EXHIBIT 2(a)
FIRST AMENDED AGREEMENT AND DECLARATION OF TRUST
OF THE PEOPLE'S AVENGER FUND BUSINESS TRUST
THIS AGREEMENT AND DECLARATION OF TRUST is made at Portland, Oregon, this
31st day of December, 2002, by XXXX X. XXXXXXXXX (the "Trustee").
WITNESSETH
WHEREAS, on December 7, 2002, the Trustee formed a Nevada business trust
known as "The "People's Avenger Fund Business Trust" (the "Fund") in order to
allow investors to participate in certain investment opportunities known to the
Trustee; and
WHEREAS, the Trustee filed a Certificate of Trust with respect to the Fund
with the Secretary of State of Nevada on December 9, 2002; and
WHEREAS, the Trustee has agreed to manage all property coming into the
Fund, as trustee of a Nevada business trust in accordance with the provisions
hereof; and
WHEREAS, the Trustee desires to amend this Declaration of Trust as
hereinafter provided;
NOW, THEREFORE, the Trustee hereby declares that it will hold all cash,
securities and other assets, which it may from time to time acquire in any
manner as Trustee hereunder, IN TRUST, to manage and dispose of the same upon
the terms and conditions hereinafter set forth for the benefit of the Holders
(as defined herein):
ARTICLE I
NAME AND DEFINITIONS
1.1. Name. This Nevada business trust shall continue to be known as
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"THE PEOPLE'S AVENGER FUND BUSINESS TRUST" and the Trustee shall conduct the
business of the Fund under that name or, provided the Trustee files any
documentation required by the applicable governmental agency, any other name as
the Trustee may from time to time determine.
1.2. Definitions. The following terms used in this Declaration of
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Trust are defined as follows:
(a) "Appointed Successor Trustee" has the meaning indicated in
Section 2.3(i) hereof.
(b) "Certificate of Trust" means the Certificate of Trust filed
with the Secretary of State of the State of Nevada, as required by Section
88A.210 of the Nevada Business Trust Act.
(c) "Covered Person" has the meaning indicated in Section 7.1
hereof.
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(d) "Current Investor Unit Value" means, for each Investor Unit
outstanding, the balance allocated to each Investor Unit, measured as of the
last day of the preceding calendar quarter.
(e) "Declaration of Trust" means this Agreement and Declaration of
Trust, as it may be amended from time to time.
(f) "Founders Unit Certificate" means a certificate to be issued
to a Holder of Founders Units in order to represent such Holder's beneficial
ownership of the applicable number of Founders Units.
(g) "Founders Unit" means any one of that class of Units of the
Fund formally known as the "The People's Avenger Fund Business Trust Founders
Units."
(h) "Fund" means the Nevada business trust established by this
Declaration of Trust.
(i) "Fund Expense Account" means the account designated by a
reference such as the "Fund Expense Account at [name of Qualified Bank] Bank"
established by the Trustee, which shall be a non-interest bearing special
account in the name of, and for the sole and exclusive benefit of, the Fund.
All income of the Fund generated with respect to the Permitted Investments will
be deposited into the Fund Expense Account. Moreover, all distributions of
Quarterly Income will be paid out of the Fund Expense Account.
(j) "Fund Investor Account" means the account designated by a
reference such as the "Fund Investor Account at [name of Qualified Bank] Bank"
established by the Trustee, which shall be a non-interest bearing special
account in the name of, and for the sole and exclusive benefit of, the Fund.
All amounts received by the Fund with respect to the purchase of Investor Units
will be placed in the Fund Investor Account. The only expenses to be paid out
of the Fund Investor Account will be the premiums for insurance covering the
Investor Units.
(k) "Holder" means a record owner of one or more Units, and such
term is used herein regardless of whether such record owner is an individual, a
corporation, partnership, limited liability company, limited partnership, trust,
foundation, or any other entity.
(l) "Insurer" means the insurance company designated by the Fund
to write an insurance policy that will insure against any failure of the Fund to
return all of the principal investment to the investor upon redemption of his
Investor Units. Any insurance covering an Investor Unit must be written by an
insurance company licensed to provide insurance within the United States and
must have an A.M. Best rating of "A" or higher.
(m) "Investor Returns" means, for each of the Investor Units, an
amount of cash actually earned resulting from the "best efforts" of the Trustee
under this Declaration of Trust, which shall be distributable as provided in
this Declaration of Trust. As used herein, "best efforts" means that the
Trustee will do its best to generate earnings for each Holder of an Investor
Unit, but does not guarantee that there will be any Investor Returns.
