1940
Act or any applicable provisions of the By-Laws. Any
such advisory or management agreement and any amendment
thereto shall be subject to approval by a Majority
Shareholder Vote at a meeting of the Shareholders of the
Trust. Notwithstanding any provisions of this
Declaration, the Trustees may authorize the Investment
Adviser (subject to such general or specific
instructions as the Trustees may from time to time
adopt) to effect purchases, sales, loans or exchanges of
portfolio securities of the Trust on behalf of the
Trustees or may authorize any officer or employee of the
Trust or any Trustee to effect such purchases, sales,
loans or exchanges pursuant to recommendations of the
Investment Adviser (and all without further action by
the Trustees). Any such purchases, sales, loans and
exchanges shall be deemed to have been authorized by all
of the Trustees. The Trustees may, in their sole
24
discretion, call a meeting of Shareholders in order to
submit to a vote of Shareholders at such meeting the
approval of continuance of any such investment advisory
or management agreement. If the Shareholders of any
Portfolio should fail to approve any such investment
advisory or management agreement, the Investment Adviser
may nonetheless serve as Investment Adviser with respect
to any other Portfolio whose Shareholders shall have
approved such contract.
(b) Administration. An agreement whereby the
agent, subject to the general supervision of the
Trustees and in conformity with any policies of the
Trustees with respect to the operations of the Trust and
each Portfolio, will supervise all or any part of the
operations of the Trust and each Portfolio, and will
provide all or any part of the administrative and
clerical personnel, office space and office equipment
and services appropriate for the efficient
administration and operations of the Trust and each
Portfolio (any such agent being herein referred to as an
"Administrator").
(c) Distribution. An agreement providing for the
sale of Shares of any one or more Series, or one or more
Classes of one or more Series, to net the Trust not less
than the net asset value per Share (as described in
Section 6.2(g) hereof) and pursuant to which the Trust
may appoint the other party to such agreement as its
principal underwriter or sales agent for the
distribution of such Shares. The agreement shall
contain such terms and conditions as the Trustees may in
their discretion determine to be not inconsistent with
this Declaration, the applicable provisions of the 1940
Act and any applicable provisions of the By-Laws (any
such agent being herein referred to as a "Distributor"
or a "Principal Underwriter", as the case may be).
(d) Custodian. The appointment of a bank or trust
company having an aggregate capital, surplus and
undivided profits (as shown in its last published
report) of at least two million dollars ($2,000,000) as
custodian of the Securities and cash of the Trust and of
each Portfolio and of the accounting records in
connection therewith (any such agent being herein
referred to as a "Custodian").
(e) Transfer and Dividend Disbursing Agency. An
agreement with an agent to maintain records of the
ownership of outstanding Shares, the issuance and
redemption and the transfer thereof (any such agent
25
being herein referred to as a "Transfer Agent"), and to
disburse any dividends declared by the Trustees and in
accordance with the policies of the Trustees and/or the
instructions of any particular Shareholder to reinvest
any such dividends (any such agent being herein referred
to as a "Dividend Disbursing Agent").
(f) Shareholder Servicing. An agreement with an
agent to provide service with respect to the
relationship of the Trust and its Shareholders, records
with respect to Shareholders and their Shares, and
similar matters (any such agent being herein referred to
as a "Shareholder Servicing Agent").
(g) Accounting. An agreement with an agent to
handle all or any part of the accounting
responsibilities, whether with respect to the Trust's
properties, Shareholders or otherwise (any such agent
being herein referred to as an "Accounting Agent").
The same Person may be the Contracting Party for some or all of
the services, duties and responsibilities to, for and of the
Trust and/or the Trustees, and the contracts with respect thereto
may contain such terms interpretive of or in addition to the
delineation of the services, duties and responsibilities provided
for, including provisions that are not inconsistent with the 1940
Act relating to the standard of duty of and the rights to
indemnification of the Contracting Party and others, as the
Trustees may determine. Nothing herein shall preclude, prevent
or limit the Trust or a Contracting Party from entering into sub-
contractual arrangements relative to any of the matters referred
to in subsections (a) through (g) of this Section 5.2.
ARTICLE 6
PORTFOLIOS AND SHARES
SECTION 6.1 Description of Portfolios and Shares.
(a) Shares; Portfolios; Series and Classes of Shares.
The beneficial interest in the Trust shall be divided into Shares
having a nominal or par value of one mill ($.001) per Share, of
which an unlimited number may be issued. The Trustees shall have
the power and authority, without any requirement of Shareholder
approval, from time to time to establish and designate one or
more separate, distinct and independent Portfolios, in addition
to the Initial Portfolio established and designated by Section
6.2 hereof, into which the assets of the Trust shall be divided,
to authorize a separate Series of Shares for each such additional
Portfolio (each of which Series shall represent interests only in
the Portfolio for which such Series was authorized), and to
26
authorize two or more separate Classes of Shares of any such
Series, as they deem necessary or desirable. The Trustees shall
have the power to classify or reclassify any unissued Shares of
any Series, or any Shares of any Series previously issued and
reacquired by the Trust (including in either case any Shares of
the Portfolios established and designated by Section 6.2 hereof)
into any number of additional Classes of such Series by from time
to time setting or changing in one or more respects provisions
applicable to such Class or Classes relating to sales charges,
any rights of redemption and the price, terms and manner of
redemption, special and relative rights as to dividends and other
distributions and on liquidation, sinking or purchase fund
provisions and conversion rights, and (subject to Article 7
hereof) the conditions under which the Shareholders of the
several Classes shall have separate voting rights or no voting
rights. Except as otherwise provided as to a particular
Portfolio herein or in the Certificate of Designation therefor,
the Trustees shall have all the rights and powers, and be subject
to all the duties and obligations, with respect to each such
Portfolio and the assets and affairs thereof as they have under
this Declaration with respect to the Trust and the Trust Property
in general.
(b) Establishment, etc. of Portfolios; Authorization of
Shares. In order to establish and designate any Portfolio in
addition to the Initial Portfolio established and designated by
Section 6.2 hereof, and to authorize the Shares thereof, a
Majority of the Trustees (or by an officer of the Trust pursuant
to the vote of a Majority of the Trustees) shall execute an
instrument setting forth such establishment and designation and
the relative rights and preferences of the Shares of the Series
representing interests in such Portfolio and the manner in which
the same may be amended (a "Certificate of Designation"), which
may provide that the number of Shares of such Series or any Class
thereof which may be issued is unlimited, or may limit the number
issuable. At any time that there are outstanding no Shares of
any particular Series or Class previously established and
designated, including any Class of the Portfolios established and
designated by Section 6.2 hereof, and also, in the case of any
Class of a Series, of which there are outstanding no Shares of
any other Class of such Series which are convertible into Shares
of the particular Class, the Trustees may by an instrument
executed by a Majority of the Trustees (or by an officer of the
Trust pursuant to the vote of a Majority of the Trustees)
terminate such Series or Class and the establishment and
designation thereof and the authorization of its Shares (a
"Certificate of Termination"). Each Certificate of Designation
or Certificate of Termination and any instrument amending a
Certificate of Designation shall have the status of an amendment
to this Declaration of Trust, and shall be filed and become
effective as provided in Section 9.4 hereof.
