EXHIBIT 3.1
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LIQUIDATING TRUST
AGREEMENT
By and Between
THE MICROCAP FUND, INC.,
as the Grantor,
and
Xxxxxxx X. Xxxxxx,
as Trustee
Dated as of January 28, 1997
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TABLE OF CONTENTS
ARTICLE I
NAME AND DEFINITIONS
1.1. Name . . . . . . . . . . . . . . . . . . . . 2
1.2. Certain Terms Defined . . . . . . . . . . . . 2
ARTICLE II
NATURE OF TRANSFER
2.1. Purpose of Trust . . . . . . . . . . . . . . 4
2.2. Prohibited . . . . . . . . . . . . . . . . . 5
2.3. No Reversion to Fund . . . . . . . . . . . . 5
2.4. Instruments of Further Assurance . . . . . . 5
2.5. Payment of Liabilities . . . . . . . . . . . 5
2.6. Incidents of Ownership . . . . . . . . . . . 6
2.7. Notice to Unlocated Shareholders . . . . . . 6
ARTICLE III
BENEFICIARIES
3.1. Beneficial Interests . . . . . . . . . . . . 6
3.2. Rights of Beneficiaries . . . . . . . . . . . 7
3.3. Transfer of Interests of Beneficiaries . . . 8
3.4. Trustees as Beneficiaries . . . . . . . . . . 9
ARTICLE IV
DURATION AND TERMINATION OF TRUST
4.1. Duration . . . . . . . . . . . . . . . . . . 9
4.2. Other Obligations of Trustees upon
Termination . . . . . . . . . . . . . . . . . 9
ARTICLE V
ADMINISTRATION OF TRUST
5.1. Sale of Trust . . . . . . . . . . . . . . . 10
5.2. Transactions with Related Persons . . . . . . 10
5.3. Restriction on Trust Assets . . . . . . . . . 11
5.4. Payment of Claims, Expenses and Liabilities . 11
5.5. Interim Distributions . . . . . . . . . . . . 11
5.6. Final Distribution . . . . . . . . . . . . . 11
5.7. Reports to Beneficiaries and Others . . . . . 12
5.8. Federal Income Tax Information . . . . . . . 12
5.9. Employment of Manager . . . . . . . . . . . 13
ARTICLE VI
POWERS OF AND LIMITATIONS ON THE TRUSTEES
6.1. Limitations on Trustees . . . . . . . . . . . 14
6.2. Specific Powers of Trustees . . . . . . . . . 15
ARTICLE VII
CONCERNING THE TRUSTEES,
BENEFICIARIES, EMPLOYEES AND AGENTS
7.1. Generally . . . . . . . . . . . . . . . . . . 18
7.2. Reliance by Trustees . . . . . . . . . . . . 19
7.3. Liability to Third Persons . . . . . . . . . 20
7.4. Recitals . . . . . . . . . . . . . . . . . . 20
7.5. Indemnification . . . . . . . . . . . . . . . 20
7.6. Rights of Trustees, Employees, Independent
Contractors and Agents To Own Units or Other
Property and To Engage in Other Business . . 22
ARTICLE VIII
PROTECTION OF PERSONS DEALING WITH THE TRUSTEES
8.1. Action by Trustees . . . . . . . . . . . . . 23
8.2. Delegation . . . . . . . . . . . . . . . . . 23
8.3. Reliance on Statement by Trustees . . . . . . 24
ARTICLE IX
COMPENSATION OF TRUSTEES
9.1. Amount of Compensation . . . . . . . . . . . 24
9.2. Dates of Payment . . . . . . . . . . . . . . 24
9.3. Expenses . . . . . . . . . . . . . . . . . . 24
ARTICLE X
TRUSTEES AND SUCCESSOR TRUSTEES
10.1. Number and Qualification of Trustees . . . . 25
10.2. Resignation and Removal . . . . . . . . . . 25
10.3. Appointment of Successor . . . . . . . . . . 26
10.4. Acceptance of Appointment by Successor
Trustee . . . . . . . . . . . . . . . . . . 26
10.5. Bonds . . . . . . . . . . . . . . . . . . . 26
ARTICLE XI
CONCERNING THE BENEFICIARIES
11.1. Evidence of Action by Beneficiaries . . . . 27
11.2. Limitation on Suits by Beneficiaries . . . . 27
11.3. Requirement of Undertaking . . . . . . . . . 28
ARTICLE XII
MEETING OF BENEFICIARIES
12.1. Purpose of Meetings . . . . . . . . . . . . 28
12.2. Meeting Called by Trustees . . . . . . . . . 28
12.3. Meeting Called on Request of Beneficiaries . 29
12.4. Persons Entitled to Vote at Meeting of
Beneficiaries . . . . . . . . . . . . . . . 29
12.5. Quorum and Vote Required . . . . . . . . . . 29
12.6. Adjournment of Meeting . . . . . . . . . . . 29
12.7. Conduct of Meetings . . . . . . . . . . . . 29
12.8. Record of Meeting . . . . . . . . . . . . . 30
ARTICLE XIII
AMENDMENTS
13.1. Consent of Trustees and Beneficiaries . . . 30
13.2. Notice and Effect of Amendment . . . . . . . 31
ARTICLE XIV
MISCELLANEOUS PROVISIONS
14.1. Filing Documents . . . . . . . . . . . . . . 32
14.2. Intention of Parties to Establish Trust . . 32
14.3. Beneficiaries Have No Rights or Privileges
as Shareholders of MicroCap . . . . . . . . 32
14.4. Laws as to Construction . . . . . . . . . . 32
14.5. Severability . . . . . . . . . . . . . . . . 32
14.6. Notices . . . . . . . . . . . . . . . . . . 33
14.7. Counterparts . . . . . . . . . . . . . . . . 33
14.8. Binding . . . . . . . . . . . . . . . . . . 34
LIQUIDATING TRUST AGREEMENT
AGREEMENT AND DECLARATION OF TRUST, dated as of
January 28, 1997, by and between The MicroCap Fund, Inc.,
a Maryland corporation ("Fund"), and Xxxxxxx X. Xxxxxx,
as trustee (the "Trustee," and together with any
additional trustees appointed hereunder, the "Trustees").
WHEREAS, Fund's Board of Directors and
shareholders have adopted a Plan of Liquidation and
Dissolution (the "Plan");
WHEREAS, Fund's Board of Directors anticipates
that Fund may not be able to fully wind up all of its
affairs prior to the date by which Fund must dissolve,
and therefore have made specific arrangements for such
contingency in the Plan;
WHEREAS, the Plan, among other things, (i)
provides for the establishment of a liquidating trust
pursuant to the terms and conditions hereof (the "Trust")
and the establishment of one or more escrow, reserve and
other accounts (collectively, the "Reserve Funds"), (ii)
provides the methods by which the Trustee was selected to
serve as agent of the Beneficiaries (as defined below)
and trustee of the Trust, (iii) authorizes and directs
Fund to grant, assign and convey the Retained Assets to
the Trustee as agent for the Beneficiaries (as defined
below) all assets of Fund not distributed to shareholders
in cancellation of the interest of the Shareholders in
Fund and (iv) authorizes and directs the Trustee to hold
and reduce to cash for and on behalf of, and distribute
to, the Beneficiaries the assets of the Trust in
accordance with the terms and conditions hereof.
NOW, THEREFORE, in consideration of the
premises, and subject to the terms and provisions herein,
effective as of the close of business on the Record Date,
Fund hereby grants, releases, assigns, conveys and
delivers unto the Trustee for the benefit of the
beneficiaries of the Trust (the "Beneficiaries"), all of
Fund's right, title and interest in and to all assets of
Fund not distributed to shareholders as of the Record
Date for the uses and purposes stated herein, and the
Trustee hereby accepts such assets and such Trust:
ARTICLE I
NAME AND DEFINITIONS
1.1. Name. This trust shall be known as the
MicroCap Liquidating Trust.