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(n) "Investor Unit" means any one of that class of Units of the
Fund formally known as the "The People's Avenger Fund Business Trust Investor
Units."
(o) "Investor Unit Certificate" means a certificate to be issued
to a Holder of Investor Units in order to represent such Holder's beneficial
ownership of the applicable number of Investor Units.
(p) "Owner Ledger" means the record book of the Fund which shall
be maintained and updated by the Trustee as necessary and which shall contain
the name and address of each Holder and the number of Units beneficially owned
(including the respective class thereof, as appropriate) by each Holder.
(q) "Permitted Investments" means debt securities bearing interest
or sold at a discount which satisfy all of the following criteria:
(i) The securities are issued by an entity having, at the
time of the Forward Commitment is issued, a long-term credit rating of at least
"A+" by Standard & Xxxx'x Xxxxxxxxxxx, "X0" by Moody's Investor's Service, or
the equivalent rating of any other recognized rating service;
(ii) On the date of delivery, the securities (a) are the
subject of one or more subscriptions obtained by the Trustee, on behalf of the
Fund, which obligate qualified creditworthy third party subscribers acceptable
to a Qualified Bank and the Trustee to purchase the securities for an amount
greater than the amount to be withdrawn by the Trustee from the Fund upon
delivery of such securities; or (b) have a yield to maturity of at least 350
basis points higher per annum than the 10-year U.S. Treasury market rate on such
date; and
(i) The securities (a) do not bear interest only, and (b) do
not have a final maturity of more than 10 years.
(b) "Qualified Bank" means any bank selected by the Trustee, which
satisfies all of the following criteria:
(i) Such bank maintains a rating of at least "A-1" by
Standard & Poor's Corporation, "P1" by Moody's Investor's Service, or an
equivalent rating of a recognized rating service;
(ii) Such bank maintains a trust department;
(iii) Such bank maintains a securities department or owns a
securities company;
(iv) Such bank has not failed to honor a Forward Commitment
or any similar obligation at any time; and
(v) Such bank is acceptable to the Insurer.
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The Qualified Bank initially designated by the Trustee is Barclays Bank
PLC, whose address is 7th Floor, 000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
telephone (000) 000-0000. However, if the Insurer requires the Fund to use a
different Qualified Bank, any such Qualified Bank must meet the qualifications
for a Qualified Bank specified herein
(r) "Quarterly Income" means, for the applicable quarterly period,
the total of:
(i) The Standstill Income for such period; and
(ii) All income generated from the investment transactions
entered into by the Trustee during such period, as permitted herein.
(s) "Redemption Value per Investor Unit" means the total balance
of the Investor Units to be redeemed, measured as of the date the Trustee or the
Holder (as applicable) received the redemption notice, divided by the
outstanding number of Investor Units on such date.
(t) "Securities Act" means the Securities Act of 1933, as amended.
(u) "Standstill Income" means all income generated though the
investment of cash contained in the Fund Expense Account as provided in Sections
2.2(d) and 2.3(d) hereof.
(v) "Trustee" means the Trustee named herein and any successor
Trustee(s) or Appointed Successor Trustee of the Fund elected or appointed as
Trustee(s) of the Fund in accordance with any provision of this Declaration of
Trust.
(w) "Unit" means a unit of beneficial ownership in the Fund.
ARTICLE II
UNITS
2.1. Division of Units into Classes. The Units shall be divided into
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classes, as follows:
(a) Classes of Units. The Units shall be divided into two
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classes, the Founders Units and the Investor Units. The number of Founders
Units shall be 100 and the number of Investor Units shall be unlimited.
(b) Issuance of Classes of Units. Except as otherwise provided in
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this Declaration of Trust, the following provisions shall govern the issuance of
any Units:
(i) The Trustee shall issue each Unit, regardless of the
class thereof, for a purchase price of $5,000.
(ii) The Trustee shall maintain separate records for each
class of the Units.
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(iii) At all times, the total cash received by the Fund upon
the purchase of each class of the Units, as well as all assets associated with
each class of the Units, shall be held and accounted for separately from the
cash received by the Fund upon the purchase of every other class of the Units,
as well as all assets associated with each class of the Units, and the Trustee
shall maintain sufficient records thereof. No Holder of any Unit shall have any
claim on or right to any assets allocated or belonging to any other Unit held by
another Holder.
(iv) The assets of each Unit shall be subject only to the
rights of creditors of that particular Unit, and all persons who have extended
credit that has been allocated to a particular Unit, or who have a claim or
contract which has been allocated to any particular Unit, shall look only to the
assets of that particular Unit for payment of such credit, claim or contract.
