HIGHLAND FLOATING RATE ADVANTAGE FUND AGREEMENT AND DECLARATION OF TRUST Dated as of November 26, 2007
Exhibit (a)(2)
HIGHLAND FLOATING RATE ADVANTAGE FUND
AGREEMENT AND DECLARATION OF TRUST
AGREEMENT AND DECLARATION OF TRUST
Dated as of November 26, 2007
TABLE OF CONTENTS
Page | ||||||
ARTICLE I |
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The Trust |
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1.1 |
Name | 1 | ||||
1.2 |
Definitions | 1 | ||||
ARTICLE II |
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Trustees |
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2.1 |
Number and Qualifications | 2 | ||||
2.2 |
Term and Election | 3 | ||||
2.3 |
Resignation and Removal | 3 | ||||
2.4 |
Vacancies | 3 | ||||
2.5 |
Meetings | 3 | ||||
2.6 |
Trustee Action by Written Consent | 4 | ||||
2.7 |
Officers | 4 | ||||
ARTICLE III |
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Powers and Duties of Trustees |
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3.1 |
General | 4 | ||||
3.2 |
Investments | 4 | ||||
3.3 |
Legal Title | 5 | ||||
3.4 |
Issuance, Repurchase and Redemption of Shares | 5 | ||||
3.5 |
Borrow Money or Utilize Leverage | 5 | ||||
3.6 |
Delegation; Committees | 5 | ||||
3.7 |
Collection and Payment | 5 | ||||
3.8 |
Expenses | 5 | ||||
3.9 |
By-Laws | 6 | ||||
3.10 |
Miscellaneous Powers | 6 | ||||
3.11 |
Further Powers | 6 | ||||
ARTICLE IV |
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Advisory, Management and Distribution Arrangements and other Contracts |
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4.1 |
Advisory and Management Arrangements | 6 | ||||
4.2 |
Distribution Arrangements | 6 | ||||
4.3 |
Other Service Providers | 7 | ||||
4.4 |
Parties to Contract | 7 | ||||
ARTICLE V |
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Limitations of Liability and Indemnification |
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5.1 |
No Personal Liability of Shareholders, Trustees, etc. | 7 | ||||
5.2 |
Mandatory Indemnification | 7 | ||||
5.3 |
No Bond Required of Trustees | 8 | ||||
5.4 |
No Duty of Investigation; No Notice in Trust Instruments, etc. | 8 | ||||
5.5 |
Reliance on Experts, etc. | 9 |
Page | ||||||
ARTICLE VI |
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Shares of Beneficial Interest |
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6.1 |
Beneficial Interest | 9 | ||||
6.2 |
Establishment of Series and Classes | 9 | ||||
6.3 |
Rights of Shareholders | 9 | ||||
6.4 |
Trust Only | 9 | ||||
6.5 |
Issuance of Shares | 9 | ||||
6.6 |
Register of Shares | 10 | ||||
6.7 |
Transfer Agent and Xxxxxxxxx | 00 | ||||
6.8 |
Transfer of Shares | 10 | ||||
6.9 |
Notices | 10 | ||||
ARTICLE VII |
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Custodians |
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7.1 |
Appointment and Duties | 10 | ||||
7.2 |
Central Certificate System | 11 | ||||
ARTICLE VIII |
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Redemptions and Repurchases |
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11 | ||||||
8.1 |
Redemptions and Repurchases of Shares | 11 | ||||
8.2 |
Manner of Payment | 11 | ||||
8.3 |
Disclosure of Holding | 11 | ||||
ARTICLE IX |
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Determination of Net Asset Value, Net Income and Distributions |
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9.1 |
Net Asset Value | 12 | ||||
9.2 |
Distributions to Shareholders | 12 | ||||
9.3 |
Power to Modify Foregoing Procedures | 12 |
ARTICLE X |
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Shareholders |
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10.1 |
Meetings of Shareholders | 12 | ||||
10.2 |
Voting | 13 | ||||
10.3 |
Quorum and Required Vote | 13 | ||||
10.4 |
Proxies, etc. | 13 | ||||
10.5 |
Inspection of Records | 13 | ||||
10.6 |
Shareholder Action by Written Consent | 13 | ||||
ARTICLE XI |
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Duration; Termination of Trust; Amendment; Reorganizations, Etc. |
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11.1 |
Duration | 14 | ||||
11.2 |
Termination | 14 | ||||
11.3 |
Amendment Procedure | 14 | ||||
11.4 |
Reorganizations | 15 | ||||
11.5 |
Subsidiaries | 16 | ||||
11.6 |
Conversion | 16 | ||||
11.7 |
Certain Transactions | 16 |
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Page | ||||||
ARTICLE XII |
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Miscellaneous |
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12.1 |
Filing | 17 | ||||
12.2 |
Resident Agent | 17 | ||||
12.3 |
Applicable Law | 17 | ||||
12.4 |
Counterparts | 18 | ||||
12.5 |
Reliance by Third Parties | 18 | ||||
12.6 |
Provisions in Conflict with Law or Regulation | 18 |
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HIGHLAND FLOATING RATE ADVANTAGE FUND
AGREEMENT AND DECLARATION OF TRUST
AGREEMENT AND DECLARATION OF TRUST
AGREEMENT AND DECLARATION OF TRUST made as of November 26, 2007, by the Trustees hereunder,
and by the holders of shares of beneficial interest issued hereunder as hereinafter provided.
WHEREAS, this Trust has been formed to carry on business as set forth more particularly
hereinafter;
WHEREAS, this Trust is authorized to issue an unlimited number of its shares of beneficial
interest all in accordance with the provisions hereinafter set forth;
WHEREAS, the Trustees have agreed to manage all property coming into their hands as Trustees
of a Delaware statutory trust in accordance with the provisions hereinafter set forth; and
WHEREAS, the parties hereto intend that the Trust created by this Declaration (as defined
below) and the Certificate of Trust filed with the Secretary of State of the State of Delaware on
November 26, 2007 shall constitute a statutory trust under the Delaware Statutory Trust Act and
that this Declaration shall constitute the governing instrument of such statutory trust.
NOW, THEREFORE, the Trustees hereby declare that they will hold all cash, securities, and
other assets which they may from time to time acquire in any manner as Trustees hereunder IN TRUST
to manage and dispose of the same upon the following terms and conditions for the benefit of the
holders from time to time of shares of beneficial interest in this Trust as hereinafter set forth.
ARTICLE I
THE TRUST
1.1 Name. This Trust shall be known as the “Highland Floating Rate Advantage Fund” and
the Trustees shall conduct the business of the Trust under that name or any other name or names as
they may from time to time determine.
1.2 Definitions. As used in this Declaration, the following terms shall have the
following meanings:
“1940 Act” shall mean the Investment Company Act of 1940 and the rules and regulations
promulgated thereunder and exemptions granted therefrom, as amended from time to time.
“Affiliated Person” shall have the meaning given to it in the 1940 Act.
“Assignment” shall have the meaning given to it in the 1940 Act.
“By-Laws” shall mean the By-Laws of the Trust as amended from time to time by the
Trustees.
“Code” shall mean the Internal Revenue Code of 1986, as amended, and the regulations
promulgated thereunder.
“Commission” shall mean the Securities and Exchange Commission.
“Continuing Trustee” shall mean any member of the Board of Trustees who either (a) has
been a member of the Board of Trustees for a period of at least thirty-six months (or since the
commencement of the Trust’s operations, if less than thirty-six months) or (b) was nominated to
serve as a member of the Board of Trustees by a majority of the then Continuing Trustees.
“Declaration” shall mean this Agreement and Declaration of Trust, as amended,
supplemented or amended and restated from time to time.
“Delaware Statutory Trust Act” shall mean the provisions of the Delaware Statutory
Trust Act, 12 Del. C. §3801, et seq., as such Act may be amended
from time to time.
“Delaware General Corporation Law” shall mean the Delaware General Corporation Law, 8
Del. C. §101, et seq., as amended from time to time.
“Fundamental Policies” shall mean the investment policies and restrictions as set
forth from time to time in any prospectus or any current Registration Statement of the Trust filed
with the Commission and designated as fundamental policies therein, as they may be amended from
time to time in accordance with the requirements of the 1940 Act.
“Interested Person” shall have the meaning given to it in the 1940 Act.
“Majority Shareholder Vote” shall mean a vote of “a majority of the outstanding voting
securities” (as such term is defined in the 0000 Xxx) of the Trust with each series and class of
Shares voting together as a single class, except to the extent otherwise required by the 1940 Act
or this Declaration with respect to any one or more series or classes of Shares, in which case the
applicable proportion of such series or classes of Shares voting as a separate series or class, as
the case may be, also will be required.
“Person” shall mean and include individuals, corporations, partnerships, trusts,
limited liability companies, associations, joint ventures and other entities, whether or not legal
entities, and governments and agencies and political subdivisions thereof.
“Principal Underwriter” shall have the meaning given to it in the 1940 Act.
“Prospectus” shall mean the current Prospectus as in effect from time to time under
the Securities Act of 1933, as amended, or offering memorandum of securities, of the Trust or of
any series or class, as applicable.
