EXHIBIT (a)
HIGHLAND CAPITAL FIXED INCOME FUND
------------------------
AGREEMENT AND DECLARATION OF TRUST
Dated December 23, 1998
TABLE OF CONTENTS
ARTICLE I - NAME AND DEFINITIONS.............................................1
Section 1.1 Name..............................................1
Section 1.2. Definitions.......................................1
ARTICLE II - TRUSTEES........................................................3
Section 2.1. Management of the Trust...........................3
Section 2.2. Number of Trustees................................3
Section 2.3. Term of office of trustees........................4
Section 2.4. Resignation and Appointment of Trustees...........4
Section 2.5. Vacancies.........................................4
Section 2.6. Delegation of Power to Other Trustees.............5
Section 2.7. Removal of Trustees...............................5
Section 2.8. General Powers....................................5
Section 2.9. Investments.......................................6
Section 2.10. Legal Title.......................................8
Section 2.11. By-Laws...........................................8
Section 2.12. Distribution and Repurchase of Shares.............8
Section 2.13. Delegation........................................8
Section 2.14. Collection and Payment............................8
Section 2.15. Expenses..........................................8
Section 2.16. Committees........................................9
Section 2.17. Miscellaneous Powers..............................9
Section 2.18. Litigation.......................................10
ARTICLE III - CONTRACTS.....................................................10
Section 3.1. Principal Underwriter............................10
Section 3.2. Investment Adviser...............................10
Section 3.3. Administrator....................................11
Section 3.4. Other Service Providers..........................11
Section 3.5. Transfer Agents..................................11
Section 3.6. Custodian........................................11
Section 3.7. Affiliations.....................................11
ARTICLE IV - LIMITATIONS OF LIABILITY OF SHAREHOLDERS, TRUSTEES AND
OTHERS.........................................................12
Section 4.1. No Personal Liability of Shareholders, Trustees,
Officers and Employees..........................12
Section 4.2. Trustee's Good Faith Action; Advice to Others;
No Bond or Surety..............................12
Section 4.3. Indemnification..................................13
Section 4.4. No Duty of Investigation.........................13
Section 4.5. Reliance on Records and Experts..................13
ARTICLE V - SHARES OF BENEFICIAL INTEREST...................................13
Section 5.1. Shares of Beneficial Interest....................14
Section 5.2. Voting Powers....................................14
Section 5.3. Rights of Shareholders...........................15
Section 5.4. Trust Only.......................................15
Section 5.5. Issuance of Shares...............................15
ARTICLE VI - REDEMPTIONS AND REPURCHASES....................................16
Section 6.1. Redemptions and Repurchases of Shares............16
Section 6.2. Manner of Payment................................16
Section 6.3. Involuntary Redemption...........................16
ARTICLE VII - DETERMINATION OF NET ASSET VALUE, NET INCOME AND
DISTRIBUTIONS............................................17
Section 7.1. Net Asset Value..................................17
Section 7.2. Dividends and Distributions......................18
Section 7.3. Power to Modify Foregoing Procedures.............18
ARTICLE VIII - DURATION; AMENDMENTS; TERMINATION OF TRUST OR A
CLASS OR SERIES; MERGERS; CERTAIN TRANSACTIONS...........19
Section 8.1. Duration.........................................19
Section 8.2. Amendments.......................................19
Section 8.3. Certain Transactions.............................20
ARTICLE IX - MISCELLANEOUS..................................................24
Section 9.1. Use of the Words "Highland Capital"..............24
Section 9.2. Notices..........................................24
Section 9.3. Filing of Copies, References, Headings
and Counterparts................................24
Section 9.4. Applicable Law...................................25
Section 9.5. Provisions in Conflict with Law or Regulations...25
AGREEMENT AND DECLARATION OF TRUST, made December 23, 1998 by the
Trustees hereunder and by the holders of beneficial interest to be issued
hereunder as hereinafter provided and
W I T N E S S E T H:
WHEREAS, the Trust has been formed to carry on the business
of an investment company; and
WHEREAS, the Trustees have agreed to manage all property coming into
their hands as trustees of a Massachusetts voluntary association with
transferable shares in accordance with the provisions hereinafter set forth;
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust established hereunder shall be held and managed under
this Agreement and Declaration of Trust for the benefit of the holders, from
time to time, of the shares of beneficial interest to be issued hereunder and
subject to the provisions set forth below.
ARTICLE I
NAME AND DEFINITIONS
SECTION 1.1. NAME. The name of the trust created hereby is Highland
Capital Fixed Income Fund.
SECTION 1.2. DEFINITIONS. Wherever they are used herein, the following
terms have the following respective meanings:
(a) "Administrator" means the party, other than the Trust, to a
contract described in Section 3.3 hereof.
(b) "By-Laws" means the By-Laws referred to in Section 2.11 hereof, as
from time to time amended.
(c) "Class" means any class of Shares designated by the Trustees as
such following any division of Shares of the Trust into two or more Classes as
provided in Section 5.1 hereof.
(d) "Commission" shall have the meaning provided in the 1940 Act.
(e) "Custodian" means any Person other than the Trust who has custody
of any Trust Property as required by Section 17(f) of the 1940 Act, but does not
include a system for the central handling of securities described in Section
17(f).
(f) "Declaration" means this Agreement and Declaration of Trust, as
amended from time to time.
(g) "His" shall include the feminine and neuter, as well as the
masculine, genders.
(h) "Interested Person" has the meaning specified in the 1940 Act
subject, however, to such exceptions and exemptions as may be granted by the
Commission in any rule, regulation or order.
(i) "Internal Revenue Code" means the United States Internal Revenue
Code of 1986, as amended from time to time, or any successor law.
(j) "Investment Adviser" means the party, other than the Trust, to an
agreement described in Section 3.2 hereof.
(k) "1933 Act" means the Securities Act of 1933 and rules, regulations
and orders thereunder, as amended from time to time, or any successor law.
(l) "1934 Act" means the Securities and Exchange Act of 1934 and
rules, regulations and orders thereunder, as amended from time to time, or any
successor law.
(m) "1940 Act" means the Investment Company Act of 1940 and the rules,
regulations and orders thereunder, as amended from time to time, or any
successor law. (n) "Outstanding Shares" means those Shares shown from time to
time on the books of the Trust or its Transfer Agent as then issued and
outstanding.
(n) "Person" means and includes individuals, corporations,
partnerships, trusts, associations, firms, joint ventures and other entities,
whether or not legal entities, as well as governments, instrumentalities, and
agencies and political subdivisions thereof, and quasi- governmental agencies
and instrumentalities.
(o) "Principal Underwriter" means a party, other than the Trust, to a
contract described in Section 3.1 hereof.
(p) "Prospectus" means the Prospectus and Statement of Additional
Information, if any, included in the Registration Statement of the Trust under
the 1933 Act, as such Prospectus and Statement of Additional Information, if
any, may be amended or supplemented and filed with the Commission from time to
time.
(q) "Registration Statement" means the Registration Statement of the
Trust under the 1933 Act, as such Registration Statement may be amended and
filed with the Commission from time to time.
(r) "Series" means any series of Shares designated by the Trustees as
such following the division of Shares of any Class into two or more Series as
provided in Section 5.1 hereof.
(s) "Shareholder" means a record owner of Outstanding Shares.
(t) "Shares" means the equal proportionate transferable units of
interest into which the beneficial interest in the Trust shall be divided from
time to time, or, if more than one Class or Series is authorized by the
Trustees, the equal proportionate transferable units into which each Class or
Series shall be divided from time to time.
(u) "Transfer Agent" means any Person other than the Trust who
maintains the Shareholder records of the Trust, such as the list of
Shareholders, the number of Shares credited to each account.
(v) "Trust" means the Trust named in Section 1.1.
(w) The "Trustees" means the persons who have signed this Declaration,
so long as they shall continue in office in accordance with the terms hereof,
and all other persons who now serve or from time to time may be duly elected,
qualified and serving as Trustees in accordance with the provisions of Article
II hereof and the By-Laws of the Trust, and reference herein to a Trustee or the
Trustees shall refer to such person or persons in his capacity or their
capacities as trustees hereunder.