27
(c) Character of Separate Portfolios and Shares
Thereof. Each Portfolio established hereunder shall be a
separate component of the assets of the Trust, and the holders of
Shares of the Series representing interests in that Portfolio
shall be considered Shareholders of such Portfolio, but such
Shareholders shall also be considered Shareholders of the Trust
for purposes of receiving reports and notices and, except as
otherwise provided herein or in the Certificate of Designation of
a particular Portfolio as to such Portfolio, or as required by
the 1940 Act or other applicable law, the right to vote, all
without distinction by Series.
(d) Consideration for Shares. The Trustees may issue
Shares of any Series for such consideration (which may include
property subject to, or acquired in connection with the
assumption of, liabilities) and on such terms as they may
determine (or for no consideration if pursuant to a Share
dividend or splitup), and, without limitation, may issue Shares
in exchange for shares of the corresponding class of shares of
any other investment company registered as such under the 1940
Act and designated for that purpose in the Trust's prospectus for
the Shares so issued (the investment company which issued the
shares for which the Shares of any Portfolio of this Trust are so
exchanged is sometimes referred to herein as the "Source
Investment Company" for such Shares of such Portfolio) all
without action or approval of the Shareholders. All Shares when
so issued on the terms determined by the Trustees shall be fully
paid and nonassessable (but may be subject to mandatory
contribution back to the Trust as provided in Section 6.2(g)
hereof).
SECTION 6.2 Establishment and Designation of the AFD
Exchange Reserves Portfolio; Classes of Shares; General
Provisions for All Portfolios and all Series of Shares. Without
limiting the authority of the Trustees set forth in Section
6.1(a) hereof to establish and designate additional Portfolios,
there is hereby established and designated the AFD Exchange
Reserves Portfolio (the "Initial Portfolio"), the Shares of which
shall be divided into three separate Classes, designated Class A,
Class B and Class C, which shall represent interests only in the
Initial Portfolio. Prior to issuing Shares of any Class of a
Series, the Trustees shall have power to provide, by resolution
duly adopted by a Majority of the Trustees, that the Shares of
such Class shall have rights and obligations different from any
other Class or Classes of such Series, which may include (but
without limitation) differences as to sales loads (or no loads),
CDSCs, sales charges, shareholder servicing fees, distribution
services fees and other charges and expenses to which such Class
is subject, rights of redemption and the prices, terms and
manners of redemption, special or relative rights as to dividends
and other distributions and on liquidation, any sinking or
28
purchase fund provisions, differing conversion or exchange
rights, and (subject to Article 7 hereof) the conditions under
which the holders of Shares of such Class shall have separate
voting rights or no voting rights. The differing rights and
obligations of each Class of Shares shall be set forth in the
Prospectus under which the Shares of such Class are sold, and the
Trustee may not change such rights and obligations in a manner
adverse to the holders of outstanding Shares of such Class, or
grant any preferences over such Class to the holders of Shares of
any other Class without the affirmative vote or consent of the
holders of "a majority of the outstanding voting securities" of
such Class, as the quoted phrase is used in the 1940 Act. An
unlimited number of Shares of each such Class may be issue.
Subject to the power of the Trustees to classify or reclassify
any unissued Shares of a Series pursuant to Section 6.1 (a)
above, the Shares of the Initial Portfolio shall have, and the
Shares of any further Portfolios that may from time to time be
established and designated by the Trustees (unless the Trustees
otherwise determine with respect to some further Portfolio at the
time of establishing and designating the same) shall have, the
following relative rights and preferences:
(a) Assets Belonging to Portfolios. Any portion of the
Trust Property allocated to a particular Portfolio, and all
consideration received by the Trust for the issue or sale of
Shares of such Portfolio, together with all assets in which such
consideration is invested or reinvested, all interest, dividends,
income, earnings, profits and gains therefrom, and proceeds
thereof, including any proceeds derived from the sale, exchange
or liquidation of such assets, and any funds or payments derived
from any reinvestment of such proceeds in whatever form the same
may be, shall be held by the Trustees in trust for the benefit of
the holders of Shares of that Portfolio and shall irrevocably
belong to that Portfolio for all purposes, and shall be so
recorded upon the books of account of the Trust, and the
Shareholders of such Portfolio shall not have, and shall be
conclusively deemed to have waived, any claims to the assets of
any Portfolio of which they are not Shareholders. Such
consideration, assets, interest, dividends, income, earnings,
profits, gains and proceeds, together with any General Items
allocated to that Portfolio as provided in the following
sentence, are herein referred to collectively as "Portfolio
Assets" of such Portfolio, and as assets "belonging to" that
Portfolio. If the Trust shall have or realize any assets,
interest, dividends, income, earnings, profits, gains or proceeds
which are not readily identifiable as belonging to any particular
Portfolio (collectively, "General Items"),the Trustees shall
allocate such General Items to and among any one or more of the
Portfolios of the Trust in such manner and on such basis as they,
in their sole discretion, deem fair and equitable; and any
General Items so allocated to a particular Portfolio shall belong
29
to and be part of the Portfolio Assets of that Portfolio. Each
such allocation by the Trustees shall be conclusive and binding
upon the Shareholders of all Portfolios for all purposes.
(b) Liabilities of Portfolios. The assets belonging to
each Portfolio shall be charged with the liabilities incurred by
or arising in respect of t:hat Portfolio, and all expenses,
costs, charges and reserves attributable to that Portfolio, and
any general liabilities, expenses, costs, charges or reserves of
the Trust which are not readily identifiable as pertaining to any
particular Portfolio shall be allocated and charged by the
Trustees to and among any one or more of the Portfolios of the
Trust in such manner and on such basis as the Trustees in their
sole discretion deem fair and equitable. The liabilities,
expenses, costs, charges and reserves so allocated and so charged
to a particular Portfolio are herein referred to as "liabilities
of" that Portfolio. Each allocation or liabilities, expenses,
costs, charges and reserves by the Trustees shall be conclusive
and binding upon the Shareholders of all Portfolios for all
purposes. The creditors of a particular Portfolio may look only
to the assets of that Portfolio to satisfy such creditors'
claims, and the creditors of a particular Class of a Portfolio
may look only to the share of that Class in the assets of the
Portfolio of which it is a part to satisfy their claims.