“Shareholders” shall mean as of any particular time the holders of record of
outstanding Shares of the Trust or any series or class of the Trust, as the case may be, at such
time.
“Shares” shall mean the transferable units of beneficial interest into which the
beneficial interest in the Trust shall be divided from time to time and includes fractions of
Shares as well as whole Shares. In addition, Shares also means any preferred shares or preferred
units of beneficial interest that may be issued from time to time, as described herein. All
references to Shares shall be deemed to be Shares of any or all series or classes as the context
may require.
“Trust” shall mean the trust established by this Declaration, as amended from time to
time, inclusive of each such amendment.
“Trust Property” shall mean as of any particular time any and all property, real or
personal, tangible or intangible, which at such time is owned or held by or for the account of the
Trust or the Trustees in such capacity.
“Trustees” shall mean the signatory to this Declaration, so long as such signatory
shall continue in office in accordance with the terms hereof, and all other persons who at the time
in question have been duly elected or appointed and have qualified as trustees in accordance with
the provisions hereof and are then in office.
ARTICLE II
TRUSTEES
2.1 Number and Qualifications. Prior to the offering of Shares to investors pursuant
to the Trust’s registration statement on Form N-2, there may be a sole Trustee. Thereafter, the
number of Trustees shall be determined by a written instrument signed by a majority of the Trustees
then in office or by a resolution of the Trustees then in office, duly adopted and recorded in the
records of the Trust, provided that the number of Trustees shall be no less
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than two. No reduction in the number of Trustees shall have the effect of removing any Trustee from
office prior to the expiration of his term. An individual nominated as a Trustee shall be at least
21 years of age and not older than 80 years of age at the time of nomination and not under legal
disability. Trustees need not own Shares.
2.2 Term and Election. Each Trustee shall hold office for the lifetime of the Trust or
until the next meeting of Shareholders called for the purpose of electing Trustees or consent of
Shareholders in lieu thereof for the election of Trustees, and until the election and qualification
of his or her successor. Only the term of office of a Trustee designated for election will
terminate at the next meeting of Shareholders called for the purpose of electing Trustees or
consent of Shareholders in lieu thereof for the election of Trustees, and the term of office of a
Trustee not designated for election will not terminate. The term of office of a Trustee shall
also terminate and a vacancy shall occur in the event of the death, resignation, removal,
bankruptcy, adjudicated incompetence or other incapacity to perform the duties of the office of a
Trustee.
2.3 Resignation and Removal. Any of the Trustees may resign his or her trust (without
need for prior or subsequent accounting) by an instrument in writing signed by such Trustee and
delivered or mailed to the Trustees or the Chairman, if any, the President or the Secretary and
such resignation shall be effective upon such delivery, or at a later date according to the terms
of the instrument. Any of the Trustees may be removed (provided the aggregate number of Trustees
after such removal shall not be less than the minimum number required by Section 2.1 hereof) for
cause only, and not without cause, and only by action taken by a majority of the remaining Trustees
followed by the holders of at least seventy-five percent (75%) of the Shares then entitled to vote
in an election of such Trustee. Upon the resignation or removal of a Trustee, each such resigning
or removed Trustee shall execute and deliver such documents as the remaining Trustees shall require
for the purpose of conveying to the Trust or the remaining Trustees any Trust Property held in the
name of such resigning or removed Trustee. Upon the incapacity or death of any Trustee, such
Trustee’s legal representative shall execute and deliver on such Trustee’s behalf such documents as
the remaining Trustees shall require as provided in the preceding sentence.
2.4 Vacancies. Whenever a vacancy in the Board of Trustees shall occur, the remaining
Trustees may fill such vacancy by appointing an individual having the qualifications described in
this ARTICLE II by a written instrument signed by a majority of the Trustees then in office or by a
resolution of the Trustees then in office, duly adopted and recorded in the records of the Trust,
specifying the effective date of the appointment or may leave such vacancy unfilled or may reduce
the number of Trustees; provided the aggregate number of Trustees after such reduction shall not be
less than the minimum number required by Section 2.1 hereof; provided, further, that if the
Shareholders of any series or class of Shares are entitled separately to elect one or more
Trustees, a majority of the remaining Trustees or the sole remaining Trustee elected by that series
or class may fill any vacancy among the number of Trustees elected by that series or class. Any
vacancy created by an increase in Trustees may be filled by the appointment of an individual having
the qualifications described in this ARTICLE II made by a written instrument signed by a majority
of the Trustees then in office or by a resolution of the Trustees then in office, duly adopted and
recorded in the records of the Trust, specifying the effective date of the appointment. No vacancy
shall operate to annul this Declaration or to revoke any existing agency created pursuant to the
terms of this Declaration. Whenever a vacancy in the number of Trustees shall occur, until such
vacancy is filled as provided herein, the Trustees in office, regardless of their number, shall
have all the powers granted to the Trustees and shall discharge all the duties imposed upon the
Trustees by this Declaration.
2.5 Meetings. Meetings of the Trustees shall be held from time to time upon the call
of the Chairman, if any, or the President or any two Trustees. Regular meetings of the Trustees may
be held without call or notice at a time and place fixed by the By-Laws or by resolution of the
Trustees. Notice of any other meeting shall be given by the Secretary and shall be delivered to the
Trustees orally not less than 24 hours, or in writing not less than 72 hours, before the meeting,
but may be waived in writing by any Trustee either before or after such meeting. The attendance of
a Trustee at a meeting shall constitute a waiver of notice of such meeting except where a Trustee
attends a meeting for the express purpose of objecting to the transaction of any business on the
ground that the meeting has not been properly called or convened. Any time there is more than one
Trustee, a quorum for all meetings of the Trustees shall be one-third, but not less than two, of
the Trustees. Unless provided otherwise in this Declaration and except as required under the 1940
Act, any action of the Trustees may be taken at a meeting by vote of a majority of the Trustees
present (a quorum being present) or without a meeting by written consent of a majority of the
Trustees.
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Any committee of the Trustees, including an executive committee, if any, may act with or
without a meeting. A quorum for all meetings of any such committee shall be one-third, but not less
than two, of the members thereof. Unless provided otherwise in this Declaration, any action of any
such committee may be taken at a meeting by vote of a majority of the members present (a quorum
being present) or without a meeting by written consent of the members.
With respect to actions of the Trustees and any committee of the Trustees, Trustees who are
Interested Persons in any action to be taken may be counted for quorum purposes under this Section
and shall be entitled to vote to the extent not prohibited by the 1940 Act.
All or any one or more Trustees may participate in a meeting of the Trustees or any committee
thereof by means of a conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other; participation in a meeting pursuant
to any such communications system shall constitute presence in person at such meeting.
2.6 Trustee Action by Written Consent. Any action that may be taken by Trustees by
vote may be taken without a meeting if that number of the Trustees, or members of a committee, as
the case may be, required for approval of such action at a meeting of the Trustees or of such
committee consent to the action in writing and the written consents are filed with the records of
the meetings of Trustees. Such consent shall be treated for all purposes as a vote taken at a
meeting of Trustees.
2.7 Officers. The Trustees shall elect a President, a Secretary and a Treasurer and
may elect a Chairman who shall serve at the pleasure of the Trustees or until their successors are
elected. The Trustees may elect or appoint or may authorize the Chairman, if any, or President to
appoint such other officers or agents with such powers as the Trustees may deem to be advisable. A
Chairman shall, and the President, Secretary and Treasurer may, but need not, be a Trustee.
ARTICLE III
POWERS AND DUTIES OF TRUSTEES
3.1 General. The Trustees shall owe to the Trust and its Shareholders the same
fiduciary duties as owed by directors of corporations to such corporations and their stockholders
under the Delaware General Corporation Law. The Trustees shall have exclusive and absolute control
over the Trust Property and over the business of the Trust to the same extent as if the Trustees
were the sole owners of the Trust Property and business in their own right, but with such powers of
delegation as may be permitted by this Declaration. The Trustees may perform such acts as in their
sole discretion are proper for conducting the business of the Trust. Any action by one or more of
the Trustees in their capacity as such hereunder shall be deemed an action on behalf of the Trust
and not an action in an individual capacity. The enumeration of any specific power herein shall not
be construed as limiting the aforesaid power. Such powers of the Trustees may be exercised without
order of or resort to any court.
3.2 Investments. The Trustees shall have power, subject to the Fundamental Policies in
effect from time to time with respect to the Trust, to:
(a) manage, conduct, operate and carry on the business of an investment company; and
(b) subscribe for, invest in, reinvest in, purchase or otherwise acquire, hold, pledge, sell,
assign, transfer, exchange, distribute or otherwise deal in or dispose of any and all sorts of
property, tangible or intangible, including but not limited to securities or investments of any
type whatsoever, whether equity or non-equity, of any issuer, evidences of indebtedness of any
person and any other rights, interests, instruments or property of any sort and to exercise any and
all rights, powers and privileges of ownership or interest in respect of any and all such
investments of every kind and description, including, without limitation, the right to consent and
otherwise act with respect thereto, with power to designate one or more Persons to exercise any of
said rights, powers and privileges in respect of any of said investments.