1.2. Certain Terms Defined. For all purposes
of this instrument, unless the context otherwise
requires:
(a) Affiliated Person shall mean a Person
(i) who in his individual capacity is a director,
trustee, officer, partner or employee of the Manager
or of a Person who controls, is controlled by or is
under common control with the Manager or (ii) who
controls, is controlled by or is under common
control with the Manager.
(b) Affiliated Trustee shall mean a
Trustee (i) who in his individual capacity is a
director, trustee, officer, partner or employee of
the Manager or of a Person who controls, is
controlled by or is under common control with the
Manager or (ii) who controls, is controlled by or is
under common control with the Manager.
(c) Agreement shall mean this instrument
as originally executed or as it may from time to
time be amended pursuant to the terms hereof.
(d) Beneficial Interest shall mean each
Beneficiary's proportionate share of the Trust
Assets initially determined by the ratio of the
number of Shares held by the Initial Beneficiary on
the close of business on the Record Date over the
total number of Shares issued and outstanding on
such Record Date and thereafter each Beneficiaries'
proportional beneficial interest in the Trust.
(e) Initial Beneficiary shall mean each
of the Shareholders.
(f) Manager shall mean such Person or
Persons who have been employed by, or who have
contracted with, the Trustees to assist in the
management of the Trust.
(g) Person shall mean an individual, a
corporation, a partnership, an association, a joint
stock company, a limited liability company, a trust,
a joint venture, any unincorporated organization, or
a government or political subdivision thereof.
(h) Record Date shall mean the date
selected by the Board of Directors of Fund for
determination of the shareholders of Fund entitled
to become Beneficiaries, which shall also be the
date on which Fund conveys to the Trust all of the
assets of Fund not previously distributed to
shareholders of Fund.
(i) Shares shall mean the shares of
Common Stock, par value $.01 per share, of Fund, and
the shares of Series A Convertible Preferred Stock,
par value $.01 per share, with each share of such
preferred stock being treated hereunder as being
equivalent to 1.25 shares of Common Stock.
(j) Shareholders shall mean the holders
of record of the outstanding Shares of Fund at the
close of business on the Record Date.
(k) Trust shall mean the Trust created by
this Agreement.
(l) Trust Assets shall mean all the
property held from time to time by the Trustees
under this Agreement, which initially shall consist
of the assets granted, assigned and conveyed to the
Trustee by Fund pursuant to the Plan, and, in
addition, shall thereafter include all dividends,
rents, royalties, income, proceeds and other
receipts of, from, or attributable to any assets
held by the Trust, less any of the foregoing
utilized by the Trustees to pay expenses of the
Trust, satisfy liabilities of Fund or the Trust or
make distributions to the Beneficiaries.
(m) Trustees shall mean the original
Trustee, any Trustees appointed hereunder after the
date hereof, and their successors.
ARTICLE II
NATURE OF TRANSFER
2.1. Purpose of Trust.
(a) The Trust is organized for the sole
purpose of winding up Fund's affairs with no objective to
continue or engage in the conduct of a trade or business.
(b) As Fund is required to liquidate and
dissolve prior to fully winding up its affairs,
including, but not limited to, its payment of any
unsatisfied debts, claims, liabilities, commitments,
suits and other obligations, whether contingent or fixed,
arising from any source whatsoever (the "Liabilities"),
without any established procedure to satisfy such
Liabilities, Fund's Board of Directors and Shareholders
each approved the Plan, which calls for the establishment
of the Trust, and sets forth the manner in which the
Trustees are selected, for the purpose of providing a
procedure which will enable Fund to dissolve in a timely
manner, and wind up its affairs, by assigning and
conveying to the Trustees pursuant to the terms contained
herein all assets of Fund not previously distributed to
Shareholders. The assets granted, assigned and conveyed
to the Trustees will be held in the Trust, and the
Trustees will: (i) further liquidate the Trust Assets if
necessary to carry out the purpose of the Trust and
facilitate distribution of the Trust Assets; (ii)
allocate, protect, conserve and manage the Trust Assets
in accordance with the terms and conditions hereof; (iii)
complete the winding up of Fund's affairs; (iv) act on
behalf of the Beneficiaries and in the capacity of Fund
in connection with any matters and (v) distribute the
Trust Assets in accordance with the terms and conditions
hereof.
(c) It is intended that the granting,
assignment and conveyance of the initial Trust Assets by
Fund to the Trustees pursuant hereto shall be treated for
federal and state income tax purposes as if Fund made
such distributions directly to the Shareholders. It is
further intended that for federal, state and local income
tax purposes the Trust shall be treated as a liquidating
trust under Treasury Regulation Section 301.7701-4(d) and
any analogous provision of state or local law, and the
Beneficiaries shall be treated as the owners of their
respective share of the Trust pursuant to Sections 671
through 679 of the Internal Revenue Code of 1986, as
amended (the "Code") and any analogous provision of state
or local law and shall be taxed on their respective share
of the Trust's taxable income (including both ordinary
income and capital gains) pursuant to Section 671 of the
Code and any analogous provision of state or local law.
The Trustees shall file all tax returns required to be
filed with any governmental agency consistent with this
position, including, but not limited to, any returns
required of grantor trusts pursuant to Section 1.671-4(a)
of the income tax regulations under the Code (the "Income
Tax Regulations").
2.2. Prohibited Activities. The Trust shall
not continue or engage in the conduct of any trade or
business, and the Trustees are expressly prohibited from,
and shall have no power or authority to, continue or
engage in the conduct of any trade or business on behalf
of the Trust or the Beneficiaries, and all of the terms
and conditions hereof shall be construed accordingly.
2.3. No Reversion to Fund. In no event shall
any part of the Trust Assets revert to or be distributed
to Fund.
2.4. Instruments of Further Assurance. After
the dissolution of Fund, such Persons as shall have the
right and power to so act, will, upon reasonable request
of the Trustees, execute, acknowledge, and deliver such
further instruments and do such further acts as may be
necessary or proper to carry out effectively the purposes
of this Agreement, to confirm or effectuate the transfer
to the Trustees of any property intended to be covered
hereby, and to vest in the Trustees, their successors and
assigns, the estate, powers, instruments or funds in
trust hereunder.
2.5. Payment of Liabilities. The Trustees
hereby assume all Liabilities. Should any Liability be
asserted against the Trustees as the transferees of the
Trust Assets or as a result of the assumption made in
this paragraph, the Trustees may use such part of the
Trust Assets as may be necessary in contesting any such
Liability or in payment thereof, but in no event shall
the Trustees, Beneficiaries or employees or agents of the
Trust be personally liable, nor shall resort be had to
the private property of such Persons, in the event the
Trust Assets are not sufficient to satisfy the
Liabilities of the Trust.
2.6. Incidents of Ownership. The Shareholders
shall be the Initial Beneficiaries of the Trust created
by this Agreement and the Trustees shall retain only such
incidents of legal ownership as are necessary to
undertake the actions and transactions authorized herein.
2.7. Notice to Unlocated Shareholders. If the
Trust holds Trust Assets for unlocated Shareholders, due
notice shall be given to such Shareholders in accordance
with local law.
ARTICLE III
BENEFICIARIES
3.1. Beneficial Interests.
(a) The Initial Beneficial Interest of each
former Shareholder as a Beneficiary hereof shall be
determined by the Trustees in accordance with a certified
copy of Fund's shareholder list as of the Record Date.
Fund will deliver such a certified copy of its
shareholder list to the Trustees within a reasonable time
after such date. For ease of administration, the
Trustees shall express the Beneficial Interest of each
Beneficiary in terms of units ("Units"). Each record
owner of shares of Common Stock of Fund at the Record
Date shall be entitled to receive one Unit in
cancellation of each such share and each record owner of
shares of preferred stock of Fund shall be entitled to
receive 1.25 Units in cancellation of each such share.
