RYDEX ETF TRUST
AGREEMENT AND DECLARATION OF TRUST
DATED NOVEMBER 22, 2002
RYDEX ETF TRUST
Dated November 22, 2002
This AGREEMENT AND DECLARATION OF TRUST (hereinafter "Trust Instrument") is
made November 22, 2002 (together with all other persons from time to time duly
elected, qualified and serving as Trustees in accordance with Article III
hereof, the "Trustees").
WHEREAS, the Trustees desire to establish a business trust for the
investment and reinvestment of funds contributed thereto;
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust hereunder shall be held and managed in trust under this
Trust Instrument as herein set forth below.
ARTICLE I
NAME AND DEFINITIONS
SECTION 1.01. NAME. The name of the trust created hereby is the "Rydex ETF
Trust."
SECTION 1.02. DEFINITIONS. Wherever used herein, unless otherwise required by
the context or specifically provided:
(a) The term "By-Laws" means the By-Laws referred to in Article IV, Section
4.01(e) hereof, as from time to time amended;
(b) The term "Commission" has the meaning given it in the 1940 Act (as
defined below). The terms "Affiliated Person," "Assignment," "Interested
Person," and "Principal Underwriter" shall have the meanings given them in the
1940 Act, as modified by or interpreted by any applicable order or orders of the
Commission or any rules or regulations adopted by or interpretive releases of
the Commission thereunder;
(c) The term "Delaware Act" refers to Chapter 38 of Title 12 of the
Delaware Code entitled "Treatment of Delaware Business Trusts," as it may be
amended from time to time;
(d) The term "Net Asset Value" means the net asset value of each Series (as
defined below) of the Trust (as defined below) determined in the manner provided
in Article IX, Section 9.03 hereof;
(e) The term "Outstanding Shares" means those Shares (as defined below)
shown from time to time in the books of the Trust or its Transfer Agent as then
issued and outstanding, but shall not include Shares which have been redeemed or
repurchased by the Trust and which are at the time held in the treasury of the
Trust;
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(f) The term "Series" means a series of Shares of the Trust established in
accordance with the provisions of Article II, Section 2.06 hereof;
(g) The term "Shareholder" means a record owner of Outstanding Shares of
the Trust;
(h) The term "Shares" means the equal proportionate transferable units of
beneficial interest into which the beneficial interest of each Series of the
Trust or class thereof shall be divided and may include fractions of Shares as
well as whole Shares;
(i) The term "Trust" refers to the Rydex ETF Funds and all Series of the
Rydex ETF Funds, and reference to the Trust, when applicable to one or more
Series of the Trust, shall refer to any such Series;
(j) The term "Trustee" or "Trustees" means the person or persons who has or
have signed this Trust Instrument, so long as he, she or they shall continue in
office in accordance with the terms hereof, and all other persons who may from
time to time be duly qualified and serving as Trustees in accordance with the
provisions of Article III hereof and reference herein to a Trustee or to the
Trustees shall refer to the individual Trustees in their capacity as Trustees
hereunder;
(k) The term "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of one or
more of the Trust or any Series, or the Trustees on behalf of the Trust or any
Series.
(l) The term "1940 Act" refers to the Investment Company Act of 1940, as
amended from time to time.
ARTICLE II
BENEFICIAL INTEREST
SECTION 2.01. SHARES OF BENEFICIAL OWNERSHIP INTEREST. The beneficial interest
in the Trust shall be divided into such transferable Shares of one or more
separate and distinct Series or classes of a Series as the Trustees shall from
time to time create and establish. The number of Shares of each Series, and
class thereof, authorized hereunder is unlimited. Each Share shall have no par
value. All Shares issued hereunder, including without limitation, Shares issued
in connection with a dividend in Shares or a split or reverse split of Shares,
shall be fully paid and nonassessable.
SECTION 2.02. ISSUANCE OF SHARES. The Trustees in their discretion may, from
time to time, without vote of the Shareholders, issue Shares, in addition to the
then issued and outstanding Shares and Shares held in the treasury, to such
party or parties and for such amount and type of consideration, subject to
applicable law, including cash or securities, at such time or times and on such
terms as the Trustees may deem appropriate, and may in such manner acquire other
assets
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(including the acquisition of assets subject to, and in connection with,
the assumption of liabilities) and businesses. In connection with any issuance
of Shares, the Trustees may issue fractional Shares and Shares held in the
treasury. The Trustees from time to time may divide or combine the Shares into a
greater or lesser number without thereby changing the proportionate beneficial
interests in the Trust. Contributions to the Trust may be accepted for, and
Shares shall be redeemed as, whole Shares and/or 1/1,000th of a Share or
integral multiples thereof.
SECTION 2.03. OWNERSHIP AND TRANSFER OF SHARES. The Trust or a transfer agent
for the Trust shall maintain a register containing the names and addresses of
the Shareholders of each Series and class thereof, the number of Shares of each
Series and class held by such Shareholders, and a record of all Share transfers.
The register shall be conclusive as to the identity of Shareholders of record
and the number of Shares held by them from time to time. The Trustees may
authorize the issuance of certificates representing Shares and adopt rules
governing their use. The Trustees may make rules governing the transfer of
Shares, whether or not represented by certificates. Except as otherwise provided
by the Trustees, Shares shall be transferable on the books of the Trust only by
the record holder thereof or by his duly authorized agent upon delivery to the
Trustees or the Trust's transfer agent of a duly executed instrument of
transfer, together with a Share certificate if one is outstanding, and such
evidence or the genuineness of each such execution and authorization and of such
other matters as may be required by the Trustees. Upon such delivery, and
subject to any further requirements specified by the Trustees or contained in
the By-laws, the transfer shall be recorded on the books of the Trust. Until a
transfer is so recorded, the Shareholder of record of Shares shall be deemed to
be the holder of such Shares for all purposes hereunder and neither the Trustees
nor the Trust, nor any transfer agent or registrar or any officer, employee or
agent of the Trust, shall be affected by any notice of a proposed transfer.
SECTION 2.04. TREASURY SHARES. Shares held in the treasury shall, until reissued
pursuant to Section 2.02 hereof, not confer any voting rights on the Trustees,
nor shall such Shares be entitled to any dividends or other distributions
declared with respect to the Shares.
SECTION 2.05. ESTABLISHMENT OF SERIES. The Trust created hereby shall consist of
one or more Series and separate and distinct records shall be maintained by the
Trust of each Series and the assets associated with any such Series shall be
held and accounted for separately from the assets of the Trust or any other
Series. The Trustees shall have full power and authority, in their sole
discretion, and without obtaining any prior authorization or vote of the
Shareholders of any Series of the Trust, to establish and designate and to
change in any manner such Series of Shares or any classes of initial or
additional Series and to fix such preferences, voting powers, rights and
privileges of such Series or classes thereof as the Trustees may from time to
time determine, to divide and combine the Shares or any Series or classes
thereof into a greater or lesser number, to classify or reclassify any issued
Shares or any Series or classes thereof into one or more Series or classes of
Shares, to abolish any one or more Series or classes of Shares or to take such
other action with respect to the Shares as the Trustees may deem desirable. The
establishment and designation of any Series shall be effective upon the adoption
of a resolution by a majority of the Trustees setting forth such establishment
and designation and the relative rights and preferences of the Shares of such
Series. A Series may issue any number of Shares and need not issue Shares.
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All references to Shares in this Trust Instrument shall be deemed to be
Shares of any or all Series, or classes thereof, as the context may require. All
provisions herein relating to the Trust shall apply equally to each Series of
the Trust, and each class thereof, except as the context otherwise requires.
Each Share of a Series of the Trust shall represent an equal beneficial
interest in the net assets of such Series. Each holder of Shares of a Series
shall be entitled to receive his pro rata share of distributions of income and
capital gains, if any, made with respect to such Series. Upon redemption of his
Shares, such Shareholder shall be paid solely out of the funds and property of
such Series of the Trust.