(c) Dividends. Dividends and distributions on Shares of
a particular Portfolio may be paid with such frequency as the
Trustees may determine, which may be daily or otherwise pursuant
to a standing resolution or resolutions adopted only once or with
such frequency as the Trustees may determine, to the holders of
Shares of that Portfolio, from such of the income, accrued or
realized, and capital gains, realized or unrealized, and out of
the assets belonging to such Portfolio, as the Trustees may
determine, after providing for actual and accrued liabilities of
that Portfolio. Dividends and distributions on Shares of a
Portfolio without separate Classes of Shares shall be distributed
pro rata to the holders of Shares of that Portfolio in proportion
to the number of such Shares held by such holders at the date and
time of record established for the payment of such dividends or
distributions. Dividends and distributions on the Shares of a
Portfolio having separate Classes of Shares shall be in such
amount as may be declared from time to time by the Trustees, and
such dividends and distributions may vary as between such Classes
to reflect differing allocations among such Classes of the
liabilities, expenses, costs, charges and reserves of such
Portfolio, and any resultant differences between the net asset
value of such several Classes, to such extent and for such
purposes as the Trustees may deem appropriate, but dividends and
distributions on the Shares of a particular Class shall be
distributed pro rata to the Shareholders of that Clear, in
proportion to the number of such Shares held by such holders at
30
the date and time of record established for the payment of such
dividends and distributions. Notwithstanding the last two
preceding sentences, the Trustees may determine, in connection
with any dividend or distribution program or procedure, that no
dividend or distribution shall be payable on newly-purchased
Shares as to which the purchase order and/or payment have not
been received by the time or times established by the Trustees
under such program or procedure, or that dividends or
distributions shall be payable on Shares which have been tendered
by the holder thereof for redemption or repurchase, but the
redemption or repurchase proceeds of which have not yet been paid
to such Shareholder. Dividends and distributions on the Shares of
a Portfolio may be made in cash or Shares of any Class of that
Portfolio or a combination thereof as determined by the Trustees,
or pursuant to any program that the Trustees may have in effect
at the time for the election by each Shareholder of the mode of
the making of such dividend or distribution to that Shareholder.
Any such dividend or distribution paid in Shares will be paid at
the net asset value thereof as determined in accordance with
subsection (g) of this Section 6.2.
(d) Liquidation. In the event of the liquidation or
dissolution of the Trust, the Shareholders of each Portfolio of
which Shares are outstanding shall be entitled to receive, when
and as declared by the Trustees, the excess of the Portfolio
Assets over the liabilities of such Portfolio. The assets so
distributable to the Shareholders of any Portfolio without
separate Classes of Shares shall be distributed among such
Shareholders in proportion to the number of Shares of that
Portfolio held by them and recorded on the books of the Trust.
The assets so distributable to the Shareholders of any Portfolio
having separate Classes of Shares shall be allocated among such
Classes in proportion to the respective aggregate net asset value
of the outstanding Shares thereof, and shall be distributed to
the Shareholders of each such Class in proportion to the number
of Shares of that Class held by them and recorded on the books of
the Trust. The liquidation of any Portfolio, or any Class of any
Portfolio, may be authorized by vote of a Majority of the
Trustees, subject to the affirmative vote of "a majority of the
outstanding voting securities" of that Portfolio or Class, as the
quoted phrase is defined in the 1940 Act, determined in
accordance with clause (iii) of the definition of "Majority
Shareholder Vote" in Section 1.4 hereof.
(e) Redemption by Shareholder. Each holder of Shares of
a particular Series or Class shall have the right at such times
as may be permitted by the Trust, but no less frequently than
once each week, to require the Trust to redeem all or any part of
such Shares at a redemption price equal to the net asset value
per Share of that Series or Class next determined in accordance
with subsection (g) of this Section 6.2 after the Shares are
31
properly tendered for redemption; provided, that the Trustees may
from time to time, in their discretion, determine and impose a
fee for such redemption, and the proceeds of the redemption of
Shares (including a fractional Share) of any Series or Class
shall be reduced by the amount of any applicable contingent
deferred sales charge payable on such redemption pursuant to the
terms of the initial issuance of the Shares of such Series or
Class (to the extent consistent with the 1940 Act or regulations
or exemptions thereunder). The redemption price of Shares
redeemed under this subsection (e) shall be paid in cash;
provided, however, that if the Trustees determine, which
determination shall be conclusive, that conditions exist with
respect to any Portfolio, or one or more Classes of any
Portfolio, which make payment wholly in cash unwise or
undesirable, the Trust may make payment wholly or partly in
Securities or other assets belonging to such Portfolio, or to the
Portfolio of which such Class or Classes are a part, at the value
of such Securities or assets used in such determination of net
asset value. Notwithstanding the foregoing, the Trust may
postpone payment of the redemption price and may suspend the
right of the holders of Shares of any Series or Class to require
the Trust to redeem Shares of that Series or Class during any
period or at any time when and to the extent permissible under
the 1940 Act.
(f) Redemption at the Option of the Trust. Each Share of
any Portfolio shall be subject to redemption at the option of the
Trust at the redemption price which would be applicable if such
Share were then being redeemed by the Shareholder pursuant to
subsection (e) of this Section 6.2: (i) at any time, if the
Trustees determine in their sole discretion that failure to so
redeem may have materially adverse consequences to the holders of
the Shares of the Trust or of any Portfolio, or (ii) upon such
other conditions with respect to maintenance of Shareholder
accounts of a minimum amount as may from time to time be
determined by the Trustees and set forth in the then-current
Prospectus of such Portfolio. Upon such redemption the holders of
the Shares so redeemed shall have no further right with respect
thereto other than to receive payment of such redemption price.
(g) Net Asset Value. Subject to the provisions of the
two sentences immediately following, the net asset value per
Share of any Portfolio without Classes, or of any Class of a
Portfolio having separate Classes of Shares, at any time shall be
the quotient obtained by dividing the value of the net assets of
such Portfolio or the share of such Class in such assets, as the
case may be, at such time (being the current value of the assets
belonging to such Portfolio, or the share of such Class therein,
less the then-existing liabilities of such Portfolio, or the
share of such Class in such liabilities) by the total number of
Shares of that Portfolio or Class then outstanding, all
32
determined in accordance with the methods and procedures,
including without limitation those with respect to rounding,
established by the Trustees from time to time. The aggregate net
asset value of the several Classes of a Portfolio having separate
Classes of Shares shall be separately computed, and may vary from
one another. The Trustees shall establish procedures for the
allocation of investment income or capital gains and expenses and
liabilities of a Portfolio having separate Classes of Shares
among the several Classes of such Portfolio, in order to reflect
the varying net asset values of, and the liabilities and expenses
attributable to, such Classes. The Trustees may determine to
maintain the net asset value per Share of any Portfolio at a
designated constant dollar amount and in connection therewith may
adopt procedures not inconsistent with the 1940 Act for the
continuing declaration of income attributable to that Portfolio
as dividends payable in additional Shares of that Portfolio at
the designated constant dollar amount and for the handling of any
losses attributable to that Portfolio. Such procedures may
provide that in the event of any loss each Shareholder shall be
deemed to have contributed to the shares of beneficial interest
account of that Portfolio such Shareholder's pro rata portion of
the total number of Shares required to be canceled in order to
permit the net asset value per Share of that Portfolio to be
maintained, after reflecting such loss, at the designated
constant dollar amount. Each Shareholder of the Trust shall be
deemed to have expressly agreed, by investing in any Portfolio
with respect to which the Trustees shall have adopted any such
procedure, to make the contribution referred to in the preceding
sentence in the event of any such loss.
(h) Transfer. All Shares of the Trust shall be
transferable, but transfers of Shares of a particular Portfolio
will be recorded on the Share transfer records of the Trust
applicable to that Portfolio only at such times as Shareholders
shall have the right to require the Trust to redeem Shares of
that Portfolio and at such other times as may be permitted by the
Trustees.