(x) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of the
Trust or the Trustees, including any and all assets of or allocated to any Class
or Series, as the context may require.
(y) Except as such term may be otherwise defined by the Trustees in
connection with any meeting or other action of Shareholders or in conjunction
with the establishment of any Class or Series, the term "vote" when used in
connection with an action of Shareholders shall include a vote taken at a
meeting of Shareholders or the consent or consents of Shareholders taken without
such a meeting.
ARTICLE II
TRUSTEES
SECTION 2.1. MANAGEMENT OF THE TRUST. The business and affairs of the
Trust shall be managed by the Trustees and they shall have all powers and
authority necessary, appropriate or desirable to perform that function.
SECTION 2.2. NUMBER OF TRUSTEES. The number of Trustees shall be such
number as shall be fixed from time to time by the Trustees, provided, however,
that following the effective date of the Registration Statement, the number of
Trustees in no event shall be less than three (3) nor more than twelve (12). No
reduction in the number of Trustees shall have the effect of removing any
Trustee from office prior to the expiration of his term unless the Trustee is
specifically removed pursuant to Section 2.7 of this Article II at the time of
decrease.
SECTION 2.3. TERM OF OFFICE OF TRUSTEES. The Board of Trustees shall
be divided into three classes. Within the limits above specified, the number of
the Trustees in each class and the class which each Trustee is assigned shall be
determined by resolution of the Board of Trustees. The term of office of the
first class shall expire on the date of the first annual meeting of Shareholders
or special meeting in lieu thereof following the effective date of the
Registration Statement. The term of office of the second class shall expire on
the date of the second annual meeting of Shareholders or special meeting in lieu
thereof following the effective date of the Registration Statement. The term of
office of the third class shall expire on the date of the third annual meeting
of Shareholders or special meeting in lieu thereof following the effective date
of the Registration Statement. Upon expiration of the term of office of each
class as set forth above, the number of Trustees in such class, as determined by
the Board of Trustees, shall be elected for a term expiring on the date of the
third annual meeting of Shareholders or special meeting in lieu thereof
following such expiration to succeed the Trustees whose terms of office expire.
The Trustees shall be elected at an annual meeting of Shareholders or special
meeting in lieu thereof called for that purpose, except as provided in Section
2.4 of this Article, and each Trustee elected shall hold office until his
successor shall have been elected and shall have qualified, except (a) that any
Trustee may resign his trust (without need for prior or subsequent accounting)
by an instrument in writing 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) that any Trustee may be removed (provided the aggregate
number of Trustees after such removal shall not be less than the number required
by Section 2.1 hereof) for cause, at any time by written instrument, signed by
the remaining Trustees, specifying the date when such removal shall become
effective; and (c) that any Trustee who requests in writing to be retired or who
has become incapacitated by illness or injury may be retired by written
instrument signed by a majority of the other Trustees, and he shall execute and
deliver such documents as the remaining Trustees shall require for the purpose
of conveying to the Fund or the remaining Trustees any Fund 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
document as the remaining Trustees shall require as provided in the preceding
sentence.
SECTION 2.4. RESIGNATION AND APPOINTMENT OF TRUSTEES. In case of the
declination, death, resignation, retirement, removal or inability of any of the
Trustees, or in case a vacancy shall exist, by reason of any increase in number,
or for any other reason, the remaining Trustees or, prior to the effective date
of the Registration Statement, if only one Trustee shall then remain in office,
the remaining Trustee, shall fill such vacancy by appointing such other person
as they, or any one of them, in their discretion, shall see fit. The power of
appointment is subject to the provisions of Section 16(a) of the 1940 Act.
SECTION 2.5. VACANCIES. The death, declination, resignation,
retirement, removal or incapacity of the Trustees, or any one of them, shall not
operate to annul the Trust or to remove any existing agency created pursuant to
the terms of this Declaration. Whenever a vacancy in the number of Trustees
shall occur, until such vacancy is filled as provided in Section 2.4, the
Trustees in office, regardless of their number, shall have all the duties
imposed upon the Trustees by the Declaration.
SECTION 2.6. DELEGATION OF POWER TO OTHER TRUSTEES. Subject to the
provisions of the 1940 Act, any Trustee may, by power of attorney, delegate his
power for a period not exceeding six (6) months at any one time to any other
Trustee or Trustees; provided that in no case shall less than two (2) Trustees
personally exercise the powers granted to the Trustees under the Declaration,
except as herein otherwise expressly provided.
SECTION 2.7. REMOVAL OF TRUSTEES. A Trustee may be removed from office
only for cause by a written instrument signed by the remaining Trustees or by a
vote of the holders of at least 66-2/3% of the Class of Shares of the Trust that
elected such Trustee and is entitled to vote on the matter.
SECTION 2.8. GENERAL POWERS. The Trustees in all instances shall act
as principals for and on behalf of the Trust and their acts shall bind the
Trust. The business and affairs of the Trust shall be managed by the Trustees
and they 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, appropriate or desirable in connection with the management of the
Trust. The Trustees shall not be bound or limited in any way by present or
future laws, practices or customs in regard to Trust investments or to other
investments which may be made by fiduciaries, but shall have full authority and
power to make any and all investments which they, in their uncontrolled
discretion, shall deem proper to promote, implement or accomplish the various
objectives and interests of the Trust and of its Classes and Series. The
Trustees shall have full power and authority to adopt such accounting and tax
accounting practices as they consider appropriate for the Trust and for any
Class or Series. 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, and with such full powers of delegation as the Trustees may exercise from
time to time. 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 to maintain
offices both within and without The Commonwealth of Massachusetts, in any and
all states of the United States of America, in the District of Columbia, and in
any and all commonwealths, territories, dependencies, colonies, possessions,
agencies, and instrumentalities of the United States of America and of foreign
governments, and to do all such other things as they deem necessary, appropriate
or desirable in order to promote or implement the interests of the Trust or of
any Class or Series although such things are not herein specifically mentioned.
Any determination as to what is in the interests of the Trust or of any Class or
Series made by the Trustees in good faith shall be conclusive and binding upon
all Shareholders. In construing the provisions of this Declaration, there shall
be a presumption in favor of a grant of plenary power and authority to the
Trustees.
The enumeration of any specific power in this Declaration shall not be
construed as limiting the aforesaid general and plenary powers.
SECTION 2.9. INVESTMENTS. The Trustees shall have full power and
authority:
(a) 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.
(b) To acquire or buy, and invest Trust Property in, own, hold for
investment or otherwise, and to sell or otherwise dispose of, all types and
kinds of securities and investments of any kind including, but not limited to,
stocks, profit-sharing interests or participations and all other contracts for
or evidences of equity interests, bonds, debentures, warrants and rights to
purchase securities, and interests in loans, certificates of beneficial
interest, bills, notes and all other contracts for or evidences of indebtedness,
money market instruments including bank certificates of deposit, finance paper,
commercial paper, bankers' acceptances and other obligations, and all other
negotiable and non-negotiable securities and instruments, however named or
described, issued by corporations, trusts, associations or any other Persons,
domestic or foreign, or issued or guaranteed by the United States of America or
any agency or instrumentality thereof, by the government of any foreign country,
by any State, territory or possession of the United States of America, by any
political subdivision or agency or instrumentality of any state or foreign
country, or by any other government or other governmental or quasi-governmental
agency or instrumentality, domestic or foreign; to acquire and dispose of
interests in domestic or foreign loans made by banks and other financial
institutions; to deposit any assets of the Trust in any bank, trust company or
banking institution or retain any such assets in domestic or foreign cash or
currency; to purchase and sell gold and silver bullion, precious or strategic
metals, and coins and currency of all countries; to engage in "when issued" and
delayed delivery transactions; to enter into repurchase agreements, reverse
repurchase agreements and firm commitment agreements; to employ all types and
kinds of hedging techniques and investment management strategies; and to change
the investments of the Trust and of each Class or Series.