SECTION 2.06. INVESTMENT IN THE TRUST. The Trustees shall accept investments in
any Series of the Trust from such persons and on such terms as they may from
time to time authorize. At the Trustees' discretion, such investments, subject
to applicable law, may be in the form of cash or securities in which the
affected Series is authorized to invest, valued as provided in Article IX,
Section 9.03 hereof. Investments in a Series shall be credited to each
Shareholder's account in the form of full or fractional Shares at the Net Asset
Value per Share next determined after the investment is received; provided,
however, that the Trustees may, in their sole discretion, (a) fix the Net Asset
Value per Share of the initial capital contribution or (b) impose a sales charge
upon investments in the Trust in such manner and at such time as determined by
the Trustees. The Trustees shall have the right to refuse to accept investments
in any Series at any time without any cause or reason therefor whatsoever.
SECTION 2.07. ASSETS AND LIABILITIES OF SERIES. All consideration received by
the Trust for the issue or sale of Shares of a particular Series, together with
all assets in which such consideration is invested or reinvested, all income,
earnings, profits, and proceeds thereof, including any proceeds derived from the
sale, exchange or liquidation of such assets, and any funds or payments derived
from any reinvestment of such proceeds in whatever form the same may be, shall
be held and accounted for separately from the other assets of the Trust and of
every other Series and may be referred to herein as "assets belonging to" that
Series. The assets belonging to a particular Series shall belong to that Series
for all purposes, and to no other Series, subject only to the rights of
creditors of that Series. In addition, any assets, income, earnings, profits or
funds, or payments and proceeds with respect thereto, which are not readily
identifiable as belonging to any particular Series shall be allocated by the
Trustees between and among one or more of the Series in such manner as the
Trustees, in their sole discretion, deem fair and equitable. Each such
allocation shall be conclusive and binding upon the Shareholders of all Series
for all purposes, and such assets, income, earnings, profits or funds, or
payments and proceeds with respect thereto shall be assets belonging to that
Series. The assets belonging to a particular Series shall be so recorded upon
the books of the Trust, and shall be held by the Trustees in trust for the
benefit of the holders of Shares of that Series. The assets belonging to each
particular Series shall be charged with the liabilities of that Series and all
expenses, costs, charges, and reserves attributable to that Series. Any general
liabilities, expenses, costs, charges, or reserves of the Trust which are not
readily identifiable as belonging to a particular Series shall be allocated and
charged by the Trustees between or among any one or more of the Series in
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such manner as the Trustees, in their sole discretion, deem fair and equitable.
Each such allocation shall be conclusive and binding upon the Shareholders of
all Series for all purposes.
Without limitation of the foregoing provisions of this Section 2.07, but
subject to the right of the Trustees in their discretion to allocate general
liabilities, expenses, costs, charges, or reserves as herein provided, the
debts, liabilities, obligations, and expenses incurred, contracted for or
otherwise existing with respect to a particular Series shall be enforceable
against the assets of the Trust generally. Notice of this contractual limitation
on inter-Series liabilities may, in the Trustee's sole discretion, be set forth
in the certificate of trust of the Trust (whether originally or by amendment) as
filed or to be filed in the Office of the Secretary of State of the State of
Delaware pursuant to the Delaware Act, and upon the giving of such notice in the
certificate of trust, the statutory provisions of Section 3804 of the Delaware
Act relating to limitations on liabilities among Series (and the statutory
effect under Section 3804 of setting forth such notice in the certificate of
trust) shall become applicable to the Trust and each Series. Any person
extending credit to, contracting with or having any claim against any Series may
look only to the assets of that Series to satisfy or enforce any debt,
liability, obligation or expense incurred, contracted for or otherwise existing
with respect to that Series. No Shareholder or former Shareholder of any Series
shall have a claim on or any right to any assets allocated or belonging to any
other Series.
SECTION 2.08. NO PREEMPTIVE RIGHTS. Shareholders shall have no preemptive or
other right to subscribe to any additional Shares or other securities issued by
the Trust or the Trustees, whether of the same or other Series.
SECTION 2.09. PERSONAL LIABILITY OF SHAREHOLDERS. Each Shareholder of the Trust
and of each Series shall not be personally liable for debts, liabilities,
obligations and expenses incurred by, contracted for, or otherwise existing with
respect to, the Trust or by or on behalf of any Series. The Trustees shall have
no power to bind any Shareholder personally or to call upon any Shareholder for
the payment of any sum of money or assessment whatsoever other than such as the
Shareholder may at any time personally agree to pay by way of subscription for
any Shares or otherwise. Every note, bond, contract or other undertaking issued
by or on behalf of the Trust or the Trustees relating to the Trust or to a
Series shall include a recitation limiting the obligation represented thereby to
the Trust or to one or more Series and its or their assets (but the omission of
such a recitation shall not operate to bind any Shareholder or Trustee of the
Trust). Shareholders shall have the same limitation of personal liability as is
extended to shareholders of a private corporation for profit incorporated in the
State of Delaware. Every written obligation of the Trust or any Series shall
contain a statement to the effect that such obligation may only be enforced
against the assets of the appropriate Series or all Series; however, the
omission of such statement shall not operate to bind or create personal
liability for any Shareholder or Trustee.
SECTION 2.10. ASSENT TO TRUST INSTRUMENT. Every Shareholder, by virtue of having
purchased a Share shall become a Shareholder and shall be held to have expressly
assented and agreed to be bound by the terms hereof.
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ARTICLE III
THE TRUSTEES
SECTION 3.01. MANAGEMENT OF THE TRUST. 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 Trust Instrument. The Trustees shall have 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, in any
and all commonwealths, territories, dependencies, colonies, or possessions of
the United States of America, and in any foreign jurisdiction 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 Trust Instrument, the presumption shall be
in favor of a grant of power to the Trustees.
The enumeration of any specific power in this Trust Instrument shall not be
construed as limiting the aforesaid power. The powers of the Trustees may be
exercised without order of or resort to any court.
Except for the Trustees named herein or appointed to fill vacancies
pursuant to Section 3.04 of this Article III, the Trustees shall be elected by
the Shareholders owning of record a plurality of the Shares voting at a meeting
of Shareholders. Such a meeting shall be held on a date fixed by the Trustees.
In the event that less than a majority of the Trustees holding office have been
elected by Shareholders, the Trustees then in office will call a Shareholders'
meeting for the election of Trustees.
SECTION 3.02. INITIAL TRUSTEES. The initial Trustees shall be the persons named
herein. On a date fixed by the Trustees, the Shareholders shall elect additional
Trustees subject to Section 3.06 of this Article III.
SECTION 3.03. TERM OF OFFICE OF TRUSTEES. The Trustees shall hold office during
the lifetime of this Trust, and until its termination as herein provided, except
that: (a) any Trustee may resign his position as Trustee by written instrument
signed by him and delivered to the other Trustees, which shall take effect upon
such delivery or upon such later date as is specified therein; (b) any Trustee
may be removed at any time by a vote of at least two-thirds of the number of
Trustees prior to such removal, specifying the date when such removal shall
become effective; (c) any Trustee who requests in writing to be retired or who
has died, becomes physically or mentally incapacitated by reason of disease or
otherwise, or is otherwise unable to serve, may be retired by written instrument
signed by a majority of the other Trustees, specifying the date of his
retirement; and (d) a Trustee may be removed at any meeting of the Shareholders
of the Trust by a vote of Shareholders owning at least two-thirds of the
outstanding Shares.
SECTION 3.04. VACANCIES AND APPOINTMENT OF TRUSTEES. In case of the declination
to serve, death, resignation, retirement, removal, physical or mental incapacity
by reason of disease or
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otherwise, or a Trustee is otherwise unable to serve, or an increase in the
number of Trustees, a vacancy shall occur. Whenever a vacancy in the Board of
Trustees shall occur, until such vacancy is filled, the other Trustees shall
have all the powers hereunder and the certificate of the other Trustees of such
vacancy shall be conclusive. In the case of an existing vacancy, the remaining
Trustees shall fill such vacancy by appointing such other person as they in
their discretion shall see fit consistent with the limitations under the 1940
Act. Such appointment shall be evidenced by a written instrument signed by a
majority of the Trustees in office or by resolution of the Trustees, duly
adopted, which shall be recorded in the minutes of a meeting of the Trustees,
whereupon the appointment shall take effect.