(i) Equality. All Shares of each Portfolio without
Classes shall represent an equal proportionate interest in the
assets belonging to that Portfolio, subject to the liabilities of
that Portfolio, and each Share of any such Portfolio shall be
equal to each other Share thereof. All Shares of each Class of
Shares of any Portfolio having separate Classes of Shares shall
represent an equal proportionate interest in the share of such
Class in the assets belonging to that Portfolio, subject to a
like share of the liabilities of such Portfolio, adjusted for any
liabilities specifically allocable to that Class, and each Share
of any such Class shall be equal to each other Share thereof; but
the interests represented by the Shares of the different Classes
of a Portfolio having separate Classes of Shares shall reflect
33
any distinctions among the several Classes of such Portfolio
existing under this Section 6.2 or Section 7.1 hereof, or under
the Certificate of Designation for such Portfolio. The Trustees
may from time to time divide or combine the Shares of any
Portfolio, or any Class of any Portfolio, into a greater or
lesser number of Shares of that Portfolio or Class without
thereby changing the proportionate beneficial interest in the
assets belonging to that Portfolio or in any way affecting the
rights of the holders of Shares of any other Portfolio or Class.
(j) Rights of Fractional Shares. Any fractional Share
of any Series or Class of Shares shall carry proportionately all
the rights and obligations of a whole Share of that Series or
Class, including rights and obligations with respect to voting,
receipt of dividends and distributions, redemption of Shares, and
liquidation of the Trust or of the Portfolio or Class to which
such Shares pertain.
(k) Conversion Rights; Conversion of Class B Shares of
the Portfolios. (i) Subject to compliance with the requirements
of the 1940 Act, the Trustees shall have the authority to provide
(A) that holders of Shares of any Portfolio shall have the right
to convert said Shares into Shares of any other investment
company registered as such under the 1940 Act and designated for
that purpose in the Trust's prospectus for the Shares being
converted, (B) that holders of any Class of Shares of a Portfolio
shall have the right to convert such Shares into Shares of one or
more other Classes of such Portfolio, and (C) that Shares of any
Class of a Portfolio shall be automatically converted into Shares
of another Class of such Portfolio, in each case in accordance
with such requirements and procedures as the Trustees may
establish.
(ii) Without limitation of the foregoing, each Class B
Share of any Portfolio (including without limitation the Class B
Shares of the Initial Portfolio), other than Shares purchased
through the automatic reinvestment of dividends or distributions
with respect to the Class B Shares of such Portfolio, shall be
converted automatically, and without any action or choice on the
part of the holder thereof, into Class A Shares of such Portfolio
on (1) the date that would have been the conversion date of the
class B shares of the Source Investment Company for which such
Class B Shares of the Trust were originally exchanged pursuant to
Section 6.1(d) had such shares of the Source Investment Company
not been so exchanged, or (ii) if the shares of the Source
Investment Company were held as the result of a series of
exchanges, the date that would have been the conversion date of
the class B shares of the investment company to which the holder
originally subscribed had such shares to which the holder
originally subscribed not been so exchanged (the date established
under clause (i) or clause (ii) of this sentence being herein
34
sometimes referred to as the "Conversion Date" of the Class B
Shares of this Trust so converted). Class B Shares of a Portfolio
purchased through the automatic reinvestment of a dividend or a
distribution-with respect to the Class B Shares of such Portfolio
shall be segregated in a separate sub-account on the share
records of the Trust for each of the Shareholders of record
thereof. On any Conversion Date, a number of the Shares held in
the sub-account of the Shareholder of record of the Share or
Shares being converted, calculated in accordance with the next
following sentence, shall be converted automatically, and without
any action or choice on the part of the Shareholder, into Class A
Shares of such Portfolio. The number of shares in the
Shareholder's sub-account so converted shall bear the same
relation to the total number of Shares maintained in the sub-
account on the Conversion Date (immediately prior to conversion)
as the number of Shares of the Shareholder converted on the
Conversion Date pursuant to paragraph (i) of this subsection (k)
bears to the total number of Class B Shares of such Portfolio
held by the Shareholder on the Conversion Date (immediately prior
to conversion) not purchased through the automatic reinvestment
of dividends or distributions with respect to the Class B Shares
of such Portfolio.
(iii) The number of Class A Shares of any Portfolio into
which a Class B Share of such Portfolio is converted pursuant to
paragraph (ii) of this subsection (k) shall be the quotient
(including for this purpose fractions of a Share) obtained by
dividing the net asset value per Share of the Class B Shares by
the net asset value per Share of the Class A Shares, each
determined as of the close of business on the Conversion Date of
such Class B Shares.
(iv) Class B Shares of any Portfolio converted into
Class A Shares of such Portfolio will cease to accrue dividends
at the close of business on the Conversion Date thereof, and will
thenceforth no longer be deem~ad outstanding, and the rights of
the holders thereof (except (~) the right to receive the number
of Class A Shares into which such Class B Shares have been
converted and (B) dividends declared on such Class B Shares but
not paid prior to the close of business on such Conversion Date),
and (C) the right to vote or to give any consent in respect of
Class B Shares so converted that were held as of any record date
occurring before the Conversion Date and theretofore set with
respect to any meeting held or any written consent for which the
final date is set after the Conversion Date) will cease, and such
holder shall instead have all rights of a holder of Class A
Shares in respect of the Class A Shares issuable upon such
conversion, effective from and after the close of business on
such Conversion Date. Certificates representing Class A Shares
resulting from the conversion need not be issued until
certificates representing Class B Shares converted, if issued,
35
have been received by the Trust or its agent, duly endorsed for
transfer.
(v) The Trust will appropriately reflect the conversion
of Class B Shares of any Portfolio into Class A Shares of such
Portfolio on the first periodic statements of account sent to
Shareholders of record affected which provide account information
with respect to a reporting period which includes the Conversion
Date.
(vi) Without limiting the generality of the foregoing,
except as otherwise expressly provided by the Trustees pursuant
to paraqraph (i) of this subsection (k), neither the Class A
Shares nor the Class C Shares of any Portfolio shall be
convertible into shares of any other Class or Series.
1() Suspension of Automatic Conversion of Class B Shares.
Notwithstanding the provisions of subsection (k) of this Section
6.2, the automatic conversion of Class B Shares into Class A
Shares shall be subject to suspension, as follows:
(I) Such conversion shall be suspended at any time that
the Trustees determine (i) that there is not available a
reasonably satisfactory opinion of counsel to the effect that,
under the Internal Revenue Code (x) the assessment of the higher
distribution services fee and transfer agency costs with respect
to the Class B Shares does not result in the Trust's dividends or
distributions constituting a "preferential dividend", and (y) the
conversion of the Class B Shares does not constitute a taxable
event, or (ii) any other condition to conversion set forth in the
Trust's prospectus for the Class B Shares, as such prospectus may
be amended from time to time, is not satisfied; and
(II) Such conversion may be suspended at any time that
the Trustees determine such suspension to be appropriate in order
to comply with, or satisfy the requirements of, the 1940 Act,
relating to voting by the holders of the Class B Shares on any
plan with respect to the Class A Shares proposed pursuant to Rule
12b-1 under the 1940 Act, and in connection with, or in lieu of,
any such suspension, the Trustees may provide holders of Class B
Shares with alternative conversion or exchange rights into other
Classes or Series of Shares of the Trust in a manner consistent
with the provision of the 1940 Act giving rise to the possible
suspension of such conversion right.