(c) To acquire (by purchase, subscription or otherwise), to hold, to
trade in and deal in, to acquire any rights or options to purchase or sell, to
sell or otherwise dispose of, to lend and to pledge any Trust Property or any of
the foregoing securities, instruments or investments; to purchase and sell
options on securities, currency, precious metals and other commodities, indices,
futures contracts and other financial instruments and assets and enter into
closing and other transactions in connection therewith; to enter into all types
of commodities contracts, including without limitation the purchase and sale of
futures contracts on securities, currency, precious metals and other
commodities, indices and other financial instruments and assets; to enter into
forward foreign currency exchange contracts and other foreign exchange and
currency transactions of all types and kinds; to enter into interest rate,
currency and other swap transactions; and to engage in all types and kinds of
hedging and risk management transactions.
(d) To exercise all rights, powers and privileges of ownership or
interest in all securities and other assets included in the Trust Property,
including without limitation the right to vote thereon and otherwise act with
respect thereto; and to do all acts and things for the preservation, protection,
improvement and enhancement in value of all such securities and assets.
(e) To acquire (by purchase, lease or otherwise) and to hold, use,
maintain, lease, develop and dispose of (by sale or otherwise) any type or kind
of property, real or personal, including domestic or foreign currency, and any
right or interest therein.
(f) To borrow money and in this connection issue notes, commercial
paper or other evidence of indebtedness; to secure borrowings by mortgaging,
pledging or otherwise subjecting as security all or any part of the Trust
Property; to endorse, guarantee, or undertake the performance of any obligation
or engagement of any other Person; to lend all or any part of the Trust Property
to other Persons; and to issue general unsecured or other obligations of the
Trust, and enter into indentures or agreements relating thereto.
(g) To aid, support or assist by further investment or other action
any Person any obligation of or interest which is included in the Trust Property
or in the affairs of which the Trust or any Class or Series has any direct or
indirect interest; to do all acts and things designed to protect, preserve,
improve or enhance the value of such obligation or interest; and to guarantee or
become surety on any or all of the contracts, securities and other obligations
of any such Person.
(h) To join other security holders in acting through a committee,
depositary, voting trustee or otherwise, and in that connection to deposit any
security with, or transfer any security to, any such committee, depositary or
trustee, and to delegate to them such power and authority with relation to any
security (whether or not so deposited or transferred) as the Trustees shall deem
proper, and to agree to pay, and to pay, such portion of the expenses and
compensation of such committee, depositary or trustee as the Trustees shall deem
proper.
(i) To carry on any other business in connection with or incidental to
any of the foregoing powers referred to in this Declaration, to do everything
necessary, appropriate or desirable for the accomplishment of any purpose or the
attainment of any object or the furtherance of any power referred to in this
Declaration, either alone or in association with others, and to do every other
act or thing incidental or appurtenant to or arising out of or connected with
such business or purposes, objects or powers.
(j) To the extent necessary or appropriate, to give effect to the
preferences, special or relative rights and privileges of any Class or Series,
to allocate assets, liabilities, income and expenses of the Trust to particular
Classes or Series or to apportion the same among two or more Classes or Series.
The foregoing clauses shall be construed both as objects and powers,
and shall not be held to limit or restrict in any manner the general and plenary
powers of the Trustees.
Notwithstanding any other provision herein, the Trustees shall have
full power in their discretion, without any requirement of approval by
Shareholders, to invest part or all of the Trust Property (or part or all of the
assets of any Class or Series), or to dispose of part or all of the Trust
Property (or part or all of the assets of any Class or Series) and invest the
proceeds of such disposition, in securities issued by one or more other
investment companies registered under the 1940 Act.
SECTION 2.10. LEGAL TITLE. Legal title to all the Trust Property shall
be vested in the Trustees who from time to time shall be in office. The right,
title and interest of the Trustees in the Trust Property shall vest
automatically in each Person who hereafter may become a Trustee. Upon the
termination of the term of office, resignation, removal or death of a Trustee,
he shall automatically cease to have any right, title or interest in any of the
Trust Property, and the right, title and interest of such Trustee in the Trust
Property shall vest automatically in the remaining Trustees.
SECTION 2.11. BY-LAWS. The Trustees shall have full power and
authority to adopt By-Laws providing for the conduct of the business of the
Trust and containing such other provisions as they deem necessary, appropriate
or desirable, and, subject to the voting powers of one or more Classes or
Series, to amend and repeal such By-Laws. Unless the By-Laws specifically
require that Shareholders authorize or approve the amendment or repeal of a
particular provision of the By-Laws, any provision of the By-Laws may be amended
or repealed by the Trustees without Shareholder authorization or approval.
SECTION 2.12. DISTRIBUTION AND REPURCHASE OF SHARES. The Trustees
shall have full power and authority to issue, sell, repurchase, redeem, retire,
cancel, acquire, hold, resell, reissue, dispose of, transfer, and otherwise deal
in Shares. Shares may be sold for cash or property or other consideration
whenever and in such amounts and manner as the Trustees deem desirable. The
Trustees shall have full power to provide for the distribution of Shares either
through one or more principal underwriters or by the Trust itself, or both.
SECTION 2.13. DELEGATION. The Trustees shall have full power and
authority to delegate from time to time to such of their number or to officers,
employees or agents of the Trust or to other Persons the doing of such things
and execution of such agreements or other instruments either in the name of the
Trust or any Class or Series of the Trust or the names of the Trustees or
otherwise as the Trustees may deem desirable or expedient.
SECTION 2.14. COLLECTION AND PAYMENT. The Trustees shall have full
power and authority to collect all property due to the Trust; to pay all claims,
including taxes, against the Trust or Trust Property; to prosecute, defend,
compromise, settle or abandon any claims relating to the Trust or Trust
Property; to foreclose any security interest securing any obligations, by virtue
of which any property is owed to the Trust; and to enter into releases,
agreements and other instruments.
SECTION 2.15. EXPENSES. The Trustees shall have full power and
authority to incur on behalf of the Trust or any Class or Series and pay any
costs or expenses which the Trustees deem necessary, appropriate, desirable or
incidental to carry out, implement or enhance the business or operations of the
Trust or any Class or Series thereof, and to pay compensation from the funds of
the Trust to themselves as Trustees. The Trustees shall determine the
compensation of all officers, employees and Trustees of the Trust. The Trustees
shall have full power and authority to cause the Trust to charge all or any part
of any cost, expense or expenditure (including without limitation any expense of
selling or distributing Shares) or tax against the principal or capital of the
Trust or any Class or Series, and to credit all or any part of the profit,
income or receipt to the principal or capital of the Trust or any Class or
Series.
SECTION 2.16. COMMITTEES. The Trustees may appoint from their own
number, and terminate, any one or more committees consisting of two or more
Trustees, including an executive committee which may, when the Trustees are not
in session, exercise some or all of the power and authority of the Trustees as
the Trustees may determine.
SECTION 2.17. MISCELLANEOUS POWERS. The Trustees shall have full power
and authority to: (a) distribute to Shareholders all or any part of the earnings
or profits, surplus (including paid-in surplus), capital (including paid-in
capital) or assets of the Trust or of any Class or Series, the amount of such
distributions and the manner of payment thereof to be solely at the discretion
of the Trustees; (b) employ, engage or contract with such Persons as the
Trustees may deem desirable for the transaction of the business or operations of
the Trust or any Class or Series thereof; (c) enter into or cause the Trust or
any Class or Series thereof to enter into joint ventures, partnerships (whether
as general partner, limited partner or otherwise) and any other combinations or
associations; (d) purchase and pay for entirely out of Trust Property such
insurance as they may deem necessary or appropriate for the conduct of the
business, including, without limitation, insurance policies insuring the assets
of the Trust and payment of distributions and principal on its portfolio
investments, and insurance policies insuring the Shareholders, Trustees,
officers, employees, agents, investment advisers or managers, principal
underwriters, or independent contractors of the Trust individually against all
claims and liabilities of every nature arising by reason of holding, being or
having held any such office or position, or by reason of any action alleged to
have been taken or omitted by any such person as Shareholder, Trustee, officer,
employee, agent, investment adviser or manager, principal underwriter, or
independent contractor, including any action taken or omitted that may be
determined to constitute negligence, whether or not the Trust would have the
power to indemnify such person against such liability; (e) establish pension,
profit-sharing, share purchase, and other retirement, incentive and benefit
plans for any Trustees, officers, employees and agents of the Trust; (f)
indemnify or reimburse any Person with whom the Trust or any Class or Series
thereof has dealings, including without limitation the Investment Adviser,
Administrator, Principal Underwriter, Transfer Agent, financial service firms
and other agents, to such extent as the Trustees shall determine; (g) guarantee
the indebtedness or contractual obligations of other Persons; (h) determine and
change the fiscal year of the Trust and the methods by which its books, accounts
and records shall be kept; and (i) adopt a seal for the Trust, but the absence
of such seal shall not impair the validity of any instrument executed on behalf
of the Trust.