An appointment of a Trustee may be made by the Trustees then in office in
anticipation of a vacancy to occur by reason of retirement, resignation or
increase in number of Trustees effective at a later date, provided that said
appointment shall become effective only at or after the effective date of said
retirement, resignation or increase in number of Trustees. As soon as any
Trustee appointed pursuant to this Section 3.04 shall have accepted this trust,
the trust estate shall vest in the new Trustee or Trustees, together with the
continuing Trustees, without any further act or conveyance, and he shall be
deemed a Trustee hereunder. The power to appoint a Trustee pursuant to this
Section 3.04 is subject to the provisions of Section 16(a) of the 1940 Act.
SECTION 3.05. TEMPORARY ABSENCE OF TRUSTEE. Any Trustee may, by power of
attorney, delegate his power for a period not exceeding six months at any one
time to any other Trustee or Trustees, provided that in no case shall less than
two Trustees personally exercise the other powers hereunder except as herein
otherwise expressly provided.
SECTION 3.06. NUMBER OF TRUSTEES. The number of Trustees shall be set initially
at one (1), and thereafter shall be such number as shall be fixed from time to
time by a majority of the Trustees, provided, however, that the number of
Trustees shall in no event be more than fifteen (15) or less than three (3).
SECTION 3.07. EFFECT OF DEATH, RESIGNATION, ETC., OF A TRUSTEE. The declination
to serve, death, resignation, retirement, removal, incapacity, or inability of
the Trustees, or any one of them, shall not operate to terminate the Trust or to
revoke any existing agency created pursuant to the terms of this Trust
Instrument.
SECTION 3.08. OWNERSHIP OF ASSETS OF THE TRUST. The assets of the Trust and of
each Series shall be held separate and apart from any assets now or hereafter
held in any capacity other than as Trustee hereunder by the Trustees or any
successor Trustees. Legal title in and beneficial ownership of all of the assets
of the Trust and the right to conduct any business shall at all times be
considered as vested in the Trustees on behalf of the Trust, except that the
Trustees may cause legal title to any Trust Property to be held by, or in the
name of, the Trust, or in the name of any person as nominee. No Shareholder
shall be deemed to have a severable ownership in any individual asset of the
Trust or of any Series or any right of partition or possession thereof, but each
Shareholder shall have, except as otherwise provided for herein, a proportionate
undivided beneficial interest in the Trust or Series. The Shares shall be
personal property giving only the rights specifically set forth in this Trust
Instrument. The Trust, or at the determination of the
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Trustees one or more of the Trustees or a nominee acting for and on behalf of
the Trust, shall be deemed to hold legal title and beneficial ownership of any
income earned on securities of the Trust issued by any business entities formed,
organized, or existing under the laws of any jurisdiction, including the laws of
any foreign country. Upon the resignation or removal of a Trustee, or his
otherwise ceasing to be a Trustee, he shall execute and deliver such documents
as the remaining Trustees shall require for the purpose of conveying to the
Trust or the remaining Trustees any Trust Property held in the name of the
resigning or removed Trustee. Upon the incapacity or death of any Trustee, his
legal representative shall execute and deliver on his behalf such documents as
the remaining Trustees shall require as provided in the preceding sentence.
SECTION 3.09. COMPENSATION. The Trustees as such shall be entitled to reasonable
compensation from the Trust, and they may periodically fix the amount of such
compensation. Nothing herein shall in any way prevent the employment of any
Trustee for advisory, management, legal, accounting, investment banking or other
services and payment for the same by the Trust.
ARTICLE IV
POWERS OF THE TRUSTEES
SECTION 4.01. POWERS. The Trustees in all instances shall act as principals, and
are and shall be free from the control of the Shareholders. The Trustees shall
have full power and authority to do any and all acts and to make and execute any
and all contracts and instruments that they may consider necessary or
appropriate in connection with the management of the Trust. The Trustees shall
not in any way be bound or limited by present or future laws or customs in
regard to trust investments, but shall have full authority and power to make any
and all investments which they, in their sole discretion, shall deem proper to
accomplish the purpose of this Trust without recourse to any court or other
authority. Subject to any applicable limitation in this Trust Instrument or the
By-Laws of the Trust, the Trustees shall have power and authority:
(a) To invest and reinvest cash and other property, and to hold cash or
other property uninvested, without in any event being bound or limited by any
present or future law or custom in regard to investments by trustees, and to
sell, exchange, lend, pledge, mortgage, hypothecate, write options on and lease
any or all the assets of the Trust;
(b) To operate as and carry on the business of an investment company, and
exercise all the powers necessary and appropriate to the conduct of such
operations;
(c) To borrow money and in this connection issue notes or other evidence of
indebtedness; to secure borrowings by mortgaging, pledging or otherwise
subjecting as security the Trust Property; to endorse, guarantee, or undertake
the performance of an obligation or engagement of any other Person and to lend
Trust Property;
(d) To provide for the distribution of interests of the Trust either
through a principal underwriter in the manner hereinafter provided for or by the
Trust itself, or both, or otherwise pursuant to a plan of distribution of any
kind;
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(e) To adopt By-Laws not inconsistent with this Trust Instrument providing
for the conduct of the business of the Trust and to amend and repeal them to the
extent that they do not reserve that right to the Shareholders; such By-Laws
shall be deemed incorporated and included in this Trust Instrument;
(f) To elect and remove such officers and appoint and terminate such agents
as they consider appropriate;
(g) To employ one or more banks, trust companies or companies that are
members of a national securities exchange or such other entities as the
Commission may permit as custodians of any assets of the Trust subject to any
conditions set forth in this Trust Instrument or in the By-laws;
(h) To retain one or more transfer agents and shareholder servicing agents,
or both;
(i) To set record dates in the manner provided herein or in the By-Laws;
(j) To delegate such authority as they consider desirable to any officers
of the Trust and to any investment advisor, manager, custodian, underwriter or
other agent or independent contractor;
(k) To sell or exchange any or all of the assets of the Trust, subject to
the provisions of Article XI, Section 11.04(b) hereof;
(l) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and deliver
powers of attorney to such person or persons as the Trustee shall deem proper,
granting to such person or persons such power and discretion with relation to
securities or property as the Trustees shall deem proper;
(m) To exercise powers and rights of subscription or otherwise which in any
manner arise out of ownership of securities;
(n) To hold any security or property in a form not indicating any trust,
whether in bearer, book entry, unregistered or other negotiable form; or either
in the name of the Trust or in the name of a custodian or a nominee or nominees,
subject in either case to proper safeguards according to the usual practice of
Delaware business trusts or investment companies;
(o) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes in
accordance with the provisions of Article II hereof and to establish classes of
such Series having relative rights, powers and duties as they may provide
consistent with applicable law;
(p) Subject to the provisions of Section 3804 of the Delaware Act, to
allocate assets, liabilities and expenses of the Trust to a particular Series or
to apportion the same
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between or among two or more Series, provided that any liabilities or expenses
incurred by a particular Series shall be payable solely out of the assets
belonging to that Series as provided for in Article II hereof;
(q) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern, any security of which is
held in the Trust; to consent to any contract, lease, mortgage, purchase, or
sale of property by such corporation or concern, and to pay calls or
subscriptions with respect to any security held in the Trust;
(r) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy including, but not limited to,
claims for taxes;
(s) To make distributions of income and of capital gains to Shareholders in
the manner hereinafter provided;
(t) To establish, from time to time, a minimum investment for Shareholders
in the Trust or in one or more Series or class, and to require the redemption of
the Shares of any Shareholders whose investment is less than such minimum upon
giving notice to such Shareholder;
(u) To establish one or more committees, to delegate any of the powers of
the Trustees to said committees and to adopt a committee charter providing for
such responsibilities, membership (including Trustees, officers or other agents
of the Trust therein) and any other characteristics of said committees as the
Trustees may deem proper. Notwithstanding the provisions of this Article IV, and
in addition to such provisions or any other provision of this Trust Instrument
or of the By-Laws, the Trustees may by resolution appoint a committee consisting
of less than the whole number of Trustees then in office, which committee may be
empowered to act for and bind the Trustees and the Trust, as if the acts of such
committee were the acts of all the Trustees then in office, with respect to the
institution, prosecution, dismissal, settlement, review or investigation of any
action, suit or proceeding which shall be pending or threatened to be brought
before any court, administrative agency or other adjudicatory body;
(v) To interpret the investment policies, practices, or limitations of any
Series;
(w) To establish a registered office and have a registered agent in the
state of Delaware;
(x) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary, suitable,
or proper for the accomplishment of any purpose or the attainment of any object
or the furtherance of any power hereinbefore set forth, either alone or in
association with others, and to do every other act or thing incidental or
appurtenant to or growing out of or connected with the aforesaid business or
purposes, objects or powers.