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The foregoing clauses shall be construed both as objects and powers, and shall not be held to
limit or restrict in any manner the general or plenary powers of the Trustees.
3.3 Legal Title. Legal title to all the Trust Property shall be vested in the Trustees
as joint tenants except that the Trustees shall have power to cause legal title to any Trust
Property to be held by or in the name of one or more of the Trustees, or in the name of the Trust,
or in the name of any other Person as nominee, custodian or pledgee, on such terms as the Trustees
may determine, provided that the interest of the Trust therein is appropriately protected.
The right, title and interest of the Trustees in the Trust Property shall vest automatically
in each person who may hereafter become a Trustee upon his due election and qualification. Upon the
ceasing of any person to be a Trustee for any reason, such person shall automatically cease to have
any right, title or interest in any of the Trust Property, and the right, title and interest of
such Trustee in the Trust Property shall vest automatically in the remaining Trustees. Such vesting
and cessation of title shall be effective whether or not conveyancing documents have been executed
and delivered.
3.4 Issuance, Repurchase and Redemption of Shares. The Trustees shall have the power
to issue, sell, repurchase, redeem, retire, cancel, acquire, hold, resell, reissue, dispose of,
transfer, and otherwise deal in, Shares, including Shares in fractional denominations, and, subject
to the more detailed provisions set forth in ARTICLE VIII and ARTICLE IX, to apply to any such
repurchase, redemption, retirement, cancellation or acquisition of Shares any funds or property
whether capital or surplus or otherwise, to the full extent now or hereafter permitted corporations
formed under the Delaware General Corporation Law.
3.5 Borrow Money or Utilize Leverage. Subject to the Fundamental Policies in effect
from time to time with respect to the Trust, the Trustees shall have the power to borrow money or
otherwise obtain credit or utilize leverage to the maximum extent permitted by law or regulation as
such may be needed from time to time and to secure the same by mortgaging, pledging or otherwise
subjecting as security the assets of the Trust, including the lending of portfolio securities, and
to endorse, guarantee, or undertake the performance of any obligation, contract or engagement of
any other person, firm, association or corporation.
3.6 Delegation; Committees. The Trustees shall have the power, consistent with their
continuing exclusive authority over the management of the Trust and the Trust Property, to delegate
from time to time to such of their number or to officers, employees or agents of the Trust the
doing of such things, including any matters set forth in this Declaration, and the execution of
such instruments either in the name of the Trust or the names of the Trustees or otherwise as the
Trustees may deem expedient. The Trustees may designate one or more committees which shall have all
or such lesser portion of the authority of the entire Board of Trustees as the Trustees shall
determine from time to time except to the extent action by the entire Board of Trustees or
particular Trustees is required by the 0000 Xxx.
3.7 Collection and Payment. The Trustees shall have power to collect all property due
to the Trust; to pay all claims, including taxes, against the Trust Property or the Trust, the
Trustees or any officer, employee or agent of the Trust; to prosecute, defend, compromise or
abandon any claims relating to the Trust Property or the Trust, or the Trustees or any officer,
employee or agent of the Trust; to foreclose any security interest securing any obligations, by
virtue of which any property is owed to the Trust; and to enter into releases, agreements and other
instruments. Except to the extent required for a corporation formed under the Delaware General
Corporation Law, the Shareholders shall have no power to vote as to whether or not a court action,
legal proceeding or claim should or should not be brought or maintained derivatively or as a class
action on behalf of the Trust or the Shareholders.
3.8 Expenses. The Trustees shall have power to incur and pay out of the assets and/or
income of the Trust any expenses which in the opinion of the Trustees are necessary, appropriate,
desirable or incidental to carry out any of the purposes of this Declaration, and the business of
the Trust, and to pay reasonable compensation from the funds of the Trust to themselves as
Trustees. The Trustees may pay themselves such compensation for special services, including legal,
underwriting, syndicating and brokerage services, as they in good faith may deem reasonable and
reimbursement for expenses reasonably incurred by themselves on behalf of the Trust. The Trustees
shall also fix the compensation payable by the Trust to its officers and its employees, if any.
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3.9 By-Laws. The Trustees shall have the exclusive authority to adopt and from time to
time amend or repeal By-Laws for the conduct of the business of the Trust.
3.10 Miscellaneous Powers. The Trustees shall have the power to: (a) employ or
contract with such Persons as the Trustees may deem desirable for the transaction of the business
of the Trust; (b) enter into joint ventures, partnerships and any other combinations or
associations; (c) purchase, and pay for out of Trust Property, insurance policies insuring the
Shareholders, Trustees, officers, employees, agents, investment advisors, distributors, selected
dealers or independent contractors of the Trust against all claims arising by reason of holding any
such position or by reason of any action taken or omitted by any such Person in such capacity,
whether or not constituting negligence, or whether or not the Trust would have the power to
indemnify such Person against such liability; (d) establish pension, profit-sharing, share
purchase, and other retirement, incentive and benefit plans for any Trustees, officers, employees
and agents of the Trust; (e) make donations, irrespective of benefit to the Trust, for charitable,
religious, educational, scientific, civic or similar purposes; (f) to the extent permitted by law,
indemnify any Person with whom the Trust has dealings, including without limitation any advisor,
administrator, manager, transfer agent, custodian, distributor or selected dealer, or any other
person as the Trustees may see fit to such extent as the Trustees shall determine; (g) guarantee
indebtedness or contractual obligations of others; (h) determine and change the fiscal year of the
Trust and the method in which its accounts shall be kept; (i) notwithstanding the Fundamental
Policies of the Trust, convert the Trust to a master-feeder structure; provided, however, the Trust
obtains the approval of shareholders holding at least a majority of the Trust’s Shares present at a
meeting of Shareholders at which a quorum is present; and (j) adopt a seal for the Trust, but the
absence of such seal shall not impair the validity of any instrument executed on behalf of the
Trust.
3.11 Further Powers. The Trustees shall have the power to conduct the business of the
Trust and carry on its operations in any and all of its branches and maintain offices both within
and without the State of Delaware, in any and all states of the United States of America, in the
District of Columbia, and in any and all commonwealths, territories, dependencies, colonies,
possessions, agencies or instrumentalities of the United States of America and of foreign
governments, and to do all such other things and execute all such instruments as they deem
necessary, proper or desirable in order to promote the interests of the Trust although such things
are not herein specifically mentioned. Any determination as to what is in the interests of the
Trust made by the Trustees in good faith shall be conclusive. In construing the provisions of this
Declaration, the presumption shall be in favor of a grant of power to the Trustees. The enumeration
of any specific power in this Declaration shall not be construed as limiting the Trustees’ powers.
The Trustees will not be required to obtain any court order to deal with the Trust Property.
ARTICLE IV
ADVISORY, MANAGEMENT AND DISTRIBUTION ARRANGEMENTS AND OTHER CONTRACTS
4.1 Advisory and Management Arrangements. Subject to the requirements of applicable
law as in effect from time to time, the Trustees may in their discretion from time to time enter
into advisory, administration or management contracts (including, in each case, one or more
sub-advisory, sub-administration or sub-management contracts) whereby the other party to any such
contract shall undertake to furnish such advisory, administrative and management services with
respect to the Trust as the Trustees shall from time to time consider desirable and all upon such
terms and conditions as the Trustees may in their discretion determine. Notwithstanding any
provisions of this Declaration, the Trustees may authorize any advisor, administrator or manager
(subject to such general or specific instructions as the Trustees may from time to time adopt) to
exercise any of the powers of the Trustees, including to effect investment transactions with
respect to the assets on behalf of the Trust to the full extent of the power of the Trustees to
effect such transactions or may authorize any officer, employee or Trustee to effect such
transactions pursuant to recommendations of any such advisor, administrator or manager (and all
without further action by the Trustees). Any such investment transaction shall be deemed to have
been authorized by all of the Trustees.
4.2 Distribution Arrangements. Subject to compliance with the 1940 Act, the Trustees
may retain underwriters and/or placement agents to sell Shares and other securities of the Trust.
The Trustees may in their discretion from time to time enter into one or more contracts, providing
for the sale of securities of the Trust, whereby the Trust may either agree to sell such securities
to the other party to the contract or appoint such other party its sales agent for such securities.
In either case, the contract shall be on such terms and conditions as the Trustees may in their
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discretion determine not inconsistent with the provisions of this Article IV or any other provision
of this Declaration or the By-Laws; and such contract may also provide for the repurchase or sale
of securities of the Trust by such other party as principal or as agent of the Trust and may
provide that such other party may enter into selected dealer agreements with registered securities
dealers and brokers and servicing and similar agreements with persons who are not registered
securities dealers to further the purposes of the distribution or repurchase of the securities of
the Trust.
4.3 Other Service Providers. The Trustees may in their discretion from time to time
authorize the Trust to enter into one or more agreements whereby the other Person or Persons to any
such agreements will undertake to provide to the Trust, any series or class, or Shareholders such
services as the Trustees consider desirable and all upon such terms and conditions as the Trustees
in their discretion may determine.