SECTION 2.18. LITIGATION. The Trustees shall have full power and
authority, in the name and on behalf of the Trust, to engage in and to
prosecute, defend, compromise, settle, abandon, or adjust by arbitration or
otherwise, any actions, suits, proceedings, disputes, claims and demands
relating to the Trust, and out of the assets of the Trust or any Class or Series
thereof to pay or to satisfy any liabilities, losses, debts, claims or expenses
(including without limitation attorneys' fees) incurred in connection therewith,
including those of litigation, and such power shall include without limitation
the power of the Trustees or any committee thereof, in the exercise of their or
its good faith business judgment, to dismiss or terminate any action, suit,
proceeding, dispute, claim or demand, derivative or otherwise, brought by any
Person, including a Shareholder in his own name or in the name of the Trust or
any Class or Series thereof, whether or not the Trust or any Class or Series
thereof or any of the Trustees may be named individually therein or the subject
matter arises by reason of business for or on behalf of the Trust or any Class
or Series thereof.
ARTICLE III
CONTRACTS
SECTION 3.1. PRINCIPAL UNDERWRITER. The Trustees in their discretion
from time to time may authorize the Trust to enter into one or more contracts
providing for the sale of Shares. Pursuant to any such contract, the Trust may
agree either to sell Shares to the other party to the contract or appoint such
other party its sales agent for such Shares. In either case, any such contract
shall be on such terms and conditions as the Trustees in their discretion may
determine; and any such contract also may provide for the sale of Shares by such
other party as principal or as agent of the Trust.
SECTION 3.2. INVESTMENT ADVISER. The Trustees, subject to any
approvals by Shareholders required by applicable law, in their discretion from
time to time, may authorize the Trust to enter into one or more investment
advisory agreements whereby the other party or parties to any such agreements
shall undertake to furnish the Trust investment advisory and research facilities
and services and such other facilities and services, if any, as the Trustees
shall consider desirable and all upon such terms and conditions as the Trustees
in their discretion may determine. Notwithstanding any provisions of this
Declaration, the Trustees may authorize the Investment Adviser, in its
discretion and without any prior consultation with the Trust, to buy, sell, lend
and otherwise trade and deal in any and all securities, commodity contracts and
other investments and assets of the Trust and to engage in and employ all types
of transactions and strategies in connection therewith. Any such action taken
pursuant to such agreement shall be deemed to have been authorized by all of the
Trustees.
The Trustees also may authorize the Trust to employ, or authorize the
Investment Adviser to employ, one or more sub-investment advisers from time to
time to perform some or all of the acts and services of the Investment Adviser
and upon such terms and conditions as may be agreed upon between the Investment
Adviser and such sub-investment adviser and approved by the Trustees.
SECTION 3.3. ADMINISTRATOR. The Trustees, in their discretion from
time to time, may authorize the Trust to enter into one or more administration
agreements, whereby the other party to such agreement shall undertake to furnish
to the Trust or a Series or a Class thereof such administrative facilities and
services and such other facilities and services, if any, as the Trustees
consider desirable and all upon such terms and conditions as the Trustees in
their discretion may determine.
The Trustees also may authorize the Trust to employ or authorize the
Administrator to employ one or more sub-administrators from time to time to
perform some or all of the acts and services of the Administrator and upon such
terms and conditions as may be agreed upon between the Administrator and such
sub-administrator and approved by the Trustees.
SECTION 3.4. OTHER SERVICE PROVIDERS. The Trustees, in their
discretion from time to time, may authorize the Trust to enter into one or more
agreements whereby the other party or parties to any such agreements will
undertake to provide to the Trust or any Class or Series or Shareholders or
beneficial owners of Shares such services as the Trustees consider desirable and
all upon such terms and conditions as the Trustees in their discretion may
determine.
SECTION 3.5. TRANSFER AGENTS. The Trustees, in their discretion from
time to time, may appoint one or more transfer agents for the Trust or any Class
or Series thereof. Any contract with a transfer agent shall be on such terms and
conditions as the Trustees in their discretion may determine.
SECTION 3.6. CUSTODIAN. The Trustees may appoint a bank or trust
company, subject to applicable law, as a custodian of the Trust or any Class or
Series with authority as its agent to hold cash and securities owned by the
Trust or the Class or Series and to release and deliver the same and otherwise
to perform such duties as the Trustees may specify, all upon such terms and
conditions as may be agreed upon between the Trust and the Custodian.
SECTION 3.7. AFFILIATIONS. The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, creditor, director, officer, partner, trustee or employee of or has
any interest in any Person or any parent or affiliate of any such Person, with
which a contract or agreement of the character described in this Article III has
been or will be made, or that any such Person, or any parent or affiliate
thereof, is a Shareholder of or has an interest in the Trust, or that
(ii) any such Person also has similar contracts, agreements or plans
with other investment companies (including, without limitation, the investment
companies referred to in the last paragraph of Section 2.9) or Persons, or has
other business activities or interests shall not affect in any way the validity
of any such contract, agreement or plan or disqualify any Shareholder, Trustee
or officer of the Trust from authorizing, voting upon or executing the same or
create any liability or accountability to the Trust or its Shareholders.
ARTICLE IV
LIMITATIONS OF LIABILITY OF SHAREHOLDERS, TRUSTEES AND OTHERS
SECTION 4.1. NO PERSONAL LIABILITY OF SHAREHOLDERS, TRUSTEES, OFFICERS
AND EMPLOYEES. No Shareholder shall be subject to any personal liability
whatsoever to any Person in connection with Trust Property or the acts,
obligations or affairs of the Trust or any Class or Series thereof. All Persons
dealing or contracting with the Trustees as such or with the Trust or any Class
or Series thereof or having any claim against the Trust or any Class or Series
thereof shall have recourse only to the Trust or such Class or Series for the
payment of their claims or for the payment or satisfaction of claims,
obligations or liabilities arising out of such dealings or contracts. No
Trustee, officer or employee of the Trust, whether past, present or future,
shall be subject to any personal liability whatsoever to any such Person, and
all such Persons shall look solely to the Trust Property, or to the assets of
one or more specific Class or Series of the Trust if the claim arises from the
act, omission or other conduct of such Trustee, officer or employee with respect
to only such Class or Series, for satisfaction of claims of any nature arising
in connection with the affairs of the Trust or such Class or Series. If any
Shareholder, Trustee, officer or employee, as such, of the Trust is made a party
to any suit or proceeding to enforce any such liability of the Trust or any
Class or Series thereof, he shall not, on account thereof, be held to any
personal liability.
SECTION 4.2. TRUSTEE'S GOOD FAITH ACTION; ADVICE TO OTHERS; NO BOND OR
SURETY. The exercise by the Trustees of their powers and discretions hereunder
shall be binding upon all Interested Persons. A Trustee shall not be liable for
errors of judgment or mistakes of fact or law. The Trustees shall not be
responsible or liable in any event for any neglect or wrongdoing of them or of
any officer, agent, employee, consultant, investment adviser or other adviser,
administrator, distributor or principal underwriter, custodian or transfer,
dividend disbursing, shareholder servicing or accounting agent of the Trust, nor
shall any Trustee be responsible for the act or omission of any other Trustee.