(b) The certificates representing Shares will
be deemed to evidence the number of Units in the Trust
owned by each Beneficiary, provided, however, that upon
exchange or transfer of such certificates, the
certificates shall be marked with an appropriate legend,
or new certificates in a form approved by the Trustees
shall be issued and shall evidence the number of Units
owned.
(c) If any conflicting claims or demands are
made or asserted with respect to the ownership of any
Units, or if there should be any disagreement between the
transferees, assignees, heirs, representatives or
legatees succeeding to all or part of the interest of any
Beneficiary resulting in adverse claims or demands being
made in connection with such Units, then, in any of such
events, the Trustees shall be entitled, at their sole
election, to refuse to comply with any such conflicting
claims or demands. In so refusing, the Trustees may
elect to make no payment or distribution with respect to
such Units, or to make such payment to a court of
competent jurisdiction or an escrow agent, and in so
doing the Trustees shall not be or become liable to any
of such parties for their failure or refusal to comply
with any of such conflicting claims or demands, nor shall
the Trustees be liable for interest on any funds which it
may so withhold. The Trustees shall be entitled to
refrain and refuse to act until either (i) the rights of
the adverse claimants have been adjudicated by a final
judgment of a court of competent jurisdiction, (ii) all
differences have been adjusted by valid written agreement
between all of such parties, and the Trustees shall have
been furnished with an executed counterpart of such
agreement, or (iii) there is furnished to the Trustees a
surety bond or other security satisfactory to the
Trustees, as they shall deem appropriate, to fully
indemnify them as between all conflicting claims or
demands.
3.2. Rights of Beneficiaries. Each
Beneficiary shall be entitled to participate in the
rights and benefits due to a Beneficiary hereunder
according to his Beneficial Interest. Each Beneficiary
shall take and hold the same subject to all the terms and
provisions of this Agreement. The interest of the
Beneficiary hereby is declared and shall be in all
respects personal property and upon the death of an
individual Beneficiary, his Beneficial Interest shall
pass as personal property to his legal representative and
such death shall in no way terminate or affect the
validity of this Agreement. A Beneficiary shall have no
title to, right to, possession of, management of, or
control of, the Trust Assets except as herein expressly
provided. No widower, widow, heir, or devisee of any
person who may be a Beneficiary shall have any right of
dower, homestead, or inheritance, or of partition, or of
any other right, statutory or otherwise, in any property
forming a part of the Trust Assets but the whole title to
all the Trust Assets shall be vested in the Trustees and
the sole interest of the Beneficiaries shall be the
rights and benefits given to such Persons under the
Agreement.
3.3. Transfer of Interests of Beneficiaries.
The Beneficial Interests will be registered with the
Securities and Exchange Commission on Form 8-B. Once the
Trust's Registration Statement on Form 8-B has been
declared effective, the Beneficial Interest of a
Beneficiary may be transferred, in accordance with
applicable securities laws, either by the Beneficiary in
person or by a duly authorized agent or attorney, or by
the properly appointed legal representatives of the
Beneficiary; provided, however, that if the Trust
receives a ruling from the Internal Revenue Service to
the effect that transferability by Beneficiaries of their
Beneficial Interests will adversely affect the Trust's
qualification as a "liquidating trust" for purposes of
the Code and Treasury Regulation Section 301.7701-4(d),
the Beneficial Interest of a Beneficiary may not be
transferred either by the Beneficiary in person or by a
duly authorized agent or attorney, or by the properly
appointed legal representatives of the Beneficiary, nor
may a Beneficiary have authority or power to sell,
assign, transfer, encumber, or in any other manner
dispose of his Beneficial Interest; provided, however,
that the Beneficial Interest shall be assignable or
transferable by will, intestate succession, or operation
of law and, provided further, that the executor or
administrator of the estate of a Beneficiary may
mortgage, pledge, grant a security interest in,
hypothecate or otherwise encumber, the Beneficial
Interest held by the estate of such Beneficiary if
necessary in order to borrow money to pay estate,
succession or inheritance taxes or the expenses of
administering the estate of the Beneficiary, upon written
notice to the Trustees.
The Beneficial Interests of the Beneficiaries
hereunder shall not be subject to attachment, execution,
sequestration or any order of a court, nor shall such
interests be subject to the contracts, debts,
obligations, engagements or liabilities of any
Beneficiary, but the interest of a Beneficiary shall be
paid by the Trustees to the Beneficiary free and clear of
all assignments, attachments, anticipations, levies,
executions, decrees and sequestrations and shall become
the property of the Beneficiary only when actually
received by such Beneficiary.
3.4. Trustees as Beneficiaries. Each Trustee,
either individually or in a representative or fiduciary
capacity may be a Beneficiary to the same extent as if he
were not a Trustee hereunder and have all the rights of a
Beneficiary, including, without limitation, the right to
vote and to receive distributions, to the same extent as
if he were not a Trustee hereunder.
ARTICLE IV
DURATION AND TERMINATION OF TRUST
4.1. Duration. The existence of this Trust
shall terminate upon the earliest of (i) a termination
required by the applicable laws of the State of New York,
(ii) the termination due to the distribution of all the
Trust Assets as provided in Section 5.6, or (iii) the
expiration of a period of three years from the date of
the creation of the Trust; provided, however, the
Trustees, in their discretion, may extend the existence
of this Trust to such later date as they may designate,
if they determine that an extension is reasonably
necessary to pay or make provision for then known
liabilities, actual or contingent, and provided further,
however, that the Trust shall not in any event terminate
pursuant to this clause (iii) prior to the date the
Trustees are permitted to make a final distribution in
accordance with Section 5.6.
4.2. Other Obligations of Trustees upon
Termination. Upon distribution of all the Trust Assets,
the Trustees shall provide for the retention of the
books, records, lists of holders of Units, certificates
for Shares and Units and files which shall have been
delivered to or created by the Trustees. At the
Trustees' discretion, all of such records and documents
may be destroyed at any time after seven years from the
distribution of all the Trust Assets. Except as
otherwise specifically provided herein, upon the
distribution of all the Trust Assets, the Trustees shall
have no further duties or obligations hereunder.
ARTICLE V
ADMINISTRATION OF TRUST ASSETS
5.1. Disposition of Trust Assets. The
Trustees may, at such times as they may deem appropriate,
collect, liquidate, reduce to cash, transfer, assign, or
otherwise dispose of all or any part of the Trust Assets
as they deem appropriate at public auction or at private
sale for cash, securities or other property, or upon
credit (either secured or unsecured as the Trustees shall
determine).
5.2. Transactions with Related Persons.
Notwithstanding any other provisions of this Agreement,
but only to the extent that such transactions have not
been previously approved by the Shareholders as part of
the Plan, the Trustees shall not knowingly, directly or
indirectly, sell or otherwise transfer all or any part of
the Trust Assets to, or contract with, (i) any Trustee,
employee or agent (acting in their individual capacities)
of this Trust or (ii) any Person of which any Trustee,
employee or agent of this Trust is an affiliate by reason
of being a trustee, director, officer, partner or direct
or indirect beneficial owner of 5% or more of the
outstanding capital stock, shares or other equity
interest of such Persons; unless, in each such case,
after disclosure of such interest or affiliation, such
transaction is approved by a majority of the Trustees who
are not interested in the transaction and such Trustees
determine that such transaction is on its terms fair and
reasonable to the Trust and is in the best interests of
the Beneficiaries, and in no event less favorable to this
Trust than terms available for a comparable transaction
with unrelated Persons. The Trustees are entitled to
rely in good faith on certificates of the Trustees,
employees and agents of the Trust with respect to their
interests in any transaction.
5.3. Restriction on Trust Assets. The Trust
shall not receive transfers of any assets prohibited by
Revenue Procedure 82-58, as the same may be amended,
supplemented or modified including, but not limited to,
any listed stocks or securities, any readily-marketable
assets, any operating assets of a going business, any
unlisted stock of a single issuer that represents 80
percent or more of the stock of such issuer or any
general or limited partnership interests.