The foregoing clauses shall be construed both as objects and power, and the
foregoing enumeration of specific powers shall not be held to limit or restrict
in any manner the
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general powers of the Trustees. 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 or the applicable Series, and not an action in an individual capacity.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust.
No one dealing with the Trustees shall be under any obligation to make any
inquiry concerning the authority of the Trustees, or to see to the application
of any payments made or property transferred to the Trustees or upon their
order.
SECTION 4.02. ISSUANCE AND REPURCHASE OF SHARES. The Trustees shall have the
power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold, resell,
reissue, dispose of, and otherwise deal in Shares and, subject to the provisions
set forth in Article II and Article IX, to apply to any such repurchase,
redemption, retirement, cancellation, or acquisition of Shares any funds or
property of the Trust, or the particular Series of the Trust, with respect to
which such Shares are issued.
SECTION 4.03. TRUSTEES AND OFFICERS AS SHAREHOLDERS. Any Trustee, officer, or
agent of the Trust may acquire, own, and dispose of Shares to the same extent as
if he or she were not a Trustee, officer, or agent; and the Trustees may issue
and sell or cause to be issued and sold Shares to and buy such Shares from any
such person or any firm or company in which he or she is interested, subject
only to the general limitations herein contained as to the sale and purchase of
such Shares; and all subject to any restrictions which may be contained in the
By-Laws.
SECTION 4.04. ACTION BY THE TRUSTEES. The Trustees shall act by majority vote at
a meeting duly called or by written consent of a majority of the Trustees
without a meeting or by telephone meeting provided a quorum of Trustees
participate in any such telephone meeting, unless the 1940 Act requires that a
particular action be taken only at a meeting at which the Trustees are present
in person. At any meeting of the Trustees, three (3) of the Trustees shall
constitute a quorum. Meetings of the Trustees may be called orally or in writing
by the Chairman or by any two (2) other Trustees. Notice of the time, date and
place of all meetings of the Trustees shall be given by the party calling the
meeting to each Trustee by telephone, telefax, or telegram sent to his home or
business address at least twenty-four (24) hours in advance of the meeting or by
written notice mailed to his home or business address at least seventy-two (72)
hours in advance of the meeting. Notice need not be given to any Trustee who
attends the meeting without objecting to the lack of notice or who executes a
written waiver of notice with respect to the meeting. Any meeting conducted by
telephone shall be deemed to take place at the principal office of the Trust, as
determined by the By-Laws or by the Trustees. Subject to the requirements of the
1940 Act, the Trustees by majority vote may delegate to any one or more of their
number their authority to approve particular matters or take particular actions
on behalf of the Trust. Written consents or waivers of the Trustees may be
executed in one or more counterparts. Execution of a written consent or waiver
and delivery thereof to the Trust may be accomplished by telefax.
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SECTION 4.05. CHAIRMAN OF THE TRUSTEES. The Trustees shall appoint one of their
number to be Chairman of the Board of Trustees. The Chairman shall preside at
all meetings of the Trustees, shall be responsible for the execution of policies
established by the Trustees and the administration of the Trust, and may be (but
is not required to be) the chief executive, financial, and/or accounting officer
of the Trust.
SECTION 4.06. PRINCIPAL TRANSACTIONS. Except to the extent prohibited by
applicable law, the Trustees, on behalf of the Trust, may, in a manner
consistent with applicable legal requirements, buy any securities from or sell
any securities to, or lend any assets of the Trust to, any Trustees or officer
of the Trust or any firm of which any such Trustee or officer is a member acting
as principal, or have any such dealings with any investment advisor, distributor
or transfer agent for the Trust or with any interested Person of such person;
and the Trust may employ any such person, or firm or company in which such
person is an Interested Person, as broker, legal counsel, registrar, investment
advisor, distributor, transfer agent, dividend disbursing agent, or custodian,
or in any other capacity upon customary terms.
ARTICLE V
EXPENSES OF THE TRUST
SECTION 5.01. PAYMENT OF EXPENSES BY THE TRUST. Subject to the provisions of
Article II, Section 2.07 hereof, the Trust or a particular Series shall pay, or
shall reimburse the Trustees from the assets belonging to all Series or the
appropriate Series for their expenses (or the expenses of a Class of such
Series) and disbursements, including, without limitation, fees and expenses of
Trustees, interest expense, taxes, fees and commissions of every kind, expenses
of pricing Trust portfolio securities, expenses of issue, repurchase and
redemption of shares, including expenses attributable to a program of periodic
repurchases or redemptions, expenses of registering and qualifying the Trust and
its Shares under Federal and State laws and regulations or under the laws of any
foreign jurisdiction, charges of third parties, including investment advisors,
managers, custodians, transfer agents, portfolio accounting and/or pricing
agents, and registrars, expenses of preparing and setting up in type
prospectuses and statements of additional information and other related Trust
documents, expenses of printing and distributing prospectuses sent to existing
Shareholders, auditing and legal expenses, reports to Shareholders, expenses of
meetings of Shareholders and proxy solicitations therefor, insurance expenses,
association membership dues and for such non-recurring items as may arise,
including litigation to which the Trust (or a Trustee acting as such) is a
party, and for all losses and liabilities by them incurred in administering the
Trust, and for the payment of such expenses, disbursements, losses and
liabilities the Trustees shall have a lien on the assets belonging to the
appropriate Series, on the assets of each such Series, prior to any rights or
interests of the Shareholders thereto. This section shall not preclude the Trust
from directly paying any of the aforementioned fees and expenses.
SECTION 5.02. PAYMENT OF EXPENSES BY SHAREHOLDERS. The Trustee shall have the
power, as frequently as they may determine, to cause each Shareholder, or each
Shareholder of any particular Series, to pay directly, in advance or arrears,
for charges of the Trust's custodian or
12
transfer, shareholder servicing or similar agent, an amount fixed from time to
time by the Trustees, by setting off such charges due from such Shareholder from
declared but unpaid dividends owed such Shareholder and/or by reducing the
number of Shares in the account of such Shareholder by that number of full
and/or fractional Shares which represents the outstanding amount of such charges
due from such Shareholder.
ARTICLE VI
CONTRACTS WITH SERVICE PROVIDERS
SECTION 6.01. INVESTMENT ADVISOR. The Trustees may in their discretion, from
time to time, enter into an investment advisory or management contract or
contracts with respect to the Trust or any Series; provided, however, that the
initial approval and entering into of such contract or contracts shall be
subject to a "majority shareholder vote," as defined by the 1940 Act.
Notwithstanding any other provision of this Trust Instrument, the Trustees may
authorize any investment advisor (subject to such general or specific
instructions as the Trustees from time to time may adopt) to effect purchases,
sales or exchanges of portfolio securities, other investment instruments of the
Trust, or other Trust Property on behalf of the Trustees, or may authorize any
officer, agent, or Trustee to effect such purchases, sales, or exchanges
pursuant to recommendations of the investment advisor (and all without further
action by the Trustees). Any such purchases, sales, and exchanges shall be
deemed to have been authorized by all of the Trustees.
The Trustees may authorize, subject to applicable requirements
of the 1940 Act, including those relating to Shareholder approval, the
investment advisor to employ, from time to time, one or more sub-advisors to
perform such of the acts and services of the investment advisor, and upon such
terms and conditions, as may be agreed upon between the investment advisor and
sub-advisor. Any reference in this Trust Instrument to the investment advisor
shall be deemed to include such sub-advisors, unless the context otherwise
requires.
SECTION 6.02. PRINCIPAL UNDERWRITER. The Trustees may in their discretion from
time to time enter into an exclusive or non-exclusive underwriting contract or
contracts providing for the sale of Shares, whereby the Trust may either agree
to sell Shares to the other party to the contract or appoint such other party
its sales agent for such Shares. In either case, the contract shall be on such
terms and conditions, if any, as may be prescribed in the By-Laws, and such
further terms and conditions as the Trustees may in their discretion determine
not inconsistent with the provisions of this Article VI, or of the By-Laws; and
such contract may also provide for the repurchase or sale of Shares by such
other party as principal or as agent of the Trust.