The Trustee shall include a notice of such limited liability of each class of
the Units in the Certificate of Trust. Any general liabilities, expenses,
costs, charges or reserves of the Fund that are not readily identifiable as
belonging to any particular class of the Units shall be solely charged by the
Trustee against the Quarterly Income of the Fund and then, to the extent such
Quarterly Income is insufficient, to the assets of the Founders Units and be
payable by the Holders of the Founders Units.
(v) The Fund shall hold legal title to the Quarterly Income
earned on the investments made pursuant to the terms of this Declaration of
Trust, which shall be utilized for the payment of the expenses and costs of the
Fund and distributed to the Holders in accordance with the provisions of this
Declaration of Trust.
2.2. The Founders Units. The following provisions describe the
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additional rights, privileges and preferences of the Founders Units:
(a) Receipt of the Purchase Price of the Founders Units. Upon
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receipt of the purchase price of the Founders Units, the Trustee, in its sole
discretion, shall deposit the cash in the Fund's operational account or in the
Fund Expense Account; provided however, to the extent any of such cash is
deposited in the Fund Expense Account, the Trustee shall:
(i) Make appropriate notations in the accounting records of
the Fund to designate such account as a Fund Expense Account; and
(ii) Verify that the Qualified Bank has correctly identified
such account as a Fund Expense Account.
(b) Issuance of Certificates. The Trustee shall issue each Holder
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of Founders Units a Founders Unit Certificate for the appropriate number of
Founders Units.
(c) Voting. The Holders of Founders Units shall have the
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exclusive right to vote for the election of the Trustee of the Fund and for all
other purposes. Each outstanding Founders Unit shall entitle the Holder thereof
to one vote on all matters submitted to a vote of the Holders of the Founders
Units.
(d) Permitted Investments. Except as provided in Section 2.2(e)
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hereof, the Trustee shall be entitled to invest any cash contained in the Fund
Expense Account in any of the Permitted Investments.
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(e) General Investment. To the extent any cash contained in a
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Fund Expense Account is not invested in the Permitted Investments, the Trustee
shall be entitled to instruct each Qualified Bank to invest such cash in the
manner described in Section 2.3(d) hereof.
(f) Liabilities. All of the liabilities, expenses and costs of
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the Fund in excess of Quarterly Income shall be solely charged against the
assets of the Founders Units, and all contracts or arrangements entered into by
the Trustee on behalf of the Fund shall include a notice thereof.
(g) Distribution of Assets and Income. The Holders of the
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Founders Units shall be entitled to receive distributions as provided in Section
3.3 hereof.
(h) Transfer of the Founders Units. Except for the redemption
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rights described in Section 2.2(i) hereof, no Holder of the Founders Units shall
be entitled to sell, pledge, hypothecate, or otherwise transfer any portion of
such Holder's Founders Units. Notwithstanding the foregoing, a Holder shall be
entitled to pledge all or any potion of such Holder's Founders Units with the
prior written consent of the Trustee, which may be withheld if such pledge would
violate any provision of the Securities Act or any other applicable securities
law or regulation.
(i) Determine the redemption value of the Founders Units to
be redeemed, which shall be equal to such Founders Units' pro rata share of the
value of the net assets of the Fund as of the date of receipt of the Holder's
redemption request; and
(ii) Forward such amount, in cash or other available assets,
to the redeeming Holder pursuant to the instructions provided by such Holder in
the redemption notice.
2.3. The Investor Units. The following provisions describe the
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additional rights, privileges and preferences of the Investor Units:
(a) Certificates. The Trustee shall issue each Holder of Investor
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Units an Investor Unit Certificate for the appropriate number of Investor Units.
(b) Subscriptions and Receipt of the Purchase Price of the
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Investor Units. Upon receipt of the subscription agreement of a desired
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investor, the Trustee shall notify the investor of the Fund's acceptance of the
investor's subscription and shall:
(i) Deposit the purchase price for such Investor Units (at
which time the investor will be deemed a Holder of such Investor Units for
purposes of this Declaration of Trust) in a Fund Investor Account at the
Qualified Bank; and
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(ii) Make appropriate notations in the accounting records of
the Fund of the number of the Investor Units purchased by an investor.
(c) Permitted Investments. Except as provided in Section 2.3(d)
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hereof, the Trustee shall be entitled to invest any cash contained in the Fund
Expense Account in any of the Permitted Investments.