5.4. Payment of Claims, Expenses and
Liabilities. The Trustees shall pay from the Trust
Assets all claims, expenses, charges, liabilities, and
obligations of the Trust and all Liabilities and
obligations which the Trustees specifically assume and
agree to pay pursuant to this Agreement and such
transferee liabilities which the Trustees may be
obligated to pay as transferees of the Trust Assets,
including among the foregoing, and without limiting the
generality of the foregoing, interest, penalties, taxes,
assessments, and public charges of every kind and nature
and the costs, charges, and expenses connected with or
growing out of the execution or administration of this
Trust and such other payments and disbursements as are
provided in this Agreement or which may be determined to
be a proper charge against the Trust Assets by the
Trustees.
5.5. Interim Distributions. At such times as
may be determined by them, the Trustees shall distribute,
or cause to be distributed, to the Beneficiaries, in
proportion to the number of Units held by each
Beneficiary, such cash or other property comprising a
portion of the Trust Assets as the Trustees may in their
sole discretion determine may be distributed without
detriment to the conservation and protection of the Trust
Assets; provided, however, that the Trustees shall
distribute, or cause to be distributed, at least annually
to the Beneficiaries any proceeds from the sale of Trust
Assets in excess of a reasonable amount (as determined by
the Trustees) to satisfy the claims, expenses and
liabilities described in Section 5.4.
5.6. Final Distribution. If the Trustees
determine that the Liabilities and all other claims,
expenses, charges, liabilities and obligations of the
Trust have been paid or discharged, or if the existence
of the Trust shall terminate pursuant to Section 4.1, the
Trustees shall, as expeditiously as is consistent with
the conservation and protection of the Trust Assets,
distribute the Trust Assets to the Beneficiaries in
proportion to the number of Units held by each
Beneficiary. The Trustees shall hold in the Trust and
thereafter make disposition of all liquidating
distributions and other payments due any Beneficiaries
who have not been located, in accordance with Maryland
law, subject to applicable state laws regarding escheat
and abandoned property.
5.7. Reports to Beneficiaries and Others. As
soon as practicable after the end of each taxable year of
the Trust and after termination of the Trust, the
Trustees shall submit a written report and account to the
Beneficiaries showing (i) the assets and liabilities of
the Trust at the end of such taxable year or upon
termination and the receipts and disbursements of the
Trustees for such taxable year or period, certified by an
independent certified public accountant, (ii) any changes
in the Trust Assets which they have not previously
reported, and (iii) any action taken by the Trustees in
the performance of their duties under this Agreement
which they have not previously reported and which, in
their opinion, materially affects the Trust Assets. The
Trustees may submit similar reports for such interim
periods during the taxable year as they deem advisable or
as may be required by the Securities and Exchange
Commission. The taxable year of the Trust shall end on
December 31 of each year unless the Trustees deem it
advisable to establish some other date as the date on
which the taxable year of the Trust shall end.
5.8. Federal Income Tax Information. As soon
as practicable after the close of each taxable year, the
Trustees shall mail to each Person who was a Beneficiary
at the close of the year, a statement showing on a unit
basis the dates and amounts of all distributions made by
the Trustees, the Trust Assets disposed of by the Trust,
if any, income earned on Trust Assets, if any, and such
other information as is reasonably available to the
Trustees which may be helpful in determining the amount
of gross income attributable to the Trust that such
Beneficiary should include in such Person's Federal
income tax return for the preceding year. In addition,
after receipt of a request in good faith, or in their
discretion without such request or if required by
applicable law, the Trustees shall furnish to any Person
who has been a Beneficiary at any time during the
preceding year a statement containing such further
information as is reasonably available to the Trustees
which shall be helpful in determining the amount of
taxable income which such Person should include in such
Person's Federal income tax return.
5.9. Employment of Manager
(a) The Trustees shall be responsible for the
general policies of the Trust and for the general
supervision of the activities of the Trust conducted by
all agents, employees, advisors or managers of the Trust.
However, the Trustees are not and shall not be required
personally to conduct the activities of the Trust, and
consistent with their ultimate responsibility as stated
above, the Trustees shall have the power to appoint,
employ or contract with any Person or Persons (including
one or more of themselves or any corporation,
partnership, or trust in which one or more of them may be
directors, officers, shareholders, partners or trustees)
as the Trustees may deem necessary or proper for the
transaction of the activities of the Trust. The Trustees
may therefore employ or contract with such Person or
Persons (herein referred to as the "Manager") and may
grant or delegate such authority to the Manager as the
Trustees may in their sole discretion deem necessary or
desirable to carry out the purpose of the Trust without
regard to whether such authority is normally granted or
delegated by trustees.
The Trustees shall have the power to determine
the terms and compensation of the Manager or any other
Person whom they may employ or with whom they may
contract, provided, however, that any determination to
employ or contract with any Trustee or other Person such
that a Trustee or other Person would be an Affiliated
Trustee or an Affiliated Person shall be valid only if
made, approved or ratified after disclosure of such
interests by the affirmative vote or written consent of a
majority of the non-Affiliated Trustees. The Trustees
may exercise broad discretion in allowing the Manager to
administer and regulate the operations of the Trust, to
act as agent for the Trust, to execute documents on
behalf of the Trustees, and to make executive decisions
which conform to general policies and general principles
previously established by the Trustees.
(b) The Manager or other Persons shall not be
required to administer the Trust as its sole and
exclusive function and may have other business interests
and may engage in other activities similar or in addition
to those relating to the Trust, including the rendering
of advice or services of any kind to investors or any
other Persons and the management of other investments.
ARTICLE VI
POWERS OF AND LIMITATIONS ON THE TRUSTEES
6.1. Limitations on Trustees. The Trustees
shall not at any time, on behalf of the Trust or
Beneficiaries, enter into or engage in any trade or
business, and no part of the Trust Assets shall be used
or disposed of by the Trustees in furtherance of any
trade or business. The Trustees shall be restricted to
the holding and collection of the Trust Assets and the
payment and distribution thereof for the purposes set
forth in this Agreement and to the conservation and
protection of the Trust Assets and the administration
thereof in accordance with the provisions of this
Agreement. In no event shall the Trustees take any
action which would jeopardize the status of the Trust as
a "liquidating trust" for federal income tax purposes
within the meaning of Treasury Regulation Section
301.7701-4(d). This limitation shall apply regardless of
whether the conduct of any such trade or business is
deemed by the Trustees to be necessary or proper for the
conservation and protection of the Trust Assets. The
Trustees shall not invest any of the funds held as Trust
Assets, except that the Trustees may invest any portion
of the Trust Assets in (i) direct obligations of the
United States of America or obligations of any agency or
instrumentality thereof which mature not later than one
year from the date of acquisition thereof; (ii) money
market deposit accounts, checking accounts, savings
accounts, or certificates of deposit, or other time
deposit accounts which mature not later than one year
from the date of acquisition thereof which are issued by
a commercial bank or savings institution organized under
the laws of the United States of America or any state
thereof; or (iii) any other investments which may be
determined by the Trustees to be permissible under
Revenue Procedure 82-58, as the same may be amended,
supplemented or modified.
6.2. Specific Powers of Trustees. Subject to
the provisions of Section 6.1, the Trustees shall have
the following specific powers in addition to any powers
conferred upon them by any other Section or provision of
this Agreement or any statutory laws of the State of New
York; provided, however, that the enumeration of the
following powers shall not be considered in any way to
limit or control the power of the Trustees to act as
specifically authorized by any other Section or provision
of this Agreement and to act in such a manner as the
Trustees may deem necessary or appropriate to conserve
and protect the Trust Assets or to confer on the
Beneficiaries the benefits intended to be conferred upon
them by this Agreement:
(a) To determine the nature and amount of the
consideration to be received with respect to the sale or
other disposition of, or the grant of interests in, the
Trust Assets.