The Trustees may take advice of counsel or other experts with respect to the
meaning and operation of this Declaration and their duties as Trustees, and
shall be under no liability for any act or omission in accordance with such
advice or for failing to follow such advice. In discharging their duties, the
Trustees, when acting in good faith, shall be entitled to rely upon the records,
books and accounts of the Trust and upon reports made to the Trustees by any
officer, employee, agent, consultant, accountant, attorney, investment adviser
or other adviser, principal underwriter, expert, professional firm or
independent contractor. The Trustees, as such, shall not be required to give any
bond or surety or any other security for the performance of their duties. No
provision of this Declaration shall protect any Trustee or officer of the Trust
against any liability to the Trust or its Shareholders to which he would
otherwise be subject by reason of his own willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.
SECTION 4.3. INDEMNIFICATION. The Trustees may provide for the
indemnification by the Trust or by any Class or Series thereof of the
Shareholders, Trustees, officers and employees of the Trust and of such other
Persons as the Trustees in the exercise of their discretion may deem appropriate
or desirable in the By-Laws or by contract, vote or other action. Any such
indemnification may be mandatory or permissive, and may be insured against by
policies maintained by the Trust.
SECTION 4.4. NO DUTY OF INVESTIGATION. No purchaser, lender or other
Person dealing with the Trustees or any officer, employee or agent of the Trust
or a Class or 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 or undertaking of the Trust or a Class or Series, 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. Every written obligation,
contract, instrument, certificate, Share, other security or undertaking of the
Trust or a Class or Series 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 Class or 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 Class or Series, and may contain any further recital
which they may deem appropriate, but the omission of any such recital shall not
operate to bind the Trustees or Shareholders individually.
SECTION 4.5. RELIANCE ON RECORDS AND EXPERTS. Each Trustee, officer or
employee of the Trust, in the performance of his duties, shall 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 records, books and accounts of
the Trust or a Class or Series thereof, upon an opinion or other advice of legal
counsel, or upon reports made or advice given to the Trust or a Class or Series
thereof by any Trustee or any of the Trust's officers or employees or by the
Investment Adviser, the Administrator, the Custodian, a Principal Underwriter,
Transfer Agent, accountants, appraisers or other experts, advisers, consultants
or professionals selected with reasonable care by the Trustees or officers of
the Trust, regardless of whether the person rendering such report or advice also
may be a Trustee, officer or employee of the Trust.
ARTICLE V
SHARES OF BENEFICIAL INTEREST
SECTION 5.1. SHARES OF BENEFICIAL INTEREST. The interest of the
beneficiaries of the Trust initially shall be divided into common shares of
beneficial interest of $0.001 par value. The number of common shares authorized
hereunder is unlimited. All shares issued, including, without limitation, those
issued in connection with a dividend or distribution or a share split, shall be
fully paid and nonassessable. The Trustees, without Shareholder approval, may
authorize one or more Classes of Shares (which Classes, without Shareholder
approval, may be divided by the Trustees into two or more Series), Shares of
each such Class or Series having such preferences, voting powers and special or
relative rights or privileges (including conversion rights, if any) as the
Trustees may determine and as shall be set forth in a resolution adopted in
accordance with the By-Laws. The number of Shares of each Class or Series
authorized shall be unlimited except as the By-Laws otherwise may provide. The
Trustees from time to time may divide or combine the Shares of any Class or
Series into a greater or lesser number without thereby changing the
proportionate beneficial interest in the Class or Series.
The ownership of Shares shall be recorded on the books of the Trust or
the Transfer Agent. No certificates certifying the ownership of Shares shall be
issued except as the Trustees otherwise may determine from time to time. The
Trustees may make such rules as they consider appropriate for the issuance of
Share certificates, the transfer of Shares and similar matters. The record books
of the Trust as kept by the Trust or the Transfer Agent, as the case may be,
shall be conclusive as to who are the Shareholders of each Class or Series and
as to the number of Shares of each Class or Series held from time to time by
each Shareholder. The Trustees at any time may discontinue the issuance of Share
certificates and may, by written notice to each Shareholder, require the
surrender of Share certificates to the Trust for cancellation. Such surrender
and cancellation shall not affect the ownership of Shares in the Trust.
SECTION 5.2. VOTING POWERS. Subject to the voting powers of one or
more Classes or Series, the Shareholders shall have power to vote only (i) with
respect to the election of Trustees, (ii) for the removal of Trustees as
provided for herein, (iii) with respect to any Investment Adviser as required by
applicable law, (iv) with respect to any termination or amendment of this Trust,
or with respect to certain transactions, to the extent and as provided in
Article VIII, (v) to the same extent as the stockholders of a Massachusetts
business corporation as to whether or not a court action, proceeding or claim
should or should not be brought or maintained derivatively or as a class action
on behalf of the Trust or the Shareholders, and (vi) with respect to such
additional matters relating to the Trust as may be required by law, this
Declaration, the By-Laws or any registration of the Trust with the Securities
and Exchange Commission (or any successor agency) or any state, or as the
Trustees may consider necessary or desirable. Each whole Share shall be entitled
to one vote as to any matter on which it is entitled to vote and each fractional
Share shall be entitled to a proportionate fractional vote. Notwithstanding any
other provision of this Declaration, on any matter submitted to a vote of
Shareholders, all Shares of the Trust then entitled to vote shall be voted in
the aggregate as a single Class without regard to Classes or Series, except as
otherwise provided in the By-Laws or required by applicable law. There shall be
no cumulative voting in the election of Trustees.
SECTION 5.3. RIGHTS OF SHAREHOLDERS. The ownership of the Trust
Property of every description and the right to conduct any business of the Trust
are vested exclusively in the Trustees, and the Shareholders shall have no
interest therein other than the beneficial interest conferred by their Shares,
and they shall have no right to call for any partition or division of any
property, profits, rights or interests of the Trust or of any Class or Series,
nor can they be called upon to share or assume any losses of the Trust or of any
Class or Series or suffer an assessment of any kind by virtue of their ownership
of Shares. The Shares shall be personal property giving only the rights
specifically set forth in this Declaration. The Shares shall not entitle the
holder to preference, preemptive, appraisal, conversion or exchange rights,
except as the Trustees may specifically determine with respect to any Class or
Series.
Every Shareholder by virtue of having become a Shareholder shall be
held to have expressly assented and agreed to the terms of this Declaration and
the Bylaws and to have become a party hereto and thereto. The death of a
Shareholder during the continuance of the Trust shall not operate to terminate
the same nor entitle the representative of any deceased Shareholder to an
accounting or to take any action in court or elsewhere against the Trust or the
Trustees, but only to the rights of said decedent under this Trust.
SECTION 5.4. TRUST ONLY. It is the intention of the Trustees to create
only the relationship of Trustee and beneficiary between the Trustees and each
Shareholder from time to time. It is not the intention of the Trustees to create
a general partnership, limited partnership, joint stock association,
corporation, bailment or any form of legal relationship other than a
Massachusetts business trust. Nothing in this Declaration shall be construed to
make the Shareholders, either by themselves or with the Trustees, partners or
members of a joint stock association.
SECTION 5.5. ISSUANCE OF SHARES. The Trustees in their discretion may
issue, from time to time and without any authorization or vote of the
Shareholders, Shares of any Class or Series, in addition to the then issued and
Outstanding Shares, to such party or parties and for such amount and type of
consideration, including cash or property, at such time or times and on such
terms as the Trustees may deem appropriate or desirable, and may in such manner
acquire other assets (including the acquisition of assets subject to, and in
connection with the assumption of, liabilities) and businesses. In connection
with any issuance of Shares, the Trustees may issue fractional Shares and
reissue and resell full and fractional Shares held in the treasury. The Trustees
may authorize the issuance of certificates of beneficial interest to evidence
the ownership of Shares. Shares held in the treasury shall not be voted nor
shall such Shares be entitled to any dividends or other distributions declared
with respect thereto. The Trustees, in their discretion from time to time and
without any authorization or vote of the Shareholders, also may issue to the
extent consistent with applicable law securities of the Trust convertible into
Shares of the Trust and warrants to purchase securities of the Trust, in each
case pursuant to such terms and under such conditions as the Trustees may
specify in their discretion. Shares of any Class or Series, in addition to the
then issued and outstanding Shares, and such warrants or convertible securities,
may be issued to such party or parties and for such amount and type of
consideration, including cash or property, at such time or times and on such
terms as the Trustees may deem appropriate or desirable, and may in such manner
acquire other assets (including the acquisition of assets subject to, and in
connection with the assumption of, liabilities) and businesses. The officers of
the Trust are severally authorized to take all such actions as may be necessary
or desirable to carry out this Section 5.5.