(d) General Investment. To the extent the cash in a Fund Investor
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Account is not invested in the Permitted Investments, the Trustee shall be
entitled to instruct each Qualified Bank to invest such funds as follows:
(i) In the Qualified Bank's primary money market account or
any other obligation of a Qualified Bank; or
(ii) Provided the Fund shall not become subject to early
withdrawal penalties in excess of the interest earned during the period of
investment, in any of the Qualified Bank's short term time deposits having a
maturity of not more than 365 days.
(e) Liabilities. None of the liabilities, expenses or costs of
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the Fund shall be chargeable against the Fund Investor Accounts, including,
without limitation, any fees charged by any Qualified Bank, and all contracts or
arrangements entered into by the Trustee on behalf of the Fund shall include a
notice of the unavailability of such funds for satisfaction of any claims on
such contracts or arrangements.
(f) Distribution of Income. The Holders of the Investor Units
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shall be entitled to receive distributions as provided in Section 3.2 and
Section 3.4 hereof.
(g) Transfer of the Investor Units. Except for the redemption
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rights described in Section 2.3(h) hereof, no Holder shall be entitled to sell,
pledge, hypothecate, or otherwise transfer any portion of such Holder's Investor
Units. Notwithstanding the foregoing, a Holder shall be entitled to pledge all
or any potion of such Holder's Investor Units with the prior written consent of
the Trustee, which may be withheld if such pledge would violate any provision of
the Securities Act or any other applicable securities law or regulation.
(h) Redemption. Investor Units may not be redeemed for a period
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of 90 days following the purchase thereof (such period the "Initial 90-day
Period"). Following the expiration of the Initial 90-day Period, each Holder
shall be entitled, upon 30 days' advance written notice to the Trustee before
the end of any calendar quarter, to have the Fund redeem all or any portion of
such Holder's Investor Units. Notwithstanding the foregoing, a Holder may not
be entitled to have the Fund redeem less than all of such Holder's Investor
Units if, following such redemption, the Holder would own less than five
Investor Units. The Holder's notice of request for redemption shall be
delivered to the Trustee by certified mail, return receipt requested, indicate
the number of Investor Units requested to be redeemed, and be signed by the
Holder exactly as the Investor Units are registered in the Fund's Owner Ledger
(e.g., a trustee or custodian must sign as such). The notice of request for
redemption must also include the Holder's original Investor Unit Certificate(s).
On or before the expiration of the 30-day period, the Trustee shall:
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(i) Determine the Redemption Value per Investor Unit of the
Investor Units to be redeemed;
(ii) Calculate the total amount due to the Holder by
multiplying the number of Investor Units being redeemed by the Redemption Value
per Investor Unit; and
(iii) Forward the total amount due to the Holder in cash,
pursuant to the instructions provided by such Holder in the redemption notice.
In addition to the rights of each Holder to request the redemption of such
Holder's Investor Units, the Fund shall be entitled, in its sole discretion, to
redeem all of the Investor Units owned by any Holder at any time after the
expiration of the Initial 90-Day Period. Should the Fund elect to redeem any
Investor Units, the Trustee shall provide written notice to the applicable
Holder, by certified mail, return receipt requested, and within 30 days of the
Holder's receipt of such notice, the Trustee shall forward the total amount due
to the Holder as a result of the Fund's redemption of all of such Holder's
Investor Units, as calculated in accordance with this Section 2.3(h).
(i) Voting. The Holders of the Investor Units shall not be
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entitled to vote for the election of the Trustee of the Fund or for any other
purpose. Notwithstanding the foregoing, if neither the Trustee nor any of the
officers of the Fund, if any, have interacted with a Holder of Investor Units in
any manner (whether by telephone, e-mail, facsimile or through the payment of
Investor Returns) for a period in excess of 120 days and, despite the Holder's
good faith efforts to contact such person(s), the Holder shall be unable to
reach them, then the Holder shall be entitled to make a written request upon any
circuit judge of Multnomah County, Oregon, acting as an individual and not in
any judicial capacity, to remove the then current Trustee of the Fund and to
appoint a successor trustee (the "Appointed Successor Trustee"). Any Appointed
Successor Trustee appointed under this Section 2.3(i) shall be a bank with trust
powers or a trust company, either state or national. Once appointed, the
Appointed Successor Trustee shall be entitled to contact the Fund's accountant
and obtain all records of the Fund in the possession of the accountant which
would be useful or necessary in order to allow the Appointed Successor Trustee
to contact each of the Holders of the Investor Units and to complete the
redemption of all of the outstanding Investor Units in accordance with the
provisions of this Declaration of Trust. Although any Appointed Successor
Trustee shall possess and shall be entitled to exercise all powers and authority
conferred on the Trustee in this Declaration of Trust, any such Appointed
Successor Trustee shall only exercise such powers and authority to the extent
necessary to achieve the responsibilities discussed in the preceding sentence.