(b) To collect, liquidate or otherwise convert
into cash, or such other property as they deem
appropriate, all property, assets and rights in the Trust
Assets, and to pay, discharge and satisfy all other
claims, expenses, charges, Liabilities, and obligations
existing with respect to the Trust Assets, the Trust or
the Trustees.
(c) To elect, appoint, engage, retain or
employ any Persons as agents, representatives, employees,
or independent contractors (including without limitation,
investment advisors, accountants, transfer agents,
attorneys-at-law, managers, appraisers, brokers, or
otherwise) in one or more capacities, and to pay
compensation from the Trust Assets for services in as
many capacities as such Person may be so elected,
appointed, engaged, retained or employed, to prescribe
the titles, powers and duties, terms of service and other
terms and conditions of the election, appointment,
engagement, retention or employment of such Persons and,
except as prohibited by law, to delegate any of the
powers and duties of the Trustees to any one or more
Trustees, agents, representatives, employers, independent
contractors or other Persons.
(d) To retain and set aside such funds out of
the Trust Assets as the Trustees shall deem necessary or
expedient to pay, or provide for the payment of (i)
unpaid claims, expenses, charges, Liabilities, and
obligations of the Trust or Fund, (ii) contingencies, and
(iii) the expenses of administering the Trust Assets.
(e) To do and perform any and all acts
necessary or appropriate for the conservation and
protection of the Trust Assets, including acts or things
necessary or appropriate to maintain assets held by the
Trustees pending sale or other disposition thereof or
distribution thereof to the Beneficiaries.
(f) To hold legal title to property of the
Trust in the name of the Trust, or in the name of one or
more of the Trustees, or of any other Person, without
disclosure of the interest of the Trust therein.
(g) To cause any investments of any part of
the Trust Assets to be registered and held in the name of
any one or more of their names or in the names of a
nominee or nominees without increase or decrease of
liability with respect thereto.
(h) To institute or defend actions or
declaratory judgments or other actions, arbitrations or
mediations and to take such other action, in the name of
the Trust or Fund or as otherwise required, as the
Trustees may deem necessary or desirable to enforce any
instruments, contracts, agreements, causes of action or
rights relating to or forming a part of the Trust Assets.
(i) To determine conclusively from time to
time the value of and to revalue the securities and other
property of the Trust, in accordance with independent
appraisals or other information as they deem
satisfactory.
(j) To cancel, terminate, or amend any
instruments, contracts, agreements, obligations or causes
of action relating to or forming a part of the Trust
Assets, and to execute new instruments, contracts,
agreements, obligations or causes of action
notwithstanding that the terms of any such instruments,
contracts, agreements, obligations or causes of action
may extend beyond the terms of this Trust, provided that
no such new instrument, contract, agreement, obligation
or cause of action shall permit the Trustees to engage in
any activity prohibited by Section 6.1.
(k) To vote by proxy or otherwise on behalf of
the Beneficiaries and with full power of substitution all
shares of stock and all securities held by the Trustees
hereunder and to exercise every power, election,
discretion, option and subscription right and give every
notice, make every demand, and to do every act or thing
in respect to any shares of stock or any securities held
by the Trustees which the Trustees might or could do if
they were the absolute owners thereof.
(l) To undertake or join in any merger, plan
of reorganization, consolidation, liquidation,
dissolution, readjustment or other transaction of any
corporation, any of whose shares of stock or other
securities, obligations, or properties may at any time
constitute a part of the Trust Assets, and to accept the
substituted shares of stock, bonds, securities,
obligations and properties and to hold the same in trust
in accordance with the provisions hereof.
(m) In connection with the sale or other
disposition or distribution of any securities held by the
Trustees, to comply with the applicable Federal and state
securities laws, and to enter into agreements relating to
sale or other disposition or distribution thereof.
(n) To authorize transactions between
corporations or other entities whose securities, or other
interests therein (either in the nature of debt or
equity) are held by the Trustees as part of the Trust
Assets.
(o) To perform any act authorized, permitted,
or required under any instrument, contract, agreement,
right, obligation or cause of action relating to or
forming a part of the Trust Assets whether in the nature
of an approval, consent, demand or notice thereunder or
otherwise, unless such act would require the consent of
the Beneficiaries in accordance with the express
provisions of this Agreement.
ARTICLE VII
CONCERNING THE TRUSTEES,
BENEFICIARIES, EMPLOYEES AND AGENTS
7.1. Generally. The Trustees accept and
undertake to discharge the trust created by this
Agreement, upon the terms and conditions thereof on
behalf of the Beneficiaries. The Trustees shall exercise
such of the rights and powers vested in them by this
Agreement, and use the same degree of care and skill in
their exercise as a prudent man would exercise or use
under the circumstances in the conduct of his own
affairs. No provision of this Agreement shall be
construed to relieve the Trustees from liability for
their own negligent action, their own negligent failure
to act, or their own willful misconduct, except that:
(a) No Trustee shall be responsible for the
acts or omissions of any other Trustee if done or omitted
without his knowledge or consent unless it shall be
proved that such Trustee was negligent in ascertaining
the pertinent facts, and no successor Trustee shall be in
any way responsible for the acts or omissions of any
Trustees in office prior to the date on which he becomes
a Trustee.
(b) No Trustee shall be liable except for the
performance of such duties and obligations as are
specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this
Agreement against the Trustees.
(c) In the absence of bad faith on the part of
the Trustees, the Trustees may conclusively rely, as to
the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or
opinions furnished to the Trustees and conforming to the
requirements of this Agreement; but in the case of any
such certificates or opinions which are specifically
required to be furnished to the Trustees by any provision
hereof, the Trustees shall be under a duty to examine the
same to determine whether or not they conform to the
requirements of this Agreement.
(d) No Trustee shall be liable for any error
of judgment made in good faith.
(e) No Trustee shall be liable with respect to
any action taken or omitted to be taken by him in good
faith in accordance with the direction of Beneficiaries
having an aggregate Beneficial Interest of more than 50%
relating to the time, method, and place of conducting any
proceeding for any remedy available to the Trustees, or
exercising any trust or power conferred upon the Trustees
under this Agreement.
7.2. Reliance by Trustees. Except as
otherwise provided in Section 7.1:
(a) The Trustees may rely and shall be
protected in acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request,
consent, order, or other paper or document believed by
them to be genuine and to have been signed or presented
by the proper party or parties.
(b) The Trustees may consult with legal
counsel, auditors or other experts to be selected by
them, including firms of which a Trustee may be a member,
and the advice or opinion of such counsel, auditors or
other experts shall be full and complete personal
protection to all Trustees, employees and agents of the
Trust in respect of any action taken or suffered by them
in good faith and in reliance on, or in accordance with,
such advice or opinion.
(c) Persons dealing with Trustees shall look
only to the Trust Assets to satisfy any liability
incurred by the Trustees to such Person in carrying out
the terms of this Trust, and the Trustees shall have no
personal or individual obligation to satisfy any such
liability.
(d) As far as practicable, the Trustees shall
cause any written instrument creating an obligation of
the Trust to include a reference to this Agreement and to
provide that neither the Beneficiaries, the Trustees nor
their agents shall be liable thereunder and that the
other parties to such instrument shall look solely to the
Trust Assets for the payment of any claim thereunder or
the performance thereof; provided, however, that the
omission of such provision from any such instrument shall
not render the Beneficiaries, Trustees, or their agents
liable nor shall the Trustees be liable to anyone for
such omission.
7.3. Liability to Third Persons. No
Beneficiary shall be subject to any personal liability
whatsoever, in tort, contract or otherwise, to any Person
in connection with the Trust Assets or the affairs of
this Trust; and no Trustee, employee or agent of this
Trust shall be subject to any personal liability
whatsoever, in tort, contract or otherwise, to any Person
in connection with the Trust Assets or the affairs of
this Trust, except for his own willful misconduct,
knowingly and intentionally committed in bad faith; and
all such other Persons shall look solely to the Trust
Assets for satisfaction of claims of any nature arising
in connection with the affairs of this Trust. The
Trustees shall, at all times, maintain insurance for the
protection of the Trust Assets, its Beneficiaries,
Trustees, employees and agents in such amount as the
Trustees shall deem adequate to cover all foreseeable
liability to the extent available at reasonable rates.