4.4 Parties to Contract. Any contract of the character described in Sections 4.1, 4.2
and 4.3 of this Article IV or in Article VI hereof or elsewhere in this Declaration may be entered
into with any Person, although one or more of the Trustees, officers or employees of the Trust may
be an officer, partner, director, trustee, shareholder, or member of such other party to the
contract, and no such contract shall be invalidated or rendered voidable by reason of the existence
of any such relationship, nor shall any Person holding such relationship be liable merely by reason
of such relationship for any loss or expense to the Trust under or by reason of said contract or
accountable for any profit realized directly or indirectly therefrom, provided that the contract
when entered into was reasonable and fair and not inconsistent with the provisions of this
Declaration or the By-Laws. The same Person may be the other party to contracts entered into
pursuant to this Declaration, and any individual may be financially interested or otherwise
affiliated with Persons who are parties to any or all of the contracts mentioned in those sections
or articles.
ARTICLE V
LIMITATIONS OF LIABILITY AND INDEMNIFICATION
5.1 No Personal Liability of Shareholders, Trustees, etc. No Shareholder of the Trust
shall be subject in such capacity to any personal liability whatsoever to any Person in connection
with Trust Property or the acts, obligations or affairs of the Trust. Shareholders shall have the
same limitation of personal liability as is extended to stockholders of a private corporation for
profit incorporated under the Delaware General Corporation Law. No Trustee or officer of the Trust
shall be subject in such capacity to any personal liability whatsoever to any Person, save only
liability to the Trust or its Shareholders arising from bad faith, willful misfeasance, gross
negligence or reckless disregard for his duty to such Person; and, subject to the foregoing
exception, all such Persons shall look solely to the Trust Property for satisfaction of claims of
any nature arising in connection with the affairs of the Trust. If any Shareholder, Trustee or
officer, as such, of the Trust, is made a party to any suit or proceeding to enforce any such
liability, subject to the foregoing exception, he shall not, on account thereof, be held to any
personal liability. Any repeal or modification of this Section 5.1 shall not adversely affect any
right or protection of a Trustee or officer of the Trust existing at the time of such repeal or
modification with respect to acts or omissions occurring prior to such repeal or modification.
5.2 Mandatory Indemnification. (a) The Trust hereby agrees to indemnify each person
who at any time serves as a Trustee or officer of the Trust (each such person being an
“indemnitee”) against any liabilities and expenses, including amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and reasonable counsel fees reasonably incurred
by such indemnitee in connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or investigative body in
which he may be or may have been involved as a party or otherwise or with which he may be or may
have been threatened, while acting in any capacity set forth in this Article V or by reason of his
having acted in any such capacity, except with respect to any matter as to which he shall not have
acted in good faith in the reasonable belief that his action was in the best interest of the Trust
or, in the case of any criminal proceeding, as to which he shall have had reasonable cause to
believe that the conduct was unlawful, provided, however, that no indemnitee shall be indemnified
hereunder against any liability to any person or any expense of such indemnitee arising by reason
of (i) willful misfeasance, (ii) bad faith, (iii) gross negligence, or (iv) reckless disregard of
the duties involved in the conduct of his position (the conduct referred to in such clauses (i)
through (iv) being sometimes referred to herein as “disabling conduct”). Notwithstanding the
foregoing, with respect to any action, suit or other proceeding voluntarily prosecuted by any
indemnitee as plaintiff, indemnification shall be mandatory only if the prosecution of such action,
suit or other proceeding by such indemnitee (1) was authorized by a majority of the Trustees or (2)
was instituted by
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the indemnitee to enforce his or her rights to indemnification hereunder in a case in which the
indemnitee is found to be entitled to such indemnification. The rights to indemnification set forth
in this Declaration shall continue as to a person who has ceased to be a Trustee or officer of the
Trust and shall inure to the benefit of his or her heirs, executors and personal and legal
representatives. No amendment or restatement of this Declaration or repeal of any of its provisions
shall limit or eliminate any of the benefits provided to any person who at any time is or was a
Trustee or officer of the Trust or otherwise entitled to indemnification hereunder in respect of
any act or omission that occurred prior to such amendment, restatement or repeal.
(b) Notwithstanding the foregoing, no indemnification shall be made hereunder unless there has
been a determination (i) by a final decision on the merits by a court or other body of competent
jurisdiction before whom the issue of entitlement to indemnification hereunder was brought that
such indemnitee is entitled to indemnification hereunder or, (ii) in the absence of such a
decision, by (1) a majority vote of a quorum of those Trustees who are neither “interested persons”
of the Trust (as defined in Section 2(a)(19) of the 0000 Xxx) nor parties to the proceeding
(“Disinterested Non-Party Trustees”), that the indemnitee is entitled to indemnification hereunder,
or (2) if such quorum is not obtainable or even if obtainable, if such majority so directs,
independent legal counsel in a written opinion concludes that the indemnitee should be entitled to
indemnification hereunder. All determinations to make advance payments in connection with the
expense of defending any proceeding shall be authorized and made in accordance with the immediately
succeeding paragraph (c) below.
(c) The Trust shall make advance payments in connection with the expenses of defending any
action with respect to which indemnification might be sought hereunder if the Trust receives a
written affirmation by the indemnitee of the indemnitee’s good faith belief that the standards of
conduct necessary for indemnification have been met and a written undertaking to reimburse the
Trust unless it is subsequently determined that the indemnitee is entitled to such indemnification
and if a majority of the Trustees determine that the applicable standards of conduct necessary for
indemnification appear to have been met. In addition, at least one of the following conditions must
be met: (i) the indemnitee shall provide adequate security for his undertaking, (ii) the Trust
shall be insured against losses arising by reason of any lawful advances, or (iii) a majority of a
quorum of the Disinterested Non-Party Trustees, or if a majority vote of such quorum so direct,
independent legal counsel in a written opinion, shall conclude, based on a review of readily
available facts (as opposed to a full trial-type inquiry), that there is substantial reason to
believe that the indemnitee ultimately will be found entitled to indemnification.
(d) The rights accruing to any indemnitee under these provisions shall not exclude any other
right that any person may have or hereafter acquire under this Declaration, the By-Laws of the
Trust, any statute, agreement, vote of stockholders or Trustees who are “disinterested persons” (as
defined in Section 2(a)(19) of the 0000 Xxx) or any other right to which he or she may be lawfully
entitled.
(e) Subject to any limitations provided by the 1940 Act and this Declaration, the Trust shall
have the power and authority to indemnify and provide for the advance payment of expenses to
employees, agents and other Persons providing services to the Trust or serving in any capacity at
the request of the Trust to the full extent corporations organized under the Delaware General
Corporation Law may indemnify or provide for the advance payment of expenses for such Persons,
provided that such indemnification has been approved by a majority of the Trustees.
5.3 No Bond Required of Trustees. No Trustee shall, as such, be obligated to give any
bond or other security for the performance of any of his duties hereunder.
5.4 No Duty of Investigation; No Notice in Trust Instruments, etc. No purchaser,
lender, transfer agent or other person dealing with the Trustees or with any officer, employee or
agent of the Trust shall be bound to make any inquiry concerning the validity of any transaction
purporting to be made by the Trustees or by said officer, employee or agent or be liable for the
application of money or property paid, loaned, or delivered to or on the order of the Trustees or
of said officer, employee or agent. Every obligation, contract, undertaking, instrument,
certificate, Share, other security of the Trust, and every other act or thing whatsoever executed
in connection with the Trust shall be conclusively taken to have been executed or done by the
executors thereof only in their capacity as Trustees under this Declaration or in their capacity as
officers, employees or agents of the Trust. The Trustees may maintain insurance for the protection
of the Trust Property, the Shareholders, Trustees, officers, employees and agents in such amount as
the Trustees shall deem adequate to cover possible tort liability, and such other insurance as the
Trustees in their sole judgment shall deem advisable or is required by the 1940 Act.
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5.5 Reliance on Experts, etc. Each Trustee and officer or employee of the Trust shall,
in the performance of its duties, be fully and completely justified and protected with regard to
any act or any failure to act resulting from reliance in good faith upon the books of account or
other records of the Trust, upon an opinion of counsel, or upon reports made to the Trust by any of
the Trust’s officers or employees or by any advisor, administrator, manager, distributor, selected
dealer, accountant, appraiser or other expert or consultant selected with reasonable care by the
Trustees, officers or employees of the Trust, regardless of whether such counsel or expert may also
be a Trustee.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
6.1 Beneficial Interest. The interest of the Shareholders hereunder shall be divided
into an unlimited number of transferable shares of beneficial interest, par value $.001 per share.
All Shares issued in accordance with the terms hereof, including, without limitation, Shares issued
in connection with a dividend payable in Shares or a split of Shares, shall be fully paid and
nonassessable when the consideration determined by the Trustees (if any) therefor shall have been
received by the Trust.