At all times, the Trustee, on behalf of the Fund, shall provide the Fund's
accountant with a duplicate set of all of the Fund's business records related to
the Fund Expense Account, the Fund Investor Accounts, and the ownership of the
Founders Units and the Investor Units, including, without limitation, the Owner
Ledger, the Founders Unit Certificates and the Investor Unit Certificates.
Within five business days of any change in the Fund's accountant, the Trustee
shall provide the name, address and telephone number of the Fund's new
accountant to the Fund's attorneys and its registered agent in the State of
Nevada. Upon request of any Appointed Successor Trustee, the Fund's attorneys
or its registered agent shall be entitled to disclose the name of the Fund's
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then current accountant to the Appointed Successor Trustee. Upon the execution
hereof, the Trustee, on its own behalf and on behalf of the Fund, shall be
deemed to have waived any attorney/client privilege solely with respect to the
information provided to the Fund's attorneys pursuant to this Section 2.3(i).
Upon the request of any Holder of Investor Units, the Trustee shall provide such
Holder with the names, addresses, and telephone numbers of the Fund's then
current accountant and attorneys.
2.4. Records of Ownership. Each Founders Unit Certificate and each
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Investor Unit Certificate issued by the Fund shall be recorded, along with all
other appropriate information, in the Owner Ledger. The Owner Ledger shall be
conclusive as to the number of issued and outstanding Units, and as to the
Holder of each outstanding Unit.
2.5. No Preemptive Rights. No Holder shall have a preemptive or any
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other right to receive, purchase or subscribe for any additional Units issued by
the Fund by reason of the Holder's ownership of any Unit.
ARTICLE III
INCOME AND EXPENSES
3.1. Calculation of Quarterly Income and Payment of Expenses. Within
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three business days of the end of each calendar quarter, the Trustee shall
calculate the Quarterly Income. Prior to making any disbursements to the
Holders, the Trustee shall utilize the Quarterly Income to pay all costs and
expenses of the Fund, including any fees payable to the Qualified Bank(s) and
the compensation payable to the Trustee. The liabilities, expenses and costs of
the Fund (including the compensation due to the Trustee) will be charged only
against the Quarterly Income, up to a maximum of 0.5 percent per quarter of the
total amount on deposit during such quarter in the Fund's operational account,
the Fund Expense Account, and the Fund Investor Account. To the extent such
liabilities, expenses and costs of the Fund exceed 0.5 percent per quarter
(excluding the compensation due to the Trustee), any such excess shall be solely
charged against the assets of the Founders Units and be payable by the Holders
of the Founders Units. However, any such amount paid out of the Fund Expense
Account in any given month may be recouped over the next two monthly periods,
but only to the extent that the Quarterly Income for the subject calendar
quarter exceeds the expenses for such month. For instance, if a portion of the
Fund's expenses for the month of June are paid from the Fund Expense Account,
such amount may be recouped from the Fund's Quarterly Income in excess of
expenses in July and/or August, and any amount not recouped by the Fund in such
months shall not be chargeable against Quarterly Income in any other month,
regardless of the amount of income.
None of the liabilities, expenses or costs of the Fund shall be chargeable
against the Fund Investor Account. At all times, the Trustee shall ensure that
the total monthly expenses of the Fund, including any compensation due to the
Trustee, excluding taxes, shall not exceed 0.167 percent of the total amount on
deposit during such month in the Fund's operational account, the Fund Expense
Account, and the Fund Investor Account.
The only permitted charges against the Fund Investor Account are the
insurance premiums for the insurance covering the Investor Units.
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3.2. Distributions to the Holders of the Investor Units. Following
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payment of the expenses as provided in Section 3.1, the Trustee shall, out of
the remaining Quarterly Income, distribute the quarterly Investor Returns to
each Holder who has owned Investor Units for at least 45 days. If desired, any
Holder of five or more Investor Units may utilize the Investor Returns paid to
such Holder to purchase additional Investor Units. To the extent a Holder
desires to do so and the Investor Returns paid to such Holder are not equally
divisible by $5,000, the Trustee will, upon request, retain the uneven amount of
such Holder's Investor Returns in the Fund Investor Account. Once the aggregate
of all such uneven funds applicable to such Holder reaches an amount divisible
by $5,000, such Holder will be deemed to have purchased an additional Investor
Unit for each $5,000 applicable to such Holder.