7.4. Recitals. Any written instrument
creating an obligation of this Trust shall be
conclusively taken to have been executed or done by a
Trustee, employee or agent of this Trust only in his
capacity as Trustee under this Agreement or in his
capacity as employee or agent of the Trust.
7.5. Indemnification. Each Trustee and
employee of the Trust and each agent of the Trust and the
directors, officers, partners, employees, equity owners
and agents of such agent (each an "Indemnified Person"
and collectively, the "Indemnified Persons") shall be
indemnified out of the Trust Assets against all
liabilities and expenses, including amounts paid in
satisfaction of judgments, in compromise or as fines and
penalties, and counsel fees, reasonably incurred by the
Indemnified Persons in connection with the defense or
disposition of any action, suit or other proceeding by
the Trust or any other Person, whether civil or criminal,
in which the Indemnified Person may be involved or with
which the Indemnified Person may be threatened (i) in the
case of any Trustee or any employee or agent of the
Trust, while in office or thereafter, by reason of his
being or having been such a Trustee, employee or agent,
and (ii) in the case of any director, officer, partner,
employee, equity owner or agent of any agent of the Trust
by reason of any such Person exercising or failing to
exercise any right hereunder; provided, however, that the
Indemnified Person shall not be entitled to such
indemnification in respect of any matter as to which the
Indemnified Person shall have been adjudicated to have
acted in bad faith or with willful misfeasance,
negligence, or in reckless disregard of the Indemnified
Person's duties; and provided, further, however, that, as
to any matter disposed of by a compromise payment by such
Indemnified Person pursuant to a consent decree or
otherwise, no indemnification either for said payment or
for any other expenses shall be provided unless the
Trustees shall have received a written opinion from
independent counsel approved by the Trustees to the
effect that if the foregoing matters had been
adjudicated, such Indemnified Person would not have been
found to have acted in bad faith or with willful
misfeasance, negligence, or in reckless disregard of the
Indemnified Person's duties. The rights accruing to any
Indemnified Person under these provisions shall not
exclude any other right to which the Indemnified Person
may be lawfully entitled; provided, however, that no
Indemnified Person may satisfy any right of indemnity or
reimbursement granted herein or to which the Indemnified
Person may be otherwise entitled except out of the Trust
Assets, and no Beneficiary shall be personally liable to
any person with respect to any claim for indemnity or
reimbursement or otherwise. The Trustees may make
advance payments in connection with indemnification under
this Section, provided that the Indemnified Person shall
have given a written undertaking to repay any amount
advanced to the Indemnified Person and to reimburse the
Trust in the event it is subsequently determined that the
Indemnified Person is not entitled to such
indemnification. The Trustees may purchase such
insurance as they feel, in the exercise of their
discretion, adequately insures that each Indemnified
Person shall be indemnified against any such loss,
liability or damage pursuant to this Section. The rights
accruing to any Indemnified Person by reason of the
foregoing shall not be deemed to exclude any other right
to which he may legally be entitled nor shall anything
else contained herein restrict the right of the Trustees
to indemnify or reimburse such Indemnified Person in any
proper case even though not specifically provided for
herein, nor shall anything contained herein restrict the
right of any such Indemnified Person to contribution
under applicable law. Notwithstanding anything to the
contrary in this Paragraph 7.5, no indemnification shall
be provided in excess of that permitted by the Investment
Company Act of 1940 (the "1940 Act") if the provisions of
Section 17 thereof apply.
7.6. Rights of Trustees, Employees, Independent
Contractors and Agents To Own Units or Other Property and
To Engage in Other Business. Any Trustee, employee,
independent contractor or agent may acquire, own, hold
and dispose of Units for his individual account, and may
exercise all rights thereof and thereunder to the same
extent and in the same manner as if he were not a
Trustee, employee, independent contractor or agent. Any
Trustee, employee, independent contractor or agent may,
in his personal capacity or in a capacity of trustee,
officer, director, shareholder, partner, member, advisor,
employee of any Person or otherwise, have business
interests and holdings similar to or in addition to those
relating to the Trust. Subject to the provisions of
Article V hereof, any Trustee, employee, independent
contractor or agent of the Trust may be a trustee,
officer, director, shareholder, partner, member, advisor,
employee or independent contractor of, or otherwise have
a direct or indirect interest in, any Person who may be
engaged to render advice or services to the Trust, and
may receive compensation from such Person as well as
compensation as Trustee, employee, independent contractor
or agent or otherwise hereunder. None of these
activities shall be deemed to conflict with his duties as
Trustee, employee, independent contractor or agent.
ARTICLE VIII
PROTECTION OF PERSONS DEALING WITH THE TRUSTEES
8.1. Action by Trustees. All action required
or permitted to be taken by the Trustees, in their
capacity as Trustees, shall be taken (i) at a meeting at
which a quorum is present, having been duly called by one
or more of the Trustees on at least 24 hours prior
written or telephonic notice to all of the Trustees then
serving, or (ii) without a meeting, by a written vote,
resolution, or other writing signed by all the Trustees
then serving. Notice of a meeting may be waived in
writing by any Trustee either before or after such
meeting and the attendance of a Trustee shall constitute
a waiver of notice of such meeting except where a Trustee
attends a meeting for the express purpose of objecting to
the transaction of any business on the ground that the
meeting has not been lawfully called or convened. All or
any one or more Trustees may participate in the meeting
of the Trustees by means of conference telephone or
similar communications equipment by means of which all
persons participating in the meeting can hear each other
and participation in a meeting pursuant to which such
communications are used by a Trustee shall constitute
presence in person at such meeting. Except where this
Agreement otherwise provides, all action taken at such a
meeting shall be by vote or resolution of a majority of
such of the Trustees as are present and shall have the
same force and effect as if taken by all the Trustees. A
majority of the Trustees then serving shall constitute a
quorum. Any action taken by the Trustees pursuant to
this Section 8.1 may be implemented by any one Trustee
unless otherwise specified by the Trustees authorizing or
approving such action. Such implementation may include,
without limitation, the execution and delivery of
documents. Without limiting any of the foregoing of this
Article VIII and subject to the approval of the Trustees
as herein provided, any one Trustee may hold title to, or
an interest in, any and all of the Trust Assets, for and
on behalf of the Trust and the Trustees.
8.2. Delegation. An individual Trustee may,
at any time and from time to time, by an instrument in
writing delegate any or all of his rights, powers,
duties, authority and privileges, whether or not
discretionary, to any other Trustee for such period or
periods of time as may be specified in such written
instrument; provided, however, that any such instrument
shall be revocable at any time and that any Trustee who
is granted any discretionary power hereunder may not
delegate such discretionary power to any Trustee who is
not granted such discretionary power.
8.3. Reliance on Statement by Trustees. Any
Person dealing with the Trustees shall be fully protected
in relying upon the Trustees' certificate signed by any
one or more of the Trustees that they have authority to
take any action under this Trust. Any Person dealing
with the Trustees shall be fully protected in relying
upon the Trustees' certificate setting forth the facts
concerning the calling of any meeting of the Trustees or
the Beneficiaries, the giving of notice thereof, and the
action taken at such meeting, including the aggregate
number of Units held by the Beneficiaries taking such
action.
ARTICLE IX
COMPENSATION OF TRUSTEES
9.1. Amount of Compensation. In lieu of
commissions or other compensation fixed by law for
trustees, each Trustee shall receive as compensation for
services as Trustee hereunder, (i) $500 per month or
portion thereof during which such Person serves as
Trustee plus $200 per hour spent on Trust matters or (ii)
such greater compensation as shall be determined by the
Board of Directors of Fund at their final meeting or as
may subsequently be approved by Beneficiaries having an
aggregate Beneficial Interest of more than 50%.