6.2 Establishment of Series and Classes. To the extent permitted by the 1940 Act, the
Delaware Statutory Trust Act and any other applicable law, the Trustees may divide, all without the
approval of Shareholders, the Shares into any number of series or classes representing interests in
the assets belonging to the Trust, each Share of each such series and class having an equal
beneficial interest as each other Share of such series or class in such assets and identical
voting, dividend, liquidation and other rights and subject to the same terms and conditions, except
that (a) expenses allocated to a series or class may be borne solely by that series or class as
determined by the Trustees and (b) each series and class may have exclusive voting rights with
respect to matters affecting only that series or class. The establishment and designation of each
additional series or class of Shares of the Trust shall be effective upon the adoption by a
majority of the then Trustees of a resolution that sets forth such establishment and designation
and the relative rights and preferences of such series or class of the Trust, whether directly in
such resolution or by reference to another document including, without limitation, any Prospectus
or registration statement of the Trust, or as otherwise provided in such resolution. The Trustees
may change the name of any series or class in their sole discretion. The Trustees may, subject to
the Fundamental Policies and the requirements of the 1940 Act and the Delaware Statutory Trust Act,
authorize and issue such other securities, including preferred shares, debt securities or other
senior securities. To the extent that the Trustees authorize and issue shares of any series or
class pursuant to this Section 6.2, they are hereby authorized and empowered to amend or supplement
this Declaration or the Trust’s Certificate of Trust as they deem necessary or appropriate,
including to comply with the requirements of the 1940 Act, the Delaware Statutory Trust Act or
requirements imposed by the rating agencies or other Persons, all without the approval of
Shareholders. Any such supplement or amendment shall be filed with the Commission as is necessary.
The Trustees are also authorized to take such actions and retain such persons as they see fit to
offer and sell such securities.
6.3 Rights of Shareholders. The Shares shall be personal property giving only the
rights in this Declaration specifically set forth. The ownership of the Trust Property of every
description and the right to conduct any business herein before described are vested exclusively in
the Trustees, and the Shareholders shall have no interest therein other than the beneficial
interest conferred by their Shares, and they shall have no right to call for any partition or
division of any property, profits, rights or interests of the Trust or of any series or class nor
can they be called upon to share or assume any losses of the Trust or of any series or class or
suffer an assessment of any kind by virtue of their ownership of Shares. The Shares shall not
entitle the holder to preference, preemptive, appraisal, conversion or exchange rights, except as
the Trustees may specifically determine with respect to any series or class.
6.4 Trust Only. It is the intention of the Trustees to create only the relationship of
Trustee and beneficiary between the Trustees and each Shareholder from time to time. It is not the
intention of the Trustees to create a general partnership, limited partnership, joint stock
association, corporation, bailment or any form of legal relationship other than a Delaware
statutory trust. Nothing in this Declaration shall be construed to make the Shareholders, either by
themselves or with the Trustees, partners or members of a joint stock association.
6.5 Issuance of Shares. The Trustees, in their discretion, may from time to time
without vote of the Shareholders issue Shares, including preferred shares, that may have been
established pursuant to Section 6.2, in addition to the
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then issued and outstanding Shares and Shares held in the treasury, to such party or parties and
for such amount and type of consideration, including cash or property, at such time or times, and
on such terms as the Trustees may determine, and may in such manner acquire other assets (including
the acquisition of assets subject to, and in connection with the assumption of, liabilities) and
businesses. The Trustees may from time to time divide or combine the Shares into a greater or
lesser number without thereby changing the proportionate beneficial interest in such Shares.
Issuances, repurchases and redemptions of Shares may be made in whole Shares and/or l/l,000ths of a
Share or multiples thereof and/or in any other fraction as the Trustees may determine.
6.6 Register of Shares. A register shall be kept at the offices of the Trust or any
transfer agent duly appointed by the Trustees under the direction of the Trustees which shall
contain the names and addresses of the Shareholders and the number of Shares held by them
respectively and a record of all transfers thereof. Separate registers shall be established and
maintained for each series or class of Shares. Each such register shall be conclusive as to who are
the holders of the Shares of the applicable series or class of Shares and who shall be entitled to
receive dividends or distributions or otherwise to exercise or enjoy the rights of Shareholders. No
Shareholder shall be entitled to receive payment of any dividend or distribution, nor to have
notice given to him as herein provided, until he has given his address to a transfer agent or such
other officer or agent of the Trustees as shall keep the register for entry thereon. It is not
contemplated that certificates will be issued for the Shares; however, the Trustees, in their
discretion, may authorize the issuance of share certificates and promulgate appropriate fees
therefor and rules and regulations as to their use.
6.7 Transfer Agent and Registrar. The Trustees shall have power to employ a transfer
agent or transfer agents, and a registrar or registrars, with respect to the Shares. The transfer
agent or transfer agents may keep the applicable register and record therein, the original issues
and transfers, if any, of the said Shares. Any such transfer agents and/or registrars shall perform
the duties usually performed by transfer agents and registrars of certificates of stock in a
corporation, as modified by the Trustees.
6.8 Transfer of Shares. Shares shall be transferable on the records of the Trust only
by the record holder thereof or by its agent thereto duly authorized in writing, upon delivery to
the Trustees or a transfer agent of the Trust of a duly executed instrument of transfer, together
with such evidence of the genuineness of each such execution and authorization and of other matters
(including compliance with any securities laws and contractual restrictions) as may reasonably be
required. Upon such delivery the transfer shall be recorded on the applicable register of the
Trust. Until such record is made, the Shareholder of record shall be deemed to be the holder of
such Shares for all purposes hereof and neither the Trustees nor any transfer agent or registrar
nor any officer, employee or agent of the Trust shall be affected by any notice of the proposed
transfer.
Any person becoming entitled to any Shares in consequence of the death, bankruptcy, or
incompetence of any Shareholder, or otherwise by operation of law, shall be recorded on the
applicable register of Shares as the holder of such Shares upon production of the proper evidence
thereof to the Trustees or a transfer agent of the Trust, but until such record is made, the
Shareholder of record shall be deemed to be the holder of such for all purposes hereof, and neither
the Trustees nor any transfer agent or registrar nor any officer or agent of the Trust shall be
affected by any notice of such death, bankruptcy or incompetence, or other operation of law.
6.9 Notices. Any and all notices to which any Shareholder hereunder may be entitled
and any and all communications shall be deemed duly served or given if mailed, postage prepaid,
addressed to any Shareholder of record at his last known address as recorded on the applicable
register of the Trust.
ARTICLE VII
CUSTODIANS
7.1 Appointment and Duties. The Trustees shall at all times employ a custodian or
custodians, meeting the qualifications for custodians for portfolio securities of registered
management companies contained in the 1940 Act, as custodian with respect to the assets of the
Trust. Any custodian shall have authority as agent of the Trust as determined by the custodian
agreement or agreements, but subject to such restrictions, limitations and other requirements, if
any, as may be contained in the By-Laws of the Trust and the 1940 Act, including without limitation
authority:
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(1) to hold the securities owned by the Trust and deliver the same upon written order;
(2) to receive any receipt for any moneys due to the Trust and deposit the same in its own
banking department (if a bank) or elsewhere as the Trustees may direct;
(3) to disburse such funds upon orders or vouchers;
(4) if authorized by the Trustees, to keep the books and accounts of the Trust and furnish
clerical and accounting services; and
(5) if authorized to do so by the Trustees, to compute the net income or net asset value of
the Trust;
all upon such basis of compensation as may be agreed upon between the Trustees and the custodian.
The Trustees may also authorize each custodian to employ one or more sub-custodians from time
to time to perform such of the acts and services of the custodian and upon such terms and
conditions, as may be agreed upon between the custodian and such sub-custodian and approved by the
Trustees, provided that in every case such sub-custodian shall meet the qualifications for
custodians contained in the 1940 Act.
7.2 Central Certificate System. Subject to such rules, regulations and orders as the
Commission may adopt, the Trustees may direct the custodian to deposit all or any part of the
securities owned by the Trust in a system for the central handling of securities established by a
national securities exchange or a national securities association registered with the Commission
under the Securities Exchange Act of 1934, or such other Person as may be permitted by the
Commission, or otherwise in accordance with the 1940 Act, pursuant to which system all securities
of any particular class of any issuer deposited within the system are treated as fungible and may
be transferred or pledged by bookkeeping entry without physical delivery of such securities,
provided that all such deposits shall be subject to withdrawal only upon the order of the Trust.
ARTICLE VIII
REDEMPTIONS AND REPURCHASES
8.1 Redemptions and Repurchases of Shares. Unless otherwise required by the 1940 Act,
from time to time the Trust may redeem or repurchase its Shares, all upon such terms and conditions
as may be determined by the Trustees and subject to any applicable provisions of the 1940 Act. The
Trust may require Shareholders to pay a withdrawal charge, a sales charge, or any other form of
charge to the Trust, to the underwriter or to any other person designated by the Trustees upon
redemption or repurchase of Shares in such amount as shall be determined from time to time by the
Trustees. The Trust may also charge a redemption or repurchase fee in such amount as may be
determined from time to time by the Trustees.