ARTICLE VI
REDEMPTIONS AND REPURCHASES
SECTION 6.1. REDEMPTIONS AND REPURCHASES OF SHARES. From time to time,
the Trust may redeem or repurchase its Shares, all upon such terms and
conditions as may be determined by the Trustees and subject to any applicable
provisions of the 1940 Act. The Trust may require Shareholders to pay a
withdrawal charge, a sales charge, or any other form of charge to the Trust, to
the underwriter or to any other person designated by the Trustees upon
redemption or repurchase of Shares in such amount as shall be determined from
time to time by the Trustees. The Trust also may charge a redemption or
repurchase fee in such amount as may be determined from time to time by the
Trustees.
SECTION 6.2. MANNER OF PAYMENT. Payment of Shares redeemed or
repurchased, at the option of the Trustees or such officer or officers as they
may duly authorize for the purpose, in their complete discretion, may be made in
cash, or in kind, or partially in cash and partially in kind. If payment is made
in kind, the Trustees, or their delegate, shall have absolute discretion as to
what security or securities shall be distributed in kind and the amount of the
same, and the securities shall be valued for purposes of distribution at the
figure at which they were appraised in computing the net asset value of the
Shares, provided that any Shareholder who cannot legally acquire securities so
distributed in kind by reason of the prohibitions of the 1940 Act shall receive
cash.
SECTION 6.3. INVOLUNTARY REDEMPTION. If the Trustees shall be of the
opinion at any time and in good faith, that direct or indirect ownership of
Shares of any Class or Series or other securities of the Trust has or may become
concentrated in any person to an extent which would disqualify the Trust as a
regulated investment company under the Internal Revenue Code, then the Trustees
shall have the power by lot or other means deemed equitable by them (i) to call
for redemption by any such person a number, or principal amount, of Shares or
other securities of the Trust sufficient to maintain or bring the direct or
indirect ownership of Shares or other securities of the Trust into conformity
with the requirements for such qualification and (ii) to refuse to transfer or
issue Shares or other securities of the Trust to any person whose acquisition of
the Shares or other securities of the Trust in question would result in such
disqualification. The redemption shall be effected upon such terms and
conditions as shall be determined by the Trustees.
The holders of Shares or other securities of the Trust shall upon
demand disclose to the Trustees in writing such information with respect to
direct and indirect ownership of Shares or other securities of the Trust as the
Trustees deem necessary to comply with the provisions of the Internal Revenue
Code, or to comply with the requirements of any other taxing authority.
ARTICLE VII
DETERMINATION OF NET ASSET VALUE,
NET INCOME AND DISTRIBUTIONS
SECTION 7.1. NET ASSET VALUE. The net asset value of each outstanding
Share of the Trust or of any Class or Series thereof shall be determined on such
days and at or as of such time or times as the Trustees may determine. Any
reference in this Declaration to the time at which a determination of net asset
value is made shall mean the time as of which the determination is made. The
power and duty to determine and method of determination of net asset value may
be delegated by the Trustees from time to time to the Investment Adviser, the
Administrator, the Custodian, the Transfer Agent or such other Person or Persons
as the Trustees may determine. The value of the assets of the Trust or any Class
or Series thereof shall be determined in a manner authorized by the Trustees.
From the total value of said assets, there shall be deducted all indebtedness,
interest, taxes, payable or accrued, including estimated taxes on unrealized
book profits, expenses and management charges accrued to the appraisal date, and
all other items in the nature of liabilities which shall be deemed appropriate
by the Trustees, as incurred by or allocated to the Trust or any Class or Series
thereof. The resulting amount, which shall represent the total net assets of the
Trust or Class or Series thereof, shall be divided by the number of Outstanding
Shares of the Trust or Class or Series thereof at that time and the quotient so
obtained shall be deemed to be the net asset value of the Shares of the Trust or
Class or Series thereof. The Trust may declare a suspension of the determination
of net asset value to the extent permitted by the 1940 Act. It shall not be a
violation of any provision of this Declaration if Shares are sold, redeemed or
repurchased by the Trust at a price other than one based on net asset value,
subject to the provisions of the 1940 Act. No provision of this Declaration
shall be construed to restrict or affect the right or ability of the Trust to
employ or authorize the use of pricing services, appraisers or any other means,
methods, procedures, or techniques in valuing the assets or calculating the
liabilities of the Trust or any Class or Series thereof.
SECTION 7.2. DIVIDENDS AND DISTRIBUTIONS.
(a) The Trustees from time to time may distribute ratably among the
Shareholders of the Trust or of a Class or Series thereof such portion of the
net earnings or profits, surplus (including paid-in surplus), capital (including
paid-in capital), or assets of the Trust or such Class or Series held by the
Trustees as they may deem appropriate or desirable. Such distributions may be
made in cash, additional Shares or property (including without limitation any
type of obligations of the Trust or Class or Series or any assets thereof), and
the Trustees may distribute ratably among the Shareholders of the Trust or Class
or Series thereof additional Shares of the Trust or Class or Series thereof
issuable hereunder in such manner, at such times, and on such terms as the
Trustees may deem appropriate or desirable. Such distributions may be among the
Shareholders of the Trust or Class or Series thereof at the time of declaring a
distribution or among the Shareholders of the Trust or Class or Series thereof
at such other date or time or dates or times as the Trustees shall determine.
The Trustees always may retain from the earnings or profits such amounts as they
may deem appropriate or desirable to pay the expenses and liabilities of the
Trust or a Class or Series thereof or to meet obligations of the Trust or a
Class or Series thereof, together with such amounts as they may deem desirable
to use in the conduct of its affairs or to retain for future requirements or
extensions of the business or operations of the Trust or such Class or Series.
The Trust may adopt and offer to Shareholders such dividend reinvestment plans,
cash dividend payout plans or other distribution plans as the Trustees may deem
appropriate or desirable. The Trustees in their discretion may determine that an
account administration fee or other similar charge may be deducted directly from
the income and other distributions paid on Shares to a Shareholder's account in
any Class or Series.
(b) The Trustees may prescribe in their absolute discretion such bases
and times for determining the amounts for the declaration and payment of
dividends and distributions as they may deem necessary, appropriate or
desirable.
(c) Inasmuch as the computation of net income and gains for Federal
income tax purposes may vary from the computation thereof on the books of
account, the above provisions shall be interpreted to give the Trustees full
power and authority in their absolute discretion to distribute for any fiscal
year as dividends and as capital gains distributions, respectively, additional
amounts sufficient to enable the Trust or a Class or Series thereof to avoid or
reduce liability for taxes.
SECTION 7.3. POWER TO MODIFY FOREGOING PROCEDURES. Notwithstanding any
provision contained in this Declaration, the Trustees may prescribe in their
absolute discretion such other means, methods, procedures or techniques for
determining the per Share net asset value of a Class or Series thereof or the
income of the Class or Series thereof, or for the declaration and payment of
dividends and distributions on any Class or Series.
ARTICLE VIII
DURATION; AMENDMENTS; TERMINATION OF TRUST OR A
CLASS OR SERIES; MERGERS; CERTAIN TRANSACTIONS
SECTION 8.1. DURATION. The Trust shall continue without limitation of
time, but subject to the provisions of this Article VIII. The death,
declination, resignation, retirement, removal or incapacity of the Trustees, or
any one of them, shall not operate to terminate or annul the Trust or to revoke
any existing agency or delegation or authority pursuant to the terms of this
Declaration or of the By-Laws.