3.3. Distributions to the Holders of the Founders Units. To the extent
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any Quarterly Income remains after the payment of the items required in Section
3.1 and Section 3.2 hereof, the Trustee shall be entitled to distribute such
amount, pro rata, to the Holders of the Founders Units.
3.4. Additional Distributions to the Holders of the Investor Units. In
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its sole discretion, the Trustee shall be permitted, after obtaining the written
approval of a majority of the Holders of the Founders Units, to make additional
distributions to the Holders of the Investor Units which are not otherwise
prohibited by the provisions hereof. Any such additional distributions shall be
made to the Holders of the Investor Units based on their respective ownership of
the total number of Investor Units outstanding.
ARTICLE IV
THE TRUSTEE
4.1. Election and Number. At all times, there shall be one Trustee of
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the Fund, and Xxxx X. Xxxxxxxxx shall be the original Trustee. The Trustee
shall hold office during the duration of the Fund and until its termination in
accordance with this Declaration of Trust; provided, however:
(a) The Trustee may resign (without need for prior or subsequent
accounting) upon a minimum of 30 days' advance written notice to the Holders of
the Founders Units. Any such resignation shall take effect upon the expiration
of such 30-day time period or upon such later date as is specified in the notice
of resignation.
(b) The Trustee may be removed, with or without cause, by a
written instrument signed by the Holders of at least two-thirds of the
outstanding Founders Units.
4.2. Effect of Death, Resignation, etc. of a Trustee. The death,
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resignation, retirement, removal or incapacity of the Trustee shall not operate
to annul the Fund or to revoke any existing agency created pursuant to the terms
of this Declaration of Trust. Upon any such death, resignation, retirement,
removal or incapacity of the Trustee, the Holders of the Founders Units shall be
entitled to elect a successor Trustee. Any such successor Trustee elected under
this Section 4.2 must be a qualified investment adviser, pursuant to the
Investment Advisers Act of 1940, as amended, and any applicable state securities
law or regulation.
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4.3. Powers. Subject to the provisions of this Declaration of Trust,
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the Trustee shall have all powers necessary or convenient to carry out the
management of the Fund, including, without limitation, the following powers:
(a) To make and execute any and all contracts and instruments that
it may consider necessary or appropriate in connection with the management of
the Fund;
(b) To invest the cash contained in the Fund Expense Account and
the Fund Investor Account, as provided herein;
(c) To elect and remove such officers and appoint and terminate
such agents as the Trustee considers appropriate;
(d) To delegate such authority as the Trustee deems appropriate to
any officer or employee of the Fund;
(e) To collect all property due to the Fund; to pay all claims,
including taxes, against the Fund's property; to prosecute, arbitrate, defend,
compromise or abandon any claims relating to the Fund's property; to foreclose
any security interest securing any obligations, by virtue of which any property
is owed to the Fund; and to enter into releases, agreements and other
instruments;
(f) To change the fiscal year of the Fund; and
(g) To carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary, proper or
desirable for the accomplishment of any purpose or the attainment of any object
or the furtherance of any power hereinabove set forth, and to do every other act
or thing incidental or appurtenant to or connected with the aforesaid purposes,
objects or powers.
ARTICLE V
COMPENSATION AND LIMITATION OF LIABILITY OF THE TRUSTEE
5.1. Compensation. The Trustee will receive compensation from the Fund
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equal to the difference between the actual liabilities, expenses and costs of
the Fund and 0.5 percent per quarter of the total amount on deposit during such
quarter in the Fund's operational account, the Fund Expense Account, and the
Fund Investor Account. If the liabilities, expenses and costs of the Fund
exceed 0.5 percent per quarter, the Trustee shall receive no compensation for
that quarter.
The Trustee will not be entitled to any compensation from the Fund until
all paid insurance premiums have been refunded to the investors out of the
Quarterly Income. Any expenses of the Fund related to any offering of the Units
to investors will likewise be paid out of any compensation which may be due to
the Trustee. The Investor Units will not be charged with any such expenses.
5.2. Limitation of Liability. The Trustee shall not be responsible or
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liable in any event for any neglect or wrongdoing of any officer, employee or
agent of the Fund; provided, however, nothing herein shall protect the Trustee
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against any liability to which it would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties and obligations arising under this Declaration of Trust.