SECTION 6.03. TRANSFER AGENT. The Trustees may in their discretion from time to
time enter into one or more transfer agency and shareholder service contracts
whereby the other party or parties shall undertake to furnish the Trustees with
transfer agency and shareholder services. The contract or contracts shall be on
such terms and conditions as the Trustees may in their discretion determine not
inconsistent with the provisions of this Trust Instrument or of the By-Laws.
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SECTION 6.04. ADMINISTRATION AGREEMENT. The Trustees may in their discretion
from time to time enter into an administration agreement or, if the Trustees
establish multiple Series or classes, separate administration agreements with
respect to each Series or class, whereby the other party to such agreement shall
undertake to manage the business affairs of the Trust or of a Series or class
thereof of the Trust and furnish the Trust or a Series or a class thereof with
office facilities, and shall be responsible for the ordinary clerical,
bookkeeping and recordkeeping services at such office facilities, and other
facilities and services, if any, and all upon such terms and conditions as the
Trustees may in their discretion determine.
SECTION 6.05. SERVICE AGREEMENT. The Trustees may in their discretion from time
to time enter into service agreements with respect to one or more Series or
Classes of Shares whereby the other parties to such Service Agreements will
provide administration and/or support services pursuant to administration plans
and service plans, and all upon such terms and conditions as the Trustees in
their discretion may determine.
SECTION 6.06. PARTIES TO CONTRACT. Any contract of the character described in
Sections 6.01, 6.02, 6.03, 6.04 and 6.05 of this Article VI or any contract of
the character described in Article VIII hereof may be entered into with any
corporation, firm, partnership, trust, or association, although one or more of
the Trustees or officers of the Trust may be an officer, director, trustee,
shareholder, or member of such other party to the contract, and no such contract
shall be invalidated or rendered void or voidable by reason of the existence of
any such relationship, nor shall any person holding such relationship be
disqualified from voting on or executing the same in his capacity as Shareholder
and/or Trustee, 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 not
inconsistent with the provisions of this Article VI or Article VIII hereof or of
the By-Laws. The same person (including a firm, corporation, partnership, trust
or association) may be the other party to contracts entered into pursuant to
Sections 6.01, 6.02, 6.03, 6.04 and 6.05 of this Article VI or pursuant to
Article VIII hereof, and any individual may be financially interested or
otherwise affiliated with persons who are parties to any or all of the contracts
mentioned in this Section 6.06.
SECTION 6.07. PROVISIONS AND AMENDMENTS. Any contract entered into pursuant to
Sections 6.01 or 6.02 of this Article VI shall be consistent with and subject to
the requirements of Section 15 of the 1940 Act or other applicable Act of
Congress hereafter enacted with respect to its continuance in effect, its
termination, and the method of authorization and approval of such contract or
renewal thereof, and no amendment to any contract, entered into pursuant to
Section 6.01 of this Article VI shall be effective unless assented to in a
manner consistent with the requirements of said Section 15, as modified by any
applicable rule, regulation or order of the Commission.
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ARTICLE VII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
SECTION 7.01. VOTING POWERS. The Shareholders shall have power to vote only (i)
for the election of Trustees as provided in Article III, Section 3.01 and 3.02
hereof, (ii) for the removal of Trustees as provided in Article III, Section
3.03(d) hereof, (iii) with respect to any investment advisory or management
contract as provided in Article VI, Sections 6.01 and 6.07 hereof, and (iv) with
respect to such additional matters relating to the Trust as may be required by
law, by this Trust Instrument, or the By-Laws or any registration of the Trust
with the Commission or any State, or as the Trustees may consider necessary or
desirable.
On any matter submitted to a vote of the Shareholders, all
Shares shall be voted separately by individual Series, except: (i) when required
by the 1940 Act, Shares shall be voted in the aggregate and not by individual
Series; and (ii) when the Trustees have determined that the matter affects the
interests of more than one Series, then the Shareholders of all such affected
Series shall be entitled to vote thereon. The Trustees also may determine that a
matter affects only the interests of one (1) or more classes of a Series, in
which case any such matter shall be voted on by such class or classes. Each
whole share shall be entitled to one (1) vote as to any matter on which it is
entitled to vote, and each fractional Share shall be entitled to a proportionate
fractional vote. There shall be no cumulative voting in the election of
Trustees. Shares may be voted in person or by proxy or in any manner provided
for in the By-Laws. A proxy may be given in writing. The By-Laws may provide
that proxies may also, or may instead, be given by any electronic or
telecommunications device or in any other manner. Notwithstanding anything else
herein or in the By-Laws, in the event a proposal by anyone other than the
officers or Trustees of the Trust is submitted to a vote of the Shareholders of
one or more Series or of the Trust, or in the event of any proxy contest or
proxy solicitation or proposal in opposition to any proposal by the officers or
Trustees of the Trust, Shares may be voted only in person or by written proxy.
Until Shares are issued, the Trustees may exercise all rights of Shareholders
and may take any action required or permitted by law, this Trust Instrument or
any of the By-Laws of the Trust to be taken by Shareholders. Meetings of
shareholders shall be called and notice thereof and record dates therefor shall
be given and set as provided in the By-Laws.
SECTION 7.02. QUORUM AND REQUIRED VOTE. One-third of Shares entitled to vote in
person or by proxy shall be a quorum for the transaction of business at a
Shareholders' meeting, except that where any provision of law or of this Trust
Instrument permits or requests that holders of any Series shall vote as a Series
(or that holders of a class shall vote as a class), then one-third of the
aggregate number of Shares of that Series (or that class) entitled to vote shall
be necessary to constitute a quorum for the transactions of business by that
Series (or that class). Any lesser number shall be sufficient for adjournments.
Any adjourned session or sessions may be held, within a reasonable time after
the date set for the original meeting, without the necessity of further notice.
Except when a larger vote is required by law or by any provision of this Trust
Instrument of the By-Laws, a majority of the Shares voted in person or by proxy
shall decide any questions and a plurality shall elect a Trustee, provided that
where any provision of law or of this Trust Instrument permits or requires that
the holders of any Series shall vote as a Series (or that the holders of any
class shall vote as a class), then a majority of the Shares present in person or
by proxy of that Series or, if required by law, subject to a "majority
shareholder vote", as defined by the 1940 Act, of that Series (or class), voted
on the matter in person or by proxy shall decide
15
matter insofar as that Series (or class) is concerned. Shareholders may act by
unanimous written consent. Actions taken by Series (or class) may be consented
to unanimously in writing by Shareholders of that Series.
ARTICLE VIII
CUSTODIAN
SECTION 8.01. APPOINTMENT AND DUTIES. The Trustees at all times shall employ a
bank, a company that is a member of a national securities exchange, or a trust
company, each having capital, surplus and undivided profits of at least two
million dollars ($2,000,000), or any other entity satisfying the requirements of
the 1940 Act, as custodian with authority as its agent, but subject to such
restrictions, limitations, and other requirements, if any, as may be contained
in the By-Laws of the Trust:
(1) to hold the securities and other assets of the Trust and deliver the
same upon written order or oral order confirmed in writing;
(2) to receive and receipt for any moneys due to the Trust and deposit the
same in its own banking department or elsewhere as the Trustees may
direct; and
(3) to disburse such funds upon orders or vouchers;
and the Trust also may employ such custodian as its agent:
(4) to keep the books and accounts of the Trust or of any Series or class
and furnish clerical and accounting services; and
(5) to compute, if authorized to do so by the Trustees, the Net Asset
Value of any Series, or class thereof, in accordance with the
provisions hereof; all upon such basis of compensation as may be
agreed upon between the Trustees and the custodian.
The Trustees also may authorize the 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 be a bank, a company that is a member of a
national securities exchange, a trust company or any other entity satisfying the
requirements of the 1940 Act.
SECTION 8.02. 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
16
under the Securities Exchange Act of 1934, as amended, 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 or series
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 or its custodians, sub-custodians or other agents.