SECTION 8.2. AMENDMENTS. The execution of an instrument setting forth
the establishment and designation and the relative rights of any Class or Series
of Shares in accordance with Section 5.1 hereof shall, without any
authorization, consent or vote of the Shareholders, effect an amendment of this
Declaration. Except as otherwise provided in Section 8.3 hereof, if authorized
by a majority of the Trustees and by vote of a majority of the outstanding
voting securities of the Trust affected by the amendment (which voting
securities shall, unless otherwise provided by the Trustees, vote together on
such amendment as a single class), or by any larger vote which may be required
by applicable law or this Declaration in any particular case, the Trustees may
amend or otherwise supplement this Declaration. The Trustees may also amend this
Declaration without the vote or consent of Shareholders to change the name of
the Trust or to make such other changes as do not have a materially adverse
effect on the rights or interests of Shareholders hereunder or if they deem it
necessary to conform this Declaration to the requirements of applicable Federal
laws or regulations or the requirements of the regulated investment company
provisions of the Internal Revenue Code, but the Trustees shall not be liable
for failing so to do.
No amendment may be made under this Section which shall amend, alter,
change or repeal any of the provisions of Article VIII unless the amendment
effecting such amendment, alteration, change or repeal shall receive the
affirmative vote or consent of the holders of 66-2/3% of each Class and Series
of Shares outstanding and entitled to vote (with each such Class and Series
separately voting thereon on consenting thereto as a separate Class or Series).
Such affirmative vote or consent shall be in addition to the vote or consent of
the holders of Shares otherwise required by law or by any agreement between the
Trust and any national securities exchange.
Nothing contained in this Declaration shall permit the amendment of
this Declaration to impair the exemption from personal liability of the
Shareholders, Trustees, officers, employees and agents of the Trust or to permit
assessments upon Shareholders.
Notwithstanding any other provision hereof, until such time as a
Registration Statement under the 1933 Act, covering the first public offering of
securities of the Trust shall have become effective, this Declaration may be
terminated or amended in any respect by the affirmative vote of a majority of
the Trustees or by an instrument signed by a majority of the Trustees.
SECTION 8.3. CERTAIN TRANSACTIONS.
(a) Except as otherwise provided in this Section 8.3, at least 75% of
the votes entitled to be cast by Shareholders, in addition to the affirmative
vote of at least 75% of the Trustees, shall be necessary to effect an amendment
to this Declaration to make the Shares "redeemable securities" or to convert the
Trust from a "closed-end company" to an "open-end company" (as such terms are
defined in Section 5(a)(2) and Section 5(a)(1), respectively, of the ▇▇▇▇ ▇▇▇)
unless the Continuing Trustees (as hereinafter defined), by a vote of at least
75% of such Continuing Trustees, approve such amendments in which case the
affirmative vote of a majority of the votes entitled to be cast by Shareholders
shall be required to approve such transaction.
(b) The affirmative votes of at least 75% of the Trustees and of at
least 80% of the votes entitled to be cast thereon by Shareholders are required
to authorize any of the following transactions:
(i) unless the 1940 Act or any other Federal or state law or
regulation requires a lesser vote, any Shareholder proposal as to specific
investment decisions made or to be made with respect to the Trust's assets as to
which Shareholder approval is required under Federal or Massachusetts law; or
(ii) any proposal as to the voluntary liquidation or
dissolution of the Trust or any amendment to this Declaration to terminate the
existence of the Trust, unless the Continuing Trustees, by a vote of at least
75% of such Continuing Trustees, approve such proposals, in which case the
affirmative vote of a majority of the votes entitled to be cast by Shareholders
shall be required to approve such transaction.
(c) The affirmative vote of at least 75% of the of Trustees and the
holders of at least 66-2/3% of the votes entitled to be cast thereon by
Shareholders, including at least 66-2/3% of the votes entitled to be cast
thereon other than votes held by an Interested Party (or its Affiliate) (as
hereinafter defined) who is a party to a Business Combination (as hereinafter
defined) or an Affiliate or Associate (as hereinafter defined) of the Interested
Party, are required to authorize any Business Combination unless either the
condition in clause (i) below is satisfied, or all of the conditions in clauses
(ii), (iii), (iv), (v) and (vi) below are satisfied, in either which case
paragraph (e) below shall apply.
(i) The Business Combination shall have been approved by a
vote of at least 75% of the Continuing Trustees.
(ii) The aggregate amount of cash and the Fair Market Value
(as hereinafter defined), as of the date of the consummation of the Business
Combination, of consideration other than cash to be received per Share by
holders of any Class of outstanding Shares in such Business Combination shall
be at least equal to the higher of the following:
(A) the highest per Share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees) paid by an
Interested Party (as hereinafter defined) for any Shares acquired by it (i)
within the two-year period immediately prior to the first public announcement of
the proposal of the Business Combination (the "Announcement Date"), or (ii) (a)
in the Threshold Transaction (as hereinafter defined), or (b) in any period
between the Threshold Transaction and the consummation of the Business
Combination, whichever is higher; and
(B) the net asset value per Share of such Shares
on the Announcement Date or on the date of the Threshold
Transaction, whichever is higher.
(iii) The consideration to be received by holders of the
particular Class of outstanding Shares shall be in cash or in the same form as
the Interested Party has previously paid for Shares of any Class. If the
Interested Party has paid for Shares of any Class with varying forms of
consideration, the form of consideration for such Class of Shares shall be
either cash or the form used to acquire the largest number of Shares of such
Class of Shares previously acquired by it.
(iv) After the occurrence of the Threshold Transaction, and
prior to the consummation of such Business Combination, such Interested Party
shall not have become the beneficial owner of any additional Shares except by
virtue of the Threshold Transaction.
(v) After the occurrence of the Threshold Transaction, such
Interested Party shall not have received the benefit, directly or indirectly
(except proportionately as a Shareholder), of any loans, advances, guarantees,
pledges or other financial assistance or any tax credits or other tax advantages
provided by the Trust, whether in anticipation of or in connection with such
Business Combination or otherwise.
(vi) A proxy or information statement describing the proposed
Business Combination and complying with the requirements of the 1934 Act and
1940 Act shall be prepared and mailed by the Interested Party, at such
Interested Party's expense, to Shareholders at least 30 days prior to the
consummation of such Business Combination (whether or not such proxy or
information statement is required to be mailed pursuant to the 1934 Act or 1940
Act.
(d) For the purposes of this Section 8.3 only:
(i) "Business Combination" shall mean any of the transactions
described or referred to in any one or more of the following subparagraphs:
(A) any merger, consolidation or share exchange
of the Trust with or into any other Person;
(B) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a series of transactions in
any 12-month period) to or with any other person of any assets of the Trust
having an aggregate Fair Market Value of $1,000,000 or more except for portfolio
transactions of the Trust (including, without limitation, pledges of portfolio
securities in connection with borrowings and debt securities and default
provisions with respect thereto, reverse repurchase agreements and security loan
transactions) affected in the ordinary course of the Trust's business;
(C) the issuance or transfer by the Trust (in
one transaction or a series of transactions in any 12-month period) of any
securities of the Trust to any other person in exchange for cash, securities or
other property (or a combination thereof) having an aggregate Fair Market Value
of $1,000,000 or more excluding (i) sales of debt securities of the Trust in a
public or private offering, (ii) sales of any securities of the Trust in
connection with a public offering thereof, (iii) issuances of any securities of
the Trust pursuant to a dividend reinvestment plan adopted by the Trust or
pursuant to a share dividend and (iv) issuances of any securities of the Trust
upon the exercise of any share subscription rights distributed by the Trust;
(ii) "Continuing Trustee" means any Trustee who is not an
Interested Party or an Affiliate of an Interested Party and has been a Trustee
for a period of at least 12 months (or since the Trust's commencement of
operations, if that period is less than 12 months), or is a successor of a
Continuing Trustee who is unaffiliated with an Interested Party and is
recommended to succeed a Continuing Trustee by a majority of the Continuing
Trustees then on the Board of Trustees.
(iii) "Interested Party" shall mean any person, other than an
investment company advised by the Trust's initial investment adviser or any of
its Affiliates, which enters, or proposes to enter, into a Business Combination
with the Trust.