ARTICLE VI
INSURANCE
6.1. Insurance Covering Investor Units. Upon the purchase of Investor
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Units, each investor will receive an insurance policy issued by the Insurer,
naming the investor as the insured, covering 100 percent of his principal
investment. The policy will insure against any failure of the Fund to return
all of the principal investment to the investor upon redemption of his Investor
Units. The insurance premium will be an amount equal to three percent per annum
of the total invested by an investor, payable at the time of investment, at the
rate of 0.75 percent each quarter. Therefore, at the time each Investor Unit is
purchased, each $5,000 invested will be subject to a charge of $37.50 per
quarter. The Fund will debit the amount of the premium due for the insurance
for the quarter in which an Investor Unit is purchased from the portion of the
Fund Investor Account applicable to the investor. If less than a quarter
remains after the Investor Unit is purchased, the amount of the insurance
premium will be prorated for the time remaining in the quarter. Other aspects
of the insurance are the following:
(a) Any Fund Investor Account must be at a Qualified Bank
acceptable to the Insurer. As of the date of this Declaration of Trust, the
Qualified Bank is expected to be Barclays Bank PLC, New York, New York. In the
event that another bank is selected, it must meet the definition of a Qualified
Bank.
(b) Any investor may have his Investor Units redeemed at the end
of any quarter, thereby limiting his exposure for insurance premiums to only
0.75 percent of his total investment at that time for the quarter in which
redemption occurs.
(c) At any time when the principal amount of the Investor Units is
increased or decreased, as the case may be, the amount of the insurance with
respect to the applicable Investor Units will concurrently be increased or
decreased, as appropriate.
(d) If desired, the Fund may change the insurance company to act
as the Insured. In such event, any newly selected insurance company must meet
the definition of the Insured in this prospectus.
6.2. The Insurance Policy. The Insurer will issue a policy containing
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the below-described provisions with respect to the Fund's Investor Units:
(a) The policy will be delivered by the Insurer to each Holder of
the Investor Units.
(b) Under the policy, the Insurer unconditionally and irrevocably
agrees to pay for disbursement to the Investor Unit Holders that portion of the
Redemption Value per Investor Unit which is then due for redemption and which
the Fund shall have failed to provide.
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(c) Upon receipt of telephonic or telegraphic notice, subsequently
confirmed in writing, or written notice by registered or certified mail, from an
Investor Unit Holder or the paying agent to the Insurer that the required
payment of principal value has not been made by the Fund to the Investor Unit
Holder, on the due date of such payment or within 30 business day after receipt
of notice of such nonpayment, whichever is later, the Insurer will make a
deposit of funds, in an account with Barclays Bank PLC, New York, New York, or
it's successor, as its agent (the "Fiscal Agent") sufficient to make the portion
of such payment not paid by the Investor Unit Holder. Upon presentation to the
Fiscal Agent of evidence satisfactory to it of the Investor Unit Holder's right
to receive such payment and any appropriate instruments of assignment required
to vest all of the Investor Unit Holder's right to such payment in the Investor
Units, the Fiscal Agent will immediately disburse such amount to the Investor
Unit Holder.
(d) As long as all premiums on the insurance policy are paid when
they are due, the policy is non-cancelable for any reason.
ARTICLE VII
INDEMNIFICATION
7.1. Trustee, Officers, etc. The Fund shall indemnify to the fullest
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extent of the law, as currently in effect or as hereafter amended, the Trustee
and the Fund's officers and those who have ceased to be a Trustee or officer
(each such person being referred to hereinafter as a "Covered Person") against
all liabilities and expenses, including, without limitation, amounts paid in
satisfaction of judgments, in compromise or as fines and penalties, and counsel
fees reasonably 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 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, except that no
Covered Person shall be indemnified against any liability to the Fund or the
Holders to which such Covered Person would otherwise be subject 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.
7.2. Compromise Payment. As to any matter disposed of (whether by a
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compromise payment, pursuant to a consent decree or otherwise) without an
adjudication in a decision on the merits by a court, or by any other body before
which the proceeding was brought, that such Covered Person is liable to the Fund
or the Holders 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, indemnification shall be provided if there has been obtained an
opinion in writing of independent legal counsel, based upon a review of readily
available facts (but not a full-trial type inquiry), to the effect that such
indemnification would not protect such Covered Person against any liability to
the Fund to which such Covered Person would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of its office. Any approval pursuant to this
Section 7.2 shall not prevent the recovery from any Covered Person of any amount
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paid to such Covered Person in accordance with this Article VII as
indemnification if such Covered Person is subsequently adjudicated by a court of
competent jurisdiction to have been liable to the Fund or its Holders 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.