8.2 Manner of Payment. Payment of Shares redeemed or repurchased may at the option of
the Trustees or such officer or officers as they may duly authorize for the purpose, in their
complete discretion, be made in cash, or in kind, or partially in cash and partially in kind. In
case of payment in kind the Trustees, or their delegate, shall have absolute discretion as to what
security or securities shall be distributed in kind and the amount of same, and the securities
shall be valued for purposes of distribution at the figure at which they were appraised in
computing the net asset value of the Shares, provided that any Shareholder who cannot legally
acquire securities so distributed in kind by reason of the prohibitions of the 1940 Act shall
receive cash.
8.3 Disclosure of Holding. Shareholders shall upon demand disclose to the Trustees in
writing such information with respect to direct and indirect ownership of Shares of the Trust as
the Trustees deem necessary to comply with the provisions of the Code, the 1940 Act or other
applicable laws or regulations, or to comply with the requirements of any other taxing or
regulatory authority.
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ARTICLE IX
DETERMINATION OF NET ASSET VALUE, NET INCOME AND DISTRIBUTIONS
9.1 Net Asset Value. The net asset value of each outstanding Share of the Trust shall
be determined at such time or times on such days as the Trustees may determine, in accordance with
the 1940 Act. The method of determination of net asset value shall be determined by the Trustees
and shall be as set forth in the Prospectus or as may otherwise be determined by the Trustees. The
power and duty to make the net asset value calculations may be delegated by the Trustees and shall
be as generally set forth in the Prospectus or as may otherwise be determined by the Trustees.
9.2 Distributions to Shareholders. (a) The Trustees shall from time to time distribute
ratably among the Shareholders of any series or class of Shares in accordance with the number of
outstanding full and fractional Shares of such series or class such proportion of the net profits,
surplus (including paid-in surplus), capital, or assets held by the Trustees as they may deem
proper or as may otherwise be determined in accordance with this Declaration. Any such distribution
may be made in cash or property (including without limitation any type of obligations of the Trust
or any assets thereof) or Shares of any series or class and the Trustees may distribute ratably
among the Shareholders of any series or class of shares in accordance with the number of
outstanding full and fractional Shares of such series or class additional Shares of any series or
class in such manner, at such times, and on such terms as the Trustees may deem proper or as may
otherwise be determined in accordance with this Declaration.
(b) Distributions pursuant to this Section 9.2 may be among the Shareholders of record of the
applicable series or class of Shares at the time of declaring a distribution or among the
Shareholders of record at such later date as the Trustees shall determine and specify.
(c) The Trustees may always retain from the net profits such amount as they may deem necessary
to pay the debts or expenses of the Trust or to meet obligations of the Trust, or as they otherwise
may deem desirable to use in the conduct of its affairs or to retain for future requirements or
extensions of the business.
(d) Inasmuch as the computation of net income and gains for federal income tax purposes may
vary from the computation thereof on the Trust’s books, the above provisions shall be interpreted
to give the Trustees the power in their discretion to distribute for any fiscal year as ordinary
dividends and as capital gain distributions, respectively, additional amounts sufficient to enable
the Trust to avoid or reduce liability for taxes.
9.3 Power to Modify Foregoing Procedures. Notwithstanding any of the foregoing
provisions of this Article IX, the Trustees may prescribe, in their absolute discretion except as
may be required by the 1940 Act, such other bases and times for determining the per share net asset
value of the Trust’s Shares and/or net income, and/or the declaration and payment of dividends and
other distributions as they may deem necessary or desirable for any reason, including to enable the
Trust to comply with any provision of the 1940 Act, or any securities exchange or association
registered under the Securities Exchange Act of 1934, or any order of exemption issued by the
Commission, all as in effect now or hereafter amended or modified.
ARTICLE X
SHAREHOLDERS
10.1 Meetings of Shareholders. The Trust shall not be required to hold meetings
annually, unless required by law. Meetings of Shareholders may be called at any time by the
Trustees, by the Secretary whenever ordered by a majority of the Trustees or by the President and
shall be called by any Trustee or by the Secretary for any proper purpose upon written request of
Shareholders of the Trust holding in the aggregate not less than 51% of the outstanding Shares of
the Trust or series or class of Shares having voting rights on the matter, such request specifying
the purpose or purposes for which such meeting is to be called. Any Shareholder meeting shall be
held within or without the State of Delaware on such day and at such time as the Trustees shall
designate. Any Shareholder meeting shall be called and notice thereof and record dates therefor
shall be given and set as provided in the By-Laws.
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10.2 Voting. Shareholders shall have no power to vote on any matter except matters on
which a vote of Shareholders is required by applicable law, this Declaration or resolution of the
Trustees. This Declaration expressly provides that no matter for which voting is required by the
Delaware Statutory Trust Act in the absence of the contrary provision in the Declaration shall
require any vote. Except as otherwise provided herein, any matter required to be submitted to
Shareholders and affecting one or more series or classes of Shares shall require approval by the
required vote of all the affected series or classes of Shares voting together as a single class;
provided, however, that as to any matter with respect to which a separate vote of any series or
class of Shares is required by the 1940 Act, such requirement as to a separate vote by that series
or class of Shares shall apply in addition to a vote of all the affected series or classes voting
together as a single class. Shareholders of a particular series or class of Shares shall not be
entitled to vote on any matter that affects only one or more other series or classes of Shares.
There shall be no cumulative voting in the election or removal of Trustees.
10.3 Quorum and Required Vote. (a) The holders of thirty percent (30%) of the Shares
entitled to vote on any matter at a meeting present in person or by proxy shall constitute a quorum
at such meeting of the Shareholders for purposes of conducting business on such matter. The absence
from any meeting, in person or by proxy, of a quorum of Shareholders for action upon any given
matter shall not prevent action at such meeting upon any other matter or matters which may properly
come before the meeting, if there shall be present thereat, in person or by proxy, a quorum of
Shareholders in respect of such other matters.
(b) Subject to any provision of applicable law, this Declaration or a resolution of the
Trustees specifying a greater or a lesser vote requirement for the transaction of any item of
business at any meeting of Shareholders, (i) the affirmative vote of a majority of the Shares
present in person or represented by proxy and entitled to vote on the subject matter shall be the
act of the Shareholders with respect to such matter, and (ii) where a separate vote of one or more
series or classes of Shares is required on any matter, the affirmative vote of a majority of the
Shares of such series or class of Shares present in person or represented by proxy at the meeting
shall be the act of the Shareholders of such series or class with respect to such matter. For the
election of Trustees, a plurality of the Shares present in person or represented by proxy and
entitled to vote on the election of Trustees at the meeting will elect Trustees.
10.4 Proxies, etc. At any meeting of Shareholders, any Shareholder entitled to vote
thereat may vote by properly executed proxy, provided that no proxy shall be voted at any meeting
unless it shall have been placed on file with the Secretary, or with such other officer or agent of
the Trust as the Secretary may direct, for verification prior to the time at which such vote shall
be taken. Pursuant to a resolution of a majority of the Trustees, proxies may be solicited in the
name of one or more Trustees or one or more of the officers or employees of the Trust. No proxy
shall be valid after the expiration of 11 months from the date thereof, unless otherwise provided
in the proxy. Only Shareholders of record shall be entitled to vote. Each whole Share shall be
entitled to one vote as to any matter on which it is entitled to vote, and each fractional Share
shall be entitled to a proportionate fractional vote on any such matter on which it is entitled to
vote. When any Share is held jointly by several persons, any one of them may vote at any meeting in
person or by proxy in respect of such Share, but if more than one of them shall be present at such
meeting in person or by proxy, and such joint owners or their proxies so present disagree as to any
vote to be cast, such vote shall not be received in respect of such Share. A proxy purporting to be
executed by or on behalf of a Shareholder shall be deemed valid unless challenged at or prior to
its exercise, and the burden of proving invalidity shall rest on the challenger. If the holder of
any such Share is a minor or a person of unsound mind, and subject to guardianship or to the legal
control of any other person regarding the charge or management of such Share, he may vote by his
guardian or such other person appointed or having such control, and such vote may be given in
person or by proxy.
10.5 Inspection of Records. The records of the Trust shall be open to inspection by
Shareholders to the same extent as is permitted shareholders of a corporation formed under the
Delaware General Corporation Law.
10.6 Shareholder Action by Written Consent. Any action that may be taken by
Shareholders by vote may be taken without a meeting if the holders entitled to vote thereon of the
proportion of Shares required for approval of such action at a meeting of Shareholders pursuant to
Section 10.3 consent to the action in writing and the written consents are filed with the records
of the meetings of Shareholders. Such consent shall be treated for all purposes as a vote taken at
a meeting of Shareholders.
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ARTICLE XI
DURATION; TERMINATION OF TRUST; AMENDMENT; REORGANIZATIONS, ETC.
11.1 Duration. Subject to possible termination in accordance with the provisions of
Section 11.2 hereof, the Trust created hereby shall have perpetual existence.