9.2. Dates of Payment. The compensation
payable to each Trustee pursuant to the provisions of
Section 9.1 shall be paid monthly or at such other times
as the Trustees may determine.
9.3. Expenses. Each Trustee shall be
reimbursed from the Trust Assets for all expenses
reasonably incurred by him in the performance of his
duties in accordance with this Agreement.
ARTICLE X
TRUSTEES AND SUCCESSOR TRUSTEES
10.1. Number and Qualification of Trustees.
Subject to the provisions of Section 10.3 relating to the
period pending the appointment of a successor Trustee,
there shall be no fewer than one nor more than five
Trustees of this Trust, each of whom shall be a citizen
and resident of or a corporation which is incorporated
under the laws of a state of the United States and, if a
corporation, it shall be authorized to act as a corporate
fiduciary under the laws of the State of New York and
each of whom shall not have been at anytime prior to May 8,
1996 an "interested person" (as such term is used in the 1940
Act) with respect to Fund or Commonwealth Associates (a
partnership which sponsored Fund and acted as underwriter
of Fund's initial public offering) as if each of Fund and
Commonwealth Associates were an investment company
registered under the 1940 Act. Within the limits set
forth in this Section 10.1, the number of Trustees may be
increased or decreased from time to time by the Trustees.
If any corporate Trustee shall ever change its
name, or shall reorganize or reincorporate, or shall
merge with or into or consolidate with any other bank or
trust company, such corporate Trustee shall be deemed to
be a continuing entity and shall continue to act as a
Trustee hereunder with the same liabilities, duties,
powers, titles, discretions and privileges as are herein
specified for a Trustee.
10.2. Resignation and Removal. Any Trustee
may resign and be discharged from the Trust hereby
created by giving written notice thereof to the remaining
Trustee or Trustees and by mailing such notice to the
Beneficiaries at their respective addresses as they
appear in the records of the Trustees. Such resignation
shall become effective on the day specified in such
notice or upon the appointment of such Trustee's
successor and such successor's acceptance of such
appointment, whichever is earlier. Any Trustee may be
removed at any time, with or without cause, by
Beneficiaries having an aggregate Beneficial Interest of
at least 75% of the total Beneficial Interest.
10.3. Appointment of Successor. Should at any
time a Trustee resign or be removed, die, become mentally
incompetent or incapable of action (as determined by a
majority of the remaining Trustees in their sole
discretion), or be adjudged a bankrupt or insolvent, a
vacancy shall be deemed to exist and a successor shall be
appointed by the remaining Trustees. If and only if such
a vacancy is not filled by the remaining Trustees within
60 days, the Beneficiaries may, pursuant to Article XII
hereof, call a meeting to appoint a successor Trustee by
Beneficiaries holding a majority of the Beneficial
Interest represented at the meeting. Pending the
appointment of a successor Trustee, the remaining
Trustees then serving may take any action in the manner
set forth in Section 8.1.
10.4. Acceptance of Appointment by Successor
Trustee. Any successor Trustee appointed hereunder shall
execute an instrument accepting such appointment
hereunder and shall deliver one counterpart thereof to
each of the other Trustees and, in case of a resignation,
to the retiring Trustee. Thereupon such successor
Trustee shall, without any further act, become vested
with all the estates, properties, rights, powers, trusts
and duties of his or its predecessor in the Trust
hereunder with like effect as if originally named
therein; but the retiring Trustee shall nevertheless,
when requested in writing by the successor Trustee or by
the remaining Trustees, execute and deliver an instrument
or instruments conveying and transferring to such
successor Trustee upon the trust herein expressed, all
the estates, properties, rights, powers and trusts of
such retiring Trustee, and shall duly assign, transfer
and deliver to such successor Trustee all property and
money held by him hereunder.
10.5. Bonds. Unless required by the Board of
Directors of Fund prior to the Record Date, or unless a
bond is required by law, no bond shall be required of any
original Trustee hereunder. Unless required by a
majority vote of the Trustees prior to a successor
Trustee's acceptance of an appointment as such pursuant
to Section 10.4, or unless a bond is required by law and
such requirement cannot be waived by or with approval of
the Beneficiaries, no bond shall be required of any
successor Trustee hereunder. If a bond is required by
law, no surety or security with respect to such bond
shall be required unless required by law and such
requirement cannot be waived by or with approval of the
Beneficiaries or unless required by the Board of
Directors of Fund. If a bond is required by the Board of
Directors of Fund or by a majority vote of the Trustees,
the Board of Directors of Fund or the Trustees, as the
case may be, shall determine whether, and to what extent,
a surety or security with respect to such bond shall be
required.
ARTICLE XI
CONCERNING THE BENEFICIARIES
11.1. Evidence of Action by Beneficiaries.
Whenever in this Agreement it is provided that the
Beneficiaries may take any action (including the making
of any demand or request, the giving of any notice,
consent, or waiver, the removal of a Trustee, the
appointment of a successor Trustee, or the taking of any
other action), the fact that at the time of taking any
such action such Beneficiaries have joined therein may be
evidenced (i) by any instrument or any number of
instruments of similar tenor executed by Beneficiaries in
person or by agent or attorney appointed in writing, or
(ii) by the record of the Beneficiaries voting in favor
thereof at any meeting of Beneficiaries duly called and
held in accordance with the provisions of Article XII.
11.2. Limitation on Suits by Beneficiaries.
No Beneficiary shall have any right by virtue of any
provision of this Agreement to institute any action or
proceeding at law or in equity against any party other
than the Trustees upon or under or with respect to the
Trust Assets or the agreements relating to or forming
part of the Trust Assets, and the Beneficiaries do hereby
waive any such right, unless Beneficiaries having an
aggregate Beneficial Interest of at least 25% shall have
made written request upon the Trustees to institute such
action or proceeding in their own names as Trustees
hereunder and shall have offered to the Trustees
reasonable indemnity against the costs and expenses to be
incurred therein or thereby, and the Trustees for 30 days
after their receipt of such notice, request, and offer of
indemnity shall have failed to institute any such action
or proceeding.
11.3. Requirement of Undertaking. The
Trustees may request any court to require, and any court
may in its discretion require, in any suit for the
enforcement of any right or remedy under this Agreement,
or in any suit against the Trustees for any action taken
or omitted by them as Trustees, the filing by any party
litigant in such suit of an undertaking to pay the costs
of such suit, and such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due
regard to the merits and good faith of the claims or
defenses made by such party litigant; provided, however,
that the provisions of this Section shall not apply to
any suit or other proceeding by the Trustees.
ARTICLE XII
MEETING OF BENEFICIARIES
12.1. Purpose of Meetings. A meeting of the
Beneficiaries may be called at any time and from time to
time pursuant to the provisions of this Article for the
purposes of taking any action which the terms of this
Agreement permit a Beneficiary having a specified
aggregate Beneficial Interest to take either acting alone
or with the Trustees.
12.2. Meeting Called by Trustees. The
Trustees may at any time call a meeting of the
Beneficiaries to be held at such time and at such place
within the State of New York (or elsewhere if so
determined by a majority of the Trustees) as the Trustees
shall determine. Written notice of every meeting of the
Beneficiaries shall be given by the Trustees (except as
provided in Section 12.3), which written notice will set
forth the time and place of such meeting and in general
terms the action proposed to be taken at such meeting,
and shall be mailed not more than 90 nor less than 10
days before such meeting is to be held to all of the
Beneficiaries of record not more than 90 days before the
date of such meeting. The notice shall be directed to
the Beneficiaries at their respective addresses as they
appear in the records of the Trust.