(iv) A person shall be a "beneficial owner" of any Share:
(A) which such person or any of its Affiliates
or Associates beneficially owns, directly or indirectly; or
(B) which such person or any of its Affiliates
or Associates has the right to acquire (whether such right is exercisable
immediately or only after the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion rights, exchange
rights, warrants or options, or
(C) which is beneficially owned, directly or
indirectly, by any other person with which such person or any of its Affiliates
or Associates has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any Shares.
(v) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the 1934 Act.
(vi) "Fair Market Value" means:
(A) in the case of Shares, the highest closing
sale price during the 30- day period immediately preceding the relevant date of
a Share on the New York Stock Exchange, or if such Share is not listed on such
Exchange, on the principal United States securities exchange registered under
the 1934 Act on which such Share is listed, or, if such Share is not listed on
any such exchange, the highest closing sale price (if such Share is a National
Market System security) or the highest closing bid quotation (if such Share is
not a National Market System security) with respect to a Share during the 30-day
period preceding the relevant date on the National Association of Securities
Dealers, Inc. Automated Quotation Systems (NASDAQ) or any system then in use,
or if no such quotations are available, the fair market value on the relevant
date of the Share as determined by at least 75% of the Continuing Trustees in
good faith, and
(B) in the case of property other than cash or
stock, the fair market value of such property on the relevant date as determined
by at least 75% of the Continuing Trustees in good faith.
(vii) "Threshold Transaction" means the transaction by or as a
result of which an Interested Party first becomes the beneficial owner of
Shares.
(viii) If any Business Combination occurs in which the Trust
survives, the phrase "consideration other than cash to be received" as used in
subparagraph (c) (ii) shall include the Shares retained by the holders of such
Shares.
(ix) Continuing Trustees, acting by a vote of at least 75%,
shall have the power and duty to determine, on the basis of information known to
them after reasonable inquiry, all facts necessary to determine (a) the number
of Shares beneficially owned by any Person, (b) whether a Person is an Affiliate
or Associate or another, (c) whether the requirements of subparagraph (c) above
have been met with respect to any Business Combination, and (d) whether the
assets which are the subject of any Business Combination have, or the
consideration to be received for the issuance or transfer of securities by the
Trust in any Business Combination has, an aggregate Fair Market Value of
$1,000,000 or more.
(e) If any Business Combination described in paragraph (d) (i) (A) or
(B) (if the merger, consolidation, share exchange or transfer or other
disposition constitutes a merger, consolidation, share exchange or transfer of
all or substantially all of the assets of the Trust with respect to which
shareholder approval is required under Massachusetts Law) is approved by a vote
of 75% of the Continuing Trustees or all of the conditions in paragraph (c)
(ii), (iii), (iv), (v) and (vi) are satisfied, a majority of the votes entitled
to be cast by Shareholders shall be required to approve such transaction. If any
other Business Combination is approved by a vote of 75% of the Continuing
Trustees or all of the conditions in paragraph (c) (ii), (iii), (iv), (v) and
(vi) are satisfied, no shareholder vote shall be required to approve such
transaction unless otherwise provided in this Declaration or required by
applicable law.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. USE OF THE WORDS "HIGHLAND CAPITAL." Highland Capital
Management, L.P. (hereinafter referred to as Highland Capital) has consented to
the use by the Trust of the identifying words "Highland Capital" in the name of
the Trust. Such consent is conditioned upon the continued employment of Highland
Capital or a subsidiary or affiliate of Highland Capital as Investment Adviser
of the Trust or as the investment adviser of each of the investment companies
referred to in the last paragraph of Section 2.9. As between the Trust and
itself, Highland Capital shall control the use of the name of the Trust insofar
as such name contains the identifying words "Highland Capital. " Highland
Capital from time to time may use the identifying words "Highland Capital" in
other connections and for other purposes, including, without limitation, the
names of other investment companies, trusts, corporations or businesses which it
may manage, advise, sponsor or own or in which it may have a financial interest.
Highland Capital may require the Trust to cease using the identifying words
"Highland Capital" in the name of the Trust if Highland Capital or a subsidiary
or affiliate of Highland Capital ceases to act as investment adviser of the
Trust or as the investment adviser of each of the investment companies referred
to in the last paragraph of Section 2.9.
SECTION 9.2. NOTICES. Notwithstanding any other provision of this
Declaration, any and all notices to which any Shareholder may be entitled and
any and all communications shall be deemed duly served or given if mailed,
postage prepaid, addressed to any Shareholder of record at his last known
address as recorded on the register of the Trust. If and to the extent
consistent with applicable law, a notice of a meeting, an annual report, and any
other communication to Shareholders need not be sent to a Shareholder (i) if an
annual report and a proxy statement for two consecutive shareholder meetings
have been mailed to such Shareholder's address and have been returned as
undeliverable, (ii) if all, and at least two, checks (if sent by first class
mail) in payment of distributions on Shares during a twelve-month period have
been mailed to such Shareholder's address and have been returned as
undeliverable or (iii) in any other case in which a proxy statement concerning a
meeting of security holders is not required to be given pursuant to the
Commission's proxy rules as from time to time in effect under the 1934 Act.
However, delivery of such proxy statements, annual reports and other
communications shall resume if and when such Shareholder delivers or causes to
be delivered to the Trust written notice setting forth such Shareholder's then
current address.
SECTION 9.3. FILING OF COPIES, REFERENCES, HEADINGS AND COUNTERPARTS.
The original or a copy of this instrument, any amendment hereto and each
declaration of trust supplemental hereto, shall be kept at the office of the
Trust. Anyone dealing with the Trust may rely on a certificate by a Trustee or
an officer of the Trust as to whether or not any such amendments or supplemental
declarations of trust 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 a Trustee or an officer of the Trust to be a copy of
this instrument or of any such amendment hereto or supplemental declaration of
trust.
In this instrument or in any such amendment or supplemental
declaration of trust, references to this instrument, and all expressions such as
"herein," "hereof," and "hereunder," shall be deemed to refer to this instrument
as amended or affected by any such supplemental declaration of trust. Headings
are placed herein for convenience of reference only and in case of any conflict,
the text of this instrument, rather than the headings, shall control. This
instrument may be executed in any number of counterparts each of which shall be
deemed an original, but such counterparts shall constitute one instrument. A
restated Declaration, integrating into a single instrument all of the provisions
of the Declaration which are then in effect and operative, may be executed from
time to time by a majority of the Trustees then in office and filed with the
Secretary of State of the Commonwealth of Massachusetts. A restated Declaration,
upon execution, shall be conclusive evidence of all amendments and supplemental
declarations contained therein and thereafter may be referred to in lieu of the
original Declaration and the various amendments and supplements thereto.
SECTION 9.4. APPLICABLE LAW. The Trust set forth in this instrument is
made in The Commonwealth of Massachusetts, and it is created under and is to be
governed by and construed and administered according to the laws of said
Commonwealth. The Trust shall be of the type commonly called a Massachusetts
business trust, and without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a trust.
SECTION 9.5. PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS.
(a) The provisions of this Declaration are severable, and if the
Trustees shall determine, with the advice of legal counsel, that any of such
provisions is in conflict with the 1940 Act, the Internal Revenue Code or with
other applicable laws and regulations, the conflicting provision shall be
construed in such a manner consistent with such law as may most closely reflect
the intention of the offending provision; provided, however, that such
determination shall not affect any of the remaining provisions of this
Declaration or render invalid or improper any action taken or omitted prior to
such determination.
(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not affect in any
manner such provision in any other jurisdiction or any other provision of this
Declaration in any jurisdiction.
IN WITNESS WHEREOF, the undersigned Trustee has hereunto set his hand
and seal for himself and his assigns as of the day and year first above written.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇, Trustee
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Address: 1150 Two Galleria Tower
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ADDRESS OF TRUST:
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1150 Two Galleria Tower
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ADDRESS OF RESIDENT AGENT:
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CT Corporation System
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The names and addresses of all the Trustees of the Trust are as follows:
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c/o Highland Capital Fixed Income Fund
1150 Two Galleria Tower
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