11.2 Termination. (a) The Trust may be terminated, only upon approval of not less than
80% of the Trustees and 80% of the Continuing Trustees. Upon the termination of the Trust:
(i) The Trust shall carry on no business except for the purpose of winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of the Trust and all of the powers of
the Trustees under this Declaration shall continue until the affairs of the Trust shall have been
wound up, including the power to fulfill or discharge the contracts of the Trust, collect its
assets, sell, convey, assign, exchange, merge where the Trust is not the survivor, transfer or
otherwise dispose of all or any part of the remaining Trust Property to one or more Persons at
public or private sale for consideration which may consist in whole or in part in cash, securities
or other property of any kind, discharge or pay its liabilities, and do all other acts appropriate
to liquidate its business; provided that any sale, conveyance, assignment, exchange, merger in
which the Trust is not the survivor, transfer or other disposition of all or substantially all the
Trust Property of the Trust shall require approval of the principal terms of the transaction and
the nature and amount of the consideration by Shareholders with the same vote as required to
open-end the Trust.
(iii) After paying or adequately providing for the payment of all liabilities, and upon
receipt of such releases, indemnities and refunding agreements, as they deem necessary for their
protection, the Trustees may distribute the remaining Trust Property, in cash or in kind or partly
each, among the Shareholders according to their respective rights.
(b) After the winding up and termination of the Trust and distribution to the Shareholders as
herein provided, a majority of the Trustees shall execute and lodge among the records of the Trust
an instrument in writing setting forth the fact of such termination and shall execute and file a
certificate of cancellation with the Secretary of State of the State of Delaware. Upon termination
of the Trust, the Trustees shall thereupon be discharged from all further liabilities and duties
hereunder, and the rights and interests of all Shareholders shall thereupon cease.
11.3 Amendment Procedure. (a) The Trustees may, without any Shareholder vote, amend or
otherwise supplement this Declaration by making an amendment, a Declaration supplemental hereto or
an amended and restated declaration; provided, that Shareholders shall have the right to vote on
any amendment (i) that would affect the voting rights of Shareholders granted in Section 10.2, (ii)
to this Section 11.3, (iii) as set forth in Section 11.6 or Section 11.7, (iv) required to be
approved by Shareholders by law or by the Trust’s registration statement(s) filed with the
Commission and (v) that is submitted to them by the Trustees in their sole discretion. Any
amendment submitted to Shareholders that the Trustees determine would affect the Shareholders of
any series or class shall be authorized by vote of the Shareholders of such series or class, and no
vote shall be required of Shareholders of a series or class not affected. Notwithstanding anything
else herein, any amendment to Article V that would have the effect of reducing the indemnification
and other rights provided thereby to any indemnitee of the Trust or to Shareholders or former
Shareholders, and any repeal or amendment of` this sentence, shall each require the affirmative
vote of the holders of two-thirds of the outstanding Shares of the Trust entitled to vote thereon.
(b) An amendment duly adopted by the requisite vote of the Board of Trustees and, if required,
the Shareholders as aforesaid, shall become effective at the time of such adoption or at such other
time as may be designated by the Board of Trustees or Shareholders, as the case may be. A
certification in recordable form signed by a majority of the Trustees setting forth an amendment
and reciting that it was duly adopted by the Trustees and, if required, the Shareholders as
aforesaid, or a copy of the Declaration, as amended, in recordable form, and executed by a majority
of the Trustees, shall be conclusive evidence of such amendment when lodged among the records of
the Trust or at such other time designated by the Board.
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Notwithstanding any other provision hereof, until such time as a Registration Statement under
the Securities Act of 1933, as amended, covering the first offering of Shares of the Trust shall
have become effective, this Declaration may be terminated or amended in any respect by the
affirmative vote of a majority of the Trustees or by an instrument signed by a majority of the
Trustees.
11.4 Reorganizations. (a) Notwithstanding anything else contained herein but subject
to applicable federal and state law and except as provided in Section 11.7, the Trustees may,
without any Shareholder vote or approval, only upon approval of not less than 80% of the Trustees
and 80% of the Continuing Trustees:
(i) sell and convey all or substantially all of the assets of the Trust (or a segregated
portfolio of assets thereof) to another entity that is a closed-end management company as defined
in the 1940 Act for adequate consideration, which may include the assumption of all outstanding
taxes and other liabilities, accrued or contingent, of the Trust and which may include shares of or
interests in such entity;
(ii) at any time sell and convert into money all or substantially all of the assets of the
Trust;
(iii) cause the Trust to merge or consolidate with or into, or be reorganized as, another
trust, or a corporation, partnership, limited liability company, association or other organization,
organized under the laws of Delaware or any other jurisdiction or a segregated portfolio of assets
of any of the foregoing (each an “Entity”), if the surviving or resulting Entity is the Trust or
another registered closed-end management company as defined in the 1940 Act (or a segregated
portfolio of assets of such other management company);
(iv) cause the Trust to merge or consolidate with or into, or be reorganized as, a newly
organized Entity in a transaction or series of transactions intended to qualify as a reorganization
under Section 368(a)(1)(F) of the Code, or a successor provision;
(v) cause the Trust to incorporate under the laws of Delaware or any other jurisdiction;
and/or
(vi) cause to be organized, or assist in organizing, an Entity to acquire all or part of the
Trust Property or to carry on any business in which the Trust directly or indirectly has any
interest and to sell, convey and transfer all or part of the Trust Property to any such Entity in
exchange for shares or other equity securities thereof or otherwise and to lend money to, subscribe
for the shares or other equity securities of and enter into any contracts with any such Entity.
The Trustees shall provide written notice to affected Shareholders of any transaction
described in this Section 11.4. The transactions described in this Section 11.4 may be effected
through share-for-share exchanges, transfers or sales of assets, shareholder in-kind redemptions
and purchases, exchange offers or any other method the Trustees approve.
(b) Upon making reasonable provision for the payment of all known liabilities of the Trust as
described in either subparagraph (i) or (ii) of Section 11.4(a), by such assumption or otherwise,
the Trustees shall distribute the remaining proceeds or assets (as the case may be) ratably among
the Shareholders of the Trust; however, the payment to any particular series or class may be
reduced by any fees, expenses or charges allocated to that class. Upon completion of the
distribution of the remaining proceeds or assets pursuant to subparagraph (i) or (ii) above, the
Trust shall terminate as set forth in Section 11.2 and the Trustees and the Trust shall be
discharged of any and all further liabilities and duties hereunder with respect thereto and the
right, title and interest of all parties therein shall be canceled and discharged. Upon
termination of the Trust as set forth in Section 11.2, following completion of winding up of its
business, the Trustees shall cause a certificate of cancellation of the Trust’s certificate of
trust to be filed in accordance with the Delaware Statutory Trust Act, which certificate of
cancellation may be signed by any one Trustee.
(c) Any agreement of merger or consolidation or certificate of merger may be signed by a
majority of Trustees, and facsimile signatures conveyed by electronic or telecommunication means
shall be valid. Pursuant to and in accordance with the provisions of Section 3815(f) of the
Delaware Statutory Trust Act, an agreement of merger, consolidation or sale of assets approved by
the Trustees in accordance with this Section 11.4 may effect any
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amendment to the Declaration or effect the adoption of a new declaration of the Trust if it is the
surviving or resulting trust in the merger or consolidation.
11.5 Subsidiaries. Without approval by Shareholders, the Trustees may cause to be
organized or assist in organizing one or more corporations, trusts, limited liability companies,
partnerships, associations or other organizations to take over all of the Trust Property or to
carry on any business in which the Trust shall directly or indirectly have any interest, and to
sell, convey and transfer all or a portion of the Trust Property to any such corporation, trust,
limited liability company, partnership, association or organization in exchange for the shares or
securities thereof, or otherwise, and to lend money to, subscribe for the shares or securities of,
and enter into any contracts with any such corporation, trust, limited liability company,
partnership, association or organization, or any corporation, trust, limited liability company,
partnership, association or organization in which the Trust holds or is about to acquire shares or
any other interests.
11.6 Conversion. Notwithstanding any other provisions of this Declaration or the
By-Laws of the Trust, a favorable vote of a majority of the Trustees then in office followed by the
favorable vote of the holders of not less than seventy-five percent (75%) of the Shares of each
affected series or class outstanding, voting as separate series or classes, shall be required to
approve, adopt or authorize an amendment to this Declaration that makes the Shares a “redeemable
security” as that term is defined in the 1940 Act, unless such amendment has been approved by 80%
of the Trustees and 80% of the Continuing Trustees, in which case approval by a Majority
Shareholder Vote shall be required. Upon the adoption of a proposal to convert the Trust from a
“closed-end company” to an “open-end company” as those terms are defined by the 1940 Act and the
necessary amendments to this Declaration to permit such a conversion of the Trust’s outstanding
Shares entitled to vote, the Trust shall, upon complying with any requirements of the 1940 Act and
state law, become an “open-end” investment company. Such affirmative vote or consent shall be in
addition to the vote or consent of the holders of the Shares otherwise required by law, or any
agreement between the Trust and any national securities exchange.
11.7 Certain Transactions. (a) Notwithstanding any other provision of this Declaration
and subject to the exceptions provided in paragraph (d) of this Section 11.7, the types of
transactions described in paragraph (c) of this Section 11.7 shall require the affirmative vote or
consent of a majority of the Trustees then in office followed by the affirmative vote of the
holders of not less than seventy-five percent (75%) of the Shares of each affected series or class
outstanding, voting as separate series or classes, when a Principal Shareholder (as defined in
paragraph (b) of this Section 11.7) is a party to the transaction. Such affirmative vote or consent
shall be in addition to the vote or consent of the holders of Shares otherwise required by law or
by the terms of any series or class of preferred shares, whether now or hereafter authorized, or
any agreement between the Trust and any national securities exchange.