12.3. Meeting Called on Request of
Beneficiaries. Within 30 days after written request to
the Trustees by Beneficiaries having an aggregate
Beneficial Interest of at least 50% to call a meeting of
all the Beneficiaries, which written request shall
specify in reasonable detail the action proposed to be
taken, the Trustees shall proceed under the provisions of
Section 12.2 to call a meeting of the Beneficiaries, and
if the Trustees fail to call such meeting within such 30-
day period then such meeting may be called by
Beneficiaries having an aggregate Beneficial Interest of
at least one-third or their designated representative.
12.4. Persons Entitled to Vote at Meeting of
Beneficiaries. Each Beneficiary shall be entitled to
vote at a meeting of the Beneficiaries either in person
or by his proxy duly authorized in writing. The vote of
each Beneficiary shall be weighted based on the number of
Units held by each Beneficiary in the Trust Assets.
The signature of the Beneficiary on such written
authorization need not be witnessed or notarized.
12.5. Quorum and Vote Required. At any
meeting of Beneficiaries, the presence of Beneficiaries
having an aggregate Beneficial Interest sufficient to
take action on any matter for the transaction of which
such meeting was called shall be necessary to constitute
a quorum; but if less than a quorum be present,
Beneficiaries having an aggregate Beneficial Interest of
more than 50% of the aggregate Beneficial Interest of all
Beneficiaries represented at the meeting may adjourn such
meeting with the same effect and for all intents and
purposes as though a quorum had been present. Except to
the extent a higher percentage is specified for a
particular matter or is required by law, the approval of
Beneficiaries having an aggregate Beneficial Interest of
more than 50% of the aggregate Beneficial Interest of all
Beneficiaries shall be required for taking action on any
matter voted on by the Beneficiaries.
12.6. Adjournment of Meeting. Any meeting of
Beneficiaries may be adjourned from time to time and a
meeting may be held at such adjourned time and place
without further notice.
12.7. Conduct of Meetings. The Trustees shall
appoint the Chairman and the Secretary of the meeting.
The vote upon any resolution submitted to any meeting of
Beneficiaries shall be by written ballot. An Inspector
of Votes, appointed by the Chairman of the meeting, shall
count all votes cast at the meeting for or against any
resolution and shall make and file with the Secretary of
the meeting their verified written report.
12.8. Record of Meeting. A record of the
proceedings of each meeting of Beneficiaries shall be
prepared by the Secretary of the meeting. The record
shall be signed and verified by the Secretary of the
meeting and shall be delivered to the Trustees to be
preserved by them. Any record so signed and verified
shall be conclusive evidence of all the matters therein
stated.
ARTICLE XIII
AMENDMENTS
13.1. Consent of Trustees and Beneficiaries.
At the direction or with the consent of both the Trustees
and Beneficiaries having an aggregate Beneficial Interest
of at least a majority, or such greater percentage as
shall be specified in this Agreement for the taking of an
action by the Beneficiaries under the affected provision
of this Agreement, of the total Beneficial Interest, the
Trustees shall promptly make and execute a declaration
amending this Agreement for the purpose of adding any
provisions to or changing in any manner or eliminating
any of the provisions of this Agreement or amendments
thereto; provided, however, that no such amendment shall
permit the Trustees to engage in any activity prohibited
by Section 6.1 hereof or affect the Beneficiaries' rights
to receive their pro rata shares of the Trust Assets at
the time of distribution; and provided further, however,
that no consent of the Beneficiaries shall be required
with respect to any amendment made solely for the purpose
of facilitating the transferability by Beneficiaries of
Units so long as such amendment has been approved by all
the Trustees or making any other addition, change or
deletion to resolve any ambiguity or inconsistency herein
or that does not materially and adversely affect any
Beneficiary's Beneficial Interest.
13.2. Notice and Effect of Amendment.
Promptly after the execution by the Trustees of any such
declaration of amendment, the Trustees shall give notice
of the substance of such amendment to the Beneficiaries
or, in lieu thereof, the Trustees may send a copy of the
amendment to each Beneficiary. Upon the execution of any
such declaration of amendment by the Trustees, this
Agreement shall be deemed to be modified and amended in
accordance therewith and the respective rights,
limitations of rights, obligations, duties, and
immunities of the Trustees and the Beneficiaries under
this Agreement shall thereafter be determined, exercised
and enforced hereunder subject in all respects to such
modification and amendments, and all the terms and
conditions of any such amendment shall be thereby deemed
to be part of the terms and conditions of this Agreement
for any and all purposes.
ARTICLE XIV
MISCELLANEOUS PROVISIONS
14.1. Filing Documents. This Agreement shall
be filed or recorded in such office or offices as the
Trustees may determine to be necessary or desirable. A
copy of this Agreement and all amendments thereof shall
be maintained in the office of each Trustee and shall be
available at all times during regular business hours for
inspection by any Beneficiary or his duly authorized
representative. The Trustees shall file or record any
amendment of this Agreement in the same places where the
original Agreement is filed or recorded. The Trustees
shall file or record any instrument which relates to any
change in the office of Trustee in the same places where
the original Agreement is filed or recorded.
14.2. Intention of Parties to Establish Trust.
This Agreement is not intended to create and shall not be
interpreted as creating a corporation, association,
partnership, or joint venture of any kind for purposes of
Federal income taxation or for any other purpose.
14.3. Beneficiaries Have No Rights or
Privileges as Shareholders of Fund. Except as expressly
provided in this Agreement or under applicable law, the
Beneficiaries shall have no rights or privileges
attributable to their former status as Shareholders of
Fund.
14.4. Laws as to Construction. This Agreement
shall be governed by and construed in accordance with the
laws of the State of New York. The Trustees, and the
Beneficiaries (by their vote with respect to the
Liquidation Plan and/or their acceptance of any
distributions made to them pursuant to this Agreement),
consent and agree that this Agreement shall be governed
by and construed in accordance with such laws.
14.5. Severability. In the event any
provision of this Agreement or the application thereof to
any Person or circumstances shall be finally determined
by a court of proper jurisdiction to be invalid or
unenforceable to any extent, the remainder of this
Agreement, or the application of such provision to
persons or circumstances other than those as to which it
is held invalid or unenforceable, shall not be affected
thereby, and each provision of this Agreement shall be
valid and enforced to the fullest extent permitted by
law.
14.6. Notices. Any notice or other
communication by the Trustees to any Beneficiary shall be
deemed to have been sufficiently given, for all purposes,
if deposited, postage prepaid, in a post office or letter
box addressed to such Person at his address as shown in
the records of the Trust.
All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly
given if delivered personally or sent by cable, telegram,
telecopier or telex to the parties at the following addresses
or at such other addresses as shall be specified by the parties
by like notice:
(a) If to the Trustees:
Xxxxxxx X. Xxxxxx
Xxx Xxxxxxxxxxx Xxxxx
Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx &
Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
(b) if to Fund:
The MicroCap Fund, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
14.7. Counterparts. This Agreement may be
executed in any number of counterparts, each of which
shall be an original, but such counterparts shall
together constitute but one and the same instrument.
14.8. Binding.
(a) The obligations of Fund are not personally
binding upon, nor shall resort be had to the private
property of, any of the directors, shareholders,
officers, employees or agents of Fund, but only the
property of Fund shall be bound.
(b) The obligations of the Trust are not
personally binding upon, nor shall resort be had to the
private property of, any of the Trustees, Beneficiaries,
employees or agents of the Trust, but only the Trust
Assets shall be bound.
IN WITNESS WHEREOF, The MicroCap Fund, Inc. has
caused this Agreement to be executed by its President and
Chief Executive Officer, and the initial Trustee herein
has executed this Agreement, as trustee and not as an
individual, this 28th day of January, 1997.
THE MICROCAP FUND, INC.
By:/s/ XXXXXXX X. XXXXXX
-----------------------------
Xxxxxxx X. Xxxxxx
President and Chief Executive
Officer
/s/ XXXXXXX X. XXXXXX
--------------------------------
Trustee