ARTICLE IX
DISTRIBUTIONS AND REDEMPTIONS
SECTION 9.01. DISTRIBUTIONS.
(a) The Trustees from time to time may declare and pay dividends or other
distributions with respect to any Series. No dividend or distribution,
including, without limitation, any distribution paid upon termination of the
Trust or of any Series (or class) with respect to, nor any redemption or
repurchase of, the Shares of any Series (or class) shall be effected by the
Trust other than from the assets held with respect to such Series, nor shall any
Shareholder of any particular Series otherwise have any right or claim against
the assets held with respect to any other Series except to the extent that such
Shareholder has such a right or claim hereunder as a Shareholder of such other
Series. The Trustees shall have full discretion to determine which items shall
be treated as income and which items as capital; and each such determination and
allocation shall be conclusive and binding upon the Shareholders. The amount of
such dividends or distributions and the payment of them and whether they are in
cash or any other Trust Property shall be wholly in the discretion of the
Trustees.
(b) Dividends and other distributions may be paid or made to the
Shareholders of record at the time of declaring a dividend or other distribution
or among the Shareholders of record at such other date or time or dates or times
as the Trustees shall determine, which dividends or distributions, at the
election of the Trustees, may be paid pursuant to a standing resolution or
resolutions adopted only once or with such frequency as the Trustees may
determine. The Trustees may adopt and offer to Shareholders such dividend
reinvestment plans, cash dividend payout plans, or related plans as the Trustees
shall deem appropriate.
(c) Anything in this Trust Instrument to the contrary notwithstanding, the
Trustees at any time may declare and distribute a stock dividend pro rata among
the Shareholders of a particular Series, or class thereof, as of the record date
of that Series fixed as provided in paragraph (b) of this Section 9.01.
SECTION 9.02. REDEMPTIONS. The Trustees may specify conditions, prices, and
places of redemption, may specify binding requirements for the proper form or
forms of requests for redemption and may specify the amount of any deferred
sales charge to be withheld from redemption proceeds. Payment of the redemption
price may be wholly or partly in securities or other assets at the value of such
securities or assets used in such determination of Net Asset Value, or may be in
cash. Upon redemption, Shares may be reissued from time to time. The
17
Trustees may require Shareholders to redeem Shares for any reason under terms
set by the Trustees, including, but not limited to, the failure of a Shareholder
to supply a taxpayer identification number if required to do so, or to have the
minimum investment required, or to pay when due for the purchase of Shares
issued to him. To the extent permitted by law, the Trustees may retain the
proceeds of any redemption of Shares required by them for payment of amounts due
and owing by a Shareholder to the Trust or any Series or class or any
governmental authority. Notwithstanding the foregoing, the Trustees may postpone
payment of the redemption price and may suspend the right of the Shareholders to
require any Series or class to redeem Shares during any period of time when and
to the extent permissible under the 1940 Act. All authorized Shares shall be
subject to redemption and redeemable in accordance with and pursuant to
procedures or methods prescribed by or approved by the Trustees. The Shares of
any Series, if so determined by the Trustees, shall be redeemable only in
aggregations of such number of Shares and on such days as may be determined by
or determined pursuant to procedures or methods prescribed by or approved by the
Trustees from time to time with respect to such Series. The number of Shares
comprising an aggregation for purposes of redemption or repurchase shall be
referred to as a "Creation Unit." The Trustees shall have the unrestricted power
to alter the number of shares constituting a Creation Unit by resolution adopted
by the Trustees, at any time including prior to the time the Trust commences
operations. Each holder of a Creation Unit aggregation of shares of a Series,
upon request to the Trust in accordance with procedures established by the
Trustees, shall be entitled to require the Trust to redeem all or any number of
such holder's Shares standing in the name of such holder on the books of the
Trust, but in the case of the Shares of any Series as to which the Trustees have
determined that such Shares shall be redeemable only in Creation Unit
aggregations, only in such Creation Unit aggregations of shares of such Series
as the Trustees may determine from time to time in accordance with this Article
IX, at a redemption price per share equal to an amount determined by the
Trustees in accordance with applicable laws.
SECTION 9.03. DETERMINATION OF NET ASSET VALUE AND VALUATION OF PORTFOLIO
ASSETS. The term "Net Asset Value" of any Series shall mean that amount by which
the assets of that Series exceed its liabilities, all as determined by or under
the direction of the Trustees. Such value shall be determined separately for
each Series and shall be determined on such days and at such times as the
Trustees may determine. The Trustees may delegate any of their powers and duties
under this Section 9.03 with respect to valuation of assets and liabilities. The
resulting amount, which shall represent the total Net Asset Value of the
particular Series, shall be divided by the total number of shares of that Series
outstanding at the time and the quotient so obtained shall be the Net Asset
Value per Share of that Series. At any time the trustees may cause the Net Asset
Value per Share last determined to be determined again in similar manner and may
fix the time when such redetermined value shall become effective. If, for any
reason, the net income of any Series, determined at any time, is a negative
amount, the Trustees shall have the power with respect to that Series: (i) to
offset each Shareholder's pro rata share of such negative amount from the
accrued dividend account of such Shareholder; or (ii) to reduce the number of
Outstanding Shares of such Series by reducing the number of Shares in the
account of each Shareholder by a pro rata portion of the number of full and
fractional Shares which represents the amount of such excess negative net
income; or (iii) to cause to be recorded on the books of such Series an asset
account in the amount of such negative net income (provided that the same shall
thereupon become the property of such Series with respect to such Series and
shall not be paid to
18
any Shareholder), which account may be reduced by the amount, of dividends
declared thereafter upon the Outstanding Shares of such Series on the day such
negative net income is experienced, until such asset account is reduced to zero;
or (iv) to combine the methods described in clauses (i) and (ii) and (iii) of
the sentence; or (v) to take any other action they deem appropriate, in order to
cause (or in order to assist in causing) the Net Asset Value per Share of such
Series to remain at a constant amount per Outstanding Share immediately after
each such determination and declaration. The Trustees also shall have the power
not to declare a dividend out of net income for the purpose of causing the Net
Asset Value per share to be increased. The Trustees shall not be required to
adopt, but at any time may adopt, discontinue, or amend the practice of
maintaining the Net Asset value per Share of the Series at a constant amount. In
the event that any Series are divided into classes, the provisions of this
Section 9.03, to the extent applicable as determined in the discretion of the
Trustees and consistent with applicable law, may be equally applied to each such
class.
SECTION 9.04. SUSPENSION OF THE RIGHT OF REDEMPTION. The Trustees may declare a
suspension of the right of redemption or postpone the date of payment as
permitted under the 1940 Act. Such suspension shall take effect at such time as
the Trustees shall specify but not later than the close of business on the
business day next following the declaration of suspension, and thereafter there
shall be no right of redemption or payment until the Trustees shall declare the
suspension at an end. In the case of a suspension of the right of redemption, a
Shareholder may either withdraw his request for redemption or receive payment
based on the Net Asset Value per Share next determined after the termination of
the suspension.
ARTICLE X
LIMITATION OF LIABILITY AND INDEMNIFICATION
SECTION 10.01. LIMITATION OF LIABILITY. All persons contracting with or having
any claim against the Trust or a particular Series shall look only to the assets
of all Series or such particular Series for payment under such contract or
claim; and neither the Trustees nor, when acting in such capacity, any of the
Trust's officers, employees or agents, whether past, present or future, shall be
personally liable therefor. Every written instrument or obligation on behalf of
the Trust or any Series shall contain a statement to the foregoing effect, but
the absence of such statement shall not operate to make any Trustee or officer
of the Trust liable thereunder. Provided they have exercised reasonable care and
have acted under the reasonable belief that their actions are in the best
interest of the Trust, the Trustees and officers of the Trust shall not be
responsible or liable for any act or omission or for neglect or wrongdoing of
them or any officer, agent, employee, investment adviser or independent
contractor of the Trust, but nothing contained in this Declaration or in the
Delaware Act shall protect any Trustee or officer of the Trust against liability
to the Trust or to Shareholders to which he or she would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office.
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SECTION 10.02. INDEMNIFICATION.