7.3. Holders. In case any Holder shall be held to be personally liable
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solely by reason of such Holder's status as a Holder and not because of such
Holder's acts or omissions or for some other reason, such Holder shall be
entitled to be held harmless from and indemnified against all loss and expense
arising from such liability, but only out of the assets of the particular class
of Units owned by such Holder.
7.4. Expenses of Indemnification. Expenses, including counsel fees so
----------------------------
incurred by any person entitled to indemnification pursuant to this Article VII
(but excluding amounts paid in satisfaction of judgments, in compromise or as
fines or penalties), may be paid from time to time by the Fund in advance of the
final disposition of any such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such person to repay amounts so paid to the Fund
if it is ultimately determined that indemnification of such expenses is not
authorized under this Article VII, provided that:
(a) Such person shall provide security for such undertaking;
(b) The Fund shall be insured against losses arising by reason of
such person's failure to fulfill the undertaking; or
(c) If independent legal counsel in a written opinion, shall
determine, based on a review of readily available facts (but not a full
trial-type inquiry), that there is reason to believe such person ultimately will
be entitled to indemnification.
ARTICLE VIII
MISCELLANEOUS
8.1. Trustee's Good Faith Action, Expert Advice, No Bond or Surety.
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The exercise by the Trustee of its powers and discretion hereunder shall be
binding upon everyone interested. The Trustee shall not be liable except for
its own willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties and obligations arising under this Declaration of Trust, and shall
not be liable for errors of judgment or mistakes of fact or law. The Trustee
may take advice of counsel or other experts with respect to the meaning and
operation of this Declaration of Trust, and shall be under no liability for any
act or omission in accordance with such advice or for failing to follow such
advice. The Trustee and each officer or employee of the Fund shall, in the
performance of its duties, be fully and completely justified and protected with
regard to any act or any failure to act resulting from reliance in good faith
upon the books of account or other records of the Fund, upon an opinion of
counsel, or upon reports made to the Fund by any of its officers or employees,
or any accountants, appraisers or other experts or consultants selected with
reasonable care by the Trustee, officers or employees of the Fund. The Trustee
shall not be required to give any bond or surety.
8.2. Duration and Termination of the Fund. Unless terminated as
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provided herein, the Fund shall continue without limitation of time. Provided
no Investor Units are outstanding, the Fund may be terminated at any time by a
majority vote of the Holders of the outstanding Founders Units. Upon the
appointment of an Appointed Successor Trustee pursuant to Section 2.3(i) hereof,
such Appointed Successor Trustee shall be entitled to terminate the Fund after
redemption of all of the Investor Units.
8.3. Filing of Copies, References, Headings. The original or a copy of
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this Declaration of Trust and of each amendment hereto shall be kept at the
office of the Fund where it may be inspected by any Holder. In this instrument
and in any such amendment, references to this instrument, and all expressions
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such as "herein," "hereof" and "hereunder," shall be deemed to refer to this
Declaration of Trust, as it may be amended form time to time. Headings are
placed herein for convenience of reference only and shall not be taken as a part
hereof or control or affect the meaning, construction or effect of this
instrument. This Declaration of Trust may be executed in any number of
counterparts, each of which shall be deemed an original.
8.4. Organizational Expenses. In the event that any person advances
------------------------
the organizational expenses of the Fund, such advances shall become an
obligation of the Fund subject to such terms and conditions as may be fixed by
the Trustee, in its sole discretion.
8.5. Applicable Law. This Declaration of Trust is made in the State of
--------------
Nevada, and it is created under and is to be governed by and construed and
administered according to the laws of such state.
8.6. Fiscal Year. The fiscal year of the Fund shall begin on the 1st
------------
of January and shall end on December 31st of each year.
8.7. Provisions in Conflict with Law or Regulations. The provisions of
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this Declaration of Trust are severable, and, if the Trustee shall determine,
with the advice of counsel, that any of such provisions is in conflict with any
applicable laws and regulations, the conflicting provision shall be interpreted
so as to effectuate as nearly as possible its original intent while complying
with applicable law or regulation; provided, however, that such determination
shall not affect any of the remaining provisions of this Declaration of Trust or
render invalid or improper any action taken or omitted prior to such
determination. If any provision of this Declaration of Trust shall be held
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such jurisdiction and
shall not in any manner affect such provisions in any other jurisdiction or any
other provision of this Declaration of Trust in any jurisdiction.
IN WITNESS WHEREOF, the Trustee has executed this Declaration of Trust as
of the date first written above.
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XXXX X. XXXXXXXXX, Trustee
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