SECTION 6.3 Ownership of Shares. The ownership of Shares
shall be recorded on the books of the Trust or of a Transfer
Agent or similar agent for the Trust, which books shall be
maintained separately for the Shares of each Series that has been
authorized. Certificates evidencing the ownership of Shares need
not be issued except as the Trustees-may otherwise determine from
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time to time, and the Trustees shall have power to call
outstanding Share certificates and to replace them with book
entries. The Trustees may make such rules as they consider
appropriate for the issuance of Share certificates, the use of
facsimile signatures, the transfer of Shares and similar matters.
The record books of the Trust as kept by the Trust or any
Transfer Agent or similar agent, as the case may be, shall be
conclusive as to who are the Shareholders and as to the number of
Shares of each Portfolio held from time to time by each such
Shareholder.
The holders of Shares of each Portfolio shall upon
demand disclose to the Trustees in writing such information with
respect to their direct and indirect ownership of Shares of such
Portfolio as the Trustees deem necessary to comply with the
provisions of the Internal Revenue Code, or to comply with the
requirements of any other authority.
SECTION 6.4 Investments in the Trust. The Trustees may
accept investments in any Portfolio of the Trust from such
Persons and on such terms and for such consideration, not
inconsistent with the provisions of the 1940 Act, as they from
time to time authorize. The Trustees may authorize any
Distributor, Principal Underwriter, Custodian, Transfer Agent or
other Person to accept orders for the purchase of Shares that
conform to such authorized terms and to reject any purchase
orders for Shares, whether or not conforming to such authorized
terms.
SECTION 6.5 No Pre-emptive Rights. No Shareholder, by
virtue of holding Shares of any Portfolio, shall have any
preemptive or other right to subscribe to any additional Shares
of that Portfolio, or to any shares of any other Portfolio, or
any other Securities issued by the Trust.
SECTION 6.6 Status of Shares. Every Shareholder, by
virtue of having become a Shareholder, shall be held to have
expressly assented and agreed to the terms hereof and to have
become a party hereto. Shares shall be deemed to be personal
property, giving only the rights provided herein. Ownership of
Shares shall not entitle the Shareholder to any title in or to
the whole or any part of the Trust Property or right to call for
a partition or division of the same or for an accounting, nor
shall the ownership of Shares constitute the Shareholders
partners. The death of a Shareholder during the continuance of
the Trust shall not operate to terminate the Trust or any
Portfolio, nor entitle the representative of any deceased
Shareholder to an accounting or to take any action in court: or
elsewhere against the Trust or the Trustees, but only to the
rights of said decedent under this Declaration of Trust.
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ARTICLE 7
SHAREHOLDERS' VOTING POWERS AND MEETINGS
SECTION 7.1 Voting Powers. The Shareholders shall have
power to vote only (i) for the election or removal of Trustees as
provided in Sections 4.l(c) and hereof, (ii) with respect to the
approval or termination in accordance with the 1940 Act of any
contract with a Contracting Party as provided in Section 5.2
hereof as to which Shareholder approval is required by the 1940
Act, (iii) with respect to any termination or reorganization of
the Trust or any Portfolio to the extent and as provided in
Sections 9.1 and 9.2 hereof, (iv) with respect to any amendment
of this Declaration of Trust to the extent and as provided in
Section 9.3 hereof, (v) to the same extent as the stockholders of
a Massachusetts business corporation as to whether or not a court
action, proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the
Trust or any Portfolio, or the Shareholders of any of them
(provided, however, that a Shareholder of a particular Portfolio
shall not in any event be entitled to maintain a derivative or
class action on behalf of any other Portfolio or the Shareholders
thereof), and (vi) with respect to such additional matters
relating to the Trust as may be required by the 1940 Act, this
Declaration of Trust, the By-Laws or any registration of the
Trust with the Commission (or any successor agency) or any State,
or as the Trustees may consider necessary or desirable. If and to
the extent that the Trustees shall determine that such action is
required by law or by this Declaration, they 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 separate
vote of the outstanding Shares, of each Series entitled to vote
thereon; provided, that (l) when expressly required by the 1940
Act or other law, actions of Shareholders shall be taken by
Single Class Voting of all outstanding Shares of each Series and
Class whose holders are entitled to vote thereon, and (ii) when
the Trustees determine that any matter to be submitted to a vote
of Shareholders affects only the rights or interests of the
holders of Shares one or more but not all Series or of one or
more but not all Classes of a single Series (including without
limitation any distribution plan pursuant to Rule 12b-1 under the
1940 Act applicable to any such Series or Class), then only the
Shareholders of the Series or Classes so affected shall be
entitled to vote thereon. Without limiting the generality of the
foregoing, and except as required by the 1940 Act or other law,
the Shareholders of each Class shall have exclusive voting rights
with respect to the provisions of any distribution plan adopted
by the Trustees pursuant to Rule 12b-1 under the 1940 Act
applicable to such Class.
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SECTION 7.2 Number of Votes and Manner of Voting;
Proxies. On each matter submitted to a vote of the Shareholders,
each holder of Shares of any Series shall be entitled to a number
of votes equal to the number of Shares of such Series standing in
his name on the books of the Trust. There shall be no cumulative
voting in the election of Trustees. Shares may be voted in person
or by proxy. A proxy wit:h respect to Shares held in the name of
two (2) or more Persons shall be valid if executed by any one of
them unless at or prior to exercise of the proxy the Trust
receives a specific written not:ice to the contrary from any one
of them. 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. Until Shares are issued, the Trustees may
exercise all rights of Shareholders and may take any action
required by law, this Declaration of Trust or the By-Laws to be
taken by Shareholders.
SECTION 7.3 Meetings. Meetings of Shareholders may be
called by the Trustees from time to time for the purpose of
taking action upon any matter requiring the vote or authority of
the Shareholders as herein provided, or upon any other matter
deemed by the Trustees to be necessary or desirable. Written
notice of any meeting of Shareholders shall be given or caused to
be given by the Trustees by mailing such notice at least seven
(7) days before such meeting, postage prepaid, stating the time,
place and purpose of the meeting, to each Shareholder at the
Shareholder's address as it appears on the records of the Trust.
The Trustees shall promptly call and give notice of a meeting of
Shareholders for the purpose of voting upon removal of any
Trustee of the Trust when requested to do so in writing by
Shareholders holding not less than ten percent (10%) of the
Shares then outstanding. If the Trustees shall fail to call or
give notice of any meeting of Shareholders for a period of thirty
(30) days after written application by Shareholders holding at
least ten percent (10%) of the Shares then outstanding requesting
that a meeting be called for any other purpose requiring action
by the Shareholders as provided herein or in the By-Laws, then
Shareholders holding at least ten percent (10%) of the Shares
then outstanding may call and give notice of such meeting, and
thereupon the meeting shall be held in the manner provided for
herein in case of call thereof by the Trustees.