(a) Subject to the exceptions and limitations contained in paragraph (b)
below:
(i) every Person who is, or has been, a Trustee or officer of the
Trust (hereinafter referred to as a "Covered Person") shall be indemnified
by the Trust to the fullest extent permitted by law against liability and
against all expenses reasonably incurred or paid by him in connection with
any claim, action, suit, or proceeding in which he or she becomes involved
as a party or otherwise by virtue of his being or having been a Trustee or
officer and against amounts paid or incurred by him in the settlement
thereof; and
(ii) the words "claim," "action," "suit," or "proceeding" shall apply
to all claims, actions, suits, or proceedings (civil, criminal, or other,
including appeals), actual or threatened, while in office or thereafter,
and the words "liability" and "expenses" shall include, without limitation,
attorney's fees, costs, judgments, amounts paid in settlement, fines,
penalties, and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) who shall have been adjudicated by a court or body before which
the proceeding was brought (A) to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross negligence,
or reckless disregard of the duties involved in the conduct of his office
or (B) not to have acted in good faith in the reasonable belief that his
action was in the best interest of the Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of his office:
(A) by the court or other body approving the settlement;
(B) by at least a majority of those Trustees who neither are
Interested Persons of the Trust nor are parties to the matter based
upon a review of readily-available facts (as opposed to a full
trial-type inquiry); or
(C) by written opinion of independent legal counsel based upon a
review of readily-available facts (as opposed to a full trial-type
inquiry); provided, however, that any Shareholder, by appropriate
legal proceedings, may challenge any such determination by the
Trustees or by independent counsel.
20
(c) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not be exclusive of
or affect any other rights to which any Covered Person may now or hereafter be
entitled, shall continue as to a person who has ceased to be a Covered Person
and shall inure to the benefit of the heirs, executors, and administrators of
such a person. Nothing contained herein shall affect any rights to
indemnification to which Trust personnel, other than Covered Persons, and other
persons may be entitled by contract or otherwise under law.
(d) To the maximum extent permitted by applicable law, expenses in
connection with the preparation and presentation of a defense to any claim,
action, suit, or proceeding of the character described in paragraph (a) of this
Section 10.02 may be paid by the Trust or Series from time to time prior to
final disposition thereof upon receipt of any undertaking by or on behalf of
such Covered Person that such amount will be paid over by him to the Trust or
Series if it ultimately is determined that he or she is not entitled to
indemnification under this Section 10.02; provided, however, that either (a)
such Covered Person shall have provided appropriate security for such
undertaking; (b) the Trust is insured against losses arising out of any such
advance payments, or (c) either a majority of the Trustees who are neither
Interested Persons of the Trust nor parties to the matter, or independent legal
counsel in a written opinion, shall have determined, based upon a review of
readily-available facts (as opposed to a trial-type inquiry or full
investigation), that there is a reason to believe that such Covered Person will
be found entitled to indemnification under this Section 10.02.
SECTION 10.03. SHAREHOLDERS. In case any Shareholder or former Shareholder of
any Series shall be held to be personally liable solely by reason of his being
or having been a Shareholder of such Series and not because of his acts or
omissions or for some other reason, the Shareholder or former Shareholder (or
his heirs, executors, administrators, or other legal representatives, or, in the
case of a corporation or other entity, its corporate or other general successor)
shall be entitled out of the assets belonging to the applicable Series to be
held harmless from and indemnified against all loss and expense arising from
such liability. The Trust, on behalf of the affected Series, shall assume, upon
request by the Shareholder, the defense of any claim made against the
Shareholder for any act or obligation of the Series and satisfy any judgment
thereon from the assets of the Series.
SECTION 10.04. NO BOND REQUIRED OF TRUSTEES. No Trustee shall be obligated to
give any bond or other security for the performance of any of his duties
hereunder.
SECTION 10.05. NO DUTY OF INVESTIGATION; NOTICE IN TRUST INSTRUMENTS, ETC. No
purchaser, lender, transfer agent or other Person dealing with the Trustees or
any officer, employee or agent of the Trust or a Series thereof 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, instrument, certificate, Share, other security of the Trust or a
Series thereof or undertaking, and every other act or thing whatsoever executed
in connection with the Trust shall be conclusively presumed 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 or a Series thereof.
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Every written obligation, contract, instrument, certificate, Share, other
security of the Trust or a Series thereof or undertaking made or issued by the
Trustees may recite that the same is executed or made by them not individually,
but as Trustees under the Declaration, and that the obligations of the Trust or
a Series thereof under any such instrument are not binding upon any of the
Trustees or Shareholders individually, but bind only the Trust Property or the
Trust Property of the applicable Series, and may contain any further recital
which they may deem appropriate, but the omission of such recital shall not
operate to bind the Trustees individually. The Trustees shall at all times
maintain insurance for the protection of the Trust Property or the Trust
Property of the applicable Series, its Shareholders, Trustees, officers,
employees and agents in such amount as the Trustees shall deem adequate to cover
possible tort liability, and such other insurance as the Trustees in their sole
judgment shall deem advisable.
SECTION 10.6. RELIANCE ON EXPERTS, ETC. Each Trustee, officer or employee of the
Trust or a Series thereof shall, in the performance of his duties, powers and
discretions hereunder 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 or a Series thereof,
upon an opinion of counsel, or upon reports made to the Trust or a Series
thereof by any of its officers or employees or by the Investment Adviser, the
Administrator, the Distributor, Transfer Agent, selected dealers, accountants,
appraisers or other experts or consultants 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 XI
MISCELLANEOUS
SECTION 11.01. TRUST NOT A PARTNERSHIP. It is hereby expressly declared that a
trust and not a partnership is created hereby. No Trustee hereunder shall have
any power to bind personally either the Trust's officers or any Shareholder. All
persons extending credit to, contracting with, or having any claim against the
Trust or the Trustees shall look only to the assets of the appropriate Series or
(if the Trustees shall have yet to have established the Series) the Trust for
payment under such credit, contract, or claim; and neither the Shareholders nor
the Trustees, nor any of their agents, whether past, present, or future, shall
be personally liable therefore. Nothing in this Trust Instrument shall protect a
Trustee against any liability to which the Trustee otherwise would be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of the office of Trustee
hereunder.
SECTION 11.02. TRUSTEE ACTION. The exercise by the Trustees of their powers and
discretions hereunder in good faith and with reasonable care under the
circumstances then prevailing shall be binding upon everyone interested. Subject
to the provisions of Article X hereof and to Section 11.01 of this Article XI,
the Trustees shall not be liable for errors of judgment or mistakes of fact or
law.
SECTION 11.03. ESTABLISHMENT OF RECORD DATES. For the purpose of determining the
Shareholders of any Series (or class) who are entitled to receive payment of any
dividend or of any other
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distribution, the Trustees may from time to time fix a date, which shall be
before the date for the payment of such dividend or such other payment, as the
record date for determining the Shareholders of such Series (or class) having
the right to receive such dividend or distribution. Without fixing a record
date, the Trustees may for distribution purposes close the register or transfer
books for one or more Series (or classes) any time prior to the payment of a
distribution. Nothing in this Section shall be construed as precluding the
Trustees from setting different record dates for different Series (or classes).
The Trustees may fix in advance a date, to be determined by the Trustees and no
longer than that permitted by applicable law, before the date of any
Shareholders' meeting, or the date for the payment of any dividends or other
distributions, or the date for the allotment of rights, or the date when any
change or conversion or exchange of Shares shall go into effect as a record date
for the determination of the Shareholders entitled to notice of, and to vote at,
any such meeting, or entitled to receive payment of such dividend or other
distribution, or to receive any such allotment of rights, or to exercise such
rights in respect of any such change, conversion or exchange of Shares.
SECTION 11.04. TERMINATION OF TRUST.
(a) This Trust shall continue without limitation of time but subject to the
provisions of paragraph (b) of this Section 11.04.
(b) The Trustees, subject to a majority shareholder vote of each Series
affected by the matter, or, if applicable, to a majority shareholder vote of the
Trust, and subject to a vote of a majority of the Trustees, may:
(i) sell and convey all or substantially all of the assets of the
Trust or any affected Series to another trust, partnership, association, or
corporation, or to a separate series of shares thereof, organized under the
laws of any state, which trust, partnership, association, or corporation is
an open-end management investment company as defined in the 1940 Act, or is
a series thereof, for adequate consideration which may include the
assumption of all outstanding obligations, taxes, and other liabilities,
accrued or contingent, of the Trust or any affected Series, and which may
include shares of beneficial interest, stock, or other ownership interests
of such trust, partnership, association, or corporation or of a series
thereof; or
(ii) at any time, sell and convert into money all of the assets of the
Trust or any affected series.