(b) The term “Principal Shareholder” shall mean any corporation, Person or other entity that
is the beneficial owner, directly or indirectly, of five percent (5%) or more of the outstanding
Shares of all outstanding classes and shall include any “affiliate” or “associate” as those terms
are defined in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of
1934, of a Principal Shareholder. For the purposes of this Section 11.7, in addition to the Shares
that a corporation, Person or other entity beneficially owns directly, (a) any corporation, Person
or other entity shall be deemed to be the beneficial owner of any Shares (i) that it has the right
to acquire pursuant to any agreement or upon exercise of conversion rights or warrants, or
otherwise (but excluding share options granted by the Trust) or (ii) that are beneficially owned,
directly or indirectly (including Shares deemed owned through application of clause (i) above), by
any other corporation, Person or entity with which its “affiliate” or “associate” has any
agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing
of Shares, or that is its “affiliate” or “associate,” and (b) the outstanding Shares shall include
Shares deemed owned through application of clauses (i) and (ii) above but shall not include any
other Shares that may be issuable pursuant to any agreement, or upon exercise of conversion rights
or warrants, or otherwise.
(c) This Section 11.7 shall apply to the following transactions:
(i) The merger or consolidation of the Trust or any subsidiary of the Trust with or into any
Principal Shareholder.
(ii) The issuance of any securities of the Trust to any Principal Shareholder for cash (other
than pursuant to any automatic dividend reinvestment plan).
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(iii) The sale, lease or exchange of all or any substantial part of the assets of the Trust to
any Principal Shareholder (except assets having an aggregate fair market value of less than 2% of
the total assets of the Trust, aggregating for the purpose of such computation all assets sold,
leased or exchanged in any series of similar transactions within a twelve-month period.)
(iv) The sale, lease or exchange to the Trust or any subsidiary thereof, in exchange for
securities of the Trust, of any assets of any Principal Shareholder (except assets having an
aggregate fair market value of less than 2% of the total assets of the Trust, aggregating for the
purposes of such computation all assets sold, leased or exchanged in any series of similar
transactions within a twelve-month period).
(d) The provisions of this Section 11.7 shall not be applicable to (i) any of the transactions
described in paragraph (c) of this Section 11.7 if 80% of the Trustees and 80% of the Continuing
Trustees shall by resolution have approved a memorandum of understanding with such Principal
Shareholder with respect to and substantially consistent with such transaction, in which case
approval by a Majority Shareholder Vote shall be the only vote of Shareholders required by this
Section 11.7, or (ii) any such transaction with any entity of which a majority of the outstanding
shares of all series and classes of a stock normally entitled to vote in elections of directors is
owned of record or beneficially by the Trust and its subsidiaries.
(e) The Board of Trustees shall have the power and duty to determine for the purposes of this
Section 11.7 on the basis of information known to the Trust whether (i) a corporation, person or
entity beneficially owns five percent (5%) or more of the outstanding Shares of any series or
class, (ii) a corporation, person or entity is an “affiliate” or “associate” (as defined above) of
another, (iii) the assets being acquired or leased to or by the Trust or any subsidiary thereof
constitute a substantial part of the assets of the Trust and have an aggregate fair market value of
less than 2% of the total assets of the Trust, and (iv) the memorandum of understanding referred to
in paragraph (d) hereof is substantially consistent with the transaction covered thereby. Any such
determination shall be conclusive and binding for all purposes of this Section 11.7.
ARTICLE XII
MISCELLANEOUS
12.1 Filing. (a) This Declaration and any amendment or supplement hereto shall be
filed in such places as may be required or as the Trustees deem appropriate. Each amendment or
supplement, other than an amendment or supplement adopted pursuant to Section 6.2, shall be
accompanied by a certificate signed and acknowledged by a Trustee stating that such action was duly
taken in a manner provided herein, and each amendment or supplement to the Declaration shall, upon
insertion in the Trust’s minute book, be conclusive evidence of all amendments contained therein. A
restated Declaration, containing the original Declaration and all amendments and supplements
theretofore made, may be executed from time to time by a majority of the Trustees and shall, upon
insertion in the Trust’s minute book, be conclusive evidence of all amendments and supplements
contained therein and may thereafter be referred to in lieu of the original Declaration and the
various amendments and supplements thereto.
(b) The Trustees hereby authorize and direct a Certificate of Trust, in the form attached
hereto as Exhibit A, to be executed and filed with the Office of the Secretary of State of the
State of Delaware in accordance with the Delaware Statutory Trust Act.
12.2 Resident Agent. The Trust shall maintain a resident agent in the State of
Delaware, which agent shall initially be The Corporation Trust Company, 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000. The Trustees may designate a successor resident agent, provided,
however, that such appointment shall not become effective until written notice thereof is delivered
to the Office of the Secretary of the State.
12.3 Applicable Law. This Declaration and the Trust created hereunder are governed by
and administered according to the Delaware Statutory Trust Act and the applicable laws of the State
of Delaware; provided, however, that there shall not be applicable to the Trust, the Trustees or
this Declaration (a) the provisions of Section 3540 of Title 12 of the Delaware Code, or (b) any
provision of the laws (statutory or common) of the State of Delaware (other than the Delaware
Statutory Trust Act) pertaining to trusts that relates to or regulates (i) the filing with any
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court or governmental body or agency of trustee accounts or schedules of trustee fees and charges,
(ii) affirmative requirements to post bonds for trustees, officers, agents or employees of a trust,
(iii) the necessity for obtaining court or other governmental approval concerning the acquisition,
holding or disposition of real or personal property, (iv) fees or other sums payable to trustees,
officers, agents or employees of a trust, (v) the allocation of receipts and expenditures to income
or principal, (vi) restrictions or limitations on the permissible nature, amount or concentration
of trust investments or requirements relating to the titling, storage or other manner of holding of
trust assets, or (vii) the establishment of fiduciary or other standards of responsibilities or
limitations on the acts or powers of trustees, which are inconsistent with the limitations or
liabilities or authorities and powers of the Trustees set forth or referenced in this Declaration.
Without limiting the provisions hereof, the Trust and the Trustees may exercise all powers that are
ordinarily exercised by a trust under the Delaware Statutory Trust Act. The Trust specifically
reserves the right to exercise any of the powers or privileges afforded to trusts or actions that
may be engaged in by trusts under the Delaware Statutory Trust Act, and the absence of a specific
reference herein to any such power, privilege or action shall not imply that the Trust or the
Trustees may not exercise such power or privilege or take such actions. Additionally, reference
shall be specifically made to the Delaware General Corporation Law as to the construction of
matters not specifically covered herein or in the Delaware Statutory Trust Act or as to which an
ambiguity exists, although such law shall not be viewed as limiting the powers otherwise granted to
the Trustees hereunder and any ambiguity shall be viewed in favor of such powers.
12.4 Counterparts. This Declaration may be simultaneously executed in several
counterparts, each of which shall be deemed to be an original, and such counterparts, together,
shall constitute one and the same instrument, which shall be sufficiently evidenced by any such
original counterpart.
12.5 Reliance by Third Parties. Any certificate executed by an individual who,
according to the records of the Trust, or of any recording office in which this Declaration may be
recorded, appears to be a Trustee hereunder, certifying to: (a) the number or identity of Trustees
or Shareholders, (b) the name of the Trust, (c) the due authorization of the execution of any
instrument or writing, (d) the form of any vote passed at a meeting of Trustees or Shareholders,
(e) the fact that the number of Trustees or Shareholders present at any meeting or executing any
written instrument satisfies the requirements of this Declaration, (f) the form of any By-Laws
adopted by or the identity of any officers elected by the Trustees, or (g) the existence of any
fact or facts that in any manner relate to the affairs of the Trust shall be conclusive evidence as
to the matters so certified in favor of any person dealing with the Trustees and their successors.
12.6 Provisions in Conflict with Law or Regulation. (a) The provisions of this
Declaration are severable, and if the Trustees shall determine, with the advice of counsel, that
any of such provisions is in conflict with the 1940 Act, the regulated investment company
provisions of the Code or with other applicable laws and regulations, the conflicting provision
shall be deemed never to have constituted a part of this Declaration; provided, however, that such
determination shall not affect any of the remaining provisions of this Declaration or render
invalid or improper any action taken or omitted prior to such determination.
(b) If any provision of this Declaration shall be held invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall attach only to such provision in such
jurisdiction and shall not in any manner affect such provision in any other jurisdiction or any
other provision of this Declaration in any jurisdiction.
IN WITNESS WHEREOF, the undersigned has caused this Agreement and Declaration of Trust to be
executed as of the date first written above.
/s/ R. Xxxxxx Xxxxxxxxx | ||||
R. Xxxxxx Xxxxxxxxx | ||||
Sole Trustee | ||||
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