SECTION 7.4 Record Dates. For the purpose of determining
the Shareholders who are entitled to vote or act at any meeting
or any adjournment thereof, or who are entitled to participate in
any dividend or distribution, or for the purpose of any other
action, the Trustees may from time to time close the transfer
books for such period, not exceeding thirty (30) days (except at
or in connection with the termination of the Trust), as the
Trustees may determine; or without closing the transfer books the
39
Trustees may fix a date and time not more than sixty (60) days
prior to the date of any meeting of Shareholders or other action
as the date and time of record for the determination of
Shareholders entitled to vote at such meeting or any adjournment
thereof or to be treated as Shareholders of record for purposes
of such other action, and any Shareholder who was a Shareholder
at the date and time so fixed shall be entitled to vote at such
meeting or any adjournment thereof or to be treated as a
Shareholder of record for purposes of such other action, even
though he has since that date and time disposed of his Shares,
and no Shareholder becoming such after that date and time shall
be so entitled to vote at such meeting or any adjournment thereof
or to be treated as a Shareholder of record for purposes of such
other action.
SECTION 7.5 Quorum and Required Vote. A majority of the
Shares entitled to vote shall be a quorum for the transaction of
business at a Shareholders' meeting, but any lesser number shall
be sufficient for adjournments. Any adjourned session or sessions
may be held within a reasonable time after the date set for the
original meeting without the necessity of further notice. A
Majority Shareholder Vote at a meeting of which a quorum is
present shall decide any question, except when a different vote
is required or permitted by any provision of the 1940 Act or
other applicable law or by this Declaration of Trust or the By-
Laws, or when the Trustees shall in their discretion require a
larger vote or the vote of a majority or Larger fraction of the
Shares of one or more particular Series.
SECTION 7.6 Action by Written Consent. Subject to the
provisions of the 1940 Act and other applicable law, any action
taken by Shareholders may be taken without a meeting if a
majority of Shareholders entitled to vote on the matter (or such
larger proportion thereof or of the Shares of any particular
Series as shall be required by the 14340 Act or by any express
provision of this Declaration of Trust or the By-Laws or as shall
be permitted by the Trustees) consent to the action in writing
and if the writings in which such consent is given are filed with
the records of the meetings of Shareholders, to the same extent
and for the same period as proxies given in connection with a
Shareholders, meeting. Such consent shall be treated for all
purposes as a vote taken at a meeting of Shareholders.
SECTION 7.7 Inspection of Records. The records of the
Trust shall be open to inspection by Shareholders to the same
extent as is permitted stockholders of a Massachusetts business
corporation under the Massachusetts Business Corporation Law,
M.G.L. ch. 156B.
40
SECTION 7.8 Additional Provisions. The By-Laws may
include further provisions for Shareholders' votes and meetings
and related matters not inconsistent with the provisions hereof.
ARTICLE 8
LIMITATION OF LIABILITY: INDEMNIFICATION
SECTION 8.1 Trustees. Shareholders, etc. Not Personally
Liable; Notice. The Trustees and officers of the Trust, in
incurring any debts, liabilities or obligations, or in limiting
or omitting any other actions for or in connection with the
Trust, are or shall be deemed to be acting as Trustees or
officers of the Trust and not in their own capacities. No
Shareholder shall be subject to any personal liability whatsoever
in tort, contract or otherwise to any other Person or Persons in
connection with the assets or the affairs of t:he Trust or of any
Portfolio, and subject to Section 8.4 hereof, no Trustee,
officer, employee or agent of the Trust shall be subject to any
personal liability whatsoever in tort, contract, or otherwise, to
any other Person or Persons in connection with the assets or
affairs of the Trust or of any Portfolio, save only that a-rising
from his own willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his
office or the discharge of his functions. The Trust or if the
matter relates only to a particular Portfolio, that Portfolio)
shall be solely liable for any and all debts, claims, demands,
judgments, decrees, liabilities or obligations of any and every
kind, against or with respect to the Trust or such Portfolio in
tort, contract or otherwise in connection with the assets or the
affairs of the Trust or such Portfolio, and all Persons dealing
with the Trust or any Portfolio shall be deemed to have agreed
that resort shall be had solely to the Trust Property of the
Trust or the Portfolio Assets of such Portfolio, as the case! may
be, for the payment or performance thereof.
The Trustees shall use their best efforts to ensure that
every note, bond, contract, instrument, certificate or
undertaking made or issued by the Trustees or by any officers or
officer shall give notice that this Declaration of Trust is on
file with the Secretary of The Commonwealth of Massachusetts and
shall recite to the effect that the same was executed or made by
or on behalf of the Trust or by them as Trustees or Trustee or as
officers or officer, and not individually, and that the
obligations of such instrument are not binding upon any of them
or the Shareholders individually but are binding only upon the
assets and property of the Trust, or the particular Portfolio in
question, as the case may be, but the omission thereof shall not
operate to bind any Trustees or Trustee or officers or officer or
Shareholders or Shareholder individually, or to subject the
41
Portfolio Assets of any Portfolio to the obligations of any other
Portfolio.
SECTION 8.2 Trustees' Good Faith Action; Expert Advice;
No Bond or Surety. The exercise by the Trustees of their powers
and discretions hereunder shall be binding upon everyone
interested. Subject to Section 8.4 hereof, a Trustee shall be
liable for his own willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee, and for nothing else, and shall
not be liable for errors of judgment or mistakes of fact or law.
Subject to the foregoing, (i) the Trustees shall not be
responsible or liable in any event for any neglect or wrongdoing
of any officer, agent, employee, consultant, Investment Adviser,
Administrator, Distributor or Principal Underwriter, Custodian or
Transfer Agent, Dividend Disbursing Agent, Shareholder Servicing
Agent or Accounting Agent of the Trust, nor shall. any Trustee be
responsible for the act or omission of any other Trustee; (ii)
the Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Declaration of Trust
and their duties as Trustees, and shall be under no liability for
any act or omission in accordance with such advice or for failing
to follow such advice; and (iii) in discharging their duties, the
Trustees, when acting in good faith, shall be entitled to rely
upon the books of account of the Trust and upon written reports
made to the Trustees by any officer appointed by them, any
independent public accountant, and (with respect to the-subject
matter of the contract involved) any officer, partner or
responsible employee of a Contracting Party appointed by the
Trustees pursuant to Section 5.2 hereof. The Trustees as such
shall not be required to give any bond or surety or any other
security for the performance of their duties.
SECTION 8.3 Indemnification of Shareholders. If any
Shareholder (or former Shareholder) of the Trust shall be charged
or held to be personally liable for any obligation or liability
of the Trust solely by reason of being or having been a
Shareholder and not because of such Shareholder's acts or
omissions or for some other reason, the Trust (upon proper and
timely request by the Shareholder) shall assume the defense
against such charge and satisfy any judgment thereon, and the
Shareholder or former Shareholder (or the heirs, executors,
administrators or other legal representatives thereof, or in the
case of a corporation or other entity, its corporate or other
general successor) shall be entitled (but solely out of the
assets of the Portfolio of which such Shareholder or former
Shareholder is or was the holder of Shares) to be held harmless
from and indemnified against all loss and expense arising from
such liability.