Upon making reasonable provision, in the determination of the Trustees, for
the payment of all such liabilities in either (i) or (ii) of this Section
11.04(b), by such assumption or otherwise, the Trustees shall distribute the
remaining proceeds or assets (as the case may be) of each Series (or class)
ratably among the holders of Shares of that Series then outstanding.
(c) The Trustees may take any of the actions specified in this Section
11.04(b)(i) and (ii) above without obtaining the approval of shareholders if a
majority of the Trustees determines that the continuation of the Trust or Series
(or class) is not in the best
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interests of the Trust, such Series (or class), or their respective Shareholders
as a result of factors or events adversely affecting the ability of the Trust or
such Series (or class) to conduct its business and operations in an economically
viable manner. Such factors and events may include the inability of the Trust or
a Series (or class) to maintain its assets at an appropriate size, changes in
laws or regulations governing the Trust or the Series (or class) or affecting
assets of the type in which the Trust or Series (or class) invests, or economic
developments or trends having a significant adverse impact on the business or
operations of the Trust or such Series (or class).
(d) Upon completion of the distribution of the remaining proceeds or the
remaining assets as provided in paragraph (b) of this Section 11.04, the Trust
or any affected Series shall terminate and the Trustees and the Trust shall be
discharged of any and all further liabilities and duties hereunder and the
right, title, and interest of all parties with respect to the Trust or Series
shall be canceled and discharged.
Upon termination of the Trust, following completion of winding up of the
Trust's business, the Trustees shall cause a certificate of cancellation of the
Trust's certificate of trust to be filed in accordance with the Delaware Act,
which certificate of cancellation may be signed by any one Trustee.
SECTION 11.05. Reorganization. Notwithstanding anything else herein, the
Trustees, in order to change the form of organization of the Trust, may, without
prior Shareholder approval, (i) cause the Trust to merge or consolidate with or
into one (1) or more trusts, partnerships, associations, or corporations so long
as the surviving or resulting entity is an open-end management investment
company under the 1940 Act, or is a series thereof, that will succeed to or
assume the Trust's registration under that Act and which is formed, organized,
or existing under the laws of a state, commonwealth, territory, possession, or
colony of the United States or (ii) cause the Trust to incorporate under the
laws of State of Delaware. Any agreement of merger or consolidation or
certificate of merger may be signed by a majority of Trustees and facsimile
signature conveyed by electronic or telecommunication means shall be valid.
Pursuant to and in accordance with the provisions of Section 3815(f) of the
Delaware Act, and notwithstanding anything to the contrary contained in this
Trust Instrument, an agreement of merger or consolidation approved by the
Trustees in accordance with this Section 11.05 may effect any amendment to the
Trust Instrument or effect the adoption of a new trust instrument of the Trust
if the Trust is the surviving or resulting trust in the merger or consolidation.
SECTION 11.06. FILING OF COPIES; REFERENCES; HEADINGS. The original or a copy of
this Trust Instrument and the original or a copy of each amendment hereof or
Trust Instrument supplemental hereto shall be kept at the office of the Trust
where it may be inspected by any Shareholder. Anyone dealing with the Trust may
rely on a certificate by an officer or Trustee of the Trust as to whether or not
any such amendments or supplements have been made and as to any matters in
connection with the Trust hereunder, and, with the same effect as if it were the
original, may rely on a copy certified by an officer or Trustee of the Trust to
be a copy of this Trust Instrument or of any such amendment or supplemental
Trust Instrument, and references to
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this Trust Instrument, and all expressions such as or similar to "herein,"
"hereof," and "hereunder" shall be deemed to refer to this Trust Instrument as
amended or affected by any such supplemental Trust Instrument. All expressions
such as or similar to "his," "he," and "him" shall be deemed to include the
feminine and neuter, as well as masculine, genders. Headings are placed herein
for convenience of reference only and, in case of any conflict, the text of this
Trust Instrument, rather than the headings, shall control. This Trust Instrument
may be executed in any number of counterparts each of which shall be deemed an
original.
SECTION 11.07. APPLICABLE LAW. The trust set forth in this instrument is made in
the State of Delaware, and the Trust and this Trust Instrument, and the rights
and obligations of the Trustees and Shareholders hereunder, are to be governed
by and construed and administered according to the Delaware Act and the laws of
said State; provided, however, that there shall not be applicable to the trust,
the Trust, the Trustee or this Trust Instrument (a) the provisions of Section
3540 of Title 12 of the Delaware Code or (b) any provisions of the laws
(statutory or common) of the State of Delaware (other than the Delaware Act)
pertaining to trusts which relate to or regulate (i) the filing with any 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 and 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 or
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 Trust Instrument. The Trust shall
be of the type commonly called a "Delaware business trust," and, without
limiting the provisions hereof, the Trust may exercise all powers or privileges
afforded to trusts or actions that may be engaged in by trusts under the
Delaware Act, and the absence of a specific reference herein to any such power,
privilege, or action shall not imply that the Trust may not exercise such power
or privilege or take such actions.
SECTION 11.08. AMENDMENTS. Except as specifically provided herein, the Trustees,
without shareholder vote, may amend or otherwise supplement this Trust
Instrument by making an amendment, a Trust Instrument supplemental hereto, or an
amended and restated trust instrument. Shareholders shall have the right to vote
(i) on any amendment which would affect their right to vote granted in Section
7.01 of the Article VII hereof, (ii) on any amendment to this Section 11.08,
(iii) on any amendment as may be required by law or by the Trust's registration
statement filed with the Commission, and (iv) on any amendment submitted to the
Shareholders by the Trustees. Any amendment required or permitted to be
submitted to Shareholders which, as the Trustees determine, shall affect the
Shareholders of one or more Series shall be authorized by vote of the
Shareholders of each Series affected and no vote of Shareholders of a Series not
affected shall be required. Notwithstanding anything else herein, any amendment
to Article X hereof shall not limit the rights to indemnification or insurance
provided therein with respect to action or omission of Covered Persons prior to
such amendment.
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SECTION 11.09. DERIVATIVE ACTIONS. In addition to the requirements set forth in
Section 3816 of the Delaware Act, a Shareholder may bring a derivative action on
behalf of the Trust only if the following conditions are met:
(a) Shareholders eligible to bring such derivative action under the
Delaware Act who hold at least 10% of the Outstanding Shares of the Trust, or
10% of the Outstanding Shares of the Series or class to which such action
relates, shall join in the request for the Trustees to commence such action; and
(b) The Trustees must be afforded a reasonable amount of time to consider
such shareholder request and to investigate the basis of such claim. The
Trustees shall be entitled to retain counsel or other advisers in considering
the merits of the request and shall require an undertaking by the Shareholders
making such request to reimburse the Trust for the expense of any such advisers
in the event that the Trustees determine not to bring such action.
SECTION 11.10. Fiscal Year. The fiscal year of the Trust shall end on a
specified date as set forth in the By-Laws, provided, however, that the
Trustees, without Shareholder approval, may change the fiscal year of the Trust.
SECTION 11.11. PROVISIONS IN CONFLICT WITH LAW. The provisions of this Trust
Instrument 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, with
the regulated investment company provisions of the Internal Revenue Code or with
other applicable laws and regulations, the conflicting provision shall be deemed
never to have constituted a part of this Trust Instrument; provided, however,
that such determination shall not affect any of the remaining provisions of this
Trust Instrument or render invalid or improper any action taken or omitted prior
to such determination. If any provision of this Trust Instrument shall be held
invalid or improper, 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 Trust Instrument in any
jurisdiction.
IN WITNESS WHEREOF, the undersigned, being the initial Trustee of the
Trust, has executed this instrument this 22nd day of November, 2002.
/s/ Xxxxxx X. Xxxxxx, Xx.
-------------------------
Xxxxxx X. Xxxxxx, Xx.,
as Trustee and not individually