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SECTION 8.4 Indemnification of Trustees Officers, etc.
Subject to the limitations set forth hereinafter in this Section
8.4, the Trust shall indemnify (from the assets of the Portfolio
or Portfolios to which the conduct in question relates) each of
its Trustees and officers (including Persons who serve at the
Trust's request as directors, officers or trustees of another
organization in which the Trust has any interest as a
shareholder, creditor or otherwise [hereinafter, together with
such Person's heirs, executors, administrators or personal
representative, referred to as a "Covered Person"]) against all
liabilities, including but not limited to amounts paid in
satisfaction of judgments, in compromise or as fines and
penalties, and expenses, including reasonable accountants' and
counsel fees, incurred by any Covered Person in connection with
the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which such Covered Person
may be or may have been involved as a party or otherwise or with
which such Covered Person may be or may have been threatened,
while in office or thereafter, by reason of being or having been
such a Trustee or officer, director or trustee, except with
respect to any matter as to which it has been determined that
such Covered Person (i) did not act in good faith in the
reasonable belief that such Covered Person's action was in or not
opposed to the best interests of the Trust or (ii) had acted with
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered
Person's office (either and both of the conduct described in (i)
and (ii) being referred to hereafter as "Disabling Conduct"). A
determination that the Covered Person is entitled to
indemnification may be made by (i) a final decision on the merits
by a court or other body before whom the proceeding was brought
that the Covered Person to be indemnified was not liable by
reason of Disabling Conduct, (ii) dismissal of a court action or
an administrative proceeding against a Covered Person for
insufficiency of evidence of Disabling Conduct, or (iii) a
reasonable determination, based upon a review of the facts, that
the indemnitee was not liable by reason of Disabling Conduct by
(a) a vote of a majority of a quorum of Trustees who are neither
"interested persons" of the Trust as defined in Section 2(a)(19)
of the 1940 Act nor parties to the proceeding, or (b) an
independent legal counsel in a written opinion. Expenses,
including accountants' and counsel fees so incurred by any such
Covered Person (but excluding amounts paid in satisfaction of
judgments, in compromise or as fines or penalties), may be paid
from time to time by the Portfolio or Portfolios to which the
conduct in question related in advance of the final disposition
of any such action, suit or proceeding; Provided, that the
Covered Person shall have undertaken to repay the amounts so paid
to such Portfolio or Portfolios if it is ultimately determined
that indemnification of such expenses is not authorized under
43
this Article 8 and (i) the Covered Person shall have provided
security for such 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 Trustees, or an
independent legal counsel in a written opinion, shall have
determined, based on a review of readily available facts (as
opposed to a full trial-type inquiry), that there is reason to
believe that the Covered Person ultimately will be found entitled
to indemnification.
SECTION 8.5 Compromise Payment. As to any matter
disposed of by a compromise payment by any such Covered Person
referred to in Section 8.4 hereof, pursuant to a consent decree
or otherwise, no such indemnification either for said payment or
for any other expenses shall be provided unless such
indemnification shall be approved (i) by a majority of a quorum
of the disinterested Trustees or (ii) by an independent legal
counsel in a written opinion. Approval by the Trustees pursuant
to clause (i) or by independent legal counsel pursuant to clause
(ii) shall not prevent the recovery from any Covered Person of
any amount paid to such Covered Person in accordance with either
of such clauses as indemnification if such Covered Person is
subsequently adjudicated by a court of competent jurisdiction not
to have acted in good faith in the reasonable belief that such
Covered Person's action was in or not opposed to the best
interests of the Trust or to have been liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office.
SECTION 8.6 Indemnification Not Exclusive etc. The right
of indemnification provided by this Article 8 shall not be
exclusive of or affect any other rights to which any such Covered
Person may be entitled. As used in this Article 8, a
"disinterested" Person is one against whom none of the actions,
suits or other proceedings in question, and no other action, suit
or other proceeding on the same or similar grounds is then or has
been pending or threatened. Nothing contained in this Article 8
shall affect any rights to indemnification to which personnel of
the Trust, other than Trustees and officers, and other Persons
may be entitled by contract or otherwise under law, nor the power
of the Trust to purchase and maintain liability insurance on
behalf of any such Person.
SECTION 8.7 Liability of Third Persons Dealing with
Trustees. No person dealing with the Trustees shall be bound to
make any inquiry concerning the validity of any transaction made
or to be made by the Trustees or to see to the application of any
payments made or property transferred to the Trust or upon its
order.
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ARTICLE 9
DURATION; REORGANIZATION; AMENDMENTS
SECTION 9.1 Duration and Termination of Trust. Unless
terminated as provided herein, the Trust shall continue without
limitation of time and, without limiting the generality of the
foregoing, no change, alteration or modification with respect to
any Portfolio or Series of Shares shall operate to terminate the
Trust. The Trust may be terminated at any time by a Majority of
the Trustees, subject to the favorable vote of the holders of not
less than a majority of the Shares outstanding and entitled to
vote of each Portfolio of the Trust, or by an instrument or
instruments in writing without a meeting, consented to by the
holders of not less than a majority of such Shares, or by such
greater or different vote of Shareholders of any Series as may be
established by the Certificate of Designation by which such
Series was authorized. Upon termination, after paying or
otherwise providing for all charges, taxes, expenses and
liabilities, whether due or accrued or anticipated as may be
determined by the Trustees, the Trust shall in accordance with
such procedures as the Trustees consider appropriate reduce the
remaining assets to distributable form in cash, Securities or
other property, or any combination thereof, and distribute the
proceeds to the Shareholders, in conformity with the provisions
of Section 6.2(d) hereof.
SECTION 9.2 Reorganization. The Trustees may sell,
convey and transfer all or substantially all of the assets of the
Trust, or the assets belonging to any one or more Portfolios, to
another trust, partnership, association or corporation organized
under the laws of any state of the United States, or may transfer
such assets to another Portfolio of the Trust, in exchange for
cash, Shares or other Securities (including, in the case of a
transfer to another Portfolio of the Trust, Shares of such other
Portfolio), or to the extent permitted by law then in effect may
merge or consolidate the Trust or any Portfolio with any other
Trust or any corporation, partnership, or association organized
under the laws of any state of the United States, all upon such
terms and conditions and for such consideration when and as
authorized by vote or written consent of a Majority of the
Trustees and approved by the affirmative vote of the holders of
not less than a majority of the Shares outstanding and entitled
to vote of each Portfolio whose assets are affected by such
transaction, or by an instrument or instruments in writing
without a meeting, consented to by the holders of not less than a
majority of such Shares, and/or by such other vote of any Series
as may be established by the Certificate of Designation with
respect to such Series. Following such transfer, the Trustees
shall distribute the cash, Shares or other Securities or other
consideration received in such transaction (giving due effect to
45
the assets belonging to and indebtedness of, and any other
differences among, the various Portfolios of which the assets
have so been transferred) among the Shareholders of the Portfolio
of which the assets have been so transferred; and if all of the
assets of the Trust have been so transferred, the Trust shall be
terminated. Nothing in this Section 9.2 shall be construed as
requiring approval of Shareholders for the Trustees to organize
or assist in organizing one or more corporations, trusts,
partnerships, associations or other organizations, and to sell,
convey or transfer less than substantially all of the Trust
Property or the assets belonging to any Portfolio to such
organizations or entities.
SECTION 9.3 Amendments; etc. All rights granted to the
Shareholders under this Declaration of Trust are granted subject
to the reservation of the right to amend this Declaration of
Trust as herein provided, except that no amendment shall repeal
the limitations on personal liability of any Shareholder or
Trustee or the prohibition of assessment upon the Shareholders
(otherwise than as permitted under Section 6.2(q)) without the
express consent of each Shareholder or Trustee involved. Subject
to the foregoing, the provisions of this Declaration of Trust
(whether or not related to the rights of Shareholders) may be
amended at any time, so long as such amendment does not adversely
affect the rights of any Shareholder with respect to which such
amendment is or purports to be applicable and so long as such
amendment is not in contravention of applicable law, including
the 1940 Act, by an instrument in writing signed by a Majority of
the Trustees (or by an officer of the Trust pursuant to the vote
of a Majority of the Trustees). Any amendment to this Declaration
of Trust that adversely affects the rights of all Shareholders
may be adopted at any time by an instrument in writing signed by
a Majority of the Trustees (or by an officer of the Trust
pursuant to a vote of a Majority of the Trustees) when authorized
to do so by the vote in accordance with Section 7.1 hereof of
Shareholders holding a majority of all the Shares outstanding and
entitled to vote, without regard to Series, or if said amendment
adversely affects the rights of the Shareholders of less than all
of the Series or of less than all of the Classes of Shares of any
Series, by the vote of the holders of a majority of all the
Shares entitled to vote of each Series or of each Class, as the
case may be, so affected. Subject to the foregoing, any such
amendment shall be effective when the instrument containing the
terms thereof and a certificate (which may be a part of such
instrument) to the effect that such amendment has been duly
adopted, and setting forth the circumstances thereof, shall have
been executed and acknowledged by a Trustee or officer of the
Trust and filed as provided in Section 9.4 hereof.
SECTION 9.4 Filing of Copies of Declaration and
Amendments. The original or a copy of this Declaration and of
46
each amendment hereto (including each Certificate of Designation
and Certificate of Termination), shall be kept at the office of
the Trust where it may be inspected by any Shareholder, and one
copy of each such instrument shall be filed with the Secretary of
The Commonwealth of Massachusetts, as well as with any other
governmental office where such filing may from time to time be
required by the laws of Massachusetts. A restated Declaration,
integrating into a single instrument all of the provisions of
this Declaration which are then in effect and operative, may be
executed from time to time by a Majority of the Trustees and
shall, upon filing with the Secretary of The Commonwealth of
Massachusetts, 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.
ARTICLE 10
MISCELLANEOUS
SECTION 10.1 Governing Law. This Declaration of Trust is
executed and delivered in The Commonwealth of Massachusetts and
with reference to the laws thereof, and the rights of all parties
and the construction and effect of every provision hereof shall
be subject to and construed according to the laws of said
Commonwealth.
SECTION 10.2 Counterparts. This Declaration of Trust and
any amendment thereto may be simultaneously executed in several
counterparts, each of which so executed shall be deemed to be an
original, and such counterparts, together, shall constitute but
one and the same instrument, which shall be sufficiently
evidenced by any such original counterpart.
SECTION 10.3 Reliance by Third Parties. Any certificate
executed by an individual who, according to the records in the
office of the Secretary of The Commonwealth of Massachusetts
appears to be a Trustee hereunder, certifying to: (a) the number
or identity of Trustees or Shareholders, (b) the due
authorization of the execution of any instrument or writing, (c)
the form of any vote passed as a meeting of Trustees or
Shareholders, (d) the fact that the number of Trustees or
Shareholders present at any meeting or executing any written
instrument satisfies the requirements of this Declaration of
Trust, (e) the form of any By Law adopted, or the identity of any
officers elected, by the Trustees, or (f) the existence or non-
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, or any of them, and the successors of such Person.
47
SECTION 10.4 References; Headings. The masculine gender
shall include the feminine and neuter genders. Headings are
placed herein for convenience of reference only and shall not be
taken as a part of this Declaration or control or affect the
meaning, construction or effect hereof.
SECTION 10.5 Use of the Names "AFD" and "Alliance".
Alliance Capital Management Corporation ("Alliance") has
consented to the use by the Trust of the identifying names "AFD"
and "Alliance", each of which is a property right of Alliance.
The Trust will only use the names "AFD" and/or "Alliance" as a
component of its name and for no other purpose, and will not
purport to grant to any third party the right to use the names
"AFD" and/or "Alliance" for any purpose. Alliance or any
corporate affiliate of Alliance may use or grant to others the
right to use the names "AFD" and/or "Alliance", as all or a
portion of a corporate or business name or for any commercial
purpose, including a grant of such right to any other investment
company. At the request of Alliance, the Trust will take such
action as may be required to provide its consent to the use of
such name by Alliance, or any corporate affiliate of Alliance, or
by any Person to whom Alliance or an affiliate of Alliance shall
have granted the right to the use of the names "AFD" and/or
"Alliance". Upon the termination of any investment advisory or
management agreement into which Alliance and the Trust may enter,
the Trust shall, upon request by Alliance, cease to use the names
"AFD" and/or "Alliance" as a component of its name, and shall not
use such name or initials as a part of its name or for any other
commercial purpose, and shall cause its officers and Trustees to
take any and all actions which Alliance may request to effect the
foregoing and to reconvey to Alliance or such corporate affiliate
any and all rights to such name.
IN WITNESS WHEREOF, the undersigned has hereunto set his
hand and seal, for himself and his assigns, and has thereby
accepted the Trusteeship as the Initial Trustee of AFD Exchange
Reserves hereby granted and agreed to the provisions hereof, all
as of the day and year first above written.
/s/ Xxxxxx X. Xxxxxxx
__________________________
Xxxxxx X. Xxxxxxx
48
The undersigned Settlor of AFD Exchange Reserves, hereby
accepts, approves and authorizes the foregoing Agreement and
Declaration of Trust of AFD Exchange Reserves.
Dated: January 14, 1994
/s/ Xxxxxxxx X. Xxxxxxxxxx
__________________________
Xxxxxxxx X. Xxxxxxxxxx
49
ACKNOWLEDGMENTS
M A S S A C H U S E T T S
Suffolk, ss.: January 14, 1994
Then personally appeared the above named Xxxxxx X.
Xxxxxxx and acknowledged the foregoing instrument to be his free
act and deed.
Before me,
/s/ Xxxxx X. Xxxx
___________________
Notary Public
MY COMMISSION EXPIRES
DECEMBER 16, 1939
M A S S A C H U S E T T S
Suffolk, ss.: January 14, 1994
Then personally appeared the above named Xxxxxxxx X.
Xxxxxxxxxx and acknowledged the foregoing instrument to be her
free act and deed.
Before me,
/s/ Xxxxx X. Xxxx
________________________
Notary Public
50
00250163.AM0
